Pay Now or Pay Later?

Decisions, decisions.

Notice the title of this post isn’t “Buy Now or Buy Later.” That’s because you’ve long ago made the decision to buy. Now, you’re trying to decide how long you should wait to pay for it.

Should we pay now or later?

Recently my wife and I were doing a little furniture shopping. We had been saving for a new couch and recliner for our living room for a while, and we had finally reached our goal.

Strolling through the store, I saw a couple talking to a salesman. He was putting their information into a computer, getting ready to process an application for credit. I realized that these people had no intention of actually paying for their furniture that day – they had decided to buy and charge it to a store account.

Then I saw another such couple. It occurred to me that maybe saving up for a purchase puts me in the minority of customers at this little furniture store.

You mean I have to pay for it?

You see, when buying an item, you have to pay for it. The money has to come from somewhere. I don’t think some people get this simple truth. Your credit card company or the store where you’re shopping will gladly give it to you today, but you’ll pay dearly for this money in the form of interest.

Paying later ensures that you’ll always pay more than the asking price. It also means your obligations will increase every month. Essentially, you’re relying on your future self to consistently make on-time payments until the debt is paid off. The problem is, our future selves aren’t very reliable.

The alternative to paying later is paying now. But this is tough. It requires you to sit out of the game for a while until you’ve saved up enough to make the purchase. Who wants to do that? It’s not the glamorous thing to do, and it certainly won’t win you any awards.

But it does offer you some benefits

First, it allows you to remain debt-free. We all know the benefits of being debt-free.

Next, it allows you to earn interest on your savings instead of paying interest to someone else. Your decision to pay now completely transforms the equation. You go from paying more than the asking price and being a slave to your paycheck, to having control of where your money goes. From the back seat to the driver’s seat.

It allows you time to shop around, compare features and prices, and make sure you’re getting the best deal. Do you really need the $300 blender, or will the $60 one do the job just as well? Could you find a discount code to get it down to $50? What’s the price on Amazon? Take time to think about which features you really need.

Finally, paying now gives you time to practice good old-fashioned delayed gratification (DG). As you approach your savings goal, you’re constantly denying yourself the pleasure of having the item. The more you flex your DG muscle the stronger it gets.

Either way you’ll have your item. Paying now, with your own money, sets you free from debt and ultimately puts you in control of your finances.

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Ripoff Alert #13 – Facebook Photo Tagging

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

Facebook Photo Tagging Virus

Everybody and their 8 year-old kid is on Facebook. In August, the site is expected to reach 1 billion active users a month. These users upload 300 million photos each day.

So naturally, Facebook and its users are ripe targets for scam attempts. Several technology blogs are reporting a new, widespread attempt by scammers to load a virus onto your computer via the photo-tagging notification system.

Here’s how it works: You receive an email saying you’ve been tagged in a photo. You open the email, and it looks very similar to notification emails you’ve always received from Facebook. You click the link and BAM – a virus is loaded onto your computer in just 4 seconds. Then you’re redirected to a real-looking Facebook page. It’s quick, seamless, and you probably didn’t notice a thing.

But before you click on any links, look closely at the sender’s email address. You’ll notice it’s spelled “Faceboook” with three Os. Another way you can tell it’s a ruse is to hover your mouse pointer over any links in the email. Without clicking, you should be able to see they won’t take you to Facebook.

The scamsters know we’ve all received so many of these notification emails in the past that we don’t even think about it anymore. They are using our trust against us. Or maybe just our habits.

Make it a habit to be suspicious of any emails you receive that have links in them. Before you click, make sure you really recognize the email address. In this case, it’s probably best to just delete the email, log into your Facebook account using a new tab, and look at the new photos on your profile page.

Think before you click and you’ll stay out of trouble.

Student Loan Debt is Crushing Dreams

For our parents and grandparents, going to college wasn’t necessarily a step in gaining a good job and earning a decent living. Fast forward a few decades and everyone assumes that after high school our formal education continues at least four more years.

It’s understood among Gen Y and the Millennials that anyone who wants a well-paying job needs at least an undergraduate degree. But this isn’t an invitation to spend gobs of money to attend any school that accepts you. Likewise, the party scene and the caliber of the football team should have no bearing on your decision.

