photo credit: turtlemom4bacon

We only have a few days left in 2008 and I have been busy collecting some items around the house that we can donate to Goodwill and the Salvation Army. Kids clothes, sports equipment, books, and some unused toys will be given to charity this year. Does your family donate unused items and take advantage of the tax write off for 2008? Some other ideas to help those less fortunate or struggling to make ends meet this holiday season can take a little more creativity. If cash is tight in your household, as it is for many this holiday season, what else can you do? If you are like me, you might have a few thousand mileage points from an airline that you are not using. Did you know that you can donate those miles to charity? Yes, many families could benefit from donating air miles as they can be used for Make a Wish Foundation or The Red Cross and hundreds of other charities. If you have unused United Airlines miles, Delta miles, or Southwest miles, you could donate and help families across the country.

Maybe you were one of the select few who had positive returns on your stocks in 2008. You can donate stock and pass the gains to a charity of your choice. You get the tax write off and the charity gets the stock.

Do you have any creative ideas for donations in 2008? Does your family, especially your children get involved in donating used toys or clothing?

Some helpful links for more info on tax write offs and donations for 2008
IRS.gov
Salvation Army
Goodwill

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photo credit: mrpattersonsir

The 700 Billion bailout plan is not enough to help struggling American’s save homes currently facing foreclosure notices. In some instances a couple may be living paycheck to paycheck and one minor hiccup can derail the family finances. A hospitalization, a reduction in work hours, or increased expenses could mean the difference between shelter and homelessness. Many large institutions that are labeled “too big to fail” have the U.S. government to help when investments go bad, who can you turn to when you hit a rough spot in your family finances?

Your friends are hurting and feeling financial devastated right now. You want to help, but don’t know how. Should you offer to help them in some way as they are having mortgage paying issues? Solving a families money problems with more money may not be the best solution. How can you help friends who are facing a financial nightmare?
Here are free creative ideas to help friends facing foreclosure or bankruptcy:

1. Date night. Offer to watch your friends children while they have a date night. I’m not suggesting you promote going out to Ruth’s Chris steak house and a concert. You can offer to watch their kids at your house and let them have a night to catch-up. No strings attached and you shouldn’t probably assume they will talk about money issues. It’s just a good opportunity to have them talk again.

2. Recommend financial counseling. If your friend was ill or needed surgery, I’m sure you would recommend a good doctor that they could contact. Since a home foreclosure or bankruptcy is a serious financial emergency, see if they would be willing to talk with a professional. Many local cities and counties offer debt counseling services. Also, if you attend a church you can see if your pastor has access to Good Sense Ministry, Crown Financial Ministries and Dave Ramsey church programs. These courses are free at many churches and can offer ideas to help create a budget and track and cut expenses. I have taken the Good Sense Ministry coursework and while much of the information is very easy to understand, you can implement changes overnight. Tracking your expenses daily will open your eyes to where your money is going. The most important aspect of any of these seminars is open communication between spouses and a willingness to try something new with your finances.

3. Listen to your friend. Talk is cheap and free advice is still free. Listening to a friend who is going through a financial disaster like a foreclosure or bankruptcy can be priceless. You might not have the answers, but offering to listen to your friend in need could be the most important thing they need right now. The hard part is going to be listening, as you probably be tempted to give advice.

4. Cook a meal for them. If money is tight for your family as well, you could offer to fix them a spaghetti dinner or have them over to your house for a combined family meal. This will allow you to talk more and show your support through the financial crisis. A healing meal can be a wonderful blessing to your friends.

5. Recommend a professional. Do you know how to work with your lender and get months added to your mortgage? Do you know what letters to write your lender if you want to extend your foreclosure process? A great, not good, but great realtor or mortgage broker could assist your friend with this information. They have the industry knowledge and could keep your friends in the current home for a few more months. This could also allow them to negotiate the loan terms and keep the home too.

6. Miranda at Yielding Wealth suggested a coupon competition to spark a healthy competition with your friend to try and save as much money as possible. Could you save over $100 a month on your grocery bill? You could also swap coupons or trade coupons with your friends if you don’t purchase a particular item or brand.

7. Buy heating oil in bulk with your neighbors and negotiate a lower price. If you need to purchase heating oil this winter Greener Pastures: Personal Finance suggests helping neighbors save money by buying oil together.

8. Laurel Plum suggests helping friends declutter and sell unwanted items on ebay or craigslist. Laurel has a lot of great info on here website as she specializes in helping people organize and declutter.

9. FruGal emphasizes listening to your friend facing a bankruptcy or foreclosure and also offering to drive kids to school. A carpool to school or even offering to pick up your friends children from soccer practice might give them a little break.

10. FFB recommends calling up a creditor or mortgage company and asking to negotiate the terms of your loan. Can’t hurt when facing a bankruptcy or foreclosure. I would be surprised if they said “no” flat out and wouldn’t be interested in working with the person. If the mortgage lender could add a month or two to the loan, that could help a friend save a home.

