Goodbye 2008, Hello 2009

Well chickadees, it's almost time to bid 2008 adieu. I don't know how most of you will look back on the year, as choruses of "Auld Lang Syne" waft from many a pub, street and living room after the ball drops on Wednesday night, but for me the year definitely had its ups and downs.

Ups: Getting a fabulous raise, visiting family more often, celebrating one-year wedding anniversary, making some marvelous friends, starting this blog, all the uber cute clothes I've added to my wardrobe.

Downs: Living in Washington DC, grandfather passing away, lack of funds to go traveling with, not seeing Love much as law school has become "the other woman" in our relationship (haha), the cost of all the uber cute clothes I've added to my wardrobe.

You get the point. I've yet to whittle my list of 2009 resolutions down to one or two that somewhat resemble realistic goals. (Something tells me "convert living room into giant home theater replete with DVD projector" or "take roadtrip down to Argentina in late-60s model VW bus" are either too expensive or too Hunter S. Thompson-esque, respectively ... at least at this point in my life.) Sigh. I guess there's solace in knowing that a money resolution is always good fallback fodder for those looking to be more financially fit. And I have a feeling that many of you probably feel the same way.

So what do you want out of 2009? A larger emergency fund? Paying down (hopefully!) most of your debt? Sharing your fiscal mistakes to educate those you care about? Personal finance expert Dara Duguay, director of Citigroup’s Office of Financial Education, recently shared five excellent money resolutions that many of us could adopt to help get our finances in order for 2009. If you're more of an a la carte gal like me, pick and sample which of the following may be the best for you to work on in the coming year:

Don’t treat money as a taboo subject. Whether managing finances yourself or with a spouse/partner, avoiding money issues in the hopes that they will just go away or until you have a financial crisis only guarantees stress and arguments. Set aside time every month – or schedule regular monthly “money meetings” with your partner – to review the bills, progress toward your money goals, investment portfolio, college savings and any other money topic that is relevant. This monthly review could coincide with bill paying or when your bank statement arrives.

Create an emergency fund. Emergency savings are, in effect, a form of insurance. It will protect you from life’s curveballs catapulting you into a financial crisis. So open a savings account and don’t stop contributing until you have saved enough to cover at least three months of monthly expenses. If you can save six months worth, even better. This will prevent you from having to take cash advances, which while helpful in emergencies, come with fees and interest rate charges that are usually higher than your credit card purchases. Use cash advances with discretion, and don’t use them to fill gaps in your income or savings. Having an emergency fund will give you peace of mind.

Pay more than the minimum on your credit cards whenever you can. Even a small amount more than the minimum can make a big difference in the time it takes to pay off your balance and the total cost of interest. Also, be sure to make your monthly payments on time, every time. Even one late or missed payment can be recorded in your credit report and affect your credit history.

Contribute the maximum to a retirement savings plan. Approximately 50% of Americans who have the opportunity to contribute to a company retirement plan, choose not to. In many cases, contributions are matched by the company. This is free money that is being thrown away by opting out. Remember that your contributions will reduce your taxable income and will only be taxed when you start to withdraw them at retirement age.

Make sure you have adequate insurance protection. There is nothing like an emergency to wipe out your savings or add to your debt level. Protect yourself financially from as many emergencies as possible by ensuring adequate insurance for health, life, auto and home. Confronting these issues can be difficult since no one likes to think about possible illness or death, but to assume you are invincible from “life events” or tragedy is to not be realistic about life.

Here's to a great 2009, filled with good health, substantial wealth (fingers crossed) and renewed prosperity! To quote Oprah (one of my idols), "Cheers to a New Year and another chance for us to get it right."

Achieve your financial goals

It’s no secret that women – an important segment of the financial marketplace – face different financial realities than those of men. In fact, the vast majority of today’s women, as well as the next generation of women, will be responsible for their own and their family’s finances at some point in time.

Women & Co., a division of Citigroup, recently published a study that found 63% of women today currently serve as the “Chief Financial Officer” of their households. Impressive! Of those women, 75% believe that in the future, their daughters will be the CFO of their own households. (Can I get a collective "awww"?)

When it comes to all things women and money, Women & Co. CEO Lisa Caputo and CFA Linda Descano invariably know their stuff. According to them, in times like these it’s essential to tune out "the noise," stay focused and empower yourself with the knowledge and resources you need for long-term financial well-being:

Here are their top tips:

• Assess your financial situation. Every woman’s financial situation is as unique as she is. It’s important to talk with someone who understands your personal situation – your goals, time frame, and risk tolerance. First, make sure you have a financial support network in place – they recommend an attorney, accountant, and a financial advisor. Unfortunately us normal people usually don't have the access or funds to hire this small army of expert financial advice. If that's the case, ask your family and friends for recommendations. Women & Co. found that 72% of women are using a financial advisor for information, guidance, or a second opinion. Remember – there is no single answer that will work for everyone. Find a plan and support network that works for you.

• Plan for ‘time-out’ periods. Many women take time out from the workforce to care for children, aging parents, or spouses. Often, these time-outs result in reduced retirement savings and Social Security benefits. Meanwhile, with the average life expectancy for women being 80.4 years and that of men being 75.2 years, 90% of women find themselves outliving their spouse. Women can prepare for the unexpected by maintaining appropriate insurance coverage, and keeping their will, beneficiary designations, and other legal documents up to date. Start saving early, save more, and of course, plan carefully!

• Be a role model. Women & Co.'s study found that 85% of women feel they would have been better off if they had known more about finances and investing earlier in life. Make sure your daughters and granddaughters get an early start by talking to them about money and saving now! According to the study, 94% of women today are talking to their daughters about money compared with 52% who discussed money with their own mothers. Money is the #1 topic of discussion between mothers and daughters today, more than drinking, drugs, sex, and politics. Join the conversation! 92% of today’s women believe they are positive financial role models for their own daughters. Help raise a more financially educated, powerful, confident generation of women by talking to them about money issues early on.

• Stay informed. It's no surprise that information is an important component of financial security. As circumstances change, we need to re-educate ourselves based on whatever new realities we face, in order to make informed financial decisions. The study found that the top 3 most important resources for women are: a financial advisor, a spouse or partner, and research. Women also reported in that study that hard work and discipline are more important than education and luck when it came to financial success. Continue to seek out trusted sources of information that will provide guidance and tools, as well as the ongoing support you need to work toward your long-term financial goals.

• Clarify your financial goals. Assess where you are now financially by reviewing your net worth, credit score and cash flow. Ask yourself, “Where do I want to be in 1 year, 5 years, or even 20 years?” (Ed note: For more on setting up your budget, read my post on it here.) Work toward your financial goals, including retirement, by reviewing your finances at least once a year and making sure your savings and investment strategies are aligned with your goals.

It's (not) beginning to look a lot like Christmas

Everyone in the blogosphere (especially the personal finance blogosphere) seems to have a post by now dedicated to Christmas shopping and how to harness fabulous deals. I usually love money-saving tips -- bring them on!

Lately, though, I'm tired of scanning these gift-giving pointers -- perhaps because most are inanely obvious and repetitive in nature. Yes, I know that if I make the presents myself I can save more money, or if I shop deals online versus in-store or wait to give gifts a day after Christmas, I can save big. Sigh. I think there's a bigger picture issue that's apparent this year aside from finding the cheapest Wii or flat-screen TV. Maybe it's that so many of us are unemployed this year, or maybe it's that those of us who still have jobs are struggling financially, but to paraphrase Love from the other day, "It just doesn't really feel like Christmas this year."

This sentiment truly hit me when I stood en masse on a crowded escalator yesterday, nothing but a small pin prick on a nameless mall map, peering over the revolving handrail at the mall Santa below (spitting image of the real thing, by the way). I felt ... numb ... and had an epiphany. Had I become a modern-day Ebeneezer Scrooge?

Yes, it's 2008 and times are tough, maybe not as tough as a Dickens novel, but the joie de vivre that usually encircles mall Santas and excessive amounts of eggnog thus far is completely lost on me. This holiday season, I've felt an encroaching sense of acerbity about the whole affair, and if you can believe it, it's not the "gift giving" aspect that bothers me. After all, it's usually what conjures up a bitter tang on most people's palettes.

I'm not exactly sure why this year feels so different, but my guess is that for many there isn't that much to be cheerful about. It's one thing to read daily statistics about those who have been laid off across the country or have lost homes, but it's quite another to be able to count those close to you who barely have enough money to pay their cell phone bills.

