I visited my sister in car-obsessed Los Angeles over the weekend.  Cars are a daily fact of life in L.A.   Los Angelenos practically live in their cars because it takes so long, both in distance and traffic jams, just to get somewhere.  It took us 40 minutes to get to the nearest Target from my sister’s house!

My sister is a dentist and over the weekend, we went to meet her dental assistant at her office.  We pulled up to the parking garage so that my sister could let the dental assistant, “Monique,” into the garage.  Monique was driving a Ford Expedition.  I marveled at how large her car was.  My sister remarked that usually Monique takes the bus to work because she can’t afford to fill up her tank, but that because it was a Saturday, she chose to drive to work.  My jaw dropped - what is the point of having a car if you can’t afford to fill it with gas?  I take public transportation to work, but that’s because I don’t want to deal with parking or the horrendous traffic jams.  If it came down to “I can’t afford a tank of gas,”  I can’t drive the car; therefore I wouldn’t have the car.  My sister told me that Monique actually wanted an even bigger car, i.e., the Ford Excursion, but her mother said she shouldn’t.  What’s the lesson?  You should always listen to your mother. 

The summer wedding season is upon us again and the checkbooks are crying for mercy.  I recently caught a couple of episodes of WE TV’s “Rich Bride, Poor Bride,” a show that profiles engaged couples attempting to stay within their respective budgets.  They handed the wedding planner their anticipated budgets.  By the end of the show, when the actual total was revealed, each couple inevitably went WAY over budget, with, not surprisingly, some ridiculous requests.  One couple was looking to rent live peacocks for the reception while another wanted a helicopter to whisk them to a grand entrance at the church.  My wedding requests were a bit more mundane.  I didn’t ask for zoo animals, but I did want the wedding at a nice hotel and I didn’t want to subject the guests to rubbery chicken and watered down drinks.  In the end, we didn’t pinch too many pennies on the food and drink, but surprisingly we did manage to spend several thousand dollars less than our initial wedding budget of $30,000 by doing some of the following things.

• Comparison-shop for flowers:  Do not settle for the first florist you visit, no matter how nice their shop looks or how highly recommended they are.  Flowers are definitely an area where you can shave off dollars in cost without anyone noticing.  The first florist we visited, who came highly recommended, wanted to charge for everything under the sun, including a rental fee for the vases holding the flowers.  I thought that was part of the price for the flowers!  She also wanted a steep $75 fee just to come back and pick up the vases.  I was resigned to paying several thousand dollars for flowers until I visited the third florist on my list.  Although this flower shop was located in a tiny store with barely enough room to move, first impressions can be deceiving.  The florist, also recommended by friends, charged a very reasonable $35.00 for each table centerpiece, including the vase.  The floral arrangements were gorgeous.  Overall, I only paid $1100 for the flowers, which included the table centerpieces, flowers for the ceremony, and bouquets and boutonnieres.
• Save on the invitations by printing them yourself:  Some brides may balk, but it can save you hundreds of dollars.  We decided to forgo the expensive crane paper invitations with foil inlay, ribbons, and scented tissue paper, opting instead for a box of blank invitation stationary at Office Depot.  The card stock was very nice, and it only cost us about $25.00.  We formatted the invitation layout on our laptop, typed in the text, and printed the invitations at home.  Another plus: you don’t have to worry about an outside printer misspelling the names of your parents or future in-laws.  Everything can be instantly proofread and corrected before you print out 200 invites.
• Check out national chains for better deals on tuxedos:  Unless you are a regularly attend black-tie events, chances are you are only going to need a tuxedo for those very special occasions, like your own wedding.  So, instead of buying, rent one instead.  My husband and his groomsmen rented their tuxs at Men’s Warehouse.  The store had a great deal: rent four, get the fifth tux rent-free.  They even threw in the socks and shoes.  You get to keep the socks.
• Suppress the urge to go all out on the wedding dress:  This is potentially a huge budget buster.  Do you want Vera Wang couture or are you willing to settle for the $99 deal at David’s Bridal?  I ended up spending about $900 on a beautiful silk wedding dress.  I loved the fabric and the price was good because the dress was a sample style from the previous season.  However, I regretted the fact that I didn’t shop around more; I probably could have spent even less money buying a dress that I only wore for a total of six hours.  I came to this realization after attending a couple of weddings soon after I got married.  At the first wedding, I knew for a fact that the bride spent $3,500 on her dress; she wasn’t secretive about its cost.  Despite its high price, the dress was nothing special; it was a plain strapless sheath wedding dress.  At the second wedding, the bride wore a dress that was absolutely gorgeous. It was also a strapless sheath, but had beautiful flower embrodiery all over.  I was stunned when the bride told me that she had only spent $200 for the dress at David’s Bridal. 
• Have the wedding at a nice hotel rather than a venue that doesn’t include catering:  I was just chatting with a friend about this point.  She is having her wedding at a local historic mansion and told me that with the rental fee for the venue, the tables and chairs, plus the fee for the wedding planner, she was spending more money than she would have had she chosen to have the wedding at a luxury hotel.  For our wedding, we checked out places like botanical gardens, old mansions, and vineyards for our wedding, but ultimately decided to go with a nice hotel because of all the extra fees associated with renting those places.  Not only would we have to fork over $4000 to $6000 for the rental fee, we would have had to rent the tables, chairs, and linens as well as hire a “house manager” for the evening.  In a hotel, all that stuff is included.  However, there are some trade-offs.  Having the wedding at a hotel may not feel as special to you.  There might be several other couples in the hotel getting married, and you might miss out on having gardens and other areas for the cocktail hour and photos.  However, what you miss out on in charm, you make up for in convenience and price.

