Guest Post by Christian Gordun

The holiday hangover is not over yet – most of us still have a stack of holiday shopping bills piled up on our coffee tables or desks to deal with. In a recent post, we addressed one way people can rebound from the holidays and start anew this year, but just like any hangover, the ultimate cure involves more than just one simple trick.

Let’s take a look at some reasons why shoppers often end up with a massive debt headache and arm you with some simple but effective money-saving tips that will help you stick to your budget and avoid the infamous holiday shopping hangover.

The Cause

During the holiday season, shoppers are often rushed to check off all the items on their list and will forgo some of the easiest ways to save money such as checking out competitive prices or using coupons. As they get caught up in the holiday buying frenzy, many are forced to make impulsive purchases while last-minute shopping at stores, instead of researching different options online. The holiday rush causes consumers to forget how much they are spending and rack up massive credit card debt, which has shoppers making New Year’s spending resolutions they know they’ll never keep.

The Cure

Instead of making all those impossible resolutions, we’re going to let you all in on a little secret that will leave you debt-free after every holiday shopping season: you never have to pay full price for anything again! As a result of the recession, more retailers than ever are giving you the chance to save money via online coupon codes and deals. It’s simple, just follow these rules:

1. Go Online: Stop printing and start clicking! If you come across an invalid coupon, it’s easier to find a replacement when you’re shopping online rather than when you’re at a store.
2. Think Outside the Grocery Cart: Step away from the idea that coupons should only be used to buy groceries. There are coupon codes for almost every item that you can buy online – from magazine subscriptions to electronics and flowers.
3. Time it Right: The best online deals are offered three times a month: the very beginning, the very middle and the very end. Online stores post fresh coupons the 1st-3rd of the month, the 14-16th, and the 28th through the end of the month.
4. Avoid Shared Coupons: Avoid using sites that let users post coupons because the likelihood they will be faulty or expired is much higher. Instead use sites which ONLY post coupons that are approved by the retailer.

Coupon Craze is an online coupon code and deal site that will help you follow these coupon commandments. Like we said last time, if you’re hungover, you take aspirin, have a greasy breakfast, get hydrated and sometimes swear that you’ll never do that again! Treat a financial hangover the same way. Create a budget and then stick to it by using online coupons.

Are you ready to make online coupons a part of your shopping routine? Let us know!

About the Author

Christian Gordun is the founder and CEO of Coupon Craze, a free consumer resource with online coupon codes and deals from over 10,000 retailers. He founded the company in 2000 as a hobby, and prior to taking it on fulltime, spent five years as a senior programmer and technical project manager. He received his master’s degree from London Business School in 2008.

Often, the cheer of the holiday season can be all consuming and shoppers forget that unlike Santa, their budgets are real. The exhilarating high of making a memorable December is quickly forgotten when the next year’s financial hangover settles into our banking accounts.

So what can you do to rebound from the holidays and start anew this year?

This post will provide suggestions to those relying on credit to create a budgeting plan. We’ll begin by taking a look at one potential cause for a financial hangover, and then discuss how to start a credit budgeting plan to alleviate and prevent future financial hangovers.

The Cause

One catalyst for a financial hangover takes the form of credit purchases. Evaluating the total price paid for credit purchases is an area that people often neglect when using plastic. If you don’t pay off your credit card bills in full every month, then you are financing your purchases and need to add in the interest costs to your budget. Budgeting credit purchases based solely on the price paid during checkout can put you in a difficult financial position.

The Cure

If you are a person that relies on credit, you should plan a 2010 credit budget. To create a successful plan, it is imperative that you take the time to research total purchase cost, which includes the retail price plus interest accrued over time. To avoid creating “perma-debt” this credit budget must outline both the total cost of your purchases and how long it will take you to pay off the debt. Before you decide to make a credit purchase, follow these steps:

1. Tally the retail price of your purchases – “The retail cost of this purchase is $219.99”
2. Target a date to pay off your debt = “Based on my budget, I can pay this off in four months”
3. Estimate your total cost plus interest

Of course your total credit card payment will depend on your particular card and the balance you currently have on your card.  But you can estimate your real purchase price with interest to make an informed decision.  Try a loan calculator at a site like Bankrate.com.  After all a credit card line is a form of a loan.  Note that many calculators list the length of time in years. If you plan on paying off the loan in less than 12 months you’ll need to convert it to a fraction of a year (4 months divided by 12 months =.33)

Using the Bankrate.com loan calculator, the total cost to pay for this purchase over four months with a 14.9% interest rate is $226.81 broken into four monthly payments of $57.27.

