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With  the economy in shambles, people are doing interesting things to supplement their income.  Options include freelancing, blood donations, and pawn shops.  Laid off, discouraged workers are quickly turn to the pawn industry to bring in cash quickly.

Publicly traded Cash America International has seen its share price rise from $12 per share to over $22 in the last two months.  British pawnbrokers Albemarle and Bond’s profits have increased from £24.9 million to £26.5 million.  This is a worldwide phenomenon.

While credit card companies are slashing credit limits and denying new customers, pawn shops are happy to have anyone’s business.  However, pawn shop lending may not be all it is cracked up to be.  For those of you who do not know how pawn shops work, here is a quick rundown.

Pawn shops offer short term, generally 30 to 180 days, loans collateralized by personal property.  For example, a pawn shop may give someone $1000 for a jewelry loan.  The borrower has to pay back the $1,000 plus interest and fees.  State laws limit interest that may be charged.  If the borrower does not pay the loan back plus interest by the date specified in the loan, the pawn shop can keep the jewelry or sell it to anyone the like.  Fees are generally around 2% per month and fees can easily reach 20%.

Popular items at pawn shops include jewelry, musical instruments, electronics, guns, and even cars.  However, pawn shops will generally give little cash compared to the true value of the item and charge high fees, similar to payday loans, that turn pawning into a bad deal for the borrower.

Rather than take your belongings to a pawn shop, you might consider selling what you no longer use on eBay.  While you do have to pay a small listing and PayPal fee, you do not have to pay interest to get your own stuff back.  Do not use your property (other than for mortgages or car loans) as collateral for a loan.  It is a bad deal for you if you do pay back the high interest and fees or if you take the low value on what your items are worth.

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If you are like me, you have a big stack of US savings bonds that has been accumulating dust in a safe deposit box since you were born.  If you are under 30, those are still gaining interest today.  But what should we do with our savings bonds?  I never thought to cash mine in until I got to grad school, and that prompted quite a bit of research into how to deal with finding the value, paying the taxes, and cashing in my bonds.  I will take you through the process I went through up to today, the day I take my bonds to the bank.

The first thing to do if you have savings bonds, if you want to cash them or not, is to find the value.  The best place to go for that is treasurydirect.gov.  Treasury Direct is the US Treasury website for bonds and similar instruments.  The bond calculator requires you to enter the issue date and face value of the bond to find the current value.  You can enter all of your bonds into the calculator to find the current value of all bonds and interest earned.

If you decide you want to cash the bonds, you should look into tax deduction options.  Using your bonds for qualified higher education expenses (such as tuition and fees) or if you modified adjusted gross income is below $82,100 (or double that if filing jointly with another individual.  Everyone’s situation is a little different, so consult with a tax professional for personalized information.

If you do not cash the bonds, you can convert them to “electronic savings bonds”.  Treasury Direct has a simple process for doing this.  A word of caution, if your bonds are matured and you convert them to electronic bonds, they will be cashed out automatically.  If you want to keep a matured bond, you have to keep it in paper.  To convert the bond, you have to sign up for an account at Treasury Direct and set up a conversion account.  You list each bond individually that you plan to convert, and you mail the bonds to the US Treasury.  The bonds will then show on your Treasury Direct account.  From there, you have the option to cash the bonds in and transfer the funds to your bank account as an ACH or leave them to accumulate interest.  Another perk of Treasury Direct is the ability to purchase and manage all of your savings bonds in one place.

I took the other route to cash my bonds, I went to the bank.  Any bank or credit union in the United States should be able to cash in your bonds.  I took 18 in this morning to convert and spent an hour dealing with the paperwork and whatnot.  If you bring the bonds to the bank, be sure to bring a valid drivers license or other government issued ID with you for verification.  The process is fairly simple, but it does take a while for the bank teller to fill everything out.

You can cash your savings bonds 5 years from the issue date without any penalty.  They will generally reach the face value in 10-15 years, but you can hold on to them to continue accuring interest for up to 30 years for all series E, EE, or I bonds (the most common for individuals).  You must pay taxes on interest earned during the entire period unless you fall into the categories outlined above.

One last issue I want to touch on: savings bonds are not just for kids.  While savings bonds are popular presents for newborns and Bar Mitzvahs, you can buy them for yourself at any time in your life.  Many employers, and Treasury Direct, offer automatic savings bond purchase plans.

