This month seems expensive and I am looking for ways to save. I used $500 from my emergency savings to pay the deductible for my daughter’s December auto accident and that money was to be refunded by now. My insurance company is not returning emails or phone calls.  This is a major, highly rated company.  I sent my second email of concern to my agent tonight and told him that his company is not meeting my expectations.

I always have my W-2 from my employer by now.  For the past thirty-five years, my tax return would have been filed by mid-January.  No reasons offered for the delay—only a comment that W-2s are required by the end of the month. I will file the day I get my W-2, and hoping for a modest return which will help reduce debt.

[Related Articles: Read more posts by the Debt Diva]

I have met my goal to reduce weekday lunch expenses by eating lunch at work at least 4 days a week in 2012.  I have not eaten out any week night, either. I do eat out on the weekends, but eliminating all week-day expenses is beyond my goal.  My weekend meals are with my daughter; her new job takes her out of the city during the weekdays so we spend the weekends catching up with one another and running errands. These meals are a connection to her.

I added a new goal: No debit card fees in 2012. I don’t have an excuse for incurring fees. I live in Iowa, one of the first states with ATM machines everywhere. I have two debit cards—one from my bank and one from my credit union. Both have multiple ATM locations I can use without a fee within blocks from my home and office. My credit union has a machine within 100 feet of my desk.  Hanging my head in shame!

[Credit Check Tool: Try Credit.com's Free Credit Report Card]

My daughter has dental insurance available to her at her new job.  I canceled her from my dental policy and will save almost $500 this year. She is getting a new cell phone; I will save nearly $1000 a year.

I am sending more money to emergency savings each month, so the small balance in my checking account keeps me alert.  It helps me spend conservatively—I actually had enough left in my checking account to pay my bi-annual auto insurance bill from my checking account rather than from my savings account where it had been budgeted. I am not yet comfortable seeing a low balance in my checking account, but we have not starved or failed to pay bills. It is just different; and that difference is going to allow me to retire without worry!

How have you achieved additional savings?

[Featured Products: Compare credit score, report, and monitoring plans at Credit.com]

Image: 401K, via Flickr.com

A new rule protecting certain federal benefits from garnishment became effective May 1, 2011. The regulation, titled, Garnishment of Accounts Containing Federal Benefit Payments, is important because it will help protect the elderly and disabled, among others, who receive federal benefits from having that money taken from their checking or savings accounts by creditors.

What is protected?

Federal law protects certain types of Federal benefits payments from creditors. These include Social Security benefits, Supplemental Security Income (SSI) benefits, VA benefits, Federal Railroad retirement benefits, Federal Railroad unemployment and sickness benefits, Civil Service Retirement System benefits and Federal Employee Retirement System benefits. Under Federal law, these types of funds are protected from garnishment by judgment creditors.

What is garnishment?

If a creditor successfully sues a debtor to collect a debt, it will be awarded a judgment. A judgment creditor may be able to try to collect the judgment by taking or “garnishing” money from the debtor’s bank account. State and federal laws restrict garnishment, and some income—the types listed above, for example—are protected. In most cases, a creditor must first get a judgment before garnishing funds, though there are some exceptions, such as student loans.

[Related Article: Eleven Ways a Debt Collector May Be Breaking the Law]

Why is this rule needed?

Financial institutions who receive a garnishment order often place a freeze on the debtor’s account, and may send the garnished funds to the court or creditor. That may include money that should be protected. The debtor is then left without access to the funds needed to pay essential bills, and must then try to prove which money in the account that was frozen or taken is exempt.

What the new regulation does

A financial institution that receives a garnishment order will now be required to review the debtor’s account history during the previous 60 days. If, during this ‘‘lookback period,’’ one or more exempt payments were directly deposited to the account, the financial institution must allow the account holder to have access to an amount equal to total benefits received during that period, or the balance of the account on the date of the account review, whichever is less. Financial institutions will also be required to provide account holders with a notice of their rights.

To help financial institutions identify which funds are protected, there will be a tracking code attached to direct deposits of certain federal benefits. Benefits payments received by check are not covered by this regulation because they can’t be identified using these tracking codes. While those funds are still protected from garnishment, recipients may run into the old problem of having their accounts frozen first, and trying to assert their rights later.

This regulation does apply to accounts that are jointly held with someone else, and it also applies to multiple accounts, if a debtor has more than one account with a financial institution.

[Resource: Get your free Credit Report Card]

What it doesn’t do

It does not protect funds from garnishment to collect child support or money owed to the U.S. government. It doesn’t protect all benefit payments that may be exempt, such as military retirement payments, and certain payments made by the Army, Navy, Air Force, Marines, Coast Guard, National Oceanographic and Atmospheric Administration and the Public Health Service. (That may change in the future.)

It also doesn’t protect funds that have been transferred from one account to another. If, for example, a debtor’s Social Security check is deposited into his checking account, but he later transfers that money to a savings account, this regulation no longer protects it. (Again, the funds may still be exempt from garnishment, but the debtor may find himself with his account frozen, trying to prove that the funds should not be garnished.) And it only protects sixty days’ worth of direct deposit benefits payments.

What you should do next

If you receive income from federal benefits and are having trouble paying your bills, be sure to get help. Talk with a consumer law attorney or bankruptcy attorney to find out how to protect your money and assets, and resolve your debts.  If a debt collector threatens to garnish income received from any of these protected sources, such as Social Security income, talk with a consumer law attorney immediately. The debt collector may be breaking the law.