The fear and uncertainty in the air is palpable. Many are hanging on by a frayed thread, thankful just to get by these days, much less to replicate a Normal Rockwell painting set around a cozy Christmas tree buttressed by piles of beautifully wrapped presents.

In recent years past, those that struggled were in the minority. Since the early '90s, the United States has seen enormous gains based on mortgage-backed securities -- our finances expanded by people packaging and selling them to other countries. Now, there's a fear that all those gains we've built in that last 20 years will simply vanish. The giant strides in growth we've seen are crumbling as I lament about the very problem, and just when we think we've hit a bottom, that things have to bounce back, they in fact get worse.

And forget it only affecting the finance sector. Sure, hedge fund managers, investment bankers and the Gordon Gekkos of the world may have had their 15 minutes of fame nancing down Wall Street in private towncars and Armani suits, but they're just the first domino to topple the rest in this scheme. Now thousands, in all sectors, are feeling the heat. Tourism, hotels, automobiles, manufacturing, education, anything related to real estate (including construction), leisure, restaurants, marketing/PR firms, publishing. There isn't one entity that hasn't been touched on one level or another by the crash of dominoes as they continue to fall across the country.

Sure, we'll eventually pick up the pieces as a nation and begin back where we started, before we enjoyed and expected lives based on unrealistic illusions. But the reality is oppressive and heavy, and it's unsettling that we're on the precipice of a possible deflationary cycle -- that all the money many have put into homes as equity will disappear, and that just when we think things will turn around, they don't.

I guess it's the Scrooge in me that's unable to accept this holiday season. Surprisingly,
this motivates me more to buy gifts for all the people I care about. In the past I always bought more for myself than others. I know, it's selfish, and while I did buy people things, it was always a one-for-them,-three-for-me scenario. "Christmas isn't about giving gifts, that's so materialistic," I would pontificate between episodes of Sex and the City. Riiiiiiight. . .

Now that I've found myself in a better financial position than most, it makes me happy to be able to brighten someone's day with a present that they wouldn't (or couldn't) otherwise buy. In fact, I get ten times more happiness doing this than buying anything for myself. I guess that's what it takes to find the true spirit of the holiday season. Yes, it's about giving -- within your means, of course -- and making others happy, even if you can't give a lot. Cheesy? Maybe. But it's interesting that it takes a collapse of fantastic extremes to be able to truly evaluate the state of things and cut away all the muck and static that usually blinds so many of us at the end of every year.

Wake up and smell the economy

"It's the end of the world as we know it," or so sang R.E.M. back in the heyday of the '90s -- pre-tech boom, credit crisis and the Pussycat Dolls. While Americans bought their first computers, CDs were still the way to buy music (iTunes, what iTunes?), and the ubiquitous Freddie Prinze Jr. was everywhere, was R.E.M. onto something with their prophetic lyrics?

Yes they were, according to a new paper soon to be published by Robert Seaberg, head of the wealth planning group at Citi Global Wealth Management, who hypothesizes that very few people believed the current financial disaster could actually happen.

In a recent New York Times article, Seaberg is quoted as saying that the rich were fixated in recent years on the great wealth-generating possibilities of concentrated stock positions; derivatives created from the very mortgages that, it turns out, others couldn’t pay; and hedge funds that locked up their money to take huge bets on the economy. The collapse of the housing, employment and financial markets, coming at once, was more than a shock to the system. Like so many others, many of the rich have gone back to the drawing board.

Seaberg’s new paper, entitled “A Flock of Black Swans,” (haha) says various advisers failed to impress on their clients the need to consider the possibility that highly unlikely events — so-called “black swans” — might indeed occur. The rich may not have done anything different, but at least they would have been aware of the risks they faced.

Seaberg's point is that because everyone was riding high, they didn't have to worry about "the basics," such as saving and budgeting, and instead had fun playing with high and ultra-high net worth. Although many of us know this is one of the reasons that led to the current fiscal crisis, it's always nice to get some affirmation from a legitimate economic source -- especially when that affirmation involves "the basics," which this blog knows and loves!

According to the Times, Seaberg has singled out four areas where investments were hit hardest and where they should be adjusted to ride out any future economic storms. Even though his points directly apply to those at the top of the wealth pyramid, I think people of all sized pocketbooks could learn from his tips:

Redefine a safe investment. Until this year, safe investments included U.S. Treasuries and bonds. Even though Treasuries are still safe per se, they aren't the greatests of investments right now because the yields (or money you earn back for making the investment) is almost nil. Translation: You could become that oft-posed cliche and stuff your money under mattress -- you'd get the same results.

Investment-grade corporate bonds, Seaberg tells the Times, are still trading but their yields are down, hit by the Lehman Brothers bankruptcy and AIG's struggles. Basically, this all means that the definition of a "safe investment" has become very narrow, mainly Treasuries.

Diversify more broadly. (Ed. note: If you're not sure what diversification means, read my post about it here.) Investments have increasingly shifted from just stocks to real estate, hedge funds and private equity, so-called alternative assets with higher returns for those willing to lock up their money for long periods of time. Seaberg says the problem is that many of these investments depend on borrowing, which means their values have plummeted as credit conditions tightened.

He says that in order to diversify your investments, you should look outside the U.S. and Europe to emerging and frontier markets, such as India or China. (These countries, global crisis aside, have begun to spend massive amounts on their infrastructure, so industrial companies benefit.)

Consider tax consequences. When the value of every investment was increasing, the portion lost to taxes on every gain wasn't a big deal. Gains far outstripped the tax elemtn. This isn’t the case anymore, Seaberg says. In an environment of lower returns, the after-tax piece is going to matter more. He points out that municipal bonds from cities and states that can meet their obligations are one lower-tax alternative.

Be more realistic on housing. Seaberg says that the era of the house as a constantly appreciating asset is over. In the last two years, the average house in America has dropped 20% in value, according to the Case-Shiller Home Price Index. This means people are going to be staying in homes longer, or will hold on to them longer as investments, versus selling property fast to make a quick buck. Seaberg says that should be a signal for homeowners to make sure they have the right insurance, i.e., theft, fire. and natural disasters such as hurricanes, floods and earthquakes. Although I see Seaberg's point about property owners holding on to their homes longer because of decreasing values, I don't fully agree that the era of the house as a good investment really is over. I think much of that depends on where you live (homes in rural West Virgina, versus say the Bay Area, obviously aren't congruent in value.) To make a broad-based assumption that it doesn't work anymore is too generalized. As a homebuyer who hopes to build equity in a home, you need to be realistic about the current and future states of employment, location, and property values in your individual zip code.

Seaberg tells the Times that in a recent internal memo, Wells Fargo gave its private bankers a checklist of questions that they should have been asking all along. The first question was, “Are you clear with regards to what is your true appetite for risk?” It is followed further down with, “No matter what, always live below or at your means” and “Are you saving enough?” Um, why were they not asking these questions in the first place? Oh wait, that would have saved us all this financial strife in 2008! Silly me.

Fortunately, there is an upside in all of this, according to article, in that it helps people understand the need to assess their true risk tolerance. That soul-searching, done amid the possibility of lower returns in the near future, could alter spending and saving patterns over the long term. That's a great thing. “Without a sense of abundance, people are going to be more careful,” Seaberg says.

This just in: New credit card rules adopted

Legislators this morning adopted sweeping new rules for the credit card industry that will shield consumers from increases in interest rates on existing account balances (among other changes). Translation: sweet.

Although the rules don't go into effect asap (look for a July 2010 launch date), they will allow credit card companies to raise interest rates only on new credit cards and future purchases or advances, rather than on current balances. So that Michael Kors tote you charged last month? It's in the bag.

The changes mark the most sweeping clampdown on the credit card industry in decades and are aimed at protecting consumers from arbitrary hikes in interest rates or inadequate time provided to pay the bills.

For more on all things credit cards, read "My Credit Card, My Self."

[Associated Press]

Possible band-aids for your 401(k)

It's no secret that many who've counted on their 401(k) funds to kick in just as they began planning long-awaited, post-retirement trips to Acapulco have been handed bleak news: Due to the current economic climate, their accounts have dwindled to zero, or at least somewhere near the number. Translation? Not only will they have to put any retirement plans in Margaritaville on hold (just keep repeating: it's 5:00 somewhere), and -- wait for it -- they will have to continue working. You know, just to survive, much less for any lofty trip planning.