While working in banking, I had a customer come in every two weeks with a $500 savings bond that she and her husband had bought 30 years earlier.  Though she was long retired, she had a steady $1000 per month come in from an investment she made during her working years.  This is a great option for no risk investments.  The only downside is that with low risk comes low interest.  Current bond rates are only 1.3% and are fixed for the lifetime of the bond.  New rates are set every 6 months.  If you get a good rate, however, you get it for the life of the bond as well.  The bonds I just cashed earned about 4% for the last 24 years.

I hope this post tells you everything you ever wanted to know about US Government Savings Bonds.  If not, please let me know in the comments.  I promise that I will find an answer to your questions and post them back here.

I just had the pleasure of meeting Ramit Sethi of I Will Teach You to Be Rich. He is a very friendly, down to earth guy. His obvious interest in hearing what his readers have to say is a big hint of why he is so successful.

I tried to keep my mouth shut most of the time and just take in what other people have to say. In the hour I spent with Ramit and a handful of 20 to 30 something Denverites, I picked up one major point. Most people do not do thing because of an easy barrier of entry.

Think of how many times you could have done something fun, exciting, or valuable for yourself but did not for some stupid reason that equates to being lazy.

Another interesting point I picked up on was Ramit’s views on frugality. He said he will never talk to you about something like detergent. Rather than spend less than you earn, you should earn more than you spend.  Being rich to Ramit is not just having a lot of money, but a rich life.

I think that is a goal many of us can relate to.  Thanks Ramit for a fun and educational afternoon.

Deep down inside, I know a lot of people probably think saving the big bad company money is a bad thing.  Why would I want to save the cable company money?  Don’t they gouge me every month when I get my bill?  I take a different look at it.  Sometimes saving companies money can save you money, or make you money.  My favorite example of this is paperless billing.

I work with billing a lot at my company.  We spend hundreds of thousands of dollars every month sending out paper bills and processing paper checks.  We are always look to cut costs, and one of the most logical ways to do that is to help customers move to paperless billing.  Automatic deductions from your checking account when you pay online without a bill only costs the company about 3 cents.  Mailing and processing checks costs around 50 cents.

How does this help you?  First off, it saves you a stamp.  That is 42 cents, or whatever they cost today, that you can keep every month.  That is $5.04 per year at current rates.  If you pay a separate power, phone, and cable bill, that is $15.12 per year.  Assuming you subscribe to these services from when you are 20 to when you are 70, that is $756 over your lifetime.  That is just the stamps.  You also have to pay for the checks.  Over 50 years that is 1800 checks.  At $6 per box of 200 checks, that is another $54 just for the paper you send in.

Paper billing is also one of the biggest sources of identity theft today.  Someone can grab that bill or check from your mailbox and start printing checks that link to your account.  That can cost you money and be a big hassle to clean up.

Also, imagine the carbon footprint of cutting down trees, processing the paper, exhaust from the mail truck, and so on.  If you care about saving the planet, like me, this is yet another reason to save the big company money.

Today, companies are laying off thousands of people without blinking an eye.  If you company had an extra $500,000 per month, they could pay a lot of people.  Do you have a friend or neighbor that works for a big company in your city?  While it is not directly related, you could be saving their job.

What else do you do that costs companies money?  Paperless billing is just one example of how you can help yourself, the economy, and the company without leaving your computer.  Just something to think about.  Do you have any other good examples?  Please leave them in the comments.

I just read two interesting lists of celebrities.  The top 10 richest celebrities in the world and 10 celebrities who are poorer than you.  The lists were kind of fun and are worth a few minutes to peruse.

The top 10 list includes Bill Gates, Richard Branson, and George Lucas, just to name a few.

The poor list includes Gary Coleman, MC Hammer, and new member Michael Vick.

To wrap up the series on Personal Financial Statements, we are going to explore what the results really mean and recap the findings.

The Personal Balance Sheet gives us our liquidity position.  To analyze the information here, take a look at the quick ratio and acid test.  If your current assets do not meat or exceed your current liabilities you need to make a quick change to your financial situation.

The Personal Income Statement tells you how much you are making in a given period in the form of a net income.  A high net income means you have a good income/spending gap.  A negative net income means you are spending more than you make and should make a quick lifestyle change.

The Personal Cash Flow Statement gives you a breakdown of your cash position in a period.  It is okay for you to have a negative cash flow in some instances, such as paying down debt.  If you do this for too long, however, you will end up in trouble with debt.

Stock analysts grade companies every day and give them ratings for credit worthiness and investment grade.  Compare yourself to publicly traded companies by calculating their quick ratio, return on assets, and profit margin.  It is a fun exercise to see your total financial health.

In the comments, tell us what your stock would be worth.  Would Jim Cramer be bullish on an investment in you?