Instead, take a good look at tuition, fees, room and board, and what level of scholarships and grants are available.  In fact, total cost should be a primary consideration for students in their college selection process.

chart of the day, tuition, home prices, cpi, 1978-2010

This graph shows college tuition compared with home prices and the overall CPI from 1978 to 2010. (The CPI, or Consumer Price Index, is an overall measure of the cost of a set of goods and services paid by consumers over time.) Since 1978, college tuition has increased by a factor of more than 10x from its base of 100, compared with housing at 4x and the overall CPI at about 3.5x. It’s clear as day that college tuition is quickly becoming our next bubble.

This is the reason grads are in a heap of trouble today. Students simply enrolled in colleges regardless of the cost. They filled out some forms, took a quiz and the money just showed up. Now that they’re graduating and faced with dim job prospects, they’re wondering whether that private school tuition was such a good investment.

What many prospective college students fail to do today is think about the total, long-term cost of going to college. When taking out a car loan or mortgage, there are certain terms laid out by the lender that force us to look at the long-term costs, how long we’ll be in debt, and whether we can afford to make the payments each month going forward. Student loans are much more open-ended because of the various repayment and deferment options, which makes it much harder to assess the total costs beforehand. Plus, high school seniors often have no idea what their salaries will be after graduation, so repayment is far from their minds.

My youngest sister is going to college in the fall, which got me thinking about all of this. She’s going into psychology, but isn’t sure what she wants to do with it. Over the past year we’ve talked about student loans occasionally. I remind her of the financial newspapers and blogs, which go to great lengths to document the effects of crushing debt levels on the lives of grads and their young families.

Some couples are putting off marriage, buying a home or having a baby because of their student loan debt. As an example, my wife and I are putting off saving for a house down payment until we pay off more of our debt.

If you have a child or other family member in high school, talk to them about these issues. Help them understand that they’ll eventually have to pay back all those loans. Let them know about other options like scholarships, grants and even going to community college for a year or two.

A college education is an investment, just like stocks or starting your own business. Therefore, students need to think about whether the benefits outweigh the costs for their chosen school and what their likely salary will be based on their major. This will give them motivation to limit their borrowing and think ahead to the repayment process after graduation.

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Ripoff Alert #12 – Microsoft Tech Support Edition

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

Microsoft Tech Support Scam

How do you know if your computer really is vulnerable?

Fraudsters are looking up publicly available names and phone numbers and calling people, claiming to be from Microsoft Tech Support or Windows Helpdesk. They try to convince you that unless you give them access to your laptop or PC, your computer is at risk of crashing or getting a virus.

Their tactics vary. Some try to gain remote access to your machine, while others ask you to install malicious software that will capture your usernames and passwords. After they’ve “fixed” the issue, they send you a bill for hundreds of dollars. There have been a few unsuspecting victims who have lost over $1,000 in this scam.

Others will try to get your credit card information out of you over the phone and charge you for phony services. Still others send you to a fake website and ask you to enter your credit card information there.

You might think the caller is legitimate because he’s able to correctly guess which operating system you are using. In reality, this isn’t too hard because there are only a few mainstream operating systems out there.

All of this isn’t Microsoft’s fault. Microsoft says on their website they will never call you and ask for money to fix a computer problem. They say it in bold type: Do not trust unsolicited calls.

Here’s what you need to know to protect yourself. Never give a third party control of your computer unless you can confirm they’re from a legitimate tech support organization you have reached out to. Again, don’t trust an unsolicited caller who claims he will solve your computer problems.

Also, don’t buy any software or services from anyone who claims to be from a helpdesk, tech support or service center.

If you suspect your PC is infected by a virus or malware, download and run free software from Avast and MalwareBytes. Spybot Search & Destroy is also an excellent tool. For the best protection, make sure to keep these up to date.

Ripoff Alert #11 – Fake Government Websites Edition

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe.

Websites Posing as Government

Your driver’s license expires in a few weeks and you know you need to renew it. So you get online and type “DMV” and your state into the search engine.

You click on the first link without thinking – because who impersonates the government, right? Isn’t the government protecting its citizens by looking out for stuff like this?

