Wise Bread

Ally Bank Review: Flexibility and Decent Yields

Miranda Marquit — Fri, 17 May 2013 10:36:37 +0000

While it seems that Ally is a new player in the banking game, the reality is that the bank was actually founded in 1919 as the General Motors Acceptance Corporation (GMAC).

Today, Ally is known for its competitive yields on cash products, as well as its customer-friendly attitude.

A Brief History of Ally Bank

Ally Financial started in 1919 as the General Motors Acceptance Corporation (GMAC), and it was originally meant to help finance purchases for those buying GM cars and trucks. The company's headquarters is in Detroit, Michigan.

Over time, the financial services offered by GMAC expanded to include consumer banking, mortgages, and even insurance. However, after decades, GM began selling its stake in the company. In 2006, a 51% stake in GMAC was sold to the private equity firm Cerberus Capital Management.

GMAC was hit hard by the financial crisis, and in 2008 received TARP funds. In 2009, the company began rebranding as Ally Bank. The company name was changed to Ally Financial in 2010. Ally is still about 74% owned by the U.S. government, and an exit plan is being developed. Ally claims that it has repaid about $5.9 billion to the U.S. Treasury as of February 2013.

Along with the rebrand, Ally began focusing heavily on customer service, and offering no-nonsense accounts with competitive yields. The consumer banking side of Ally is fairly basic, offering a few products and services, and receiving recognition for its efforts.

Ally is FDIC insured, so your accounts are protected up to the maximum amount. Additionally, Ally has a mobile banking app that allows you to keep track of your accounts no matter where you are.

Services and Benefits

For savers looking for reasonably high yields, Ally Bank offers a few options. While you won't find as many products and services with Ally as you might find with other institutions, the offerings at Ally focus on boosting yields on cash products, making Ally a decent choice for emergency fund holdings. On top of that, Ally compounds interest daily, boosting your total earnings from interest.

Certificates of Deposit

Ally is well-known for its certificates of deposit. In 2012, MONEY Magazine awarded Ally the recognition for "Best One-Year CD." CD rates change often, but as of this writing the High Yield CD with a one-year term has a yield of 0.94%.

Ally also offers a no-penalty CD. This CD is a little different in that you can withdraw your money early with no penalty (as long as you wait at least six days). This is a somewhat unique situation, especially since there is no minimum deposit to open the no-penalty CD. The yield on a no-penalty CD is lower than what you will get for a more conventional CD, but if you want the freedom to withdraw your money when you want, it can make sense to use this option.

You can also choose the "Raise Your Rate" CD, which allows you to take advantage of higher CD rates. If the rate rises during the term of the CD, you have the option to raise your rate. However, you can only raise your rate once during a two-year term, and twice during a four-year term. This is still a nice feature, however, since it gives you the opportunity to improve your yield, even after you are "locked in" by a specific maturity.

Ally also offers a handy CD laddering tool that can show you how to maximize your CD earnings with the help of a ladder.

Online Savings

Ally's online savings account has been recognized as one of the best savings accounts available. There is no minimum deposit to open your account, and no monthly maintenance fees. As of this writing, the variable APY on the savings account is 0.84%.

You can set up automatic deposits to your online savings account, and you can transfer money out of the account up to six times a month.

Money Market

If you want a little more flexibility with your savings account, Ally offers a money market savings account. You receive free standard checks, as well as a Visa debit card. You don't have to pay ATM fees on the Ally end, and Ally will also reimburse your ATM fees from other banks. Because it is a savings account, you are limited to the six transactions per statement cycle if you want to avoid fees, pursuant to federal law.

Checking

You can earn interest on your checking account balance with Ally, and this can make the account a valuable addition to your emergency savings strategy, providing you with the ability to use your MasterCard debit card, as well as get free checks.

The checking account is compatible with Popmoney, allowing you to quickly and easily send and receive personal payments. You can make deposits remotely with eCheck Deposit, and you don't have to worry about ATM fees. On top of that, you can earn cash back with Ally Perks.

IRA Products

You can also find IRA-friendly products with Ally. The IRA CD options come with much higher yields, but you have to be willing to commit to a longer term. You can open a Traditional, Roth, or SEP IRA with Ally. However, carefully consider this option before you commit some of your contributions to cash products.

Auto Financing

Ally Bank isn't just for savers, though. Ally retains some of its auto financing roots with financing and leasing options. There are a variety of competitive rates, as well as the ability to make payments in a way that works for you. You can also get information on the leasing process — including what to do at the end of the lease.

Bottom Line

Ally Bank has managed to successfully rebrand itself into a competitive bank with high yields and products that consumers hold in high esteem. Ally is straightforward in its materials, offering upfront information. As a place to park your emergency fund cash, Ally is a good choice, offering flexibility and good rates.

Written by Miranda Marquit and published on Wise Bread. Read more articles from Wise Bread.

7 Places Teens (and Adults) Can Learn About Money

Julie Rains — Fri, 17 May 2013 10:24:31 +0000

We all want to encourage financial literacy in our teens (and ourselves). But what exactly does that mean, how is financial literacy best accomplished, and where can you go to learn? (See also: The Best Money Tools and Toys for Every Age Group)

What to Learn

Financial literacy is defined by the National Financial Educators Council as "possessing the skills and knowledge on financial matters to confidently take effective action that best fulfills an individual's personal, family and global community goals."

At the practical level, courses and workshops on financial literacy typically cover one or more of these topics:

Earning
Budgeting
Spending
Borrowing
Saving
Investing

Developing financial literacy and competency is a two-step process. First, learn foundational, timeless principles for managing money (e.g., spend less than you earn to save money; take more risks to earn higher investment returns).

Next, develop an understanding of real-life practices, which evolve with trends and technology. For example, comparison shopping and investing today is much different than years ago before mobile apps and online discount brokerages. Regulations pertaining to taxes, saving for retirement, handling financial transactions, and more also change frequently.

Understanding a general principle is important and then learning how things work within the current context is crucial for navigating personal finance.

How to Learn

In my experience, the best way to learn is to gain knowledge about key topics and then field test principles in the real world.

For example, I've discovered that some banks are more likely to alert you to problems or waive fees than others, despite what their printed materials may state. Similarly, the concept of risk tolerance is best grasped by gauging my reaction to investment losses following bad economic news, not by listening to a lecture about market fluctuations.

The hands-on approach reinforces concepts in ways that simply consuming information cannot. Still, personal trial and error can be a costly way to learn. Talking with your parents, friends, and colleagues about their experiences can be an effective way to gain insights into financial matters without the money-related consequences.

An effective program is project-based, fun, interactive, and relevant to current needs according to Jim Clark, President and CEO of the Boys & Girls Clubs of America. His organization offers a financial literacy course that has educated more than 500,000 teenagers since its inception about 10 years ago. He attributes its success to a design that "puts concepts into practice through experience."

Where to Learn

There are many places to learn about personal finance, many likely available in your area. Take advantage of opportunities in places you already go, like high school or the library, or seek out courses beneficial in helping you to make good decisions without angst. Here are several places that you may want to check out.

1. Boys & Girls Clubs of America

The Boys & Girls Clubs of America offers Money Matters, a program developed and sponsored by the Charles Schwab Foundation.

An adult facilitator who is a positive personal-finance role model guides participants through lessons that include discussions of real-life experiences in a small group setting. These talks include challenges that teens face, such as finding money to attend college and lessons learned from mistakes, such as bouncing a check or getting dinged with late fees. Through sharing of struggles and triumphs, along with adult mentoring and guidance, teens learn good financial practices from each other plus receive support and encouragement.

