With the recent increase in new fees at banks, and the backlash it has caused, people are starting to determine what the alternatives are.  At the moment, there are still banks and credit unions that are maintaining their current fee structure without adding anything new.  Many of those are also maintaining their “free” accounts.  But, if the Durbin Amendment remains, it may be only a matter of time before they buckle under the costs and start removing “free” accounts and adding fees.

What then?  It that happens, we might see a financial world where all debit cards have a monthly fee.  We might see more annual fees on credit cards, and higher interest on credit cards.  We might see more and more checking and savings accounts having a minimum deposit amount and/or a monthly fee.

As a card-carrying member of the NGPAF (Not Gonna Pay Any Fees) club, that might just make me decide that I don’t want to use any of their services anymore.  My depository institution might just have to become the coffee can in my backyard.  Seriously, though.  If all of those services become services with fees, we might see a pretty drastic increase in the usage of cash again.  Many of us don’t use cash all that much.  I know I don’t.

And what happens if we return to a cash economy?  The banks get even less transaction fees.  Their income drops because of it.  And we all see what happens when their bottom line is threatened.  More fees.  It could send the banking industry into a never ending spiral of more and more fees until the only people who still use banks are the ones who don’t feel comfortable keeping thousands of dollars in a coffee can in the backyard.

Luckily for me, I belong to a credit union that isn’t likely to add any additional fees anytime soon.  What about you?  Do you belong to a Credit Union or Bank that hasn’t added fees recently?  What if they did?  How long do you think it will be before we have to choose to either pay fees or carry cash?

photo credit: flattop341

Goodness!  Did you see what the markets did yesterday?  Down almost 400 points!  If you haven’t already, you had better join the rest of the world in getting out while you still can.  The era of easy gains in the stock market and guaranteed returns has officially ended, and it isn’t pretty.  It’s time to let go of the bull market ideals.  Do you know what happens to a bull in a room full of bears?  Here.  Let me show you.

Seriously. Those bears are going to eat you alive! Sell everything you got now. Take it out in gold, and head for the hills. Don’t forget the canned supplies and vegetable seeds for after the apocalypse that will follow!  Quit your job, pack your family up, and head for North Dakota.  We’ve got plenty of oil field jobs available. (see: Bakken formation) And with a bunch of liquid black gold running over your fingers, you won’t need to worry about the crashing stock market anyways!

Ok, obviously, this whole post is a little bit tongue-in-cheek, with the exception of the North Dakota part.  We really do have plenty of oil field jobs available.  Best economy in the U.S.A., in fact.   And, even if the post weren’t tongue-in-cheek, and you took it seriously, you really, really, should talk to a financial professional before making any thing resembling a sell everything move.  The whole post was all for the enjoyment of myself, MoneyMamba, and others who felt that there would be a whole plethora of posts by our colleagues touting the benefits of dollar cost averaging and long term views on the stock market.  They may be right, but sometimes you just have to poke a little fun.

Despite my best efforts, I don’t know everything about finances, stock markets in particular, so please don’t construe this as advice.  It isn’t.

photo credit: VirtualErn

If you’re even slightly interested in the US economy, and, let’s face it, most of the world is, then you’ve likely been at least marginally following the last few weeks worth of debt ceiling news.  The quick and dirty of it is that the US government has a debt ceiling that puts a cap on how much debt the US federal government can carry.  If they reach that cap, they can no longer issue treasury bonds and the like to raise money to pay for things.  Based on what I’ve read, everyone would like us to believe that it’s a major crisis, and the world will end if we don’t raise that debt ceiling and allow for more debt.  But, is it really a crisis?

Let’s think about this just a little bit.  Replace “U.S. Government” with John Doe in everything I’ve just said, and all the news you’ve read.  If we were talking about an individual, we wouldn’t be talking about how the world would end if they weren’t allowed to accumulate more debt.  We’d be talking about how they need to radically cut costs, increase income, pay off debt until they can get their finances in order.  Would  it be called a crisis?  Maybe on a personal level, John Doe would believe it was a crisis.  But, it certainly wouldn’t be world ending.

I’ll admit that it is a bit different when it’s a government entity that we’re talking about.  If the US government goes bankrupt, there will be some pretty serious problems with the economy for a while.  Which brings up another issue altogether.  The US economy needs some diversification of it’s revenue streams.  Way too much of the economy balances on how much money the US government sinks into it each month.