Scamsters are now creating legitimate-looking websites and using SEO (Search Engine Optimization) to make their sites appear before the actual government website you’re looking for. Both federal and state government agencies are being impersonated in this scam.

In some cases they ask for money in return for access to forms you’re supposedly required to fill out. In other cases they’re just after your personal info, which they will later use for identity theft.

In addition to the DMV example, another red-hot scam involves the US Diversity Visa (DV) program. This program was enacted by Congress in the early ’90s to encourage people from countries with low rates of immigration to the US to come and live here. It’s a particularly lucrative target for scamsters because the demand for them is so high, but the US government only grants 55,000 diversity visas each year. These websites offer help filling out the forms or try to extract payment from applicants. Some even claim to increase your chances of winning the lottery but the truth is, winners are selected randomly. There isn’t anybody you can pay to increase your chances.

These and other fake websites often have a “support” phone number you can call, which might route you to a call center overseas. You might think you’re dealing with a legitimate organization, but it could be anybody on the other end of the line.

The best way to protect yourself when looking for government websites is to make sure the URL ends in “.gov”. If you’re asked to pay a fee for access to government forms, you know you’re about to be ripped off. Never give your personal information unless you know exactly why it’s needed and whether the website is secure. Secure websites will start with “https” and have a lock icon.

The web provides easy access to a wealth of information for just about any topic. But this also makes it easy for criminals here and overseas to set up shop and take advantage of unsuspecting users. Be careful out there!

5 All-Natural Homemade Beauty Products That Will Save You Money

We all want to look good, but some people spend way too much money on beauty products. From wrinkle creams to lotions and potions that promise glowing skin, there is a wide variety of beauty products available today. While it is nice to have a vast selection of beauty products to choose from, many of these products can be quite expensive and can contain harsh chemicals that are bad for your skin. The reality is that many of the beauty products you find on the shelves of stores can be replaced with homemade versions that won’t break the bank or damage your skin. If you want to save money while looking good naturally, here are 5 great homemade beauty products you can create yourself.

1. Yogurt And Fruit. Yogurt and fruit may sound like a yummy treat, but these foods can also give you a great exfoliating facial treatment. A fruit and yogurt facial can be just as effective as an expensive store bought kind.

2. Lavender And Rosemary Hair Oil. If you want to give your hair daily protection while leaving it smelling beautiful, try making a lavender and rosemary hair oil. Simply blend together the lavender and rosemary and rub the oil on a brush before brushing your hair. When blended together, lavender and rosemary makes a nourishing hair treatment.

3. Face Mask. A face mask is the perfect way to bring back the health of your skin. Most store bought face masks can be quite expensive, but it’s super easy to make a face mask at home. For a refreshing apple face mask, simply blend applesauce and wheat germ together and you have an instant face mask. Or, blend together an egg, an avocado, a carrot, and some honey and you’ll have a face mask that is chock full of the vitamins needed for healthy looking skin.

4. Hand Sanitizer. If you want to make a quick hand sanitizer that will leave your hands moisturized and clean, simply blend a little aloe vera gel with some rubbing alcohol and a few drops of your favorite essential oil. This mixture will create a cleansing hand cleaner that is gentle on your skin without costing tons of money.

5. After Bath Or Shower Body Oil. If you want to create a great after bath or shower body oil that will leave your skin hydrated and smelling good, all you need to do is blend olive oil with your favorite scented oil. Almost everyone has olive oil in a cabinet somewhere which makes this soothing after bath or shower oil really simple to make.

Looking good doesn’t have to cost a lot of money. With just a little creativity and imagination, you, too, can create all natural homemade beauty products. Not only are homemade beauty products cheaper than store bought brands, but they do not contain harsh chemicals that can damage your skin or hair. If you want to save money while giving your skin or hair exactly what it needs to look and feel healthy, try creating one of the above listed homemade beauty products.

Gracie Coster enjoys writing about fashion, health, and term life insurance quotes.

[Editor’s Note: Thanks for the guest post, Gracie! As a guy, this is a topic I know nothing about. For anyone looking to save on beauty products, give a few of these a try!]