One idea to encourage savings is to lower the tax rate on interest earned on savings accounts.
Over the holiday break, I read about the winning idea in TIAA-CREF's Raise the Rate competition -- to "factor a person's savings habits into their credit score as a positive indicator of creditworthiness" -- and was surprised that it was selected as the winner.
I'm surprised because I wouldn't think savings would be a reliable factor in the probability that you would default, which is what the credit score is designed to measure, and because it would be a bit of a bear to implement.
My submission was to lower the tax rate you pay on the interest you earn from a savings account.
Despite all the hoopla about the Verizon iPhone deal, some are still perfectly happy with their old-fashioned phone.
Semi-Demi-Exboyfriend called the other day to say he's going to get rid of his land line. He figures it's going to save him a ton of money.
Not only is he going to ditch the land line, he's also going to kill his Cox high-speed Internet connection, effectively taking his computer offline. His plan is to haul his laptop to the library whenever he wants to read his e-mail. Won't that be fun?
He's not alone on the land-line issue. The other day Echo, over at Boomer and Echo, reflected on the joy of land-line freedom, listing three good reasons to get rid of the thing.
Me, I'm not so sure. If you don't already have a cell phone -- which I don't because I can't afford it and I don't deeply want one -- several reasons argue strongly in favor of keeping the land line. Even if you do have cell service, there's no reason to rush to judgment. Consider:
With new limits on the fees banks used to collect, they're raising others and inventing new ones.
You could see this coming, right? With last year's limits on certain fees they can wrangle from customers, banks are dreaming up new ones and increasing some of the old standbys.
You've likely heard that your bank is adopting monthly fees on basic and more elaborate checking accounts. But those are by no means the only fees banks have in mind.
The Wall Street Journal reports:
Banks are thinking about imposing annual fees of $25 or $30 on debit cards, according to people familiar with bank strategies. Some also are considering limiting the number of debit card transactions that a customer can make each month, these people say. Another idea circulating in the industry: limiting the size of a purchase that a customer could make with a debit card.
Southwest revamps its frequent flier program to reward travelers who buy more expensive tickets. Business travelers may benefit.
For years, Southwest Airlines has operated the simplest of frequent flier programs: Fly 16 segments in two years and you get a free flight.
Who wins? Business travelers.
Who loses? Travelers who buy cheaper flights.
The Consumer Price Index is the way the government measures rising prices. But what's your personal inflation rate?
Inflation is a funny thing: The government keeps saying that prices aren't rising much at all, when you know good and well that they are.
And inflation can be scary. After all, if prices rise and your salary doesn't, inflation translates into a lower standard of living. That's tough enough when you're working and at least have the potential to make more money. When it gets truly frightening is when you're retired.
But does inflation have to be as scary as it seems?
Sometimes when it rains, it pours, and the emergency fund is depleted. What happens then?
I recently mentioned that my cat had died. Not only was his passing heartbreaking, it was expensive. But, as I said in that post, I was very happy to be able to write a check from my emergency fund and not worry about where the money would come from.
Since I'm still paying off debt, that $800 check represented most of my meager emergency fund. I'll rebuild it over the next few months, but in the meantime I don't have much of a cash cushion. I was just hoping that there wouldn't be any subsequent emergencies.
As luck would have it, there was.
Satellite and cable TV companies are just a few of the businesses that check your credit history. Here's why having a good score is a plus.
For Christmas we ordered Dish Network for my wife's parents. They live in the country and don't have access to cable; satellite service is their only option. In the process of ordering the service, I learned that Dish Network runs a credit check that results in an inquiry on your credit file.
Even more important, it turns out that the price you pay for Dish Network service will vary substantially -- we're talking hundreds of dollars -- depending on your credit.
This is another example of how your credit score can affect many areas of your financial life. So let's take a look at why Dish Network checks the credit history of new customers, how the credit check will affect your FICO score, and the effect your credit will have on how much you pay for Dish Network service.
Being absentminded really paid off at the end of the year, thanks to my flexible spending account.
If I leave a $20 bill in a winter jacket, only to rediscover it after it has been hanging in the closet for nine months, I consider that a windfall.
Now I can hear a lot of you out there already: That's not a windfall, you schmuck, that's just dumb luck.
Oh, sure. You'll say I didn't gain any additional money that wasn't officially mine to begin with anyway, but I disagree.
In reality, what I really did was rediscover a little money I had unwittingly lost the previous winter. Therefore, it's a windfall.
That's my story anyway and I'm sticking to it.
Why I love flexible spending accounts
Now let me tell you about my latest windfall.
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