It’s time we start asking the same questions of the US government that we would be asking of John Doe.  Do you really need that expenditure?  That service?  All three cars?  The McMansion?  Unfortunately, those that are in charge in Washington are playing political ball instead of really trying to solve the problem.  They think way to hard about what programs they can cut that won’t lose them votes in the next cycle, or how much they can raise taxes without losing votes, when, instead, they should be looking to make the US government financially solvent and stabilizing it’s fiscal situation.  You or I would start with a balanced budget, I don’t see any reason why the government shouldn’t do the same.

What do you think?  I don’t think I’m being to idealistic in asking that they carry a balanced budget each year.  Or that they cut costs until they can do that.  Yes, they’ll likely have to raise taxes some to pay off what they’ve got for debt, but if it doesn’t come with some pretty significant cost cutting, they’ll all be looking for new jobs in 2012 anyways.

photo credit: Public Notice Media

It doesn’t take a genius to figure out that we (Americans in particular) are in a boatload of hurt, financially.  Take the outliers away, and we’re a nation (and world) floating up to our eyeballs in debt.  Here’s a test for those of you who commute to work.  On your way to work, or your way home, count how many payday loan shops, pawn shops, and quick cash shops you pass.

I have never hid the fact that I credit Dave Ramsey and his book, Total Money Makeover, with being one of the big catalysts in our financial turn around.  The guy is inspirational when it comes to money.  Not everyone thinks he’s all that, but the fact of the matter is that he’s helped thousands of people get control of their finances and turn their lives around.  Now, he’s setting his sights a bit higher.  On the nation.

He’s come up with this idea of a “Great Recovery“, where we take it upon ourselves to educate each other on the proper way to manage our money, and lead each other in the a more biblical usage of money.  He explains it a heck of a lot better than I ever will.  Go and watch the kickoff event he held for it last night.

I don’t know if we can pull it off, but shouldn’t we try?  I know that’s one of my purposes here, at Beating Broke.  I want to help you become better with your money.  Along the way, I know I’ve learned a few things myself.

What if everyone in the world was as frugal as the most frugal?  Inspired by conversation on the Early Retirement Extreme forums about the ethics of the Early Retirement Extreme lifestyle.  So, the beginning of that linked conversation (if you haven’t read it) is based on the premise that if everyone did as Jacob does and lived the ERE lifestyle, would the world collapse?  And, if so, doesn’t that indicate that the ERE lifestyle is not socially responsible (ethical)? Which, got me to thinking.  What if everyone was as frugal as most of the frugalers we know? What if frugal was normal?

I’m not talking about the people who hand wash their Mercedes, either.  When it really comes down to it, the ERE lifestyle is pretty similar to the frugaler lifestyle.  Each has their extremists.  So, what if everyone was frugal?

Would we all make our own shampoo?  Would we all have a sustainability garden?  Would we all coupon?  Would coupons still exist?

It’s an interesting question.  Many of the things we all see and do each day exist because a much larger section of the population use them far more regularly than we do.  Disneyworld, for instance, probably wouldn’t exist if it’s only customer base were frugalers.  What about those Mercedes cars?  Probably not in the U.S.  But, if you think about it, there wouldn’t be very many used cars available for purchase, since we’d all be busy driving them until the wheels fall off.  What would that do to the auto industry?  If all the people who buy a new car every year, or even every five years, stopped doing so?  You thought they needed a bailout a couple of years ago!  They’d really need one then.

We might see more local farms growing a larger variety of goods because more people are shopping at farmers markets and taking advantage of the Co-Op farms.  We might see less McMansions and more smaller houses with big yards and gardens.  We might see some pretty drastic changes in the pricing of some things.  Without all the willy-nilly spenders out there paying whatever the manufacturer asks for the product, you might see more reasonable pricing to get people to purchase a product.  We would likely see a return to a more craftsman foundation, much like the early retirement extreme lifestyle.  People might be interested in making things themselves if the market dynamic shifted that drastically towards the frugal side of things.

How do you see the world changing if everyone was as frugal as the most frugal?

photo credit: kenteegardin

Typically, we hear about how much oil we use and turn into plastics.  When you think about it, it does make some sense that you could then turn plastics back into oil.  And you can! Watch this:

Of course, the first thing that comes to mind after watching that is, “Why can’t they do that on a much larger scale, and eliminate a huge portion of our plastic waste?” And, here’s your answer. They can. In fact, here’s an article from 2009 about just such a plant. It’s called the Envion Oil Generator, and the company was getting ready to roll the plants out nationwide at the time. I haven’t heard anything about them since then.

