Entries for April 2008

Dear Alpha Consumer,

I am interested in taking more control of my financial future, but I feel that I'm more ahead of the game then some of my peers. I have a 401(k) that I contribute to, I save regularly, and I am pretty frugal—I learned to use the library instead of constantly buying new books and I love consignment clothes shops—you can dress for less AND have stuff that everyone else isn't wearing.

I don't feel like I'm doing enough , though. A lot of the advice I've found for people my age is for those who have done nothing so far which isn't really me. About eight months ago, I was $3,000 in credit card debt. I had a very restrictive budget and am now debt-free, save my student loans and car insurance. Each week I saved $10 toward various long- and short-term goals—a car, a new computer, vacation, savings, etc.

Now that a rebate check or deposit is headed your way, retailers want to help you figure out what to do with it. Perhaps driven by the fact that only 1 in 5 shoppers expects to actually spend the money, stores are doing what they can to persuade those planning to save it or use it to pay down debt to change their minds.

Retailers ranging from grocery stores to discount shops are posting specials to entice consumers to spend their rebate checks on their products. Here are some of the appealing offers:

Tax rebate checks are now on their way to consumers, earlier than had been expected. Have you decided how to spend the money? A survey by TNS Retail Forward found that consumers are split on what they will do with it (more than one answer was accepted). Around one third will use it to pay bills, some 30 percent will put the money into savings, and about one quarter will put it toward everyday expenses such as food and gas. Only 1 in 5 shoppers will use it to buy something special, like a new television.

The market research firm says that will be enough to help retailers, bringing them a windfall of about $42 billion in sales. That would double third-quarter growth to 6 percent, TNS calculates.

That's good news for those in the retail business, but for the rest of us, the numbers in our own bank accounts are the more important ones. That's why so many consumers are choosing to pay off debt or boost savings instead of going for a one-time splurge.

So, what will you do with your check?

This week's Carnival of Personal Finance features lies we tell ourselves about money, how to save money on computers and honeymoons, and lots of other useful tips.

Next week, Alpha Consumer will be hosting the Carnival, so be sure to submit your blog entry here.

Also, I am looking for guest posts on personal finance and consumer topics while I am on vacation toward the end of May. Please E-mail me at alphaconsumer@usnews.com if you are interested in submitting one.

Tricia from Blogging Away Debt recently wrote about how being in a "funk" can be bad for the wallet, because it's easier to give in to urges to spend money on fast food or other temporary pick-me-ups. She writes:

I also get strong urges to go shopping for stuff. Maybe a new pair of shoes or something. The oddest thing about this urge is that I am not normally into fashion. But the minute I go into a funk I must think I need to be a fashionista (not that anything is wrong with that—it's just totally against the norm for me). Sometimes I budget shop and buy clearance items, but sometimes I don't. Again, it's best to stick around the house and not go anywhere. I didn't do this one (thank goodness—I have enough shoes!).

That's tough—although as she notes in her post, spending money might feel good at the moment, but it isn't a permanent mood-booster. That's where bubble baths and movies come in.

Yesterday, when I called Susan Wones, the consumer who testified at last week's credit card hearing on Capitol Hill, she was upset. She had just found out that Chase had distributed some of her personal information, including her account numbers and home address, to congressional staff members, despite her request that her information be kept private. (Before she testified, Wones signed a waiver that allowed the company to discuss her situation, but she says she asked that the identifying information be kept private.)

By the end of the day, Rep. Mark Udall, a Colorado Democrat, issued a statement calling for Chase to publicly apologize to Wones, who is from his district. "Susan showed courage and came to Washington to tell her story, and now it seems she is being punished for doing the right thing and speaking out against unfair credit card practices," Udall said in a statement. He also took issue with the fact that Chase representatives handed out a rebuttal of her testimony to reporters who spoke with Wones after the hearing.

For more tips on saving money at the grocery store, you can watch my discussion with Good Morning LA's Jean Martirez here. As I've mentioned, one of my favorite ideas is to use ingredients that are already at home. Martirez wanted to know what she could do with ketchup, garlic, and some old cheese. Luckily, we have allrecipes.com and foodnetwork.com to help us with that one. Allrecipes.com suggests baked spaghetti.

Imagine this: You go to a restaurant. The food makes you sick—so sick you need to visit the doctor. To compensate, the restaurant offers to pay your medical bills. Does that leave you a satisfied customer?

That's the situation more than 400 Chipotle customers found themselves in Kent, Ohio, last week. They experienced the typical signs of food poisoning, including nausea, vomiting, and worse. Test results suggest they were infected with a norovirus. To make it up to them, the company famous for its burritos said it would pay for the treatment of the sickened customers.

