Saturday, November 19, 2016

Ten Lessons, Ten Years

It was roughly ten years ago that I launched The Simple Dollar. It wasn’t a smooth rollout, so pointing to a single day as “launch day” is tough, but late October to mid November 2006 is a pretty good timeframe for the launch of the site.

Let’s roll back the clock a little to see where my life was at that time.

In April 2006, Sarah and I had our big financial meltdown where we realized that we were going to be unable to pay our bills that month. This left me with a deep sense that I was somehow messing up my whole life. Sarah and I were four years out from college, each of us with burgeoning careers in our field, and we were collectively making a pretty good income. We lived in a tiny apartment together with our infant son. We were unable to pay our bills because Sarah and I had awful spending habits and the additional financial burden of child care simply pushed us over the top.

I decided, right then and there, that some serious changes needed to happen in our life. I checked out a dozen or so personal finance books from the local library and buried myself in them, learning about what we needed to do to improve our financial state. The big initial answer, at least for me, was that we needed to cut back drastically on our spending.

That’s what we did. We basically went on a “spending fast,” where we cut almost every non-essential dollar from our spending habits. We sold some of our accumulated possessions quickly in order to pay the bills that were at hand and we started rapidly paying off our credit cards.

We expected the lifestyle changes to be painful – and some of them were – but we actually found that a lot of the changes weren’t bad and that some of them were actually quite enjoyable. We started experimenting a lot with frugality during that summer and by late summer I’d started sharing those thoughts in written form and those writings eventually became this site.

What’s happened since? That infant we had back then is now an eleven year old. That eleven year old now has two younger siblings. We no longer live in that tiny apartment; instead, we now live in a four bedroom house. That four bedroom house is fully paid for. We still have two cars, just as we did then, but the ones we have now are fully paid for. We had tens of thousands of dollars in credit cards; now we have no credit card debt. We had tens of thousands of dollars in student loans; now we have now student loans. We are completely debt free.

Furthermore, we’re actually well on our way down the path to financial independence. Our goal is for both of us to effectively “retire” as soon as our youngest child leaves the nest and then spend a lot of years together doing things we both enjoy, things like visiting all of the national parks, building up a local charity, and writing a novel (well, that’s a personal goal of mine).

These changes weren’t easy ones. Along the way, we’ve had to re-evaluate and think deeply about pretty much every single aspect of our lives. We’ve made career shifts. We’ve talked about having more children, chose to have two more, and stopped there. We’ve almost completely changed how we spend our time on a daily basis.

Throughout all of these enormous financial, personal, professional, and social changes – most of them self-inflicted – a few questions come to mind.

What have I learned from all of this?

What has actually made my life better/happier?

What do you know now that you wish you had known at the start of your journey?

These are questions that I’ve been puzzling over for weeks now. I’ve written down tons of ideas and quickly deleted most of them. What remains are ten lessons for ten years, the things that have really mattered the most in terms of shaping a better financial, professional, personal, spiritual, and social life over the past decade.

Most of these ideas originated from books and then simply resonated out throughout my life as I took that idea and re-evaluated my life through that new lens. If the life that came out through the other side was somehow better, then I incorporated that change as permanently as possible into my life.

I hope you’ll find these as valuable as I have.

1. Spend less than you earn, always.

This is the first principle of these ten that I learned and it’s one that has stuck with me through thick and thin, proving the power of its simple truth time and time again. Spend less than you earn. Every week. Every month. Every year.

If you follow that simple principle, you’re going to move into a life where you’ll always have the resources you need when things take an unplanned turn. No matter what life throws at you, you’ll have the ability to handle it with ease, whether it’s an unfortunate event like a job loss or a broken-down car or an opportunity like a cross-country career move or a love that sweeps you off your feet.

Many people tend to look at the downsides of this change with pain. If you’re spending less than you earn, that means that you’re “cutting back” in some fashion, and their mind flashes immediately to their favorite “treats.” They think of the visits to the coffee shop or to the weekly date night. The thing is, that’s not what you should be cutting when you’re spending less.

What should you cut? You cut back hard on everything that isn’t important to you. You buy name brands instead of store brands (except in specific cases where you know, from personal experience, that the name brand is strictly better). You skip over silly forgettable treats like a bottle of Gatorade at the gas station (I might be speaking from experience on that one). You buy energy efficient light bulbs and install a weather strip or two and a programmable thermostat. Your goal is to minimize or eliminate the money that goes out for things that you really don’t care about so that you have money left over both for the future and for the things you really do care about.

The other part of this is the “earn” part. The more you earn, the easier it is to save a lot for the future quickly, to wipe out your debts quickly, to build up some money for retirement quickly. The more you earn, the faster your financial journey moves.

2. Think about your decisions in terms of time, not money.

Time is the one truly valuable resource in life. No matter how hard you work, you can never earn more of it. Money itself is just a way to measure time. You get a certain amount of dollars for an hour that you work, and then you trade those dollars for some item or experience, meaning that you think that a certain amount of time spent doing work is a fair trade for that particular item or experience. Money is just the go-between to help you translate the time you invest for the things that you want and need.

Because of this, I tend to think of most financial transactions in terms of time, not money. Every dollar I spend, according to the “back of the envelope” math, equates to somewhere around 4 minutes of work. Another way of looking at it is that every time I spend $120, I’m adding another work day to my life, a day where my hours are mostly filled with work tasks and not with things that I enjoy. $120 adds up surprisingly fast in an era of Starbucks and endless entertainment options.

On the other hand, moves I take to save money and spend less work in the opposite fashion. If I can do something that will save $120 over the next year, like adding weather stripping to a door, that means that this coming year (and every year after that), I’m essentially gaining a day of complete freedom.

That kind of thinking really motivates me to take action right now to spend less money. The reason is that right now, I have the sound mind and body to take on a bit of extra challenge. Right now, I can handle a task like installing weather stripping. Right now, I can make the decision to buy store brand dish soap. If I make those better decisions right now, then I’m essentially giving myself the gift of personal freedom at some point down the road. I’m earning a day without work.

I love visualizing those days without work, too. I think about an afternoon curled up in a comfortable chair with a great book on a cold day. I think about several hours spent hiking on an interesting trail in a nature preserve somewhere. I think about gathering several of my friends together to play board games all day while having great conversations. I think about packing a picnic lunch and sneaking off with my wife to some beautiful grassy hill, spreading out a blanket, and simply spending an hour or two together watching the world go by. I think about working on some big ambitious project that I never have time for but which seems so incredibly fulfilling in my head. And I earn those things through being smart with my money.

The idea that my little (and big) frugal steps directly translate into time spent completely free motivates me like nothing else.

3. Collect experiences, not things.

It is really easy to accumulate “stuff” in your life. It’s not at all unusual to find a home with closets stuffed full of possessions of all stripes. Overstuffed bookshelves and media centers, garages jam-packed with tools and other odds and ends, rafters and attics full of boxes of possessions of all kinds.

It’s so easy to want things and buy things and accumulate things that the vast majority of us finding ourselves doing it in some way or another. For me, that weak spot is board games. It’s something I recognize about myself.

Here’s the thing, though: all of that stuff is just representative of experiences that you want to have. Having that book on your bookshelf just means that you want to read it at some point in the future. Having that DVD on your shelf means that you want to watch it in the future. Having that board game on your shelf means that you want to play it in the future.

Those items represent potential experiences. Yet, if one were honest with themselves, if they were to pull out all of the stuff they have stowed away and thought about all of the experiences that those things represent, you most likely have enough stuff to fill up your spare time for the rest of your life, and probably several times over.

Lately, I’ve come to realize that I’m not as proud of my book collection as I am of the long list of books I’ve read. I’m not as proud of my board game collection as I am of the games I’ve played over the years. The things that really hold value for me? The list of state and national parks I’ve visited. The trails I’ve conquered. The longest streak of days in which I walked more the next day than the previous day.

In short, life is more fulfilling when you focus on experiences instead of stuff.

This has several advantages. For one, the less stuff you have, the less space you need to store it, thus saving on housing costs. For another, the less stuff you have, the less time you have to spend going through your stuff to find the particular item you want and the less time you spend maintaining your stuff, meaning the more time you actually spend experiencing things. For yet another, the less stuff you have, the easier it is to move and reorganize and rearrange your home.

Although it’s a principle that’s really obvious to me, it’s something that I still struggle with in my life. I find that when I clear out my possessions and focus less on acquiring stuff and more on doing stuff, I’m genuinely happier and I generally have more money to boot. The reverse is true when acquiring stuff – I get this little boost of initial happiness from the new thing, but that fades and then I just have more stuff to deal with.

