Saturday, November 12, 2016

Financial Choices and Personal Growth in a Time of Change

This week has unquestionably been a week for the history books in America. People will be thinking about and living with the consequences of this election for a very, very long time.

Regardless of your personal feelings on the issue, I think we can all agree on two key things.

First, there are many people out there who are having a deep emotional response to the events of the last week. Some people are extremely scared and worried. Some people are celebratory. Some people are relieved. Some people are angry. Some people are just simply uncertain about what is to come. Again, regardless of your own personal views on the changes beginning in America right now, it’s undeniably true that emotions and tensions are running high and they run the gamut.

Second, we are entering a time of change. Whenever you see a major political shift in a country, not only do you see changes in the laws of the land, you see changes in the culture of the land. Although speculation is running wild and we have seen a few knee-jerk responses, we do not yet know what those changes are going to look like.

Those two factors combined can lead people to feel incredibly uncertain, and that leads people to make some pretty poor choices. They’re likely to react emotionally and take actions that they might not otherwise take. Their words might be intense. They might do things that go beyond what might normally be within their character.

Those things may have some real long term consequences. Relationships can be damaged. Reputations can be damaged. Careers can be damaged. If your emotions are running high, you’re very prone to making really poor financial decisions, reacting quickly and emotionally (which is always a mistake).

When change comes in your life and in the world at large, there are some principles that you can always follow to avoid making regrettable moves in the face of that change. These principles apply to everyone, regardless of where you stand on the changes at hand.

Lock down your finances and make no major investment, career, or spending decisions for a while. You should never, ever make a major financial move in immediate response to a major event. Investment goals and spending decisions should be made based upon what you are planning for your personal future, and your plan for your personal future should be considered over a period of time. It should not be radically and suddenly changed by any life event.

Yes, there are life changing events. They happen. The events of this week might be such a life changing event for you. The thing is that even though a major event has happened, you have not given that major event enough time to really think through how it changes the long term plans of your life in a calm and unemotional fashion.

Your best immediate response is to avoid making any major moves with your money for a while. Give yourself some time to process the changes that have happened and, more importantly, give some serious thought to whether or not they really have affected your long term life plans.

Do this with any move in your life that involves significant sums of money, whether it’s making a purchase, selling something, making a career change, or making a financial move. Let all of it rest for a while and process the changes.

Whenever you make a major move in your life, it needs to come from an internal place unless it is absolutely forced by an external change. As big as the changes might seem at the moment, they’re still external changes that aren’t really applying significant force to your life as of yet. That means you should rely on internal changes in terms of what you want out of life, and that takes time. Give it time. Don’t make major decisions right now.

Practice low-cost stress reduction practices in your life. For many people, periods of change (like this appears to be) are stressful, whether that change is beneficial for you or not. People are creatures of habit, and when change happens, that means routines and habits and ways of thinking are going to be altered. That brings stress, period.

If you add to that the fact that many adults lead stressful lives simply due to the time crunch that they’re almost constantly under (myself included), it’s easy to see how a major event like this can take a simmering pot and move it to the boiling point.

Stress is harmful. It causes you to make poor decisions. It has disastrous consequences for your long term health. It rips away your ability to focus. It has a negative effect on your mood. Those negative effects can have disastrous financial, professional, and personal consequences – poor money choices, poor health, poor communication and relationships, you name it. When you lower your stress level, you reduce all of those negative effects.

My own life is almost constantly stressful, but I only feel those effects if I let them get to me. I have a routine of several de-stressing strategies that really help with this and as long as I stick with those strategies, life can hand me a lot and I’ll roll through it without the negative effects of stress. Here are the five key strategies I use.

I meditate or pray. This is something I mention fairly frequently, but I mention it because it really works well for me. It’s reduced my stress and improved my focus a great deal since it became a daily part of my life several months ago. It’s really simple, too. I just sit in a chair, close my eyes, and concentrate on my breathing for five or ten minutes. I breathe in. I breathe out. I focus on just that. If I find my attention wandering, I notice it and don’t berate myself over it, because it is going to happen. Instead, I just guide myself back to concentrating on my breathing. To me, prayer is the exact same thing, except with a focus on a spiritual target instead of one’s breathing. When I’m done, it feels like I gave my mental state a thorough cleaning, and it’s had many longer-term benefits on my stress management and particularly on my focus level.

I go on walks, particularly in nature. When I’m thinking through something, whether it’s how to write about a particular topic on The Simple Dollar or a personal problem or anything else, it’s easy to just sit at my desk and let the gears turn, but I’ve found it’s much more effective in terms of coming to a good solution and feeling better about myself and the world if I go take a walk instead, preferably outside in a more natural setting. I often go to parks and walk around on a trail for half an hour or so, looking around and trying not to think about anything other than the problem I want to resolve and the beauty of the situation I’m in. I almost always leave with a refreshed mind and body and a plan for what I’m going to do.

I try to eat healthy foods. That mostly just means eating plenty of fruits and vegetables. When I’m hungry for a snack, I’m better off if I just grab some fruit or a handful of nuts with minimal seasoning. At meal time, I try to make room on my plate for as many vegetables as possible. While fast food and heavy meals are definitely tasty and can be convenient, they also often leave me feeling bloated and feeling as though something is holding my mood down, so I’m trying to make those things rare in my life.

I exercise. Basically, I just try to do something every day that elevates my heart rate and gets me breathing heavy to the point where I can’t quite talk in complete sentences, and then I try to stay there for a bit. It doesn’t matter so much what I’m doing, but I usually try to alternate between cardio (running, jumping, etc.) and stressing a muscle group (planks, squats, push-ups, etc.). There’s this peak where I’m pushing myself but not too hard that leaves me feeling great at the end. A good place to start for free daily exercises is Darebee.

I try to achieve meaningful things or meaningful progress on big things. The biggest stresses in my life are usually things that I feel are important but that I’m not actually doing or making meaningful progress on. I’m a big believer that everything you do in life falls into four groups: important and urgent, important but not urgent, not important but urgent, and neither important nor urgent. I’m pretty good at immediately addressing the important and urgent things and discarding the neither important nor urgent things, but I often spend more time on the urgent but not important things than I should. That means I leave behind things that are important but not urgent, and when those build up, they cause stress. Simply addressing those things head on is a powerful stress reducer.

Try to avoid expressing controversial opinions – or even political opinions of any kind – in the company of those outside of your inner circle and particularly avoid it in the workplace. This is simply good practice in terms of building and maintaining professional relationships. Like it or not, you’re going to have to work with people you don’t agree with politically. You’re going to have to associate with them in your community, at least a little bit.

No matter how “on fire” you are with your political thoughts right now, whether you’re in despair or jubilant, you are failing your future by bringing those thoughts up in professional company or non-intimate personal company. You are poisoning the well of future relationships with no real benefit.

The truth is that you don’t know the political beliefs of the people in your office or the people you casually associate with in your community. They may completely disagree with you, find what you are saying to be repugnant, and walk away with a severely diminished view of your character, even if you find such character judgments based on political and current affairs viewpoints to be ridiculous. It doesn’t matter what you think in terms of how other people draw judgments about you. They’re going to draw judgments based on their own criteria, and many people do so due to political commentary.

If you feel a strong urge to unleash your political views, simply save it for another forum. Post about it online (preferably anonymously). Go join a political group. Talk about it to your close circle of friends. Find people that are openly willing to have discussions on those topics. Just keep the thoughts to yourself in mixed company.

Learn as much as you can about the changes on the horizon. Whenever something unexpected happens, whenever your sense of how the world works changes, it is very tempting to respond emotionally and “demand” in some way that the world not change, particularly if you don’t like that change.

The truth is that when a major change happens outside of your control, you’re going to have to live with it, at least for now. All of the anger and pain and jubilation in the world won’t change that.

Instead, if you’re that invested in the change, learn about the change. Study the change.

By that, I don’t mean turning to the talking heads on cable news or talk radio who are employed to give highly opinionated “hot takes” on current events. Those things are complete garbage in terms of actually informing yourself.

