Photo: Matt Biddulph

Planning a trip abroad? Have a great time, and don’t worry about traveler’s checks: wherever you’re going, no matter how piña colada and palm-frond-oriented, they probably have a full array of ATMs and credit card terminals to keep you happy.

But be forewarned: pickpockets have their eye on your wallet. Their names are Visa, Mastercard, Citibank, and a host of other light-fingered financial professionals.

These guys have a few strategies for draining your cash. You can’t avoid all of them, but you can do a lot better than the naive traveler. And, to be fair to the companies I just referred to as pickpockets, modern exchange services do make travel a lot easier, and it doesn’t seem unreasonable to pay a few bucks for that. It’s like air travel: you rarely get to fly free, but only a sucker pays full price.

Here are the fees you’re likely to come across when spending abroad with a credit card, debit card, or ATM withdrawals:

• ATM out-of-network fees. This flat fee (typically $5) is charged by your bank for using a foreign ATM. Generally, big banks charge it; community banks, credit unions, and online banks don’t.
• Bank ATM fees. This is the fee charged by the bank that owns the ATM you’re using. You’re more likely to come across this in some countries than others. (And if you’re visiting the US from abroad, I would like to personally apologize, because the US is the worst offender here.) Some banks–particularly online banks–automatically reimburse you for this type of fee. Ally Bank, for example, reimburses all ATM fees.
• Foreign exchange fees. Visa and Mastercard charge you a percentage fee on all foreign transactions, and banks typically tack on a percent or two on top of that. The fee (up to 3% total) usually applies to credit, debit, and ATM transactions. This can add up fast. Capital One credit cards waive this fee entirely. (So does Discover, but who takes Discover?) If you travel a lot, carry a Capital One card–if you can qualify, that is; they’re sticklers for a high FICO score. For a trip to Japan next month, however, I’m not going to bother applying for a new card; I’m using my credit-union-issued card, which charges a flat 1%. I can live with that.
• Cash advance fees. If you use your credit card to withdraw cash at an ATM, you will pay and pay. Unless it’s an honest-to-God emergency, don’t do this.
• Exchange rates. This is the sneakiest of all, because it’s hidden. When using a credit or debit card, you generally receive a fair exchange rate, a wholesale rate comparable to what’s published in the Wall Street Journal or the Universal Currency Converter. (If you get a rate that differs significantly from this, call your bank and complain.) At an airport currency counter, you’ll get an unfavorable rate. Worst of all is exchanging cash at a store. And if a merchant offers to ring up your credit card transaction in US dollars to avoid the foreign exchange fee, decline unless you can check the exchange rate on the spot.

Your bank’s web site is unlikely to be forthcoming on what they’re going to charge you when you travel. Call the bank and walk through two specific scenarios with them: what will you charge me, in total, when I use my card at an ATM in Barbados (or wherever you’re planning to drink your piña coladas)? What about when I use it as a credit or debit card?

Furthermore, it pays to do this before you book your trip. Banks have been known to charge the 3% exchange fee for, say, booking a flight on an international airline, even when the trip is booked in dollars.

Before you go

If you’re traveling to a place you’ve never been before, it pays to find out what the payment landscape looks like. Is plastic widely accepted? Are ATMs ubiquitous? Will they accept your card?

A little Googling here goes a long way. People who travel love to talk about the gritty details. (TripAdvisor is a particularly good resource.) A search for “Japan ATM cards” informed me that Japan is relatively cash-oriented compared to the US, and that my Mastercard-logo card won’t work in most Japanese ATMs, but it will work in ATMs at the post office. There’s a post office near my hotel, so I expect this won’t be a problem. Just in case, though, I’m bringing some Japanese cash with me.

I have an account with Chase, and my neighborhood branch was happy to order me up some yen. It took one business day to fulfill my order. This being the future, I was able to pull up the Currency app (free) on my iPhone to make sure I was getting a fair rate.

Unsurprisingly, I wasn’t: Chase charged me a larcenous 5 percent surcharge over the nominal exchange rate. Which illustrates an important point: don’t waste too much time figuring out how to save a few bucks on your first couple hundred dollars of foreign money. (That’s what I’m telling myself, at least.)

Should you bother to get foreign cash before you go? Probably not. It depends to what extent you’re heading into the unknown. This is my first trip to Japan and I will have a six-year-old in tow, so I decided to grease the wheels as much as possible. I expect to learn upon arrival that it would have been easier and cheaper to hit an ATM at the airport, but I’m just as happy not to have to figure out how to use a Japanese ATM (or whether my card will even work in this particular one) first thing after a ten-hour flight with a sleepy child clinging to my leg.

Finally, for any credit or debit card you’re planning to take on your trip, flip the card over and call the 800 number. Tell them where you’re going and when. But be prepared to have your card declined sometimes anyway: bring multiple cards, and keep a cash stash. The last thing you want is to have to explain why you can’t pay for that piña colada you just finished.

Traveling involves a lot of trade-offs. Money is always a big issue after the decision is made to fly somewhere exotic or historical; can you afford to see all the sights and live comfortably? It’s never easy to balance what you want to do and what your disposable income allows for.