Try this for a challenge: cut your collections down to the ten things you’re most likely to use or revisit in the future. It’s something I’m trying to do with my board game collection and something that I have done with my other collections. What you’ll find is that you have more time and a greater sense of freedom, plus you’ll be flush with money from the possessions you sold off on Craigslist.

What if you need something for a particular thing you want to do? See if you have a sensible substitute. If you don’t, see if you can borrow it. If you can’t, see if you can rent it. If you still can’t come up with something that works, then go ahead and buy it. Every once in a while, go through the possessions you have and critically ask yourself whether you’re ever going to realistically revisit this stuff in the next year or two. If not, get rid of it – sell it off on Craigslist.

It really is a recipe for a better life, as it leaves you with both more money and more time to actually do the things you enjoy doing.

4. Treat the unexciting elements of your work as fuel for the things you want to do in life.

Every single person on Earth has things that they have to do that they don’t enjoy. For many, those tasks are professionally oriented. Someone has to file the paperwork. Someone has to clean the bathroom. Someone has to do the drudgery. There are also tasks in one’s personal life that aren’t particularly fun, either. Someone has to clean the bathroom, again. Someone has to pay the bills. You get the idea.

It’s easy to fall into the perspective of hating those tasks. They’re miserable. You dread them and put them off and loathe every second you’re doing them. You let them put a damper on your whole life.

That’s the wrong perspective entirely. Instead, look at those tasks as the fuel for every good thing you have in your life.

You earn your money from the most miserable things that you have to do. That’s where you earn the cash. You are paid very well for that time. You aren’t paid for your breaks. You aren’t paid for the watercooler talk. Those things are fun. You make bank from handling the hard tasks, the drudgery.

Relish them. Know that you’re earning serious money every second you spend on those unenjoyable tasks. Know that every second you spend handling that task is earning the free time and free money for everything that you enjoy in your life.

Keep that in mind, then focus. Get lost in the task. Lose everything else in the world except for that task that you’ve dreaded and get it done. The more distractions you allow yourself, the longer you’re going to spend on this miserable task. Close the door. Turn off the cell phone. Bear down on that thing you don’t want to do.

Before you know it, you’re done with it. It’s done faster than you’d ever expect. You’ve earned your pay. You’ve earned your free time. And it feels good.

Every task in your life that you don’t like rewards you with many things that you do like. Keep that in mind before you tackle those tasks; you never get the goods without tackling the challenge.

5. Build blocks of freedom into your busy life; start with them, don’t stick them in later.

Every single weekday, I block off the hours of 3:30 PM to 6:30 PM to spend with my family in a meaningful way. We usually read together in the same room for thirty minutes. I help them with their homework. We usually try to do something fun together, too. I’ll make supper and we’ll have a family dinner together.

Every Sunday, I block off about six hours for a community game night. It’s my main hobby/social activity of the week. I go there, meet up with friends, play some games with them. It’s wonderful.

Every Monday, I block off about three hours to go visit a friend who doesn’t get out much at all. I usually end up playing a game with this friend.

I also reserve a block of about an hour each day for a morning routine that includes meditation, writing down things I’m grateful for, and a brisk walk or exercise session where I review the day ahead in my mind.

If at all possible, I take a longer walk in the afternoon to mentally unwind.

I wrap everything in my life around those things. These things are the first things on my schedule each week. All of my other professional and personal tasks and responsibilities flex around these things.

Many days, I wake up very early to start in on my tasks for the day. I’ll often work in the evenings as well, if necessary. You might find me doing laundry at 6 AM or writing an article at 9 AM or doing dishes at 3 in the afternoon or checking emails at 10 PM.

That’s because the things that are most important to me, the things I live for – my family, my mental and physical well-being, my core hobbies – need to be at the center of my life. If they’re not at the center of my life, what is? And if they are at the center of my life, then it makes absolute sense to plan for those things first and do everything I can to make everything else flex around it.

I don’t live to work. I work to live. My household and professional tasks are done so that I can have that time to do the things I care about the most, with those periods of time walled off from intrusion or interruption. My career is something I care about deeply, but if it takes away from the things I’m working for, then why am I really doing it?

Schedule the things you truly care about the most first. If you find that you can’t hold to those things, what does that reveal about your priorities? This practice not only ensures that you have time for the things that matter most to you, but it can uncover some really difficult matters of priority in your life.

6. Always question everything you spend your time or your money or your energy on. Is that the best use of your time, money, or energy?

Never, ever, ever stop questioning your use of your time, money, and energy. Whenever you find your mind idling or you’re engaged in a task that doesn’t take a whole lot of mental focus, use it to evaluate, evaluate, evaluate.

One approach is to think about recent choices you’ve made regarding how you use your time, money, or energy. Should you have made that purchase? Did you spend that hour very well? Was that really a good use of your energy?

Another approach is to take a recent situation where you made a mistake using your time, money, or energy. What went wrong? How can you do better in the future?

Yet another approach is to take a recent situation where you really did well using your time, money, or energy. Why did it go so well? How can you replicate those conditions again so you can enjoy that success again?

A final approach: visualize upcoming situations where you’re going to have to make some tough choices regarding your time, money, or energy. Think about the optimal way to handle that situation now, when you’re not stuck in the situation, then visualize yourself handling the situation in just that way. You’ll find that such visualization makes it far easier to make the right choice when the real situation arrives.

I intentionally turn my mind to such thoughts whenever I have mental downtime. I’ll think about such things when I’m loading the dishwasher or walking to the post office or driving home from dropping my kids off at an activity. These things cross my mind when I’m in the shower or when I’m brushing my teeth. These thoughts constantly pull me toward different life tweaks that, in the end, will help me build a better life.

7. Set big goals, but don’t set them in stone; take initial steps that work broadly toward lots of big goals.

Big, giant, life-changing goals are kind of a double-edged sword. They’re often a perfect match for the current aspirations you have in your life and build obviously upon your current life situation.

When I think of the most exciting times in my life, the times where I was most excited to jump out of bed and take on the challenges of life, it was when I was tackling a giant goal of some kind. They’re powerful and wonderful.

But life changes. The person you were five or ten years ago likely wouldn’t hold the same big goals that you might have right now. That’s normal.

So why set a big goal at all? Well, it’s simple: a big, giant, life-changing goal can give you a reason to get out of bed in the morning. It can add a focus and an excitement to your life that nothing else can really provide.

I have one big overriding goal in my life right now. It’s more of a health-oriented goal, but shooting for it gets me out of bed each morning. I know that I can work on that goal each and every day and take a step toward it each and every day.

Eventually, though, I might move on to another goal. That’s why I intentionally choose steps for that goal that I won’t regret later on. I won’t regret the health-oriented steps I’m taking right now regardless of what happens going forward.

Money goals can be much the same. No matter where you end up going in life, you won’t regret having taken steps right now toward your money goals. Paying off debt? You’ll never regret it. Saving for the future? You’ll never regret it. No matter what direction your life takes from there, you’ll never regret those fundamental steps.

Big life goals are incredibly powerful, but they are even better if the steps you’re taking are ones that are essentially transferable. Make sure that the early steps you take toward any goal are ones that you’ll be happy with no matter what happens in your life and then ride that wave of enthusiasm and motivation.

8. If you see a mistake you’re making, address it head on. Don’t run from it.

People make mistakes. I make them constantly. I spend money in ways that I shouldn’t. I don’t think through a purchase. I settle into a routine that isn’t as positive or healthy as it could be. I fall back on life crutches when I face challenges.

The key to overcoming those challenges isn’t to hide them or pretend they didn’t happen or run away from them or excuse them. Those tactics fail every time. They enable you to just keep repeating the mistake over and over again.

If you see yourself making a mistake, address it head on. Ask yourself why you’re making this mistake. Look for things you can to so that you’re not going to repeat that mistake again.

If you see yourself making a spending mistake, ask yourself why you’re doing this. What good is this purchase really going to bring to your life? Aren’t there other uses for your money that might make more sense, particularly in the long term? Are there things you can do to help you avoid making that mistake again?

The same thought process is true is true for every kind of mistake. Address it head on. Ask yourself about that mistake.

Another important part: own up to your mistakes. If you made a bad choice, don’t blame others for it. Don’t excuse it by pointing to someone else. If you made a bad choice, the reason for that choice is you. At the same time, no one else but you can reap the rewards of successfully overcoming that mistake.