In our late 50s and early 60s, the last thing most of us want to hear is that we'll have to work another 10+ years. What's even worse? That all the scrimping and saving we endured in our resilient youth failed to amount to more than a couple movie tickets on a Saturday night in our early 60s.

Aside from pulling a Bonnie and Clyde to secure your financial future (they didn't have the most glamorous of endings, anyway), rest easy knowing that legislators know what you're going through and are currently trying to fix it with a legislative band-aid, of sorts.

There are a number of proposals being passed back and forth on Capitol Hill right now, it all comes down to which band-aid they choose:

Relaxed hardship-withdrawal rules: President-elect Barack Obama has proposed temporarily dropping the 10% penalty for hardship withdrawals from an IRA or a 401(k) for amounts up to 15% of your plan or $10,000.

Easing up on required distributions: For those age 70½ or older, Obama has proposed temporarily suspending required minimum withdrawals from traditional IRAs and 401(k)s.

An automatic IRA: Under this plan, designed by a nonpartisan group and endorsed by Obama, small businesses without 401(k)s would have to enroll workers in a payroll-deduction savings plan (you could opt out), but no matching contribution would be required.

A new national savings plan: Proponents of a government-backed retirement savings account that would guarantee an inflation-adjusted return of 3% initially got little support. But recently one of its biggest backers was asked to testify on Capitol Hill - a sign that the plan is getting serious attention. [CNN Money]

If you're a newbie to all things 401(k), read my post "The 411 on 401(k)," to learn how they work.

Beware of hidden fees

There's nothing worse than feeling swindled, especially in matters of money. One of the worst ways I can think of being ripped off -- aside from being all-out robbed (thank God I've never had to experience that) -- is to suffer the horrors of hidden fees.

You sign your name on the dotted line ... perhaps you've been uninformed, uneducated or are just plain naive, truly thinking you're paying a certain amount for a new credit card or car loan. Twelve months later, you're standing slack-jawed and in shock over an obscene bill, so confused that not even an Appletini could put you right. After that first wave of adrenalin washes through you, completely nixing the calming European facial and full-body massage you just got (hey, a girl can dream), now is the perfect time for a plan of attack going forward.

The number one cardinal sin of a girl on a budget is enduring repeated hidden fees that always seem to hide in long lists of terms and conditions or other fine print that many fail to fully read or even bother to understand. You want to save money? Now is the time to stop glossing over the fine print. As you've witnessed over the last year, the erstwhile Wall Street conglomerate may score a government bailout (if they're lucky), but no one will there to bail you out just because you didn't "think you needed to read all that." You've got take to take matters into your own hands. Don't be afraid to ask questions of anything you don't understand, and make sure to never, ever sign your name (and while you're at it, your bank account) to something that you don't fully comprehend in entirety. After all, it's your money we're talking about here.

Where do the most common hidden fees lurk? I found some great tips from Suze Orman on Oprah.com, highlighting where and what to watch for in these typical areas:

Retirement savings: Do you know how much it costs you to invest in the funds in your 401(k)? The difference between paying high and low fees can add up to tens of thousands of dollars. Call your plan provider to make sure your funds don't charge sales commissions (called a "front-end load" or "deferred-sales charge") and that the annual expense ratio is no higher than 1 percent. If your plan doesn't offer lowcost options, you and your colleagues should make a ruckus—the law is clear that 401(k)s must be operated for the employee's benefit, and high-cost funds are of no help to you. The same goes for your Roth IRA—no-load funds and low-expense ratios are the surest way to boost your bottom line. Fidelity, T. Rowe Price, and Vanguard all offer many low-cost funds.

Credit card: If your monthly payment isn't on time, you'll be slapped with a late fee as high as $39. Do that three times a year, and you've donated nearly $120 to the credit card company. Late payments also hurt your FICO score. And never, ever take out a cash advance on your credit card. The cost is often 3 percent of the amount borrowed, and the interest rate can be higher than 20 percent.

Bank account: It's easy to be hit with fees of $3 or more when you use an ATM—a charge from your own bank plus the one from which you withdraw cash. Do that twice a month, and you're spending at least $72 a year.

Recurring payments: Some bills, such as your insurance premium, allow you to choose between making one big annual payment and a series of installments. If you can afford the one-time deal, you'll avoid the $5 or so service charge levied when you pay quarterly or monthly—that's $20 to $60 a year. It's easy to save $200 annually by eliminating these types of fees. Invest that $200 a year for 20 years, earn an annualized 8% gain, and you've got nearly $10,000. It pays to be a fee fiend.

Women and money, revisited

There's a stereotype that's been perpetuated through the years and it goes a little something like this: Women are fickle and tend to spend more than their male counterparts.

Not only that, but women tend to rely on men more for financial planning -- I don't necessarily mean shacking up with a sugar daddy, but statistically we lean on the men in our lives (our fathers, husbands, etc.) to help plan our financial matters. Many of whom could have been financially savvy dolls often find themselves not peddling through the Napa vineyards with their Loves, but rather sitting across from a personal accountant after being widowed or divorced, scratching their fabulously coiffed heads and wondering how they got there. Even if your future is void of divorces or deaths (fingers crossed), if you don't save now, you could still find yourself 40 and penniless, all because you failed at coming up with a pre-game strategy, and well, figured all those lunches out with friends and errant shopping trips wouldn't really matter.

Guess what? In the long run, they do:

• At some point in our lives, 9 out of 10 women will be solely responsible for their finances.
• The average age of widowhood in the U.S. is 56.
• On average, women live 7 years longer than men.
• Women live more than 19 years in retirement.
• The median income for elderly women is $8,198.
• Women collectively earn more than $1 trillion a year.
• Nearly 70% of women say they have no idea how much money they'll need for
  retirement.
• 53% of women are more likely to spend rather than save for their future.

Ladies, let's be serious -- for many of us, shopping is not only a hobby, it's a way of life ... an addiction, if you will. But $1 trillion is a lot of potential savings. There have been many times in my life when I just think "oh, it's just one shirt . . . just one pair of heels," but all those "justs" add up to what could have been a substantive amount to retire (hopefully early!) on. You can't make a pair of killer Christian Louboutins make money for you, but when invested right, you can make killer returns off your savings.

Now I'm not advising to go cold turkey and wean yourself off the bottle completely -- every stylish woman needs a cocktail once in a while and perhaps a cute handbag ... or dress ... or, well, you get the point. But you need to set limits and know that before you buy anything, you need to pay yourself first, which means setting aside a money after you get paid (and after your Roth is paid), that you can put into an investment vehicle such as a CD.

The stats I mentioned prove that while us women are bringing home the bacon, we have no ... er, bacon ... to divy up at the end of the day. Here's why:

• We often don't set a monetary goal for where we need to be at retirement.
• We start saving and investing later in our lives and don't have as many working years as men. The average woman spends 15% of her career out of the paid workforce, aka the "sandwich generation" -- caring for children, then elderly parents.
• 76% of women are too conservative when it comes to investing, where only 64%
  of men consider themselves conservative investors. Women often pass up excellent investment opportunities because we are too afraid to take the leap.
• Just 53% of women, versus 82% of men feel confident in their investment know-how. That often stops us from making necesarry decisions, also limiting our returns.

For all us money honeys out there, this is a wake-up call to begin planning our financial futures. Don't know the first thing about investing? For a fabulous "how to" on all things investing, visit http://www.fool.com/school/basics/basics01.htm and educate yourself.

And here's a good start for now: Make a list of what you own (bank accounts, stocks and investment, real estate, retirement plans). Then figure out how much you owe (include all bills, i.e., car payments, credit cards, school loans, house payments, etc.).

Now how much money goes toward your List of Woes, I mean, Owes? It's not as easy as simply counting the big, reoccuring payments every month. What makes or breaks many woman's 10- or 20-year plan is that they don't budget for the basics. Can't live without getting your nails done? (This frugal saver would tell you do your nails yourself, but that's a different matter). Need your Starbuck's fix every morning? How much do you drive on average per month and what is that costing you in gas money? What's your monthly budget for clothes? It's these kind of dollars that hold many back from achieving their financial dreams because they aren't budgeted for in the present, therefore they quickly add up. I don't know about you, but I really want those routine trips to Italy, and I want to be able to retire early enough to enjoy them!