In order to stretch your money the furthest, you need to look for deals from the get-go. All it takes is a little research and creativity, and with the savings, you will be better equipped to experience your destination to the fullest.

Plane ticket costs

Most vacations involve flights, and this is where you should start saving money while traveling.

Travel during the low season

If you are averse to research when it comes to traveling, the easiest way to save money on flights is by vacationing during a destination’s low season. This usually translates into hundreds of dollars in savings on a plane ticket.

You’ll benefit the most from low-season traveling when the place you are visiting is hospitable year-round. Many exotic islands in the Caribbean and South Pacific, for instance, always have good weather — it doesn’t matter when you go. Visit Europe in the winter or early spring, and on top of a cheaper ticket, you’ll find that attractions and hotels are less crowded.

Book early

Those who only have vacation time during the busy winter and summer breaks can still find ways to save on their plane tickets. One method is to book months in advance. Those who buy tickets a year or eight months — even three months in advance — will find prices to be quite reasonable. Often, airlines will not make the price drop too obvious; if they give you a rate that seems too high, ask for a discount and you may score a deal.

Fly during the week

Similarly, travelers who book flights that leave in the middle of the week often receive discounted prices. The reason is simple: Most people prefer traveling on the weekend, whether it’s for business or pleasure. Pick a flight that leaves on a Wednesday, for example, and you could save a few dollars.

Go standby

A popular method of traveling among backpackers, students and the thrifty is flying standby. Airlines will inform these people of a flight opening only hours or minutes in advance; it is up to the traveler to be at the airport, ready to hop on a plane. As a “reward” for filling seats on short notice, standby fliers usually pay for tickets at discounted prices. If you’re alone or simply don’t mind the short notice, this is a good way to lower your flight cost.

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photo: D’Arcy Norman

This article is part of a package on consumers and Walmart. To read the other article, on what not to buy at Walmart, click here.

Despite (or perhaps because of) the fact that Walmart (WMT) is the nation’s largest retailer, there are plenty of people who wouldn’t be caught dead in one. To these folks, Walmart conjures images of a rapacious juggernaut of stadium-sized stores offering low-quality merchandise, spotty service, and mistreating employees and the environment — while driving small local retailers out of business.

But many of those misgivings are starting to fade, partly as a result of some well-timed improvements to the company’s product line-up and its environmental record. What’s more, there’s nothing like the worst recession in 80 years to nudge “low prices” a little higher on the collective priority list. And while Walmart may not be making its employees rich, the chain handed out very few pink slips in the downturn and remains the country’s largest private employer.

To be sure, there are plenty of reasons to remain wary of the retail behemoth. Whether you are concerned about the threat to a downtown business district, object to the retail culture, or just have a mental picture of the Walmart shopper that you can’t square with your own self image, it may not be for you. But it’s worth keeping in mind that, when it leverages its enormous scale for good, Walmart can make a difference in a hurry. It’s one thing when a boutique sells fair-trade coffee, but when Walmart gets into the game, a lot of sustainable farmers benefit. Here are five product categories where you can comparison shop in good conscience at the nation’s “low-price leader.”

1. Moderately Priced Consumer Electronics

Dying to get the latest hi-definition TV from Vizio or Viore? We thought not. Those low-priced brands are what Walmart has focused on in the past, but recently the retailer has expanded its offerings to include high-def TVs from top makers such as Samsung (SSNLF), Sony (SNE), Philips (PHG), and Sharp (SHCAY). It also now offers digital cameras made by the likes of Nikon and Canon.

Walmart still isn’t the best place to shop for a top-of-the-line television or digital SLR camera. But its focus on bringing in more big brands has made it an attractive option for shoppers seeking consumer electronics in the sub-$1,000 price range. This year, for example, some WalMart stores offered a 50-inch Samsung plasma television for less than $700 during the Thanksgiving holiday weekend.

What Walmart doesn’t have is an army of educated sales people ready to explain all the settings on the back of that SLR or the subtle differences between a high-def TV with a resolution of 1080i versus one with 1080p. But such service has become less important now that 90 percent of consumers turn to the Internet for detailed product reviews, says James Russo, Nielsen’s vice president of global consumer insights.

“Consumers will do their research outside the store,” says Russo. “So if Walmart has the right selection and price point, consumers will go there.

2. Smart Phones

In the past year, Walmart has beefed up its offerings of higher-end cell phones, especially Blackberries. This is good news if you’ve reached the end of your phone contract and are looking to compare new phones and carriers all in one place, since Walmart sells phones and service plans from each of the four largest U.S. carriers: Verizon (VZ), AT&T (T), Sprint (S), and T-Mobile (DT). So if you want to see how T-Mobile’s G1 phone, which uses Google’s Android operating system, matches up against Apple’s iPhone, Walmart is the place for you. You can’t do that at an AT&T store, or even at one of Apple’s fancy boutiques.