Don’t beat yourself up over a mistake, though. Humans make mistakes. That’s part of being human. The path to being a better person isn’t to eliminate mistakes from your life, but to figure out how to make fewer of them and how to correct the ones that you do make. You’re always going to make mistakes, so your goal should be to reduce the count and the intensity.

9. “Expect anything worthwhile to take a long time.”

The above principle is a quote from Debbie Millman, who stated the principle far more succinctly than I ever could have.

Every single thing worth achieving in life is going to take a while. It’s not going to happen today or tomorrow or next week. That’s why it’s worth achieving.

If you could achieve financial stability in a day or two, no one in America would be living paycheck to paycheck, yet more than three quarters of Americans do in fact live paycheck to paycheck.

If you could achieve major weight loss in a day or two, no one in America would be overweight, yet we’re facing an obesity epidemic.

If you could build an incredibly successful startup in a day or two, literally everyone would have a stunningly successful business, but we don’t.

The truth is that the things in life that are worthwhile – great relationships, a good stable financial life, a strong career, a healthy body, a healthy mind – take time. They take repetition of good practices over a long period in order to achieve the exceptional results that you want. Otherwise, the exceptional results you want wouldn’t be out of the ordinary.

It’s going to be hard. Every long journey always is, particularly in the middle of the journey when you feel so far from the security of old habits but also so incredibly far from your destination. Many, many people give up. Don’t be one of those people.

10. Treat life as a journey of growth and discovery.

I could write a long section here, but I think that the idea I want to share was best described by Jim Valvano during his speech at the 1993 ESPY Awards. Valvano was dying of cancer and had to be helped up on the stage to give this speech, but when he got going, you could see the fire in his eyes and his heart. Here’s the key excerpt:

“When people say to me how do you get through life or each day, it’s the same thing. To me, there are three things we all should do every day. We should do this every day of our lives. Number one is laugh. You should laugh every day. Number two is think. You should spend some time in thought. Number three is you should have your emotions moved to tears, could be happiness or joy. But think about it. If you laugh, you think and you cry, that’s a full day. That’s a heck of a day. You do that seven days a week, you’re going to have something special.”

Laugh. Think. Cry. Do that every day. Laugh until it hurts. Learn something new about the world and really incorporate it into your thinking. Be moved so strongly by something that it brings tears to your eyes.

Life is a journey of growth and discovery. You can never grow unless you push yourself. You need to push your heart. You need to push your mind. You need to push your body. You need to push out against your weak points.

Every day in which you do those things, even if they perhaps didn’t go as perfectly as you might have wanted, is an exceptional day. If you have a life with those elements in it, what else do you really need?

Final Thoughts

Where will my life be ten years from now? Our youngest child will be preparing to leave the nest, likely filling out college applications and taking other career-oriented steps that people take in their late high school years. Our two older children will already be gone. Sarah and I, if things go well, will be figuring out what comes next. Are we ready to retire? I hope so.

Whatever my future holds, two things remain true. One is that the principles above will guide me from where I am now to where I hope to be in ten years. The choices I make today are heavily guided by those principles and they’ve helped to build a wonderful life over the past ten years.

The second is that I hope to be able to share the things I learn about frugality, money management, career planning, personal growth, investing, and many other things along the way with you, right here on The Simple Dollar.

Here’s to ten more great years.

The post Ten Lessons, Ten Years appeared first on The Simple Dollar.

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How to Choose a Credit Card in Four Steps

Finding the best credit card for your wallet isn’t always easy. Not only should you consider what you want in a card, you also have to think about what your credit needs.

Here’s what I mean: Certain credit cards are designed for people trying to build their credit history, while others are aimed at those with excellent credit already. Some cards offer travel or cash-back rewards, while others come with lower interest rates that can help people save money or get out of debt.

These factors and others all come into play as you shop for a card — but where do you start? This guide will walk you through the process of selecting a new credit card, step by step.

Step 1: Check your credit score.

Since the type of credit card you can qualify for typically hinges on your overall credit health, checking your credit score should be your first step. To get an estimate of your FICO score, you can sign up for a free service like CreditKarma or CreditSesameCapital One’s new CreditWise service also offers a free estimate of your FICO score once you sign up for a free account (you don’t have to be a cardholder).

If you’re interested in the details on your actual credit report, you should check out AnnualCreditReport.com. Sponsored by the federal government, this website makes it possible to get a free copy of your credit report from all three credit reporting agencies – Experian, Equifax, and TransUnion – once per year.

If you have good or excellent credit, you can generally qualify for just about any credit card on the market. If your credit is average or poor, you may not qualify for the best rewards cards on the market — or if you do, you might get stuck with higher interest rates. If your credit score is poor, you may need to apply for a credit card for bad credit – or even a secured credit card. Either way, it helps to know where you stand and what to expect before you apply.

Step 2: Determine your priorities.

Now that you know where you stand in terms of your credit score, you can decide on some credit goals. Do you want to earn travel rewards or cash back? Transfer a balance and pay down debt? Build credit from scratch?

No matter your priorities, there’s a card – or even a handful of cards – designed just for your goals. Generally speaking, most credit cards fall into one of these categories:

  • Cards that help you build credit: Plenty of “beginner” credit cards exist to help people build their credit history. This includes both unsecured credit cards that extend a line of credit and secured credit cards that require a cash deposit. Student credit cards can also help young people build credit when they’re first starting out.
  • Rewards credit cards: Rewards credit cards let people earn cash back or points with each purchase that can be redeemed for airline miles, hotel points, or other benefits.
  • Cards with low interest rates: Low-interest credit cards offer generous interest rates that help consumers save money if they expect to carry a balance on a large purchase or need to pay off debt. Some credit cards even offer special introductory offers with 0% APR for anywhere from 12 to 21 months. These cards let consumers transfer their balances, save money on interest, and potentially pay down debt faster.

Step 3: Ask questions and compare offers to narrow down your choices.

Once you know which type of credit card might work best, you should compare offers to find the best deal. Look for cards that offer the most of what you’re looking for, whether that’s a lucrative rewards program, an extremely low interest rate, or a helpful balance transfer offer that will help you save money. Some cards may even offer a signup bonus worth up to a few hundred dollars in rewards points.

Depending on the card type you choose, asking the right questions can help you whittle down your choices even further. Here are some questions you should ask depending on the card type you’re after:

If you want to build credit:

Building credit from scratch isn’t always easy, but certain cards make it possible. Student credit cards, aimed mostly at young people, make it easy to build a credit history with a small credit line and flexible terms. Secured credit cards, on the other hand, offer a small line of credit when you put down a cash deposit as collateral. Some questions to ask:

  • Does this card have an annual fee?
  • Do I need to put down collateral? If so, how much?
  • Can I upgrade this card later on?
  • What interest rate will I pay?

If you want to earn rewards:

Rewards credit cards offer a range of benefits that can depend on the card issuer and the rewards program itself. Most people sign up for rewards cards to earn airline miles, hotel points, flexible travel credit, or cash back. Here are a few questions to ask:

  • What type of rewards will I earn, and can I use them? For example, airline miles may not be useful if you loathe flying or rarely travel.
  • Does this card have an annual fee? If so, are the potential rewards worth the fee?
  • How much interest will I pay if I carry a balance?
  • Does this card come with travel benefits such as trip cancellation/interruption insurance, rental car insurance, or lost baggage reimbursement?

If you want to save money on credit card interest:

Some credit cards offer low ongoing interest rates or special promotions that can help you save money in the short term. Some cards even offer 0% APR for a limited time. Here are a few questions to ask as you explore these options:

  • Does this card charge an annual fee?
  • What is my interest rate, and how long does it last?
  • What will my interest rate be after the introductory offer?
  • If I’m transferring a balance, will I need to pay a balance transfer fee?

Step 4: Select the card with the best combination of benefits.

Comparing offers and asking the right questions is the best way to end up with the perfect card for your wallet. Once you complete this process, you should have a good idea of which card offers the right range of benefits for your needs, and whether you can qualify.

Final Thoughts

The right credit card can be extremely useful no matter what your financial situation looks like. Whether you want to build credit, transfer a balance and save money on interest, or simply earn rewards like cash back or free travel, the best credit cards on the market can help.

In the same vein, credit cards can wreak havoc on your finances if you’re not careful. If you spend more than you planned and carry a balance each month, you could struggle with credit card interest and debt for years. Before you sign up for any new credit card, make sure you have a plan that will help you maximize the benefits of credit without leaving you in debt.

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How did you pick your credit card? Would you add any steps to this list?

The post How to Choose a Credit Card in Four Steps appeared first on The Simple Dollar.