Unemployed with no job in sight? Here's help

If you've just gotten notice via a dandy little pink (it used to be your favorite color) slip that your services won't be needed any longer, then here's a reason why those long, depressing Dr. Zhivago-esque unemployment lines may be a nice respite from the me-and-half-of-America-has-been-laid-off storm.

How? (Aside from providing the much-needed $350/week sustenance until your career is back on track.) Well, at the end of November, Dubya put a new act in the books to lengthen the period of financial assistance that every laid off worker in the U.S. is entitled to in the current market, which (as you all know) is devoid of many job prospects.

The Unemployment Extension Act of 2008 extends benefits for the unemployed by seven weeks in all states, and extends them for another 13 weeks on top of that in states with unemployment rates that have averaged 6% or higher over the most recent three months. Yippee? According to the Bureau of Labor Statistics, those who live in a high unemployment states will receive a total of 20 more weeks and nearly half of the states fit that criteria as of October. (If you're not sure where your state stands, visit the BLS website.)

Here's the 411 on the act:

How you qualify: To be eligible, you must be unemployed through no fault of your own and be actively seeking work. Requirements vary from state to state. Generally, wages earned and time on the job determine if you qualify and the level of assistance you will receive.

For example, In Washington you need to have 680 hours of employment in your base year - which is the first 12 of the last 18 months of work. In Nevada, a person must have earned at least $400 in one quarter of the base year to get help.

What you get: States have their own formulas for determining how much you will receive and for how long, but a general rule of thumb is that you will get half of your last paycheck for 26 weeks, explained Andy Stettner, deputy director of the National Employment Law Project.

In most states that is based on what you earned over your base year - up to a certain amount. Every state sets its own maximum, based on that state's average income. The average unemployment insurance benefit is $292 a week according to the Department of Labor.

When you get it: Experts recommend filing for unemployment on your first day out of work. It generally takes two or three weeks after you file a claim to receive your first check. In most cases there is then a "waiting week," and then you will receive your first unemployment insurance check the week after that.

What impacts your benefits: If you work part-time or freelance while you are collecting unemployment that will most likely reduce or eliminate your benefits. The same is true for severance checks in some states. You could still get a partial unemployment check but the formula for determining what percentage of your benefit you could still receive differs by state.

How to get in on the extension: In most states your unemployment insurance will be automatically extended if the Unemployment Compensation Extension Act passes. But to be sure, Stettner recommends calling your unemployment office to ask what you need to do to qualify. [CNN Money]

Fashion on a Budget: New Target/Hayden-Harnett bag line

Target is gearing up to debut their 7th designer handbag collection, this time with bag designers Toni Hacker and Ben Harnett, Brooklyn natives who founded their fashion house a mere four years ago in 2005 and have risen rapidly to become trendsetters in their genre, selling to high-end boutiques worldwide. Us girls on a budget may not be able to strut into the nearest Apres Peau and plunk down $700 (sigh) for any Hayden-Harnett goodness, but now (much like we used to play dress up and pretend we were the Queen of England ... or was that just me?) we can "play" with a budget of $25 and live luxe. Well, kind of.

The Hayden-Harnett collection will be dropping it like it's hot on December 28th, so get thee to your nearest Target when the big day rolls around to examine the goods mano a mano. Hey, I know you'll be out anyway flitting in retail land on your post-Christmas mission to lap up goodies on sale ... at least I will be. The bags will range between $19.99 and $49.99 (not bad at all), and will include oversized envelope clutches, convertible hobos and flight totes. Snazzy detailing on said bags will include distressed brown or black faux-leather and a multi-color fig-leaf printed canvas. Sweet, because in the floral motif realm, hibiscus flowers are so 1997. Fig leafs are the new hibiscus.

And now for your viewing pleasure:Mary Poppins meets the The King and I, with a fig-leaf twist (above). Interesting Thai-influenced umbrella.
This brown clutch (above) also comes in black. Love the Chanel-influenced woven chain and faux-leather wristlet strap, not sure about the exposed coin pouch. It looks like it was stuck to the outside because they wanted the product to look "different." Is this a clutch, wristlet, or actual handbag? Is defining handbags already passe?Like the previous clutch, this one (above) also comes available in black. I think it's tres cute -- very 70s hippie meets urban chic. The (faux) leather looks like it actually wouldn't look that ... faux ... in person and I love the pleated detail and gold-riveted plates in the center.
I also love this handbag, but I can't decide whether I like it better in brown or black. Regardless, it reminds me of the $1,500 Balenciaga motorcycle bag that I have coveted for, oh, the past four years and will probably continue to do so for a very, very long time. If I buy either of these, I'd ake off the shoulder strap and use the shorter handles -- it'd be cuter held than carried by your shoulder.A fig-leaf -- I love saying that -- canvas version of the above bags.

Can't decide whether I love it or hate it (above). Leather and chain straps? Check. Odd, bottom-heavy silhouette replete with studs on underbelly? Not so check. Must examine in person.Yet another handbag of the fig-leaf canvas variety. Is it just me or is this print somewhat reminscient of the upholstered wicker couch cushions on the Golden Girls living room set? If it is (and I am by no means knocking it, HUGE fan of Golden Girls, I'm a Blanche!) then I must buy it! I do love the tan leather detailing on this fig-leaf throwback to set furniture in a late '80s sitcom.

Thoughts?

They want to suck your blood, er money

I've got a secret for you ... there's a vampire lurking in your home.

No, I don't mean one of those cheesy '80s vampires in "Lost Boys" (sorry, Kiefer), or any of those hormonally angst-ridden teenage vampires of the Cullen-variety a la Twilight. These vampires are even scarier because they suck money right out of your wallet when you least expect it -- and unfortunately, there is no Buffy to save you.

But before you go out and buy garlic and holy water in bulk, these vampires can be stopped by simply flipping a switch, or unplugging a cord. Meet the energy vampire, which usually takes shape in the eerie glow of all those little "standby" lights on your electric devices and appliances. Because these devices receive signals at all times, they silently suck energy even when they are turned “off.”

According to the Union of Concerned Scientists, energy vampires add up to an estimated 65 billion kilowatt-hours of electricity each year. This extra electricity costs consumers more than $5.8 billion annually and sends more than 87 billion pounds of heat-trapping carbon dioxide into the atmosphere each year. (Yay for global warming?) According to Best Buy, 40% of all electricity used to power electronics and appliances in the average American home is consumed while the devices are turned off. Not only that, each of those homes has about 20 to 40 electronics plugged in that abuse vampire power. How much does it cost? This vampire energy adds up to between 5% and 8% of a single family home's total electricity use per year, according to the Department of Energy. That's the equivalent of about one month's electricity bill.

The UCS says that some of the biggest energy wasters in most homes are the adapters that come with rechargeable battery-powered cordless phones, cell phones, digital cameras, music players and power tools. Most draw power whenever they’re plugged into an outlet, they say, regardless of whether the device battery is fully charged—or even connected. Other culprits include appliances or electronic equipment with standby capability (such as televisions and computer monitors), a remote control, and/or a digital clock display (such as microwaves, DVD players, and stereo systems).

So how do you become a vampire slayer?

• Unplug appliances directly from the wall when you're not using them. If you have several in one area (such as a computer, printer and myriad iPod/cell phone chargers) attach them to a single power strip and turn off the power switch when they aren't in use.
  

• If you won't be using your computer for a while, but you don't want to shut it down, turn off the monitor. This will save much more energy than using a screensaver (screensavers alone can cost you up to $100 a year).

• Reduce the brightness on your TV and computer screens by half. This can reduce their energy usage by 30 percent.

• Turn off lights whenever you're not using them (which we all do anyway, right?), and use natural light as much as possible during the day.

• When purchasing appliances like a refrigerator or dishwasher, look for the EnergyStar label. These appliances can sometimes use half as much energy as other appliances.

• Take stock of your appliances. Has that extra TV in your guest room been used in the past few months? When is the last time you watched anything on your vintage VCR, which has remained plugged in and collecting dust for the last four years?

The impermanence of money

My grandfather passed away this weekend. Naturally I didn't feel like writing for a few days, which was interesting since I usually write to sort through my feelings. Although I did work on my novel a bit, I couldn't bring myself to write a blog post.

