This is more of a rhetorical question that anything, but one that we should address because if we confront why we are not doing something that we know we should be doing, it might help us change our behavior.

Brain Matter.  One of the problems is that our mindset is dysfunctional.  What we mean by that is that we value the wrong things.  We tend to value extravagance rather than day-to-day saving and frugal actions.  Here’s a tip that will help you in this area.  The next time you find yourself drifting into wanting something that you do not have, imagine yourself with the item and having to put up with the expenses of owning it.  This works well for high-ticket items like boats, new cars, etc.

Keeping Up With the Joneses.  We all have heard that this is a bad idea, but many get trapped into this thinking.  We allow the race for the ‘bigger and better’ to get to us.  It is much easier to remember the neighbor’s boat when you do not have one and want one than it is to remember that you have a solid savings account and are planning for your future. Do not allow yourself to be caught in this race.

Borrowing Keeps You Down.  Many keep borrowing more and more just to keep up their lifestyle for their friends and family when what they are really doing is throwing away their financial future for a few fleeting moments of pleasure that will be gone in a few days or months.

What Can You Do?  Here are some tips that might help you to better save for the future.

First, force yourself to save.  Use automatic deposits to your bank accounts not only to direct deposit your paycheck, but to build wealth for the future.  Add a percentage point per year to your 401k contributions from your paycheck.  Next, if you have direct deposit at your employer, find out if you can have more than one account.  If so, create a savings account at a different financial institution and then have a small amount of money deposited there out of every paycheck you get.  Make it difficult to get to the money so that you will not be tempted to withdraw it and spend it frivolously.  You will be surprised at how fast your savings will grow.

Next, if you get a raise, immediately put that money aside into your savings account, or contribution to your 401k.  Look at it as a raise to yourself for the future.  Do the same thing if you have a second job. Immediately deposit that paycheck to your savings account

Knowing this, you should be able to motivate yourself to follow some of these steps in order to be more savings minded.

It’s no secret that we here at moneyanswerguy.com advocate the disposal of your credit cards and accounts in favor of a cash-only lifestyle.  But, the reality is that most of you are not there.  And so, rather than beat you up about it, we take a more pragmatic stance in some of our writings to help you.

Getting hit by credit card charges is not fun.  Recently a woman that I know despaired over her credit card bill because she thought that she had made her minimum payment on time.  And yet, she still had extra charges on her next statement.  Unfortunately, the answer to our question of “how do I keep from getting hit with credit card charges,” might be “you don’t.”

This is the kind of world we live in: Credit card companies have developed charges and fees that they use to make a profit regardless of your account balance.  While the debate rages over whether or not these fees are exorbitant and unnecessary, there is one thing that is true:  it pays to read the small type.  Before you sign up for a credit card, read the small type about how charges are computed and fees are assessed.  It may surprise you.

But, more importantly than that is the fact that some companies change their policies and rules in mid-stream, thereby catching you completely unaware.  This is what smacks of unethical to most people.  It’s like playing a game, and having the rules change during the game.  No one wants to be involved in that world.  Here are some things to watch out for:

Raising Interest Rates.  We all know that interest rates fluctuate with the economic climate.  But, many times, credit card companies raise your rates in spite of what the economy is doing.  And, even so, rate increases like this often are not limited to a one or two percentage point move.  It’s not uncommon to see increases of six to eight percentage points.  That’s money out of YOUR pocket and into theirs on your existing balances.

Changes in Due Dates.  This tactic is like someone moving a target while you try to hit it with an arrow.  Know what your due date is and even if there is a time that it must be submitted by.  And, do what you can to stick by it, because the bank can raise your rates if you are late on just one payment.

Hidden Charges and Penalties.  You will get hit with fees for things like cash advances, balance transfers, foreign currency exchanges, paying by phone, etc.  But the biggest fee of all might be triggered by going above your credit limit, which can cause rate increases to more than 30%!  Ouch!

Introduction Rate Headaches.  When you receive an offer that entices you to move your balance over from one card to another, look at the fine print first.  The credit card company keeps the rate on that balance low, while you accumulate higher interest rate amounts on new charges.  Then, when you make payments, they go to the lower rate balance in order to keep the higher interest rate charges building.  Talk about three steps forward and four back!

Forced arbitration.  You have limited legal rights when faced with a real dispute over balances and charges.  Recently, a family member of my own found that someone had stolen their card number and had used it to make purchases in a retail establishment clear across the country.  But, the credit card company, in their rush to make money, only made a small gesture at trying to resolve the issue.  Even now, it still is an outstanding claim.  Who knows if it will get resolved in the customer’s favor?

These are things to watch out for when attempting to use credit cards.  But, more importantly, are reasons to stay away from them all together.

