Debt, Credit Card & Consolidation Current News Digest

LifeLock spent millions spreading its CEO’s Social Security Number all across America. Now the firm will spend $12 million settling claims that it engaged in deceptive advertising and failed to protect customers' personal information.

The Federal Trade Commission and 35 state attorneys general announced on Tuesday that Lifelock is changing its business model to address allegations of unfair and deceptive business practices. 

"They developed a market to capitalize on consumers' fear,"  FTC Chairman Jon Leibowitz said at a news conference.  "They were exaggerating the service they offered to consumers. This was a fairly egregious case of deceptive advertising."

Consumers who signed up with the service as early as 2005 — about 1 million customers in all — will be eligible for refunds. The fine is steep for the firm, said Leibowitz.

"We're taking all the money they had on hand," he said.

The firm remains in business, and has agreed to change its advertising practices. Leibowitz said its services do provide some protection against identity theft, but not the level it repeatedly promised consumers in its well-known advertising campaigns.

LifeLock made a name for itself by plastering CEO Todd Davis' Social Security Number across billboards and other advertising. Many of the ads suggested that LifeLock could provide absolute protection against ID theft.

In one ad, the firm said it could make consumers' personal information "useless to a criminal."

"Consumers received far less protection than they were promised," Leibowitz said.  For example, Lifelock was useless against identity theft involving existing credit cards or bank accounts, he said.

The firm also collected extensive personal information from consumers when they registered, and promised to keep that data safe. The FTC says LifeLock failed to do so. In its complaint, the FTC says the firm:

* Did not encrypt data, but stored and transmitted it in clear text.

* Failed to require employees to use hard-to-guess passwords.

* Did not install patches and critical updates.

* Did not plan for common vulnerabilities to their network, including SQL injection attacks.

* Did not install antivirus software on employee computers.

* Allowed faxes with personal information to be available in open office area.

Illinois Attorney General Lisa Madigan said LifeLock engaged in "scare tactics" while advertising to state residents.  She said the firm sent letters to individual consumers implying they were at heightened risk for ID theft — one of which was mailed to her at home.

"Don't be scared into spending your hard-earned money," she said, addressing consumers. 

Lifelock has numerous imitators in the marketplace.  Madigan said her office will continue to monitor their advertising.

"Know that if you are misleading consumers, we will go after you," she said.

LifeLock CEO Todd Davis said his firm has addressed all concerns raised by the FTC and has long since abandoned many of the techniques the agency said were misleading.

"This has has no impact on current practices or products," he said. "We haven't used the (Social Security number) ad in quite some time."  He also said personal data stored by LifeLock is now carefully guarded, and that the FTC complaint refers to vulnerabilites that have been addressed.

He said he welcomed new federal regulation in the competitive field of ID theft protection, comparing the industry to the early years of automobiles.

Related coverage

Court: LifeLock using 'unfair business practice'

Foolproof way to prevent ID theft? Nope

Experian sues LifeLock, alleges fraud

"When cars came out there weren't speed limits," he said.  "We were told we were speeding. We understand and accept responsibility. We don't want in any way for someone to be misled."

LifeLock consumers will soon receive letters explaining how they can apply for refunds.

Madigan added that most of the services provided by paid ID theft prevention firms are available to consumers for free.  They can place fraud alerts on their credit files at the credit bureaus, and get copies of their credit reports at AnnualCreditReport.com.

Become a Red Tape Chronicles Facebook fan or follow me at http://twitter.com/RedTapeChron

When I learned about E*Trade selling their banking business to Discover, I knew my days with them were numbered (I later learned that only bank accounts with no brokerage relationships were moving… but alas the ball was already rolling). Brokers are finding it increasingly difficult to differentiate themselves and when you can get good customer service at a cheaper cost elsewhere, even the pioneers are going to find their businesses suffering. Those who have been reading for a while may remember me mentioning my investments at E*Trade and how I’ve been doing any new investing with TradeKing. My original approach was to leave my assets at E*Trade until I sell them, but a recent offer changed my mind.