It’s an intriguing idea, really. Take the plastics that we create, and then waste, and turn them back into usable oil. It would probably put a fractional dent in our oil use, but any little bit is better than none, and would help make the oil supply last longer. Of course, there’s the downside that emissions would continue that much longer too, but, frankly, I don’t see the dwindling oil supply as anything more than a epic disaster, so the longer we can offset that, the better. According to that article, the plant can create oil from plastics for about $10 a gallon(oops. Where’s my proofreaders?) Barrel. You’d think the profit margin there would be well worth building a plant or two.

What do you think? Is it a smart thing to do? Useless?

photo credit: the extinction blues

The banking and credit card reform laws were supposed to help us – and they did in many aspects – but one of the unintended consequences is that banks are making up for the lost revenue sources by creating new ones… fees, fees, and more fees!

I just closed my brokerage account from BoA/Merrill Lynch because they started charging a $50 “maintenance fee” twice per year – when I opened it years ago, I remember it was advertised as something that would always be free… not anymore! I also closed one of my credit cards from American Express that started charging an annual fee. However worse yet is being charged for a checking account, since that is something so essential to our lives and historically (at least in recent history) we’ve all become accustomed to not paying for it.

Fortunately though, we don’t have to be stuck paying these fees. When it comes to checking accounts, there are a few different ways to weasel out of them which I will discuss below:

#1 – The direct deposit trick
The exact rules vary by bank but with many, if you have direct deposit setup, your checking account fee will be waived. But what happens if your employer doesn’t offer direct deposit or you are self-employed?

Well I found a trick that has been working great for me so far. I have a brokerage account (different from the one I closed) and it allows me to setup automatic withdrawals or deposits. I have arranged for it to direct deposit $1 every month into my BofA checking, thus meeting the direct deposit requirement to get free checking. I’m going on year 3 or 4 of using this technique and so far it’s worked beautifully! However please note that some banks require a minimum amount for direct deposits to qualify.

#2 – The waiver for multiple linked accounts
With some banks, if you have multiple account types – i.e. checking, savings, and/or brokerage – you will automatically be exempt from checking account fees.

For example with Charles Schwab bank, in order to get free checking you have to have it linked to a Schwab brokerage account. Don’t have a need or desire for a broker account? No worries, because the rules don’t actually require that you use it or have money in it. So basically, you could just open up a broker account and never use it.

#3 – The minimum account balance waiver
The most common and well-known technique to get free checking is to maintain a minimum account balance. If you can afford to do it (usually $1,500 to $5,000 depending on the bank) then the fee for your checking account is waived. However if money is tight right now and this isn’t an option, then I would recommend one of the other four strategies.

#4 – Use the bank’s debit or credit card
Some banks offer to waive the checking account fees if a certain number transactions are made each month using an affiliated debit or credit card.

For example, you would normally be paying eight bucks a month for the basic account from Citi. However if you use the account’s debit card for at least five transactions per billing cycle, then the fee will be waived. Of course the drawback to this is that you may be missing out on travel rewards or cash back rewards you get with your credit card, but Citi doesn’t have a dollar requirement on the debit card purchases, so if you prefer just use it for five small purchases (and your preferred card for everything else).

#5 – Switch to a credit union or smaller bank
Last but not least, if you don’t want to play these games with your big bank, then you should think about switching over to either a community credit union or a regional bank. Because they’re the underdogs in the banking world, they are usually much more likely to offer free checking accounts (and without any hoops to jump through). I know switching banks can be headache because you might have your online payments all setup with your existing account, but just remember, making the switch may save you around $100 to $150 per year in fees!

This post comes from guest blogger Mike, founder of the message board/blog, CreditCardForum. He writes credit card reviews (most recent being the AmEx Blue Cash Everyday) and everything else on the site comes from forum members. Despite his borderline OCD obsession with cash back and rewards, he stresses that anyone who doesn’t pay their balance in full every month should avoid credit cards like the plague!

Many people have been adversely affected by the economic recession that hit the United States in the last few years. Termed the “Great Recession”, from December 2007-June 2009, The United States has not fully bounced back. Let’s take a look at the facts.

• Jobs are being cut at an alarming rate, so much so, that the unemployment rate in January 2010 was at 10.6%. As recently as February of this year, that rate has decreased to about 9.5% according to the U.S. Bureau for Labor Statistics.
• For those who are still employed, any news of layoffs that makes the front page of the newspaper leads to a paranoid, nail-biting frenzy over our own job security. Salaries have frozen, benefits have been slashed; and let’s face it, it’s now easier for employers to replace their long-time employees for the sake of cheaper labor.
• Gas prices skyrocketed from a per-gallon average of $1.78 in 2005 to $3.56 to the present date, according to the U.S. Information Administration.
• Home foreclosures are no longer a rarity; in fact, it wouldn’t be unreasonable to say that home ownership has become a luxury. The government’s efforts to fortify the real estate industry with programs such as the First Time Home Buyers Tax Credit or the Making Home Affordable program may be impacting the situation positively: foreclosure rates in February 2011 were at the lowest they’ve been in three years.