Instead, sit down and read well-researched and well-considered books and articles on the world from a lot of perspectives. For example, I think that one of the best books about the most recent election has already been written: Hillbilly Elegy: A Memoir of a Family and Culture in Crisis by J.D. Vance. I read it in the months before the election and it actually had a significant role in changing and growing my perspective on why things had happened.

Regardless of my own feelings on the events of the day, I know that there are real reasons for why those changes happened and not simple negative knee-jerk reactions pulled from emotion. Situations never, ever break down into simply thinking that some specific group of people is wholly bad or wholly good. They’re neither bad nor good. They’re just operating on principles that you may not be seeing because you haven’t yet bothered to look.

Look. If you don’t see the principles of what’s happening due to change caused by humans or find the ones you see wholly negative, you’re not looking hard enough. Keep looking. Keep learning. Understanding is the source of healing. Understanding is the source of knowing what the next step is, not just to fix the immediate problem you see, but the things that lie underneath that are actually causing the problems.

Try to understand those changes through the eyes of others. Whenever something unexpected happens in the world, one of the most powerful ways of understanding it is to simply try to see that change through the eyes of others. How does someone else see that change?

How does someone whose future has been destroyed by a factory leaving their small town see this change? How does someone who is a first generation immigrant see this change? How does someone who feels that their life concerns have been completely ignored for the last few decades by state and national leaders feel about this change? How does someone who has finally been able to marry someone that they love after decades of waiting feel about this change?

When you do that, two things happen. One, you begin to see other people as much more human, even if they’re doing things and expressing views that you don’t understand. Two, you begin to see that the changes aren’t as one-dimensional as you may have initially thought.

This process works for any change that occurs that’s out of your individual control and large enough to affect a significant number of people. By simply stepping back and considering how the change affects others, not only do you humanize the other people, you often begin to see the change more clearly.

So, how does that help you and your finances and your career? The more clearly you understand and see the changes happening in your life and in the world, the more likely it is that when you do take action in response to that change, it’s going to be a positive action that’s beneficial for you.

For example, some people panicked and immediately yanked money out of stocks as soon as they heard of an unexpected result. Those people almost immediately lost money in terms of brokerage fees and in terms of the fact that the markets didn’t react quite like they expected. They didn’t spend the time to try to understand the changes that were happening, and they paid for it.

“Be the change you want to see in the world.” This is a well known quote, but it’s absolutely true. Whenever you feel very emotionally invested in and affected by change, your heart is telling you to get involved.

Channel your energies in a positive direction. Take all of those feelings and use them positively to bring about the world you want to see. If you’re invigorated by the sense that perhaps America will finally address some of the economic problems it’s been ignoring, see what you can do to help and to hasten those solutions. If you’re scared that America is stepping back from the promises of its founding documents, go find an organization dedicated to that cause and get involved.

When something shakes you to your core, take that not as a sign to retreat, but as a sign to engage. Turn that energy into something positive. Don’t sit at home and let it fester into something negative. Find a way to channel that passion into building the results you want to see.

When you’re out in public, think to yourself about the type of person you want to be present in your community and then be that person. There’s no better way to bring about the people you want to have in your community than by being that person by example.

Remember we’re not as different as we sometimes think we are. It is very, very easy in moments of change to see people on the other side of that change as being incredibly different than you. It’s easy to see them as something “other,” something unrelatable.

That is basically never true.

To buy into that idea that people on the other side of change are unrelatable does nothing but damage your personal and professional relationships going forward. It puts you into a situation where you’re restricting yourself to interacting and dealing with only a subset of people, which is going to chop down your opportunity.

Instead, you should be looking at what we all have in common, even across divides. We all love our families. We all love our friends. We all want a better life for ourselves. We all want better economic outcomes for the people around us. We all want to experience happiness in life.

We agree on those core things almost universally. The difference between us is solely on the path to those identical goals. The events of our lives cause us to follow different routes to those end goals than other people. Those differing events causes us to look at dilemmas in life differently because we’re simply at different places in our own journey, not because the person who sees it differently is evil.

It’s simply not true.

Whenever you see someone expressing views different than your own, take a moment to realize how much you really have in common with that person. You both have people that you deeply love. You both want to see a better world, though you may differ in some of the specifics. You both want to build a better life for yourself and for the people you care the most about. All you really differ on are the details, and they’re small by comparison and often shaped just by different life experiences.

Don’t get caught up in the little details. If you do, you throw away wonderful relationships and awesome opportunities, and for what? Very little.

The old Chinese proverb, “May you live in interesting times,” is meant as an insult, because to live in “interesting” times meant that you were likely living in dangerous and unfortunate times. Let’s do our best to make these times a little less interesting.

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Why You Should Get Pre-Approved for a Car Loan Before You Head to the Dealership

Heading to the car dealership just to look around isn’t a bad idea if you need a new car, right? Just because you look doesn’t mean you have to buy, right? Well, if you’re not concerned with price or the type of loan you wind up with, then this type of thinking is perfectly fine. If you’re price-conscious like the rest of us, on the other hand, and want to get the best deal on your new ride, you should do some homework before you hit the dealership.

Not only should you research the fair value of the vehicle you’re considering and shop around and negotiate to get the best price, you should also shop around for a loan. While shopping around for a car loan doesn’t sound nearly as fun as shopping for an actual car, it’s essential if you want to avoid getting ripped off.

The idea behind getting pre-approved for a car loan is simple: By shopping around for an auto loan, you’ll enter the dealership with a good idea of the interest rates and terms you can expect — and if you’re pre-approved for a car loan, you’ll have an extra bargaining chip with the dealer to help you get a low rate, which will make your new or used car more affordable in the long run.

The Benefits of Getting Pre-Approved for a Car Loan

The auto-research experts at Edmunds agree that loan shopping before you reach the dealership is a must. “The problem with starting your car financing at the dealership is that you don’t know whether the loan you’re being offered is the best financing you can get. It can also complicate the negotiations, and limits where you can shop to get the best price,” notes Edmunds.com. “The best way to counter this is to get pre-approved for your car loan. Getting pre-approved for a car loan is the closest you can come to the perks of paying with cash while not having to save up for months or years in advance.”

Where having the cash to pay for a car can give you an edge at the dealership, getting pre-approved for a loan is the next best thing, because it makes you less reliant on the dealer’s financing options. Here are some notable benefits of having your car loan squared away before you hit the dealership:

Get a better interest rate.

Shopping around is always your best bet when you’re trying to save money, and shopping for a car loan is no exception to that rule. By getting a few different quotes from various lenders, you can ensure you’re getting the best interest rate and loan terms possible.

Know how much you can actually afford.

Shopping for your car loan separately can help you create a realistic car budget to adhere to without the pressure of a dealer’s sales pitch in the background. When you shop ahead for your loan, you’re more likely to understand the type of payment you’ll end up with based on how much you spend, and you can take your time to evaluate the numbers without a salesman bearing down on you. By knowing this information before you shop, you can focus your energy on cars in your price range and avoid the rest.

Make your shopping experience easier.

When your car loan is already taken care of, your dealership experience will be a lot less complicated. You’ll be treated more like a cash buyer, which means you can focus your energy on negotiating the price of your car versus the car loan itself.

Gain the upper hand in negotiations.

As the next best thing to a “cash buyer,” you’ll have the upper hand when you negotiate with the dealership for the best deal. Since your financing isn’t tied to the dealership, you can take that pre-approval to any car dealer in town, and they know it.

And with a pre-approved car loan offer in your hand, you’ll have a set price you don’t want to stray from. When it comes to the add-ons and upgrades dealers try to sell you at the end — or the well-known tactic of stretching out your auto loan to seven years and focusing only on the lower monthly payment — you won’t fall for it, and you’ll have ample reason to say “no.”

Choose the best financing option in the end.

The best part about getting pre-approved for an auto loan is that it’s not set in stone. If the dealer you choose just so happens to offer an awesome financing deal after you agree on a purchase price, that’s just icing on the cake.

Since some dealerships offer 0% APR financing and other amazing deals at certain times of the year, this is important to consider.  Remember, just because you approach the dealership with a pre-approved car loan doesn’t mean you can’t choose dealer financing in the end if it’s a better deal.

The whole point is that, with a pre-approved car loan, you’re the one in the driver’s seat.