TradeKing has a promotion where they will reimburse new accounts, defined as opened in the last thirty days, up to $150 in transfer fees. My account is far older than that but I asked a CSR if they’d be willing to extend that offer to me and they agreed! (had they not agreed, I wouldn’t have transferred…) E*Trade has a $60 full account transfer fee, much less than the $150 reimbursement limit, that is paid using account assets. I’m not sure what would happen if I had $0 cash, but the simple solution was to transfer $60 into the account prior to initiating the transfer. If you plan on doing this, be sure you have the amount of the fee in cash or you might not like what the brokerage does on your behalf!

ACATS

The process, surprisingly, was painless. Anytime you want to transfer your assets, you need to fill out a form with the receiving brokerage because they are the ones that initiate the transfer. For a full account transfer, TradeKing has a short ACATS form you must send along with your most recent account statement. When you want to transfer assets from one brokerage to another, you need to keep one acronym in mind – ACATS. ACATS stands for Automated Customer Account Transfer Service and that’s a system setup by the National Securities Clearing Corporation (NSCC) to automatically transfer assets from one trading account to another.

Historical Transaction Data

The only tricky part of the transaction has to do with historical data. When I transfer my account assets from E*Trade to TradeKing, the historical data isn’t included. I will need to go into my TradeKing account and manually enter the historical transaction data for those shares. I’m not sure how this will play out whenever I do my taxes but I’ve kept electronic copies of trade confirmations so I can prove, if the IRS requests it, when the shares were acquired. Since I’ll be closing my E*Trade account, I suspect they won’t be retaining those records.

Why am I transferring my assets? Simplification. I have a few holdings in E*Trade (shares of Apple, Southwest, M&T Bank, and Costco) and when I closed my E*Trade bank account, I was considered closing my brokerage account so I would have one less account to deal with. Obviously that’s a terrible reason to sell stocks, so the alternative was to transfer it to my main brokerage, TradeKing (#1 reason for them being #1 is price, $4.95 per trade). There’s nothing wrong with E*Trade, I’ve always been satisfied with them, it’s just a matter of another broker being slightly better.

One more account scratched off the list! (it’s looking pretty slim now)

Transferring Brokerage Assets from E*Trade to TradeKing from personal finance blog Bargaineering.com.

This post is from new staff writer Sierra Black. Sierra writes about frugality, sustainable living, and getting her kids to eat kale at Childwild.com.

The recession has hit families where they live. For many, it’s forced a change of address. Think about all those foreclosed homes and urban deserts: One in every 400 homes received a foreclosure notice last year. Unemployment is approaching 10%. Some families no longer have a place to call home at all.

That’s the situation for Jamie Alden (not her real name), a single mom of four kids who found herself caught up in a series of recession nightmares that have left her homeless and jobless, but not hopeless. She’s chronicling her adventures on The Boxcar Kids, where she writes with painful frankness about trying to find a job, help her kids thrive at school and keep her family together while living in a small travel trailer with her children.

The Boxcar Kids
Alden is a far cry from the stereotypical homeless person. A professional with a master’s degree in anthropology, Alden had a career for over a decade in environmental science. She relocated to California after a doctor recommended the warmer, drier climate would help one of her children, who has a chronic illness.

Like a lot of relocating families, Alden accepted a job in her new city before she’d sold her house. So she rented it out, and rented a place near her new job.

Then the economy tanked. Her renters defaulted, and she used most of her savings going through expensive legal ordeals to evict them. She was left with a damaged home that she could not find new tenants for. Unable to make the mortgage payments and pay rent on her new home, she lost the house to foreclosure.

Meanwhile, her company started layoffs. “California has a little budget problem,” she says sardonically. “We couldn’t work on any of our contracts.” She survived the first two rounds, but eventually her lack of seniority put her under the axe. As soon as he found out she’d lost her job, her landlord asked her to move out. “He knew I wouldn’t be able to pay the rent,” she says.

Throughout the summer, Alden and her kids found themselves living in state parks in second-hand tents. She used free hotel stays she’d accumulated over years of business travel to buy them an occasional night of warm beds and hot showers.

Now they have a 26-foot RV they call home. The school district considers them homeless, but Alden doesn’t. Homeless, she says, was when they lived in a tent and had to move every week. This is comparative luxury.