I guess I had an existential crisis of sorts and was left to ponder my life and the topic of money -- what is money good for to me, does money really matter in the grand scheme of things, and why do I write on it incessantly, versus say literary analysis, in a blog? Okay, so money may make the world go 'round because of the obvious reasons (i.e., we need it to eat, have shelter, etc.), but when did saving money become such a falsely quantifiable science based on some pre-determined age you think you'll live until? Take my blog, for instance: "Mastering the art of saving now to live lavishly later." What if there is no "later", and there is only "now?" Say I scrimped and saved every penny I could, forgoing things I'd love right now like a trip to Italy or an espresso maker, on the premise that I will enjoy my money when I'm older?

Perhaps I just need to vent, but I see two problems with this equation:

One, I have a feeling that one day when I'm older, I'll look back at all the time I wished I had traveled more at this age, and resent the fact that I didn't take advantage of all the energy I had to traipse around the world. At 26, I'm not who I was at 21, and that's just a five-year gap. Before I used to pull all-nighters with no problem, and relished going out with friends and meeting new ones. I was an endless reservoir of energy and enthusiasm, a social butterfly who was always up to try anything new. Nowadays I don't feel like that plucky spring chick I once was. (Am I getting old? Eep.) I'm often tired when I get home from a full day of work, I spend any extra vigor I have on kickboxing or writing at night, and look forward to the weekends when I can recharge my battery and veg like broccoli. (Usually retail therapy or lunch with friends works best for me.) If I feel like this now, what am I going to feel like at 47, my scary age? More importantly, if I feel this way times 10 at 47 (don't people get tired the older they get?), why would I want to pack my bags and go yodeling with goat-herders in the Swiss Alps or mash grapes with locals in Portugal to make homespun wine? I want to do all that when I look and feel impossibly fresh-looking. Isn't money meant to be enjoyed (responsibly, of course) in the crevices of our youth? I often see older, white-haired men driving sleek Porsches, and I wonder if they ever wish they could have had all that 25 years ago. After all, money can buy you a sportscar, but it can't buy the feeling of being young again.

The second problem to the "saving for later" equation is that none of us know when we'll die. I've never had anyone close to me die before this weekend, and I've been grappling with my mortality ever since -- it was something I thought about every once in a long while, but it never seemed likely. Me? Die?? Pffff. Exactly. Oh how naive I was, before the recent dose of reality sobered up my inebriatingly puerile state. It's a grand plan to save up for an early retirement at say, 50, 65, or 85, but what if you don't make it to then? (Of course, the argument against this would be "Well, what if you do make it to 50," but then that turns into a "chicken or the egg" debate, and we won't go there tonight.) I think it's very important to plan for the future, but when does fiscal planning simply turn into tightwad-ism ... maybe, even, for the rest of your life? Could you ever, then, enjoy your money later if you've so trained yourself to be mechanically frugal in the present?

I think it's important to think or write or talk about money, but it's equally as important to not allow money to take over your life. I know that it's easier said than done, especially when you don't have much of it. To me, money has always equated to power. Although I always knew that money couldn't buy you everything (though it seemed to help out with happiness, depending on your definition of the word), now my beliefs have been reaffirmed, especially that money cannot buy you perfect health or immortality. We all die in the end, no matter how poor or rich we are. My grandmother told me recently on the phone that "None of us get out of here alive." If that wouldn't take the "power" out of any millionaire's wings, then I don't know what would.

What are you thankful for?

As I prepared our turkey this morning -- well, technically I made Love prepare it, I can't stand touching raw poultry -- I realized that another year has come full circle. And what a fast year it's been. Although it's hard (at least for me) to concentrate on being all warm, fuzzy and giddy over cranberry jelly, what with what's happening in India right now, it's still important to ruminate on the past year and reflect on what you're thankful for. Perhaps some spiked cider would help.

Ever since the beginning of this summer, most of us have been bruised by the limping economy, by either losing our jobs or seeing friends who've lost jobs (I've seen 4), struggling to pay back debt (whether it be credit cards, student loans or house payments), or perhaps even seeing our homes foreclosed. Those of us who were frugal to begin with now just find our "talent" at finding the best deal or best coupon that much more in demand. All of sudden, a personal finance blog is the trendy must-have accessory in 2008, like a BMW or "it" bag was to 2005. Google searches for such terms as "Bahamas cruise" or "2008 Audi" have tapered like an out-of-fashion 80s jean, now more people Google "how to save my 401(k)," "tips to beat the current recession," and "save money on food." Ah, it's like 1929 all over again. (Cue big band music.)

At least there's solace in the fact that we're going through these damaged financial times together, and (hopefully) learning from them. Like I've said before, we're not alone in the struggle and we're all affected by some degree. Case in point: My love affair with free samples and coupons? Never would have been lit without the kindling of current fiscal malaise.

That's one thing I'm thankful for -- that I've learned the full value of being frugal and routinely using store deals to my benefit. Sure, I've always shopped around before to find the best bargain, but now my searches are more magnified and more well-researched.

Other things I'm thankful for:

• That I'm very healthy, and everyone I care about is also healthy. (Except my grandfather, but I learned he just opened his eyes from his coma-like state yesterday, which is very promising.) No amount of bargain-hunting, coupons or money can buy you good health.
• I'm married to a fabulous guy who wants the same things out of life as me, shares my sense of quirky humor, and balances me out in a way that no other guy could. Where I'm emotionally impulsive, he's solid and rational, where I'm "crazy," he's even-keel and sensible. We bring out the best in each other and feed off one another's energy. It's all so "Barefoot in the Park."
• I have a marvelous job that I love, am paid very well for and allows for somewhat flexible hours. (I get to work from home in the mornings and come in around 10:30 am everyday.) I feel like I have good job security and am rewarded well with solid raises.
• Love and I don't have to worry about money that much. Granted, we are living solely off my salary while he is in law school, and we do watch our spending to a certain degree, but I don't feel like it's a struggle. When I want something I usually buy it without having to save up (lavish trips and cars aside), and I can still buy as much two-ply toilet paper as I want, which I've amusingly gathered is a good gauge as to whether one is "struggling."
• We don't have that much debt to tackle, except for Love's law school tuition, which won't be knocking at our door till after he graduates and gets a litigation job, which should quell any strife over paying it back.
  
• Now is a fabulous, I repeat, fabulous time to get into the stock market if you're a newbie to the investing scene. We have not seen these kind of discounted prices since, well, the good ol' Great Depression, and might not see them again in our lifetime. For someone who wants to retire early (read: me), now couldn't be a better time to carpe diem and plan for a luxe life where I can plant the seeds of early retirement in discounted stocks, take my earnings later and invest in the greatest of investments: real estate in the Bay Area.

What are you thankful for this year?

5 Things to Never Say to a Debt Collector

I'm pleased to publish this guest post from my pal Jonathan over at Master Your Card:

Dealing with a debt collector is hardly ever pleasant, even if the debt collector is respectful and cordial. No matter how nice the collector seems, the fact remains that you're behind in your payments and it's this person's job to get the money from you. This is simply not a scenario that lends itself to pleasant conversation.

Debt collectors have a slew of tricks up their sleeves. Although there are rules that dictate how collectors can talk to people, there are many different methods collectors use in order to get the money they are tasked to collect. For this reason, you need to remain on guard when having a chat with a debt collector, no matter how friendly the conversation may seem.

1. "Here is my checking account number." By allowing the collector access to your checking account in order to access whatever payment you need to make, you're opening up a can of worms. Depending on the original agreement, you may find that more money is debited from your account that you thought would be.
2. "Stop calling me, stop contacting me, and leave me alone." According to the Fair Debt Collection Practices Act, you can demand that a collector stops contacting you altogether. You'll have to make this request in writing, but once you do this you won't hear from the collector until the debt heads to court or the collection agency just gives up. This is not a smart move. You need to stay informed when it comes to your debt, no matter how unpleasant it is.
3. "Forget it…I'm declaring bankruptcy next week." The mere threat of bankruptcy doesn’t protect you from collectors. If anything, it may force the collector to kick efforts into high gear before you go file the papers.
4. "No, I don't need that in writing." You work out a settlement agreement with your collector, but then you send in the payment before getting the agreement in writing. The next thing you know, you get a statement thanking you for your payment and demanding the remaining balance. Without the agreement in writing, you will have a difficult time proving the verbal agreement you had with the collector you originally spoke to.
5. "Screw you, you blankety-blank-blank-blank." Yes, you're frustrated and stressed out that you allowed yourself to get into this financial mess, and the person calling to insist on payment may seem like an easy target to vent your frustrations on. Try to keep everything in perspective. A debt collector is someone doing a job. This person is actually in a great position to help you by accepting a payment plan or a settlement instead of going after the full amount plus fees and interest. Try to work with the collector instead of taking out all your anger on him or her.
   