Teens are kept engaged by being recognized for their efforts and given a forum to “show off.” For example, Money Matters graduates are recognized for completing the program and are eligible for college scholarships. They can also participate in the Money Matters Music Mogul contest.

Adult Version:

For adults 50 and older, AARP offers a three-part workshop entitled AARP Foundation Finances 50+, a new program also developed and sponsored by the Charles Schwab Foundation. Face-to-face guidance is offered in several metropolitan areas. The participant guide and volunteer leader guide are available for free (you can download files or order a printed copy).

2. Student-Run Banks and Credit Unions

Banks and credit unions may have branch offices in local high schools. Students who help run the branches can develop working knowledge of banking systems. Often, hands-on experience is combined with a business class associated with the bank or credit union operations.

Teenage customers can open and manage their accounts at these branches, allowing them to become familiar with banking practices. Specific skills they gain are basic but essential, such as how to open an account, make a bank deposit, check an account balance, and withdraw money for expenses. Plus they can learn that though banking services are often available 24/7 online, branch offices have limited hours.

Adult Version:

Local credit unions may offer educational resources that cover topics such as establishing credit, borrowing for your first home, and general money management.

For instruction on how your checking account and savings account work, arrange to sit down with a knowledgeable representative. They should be able to explain monthly and transaction-based fees, ways to minimize fees, and methods of avoiding a shortfall or insufficient funds for payments you initiate.

3. High School Civics and Economics Classes

Though both of my kids have taken required coursework in civics and economics, the class seemed to make the biggest impression on my youngest son.

Most memorable was the documentary "Maxed Out," which the teens watched in class. The film covers predatory lending practices of many financial institutions. My son’s synopsis of lessons learned: “you go to college, you get a credit card, you max out the credit card, and then you die.”

Adult Version:

"Maxed Out" is available for viewing online and through streaming services, such as Netflix.

4. Scouting Programs

Scouting programs, such as Boy Scouts of America and Girl Scouts, offer many ways for teens to learn about personal finance and money management. Fund-raising activities for camping trips, special outings, and troop operations can help kids of all ages understand that money is needed for various activities. Plus, there are lessons to be learned from Girl Scout cookie sales.

Badges for financial empowerment in Girl Scouts (PDF) cover topics such as budgeting, comparison shopping, establishing credit, saving for large purchases, and entrepreneurship. The Boy Scouts’ Personal Management merit badge deals with planning for major purchases, making decisions about investing, household budgeting, and more.

Adult Version:

Parents can learn by teaching badges or sitting down with their teens as they cover the curriculum. They may find badge exercises to be useful, such as tracking income, expenses, and savings for 13 weeks (PDF).

5. College Classes

Many colleges and universities offer personal finance classes as part of their degree programs. Courses may be focused in investments, fixed income, real estate investing, and entrepreneurship. Learn in your teenage or young adult years before entering the workforce or starting a business.

Adult Version:

Pick up classes at your local university or community college offered through continuing and professional education. Choose among courses such as personal taxation, retirement planning, and investing.

6. Community Venues

Community venues, such as public libraries, often host financial literacy workshops and classes for teens. Topics covered may include investing, saving for college, and managing a bank account.

Adult Version:

Seminars and workshops on financial topics for adults are generally available at public libraries and community centers. Multi-week courses, such as Financial Peace University, are often held at churches and other houses of worship or community gathering places.

7. Home

You can learn about money at home, often in collaboration with your parents, siblings, and friends.

Things that my teens have learned recently include how to:

Sell items on eBay
Get college textbooks and supplies at a discount
Transfer money from PayPal accounts to bank accounts
Delay spending to get a price reduction
Forgo spending to save for future needs
Set aside gifts and windfalls for large purchases

They’ve also learned that savings accounts pay very little interest right now though having money set aside is valuable by itself.

There’s much more to learn but I’ve found that teens learn best when financial lessons are timely and relevant. Instructors can be parents, sisters and brothers, and friends who are willing to provide guidance and give ideas on what has worked for them.

Adult Version:

When you are ready to make a financial decision, learning all about a subject is desirable. Tapping the knowledge of your spouse, parent, friend, or even teenager can help you navigate personal finance issues.

A big difference between adults and teens, though, is that there are many topics you need to understand now, before a crisis or major financial decision. For example, you can’t wait until retirement to figure out how to generate income for household expenses. You must learn today how to develop streams of income to fund your retirement in the future.

Many financial literacy programs encourage you to apply concepts while you are participating. If not, though, act on your own. Open an IRA and start investing soon after you finish an investing class, for example. The sooner you use newly acquired knowledge, the better for your financial literacy and the faster your financial savvy will grow.

Where have you learned financial literacy?

Written by Julie Rains and published on Wise Bread. Read more articles from Wise Bread.

Best Money Tips: All You Need to Know About Saving for Retirement

Ashley Jacobs — Fri, 17 May 2013 10:00:32 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some stellar articles on all you need to know about saving for retirement, personal finance experiences for older kids, and average tax refunds.

Get It in Writing: A Quick Guide to Agreements and Contracts

Thursday Bram — Fri, 17 May 2013 09:48:59 +0000

Everybody's heard that worn-out piece of wisdom — get any deal you make in writing because something could always go south with the deal. We hear it regularly, but not all of us do it. It's a bit of a hassle, especially for small agreements. It doesn't make sense to require a contract if you're paying a neighborhood kid a little cash to mow your yard, after all. And if you're not writing out that agreement, why write out something that's a little bigger? Before you know it, it's easy to justify avoiding contracts entirely. (See also: 16 Things Your Lawyer Won't Tell You)

But it's time to refresh the saying and start following it a little more closely. It is important to get things in writing — and it's even more important to know what that writing means.

You Need It in Writing, Even When You Think You Don't

Technically, a verbal contract is supposed to hold up just fine in court. But the reality is that you can get into a situation where each side of the argument remembers the contract in a different way. Neither side may be lying in such a case. If the deal was not incredibly specific, each party may remember his interpretation of the deal, rather than the actual words used when the deal was struck.

Writing down the terms of an agreement does more than make legal situations easier to sort out. The act of writing encourages you to be as specific as possible. As you're writing, you may even find some details that really ought to be hashed out before you finish setting up the agreement.

Ask for Help

I'm not a lawyer. You should consult a lawyer any time you're not sure about signing a contract or an agreement, as well as get help when constructing your own contracts. There's a question of practicality in play, of course. You're probably not going to worry about legal counsel unless there's enough at stake to make it worth the cost of consulting a lawyer.

But any time you feel out of your depth, you should make a point of asking for help.

The Difference Between Contracts and Agreements

When we think of contracts, our minds often go straight to documents written with tons of legal jargon. In reality, a contract can be written plainly. A contract just has to be a legally-binding agreement that meets certain requirements, such as showing a benefit to be received by each side of the agreement. Many agreements are legally binding, even when they aren't contracts, but not all are.

Since we can't all go to law school, it's best to plan to jot down the key terms of any agreement you come across, and don't worry about whether it's a contract or not.

You also want to make a point of reading any agreements presented to you before you sign them. As much as no one ever wants to do so, this even includes reading the fine print presented to you when you sign up as a member of a website.

Understanding Legal Capacity

One of the key issues that goes along with making a valid contract (or even an agreement) is that the people involved have to have legal capacity — the ability to understand what they're doing when they sign a contract. Someone who is intoxicated or mentally ill, for instance, cannot agree to a contract.

