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The Best Cash Back Credit Cards, February 2012

This article was written by Flexo in Credit. 121 comments.

Cash back credit cards can help consumers practice responsible spending while earning a little extra for their efforts when used properly. It wasn’t long ago that the best cash back credit cards were offering rewards as high as 5% for all purchases, but that is unfortunately no longer the case.

Today’s cash back credit cards are all similar in nature, generally offering 1% cash back on all purchases. However, if you look hard enough, you’ll find a number of credit cards with higher cash rebates than just 1%. This article lists the best cash back credit cards you can find today, and I update the article when there is new information to share. Along with a brief description of each of these best cards, I have included the cash back percentages and any tiers or restrictions, so there are no surprises if your cash back credit card isn’t earning as much as you first thought. Keep in mind that in order to make credit card with rewards program worthwhile, you must avoid interest charges and late fees by paying your bill on time and in full every single month.

Editor’s choice

Chase Freedom® Visa – $200 Bonus Cash Back. The Chase Freedom Visa – $200 Bonus Cash Back offers a standard 1% cash back on all purchases, as well as the opportunity to earn 5% cash back on select purchases throughout the year, subject to a maximum. Every three months, the categories in which you can earn 5% cash back change, so for example January through March could be gas stations and Amazon.com, April through June might be grocery stores and movie theaters, July through September could be gas stations and restaurants while October through December could be hotels, airlines, Best Buy and Kohl’s. In order to qualify for the 5% cash back, you must have an account in good standing and follow the terms and conditions set forth by Chase. Categories will be announced to cardholders before they happen, so look out for updates from Chase.

The Chase Freedom® Visa – $200 Bonus Cash Back also offers up to an additional 10% cash back (up to 11% total cash back) on purchases made at select merchants when you shop online through the Chase website. The card also carries no annual fee. To qualify for the $200 cash back, you must spend only $500 during the first three months, making it the easy choice for best cash back credit card.

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She Spends Less Than She Earns: Zooey Deschanel

This article was written by Flexo in Frugality. 21 comments.

It’s not often that a young, female star of music, movie, and television can avoid financial scrutiny. Tales of financial woe tend to be much juicier, anyway. It’s not difficult to remember the Britney Spears train wreck. She couldn’t handle earning more than $700,000 a month. At least her antics kept her in the news.

I’ve been recently enamored with Zooey Deschanel. She’s a fine actor and a fine singer; I own her three albums on vinyl — including a Christmas album, something of a stretch for me. But today I learned something that increased my respect for her: she spends responsibly. According to the financial disclosure she included when she filed for divorce last year, obtained by TMZ, she keeps her spending under control.

Zooey Deschanel That’s not to say she doesn’t spend extravagantly. According to the disclosure, she pays $4,000 per month for a mortgage ($3,000 of which is interest on the loan), $1,000 per month on groceries, $1,000 on entertainment, and $2,600 on clothes including laundry. In all, Zooey spends more than $27,000 a month. That’s not exactly frugal living.

That doesn’t tell the full story. The actor also disclosed that she earns $95,000 per month. She owns her own businesses:

Oscar Jaffe Productions, a loan-out company. This is a type of organization used in entertainment so that when a film or television producer hires an actor like Zooey, the production company pays the actor as a corporation, not as an employee. Since the actor wouldn’t be an employee, it reduces the tax liability for the company producing the show or movie (all other things being equal).
She & Him LLC, a music licensing company. Again, with a corporation owning the licensing rights to her music, there might be some tax advantages above and beyond what might be the case if Zooey were to own the licensing rights herself.

From the earnings of these two businesses, she passes $95,000 to herself as income. All of Zooey’s expenses, including debt, add up to less than 30% of her pre-tax income. That’s not bad — but it’s not too hard to accomplish when you have $95,000 per month to work with.

Photo: breezy421
TMZ [pdf] via Well Heeled Blog

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How Is Your Budget Doing These Days?

This article was written by Phil Cioppa in Planning. 21 comments.

This is a guest article by Phil Cioppa of Arbol Financial Strategies, LLC. Phil has over 10 years of financial service experience and specializes in asset management strategies, insurance planning and taxation issues. A budget is an important part of any financial plan, and right now is the best time to take another look at yours.

Do you feel like your dollars don’t stretch as far as they used to? No, it is not your imagination. They don’t, because we are experiencing some of the most difficult economic times since the gas lines of the 1970s and the Great Depression in the late 1920s and early 1930s.

What does this mean for you? It means that it’s time to revisit your household budget to make sure that you are living within your means, that you are not wasting your hard-earned dollars on items you don’t need, and that you are setting money aside for what is really important.

What is really important? No, it’s not having the latest high tech gadget, a flashy new car, or more clothes to hang in your closet. It’s building and maintaining an adequate financial safety net for yourself so that you have the money you need to pay for setbacks and emergencies. For example, you lose your job, your employer decides not to continue paying for your health insurance, your car dies and you need to replace it, your child has an unexpected medical problem, your home needs an expensive repair, and so on. Without an adequate safety net, you may have to use credit cards to fund the unexpected, which could be devastating to your finances.

Saving for retirement is also really important. No matter how far away you are from retirement, if you don’t begin planning for it now, your inaction will come back to haunt you. No matter what –- put money aside for the future! When that future becomes “now,” you will be glad you did.

I know that doing all of this may sound like a tall order, but it’s non-negotiable. To start, re-evaluate your financial priorities, study your budget to figure out how your spending and your priorities line up, and then reduce your spending as necessary so that you can begin building a financial safety net as well as a retirement fund. And yes, doing this may require some sacrifice on your part.