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Four Ways to Tackle Overwhelming Debt

Any amount of debt can seem overwhelming, depending on what your income is or how much debt you’re comfortable having. If you’re feeling in over your head, it’s time to start looking for help to get you out of debt and back on track.

When it comes to digging out from underneath your debilitating debt, there’s a sort of order you should go through — beginning with some fundamental strategies before turning to increasingly drastic measures. Here’s where to start when you’re staring down an insurmountable debt.

Do-It-Yourself Debt Help

Here’s where you need to begin, before you call anyone else in. No one can help you like you can help yourself. Look at your finances, see where you can make some spending cuts, and pay that extra money forward to make more aggressive progress against your debt. If you’re being honest and track your spending with a critical eye, you’ll probably be able to find some expenses that could be better spent on getting yourself out of debt.

In this process, reach out to your lenders, especially any you’ve fallen behind in paying. What do they need you to do to get back on track? Starting here is going to save you time, money, and aggravation. Once you’ve done this, if you’re still having trouble, it’s time to think about bringing in some additional help with your debt.

Debt Consolidation

We’re still sort of in the DIY arena here, but this is a little more aggressive. You might look at zero-interest balance transfer credit cards or consolidation loans as a way to get your debt under control. In most cases, this means trading multiple high-interest balances for one larger loan with a lower interest rate (or, with a balance transfer card, an introductory period with 0% APR).

This approach has a few benefits: First, if you qualify for a consolidation loan or new balance transfer card, it’s probably going to help your credit score immediately — the increase in your overall credit limit will reduce the amount of your available credit that you’re using, called your utilization rate. You’ll also have just one monthly debt payment to keep track of, instead of several – potentially

Plus, if you’re able to consolidate to a lower interest rate or even a 0% APR credit card, more of your money will go toward the principal of the debt — meaning each payment will have a greater impact and you’ll make faster progress.

In addition to balance transfer fees or loan fees that you need to be mindful of, there’s one other major pitfall here: If you’re not careful — if you don’t change the behaviors that landed you in this predicament in the first place — you can just end up deeper in debt. So know yourself and tread lightly. But if the lower interest rate makes up for any fees you’ll pay, and you think you can handle the responsibility, debt consolidation offers a straightforward path out of debt.

Debt Settlement

Some people pursue debt settlement, but it’s not all it’s cracked up to be. In the first place, you’re going to have to not pay your bills for several months before your creditors are even going to consider negotiating a settlement with you — and this is going to have a very negative impact on your credit report and credit score.

What’s more, settled debt is treated like income by the IRS. You’ll get paperwork at the end of the year for the “income” that you owe taxes on and the IRS will expect you to pay it.

For most people, it’s best to skip this step. It’s just not an option that has a lot of positives to it. If you’ve already fallen behind, however, and your credit report is already pretty roughed up, this might not be quite so bad.

Debt Management

Debt management is a bit like debt settlement, but a little more positive. You pay a company a single flat rate every month to manage your debt for you. That’s going to save you a lot of money when it comes to interest and fees — however, they’re not going to do much for you that you couldn’t do for yourself. In this case, you’re effectively just outsourcing a debt consolidation loan to a third party and paying for the difference.

Better than this is getting free or low-cost consumer credit counseling from a non-profit agency. They can help you to evaluate all of your options and come up with a plan that works best for you. Paying high fees to another company to do what you can do for yourself isn’t necessary. Calling in a third party for a fresh set of eyes on the situation, however, might be useful in helping you to figure out precisely what it is that you need to be doing to get yourself out from underneath a mountain of debt — and hopefully before bankruptcy is a serious option.

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Friday, November 11, 2016

Strategies for Minimizing the Cost of a Morning Coffee

As many articles for The Simple Dollar do, this one started out as a reader mailbag question whose answer grew longer and longer and longer and eventually warranted its own post. Here’s Mike’s question.

I’m really into your idea of cutting the unimportant things so that I have plenty for the important things. Good stuff. So I am trying to apply it to coffee. Morning coffee, two or three cups, is a requirement. It’s not going away. I love the flavor and thrive on the caffeine. However I am not subscribed to the idea of buying it from a coffee shop or anything else. I’ve been tinkering. Looking for ideas for making morning coffee cheap so I can experiment with them so that I trim my morning coffee down to what is important to me and stop spending money on the parts that are unimportant. Such a good idea dude!

I like Mike.

I started off by listing out some of the tips that Sarah and I use to cut the cost of coffee. Sarah is a morning coffee junkie, just like Mike. I actually like a cup of cold coffee in the afternoon some days with just a little milk in it – real simple. I simply started listing things we do that, much like Mike describes here, retains what we really value about our coffee while cutting out things we don’t value.

So, here’s our repertoire of little strategies for minimizing cost / maximizing value from a cup of coffee. As always with a list like this, you should pick and choose the elements that work for you. Mike actually describes it well: your goal should be to eliminate elements from your coffee that you don’t find important so that you’re not paying for them while saving the elements that you do find important so that you’re actually getting personal value from every cent you spend.

Here goes.

Don’t go to coffee shops. Coffee shops not only charge you a lot for a cup of coffee that’s really only slightly better than what you get at home, they also often upsell you on things that you didn’t even plan to buy, like a muffin or a bagel or a newspaper or something else. It might be a “fun” environment, but it actually becomes a lot more meaningful if you go there occasionally rather than daily, because daily visits to something you consider “fun” tend to drain away that fun and make it ordinary.

Avoid Keurig cups and similar mechanisms like the plague. They’re convenient, sure, but they’re very expensive for what you get. The cost of a single cup of coffee at home is multiples of what it costs from another mechanism, such as an ordinary drip coffee pot or other options (which I’ll mention below). You’re also stuck with a useless device if they stop making pods to your liking.

If you do use a Keurig, get a reusable “K-cup” and fill it yourself. Keurig makes an “official” reusable K-Cup and there are some imitators out there, too. The item’s simple – you just open it up, add a bit of your own coffee to it, close it up, and then it works like a normal K-Cup. You just clean it afterwards. With one of those things, you can maintain the convenience of a Keurig machine without the high expense per K-Cup.

Use a French press instead of a drip coffee maker. A French press is a pitcher with a mesh plunger on it that you can use, along with ground coffee and hot water, to make some pretty good coffee. You just add some hot water and some coffee grounds, let them brew together for a bit, then insert the “press” and push it down onto the coffee grounds, essentially straining the solid grounds out of the liquid coffee. After that, it’s basically just like a normal pitcher.

Using this device basically eliminates all non-reusable items from the coffee making process. No disposable filters or K-Cups or anything like that. It’s one of the cheapest ways to have a hot and fresh cup of coffee in the morning (and it can be endlessly tweaked, too, if you’re into that kind of thing).

Make a bunch of coffee at once and store it in a closed container in the fridge, heating it up when you need a cup. This is actually what I do (in conjunction with the next tip). I usually just have a big sealed container of coffee in the fridge at all times and then pour a cup of it when I want one, heating it up if I want it warm. This is way more convenient than anything else in the moment of wanting a cup of coffee, plus it allows me to use up all of the extra ground coffee rather than letting unused ground coffee go to waste by growing stale.

Cold brew your coffee. This one requires no equipment other than a jar and a fine mesh strainer (and a coffee grinder if you grind your own beans). You can get all of that stuff at the store for a couple of dollars. It also creates a low acidity coffee that can last in the fridge for weeks and, honestly, it’s my favorite way to make it because of the flavor.

All you do is add two tablespoons of coffee to a jar for every cup of water that you add. So, for example, if you put six cups of water in a jar, you would put in 12 tablespoons of ground coffee. If you’re grinding it yourself, make it coarse.

Then, just cover the jar and stick it in the fridge for at least 24 hours. I find that if you take it out too early, it’s weak, but if you leave it in for days and days and days it becomes kind of bitter and really really really strong. 24-48 hours is the magic period for me for a strong cup of coffee without overwhelming bitterness.

At that point take out your fine mesh strainer and strain out the beans. I just pour it from one jar to another with the strainer in the middle. I usually strain it two or three times just to get as much as I can out of the liquid. Then, I pop the liquid coffee back into the fridge in a sealed jar again (and compost those coffee grounds).

