photo credit: wwarby

Have you sat down with your children and discussed the value of saving money yet? I posed the question to my twitter followers and was fascinated by some of the responses I received. I had figured that some people would have the money talk when the child was old enough to start doing chores around the house or maybe when they started asking for expensive clothes. I don’t recall the exact age, but I was probably around 7 or 8 when my parents discussed the importance of saving money for a rainy day. At the age of 7 I really didn’t need an emergency account, so all the money I earned went towards savings.

I received several comments from twitter friends that started teaching children about money management during the high school years. A couple had even started as early as 2 years old when they took the children shopping and discussed how much items cost at the store. My favorite comment came from a mother who had opened a bank account for her daughter when she was only 3 months old. Any cash gifts given at birthdays or holidays was going to go straight towards the child’s bank account.

It can be tough to teach your children about money when your child is begging for candy or a toy at the store. Taking time when you are at the dinner table or getting ready for bed to discuss how they can help them understand where money comes from. At 5 my daughter understands the concept that money is earned and that we don’t just visit the store and buy anything we want. Our toddler though doesn’t have any concept of money yet and thinks he can have anything. The beauty of diversion for a 3 year old is priceless and I will miss using some of my stealthy tactics with him in the store.

Maybe you’ve waited until your children are a little older and have the ability to take more responsibility with money. You might have conversations about working for extra money or doing chores around the house. Have you let your children make financial mistakes so they can learn from them? If your child wanted to buy $100 jeans, but it would deplete savings, would you allow it to happen?

Discussing financial situations with your children can also impact the way they look at money. Do you and your spouse communicate openly about your finances with your kids? If you are shopping for a car, do you set expectations around your budget?

What are you doing to teach your kids about saving money? Do you take time to discuss how you earn your money and what expenses you have to pay each month?

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photo credit: MNgilen

Sometimes a passive income idea is looking at you and asking to make you some extra money. In this case we’ll look at taking ordinary items at your local store and turning them into cash for your family. You might look at your next shopping trip a little differently and you probably will be smiling the entire time you’re out hunting for passive income. Just to be clear, this will require your time to buy the items and also some up front cash. If you don’t have a savings account or emergency account established, I wouldn’t suggest you try this passive income idea. You can start out small until you have amassed a nice little savings account to use for this new source of extra income.

So what is it? It’s not as glamorous as investing in stocks for passive income and it doesn’t require you to spend hours writing an ebook. You will visit the same stores you normally visit during the week, but now you’ll add some items to your shopping list. The Sunday paper or your weekly ads from major retailers will provide all the necessary information you need for this passive income idea. This weekend I found a name brand flash drive that retailed for $19.99 that had a manufacturer rebate check for $19.99. Total cost for the flash drive was $1.70 to cover the 8.5% sales tax here in California. I then fill out the manufacturer rebate to receive my check in the mail for $19.99. At this point the flash drive has only cost $1.70 and I can list the item on ebay. Name brand items sell wonderfully on ebay and look for tech gadgets and software. I have been able to pickup copies of anti virus software and resell it on ebay for a nice $30 profit. Again, make sure you have funds to cover the time it takes to receive the manufacturer rebate check. You don’t want to be paying 19.99% interest on a credit card balance while you are waiting for your item to sell on ebay.

Look for ads in your local newspaper and circle items that have rebate checks from the manufacturer. Best Buy, Radio Shack, Rite Aid, and Walgreens all offer rebate checks. This weekend I even found a blood pressure kit that was free after a rebate at Rite Aid. This could be a great source of extra income to cover some of your household groceries or even a meal out once a week.

You will need to be organized and timely with your rebate check submissions. Don’t forget to read all of the fine print and what is needed for the rebate process. Do you need the UPC code and a copy of your sales receipt for the rebate? Some retailers offer electronic checks so that the process is much more automated. You might want to start with a Walgreeens or Rite Aid and research what they offer first.

How much can you realistically make doing this? We have an electronics retailer called Fry’s that has numerous manufacturer rebate offers during the week. The retail value for this weekend at Fry’s would equal between $100-$200. Rebates were offered on hard drives, anti virus software, books, and flash drives. See if you can find some passive income ideas in your newspaper.

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photo credit: HarshLight

Countless hours were spent as a kid playing my favorite board game, collecting rent on apartments and hotels while negotiating for Park Place and Boardwalk. What type of Monopoly player are you? Do you play with the properties you land on or do you like to barter and make deals? Playing Monopoly might seem like a childish game, but it definitely has some sound money managing principles that teaches you to stay within a budget and not stretch yourself thin. In Monopoly if you can’t pay your rent, you must declare bankruptcy. In the end the bank forecloses on your property and the other players can pay off the liens.

The game of Monopoly may have been the first time that you learned some basics about budgeting your money. The rules are easy to follow, but how you play the game is up to you. You can simply roll the dice and pay rent or you can build up a vast wealth of apartments and hotels.

Even though Monopoly is just a game, what are some money management tips we can learn from it?

1. Cash is king. The bank in Monopoly only accepts cash. Building up passive income through property rentals can help you achieve your goal of building apartments or hotels. Today, you are payed by your employer in cash and it’s up to you on whether you invest the money or just pay your landlord rent.

2. Negotiate. You won’t get anything unless you ask. That goes for a raise from your boss or Board Walk that your friend currently owns. Will they sell it for $300 or $1,000? It probably depends on how they are doing in the game at the time. If you don’t attempt to negotiate and make a deal, you might not win the game. If the asking price is $2,000 for your future wife’s diamond ring, will you ask to negotiate? Did you?