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Friday, November 18, 2016

The Direct PLUS Loan Program: Six Things Parents Should Know

Your kid isn’t the only one studying. If you’re searching for grants and scholarship money and researching federal subsidized and unsubsidized loans, you probably feel as if you’re boning up for the hardest, most complicated test you’ve ever come up against.

And then somewhere, in the midst of all of this, you’ve probably found a beacon of light in the darkness. You learned about the Direct PLUS Loan Program.

The Direct PLUS Loan Program is a type of federal loan that parents use to fund college costs that aren’t covered by other financial aid options. So if your teenager has landed some money to pay for college, but not enough, and the well seems to be dry, the Direct PLUS Loan Program could pay the rest of the tab for your child’s education.

It sounds like a godsend, and it can be — but it is a loan, which means you could apply for it and not get it. Plus, because it is a loan, strings come attached, like an interest rate (but at least it’s fixed) and origination fees. And if you aren’t careful, those strings may feel more like chains.

So if you’re thinking of getting involved in the Direct PLUS Loan Program but have no idea where to begin, consider this your tutorial.

Know your documents.

There are two pieces of paperwork you need to be concerned about, says Kevin Paskvan, director of financial aid at Ohio Wesleyan University in Delaware, Ohio.

“Parent borrowers must complete both the loan application and a Master Promissory Note (MPN) for the loan to disburse,” he says, adding that his office has encountered parents who only completed one of those documents. Don’t be that parent.

And be careful in filling them out, Paskvan cautions. “Parents need to make sure their information is in the borrower section and the student information in the student section. We see a fair number of applications with the student listed as the parent borrower,” he says.

Don’t forget the FAFSA.

How could you forget about it? By now it’s probably a guest star in your nightly dreams. But in case you’re new to this, the FAFSA stands for the Free Application for Federal Student Aid. To learn how much in PLUS loans you can borrow, fill out the FAFSA between January and June.

Don’t apply too early.

Being too prepared can actually backfire on you, in the case of the Direct PLUS Loan.

“A federal PLUS Loan credit check lasts 180 days. If the credit check is completed too early in the process, it could expire,” Paskvan says.

Be careful about what you borrow.

This is a loan, and like all loans, you should handle it with care.

If you borrow no more than your total annual income, you should be able to pay off the debt in 10 years or less, says Mark Kantrowitz, the publisher of Cappex.com, a free website about college admissions and financial aid. And that 10-year mark, or less, is what he advises shooting for.

You can get these loans extended to 25 years… but really? Do you really want to do that to yourself? It isn’t only the extra time you’ll be burdened by the payments, but all of the extra interest that you’ll be paying.

And, by the way, that annual income guideline is for all of your kids, Kantrowitz adds. So if your annual income is $80,000, and you have three kids, you don’t want to borrow $80,000 per kid, but closer to $26,000 per kid – unless you want to be paying off the debt into your nursing home years.

And seriously, be careful, Kantrowitz cautions. “About half of Federal Parent PLUS loan borrowers are borrowing more than they can reasonably afford to repay,” he says.

Dart Humeston, director of financial aid at Barry University in Miami Shores, Fla., agrees that it’s easy to get in trouble with student loans. He says parents don’t think about the long-term implications of using PLUS loans.

“Unless the reason to borrow is a one-time emergency, realize that undergraduate students usually graduate in five years, sometimes longer. That means your Parent PLUS Loan debt will grow higher and higher every academic year,” Humeston says.

And if you’re thinking that your kid can take it over, well, maybe you’ll convince your children to pay off the loan — but don’t count on it, especially if they have their own loans under their name that they have to deal with. This loan will be in your name until it’s paid off. You can’t transfer it, not even later, after they graduate and when or if they’re consolidating loans.

There’s an incentive for setting up automatic payments.

If you have the payments automatically deducted from your bank account, you’ll get a 0.25% interest rate reduction. And after 36 months of on-time monthly payments, you’ll get a 1% interest rate deduction (as long as you keep making payments on time).

Critics say the credit check could be better.

If your gut is telling you that this loan is a bad idea for you, then you should probably listen to it.

“Some parents assume the government won’t give them a loan unless they can afford to repay it,” Humeston says.”The Parent PLUS loan credit check only looks for adverse credit, and many experts have stated that it should be a tougher credit check. Often parents are shocked upon discovering they are approved.”

In other words, they may approve you for the loan, but that doesn’t mean you actually have the means to pay it back without going broke. You don’t want to put yourself in that position. If there’s one thing worse than feeling as if you’re studying for the biggest, most nerve-wracking test ever… it’s failing it.

Related Articles

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Thursday, November 17, 2016

31 Days to Financial Independence (Day 14): Trimming Your Spending – Entertainment

31 Days to Financial Independence (Day 14): Trimming Your Spending – Entertainment

“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 $2,564 per year on entertainment. That averages out to a little over $200 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 #14 – Trim Your Entertainment Spending

The rest of this article consists of a long list of specific tactics that you can use to trim your entertainment 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. 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?

Let’s dig in.

Cut the cable cord. The average American family spends more than $100 a month on their cable bill. Imagine if that cable bill just vanished. Instantly, you’d have more than $100 a month more to work with in your budget. That money can make a car payment on a low end car. It can pay down a credit card debt surprisingly rapidly. It can make life emergencies much easier to handle.

So, how do you do it? The key isn’t to simply eliminate television viewing from your life, but replace it with other services. For example, you can get over-the-air television channels for free (see the next tip) and you can watch a service like Netflix, with almost infinite on-demand options, for just a few bucks a month. Sports can be tricky (at least those not broadcast on over-the-air networks), but if there’s a particular sport you love, buying a streaming package for just that sport is far less expensive than paying for cable or satellite just to keep watching that sport.

Install an over-the-air antenna. Over-the-air antennas are one of the best entertainment bargains out there, as they provide access to local ABC, NBC, CBS, Fox, and PBS stations for free as well as many ancillary stations that provide things like constant weather updates. In our area, for example, we have an over-the-air free children’s channel, an over-the-air free weather channel, and approximately a dozen different channels featuring all kinds of family- and adult-appropriate entertainment. We get tons of live sports events, strong local and national news coverage, and more programs than we can ever watch.

Installing such an antenna is easy. You can install a small one near your television by simply mounting it on the wall and running the cord to the back of your television set. If you live in or close to a major city, you should be able to pick up a lot of signals that way. You can get a bit better reception by mounting it on your roof, but that’s a bigger project.

Learn about and go to free events. Almost every community has a number of free events that go on throughout the year, many of which people don’t hear about simply because they’re not in touch with community events. It’s time to fix that.

Visit your community’s website and look for the community calendar. It will provide a very long listing of free and low-cost events in your community, most of which will be things that you never heard of or thought of before. If you can simply find one event a week or even one event a month to engage in, then you’ve got a steady source of free entertainment for yourself and your family. You’ll find free performances, free concerts, free activities, free movie nights, and so on.

Start using the library for movies, music, books, and other things. The local public library is one of the best resources available to you in terms of providing free entertainment. The library has thousands of books of all varieties and access to many more through interlibrary loan programs.

But it’s not just books you’ll find there. Many libraries have extensive selections of DVDs, audiobooks, CDs, and even equipment of various types that people can check out or use on site. It’s basically a giant warehouse of free entertainment that you can access if you’re willing to walk in the front door.

Reconsider your subscriptions to magazines and newspapers. Do you really read these every time they come in? Or do they just pile up on the table, forming a mountain of “things you’d like to look at someday” while you’re twiddling with your smartphone? If you’re finding that you’re paying for periodicals that you don’t read, then cut those subscriptions and save yourself some money.

Learn about and explore other free resources in your community. The free entertainment options in your community don’t just end with a concert in the park and the local library, either. Many communities offer a wide variety of programs and resources that people can tap for free entertainment.

Communities often have lakes, hiking trails, nature preserves, bicycling trails, tennis courts, book clubs, discussion forums, regular guest speakers, and on and on and on. The only way you’ll find out about all of these things is to explore your community’s website. Look for lists of civic organizations and check out what they each have to offer. You might be surprised to find some wonderful things on offer for free in your community.

Check out adjacent communities as well. These searches shouldn’t be limited to just the town you live in, either. The towns and cities near you, as well as universities and colleges near you, often have many resources that you’re entirely welcome to partake in. It’s just a matter of discovering them.

So visit the websites of the cities, towns, colleges, and universities near where you live. Find out what kind of things they have on offer and try out some of them. Try doing something new or dabbling in something that seems interesting that you’ve always thought about trying. Go to a free play or listen to a free concert or join a volunteering project. There are many options out there if you look.