There are specialized laws to deal with minors. Someone who is a legal minor can make a contract, but he can also "disaffirm" a contract, essentially backing out of it. In such cases, the minor is required to return anything he gained through the contract. There's a legal quirk where trades or barter (including when a retail item is purchased for cash) are not considered contracts.

Dealing With Boilerplate

Quite a bit of a contract may be standardized, but what is considered boilerplate (the text of a contract that can be used over and over again for similar situations) can differ between types of contracts, industries, and other factors. It's worth studying up on the clauses you're likely to see often, but don't be surprised any time you see a new one. These are a few of the more common provisions you may see:

Waiver of Jury Trial

Many contracts will include a clause requiring that, in the event of a problem, the parties go through arbitration, rather than take the matter to a jury trial.

Notice Provisions

In the event of changes or termination of the contract, each party needs to be notified. That requirement is written out as a notice provision.

Governing Law Clause

Because laws can differ by state, most contracts include a clause specifying which state or country's law the contract will be enforced under.

Force Majeure Clause

Things happen that are outside of the control of any one party, ranging from wars to hurricanes. Therefore, many contracts include a clause that lays out what should happen in the event that one party can't carry through on the contract due to one of these causes.

There are plenty of clauses and provisions that show up on a regular basis in different types of contracts. It's worth investing time in learning about the specifics of the types of contracts you'll likely deal with. The same goes for the laws that help define how we handle contracts and other agreements. At minimum, learn about how broken contracts are handled in the courts of the state you live or work in.

Have you ever been surprised by a clause in a contract or agreement? Have you ever wished you'd "gotten it in writing?"

Written by Thursday Bram and published on Wise Bread. Read more articles from Wise Bread.

2 Investing Concepts Everyone Should Know

Matt Bell — Thu, 16 May 2013 10:36:31 +0000

Investing is arguably the most complicated and intimidating topic within personal finance. Understanding (and making use of) two key investing concepts will go a long way toward demystifying the process while dialing down the fear factor. Let's get started! (See also: The 10-Step Staircase to a Comfortable Retirement)

Compound Interest

At first glance, this one seems like no big deal. Compound interest is simply interest earning interest. For example, if you invest $100 and are able to earn 10% on that money, in a year it will have turned into $110. The next year, assuming you are still able to earn 10%, it isn’t just the initial $100 that earns interest, but the interest you earned last year will earn interest as well. So, you won’t end up with $120 at the end of year two; you’ll end up with $121.

Okay, so it’s not that impressive. But wait. Let’s put more money to work and give it more time.

Imagine investing $200 per month for your retirement beginning at age 20. And let’s assume you can get a 7% return on that money. By age 30, you will have invested $24,000. That’s $200 per month for 10 years. However, because of the 7% return, your $24,000 will actually be worth $34,617. Not bad, right? You racked up more than 10 grand in interest in just 10 years!

Don't Stop Believing

But wait. The longer you give it, the better it gets. Let’s run this all the way out to age 70, which, let’s face it, will probably be considered "early retirement" by then.

The $200 you’ve been dutifully tucking into your 401(k) plan all that time adds up to $120,000, an impressive amount unto itself. But because of the power of compound interest, that sizeable sum has become much, much more sizeable. In fact, it’s now worth more than a million bucks. Now that’s impressive. You’ve earned about $970,000 in interest through the power of compound interest.

This is why Albert Einstein reportedly called compound interest "the eighth wonder of the world." Even if he didn’t say that, it doesn’t take a Nobel prize-winning scientist to understand that compound interest is a relatively powerful concept.

Speaking of Einstein, there's a complicated looking formula for calculating compound interest. It's actually pretty straightforward once you understand the terms.

Even better, here's an online tool that calcualtes it for you.

On a side note, this is exactly why it takes so long to get out of debt. Debt takes the strong wind of compound interest and flies it in your face. Keep the wind at your back by investing.

“Fair enough,” you say, “but where can I get a 7% return?”

Asset Allocation

Pick up any personal finance magazine and you’re likely to see breathless headlines about the latest mutual fund to rack up impressive returns. But you’re not fooled. You realize that last month’s hot performer might be tomorrow’s dog. So which fund will do well next month?

Surprisingly enough, generating a respectable return on your investments isn’t so much about the specific investments you choose. It’s how you spread your investment dollars around. This is known as asset allocation. It may have a boring name, but asset allocation has been found to account for about 90% of investment returns.

Choosing Between Stocks and Bonds

The key asset allocation decision is what percentage of your investment dollars to put in stocks and what percentage to devote to bonds (or stock-based and bond-based mutual funds). Stocks are riskier than bonds, but they have the potential to earn a higher return. In general, the younger you are, the more your investment mix should tilt toward stock-based investments, but your risk tolerance matters as well. You can find lots of free asset allocation calculators online.

The calculators will typically suggest something a bit more detailed than stocks vs. bonds; they may recommend that you devote different percentages of your money to large-cap stocks (the stocks of large companies), small-cap stocks, foreign stocks, and bonds. Most brokerage houses, such as Fidelity, Vanguard, Schwab, and others, offer index mutual funds in these categories, which can provide a low-cost, relatively simple way to invest in those categories.

So, those are two key steps toward becoming a knowledgeable, successful investor. First, make use of the power of compound interest by getting started with investing as early as possible (although it’s best to wait until you’re out from under any credit card or vehicle debt and have a base of savings totaling three to six months’ worth of essential living expenses). And second, base your investment decisions on an intentional asset allocation plan that’s tailored to your age and risk tolerance.

What are your key investment concepts?

Written by Matt Bell and published on Wise Bread. Read more articles from Wise Bread.

The 5 Best Washing Machines

Jeffrey Pu — Thu, 16 May 2013 10:24:31 +0000

The washing machine is a staple appliance in any household because of our need to keep our clothes fresh and clean. But while many of us are familiar with the use of a washing machine, what happens when we have to purchase a brand new one for our homes? There are a number of factors to consider when purchasing a new washing machine, and this list is here to help you figure it out.

What Is a Washing Machine?

A washing machine is an appliance that is used to wash laundry. The process includes immersing and agitating dirty clothing in water mixed with detergent and/or bleach. There are two main types of washing machines: top-loading and front-loading machines. Top-loading machines are the least expensive of the two, but also do not wash as well and use up more energy. High-efficiency models help mitigate this problem, but these come with a higher price tag. Front-loading machines perform better and more efficiently than top-loaders, but they’re also more expensive.

Best 5 Washing Machines

Maytag Maxima XL MHW7000AW

The most highly rated front-loading washing machine on Consumer Reports, the Maytag Maxima XL MHW7000AW was well-reviewed in washing performance, energy, and water efficiency. With a carrying capacity of 4.3 cubic feet, it can fit a very large load of laundry and has a number of automatic controls to ease the washing process. Currently $1,079 on Amazon Marketplace.

Samsung WF210ANW

While the usual trend is that front-loading washing machines are typically more expensive than top-loaders, the Samsung WF210ANW offers front-loader efficiency without the hefty pricetag. However, while the Samsung does comply with Energy Star standards, users agree that it is only mediocre in terms of washing performance. Its noise and vibration levels are also not top-of-the-line and it has a relatively large cycle time. Currently $699.00 at Lowe's.

Whirlpool Duet WFW97HEX

Well-reviewed at both Consumer Reports and Good Housekeeping, the Whirlpool Duet WFW97HEX is known for its Precision Dispense Ultra system that allows you to select detergent concentration and water hardness, giving you great control over your laundry. Users agree that it tackles heavily dirty laundry with ease and is highly efficient, saving you both water and energy. Currently $1,410.99 on Amazon.