If you have to spend less, examine your essential expenses, like food and other day-to-day costs of living. What can you reduce? Also look at the fat in your budget –- the stuff that you enjoy or think is nice to have, but that you really don’t need. What are you willing to give up?

Here are just a few of the kinds of questions you should ask yourself as you rework your budget:

Is your current cell phone plan truly the best deal for you?
Can you save money by bundling your phone, Internet and cable service? You’ll usually find that new account holders get the best deals so you may want to change providers.
Have you explored whether you could purchase your electricity or gas from a less expensive source, assuming those services are deregulated in your state?
Do you really need all of the TV channels you are paying for? If you changed to a cheaper package, would you miss the channels you eliminated?
Are you paying too much for your insurance? Ask your insurance broker to evaluate your insurance needs and explore whether you could save by consolidating all of your insurance with one company.
What about your vehicles? Can you get rid of one or them? And, how often do you use the motorcycle or boat you pay to insure?
How much are you spending each week on restaurant meals, happy hours, and coffee drinks? If you take the time to add up those expenses, you may be surprised at your final total. Take the money you are spending on such nonessentials and use it to pay off your debt faster, or to increase the amount that you save each month.
If you’ve been dropping thousands on vacations away, take vacations closer to home or even consider a vacation at home. Given rising airfares, you could save a bundle.
Refinance your home. With interest rates at all time lows, you could realize a substantial savings by getting a new mortgage loan and paying off your current one.

Nobody likes to change their lifestyle, but nobody likes to be broke either or to come up short when it’s time to retire! The key to surviving and even flourishing in a down economy is to be realistic about your spending, to decide what your financial priorities and needs really are, to give up some of your creature comforts if necessary, and to save, save, save. It’s essential if you want more money in your pocket for today and for tomorrow.

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Frugal Employers Will Lose Their Talent

This article was written by Flexo in Career and Work. 15 comments.

During the recession, my employer, a firm in the financial industry, eliminated raises for employees at the Vice President level and above for one year. The company, although continuing to perform well compared to its peers, cut back bonuses and other benefits. It’s easy for employers to demand higher productivity for less compensation when the job market is stagnant and the economy is threatened.

“You’re lucky to have a job” was the prevailing attitude. Many of my co-workers had family members or knew people who were out of work during the recession, and there was a lingering fear that, particularly after some internal consolidation, any of us could be out of our jobs at any time. Some were holding onto their jobs for dear life.

Paycheck The power balance between employer and employee is always tilted in companies’ favor, but never more than during a period when the economy is falling apart. Unemployment may be at 8.5%, lower than during the height of the recession, but this is still high, and employees are still willing to put up with cutbacks just to keep their jobs.

What appears to be a short-term gain for an employer — reducing expenses in human resources, salaries, and benefits — can be a long-term loss. The recession ushered in a period of New Frugality. Consumers used credit cards less often and companies cut back spending and hoarded cash. The corporate balance sheet was important, and companies appeared stronger by reducing expenses to ensure profits for shareholders. Employees suffered as a result, and the stagnant — or in some cases, decreasing — compensation will not easily be forgotten.

Eventually, the job market will swing in the other direction. The top talent will feel no loyalty to the company that didn’t respect its workers during the recession, and they will leave for greener pastures.

The Wharton School highlights several recent surveys, showing that the short-term gains companies achieve by neglecting the benefits of their employees will likely result in long-term difficulties.

36% of workers want to leave their companies.
43% of human resources managers are concerned top employees will leave.
35% of companies in the United States have smaller staffs than before the recession.
Companies have replaced full-time staff with temporary workers.

Companies cut compensation more for lower-level employees than higher-level, because executives view the average working middle class employee as easier to replace.

A company’s employees, literally its “human resources,” are the most important assets that a company can invest in. Proper handling and training will present a great return on investment. Spending money to support and enhance the lives of and benefits for employees keeps them engaged. If an employee believes he or she was treated well and respected during a time of economic upheaval, when employees at other companies are sharing their stories of frustration, the employee is more likely to appreciate the employer.

How has your employer treated you over the past few years? Have your compensation and benefits been scaled back? Will you stay when you know it will be easier to find a job?

Photo: dslrninja
Wharton School of the University of Pennsylvania

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$362,000 in Income: Not That Much for Mitt Romney

by Flexo

It’s no surprise that politicians have difficulty relating to their constituents. When Mitt Romney was asked about his finances, he admitted two facts that would sound strange to most listeners. Romney considers what he earned from speaking fees in one year, $362,000, as “not that much.” Like most individuals who earn most of their income ... Continue reading this article…

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5 Reasons to Beware 401(k) Retirement Plans

by Flexo

Financial planners just love promoting 401(k) retirement plans. They have quite a few benefits, notably a tax deduction for contributions as well as a tax deferral for contributions and earnings. They’re also one of the most popular vehicles for introducing the working middle class to the stock market, something that might not have been accessible ... Continue reading this article…

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Save Money: Break Up Before Valentine’s Day

by Guest Author

This is a guest article by Jennifer Calonia, Junior Editor at GoBankingRates. In the article, the author encourages couples in failing relationships to break-up before holidays and their obligatory expenses are imminent. While it may sound like the antithesis of romance, calling it quits with your other half before the Valentine’s Day can be advantageous ... Continue reading this article…

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How to Solve the Financial Literacy Problem

by Flexo

Opinions are generally clear about why such a large percentage of the American population winds up in financial jeopardy. There’s no formalized way to learn how to use money properly and with the best results; most people learn by experience. It would save a lot of headaches if we could somehow warn people in advance ... Continue reading this article…

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