Sometimes debt collectors cross the line and break some rules (and basic manners) in order to collect money. They may intimidate or ridicule you, or on the other hand they may act like your best friend in order to get into your wallet.

Most collectors, on the other hand, are just people doing their job while staying within the rules governing debt collection. Try your best to work with the collector to get your debt paid without falling for any tricky ploys the collector might try to use on you.

For more by Jonathan, read his latest post on credit card arbitrage.

Get a headstart on Black Friday deals

I meant to post this weekend but my grandfather ended up in the hospital and isn't doing well so I didn't feel much like writing. (Not surprising.)

I did want to share some Black Friday news though, for all you who plan to brave the stampede of shoppers (or lack thereof, this year?) when the flood gates open. Because of the state of the economy and the retail sector hurting in the current environment -- especially since so many businesses depend on holiday sales to act as a savior when all else fails -- it turns out Black Friday has become Black Week. This (obviously) means there are some great deals to be had all week -- not only on holiday gifts for others, but also for you. Treat yourself -- you know you deserve it, especially after pinching your pennies all year long.

Start your search today instead of waiting for Friday to roll around after you emerge from your turkey-induced tryphtophonic haze Thursday night. BlackFriday.info and DealTaker.com track Black Friday ads for you, so you don't have to loll about in crowded malls and parking lots, trying to deduce the best deal on that cashmere sweater or cinnamon-scented candle set. Mmmm, cinnamon. There are many other ad tracking sites, but these two are my favorite.

Also, take advantage of fabulous sales all week by checking in daily with the respective websites of your favorite stores. Amazon.com, for example, has started a Fri-Daily blog touting a new Black "Friday" deal every day this week. A half-price Abba box set? Music to this chiquitita's ears and wallet.

Head on over to DealCatcher.com and you'll get a detailed update on holiday deals as they roll out ahead of Thanksgiving. Case in point: Macy's is having a sale of up to 50% off (with an extra 20% off using your Macy's card) on clothes, shoes, handbags, etc. but this deal only lasts Tuesday and Wednesday of this week.

For this who like to satiate their retail appetite with a more designer twist, check out SaleHabit.com, where you can snag a $1,475 black Alberta Ferreti dress for $890, or a $415 Vivienne Westwood blouse for $125. (Not everything on the site is designer, but deals still abound.)

I know many of you like to wait until after Christmas/New Year's for the best prices on everything from coats to clearance Christmas cards to use in '09. Just consider Black "Week" more ammunition to use in your frugal arsenal.

To find the best deal, it's all about timing

You've wanted to buy that that to-die-for Michael Kors peacoat since you spotted it mid-summer (haven't we all, honey?), but it's already getting cooler and, well, coats are flying off racks faster than you can say "Minus 10 degrees with wind chill." If you had planned ahead, you'd be strutting around right now in your new warm and toasty Michael Kors coat, coffee cup and cute bag in hand. Unfortunately, due to lack of a good sales price and everyone wanting the same popular coat, the only thing that fits in your budget is a bad Rampage knockoff from Burlington Coat Factory. (And you have yet to ever fully feel warm in the godforsaken unlined thing.)

From now on plan ahead when you'll buy the bigger purchases in your life to maximize the savings you garner with each item. Time, it seems, really is of the essence!:

What: Airline tickets
When to buy: 1 a.m. on Wednesday
Why: This is the best time to find a deal because airlines reset their fares every Wednesday just after midnight, says Women's Health magazine. I wrote a whole blog post in July on how to snag cheap airfare, if you're curious.

What: New suit
When to buy: January or July
Why: The spring collection hits stores in January, so find a deal on fall suits; they'll be marked down as much as 30%. It's the reverse in July.

What: Gym membership
When to buy: July and August
Why: New memberships plummet midsummer, so you might find a deal because gyms are in a negotiating mood.

What: Car
When to buy: November and December
Why: Don't, as many experts say, buy the previous year's model in late summer when the new models hit. There's a year of depreciation on them already. Instead, buy next year's model late in the year, when dealers are antsy.

What: Caribbean vacation
When to buy: March and April
Why: There will still be plenty of chilly weather at home to escape in early spring, and you'll save 25% or more by avoiding the peak season of December to February, says Orbitz travel expert Kendra Thornton.

What: House
When to buy: October to December
Why: Real estate varies from place to place. But in general, supply exceeds demand in the fall, after the school year begins. [Women's Health Magazine]

Do you have any good, not-so-obvious tips on when to buy certain things?

What we've learned from the economic crisis

In an open letter to two his two daughters published this week, Money Magazine assistant managing editor Pat Regnier recently mused on what the current economic crisis has taught us, and how his children -- and really all of us -- can benefit by learning from the mistakes that were made before it all came crashing down. I love this letter because it's simple, reflective and neatly summarizes how current sentiment came to fruition.

What we're experiencing now is indeed a historical event -- one that we may not see again in our lifetimes, at least to this degree. It's important for us, like Regnier, to pass on any reflective wisdom we've managed to pull from the situation so we can educate future generations to not make the same mistakes. Granted, it's normal for the economy to go through recessions and experience both ups and downs, but this is a "down" moment we can all learn from:


Dear Lucy and Emile,

You are both too young to read this letter now. But in a decade or so, I suspect you'll be hearing about the events of autumn 2008 in your history class. You might wonder what it felt like to live through a global crisis. And when you learn about the years just before the crash -- the houses that magically doubled in value, the no-questions-asked mortgages -- you'll surely ask what all of us crazy old folks could have been thinking. I'd like to take a stab at answering those questions today, while the events are still raw and before we know how this story ends. Your mom and I are learning some big lessons right now, ones we might not recall so well after the good times return.

First let's talk about the hardest question: Why didn't people see this coming? Well, we sort of did. Talk of a real estate bubble was common by 2003. But bubbles do funny things to your head -- you'll see that when your generation's bubble comes along. You may read in your textbooks about the euphoria and optimism of boom times, but what I remember most was the worry.

In 2005, a year when home values in our neighborhood jumped 25%, your mother and I would talk anxiously about not having a giant mortgage. We didn't want to stretch for a loan before we had saved for a big down payment. That conservatism hurt: Our chances of joining what was called the ownership society seemed to become more remote with each uptick in real estate prices. We were worried that our new family would never be financially secure. Or even truly at home.

So this is how you'll know when a strong market has turned into a bubble. If you stick to prudent rules you learned before the market took off, you are bound to feel at least a little bit stupid for a while. Learn to regard that sinking feeling in your gut as a sign that you are doing something right.

Another thing we're discovering is how quickly the rules can change. For years the good jobs were in construction, real estate and, of course, financial services. All those industries are shrinking right now. And for Dad, who has spent most of his adult life either working in or writing about finance, this is...uncomfortable.

I wish I had a few more tricks up my sleeve. Unfortunately, it's hard to fully hedge your career bets -- there are a lot of struggling actor-waiters, but I know only one money manager-neurologist (my magazine's own William Bernstein).

At least educate yourself to be flexible. Try to hone a couple of concrete but transferable skills, such as writing plus some basic science (and not just the "rocks for jocks" courses). Keep learning after 21, and take some career risks -- but stretch for experience, not just money. Do this especially early on, when the cost of failure is low.

Finally, remember that it's not all about you. The next couple of years are going to be bumpy, and one of the odd consolations is that it's happening to everybody. A financial or career setback is slightly less ego-bursting when you can blame it on a bum economy. By the same token, though, that means you ought to be humble about your success when the wind is at your back. The practical lesson is to live a bit below your means in the flush years to give yourself some backup.

But more important, back up others. My deepest regret today isn't how much I saved or what I did at work but how little I've pitched in - with money, with time - in our community. It's obvious to me now, when I'm anxious about what's ahead for my own family, how important it is for people to pull together. Wasn't that just as true a year ago, when plenty of folks were already hurting? I've learned this year that I owe much more. And I'm writing this down so the two of you can hold me to that.

