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Why my new system for clothes fits like a glove

Filed under: Credit Cards General on July 30, 2014 @ 9:19 am

I used to look into a closet crammed with clothes and lament that I had nothing to wear. But discovering that I had too many clothes, not too few, has saved me time, hassle and money.

A few months ago, motivated mainly by frustration with my small closet, I Googled “people who have very few clothes.” I came across Project 333, in which you wear the same 33 items, including accessories, for three months. Each season, you can swap out items to choose 33 new things.

Project 333 saves money because once you’ve chosen your items for the season, you’re less likely to go window shopping, open deal emails and rack up credit card debt buying clothes, writes Project 333 founder Courtney Carver. You also free up time and energy to do stuff that’s more fun and fulfilling.

That was the inspiration I needed. I took a weekend and tried on tops, pants, skirts and dresses in my closet. Following Project 333 guidelines, I kept only clothes that: (1) fit me perfectly, (2) look good on me and (3) I love.

Everything that didn’t meet those three criteria went into big garbage bags to be donated to Goodwill. I’d had some of those items for over a decade and had moved them across the country multiple times. They cluttered my closet and my drawers, getting in my way every time I went to get dressed. I chose my 33 things for the season, putting away clothes that fit my criteria but weren’t right for warm weather.

Here’s what happened:

  • I found a bunch of clothes that fit, flatter me and that I love but that I had forgotten I owned because they were under piles of clothes. So, I found I didn’t need to buy any new clothes at the moment.
  • I stopped wearing yoga pants everywhere and started looking nicer on errands thanks to a Project 333 rule: Workout clothes don’t count in your 33 items, but you must wear them for their intended purpose only.
  • I started traveling light because I pack fewer items and accessories. That has made recent trips much less stressful. For a short trip, my husband and I can fit our clothes in one carry-on-size suitcase.
  • I look more polished and put together.

In the future, I won’t buy a bunch of new clothes at once. I’ll be more likely to buy one carefully chosen piece that meets my three criteria. Also, I don’t buy a lot of accessories anymore. I buy only those that I know I’ll wear with something I have and that flatter me and add sparkle to an outfit. (It’s amazing how many cool earrings I had but never wore because they blended into my brown hair.)

If you’re interesting in using Project 333 or other tactics to save money on clothes, here are four tips:

  1. Create a capsule wardrobe. That means you have quality basic pieces and accessories that can be mixed and matched, worn on a variety of occasions, and look good on you, according to Wealthy Winters, a financial independence blog.
  2. Consider your style. Take some time to look at outfits and style pages on Pinterest and other sites to figure out what you really love, Wealthy Winters recommends. Pinterest has lots of examples of capsule wardrobes.
  3. Pay with cash or debit instead of credit. When you do buy clothes, use money you already have and avoid store credit cards at all costs, recommends the blog My Personal Finance Journey. If you don’t pay the balance in full, interest can more than eat up any savings you got by opening the card.
  4. Wait for sales to snag pricy items. Look for high-quality items, and find ways to buy them at a discount, Wealthy Winters recommends. The key is knowing which stores carry the brands you like and keeping an eye out for sales. Also, know the retail cycle and when sales are most likely to occur, according to You Look Fab.

I’m so happy with Project 333 that I’ve decided to make it a permanent part of my life, and I’ve marked the seasonal clothing changes on my iCal. I love the fact that I’ve finally solved my I-have-nothing-to-wear dilemma without spending a cent.

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A few bumps, but debit cards for my teens were a success

Filed under: Student on July 25, 2014 @ 7:45 am

Several months ago, I handed debit cards to my teenage sons. Their reactions were interesting.

My 15-year-old, Byron, loved the idea, particularly the fact that he would have $150 in allowance to put in his account the beginning of each month. My 17-year-old, George, on the other hand, was stricken with fear.