3. Coffee

While Walmart has been criticized in the past for being more concerned with price than environmental or labor issues when sourcing its goods, one area where it’s improving its record is with coffee. This year, the company partnered with TransFair USA, an independent certifying agency, to offer fair trade-certified coffee in its Walmart and Sam’s Club stores. The coffee is sustainably grown by farmers who receive a living wage and is thus more expensive than competing coffees — roughly $5.88 for a 10 to 12 ounce bag, compared with less than $5 for supermarket brand Eight O’Clock Coffee. But it tastes better (or at least it should), and by selling fair-trade coffee, Walmart vastly expands the market for such goods.

Carmen K. Iezzi, executive director of the Fair Trade Federation, a North American association for such products, says Walmart’s expansion of fair trade certified items like coffee was promising, although she cautioned that it’s too early to tell how much impact Walmart’s efforts will have. Still, coffee is a good start. “When any major corporation begins to move in the direction of more sustainable practices, that is a positive sign,” says Iezzi.

4. Video Game Bundles

Of course, Walmart’s primary appeal has always been its low prices, but it makes sense for shoppers to do a cost/benefit analysis: Is it worth it to save $10 on a book, when you could be supporting an independent bookseller instead? On the other hand, you can save a lot more money if you’re in the market for video game systems, which Walmart often bundles with starter games. For example, Walmart was recently selling the Xbox 360 Elite gaming system, along with two games, including this season’s blockbuster title, Call of Duty: Modern Warfare 2, for just $259. The game console alone sells for upward of $249 at stores such as Sears, while Call of Duty typically retails for $60. And buying video game consoles and products at Walmart is arguably a guilt-free purchase. After all, Sears (SHLD) isn’t known for standing up against suburban sprawl.

5. Laundry Detergent

When it comes to the environment, Walmart’s suppliers have often fallen far short of best practices. Now the chain is trying to clean up its act by offering more eco-friendly products. One area where it’s done the most is laundry detergent. The company recently switched to selling only concentrated laundry detergent in its U.S. stores — these products use up to 50 percent less packaging and require less fuel to transport than the earlier versions. Once again, scale matters: Walmart has a serious carbon footprint, so cutting laundry detergent containers by half can have a big impact.

Walmart has taken steps to combat phosphates, which pollute the water and lead to an explosion of the algae population that destroys fish habitats and plants. The company already says there are no phosphates in detergent it sells in the U.S., and earlier this year, it announced plans to choose more eco-friendly suppliers for the laundry and dish detergent it sells in its Americas region, cutting phosphates by 70 percent by 2011. The Americas region includes Canada, Mexico, and countries in Central and South America..

And Walmart has unveiled broader initiatives to improve its eco-image. In July, the company began developing a sustainability index that will eventually rank all of its suppliers and products based on their environmental impact. “Walmart is taking some important steps, although they’ve still got a long way to go,” says Honor Schauland, a campaign assistant at the Organic Consumers Association, a Minnesota-based consumer advocacy group.

Walmart didn’t become the world’s largest retailer by accident. Executives in Bentonville, Ark., are well aware that stocking sustainable products was a good way to attract a more affluent consumer. And those consumers like low prices on recognizable brands as much as anyone, especially in the current economy, says Doug Conn, a managing director at Hexagon Securities who focuses on the retail sector.

“They have picked up on trends like organics and natural products, and that has helped get new customers,” says Conn. “But the key theme is that customers are more value-oriented than they have ever been this holiday season, and Walmart is the default place to go for low prices.”

In other words, new customers are coming for the deals. But if they shop the categories mentioned above, they can feel good about being thrifty without worrying that they’ve abandoned their ideals just to save a buck.

You’ve heard the story of the lottery winner who burns through his millions like Monopoly money and ends up in a trailer park. And if you haven’t, here’s a roundup of eight such cautionary tales.

It’s an appealing story. You and I are never going to win the lottery, so we can tell ourselves, hey, I’d never be that much of a dumbass. Yes, I deserve a big pat on the back—except, wait, I’ve made the same mistake on a smaller scale. Repeatedly.

Big hunks

When a professional financial adviser says “windfall,” they are generally talking about an amount of money that would kill you if it fell on you. I know this because I recently spoke to a bunch of financial advisers. The word “million” was used many times, as was “wealth management.” How do you know if you need wealth management? If you can read this without putting on your monocle, you don’t need it.

Then again, a lot of us will have an actual windfall. Maybe not a million, but say five figures plus. It happens most often when people inherit money, get divorced, or sell a business. And to hear the planners talk, a person coming into money is kind of like a country striking oil. Awesome! How could this possibly go wrong? Then a few months later you’re at war with Iran/your greedy brother.

So windfalls are an important topic, and it’s good to think about the big event before it happens, but it’s probably not the first thing on your mind in 2010. After talking with those financial planners, however, I realized that there isn’t much difference between big windfalls and little ones.

Nearly every planner gives the same advice: if you come into a big chunk of money, the first thing you should do is nothing. Don’t quit your job; put the money into an extremely boring account (like a money market fund or CD); let it sit there for three to twelve months until the urge to break a bottle of Cristal over the bow of your yacht passes. Some planners are a little more generous. “I encourage them spend a small amount, five to ten percent, on something frivolous to acknowledge the windfall,” says Jorie Johnson of Financial Futures in New Jersey.

