The Money Saving Fifty (50)

Many people envision a Power of Attorney (POA) as a sort of death-bed request, or a document which appoints an intercessor so that you can avoid unnecessary or unwanted medical interventions. A POA is, basically, an official appointment by you of an individual (called an “agent” or “attorney-in-fact”) to manage your affairs should you be unable to do so. It can involve medical intervention choices, but not necessarily. There are three main types of POAs:

1. General Power of Attorney, which gives your agent the authority to act on your behalf in a broad range of situations.

2. Special Power of Attorney, which gives your agent the authority to act in specifically defined situations.

3. Medical or Health Care Power of Attorney, which grants your agent the authority to make decisions on your behalf regarding medical interventions or other health care.

Any type of POA can be made “durable” by adding language that makes it remain active for the duration of your life, and in the event that you become incapacitated it will automatically “kick in.” In either a General or Special POA you can appoint an agent to manage your assets and other financial matters. POAs are easily tailored to meet the needs of the individual, and you can have multiple POAs. The question is, who needs them?

The short answer is, everyone should at least consider having a POA. Should you become incapacitated without having a POA, a judge will have to appoint an agent to manage your affairs; agent responsibilities do not automatically default to your closest relative. A court-appointed agent may or may not handle matters as you would wish, which can cause problems for your friends and family.

A POA will give you peace of mind, and assure you and your family that your personal matters will be taken care of without complication or controversy. Looking into a POA when you are still young may seem irrelevant, but it isn’t – you can take the time to give careful consideration to whom you will appoint as your agent, and communicate with him or her about the details of your decisions. Some experts believe that having a POA is actually more important than having a will.

Most attorneys will include a POA as part of an overall estate plan, or, if you choose not to work with an attorney, check with your local hospital. Many of them have free POA forms that you can pick up, because it saves hospitals a great deal of trouble if healthy, competent individuals draft a POA. And your family will thank you.

You may have seen the commercials on television with a famous actor suggesting senior citizens get a reverse mortgage to help with unexpected bills. While a reverse mortgage may be a good option for some people, it’s not for everyone. What are the pros and cons of reverse mortgages?

Cons

Many people like the idea of reverse mortgages because, according to the advertisements “your house pays you” instead of you having to pay for the house. Unfortunately, reverse mortgages can be very expensive. Reverse mortgages require all the fees to be added to the loan balance; depending upon how much your home is worth that could be quite a bit.

For senior homeowners needing to borrow a smaller amount or for only a short time, the fees associated with a reverse mortgage can make it a bad choice. There are other options you may want to consider instead. Talk with your local bank or financial advisor to see if they have suggestions that will enable you to get the money you need without having to pay such expensive fees.

Obtaining a reverse mortgage can also reduce the amount you’ll be leaving to your family as an inheritance. The major reason for this is that the loan must be paid in full from the proceeds of the sale of your home, which will leave less for your dependants.

Some seniors who obtain reverse mortgages live longer than the money they receive through the reverse mortgage. With the expressed concerns about Social Security solvency they may feel they don’t have a choice, however. Getting a reverse mortgage sooner rather than later can also reduce the amount they can obtain.

Be careful that your total loan receipt is not more than is allowable by Social Security. If you borrow more than you’re allowed, your Social Security benefits may be stopped completely.

Pros

Seniors 62 years of age and older can apply for a reverse mortgage if they own their home. The loan uses the equity of the home and allows homeowners to borrow that money to pay medical bills, pay off debt, or any number of other reasons. Some may see it as a way to supplement what they are earning through Social Security or pensions they may receive.

Rather than having to pay monthly payments as in the case of a traditional home equity loan, the reverse mortgage does not require you to pay back the loan while you are alive unless you move. Reverse mortgages also do not require a credit check. As long as the home you’re using as collateral for the reverse mortgage is your primary residence, you should qualify.

Reverse mortgages are tax free and the funds can be used for whatever you choose. As long as you have funds in your equity line of credit, that money is available to you. You and your heirs can never owe more than the property is worth, so if the value of the home decreases you and your family are covered.

There are many companies offering mortgages and they can be a good choice for some. However, look over the pros and cons of reverse mortgages and make the best decision for your own circumstances. You may also want to discuss the option with your family.