You see, I told them they would be responsible for their school supplies, clothes, books and any incidentals that might come up. I wanted them to learn how to budget and how to anticipate expenses. Byron saw a parade of Domino’s pizzas in his future. George worried that he would not have enough money set aside in the fall for clothes and school supplies.

What followed was even more interesting.

In the beginning, Byron used all of his money on takeout, pizza delivery and the Apple iTunes Store. In April, he ordered pizza three times and ate at restaurants five times. He was out of money by April 20.

I didn’t bail him out the rest of the month, even though he didn’t have money for our Saturday morning tradition of breakfast tacos at a local restaurant. There was some gnashing of teeth, but the point was made. In May, he started the month with $50 set aside for necessities, and he only ordered Domino’s twice. However, he was down to $3 by May 17, spending his money on tacos and iTunes.

June was better, with $28 in his account by June 29. Today, he has $152 in savings for necessities.

Meanwhile, George immediately set $50 aside for necessities (he set up a subaccount with that name), and ended April with $48. When he realized that he could actually save more than $50 a month, he set a goal of buying parts for his old laptop so he could rebuild it.

George decided to spend no more than $50 a month on “fun” items, and in June, he spent $130 on computer parts. Today, he has $213 in savings for school expenses.

As you can see, my boys have very different ways of approaching money. I’d rather that Byron didn’t spend so much of his money on restaurants, but he is living within his means, which is the ultimate goal. Investopedia advises that you let your teen budget his way, rather than the way you think it should be. Budgeting can be done with paper, online software such as Mint or commercial software such as Quicken, Investopedia says.

FamilyEducation.com has a teen budget worksheet that includes such items as hobbies, transportation and the all-important cell phone.

MoneyAndStuff.info recommends that you give your teen a monthly allowance, rather than a weekly sum. The site has a sample budget for the teen. Money and Stuff likes the idea of a prepaid debit card, although personal finance expert Dave Ramsey points out that they are riddled with fees. That’s something I like about my kids’ credit union accounts: There are no fees, and we opted out of overdraft protection. That means that when their checking account runs out of money, charges are simply rejected. The savings accounts aren’t dipped into.

Rejected charges have a bonus. My kids get to experience the “walk of shame” from the store counter after being told they have insufficient funds for a purchase. It just took George one time for him to make sure he has enough money in his checking account before he goes to the store.

Now that we have a record of their monthly expenses for the past few months, I think it’s time for the boys to develop a formal budget.

I think George will embrace it. He seems to enjoy the concept of having his finances under control.

Byron will be the challenge. He keeps a running tally of his expenses in his head, which I don’t love. So far, his way has worked for him, but I’d like both of them to at least know their options when it comes to budgeting. When the fall school year kicks in, I plan to teach them the basics of Excel and show them Mint, to see if there’s a system that appeals to them.

Or maybe they’ll discover their own system. That would be even better.

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Composting toilets aside, I see a tiny house in my future

Filed under: Uncategorized on July 23, 2014 @ 9:18 am

I love my house, but it definitely can be a financial burden sometimes. There’s the mortgage that takes up a good chunk of the monthly budget, maintenance and repair costs and hefty utility bills.

Wanting a space of your own — without the huge money, work and time commitment of the average house — is part of what started the tiny house movement that has gained momentum in the past few years.

The tiny house movement is a social movement centered on building and living in very small houses for reasons that include financial freedom, simpler living and environmentalism. The movement has grown over the past several years, giving rise to companies that design and sell tiny houses, tiny house lifestyle blogs and nonprofit organizations such as the Small House Society.

A tiny house on display at the Tiny House Conference in Charlotte, North Carolina, in April 2014. | Photo courtesy of Ryan Mitchell, The Tiny Life

According to the blog The Tiny Life, the average American house is a gargantuan 2,600 square feet while the average tiny house is 100 to 400 square feet. Some other fascinating stats from the blog: Many working-class Americans put one-third or more of their income — or about 15 years of their working life — into their homes.

