Thrifty Spending Issue 83

FEATURE ARTICLE:    Six tips for saving money on airfare

With fees, fine print and blackout dates, locking in a low price on your plane ticket can seem impossible. We have some tips that can help cut the cost of flying, plus help organize your search for the best deal.

In addition to setting up alerts to track fares and searching for domestic flights three and a half months prior to booking (five and a half for international), you should also buy your ticket early—you’ll pay a premium if you wait to within 14 days of travel. Also, when comparing flights online through sites such as Expedia, Kayak, Priceline and Travelocity, be sure to check the airline’s own site, which can be cheaper because there is no commission.

How to get rock-bottom rates:

  1. Look beyond discount airlines: Keep in mind that discount airlines are not always the cheapest. Airlines cannot afford to be more expensive than their competitors for comparable flights at comparable times.
  2. Buy at 3 p.m. on a Tuesday: Most sale fares kick in on Monday at 8 p.m., and end on Thursday at 8 p.m., and according to Rick Seaney, co-founder of, the greatest number of cheap seats will be available at 3 p.m. on Tuesday.
  3. Avoid flying on weekends: Be mindful of booking weekend flights because these are popular with both business travelers and vacationers. More specifically, you should avoid flights on Friday afternoon through Monday morning, if you can.
  4. Fly hungry: The least expensive flights tend to take off at dawn, or around lunchtime, as well as after 6 p.m.
  5. Consider a connecting flight: Connecting flights can be substantially cheaper than flights that are non-stop, especially for international travel.
  6. Shop for one seat: Reservation systems are programmed so that if there’s one too few cheap seats for your group, all members get bumped up to the next price level. So if you’re traveling with a group, establish the base price fro one passenger and compare it with the price for all.

MONEY SAVING TIP:  Shop at the drugstore

Savvy shoppers can score huge deals on groceries and household supplies by shopping at drugstores like Walgreens, CVS or RiteAid Pharmacies. As an incentive to get you in their doors and back again, these stores offer rock-bottom sales on everything from canned soup to cleaning supplies. Combine the sales with store and manufacturers’ coupons and many of your purchases may be free, says blogger Kirby. “I haven’t paid a dime for shampoo or toothpaste in more than two years,” she says.

How it works: At, click the “weekly ad” tab; certain advertised items offer register rewards you can use like cash on your next Walgreens purchase. At, click on the “extra care” link to sign up for a free store card. When you use it, you’ll earn 2 percent in “extra bucks” (CVS store credit) on every store or online purchase. Certain purchases, noted in the “weekly store ad” link, also generate extra bucks you can redeem on your next visit. At, click the “single check rebates” icon. That site requires you to submit receipts to earn monthly rebates.

Extreme couponer Crystal Paine of offers helpful tutorials for the Walgreens and CVS programs and countless others on her site.

DID YOU KNOW…Uncle Sam can help pay for child care?

Married and unmarried parents who work can qualify for a child care credit to help with the costs of providing child care. Certain cafeteria plans allow participants to contribute to a flexible spending account (FSA) that can be used for child care expenses. Expenses paid with FSA money cannot be claimed for the child care credit. Also, the maximum expenses eligible for the child care credit are reduced by the FSA paid expenses.

Expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are expenses for care, even though labeled education. Expenses to attend kindergarten or a higher grade are not expenses for care; however, before- and after-school care expenses do qualify until age 13.

The maximum you can put into the FSA is $5,000. The maximum expenses eligible for the credit when you have two eligible children is $6,000. However, the $6,000 is reduced by the $5,000 from the FSA, so your maximum eligible credit is $1,000. Use Form 2441 to compute the child credit and FSA exclusion.

Nonprofit Credit Counseling Agency Provides Tips to Help Consumers Check Accuracy of their Credit Reports

Debt Management Credit Counseling Corp., a nonprofit credit counseling organization (“DMCC”), provides tips to consumers on removing common errors off their credit reports. Credit report errors can cost consumers thousands of dollars in higher interest rates and lost job opportunities. Consumers with past due credit card accounts may want to consider a debt management plan to obtain lower payments and have the accounts reported as current.