LG WM2650HRA Front Load Steam Washer

The LG WM2650HRA Washer is considered by many users to be a great front-loading washing machine at a price that does not break the bank. With a large carrying capacity of 3.6 cubic feet and 9 different washing programs, this LG can take care of just about any laundry load. Additionally, users find the special steam cycle to work on even the toughest stains. However, best plan ahead if you intend to use the steam cycle — it takes at least 2 hours to finish. Currently $817.99 on Amazon Marketplace.

LG WT4801CW

A Consumer Reports Best Buy, the LG WT4801CW is considered the best top-loading washing machine available. Not only is it highly efficient, it doesn't suffer from the performance problems of its fellow brethren, all the while maintaining a reasonable price tag. Users of this LG also note that it is quiet and easy to use. The biggest complaint against this washing machine is that it is not the most gentle on clothing, and laundry can get tangled or wrinkled after being washed. Currently $599.93 at Sears Outlet.

Written by Jeffrey Pu and published on Wise Bread. Read more articles from Wise Bread.

Best Money Tips: Balance Multiple Jobs Without Losing Your Mind

Ashley Jacobs — Thu, 16 May 2013 10:00:32 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some great articles on balancing multiple jobs, better ways to invest your tax refund money, and saving on your home entertainment system upgrade.

Join Our Tweetchat on Thu 5/16, 12pm Pacific for a Chance to Win Prizes

Ashley Jacobs — Wed, 15 May 2013 22:55:32 +0000

Join our Tweetchat this Thursday at 12:00 pm Pacific for lively conversation and a chance to win prizes! Use #WBChat to participate.

This week's topic: Having a frugal Memorial Day Weekend! Learn about taking advantage of sales, saving on travel, and throwing a frugal BBQ! Tell us about your Memorial Day Weekend plans and let us know your number one tip for keeping things frugal this Memorial Day!

For an easy way to keep track of the conversation, try using our special Tweetchat Chatroom.

Anyone can participate, but you must be following @WiseBread and RSVP below to win our prize!

To make it easier for us to keep track of attendees and pick our winners, please RSVP below with your twitter ID (put that in the "Link Title" field), email address, and your twitter URL (put that in the "URL" field, do not put your blog's url in there). Winners will be selected at random from RSVPs. If a winner is chosen who RSVPed but did not attend a 2nd winner will be chosen.

New Parenting Chat Immediately Before #WBChat

Our sister blog Parenting Squad (@ParentingSquad) will be hosting a parenting chat every Thursday at 11:00 am Pacific. Drop by for fun parenting conversations and a chance to win prizes! Use #PSChat to participate.

Written by Ashley Jacobs and published on Wise Bread. Read more articles from Wise Bread.

12 DIY Ideas for Creating Inexpensive Art

Kentin Waits — Wed, 15 May 2013 10:36:30 +0000

People get intimidated by art and I’m not sure why. I’ve always thought that art should be engaging, fun, experimental, and personal — the perfect thing to create for ourselves. Whether you’re on a budget or not, creating art can be an inexpensive and exciting way to decorate and personalize your environment. If your walls are bare and your hands are willing, here are twelve ideas to get your creative juices flowing. (See also: But Is it ART?)

1. Repurpose Wallpaper

Intricate or bold wallpaper designs can become modern art statements when framed and hung. Make sure to use enough paper to clearly show large or repeating patterns. Frame one large piece or use several smaller frames to repeat the same design in a cluster.

2. Press Some Flora

Single large pressed leaves or groupings of flowers make great subject matter for homemade art displays. Press and dry, mount on a white background, and frame simply. Experiment with off-center arrangements and mix plant types for visual interest.

3. Make a Collage

If you’re feeling creative, try your hand at collage. Use photographs, text, scrap wallpaper, and other media to create an original piece of art. Collage is a forgiving medium; just cover up what you don’t like and try again.

4. Snap in Black and White

Use a digital camera and printer to experiment with black and white photography. Snap images of faces, landscapes, architectural details, or close-ups of unique design features of almost anything. Manipulate and refine your photos using photo-editing software. Group together or create a mini-gallery in a long hallway.

5. Channel Warhol

Product labels with bold or classic graphics make excellent subjects for artwork. Labels from canned food, vintage perfume bottles, bars of soap, or fruit crates are particularly good places to start. Carefully remove labels (soak stubborn labels in warm water and then press dry), mount, and frame.

6. Frame Your Frames

Sometimes frames can be the art. Collect interesting frames in graduated sizes and “nest” them together for a bold and unexpected twist on traditional artwork.

7. Get Graphic

Old magazine covers or vintage ads are an inexpensive and easy way to make an elegant artistic statement. Look for subject matter that clearly represents an era — vintage fashion, cars, appliances, or travel destinations are great places to start.

8. Thumb Through a Catalog

It’s getting harder and harder to find old store catalogues, but if you can, consider framing their pages. Vintage catalogue listings that feature camping equipment, clothing, or bicycles can make interesting displays.

9. Frame Postcards or Greeting Cards

Arrange multiple postcards or vintage greeting cards in a single frame or frame cluster. Group cards of similar color, style, or subject matter together for a more curated and striking look.

10. Display Your Collections

Use an inexpensive shadowbox to display collections you would otherwise store in a cabinet or on a shelf. Silverware, political buttons, jewelry, perfume bottles, found objects, or antique keys can be grouped and displayed as artistic collections.

11. Unbind a Book

Vintage book covers or illustrations are ready-made art just waiting to be seen in a new context. I once found an old copy of the children’s book, "The Little Prince," by Antoine de Saint-Exupery. Most of the volume was badly damaged, but I managed to pull one pristine illustration from it. I mounted and framed it for a baby shower gift to a dear friend.

12. Wax Poetic

Have a favorite poem, story, or quote? Print and frame it. Experiment with font, text size, and composition to create a piece that’s visually bold.

Here’s one important tip that will help keep your art on a budget: buy your frames first. Creating a piece that you’re really proud of and then not being able to frame it properly is disheartening. Scout thrift stores and yard sales for solid wood frames that can be rehabbed with a bit of stain or paint, then create based upon the sizes of your frames. It’ll help motivate your creative efforts and prevent you from breaking the bank at custom frame shops.

Do you decorate with your own artwork? What ideas, tips, and tricks do you have for beginners?

Written by Kentin Waits and published on Wise Bread. Read more articles from Wise Bread.

Fixed or Adjustable? Choosing the Right Mortgage Loan

Miranda Marquit — Wed, 15 May 2013 10:24:31 +0000

Part of the home buying process is choosing a mortgage. Most of us can't afford to pay cash for a home, so borrowing to complete the purchase is necessary.

However, when you use a mortgage to buy your home, you have options. What you choose depends on how much you can afford each month, as well as what interest rate you want to pay, and how long you expect to be in debt with the mortgage. (See also: 5 Things Our Realtor Told Us That Weren't True)

Before you begin the process, make sure you understand your mortgage choices, and choose what is likely to work best for you.

Fixed-Rate Mortgage

Fixed-rate mortgages are popular because they allow homebuyers to plan ahead. With a fixed-rate mortgage, you "lock in" your interest rate for the entire period of the loan. When you have a fixed-rate mortgage, the principal plus interest portion of your payment remains the same for the whole term.