Generally speaking, a living will outlines your personal directions regarding life-prolonging medical interventions you wish to receive (or not receive) in the event that you are near death or in a persistent vegetative state. On the other hand, a health-care proxy appoints an individual who will make such decisions as well as give directions for you in the event that you are unable to do so, but not necessarily near death.

There is certainly some overlap between the elements of both documents, such as an individual’s wishes regarding health care, but how the two documents are structured and how those wishes are carried out differs. Here are some of the different elements of living wills and health-care proxies. (Please note that state laws and policies affect both types of documents, and you will need to check with your local government to find out those policies unique to your state.)

A Living Will:

- Outlines specific directions regarding life-prolonging measures you wish to receive or refuse in the event of an incurable illness or if you are being kept alive via life support alone
- Is between you and your health care providers with no “middle man”
- Goes into effect when at least two doctors agree in writing that you are near death and/or in a vegetative state, when life-support or other life-prolonging measures come into play

A Health-Care Proxy:

- Appoints an individual who is aware of your health care wishes and will see that they are carried out
- Varies according to the extent of the authority you grant to your appointed individual (the “proxy”)
- Goes into effect when your attending physician confirms that you are unable to make medical care decisions, not necessarily when you are near death or in a vegetative state

There are pros and cons inherent in both documents, and as your health situation changes over the years, it’s a good idea to revisit your options. It is also advisable to discuss these options with your doctor, as he or she will have insights into your state laws and your personal health care history.

Parents want their children to learn about money without having to make the same mistakes they made when they had less financial experience. When deciding how best to teach them, many consider getting their teens a credit card. Prepaid credit cards are a great way to teach your teenager about money.

Considering the trouble a teenager can get into related to money and credit cards, parents realize the importance of teaching their children about responsible money management. You may want to consider the relative safety of prepaid credit cards.

Reasons to avoid credit cards

Let’s face it; credit cards are notorious for letting people live beyond their means. People often feel that because they have a balance on their credit card they need to use it. Nothing could be further from the truth.

Credit card use can give people the “buy now, pay later” attitude. It can also cause an entitlement attitude where people think they deserve to have items they simply cannot afford. When anyone maxes out their credit card, they’ll have to pay interest on items they could possibly have paid cash for if they had saved for it.

Unfortunately, when credit cards are maxed out, especially when your teen doesn’t have a regular paycheck, they may make payments late or miss them entirely. Guess who will have to pick up your teen’s payment?

Some parents allow their teens to face the consequences of not making payments even though it can be a harsh and possibly costly lesson. The problem of allowing a teen to create a large debt and not paying for it is they will be entering their adult life with a financial black mark against them. And it won’t necessarily teach them to be more responsible with their money.

Reasons to use a prepaid credit card

There are many reasons for helping your teen obtain a prepaid credit card. Not only will they be unable to create debt they aren’t ready to deal with at this age, they will also learn how to budget their money.

Prepaid credit cards carry the same card identification as a regular credit card. This means the cards will be accepted wherever those credit cards are accepted. Prepaid cards are also refillable which means teens can add more money to their balance if they have a summer or after-school job.

They can learn how to use a check register to track their spending so they can see how their money is reduced with each item they purchase. Use this time as a way to teach them how to balance a checking account and budget the money they do have, since they can’t spend what they don’t have at their disposal.

Prepaid credit cards are a great way to teach your teenager about money. Any mistakes they make with a prepaid card will not affect their future credit rating. They’ll also learn how to budget the money they have so they can get what they want or need without asking you for it. And that might be the best lesson of all.

As a parent, you know your children are not shy about asking for money. Some families give their children money when they ask, others give their children allowances. If you don’t currently give your children one, here are ten things to know about allowances.

Pros for giving your child an allowance:

* You may want to teach your children how to handle money; the earlier you start the better. By beginning to teach children about money at an early age, they’ll be more teachable and less likely to question your teaching.

* Having their own money will teach children to be responsible with their money. If they’re not, they face the unpopular consequences if they spend too much or lose it.

* Parents can breathe a sigh of relief because children won’t bother them for money if they have their own.

Cons of giving your child an allowance:

* Your children may think they can buy whatever they want because the money is theirs. This may mean they buy things their parents don’t approve of, which could result in stress parents may not want.

