Saturday, December 17, 2016

A Ton of Last-Minute Holiday Gift Ideas for $20 or Less

As many of you know, I write a weekly column for US News and World Report, and you can find the archives of this column here. With that column, I’m tied to a pretty tight word count of between 800 and 900 words – they don’t want articles longer than that.

Anyway, as I was writing my most recent column for them, I was trying to list a bunch of good last-minute gift ideas for under $20, and I found myself going over the word limit. Way over. I quadrupled the word count on my first draft, actually. (See, sometimes I get lost in a zone and lose track of time and how long my articles are getting…)

I decided right then and there that I wanted to share all of these ideas with readers, but I also had already submitted my topic to US News and World Report. With my editor, we pared the list down to a tidy 800 words and you can find the finished article here: 10 Last Minute Holiday Gift Ideas for $20 or Less.

Here on The Simple Dollar, I have no such word count limitations and I’m actually encouraged to write in-depth articles, so for you guys, I’m going to share my full list. Enjoy, and I hope it helps you find a great gift for a family member or friend this holiday season at a great price.

A humorous but thoughtful book A thoughtful book is always a nice gift, but it’s often the humorous touch that gets people to actually open the cover and enjoy the book. Here are five great books that mix a healthy dash of humor and thoughtfulness into a book that people will enjoy reading:

Little Victories: A Sportswriter’s Guide on Winning at Life by Jason Gay is one of those perfect little books that you can read in short bursts from the bedside table and get some humorous little individual stories, but they all tie together into a single big picture by the end. This one’s great for a sports fan and for fathers.

Wife 22 by Melanie Gideon is a hilarious novel about the trials and tribulations of a married couple nearing middle age and dealing with it via social media, where people often say way more than they should about their lives. It’s hilarious, but it will leave you thinking about how much you say on social media, how much others say, and what that really means about your relationships.

Modern Romance by Aziz Ansari is this comedian’s wonderful take on the difficulties with finding and sustaining romance in our modern world, but it goes beyond a comedic memoir and actually integrates research from NYU sociologist Eric Klinenberg (among many others) to present a great thoughtful picture of modern romance with Ansari’s comedic touch.

How to Be a Woman by Caitlin Moran is a mix of humorous memoir and manifesto mostly centered around Moran trying to figure out how to balance society’s seemingly endless pressure for women to appear externally beautiful with her own personal comfort and how she would prefer to dress. It manages to deftly mix short sections about modern feminism with funny stories about Moran trying to figure out what to wear.

The Sleepy Hollow Family Almanac by Kris D’Agostino is a great novel centering around the difficulty that a 24 year old man is having finding his path in life, spreading his wings, and fully leaving the nest. It manages to dig deeply into the challenges facing millennials entering adulthood while simultaneously telling a wonderfully funny and at times poignant story about a family dealing with turbulent times.

Amazing coffee Almost every coffee lover out there will enjoy sampling a delicious new kind of coffee. As I’m not exactly an avid coffee drinker myself, I asked two people who drink coffee daily and have a bit of the “coffee snob” in them to recommend some great options. Here’s what they suggested.

Kicking Horse Three Sisters comes recommended as a smooth medium roast coffee with almost no bitterness afterwards.

Death Wish comes recommended as a very strong coffee that is packaged in a humorous way that might add an extra chuckle to the gift.

Koffee Kult Ethiopian Harrar is the preferred coffee of one of my friends, who describes it as tasting a bit sweet even without any sweetener.

A notebook and some good pens Got any writers or hyper-organized folks on your list? Get them a notebook and a high-quality pen or two.

For notebooks, the pocket-sized notebooks in the Field Notes Shenandoah special edition three-pack are classically beautiful and very functional, while the notebooks in the DIY Indispensables Military Memo pocket notebook three-pack are sturdy and very straightforward in their design. If you prefer to give a larger notebook, the Rhodia Webnotebook is an amazing choice, as is the Baron Fig Confidant hardcover and the Vanguard softcover.

As for pens, the Uni-Ball Signo 207 Ultra Micro is a great all-around pen for a low price (it’s actually my preferred pen for everyday use), and the Pilot G2 is similarly good with a bit bolder line. If you’d like to give some color variety, this mix of Pilot Juice 0.38 mm pens comes in a wide variety of colors.