Shorter Term = Higher Payments

Usually, you choose between getting a fixed-rate mortgage for 30 years (most common) or 15 years. Often, you can get a better interest rate if you choose the 15-year fixed-rate mortgage. However, the monthly payments are usually higher. A 30-year loan will cost you more in the long run, but it is also more manageable on a monthly basis. If you are concerned about cash flow, a 30-year loan can be helpful.

Plan for Flexibility

One strategy is to agree to a 30-year mortgage, but make payments as if it's a 15-year mortgage. There will be a higher interest rate on the loan, but paying it off faster means that you save overall. The reason some homebuyers go this route is to retain flexibility. If the higher 15-year payment becomes untenable, the borrower can cut back to the agreed upon 30-year payment.

Adjustable Rate Mortgage (ARM)

The other broad category of loan types is the ARM. With this type of mortgage, the interest rate changes periodically. With the changing interest rate, you are also subject to changing mortgage payments. If the market rates rise, then you will end up with a higher monthly payment. On the other hand, if the market drops, you see a reduction in your mortgage payment.

Rate Resets Mean Unpredictability

Interest rates are usually set by adherence to a particular index. The lender will tell you how the rate is set, and how often it is set. Many rates are set quarterly, semi-annually, or annually. It's common to find an ARM with a rate that sets annually. On a particular day each period, the current rate is used to set your interest charges for the following period. If you are on a semi-annual schedule, your rate will be set for the next six months.

ARMs can make it a challenging to plan your finances, especially if the rate changes every quarter or every six months. It can also be difficult if rates begin rising. With the rate going up regularly, you find yourself paying more and more for your home each month. In some cases, if you remain in your home for the full term of the mortgage, the rate decreases (and subsequently lower payments) are not enough to offset increases. An ARM can be more costly over time than a fixed-rate mortgage, depending on the market conditions.

Low Initial Payments

With an ARM, one of the biggest advantages is that you often start out with an interest rate that is very low. Most ARMs have initial rates that are lower even than a 15-year fixed-rate mortgage. If you think you will move soon, or if you are confident that you can refinance to a fixed-rate mortgage before rates really start rising, an ARM can make sense. You have the advantage of a low rate initially, and as long as you can sell or refinance before a higher rate starts costing you, and ARM can be a good choice.

If you decide to use an ARM, make sure that you find out about interest caps. Many ARMs have caps on the interest rate, which means that you have some measure of protection in the event that interest rates rise dramatically.

Hybrid ARM

A subset of the ARM is the hybrid ARM. This type of mortgage is fixed for a set period of time, and then adjusts after the initial period is up. One common type of hybrid ARM is the 5/1 ARM. With this type of mortgage, your rate is fixed for five years, and then the rate is adjusted each year after that.

It's also possible to get a 7/1 ARM or a 3/1 ARM and lots of other ARMs. Realize, though, that the longer you have a fixed rate, the higher your rate will be. With a 7/1 ARM, you will pay a slightly higher interest rate than with a 5/1 loan. The 3/1, on the other hand, usually has a lower initial interest rate. If you want a lower rate, you have to be prepared to give up a certain amount of certainty.

Loan caps on hybrid loans also operate a little differently. You are likely to see three different types of caps with a hybrid ARM:

Initial Adjustment: This cap represents the first adjustment made after your initial fixed term is up. If you have a 5/1 hybrid, the cap might be 5%. This means that the lender can add up to 5% to your initial rate in its first adjustment.
Rate Adjustment: A rate adjustment cap is the maximum adjustment made each period. If you have a cap of 2%, it means that the lender won't adjust your rate up by more than 2% above your current rate at adjustment time — no matter what the market indicates.
Lifetime: Finally, the lifetime cap represents the highest an interest rate can go. Once you hit the lifetime cap, your interest rate won't go higher.

Depending on your situation, a hybrid ARM with a reasonable cap can be a good choice.

If you are looking for a low initial rate while you start your career, or a business, or if you have variable income, it can make sense to start with a mortgage that has an adjustable rate. However, you need to be prepared for the possibility of higher interest down the road. It makes sense to save extra money, or to refinance when you can to a fixed rate so your payments are more predictable over time.

What type of mortgage do you have? Fixed, adjustable, or hybrid?

Written by Miranda Marquit and published on Wise Bread. Read more articles from Wise Bread.

Best Money Tips: Freeing Yourself From Debt

Ashley Jacobs — Wed, 15 May 2013 10:00:32 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some awesome articles on freeing yourself from debt, reasons to not send professional emails after dark, and renting vs. buying stuff.

Ask the Readers: Do You Grow Your Own Food?

Ashley Jacobs — Tue, 14 May 2013 10:36:33 +0000

Growing your own food can be a very rewarding activity in many ways, from watching the fruits of your labor grow day by day to enjoying the actual fruits (and vegetables!) harvested fresh from your garden. You'll trim your grocery expenses over time, and if you join a co-op or community garden, you'll even expand your social circle!

Of course, it may take some time, labor, and upfront costs to get a garden planted and flourishing. While it's useful to have your own food garden, it might not fit some people's lifestyle.

Do you grow your own food? Where do you grow them? Have some crops been more successful than others? What issues have you come across, and how did you solve them? If you don't grow your own food, would you like to? What would you grow?

Tell us whether you grow your own food and we'll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

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Post your answer in the comments below. One commenter will win a $20 Amazon Gift Card!

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Tell us whether you grow your own food and we'll enter you in a drawing to win a $20 Amazon Gift Card!

Written by Ashley Jacobs and published on Wise Bread. Read more articles from Wise Bread.

13 Ideas for Entertaining on a Budget

POPSUGAR Smart Living — Tue, 14 May 2013 10:36:32 +0000

Hosting a party at your home doesn't always have to drain your wallet — you can be a hostess with the mostest on a littlest budget. The main thing you have to keep in mind is to focus on the experience. If the activity is fun enough, then there's no need for expensive decor and fancy appetizers. (RELATED: 22 Cheap Ways to Treat Yourself)

1. Music Swap

Ask friends to come over with their favorite songs, make sure you have speakers set up for all to hear, and listen to some jams all night.

2. Board-Game Potluck

Invite over a handful of friends, and ask each person to bring his or her favorite board game plus a snack to share. Take care of the drinks yourself or ask guests to pitch in if things become costly.

3. Nail Party

Do something different from the usual movie or board-game night this weekend — organize a nail party with your girlfriends. Use this as an opportunity to try out fun nail art that would cost a lot of money to get done in a salon

4. Magazine Article Club

This weekend, instead of hosting a book club, plan a magazine article night. It's very simple: just pick an article you find interesting and ask your friends to read it, too. Then you can all come together over a glass of wine to discuss what caught your attention, what was missing, and more.

5. Clothing Swap

Save money and revamp your wardrobe all at once by hosting a clothing swap with your friends. Not only will you get a chance to clean out your closet, but you'll also be able to add new items for free.

6. Travel Party

While you might not be able to take trip this weekend, you can still get away — sort of. Plan a night in centered around travel, and you'll feel like you're in vacationland from the comfort of your very own home without spending too much.

7. Painting Party

Turn your living room into an artist's studio and knock some of those must-try projects off your (ever-growing) to-do list.

8. Makeover Party

Invite your girlfriends over for a beauty workshop of sorts, and make a night of it. With help from YouTube tutorials and your friends, you'll go from novice to expert in five minutes or less at hardly any cost.