Image: Kevin Cortopassi, via Flickr.com

Sticker prices are for suckers. That's Stephen Popick's theory. From iPods to about-to-expire cuts of meat, Popick (a government economist) has taken up the habit of asking retailers if the stated price is the best they can do. And guess what?: His tactic often works. He's saved $100 on a bicycle, bought Christmas decorations for 75 percent off, and talked Best Buy into matching Costco's online price for an iPod Touch.

A recent Washington Post article examines the new trend in haggling. People have become more assertive, thanks to a recession that has hurt just about everybody's bank account, says Nancy Koehn, Harvard Business School retail historian. Haggling in the United States is "the biggest sea change of consumer behavior since the end of the Second World War," she says.

Consumer Reports released a study which found that 66 percent of Americans have tried haggling one or more times in the last six months, and that they have been successful more often than not.

The author of The Washington Post article tried a number of negotiating tactics and saved $730 in one week, including a better cable TV deal and a $100 cell phone credit.

The article also mentions a haggling service for people who are too shy to haggle themselves. Its called Negotiate4U and they claim they can get a better deal for you on everything from cell phone bills to automobiles.

Mark Frauenfelder – Editor-in-chief of MAKE magazine and the founder of the popular Boing Boing weblog, Mark was an editor at Wired from 1993-1998 and is the founding editor of Wired Online.

The savings rate in the United States has had a terrible history for the last ten or twenty years. When I was a kid, the savings rate in the United States was about 10 percent, meaning people saved $10 out of every $100 they earned. The graph below, courtesy of Billshrink, Inc. shows both the savings rate and the tremendous expansion of consumer debt over the last 60 years. (click image to view full size)

If looking at this makes you shudder, you are not alone.

The early success of use-anywhere credit cards resulted in an explosion of cards from many issuers. You can see from the red line in the graph how popular that idea has been. In spite of the credit crunch, if you are a creditworthy person, you still get many solicitations every week.

The credit card was like giving a match to an arsonist, and people predisposed to that immediate gratification gene proceeded to blow up their financial lives with awesome debt burdens. It now appears that Americans have begun saving again, which is a good thing. I don’t think that there is any question about the proposition that the credit crunch shocked people back to reality.

Now let’s talk about the New Year’s Resolution part.

I would sit the family down and have a Council of War on the family finances. Changing your financial habits, particularly spending habits, will likely not go over well with teen-agers who may feel that they are entitled to do whatever they want. No longer, and this is a great opportunity to help them make a giant leap toward responsible adult behavior. Okay, now on to the money.

So let’s assume that you have cut back on your spending and now have excess funds. What should you do with the money? These are important questions when you can earn a mere 1 percent on bank deposits and only slightly more with CDs of a longer maturity. That’s still a skimpy return. Here are some other choices.

First, you should look at paying off any outstanding credit card balances. Now this doesn’t mean closing your accounts. Credit cards, if used properly, are a great way to build and maintain excellent credit and credit scores. And having excellent credit is more important now than it has ever been. The best way to utilize your credit cards is to charge only what you can comfortably afford to pay off at the end of the month. Not only does this save you from paying interest on the balance each month, but it’s also a great strategy to ensure that you stay out of debt.

Second, you can contribute to your retirement account, especially if your employer will match some of your contribution. When an employer matches a percentage of your contribution, you should maximize the benefit by contributing up to the employer match at the very least. Failing to do so is like turning down free money!

Third, you can contribute to a Roth IRA where the money can grow and you don’t have to pay taxes on withdrawals when you retire. The 529 education savings plans offer tax advantages as well if your kids are still looking forward to college.

Fourth, after you have done some work on the first three, one of my favorites, and the purpose of this article, is that you can make additional payments on your mortgage to reduce your principal balance. If the rate on your mortgage is 5 percent, the savings would be the same between investing in something with a 5 percent return and paying off your 5 percent mortgage.

The nicest feature of this plan is that the return is guaranteed; it is a “risk-free” investment. When you make a principal reduction of, say, $1,000, that is $1,000 you never have to pay interest on again, ever. Not only that, but you cannot lose that principal as you might with another investment.

The lender cannot come back later and give you money and ask you to start paying interest on it again. Plus, it compounds because every normal payment you make afterwards diverts less to interest and more towards principal reduction and pays off your loan earlier. To see how additional payments on your mortgage can benefit you, check out these mortgage calculators.

Finally, I know a large number of retirees and those getting close to retirement. Some still have gagging mortgages for the reasons we discussed above. But others planned well and made extra mortgage payments, and have paid off their mortgages. Guess which folks are happier?

Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower articles, Randy is a mortgage broker who has financed over $1 billion in properties. He writes about home buying and real estate finance topics for CreditBloggers.com.

This year, as a special Christmas gift for my 2½-year-old, I opened him a savings account with our credit union. Now keep in mind it's been over 20 years since I opened any sort of deposit account with a financial institution, so I wasn't exactly sure what I needed to do. And since I had no interest in having to come back four times for lack of proper documentation (think DMV people), I brought everything plus a change of diapers. You would have thought I was trying to borrow mortgage-sized money.

??And as the line behind me grew longer and longer, the lovely teller could tell I was getting frustrated with her line of questioning. 'Do you have his driver's license number? Do you know if he's ever bounced a check? We're going to have to check his Equifax before we open the account. Do you want him to have online access to the account or an ATM card?" How many times can you answer different questions with the same answer? 'He's 2 years old, and while he's wanted in 9 states for an old Ponzi scheme... he's never bounced a check."??

The upside to all of this is an established relationship with a recognized financial institution and the future benefit of compound interest, albeit $195 at 1.25% annually. So just in case we ever go back to true relationship-style banking, he'll have that to fall back on.

??I wonder how long it will be before he gets his first credit card offer in the mail. I'm guessing before he turns 3.  

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.