One final note: definitely bargain with all of your vendors and get everything in WRITING.  If you’ve agreed to additional terms that are not listed in the vendor’s standard contract, write it in the contract and have all parties initial the change.  Also, unless you have a signed contract, don’t be afraid to walk away from a vendor if you feel that they are not being straight with you or they have jacked up the price to unreasonable levels.  I had originally asked my regular hairdresser to come to the hotel to do my hair and my bridesmaids’ hair.  However, I was shocked when she wanted $500.00 to do my hair and my three bridesmaids’ hair.  So, I wound up telling her that I was hiring someone else.  I wasn’t happy about having to do that, but I was more annoyed that she was trying to scalp me (pun intended) on the price.

My husband and I had our first child last month.  We’re thrilled with the arrival of our new son, but in sticker shock over the cost of essential baby items (diapers anyone?).  However, through trial and error (as well as the help of friends and family), we’ve come up with a list of money-saving tips for new parents.

• Accept gently used baby items from family and friends.  We received a baby swing, papasan chair, bassinet, baby clothing, high chair, changing table, car seat and bottle warmer from friends whose own kids had outgrown these things.
• Talk to friends and family about what worked and didn’t work.  Other parents are a great source of baby product information.  You might see a baby gadget that looks like a “must have,” but talking to a friend might reveal that the thing was a piece of junk.  Talk to a variety of people and find someone that has similar tastes and spending habits as you do.  Obviously, the friend who buys every new gadget is not going to give you good tips on essentials.  Your friends may have disagreements on what they like (”Diaper Genie beats the Diaper Champ!  No, it doesn’t!”), but at least you’ll get an idea what worked for different people.
• Get a copy of “Baby Bargains.”  Many people consider this book to be the bible on baby shopping.  This book was written by the same authors of the “Bridal Bargains Book,” and is full of reviews and suggestions.  The authors are good at trying to sort through what is a “nice thing to have” versus an essential.  They provide comparison guides, reader reviews, and talk about the best place to buy things.  One chart shows the cost for Huggies diapers at 8 different retail stores.  Another useful tip in the book was to avoid baby bedding sets.  The sets cost over $150 and contain items such as quilts that you’ll never use.
• Watch out for anything targeted for babies.  This is especially true for baby furniture, which are marked up simply because it’s a specialty market, just like wedding stuff.  Find out what you need to buy (”Baby Bargains” has some suggestions), how much you want to spend, and go to both baby specialty and regular furniture stores to comparison-shop.  We had a doozy of a time finding a reasonably priced baby dresser, but finally settled on a solid wood dresser that cost about $350.00 at an unfinished furniture store.  A comparable finished dresser would have cost upwards of $600.00.  I’ve never stained any furniture before, but it was remarkably easy to do and only cost me $23 in materials and about an 1 hour of total work spread over a couple days.
• Comparison shop online.  We found a great stroller for $90.00 on Amazon.  The same stroller was selling for $150 at a local store.  We also bought a pack-and-play which was on clearance at Target.com.  The reason it was on clearance?  The design print was being discontinued.  Because we didn’t care if our pack-and-play matched the stroller or car seat, we were perfectly happy to buy the item at a considerable discount.  Manufacturers routinely obsolete items to introduce new patterns and color schemes.
• Scour Sunday circulars for deals on diapers.  With newborns going through 10 or more a day, diapers are one of your biggest daily expenses.  Through the circulars, we found a great deal at Target; buy two large packs of diapers for $19.00 each and get a $5 gift card.  We used that gift card and rolled it right back into the next pack of diapers.  But be careful not to load up on too many diapers at once.  Babies grow like weeds and will graduate to the next size in no time at all.
• Sign up for baby product “clubs.”  Similac, Pampers, Huggies and many other baby item manufacturers have “clubs” that you can sign up for.  Once you sign up, you’ll start to get coupons in the mail for their products.  Similac sends out $5 coupons to members.  That’s a 20% savings off a large jar of formula powder.  We’ve also gotten lots of coupons from Pampers.
• Don’t go crazy with the cute baby stuff.  Remember that your adorable newborn baby will be a walking, talking kid before you know it.  So there is no need to sink thousands of dollars in that solid cherry oak crib, no matter how fabulous it looks in the store.  We bought a glider and ottoman from Walmart for $120, which is a fraction of the cost at the local baby store.  Although the fabric and pattern doesn’t look as chic as the gliders in the potterybarn kids catalog, we did not want to spend a small fortune on something we’ll only use for a couple of years.