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Thrifty Spending Issue 82

FEATURE ARTICLE:  Get rid of bank fees once and for all

There’s nothing worse than getting punished for doing the right thing. And that’s just what happened to a mom and her 18-year-old son when he opened a checking account at a local bank in McCullom Lake, Ill. His mom encouraged him to open the bank account as a way to teach him how to handle a bank account. And that’s when the trouble began.

After moving some money from checking to savings, Daniel Ganziano’s checking account balance fell to $4.85. Because of the low balance, the bank levied a $9.95 maintenance fee. The fee overdrew the account by $5.10, which triggered another fee of $28 that the bank charged daily. In just two weeks, the fees totaled $229.

This story, reported by the Chicago Tribune, is yet another example of banking fees gone wild. There are, however, a few simple steps you can take to eliminate banking fees once and for all.

1. Don’t assume small banks have small fees: With the Occupy Wall Street movement, there has been a big push to move from big banks to small, community banks. While smaller banks may be a great option for some, don’t assume they are free. Small banks, including credit unions, charge fees, too. And in some cases, they may not be the best option. Nothing replaces researching banks and making the best decision for your financial needs.

2. Go online: Some of the best banking options come from online financial institutions. Because online banks don’t have the cost of building out a network of physical branches, they often charge less in fees and pay higher interest rates.

3. Watch minimum balance requirements: It’s not uncommon for a bank to waive a monthly maintenance fee, but often you must maintain a minimum balance. It’s important to understand the terms of the maintenance fee before opening an account. And if a minimum balance is required to waive the fee, make sure you meet this requirement.

4. Monitor your account: There are a lot of good reasons to monitor your bank account. Of course, one of the most important reasons is to watch for unauthorized transactions. But keeping a close eye on your account will also help you spot bank fees that can sneak up on us. Because bank fees tend to multiply quickly if the account is overdrawn, addressing the issue as soon as possible is paramount.

5. Your bank may not be best for your children: Accounts designed for children often pose special problems when it comes to fees. Because most children do not keep a lot of money in an account, fees can quickly erode what little money they have. As a result, a parent’s bank may not be the best option for children. I’ve found that the best bank accounts for children are often online banks with no fees.

If you are wondering what happened to the bank fees charged to Daniel Ganziano, the bank eventually waived them. But it took the involvement of Jon Yates (he writes the “What’s Your Problem” column for the Chicago Tribune) before the bank would budge.

MONEY SAVING TIP:  Stockpile sale items

Many avid couponers stockpile large amounts of nonperishable groceries and toiletries purchased on sale. Carrie Kirby, who blogs for, once filled the entire cargo hold of her Subaru with cans of her favorite soda. “My basement shelves hold enough of things like toothpaste and cereal — often purchased for 25 cents or less — to last our family six months to a year,” she says.

And if a family member gets ill or loses a job, you’ll have a nicely stocked food pantry during a rocky time.

DID YOU KNOW…to add back in the income tax when determining how much it costs you to buy things?

The sales tag on the leather jacket you want says that it costs $1,000. You know to add in the sales tax to determine the full price, which is perhaps 5% higher, or $1,050. But even that is not the true full price.

You can’t buy the leather jacket by earning $1,050. You need to have $1,050 in take-home pay to buy it, and that means that on a pre-income-tax basis, you need to earn a good bit more, perhaps $1,250.

It’s true, of course, that the money that goes to income tax is not yours to spend or save. Refraining from buying the leather jacket will not get it back for you. The other side of the story is that paying income tax hinders your effort to win financial freedom early in life as much as paying sales tax. Mentally adding back the income tax helps you appreciate how many hours of labor it takes to obtain a jacket with a nominal price tag of $1,000.

Thrifty Spending Issue 81

FEATURE ARTICLE:  How to Get the Saver’s Credit

Low income workers who save for retirement using a 401(k) or IRA can earn a tax credit worth up to $1,000 for individuals and $2,000 for couples in 2011 and future years.