The Great Recession is teaching a hard lesson to young adults, who may not be used to a flailing economy. Increasing food prices and every day commodities have driven Americans to be more frugal and save. This is not the first time the United States has held afloat in rocky times.

The Great Depression of 1929, which lasted into the early 1940s, is an iconic memory for Americans. It started on Black Tuesday, October 29, 1929, when the stock market collapsed. Deflation occurred, and people feared to spend money and invest further. A staggering 25% of Americans were unemployed. Black and white pictures of this era depict a desperation beyond belief: soup kitchens to feed the countless people who were unable to afford the simplest of meals; farmers who stood in dusty barren fields during the dust bowl – a devastation of the agricultural world; and the jobless, with make-shift signs to beg for employment.

Though other smaller recessions hit the United States between the 1940s to 1960’s, none were as devastating, and the U.S. continued to prosper. However, from 1973-1979, the Bretton Woods monetary system fell (the system that allowed international recovery and monetary management following WWII). It made the dollar into a flat currency, backed by no monetary value. It instead became a promise of payment with a floating value. This caused the deflation of the dollar. Other effects occurred, such as the Iranian war, which resulted in an Arab oil embargo (creating the gas crisis of 1973). Here, the Organization of Petroleum Exporting Countries (OPEC) raised the price of oil by 70%, to $5.11 a barrel. The economy was described as having underwent “stagflation“- which means a stagnant economy which is incurring inflation.

By 2001, the U.S. hit another pivotal moment: the attacks of 9/11 decreased consumer confidence, the dot.com bubble collapsed, and major corporations (such as Enron) tainted the sentiments of larger corporations and entities. After several years, the economy improved until 2007, when our recent economic woes came into effect.

It is easy to look at today’s times and address the issues with uncertainty and indifference. However, in looking back at the our past, it is clear to see that we will once again find ourselves strengthened. This recession will not last, and instead, we will soon find ourselves amid economic prosperity. We must examine these former failings and learn from them.

Guest contributor Andrea Fisher is an online marketer and content specialist from North Carolina. She is a published journalist with an English degree and political science minor from the University of North Carolina at Greensboro.

photo credit: Dan04

When you think of the 1950s, do you think of an idyllic happy time?  Or do you think of it as an unexciting period in our country’s history?  There have been numerous changes in our society over the last 50+ years.  Many believe these changes have led to an easier and overall better way of life for each of us.

Incomes are up!  But, so is spending.  According to the Bureau of Labor Statistics, spending in America has increased tenfold since 1950.  That increased spending means that not only are Americans saving less, in many cases they are over-extending themselves and living on credit (aka, living in debt).

So, if we are making more money than ever before, why does life suddenly seem so expensive?

Let’s compare….

According to data released by the U.S. Census in 2007, there are three key areas that are draining our wallets.  And each of these four categories has changed dramatically in the last 50+ years.

HOUSING (up 21% since 1950) – In 1950, housing accounted for 22% of a family’s spending.  In 2007, housing costs had risen to 43% of spending.  Why?  Since 1950, the average house size has doubled, now standing around 2,200-2,400 square feet.  In 1950, it was common for houses to have one bathroom, for kids to share bedrooms, and for closets to be rather small (and since people had less ‘stuff’ the small closets seemed ample at the time).  Now, houses have more bathrooms than bedrooms and walk-in closets that are the size of many smaller bedrooms in a 1950’s house!  Many families of today could not imagine raising a family in the house their parents grew up in.  But the truth is, millions of families lived in those houses and survived!

TRANSPORTATION (up 3% since 1950) – In 1950, transportation accounted for 15% of spending.  In 2007, it was up to 18%.  In 1950, it was common for a family to have just one car.  And while cars have actually come down in price (when adjusted for inflation), families now have multiple cars.  And although cars are much more fuel efficient today than they were 50 years ago, Americans are driving many more miles in a year than ever before.

RECREATION, COMMUNICATION AND EDUCATION (up 10% since 1950) – In 1950, this category accounted for 2% of spending.  In 2007, it accounted for 12% of spending.  And while increased educational opportunities are partially responsible for this increase, the bulk of the increase can be attributed to cable, Internet, and phone fees.  Items that we consider a necessarily part of life – cell phones (with data plans!), cable, Internet – were non-existent in 1950.  How much does your house spend each month on cell phones, cable, and Internet?  We think we need those services, but the truth is people have lived without them in the past.  These pricey ‘wants’ have, over time, become perceived ‘needs’ in our society.