I recently watched a fascinating documentary called Tiny, about one man’s quest to build a diminutive house. It’s pretty impressive that some people can live in such small spaces. But I could definitely do without a composting toilet, thanks.

And while I admire those who do it, I can’t imagine myself , my husband Joe and our two dogs living in a house so tiny it can be pulled down the highway on wheels. But, a few months ago, I read an article in The New York Times about a couple who built a modest 700-square-foot house. Now, that I could do, and I started dreaming. I love the idea of dedicating less of my money to my living space. It also sounds fabulous to have more time and more freedom. Some small house dwellers say they can do their weekly deep clean in 15 minutes flat. Sign me up.

Several years ago, it never would have occurred to me to live in a little house. But, as blogger Miranda Marquit points out on Money Ning, the view of pumping money into a house as an investment no longer holds true, especially if you might not stay in your house long-term. Joe and I lost money — and had to come up with $10,000 at closing — to sell our last house at the height of the financial crisis, so this rings true for me.

Tiny houses tend to be more expensive by the square foot, but cheaper overall than larger houses, according to Forbes.com. Some people, if they do a lot of the labor themselves, are able to build a tiny house extremely cheaply. For example, after a foreclosure, one architect built her own tiny house for $11,000 so she could have her own space and be mortgage-free. The cost of utilities is much lower, too. For example, utility bills for a tiny house usually run $10 to $35 a month, according to the company Tumbleweed Tiny Houses. And you’re limited by space on the number of pieces of furniture and amount of stuff you can have. Overall, a small house can lead to big savings.

So, if you’re sold on the tiny house life like I am, where do you start?

The key is planning, according to the blog Tiny House Talk. Think ahead and consider how you use your space, because an efficient layout is essential for maximizing a small space. For example, one couple put their washer and dryer right in their clothes closet (yes, that’s singular — they share), while others create home offices in corners.

As for me, I’ll keep following the tiny house blogs, dreaming and trying to convince Joe that it would be great for us, and our finances, to live in a house that’s the size of a small apartment — one day.

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Tired of paying home loan PMI? Try refinancing

Filed under: Credit Cards General on July 16, 2014 @ 8:55 am

As daunting as refinancing your home loan can seem, I’ve found it can pay off in big savings on interest and other benefits.

My husband Joe and I are refinancing right now, and the biggest benefit for us is that we get out of paying private mortgage insurance (PMI).

Private mortgage insurance typically is required when you take out a mortgage and make a down payment that is less than 20 percent of the cost or appraisal value of the house you’re buying. Before we moved and bought our house three years ago, we had to sell our last house at a loss. So, much of the money we would have used for a down payment had to go to pay off our other mortgage.

PMI is costing us over $100 a month. Blogger Travis from My Personal Finance Journey recently refinanced too, partly to get out of PMI, which, he writes, “is like flushing money down the toilet each month.” I agree.

Joe and I are able to get out of paying PMI because we recently did a huge remodel that upped the value of our house. Our home used to be part of a B&B and only had a kitchenette. We created a real kitchen next to a more spacious living room in an open floor plan.

The increased home value means we have more equity, which could have gotten us out of PMI with our current mortgage company. However, our lender wanted us to jump through a bunch of hoops, including paying for an appraisal and writing them a letter.

So, we started thinking about refinancing. We were fed up with our mortgage company’s customer service anyway, and we knew we could reduce the term of our loan from 30 to 15 years and get a much better interest rate. Also, we were considering getting cash out so we could paint the exterior of our Victorian home. Flaking paint has made this a top priority because we want to protect the wood siding.

We shopped around and found a good deal with our own bank, a 3.4 percent interest rate for a 15-year term — much better than the 4.5 percent we’re paying for a 30-year term. With a better interest rate and no PMI, our monthly payment will be almost the same as it is now, and we’ll pay off our house in half the time.