I’ve been thinking about doing this myself: purchasing a motor scooter to save on gasoline.  It’s an idea that seems to be taking hold with other commuters, too.  My situation is conducive to having one.  I live within about six blocks of my job, in a mostly residential neighborhood.  It’s a nice situation. 

But, I have to take into consideration that my current vehicle costs are relatively low.  So, why should I get rid of my 200,000 mile car for a motor scooter?  Just to save money?  The way I look at it is that as long as gasoline stays above $3.00 per gallon, I am thinking that this is the way to go.

I can drive it to my part-time job, too, which is much farther away from my home, so I’ll be saving there too.   But I found out that there are other considerations to owning a gas-saving motor scooter.  Here they are:

Hidden costs.  Yes, the price is incredibly affordable (compared to a car).  For about $1,000 in my area, I can buy a 50cc scooter, that will travel at about 35 mph, and gets about 100 mpg.  Not bad.  But, I forgot about, or didn’t know about these items:

Helmet.  You don’t just need one, in some states they are mandatory.  But, even if not, you had better have one.  Head injuries are the leading cause of death in motor cycle crashes.

Licensing.  Some states require a just an operator’s license, but not a motorcycle license.  Some are based on the maximum speed of the scooter.  Check with your local Motor Vehicle office to see what requirements are there.

Maintenance and upkeep.  You will have to not only add gasoline, but oil changes, too.  And, tune-ups will be required the longer you keep the scooter.  Who will perform these and what might they cost?

Outfits.  You better keep a water-proof jacket in a storage bin on the scooter.  No telling when you might encounter a down-pour during your commute.

Storage.  If you live in a state with seasonal weather changes, you will need to store the scooter during the winter months.  Not only is it extremely cold to ride in the winter, but snow and rain can be dangerous as well.

If the situation is right, a scooter might make a lot of sense for you.  Just make sure you have all of your questions answered before you take the plunge.  Happy motoring!

Here’s the breakdown of the top ten.  This list is based on 15,000 miles per year and an average price per gallon of $3.22 (when this list was originally assembled in March of 2008).

2008 Toyota Prius: combined mileage (highway/city) 46 mpg.  Annual fuel cost estimate: $1,053.00.  Base vehicle cost new: $21,100.00

2008 Honda Civic Hybrid: combined mileage (highway/city) 42 mpg.  Annual fuel cost estimate: $1,153.00.  Base vehicle cost new: $22,600.00

2008 Honda Civic GX: The GX runs on Compressed Natural Gas, not gasoline.  combined mileage (highway/city) 28 mpg.  Annual fuel cost estimate: $1,280.00.  Base vehicle cost new: $24,590.00

2008 Nissan Altima Hybrid: combined mileage (highway/city) 34 mpg.  Annual fuel cost estimate: $1,425.00.  Base vehicle cost new: $25,170.00

2009 Toyota Camry Hybrid: combined mileage (highway/city) 34 mpg.  Annual fuel cost estimate: $1,425.00.  Base vehicle cost new: $25,350.00

2008 Smart ForTwo: combined mileage (highway/city) 36 mpg.  Annual fuel cost estimate: $1,428.00.  Base vehicle cost new: $11,590.00

2008 Toyota Yaris: combined mileage (highway/city) 32 mpg.  Annual fuel cost estimate: $1,514.00.  Base vehicle cost new: $11,350.00

2008 Mini Cooper: combined mileage (highway/city) 32 mpg.  Annual fuel cost estimate: $1,514.00.  Base vehicle cost new: $00,000.00

2009 Ford Escape/Mercury Mariner Hybrid: combined mileage (highway/city) 32 mpg.  Annual fuel cost estimate: $1,514.00.  Base vehicle cost new: $26,505.00

2009 Toyota Corolla: combined mileage (highway/city) 31 mpg.  Annual fuel cost estimate: $1,562.00.  Base vehicle cost new: $15,250.00

These vehicles each have their pluses and minuses, but overall they are good, quality-built cars.  However, the caveats still apply to purchasing new vehicles that use untested technologies.  And there are other costs relating to continuing maintenance and up-keep.  Will those costs be significantly higher as the cars age?  For example, what would the cost be to replace batteries on a hybrid?

These are things not to be taken lightly as one shops for fuel efficiency.  In the end if you must make a change in vehicle, look at this list and determine if one of these is right for you.  Otherwise, using a little common sense, and conservative driving practices could save you in fuel costs on whatever it is you drive now.

