Weekend Linkage: Debit Cards, Debt Free and Emergency Funds

by Jason Unger

While most of the Weekend Linkage posts tend to highlight stories from personal finance bloggers, this week, we’re showcasing two links from the granddaddy publisher of them all: the New York Times.

I’ve ragged on the mainstream media before for not knowing how to publish useful personal finance content, but the Times comes through with two useful pieces we can all learn from.

Thinking about buying a home? We did this year (bought, after thinking about it). If you’re a first-time homebuyer, the Times offers up Seven New Rules for the First-Time Home Buyer.

The rules:

  1. Start with the basics
  2. Consider your income
  3. Bow to unknowns
  4. Map out expenses
  5. Buy best (or cheapest)
  6. Stretch the house
  7. The eight-hour rule

Okay, so not all of these are really new rules, but they’re appropriate so that we don’t get caught in the same housing crisis again.

Next up from the Times: Overspending on Debit Cards Is a Boon for Banks.

Banks and credit unions have long pitched debit cards as a convenient and prudent way to buy. But a growing number are now allowing consumers to exceed their balances ? for a price.

Banks market it as overdraft protection, and the fees it generates have become an important source of income for the banking industry at a time of big losses in other operations. This year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer?s balance.

I always recommend using a debit card for all your purchases, but overdraft protection is a scam. Don’t get it. Instead, keep a financial cushion to prevent yourself from spending more than you have.

Get Rich Slowly offers up 11 Ways to Spice Up Your Emergency Fund. It’s a great way to build up your savings while at the same time remembering why you’re doing it.

Finally this week, Gather Little by Little writes about How to be debt free. He’s got it down to a five-step process:

  1. Commit yourself to paying off your debt.
  2. Recognize that you are the reason you?re in debt.
  3. Stop going into debt.
  4. Control your money.
  5. Start a debt snowball.

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