As these figures show, the little conveniences that we think make our lives so much improved from our 1950s counterparts are actually making us poorer!  Some say all these pricey improvements mean we are better off.  But are we really better off if we are saving less and going into debt?  You decide!

About The Single Saver…

The Single Saver offers practical, money-saving advice in a fun and interactive format. Who is this website for? Singles people. Smaller-sized families. Empty nesters. Single parents. And anyone who wants to save money. We have a TIP OF THE DAY, a BLOG featuring writings from a variety of authors, and a fun and interactive DISCUSSION FORUM.

About me…

The Single Saver is written by Denise, a single woman herself who grew up in a small family. A reformed spend-a-holic, she now enjoys the challenge of finding new ways to live a frugal yet very comfortable lifestyle. When not saving money, she is usually spending it on food for her two greyhounds and two cats.

[Editors Note: One of my weaknesses as the writer of much of the content of Beating Broke is that I am fairly unversed in most investing topics.  As such, I try to fill in those gaps where I can with knowledgeable guest posts.  What follows is one such guest post.]

For students of investing, one of the first principles taught is that commerce occurs in cycles, much like the ebbs and flows of waves in nature. The demarcations of these business cycles are typically recessionary periods, a time for consolidation and regrouping in order to recover and begin the next positive wave. No matter what the prevailing trend might be in the cycle, various market sectors are known to historically perform better than others, providing opportunities in both bear and bull market periods. Understanding these business “seasons” and how to recognize related investment opportunities is commonly referred to as seasonal investing.

The key point is that whether you are in a down market or one in recovery, there are specific sectors that traditionally offer better returns than others. The following diagram portrays the relationship between sector performance in the stock market cycle and the peak and trough activity of the economic cycle:

The positioning of various sectors is based on a study of years of historical data and should not be construed to mean that this representation will always hold. Past performance is never a guarantee of future results, but from a pure probability perspective, there is enough consistency in the above pattern that “seasonal” investors have taken advantage of these relationships and profited in the process.

The first “takeaway” from the diagram is that the stock market generally precedes actual results in the business cycle. Analysts have estimated that the markets anticipate results six months down the road and factor those results into today’s valuations. On the chart, this timing difference is represented by the difference between the “Top” of the “blue” stock market cycle and the “Peak” of the “gold” business cycle.

The current recession ended last year, but the “trough” has been extended while a mild recovery has gradually developed. However, there has been a mild bull market for the past seven months, driven primarily by government stimulus programs. There is still doubt if our recovery will stabilize once the Fed discontinues its Quantitative Easing program in June, but currently, the market appears to be optimistic.

As mild as our recovery has been, initial attention last year focused on UPS and Fed-Ex. Transportation stocks signal that commerce is moving again. Increases in transactions are confirmation that favorable trends are imminent. Banking stocks typically move early also, reflecting more financial support for business growth, but in the current case, banks are more the exception than the rule due to persisting problems with foreclosures in the real estate industry. Technology and basic industry are next in line and have shown appreciation in the recent run-up in stock values.

Seasonal investors need not focus only on domestic offerings. Today’s investor must be global in perspective since much of the growth in global commerce has been in emerging market countries. Overseas investing does involve more risk, as anyone engaged in forex trading would advise. Gains in a foreign company can be wiped out if the Dollar appreciated materially versus the other company’s currency. A forex broker can provide hedging tools, but hedging is not for the inexperienced.

The best way to invest “seasonally” and in markets overseas is by way of the many exchange-traded fund offerings on the market. One can easily construct a well-diversified portfolio of shares from a variety of funds devoted to investing in specific market sectors. If an individual stock appeals to you, then that can also be added to the mix.

Seasonal investing benefits from the business cycle’s “rollercoaster” ride. Use these principles to get the most out of your ride.

Tom Cleveland served as CFO for various Visa International entities from 1980 until 1999, retiring with the title of Group EVP and Treasurer, and was instrumental in expanding the global reach of the Visa system, building the necessary financial and settlement infrastructure to support that growth, designing and deploying global risk management processes, and securing necessary regulatory approvals for existing operating standards. The Visa forex system cleared and settled over $5 billion a day in 22 currencies at that time. He has also built and operated a private payments network connecting twenty countries, specializing in B2B, C2B and C2C cross-border payments.  He writes for forex trading and training site forextraders.com.