Rosalie from Allentown, Pa., sent in some additional ideas for how to cut down on food prices. In addition to planning menus in advance and checking out the week's specials, she writes:

Don't overlook making "breakfast" entrees for suppers. With our lifestyles so hectic, when do you get the chance to make a wonderful omelet or strata for breakfast? Also, [try] homemade pancakes. Making the mix is so simple, easy, and inexpensive, and you can add fruits for flavor and nutrition.

I agree—there's nothing like french toast when you feel like you're not supposed to be eating it. And breakfast foods, because they usually involve basics like eggs and bread, are cheap—and you probably already have the ingredients at home.

With Sam's Club and Costco stores limiting how much rice customers can buy, shoppers are asking themselves: Should I stock up on the staple? After watching a news report on the rationing last night, I suggested to my husband that we should go buy several bags of the grain. He immediately made fun of me for wanting to hoard something that was not actually in short supply.

In this case, my husband is right. There is no need to stock up, because there is no shortage in the United States. (There are concerns about rice shortages in other countries, including India and the Philippines.)

There is, however, above-average price inflation going on for all kinds of food, which makes it more important to focus on cutting grocery costs—not adding to them by buying more rice than necessary.

Before I interviewed You're So Money author Farnoosh Torabi, I asked her to keep a spending diary for a few days, so we could compare her philosophy with her own habits. Torabi's diary:

I received another E-mail in response to our recent stories on 20-somethings and personal finance. This time, it was from a woman in Cheyenne, Wyo., who says young people today don't know what "real" debt is.

She writes that she and her husband are in their 60s and 70s, respectively. They had run their own headhunting business but came upon hard times during the slowdown after 9/11. While they had been earning between $70,000 and $90,000 a year, they soon ran up credit card debt of $100,000 while trying to maintain their lifestyle on much less income. By 2003, their credit card debt had reached $180,000, and they had used up all their savings. They refinanced and settled with some of their card companies, but there's still more debt. The woman, who asked to remain anonymous, writes:

If you are interested in learning more about personal finance issues for 20-somethings, you can watch my interview with ABC News NOW here.

In response to my story that recommends 20-somethings create an emergency fund for themselves (while acknowledging how difficult that can be), I got a note from Veronica, a 24-year-old graduate student in Brooklyn, N.Y., on just how important it is to put even a few hundred dollars away for unexpected expenses. She writes:

Even though your article in this week's magazine talks about 20-somethings not being able to really have an emergency fund, I learned the importance of having an emergency fund this month. A few weeks ago, my tooth was bothering me. I had to go home to New Hampshire to get a consult with my family dentist and he referred me to a root canal specialist.

For tips on getting on top of your finances through the help of a pop quiz and handling credit card disputes, here are two videos from my recent appearances on Retirement Living TV's Daily Café:

Over the weekend, I spoke on WTOP about how to reduce food costs, which have been skyrocketing. Listen now, download on iTunes, or subscribe to the RSS feed.

I recently spoke with Ken McDonnell, program director at the American Savings Education Council, for the Alpha Consumer podcast. He explained how to save money during tight times, which he says starts with examining your expenses. You can also hear the Alpha Consumer tip of the week on handling awkward money questions.

Listen now or download iTunes and RSS.

As I was reporting for this week's magazine story on 20-something personal finance, I asked Tricia from Blogging Away Debt to share her own perspective on prioritizing different forms of debt, such as student loans and credit card debt, without getting overwhelmed. (Tricia has paid off over $26,600 in credit card debt since February 2006.) Here's what she said:

We had over $100,000 in debt when you added up our mortgage, student loans, and credit cards. To tackle all $100,000 at once would be overwhelming. Instead, we decided to focus only on the credit cards while keeping the mortgage and student loans on minimum payment auto-pilot. Once our credit cards are paid off, then we'll work to pay off the student loans, then the mortgage. Breaking down our debts in that fashion has been very helpful in keeping us motivated.

Check out this week's Carnival of Personal Finance. Tips include surviving on one income, protecting against inflation, and a defense of paying for small daily pleasures.

Unlike last time on Capitol Hill, when the consumers were uninvited to speak minutes before the congressional hearing began, Thursday's credit card hearing featured three cardholders who said their providers had treated them unfairly.

The hearing examined New York Democrat Rep. Carolyn Maloney's proposed cardholder bill of rights, which industry groups have criticized as overly restrictive.

A story I wrote this week offers six ways to eat better for less. The cooks and bloggers I spoke with offered great advice, from making better use of eggs to creatively reinventing leftovers. My own techniques involve making small changes to recipes to make them more affordable without sacrificing taste. Here are my three favorite inexpensive recipes, all slight variations on the Barefoot Contessa originals:

• Herbed baked eggs Ina Garten may not agree, but substituting dried herbs for the fresh ones she recommends, skipping the parsley altogether, and using English muffins instead of gourmet bread cuts down on costs without undermining flavor. Best for: romantic evening for two.