As it turns out, whether you’re selling your home or you just want to improve it, one of the best places to start is the kitchen, because kitchen remodels often have the highest return on investment, whether you’re selling or just wanting to make a change.

There are a variety of relatively simple do-it-yourself kitchen improvement projects. I found the following budget-friendly ideas that would have been good to know before I started:

• Do your homework first. It will likely save you time, money, and a headache or backache.
• Replacing kitchen cabinets can be an unnecessary expense. Painting, refinishing or refacing cabinets can cost a quarter of what new ones may cost. New cabinet hardware is also a great way to add life and personality to old cabinets.
• Replacing your countertops is second on the list of major expenses. Prices have come down considerably for granite and other popular stone finishes, so do your homework and get competing bids. You may even consider using granite tiles and installing them yourself. Laminates have also improved in quality and they are generally more economical.
• Give your kitchen a polished look with a backsplash. You can purchase a sheet of stainless steel and create a modern look, or you can tile your backsplash yourself. It’s much more affordable than having a designer do it and it adds color or a nice design element.
• Stainless appliances are nice but pricey. Consider replacing old appliances with basic white or black. You may even be able to use inserts from the manufacturer to make your existing appliances match.
• Update your lighting. Just like cabinet hardware, new light fixtures can add a nice designer touch without much expense. If you like your current fixtures but wish they were a different color, paint them. There are heat-resistant paints that cover just about any surface.
• One of the most economical ways to add new life to an old kitchen is with a can of quality paint. Semi-gloss or gloss is recommended for kitchens because it cleans up well.  Take the time to do the necessary prep work and masking to protect cabinets, counters, and appliances from spills or splatter.
• Add small touches. Something as simple as a piece of art, a bulletin board or a towel rack hung in the right location can add a personal touch as well as a designer look and feel.

Remember to be wise in your budgeting and spending for the project, too. Added debt can easily negate any added value. Consider doing a portion at a time in order to maintain fincancial strength and to avoid unecessary debt.

Consumer debt is not your friend

Here’s a simple MBA lesson: borrow money to buy things that go up in value. Borrow money if it improves your productivity and makes you more money. Leverage multiplies the power of your business because with leverage, every dollar you make in profit is multiplied.

That’s very different from the consumer version of this lesson: borrow money to buy things that go down in value. This is wrongheaded, short-term and irrational.

A few decades ago, mass marketers had a problem: American consumers had bought all they could buy. It was hard to grow because dispensable income was spoken for. The only way to grow was to steal market share, and that’s difficult. Enter consumer debt.

Why fight for a bigger piece of pie when you can make the whole pie bigger, the marketers think. Charge it, they say. Put it on your card. Pay now, why not, it’s like it’s free, because you don’t have to repay it until later. Why buy a Honda for cash when you can buy a Lexus with credit?

One argument is income shifting: you’re going to make a lot of money later, so borrow now so you can have a nicer car, etc. Then, when money is worth less to you, you can pay it back. This idea is actually reasonably new–fifty years or so–and it’s not borne out by what actually happens. Debt creates stress, stress creates behaviors that don’t lead to happiness…

The other argument is that it’s been around so long, it’s like a trusted friend. Debt seems like fun for a long time, until it’s not. And everyone does it. We’ve been sold very hard on acquisition = happiness, and consumer debt is the engine that permits this. Until it doesn’t.

The thing is, debt has become a marketed product in and of itself. It’s not a free service or a convenience, it’s a massive industry. And that industry works with all the other players in the system to grow, because (at least for now) when they grow, other marketers benefit as well. As soon as you get into serious consumer debt, you work for them, not for you.

It’s simple: when the utility of what you want (however you measure it) is less than the cost of the debt, don’t buy it.

Go read Dave Ramsey’s post: The truth about debt.

Dave has spent his career teaching people a lesson that many marketers are afraid of: debt is expensive, it compounds, it punishes you. Stuff now is rarely better than stuff later, because stuff now costs you forever if you go into debt to purchase it. He’s persistent and persuasive.

It takes discipline to forego pleasure now to avoid a lifetime of pain and fees. Many people, especially when confronted with a blizzard of debt marketing, can’t resist.

As a bank customer, I’m aware of the feeling that it’s a chore because going to the bank is usually an item on a to-do list.  (Personal side note: my wife is constantly amazed that I don’t carry any cash, even though most of my waking hours are spent in a bank.  So when we need cash, visiting the bank on the weekend or taking a trip to the ATM becomes a to-do item.)   

But there’s more to the studies.  Several indicate that consumers actually consider banking in the same light as going to the dentist!  That’s remarkable.  Do you share this opinion?  Why or why not?  Is going to the bank like getting a routine cleaning, more like a root canal, or like something more enjoyable?