9. Karaoke at Home

Karaoke is one of those activities that most people enjoy but don't get the chance to do very often. Throw a karaoke party at home by downloading Karaoke Anywhere, which works on both iPhone and Android and features more than 50,000 karaoke songs. All you have to do is plug your phone into your TV. Plus, it lets you record and share with other people.

10. Wine Tasting

Wine tasting has become a big trend, but you don't need to plan a trip to Napa or the South of France to join in on the fun. Instead, try hosting a wine tasting party in your own home. When you invite your friends, ask them to bring a bottle to contribute. You'll cut costs and not have to worry that you'll run out of drinks.

11. Adult Sleepover

Slumber parties were a form of entertainment for us back in the day. Not only was it a way to pass a Friday or Saturday night, but it was also a way to bond with our friends. As we get older, the venues we meet our friends in don't give us the same type of quality time a sleepover gives us; bars are way too noisy, and everyone can hear your conversations at a restaurant. Do something different this weekend, and invite your friends to your home for a nostalgic sleepover.

12. Sewing Party

Throw a sewing party with your girlfriends, and use it as an opportunity to mend or alter clothing you've been meaning to deal with.

13. Book Club

Starting a book club may be for you if you find yourself constantly gushing over books with your friends or having heated debates on which character is more swoon-worthy. Getting a bunch of like-minded bookworms together for a book club is a fun and frugal social activity that will enrich your minds and friendships.

What are your favorite fun and cheap get together activities?

If you're not careful, your at-home shindig can cost as much as going out. Keep your gatherings fun and affordable with these creative activities.

Guest Post Blurb:

This is a guest contribution from our friends at POPSUGAR Smart Living. Check out more useful articles from this partner:

Written by POPSUGAR Smart Living and published on Wise Bread. Read more articles from Wise Bread.

Spice Up the Conversation by Skipping "What Do You Do?"

Nora Dunn — Tue, 14 May 2013 10:24:31 +0000

A few years ago I sat down to dinner with a new acquaintance while I was visiting Sweden. But the conversation was unlike any other first encounter I'd ever had, and it has changed the nature of "cocktail chat" for me ever since. (See also: 7 Ways to Be the Life of Every Party)

I'm not sure what inspired me. Maybe I subliminally knew she was a kindred spirit, or maybe I sensed she was dreading the standard roll call of questions people ask when getting to know each other...starting almost inevitably with:

So, what do you do?

I read her pursed lips and took a chance. As she unfolded her napkin and prepared her "elevator speech" describing what she does for a living, I instead opened the conversation with a question that stopped her in her tracks:

What excites you?

She blinked and looked at me for a while. With each passing moment, I increasingly feared something was lost in translation or I had trodden on culturally sensitive ground.

Then her face relaxed and she smiled widely. "Nobody has asked me that before!" she said as she then considered how to answer it.

Career and Identity

In an ideal world, we love what we do for a living — and it creates part of our identity. We spend a large portion of our waking lives working at our careers, so it should stand to reason. This is why an easy opening question often surrounds career.

But for many people, careers represent little more than conduits to income, and their true identity and passion comes from their activities outside of work.

So why not open the conversation with a question that allows somebody to talk about something exciting; something that makes them bubble over with enthusiasm — and which can ultimately lead to new frontiers of conversation?

The Spicy Question

You may wish to choose a different question than "what excites you" (which in some scenarios could even be construed as suggestive).

But choose a spicy question or two to have in your coffers for your next meet-and-greet situation; it will surely lead to an interesting exchange. Keep your question open-ended — it's important not to pry. Instead, focus on something that can be answered in many different ways.

Some ideas:

What's the most important thing to you in life?
If you had all the money in the world, what is the first thing you would do?
What has been your greatest adventure in life so far?
What have you always wanted to do but haven't had a chance to yet?
If you could wave a magic wand and do or change anything, what would it be?
Where in the world have you always wanted to visit?
What's the number one item on your bucket list?
What are you happiest about right now?

The point of a spicy question isn't to shock your conversation partner (although often it will surprise them since it's not a "standard" opening question). The idea is to encourage somebody to reveal a passion, dream, experience, or story that they're excited to talk about — which in turn, leads to deeper connections, or at the very least, a conversation you'll both remember.

Once you've asked your question, listen to the answer. According to networking principles, what your conversation partner says will lead you to the next question, as long as you're attentive and open-minded.

What's your best "spicy question"?

Written by Nora Dunn and published on Wise Bread. Read more articles from Wise Bread.

Best Money Tips: Dinner Recipes for $2 or Less

Ashley Jacobs — Tue, 14 May 2013 10:00:32 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some fantastic articles on dinner recipes for $2 or less, where spending money could save you money, and resume red flags to avoid.

Why You Should Never Buy Souvenirs

Kelly Kehoe — Tue, 14 May 2013 09:48:38 +0000

Tourism is a multibillion-dollar industry and souvenir sales make up a significant portion of that pie. If you’ve traveled at all, you’ve likely noticed gift stores on almost every corner in high-traffic, touristy areas and smaller vendors in less-traveled areas that welcome out of town visitors. There are no limits to what you may find in a souvenir shop: stuffed animals, clothing, shot glasses, or even "souvenir water" from places like Niagara Falls. (See also: The Easiest Way to Save Money on Vacation)

Most of these items are pretty useless, but we feel good when we buy souvenirs because we’re certain our friends and family back home will love them. But if your friend isn’t an avid keychain collector and your kids are too old for stuffed animals, is it really worth paying all that extra money for the sake of bringing back souvenirs? Or, to take it a step further, should you buy souvenirs at all?

I’d say no.

Zero "Obligation"

There is little utility value to most souvenir items, and yet we still find ourselves buying impractical, overpriced trinkets out of some sense of obligation to the folks back home. Remember that tourism is a highly profit-driven industry and extreme markups on cheap items (sometimes in excess of 50-60% of the item’s actual value) are commonplace. Travel is expensive enough; why squander Euros, rupees, yuan, etc. on souvenirs that will inevitably find their way to the back of someone’s closet?

Travel Hassle

In 2010, I was returning to the US from a month in Europe with a group of other exchange students. One girl bought a snow globe for her parents on the way to the airport, as a last-minute, obligatory souvenir. Unfortunately, it was bigger than the allowable "tennis ball size" snow globe and airport security promptly confiscated it. Since 9/11, the number of limits on carry-on items has skyrocketed, particularly where liquid or "sharp" items are concerned. Souvenirs present another hassle to already-hectic air travel plans, and, sometimes, you could be encouraging illegal activities without even realizing it.

"If you come across people selling wildlife or wildlife products, be aware that those 'souvenirs' could very well be endangered species that have been poached from the wild and are being sold illegally," Senior Policy Officer for U.S. Government Relations Will Gartshore said in a World Wildlife Fund article. This is especially true of the fur and ivory industries, which are targeting tourists who may not be aware of these illegal activities. Why risk it? Not buying souvenirs at all is a simple way to avoid this problem.

Worker Exploitation and Scams

In addition to animal-related incidents, there have been reports of worker exploitation on the fringes of the tourism industry. Allegations of souvenir companies overworking their laborers and exposing them to toxic chemicals in the factories have come to light, and New Zealand’s tourism industry recently experienced scandals involving mislabeled and overpriced "Made in New Zealand" rugs (that were really made by cheap laborers in Peru). These are only a few instances amongst many, and as a frugal tourist, remember that getting a bargain on souvenirs may have some unforeseen consequences.

