How I Became A Saver

Something that has never crossed my mind until recently was how I became a saver. My whole life I have always been more apt to put money in the bank than spend it and recently I think I figured out why I became the saver I am. I traced it back MANY years ago to when I was in 1st grade at an elementary school in Maine…

So, how did I become I saver? I attribute it to the local credit union and my parents. When I had just began elementary school the local credit union would visit our classroom often. They were there to see if any of the students had any money to deposit into their savings accounts. Can you imagine that? 1st graders with savings accounts. Well, I was one of them!

So how exactly did they encourage me to want to save money? They had this great incentive for kids to deposit money! The credit union had a mascot of sorts, Monty Moose, that they created to identify with kids. Whenever I would deposit money I would get one Money Moose dollar for every US Dollar I deposited. My parents could then take me to the credit with my Monty Moose dollars and I could use them to purchase gifts from the Monty Moose drawer! These gifts weren’t anything fancy but everyone knows that as a kid you think little junkie cheap plastic toys are the best thing ever. They were even more awesome because I had saved up my Monty Moose dollars to buy them and felt that I had earned them.

But how did it work? When the credit union representative visited they would leave deposit envelopes for the kids to take home. Whenever I got one the first thing I would do when I got home was beg my mom for money to deposit so I could get more Monty Moose dollars. I didn’t get an allowance or any other money at the time so my mom didn’t mind giving me one or two dollars a week to deposit into my savings. When you turned your deposit in to the banker the next time they visited they would give you your Monty Moose dollars. However, they didn’t keep any gifts with them so you couldn’t turn around and immediately spend your Monty Moose dollars. I had to save mine and wait until my parents would take me in to the credit union.

That is how the bank benefited from the program. They got parents in the door when they brought their kids in to redeem their Monty Moose dollars. After waiting in line, when it was my turn they would take me to a file cabinet and the whole bottom drawer was filled with all sorts of little toys and you could choose whatever you wanted, provided you had saved enough Monty Moose dollars. If this program didn’t exist I don’t know if or when I would have been exposed to saving money and I sincerely doubt I would have been as excited about it as I was in elementary school.

In retrospect, knowing what I know about banks now, I expected there were a ton of fees related to that program. I was able to find their website and the program still exists! The best part is they have no minimum balance, no minimum transaction amounts and I couldn’t find any fees related to the account either. The only stipulation is that you have to be 12 years old or younger. They issue children passbooks to keep track of their savings and even pay dividends, although it is only 0.1%.

Looking back on it my parents were the biggest influence on me becoming a saver. They almost always gave me money to deposit for Monty Moose when I asked for it. If they hadn’t supported the program I can’t say for sure what would have happened, but there is a chance I may not have become a saver.

They also supported me in other ways much later in life. My parents always told me they would pay half for my first car up to a certain dollar amount. I saved most of the money I received from various small business ideas, birthdays and Christmas and when I finally had gotten my license I had saved up for my half of my first car!

Now, after reflection, I can say with a high degree of certainty that the Monty Moose dollars program at my local credit union was the first step that led me to become a saver. Were there other events? Sure, but this was the first.

Do you wish there was a program like this when you were a kid? If you have kids, have you looked for a similar program to get your children excited to save money?

My Tip For How To Save Money On Travel

Today is the last day of the three day Memorial Day weekend for most of us in the United States. Many people are headed home from their three day weekend trips. Vacations and quick weekends away can get expensive fast and I thought it would be a great time to share a tip that can help you to save on your next weekend away from home or full blown vacation!

My tip on how to save money on travel is to avoid eating out while traveling. I know that a lot of people love to eat out when they reach their destination and it is part of the vacation feel. That isn’t what I’m talking about. I’m talking about eating out when you get in the car and drive or get on a flight and fly to your destination. The best part about this tip is the bigger the family the more you save!

If you are driving to your destination stop by the grocery store before you leave for you trip. Instead of spending money on the typical restaurant experience, buy some items you can pack for lunches, dinners and some snacks for in between. Most people just stop somewhere quick in the rush to get to wherever they are going. Your fast food options normally include McDonald’s, Wendy’s and Burger King at most interstate exits and can be quick if appropriately staffed. That isn’t always the case and they aren’t very healthy either. Gas stations are another option but they have very inflated prices and typically only carry snacks and lighter meal items. Packing your food is even faster than fast food or a gas station because you don’t have to stop at all! I always liked to pack peanut butter and jelly sandwiches with Pringles but you can pack deli meat sandwiches in a cooler if you want. For drinks I pick up a 24 pack of water bottles (the only time I buy bottled water) and a 12 pack of soda as well. Again, the larger the family the more you stand to save.

Things can be a bit more complicated in the airport but bringing along food and drink is still manageable. Airport food is very expensive and, unless you like overpriced food, is rarely worth it. You can easily pack some food in your carry on bag but drinks are a bit harder because of those pesky security guards. There is a way to get around it and what I do is buy a 1.25 liter bottle of Coke Zero (my soft drink of choice) a week or so in advance. When I am done drinking it I keep the bottle. You can take empty bottles through security and the fill it up with the water fountain on the other side. Drinks at the airport cost at least double what they are anywhere else so I always bring an empty bottle.