Volunteer. Speaking of volunteering, volunteer work is a wonderful way to spend time doing something that really matters, investing your time and your energy and your skills to make some slice of the world a bit better.

See if there’s a Habitat for Humanity organization in your community and sign up to volunteer. You’ll spend a day meeting people and learning some carpentry skills. Sign up to help out with the local food pantry, stocking shelves or helping people who show up. Volunteer to coach a youth soccer team or a youth baseball team. Volunteer to help clean up a park. There are many ways you can volunteer and help out your community, so embrace those opportunities and add one to your life. You’ll meet people and get to engage in something bigger than yourself that helps people in your community and maybe learn a skill or two in the process. What could be better than that?

Move some of your “nights out” into your home. Once a month or so, move an event that would have been “out on the town” into your home. Have a date night in your family room with a big bowl of popcorn and a binge-watching of some new series from Netflix. Make a romantic dinner and serve it at your own dinner table with a candle and the lights low and some soft music playing.

It doesn’t have to be an everytime thing, but if you simply make it into a sometimes thing, you’re going to end up saving a lot of money in the long run while still having an entertaining and enjoyable social life.

Host dinner parties (preferably potlucks) instead of going out. Instead of simply going out to dinner or going out to a club with friends, invite them over for a dinner party instead. Have them bring something with them and the cost of the meal will get very, very low for everyone involved.

It doesn’t have to be complicated or fancy. Just have a simple main course that everyone will enjoy, like a big pot of soup, and maybe have your guests bring appropriate side dishes. Enjoy a wonderful dinner together and maybe a simple after-dinner activity around the table like a game of cards or a board game or retire to the next room for a movie or maybe just simple conversation.

Research discount days at attractions. While there are likely many attractions – museums, amusement parks, baseball stadiums, wineries, and so on – in your area that you might enjoy visiting, you can usually get a lot more value for your dollar if you put in a little bit of research in advance as to when to go and where to buy tickets.

For example, you can often find discounted tickets to the attractions you’re interested in by buying them from other retailers. You might also find days where the ticket prices are discounted – or completely free – at the door, or you might discover days where there are special perks for attendance, such as bobblehead days.

Identify an interesting free hobby and dig into it. There are an almost infinite number of free hobbies out there that you can dig into and explore with your leisure time. I identify a “free hobby” as being one that you can engage in with minimal equipment, that doesn’t require a constant outlay of money to participate, and doesn’t require constant equipment upgrades. For example, trail hiking is a hobby that I define as a “free” hobby, since there are countless trails and places to hike within an hour or so of my home.

I have friends who have all kinds of “free” hobbies, from mushroom collecting to card trading, from rock collecting to reading, from film watching (from the library’s DVD collection and community movie nights) to soccer playing. All of these things can absorb countless hours and provide tons of fulfillment, and those just scratch the surface.

Dig into your media collection and enjoy what you have. Many people have extensive media collections in their homes: piles of DVDs, CDs, video games, books, and other media elements that just sit on shelves, gathering dust. Instead of letting all of that stuff that you love gather dust, use it. Watch those movies. Read those books.

If you find that none of them are appealing to you, then why do you have them? Sell them off and make yourself some money that way. A shelf full of DVDs or a shelf full of books have some value, so extract that value. Hit Craigslist and turn that unwanted media into cash.

Refresh your media collection by trading. Another option for those media items that you don’t want is to simply trade them to your friends and family. Put those items in the hands of people who might enjoy them, and then at the same time receive some media items in exchange that you’ll be excited to read or listen to or watch.

You might even want to organize a book swap meet or a DVD swap meet with your friends. Everyone brings a box of books or DVDs to trade and then everyone does a bunch of one-for-one swaps so that you’re trading something you don’t want to watch or read to a friend who does want to watch or read that item. Not only do you refresh your own media collection for free, you’re also spending a few hours with friends shooting the breeze.

Check the website of your destination before you leave. This is such a simple money-saving step! Whenever you’re about to go somewhere, whether it’s a restaurant or a movie theater or a store, check the website of that destination before you leave. You’ll often find a coupon or some other discount right on that website that will directly save you money on the thing you were already about to do.

For example, let’s say you were about to go to a restaurant for dinner and then shopping at a couple of stores to look for a particular book. Check the restaurant’s website and you might find a coupon for $2 off your entree. Check the store’s website and you might find that one store has that book for 40% off while another store only has it for 20% off, making it sensible to go to the store with the bigger discount. Right there, you just saved $10 and didn’t adjust your evening plans at all.

It’s probably also worth your while to check their social media feeds, too. Check out the Facebook page and Twitter profile of the places you’re about to visit and see whether or not they’re offering any special discounts there.

Just make this online check a matter of course when you’re going anywhere – even to the grocery store – and you’ll find yourself stumbling into discounts.

Eat dinner after the show, rather than before. This is another great “date” strategy that can save some serious cash. Rather than going to dinner and then going to the theater, do it the other way around. That way, you can often snag a ticket at a matinee price at the theater which will save you some cash.

Another advantage: matinee shows are often less crowded, which means you’re more likely to get a great seat and you’re less likely to be pressed into an uncomfortable chair right next to someone else.

As was stated at the start of this article, 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.

If you do that, you’ll find yourself using the strategies that really click to save money, and that’s the goal of a list like this.

Next time, we’ll take a look at strategies to save money on clothing!

The post 31 Days to Financial Independence (Day 14): Trimming Your Spending – Entertainment appeared first on The Simple Dollar.

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Job Keywords: Should Your Resume Be Four Pages Long?

The job search process is mysterious, no matter which side of the conference table you’re sitting on.

As a job seeker, the questions you ponder are along the lines of, “How can I figure out what the company culture is like, before I take the job?” and “Is there a way of tricking the hiring manager into telling me my real chances of ever getting a raise or promotion at this gig?”

When you’re in charge of hiring, however, your questions are often a bit more absurd – for instance, “Why is this resume four pages long?”

Ask anyone who’s ever hired an employee, whether they’re in human resources or middle management: The four-page resume is A Thing.

Why? Because every modern job seeker now knows that using the right resume keywords is the trick to getting past the resume robots, also known as the Applicant Tracking System, which filters the flood of incoming resumes before any humans get involved. Just to be on the safe side, some job seekers cram in as many keywords as possible, leading to essay-length resumes that were not written with human beings in mind.

But, when you have to get through the ATS in order to get to those human beings, is this really the wrong approach? Let’s break it down.

Should your resume be four pages long?

First things first: Unless you genuinely have four pages of relevant experience that can’t be compressed into any fewer pages, your resume should not be four pages long. Secondly: You do not have four pages of experience. This is likely true even if you’re 65 years old and a pioneer in your field.

Also, remember that it’s not just about what you’ve done – it’s about what you’ve done that matters to the hiring manager. You shouldn’t include every job you’ve ever had, or use generic descriptions from a resume template that you repurpose for every job. Your goal is to first make it through the resume scanning software, and then to show the person on the other end that you can solve the company’s problems.

How many keywords are too many keywords?

It’s hard to set a ceiling on the number of keywords, but it’s important to understand that most of today’s Applicant Tracking Systems are a little smarter than the old-school versions, which sometimes just counted the total number of keywords. Instead, many systems will use contextualization, which tells the company not just that you have a skill, but whether you’ve used it recently.

“It’s not your father’s Oldsmobile, where if you put in ‘Java’ [an ATS] would automatically apply you to Java jobs,” Lisa Rowan, program director of HR, Learning and Talent Strategies for Framingham, Mass.-based analyst firm IDC, told The Ladders.

In other words, keyword-stuffing — cramming in these terms multiple times whether they belong or not – probably won’t work in your favor, so there’s no need to do it.

What’s the best way to choose resume keywords?

When it comes to picking resume keywords, you need to cover two things: keywords related to the job description, and keywords related to the job generally.

The first is the simplest: Scan the job description, and pick out the words that relate to the role. So, to use the Java-related example above, let’s say you’re applying for a software engineer role. You’ll want to include any important words you see in the job listing, such as Java, testing, data, collaborate. (See more software engineer resume keywords here.)

Once you’ve done that, you want to think beyond what’s in front of you and try to imagine what the recruiter or hiring manager meant to include, but didn’t state outright in the listing.