Making good spending decisions depends on having the right information. By creating a credit budgeting plan, you’ll have complete transparency regarding the total cost of using credit and know exactly when you’ll have a zero balance.

Unfortunately, being able to calculate your total cost plus interest may not always be convenient when shopping. One avenue where you may find a better deal is by researching retailers with alternative payment plans, such as Gettington.com, that provide a choice of payment plans along with a clear breakdown of a total purchase cost and interest paid before you make a purchase.  Transparency in understanding your total cost before you make your purchase enables you to make better budget decisions.

Remember: if you’re hungover, you take aspirin, have a greasy breakfast, get hydrated and sometimes swear that you’ll never do that again! Treat a financial hangover the same way. By creating a credit budget and researching the Web, you’ll be on the road to recovery and well-equipped to avoid future credit headaches.

How do you plan to budget credit purchases in 2010?

About the Author

Paula Drum is General Manager of Gettington.com, an e-commerce retailer that provides three payment options to help customers budget purchases that fit their individual financial needs.

Tackling the Little Things

Getting debt under control and improving savings habits are two big steps to a better financial life, but those actions only are possible if Americans have more specific aspects of their financial lives under control.

While the economy recovers, job stability remains a vast and very valid concern. Without income, saving stops and debt can spiral. Even if they still have a job, Americans need to assess their marketability and increase their professional value by networking and upgrading job skills.

If someone experiences a job loss, it’s important to be proactive. They should negotiate severance pay, file for unemployment benefits and look into alternative insurance plans, because living unprotected will risk their family’s security. Individuals who have lost their jobs also should immediately start looking for work. Most states allow people to work a certain number of hours, and earn up to half their previous income, and still retain unemployment benefits.

Those who are struggling financially also might find it difficult to pay their mortgage. If individuals have missed a payment, they should immediately search through financial records or identify spending habits to find out what caused the missed payment. They also should contact their lender, who is required to examine their client’s financial life before taking any drastic action against the client’s home.

Even without a job loss or mortgage trouble, it’s time for Americans to involve their entire family in assessing the household budget. Tracking spending for a month will reveal some easy places to cut back without causing any significant lifestyle changes. Turning off lights and appliances, cutting down on weekend trips and dinners out and eliminating habits such as smoking all will help reduce household spending. And, it will give the family a head start on saving in case of emergencies.

For Americans to recover, maintain or rebuild their financial lives after this recession, they need to make permanent changes so they’re prepared for any future trouble in the economy. Identifying areas in which they are struggling, scrutinizing bills and spending habits and prioritizing aspects of their financial lives will help individuals create a proactive financial plan to last the whole year, and beyond.

Next Up: Seven Resolutions

Changing the Way We Save

Although pre-recession Americans spent or consumed much of what they earned, the recession did provide a teachable moment.

In the 1980’s, Americans averaged saving 10 percent to 11 percent of their disposable income. By 2007 the Federal Bureau of Economic Analysis reported that figure dropped to a low of 1.7 percent. Only in 2009, in the midst of a recession that had Americans worrying about their jobs and futures, did the savings rate increase, but only to 5 percent.

It’s a start, but that rate is still less than half of what it was a quarter century ago. And it’s leaving a majority of Americans unprepared for retirement and emergencies.

“Americans are significantly ‘under saved’ as they near their retirement years,” Neiser says. “They’ll need at least 50 percent to70 percent of their pre-retirement income to live comfortably in retirement, and most aren’t even close to having the financial cushion to do that.”

In 2009, only 13 percent of workers questioned in the Employee Benefit Research Institute’s (EBRI) annual Retirement Confidence Survey said they felt very confident about having enough money for a comfortable retirement. That’s the lowest percentage since EBRI first asked the question in 1993 and a 50 percent decline in confidence since 2007.

The recession also taught us the need for having an emergency savings for our financial and psychological well-being. Having a cash nest egg can help consumers better weather the recession, and in the future, it will enable them to avoid accruing debt when unexpected expenses occur. According to the Consumer Federation of America, those with an emergency savings of more than $500 are less likely to worry, lose sleep, suffer poor health and decrease productivity at work than those who have saved less.

“It is the perfect time for individuals to take a hard look at their finances, spending a little less and saving more,” says Beck.