After the first month of my trial at Lending Club, I am happy with the results.  I have received my first payments ($1.66 per month) which I can track on the Lending Club site or on Mint.  Here is my current outstanding loan break down.

As you can see, I have $48.85 left outstanding.  Assuming I want to re-invest, I can do so in 14 months.  At that point I will have recovered over $25 from my investments.  Lending Club looks like it will take .01 per loan per month as a fee.

After my trial, I can confidently recommend the Lending Club product.  However, each loan is different.  As long as my borrowers keep paying, everything is good.  It is up to them if I get paid back.  There is no collateral, or protection for me, in case of non-payment.

If you want an invite to trying out Lending Club, just let me know through the new contact form.  You get $50 free if a current member sends you an invite.

I will keep you all updated as this trial continues.  My $50 free is now growing by 12.21% per month.  If you do sign up, be sure to look at each borrower closely.  The letter grade system gives you a good idea of the risk you are taking on.

Have any of you tried Lending Club?  Please tell us about your experiences in the comments.  Thanks again to Stephanie at PTY for the invitation that led to my free $50.

Update: If you join through this affiliate link, we each get $25.  Sorry, the $50 deal is over.

I recently wrote a post about how generic drugs work just as well as name brand medications.  The same goes for many foods and household products.  Unlike over the counter and prescription drugs, the ingredients are not going to be exactly the same, but most products are similar enough to be worth the cost savings.

If you have ever baked anything, you have probably walked up through the baking section at your local grocery store.  I can attest that name brand sugar and flour are identical to Kroger brand as far as I can tell.  For ingredients, you are probably safe with the cheaper store brand.

For prepared foods, there might be a difference.  If you are a big fan of Kraft Mac and Cheese, store brand probably will not live up.  However, if you care more about the food than the style, store brands will save you money.

For home goods, such as trash bags, dish detergent, cleaning products and chemicals, and so on, I only buy store brand.  The products are much cheaper and are just as good as the expensive counterpart.

I almost always make an effort to buy the store brand when I go to the grocery store.  I only have one memory of a store brand not being the same quality as the name brand.  My girlfriend told me that the store brand Mac and Cheese was bad.  So, for two people, I only know of two times the store brand was not up to par.  In my case, I got a full refund under the company quality guarantee.

When you think about it, it is usually only a quarter or a dollar.  Over time, it ads up quickly.  You have to pick which products you will not budge on, but for most things you buy, you can probably save a lot.  I will never give up my Tropicana orange juice, or Crest Toothpaste, for example.  For the most part, though, I would rather give away less of my money for the same thing.

I just changed the entire site from a Google Blogger host to a self hosted WordPress blog format. I hope you like the new theme. The posts will be the same, it will just look a bit different.

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Credit card dependence is a big problem for consumers. As I often write here, I use credit cards to make money, not to spend it. If you pay your card off in full every month, you are being a responsible consumer. If you keep your balance low on a low interest card, you are doing okay. If you maintain a high balance on a high interest card, you are not doing yourself any favors.

When in banking, I worked with customers every week, sometimes every day, who were writing bad checks on their account. The people who showed up on the “short report” were generally there on an isolated incident. I got to know the people on the report. They were constantly struggling to make ends meat. However, they had enough money, in their own eyes, to make regular trips to the liquor store and casino.

If you are dealing with money problems, first look within. An indicator of your problem may be credit card dependency. If you can’t make it through the month without a credit card (debit cards are fine), you probably need to re-evaluate your spending habits.

Look at your primary needs, not wants. Your needs are your home, food, and transportation to work/school. That is it. Clothes are a need, but expensive clothes are not. If you can’t afford to pay off your credit card, you do not need a Coach bag or $1500 shoes.

Another sign of credit card dependence is your balance. Credit cards are called “revolving credit.” If your balances are always high, you are not revolving.

Even worse: cash advances. A cash advance on a credit card generally has an up front fee in addition to an average APR of 29.97%. If you buy something from a cash advance, you are paying 2.5% per month for those funds. Nothing is that important unless you are going to starve without it.

As average credit card balances rise, you need to work to resist the trend. Keep your card balances low. A great way to keep yourself from using your credit card is to use the 24 hour thinking rule. Before buying something on credit, dwell on it for a day. If you still think you need it after a day, you probably do. I know someone who uses the block of ice trick to prevent credit card abuse. She keeps her cards frozen in a block of ice. If she is going to use them, she needs to wait for the ice to thaw. A microwave would destroy the card, so you really have to wait and think about it.

Just be sure you are not dependent on credit. If you are worried you have a problem, talk to a trusted family member or friend about it. Their external opinion of how you live might give you a needed wake up call and save you from worse problems down the road.

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