Everybody Loves Your Money

Okay, so the title is probably a little bit inflammatory.  I’ve heard more than a few people talking about what they should do with their money during an economic downturn.  Of course there probably isn’t any one answer to this depending on your circumstances but I am doing a couple things to give myself some peace of mind.

Step 1:

We keep about $1000 in cash on hand.  I keep this in a safe and don’t use it to "loan" myself money etc.  It pretty much just sits there.  The main motivation for keeping this money on hand is to use it during a natural disaster if I’m not able to access my bank accounts.  The recent economic issues have only strengthened this strategy for us.  If there was a massive run on the banks, it’s nice to know that I’ve got a little bit of cash available to cover food and essentials for a week or two.

Step 2:

We keep our money in a credit union.  If you’ve been a reader for very long here, you know that I’m a big fan of credit unions.  My experiences with them have shown me that I’d much rather do business with an organization that is not trying to make a profit from my deposits.  The bottom line is that I receive better rates on my savings and also get lower loan rates if I need a loan.  Their fees are much lower than traditional banks as well.

With the recent economic issues, I’m feeling even better about my decision to exclusively use a credit union.  Our credit union didn’t take on any risks with subprime mortgages and they service all the loans they make.  Because they service their loans and keep them on their books, they applied much stricter guidelines for getting a loan in the first place.  That discipline has kept them financially strong during these times.  In the end, it’s something that’s worth looking in to if you have any concerns about your current bank.

We received a letter today from our credit union telling us that the recent legislation that was passed included additional protections for our savings accounts at the credit union.  Our insurance limits have been raised to $250,000 on each of our accounts.  This insurance is provided by the National Credit Union Administration (NCUA) and is basically just like the FDIC insurance at normal banks.

Step 3:

We are keeping our HELOC open in case we need to draw on that money in a long term emergency.  Of course that assumes that the credit union will continue to leave the line of credit open to us.  So far it’s still there and I would have thought they would have yanked it by now if they were going to.

Step 4:

We are paying off our credit cards each month and have very high limits on them in case we need it.  The only time I think I’d resort to that is if we hit total Armageddon in America.  I absolutely despise the idea of having any credit card debt.  It’s just one more tool in our bag of tricks.

So, these are a few of the things that we are doing to help us feel in control of our finances during these unstable times.  We feel that the steps we are taking are giving us the security we need to weather this storm and provide us with money in any scenario we can imagine.

I’ve mentioned before how much I like the "deal".  For me, the "deal" is anything that I can do to get a better price on something.  I absolutely hate paying retail for something.  When I do have to pay retail for something I find myself feeling a bit of dread as I pay the cashier.  Whether I’m at the department store buying new clothes, or at the grocery store buying food, I always prefer to buy the product that is on sale.  Here are a few examples of how I shop:

Awhile back, we needed a new digital camera.  Rather than just drop in to the first store I came across, I spent a little time researching prices.  I had previously seen the camera I wanted while I was shopping at a store so I knew exactly what I was after.  Once I decided I wanted to purchase it, I checked Amazon, Buy.com, Ebay and Pricewatch to try to get a sense for what the "going rate" was online.  Once I knew what that cost was (incl shipping) I then searched through all the potential stores that I could buy it at (online at their websites) Ultimately I ended up buying the camera from a store that had a 10% coupon off all electronics.  While it may sound like it took a lot of effort, I’d say I put in about 15 minutes total to find the best deal.

The latest thing I need is a new pair of shoes.  I have been wearing the same type of casual shoe for a few years now and absolutely love how they fit so there was no question which kind of shoe I’d like.  They are made by Georgia Boot and are called Romeos.  There are some off brands that look similiar but they are not nearly as comfortable and are not as high quality.  I know where to buy these and their cost is always regularly $59.99.  Every month or two, I notice that they go on sale when I’m looking through the Sunday ads.  I’m currently waiting for their sale again and then I’ll pick them up.  I can do this because I haven’t waited until my current pair is completely falling apart which gives me a bit of flexibility.  My brother in law thinks I’m crazy.  He says, "For crying out loud, just buy the shoes!"  Naaah.  I’ll wait until they are on sale and will save myself $20.  Over the course of a year, I will save hundreds and hundreds of dollars by having a little patience and not being quite so quick to pull the trigger on purchases.

It doesn’t really matter what you are buying.  This same approach works for everything.  We saved over $20,000 when we bought our house because we were patient and didn’t jump at buying it the second that we knew it was for sale.  By having a little patience and doing a bit of negotiating we saved thousands.  (It helped that the owner was trying to sell it by word of mouth.  If he had listed it in the MLS I wouldn’t have been so lucky).

Different family members have made comments over the years that I always seem to be able to find the good deals.  It’s really not too hard to find those good deals if you are looking in the first place.  The key is to give yourself time to find the deals as opposed to just handing the cash out the second you want something.  By planning ahead a little bit you can really reduce your annual costs for the things you buy.