Up Next: Tackling the Little Things

The Best Recovery for a Financial Hangover

Resolutions Can Provide Rebound in 2010

For most Americans, the New Year is a time for resolutions. Resolving to become a better person is admirable. But as we emerge from the recession, from which some of us are still reeling, it's time for changes in financial habits that are permanent and have more staying power than the average beginning-of-the-year promises.

Before the recession, spending and consumption were the way of life in America. But during more recent, leaner times, we have been forced to face the damage done by unabashed spending and financing "the good life" with high-interest credit cards. And the damage remains.

“During this recession, all of us learned something about credit, debt and how and for what reason we spend money,” says National Endowment for Financial Education^® (NEFE^®) president and CEO, Ted Beck. “It would be a shame if we go back to our old ways of accumulating mountains of debt and saving little if any for our futures as things get better.”

As the economy continues to rebound in 2010, it may be tempting for Americans to ebb into the bad habits that led so many of them into financial trouble. That’s why in 2010, it’s important to evaluate your financial life and take steps to be better prepared should the economy once again fall flat.

Managing Debt

First things first, 2010 will mean significant changes in the way credit cards are provided by banks and accessed by consumers.

The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 gives consumers more control over their relationships with credit card providers. As part of the CARD Act, back in August, credit card companies were required to provide consumers with 45 days’ notice before increasing rates or changing any significant terms of the credit agreement and to mail statements at least 21 days before payment is due.

These changes will help Americans to start paying off their average $8,000 in credit card debt, or $5,612 per card, according to the credit-reporting agency, TransUnion. However, more diligence on the behalf of consumers is necessary to get the most out of the legislative changes.

"[The CARD Act legislation] will level the playing field between the credit card companies and the consumer to have a real fair shot at planning and taking action on their personal finances,” says Brent Neiser, CFP^®, and NEFE director of Strategic Programs and Alliances. “Consumers will have to be proactive though to get the full benefits of the CARD legislation. This means being diligent with reading and fully understanding all correspondence that is sent from your financial institution.”

On February 22, new rules will kick in including: a ban on retroactive rate increases on existing balances, except in cases of severe default; better disclosure in credit card terms so consumers can easily understand the contract and avoid unnecessary costs; and protections for college students and marketing done on campuses. For more information, visit here.

Next up: Changing the Way We Save

Here are some fail-safe tips from FICO Credit Guru Shon Dellinger to help enthusiastic shoppers stay financially sound:

1. Be Smart with Credit. Using a credit card is ok – experts agree having 3-5 credit cards helps your credit, if used responsibly. But carrying a balance on your credit card leaves you (1) stuck paying interest that could cost you, in some cases, double or triple the cost of those gifts in the long run and (2) with a much lower credit score, which could jack up interest rates on your credit cards and jeopardize your chance of getting lines of credit elsewhere (buying a house, a car, etc.). Services like FICO Score Watch combat this by providing emails or texts alerting you to any changes in your FICO score (either positive or negative), and notifying you when you’ve qualified for a better interest rate. A credit score increase of 30 points will save the average consumer $105 per year.

For more information on FICO Score Watch, go to: www.myfico.com/Products/ScoreWatch/Description.aspx.

2. Resist “Short Savings.” The salesperson at your favorite department store offers you an instant 20% savings just for opening up a credit card in their name. While that $20 seems tempting at the time, it can quickly put you in debt if you’re not careful. The temptation of the deal is also one reason why the average consumer has a total of 13 credit cards. Opening new lines of credit can also hurt your credit score, so make sure the card meets your overall needs and not just your desire for quick savings.

3. Don’t Wait Till April! Many holiday shoppers use their Tax refund to pay off credit card balances left over from the holidays, which can be incredibly expensive, not to mention detrimental to your credit standing. A credit card balance of $500 dollars from January until April will cost you $237 dollars based on today’s average credit card interest rate.

4. Get Info on Your Credit. Go to the myFICO Forums, where you can connect with thousands of other people all in your same boat. Don’t wait til after the holidays, when the damage is done. FICO is offering 30% off all products on its web site if you enter the discount code MYFICO HOLIDAY.

In 12 years, Antoine Walker(notes) made more than $110 million playing professional basketball moderately well.

It always seems to happen.

Whatever the details, it was a big chunk of change, which, amazingly, wasn’t enough.

These guys seem to wind up in debtor’s prison or the poor house, or both. It’s a shame, in a way, to see all that money wind up gone, but at least these guys stimulate the economy, right? I mean, that money didn’t just vanish; it just moved from his pockets to everybody else’s.