3. Pay your bills on time. It’s funny how Monopoly imitates life. When you land on luxury tax, you must pay it or start selling off properties. The game comes to a stop until you take action. You don’t have a chance to pay the minimum on a credit card and move money towards another debt.

4. Being a landlord can be fun. Owning hotels on Park Place or Boardwalk can be very lucrative when a fellow player stops on your property. Owning property can create a passive income stream that can pay for your retirement or children’s college. In real life you obviously want to charge a market rate and not something expensive like Boardwalk that has the potential to put your tenant into bankruptcy.

5. An emergency fund is always needed. One roll of the dice and you could wind up in jail or owing a huge luxury tax. If you’ve overextended yourself and purchased property without an adequate emergency fund, you’ll wind up having to sell something. Having an emergency cash fund or rainy day fund can help you navigate through tough times. Having an emergency account in real life can help you fix a flat tire or purchase a new washing machine.

Do you have a favorite game you played that taught you money management skill?

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photo credit: Rob Young

GE is one of my favorite investments over the last decade and made the decision to slash it’s dividend this week to cut costs. The move by GE will free up over 9 billion dollars and cut’s the dividend to 10 cents a share. GE is a core holding in many mutual funds and I probably indirectly own a few shares in my Vanguard 500 fund. Is this the time to snatch-up shares of a beaten down titan like GE, or do you focus on building up your savings account? Maybe you are doing both. Have you started a 529 account for your children? This could be a great opportunity to invest for college with today’s stock discounts.

Some of my favorite reads from personal finance blogs that challenged me to save more money:

Greener Pastures: Personal Finance wrote The Dreaded Bi-Weekly Paycheck and challenged Lisa to utilize ING and help budget her expenses and savings.

Bargaineering wrote Ever Go Dumpster Diving? I worked for an investment bank that would throw out new items left over from conferences. I salvaged leather bags, notebooks, and tons of pens and markers.

The Thrifty Life wrote Why It Pays To Speak Up.

Budgets are Sexy wrote How Frugal is too Frugal? (when you don’t have a life anymore) I would consider frugal as utilizing your resources and income wisely and cheap being the person who doesn’t consider the entire family unit when making budget decisions.

Fiscal Fizzle wrote The Lifetime Cost of Owning a Dog and breaks down all the fees associated with owning pets.

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photo credit: Zack Sheppard

A notice came in the mail this week from our water district for a proposed hearing to address the current water shortage brought on by the California drought. Rates for the baseline water usage will not change. However, a proposed penalty increase of 10 times the current fee is being suggested to curb water usage. My first thought was what? Then I thought about it and the fee should help prevent people from leaving sprinklers on over night. The district has proposed no current changes to the current baseline fee amount. But, what is going to be the new baseline gallon limit per household? This number will no doubt change due to the drought restrictions. The new drought penalty would raise the usage fee for 100 gallons from $0.352 to $3.52. That’s a 10 fold increase from $35.20 to $352.00.

What are some home conservation steps to take now to prepare for the new drought guidelines?

1. Install new low flow toilets. Prices range from $100-$400+ Our second and primary bathroom uses 6 gallons per flush compared to the new 1.4 gallon toilets. If we use the toilet 10 times a day for our family, we could save 1,380 gallons a week.

2. Hand wash dishes. I don’t know how many gallons of water our dish washer uses, but I would guess washing by hand is more efficient. Having a dishwasher is a luxury and we could go without if needed.

3. Install low flow shower heads. A low flow shower head would pay for itself rather quickly and probably also want me to take a shorter shower. Last time we stayed at a hotel, I wanted to call the front desk and complain about the noise and poor water quality from the shower. I then read the card in the bathroom that the hotel was under a drought and they asked guests to limit showers.

4. Water lawn in the morning. Our current watering schedule for the lawn is set to 6am and runs for 15 minutes, 3 times a week. In the summer months this sometimes is moved to 4 days a week.

5. Install artificial grass. Costco carried an artificial lawn that looked decent, but I’m still skeptical how a dog would use it. It looks beautiful in the picture, but I would need to see how functional it really is with pets. The total cost after installation at Costco was still a few thousand dollars. I think it’s cheaper to water our current lawn sparingly.

6. Let the lawn die and replace with ground cover. A cheap alternative would be to let the back lawn die and replace the dead lawn with a cheap ground cover. Many tree services are happy to provide free wood chips that make a wonderful ground cover.

7. Capture rain water from downspout. We could purchase rain barrels or install a reservoir in our backyard to capture the rain runoff. The rain barrels could then be used to water plants in the spring and summer.

8. Stop washing cars. I think it’s cheaper to wash a car at home versus the local gas station. The cheapest gas station charges $5.00 for a car wash and we can probably was a car for under a dollar. If we have water restrictions I would imagine that a car wash will start charging more and it might make sense to just drive with a dirty car.

9. Cover your pool. If you own a pool and have to fill it regularly throughout the summer, it might make sense to buy a solar cover to help with water evaporation. The cost of the cover could pay for itself quickly if your water district fines jump.

10. Fix leaks and change behavior. A leaky faucet will impact your water bill, but so will your water behavior. Do you leave a faucet running while brushing your teeth? Do you leave the hose running while filling your dogs water bowl? Do you wait to enter the shower until the water is hot? Just making small changes during a drought, can help prevent sticker shock on your next water bill.

Have you been through a water drought in your area? What measures did you need to take to decrease your water usage?

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