Like I said before, once you reach your destination you’re free to eat out if it is part of the vacation plan. I like eating at beachfront restaurants when I’m going to beach. I try to stay away from the major chains because I can go to them at home and it is the same exact experience. Vacations should be about experiences and memories. The car or plane ride is rarely one of them so next time you head out save some money by stopping by the grocery store before you go!

Do you have a travel tip you’d like to share? What do you think about this idea? Let me know if you plan on trying it out!

If you have a travel tip of your own, head on over to Budgets Are Sexy to enter his $1,000 giveaway, in partnership with HotelClub!

Christmas is Seven Months Away – Have You Started Saving?

When you woke up this morning I sincerely doubt you realized that Christmas is seven months away. Well it is! I’m not a huge Christmas person but I do like to make sure that I can give meaningful gifts for my close friends and family. I normally buy for eight to ten people in any given year and normally spend anywhere from $20 to $50 on each person. If I had kids I bet I’d be spending a lot more.

In order to get meaningful gifts I try to buy as many gifts ahead of time as possible. However, like a lot of people I know, I am a procrastinator and normally end up buying most of my gifts in December. This can mean spending a lot of money in a short time frame and I don’t know about you but my budget could easily get blown on Christmas.

My monthly spending allowance is much less than what I plan to spend on gifts so how do I get the money to buy my gifts at the last minute in December? I’m going to save in advance! For simplicity’s sake let’s pretend that I said I was planning on spending $700 for Christmas this year. In order to save that much money I would need to save $100 each month until Christmas. Most people would agree that sounds much more reasonable than coming up with $700 out of nowhere in December. I get two paychecks a month so that makes it even more manageable at only $50 a paycheck.

Talking about saving for Christmas is easy, but actually doing it is another story. Here are a couple ways you can effortlessly save for Christmas without having to think about it after you have it set up.

The first requires you to set up a new savings account. If you have a bank like ING Direct this process is as simple as a few clicks and about 2 minutes. If you have a more traditional bank or credit union stop by a local branch and ask to have a new account set up. Next, set up a direct deposit for the desired amount to automatically get part of your paycheck deposited into your Christmas account. Most employers should allow this. I can set mine up myself where I work but you may have to talk to your Human Resources department and fill out a simple form.

Another method would be to set up an automatic transfer out of your checking account and into your savings account the day after your paychecks get deposited. At ING Direct this is called an Automatic Savings Plan. All you have to do is set it up and forget it until Christmas and then you’ll have your desired amount ready for buying gifts!

If that all sounds like too much work for you I can understand that. This method is even easier, but a little less secure. After your paycheck is deposited withdraw your desired amount from your checking account and put the Christmas money in a secret place that you know you won’t touch. You can hide it in a jar in your kitchen or in a safe hidden in a closet. The location is up to you but make sure it is somewhere you won’t be tempted to spend it, somewhere you will remember, and somewhere not out in the open so it doesn’t get “borrowed from” or stolen.

Now that you are fully aware Christmas is only seven months away hopefully you have a great idea how to pay for it this year. This should help reduce any Christmas stress and more importantly Christmas debt.

Have you ever saved in advance for Christmas? How did it work out? Any other tips you’d like to share?

How To Win Scholarships

Even before I graduated from high school I knew I need to win scholarships to help pay for college. Scholarships are free money for the most part but you have to spend some time to finding the scholarships and filling out the applications. In the end, it was worth it for me because over the course of my 4 years in college I probably received about $20,000 in scholarship money!

There are many different types of scholarships. There are need-based scholarships (obviously based on financial need), academic scholarships (based on grades), and special qualification scholarships (such as organizations, gender, ethnic background, etc)  just to name a few.

There are also a ton of places to check for scholarships. FastWeb is a scholarship search engine I used while I was attending college. You can also find scholarships through high school guidance counselors and college financial aid departments. Another great place to look is the student or parent’s current employer and the potential future employers of the student. This is not an exhaustive list so check anywhere you can think may offer a scholarship.

How To Win A Scholarship You Want To Apply For

The first step in winning a scholarship is applying for it. If you don’t apply you have a 99.99% chance of not winning. The .01% are the scholarships that you must be nominated for and can’t apply for. Once you start looking you will realize there are thousands and thousands of scholarships out there, but chances are you won’t qualify for a lot of them. Don’t get discouraged. Find the scholarships you can qualify for and apply for those.