Love, Dad

You can survive being laid off

A couple of my friends and I got together this evening, including my good friend who was laid off from my company two months ago. (You might remember her as as my guest poster a while back.) We rehashed how the past week or two has been on the unemployment front over Baja Fresh tacos and subsequent lattes (I happily picked up the tab), and the overwhelming topic of conversation (no surprise) was unemployment, the state of the economy and how we're all drastically cutting back on our spending to pad any "worst case" scenarios, should they happen.

My friend was laid off in September and has yet to find a job as the end of November is rapidly approaching.

"What should I do? Am I going to be okay?" she asked in her car, as she dropped me off for the night. (This is after broke, laid off ex-colleague #2 sped off with a parking ticket flapping from under his windshield, which was highly amusing and ironic.) I looked at her and answered back with brutal honesty: "You're going to be completely fine."

You all are. With Citigroup's recent announcement yesterday that they were eliminating another 50,000 jobs, law firms folding right and left, and unemployment over 6% in the United States, any of us could be wiped clean from our organization's payrolls in a second. For all you Grey's Anatomy fans out there, being laid off is as instanteanous and jarring as Erica Hahn performing cardiothoracic surgery one minute and then leaving Seattle Grace for good the next, minus all the McSteamy drama to cushion the blow.

So, to quote my friend, what should you do? On the jobs front, all you can do is keep applying to as many openings as you can and stay on top of interviews and callbacks. Don't take it personally if you never hear back after submitting your cover letter and resume -- it's not you, it's the economy. Seriously.

On what to do on the finance front after you've been laid off, SmartMoney Magazine wrote a fabulous article with tips on staying afloat:

DO...

• Negotiate. While not required to do so by law, many employers offer laid-off employees severance packages. Typically, these packages are on the table for a limited amount of time. Pay is usually based on the employee's length of service. (One employee may qualify for an amount equal to two weeks of salary while another, for as much as a year's worth.) The good news: Employees, especially those who've been at the company for many years and have a stellar service record, can often negotiate a better deal.

Try to cash in unused vacation days, for example, says Laura Moskowitz, staff attorney at the National Employment Law Project (NELP), a nonprofit that helps low-wage workers and the unemployed. Employers in 24 states — including California, Massachusetts, Kentucky and Illinois — are required by law to include unused vacation pay in an employee's final paycheck, according to Workplace Fairness, a nonprofit promoting worker rights. Employers in other states may do so voluntarily, or are bound to do so by corporate policy. Unused sick days, on the other hand, won't be included unless it's mandated in an employment contract. So be sure to inquire about your employer's policy.

• File for unemployment benefits promptly. Even while receiving a severance package from your employer, you're entitled to unemployment benefits. Just make sure to file for those benefits right away because once you apply, there's usually a few weeks lag time until the first check arrives.

Depending on the industry you worked in or the circumstances of your layoff, extended benefits or subsidized training may be available to you through a government program called Trade Adjustment Assistance (TAA). The TAA assists those who've been laid off due to increased imports from, or shifts in production to, other countries, says Maurice Emsellem, public policy director at NELP. Lose your factory job because the company moved its manufacturing facilities to China, and you may be entitled to up to two years of subsidized retraining and up to 52 weeks of extended unemployment benefits, according to the Department of Labor.

• Access health-insurance options. If you can't join your spouse's employer-sponsored health plan, consider either extending your previous coverage through COBRA or buying an individual policy.

Under COBRA, workers keep the coverage they had through their employers without worrying about getting turned down due to illness or a pre-existing condition. This option is pricey, though: You'll pay the entire premium plus a 2% administrative fee, which for a family, could top $1,000 a month. If you're the head of a family or middle-aged, for example, and have higher use of medical services, then COBRA would make more sense.

If you're young and healthy and just want coverage for medical emergencies, then look into private insurance. These health plans have lower premiums — on average $344 a month for families and $148 for individuals — but carry much higher deductibles.

DON'T...

• Tap into your 401(k). You're out of a job, have bills to pay and your savings account is dwindling. Your 401(k) might be calling your name, but tapping into the retirement account should always be your last resort.

Beyond the fact that you're dipping into your nest egg, the biggest problem here is Uncle Sam: Say a laid-off worker in the 30% tax bracket withdraws $10,000 from his tax-deferred retirement account. Not only will he pay $3,000 in income taxes, he'll also pay a federal penalty of 10%. Once everything is paid out, he'll be left with just $6,000 in spending cash, the article states.

• Overuse your credit cards. Interest rates alone should be enough to keep people from using their credit cards too much. If a payment is late — even by one day — your card issuer may jack the interest rate up to 20% to 25%, says the article. Credit-card companies are also tightening lending standards and lowering credit limits for high-risk cardholders, which makes it that much costlier should you get into the habit of overcharging. If you're desperate for cash, take money out of a standard savings account or taxable investment account, such as a stock portfolio, before turning to your credit cards or 401(k). [SmartMoney Magazine]
  

No cash to donate? Then use your card!

The New York Times reported on Friday that the Salvation Army is experimenting with a plastic alternative for people who do not have cash to throw in a holiday red kettle.

This season, five bell-ringers in El Paso County, Colo., will be the first to test accepting debit and credit cards along with spare change and bills. Salvation Army officials say the kettle tradition needs to be tweaked as consumers increasingly carry only plastic.

When I first read this I thought it was a terrible idea. Just what the economy needs, people donating money they don't have, on top of paying off debt they shouldn't have charged. Brilliant. But the more I think about, the more it makes sense -- as long as the card in question being swiped is of the debit variety, where the cash will come straight out of your account.

Like I said before, I never really carry cash, so a set-up like this would more fit my lifestyle. There have been times when I've wanted to drop a few dollars into a shiny red Salvation Army kettle, but came up short with some lint, a hair tie and a couple bobby pins from the bottom of my purse. Unless it was a charity for Macguyver, I don't think they'd appreciate my offer.

On the other hand, charging donations just doesn't seem like a kosher thing to do, especially in the current state of the economy. What do you guys think? Can you picture a bell-ringing Salvation Army elf with a card swiper affixed to the inside of his jacket? I think I've seen stranger things.

You may already have that insurance...

Before you commit to that insurance coverage (from car to health, and everything in between), make sure you're not already covered! Many organizations like credit card companies and even AAA offer automatic insurance on certain things just by being a member. Sneaky, sneaky. You may have insurance without even realizing it. Save and don't overpay by figuring out what you might already have:

• Your homeowner’s policy may cover lost luggage, as well as items stolen from your car and other locations, such as your purse. It also may cover items you have borrowed, property damaged by vandalism, or property damaged in a move.
  
  
• Your credit card may provide accidental death insurance for you if your airline tickets were purchased with the card.
  
  
• Some credit cards offer $1,000 in life insurance for cardholders, free for the asking.
  
  
• AAA insures its members for hospital and death benefits if they are in an auto accident.
  
  
• Your auto policy includes medical coverage, so if you are in an auto accident, your costs may be fully covered regardless of the co-pay and deductible provisions of your health insurance policy.
  
  
• Your health insurance may cover children who are away at college—check before you buy separate insurance for your college-age kids.
  
  
• Clubs, fraternal organizations, credit unions, and other groups may have free life insurance benefits with their memberships.
  
  
• Your auto policy or credit card may cover damage to rental cars, saving you money on expensive rental car insurance. [from It's More Than Money - It's Your Life!]
  

Debit or credit?

"Debit or credit?" Ah yes, the conundrum posed by many a sales associate at the culmination of your shopping trip. I almost never think twice about my answer every time I swipe my (debit) card -- and this is even for purchases of as little as a few dollars (I never carry cash, it's a bad habit).

"Debit," I answer. Of course. It is a debit card, after all, so why would I use it as credit?

According to CreditUnions.com, 26.6 billion transactions were made with debit cards in 2006 alone, so all signs point to plastic being more popular than paper nowadays. (Not sure if that's such a good thing, being mired now in this credit crisis, but that's beside the point.)

When a cashier asks you "credit or debit" (in what tends to be a somewhat monotonous tone -- they could really care less) do you consciously ask yourself which is the best alternative -- the PIN or the pen? Surprisingly there is a difference, and depending on what kind of spender you, your answer can drastically alter the rewards you reap in the end. There may actually be more perks to using your check card as a credit card over one of the debit variety.