So, how do you know if refinancing is right for you? Personal finance blog Get Rich Slowly offers five reasons to refinance: . lowering your interest rate, shortening the term of your loan, lowering your monthly payment, switching to a fixed-rate from an adjustable rate loan or tapping home equity cash for a home improvement.

One other factor: How long do you plan to stay in the home? Closing costs typically add up to several thousand dollars, so it might not be worth refinancing if you think you’ll move in a few years. For us, this was a wild card: We’re here for my husband’s job and don’t know what will happen in the future. We’re gambling that we’ll stay here for a while.

We decided not to pull equity cash out of our new loan. That’s because our home appraised for a bit less than we had hoped, meaning we would end up with paying PMI again if we took the cash out. By applying for a home equity line of credit (HELOC) instead, we were able to accomplish our goal of freeing ourselves from PMI.

A HELOC is a loan in which the borrower’s home serves as collateral. With a HELOC, you typically can borrow an amount equal to or less than 85 percent of the equity in your home.

Also, our bank is having a HELOC special with 1.99 percent APR for a year, so it makes more sense to go that route.

If you do refinance, financial planner Hank Coleman on DailyFinance.com †lists some common mistakes people make when refinancing. These include not shopping for the best deal, settling for the lender’s appraiser (a mistake we made, unfortunately) instead of hiring your own and not knowing that you can change your mind within three days of closing.

All in all, if you’re doing it for the right reasons, refinancing a mortgage can be a great financial move.

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Millennials’ frugality launches the 50 Percent Club

Filed under: Credit Cards General on July 11, 2014 @ 2:08 pm

In April, I admired how millennials seem more frugal than their predecessors.

I’ve noticed that my younger friends and coworkers drive older cars, share cars with their spouses, refrain from eating out for lunch. They remind me of my parents, who grew up during the Depression. And their backgrounds aren’t so very different.

That’s because millennials grew up and came of age during the Great Recession. This generation watched their parents get laid off five to six years ago. They started or finished college when job prospects were thin on the ground.

And millennials have a disadvantage the older generations didn’t have: They carry a greater burden of debt coming out of college because of student loans that average about $29,000 for the graduating senior. And that’s not including credit card debt. They are putting off buying a house, even getting married.

Yes, the younger generation is definitely more careful with money and the future than I was when I was their age. I admire them.

Now, some of them have taken their frugality a step further.

There is a movement among some of the younger financial bloggers to save not 10 percent, not 25 percent, but 50 percent of their income.

Started by Kathleen O’Malley of Frugal Portland and Latisha of Young Finances and called the 50% Club, the idea embodies the fiscal psyche of millennials. Stuff does not capture their attention the way it did for previous generations.

And that’s what really strikes me; they are intrigued by the idea of less stuff. Says Romeo Jeremiah of Life and Personal Finance Reflections: “I realized that I didnít have to replace televisions, clothes, furniture, cellphones, or cars as often as I did in the past. And I also realized that these things didnít bring any additional happiness.”

And these millennials aren’t earning small change. For example, Kathleen plans to save $75,000 a year by combining efforts with her fiance.

So, what’s the point of saving all this money? What do they plan to do with it? In the case of Latisha, she wants to travel the world. Lauren Bowling says on LearnVest that she plans to put her money into retirement. Likewise for Kathleen, who is also using some of the money to invest in non-retirement funds.

When I think back to my late 20s and early 30s, I shudder. I was spending huge chunks of money on eating out with friends. I was making $30,000 a year, and spending $50 a week on eating out, or almost 10 percent of my gross income. If I had invested that in dividend stocks, I would have more than $200,000 today, enough to buy a house outright in some markets.

The millennials have that figured out. They are paying down their debt to save for a house, or retirement, or to raise babies, or just to travel.

For my husband and me, we do set aside 60 percent of my take-home for our millennials’ college funds, but saving 50 percent of our combined income is just not in the cards. Not now, anyway.