Alden named her blog after a series of popular early 20th century children’s books about four kids who live a scrappy, happy life in a boxcar after their parents die, until they are rescued by a kindly, rich grandparent. There’s no rich grandparent to rescue Alden and her kids from their boxcar. Instead, Alden is learning to navigate a maze of social services and getting creative about frugality in ways most of us have never considered.

She’s not alone. Many formerly middle-class families have found themselves at least temporarily without a home to call their own. Foreclosures were filed against 2.8 million properties in 2009, while apartment vacancies are also at a 30-year high water mark. A lot of people are just not living in houses these days.

Where are they going? Many are staying with family or friends. Some are in shelters. Others are what Alden calls “alternatively housed” in RVs, camper vans, anything with a roof.

The best defense is a good offense
Alden’s story, and the many others like it are a scary wake-up call for me. My own family is not so far from the precipice these folks fell off of.

We own a home, but don’t have a lot of equity in it. We have a small emergency fund, but not enough to get us through even one month of normal living expenses. I’ve been putting all our money into debt repayment, not building up capital. We have some retirement funds that are still pretty hung over from the financial collapse in 2008.

In other words, we’re a lot like many middle-class families: comfortable enough day-to-day, but not secure enough to withstand a major disaster. Time to make an emergency plan: Not just an emergency fund, but a plan that goes beyond bank accounts. Here’s what I came up with:

• Be prepared.This means building up more of an emergency fund. Experts argue over how many months expenses you should put by, but no one seems to think less than 3 months is safe.
• Be frugal. Living simply now means having fewer adjustments to make in the event of a financial catastrophe. Not only can you pay off debts and build up savings faster, but you’re already living below your means. If the means suddenly shrink, you have a smaller gap to cover to make ends meet.
• Be organized. Know your net worth, and keep tabs on all your accounts. When we were moving last year, I discovered a stock fund I’d forgotten I had. Those forgotten assets matter if your income dries out.
• Protect your credit. Keep credit accounts open and in good standing. In general, running up credit card bills is Bad Plan Theater. If your plastic is what’s standing between you and homelessness, reconsider your position. If you expect to be able to resolve your financial crisis within six months, charging some expenses might be a better plan than tapping retirement accounts.
• Know your options. Do you have friends and family you could stay with in a housing crisis? Another career you could transition into if you had to? Valuable Stuff you could sell?
• Be ready to learn. If you find yourself in a financial crisis, you’ll be running a maze of social services at a time when you’re likely to be exhausted and stressed. Being on top of the organizational and financial strategies I mentioned above will not only make you less likely to need these services, it’ll make you better prepared if you do.

If you’re partnered, it’s probably a good idea to talk over a family disaster plan with your better half. You know, before you’re living in an actual disaster. These conversations always go better when they’re hypothetical.

Making an emergency plan was a bit like making a will; we had to think about what would happen to our kids, our stuff and our estate should we suddenly be unable to care for it. It was no fun, I hope to never need it, but I’m glad to have done it. For more tips on emergency planning, check out Philip Brewer’s article on Wise Bread.

—
Related Articles at Get Rich Slowly:

• Healthy Food on an Unhealthy Budget
• links for 2007-05-11
• Could You Eat Healthfully on One Dollar a Day?
• A Treatise of True Things About Whole Foods Market
• Fighting Food-Budget Killers

Over the past year, one of the frequent questions I get is: “Where I can safely invest my money to get a decent return?” For example, Joseph wrote in November:

Around February/March I should have $5,000 to invest. My debts are under control and my wife and I have lowered our monthly expenses. I was wondering if you had any advice on ways to invest $5,000? I don’t want a savings account because the interest rates are just sad, but I don’t know if a certificate of deposit or money market account is worth the effort.

Or take this e-mail I got from MG just last week:

How about addressing how to invest $5,000, $10,000, or $15,000 these days? With high-yield savings rates getting lower and lower and the stock market not doing so well either, what would you recommend?

Because the stock market has been so volatile over the past fifteen years, a lot of people are scared to invest. Or they just want to find safe places to put part of their money in the short term. Unfortunately, it’s not like new ways to invest safely are being invented. If you want your money to be safe, you’ve basically got the same tried-and-true investments you’re already familiar with.

Two recent articles in national magazines addressed this subject. Let’s look at their advice.