This is hands-down my favorite way to have coffee. I like it cold to begin with. It’s also got a flavor that I like, which I assume is the relatively low acidity of it, and it lasts for a long time without tasting stale. You can easily heat it if you’d like, too, and there’s no extra equipment involved other than the sieve.

Buy beans in bulk and grind them yourself. Here’s the reasoning: whole beans stay fresher for much longer than ground coffee. Beans last quite a long time, especially in a closed container. Thus, you can buy a bulk purchase of beans – say five pounds – and get a discounted price on those beans. Then, you simply store the beans in your cupboard and grind some of the beans as needed.

Re-grind cheap ground coffee. This is a tip I learned from an old friend and it surprisingly works. Many people think cheap ground coffee is mediocre, but one really effective way to make it much stronger and more flavorful is to simply grind it again. Use your own coffee grinder on the finest setting and grind Folgers or Maxwell House grounds into a powder.

See, what’s happened with those large-scale ground brands is that they’ve sat there on the shelf for quite a while, allowing the surface of those grounds to oxidize and lose some flavor. However, with the cheaper brands, the grounds are coarse enough that there’s still potent and delicious coffee inside. Grinding Folgers into a powder releases that flavor, making very good coffee from the least expensive brands.

Freeze leftover coffee in ice cube trays. If you have some leftover coffee that you’re considering dumping, consider instead filling an ice cube tray with it and freezing it. Later on, you can use those cubes as the basis of a really good iced coffee, using coffee cubes instead of normal ice cubes to make the drink cool. That way, when those cubes melt, they’re going to be adding coffee to the drink instead of watering it down. You can also use those cubes creatively or even take a few cubes into a coffee cup and microwave it to melt the cubes for an emergency cup of coffee in the future.

These are just some of the ideas that you can use to reduce the cost of a cup of coffee in your life. As always, try lots of tips, stick with the ones that work for you, and focus on eliminating the unimportant so that you have space for the important.

Good luck!

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Thursday, November 10, 2016

31 Days to Financial Independence (Day 13): Trimming Your Spending – Health Care

“31 Days to Financial Independence” is an ongoing series that appears every Thursday on The Simple Dollar. You might want to start this series from the beginning!

Last time, we continued looking at the average American family budget, going through each category and examining how one could trim the cost of typical expenses in that category. Here’s the “average American family budget” that we’re looking at, along with links back to the earlier entries on those specific areas:

Housing – $10,080
Transportation – $9,004
Taxes – $7,432
Utilities – $7,068
Food – $6,602
Insurance (including things like pensions) – $5,528
Debt Payments – $5,252
Healthcare – $3,631
Entertainment – $2,564
Cash Contributions – $1,834
Apparel and Services – $1,604
Education – $1,138
Vices – $775
Miscellaneous – $664
Personal Care – $608
TOTAL – $63,784

Today, we’re going to take a look at health care spending. As you can see from the budget above, the average American family spends $3,631 per year on health care. That averages out to about $300 per month. Remember, however, that this “average American family” includes single adults, married couples without children, and families with children, too. In other words, a single person is probably coming in below that, whereas a large family (like ours) is probably coming in above that.

Exercise #13 – Trim Your Health Care Spending

The rest of this article consists of a long list of specific tactics that you can use to trim your food costs. As with the other savings articles in this series, it’s important to remember that everyone lives a somewhat different life and thus some of these tactics are going to seem useful and sensible to you, while others will seem like a stretch to you, and still others won’t apply at all. That’s okay. Ignore the ones that don’t apply. Make an effort to adopt the most sensible ones. Then, give the others a trial run and see if it’s something that can work for you. Commit to some of the challenging ones for thirty days and see if they work, or apply them during the relatively rare situations when those costs come up.

Remember, your overall goal is to cut back hard on the areas of life that are less important to you – the shallows – so that you can afford the “deep” areas of your life both today and tomorrow. Health care costs, on the whole, are very important, but that does not mean there aren’t wasteful elements of how many people spend their health care dollars. Keep that in mind as you read each tip. Is this tip cutting back on something that’s really important to me, that amounts to a core life value? If not, why not cut it so that I can afford those things that really matter?

Also, not that we’re not discussing insurance here. Insurance was discussed as an entirely separate topic already.

Let’s dig in.

Buy generic or store brand medications when possible, both over the counter and prescription. Generic and store brand medications are often identical or very similar to name brand versions of medications, which means that you can buy and use such medications as a direct replacement for medications you already use. The advantage? Generic and store brand medications are virtually always substantially cheaper than the name brand version.

Whenever you visit a pharmacy or the pharmacy section of a store to purchase a medication, talk to a pharmacist about store brand or generic versions of the item you’re about to buy, just to make sure there aren’t any hidden differences you should know about. You’ll often find that it’s the exact same thing except that the price tag is a lot lower.

Eat a better balanced diet consisting of fewer processed foods. This is more of an “indirect” savings than a “direct” savings, but it’s still noteworthy. Eating a balanced diet with more vegetables and fewer processed foods is one of the few things that doctors and nutritionists tend to agree on in terms of your long term health. Such a diet has a positive impact on the rates of many, many diseases and ailments. It also has a positive impact on your weight, and approaching a normal weight itself has positive impacts on many diseases.

It’s not hard to do this. You don’t have to become a raw vegan. Just put one more scoop of veggies on your plate and one less portion of meat when you’re eating. Eat an apple for a snack instead of a candy bar. Skip the fast food and eat something at home. Make those substitutions regular, normal things. They don’t have to be “every time” things, but when you make them into regular choices, they’re going to have a greater positive impact on your health and thus a greater positive impact on your health care costs, particularly over the long term.

Again, many people overblow this and think that they need to become fully vegetarian or vegan and then reject the whole idea. Having one scoop more of vegetables and one scoop less of meat on your plate is a great step and doesn’t require you to have a diet of kale and carrots. Just shift what you do right now in a direction that involves more vegetables and fruits and you’re probably in much better shape right there.

Get some real exercise every day. The other major step that almost every doctor in the world agrees on in terms of reducing your long term medical costs is to get some real exercise on a very regular basis. Do whatever it takes to get your heart pumping a little each day and move around each day. You should be walking at least a few thousand steps every day, so a daily walk is a good idea. A daily workout of some kind is a good idea, too.

I have two fitness goals every day. The first goal is 10,000 steps, which I usually achieve with a walk around my town. The second is to start a daily workout, and usually if I’ve started that workout, I’ll finish it. I usually just do the daily workout from Darebee as it’s free, doesn’t require any equipment, and achieves the goal of getting my heart rate up and elevating my breathing.

Remember, you don’t have to become a workout guru. You don’t have to go to the gym and “die” to get into better shape. You just need to elevate your heart rate and get a little out of breath for a while. In fact, if you feel like you’re “dying,” that’s a bad thing as you’re overexerting yourself and creating negative feedback against exercise in your mind. Don’t do it. Find things that feel good and elevate your heart rate and your breathing. I find that the Darebee workouts do that, as do weights.

Participate in workplace and insurance wellness programs. Many workplaces and insurance plans offer programs where benefits are offered if you commit to certain wellness initiatives. Some workplaces, for example, offer pedometers and give insurance discounts to people who meet a certain step count threshold. Others offer financial incentives for weight loss.

Ask around your workplace – particularly the human resources department – for such initiatives, especially if you work for a large organization. It’s also well worth contacting your insurance company directly to see if they offer such programs. If you can directly earn money or other benefits by losing weight or exercising, it becomes a double win.

Have regular wellness visits / healthy checkups with your doctor. Almost every insurance plan covers such visits in full, so they shouldn’t result in any out-of-pocket expenses for you. It is far cheaper for an insurance company to pay for wellness visits for a responsible person so that medical problems can be caught early and covered inexpensively than to pay for expensive medical care for someone who wasn’t taking care of themselves, so they make it as efficient as possible for people to take advantage of this.

So, take advantage of this. For you, those wellness visits are free (or very low cost – check with your provider). Go to them. If they do find a problem, it’s going to be cheaper and easier and less painful for you now than it will be later on when it becomes a true life challenge.