Each and every single one of us has a lot of hopes and dreams for the future. We dream that we could someday retire to an exotic location. We hope that we will be able to pay for our children’s college free and clear. We desire to have our homes one-hundred percent paid for. There are a lot of different things that we would do if we just had the money to do so. A lot of people imagine what they would do if they had won the lottery. They think about the things that they would buy, the charities that they would give to, and the like. Dreaming isn’t enough, and you’re not going to win the lottery, but don’t worry these goals are still within the realm of possibility.

In order to accomplish all of these different goals we need to have some more money. Of course it’s not that easy, extra money doesn’t fall out of the sky. There are really only two options: work harder, or spend less. In the end a mix of both will do very well for you. It seems that most Americans are stuck on their expensive lifestyles and are unwilling to depart with any of their luxury items. So the only option is to make more money. Sometimes we just need to make more money. By working extra, we can accomplish all of those goals that the money was just not there before.

I’m a young guy, and have some rather lofty financial goals. I’m going to want to go to graduate school, buy a new vehicle and perhaps a home in the next five to ten years, so why not work as much as I can while I’m here? It allows me to live on a fraction of my income and save the rest for my financial goals.

Right now I work about 60 hours a week as an undergraduate with a full-time load. I do 11 hours a week of computer support, 6 hours of tutoring, 5 hours managing the school’s newspaper, 10 hours of freelance writing, 10 hours working at forensics tournaments, another 10 hours doing web design work, and a good 8-10 hours a week of homework. It’s a lot of different obligations, but I guarantee that I’m the most well paid student at the university I attend.

Does this mean that I never have any fun, work all the time, and have no time to spend with my fiancé? Of course not! I have plenty of time to rest, relax, sleep, and have quality time with my fiancé. There are only so many hours in a week, but if you manage them properly, you can still do everything you want and more. The beauty is that most of my work can be done just about whenever I please. Only about 20 hours of the work that I do I have to be at a specific place at a specific time. All of the rest is either done as I have time to do it.

I’m able to fit this all in because of my excellent time management skills. Every Monday I make a list of everything that I need to get done that week, and then separate it down by the day. Each morning I start on that day’s list of tasks, and work until I get them completed. It’s pretty rare that I’m not doing by 5:00 PM, giving me plenty of time to spend with friends and plenty of time to relax. I work hard, don’t get distracted, and get the job done. That’s about all there is to it.

I’m making some very excellent income for where I’m at in life, and have plenty of time to go around. You can work 60 hours a week just fine if you manage your time well. Look for extra work that’s flexible and can be done as you please, but you have to keep yourself motivated to work! It might not be the easiest thing to do right now, but in five years or so, your hard work will definitely pay off and you will be much further along than your peers financially.

A number of credit card companies have increased their borrowing costs just in time for the summer holidays, when many households are likely to be relying on their credit cards, according to a recent report.

The summer holidays when schools break up for six weeks are just around the corner, and many families may be gearing up for a break abroad, a holiday in the UK, or some day trips for the family. Whatever the choice, many of these people will be relying on their credit cards to fund their break or days out, particularly in the current financial climate when money is so tight for many.

Industry officials have said that consumers could end up paying millions of pounds extra in interest simply because of the decision of some credit card firms to take advantage of the popularity of 0% credit cards at this time of year by hiking up costs. HSBC, Nationwide, Mint, RBS, and Capital One are said to be amongst those that have hiked up fees and charges on their credit cards in time for the holidays, which means that many cardholders could end up paying over the odds.

Reports state that it is a common tactic for credit card firms to hike up the cost of card usage when July and August come around, as this is a time when many people up the usage on their cards, and credit cards can therefore make even more money off consumers. Consumers are warned that extravagant spending on their credit cards could therefore leave them with a similar financial hangover to that often faced by consumers after the expensive Christmas and New Year periods.

There’s a commonly held belief that college students are dirt poor and have to find ways of living on practically nothing, and it’s absolutely true. Most students believe they don’t have time to work any serious amount of hours while they are in school, so they don’t make very much money. For being in college, I am doing rather well, but choose to live on next to nothing anyway, because it allows me to put away a ton of money in savings and investments for the future. There are months when I live on 20% to 30% of my income easily, and I really only spend about $600 a month. Here’s how I do it.

The biggest expense that people generally have is their home. Since I’m in college, it really doesn’t make sense to consider buying a home. I had two options for living, a dormitory and a mandatory overpriced meal plan that would cost around $2000 for a semester, or I could try to find a house or apartment to rent. I decided that it was about time for me to move off campus, so I found a room-mate, and we started looking for places to live.

We must have looked at 10 different apartments and houses before we found a winner. It’s only $350 a month plus utilities, and it’s not totally a trash-heap. The utilities average $150 a month between city utilities and the home heating oil bill, so we’re doing pretty well. I do happen to live in rural South Dakota, so that makes the real-estate part of the process much easier. This just can’t be done in a lot of major cities, but don’t think you need to have a very big and fancy house or apartment when a reasonable and livable place can be had for a lot less, if you put the effort in to find it.

