FMF posted today about one of his money saving tips, to tell your friends when you’re thinking of buying something. In his article, he mentions several instances of when he mentioned he was thinking about buying something and his neighbor offered him that very thing, used, either for free or at a low price. I want to expand on this tip because it’s a good one on many more levels.

Another reason to mention that you’re buying something is that your friends might know of special deals out there that you didn’t. It’s a lot better to find out that the DVD you just bought could’ve been had for less before you bought it than after. One of my friends was looking at buying the The Boston Red Sox 2004 World Series Collector’s Edition DVD which is on sale at Amazon for $103.99, that’s 20% off. That sounds like a good deal… unless you know that the same set can be had at DeepDiscountDVD for only $77.97! Mentioning it saved him over $26.

If you’re one who is hard to buy a gift for, mentioning something could be a subtle way of letting people know what they could get you for an upcoming birthday or holiday season. If you think it’s underhanded, it’s not, they’ll thank you for not having to struggle with something to get you.

How long do I really need to keep these old pay stubs? What about credit card statements, do I really need to keep old credit card statements or should I shred and recycle them? Let this be your guide to how long you need to keep your old W-2’s, tax returns, credit card statements, and all those other good financial documents you have stored away in that lock box of yours (or a stack of papers if you’re like me). In many cases, electronic versions are around so you could save yourself a lot of space and headache by saving them to files on your computer and burning it to a CD.

Tax Documents - 7 years - These are your W-2’s, donation receipts, or anything else you will need to prove that your tax return is accurate, including the return itself. The IRS can audit you after four years and up to seven years if they believe you’ve committed fraud. You might know you didn’t commit fraud, but the IRS doesn’t, so keep all your documents for 7 years so you can prove you didn’t. I just keep these in a file folder in a box.

Receipts - As Long As The Warranty Is - The warranty is useless to you if you can’t prove how long you’ve owned the product. If you have a business, these receipts are also your proof of expenses so keep these at least 7 years. Unless the product is over a hundred dollars, I don’t bother with the receipt. Also, some credit cards offer you longer warranties than the manufacturer and with them you won’t need a receipt, they have a record of the purchase already in your statement. You could always just staple the receipt to the instruction manual or warranty document and that’d be that.

Identity-Related or Personal Documents - Forever - Your birth certificate, passports, social security cards, and documents like marriage certificates you’ll obviously want to keep forever in a very safe place. I also don’t really understand people who carry around these documents in their wallet or purse, you’re only asking for a disaster to occur. Replacing a birth certificate (and a social security card) is such a headache, keep those safely tucked away at home for the one time a year you’ll need it.

Investment Documents - 7 years - If you have capital gains or losses in a year, you’ll want to keep those documents for seven because they’re considered tax documents. Otherwise, they’re really of little value to you so you can just dump them. If you are audited and don’t have the documentation, the cost basis of the stock is assumed to be $0! My brokerage (and probably yours) keeps electronic versions of your documents for a long time so the paper versions are just a waste of space. Check to see how long your brokerage archives your documents.

Bank & Credit Card Statements - six months - Usually you want to review these, preferably online on a weekly or monthly basis, for any inaccuracies, thefts, fraud, etc. Except for those situations, the bank statements are of little value. I keep a few months worth but otherwise I shred and recycle them.

Bills - six months - The same rule applies for bills, check for errors, omissions, additions, or other irregularities as soon as you get them. These might also be useful because most places accept two utility bills as proof of residence. I keep a few months then shred the rest.

Pay Stubs - 1 year - Particularly useful to show income whenever you’re applying for a loan, these documents usually don’t have much value otherwise. Also, electronic versions might be around and you can almost always get your human resources department to print out old pay stubs or verify employment.

Consumerism Commentary has an article about the $10,000 hybrids that Honda is planning to roll out in 2007 and wonders aloud if it’s worth it to switch from a 2004 clunker getting 30 miles per gallon to a sleek 2007 clunker getting 60 or 70 miles per gallon. It depends.