* Your children will probably complain that their allowance isn’t enough and ask you to raise it.

1. Why give an allowance? Having an allowance can be effective for teaching your children about money.

2. What can it teach? Allowances given to pre-teens and teens can be used to help finance their college career if they choose to go. By giving them an allowance, you give them the opportunity to open a saving account and checking account, both of which will be important when they leave home.

3. When to give it? A good time to start giving an allowance is when your children begin learning about money in school. Remember, if they can’t count it, they won’t know how much items cost and how much to use to pay for them.

4. How will it be used? You may not expect them to pay for school lunches, but you do want them to have the benefit of actually paying for some items with their own money.

5. What about saving? Explain that they will be expected to save a portion of their allowance. This teaches them the importance of saving, and expecting them to put something in savings first will help them learn this.

6. Will it be tied to chores? You will want to choose between linking your child’s allowance with doing household chores. That decision, obviously, is one you’ll want to make as a family.

7. How much do you give? You’ll want to consider your family’s financial situation, how much you can afford to give, and what your children generally ask you for money for. Some reports say the average allowance for 6-8 year olds is around $5 a week, $7 for children 9-11, and $15 for 12-17 year olds.

8. How often do you give it? Depending on how often you’re paid, you may not be able to give a weekly allowance. Also, as children get older, you may want to give them an allowance on a monthly basis so they learn to budget their money.

9. What else can they learn? When you give your child an allowance, you’re teaching them about spending wisely. It’s much easier for them to learn about losing $5 now rather than $500 when they’re older. An allowance gives your child a chance to make mistakes now when the stakes aren’t so serious.

10. What about docking their allowance? There may come a time when your child does something that makes you want to keep their allowance to teach them a lesson. If you choose to do this, don’t overuse this technique. It may cause resentment in your children.

Allowances and whether to give them is something each family will want to decide on their own. These ten things to know about allowances are by no means complete, but some things you may want to consider when deciding if they are right for your family.

Hosting Thanksgiving dinner each year can be physically and financially draining. To give everyone a chance to enjoy the get together, why not break from tradition. Having a pot-luck thanksgiving dinner can save you money if you’ve been the one doing the lion’s share of the work each year.

Rather than having one family being totally responsible for the meal, it makes sense to ask everyone to chip in – especially if you have many families getting together each year. The hosting family can be responsible for the turkey and the paper goods. A second family can plan to bring another meat, another can be in charge of potato dishes, another noodle dishes; hand off relish trays to another family, desserts to a couple of families, and everyone can bring a drink to share. Oh, and don’t forget dinner rolls! You get the idea; you have each family be responsible for bringing something so one family isn’t supplying everything.

You may think using paper goods is a waste of money, but think about it a minute. If a huge crowd is at your home and you don’t have enough dishes for everyone, that means you’ll either have to borrow, rent, or buy them. A stack of good quality disposable plates are cheap compared to the prospect of buying enough dishes for the whole crew!

Another benefit of using disposables is that clean-up will be much easier. Instead of having a couple miss out on visiting with others because they’re washing all the dishes, they’ll be able to put lids on things, clean up any spills, and then toss the rest. How easy is that?

Having other families chip in on the food also means that one family won’t have to bear the brunt of the cost. Instead of one family spending an entire paycheck for food to feed a whole bunch, the cost can be spread out among many families. In the long run, each family will end up spending less.

Plan your menu well in advance and let each family choose what they’re bringing. If you’re hosting the party, you may want to have some extra, easy-to-fix dishes available just in case one family can’t make it.

When planning your own part of the meal, begin purchasing items you’ll need several weeks before the holiday. This will enable you to buy things a little at a time, use coupons to save the most money, and provide enough time to ensure you have everything. Many grocery stores offer coupons for free turkeys when you spend a certain amount of money in the weeks leading up to Thanksgiving. Planning early means there’s no need for an emergency trip to the store to buy something you forgot.

Having a pot-luck Thanksgiving dinner can save you money, there’s no denying that. However, if you’ve never had one it might be an unusual thought for some. Discuss it early enough for everyone to feel comfortable with it. You may find, after giving it a try, that everyone is glad to be able to help provide something for the meal.