For now, I have to admire from afar.

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How about an emergency fund that’s fun to save for?

Filed under: Credit Cards General on July 2, 2014 @ 12:00 am

Everyone knows that having an emergency fund is important, although socking money away for burst pipes or car transmission failures is no fun.

But recently I discovered the idea to start a twist on an emergency fund called a “freedom fund.”

Just as catastrophes happen in life, so do opportunities. But it can be easy to pass them up due to lack of money or time.

I sometimes find myself stressing out when I get a spontaneous invitation — for example, to visit a friend in another city — that’s not in the budget. I’ve also dismissed or put off dreams due to money. (I’ve been saying for years that someday I’ll take a week off for my own little writer’s retreat and work on essays by the beach.)

It’s funny, but I got the idea for a freedom fund while watching too many episodes of “House Hunters International.” Seeing couples do things many people only dream of — moving to places like Italy, Costa Rica and France for a year or more — got me thinking. In many episodes, the house hunters mention having saved up to pay for their experience. In one episode, a couple of pro bloggers had created a fund to move to Colombia and find online work.

So, I pitched the idea of a freedom fund to my husband, Joe, and he loved it, partly because it makes saving a lot more fun. It’s pretty easy to put money away when you know its sole purpose allows you the freedom to enjoy life more, do what’s important to you and fulfill goals.

I immediately started an account and made some cuts to our budget. We’re adding the money we save from the budget cuts each month, and we will sock additional money away whenever we can — for example, if we get a small windfall or sell something on Craigslist.

On the personal finance blog Get Rich Slowly, Lisa Mueller explains that it took her a while to realize that saving, in addition to being a way to build wealth, can be a path toward freedom and flexibility. For Mueller, a freedom fund has allowed her to:

  • Quit a 9-to-5 job.
  • Take a class.
  • Take time to think about what she wants out of life.
  • Enjoy the summer.
  • Connect with friends.

That’s exactly what I’m hoping to get out of our fund — to make our money work for us a little more instead of the other way around.

Blogger Jay at The First Million is the Hardest writes that he saved for a long time without knowing what he was saving for. Then he started a freedom fund with the aim of quitting his 9-to-5 job. He plans to invest his money to build an income stream that could replace his salary.

Alexa Von Tobel, founder and CEO of the personal finance site LearnVest, writes at Inc.com that her freedom fund allowed her to launch her business.

The possibilities of a freedom fund are unlimited. I’m a freedom-fund newbie, but I think everyone should start one. If we have to save for brake pad replacements and the like, we also should stash money away for the stuff that feeds our souls.

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Paying for college or retirement: It’s not all or nothing

Filed under: Credit Cards General on June 27, 2014 @ 10:42 am

You’ve heard it before: You can take out a loan to go to college, but you can’t take out a loan to retire.

Financial planners will tell you not to sacrifice your retirement to pay for the kids’ college. The kids have plenty of time to pay back a student loan, they say. You’re doing them a favor by being well-funded in your retirement, they claim.

While that’s all true, it doesn’t mean you have to leave them to completely fend for themselves if you have the means to help them. Often, with a little belt-tightening, you can help your children and still build your nest egg.

The alternative is difficult, especially in 2014. It’s not easy to look your 17-year-old in the eye and tell him he will likely have $29,000 in student loans by the time he graduates, and that’s not including credit card debt. The pundits don’t advise you on how to explain to your child that he may have to defer buying a house or having children because he will be strapped with debt right out of the gate.

Every generation claims they had it rougher than the current one. I believe it’s flipped this go-around. Students pay tens of thousands of dollars every year for tuition and living expenses. My tuition in 1985 was $300 a semester. It’s now about $5,000 a semester for in-state tuition at the school my kids hope to go to, The University of Texas at Austin.

When I graduated in 1985, I didn’t owe a penny. I was able to work my way through college, getting grants and scholarships to supplement my income. For my husband, it was the same.