At $2.50 a gallon, a 30 mpg car pays 8.3 cents per mile driven. If you consider that the average car drives approximately 12,000 miles a year, that puts the total gasoline price at $1,000 a year. For a 60 mpg car, the total cost of gasoline is $500, a difference of $500 (not $1,000 as I erroneously wrote here before) So at $2.50/gal, the car would pay for itself (initial cost, not including taxes, titles, etc.) in twenty years. At $5/gal gasoline, that’s in ten years.

So is it worth the change? Probably, but it depends in part on how much you would “lose” if you sold the car in 2007 and bought the $10k hybrid. It also depends on whether the hybrid tax breaks are still around by the time these cars roll off the factory floor. You can also add in all sorts of other financial calculations like the interest earned on money not spent on gas, etc. but if a $10k hybrid car exist that performed well enough (I’ve never driven or rode in a hybrid car) then I’d switch in a heartbeat.

[Edited because my math skills are weak, must be all those MBA classes I've been sitting through.]

This will be the first Personal Finance Blogger Spotlight that will feature a podcaster, The Debt Podcast. The Debt Podcast is run by Jay, a bankruptcy and consumer law attorney in New York City who has over ten years of experience, and he’s been podcasting for quite some time now. I’ve listened to some of his podcasts and they’re very informative, last between ten to twenty minutes, and are released every business day.

Whereas most of the personal finance bloggers out there aren’t actual professionals (notable exceptions are folks like JLP of All Things Financial and David of Pacesettler Mortgage Blog), Jay is a bankruptcy lawyer so the things he says or suggests carry a bit more authority, at least for me.

If you’d like to be interviewed for this series, please send me an email and we can set something up.

I hope you enjoy the interview!

I mentioned that the tax shortfall in 2001 was a cool $345 billion, well, the IRS still owes about two billion dollars to 1.7M taxpayers for their 2002 returns! If you make under a certain amount, you aren’t required to file a tax return. Well, a bunch of people in that category (1.7M to be exact) were entitled to refunds that they subsequently didn’t get because they didn’t file a return.

What’s kind of funny is that every year, around this time, you read of how much money the IRS failed to pay out 3 years ago (that’s how long people have to collect) because people didn’t file tax returns. What’s even funnier (or decidedly unfunny and very inconvenient) is that in order for you to get your 2002 refund, you’ll have to submit a 2003 and 2004 tax return too (just to see if you perhaps owed money).

via Business Week.

In my wallet sit two credit cards that I use: AT&T Universal Cash Rewards card that gives me 5% at gas stations, supermarkets and drugstores; and an American Express Costco card that gives me 3% at restaurants and 2% for any travel purchases. Welcome Citi mtvU Platinum Select Visa Card for College Students with 5% back on “restaurants, bookstores, record stores, movie theaters, and video rentals.” It’s a student card but I’m a student at Johns Hopkins so I hope that qualifies me. The best part is that Amazon.com is considered a bookstore so you get 5% on those purchases too, better than Amazon’s own credit card!

Here are some of the specifics:

Through the reward program, cardholders earn one point for general purchases and five points for every dollar spent at restaurants, bookstores, record stores, movie theaters, and video rentals. The program also awards 25 points when payments are made on time and spending does not surpass the credit limit. Twice per year, anywhere between 250 and 2,000 points may be awarded dependent on the student’s GPA (beginning at 2.5). These points can be redeemed for gift cards, CDs, a VIP mtvU Spring Break Pass, tickets to the MTV Video Music Awards, and airline tickets. There is a 75,000 yearly limit to the number of points that can be earned, and points will expire in five years. (more details)

No annual fee too (a pre-requisite for all credit cards nowadays).

I see these advertisements all the time on television and in magazines promising to lower your monthly payments, help you get out of debt, and basically solve all of your life’s problems. If it really were as easy as making a simple phone call, why can’t you do it yourself and what exactly do these debt consolidation services offer? The inner skeptic in all of us is always wary of promises like those offered by debt consolidation services because they sound too easy and too painless when we know the actual fight out of debt is neither.