“Sometimes ads for jobs are very short and don’t reveal much about the employer’s expectations. Try looking on the company’s website, since there might be a longer description in the human resources section of their site than in the ad you saw,” writes Alison Doyle at The Balance. “Another strategy is to search job sites like Indeed and SimplyHired by the same job title to get a sense of what other employers are looking for in candidates.”

How can you be sure that you’ve used the right keywords?

Finally, there are some free (or low-cost) tools out there that will help you determine whether or not you’ve chosen the right resume keywords. One such tool is Jobscan.co, which allows you to upload your resume and compare it against a job listing, to see how you measure up. (The full-blown service requires a fee, but you can get a few free scans a month.)

Related Articles:

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Wednesday, November 16, 2016

12 Tactics for an Inexpensive Thanksgiving Meal

During Thanksgiving week, both my wife’s extended family and my extended family host a Thanksgiving dinner with untold numbers of side dishes, leaving everyone feeling absolutely stuffed afterwards from the huge delicious meal. As everyone cleans up and then retreats to the living room in a turkey coma, something I can’t help but observe is the expense of all of it.

No matter how you slice it, a big turkey dinner with lots of sides is expensive.

As anyone who has read The Simple Dollar for the last several years knows, I can’t help but look at a situation and wonder how I could retain what’s good about that situation without reducing the quality while spending the least amount of money possible.

So I asked. I’ve been asking our Thanksgiving dinner hosts for years how they pull off a great dinner without breaking the bank. I’ve also shared the tips I’ve learned from various dinners with different hosts.

Now, we’ve never hosted a large Thanksgiving dinner ourselves. We are geographic outliers for both of our extended families, so it makes sense for others to host. The tips below aren’t from our initial Thanksgiving fumblings, but from many years of experience from others who have hosted many dinners over the years.

Here are the twelve best tactics they shared.

Shop for a turkey based on cost per pound. When you’re shopping for a big turkey, the number one thing to think about is the cost per pound of the turkey (aside from any other personal considerations you might have, such as an organic turkey or a free range turkey). The reason is simple: the lower the price per pound, the more food you get for your dollar. It’s that simple.

Include lots of grocers in your search. Here’s the thing: among grocers, the price of a Thanksgiving turkey is a convenient way to attract new customers, so turkeys are almost always a loss leader for grocery stores. They’ll advertise an absurdly low price on turkeys in order to get people in the door. They’ll even give away turkeys at some stores if you spend enough money.

So, widen your search. Don’t just examine the prices at your preferred retailer. Look at the cost per pound for turkey at every grocer in your area. While you’re at it, price out the ingredients of many of your other dishes.

Make it a potluck dinner for local guests. Again, it’s easy: just have every guest bring a side dish or some other element for the meal. Of course, this only applies to local guests; it’s pretty hard to expect people from out of town to bring side dishes.

Still, every single side dish or beverage that’s provided by a guest is one that’s not paid for by you. It distributes the cost of the meal and takes some of the burden off of the shoulders of the host.

Limit the side dishes you actually prepare yourself. Regardless of the number of dishes that other guests bring, put a reasonable cap on the number of side dishes you prepare yourself. There’s no need to have three different variants on potatoes – pick one and make it wonderful. There’s no need to have four casseroles – pick one and make it well.

Not only is it expensive to make a lot of different sides, you’re often going to find that much of the food goes to waste unless you have a ton of people, in which case you’re probably better off just making a ton of the favorites rather than a lot of variations (some of which simply won’t be as popular).

Buy ingredients in bulk. If you’re focusing on just making plenty of a few sides, then buying ingredients for that side dish in bulk is going to save you quite a bit of money. The cost per pound of potatoes, for instance, goes down as the bulk you buy goes up.

Thus, not only is there a good reason to make fewer sides (and make more of them) for convenience, it also saves money because the ingredients cost less per pound.

Make your own spice mixes, such as poultry mix and pumpkin spice mix. Yes, mixes such as poultry mix are really convenient, but the truth is that they’re expensive for what you get. They’re just mixes of other spices and you can easily find the recipes for those mixes online. For instance, you can make a great pumpkin pie spice with seven parts ground cinnamon, two parts ground ginger, two parts ground nutmeg, one part ground allspice, and one part ground cloves. That’s almost perfect for pumpkin pie and it’s going to be less expensive than buying your own pumpkin pie spice.

Turn down your home thermostat. When you start cooking your Thanksgiving dinner on the big day, kick your home thermostat down a few degrees. The heat produced by your kitchen plus the heat produced by a lot of people in your home will keep your home nice and warm, so turning the thermostat down will keep your furnace from needlessly kicking on throughout the day, thus saving you money on your energy bill.

Make as much as you can yourself from basic ingredients, and start a few days early so you’re not time crunched. It can be really tempting to just buy a container of pre-made gravy, for example, but the truth is that the gravy is pretty expensive. Instead, make as many items as you can from scratch (or at least partially prepare them) and store them in the fridge for a day or two before the meal.

If you’re going to host year after year, buy reusable kitchenware and flatware that can be used over and over again. It’s never a bad idea to have a box of reusable plates, napkins, and silverware stowed away in the pantry in case you have guests. Many families who have large dinners will simply turn to paper plates, but the cost of paper plates year after year really adds up (and it’s not environmentally wise to boot). While this might not be a smart strategy for this year, it’s worth your while to keep your eyes open for inexpensive deals on dishes, napkins, and silverware, just to store away for big holiday meals.

Use leftovers in creative ways. It’s easy to just toss the leftovers on the table, make a plate of leftovers, and microwave them, but the truth is that it gets tired pretty fast. A much better approach is to find creative ways to use those leftovers.

I am a huge fan of potato pancakes, which are essentially mashed potatoes formed into the shape of a disk and then fried in a skillet until the edges are browned. Absolutely amazing. One of our family members often makes turkey enchiladas two days after Thanksgiving, using the turkey as the meat content in an otherwise typical enchilada recipe. Turkey tortellini is another delicious and unexpected option for leftover turkey.

Package your leftover turkey for freezing in individual recipe-ready bags. Eventually, you’re going to decide you’re done with turkey for a while, and that’s usually reached at a point where you have some turkey meat left over. Don’t just toss that meat. Instead, find a few recipes that use turkey meat (like, perhaps, the turkey enchiladas noted above), measure out and prepare the meat for easy inclusion in that recipe, and package it for freezing so that you just need to thaw the package and put it straight into the recipe. Boom – easy turkey enchiladas in a month or so!

Use the turkey carcass to make a large quantity of poultry stock. This is my favorite tip of all as I love stock. It’s so useful – you can use it as the basis for soups and stews and as the liquid component of casseroles. All you have to do is take the bones and cartilage from the turkey, break them down a little so that they fit in a big pot (or, even better, a slow cooker), then add some leftover vegetable scraps (onions and celery, for instance, but you can add whatever you want) and some peppercorns. Then, cover all of this with water so that there’s perhaps an inch or two above the top of the bones, then let it simmer all day. If you’re using a slow cooker, you can actually let this cook on the Monday after Thanksgiving while you’re at work.

After several hours of simmering, just strain and save the liquid, discarding the bones and vegetable scraps and peppercorns. I usually separate that liquid into serving sizes of two cups and then save those individual servings in the freezer. For soups, I’ll pull out two servings; for casseroles or other uses, one will do.

These strategies together can really maximize the value of your Thanksgiving holiday dinner, enabling you to cut the total cost and get more value out of the things you prepare. Good luck!

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How to Break a Lease Early – and Gracefully

I’ve been moving around a lot in the past 18 months, and we’re not talking minor jaunts across town. I’ve gone from Los Angeles, to Madison, Wis., to New York City, to San Francisco, and back to New York. I’ve become quite good at shedding unnecessary possessions (shipping is expensive!) — and ducking out of apartment leases.

Whether you’re excited to move and start a new chapter in your life — maybe you took a new job or bought your first home — or you’re responding to a sudden crisis such as an ailing family member or a job loss, moving out isn’t always something you can time perfectly to coincide with the end of your apartment lease.

That’s why most apartment leases require a one-year contract. If everyone could move out at the drop of a hat, landlords would have a much harder time keeping their properties rented out with any consistency.

Thankfully, there are ways to break a lease without breaking the law or knowing any secret tricks. In my experience, the keys to leaving your lease early are being determined, being personable, and being gracious.

Because no matter what kind of contract you signed, your landlord has the power to let you out of it. Generally, as long as you’re in his or her good graces and there’s a new tenant willing to take your place, you won’t have a problem getting out of your lease.

If you’re wondering how to break a lease to get on with your life, here are five tips to keep in mind.