Advice from Consumer Reports
The March 2010 issue of Consumer Reports has a great article on finding the best rates on your savings. They start the same place we all start: bank accounts. Here’s what Consumer Reports recommends:

• Compare bank yields. They recommend checking out rates at Colorado Federal Savings Bank, Capital One Direct, and Bank of Internet, as well as old stand-bys like Ally Bank and FNBO Direct. But remember: Sometimes the best place to earn money on your savings is in a checking account. You can use CheckingFinder to track down deals on rewards checking accounts around the country.
• Be cautious about bonds. Bonds continue to be one of my blind spots, though I’m learning more about them as time goes on. The Consumer Reports article cautions against bonds right now because their long-term outlook isn’t very good. If you’re interested in bonds, consider Treasury Inflation-Protected Securities (TIPS), which give a modest return but offer built-in protection against inflation. (I’ve got a small post for later today that looks at I Bonds, which also protect against inflation.)
• Look at stock dividends. Some stocks pay regular dividends to shareholders, dishing out five or six percent a year. That’s probably way more than your bank pays on savings, but it also exposes you to added risk. You can reduce this risk by diversifying: Buy a mutual fund with high dividends instead of individual stocks. Examples include XLU (a utilities sector exchange-traded fund with a 4.31% yield), TWEIX (American Century Equity Income fund, yielding 2.77%), VEIPX (Vanguard Equity Income fund, yielding 3.14%), and VWNFX (Vanguard Windsor II fund, yielding 2.33%).

To be honest, I’m not sure that chasing stock dividends is the best way to get safe savings. Yes, I believe the market will increase over the long term, but folks who want safe harbors are usually looking to avoid risk, and over the short term, stock funds are risky, even if they do have nice dividends.

The article suggests another option, one that I happen to like a lot. Because yields are so low right now, it can make sense to use your money to pay down your mortgage instead. You shouldn’t do this if you don’t have emergency savings yet, but if you’re near retirement or you’re still paying private mortgage insurance, this can be an especially great use of your savings dollars.

Advice from Kiplinger’s
The March 2010 issue of Kiplinger’s Personal Finance has a small section on finding better rates. Their advice? “Start by looking online. Ally Bank is paying 1.5% 1.44% on savings — way north of the 0.23% average rate on money-market funds.”

Kiplinger’s recommends taking on a little more risk in order to get better rates. In particular, the magazine suggests:

• Vanguard Short-Term Investment-Grade Bond Fund (VFSTX), which has a 3.78% yield as of the end of January. (This fund has a $3,000 minimum investment.)
• Fidelity Intermediate Municipal Income Fund (FLTMX), which has a 3.50% yield, but offers tax advantages. (But there’s a $10,000 minimum investment.)
• Fidelity GNMA Fund (, which owns home mortgages, currently has a 3.68% yield. (This fund has a $2,500 minimum investment; $500 for IRAs.)

For safe savings, bond funds may make more sense than stock funds, but I still think they’re riskier than most people in this situation are after. I guess it depends on what your goals are.

The bottom line
As you prepare to save, you need to ask yourself a few questions:

• What are your goals with this money? If you’re saving for retirement, stashing money in a savings account probably isn’t the best way to go about it. You’re not going to get the returns you need. In fact, you’ll barely keep up with inflation.
• How much risk can you tolerate? Risk and return are intertwined. If you want high rates of return, you’re not going to get them with safe investments. To do that, you’ve got to be willing to tolerate ups and downs. If you’re okay giving up potential gains in order to protect your money, then there are a variety of options.
• How liquid do you need the money to be? That is, do you want easy access to the money? Some investments — like certificates of deposit and savings bonds — can offer higher rates of return — if you promise not to touch the money for months or years.

Where do you put money that you want to keep safe? Do you even worry about returns? How can GRS readers find a good balance between safety and earnings?

This website may receive payment by the companies mentioned in this blog.