Take advantage of preventive care offered by the Affordable Care Act. Many elements of preventive care are offered special additional coverage due to the provisions of the Affordable Care Act. Many elements of treatments for common ailments such as diabetes are made much less expensive for people because of the ACA. Regardless of your feelings on the law, it’s financially beneficial for you, if you’re suffering from a chronic condition, to take advantage of those provisions.

Again, talk to your doctor. They know the details on the ACA and how it applies to your situation. Ask them about inexpensive ongoing care and preventive care.

Check on your insurance coverage for every procedure and look for alternatives for uncovered procedures. Whenever your doctor suggests an additional procedure of any kind, don’t just nod your head “yes” in a daze. First, ask your doctor about potential insurance impact as well as alternatives that might be covered. Second, talk to your insurance company about the procedure and your options.

It’s better for everyone involved – you, the doctor, and the insurance company – if you can find a treatment plan that takes care of your condition at minimal cost. However, everyone’s medical conditions are a little different, so it can take some time and effort to find that most effective treatment plan. Be an advocate for yourself and talk to all sides to find a solution.

Know your local emergency care providers. This takes a little bit of homework, but it can save you a ton of money in a pinch. Know what emergency care options are available in your community and how each of them work with your insurance. Make sure your insurance is accepted at a particular hospital and then know the relative quality of care at the hospitals where your insurance is accepted.

With just a little research, you can figure out pretty quickly where the best place for you to go for a medical emergency is in terms of balancing your out of pocket costs and the quality of care received there. Then, in an emergency, you’ll already know where you should go to get the best bang for the buck medical care.

Talk to your doctor about cutting prescriptions. Many people find themselves prescribed to medications to take care of ailments of various kinds. Sometimes, those ailments improve over time and don’t require as much medication or the same type of medication. Sometimes, those conditions are being overtreated by medication, or a short-term medication is used for longer than is intended.

In those cases, it makes sense to cut back on the medications that you take. Doing so can actually improve your medical outcomes while also saving you a lot of money (and probably improve life quality by reducing side effects). Again, this is a perfect opportunity to talk to your doctor about whether or not you can trim your medication intake and still experience positive health outcomes.

Talk to your doctor about actions – not medicine – you can take to help improve your condition. Many medications are given to people to help deal with problems that they can improve through personal action. Pain medication might be given to cover up an ailment that can be fixed with regular exercise, for example, or a diabetes medication might be given to cover up for an ailment triggered by obesity.

Rather than merely relying on medication, look for actions you can take to fix the underlying problem so that there’s no problem for the medication to treat. Ask your doctor what kind of personal actions you can take to resolve the underlying medical problem, either by reducing the severity, by eliminating it completely, or by minimizing the symptoms of the illness. If your other life choices can enable you to eliminate a medication from your life, that’s going to save you a lot of money.

Buy generic drugs without insurance by asking whether the cost is lower if you don’t use your insurance plan. Believe it or not, many pharmacies can sell generic prescription medications over the counter for much less than the cost to people who have prescription insurance. It seems crazy, I know, but that’s simply the medical insurance situation in America.

Talk to your pharmacist about any and all medications you’re prescribed and see whether or not a generic alternative paid for without insurance is less expensive out of pocket for you. You very well might find yourself paying a lot less out of pocket for the medicine you need.

Order maintenance medicines in bulk by mail. There are many mail-order prescription insurance programs that will send you all of the medications you need for an extended period (say, three months) all at once. These types of programs are typically significant money savers.

If you take a long term maintenance prescription or two, take a look at ordering those prescriptions through the mail in bulk and see whether or not such a plan can save you money compared to using your local pharmacy.

Next time, we’ll look at some strategies for reducing entertainment costs.

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Five Jobs Where You Can Work Part-Time and Still Have a Career

There are lots of reasons to want to work part-time, from launching your own side business to spending more time working on your hobbies. However, let’s be real: For most American parents, the search for lucrative, fulfilling part-time work is about the necessities of balancing work and life in the 21st century. Unless you have a trust fund or a partner who makes a mint, you need to work; unless you live with an accommodating retired relative, you probably need to minimize childcare costs.

The problem is that in most industries, going part-time means that you stop having a career and start having a job. Working mothers have struggled with this problem for decades: Opt to work part-time, and you might find yourself mommy-tracked right off the promotion path, even if you’re a daddy. (And dads are stepping up: A 2015 EY survey found that dads were even more willing than moms to report themselves willing to change careers to get better work-life balance. They were also more willing to pass up a promotion.)

However, not every career is so unforgiving. If you’re thinking about retraining for a job that will give you the flexibility to spend more time with your family and still earn a living, one of these might suit:

1. Registered Nurse

Registered nurses can work a full workweek in three, 12-hour shifts or pick up per-diem jobs and drop down to 24 hours a week… or less. Because they’re licensed healthcare professionals, nurses don’t have to worry about demonstrating their worth to future employers. Their degree, licensure, and continuing education requirements (depending on the state) make the case for them.

Just be aware that new nurses are probably better off investing in a bachelor’s degree, instead of doing the shorter associate’s degree track, especially if they want to work in a hospital in a major metropolitan area. Registered nurses earn a median wage of $28 per hour.

2. Consultant

If you’re a market analyst, management consultant, or other business guru, you don’t have to commit to working an 80-hour week in order to keep your resume fresh. CNBC reports that management analysts/consultants earn median wages of around $30 to $40 per hour, and are in demand.

3. Freelance Writer or Designer

Media folks who want to leave the rat race can often use their existing connections to work as much or as little as they want (and the market demands). This gig has the advantage of being super flexible. Play your cards right and keep your skills up-to-date, and you could reduce your hours pretty significantly and still stay in the game. This is especially true if you update your resume to a skills-based format that shows off the projects you’ve worked on, instead of focusing on your linear career path.

4. Master Plumber

Master plumbers typically have associate’s degrees and complete an apprenticeship, according to Monster.com, but they also set their own hours — and can rake in the bucks, earning $25 per hour, median. If you’ve ever had your pipes back up and needed a plumber fast, you know why they can command good money and call the shots.

5. Tax Preparer

Many tax preparers work more during the tax season, which runs from January through mid-April (or thereabouts, depending on the year). But the money they make during the busy season could be enough to keep them afloat for the rest of the year. (Median annual salaries hover around $40,000.)

Although some tax preparers diversify in order to work year-round, branching out into bookkeeping or payroll services, others might prefer to burn the midnight oil for a few months and take it a bit easier the rest of the year. Depending on where they work, tax preparers might need to become Certified Public Accountants or Enrolled Agents.

Related Articles:

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Wednesday, November 9, 2016

Why Save for Retirement If You Have Social Security?

Dana asks a great question:

My husband and I are in our early forties. Our house is paid off in the last year and we have no other debts. However, we do not have much saved for retirement.

This was something that has been worrying us. But then we took a look at a Social Security calculator and it estimated that my husband and I will receive about $2,000 a month each in SS benefits. That’s more than what we spend in a month by a noticeable margin and we commute every day.

I’m trying to understand why we should be so worried about saving for retirement. SS is guaranteed by the government and if the government starts defaulting it won’t matter how we’re invested. If SS takes care of our needs why save more?

Great question, Dana!

Dana makes a great case as to why it might make sense to not save for retirement and instead rely on Social Security to pay for one’s retirement expenses. While I do think that some of the numbers that retirement calculators pump out are enormously high, I also think that almost every American is well served by saving something for retirement.

Here’s why.

First of all, even though that estimate looks pretty good, it might not add up to as much as you think. While you will be eliminating some expenses, the truth is that many will stay in place and some others are going to grow. As you age, your average health care costs increase, for example, as does the cost of health insurance. Even if you’re as fit as a fiddle, that cost is going to go up and it’s going to fall to your shoulders after you retire.

Second, you might want to – or be forced to – retire early. It is very likely that the benefit estimate that Dana is working with in her example is an estimate of the monthly benefits she’ll receive if she starts receiving those benefits at age 67. What happens if she loses her job at 62 and can’t find a similar job at that age? What if it happens to her husband?

Furthermore, what if she actually wants to retire at 62 or at 60 or even earlier? In that case, she’ll have to fully fund living expenses out of pocket for the years until Social Security becomes available. If she chooses to start taking benefits early, then her benefits will be significantly reduced.