11. Jennifer has a wonderful idea to offer and help your friends pets. Pets can be impacted by a foreclosure and might have to be surrendered to a local animal shelter or adoption agency. If you have the room or yard, you might want to consider offering to house a friends pet.

12. Susan suggests watching a friend for signs of stress and depression. Offering to talk, listen, and finding medical help if necessary. She also shares how a prepaid phone card could help a friend in need. This could allow someone to stay connected and negotiate with lenders, creditors, and even a realtor.

13. Sean suggests the Drugstore Game found at Chief Family Officer that can help reduce expenses for pennies on the dollar. Great tip!

Do you have a creative free idea that could help your friends through a financial disaster? Leave a comment and I’ll add it to the list above.

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photo credit: gwdexter
What would you say if you could make $500 in extra income and no work was required? You would want to know what the catch was, right? I know three couples that are facing this very same question and they are measuring the risks and rewards as it will impact the entire family and the current living arrangements. I’m not talking about asking your boss for a raise or even going out and finding an alternative income source. An extra bedroom is all that is needed for the potential $500 in extra passive income. The rental income would be passive as you have already invested in the building. Would you be willing to have a roommate live in your house, condo, or townhouse for an extra $500? You could possibly make more if you had more than 1 bedroom to rent.

How would you spend an extra $500 a month?

1. Mortgage payment. This should be your primary goals. Don’t consider the extra $500 as spending money but as a resource to pay your mortgage. It will also be tempting to spend an additional $500 a month and you might want to setup an auto deduction program from your checking account.

2. Payoff credit card debt. If you are able to make your mortgage payment but are still late or just paying your minimum due, the extra $500 will apply towards CC debt. Maybe your teaser 0% rate from Chase or American Express is set to expire and you don’t know where you are going to get the money to make your minimum payment. Many wonderful articles have been written about the debt snowball effect by Dave Ramsey and basically puts the emphasis on paying off your smallest debt first. The minimum payments will still be paid towards your other debt, but Dave Ramsey suggests paying all additional funds to your smallest debt first. Then once that debt is paid, do the same technique for your second smallest bill. Repeat process until all debts are repaid.

3. Home equity line of credit (HELOC). Maybe you recently renovated your home or added an extra bedroom and have amassed a balance on your home equity line of credit. The extra $500 from a roommate could allow you to repay this debt to the bank more quickly. Maybe you have tapped out your equity, but still have more building plans you would like to accomplish. Having a roommate could help repay the loan and allow you to build your dream home. Find a roommate with carpenter skills and you might save even more money.

4. Private school. Maybe you are not happy with the public schools in your neighborhood or you want to send your children to a private school. In our neighborhood private schools cost $450-$750 a month. Having a roommate could pay for your childrens education.

5. College. Do you have a 529 college savings plan for your children? Would you consider a roommate as an option to build $500 a month towards college for you kids?

Maybe you have a roommate now and are benefiting from the added income. I would be interested to hear how you have utilized the added income. If you are facing financial stress, would you consider having a roommate to save your home from foreclosure?

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Are you wondering “How to Pay Off Credit Cards?” We are all looking for ways to make more money these days, but sometimes cutting debt can be more effective to our financial health. When my wife and I were first married we had accumulated credit card debt and were making the minimum monthly payments. Each month we payed the minimum, but were frustrated with the high interest rates and feelings of hopelessness. Feeling hopeless is the worst part of debt, and can lead to unhealthy spending habits. You might start thinking that you will never pay off your credit cards, so why not keep spending? When we carried a balance on our credit cards, I often thought that we would never be able to get out of debt and felt buyers remorse for purchasing the new computer.

If you are asking “How To Pay Off Credit Cards?”, here are some great ways to take action over your finances and stop feeling hopeless. These ideas will only work if you take action, and apply the money to your credit card payments. Don’t spend the new money, use it to pay off your debt.

1. Stop using credit cards. Just stop! Don’t put one more purchase on your cards. Start using cash or your debit card.

2. In case you read over #1 quickly. You can still spend money, just don’t use credit cards. If you are tempted, ask a friend to hold your credit card for you. My favorite idea that I read once, put your credit card in a bowl of water and freeze it. Makes it tougher the next time you try and take the card to the store.

3. Aha! Almost forgot the online purchases, you don’t need a card for those. This one will take some action. If you struggle with buying things on the internet, call your credit card company and ask to put a hold for new spending. Don’t close it, just place a temporary hold until you payoff your credit cards. I know your thinking right now “What If I’m in an emergency and need my credit card?” Well, chances are that emergency won’t ever happen. If it does, you can access your Emergency Account, or call your credit card company and ask to release the hold.

4. Sell something. Utilize Craigslist, ebay, or have a garage sale. You probably have items laying around your apartment or house that you no longer use. Why let those assets sit around collecting dust? Turn those dusty assets into cash and pay off your credit cards. Here’s a good barometer to help determine a dusty asset. Have you used the item in the last 3 years? If not, sell it!

