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February 2009 - Posts - The Dollar Stretcher
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The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

February 2009 - Posts

  • Money Saving Mommies

    As you know I like to pass on interesting sites, etc in the world of Dollar Stretching. Just today I found Money Saving Mommies (link here).

    Your hostess is Mommy B. who is a stay-at-home mom of 3, who's making a go of it by saving money at home. Pay her a visit. You'll find an interesting blog. I thought that the diaper post was especially good. 

    Keep on Stretching those Dollars!

    Gary

     

  • The Things We Believe In

    The human mind is very interesting. We're given an amazing ability to think. And, yet sometimes we also have an amazing ability to deny the facts and believe whatever we want. Today I'd like to take a look at some of the financial things that we might believe.

    Bad things won't happen to me. We'd all like to believe it. We own the one car that won't break down. Others will get sick, but not me. Therefore I don't need an emergency savings account or insurance. I can postpone the savings or insurance until I have more money. But, the facts are sobering. Every car will break down at some point. And almost all of us will spend some time in the hospital during our lives. The truth is that everyone needs a plan for handling unexpected expenses.

    I did it before and didn't get hurt. Just because you got away with a bad decision before doesn't mean that you'll continue to get by with it. It's a little like walking away from an auto accident. You don't automatically assume that you'll be as fortunate the next time it happens. So the sane driver tries to avoid accidents.

    That "everybody's doing it" is a good reason. If you hear yourself saying this, you need to check your math. Because it's very rare that everyone is doing something dangerous. Usually it's only a few people. And rarely do we know enough about their finances to know whether they're really getting away with it. Even if they look prosperous, that doesn't mean they don't get calls from bill collectors and worry themselves to sleep each night.

    Besides, even if everyone were doing it, that doesn't mean that it's smart for you to do it. A few years ago lots of people were using variable mortgages to buy homes they couldn't afford. It seemed like everyone was doing it. But, now we know that it wasn't alright. Bottom line? Think through any move and how it might affect your personal finances.

    That I'm smart enough to avoid problems. We'd all like to believe that we're smarter than average. And, that our smarts make us less vulnerable to financial problems than the average guy. The sad truth is that our guard is down when we're so sure of ourselves and we're probably more likely to have problems. Don't be fooled by your own arrogance.

    That decisions don't have consequences. We all live with our decisions. But many of us fail to see the connections between the problems that we're having today and the decisions we made yesterday. We chose a new car instead of leaving the money in savings. Months later the refridgerator breaks down and we don't have the money to repair it. Bad luck has nothing to do with it. It's the decision we made to take the money out of savings that caused the suffering today. To understand what went wrong (so that we can learn from the experience) we often have to go beyond the first step. Sometimes the problem goes back a few steps.

    Take a look at some of the things that you believe about your finances. You might just find that some of them simply aren't true.

    Keep on Stretching those Dollars!

    Gary

     

  • Interesting Blogs

     Just heard about a blog that might interest you. We've often recommended that you contact the companies that you do business with. Not just to complain, but also to praise them when they do a good job. I received an email from Vanessa Marie Primavera-Sybrandy letting me know about a blog entry she did listing how different companies responded to consumer contacts. You'll find it here.  Interesting results. It seems like the most popular response was to send her coupons. Vanessa even has links for most of the companies (which might make it easy for you to contact them if you wanted to). It's part of her blog "Saving Money". You might want to check it out.

    Keep on Stretching those Dollars!

    Gary

  • Inheriting Spouse's Debts

    My question is about each married individuals responsibilities in case of the death of the other. I will use my husband and I as an example.  We have separate bank accounts, separate loans, separate credit cards except for our heating utility company. Our marriage is the second for each of us. While I have established a very good credit history, my current husband has bad credit.  Will I be responsible for paying off his debts if he should die first? I have NEVER used his credit cards and my name is not on any accounts of his. Our cars are also only listed in his name or mine. Nancy

    While none of us like to think about it, we should all be prepared for our own deaths and those near to us. Nancy is very smart to ask these questions now while she can still take any corrective action that's necessary.

    There are two ways that you can find yourself being responsible for  another person's credit card debts. The first is if you agree to be responsible for debts incurred on the card. You'll need to sign an application for this to happen. Generally you'll be the owner/co-owner of the account or have co-signed on the account. But, you'll know if you've obligated yourself this way (unless you didn't bother to read what you were signing). In Nancy's case, it appears that she hasn't done that.

    The second way that you could be responsible for credit card debts is less obvious. Let's take Nancy's situation. Suppose that she is not personally responsible for the card. Only her husband (from now on known as "Hubby") is. So if Hubby should die, the credit card company must look to his assets for payment. What does he own? Anything that's titled in his name (like the car that Nancy mentioned) is fair game for creditors. So if Hubby is not on the title to Nancy's car, the car should be safe from his creditors. So far, so good for Nancy.

    Where it gets tricky is with anything that's owned in a joint account. In some joint accounts you only own your portion of the account (i.e. half of an account with two joint owners or 1/3 of an account with 3 owners). But in most, it's assumed that either party owns all of the account. In other words, either Nancy or Hubby could write a check for the entire balance of a joint checking account. In this case the credit card company would say that Hubby owned all of the checking account and claim the entire balance to pay off Hubby's credit card bill. And, they'd get the money.

    Nancy has been wise to avoid joint accounts. She's gone a long way to avoiding debts that aren't her's. But there's still one more hurdle  she'll need to clear.

    There's a patchwork of state laws that must be considered. For instance, your state may have a law that says that it's assumed that half the property acquired during a marriage belongs to each partner. That could mean that half of your property (including savings accounts, etc.) is available to pay your spouse's debts. Only research in your state laws will alert you to all the dangers. In some cases a lawyer will be required.

    Whether Nancy needs to talk with one will depend on her circumstances. She can do the basic things herself (and for the most part she already has). Keep separate credit card accounts. Don't co-sign or guarantee any loans. Keep your assets separate.

    If either Nancy or Hubby has significant assets (and, you'll need to decide what 'significant' means to you), it might be wise to see an attorney. If you come in with the facts and specific questions it should't be too expensive to find out if you have any exposure to debts that you didn't create.

    As a general rule you don't become responsible for someone's debts because you're related to them. But, the exceptions to this rule can be really expensive! So find out before it's too late.

    Keep on Stretching those Dollars!

    Gary

  • Government Policies and Unemployment

    Very interesting article about the depression by two economists. They've analyzed data through the depression to see how effective federal government policies were at reducing unemployment. The results might surprise you. You'll find it here. They say that those who don't learn from history are doomed to repeat it. Sure hope that's not the case today.

    Keep on Stretching those Dollars!

    Gary 

     

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Gary is a former financial planner and purchasing manager who edits The Dollar Stretcher website <www.stretcher.com> and newsletters. You can follow Gary on Twitter.com/gary_foreman
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