As one with marketing responsibilities for the bank and concerned about improving the experience for every customer, I’m curious to know why this perception exists, and what can be done to improve if not abolish it.  Consequently, I’ve been doing a lot of reading lately.  In fact, in the last three months I’ve read almost as many books and articles and papers as I did during my last year of college.

Most of the reading I’ve done is business related—marketing, branding, leadership, efficiency enhancement, and the like.  And one common theme is emerging: the ability to actively engage customers, staff, management, peers, and prospective clients in meaningful positive ways is a key driver (if not the key driver) to improving the customer experience, the performance of staff members, and peer perception.

So I pose these questions (very transparently seeking to engage those willing or wanting to voice an opinion or participate in the conversation): In what way do you want your bank to actively engage with you?  What kind of interaction do you value?  What are your expectations? Is banking really just a chore?

There’s a lot of discussion about change in the banking industry right now.  Business plans have been turned on their ears.  Once solid and seemingly safe ways to make loans are now being questioned.  It’s getting more difficult for financial institutions to provide distinguishing products and services.  It’s even getting hard to tell what a bank is or is not anymore.

What an incredible opportunity this presents for all of us!  This shifting is creating an environment where it has never been a better time for consumers to make their voices heard, and for bankers (at least the smart and successful ones) to be taking the time to seriously consider every customer comment, complaint, note of praise, or suggestion.

I’m going to let you in on a little secret…this is not a totally new concept to community-based financial institutions.  I’m not talking about the big guys claiming to be community banks, I’m talking about the true community-centered banks that take the time to look a customer in the eye, who may have had to eat some crow now and then, and who have tried to adjust to their customers’ needs and wants in order to stay alive in a highly-regulated and viciously-competitive marketplace.  For these smaller institutions, listening and adapting to your needs is something they try very hard to do.

Now, in the interest of full disclosure, not every small bank or credit union fits this description, but generally they try.  They at least try harder and are more capable of faster change than the giant institutions that care more about making money off of your money than they do about earning your trust, providing you honest services at a reasonable rate, and investing in your future as a partner–whether you have $5 or $5,000,000.

So here’s a chance for you to make your voice heard.  Whether you’re a customer of Western Community Bank or not, comment on this post.  If you’re reading this on our blog, comment below.  If you’re an email subscriber, visit http://smartbankingtips.com/ and leave us your thoughts.  Help us transform banking to be better for you.  Help us strengthen our communities.  Help us better understand your needs so we can better serve you. 

Our ears are open.  We’re a little nervous.  But we want to hear from you.  The platform is now yours…

Here’s where I see some of the greatest opportunities for individuals, families, and businesses: 

• Improved lending standards. Though they will remain tighter than what we’ve seen in the last few years, lending standards will be different in good ways. It seems that everyone is internalizing the benefits of the sound, fair, and more responsible versions of standards from the last 15 years. These fresh standards will be better because the economy is forcing all of us to be more responsible and accountable. Sound standards are good for the economy and everyone participating.
• Customer service matters, but doesn’t replace technology. This one is a paradox. I argued in part one that technology matters but doesn’t replace customer service. In fact, both are true. In 2010 we’ll see an increase in the adoption of technologies designed specifically to assist the customer–technologies that do what people can’t. So while it’s critically important for banks to give you the attention you deserve, when your bank chooses to become IT savvy and makes sound business IT investment decisions, they’re going a long way to invest in your  financial success and future needs.
• New regulations will require more accountability from everyone. The Federal Reserve has stated: “Our goal is to ensure that consumers receive the information they need“.  Combined with other things I have read in trade publications, regulators are working to require the banking industry and the consumers who use the products to be more responsible for their actions.  Or in the words of  economist Merton Finkler, “In a highly leveraged economy, fiscal and monetary policies are not enough. We have to make changes in lending behavior.  Excessive debt accumulation, whether it be by the government, banks, corporations or consumers, poses greater systemic risks.”  In our ever-shrinking world, the actions of individuals matter more than ever.
• Banking really is no longer a service, but a commodity (like just about everything else). From Wikipedia: “A commodity is some good for which there is demand, but which is supplied without qualitative differentiation across a market. It is fungible, i.e. the same no matter who produces it…Commoditization occurs as a goods or services market loses differentiation across its supply base…As such, goods that formerly carried premium margins for market participants have become commodities…” It hurts me to say this, but that’s a pretty good definition of banking, no matter where you choose to put your money.  The winners in 2010 and beyond (and the banks you should be looking to do business with) will no longer be determined by their products or services, but rather by how well they deliver on their promises and by their willingness to give back to the people and communities they serve.  This is especially true for the smaller “Main Street” banks that are more in touch with the local economies and communites they serve.