Once you find scholarships you qualify for here are some tips to increase your chances of winning:

  • The more effort it takes to apply for a scholarship the fewer number of applications the scholarship sponsor will likely get. This increases your chances of winning so don’t write off any scholarship application just because it requires an essay.
  • Try to find the applications with the smallest potential pool of applicants possible. Do you have a unique heritage? There might be a scholarship for that. Are one of your parents in the military? Apply for the local commissary scholarships! Even better, submit your scholarship to a commissary in the area with as small a population as possible to increase your odds of winning. Did military parent work on aircraft carriers? Mine did and believe it or not there are scholarships for that too!
  • While applying for a scholarship keep your audience in mind. Write to who will be reviewing the scholarship entries and tailor your experiences/essay/qualifications to get the reviewer to want to pick you. If you are writing for a military based scholarship don’t offend the military.
  • Do not lie! If you lied you will likely get your scholarship application tossed out or if you were awarded the scholarship it could be revoked.
  • After you apply, follow up with the scholarship organization to ensure they received your submission if at all possible. This shows your continued interest in the scholarship organization.

Make sure to keep track of all of the scholarships you apply to. Whenever you hear back, update the status of each individual scholarship on your list. This will allow you to be able to analyze what types of scholarships you seem to be winning. In the future, make sure you apply to more of the types of scholarships you are winning.

I used all of these tips when I applied for scholarships. The ones I normally ended up winning were academic based or were based on my parents’ previous or current employment. I have to admit though, for every 1 scholarship I won I easily got rejected by 20 others. Keep your chin up and keep applying! Scholarship money was some of the easiest money I have made in my life and I am very thankful to all those who helped me complete my education.

Do you have any other tips for applying for and winning scholarships? Did you get any scholarships when you were in college?

Business Mileage Reimbursement – Do You Really Make Money?

In 2012 the IRS standard business mileage reimbursement rate is 55.5 cents per mile. (the 2013 business mileage reimbursement rate has been announced since this post went live.) If you drive a lot of business miles it can be a pretty hefty addition to your standard income. At one point I was driving 720 miles a week for business which ended up being $202.58 in mileage reimbursement a week! I did this for about 12 weeks for a total of roughly $2,400.

Whenever I’ve talked to anyone who receives mileage checks they all tell me how much money they “make” by driving for business miles. The mileage rate more than covers the cost of the gas they use! I want to challenge this assumption. The IRS doesn’t aim for people to make money for getting mileage reimbursement so what costs are assumed in that 55.5 cents per mile? According to the IRS (Rev Proc 2010-51), “Items such as depreciation [decrease in value] or lease payments, maintenance and repairs, tires, gasoline (including all taxes thereon), oil, insurance, and license and registration fees” are the types of costs covered by this mileage rate. It turns out that 55.5 cents per mile isn’t just gas money after all.

So how did I use my mileage reimbursement? I decided I would add my actual business gas usage to my gas budget and then figure out what to do with the rest. I would take the actual miles on my expense report divided by my actual miles per gallon (MPG) to get the number of gallons of gas I used for business purposes. I calculated the gas mileage of my car each time I filled up the tank. To do this:

  1. Reset your odometer when you first fill up your tank. In order for this to work you have to completely fill your tank.
  2. Drive like normal and don’t reset your odometer.
  3. The next time you go to the gas station fully fill you gas tank again. Check your odometer and divided the number of miles you drove by the number of gallons of gas you just put in your tank to get your miles per gallon (MPG).
  4. You can now reset your odometer again for your next tank of gas.

Turns out I averaged 40 MPG in my Honda Civic as these were mostly highway miles. Next I took the 720 miles I drove per week and divided by my MPG (40) to find out I used 18 gallons of gas per week for business purposes. Multiply that times an average gas price to get your additional business gas cost. For simplicity I assumed gas would be 3.50 a gallon for a total of $63 dollars per week in gasoline costs.

Running the numbers means that after spending $63 in gas I still had $140 a week left over! Great deal… until you consider the other costs the IRS listed. This money was supposed to cover the decrease in value and lifespan of my car and help me pay for any maintenance or repairs, including oil changes, due to the extra mileage. It is also supposed to cover my insurance costs, license and registration fees and any personal property taxes I would have to pay. That $140 had a long way to go.

So what should you do with your “extra” mileage money that exceeds the cost of your gas? Hopefully you are already paying your insurance, license and registration fees and property taxes. Driving a few extra miles for business shouldn’t cause those items to increase in cost so I didn’t allocate any extra money to those items. Extra maintenance and oil changes will probably increase with mileage so putting some money aside for those items would be a good idea. The big money item in the list is the decrease in value and lifespan of your car. I suggest you put the rest of the money in a new car fund to replace your car and the value it lost from your business miles when it eventually gets sold or scrapped if you drive it into the ground.

Now if I wasn’t paying attention this money would have gone into my checking account along with my paychecks and I could have very easily spent it along with my normal money. If I wasn’t careful I could have adjusted my lifestyle up to the additional income since the money was coming in so regularly. Instead I saved that extra $140 a week. I already had enough money put away for car maintenance so I put the whole $140 into my new car fund for when I eventually need a newer car. After 12 weeks my new car fund had an additional $1,680 in my new car fund. Not bad for being a disciplined saver.

You may be able to take a mileage reimbursement deduction if you own your own business but you can’t deduct mileage paid to you by someone else.

What will you be doing with your mileage reimbursement money in the future now that you know all of the costs it is supposed to cover? Let me know in the comments below!