The other day I found out that banks are offering incentives for customers to close out their home equity lines of credit. The largest incentive I’ve seen was a $700 gift card. Banks are targeting people that don’t have a balance or have a small balance they can most likely pay off pretty quickly.

When I first heard of this happening, I was surprised. As I thought about it more, the more sense it made. Banks have to keep reserves based on the loan outstandings; therefore the more open lines of credit, the more reserves. What I think is really crazy is that banks are still desperately trying to make their loan goals for 2008 despite the financial crisis. It is extremely hard to get approved for a loan now, not to mention high interest rates. I checked the other day for rates on a second mortgage loan and they are as low as 7.9%.

You would think that with prime rate dropping, banks would lower their interest rates on loans. It seems the opposite is happening. How are high interest rates going to spur consumers to refinance? It just seems backwards to me.

Posted under Economy

In ultimate frugal fashion, this year I decided to make many of our Christmas gifts.  Mr. Money and I had decided months ago we wouldn’t buy each other anything, despite our persistent longing for a Nintendo Wii.  We concluded that the money would be better put to use sitting in our savings account just in case I lose my job. If we go a few more months wanting one, we may cave and purchase one.  Who knows, maybe in a few months they’ll drop in price if the economy gets worse and no one is buying them.  A girl can only hope!

I feel a little miserly knowing that we have money tucked away in a savings account and I’m not spending a lot on Christmas.  I know a lot of the time I’m afraid we don’t have enough money in our checking account and that we’re “poor” but I know that cushion is there in case we need it.  It’s a good feeling, but at the same time I feel like I’m being cheap.  Shouldn’t I be spending $25 per person on Christmas gifts?  After all, I’ve got the money.  I seriously had to sit down one day and think about it.  Sure, we’ve got the money.  But that is money for emergencies.   Christmas is not an emergency.  So I set out to make Christmas special this year.  I am making (and have made) many different Christmas gifts for those I love.  Here are some things I’m doing this year:

• I learned how to make soap.  Yes, you read that right.  Soap! with real lye!  It is so much fun albeit dangerous.  I enjoy making different scents with people in mind.  I also get immense pleasure using the soap I’ve hand crafted in the shower.  It’s pretty cool!
• I knit many gifts.  My niece and nephew will be recipients of hats with ear flaps.  My niece (two years old) will probably not care, and my nephew (six years old), well I’m hoping he thinks it’s cool.  Either that, or he’ll remember this gift for the rest of his life as The Gift that Sucked.  I’m also knitting scarves for other people, and dishcloths!  Everyone can use a dishcloth!
• I’m making a candy cane sugar scrub for the women. How yummy does that sound?  I can’t wait to try it myself!  Tomorrow I’m going to the Dollar Tree to buy jars to put it in.
• I’m going to make some homemade laundry detergent samples and give that to people with the recipe.  Everyone always asks about my homemade laundry detergent and I thought this would be the perfect time to try it without them having to make it themselves!

I’m going to pair these items together depending on the person, and put them into a $1 reusable cloth grocery bag so they can reuse that and help eliminate plastic bags!  I wanted to get ambitious and make my own cloth bags and use those, but I don’t think that’s happening this year.  I don’t think I have the time!
We haven’t spent a ton of money this year on presents, but I am excited that I’ll be able to share more gifts with more people than I could in the past.  Personally I’d rather get something hand made from someone because that just shows they actually care, and they took the time to make it for me.  It just seems more personal and kind.  I think that’s the real meaning of Christmas.

Are you making gifts for people this year?  What’s the best hand made present you’ve received?

Posted under Economy, Save Your Money

Well, it looks like I’m safe for about another year at my job.  There is talk that they won’t be switching over branches in my area to the new bank until third quarter of next year.  Also, I heard that they’ll look to find me a comparable position to the one I’m in currently, and if they can’t find me one, I’ll most likely get three months pay as a severance package.  I’m breathing a sigh of relief.  Rather than wallowing in my sorrows, I’m going to make a financial plan and stick with it for the next 9 months or so.

• I am planning on paying off the last student loan in nine months.  We owe $6850 on it.  That’s a payment of $760 a month.  It sounds astronomical, but I think we can do it if we really focus.  Any extra snowflake money will go towards it.  I think that the peace of mind from having that gone, and having one less payment will be worth it.  Then it’s to attack that car loan.

• I will still save 20% of my paycheck in savings each pay period.  This way I’ll still feel that I’m proactively saving money.  Every little bit helps!

• I’ll continue to make minimum payments on our other debts, and maybe some small principal only payments as well.  

• I need to come up with a zero based budget.  For some reason this scares the bejeebus out of me!

What is your opinion of my financial plan?  Do you think I should keep saving instead of paying off that loan early?

Posted under Economy, Jobs