Third, a full Social Security plan doesn’t consider tax increases. If tax policy changes or tax rates go up, that means that you’re going to be paying a greater portion of your income in taxes. These changes could come in the form of increased income taxes, increased property taxes, increased sales taxes, and so on.

Like it or not, there’s a very good chance that our nation’s economic future involves higher taxes. Very few people want to give up the services we have now, the cost of those services is going to go up, and we’re already at a tax deficit nationally and in most states. Add all of that together and it’s a recipe for increased taxes.

Fourth, relying on a healthy Social Security income assumes that Social Security benefits won’t ever be cut – and that’s far from a guarantee. A big part of this plan is the assumption that there will never be any reduction in Social Security benefits going forward, which is very likely a mistake. The truth is that without some changes to the Social Security system, there will be funding problems in the future. What form will those changes take?

One likely change is a reduction in benefits – a 20% cut is often mentioned. Does Dana’s plan work if her benefits drop to $1,600 a month, especially given the other factors discussed here?

Another likely change is that benefits won’t start until an older age. You might not see benefits appearing until age 70 or age 72. This is due to the fact that people are simply living longer. The system is designed to pay out for five or so years, but as people get older and older, that length increases to ten or fifteen years, and that strains the system.

The point is this: you simply cannot predict the future. Believing that your entire retirement process is taken care of because of the availability of Social Security benefits at their current level means that you’re assuming that nothing will change to disrupt that plan over the next forty to fifty years. Well, fifty years ago, tax rates were far higher than they are now, for starters, and Social Security benefits paid out very differently.

So, how does that all affect you?

First of all, the big retirement numbers you often see – millions of dollars – is intended to include all of those contingencies. It includes protection against all of the things described above and more. It’s also insulated against bumps in the stock market (like the one we’re having today).

It’s also intended to include some retirement perks. It assumes that you’re going to keep your full current lifestyle and probably add a few perks like some additional travel.

The truth is that most people want a retirement somewhere in the middle. They’re not planning on an expensive retirement, but they also want some sort of protection against the events described above. It’s a balancing act.

That’s why the best retirement savings advice is based around moderation. It’s about not neglecting your current life, but not neglecting your future life, either.

Many people fall into the assumption that extracting even a few dollars a month from their paycheck is just far too painful to face. That just isn’t true. It’s a balancing act, and what you’re actually giving up right now when you save is your least important expenses. You’re giving up the completely forgettable and wasteful things in life, the things you barely remember. You give up the bag of chips from the convenience store or the celebrity gossip magazine, and it’s those dollars that you actually save for retirement.

What do you get with that savings? You take care of the hardest challenges I described above. You take some of the danger away from tax changes, from unexpected unemployment, and from other factors. Also, with every little bit of savings, you add a bit more flexibility to your retired life.

Without that additional savings, you’re not in a purely dangerous spot, but you do find yourself turning to having to work in your seventies to make ends meet if some of those changes occur.

What can you do, then?

It’s easy. Save what you can. Don’t save so much that it makes life miserable for you today. Just save enough so that the things you have to trim are forgettable. Save a few percent of your income. If your employer offers matching money in your 401(k), save enough to gobble up all of that matching money.

Where do you save it? A Roth IRA is a perfectly good place. So is your workplace 401(k). Don’t get stressed out about the details of it. It’s more important to save a dollar or two anywhere than to worry about the “perfect” place to put it.

If you find that it’s interfering with your life today in a noticeable way, cut back on your savings. The thing is, you’ll probably not even notice it. You’ll just subtly make different choices on some of the things that don’t matter. You’ll buy some store brand garbage bags. You’ll choose a slightly less expensive option for a gift. You’ll jump right in your car after gassing up instead of going inside for a goodie. You’ll buy LED light bulbs and swap out your normal ones as they burn out. Little, forgettable changes.

What do those forgettable changes get you? They get you an easier retirement, one with fewer risks and a bit more support and flexibility.

That’s a pretty good trade, and that’s why you should save a little, even with Social Security.

Good luck!

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How to Choose a Teen Checking Account

For many teens, learning about algebra and geometry is more common then learning to manage one’s personal finances. Perhaps it’s an unfortunate oversight in our education system, or maybe it’s just not a priority when there are so many other subjects to be taught in school.

Whatever the reason, personal finance experts say one of the best ways for parents to start their child on the road toward financial responsibility is to open a teen checking account.

“Most banks and credit unions allow you to open an account when the child is 13,” says Carissa Uhlman, of Inceptia, a nonprofit that offers free, online money management courses for teenagers. “However that may not make the most sense in terms of where your child is at. It often makes more sense to wait until your child gets their first job or starts driving because that’s when they’ll start to have some kind of bills, or will need money for gas. And they’ll have the ability to get around, so they’ll be spending more money — to go to the movies, or at the mall.”

All of this spending and newfound mobility brings with it an educational opportunity for parents, in the form of instilling good financial habits in a child. Yet even at home, managing personal finances is not necessarily a popular topic.

According to a report from Junior Achievement-Rocky Mountain, an organization dedicated to preparing young people to succeed in a global economy, 84% of teens report looking to their parents for information on how to manage money, but 34% of parents say their family’s approach to such matters is to not discuss finances with the children and “let kids be kids.”

“A lot of parents just think children understand how personal finances and checking accounts work because they’ve grown up watching their parents. But you’d be surprised. Teenagers often don’t understand that swiping a debit card is tied to money in an account,” says Uhlman. “Parents think their teens understand this stuff intrinsically because they watch their parents, but that’s just not the case.”

Here are some more tips from the experts when it comes to opening a teen checking account.

Keep in Mind That This Will Be a Joint Account

Because a teenager is a minor, an adult will need to be involved in opening the checking account and should be aware that it will be a joint account. In other words, the account will be shared and the adult involved will also bear the financial burden of any overcharges or fees incurred.

But the joint nature of the account also presents an opportunity for the parent to guide the teen financially while also remaining in control of what transpires, says Lori Askins, of New York-based BR Finance Solutions.

“The parent can set limits on the account,” says Askins. “Depending on where you bank, you can set withdrawal limits and transaction limits, and the parents can receive alerts through text messages and emails when a balance is low. There are constant updates, so that the parent knows everything that’s going on.”

Ask the Right Questions

There’s a variety of questions the adult should ask a bank before opening a teen checking account, experts say. For instance, it’s important to know whether an account comes with spending limits — and if not, whether limits can be assigned, such as putting a cap on how much the teen can withdraw from ATMs in a single day.

Another important question to ask is whether the adult is required to have an account with the bank. If you’re not a customer yourself, will any fees be incurred should you decide to close the teen’s account?

Finally, be sure to ask the bank what happens when your teenager reaches 18. In most cases, the checking account is converted to a standard account, which may bring mean new fees and requirements.

Look for a Technology Forward Bank

It’s a rare teenager that isn’t tied to a smartphone these days. Given the prevalence of technology in your child’s life, it only makes sense to choose a bank that recognizes that fact.

“Find a bank and an account that offers the ability to do a lot of things online,” stresses Uhlman. “Does the bank have a good app? Does it allow your teen to monitor their account online? For a lot of teens, that’s pretty much the way they’ll bank for life, so you’re likely to find your teen will be more engaged if they have those technology options.”

Choose a Bank With a Strong ATM Presence in Your Area

Finding an bank with plenty of nearby ATMs will save both you and your teen money in unnecessary out-of-network ATM fees. “Selecting a bank that has a good number of ATMs in your area will prevent your teen from being tempted to go out of network and be hit with those fees,” says Uhlman. Failing that, some online banks will reimburse you for a certain number of out-of-network ATM fees per month.

Finding the Right Bank For You and Your Teen

How will you ultimately know which bank and bank account is the best choice? That comes down to all of the advice already discussed, as well as a few additional considerations.

Askins says some parents prefer to use a bank they already have an account with, simply for ease and accessibility. Alternatively, some parents might want to choose a bank that offers accounts specifically tailored to teenagers.