While the money is sitting in the boring account, you make a plan: How can I best use this money to achieve my long-term goals? Retirement or college savings? A house? A new career? (You know, boring stuff.)

Meanwhile, your planner will be delivering a necessary buzzkill. “I had a client years ago who got divorced and got $5 million,” says Jill Boynton of Cornerstone Planning in New Hampshire. “And we had to show her that even this money is not going to give her an extravagant lifestyle for the rest of her life.”

Little lotteries

I’ve never received the kind of windfall that would have me running to a financial planner or yacht dealership. Not even close. But I have let money slip through my fingers because I didn’t recognize it as a windfall.

Forget about the million dollars. What if you made an extra thousand dollars? A holiday bonus, a sales commission, overtime pay, a gift from a rich uncle, the first paycheck at a new job—it happens all the time. You know it’s not a life-changing amount of money. It’s extra. You’re probably already thinking about the cool stuff you could do with an extra grand. (I certainly am.)

I think Jorie Johnson’s advice applies equally well to a thousand bucks as it does to a million: set it aside until the thrill wears off, spend a little, save the rest.

Recently I started doing something often recommended by frugal people. I have a couple of moderately expensive hobbies. When I want to buy something related to one of these hobbies, I have to do two things. First, I save up the money. (Duh.) Then I write down what I want and how much it costs. I keep this information on a spreadsheet. Once an item has been on the sheet for a whole month, I can go ahead and buy it.

You know the rest: by the end of the 30-day waiting period, I rarely actually want the thing any more. I’m looking at my spreadsheet right now, and in the last four months, I’ve decided not to buy $600 worth of stuff, including some really stupid stuff. (Why did I think I wanted a box that lets you hook up four pairs of headphones to one computer?) Of course, I did spend some money on my hobbies during this time—about $300.

Sure, I knew philosophically that people (other people) spend money on stuff they don’t need. Now I have proof.

Adding it up

Little windfalls add up. That $1000 could take a chunk out of some high-interest credit card debt or pay for a credit or two of college. And the average person living in anything other than desperate circumstances receives several such mini-windfalls every year.

There’s one other type of windfall that tends to magically disappear: a raise. What should you do when you get one? “The best thing they can do with it is immediately increase their 401(k) contributions by the amount of the raise if they’re not already maxing out the 401(k),” says Jill Boynton. “So that way they’ve just increased their savings and they haven’t changed their lifestyle at all.” (I’m so glad Boynton said this so I didn’t have to!)

Now, if you’ll excuse me, I seem to have misplaced my monocle.

Matthew Amster-Burton, author of the book Hungry Monkey, writes on food and finance from his home in Seattle.

Unless you’re a real wine aficionado, you probably lack the confidence to know which of those bottles of wine on-sale at the local BevMo are a bargain and which deserve the appellation, two-buck-chuck. That’s why we’ve asked two Master Sommeliers to suggest some wines that can stand-in for more well-known (and expensive) bottles. With the right attitude and our handy chart, you’ll upgrade your wine cred, impress your guests, and save money.

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<a href="http://www.mint.com/blog/wp-content/uploads/2010/01/wine-3.jpg"><img src="http://www.mint.com/blog/wp-content/uploads/2010/01/wine-3.jpg" alt="wine-3" title="wine-3" width="1323" height="794" class="alignnone size-full wp-image-8301" /></a><br /><a href="http://www.mint.com/">budget planner</a> – Mint.com

Photo: Callahan

Pssst. Hey, kid. Yeah, it’s me, in the trenchcoat. Want to earn 3 to 5 percent interest on your checking account? Well, you can. There’s a catch, of course, but it’s not a big catch, and you don’t have to do anything sneaky. (Trenchcoat notwithstanding.)

Over 600 credit unions and community banks offer reward checking accounts, and nearly 1.5 million customers have signed up. With a typical reward account, you’re required to use direct deposit and e-statements, and you have to use your debit card at least a dozen times in each statement period. Fail to meet the criteria, and you forfeit nearly all your interest for that month.

In return for putting up with this rigmarole, you get around 4% interest on the first $25,000 in the account and around 1% on anything over $25,000. You’re automatically reimbursed for up to $25 in ATM fees per month. No minimum balance is required, and it’s otherwise exactly like a normal checking account, including federal deposit insurance.

“If you use a debit card as often as you tie your shoes, it’s a slam dunk,” says Greg McBride, senior financial analyst for Bankrate.com.

Four percent just for giving your debit card a workout? With “high-interest” savings accounts offering less than 1.5 percent and regular savings accounts offering jack sh—er, even less, reward checking sounds too good to be true.

But it’s legit. Banks make money off reward checking in several ways.

1. Every time you use your debit card, the bank gets a cut of the Visa or Mastercard fee that the merchant pays.

2. The bank attracts new money by offering high rates on new deposits without having to pay higher rates on its existing deposits.