Hopefully this list will help you save a few bucks.  Also, keep in mind that generous friends and family will likely inundate you with gifts of clothing, toys, gift cards, cash, etc.  So if you are expecting a child, resist the temptation to run to Babies-R-Us to stock up.  You may need to buy less than you think.

How do the wealthy get rich?  A few of us hit it big through God-given talents like singing or acting.  Others, like Mark Zuckerberg of Facebook, merge a skill, e.g. computer programming, with an innovative idea and buyers willing to pay mind-boggling sums for his or her creation.

Others try to become wealthy quickly by flipping houses or becoming day traders.  Eventually, however, most of these get-rich-quick dreamers crap out because the market they invested in has collapsed, they borrowed too much money, or they went out and spent every dime they had (and more) on fancy dinners, designer clothing, limousines, and extravagant trips.

Most wealthy people, however, do it the old “boring” way, choosing to accumulate their money slowly and steadily.  This is the thesis of the book, “The Millionaire Next Door” by Stanley J. Thomas and William D. Danko.  Through interviews with hundreds of millionaires, Thomas and Danko concluded that many of them accumulate wealth through living below their means, shunning conspicuous consumption, and allocating wealth in a productive way to make more money. 

I can see this from personal observation of my Uncle Frank, a self-made millionaire many times over.  He never read “the Millionaire Next Door” but seems to represent the classic example of one, with habits such as the following:

Living below his means:

• Has always socked money away, even as a civil servant making a paltry government salary with three kids to support.
• Refuses to buy coffee at Starbucks.  McDonalds coffee will do just fine.
• Has never incurred credit card debt.
• Has lived in the same home (like Warren Buffet) for decades, even after he became wealthy.

Shunning conspicuous consumption:

• Brushes off random comments by business associates that his clothes are not Brooks Brothers chic.
• Has never driven an expensive European vehicle like Mercedes or BMW.
• Doesn’t sport expensive cuff-links or a gold Rolex watch.

Allocating wealth in a productive way:

• Used savings from his job as a civil servant to start his business and make investments.
• Reinvests his profits in his business instead of spending it on purely consumer items, like a boat or a second home at the beach.
• Funded college and graduate school for his kids, instead of buying them fancy cars and clothes.
• When he travels for work, he’s more likely to stay at the Hampton Inn over the St. Regis, unless he gets a very good deal on the hotel rate.
• For international trips, he uses a consolidator to get the cheapest business class seats.

Some may ask “does this guy have any fun?”  Others may question why make money if you can’t enjoy it?  However, this presumes that everyone wants to buy Hummers and live in McMansions with debt up to their eyeballs.  People like Uncle Frank don’t get their kicks by going to the mall every weekend.  They derive enjoyment and satisfaction out of the challenges of building wealth and the accruing benefits of financial freedom.   They have shunned instant gratification to achieve their long-term goals.   

The wealthy approach money and their lives differently than the average working Joe.  Check out Ryan Taylor’s Millionaire Money Habits for ways that millionaires think about their money.

In February, I wrote about a purchase that I made at a local children’s store (Recession Survival Tips - Negotiating a Better Deal) in which I asked for the online price of a mattress.  The online price was only available online.  I wanted to purchase the item in the store.  At first, the manager did not want to give me the online price.  However, she realized that if she didn’t give it to me, I was just going to go home and order it online, and it would cost her more to ship it to me.  She gave me the online price.  We both won because she made a sale, and a profit, and I got what I wanted immediately. 