It is so important for your family to know the extent and nature of your finances. Although you may prefer to keep such matters private, your family will struggle in the event of your death or illness when your assets will need to be managed by someone besides you. And frank discussions about money are how children learn about financial management. For a family to function harmoniously and efficiently, and for kids to learn how to manage their own personal finances, everyone needs to be in the know. Here are some reasons to talk about your finances with those closest to you.

1. Break the Silence, Ease the Burden

Is your family struggling financially? In these economic times, the number of families in financial difficulty – if not crisis – is growing. Why discuss it with your immediate family?

Open discussion about the family’s finances eases some of the stress on the main financial provider in the family. And your spouse and children may have ideas and resources you might not have known about or considered. The family may get together and decide to have a yard sale, or the children may be willing to take on neighborhood jobs to help out. Maybe your spouse has an idea for a home-based business or other form of extra income. You don’t have to carry the family’s entire economic situation by yourself. Soliciting the support of your loved ones can take some of the pressure off.

2. Honesty Is Still the Best Policy

Your family will respect your willingness to be honest with them and trust them with financial information. Family members appreciate being included and involved in decisions that affect them, and usually have much to contribute.

3. Bridge the Generation Gap

Do you sometimes wonder what your dad is thinking when he says no to some expenditures? Do you get frustrated with your teen’s inability to understand the importance of saving and avoiding debt? Airing these frustrations and misunderstandings in frank family discussions is an excellent way to bridge the financial gap that exists between generations.

4. Make a Family Budget

Including the whole family in formulating a budget is a good way to get everyone involved and knowledgeable about the family’s financial state. On a practical note, it is essential to get a handle on the actual numbers involved in your family’s finances.

Making a budget forces everyone to work within a limited number of dollars, and can actually ignite creativity. If you can’t just buy it, why not learn to make it? Or come up with an alternative? An example of this is an entertainment budget. If your family is used to spending $100 a week on eating out and entertainment and you have to cut back to $50, let your kids come up with interesting alternatives such as a family board game night or cooking meals together.

Your children will remember what they learn when they come alongside their parents to help with the finances. After all, how your family manages its money affects every family member.

You may have heard the saying “money doesn’t grow on trees.” You may have even told your children the same thing. Here are ten ways you may want to try to teach your kids about money.

When you decide to teach your children about money is something you and your partner will want to discuss. They will obviously learn something about money at school, but you may want them to learn some specific things:

* How to earn money by having a job
* How to save money by setting aside money for larger purchases
* How to budget by limiting how much is spent each month to ensure needs are met prior to purchasing things they want

Don’t be afraid to talk about your family’s finances. Talk about what you do for a job and why you work. Explain to them that you have monthly bills that must be paid. Tell them about how banks are used to hold money and disperse it to pay people.

1. If you don’t currently have a budget, take the opportunity to do that as a family. This allows everyone to understand what money comes in and what goes out each month.

2. Show them your paycheck and how much is taken out for withholdings. Explain what each item is and why it’s important.

3. Let them watch you fill out the deposit ticket. Show them how you can keep some money out as cash and the rest goes into your checking account to be used.

4. Pay your bills with them watching. Explain why you choose to pay bills according to due date and what happens if you’re late in paying them.

5. Tell them how long you have to work to pay for things. If your telephone bill is $50 and you make $10 an hour, it would take you five hours to pay that bill. This may help them understand the value of money a little better.

6. Some families use credit cards. Tell about the potential dangers of using them; that it’s easy to buy things you really can’t afford and that you will end up paying more for those items in the long run due to interest.

7. Consider giving them an allowance so they understand how to earn, how to save, and how to comparison shop to get the best deals. Real life experiences ? whether positive or negative ? may have more of an effect on your child’s learning than what you say.

8. Discuss how having money comes with responsibility. While it would be great to be able spend everything they have, that’s not a good idea. Teach them to save first, be charitable, and then spend money responsibly.

9. Allow your children to make mistakes with their allowance. If they spend everything in one day, it will help them understand the concept of budgeting when they want something later in the week. Now would be a good time to ask them to work extra to get extra money to pay for something.

10. To teach them to budget, have them write down what they “want” and then prioritize the list. Explain how to save up for larger items, like an mp3 player, by setting aside a little bit out of each week’s allowance and still have some to spend each week.