Be Kind to Your Landlord Throughout Your Tenure

I’ve spent a fair amount of time on internet forums where people discuss their real estate properties. I hope to be able to invest in rental property one day, and I enjoy learning about the process of renting out homes for income.

One common thread I find in these forums is that landlords are by and large grateful when they’re lucky enough to have tenants who exhibit even the most basic decency. Being quiet on weeknights and attempting to fix very simple problems before reaching for the phone are seen as particularly admirable qualities for a tenant to possess. Paying rent on time and telling the truth if they need an extension are also pluses.

These are all practices you can easily incorporate into your life as a renter. As busy as you may be, and as annoying as it can be to do simple fixes when you’re not handy, giving it a shot can pay dividends down the road. And, as with any relationship, the more goodwill you build up, the easier it will be to make requests down the line.

Thankfully, my fiance and I didn’t face serious issues with our units that required urgent attention from the landlord. But, we encountered many small things (unclogging drains, stopping leaks, etc.) that we were able to handle ourselves with a little bit of effort and elbow grease.

The pinnacle of these efforts was the time my fiance fixed the gate of our building’s parking garage. It had been blown off its track on a particularly windy day. This fix so surprised our landlord that it earned us a personal email of thanks. I assume acts like this, as well as timely, consistent rent payments, helped ease our transition out of the lease and secured us a glowing recommendation when our next landlord vetted us.


Offer to Find a Replacement Tenant

Landlords generally just want to receive their rent check every month with as few intervening headaches as possible — it doesn’t really matter from whom. As long as the renter has good credit history or references, doesn’t damage the property, and pays rent on time, most landlords are happy.

Just as finding an apartment can be a grind, listing one for rent can be difficult as well. Posting an ad, drawing up a new lease, showing the apartment to prospective tenants, and evaluating applications and running credit checks is a lot of legwork. Listing through a real estate agent can eliminate some of that work, but typically comes with a fee of one month’s rent to be paid by either the landlord or the tenant.

Unless you’re in a red-hot real estate market where your landlord could potentially raise the rent to make up for the extra work and disruption, your landlord probably doesn’t want to deal with all the extra work of finding a new tenant when they already have one under contract.

So, if you’re going to try breaking your lease, always offer to help find a replacement tenant. We had one landlord who said we could move out whenever we wanted as long as we agreed to list the apartment on Craigslist and handle all the logistics ourselves. We did so, and presented her with qualified candidates — and it made the transition go as smoothly as possible.

Build a Real Relationship With Your Landlord

On the rare times I have to call our building manager out to handle a situation, I try to take the time to treat them like any other guest. I offer them water, ask them questions, and stick around to see if I can be of any help. (Of course, I’m never any help. I can barely hang a picture frame. But I’m great at nodding and furrowing my brow as problems are explained to me.)

Being friendly has led to some great interactions. When my landlord in Madison had to come by and fix a spring on our door, I got to hear all about his childhood. It turned out that he used to go on long runs through a nearby spot in the woods. Learning about his exploits inspired me to check out that area, and I had some great times there. I might have never explored that spot had I not taken the time to try to get to know him.

Just as practicing basic kindness is almost always a good idea in the long run, getting on more personal terms with your landlord can help if you later need to get out of your lease. This particular landlord ended up being more than generous when we told him how we were hoping to get out of our lease a few months early. I can’t help but imagine our personal relationship was a big help in that regard.

Be Prepared to Make Some Sacrifices

If you want to get out of your a lease quickly, it might cost you some time and money. Whether it’s showing your apartment to prospective tenants at inconvenient hours, agreeing to replace or repair things you had no part in breaking, or giving up your security deposit, there will be some hard choices to make.

When leaving our last place, the only way we could get out was to give up our entire security deposit. We kept the place in pristine condition, so that was a tough pill to swallow. Until that point, I’d never left an apartment without receiving my security deposit back in full.

But when doing a thorough analysis of the pros and cons, we realized we’d save more money by moving right away — via the higher salaries we were set to earn — than if we’d stayed put just to save the security deposit.

Move Out with Grace

This is obvious. Just as you shouldn’t leave a job by upending your desk and giving the middle finger to your boss (as tempting as it may be), you also shouldn’t be disrespectful to your landlord during the move-out process. Clean the apartment, even if you feel like there’s no point. Return the keys, even if it means you have to commute across town at rush hour to do so. Send your landlord a nice email to thank them for their help, even if it did take them two weeks to fix that leak over the tub.

My fiancee and I made the choice to clean our apartment top to bottom before moving out, even though we knew we were going to lose our security deposit for breaking the lease. It was the right thing to do, and while it was a hassle, you never know who’s going to call your former landlord looking for a reference.

Summing Up

That was quite a few words on getting out of a lease, but the most important thing to keep in mind is that it all boils down to being a decent person. As with most things in life, if you’re nice to people and reasonable, they’re going to be more willing to help you.

It’s also important to remember that you’ll never get anywhere if you’re afraid to ask your landlord some tough questions. You’ll never know if you can break the lease if you don’t ask. Happy moving!

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The post How to Break a Lease Early – and Gracefully appeared first on The Simple Dollar.

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Tuesday, November 15, 2016

What’s Next? Finding Goals and Ambition When You’ve Conquered Challenges

Readers of The Simple Dollar find themselves at many different points on their financial journey. Some people are just realizing for the first time that they really need to get their finances in shape. Others are in a “honeymoon” period, enjoying the discovery of frugality and of life-changing financial moves. Still others are in the midst of what I call the “long slog” – the years of consistent good choices that are needed to achieve big financial goals.

There are some, though, that find themselves at the end of that “long slog.” Their personal resilience and ambition have pushed them all the way through and they’ve achieved some big goals. They have a good job, one that they’ve worked hard to secure. They have their debts paid off. They’re saving more than enough for retirement. They have all of the things that they so desperately wanted years ago and through a ton of hard work, they’ve achieved it.

So what’s next?

Many people find themselves amazed to hear that, quite often, others who have achieved big things – big goals that they themselves hold, like a great career or financial independence or a strong family – are actually unhappy once they’ve achieved it. They have all of these wonderful things, so how can they really be unhappy?

The truth is that many people actually thrive on challenge rather than on success and when that challenge is finally complete and you stand on the summit, it’s exhilarating for a bit, but then you’re left feeling empty.

If the challenge drives you out of bed in the morning and suddenly the challenge is gone, what’s the motivation to get out there and bust your tail? It can become seriously tempting to start coasting… but for people who thrive on a challenge, coasting is boring. Plus, it also means a step back in your level of quality that you’re known for producing in all aspects of your life.

It’s a crossroads that many people find themselves at once they’ve really established a strong financial backbone in their life. The wolves aren’t at the door anymore. Everything is automated and the march to retirement – maybe even early retirement – is more or less a foregone conclusion if you just keep clocking in and clocking out. You’ve done it. You’ve achieved the “American dream.”

But what if you’re utterly bored? What if you’re completely unsatisfied at that point?

Here are some paths to think about going forward.

Envision Your Ideal Life in Ten Years

I found myself at perhaps the biggest crossroads in my life in late 2011, when I had sold The Simple Dollar to new owners and agreed to stay on as the primary writer for the site. At that point, due to our efforts financially and professionally over the last several years, Sarah and I found ourselves in the healthiest financial shape of our lives. We had worked very hard, lived very lean, and paid off our debts before selling the site, so the income was merely a cushion at that point.

For the first several months after that sale, I kind of drifted. Our goal had been to achieve debt freedom with a healthy cushion in the bank and adequate retirement savings. That had been our mountain to climb from the start of 2006 to the end of 2011 – a six year period. And we had achieved it.

The thing that turned everything around for me was the encouragement of a friend, who suggested in the spring of 2012 that I sit down and seriously think about what I wanted my life to be like in ten years. I should encourage Sarah to do the same and then merge our pictures so that we were working toward the same thing.

So, what did I want my life to be like in 2022? I wanted to be a supportive parent for my children in their teen years, because in 2022 we will have three teenagers under our roof. I wanted, ideally, to be on the precipice of retirement, something I wanted to do right after they’re moved out, and Sarah can join me if she wants in that timeframe. (Don’t worry, I have many thoughts about what to do when I no longer have to work for money.)

But more than anything, I realized I wanted to spend those ten years helping people, something that I had really come to love about The Simple Dollar.