—
Related Articles at Get Rich Slowly:

• Daily Links: Better Things to Do With My Money Edition
• Best Money Market Rates & Savings Account Interest Rates - Updated DAILY
• Highest CD (Certificates of Deposit) Rates - Updated DAILY
• Free Home-Equity Information Kit
• Money Hack: Use CDs to Beat Falling Interest Rates

If you’re looking for an easy-to-use, effective home budget software product for your desktop, I would like to recommend one that is quickly becoming very popular among many savers I know. While many people are very familiar with Quicken, they’ve got a rival that’s fast grabbing market share due to its top features and great customer and technical support. That budget planning software is none other than YNAB (You Need A Budget).

If you’re interested in trying out the product, you can also download YNAB for a 7 day free trial. Note that the YNAB site also offers additional items through their online store, including:

• YNAB 3 software
• The YNAB Way (e-book), which explains the YNAB methodology — a debt reduction strategy upon which YNAB 3 is based
• A YNAB 3 Gift Certificate for a friend or loved one
• A one hour, one-on-one budget coaching session
• An UNCredit Card USB Drive

The coupon code “digerati” applies to all the items above (except for the budget coaching session), which you’ll find in the YNAB store.

The “You Need A Budget” Methodology

YNAB is based on solid money management principles and a methodology that helps you keep your finances under control. Here are some rules that YNAB aims to address:

• Rule #1: Stop living paycheck to paycheck. YNAB will guide you through living within your means.
• Rule #2: Give every dollar a job. You’ll be able to account for every dollar you have.
• Rule #3: Save for a rainy day. You’ll get a good picture of your savings through this tool.
• Rule #4: Roll with the punches. YNAB is a flexible tool that allows you to adjust your budget whenever necessary.

YNAB Features

If you still need a bit more information, here’s a summary of YNAB’s features:

1. You can import your data from various bank accounts into YNAB.
2. YNAB employs the envelope budgeting approach.
3. You can save more easily by using YNAB’s saving methodology.
4. Debt reduction becomes an easier task by using this budgeting tool.
5. You can schedule recurring transactions easily.
6. The tool allows you to keep an eye out on your spending, particularly your unexpected expenses.
7. YNAB has features such as “Quickbudget”, that allow you to work on your budget quickly and efficiently.

Home Budget Software: YNAB Sale, 15% Off Regular Price

Many taxpayers are receiving W-2 forms and other tax documents in the mail. While some people are dreading having to prepare their annual tax return, others are looking forward to getting a big, fat refund – especially if they are unemployed or experiencing financial hardship.

Anyone looking forward to getting an income tax refund this year may be tempted to use one of those rapid refund services to get their money quicker. But taxpayers are better off skipping refund anticipation loans and just waiting for their money.

Loans Prey on Low-Income People

Many of the people who rely on refund anticipation loans have low or moderate incomes. They are socked with fees to receive personal loans to tide them over until they receive their tax refunds. The typical cost of one of these loans is around $250, according to the Wisconsin Department of Revenue. More than 8 million U.S. taxpayers lost about $800 million from their refunds last year because of these loans, according to Consumer Affairs.

Skip Personal Loan and File Electronically

Taxpayers usually receive their refunds in two weeks or less. For most people, filing electronically and having refunds direct deposited in a bank account speeds up the amount of time it takes to receive a tax refund. It doesn’t make sense to pay a fee for a loan or for a refund anticipation check when a refund can be direct deposited in a bank account in such a short amount of time.

More Fees for Refunds

Refund anticipation checks, which usually cost about $30, should also be avoided. About 12 million taxpayers paid about $336 million in fees to receive refund anticipation checks last year.

Taxpayers who don’t have a bank account should open one before filing their taxes. There are many free or low-cost bank accounts that don’t require a minimum balance. In many communities, free tax help is available from various agencies. Volunteers can help prepare and file returns electronically. 

Change Tax Withholding

Finally, it’s important to note that any taxpayer who is receiving a huge tax refund may have too much of their income withheld from each paycheck. Taxpayers can change their withholding by filling out a new W-4 form, which is available from the Internal Revenue Service (IRS). 

Anyone who receives a large tax refund has basically given the federal government an interest-free loan during that tax year. Changing withholding allows taxpayers to keep more of their income throughout the year. The IRS has a calculator to help taxpayers figure out how much of their paychecks to have withheld.

Many people unfortunately find themselves in the situation where they have ten bills stacked on their kitchen table, and only enough money to pay three or four. Often, if an unpaid personal loan is one of those bills, it will tend to not be paid as quickly as, say, the electricity bill.