3. Naturally, the bank is counting on a certain number of customers failing to clear all the hurdles and thereby forfeiting their interest for the month. It’s like those mail-in rebate cards you forget to mail in. “That higher interest rate really only applies to a consumer who’s meeting those requirements month in and month out,” says McBride. “For somebody who only meets it half the time, the cost of those incremental deposits isn’t 4 percent, it’s 2 percent.”

4. Reward checking customers keep big wads of cash in their checking accounts, and that’s money the bank can use for loans. According to Bancvue, which provides consulting services to community banks, the average reward checking customer maintains a seven times higher balance than a typical checking customer.

Karawynn Long of Seattle is in the seven-times-higher category. Long, who writes the personal finance blog Pocketmint, opened her reward checking account with Bank of the Sierra last fall. She went from keeping $2000-$5000 in her old checking account to close to $25,000 in her reward checking. “I’m basically using it as a savings account stash for twenty, twenty-two thousand extra dollars,” she says.

Is a reward checking account right for you? “Whether or not this is going to work for you really boils down to whether this is a fit for your financial lifestyle,” says McBride. “If you’re going to have to keep a running tally of how many debit card transactions you’ve done so you can make sure you clear that threshold every month, this probably isn’t going to work for you.”

Long, on the other hand, is making $1000 a year, risk-free, just for parking extra cash in her checking account. “I haven’t actually had to change my behavior,” she says. “We haven’t had to do anything differently or make any purchases with a debit card we wouldn’t ordinarily have done, but it does require a little extra monitoring.”

There is the issue of fraud to consider. The banks promise that customers are fully covered in the event of debit card fraud, and I believe them. But debit fraud exposes you to many dangers and annoyances that credit fraud doesn’t: you may face overdraft fees and not know when you’re going to get your money back. I don’t mean to worry anyone unnecessarily; I would personally feel comfortable keeping my money in one of these accounts, but you have to check in regularly online and be on the lookout for trouble. “It is something that requires you to pay some attention to it, unlike where you just throw stuff into the savings account and never look at it,” says Long.

Low interest rates on CDs and savings accounts have driven the growth of reward checking; the number of reward checking account holders has approximately doubled in the last 18 months, according to Bancvue’s sister marketing company, First ROI. What happens in a few years, when the Fed raises interest rates? Reward checking may become less attractive next to, say, a 5 percent CD, once such a thing exists again. Then again, you have to have a checking account, and any interest on it is better than none.

Matthew Amster-Burton, author of the book Hungry Monkey, writes on food and finance from his home in Seattle.

(Daniel Leninger)

Last November, Mint reported at length on the many ways that banks and creditors were sticking it to consumers in anticipation of the The Credit Card Accountability Responsibility and Disclosure Act of 2009 (set to take effect in February.) Among the various unsavory practices were sudden interest rate hikes, strict enforcement of overdraft fees, “due date roulette”, reduced credit limits and universal default – all of which will soon be prohibited. And despite often being depicted as helpless and uneducated, consumers have begun retaliating by hitting the big banks where it hurts – at their bottom line. Slowly but surely, people are concluding that it is simply not worth transacting with institutions that mistreat them, and are beginning to take their business elsewhere instead. Consumer rebellion against banks has taken several forms thus far. Let’s take a look at some of these:

Withdrawing Money

Perhaps the most direct retaliation to bank mistreatment is the simple removal of money by consumers from their bank accounts. To be sure, some of this activity owes to the pathetic amount of interest currently being paid out by most banks. In the UK, for instance, TheMoneyStop reports that consumers are, “…withdrawing billions due to poor returns” on their savings accounts. In the United States, however, banks are increasingly seeing depositors withdraw their money due largely to the types of shoddy service discussed earlier. Indeed, many consumers are apparently resolved to withdraw their money from the “Big Four” banks (Citibank, Chase, Wells Fargo and Bank of America) even if it makes no visible difference to the overall industry. TheWeek.com quoted a disgruntled customer as saying, bluntly, “…maybe I can’t make Chase feel my pain — but I’ll feel better about myself in the morning.”

(AMagill)

The bitterness that some customers feel toward their banks is hard to exaggerate, and the data substantiates the anecdotes. According to Rueters, a J.D. Power & Associates survey found that, “…only 35 percent of customers polled said they are highly committed to their retail banks” during 2009, “…down from 37 percent in 2008 and 41 percent in 2007.” Bank of America and Citibank were named specifically as receiving low marks in customer service, perhaps providing an impetus for consumers to withdraw funds.

Switching to Smaller, Local Banks

Another outlet for the frustrations of disenfranchised consumers has been switching to smaller, local banks. Despite blogger Felix Salmon’s remark that changing banks, “…is hard, and people are lazy”, the Huffington Post reported on January 8 that its viral, video-driven Move Your Money campaign has resulted in millions of dollars being transferred from big banks to smaller, local competitors. Among the beneficiaries of the growing exodus has been Trustco’s Albany, NY branch, which, “…had 30 new accounts opened just Thursday, almost all of them new customers saying it was their way of ‘fighting back’ against larger banks like Citi and Chase.” Nor are unwealthy consumers the only ones making a stand. Albany’s NEWS10 television station reported that, “…one of those new accounts [at Trustco] is seven figures.” And far from being a local trend, Trustco administrative vice president Robert Leonard states that, “…the trend is the same at their branches in Westchester and in their Florida branch.”