A couple of bars of fancy chocolate A bar of unusual chocolate (or two… or three…) is an amazing gift for anyone with a sweet tooth. It’s often cracked open immediately and shared, as part of the experience for many chocolate lovers is sharing. Here are three great bars that are distinctive but also easy to get before the holidays.

Amano Ocumare is hands-down the best dark chocolate I have ever tasted and it is the standard by which I judge other dark chocolates. It’s incomparable in flavor, in my book.

Akesson’s Madagascar Single Plantation has won a ton of awards for its distinctive flavor which is imbued by the Criollo cacao beans used to make the chocolate. It smells amazing.

Fruition Maranon Dark Milk Chocolate was judged as the best milk chocolate in the world at the 2016 International Chocolate Awards. I haven’t tried it… but I want to.

A local food product or beverage If you’re buying a gift for someone who lives far away, a local food product or beverage offer great local flavor. A bottle of wine from a local winery or a six-pack of beer from a local craft brewer are both good gifts. Chocolates or other snacks that are made locally are thoughtful gifts, too.

For example, in the area where I live, I would strongly consider giving a bottle of Snus Hill wine (Sven Red) or a six pack of Exile beer (Beatnik Sour or Sir Moch-A-Lot). All of those options are quite local for me and quite good.

An adult coloring book and set of colored pencils Adult coloring books have caught on as a great de-stressing tool for busy adults, particularly parents. They can make for a great gift for the quirky but overworked person in your life. A Prismacolor Premier colored pencil set serves well for coloring tools as does this distinctively packaged set of Ohuhu colored pencils. As for coloring books, all of Johanna Basford’s coloring books are wonderful, particularly Secret Garden, Lost Ocean and Enchanted Forest, and Myth and Magic by Kinuko Craft is another good option.

Golf balls Although I abandoned golf many years ago as a hobby that was too expensive for my tastes, many friends and family members still regularly golf and, for them, a box of good golf balls can make their playing experience a little better and shave off a bit of the cost, too. In the under-$20 range, there are several brands of very good balls.

Wilson Titanium balls are very solid, fly nice and straight, and come at a very nice price per ball. Another option is the Callaway Supersoft, which costs a bit more per ball than the Wilsons, but they have a great reputation for flying far and still come in at a reasonable price.

Another great add-on to this gift is a bag of quality tees, like these Pride Professional tees, as most golfers tend to break several tees per round. At least I did, anyway.

A curated crossword puzzle book (or other puzzle book) If you have a puzzle lover on your list, consider giving Rainy Day Sunday Crosswords, which is a bound collection of The New York Times Sunday crosswords in a nice portable 6″ by 9″ format. If the recipient has a smartphone or tablet, a year’s subscription to the Times’ crosswords plus access to the archives is an amazing gift, though it does exceed the $20 limit by a bit.

If you know someone that loves puzzles but not necessarily crosswords, I highly recommend My Best Mathematical and Logic Puzzles by Martin Gardner, which is a collection of the best puzzles from Gardner’s long-running column in Scientific American. The Moscow Puzzles is another great collection in a similar vein.

A high-end version of an ordinary care product It’s a simple little gift idea that works for practically everyone. Take an ordinary care product that they use every day and buy them an upgraded version of that product, a high quality item that they might not have heard of that will really suit their needs.

For men, for example, you might consider getting a bar of Dr. Squatch’s cedar citrus soap to create that gentle manly smell, or perhaps a bar of V76 for someone very meticulous about their appearance. A Merkur long-handled safety razor is another great gift for a guy, as the cost-per-use and shave quality one gets from a good safety razor blows away that of a cartridge razor.

For women, a bar of Kahina Giving Beauty lemongrass nettle soap has an amazing aroma, while a bar of Dead Sea mineral mud soap is a really distinctive gift that’s useful for deep cleaning.

A fun game In case you haven’t been paying attention, there has been a revolution in board games and card games over the last 15 years, with the some incredibly smart designs. This is a category of gifts within which I can make suggestions all year long, but here are just five that are great fun under $20 and won’t take up a ton of space.

Red 7 is a quick card game where each card not only has a number and color, but also describes a rule. On your turn, you must be ahead of all other players with regard to the current rule at the end of your turn and you can play only one card from your hand. Will it be a new rule? Will it help you get ahead with the current rule? It plays very quickly and has a great “let’s play it again!” feeling to it.