So, what have I done since then? I’ve put the pedal to the floor when it comes to saving for the future, building up a very healthy bundle of savings. I’ve focused on a daily schedule that maximizes my effective parenting time, meaning I’m there when the kids get on the bus in the morning and I’m there to help with homework and life conversations and some fun when they get off the bus in the afternoon. I’ve become extensively involved in volunteer work in what spare time I have, including such things as phone banking for political candidates that I care about, stocking the shelves at a food pantry, and serving on the board of the umbrella organization that manages the food pantry, even serving as president of that board. That’s really what I want to be doing right now with most of my time, and I’m doing it.

So, think about the life you want to live ten years from now. Keep it within reality, but make it something that will make you reach for it. What does that life look like? What makes it incredibly desirable for you?

That’s your new motivation: building that life. For me, it meant continuing my financial progress far beyond my initial goals. It meant committing to several lifestyle changes, some of which have clicked and some of which have been a challenge. It meant taking on new professional and community challenges.

That picture of 2022 looks far more real at the four year mark than it did when I started.

Give this type of thinking some time. Think about that picture of your future right now, but then come back to it later, and come back to it again and again. Think of the wide variety of things that you might be doing in those years and ask yourself which ones are most meaningful.

What will happen is that you’re going to eventually find elements that really hit home for you. They’re going to feel deeply meaningful. They are going to excite you and they might give you a “punched in the gut” feeling. Those are the ones that you need to focus on because those are the ones that are truly close to the core of who you are. Those are the key pieces of your life for the next ten years (or so).

Accelerate Retirement

One aspect that many people will find in their visions of an ideal future is that they’re retired, or at least in a state where they’re spending most of their time on things that aren’t necessarily geared toward earning money.

To do that, of course, you’re going to need a lot of money in the bank to cover your living expenses, which means that saving for the future is going to continue being a major thread in your life.

There’s no real need to change how you do it, just that you continue to do it with ferocity. The purpose of a vision of the future without work is the motivation for that fury. It’s no longer about escaping a financially insecure position. It’s about building an amazing, meaningful future.

Even if early retirement isn’t part of that vision, it’s likely that your vision for the future includes something that requires significant capital to pull off, like owning a small business without being in thrall to a bank. That can also provide the motivation you need to keep making financial progress.

Be Intentional with Work Projects

For many people, having a reputation as someone who produces quality work is extremely important. Many, many people want to be known as the person who gets things done or who is always involved with successful projects.

At the same time, many people find themselves working on professional projects that they don’t particularly value. The outcome of this project does not feel important to them, so it’s hard to be focused or involved or motivated. Being a high achiever is hard to do when you’re working on something that is meaningless to you.

Here’s where you can take your solid financial foundation and put it to work. Because you’re not standing on the precipice of financial doom, you have a bit of leverage at work that you didn’t have before. Use that leverage. Make it so that you’re involved with a project in your workplace or a role in your workplace that is meaningful or exciting or interesting to you. If there isn’t one, look for another employer.

It’s worth remembering that in any big project, not every task is going to be fun, but if you are working on a project you believe in, every task is meaningful. In the times in my life when I’ve worked on a project that I really believed in, I didn’t mind doing the less-fun tasks that needed to be done to make the project successful. It was only when I no longer believed in the project that the less-fun projects became misery.

Be intentional at work. Make sure that you’re working on things that are meaningful for you, whether it’s due to intellectual interest or because of the impact of whatever it is that you’re producing. Use your relative financial freedom to move yourself onto a project that lights a fire under you.

Develop a Side Gig with Meaning

Perhaps you find yourself in a job that’s comfortable, that pays well but isn’t particularly challenging, and you don’t want to rock the boat as it sails on toward retirement. Many people find themselves in this position, where they have a skill set that practically guarantees them a good job but it’s one that isn’t particularly challenging most of the time.

In those situations, it’s probably a poor long-term decision to rock the boat at work, but you need something to channel your energy and ambition. In those situations, a side gig can be perfect.

There are many, many kinds of small side businesses you can launch on your own. The internet offers nearly infinite opportunity for people with ambition and patience – you can start a Youtube channel or a blog or start writing books for the Kindle store or selling your crafts on Etsy or even stream your video game play on Twitch or writing a smartphone app. In the offline world, the options are just as infinite, from launching a lawn care business or seeking freelancing work or simply making things in your garage for sale (like the guy who lives near me who sells wooden chairs he makes in his garage).

The key here isn’t just to launch something that seems like it will make money, but to launch something that is meaningful to you. You want to choose something where it will be joyful for you to sink a lot of hours into the project, discarding some of your other leisure interests in order to devote time to this project.

The Simple Dollar is a perfect example of this. I launched it as a side gig in 2006. By mid-2008, it had grown so large that it basically forced itself into becoming my full time gig. By 2011, it was so large I had to have multiple assistants to keep the ship running. Why did that growth happen? The work was meaningful for me. Every time I got an email or a message from a reader telling me that something I had written had helped improve their life, I felt good in a way that my previous job never really gave me. It’s that meaning that keeps me writing tens of thousands of words per week for the site.

When you find something that’s meaningful and something that really engages your skills, you’re going to find something powerful that you really want to sink tons of time and energy into.

Get Involved in a Social Project

On the other hand, you may find that the things that are most meaningful for you aren’t things that lead to profit, but instead things that lead to positive social change.

Perhaps positive social change for you means building houses every weekend with Habitat for Humanity. Perhaps it means getting involved in politics at the local level, or getting involved with campaign work at the state or national level to produce the kind of candidates you want to see for our state and national leadership. Perhaps it’s building up a local food pantry. Perhaps it’s writing open source software that anyone can use.

It comes down to finding a project that’s meaningful to you, either in the execution of it or the outcome of it. Either you find the work deeply personally engaging or you have a deep desire to see the outcome in the world that’s produced by that project.

Handling the Risk Question

Here’s the catch: most of these suggestions do involve some risk with the life you have right now. That risk might come in the form of pushing for changes in your workplace role, or it might come in the form of putting the focus of your energy on a project outside of your primary workplace.

For someone who has spent many years on a financial and professional journey building up job security at a well-paying job and building a level of financial independence for themselves, introducing that kind of risk can seem pretty scary.

Here are some points of advice for considering risking what you have for something more.

First, you’re probably not reading this if you’re thoroughly happy with your current life situation. It’s probably because there’s no challenge in your life. Part of the path to introducing challenge in your life is to introduce some risk. Without something at risk, without something on the line, there isn’t a whole lot of challenge.

Second, you should look at your job as “the thing you do to provide the income needed to do what you care most about.” Recast your job not as drudgery to maintain your life, but as a key part in whatever thing you’re taking on that you truly care about. You work at your job so that you can afford to spend hours working on Habitat houses or building that side business of selling jewelry on Etsy or whatever it may be. Your job is a key part in that; every task you complete at work is a task that helps your personal passion projects.

Third, you likely have a great deal of economic security. If you’re feeling like you’ve achieved your economic and professional goals, it’s likely that you already have a significant net worth. You should have your debts paid off and some money in the bank. If you don’t have that, then that should be your major goal.

However, assuming you do have those things, it’s important to remember that even if you do put your current job at risk, it’s not the end of the world if that risk doesn’t pay off. You’ve worked to give yourself the freedom to take a little bit of risk in your career; otherwise, what really was the point of doing it?

Finally, meaningful work can change your life. It can often change your life in unexpected ways. I view the writing that I do for The Simple Dollar to be meaningful work and through that work I have had many many wonderful things happen in my life that I never expected, from building relationships with people in the town where I live to understanding myself and the world in completely new ways. I took on some career risk when I started The Simple Dollar; that risk was worth it, and would have been worth it even if The Simple Dollar never earned a dime for me. It changed my life in ways that I never, ever expected because of the relationships it built, the ideas it made me discover and understand, and the elements of character it drug out of me.

Whenever you take on a new challenge that’s meaningful for you, those things are going to happen. You’re going to discover new things about yourself. You’re going to build new relationships. You’re going to learn new ideas and skills. Even if the economic risk doesn’t pay off, those things will remain and they are elements of almost anyone’s definition of a better life.

Final Thoughts

If you’re the type of person who has enough grit to build a strong career and a strong financial foundation for you and your family, you’re going to be gearing up for a new challenge once you have achieved those things. Listen to your heart now. Ask yourself where you’d really like to be in ten years and give that question some truly serious thought. You’ll know when you find the right answer, because it will just ring true for you, and then you have the basis for your next challenge.

The best part? You’ll realize that the mountain you’ve already climbed – the building of your strong financial situation and your great career – is just the foundation for the next challenge.

Good luck!

The post What’s Next? Finding Goals and Ambition When You’ve Conquered Challenges appeared first on The Simple Dollar.

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