Recycle

Everything need not be new.  Shoes, clothes, lunch boxes, and left-over pens, pencils and pad papers can still be used for the coming school year.  Hence, bring out last year’s boxes and search for usable materials.  These should provide substantial savings.

Bargain hunting

Stores normally have back-to-school promos wherein prices are slashed by as much as 50 percent.  Discount stores are places you would want to explore as well.  But don’t limit yourself to stores and garage sales. Auction websites or sites such as Craig’s List will work as well. With so many people trying to turn their unused stuff into liquid cash, you are sure to get good deals out of them.

Buy items with size allowances 

Think about buying shoes for your kids that are one size bigger.  By doing this, they may be able to use the shoes for up to two years, delaying the purchase of a new pair by at least another year.

Buy the right computer

Unless your child is a graphic design or an architecture student, a typical computer will do.  By typical we mean the usual Core 2 Duo processor, 1 gigabyte of RAM, DVD-rom, 124 megabyte-graphics card will do.  These computers are more than strong enough to run word processors, spreadsheets, and Internet browsers for their school research.  Make it clear to the kids that your purchase of a computer is mainly for school assignments and not for games.

Use this as an opportunity to teach

As always, financial IQ is never too early to be taught.  The earlier you teach them, the more aware they become of wise spending principles

The savings you make on these bargains are quite considerable once you put them all together and should be able to help you during these times.

1. Put off claiming Social Security.
A person’s earning power generally increases as he nears retirement age. Since Social Security is calculated based on the 35 highest-earning years in the workforce, then a person’s potential payout increases along with retirement in later age. In fact, each year that a person delays his retirement affords him a 7 to 8 percent increase in Social Security benefit payouts. Such discrepancy in earnings can greatly make up for any low earnings year in his or her 20’s.

2. Review your lifestyle.
Home
Many retirees downsize to smaller nests that are easier to maintain in their golden years. Apart from the location, affordability should always be the top consideration. Forbes.com came out with an in depth feature of America’s most affordable places to retire. Columbus, Ohio, for example, attracts retirees not only because of its reasonably-priced housing and low-cost living but because its 4.5 percent inflation rate allows them to maximize their savings than other quickly-developing cities.

Car
Slash down on monthly gas bills by being conscious of your consumption. The key word in retirement is practicality, therefore switching from two cars to just one and merely using fuel with the lowest required octane are valuable money-saving ideas.

Credit cards
To avoid the finance charges that come along with the unmanaged use of credit cards, it is always best to plan your purchases and pay in cash. If you are a disciplined user, however, and always pays off balances before it’s due, you may avail of the various perks and savings that come along with frequent use. BillShrink.com is one websites that has a guide for consumers on finding credit cards that tailor-fit their spending habits.

3. Work part-time.
While most people look forward to “smelling the flowers” and just having a restful retirement, there’s always an option to go for a part-time job and earn extra income, especially when the need to be busy again creeps in. Surely this will stretch the nest egg a little further. In order for a part-time job to be less taxing than it was during pre-retirement, it has to be something you are passionate about or interested in learning more about. You can be a school consultant or a writer or perhaps a church choir trainer. The cities of Dallas and Houston in Texas brag about its latter-year employment possibilities for the enterprising-type as evident in 20 percent of its 65 year-old and above residents who are collecting a weekly paycheck.

4. Earn from passive income.
Passive income is allowing your money to work for you, instead of you working for it. Some examples of this income are owning a rental property, royalties on an invention, or creative work and network marketing.

5. Stay healthy.
People work so doubly hard with eyes on the goal, i.e. retirement that they fail to safeguard the very unit they only have to enjoy it – their health. Without good health, all those years of efforts will be for naught. For example, 5 years before retirement, a manufacturing technician suffered a cardiac arrest for completely ignoring a doctor’s advice to get regular exercise, follow a healthy diet and take regular maintenance medication. Instead he abused his body with alcohol and long hours of work. Consequently, he was laid-off and he started to undergo a cardiac rehabilitation process, the cost of which depleted the family’s entire savings.

The beauty of retirement is unfortunately lost in similar situations. The truth is, whether we are in control or not, the route towards retirement is littered with as much certainties as surprises. The abovementioned tips are no doubt important for having secured “golden years,” but its fullness is only truly attained if we take care of ourselves and make the most of our day-to-day life as much as we do about our future.

Here’s the good news.  The government – through the Federal Deposit Insurance Corporation or FDIC – provides insurance coverage of up to $250,000 for deposits in FDIC-insured banks or savings associations.  In other words, your money is safe even if your neighborhood bank or savings association fails or is shut down; you can still withdraw your deposit after the FDIC works things out.

Here’s the bad news, though.  If your deposits amount to more than $250,000, you will be somewhat out of luck.  I say ‘somewhat’ because you can still claim and withdraw up to the maximum $250,000 insured amount.  However, you cannot be assured of claiming anything beyond that $250,000.

Understanding FDIC

The FDIC was established in 1933 with a single overriding mandate – to ensure public confidence in the banking industry.  This is achieved by providing all depositors in FDIC-insured banks with an insurance ‘coverage’ of $250,000; and second, by acting as the ‘receiver’ of failed or closed banks, taking over the task of collecting and selling the failed bank’s assets and using collected funds to settle the bank’s debts including claims for deposits in excess of the insured amount.