Usually people spout off an answer based on pure personal preference alone, tied to however they are feeling in the heat of the moment. Even I've been guilty of this, which I guess isn't all that surprising -- I do get caught up in emotional impulse more often than rational logic, the latter of which I have Love for.

Within the debate, fees are a defining characteristic according to which side of the debit v. credit coin you land on. Type in your PIN and you make the merchant happy because the cost of processing your debit transaction is less than if you had chosen "credit." (The fee tacked on to the merchant's cost is usually just a few cents, but if you're a retailer like Target, a few cents here and there definitely adds up.) Choose the pen over debit and sign for your purchase, though, and then Visa and MasterCard will be elated -- they can then process your transaction through their networks, and not through the retailer.

Of course for you as the spender, the merchant versus card company fees issues don't play into your decision; the money will come directly out of your bank account either way. But according to a 2004 MasterCard survey, 70% of debit card holders didn't know that swiping their check cards as credit was even an option -- one that may actually be the better choice.

Here's why:

• Signing saves you fraud headaches. When you pay with a check card, your transaction has two ways it can go (depending on whether you choose debit or credit): If you enter your PIN, then your transaction gets processed through an EFTS (or "electronic funds transfer system") such as STAR or NYCE. Unfortunately EFTSs don't offer liability protection. On the other hand, signature transactions get processed through Visa or MasterCard, for example, who guarantee you won't be liable for any fraudulent use (that is, if you report it in a timely manner). As I mentioned a couple months ago, I had $600 withdrawn from of my bank account from ATMs being simultaneously used in Cuba, Chicago and Mexico. Luckily my bank (Bank of America) refunded all the money that had been stolen (after I had to go through much paper work), but what they found was that my PIN had been stolen and duplicates of my card had been made. I've had never written my PIN down or told anyone what it was, so I was shocked and suprised, but thieves have a myriad of ways they can find out your code these days. If typing in your PIN is more your style, be careful.
  

Also, don't forget that in case your bank doesn't cover your stolen amount, you should still report the fraud ASAP. Federal law says that if you report the fraud within two (business) days, you're liable for no more than $50. Wait up to 60 days and you're liable for up to $500. Beyond 60 and you can most likely say bye-bye to getting any back. Sometimes procrastination just sucks.

• Paying by PIN could lead to small fees for you. A Federal Reserve study released a couple years ago stated that 14% of banks add a fee for PIN-based transactions. Those that do, the study reported, charge you about 75¢ per use. Of course this doesn't pertain to the big wigs like Bank of America and Wells Fargo, but if you're with a smaller bank, don't forget to ask about their policy on PIN use.
  
• Extra "rewards" can come with signing. Many cards have promotional deals affixed that can earn you "points" or "rewards" toward snazzy deals like cruises, airfare deals and...magazine subscriptions. To reap all these rewards though -- who wouldn't want a free year of Horse and Hound? -- you usually have to sign for your purchase.
  

So why use a PIN at all? Now that I'm rethinking the PIN vs. pen debate in my own life, one giant use comes in handy when answering "debit" -- it gives you cash back! For a girl who never carries cash (again, I really need to break that habit), I often find myself in a position where I verily need paper money, but there is nary a Bank of America in sight. Of course, this is precisely when all other banks seems conveniently parked on every street corner. "Where is a Bank of America when you need one?!" I grumble -- until I spot a 7/11 emerge from the flock of Wells Fargos and Wachovias. Sweet. Not only do I get to buy a slurpee, but I can also get a $20 back in the deal.

Use just any bank's ATM and run the risk of being hit with severe fees (these are a huge pet peeve of mine). Usually the ATM will charge you at least $1.50, but I've even seen fees as high as $3. And that doesn't even count whatever fees your own bank will slap you with (generally another $1.50 to $2). As someone on a budget, I can't think of a worse personal hell than being stuck having to withdraw a $20 from a nondescript ATM, and mentally tacking on the $5 total in fees that come nefariously attached to my cash. It's a violating feeling, to say the least, and a PIN acts as a definite savior in the situation.

Cheap airfare sale for this winter

If you're still wondering whether you can afford expensive plane tickets to head back and visit family for the holidays, there may be hope for you yet!

Southwest Airlines just announced a special fare sale that will include Winter holiday travel! (Exciting news, considering most airfare sales always block out December and early January as not applicable.) The news gets even better considering the savings you accrue from Southwest being one of the only fee-free airlines to fly in the United States.

The firesale offers one-way tickets for $49 to $109 (Monday through Thursday and Saturday) or $59 to $159 (Friday and Sunday) for all dates between December 2, 2008 through February 11, 2009. One caveat, though: The travel deal isn't available from Orange County, CA or Washington DC (Dulles). Bummer.

Act fast though: You have to book your flight by midnight tonight (November 13th), or else your one-way coach will turn into a pumpkin.

For those of you who planned to wing it solo for the holidays, the sale makes that mini-vaca to Aspen for snowboarding thatmuch more attainable. Now you'll only have to worry about what to wear on the slopes!

For more details, visit Southwest.

Fashion on a Budget: Target edition

On nights when I have nothing to do, I often end up at Target's online storefront. I know, I'm supposed to be saving because Love and I have all these financial goals we want to meet -- such as t0 move back across the country to California and buy a home (while repaying his uber-expensive student loans off) -- after he graduates law school in about a year and half. But when it comes to fashion I can't help myself. And until I can routinely hand my debit card over to a Nordstrom's associate for something that's either a.) consistently above $200, or b.) not on super sale, I'll always have Target. Oh who am I kidding -- even if I had all the money in the world, I'd still skim the racks at the House of Red, wouldn't you? There's just something so satisfying about leaving the store with bags of goodies.

And their new fashion shipments do not disappoint!:I want, I need the Anya Hindmarch for Target black python handbag above ($44.99). Classy and chic? Check. Modern yet retro? Check. Would Holly GoLightly approve? Che-he-HECK. Oh, and then I would need the Anya Hindmarch for Target black python clutch ($19.99) on the days where I can go "light." I love it when designers throw their chips in with Target, it makes everything luxurious feel so attainable. (Can't wait for the Alexander McQueen line!)

High waisted pencil skirt in black, for only $12.99! I hate how they paired it with the black tights (yuck), but throw on a killer pair of black Angelina Jolie-esque peep-toe pumps and you'll be good to go! If I didn't already own a black high waisted pencil, I'd definitely be on my way out to pick this one up.
Black accordian ruffle dress (above), $29.99. I love the simple, timeless cut, cute puffy sleeves and ruffle detailed around the lapel. My favorite dresses are ones like these, that you can throw on in a moment's notice and still look as put together as someone who spent an afternoon trying to figure out what to wear. (Would pair quite nicely with the aforementioned Anya Hindmarch clutch.)
Wrap dress in Phantom Grape, $29.99. Surprisingly, I don't altogether hate this ensemble the way its paired with flats (I'm a heels girl), although I do think a pointed-toe kitten heel pump, at the very least, would look even better. This reminds me of one of those dresses you'd see Sophia Loren wearing in some early 1960s movie set in Italy. A little Tuscan-countryside-girl-spends-the day-shopping-in-Rome (via Vespa, of course).
Saniya pointed-toe black flats, $16.99. FINALLY, a pair of basic black pointed flats for under $20. I think I'll pick up a pair for this fall/winter. They also have them in a metallic hue.Vira fringe pumps in dark camel, $27.99. These are a knockoff of the L.A.M.B. "Yoyo" heels, which retail for about $400, so at $27.99, these guys are a steal. Like all these finds, I'm going to especially need to see these heels in person, because they look like they may have an air of cheapness to them, but then again it may just be the fringe talking.

While are quite a few hits, there are also some misses:

Seriously, are we really going there now, people? It's like some disgruntled fashion intern in the depths of Vogue concocted a devious plan to throw like acid in Anna Wintour's uptight face. "I know how I'll get this cold, mean-hearted fashion world back," surmises said intern, hidden beneath layers of cubicles. "I'll make spandex silver lamé leggings the new 'it' thing to own! That will teach them!"

Honestly, how could anyone dig these appalling things? (Okay, aside from Lady Gaga and any ex-back up dancers from In Living Color?) And it's not just a Target thing; I've noticed them in many stores these days. News flash: It isn't 1979 anymore, and even if it was, this is not one of its shining moments.