In today’s NY Times, there is an article about bargaining with retailers .  Apparently, bargaining is back in vogue.  Retailers want to make sales, consumers want to save money.  The article says that before the 1850’s, bargaining used to be common.  I don’t think bargaining ever went out of style for those of us always looking for the best deal.  In Asia, every item is negotiable.  In fact, the vendor will often chase after you in order to make the sale.  Bargaining is a fact of life for most of the world.

You’re used to negotiating car prices, but I think you should consider bargaining for anything that has a high markup.  On these items, the retailer can afford to make a profit, and you can save some money.  Everyone wins.  The following items are good candidates for bargaining:

• Jewelry
• High end consumer goods (TV’s, furniture)
• Any type of service (car repair, home repair/remodeling, event planning and services)
• Anything being sold on commission
• Anything that’s available cheaper online

You should approach bargaining with a plan.  You need to know how much an item sells for both in your local market and online.  If you have a competitor’s price on hand, the retailer will be much more likely to bargain with you.  If you’re able to determine how much an item costs the retailer, you’ll have the upper hand in negotiations.  However, that information may be hard to come by.  When I’m shopping in China, I usually start out with a starting bid of 10% of the asking price.  They expect you to bargain, so the prices are marked up accordingly.  Don’t be afraid to walk away from the sale.  It’s one of your strongest bargaining tools.  If the retailer knows that they’re going to lose the sale, they may change their mind very quickly.  Also, don’t be afraid to mention the competitors.  Retailers usually have an idea of their competitors prices.  If they know that you know you can go somewhere else for a better deal, they’ll be more willing to bargain.  In my opinion, everything’s negotiable.

Remember when you diligently trudged to your college bookstore to acquire the multiple hardback textbooks and softcover workbooks for your classes at the beginning of the semester?  Remember the migrane when you realized how much of your precious student aid would have to go towards paying for the textbooks?  It is no overstatement to say that the cost is astronomical.  I took an accounting class at a local community college a couple of years ago and was stunned to learn that the cost of the textbooks for the class was almost $200.00.  Come on!  These publishers think we’re rich or something?  I had to laugh when I overheard the head honcho of my department complaining about his college freshman son spending over $500.00 on textbooks.  He thought his son had inflated the bill to nab some extra spending money.  Several co-workers, more recent college grads, piped in that the huge cost was no joke - indeed that is what it costs to buy books these days.  Oh yeah, forget about recouping any of the costs of your textbooks.  If you tried to see it back to your college bookstore, you were likely to only net pennies on the dollar. 

While the rest of us were complaining, a business student at Santa Clara University spied an opportunity here and started the textbook version of Netflix.  Colin Barceloux’s business, which was profiled in www.entrepreneur.com, is called www.bookrenter.com and rents textbooks for up to 75 percent off the retail price for a specified period.  Students return the books by printing out a free UPS label.  They can also request an extension or even buy the books outright, with the initial rental fee going towards the price of the book.  Taking advantage of the fact that his business reuses books and thus saves trees, Barceloux also had it certified as a “green business.”  This is a pretty ingenious idea.  For those geeks out there, there is a downside.  You can’t write in or highlight text.  But I view that restriction as a small inconvenience when compared to the vast savings achieved.  Moreover, you don’t need to deal with the hassle of hauling a growing collection of textbooks from dorm to dorm as you ascend the college ladder.

This business is just one example of how business ideas pop up frequently in our everyday lives.  Barceloux is only 26 years old, but he clearly has the guts and the wherewithall to act on his business idea.   

Saving for college has never been a more daunting task.  According to www.collegeboard.com, the 2007-08 average yearly cost of a private four-year college is now $23, 712 (an increase of 6.3 percent from the previous year) and a public four-year college is now $6,185 (an increase of 6.6 percent from last year).  Even though our child is a newborn, we realized that, with these numbers, it is not too early to start saving.

The projected future cost of college can send the savviest financial expert running for the hills.  So what to do?  The best way to stockpile savings for college is to open a state-run college savings plan, or 529 plan.  What are the benefits?