Not so today.

These days, grants are hard to come by and scholarships are incredibly competitive. The recent graduates I know are saddled with $30,000 to $40,000 in student loans.

The troubles of the millennial student are hitting home for me. You see, I’m the mother of two millennials, and my eldest starts college in a year.

It goes against the grain for me not to help my kids with college in some fashion. My grandparents gave my parents cars when I was growing up. My parents lent money to my husband and me so we could afford a house in an out-of-reach Austin market in 2000. Giving our kids support at key points in their lives is an important part of my family’s tradition. If our children are responsible citizens, if they work and get good grades, we help them out. That’s just the way we do things. (In fact, Peter Anderson of Bible Money Matters cites a study that shows kids who don’t help pay their way actually have lower GPAs.)

And we’re not alone, according to a 2014 Sallie Mae study. Future students can count on two-fifths of their college expenses being financed by parents, relatives and friends.

That’s not to say that my husband and I plan to blow our retirement on supporting the kids in college. This isn’t an all-or-nothing venture. Nowhere does it say that you have to pay for all of your kids’ college, and there is plenty of gradation between paying nothing and paying a part.

But, in the Mohammad household, things are going to be tight for the next few years while the boys do their studies, and that’s OK. I see it as our coming-of-age gift to them, the last great present before we send them out into the world. To minimize their debt as they prepare for adulthood will be immeasurably rewarding.

The boys still may have to take out some loans. We aren’t comfortable raiding our retirement for college, because the pundits are right: You can’t take out a loan for retirement. But hopefully, our contribution will make a dent.

My eldest plans to go to community college his first two years while living at home to save money. My other boy is shooting for a Navy ROTC scholarship, which would at least pay for tuition. I’m immensely proud of them for making plans to avoid loans. They seem to grasp that this isn’t free money, and there are consequences to having a stack of loans upon graduation. If we can help to offset loan costs with our contribution, it’s money well spent.

So, yes, we’ll be helping our children pay for college. †I’ve always found that generosity has a way of paying you back tenfold.

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Late library fine? Expect collections

Filed under: Credit Cards General on June 25, 2014 @ 11:04 am

Last month, I checked a huge stack of magazines out of our library for some fun summer reading. I was late returning them (oops), but figured I’d pay my fine next time I stopped into the library.

Last week, though, I got an unpleasant surprise: a letter from a collection agency called Unique National Collections, which specializes in collecting money for libraries. I owed $52.

Fretting about the damage the collection could do to my credit, I spoke to a Unique employee, who told me I had 125 days to pay up before the collection would be reported to the three major credit bureaus, Experian, Equifax and TransUnion. The representative also told me it’s common for libraries to send accounts to Unique right away. This means the first notice a consumer gets about a fine could be from the collection agency.

I did a little research and found that Unique calls its process of collecting fines the Gentle Nudge. The Gentle Nudge consists of a “120-day series of letters, calls, skip tracing and credit reporting.” The process “effectively and courteously prompt(s) patrons to return materials to the library and resolve overdue fines/fees” — and does so without alienating patrons, according to Unique’s website.

To me, getting a letter from a collection agency before I even knew what I owed felt like anything but a “gentle nudge.” I work hard to maintain a high credit score, and it seemed aggressive for the library to send my account to collections without even sending me a courtesy email first.

But late library patrons across the country can expect to get similar letters. According to DailyFinance.com, an increasing number of libraries are using collection agencies for fines.

For example, the New York Public Library might send any fine over $50 to collections. The Boulder Public Library, in Colorado, will send an account to collections, and charge a $15 collection fee when checked-out items become more than five weeks overdue. The collection agency will contact the library user several times over 17 weeks before reporting the account to the major credit bureaus. The Montgomery County Public Libraries, in Maryland, give patrons several chances to pay up before resorting to a collection agency. First, the library notifies the customer via email or postal mail when items are 21 days past due. If the patron doesn’t respond in two weeks and the fines total $25 or more (or are 60 days past due), the library will send another letter. If the library user still doesn’t respond, the account is sent to collections.