What are your thoughts?  What changes do you want to see?  What would you adjust?

I’m a firm believer that challenges are opportunities dressed in work clothes.  By deduction, this means that we have a surplus of opportunity in our current economic environment.  But before we can regroup and march forward we have to assess the past. 

Here is some of what we learned in 2009:

• Washington and Wall Street are more out of touch with Main Street than ever. There are over 8,000 community banks in the U.S that understand the needs of the local economies, communities, and individuals they serve. These generally operate in an honest, ethical, and sound manner. Very few of these smaller banks receive any of the luxuries afforded the much larger institutions, yet are being examined as though they are the cause of the problem. And even with bail-out money and more public scrutiny, the banking behemoths receiving the greatest consideration have yet to demonstrate any meaningful remorse or corrective action.
• “Too-big-to-fail” is a misnomer. The megabanks that received the biggest bailouts failed by most people’s definitions. Too-big-to-fail in this case really means too-deep-into-the-politicians-pockets-to-have-to-suffer-the-consequences-of-poor-decisions-and-mismanagement-in-a-free-market-system.
• Technology matters, but doesn’t replace customer service. Enhancements in processing services, online tools, and mobile banking are important–so long as they ultimately provide the customer with a better experience, or allow bank staff to better serve their clientele in meaningful ways. But these services, no matter how good, don’t take the place of exceptional and personal customer service.
• Lending standards were too liberal. Lending standards that required no verification of income and provided consumers the opportunity to borrow beyond their means to repay were not only dangerous and irresponsible; they were an effective way to hurt banks and consumers that were trying to do things the right way with integrity and ethics.

Certainly this is a shortened (and probably oversimplified) list, but the ideas here will have an interesting ripple effect into 2010.  I anticipate this year will demonstrate that…

• Tightened lending standards will remain, but will be different in good ways.
• Customer service matters, but doesn’t replace technology.
• New regulations will require more accountability from everyone.
• Banking really is no longer a service, but a commodity that is driven and enhanced by customer service (like just about everything else).

More on these ideas in the next post…

“The annual holiday shopping season is a peak time for identity theft, so it’s critical that consumers be on high alert and educate themselves in order to help reduce the risk of becoming victims,” said Adam Levin, chairman, Identity Theft 911, which offers ID theft resolution services.

His company offered these tips for safer holiday shopping:

• When shopping online, look for a small “padlock” icon in the browser, which means the site has been verified to be secure.
• Use credit cards instead of debit cards.
• Keep credit card numbers secret. Don’t store credit card and personal information in any online accounts
• Check bank and credit card statements and accounts every day to make sure each transaction is legitimate. Remember that shopping Web sites have no reason to ask for Social Security numbers or passwords, so never provide them.
• Never send payment information via e-mail.
• Don’t use automated teller machines that are in secluded areas. They are more likely to be equipped with card readers than an ATM in or near a bank.

1) Check your FDIC insurance coverage limits.

a) Understand what the FDIC insures … and what it does not.
The FDIC insures all deposits at insured banks, including checking, NOW and savings accounts, money market deposit accounts, and certificates of deposit (CDs) up to the FDIC’s insurance limit.  The FDIC does not insure stocks, bonds, mutual fund shares, life insurance policies, annuities, or municipal securities, even if the small business purchased these products from an insured bank.* 

b) Use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) to calculate the exact amount of insurance coverage that your small business has at each insured bank.  EDIE is located on the FDIC’s Web site at www.fdic.gov/edie/.

c) Understand how the FDIC defines account ownership categories to maximize insurance coverage.
The FDIC considers “single accounts” of sole proprietorships as personal accounts (not as business accounts) when calculating insurance coverage.  Single accounts are deposits owned by one person.  If more than one person is a signatory to an account and they have equal authority to withdraw funds, the FDIC may include these funds in the “joint category” thus allowing the sole proprietorship additional FDIC insurance.*

d) Remember:  the increases in deposit insurance will expire.
Increases in deposit insurance coverage for non-transaction accounts expire on December 31, 2013 and for transaction accounts on June 30, 2010.   Depositors should continue to monitor not only deposit insurance limits, but also what is and is not covered by the FDIC. 

e) Ask your bank if it provides extra insurance coverage through CDARS.
If a small business has deposits at a bank that exceed the FDIC’s insured coverage limit, CDARS (Certificate of Deposit Account Registry Service) can provide protection.  It enables banks to offer up to $50 million in federal deposit insurance by spreading the deposits among several banks (thus spreading the risk) and allowing customers to keep all of their deposits in one bank.  More than 2,000 banks offer this service.  Also, consider splitting deposits among additional FDIC-insured banks.