• The earnings on your investments grow federal tax-deferred, as long as the withdrawals are used to pay qualified educational expenses.  The distributions are also tax-free. 
• Your own state plan may also offer tax breaks, such as a state tax deduction on your contributions into the plan.  However, if you live in a state with no state income tax, like Florida, you might find it more advantageous to open a 529 plan in another state. 
•  You as the donor control the funds in the 529 account.  You can designate another beneficiary and you can actually reclaim the funds in the plan, if you find that you need the money later for other expenses.  However, you will owe taxes on the earnings portion of the funds that you withdraw from the account.
• 529 funds set up by grandparents are not counted in the analysis of a family’s finances for purposes of federal financial aid.
• As a donor, you can contribute up to $300,000 into the plan and you don’t need to worry about exceeding the current limit of $12,000 on tax-free gifts.  

The website, www.savingforcollege.com, contains all of this information and  more on all 50 states’ 529 plans.  It is a good place to research which plans offer the biggest bang for your buck.

With all of its tax benefits and its flexibility, setting up a 529 plan seems like a no-brainer.  However, setting up the plan is only the beginning.  The college calculator at www.savingforcollege.com, which provides comprehensive information regarding 529 college savings plans, calculates that in 18 years, it will cost a total of $312,000 for a college whose tuition is $23,712 a year.  Assuming that the 529 plan has returns of 7 percent per year, I would need to make monthly contributions of $612.00 into the 529 plan, starting right now.  All the expenses that come with having a baby may be a greater weight on you right now, but it might be a good idea to bite the bullet and start contributing now to take advantage of the longer time period and compounding returns.  If you do wait another 5 years to start contributing, your monthly contribution would rise to nearly $1,000 per month.  With all of the other expenses associated with raising a child, delaying the inevitable may be more painful financially down the road.

To come out of this recession relatively unscathed, one of my priorities has been to stem the outflows from my checking account.  But what if you can increase the inflows into your checking account?  You could ask for a raise or switch to a higher-paying job.  However, the Wall Street Journal’s February 9-10, 2008 edition advocates an easier, more immediate way to boost your account balance.   Reporter Jane Kim’s “New Checking Has High Yields — and Strings”  talks about opening a “reward checking account” at a community bank or credit union, which has interest rate yields of as high as 6 %.  This compares very favorably with average bank rates on checking accounts.  Last time I checked at my bank, Bank of America, the checking interest rate didn’t even clear 1% - and that’s with a $1,500 minimum balance.  These reward checking accounts also beat the rates offered by internet banks like www.Ingdirect.com, which has followed the Federal Reserve’s interest rate cuts in lockstep and is now paying 3.40% on my savings account.

Of course, there’s a catch to earning such a high interest rate:

• You must get your bank statement delivered electronically to you
• You must have at least one direct deposit (like your paycheck) or automatic debit each month
• You must use your debit card at least 10 times a month

 The advantages are:

• There are usually no monthly fees or minimum-balance requirements
• Many banks will offer to refund ATM fees charged by other banks (Wow!)

 Why, might you ask, are these banks being so generous with their interest rate yields?  Well, if you meet their requirements, they save money on mailing statements and make money on debit card transactions.  However, beware - if you don’t follow all of the requirements for a particular month (e.g., 9 instead of 10 debit transactions), the interest rate will drop precipitously, probably to less than 1% for that month.  But, considering that the large banks are paying 1% or less on checking accounts, there’s really no downside, if you can meet the requirements without too much effort.

You might have to do some online research to see which local banks and credit unions are offering these accounts.  Some banks that the Wall Street Journal says are offering accounts nationwide include Iowa’s State Bank of Toledo and Bank of Fayetteville, of Fayetteville, Ark.  

I went to a local store today to buy an infant mattress.  This local store also has an online store that is run out of the same location.  The particular mattress that I wanted cost $100 online, but $120 in the store.  The $20 discount off the normal price was only available online.  I asked one of the store employees who turned out to be a manager about getting the online price in the store.  She reiterated that the online price was only available online.  After I asked for the online price again, she asked me where I live.  I only live about 10 miles from the store.  She did a quick mental calculation and realized that if I went home and ordered the mattress online, she would collect $100 plus tax from me.  Orders $100 and more get free shipping.  That means that she would then have to eat the shipping cost.  If she sold me the mattress right now, she would save the shipping cost.  We would both win.  I would get the mattress instantly at the price I wanted, and she would maximize her profit.  What I admired about the manager was that she wasn’t being rigid in her policies.  She saw an opportunity to maximize her profit, please a customer, and most importantly, make a sale.  This type of flexibility and common sense thinking is crucial for small business owners.  Consumers should also realize that everything’s negotiable, especially in today’s tough times.  Retailers are hungry for business.  If there is a way that both the business and consumer can both win, then smart business owners will jump at the opportunity.