If that happens to you, it can severely damage your credit — even if it’s for a few dollars. A collection is a collection, whether it’s for a library book or an unpaid credit card bill, according to personal finance site Learnvest. And as MSN Money points out, even a small amount sent to collections can have a big impact on your credit score. MSN Money mentions one consumer who had an overlooked $5 bill sent to collections, causing her score to plummet by 96 points, from 785 to 689. And collections typically remain on your credit report for seven years.

Want to avoid having your credit marred by a library fine? Every library’s policy is different, so check with your library.

Personal finance blogger Carson Brackney of Personal Finance Analyst, who had a forgotten $37 library fine turned over to collections, says if you’re going to use a library to save money on books, be vigilant about returns so your frugal habit doesn’t do you more harm than good. If you have trouble remembering to return items, consider Library Elf, a free reminder service to avoid fines altogether.

If your account does get sent to collections, pay right away. Act fast and you might be able to keep that collection from being reported to the credit bureaus. I sent a check immediately to avoid wrecking my credit.

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Should I get an EMV card for my overseas travels?

Filed under: Credit Cards General on June 20, 2014 @ 9:33 am

I’m planning a family trip to Jordan this summer, and like a good traveler, I sat down one recent Friday and called our credit card companies. I wanted to know if we needed EMV cards, also known as chip-and-PIN or chip-and-signature cards, to make purchases in Jordan.

We will be with family, which means expenses will be minimal, but I wanted to make sure we’ll have a card we can use as a backup.

After calls to four card issuers who gave me four different answers, I realized this wasn’t going to be easy. It begins with the fact that there is no universal system for secure cards. Every country is different, and there are even differences within the same country.

Chip and PIN refers to a technology that makes credit cards more resistant to data theft, requiring a personal identification number for payment to be accepted.† It’s common in other parts of the world, including Europe and parts of Asia. But not in the U.S.

You see, the less-secure magnetic-stripe card dominates in the U.S. (although that will change over the next 16 months, when merchants will need to have appliances in place that take the chip cards). Chip-and-PIN cards are hard to get for U.S. cardholders, although some companies offer a similar chip-and-signature card (which is less secure than chip and PIN, but still safer than mag stripe).

However, as handy as it is to know what kind of technology a country’s merchants have, it isn’t necessary, says Doug Johnson, vice president of risk management policy for the American Bankers Association. For example, Johnson used his chipless card throughout London last week without any problem. “It’s at the discretion of the retailer,” he says. “The exception is when it isn’t accepted.”

As expirations come up, debit and credit cards are being issued with the chip, Johnson says.

Still, even if your current card will usually be accepted, here are some card tips for you before you go overseas:

1. Tell your card issuer when you will be traveling. That lessens the likelihood your card will be rejected for security reasons.

2. If you want to know whether the magnetic stripe is accepted in your destination, search or start a thread on a site like CreditCardForum.com or flyertalk.com and find someone who has recently traveled to your area. If you want to avoid the possibility that your card will be rejected, ask your issuer for a card with a chip in it, says Johnson.

3. Bank of America advises that you allow for extra time when traveling abroad, because unless you have a chip-and-PIN card, you will need to go to attended train terminals in some regions, such as Europe.

4. Most American issuers are releasing chip and signature cards. While you may run into some self-service kiosks that require a PIN, the signature cards will work with most international merchants.

5. Keep a list of your card numbers, PINs and the issuer’s contact information separate from your wallet or purse in case of theft or loss.

6. Clarify which phone number to call the issuer in case of an emergency. The overseas number is usually different from the one for domestic calls. In some cases, it’s the “collect” number on the back of the card.