For example, Capital One offers a ‘Money’ account, which was created with teens in mind. The account has no hidden fees or minimums and allows your teenager to earn interest. “This is great as your teenager is still in the learning process and you wouldn’t want to incur a monthly fee for not meeting a minimum balance every month,” says Askins.

Capital One provides a MasterCard debit card that can be used at numerous ATMs without fees, as well at stores, continues Askins. In addition, Capital One offers text alerts and a mobile app to track spending.

US Bank also offers a student account with no monthly maintenance fees and full access to online and mobile banking. And USAA’s Youth Spending account includes a variety of parental controls such as specifying whether a child can make transfers and deposits, setting spending limits that help a child learn about making money last, and creating account alerts that are triggered when limits are exceeded.

“This is the prime opportunity for you to teach your children basic money management, before they’re out on their own and make disastrous mistakes,” concludes Uhlman. “Allowing them to open an account as a teen, gives you an opportunity to monitor them and have discussions about money. And it allows them to make some small mistakes and rebound.”

Related Articles

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Tuesday, November 8, 2016

Handling Stress Without Undoing Financial Progress

During the last year, my wife has made the choice to get her masters degree in order to not only improve her professional skills but also increase her range of employment opportunities and income. I’m glad that she’s doing it and I’m fully supportive of her doing so. We can afford to pay for this degree on our own without tapping any kind of financial aid and we’re both very confident that the higher degree will pay for itself in just a few years.

So, what’s the problem?

The problem is that the class is eating up a lot of her time. She has a class after work once a week for four hours, plus a class every other week after work on Friday and then most of the following day. On top of that, she’s had reading, homework assignments, and projects to work on and is also working on a lengthy paper.

The result of that commitment is that she has significantly less time to devote to other aspects of her life. Her time on housework is significantly reduced, and her time spent on hobbies and personal interests, as well as time spent with the children and with me is reduced as well.

That change has an impact on our family as a whole. I’ve had to step up and devote more time to a number of areas of our life. I’ve taken on a greater share of household chores and a greater share of meal preparation. I’m spending much more time on child rearing responsibilities, as it’s almost always me that ensures that homework is done, helps with homework, and takes children to after school activities at this point. These are tasks that I don’t mind doing at all, but the time has to come from somewhere. It’s time taken away from time I spent with my wife. It’s time taken away from hobbies. It’s time taken away from other social commitments.

What happens when you cut away pieces of your life that you value deeply? You feel some stress. You feel a little less happy about things.

It’s in those moments of stress that it becomes very tempting to spend money to put a temporary bandage on the problem. There are a multitude of ways to spend money that could return a bit of that free time that could be spent with my wife or on hobbies or on professional projects, time that’s now spent on errands or household chores or meal preparation.

For example, on a busy evening, I could simply order a pizza for supper or get everyone sandwiches from the sandwich shop. That would reduce (but not eliminate) the time spent on meal prep (I still have to order food, pay for it, handle all of the cleanup, and so on, so there’s just a reduction in time, not an elimination of it). I could hire a local laundry service to do several loads of laundry and then deliver it folded, which would save some laundry time. I could hire someone to do some light housecleaning, such as vacuuming and dusting. Sarah and I could hire a babysitter and go out on a date on a Saturday evening when she doesn’t have a class. We might spend money to have a “special day” where we try to increase the supposed “quality” of family time when “quantity” becomes difficult.

You get the idea.

Beyond that, it’s also tempting to simply spend money to feel a blast of joy when things aren’t easy. Quite often, this makes things more stressful over the long term, but in the moment, buying a new item or an experience can take you away from the stress for a little while, and that feeling is very tempting.

The reality is that stressful life situations encourage you to spend money. There are many, many opportunities in life to throw your money at something that will seemingly save a little time or else provide some easy fun or easy pleasure and those temptations amplify when things are challenging. The problem, of course, is that when you spend that money, you usually end up making the stress worse over the long run.

The question then becomes how do you manage personal stress without resorting to throwing money at the problem? Here are the best solutions I’ve found, solutions that are really helping during this rough patch.

Protect Yourself from “Emotional Spending”

The simple fact of the matter is that when you’re feeling stressed, your decision making process goes a bit haywire. You don’t go completely off the rails (usually), but you find yourself inflating the importance of some factors and minimizing the importance of other factors when you make decisions, and those changes come in ways that you wouldn’t otherwise support without the stress affecting your mind.

I’ll use my own mindset as an example. When I sit back and calmly look at my decision making processes from when I’m stressed, it becomes obvious that I put much more weight on “quick fixes” for problems. I don’t look at what the best solution is for the long term. Instead, I look for whatever solution will most effectively take this problem off of my plate right now and I jump for it. For instance, if I’m unhappy, I’ll look for that big burst of momentary happiness rather than the harder, longer work of eliminating that source of unhappiness.

I’m unhappy because I don’t have enough time to go to a board game night with my friends and I miss it several weeks in a row? I might respond by buying a new game for that burst of happiness, or maybe even finding some way to shirk a responsibility so that I can go spend time with those game-playing friends by maybe buying my kids some take-out food for supper.

Those kinds of choices are purely emotional. They’re driven not by rational choice, but by stress and by amplified personal feelings. So, one of my best strategies for handling stress in my life without undermining financial progress is to simply make it much more difficult to spend emotionally.

I do this by doing several things at once.

First of all, I automate a lot of my finances. Almost all of our bills are paid automatically, which means I don’t have to think about paying them. I also don’t have to think about saving for the future, as our savings and investments are all automatic, too.

Second of all, I basically deny myself access to an ATM card. I don’t use one. I basically don’t ever carry it. It’s in my home, but in a place that’s not immediately easy to access. Thus, when I’m in an emotional state, I can’t just drive up to an ATM and pull out cash from my checking account, and I can’t just use that card to buy something at a retailer. I don’t have access to it unless I really work for it, at which point I’ll usually catch myself.

Third, I use a credit card with a fairly low credit limit for most purchases. I use it for gas and groceries and sometimes for other things, too, but if I spend on it with reckless abandon, I hit that credit limit pretty quickly. I just decline increases in my credit limit when they’re offered to me.

Finally, I don’t store my credit card information or passwords at online retailers. To make an online purchase, I have to remember the password (it’s not stored) and then manually enter payment information (it’s not stored, either). Often, those hurdles make me rethink the purchase entirely. I’ll realize how foolish it is, then I’ll stop.

Step Back from Less Important Commitments and Responsibilities

Stress in my life grows exponentially with each new commitment and responsibility. I can handle a lot of commitments and responsibilities easily, but there comes a point where adding another commitment or responsibility to the puzzle escalates the stress rapidly, and when I’m stressed, I’m prone to spending mistakes.

Thus, one great solution is to simply remove the least important commitment or responsibility from the mix for a while.

Personally, I often skip out on housework. I’ll leave the laundry undone and let it pile up, just doing enough to make sure people have things to wear. I’ll skip vacuuming the floor. I’ll let some dishes pile up in the sink. I can handle those things later, during a lower-stress period.

Knowing that I don’t have to think about those chores right now feels like a relief. I can instead focus on other things that need to be done. If I just put the laundry aside for a day or two and wait until the weekend to vacuum the living room, I can easily make dinner tonight or get this article finished. I suddenly feel much more in control of things.

Here are two key things you can do.

First, figure out which things on your to-do list can be delegated or postponed, and then delegate or postpone them. Pass tasks off to other people. Put non-urgent things off until the weekend.

Second, step down from longer-term commitments as long as they’re in good hands. Perhaps you’re on a committee that’s eating up time and you realize it’s not that important to you. Don’t be afraid to step back or step down, as long as you can ensure anything you’re personally responsible for is handled.

Combining these steps can wipe a lot of things off of your plate during a stressful time.

Turn Off Social Media and Electronic Devices

Social media diverts your attention from the challenges at hand. Electronic devices – particularly your cell phone – aids in that distraction, providing easy access to texts, social media, games, and other things.

Turn them off. Shut them down for a while.

When I’m stressed out, my cell phone and my social media accounts do nothing more than prolong the stress (unless I am using them for a very specific task). They pull my attention away from what I need to complete, and the longer it takes me to complete the things I truly need to complete, the less time I have for my other life responsibilities and life tasks.