f) Make sure “sweep accounts” are “swept” into FDIC-insured accounts.
“Sweep accounts,” set up to earn interest on small business deposit accounts, should be swept into FDIC-insured accounts.  If your bank doesn’t offer a sweep option, make sure it collateralizes the swept deposits with U.S. government securities.

g) What if your bank merges with another bank?
If two insured banks merge, the FDIC provides separate insurance coverage for deposits at both institutions for a limited time.  This grace period allows small business owners time to restructure their accounts to maintain full FDIC insurance coverage on all their deposits.  The length of the grace period varies by the type of deposit account.*

2) Review the viability of your business plan.

a) Make sure your business plan has three scenarios: best case, most likely, and worst case.  Be prepared to execute each one.
b) Review your business plan with trusted financial advisors including your banker, your accountant and your lawyer.  Ask for their input and revise the plan as appropriate.
c) If your plan calls for expanding your business, reassess the business/market needs for this expansion.  Previous assessments may not be valid given today’s economic uncertainty.

3) Keep your banker in the loop.

a) Provide updates on how your business is weathering today’s economic storm.
b) Make sure you share all of the news–the good, the bad and the ugly. Bankers do not like surprises.
c) Ask for feedback on your revised business plan scenarios.

4) Conserve cash.

a) Withdraw cash from your business only when absolutely necessary.  Think twice about taking money out of your business to support a lavish lifestyle.  Bankers are unlikely to replace these funds (via a loan).
b) Review how your business collects, disburses, and invests cash.  Ask your banker to review your cash management systems to boost available cash flow.  Your goal should be to accelerate your receivables, maximize your investment income and pay bills on time.

5) Keep your suppliers informed of your financial situation. 

Trade credit is an important source of funds for most businesses.  It is important to maintain good relations with suppliers since they provide you with the products and services you need to run your business as well as the credit to finance them.  If you think your business might experience a cash flow problem, ask suppliers if they would consider extending their trade credit terms to you.  Every dollar of trade credit extended is one less dollar that you will need to ask your banker for.

*Source: FDIC

Robert C. Seiwert is a Senior Vice President of the American Bankers Association.  Prior to joining the ABA, Mr. Seiwert was a banker for over 30 years, serving as President and CEO of a high-performing community bank and Director of Commercial Marketing for one of the nation’s largest financial institutions. 

The following tips can help you manage your account wisely to avoid overdraft situations.

• Keep an eye on your account balance prior to writing a check or using your debit card. Prevention is your best medicine.
  • Review your transactions on an ongoing basis.
  • Use services, such as online banking, your bank may provide to help you keep up-to-date with your balance.
  • Remember to record and deduct checks, automatic recurring payments and debit card transactions and to add any deposits that have not yet been posted to your account.
  • Do not use your debit card like you use your credit card. Your debit card is like an electronic check and the funds are automatically deducted from your account.
• Ask your bank about all of its overdraft services. Community banks generally offer three types of overdraft services: overdraft lines of credit, transfers or sweeps from a savings account or another checking account, and overdraft coverage.
  • Overdraft lines of credit charge interest but provide a safety net. They may also have a transaction and/or annual fee. If needed, disbursements can be repaid over a period of time.
  • Transfer or sweep arrangements allow customers to cover overdrafts using their own funds for a small transaction fee.
  • Many times a bank will choose to pay an overdraft for a fee to avoid consumers having the inconvenience of returned transactions – embarrassment, fees and hassles from merchants.
  • Talk to your community banker about the best choice(s) for you.

During these challenging economic times, consumers are making tough financial choices–more so than they have ever had to do in the past. We want to be sure that consumers manage their accounts wisely. Most community banks provide some form of overdraft services, and do so in a way that best meets the needs of their customers. Remember that community bankers are there to help you.

Relationships One of my peers recently reminded me that while we’re working hard to handle the pressures of the economy on the bank and the daily duties we face, that we can’t forget we have families and relationships to strengthen. As one blogger effectively said it: “The regular companionship and camaraderie of people you care about and share interests with is continually life-affirming. [Relationships] don’t revolve around the things you have or the activities you can afford – they revolve around people and shared experiences.”

Gratitude I find that the more I’m focused on the things I do have, rather than focusing on that which I do not, that I am more cheerful and giving. I become more positive in my thoughts and speech. I become more content to work harder to reach my goals. I have more purpose in my daily actions and interactions. Cicero said “Gratitude is not only the greatest of virtues, but the parent of all the others.”

Service Helen Keller said, “Happiness cannot come from without. It must come from within. It is not what we see and touch or that which others do for us which makes us happy; it is that which we think and feel and do, first for the other fellow and then for ourselves.” It is in the act of helping others that many receive a great deal of personal joy and satisfaction – something that cannot be replaced by any sort of material item.

What really matters to you? What do you value most?