Please don’t confuse debt consolidation services with credit repair services. Credit repair services are all scams. If you have an error in your credit report, go to the reporting agency and let them know and they will fix it for free. If you were just irresponsible in the past, you will have to mend your ways and time will heal your credit.

The Debt Consolidation Process:
This is what happens when you work with a debt consolidation service. You sign up with them and enter into a negotiation period in which the service contacts all your creditors and tries to lower the amount you owe or the monthly payments. During this time, since you’re not paying, the creditors will still be calling you. Then the debt consolidation service hooks you up with a loan referral company, which becomes the only company you send money to, who will take your payment and disperse it amongst your creditors. The first and possibly second payment goes towards fees and other incidentals (such as the fees for the debt consolidation loan mentioned later, credit report, etc.), not towards any of your debt! Once you make multiple on-time payments to the loan referral company, they consolidate your outstanding debt and they become your single creditor. All throughout, you can expect double digit interest rates on your loan.

Sounds great right? Well, you may or may not have known NCN just paid off over ten thousand dollars in credit card debt in less than a year’s time and I wanted to know his opinion of these services and this is what he had to say:

Jim,
I never considered using a debt consolidation company. Here are the reasons why.
1. I wanted to be in total control of my money.
2. I wanted the success (or failure) to rest with the decisions that I made.
3. I have heard that using a debt consolidation service reflects negatively on your credit report. I have never looked into this, but Dave Ramsey mentions this several times a week on his radio program. Good enough for me.
4. Why do I want to pay MORE money for the privilege of having some company do the work that I should be doing for myself? I can call and get lower rates, I can schedule extra payments, I can negotiate.
5. Quite frankly, most debt consolidation services strike me as “slimy”. Just my opinion.

There you have it. The one person I know of that would’ve benefited from a debt consolidation service stayed away because he could do it all himself (and you can too).

If you’re considering a debt consolidation service, I suggest popping over to No Credit Needed (NCN’s blog), reading his stuff, and fire off an email to him. He’s a very friendly guy and always seems willing to give you a well thought out answer to your question. If you’re interested, he also has a podcast that I’ve enjoyed from time to time.

This week’s edition has been posted by Retire at 30. Ten articles made the cut and TT did an excellent job.

I was a fan of Kirby on Finance’s post about Five Tips for Frugal College Grads (since I too recently graduated) and Amanda’s post “The Perils of Dating: Beyond the Broken Heart” which starts off talking about a poor guy who shelled out over $300 on his first four dates.

Retire at 30 will be hosting the 11th issue of the Festival of Frugality tomorrow so if you’d like to get involved be sure to send in your submission tonight. There are two handy forms, one at the Conservative Cat and one at Blog Carnival. If you prefer, you can also use my local contact page form to submit your entry but with the deadline looming that might not be the best option.

If you’re interested in hosting a future Festival of Frugality, please contact me after reading what this Festival is about. There’s a list of future hosts and the next available time slot as well as hosting requirements. Thanks!

RadioShack’s president and CEO, David Edmondson, resigned today because of errors on his resume, which is polite for he lied on his resume. Apparently Edmondson claimed to have earned two college degrees from schools that have absolutely no record of his attendance.

Edmondson had claimed that he received degrees in theology and psychology from Pacific Coast Baptist College in California, which moved in 1998 to Oklahoma and renamed itself Heartland Baptist Bible College.

The school’s registrar told the Star-Telegram that records showed Edmondson completed only two semesters and that the school never offered degrees in psychology. The school official declined to comment to The Associated Press.

After googling for more information, I saw a lot of websites either advocating or chastising the practice of embellishing your resume. I also saw a lot of sites talking about padding your resume or removing items that are less than favorable. My advice: Don’t do it. If you aren’t qualified for a particular job, then do what you need to do in order to be qualified next time. If you don’t have a skill, don’t put it on your resume because you’re only wasting your and the recruiter’s time. If you didn’t go to a particular school, let alone two particular schools, don’t even think about putting it on your CV.

You will not get away with it and when you’re caught, it will likely be very embarassing.

via ABC News, Associated Press.