Alternatives

But if you don’t want to avoid buying souvenirs altogether, there are a few, frugal ways to bring a little something back for your friends and family. Photos and maps are inexpensive and probably last longer than a cheap keychain. You could also bring back coasters and pens from hotels you stayed at, and places like Disney World or Disneyland hand out freebies such as pins (for special occasions), character or princess stickers, and the Autopia "driver's license." If you're vacationing off the beaten path, consider taking home a pressed leaf (they make for great wall art) or a little jar of sand (though mind the rules about removing sea shells from the beach, especially if you're in an environmentally-sensitive area).

Saving the best for last, postcards are the true winners when it comes to souvenirs. They’re simple, personalized, and affordable (just pay for the postcard and postage). That way, your friends and family still get a piece of your vacation without cluttering their homes or overstretching your wallet like traditional souvenirs often do.

What about you? Do you like buying souvenirs or do you have something else you like to bring back home? Tell us in the comments below!

Written by Kelly Kehoe and published on Wise Bread. Read more articles from Wise Bread.

How We Brainwash Ourselves Into Brand Loyalty

Emily Guy Birken — Mon, 13 May 2013 10:36:32 +0000

The great Irish writer and satirist Jonathan Swift once wrote: "It is useless to attempt to reason a man out of thing he was never reasoned into."

All of us have encountered individuals who are stubbornly and irrevocably committed to a belief that is, according to us, just plain wrong, not to mention illogical. And we've all found that trying to use reasoned arguments to change that person's mind has generally been a great way to end a friendship.

We like to believe that we are far more rational than that, and that our beliefs come from careful reasoning.

But some troubling scientific studies have recently indicated that we are, on the whole, masters at lying to ourselves about where our beliefs and ideas come from. This has enormous implications in our lives, especially when it comes to loyalty to an idea or belief system — or, in the case of finances, brand loyalty.

If you've ever waited 12 hours in line for the newest Apple gadget or slapped a "Friends don't let friends drive a Ford" sticker on the back of your truck, you might want to spend a little time thinking about why you believe your favorite brand is the best. Your loyalty might have less to do with excellent products and more to do with your brain's ability to rationalize. (See also: Psychology and Loans: The Strange Reasons Why You Make Bad Decisions)

Beliefs Come Before Reasoning

If you ask someone why they are an Apple fan, they will be able to give you plenty of plausible reasons for their love of the brand: great technology, ease of use, innovation, etc. But according to various studies, a rabid fan of Apple (the kind who names their son Mac and their daughter Apple) first formed their belief in the excellence of Apple products — and then searched for reasons to confirm that belief.

In point of fact, scientists have discovered that we as a species form beliefs prior to creating/learning/finding reasons for having this belief.

Several studies of patients with split-brains — individuals who have had the connections between the left and right hemisphere of their brains severed in order to relieve severe epilepsy — have shown that the brain will work to rationalize behavior that would otherwise not make sense. For instance, Michael Gazzaniga writes in "The Ethical Brain" about an experiment wherein one split-brain patient was presented the word walk to only one side of his brain:

[The patient] got up and started walking. When he was asked why he did this, the left brain (where language is stored and where the word walk was not presented) quickly created a reason for the action: "I wanted to go get a Coke."

As far as the left side of his brain understood it, the patient had absolutely no reason to go for a walk. So his brain provided him with a plausible, reasonable explanation for his jaunt, and the patient himself believed that was why he was on his feet.

In another study authored by Gazzaniga, split-brain patients were shown images so that each side of the brain only took in one set of images. The right hemisphere (which does not control language and speech) was shown a snowy scene, and the left hemisphere was shown a chicken leg. The patient was then asked to point to another picture that would relate to the scene. At that point, the patient would point to a chicken with their right hand (because the left brain, which controls the right side of the body, had seen the chicken leg), while the patient pointed to a snow shovel with their left hand. According to the study,

If you ask the patient why the left hand pointed to a shovel, the talking hemisphere does not know! But it quickly makes up an answer, such as, "Well, you have to clean up after those chickens."

Basically, what these studies have proven is that our sense of self will not allow us to simply not know why we do something. We need a reason for our actions, whether those actions are as simple as going for a walk or pointing to a picture, or as complex as driving the same brand of car for a lifetime. Our brains quickly come up with plausible explanations for our preferences, actions, and beliefs so as to maintain our sense of ourselves.

The Confirmation Bias Rears Its Ugly Head

So, the beginning of a preference comes down to our brains rationalizing a plausible, face-saving reason for our choice. But our brains don't stop there. From that point on, we are committed to our preference and will fight to hold onto it.

That's where the confirmation bias comes in. That is the cognitive quirk that makes us seek out information that confirms what we believe, and ignore the information that opposes it. Confirmation bias is generally found in emotionally charged issues, which is why politicians with opposing viewpoints can look at the exact same set of facts and come to completely different conclusions. This is exactly the issue that Jonathan Swift recognized in his quotation — confirmation bias makes it impossible to use reason to change someone's mind on an emotionally charged issue.

What's interesting is that brand loyalty does not seem like it should be particularly emotionally charged — and yet our confirmation biases will keep us coming back for more from the same brand.

For instance, I was an enormous fan of M. Night Shyamalan (who, granted, is not exactly a brand), when he first came out with "The Sixth Sense," "Unbreakable," and even "Signs." As his movies got progressively more terrible, I still found myself defending the director and actively trying to find things I enjoyed about his movies, even when I knew they were awful. And even though I am no longer rationalizing my original enthusiasm for the director, I will admit to still seeing every one of his movies as they come out. My initial loyalty was strong enough for me to continue to search for things to enjoy from Shyamalan's films.

What's particularly concerning about this example is that I hardly felt as loyal to Shyamalan's films in the beginning as I currently do to Apple computers and Honda cars.

We Love When Rationales Are Given to Us

Since our brains are already primed to create rational-sounding reasons for our preferences, advertisers work hard to give us reasons — which we are happy to use, since it requires less work on our part.

According to Douglas Van Praet, an expert in advertising, psychology, and neurobiology,

It is our unconscious tendency to respond to a rationale even if it appears to be irrational, accepting factual information that doesn't always really make sense…In a study…researchers approached people in the act of using copying machines and asked if they could cut into the line and make photocopies. The experimental subjects were given different reasons for the request ranging from the sensible to the seemingly senseless, such as "because I'm in a rush" and "because I need to make copies." The researchers found out that compliance was higher when they gave a reason, even if the reason didn't really make sense.

What this means for us is that marketers are able to help us choose their brand by giving us plausible-sounding reasons for doing so. These reasons can be anything from Cocoa Crispies supposedly supporting your child's immunity to Cascade dish detergent's "sheeting action" for virtually spotless dishes. It doesn't matter that these claims don't hold up to scrutiny. They sound just reasonable enough to satisfy our loyalty.

With a reason already built in to the advertisements for our favorite brands, we don't need to do any work to convince ourselves to continue to buy them.

Dealing With Brand Loyalty

While your deeply-held beliefs on social, political, and religious issues may not be anything you care to change, your brand loyalty could be leading you financially astray. This is why it's a good idea to regularly and consistently challenge yourself. If you really think about it, why do you love your Honda so deeply? If it's because it has truly been reliable and easy to maintain, then mazel tov — it has probably earned your loyalty.

But if you have ignored company missteps over the years and found you enjoyed driving a rental Buick on vacation more than your daily drive, then perhaps its time to revisit your emotional attachment to the brand.