When stress takes hold, you have to drop as many distractions as possible, and cell phones and social media are chief among distractions in the modern world.

Turn off your phone. Get things done. When things are done, you have fewer demands on your plate, and thus your stress naturally melts away.

Find Free Ways to De-Stress

This final suggestion is just a group of little techniques that I use not to eliminate the source of the stress, but to improve my ability to handle stress itself and to minimize the psychological impact of stressful situations on my life.

I’m very much in the category of wanting to tackle the causes of stress head-on, but sometimes that just doesn’t work. Things in life that cause stress are sometimes outside of your control, and so simply knowing how to minimize stress without eliminating the source of the stress can be incredibly valuable for helping you to keep your head on straight.

Here are some techniques that I use regularly in my life to keep stress from overwhelming me.

Meditate and/or pray This is something I make time for each day, at least for ten minutes, but usually for multiple sessions and sometimes longer sessions. I view them as being very similar in practice, with the only real change being the target of one’s focus. I find that a simple, regular practice causes the effects of stress to melt away and actually strengthens my ability to focus if I keep up with it every day.

Here’s how I personally do it. I simply find a comfortable spot where I’m seated or laying down, then I close my eyes. For ten minutes, I focus on one single thing. Usually, for me, it’s my breathing – breathing in, breathing out. You might choose to focus on a word or a particular phrase. Just get one thing central in your mind.

For the entire time, keep your focus on that one thing. Your mind will wander. When it does, notice it, then gently bring your mind back to the target of your focus.

That’s it. Believe it or not, stress melts away when you do this and your ability to focus on the task at hand improves, too, particularly when you repeat it every day.

Spend time in nature Whenever I have an opportunity to complete a task outside or need time to think about something, I go out into nature. Usually, I’ll go on a short hike to a secluded spot and do my thinking or studying there.

I find that when I’m out in nature, the positive effects are greatly reduced if I stare at an electronic device. If I’m reading a book or writing in a notebook, it’s somewhat reduced. The best positive effects come when I’m just thinking and walking and looking around. The stress just melts away for a while.

Start a gratitude journal Each day, take a moment or two to list three things you’re grateful for in your life. Think about the good things that your life contains, whether big or small, and simply write them down. I usually do this via handwriting, as I find that I focus more on what I’m writing and retain it better if I write by hand.

This practice forces you to intentionally turn your mind away from the problems and challenges in life and toward the multitude of good things in your life. You have to think about the good in life in order to make this practice work. In doing so, you’ll often see that the big stressors in life really aren’t all that big in the scope of things. I recommend it as a great daily practice for de-stressing.

Get adequate sleep Quite often, when you’re overburdened with things to do, you’ll cut down on sleep in an effort to get more things done. In the extreme short term, this is a helpful strategy as it gives you a few more waking hours immediately, but in the long term, it’s disastrous.

A full night of sleep essentially refills a person’s decision-making capacity. If you don’t get a full night of sleep, you don’t refill the tank. You can operate, but your decision making starts to go downhill much faster than normal. This can be fine if you’re just trying to complete something that requires time and not quality work, but if you have anything on your plate that requires quality work, you’re going to have a hard time with it and your capacity for stress management will be low.

Don’t cut out the sleep. If you need to, take naps. If you’re having difficulty sleeping, talk to your doctor. Never, ever leave yourself in a state where you don’t feel well rested.

Block off personal time No matter how intense your life seems, if you don’t have time for things that deeply matter to you personally – whatever they might be – you’re going to grow disillusioned with your life and that’s going to contribute to stress.

Not taking time for yourself leads to a cycle of negative feelings that just escalates stress. You begin to feel that you’re giving everything in your life to others – your energy, your time, your creativity – and you have nothing left for yourself, which leaves you wondering why you’re doing this at all. That leads to less progress on the things that are stressing you and lower quality effort. That, in itself, makes the stressors even worse.

The solution is to block off time regularly for things that are important to you personally. Maybe that means an hour a day spent reading a book. Maybe it means an evening a week spent playing games with friends. Maybe that means a hour a day spent running or exercising. The point is that you’re spending some time on something that’s personally important and personally enjoyable for you, whatever that might be.

That time is not only a natural de-stresser, but it also leaves you with a life that feels more meaningful. You retain a sense of importance in your own life. You don’t feel like merely a servant of others, but as a complete person that matters.

Final Thoughts

Stress is a tough challenge for anyone to face, but it becomes even tougher when you’re trying to tackle a path to financial independence. Given how easy it is to use money for a temporary stress reducer, it can become a button that we push over and over again, delaying the stress but also taking us away from our dreams of financial freedom.

The best solution is to figure out for ourselves how to manage our stressful situations as well as managing how we respond to those stressful situations. The techniques above help me to juggle all of the things in my life – they form a lifeline that keeps me on a good financial path, even as I juggle the responsibilities of my writing contracts, my three children, my community responsibilities, my marriage, my wife’s reduced role in household efforts as she completes her degree, and many other items.

Good luck in whatever stresses life hands to you.

The post Handling Stress Without Undoing Financial Progress appeared first on The Simple Dollar.

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Born-Again Debt: What Is Re-Aging, and Is It Legal?

The world of credit is filled with terms that can sound quite foreign to most people who don’t work in the industry. Once such term is “re-aging.” And, if you currently have the unfortunate experience of collection accounts appearing on your credit reports, it’s a term you should definitely understand.

Re-Aging Defined

Credit problems are not allowed to haunt your credit reports forever. This is great news if you’ve made credit mistakes in your past. Thanks to the Fair Credit Reporting Act (FCRA) there are very strict limitations regarding how long derogatory information is permitted to remain on your credit reports.

At some point, most derogatory accounts are eventually required to be purged from your credit reports, according to the FCRA. Collection accounts, for example, have an FCRA requirement to be removed from your credit reports after seven years. More specifically, collection accounts must be purged from your credit reports seven years from the date of default on the original account.

Re-aging occurs when the “purge from” date on a derogatory account is changed to be more current than the date of the original default, resulting in the account hanging around on your credit reports longer than allowed under the law.

Not only does re-aging cause the negative credit report entry to remain on your reports longer than is legally permitted, it also will most likely have an unfairly negative impact on your credit scores as well, because the item will be interpreted as being more recent and not in the distant past.

The date on a collection used as the purge-from date or “anchor” date is formally referred to as the FCRA Compliance Date of First Delinquency. There is no other definition of re-aging as it pertains to credit reports and credit reporting. Changing other dates, such as reported dates and payment dates, is not re-aging, because it doesn’t result in the collection remaining on your credit report longer than allowed by law. The Federal Trade Commission, the Consumer Financial Protection Bureau, and the National Consumer Law Center all agree that the above definition of re-aging is the one and only actual definition.

The Two Debt Clocks

When it comes to outstanding, derogatory debt, there are two different clocks with which you should be familiar:

Credit reporting clock: The first is the seven-year credit reporting clock discussed above. This clock limits almost all derogatory credit entries to a seven-year credit reporting life span.

Nothing can legally restart the seven-year credit reporting clock — absolutely nothing. When a collection agency purchases a debt, they cannot re-age the account to restart the clock. You cannot restart the clock by making a payment either. In fact, any changing of the date of first delinquency, the date of default, or the purge from date on an account would be illegal.

Time-barred debt clock: The second clock deals with how long a creditor or collection agency may have the right to sue you for an unpaid debt. This second clock varies from state to state. In some states, a creditor may exercise their right to sue you for an unpaid debt for up to three years. In some states, you can be sued for up to 15 years. However, most states fall somewhere in between these two extremes.

Once enough years have passed and you’re beyond your state’s specific time requirement, a debt becomes “time barred.” Although nothing can legally change the length of time a collection account can remain on your credit reports, you can unfortunately reset the “time barred” debt clock back to the present.

For example, making a payment on an account could allow a debt collector the opportunity to sue you again, if they want to do so. To add insult to injury, if you are sued and lose the case, then a judgment will be issued against you and that judgment could legally be allowed to appear on your credit reports for the next seven years.

Related Articles: 

John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

The post Born-Again Debt: What Is Re-Aging, and Is It Legal? appeared first on The Simple Dollar.

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