(Betssssssy)

Additionally, Financial-Planning.com reports that since ‘Move Your Money’ kicked off on December 29, “…daily Web traffic has more than tripled on the National Association of Federal Credit Unions’ CULookUp.com, a credit union locator site.” While this is an admittedly crude proxy for new account openings, NAFCU President Fred Becker said, “…it is a good indication that bank customers are looking for alternatives.” The campaign’s two week-old Facebook group, actively for all of two weeks, already boasts a following of over 20,000 members. And even in Michigan (whose economy is so bad that one might expect consumers to sit tight regardless of poor bank treatment) the Lansing State Journal finds that, “…about 59,000 people joined one of Michigan’s 335 credit unions in 2009 through the end of September – the most in more than five years.”

Heightened Interest in Online Banks

Dissatisfaction with big name banks has also led to rising interest in Internet-only, “direct” banks. The trend was foreseen as far back as April 2009, when BankTech.com reported a study by Tower Group predicting that, “…the amount of money deposited with direct banks will double by 2012.” Monetarily, such a prediction equates to, “…$350 billion in deposits held by direct banks by 2012, up from $160 billion last year.” Without question, some of this growth can be attributed to consumers becoming more comfortable with online banking in general. However, in many respects, the benefits of Internet-only banks dovetail perfectly with the biggest reasons people are unhappy with their current banks. Since the costs of operating direct banks are less than ten percent than those of brick and mortar banks, consumers benefit from fewer and less expensive fees. Some online banks (such as EBank) not only refrain from levying their own ATM fees, but also reimburse any such fees that other banks charge – the very same day.

(Mint)

Additionally, direct banks have acquired a reputation for paying higher rates of return on savings deposits than traditional banks. Bankaholic’s report on the top 50 money market rates and high interest savings accounts found two direct banks (Capital One Direct and Ally Banking) in the top three at 1.58% and 1.49%, respectively, as of January 11. With larger banks often paying less than 1% interest on savings deposits (in addition to nickel and diming their customers to death), it’s hardly surprising that direct, online banks are attracting more people into the fold.

Outright Refusal to Pay

The more radical among consumers are actually refusing to pay what banks and creditors say they owe. An exemplar of this tactic is Ben Pavone, a California lawyer who, “…told Bank of America in a letter last week that he refuses to pay off his credit card debt until the bank lowers his interest rate”, according to the Huffington Post. Furthermore, should Bank of America try to tarnish Pavone’s credit rating, the feisty lawyer vows, “…he’ll sue ‘em.” Reportedly, Pavone’s dissatisfaction with the bank stemmed from his credit limit being reduced when Pavone requested that it be raised. Nevertheless, the lawyer now considers himself to have been, “…squeezed for cash” and is “…eager to argue in court that your interest rates are unfair within the meaning of various state and federal statues, and anxious to point out that you ‘had’ to cut my credit limit from $32,000 down to $30,000 at the same time you were borrowing billions from the federal government and paid your executive bonuses in full.”

It’s important to realize what is at stake when lawsuits are discussed. Even an attorney must endure myriad forms, procedures and paperwork (not to mention an investment of time) to move a lawsuit through the legal system. It is a far more complicated process than many people believe. The fact that some are not only willing to refuse payment but fight for their decision in court suggests that even sophisticated and successful individuals are growing tired of bank industry games.

(Quaziefoto)

Pavone says he drew inspiration for his decision from Ann Minch’s “Debtors Revolt” campaign, which itself grew out of Minch’s frustration with Chase Bank. Upon being informed that her credit card interest rate had zoomed to 21.24%, Minch responded, “…are you stupid? Chase Bank, are you stupid?” in a YouTube clip that has drawn over 50,000 views since its release. Even personal finance guru Suze Orman has lent her moral support to the Debtors Revolt. When Minch appeared as a guest on Orman’s TV program, she revealed that she, like others discussed earlier, had, “…closed her savings and checking accounts with Bank of America and put her money in a local bank.” Before departing the topic, Orman declared herself as emphatically, “…on the bandwagon of credit unions” and other smaller institutions which treat customers ethically. The Debtors Revolt is hardly an isolated occurence, and has spurred countless imitators to carry on what Ann Minch started.

Short & Long Term Implications

The financial sector is in such a state of upheavel that it is difficult to make iron-clad predictions about its future. However, consumer response to bank practices of the last 12-18 months indicate that patience is running low for the various money-squeezing tactics that were once the norm. Aside from the the looming Credit Card Accountability Responsibility and Disclosure Act and other regulatory pressures, consumers are now applying discipline personally, through the market, by taking their deposits to more upstanding and efficient institutions. It is not difficult to imagine a resurgance in community banking (coupled with increased use of online direct banks) spelling reduced marketshare for the “big four.”