Some unsecured personal loan recipients take this a step further and just decide not to pay back the loan at all, not even make any effort to contact the lender, and just say forget it.

Here are three reasons why it may be smart to make an attempt to pay back that personal loan gone bad:

1. Integrity Is on the Line Here

Let’s be honest: people who completely skip out on loans have done an incredible amount of damage to the U.S. economy and, frankly, American society in general.

Once forfeited, integrity is a difficult thing to recover. That unpaid personal loan may not seem like a big deal, but to the extent that it is an expression of integrity, it absolutely is a big deal.

2. Credit Issues

Some borrowers may feel like it’s too late to worry about credit reports, but that, too, can be a problematic approach to this problem.

Unsecured personal loans are not necessarily based upon formal credit reports, but personal lenders do communicate with each other. For this reason, once a personal loan is not paid back to one lender, going across the street–or to another Web site–to get another personal loan isn’t likely to be easy.

Losing the ability to get any kind of credit is a tough situation to be in.

3. Stuck Money

The expression “stuck money” refers, quite colorfully, to the idea that owing money is a common reason for not being able to move freely in life. This can be the case with an unsecured personal loan gone bad.

Besides the psychological side of inertia, roadblocks to rebuilding the finances can be numerous when there are unpaid personal loans out that don’t receive any attention. For example, personal lenders may try to levy bank accounts or take uncooperative borrowers to court.

This article is not meant as a scold to people who cannot currently pay back a problematic personal loan. Rather, these words are meant to encourage borrowers to do their best to pay back a personal loan if at all possible, because there are at least three really good reasons for making that effort.

On today’s episode of The Personal Finance Hour, I’ll join Jim from Bargaineering to discuss the wonderful of banking. We’ll talk about online banks, offline banks, savings accounts, CD rates, and more. (We’ll also talk about how to optimize your accounts.)

This show will air live at 3pm Pacific (6pm Eastern). It’s much more entertaining for everyone when you call in to participate. We’d love to hear how you use your bank accounts. Do you have any tips or tricks you can share? Call us at 1-347-327-9144 share (or join the rowdy crew in the chat room).

Update: The show is over. Thanks to the five people who called in. We had a good time chatting about the difference between banks and credit unions, the virtues of reward checking accounts, the importance of customer service, and just what a money market account lets you do. Tune in next week when we chat about being thankful (surprise surprise).

The Personal Finance Hour
There are a few ways you can catch The Personal Finance Hour. You can listen through an audio feed at the show page, or you can also listen through this widget:

We’re also on iTunes! You can subscribe to The Personal Finance Hour as a weekly podcast by following this link (which will open iTunes).

Jim and I do this most Mondays — and we hope you’ll join us. We think this is a fun way to connect with readers and to help everyone learn more about money management. You can catch The Personal Finance Hour live at 3pm Pacific (6pm Eastern) nearly every Monday.

—
Related Articles at Get Rich Slowly:

• The Personal Finance Hour, Episode 11: Frugal Weekend Fun
• Your Secret Credit Scores
• The Personal Finance Hour, Episode 12: Earning Extra Money
• The Personal Finance Hour, Episode 4: Couples and Finances
• The Personal Finance Hour, Episode 3: Finding Balance

Living in San Francisco, one of the most expensive places in the country, I have learned a lot about budgets. First lesson: I need a budget. Recently, I kept track of my monthly expenditures and was shocked by the number in my “entertainment” column; no wonder my paychecks disappear so quickly.

There are obvious alternatives to nights on the town, like socializing at home. However, sometimes we’re obligated to go out—a friend’s birthday, for example, or the need to leave the house and indulge ourselves a little. Fortunately, there are plenty of ways to cut corners and still have a good time without entertaining ourselves into debt.

1. The credit card—leave home without it!
   It’s easy to go out with every intention of scrimping and saving, but it’s much harder to put those intentions into practice. If you have sufficient funds in the bank, the best thing to do is to withdraw a set amount of cash before you go out and leave the credit card at home. That way, you only spend what you can truly afford. (It feels pretty silly asking to borrow money for dessert or an extra drink.)