With smaller-ticket items, challenging your brand loyalty can be fairly simple. Just try buying different brands of soap, cereal, toothpaste, etc. But with the larger items that tend to engender more loyalty — like cars and computers — you will have to do a little more work to determine if you really do love your brand as much as you think you do. You will have to seek out the negative information about your favored brand and force yourself to think about those negatives when you'd rather ignore them.

Doing all of this might not be easy — but it is the reasonable way to make sure you're not wasting your money.

Jonathan Swift would definitely approve.

Written by Emily Guy Birken and published on Wise Bread. Read more articles from Wise Bread.

6 Totally Free Babysitting Alternatives

Craig Ford — Mon, 13 May 2013 10:24:32 +0000

If you're married with young kids, getting out of the house and enjoying a date together can really add up:

$35.00 for dinner
$25.00 for a movie and popcorn
$30 for babysitting

Sometimes when young couples start adding up all the numbers they come to an unfortunate conclusion — they can't afford to go on dates. Sure, you could reduce the cost of dining out by finding a cheaper establishment. You could even skip the movie and go for a walk instead. However, if you want to be able to get out of the house, babysitting is a hard expense to avoid — without a little creativity. (See also: How to Save on Babysitting Without Ending Up on the Local News)

1. Ask the Grandparents

Yes, this is an option that will only apply to a limited number of people who happen to be fortunate enough to live in the same town as their parents. But if you do live in the same town as your parents, then I'm betting your kids already enjoy every chance they have to spend time with grandma and grandpa, and affordable, reliable babysitting isn't really a problem for you.

2. Swap Babysitting With Another Couple

We have some close friends who have young children. Since babysitting is expensive for both of us, we agreed to a biweekly babysitting swap. Not only did we each get a date once a month, but our kids looked forward to date nights because they got to play with friends. When kids have the opportunity to play with other kids their age, they'll welcome the dates with as much anticipation as mom and dad.

3. Join or Create a Baby Sitting Co-Op

Last year our church started a babysitting co-op. Parents could leave their kids at the church while two of the other parents stayed and did the babysitting. Each child brought something to eat for dinner and the babysitters selected a kid friendly movie for the kids to watch. The only rule was that if you left your kids you needed to be sure to take a turn babysitting in the future. If there are six to eight couples on an evening, all but one of them were able to go on a date without an extra expense for babysitting. Again, the kids look forward to their night out as much as parents do.

4. Exchange Services

If you typically have a teenager babysit for you, it's possible that you could help them with something that they would consider more valuable than money. This could include something like tutoring them in school or coaching them in a sport.

5. Double Date With Other Parents

This suggestion may seem like it's breaking the rules, since typically most people think dating is about spending time together as a couple. However, if you're more in the mood for getting out of the house and doing something fun, then consider a double date with another couple that has kids. We've had other couples come over to our house and the kids typically entertain themselves. On other occasions, we've met couples somewhere like Chick-Fil-A with a play area. Usually, the kids play while the adults can hang out and enjoy adult conversation.

6. Be Friends With People Who Don't Have (but Do Like) Kids

A few weeks ago we were shocked when some friends who don't have kids asked if they could babysit for us so we could have a date. We've spent time with the couple on several occasions and they told us how much they enjoy kids — especially how much they enjoy being around our kids. I don't know how you develop a strategy around this, but I guess if people like being around your kids you might have some free babysitting opportunities arise. All this time we thought we were raising well-behaved kids for their own good.

What babysitting options have you tried?

Written by Craig Ford and published on Wise Bread. Read more articles from Wise Bread.

Best Money Tips: How to Ask Your Boss for a Raise

Ashley Jacobs — Mon, 13 May 2013 10:00:31 +0000

Welcome to Wise Bread's Best Money Tips Roundup! Today we found some stellar articles on how to ask your boss for a raise, frugal ways to move, and getting the best price when selling back textbooks.

Couponing: Hobby or Lifestyle?

Kelly Kehoe — Mon, 13 May 2013 09:48:31 +0000

If you watch TLC, then you’ve probably heard of or watched "Extreme Couponing." It’s a TV show about people who spend countless hours per week going through coupon clippings, figuring out how to buy hundreds of dollars of goods for pennies on the dollar.

The practice of extreme couponing has become increasingly popular over the past few years as families look for more ways to be more frugal with their purchasing habits. But is there a such thing as being too frugal? (See also: Extreme Couponing? 5 Reasons Why I’ll Pass)

Saving money is obviously ideal, but if you’re spending hours per week just to save a few dollars at the supermarket, is it truly worth your time? Before you step into the couponing arena, it’s important to determine whether you want to be a hobbyist or an extreme couponer.

Getting Started

Anyone who has watched "Extreme Couponing" was probably dazzled by the potential savings the first time they saw the show, but in reality, saving tens or hundreds of dollars through couponing is a tricky task. It takes a lot of organization, not to mention a lot of math. You don’t want to be that person who miscalculated and either pays full price or returns all those items to the shelves, much to the annoyance of the cashier and people waiting in line behind you.

To avoid getting overwhelmed, take it slow. Even if you want couponing to be more than just a hobby, don’t fret about the deals you could be missing and squander several hours in pursuit of the most savings or free stuff. Instead, print or clip whatever coupons come your way and hold off on the more "extreme" aspects of couponing until you have more experience.

Finding Coupons

Newspaper ads and coupon leaflets used to be the most common places to find good deals, but in the past few years, couponing websites have grown in popularity. You may have to pay for the cost of printing, but it’s generally easier to find the types of coupons you’re looking for, not to mention deals (such as manufacturers’ coupons) you might not have heard about, had you stuck solely to local ads.

Couponing hobbyists tend to pick one or two sites they like and stick with those, while extreme couponers maximize their use of paper ads and surf through several couponing websites in search of hidden gems that could save them a lot of money at the store.

A few good websites for finding coupons and promotional deals include:

Staying Organized

Regardless of whether this is just a hobby or a full-on lifestyle for you and your family, the key to succeeding at couponing is staying organized. You don’t want to be that person who holds up the line at a grocery store as you’re shuffling through a seemingly endless assortment of coupons. Instead, come up with a filing system to keep everything in order. For some couponers, this could be categorized envelopes (one for dairy products, one for toiletries, one for drinks, etc.) or an expandable folder in which you order coupons by expiration dates and stores where you can use them. Whatever works for you, as long as you can collect and organize them efficiently. Nobody wants to waste time looking around for a coupon they thought they clipped!

Understanding Wants vs. Needs

The intensity of couponing habits separates the hobbyists from the extreme couponers.

While hobbyists may spend an hour or so going through coupons, extreme couponers spend hours looking for coupons, clipping or printing coupons, and strategizing their next shopping excursion, so they can get the best deal possible. The problem here is that couponing, if not done in moderation, becomes less about saving money than it does about acquiring as much free stuff or the biggest savings possible.

Buying sixty cups of yogurt in one shopping trip just because you can get them for five cents each isn’t promoting a sustainable lifestyle unless you plan on eating all of it before it expires. Some couponers accumulate dozens of bottles of condiments, hundreds of common toiletry items, and countless drinks, simply because they were "such a good deal." While these are extreme examples, learn to differentiate between wants and needs early on in your couponing endeavors. You’ll save a lot of time, money, and space in the end.

The Verdict

Couponing in moderation is ultimately the best way to go about getting deals at the grocery store. Although you may miss out on some "amazing deals," you’ll have more time for other hobbies but still be able to save some money on your grocery bills.

Are you a hobbyist couponer or do you aspire to be a lifestyle couponer?

Written by Kelly Kehoe and published on Wise Bread. Read more articles from Wise Bread.

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