Photo: RLEVANS

You’ve heard of Too Big to Fail, right? Well, this week I want to introduce you to a simple personal budgeting tactic I call Too Small to Fail. Around my house, this dumb little idea helps my family keep our savings on track and, if you want to be hyperbolic about it, prevent financial collapse. (See, it’s the opposite of Too Big to Fail in more ways than one.) Before I explain how it works, let’s look at what’s wrong with a traditional budget.

Budgets ask you to look into the future. People are not good at looking into the future. Just watch a World of Tomorrow filmstrip. Where are my helpful robots? (Zhu Zhu hamsters are not helpful!)

Predictions about money are even less accurate. How much am I going to spend on dining over the next month? Beats the heck out of me. Will we be invited out to dinner? How much money is left after buying groceries? Trying to sit down and write a line item each for groceries, dining, entertainment, and so on is silly. You’ll get the numbers wrong and then feel guilty about it later.

Some people renegotiate their budget over the course of the month. “Okay, we overspent on dining already, so we’ll take some money out of entertainment and skip the movies.” If it’s so negotiable, why write it down in the first place?

I remember my parents making this kind of budget when I was a kid. Once a month, they’d sit at the dining room table and argue. You could see the DON’T COME IN HERE waves from several rooms away. When I grew up and got married, my wife and I adopted the same system, because we didn’t know any better.

Well, not anymore. Too Small to Fail relies on two insights:

1. Budgets make you worry most about small expenses, because those are the negotiable ones. As Michael Rubin put it in a MintLife article last August, budgeting can lead to “relentless focus on minor expenses.” So in our budget, we throw all the small-ticket items into the same category: groceries, dining, entertainment, it’s all the same. If we spend more on dining one week, we spend less on groceries. The total amount in the bucket is important, but the amount spent on each little category isn’t.

To illustrate, our monthly budget (with made-up numbers) looks something like this:

Rent:$100
Phone:$50
Retirement:$25
Vacation fund:$12
Small-ticket items:$30

The numbers are all basically the same from month to month, and as long as it all adds up to less than our monthly income, we’re good.

2. You don’t have to let your boss decide how often you get paid. Have you ever had a job where you were paid monthly? My wife gets a monthly paycheck. I don’t know about you, but I am incapable of making any sum of money last a whole month. Remember Brewster’s Millions? I could have blown the $30 mil in two weeks.

Instead, why not pay yourself weekly? That’s how we do it. We pay ourselves a lump sum every Friday to be used for our daily expenses. (Monthly, nonnegotiable items like rent and utilities come out of a separate account.) Because the money only has to last a week, it’s hard for us to get into much trouble. Sure enough, every week, we spend most of our allowance in the first three days. But then there are only four days left. If we run out of cash on Wednesday and have to raid the pasta drawer for a couple of days, big deal.

I know, this sounds anal and artificial. It is. It’s also effective. Ramit Sethi, author of I Will Teach You to Be Rich, advises you to use barriers to prevent yourself from spending. The classic example is freezing your credit card in a block of ice. This is the same idea: I’m not really out of money when the weekly allowance is spent. But to get more money, I’d have to dip into another account. That’s enough of a barrier to make me slap my own hand and say, “Don’t do that.”

You could even pay yourself twice a week. Or you could use this system to give a separate allowance to yourself and your partner.

If you want to give this a try, start right after you deposit your next paycheck. How much should you pay yourself? It’ll probably take several weeks to figure it out. You’re not trying to put yourself on an austerity program—though if you’re in need of an austerity program, this is a good way to implement it. You want an amount that will cover all of your expenses for the week, but not so much that you’re outspending your income or failing to leave yourself enough to pay your monthly bills.

What about big-ticket items like a new computer or holiday gifts? We save for those, a few dollars a week, over the course of the year.

Too Small to Fail lets you have fun by spending all your money every week. Only you and your helpful robot have to know that you’re being fiscally responsible at the same time.

Matthew Amster-Burton, author of the book Hungry Monkey, writes on food and finance from his home in Seattle.

Have you ever put an old chestnut like “save more” or “spend less” on your list of New Year’s resolutions? I’ve done it, too, with results undetectable by the most precise financial calculator.

Instead, here’s a top ten list (in traditional David Letterman order) of concrete resolutions you can actually accomplish. I’m not saying they’ll be easy, but all of these are either on my list for 2010 or are resolutions I’ve successfully completed in years past. Pick a couple of favorites and go to town on them. Happy new year.

10. Make or update your will. The number one reason people don’t do this is that they believe they will never die. If you are, in fact, immortal, go ahead and skip this one. Otherwise, if you have a simple estate, you can make a will on the cheap: get Nolo’s Simple Will Book or use their Online Tool for $70 (and it’s on sale for $50 until January 7). If you have a complex estate (do you employ a chauffeur with a name like Worthington?), get a lawyer and remember the first rule of estate planning: don’t forget a little something for your personal finance columnist.

9. Set up an automatic savings plan, if you don’t already have one. Even $5 a week is a fine place to start. SmartyPig works well for this. Pick a specific goal, check your progress periodically, and don’t mess with it—except to increase the weekly allotment.