After I spend my first $250 a month on housing and utilities, I generally like to eat too, so I buy some groceries. The small town of Madison does not have a Wal-Mart or other big grocery store chain, but fortunately my room-mate commutes to Sioux Falls (a city of 150,000 people) every weekend. We share the grocery bill for convenience, and I usually only spend about $25 a week on food for myself. I also have this habit of eating out after church on Sundays, and on occasion when I really don’t want to cook, which adds up to be another $50 a month.

I’ve got all of the basic requirements of living done, and I’m only at $400 a month. I need gasoline for my car, which averages to be another $50 a month fortunately I don’t need to do a whole lot of driving except to visit the parents that are an hour away every now and then. Oh, and my car is paid for by the way, so I don’t have to deal with a payment for it.

I’m getting married in August to a very wonderful woman, and I like to treat her as best I can. I usually buy her flowers once a month, and take her out to eat once or twice, so there’s another $50 spent. I know I don’t need to spend that much money on her, but I like to treat her well.

For us young people, television and the internet seem to be necessities, so we pay for high-speed cable internet, and cable television. That’s about $80 a month for both of those between me and my room-mate.

We’re at $540, and there’s $60 to go. This money goes to a number of different things, sort of a slush fund if you will. I know I’m going to spend money during the month on entertainment, and random things I might want from one of the box stores, but this is stuff that I never really know in advance, so it serves as a miscellaneous line in my budget.

I have no debt to speak of, so I don’t have to write any checks for things such as big nasty credit card payments, home equity loans, automobile loans, personal loans, and the like, which is very nice. Oh, and by the way, not borrowing the money in the first place is the best way to get and stay out of debt.

There you have it, it’s not pretty, it doesn’t have a lot of luxury in it, but it’s more than enough to give me a very satisfying standard of living and allow me to do the things that I enjoy doing and save a whole mess of money in the process.

This week’s carnival of personal finance is at YouNeedABudget.com.  This site was included with the 5 Mistakes to Avoid When Buying a Car From a Dealership article, as well as a number of other great personal finance readers.  Here are some that I liked:

• Debt Freedom Fighter provides 3 Credit Card Tricks that Keep More Money In Your Pocket.
• American Consumer News presents 5 Untruths About Your Credit Report
• DJ from The Family Wallet presents Turn Closet Cleaning into Cash.
• AJC takes issue with paying your mortgage off as quickly as you can.
• 7 Millionaires … In Training! thinks you need to think again if you’re of the opinion that 100k means you’re ‘rich’. 

When you are first seeking employment and have no work experience, whether you are right of high-school or college, you are going to need to start in an entry level position somewhere. Not everyone can jump to a six figure income right away. You might be able to if you are a doctor, but otherwise, that’s just not very darn likely. Hopefully by following these tips you will be able to get into that perfect entry level job.

I live in rural South Dakota, so it’s not a very common that when I walk down the street to Taco Johns or the grocery store that I come across a panhandler. In fact, I’ve never seen one here in Madison. I have seen one in my previous town of 15,000. When I visit a major city, it’s really an interesting cultural difference to see how poverty is handled in rural versus urban settings. You really feel bad for these people, but you also don’t want to enable some sort of addiction or enable their continued poverty, so when do you give, and when do you just keep walking? I talked with a number of urban dwellers that I know and asked for some suggestions. Here’s what I found.

Generally there are a couple of types of people that you shouldn’t give money to. If you go by the same areas on a regular basis, you’ll sometimes see the same people there asking for money for a long period of time. Don’t play their game, if the money you didn’t help them the first time, it’s probably not going to help them now. You can usually spot regulars because they have the cardboard signs, of course there are exceptions.

If the person asking you for money is a kid who’s dressed relatively decent, don’t give hi more her the money. If they really needed it, they’d call their parents to get home. Most of the time they’re just doing it for a sport or for some extra cash. Don’t give them money.

There are some times that you might consider helping someone out. When people are dirty, tired, and hungry sometimes you should give them a break. You might not want to give them money because who knows what they’ll do with it, but it would be okay to take them to the McDonalds and buy them lunch. If your gut feeling tells you to help out the person, go ahead and do it! One donation from you will be nice for them right now, but won’t do much either way when it comes to their long term status as being homeless.

Another time I would probably give money is when the person is playing an instrument. They are actually working for their money and soothing us with a beautiful tune! At least they’re not just sitting on the street, they’re providing some sort of service! If the melody is good, usually I’ll throw in a dollar or two.