7. Does the issuer charge a foreign transaction fee? Capital One in particular is known for not charging these fees, but others can charge upward of 3 percent, Bankrate.com reports.

8. Bank of America advises you to have two forms of payment in case one is rejected. For example, carry both a debit and a credit card.

I’ve learned from a co-worker who recently traveled to Jordan that the magnetic stripe is still accepted there. But just in case, my husband received a chip-and-signature card from one of his issuers.

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How I cut cellphone costs in half

Filed under: Credit Cards General on June 18, 2014 @ 11:52 am

For a long time, I felt I was paying too much for cellphone service. I was right: Last year, I switched to a pay-for-what-you-use service and cut my bill in half.

When we switched cellphone providers, my husband and I were in the midst of paying off a massive student loan debt and some credit cards, and we were trying to cut costs wherever we could. So, it hurt to fork over $135 a month to T-Mobile for moderate cellphone use. Neither of us watches movies on the phone or texts constantly.

One trick I learned while trying to save was to look at yearly expenses to get a better idea of the real cost. As the personal finance blog Get Rich Slowly points out, recurring monthly expenses are “potential money sinks.” And looking only at the per-month cost can make the amount you pay seem like less of a budget buster.

So, I did the math and found we were paying $1,620 a year for cellphone service. I asked T-Mobile if they could give me a better deal. I explained my situation and told them I thought I was paying far too much and was considering breaking my contract. They told me I was stuck: They couldn’t do any better. Using a tip I’d found online, I asked to speak to their “customer retention” specialist, who I had heard had extra power to negotiate. No luck.

So, I researched and came across a company called Ting that doesn’t use contracts and calculates your bill each month based on the amount of talk time, texts and data you use. Ting has categories from extra small (no usage) to extra large, and you pay based on which one you fall into. So, if you use 1,000 minutes of voice time but don’t send any texts, you’d pay $18 for the time you talked and nothing for texts. If you suddenly took up texting and sent 500 the following month, you’d pay $5 for texts that month.

Joe and I were hesitant to switch, partly because we had to buy our own phones with Ting. Choosing from a variety of price points, we picked decent Samsung smart phones for about $250 each. We also worried the service would be bad, even though Ting uses Sprint’s network.

But it’s been over a year, and our service is as good as it was with T-Mobile. Our bills fall between $60 and $75 a month, saving us over $800 a year (minus the cost of the phones, which we plan to keep for several years.)

If we had broken our T-Mobile contract early, we would have had to pay an early termination fee of $50 to $200, depending on how much time we had left. We waited to avoid the fee, though Ting offers a credit of 25 percent of your early termination fee with another carrier.

Now, I don’t think Ting makes sense for everyone. In fact, very heavy data users might find it costs more than going with a traditional carrier, though Ting did lower its rates this year.

But if you’re a moderate cellphone user, you might be able to save quite a bit by exploring non-traditional options. Other bloggers, including J.D. Pohlman at Pohlman’s Personal Finance blog, have also been happy with Ting.

Or, GoBankingRates.com offers three alternative cellphone companies that could help you save. For example, Republic Wireless offers unlimited calls, texts and data for $19 a month. The company is able to offer low rates because your phone will switch to Wi-Fi whenever that’s available.

That could cause some hassles, though. According to CNET.com, Republic offers a lot of bang for your buck. But, switching between available wireless and cellular might cause service quality issues , according to Xaprb.com. Also, having to enter passwords to connect to password-protected Wi-Fi could be annoying. And, you might need to look into downloading privacy apps if you’re worried about security or privacy issues with public Wi-Fi.

If you want to save on cell service, CNET suggests also looking into Virgin Mobile, Tracfone or T-Mobile’s prepaid plans.

In any case, I think it’s a good sign that there are many more cellphone plan choices than there were just a few years ago. If you think you’re paying too much for cell service, you probably are — like I was — and looking into alternatives can help you save big.

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