These ten ways to teach your kids about money are by no means all available. Think about your family and its needs. Then choose one of these methods or another that will best meet your goal of teaching your children about money.

When it comes to decorating your home, you may have a definite idea of how you’d like your house to look. You know what furniture you’d love to have, but it can be so expensive. Can online furniture shopping save you money? Here are the pros and cons of looking online to find the furniture you desire.

Before you go looking for new furniture, whether online or offline, it’s important to know what you need. Do you need a piece to fit in a specific spot? Take measurements so you’ll know what size it needs to be.

Another thing you’ll want to know ahead of time is how much money is in your budget. Know how much you have to spend and then stick to that amount. Obviously you want to stay within your budget, but you also don’t want to settle for something that isn’t well made and likely to stand up to use.

Pros for online furniture shopping include:

* Being able to shop from the comfort of your home at any time of the day or night.

* Avoiding pushy salespeople or rude customers.

* Saving on gas because you’re not driving from store to store trying to find the perfect piece of furniture.

* Having a larger variety of styles to choose from. If you don’t find exactly what you want, you can often select fabric with little or no additional cost.

* Being able to comparison shop between styles and even different manufacturers or furniture stores.

* Competing businesses may offer price matching to get you to choose them, so this could save you money.

* Consider the cost of shipping. Some businesses will offer free shipping; choosing one that offers this could well save you over $200.

* Safety when shopping online. Paying with a credit card online is actually safer than paying by check. You’ll have someone else on your side should there be a problem.

It is possible to find going out of business sales or companies that are selling overstock items. This is one way to save a good deal of money, but you’ll want to be careful. Take time to research the business and its rating with the Better Business Bureau. Find out what others think about their customer service.

Cons for shopping for furniture online include:

* Being unable to inspect the quality of the furniture you’re interested in buying. This means you’ll have to trust the supplier to provide an accurate description.

* Being charged more for shipping than the price of the item you’re purchasing.

* Receiving wood laminate furniture rather than the solid wood furniture you ordered. If this is the case, you’ll want to address the problem right away and either get your money back or get a replacement.

* Lack of customer service. Basically, if an online furniture business does not offer customer service after the sale, you probably don’t want to do business with them.

If you consider the pros and cons of buying online, you can see why so many people are doing it. Can online furniture save you money? You bet it can! Of course, with anything you do online, be careful who you give personal information to, especially financial information.

Most people never think they’ll need an offshore savings account, but you may want to know how to open one nonetheless. Who knows, you may become rich and need an offshore account for doing business or to earn higher interest than you can in the United States. Just in case you do want to know, here’s how to open an offshore bank savings account.

Before attempting to open an offshore account of any kind, you’ll need the following documents:

* Passport or another form of acceptable identification. Rarely can you use a driver’s license to open an offshore account.
* Legal address. You can use an electric, water, or other utility bill to verify your legal residence.
* Background documentation such as a copy of your employment contract.

Familiarize yourself with the guidelines set forth by the US Department of Treasury (USDT). You may be limited in which countries to choose from when opening an account, how much you’re legally allowed to maintain in your account, and minimum deposits you’re allowed to make. The Office of Foreign Assets Control (OFAC) at the US Department of Treasury can provide these guidelines to you.

The steps to opening an offshore bank savings account are as follows:

1. Choose one of fifty countries allowed by the USDT. Organizations such as Delta Quest and Maritime International can give you advice about staying in compliance as well as which country will offer the best investment opportunities for your hard-earned money.

2. Choose the bank you want to open the account with. Will you be able to access your account through the internet? How much are the fees to open the account? What are the services they offer to bank customers?

3. Find out what the minimum deposit amount is and what fees you’ll be charged if you fall below that amount.

4. Research to find the bank in your chosen country with the best interest rates.

5. Ask for an application and fill it out including all information to prove residency, identification, and a reference letter from your current bank.

6. Make your deposit, based on their minimum allowable amount or more, and keep in mind that the account could take up to seven days to become active once the deposit is received. The minimum can be as little as $1,000 for countries like Belize and Antigua but as much as $15,000 for countries like Switzerland or Austria.

If the offshore bank you’ve chosen offers a branch in the US, they can help you open your offshore bank savings account. They can also advise you if you need further information. Stateside branches also help you to maintain communication with your offshore bank to make deposits or check on your balance.