8. Get rid of useless crap. No time like the present

7. Start a business. Hmm, that sounds too ambitious. Instead, start a side project that happens to be tax-advantaged. And start small. It could be selling crafts on Etsy, any kind of shop or repair work (I sharpen knives, for example), or even freelance writing. Go legit—get your city business license and file Schedule C. Why? Even if you don’t itemize, business expenses are tax-deductible. It’s fun to get paid (even a little) for something you enjoy. And if you become un- or underemployed, having an existing side business gives you something to focus on. Which brings us to…

6. Simulate bad news. Armies and city governments run disaster simulations. You can play the home game, the financial equivalent of testing your smoke alarm. Are you doing enough to prevent an emergency or life change from becoming a financial disaster? (Oh my God, I totally sound like an insurance salesman.) This year, evaluate your insurance, your emergency fund, and your family’s plans in the event of job loss, natural disaster, death or illness, and other bad things. This will not be fun, but you know what would be less fun? Doing it during the actual emergency.

5. Plan for financial good news. Now, this is more like it! Here’s hoping you get a raise, bonus, or inheritance this year. It’s about damn time, right? (I mean, not that I’m actively hoping you get an inheritance. Unless it’s from a rich uncle you never met.) Furthermore, here’s hoping you spend some of it on fun and some of it on long-term goals. Decide now. It’ll take you five minutes. What percent of any unexpected income will you set aside for retirement or the emergency fund this year?

4. Talk to your relatives about a gift moratorium. I know, sounds like negotiating with North Korea. But if you do raise the idea, do it in the summer—far from winter holidays and not too close to anyone’s birthday—and make the terms clear (maybe children and handmade gifts are excluded from the cease-fire, say). Explain that it’s not because you don’t love getting presents, but because you’re taking charge of your financial situation and find it hard not to spend on your wonderful siblings and cousins and uncles without making a pact. Oh, if my parents are reading this, next year I’d like a stocking full of candy and a donation to my favorite charity. And a chauffeur. Kidding!

3. Look into Roth IRA conversion. As of 2010, there’s no longer an income limit for converting a traditional IRA to a Roth IRA. (If you couldn’t convert to a Roth in the past because you made over $100,000, congratulations.) Converting your traditional IRA (or an old 401k or 403b) to a Roth may or may not be the right move for you—talk to your financial adviser—but if you’re even considering it, you’ll need to think about where the money will come from to pay the tax on the conversion. Good news: you can pay the taxes over the course of two years.

2. Take a nice vacation. You’ve earned it. Just one rule: you have to pay cash, and you have to save up the cash with the vacation in mind. This year we’re taking a family vacation to Japan; we’ve been planning and saving for it since 2007. If you follow through on this resolution, do me two favors: have a great time and don’t invite me over to watch your slide show.

1. Don’t buy a house. Okay, maybe this one is just for me. Have you ever saved up for something and then realized you didn’t want it anymore? For years, my wife and I have been socking away money every month into our down payment fund. And it’s getting awfully close to our goal. Due in part to the housing collapse, however, we have completely lost interest in buying a house. So one of our resolutions for this year is to determine how to reallocate that money—probably to beef up our retirement savings and emergency fund. Although, come on, how much can a chauffeur cost? Seriously, that much? Never mind.

Matthew Amster-Burton, author of the book Hungry Monkey, writes on food and finance from his home in Seattle.

With just a couple of days left to complete your holiday shopping, you’d better make sure you know how to shop smart and aren’t wasting time and or money. Here are some quick tips that can help get you through those last few stressful hours.

DO: Make a Plan Overspending during the holidays is easy to do when you don’t have a plan. Take a few minutes and plan for everything you will need to spend money on this season from gifts to decor to travel. Mint.com can help you figure out how much to safely spend, without a holiday hangover in January.

DO: Ditch the Department Store Off-price retails like TJ Maxx and Marshalls are bigger than ever. They offer the same on-trend brand name merchandise found in department stores and boutiques for 20-60% less. You’ll find everything from designer clothing for the entire family and to gourmet food items and kitchen utensils to small electronics, books and DVD’s along with the hottest toys.

DON’T: Shortchange the Garbage Man This year, according to the NRF (National Retail Federation) American families will spend an average of $682.74 on holiday gifts. However the majority fear this is not enough leading 70% of consumers considering cutting their list with the service sector and garbage man (54%) topping the list.

DO: Be Efficient Cutting back does not mean you have to go without. Instead find ways to save doing all the things you love to do during the holiday season. Try investing in decorative lights that have energy saving light bulbs; consider purchasing an artificial tree that can be used every year or if you prefer a real tree, scale down the size this year to save money.

DON’T: Sacrifice Quality It may seem like you’re getting a deal when discount stores offer multiple items for a low price. But many times those items were manufactured to sell at that low price and the items will not stand the test of time. Instead spend a few dollars more to invest in quality – it will save you money down the road.

DO: Have Happy Holidays

Farnoosh Torabi is a personal finance author, expert and television personality. In 2008 she published “You’re So Money – Live Rich Even When You’re Not,” a tell-all for young adults searching for financial independence and can currently be seen on SoapNet’s new series “Bank of Mom and Dad,” coaching young women struggling with piles of debt.