I went to a site yesterday to see what types of products were available to use my free product coupon and noticed that the website was encouraging people about going to free events sponsored by the library, and to borrow books and other media from the library.

This made me think that with more people using the library and funding being cut because of tax dollars that making a donation to the library system would be a great thing to do. Even if 10% of the approximately 2.8 million Chicagoans donated five or ten dollars to the library system then the library would have an additional $700K-1.4M for programs. Of course the reason people are going to the library is because of the economy, but for the cost of a movie or purchase of a DVD could make a difference. Not everyone who uses the library is in dire straits and could afford to use a book. Tax dollars only go so far. With more people using the resources, then the resources are spread thin. Donations are also tax deductible if that is an added incentive.

I am committed to this and will be making a donation.

Mortgage accelerator programs are not bargains at all. My mortgage company always sends me information about their mortgage accelerator program which would allow me to save money over the lifetime of my loan.  Instead of paying monthly I would pay biweekly which would add an additional payment and a quarter each year for the lifetime of the loan. 

BUT, there is a catch, to sign up I have to pay $49 to enroll and a fee of $9 for each month I participate in the program. Over the course of a year, that’s $157 in fees, plus an increase in the amount of my mortgage. Sounds good to save money over the life of the loan, but a better way to do this is to send in an extra amount – however small and consider that amount your mortgage. 

Each month I send in a little over $50 extra. At the end of a year, without paying an additional $157, I have made about 13.5 payments to my mortgage. The benefit to a self-directed prepayment program is that I do not have to pay the same amount all the time, there are no additional fees and there is still a savings.

Figuring out how much more you want to add to your mortgage’s principal is a personal decision. You might not want to make any additional payment each month or at all but if you have a mortgage that does not penalize for prepayment you could prepay, just by making an additional payment over the course of a year.

 Multiply your mortgage payment by 13, then divide that number by 12. This will give you the new amount that you should pay if you want to pre-pay your mortgage. Round the dollar amount to an even number. Pay attention to the pricing for any fee-based mortgage accelerator programs. Even by just adding the yearly fee to your principal will make a difference in interest savings and the amount of equity that you build.

The CNN report comes at a time when new Commerce Department data was released indicating that Americans spent 0.2% more in February. This may seem like a sign that the economy is improving. It is, but personal income decreased by 0.1 % and income decreased by 0.2%. Real disposable income decreased by 0.4%. The news does not make you want to run right out and start spending. Spender’s remorse may not be a fallacy, but having less money to spend is very real.

Finally, there is a study that supports being frugal. Saving too much can make people resent saving. Moderation is key. Though that sounds great in theory, saving money, just like spending can be addictive. Compare this to a crash diet, dieting becomes a way of life, just as eating unhealthy can be a way of life for some as well. Being in the middle, of the two extremes is harder to manage because you are denying yourself many things all the time. First you are denying overspending and you are denying not spending anything. 

The middle ground would be to include the best of both worlds – saving, but buying what you can afford. Indulging within reason can be liberating because there is no wonder where the money is going to come from – you already have it.

Is foreclosure in your future? Even if it isn’t mortgage scam artists are preying on people’s sensitivities and asking for money to help resolve financial issues. 

Mortgage companies that are not your own would not call you about anything. That should be the first indicator that this is not a legitimate form of help. Also to have your mortgage reduced, you should not have to pay fees up front. Paying points to have a reduced rate is not the same as having someone ask for hundreds or thousands of dollars to have your mortgage adjusted.

Findaforeclosurecounselor.org helps people who are close to foreclosure get some help for free. This is a resource listed on Neighborworks America.

Just because you go through foreclosure counseling, there is no guarantee that you will avoid foreclosure, but you will not have to go further into debt trying to prevent losing your home.

Interested in refinancing now that the rates are dropping? If you purchased your home before the housing market soared and have a rate that is about 6% or so, you might not make any significant savings by refinancing. When you factor in the amount of time that you will spend paying your mortgage and associated fees, you may not make any significant gains with a lower interest rate. Also, your monthly payment may increase if you decrease the term with the additional fees. To save money over the course of your loan, making an additional payment over the course of a year will allow you to save money in interest.

Is your spending in line with your income?

Even though there are many people who are saving money and espousing frugality, there are also people who are spending – just fewer of them.

The Bureau of Labor Statistics indicates that the current rate of unemployment is 8.1% as of February, 2009. There are still many people who are employed and making purchases.

But are those purchases in line with their income? I heard a woman say that there are no secure jobs anymore. There are some jobs that are more secure than others, yet having job security does not mean that spending should go uncapped. We have all heard of recommended minimum amounts that people should save yet if everyone paid their bills and saved some with money left over is there a recommended amount that people should spend on discretionary purchases?

Convenience and cost have made many relatively happy to spend on small indulgences, like coffee, dining out and inexpensive clothing & accessories. Now that the cost is more of a factor when people want to save, convenience stores which offer snacks, drinks and other goodies on the go are suffering as well. Thrift stores are booming in the clothing and accessories sections. The other sections, such as books and housewares haven’t seen people bustling to buy as much in the used goods trade.

When people make more, they have more discretionary spending available: More money, more to spend, and more to buy.

Investopedia defines disrectionary spending as: 

…an important part of a healthy economy – people will only spend money on things like travel, movies and consumer electronics if they have the funds to do so. Some people will use credit cards to purchase discretionary goods, but increasing personal debt is not the same as having discretionary income.

A healthy economy would mean spending within limits only if there is enough money there. How much is enough to have for discretionary purposes? And do you have to spend all of your discretionary funds?

Gas and food prices took a big chunk out of discretionary spending, but now that gas prices have almost halved off of their all time highs and managing at the grocery store what will this mean for the economy and unnecessary items?