Here are some items that could be your “dusty assets”

-baby clothes
-toys
-tools (Do you own any duplicate tools?)
-sports equipment (tennis rackets, tennis balls) What? Checkout ebay and you could find this to be a good source of passive income too! Just type tennis balls on ebay. You will be amazed. I have shipped them as far as Alaska. A lady used them for her sled dogs. I’m serious!
-books (college textbooks)
-electronics (old computer, second or third tv, dvd’s, video games)
-collectibles (Disney and Star Wars are always hot on ebay)

Do you have a hobby you started but have neglected for the last 3 years? I had a dream of scuba diving when I was in high school and college. 15 years later and three moves, I still had the equipment. It was clearly time to sell the weight belt, flippers, mask, and wetsuit. Sell your “dusty assets” and pay off those credit cards.

5. Call your credit card company and ask them to lower your rate. You might be thinking, “Yeah Right?” Seriously, it really can happen. I have called my card company and they did it. You can tell them that you are looking at consolidating debt and might move to another company.

6. Transfer your debt to a new credit card. This can be a good option if you are organized and have good credit. This might be a good time to try that 0% interest for 6 months ad you see in the mail or online. But be careful! You really need to be organized and diligent with your payments. Read all of the disclosure statements and verify when payments are due. If you have several late fees and have poor credit, you might not be able to open another credit card. You may only want to do this if you have the ability to receive a lower rate. Don’t try this if you are just trying to avoid paying your debts.

7. Cancel a service. Not your trash or car insurance. Cancel something you can do without for 3-12 months. Do you really need all 500 premium cable channels? Probably not. Take that extra savings and apply it to your credit card debt.

-Downgrade your cellphone service or try a prepaid cell phone.
-Try a free internet service for 3 months
-Stop eating out. Make a homemade pizza instead. Start making your own coffee, rather than going to Starbucks.
-Stop renting movies. Go to your local library and borrow a dvd.

8. Ask your family for a loan. This can be hard to do, but it could save you a ton of money. If your parents or grandparents have money in a money market or cd and are willing to make a loan, you could make them an offer. You need to treat this transaction seriously and not skip payments or be late. If your current credit card rate is 12% or higher, you could ask your family to create new terms for your loan. Imagine how quickly you could pay off your credit cards with a 7% or lower loan. Again, this is family, don’t miss a payment and ruin a good thing.

How to pay off credit cards? Tired of feeling hopeless and frustrated with your credit card debt? Take some action! You will see an immediate reduction on your credit card debt if you sell some “dusty assets” and ask your credit card company to lower your rate. Next, try downsizing some of your monthly expenditures like eating out, cable, internet, and movie rentals. Finally, you can look to consolidate debt, transfer to a lower credit card company, or ask your family for a loan. Remember to treat that family loan as a real loan, and don’t be delinquent. If you have some debt reduction strategies that have worked for you, please let me know.

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If you could find a way to pay $1.99 for gas, would you tell others about it? If you knew that you could buy your favorite Starbuck’s drink for half the price, would you get excited? What about finding $50 on the street? Would that put a smile on your face the rest of the day? I love helping friends get creative with finances and find other ways to tackle problems such as gas prices. Many of my friends wish that they had my Toyota Prius, as gas prices here in the Bay Area are touching $4.55 a gallon. They actually don’t need a Prius, they can keep the same car or SUV that they currently own. How? Change the way they look at the cost of an item. Sure gas is $4.55, but the Starbuck’s coffee they drink cost $4.05 or a Pespsi from 7-11 cost $1.50. Get creative and look at debt elimination as a source of passive income. How can it be passive? You will continue to pay yourself each day, week, month, and forever. Each time you make a smart purchase or cut out fat, you will create passive income for your family.

Here’s a quick idea I discussed with a friend this weekend. He told me he can’t live without his cell phone for work and needs to come up with some extra money for gas and food. Well, what about his home phone? Yeah, but that’s only $30-40 a month he says. Well, since he needs gas and food, he should consider canceling the home phone. Also, think of that home phone as a passive investment that would make you $480 a month? If you could live with a cell phone as your primary phone, it would be similar to earning $480 a year in passive income.

Want another. Same friend has cable. I know, we all love it and have to have it. He didn’t think the home phone would save him enough money. His phone, internet, and tv is over $100 a month. What about cable and internet? He could use free internet. What? Come on, those darn banner ads? He doesn’t use the internet 24/7 and could also use his cell phone to check email. Cable? That’s going to be a hard one. He could buy rabbit ears and watch standard tv, or go without it. He needs gas and food for his family, saving or earning $100 extra a month is worth it. That’s $1,200 a year.

So many times, we think of having to earn more money. Sometimes we just need to cut back and think smarter about our expenses. Do we have to have a home phone or cable tv? What about just cutting out premium channels or long distance from your home phone? If you needed to earn another $50-100 a month to pay for gas and food, what would you cut out of your budget? If you wanted to create another passive investment stream for your family, what would you suggest you cut from your expenses? Would you consider these ideas a passive income stream or debt elimination strategy?

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