I’m really surprised that the professional sports leagues haven’t really come up with a solution to this widespread problem. Why haven’t they employed the likes of American Express, Fidelity, or some of the better-known financial institutions to not only teach these guys how to manage their money, but why not even do more than that?

Don’t you see a very lucrative niche here? I guess much of this is handled by the athletes’ agents. But maybe therein lies the problem.

Why not employ financial planners? Why not, instead of giving them x percent (10 percent, is that the going rate for “talent?”) on the front end, give them 7 percent on the backend?

If I make you money as a financial guru, give me a piece of it when it’s bigger? Then, there is an incentive for both parties to utilize my services?

What am I missing here?

Is it that these guys are so toxic that nobody wants to touch them? Are the sports agents so powerful that nobody can “break in” to this aspect of an athlete’s life?

Why aren’t the players unions more involved? Or are they in on the money grab, too?

Just think what a really talented money manager could make out of an NBA star? It boggles the mind how much better off he could make not only the athlete, but the athlete’s community. And all without the extreme sadness experienced by the once highly-sought after athlete, once he is put out to pasture.

If you are taking in less money than you spend, you have a budgetary shortfall. A deficit. A hole. You may not yet be going into debt; you may be using available savings.

A short-term budget shortfall is sometimes necessary. Perhaps your car broke down and you needed a repair. Washing machine stopped working. Got laid off.

Nevertheless, a prolonged shortfall can wreak havoc on your household. What do you do?

There are two things you have to do in a lengthy budget shortfall. The first, and I think it’s obvious, is to “tighten the belt.” Cut out unnecessary spending. That cable bill? You don’t need it. Cell phone? Cut your minutes, get a new, cheaper plan (pre-paid is a viable option). Netflix? Can it.

But companies that sell you this sort of stuff have gotten smarter. They tie you into contracts with early termination fees. Cell phone companies are especially adept at this.

You can only cut your expenses so much.

So you have to tackle the other part of the equation:

Income – Expenses = Cash Flow

Obviously, you want a positive cash flow. Once you’ve gotten your expenses down, there’s only one thing you can do to make your cash flow rise: Increase your income.

Today, with unemployment higher than it’s been in my short memory, you are likely facing a layoff or salary cut. No increases are in sight for “Average Joes” so you best think of another alternative.

Do you have a hobby? Can you convert your passion into cash? (By the way, my hobbies are generally expensive, so I face a dilimma – cut it out or turn it into income?)

Do you have unique skills (you do, you just have to find them and monetize them)?

Can you hold down a second (or a third) job for enough time to even out the income and expenses?

I have talked about this before here, here, and here.

I am convinced that the only sure thing nowadays is to own and operate your own online business. Become an “information marketer.” You know things other people don’t. If you have a penchant for writing, you can build a  “small reports fortune” by writing short (5-15 pages) reports about your area of expertise. You can often sell these for $5-$27!

If your writing isn’t great (it’s way better than you think – just write like you talk; people like that), start up a private label rights business. Here, you acquire (often for free, sometimes for a fee) pre-written reports that you can call your own and sell them. Two other great sources are PLRWholesaler and PLRSO Club.

You can set up blogs and websites with AdSense ads (you get a few pennies every time somebody clicks on an ad). I have posts with AdSense ads on this blog. While I don’t make a ton of money with ads, the money they generate adds up.

Another way to build up an online income is become an affiliate and sell other people’s products. Commission Junction, LinkShare, Google, and many others offer affiliate programs. All you do is sign up, put some affiliate links in your blog posts or web pages, and wait for the commissions to come in. It’s not exactly that easy, but it is that simple. Of course, the more smart effort you put into it, the more money you’ll generate.

The best part about all of this? Once you set it up, it’s all pretty automatic! Of course, your web site, whether it’s a blog or a more traditional site, has to be full of content that people want. It’s not good enough to throw up some feeble content and then let the site go. Constantly update it; keep it fresh. Keep people coming back for more.

Offer VALUE.

These are just a few examples of how you can create more income (out of virtual thin air). There are hundreds of ways to start a budding online business.

One of the best systems I’ve come across is the Internet Millions System. It’s a PLR product I bought, modified my way, and put together in a digital download. It shows you how to begin a Private Label Rights business – how to acquire product, promote it, get traffic to your web site, convert browsers into buyers, etc. Basically, everything is covered from start to finish.

If you are currently suffering a negative cash flow, I encourage you to act on the information you’ve read here. If you need any help, please contact me via the Comments.