2. They call it happy hour for a reason.
   People tend to go out to dinner or meet up later in the evening, especially on the weekends. Unfortunately, they’re missing some great deals courtesy of local bars and restaurants. Many places offer happy hours (which usually last at least two or three hours, despite the singular name) with food and drink deals like half-priced cocktails, 2-for-1 appetizers, cheap beer, etc. There’s no reason why the party can’t get started a little earlier. Just try to get there early to snag a seat as happy hour is becoming increasingly popular (and crowded) in these penny-pinching times.




3. Dinner and drinks without loosening the purse strings.
   Dining out can be a difficult obstacle to staying within budget. Food and beverages are often overpriced and even if you order minimally, there’s a chance the rest of the group (who didn’t exercise such restraint) will want to split the bill. There are ways to get around this, though. First, consider ordering off the appetizer menu. It’s cheaper and the portions are much more reasonable. Another option is splitting an entrée with a friend—most main courses are enough for two people, or you can save half for tomorrow’s lunch. Keep an eye out for restaurant specials and coupons in the local paper, or go to Restaurant.com and buy gift certificates to restaurants in your area for significantly reduced prices. (A $25 gift certificate for $10 is a frequent deal on their Web site.)

   Beverages have a high markup so choose your poison wisely. Water is the best bet, but if you’re craving something with more flavor (or alcohol), just know you may have to cut back on something else during the night. Speaking of alcoholic beverages, ever notice how some mixed drinks are more expensive than others? That’s because patrons pay for the alcohol content, not whatever mixers are included. Stick to drinks with only one kind of alcohol or pick a stronger drink that you can sip on through the night. (Long Island Iced Tea is a popular choice among frugal drinkers. It’s pricier, but one or two should do the trick.) Sticking to domestic beers and ordering “well drinks” (read: not top-shelf liquor) are two more ways to keep the spending to a minimum.




4. Why pay for entertainment?
   Since moving to this pricey city, I’ve discovered the beauty of art show openings. They’re free, they happen at night, and there is usually a table of snacks and beverages to enjoy. (Hello, free dinner!) Plus, you’re introduced to new artists and their work. Check online or browse the local paper to see if any gallery shows or art walks are happening in your area.

   The Internet and newspaper are great sources for other events—concerts, book readings, community theater productions, shows at the local college, movie screenings—that are discounted or free. In fact, there are numerous Web sites and blogs dedicated to finding frugal forms of fun in various cities. Do a search online or read the calendar section of your city’s newspaper for updates on free or budget entertainment.

5. Have fun without spending a dime (or spending just a few of them).
   Having fun with friends doesn’t necessitate a restaurant or club setting. There are lots of ways to spend time together and enjoy a night out without dipping into grocery funds. Creativity is the key. One night, my friends and I created and participated in a scavenger hunt downtown. It was fun and we met new people as a result—all with zero impact on our finances.

   If weather permits, try a nighttime neighborhood tour or take a hike and go stargazing. There’s no reason why being active should be relegated to daytime, as long as you travel in a big group and are mindful of your surroundings. Stick to the safer parts of the city and use your best judgment.

   Bowling, though not free, is another affordable alternative to a night out. You split the cost of lanes, the brew is cheap, and you spend a night perfecting your game (or if you’re me, perfecting just how skillfully the ball goes straight into the gutter).

Wallets may be lean, but that doesn’t mean we can’t occasionally enjoy ourselves. In fact, escaping the house to socialize with friends is what makes tough times bearable. It lends a sense of normalcy to our financially unstable realities. And, there are benefits to frugal entertainment, such as discovering activities in our cities that we might not have explored before. It requires a little effort—well, if you consider going online or opening a newspaper an effort—but the results can be surprisingly rewarding and not just for our bank accounts. Remember, it’s not being cheap—it’s being creative.

Written on 11/12/2009 by DivineCaroline. DivineCaroline a place where people come together to learn from experts in the fields of health, spending, and parenting. Come discover, read, learn, laugh, and connect at DivineCaroline.com.

Photo Credit: Laram777

Prepaid credit cards gaining favor Salt Lake Tribune Finances » But consumer advocates warn they can come with as many or more fees as credit cards and bank accounts. Washington » Consumers are increasingly … and more »

« Previous entries