The interesting thing about the FDIC is that it is funded from premiums paid by insured banks as well as earnings from its investments in US Treasury securities; no federal or state taxes are used.  The FDIC also prides itself on the fact that, throughout its 75-year history, no customer has ever lost a single penny of his or her insured deposits.

What is Safe?

There are a few things to keep in mind about FDIC, however, if customers want to maximize the protection that FDIC gives them.

For one, FDIC coverage does not extend to all financial institutions; it covers primarily banks and savings associations with depositors as the primary clientele.  The next time you’re in the bank, look for the sticker or card with the FDIC logo there.  That would be a good sign of coverage.  You can also go to the FDIC website to see if your bank is insured.  You can also simply ask your bank’s personnel outright.

Second, coverage is for deposits only.  In other words, FDIC insurance does not extend to include investments made through the bank (including mutual funds, stocks or bonds) even if the bank itself is part of the FDIC-insured banks.  Contents of safety deposit boxes, moreover, are also not covered.

Finally, insurance coverage is up to $250,000 only of the deposits within the insured bank.  Keep in mind is that this is for individual deposit accounts only.  Joint savings, partnerships or corporations are considered a single entity and as such are covered by the $250,000 limit.  At the same time, keep in mind that FDIC coverage includes the bank’s branches – thus, opening accounts in different branches does not increase your insurance coverage.  For example, if you have individual deposits of $100,000 in four different branches (or a total of $400,000) of one bank, your maximum coverage is still limited to $250,000.

Beyond the $250,000 Coverage

There are very specific instances when coverage beyond the $250,000 is allowed, mainly through establishing deposits under different ownership categories.  One such ownership category are Revocable Trust Accounts, or deposit accounts for people with a stated intention that the accounts will be turned over to one or more beneficiaries upon the death of the original account holder.

For example, Mr. Smith sets up a “Payable on Death” deposit account of $500,000 which will go to his son and daughter upon his death.  In the event of the bank’s failure, FDIC will release the full $500,000 since there are two beneficiaries named.  If the POD is for a single beneficiary, however, the $250,000 insurance coverage will be applied, even if the total deposit is $500,000.

You can go to the FDIC website to find out more about specific exceptions.

One of the best ways to deal with the impending crisis is to go into a ‘savings’ mindset – not necessarily in terms of penny-pinching or trying to build up your financial deposits, but more in terms of looking for means to reduce household expenses, especially in your home.  Reducing household costs can be as simple as ‘thinking green’ or taking an environmentally friendly and more energy-efficient approach to your home life.

Five Energy-Efficient Home Upgrades

As a first step, consider having an energy auditor go through your house.  As the name implies, this is a specialized contractor who can check your home, identify areas for improvement and make recommendations.  While there are DIY kits or home improvement sites available, having a professional with the proper equipment undertake an energy audit will translate into monies well spent down the road.  If you’re not yet ready for a full-scale energy audit, however, here are some stop-gap measures you can consider:

1. Consider a programmable thermostat.
Here’s a thought:  how many hours in a day are there people at home?  You and your wife are at work, the kids are at school, you don’t have pets that indoor (not all the time, anyway) – so why should your house be ‘comfortable’ 24/7 when there’s no one at home to benefit?  Secondly, consider your sleep cycles.  Do you really need to have your air conditioner or heater going full blast the whole time when you won’t even be awake to ‘feel’ the heat or cold?

A programmable thermostat may be just the ticket.  Program it to kick in thirty minutes or so before the first family member gets home.  And program it to turn off climate-control appliances two or three hours before people start waking up (and perhaps just turn them on again thirty minutes before wake-up time).

2. Check for leaks.
I’m not referring to water faucet leaks.  Check your windows and ducts (which carry cooled or heated air to your rooms) for leaks through which hot or cold air escapes.  Such leaks force your air conditioners or heaters to work harder which, in turn, means additional energy costs.  Properly insulating your home (especially windows and ducts) could translate into as much as 10 percent in savings on utility bills.

3. Unplug appliances.
How many of your home appliances have clocks blinking away at all hours of the day?  Never mind if you don’t know how to program the clocks; the mere fact that they’re ‘blinking away’ means that they’re using energy even if the appliance is ‘off.’  Standby lights (such as you’ll find on your television) are also dead giveaways of energy (and thus money) being drained in vain.  Take a walk around the house and unplug your appliances and you’ll find yourself saving a bit more on your electrical bill.  If you need appliances to tell the time, buy a couple of inexpensive, battery-operated clocks.

A word of caution:  you have to be careful of unplugging high-end television sets or you may irreversibly damage your appliance.  Some such displays have special unplugging instructions; for instance, some require a proper cooling down period before they are unplugged.

4. Buy a better light bulb.
Change your incandescent lights with compact fluorescent light (CPL) bulbs.  The latter require 75% less energy and last ten times longer than your conventional light bulbs.  Granted, they may be a bit more expensive than the ordinary light bulbs but the savings they will provide you in the long term will be absolutely worth the initial expense.  Additionally, how much are you ‘saving’, really, if you constantly have to replace burned-out bulbs?

5. Shop wisely – shop ‘green.’
When shopping, look for energy-efficient appliances, especially those with the ‘Energy Star’ label.  Energy Star is a joint program of the US EPA and Department of Energy that, among other things, identifies and labels energy-efficient appliances.  Currently, this program has identified various appliances in 44 product categories – everything from major appliances like washers to home electronics products – to be energy-efficient.