The saver’s credit can be claimed by workers whose modified adjusted gross incomes are up to $28,250 for singles, $42,375 for heads of households, and $56,500 for married couples in 2011. In 2012 those income limits will increase to $28,750 for singles, $43,125 for heads of households, and $57,500 for couples.The first $2,000 workers contribute to an IRA, 401(k), or similar workplace retirement account can count towards the saver’s credit. The credit can be used to increase your refund or reduce the tax you owe. This tax credit is available in addition to the tax deferral you get for making a traditional 401(k) and IRA contribution and any 401(k) match you get from your employer.

Consider a married couple who earned $30,000 in 2011 and contributed $1,000 to an IRA. They will be able to claim a $500 tax credit for their $1,000 IRA contribution.

Saver’s credits totaling just over $1 billion were claimed on approximately 6.25 million individual income tax returns in 2009. The credit varies based on your income and tax filing status and ranges from 10 percent to 50 percent of the amount you saved up to $2,000. Most taxpayers received modest tax credits for their retirement account contributions. Saver’s credits averaged $121 for single filers, $159 for heads of households, and $202 for married couples. “Though the maximum saver’s credit is $1,000, $2,000 for married couples, it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers,” the IRS says in a statement.

Awareness of the saver’s credit is increasing, but remains low. Just 21 percent of people earning less than $50,000 say they are aware of the saver’s credit, according to a Transamerica Center for Retirement Studies online survey of 4,080 workers age 18 and older at for-profit companies, but that’s up from 12 percent in 2010.

The saver’s credit was first added to the tax code in 2002 as a temporary provision, and was then made permanent in 2006. Income limits are now adjusted annually to keep pace with inflation. Workers under age 18, full-time students, and individuals claimed as dependents on someone else’s tax return are not eligible for the credit. Rollovers and trustee-to-trustee transfers into retirement accounts don’t count toward the credit. Your eligible contributions may be reduced by recent distributions you have taken from a retirement account.

Workers interested in getting the saver’s credit in 2011 must make 401(k), 403(b), 457, or Thrift Savings Plan contributions by the end of the calendar year. However, retirement savers have until April 17, 2012 to add money to an IRA that will allow them to get the credit in tax year 2011.

MONEY SAVING TIP:  Pursue goals of intense concern to you and you alone.

Have you ever had the experience of enjoying a nice dinner out with your spouse or a good friend, commenting that you were too full to have dessert, and then found yourself wavering when the waiter came by with the dessert tray? If you love cheesecake, and you see that this place makes a good cheesecake, you want some, whether in theory it is a good idea for you to order some on this particular occasion or not.

You need to want to save the way you want to eat cheesecake (if you love cheesecake), or the way you want to eat a chocolate brownie (if you are a chocolate brownie lover), or the way you want to eat an apple cobbler (if you are an apple cobbler lover). A general desire to save is like a general desire for desert — it’s not compelling enough to inspire action. Find what you’re passionate about and make your savings account turn it into a reality. The trick to becoming an effective saver is identifying that something, the saving goal that provides you with the motivation needed to get the job done.

People trying to sell always try to hit the emotional hot buttons with their sales pitches. They do this because it works. It works on the saving side too. To save well, you need to direct your money management energies to the pursuit of a goal that hits your emotional hot buttons.

DID YOU KNOW…You need to protect yourself in a short sale?

After a short sale, the mortgage lender often will report to credit bureaus that the home loan was settled for less than the full amount. In addition, it can also note the amount of the deficit as “balance owed” on the credit report, even though the obligation has been finalized and no additional money is owed.

In other words, if you have a $300,000 mortgage and sell your house for $250,000, the bank could report a balanced owed of $50,000.

While the short sale will damage your credit score dramatically (as much as a foreclosure, according to examples recently released by FICO), you can mitigate the damage slightly by arranging with the lender not to report a balance owed.

The best time to negotiate this with the lender: before or during the short sale process, says Ulzheimer. While you can attempt it after the fact, that’s not as practical.

“After it’s been paid, the lender starts to lose interest in speaking with a former customer.”