Hanabi is a clever little card game where everyone holds their hands backwards so that everyone else can see them, but you can’t tell other players what they have in their hand. Instead, you can only give each other little clues about how many of a suit or how many of a value that they have. The goal is cooperative; you’re trying to build straights of each suit on the table. It’s amazingly thoughtful for how simple the rules are and will get the group talking afterwards.

Trick of the Rails is a trick taking card game where the tricks alternate between the winner claiming a share of stock in a train company or modifying the value of a train company (thus affecting the value of everyone’s shares). The cards themselves double as both rail cards (which increase the value of companies) and share cards (which you’re trying to collect in the most valuable companies). The choices everyone makes throughout the game ends up determining the values of the companies, so you have to be careful with every trick!

For Sale is a wonderful little auction game where you bid openly for properties during the first round and then sell those properties during the second round to the best buyer in the market. It plays quick, but still involves some great decisions.

Jungle Speed is basically a game of reflexes with cards, where players take turns revealing cards from their face down “deck” of cards until two cards match, then the first one of those two players with matching cards race to see who can grab the totem first. It’s such simple fun, yet it tends to click well with almost everyone.

A gift handmade by you If you have some extra time this weekend, why not spend it actually making a distinctive gift for someone? Sarah and I did this one holiday season, where we made tons of gifts for everyone on our list, and most years we make at least some of the gifts that we give. I’ve written many articles on handmade gifts; here are five of the coolest ones that you can easily pull off in a single weekend.

These personalized cards and stationery are probably my favorite gift to make and, honestly, to receive. This gift gives you the freedom to make a very personal gift as well as an artistically pleasing gift at the same time.

An artfully arranged bundle of homemade cookies makes for a wonderful small gift for someone on your list. It only takes an hour or two to make a tasty batch of homemade cookies, and the supplies needed for an artful presentation are simple, too.

You can make a beautiful crocheted hat and/or scarf in an afternoon while binge-watching a Netflix series, plus you have the freedom to choose exactly the color that would work best for the recipient.

Another idea is to make artfully arranged meals in a jar. A great easy-to-make soup kit in a beautiful jar with ingredients you selected yourself makes not only for a pretty gift, but for a tasty one, too.

You can also make a batch of wine jelly, which is surprisingly easy to make and offers a very distinct flavor that sets it apart from ordinary jellies.

Hopefully, somewhere on this long list of ideas, you can find something that strikes a chord and helps you discover the perfect low-cost gift for someone on your list.

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Scholarships for Women Returning to College

No matter why you left college in the first place — to raise children, to care for aging parents, to work full-time, to figure out your goals — if you’ve decided that now’s the time to crack open the books again and head back to the classroom, you’re not alone.

About 4 million of the approximately 15.5 million undergraduate students in America were 25 years or older in 2015, according to the U.S. Census Bureau. And if you’re a part of that nontraditional demographic, there’s double the likelihood that you’re a woman.

College bills can hurt no matter when you enroll, so we suggest that — in addition to seeking out financial aid and student loans when appropriate — these five scholarships for women might help take some of the sting out of the tuition and fees you’ll owe, or at least open you to opportunities you hadn’t before considered.

Jeannette Rankin Women’s Scholarship Fund

More than 900 women have received scholarships totaling more than $2.5 million from the Jeannette Rankin Fund over the past 40 years to support their educational dreams.

  • Eligibility basics: Women, U.S. citizen or permanent resident, age 35 or older, low-income pursuing an undergraduate degree at an accredited college or university
  • Application process: Opens Nov. 1 for the 2017-18 school year
  • Selection notes: Decision makers want to know your goals, your plan for reaching your goals, and how you will use your education to give back to the community. Be prepared to complete a detailed application. Awards are typically around $2,000.
  • Learn more: www.rankinfoundation.org

Patsy Takemoto Mink Education Foundation Education Support Awards

Longtime U.S. Congresswoman Patsy Takemoto Mink was the first woman of color elected to the U.S House of Representatives. Her foundation continues to support issues that were of great import for her during her political career (and beyond): “educational access, opportunity, and equity for low-income women, especially mothers.”

  • Eligibility basics: Low-income women, 17 or older, who are mothers with minor children. Must be enrolled in a non-profit accredited institution or program.
  • Application process: Applications are typically due Aug. 1.
  • Selection notes: Five awards of up to $5,000 each are given out every year to women based on 1) financial need; 2) personal circumstance; 3) educational path; 4) vocational or occupational goals; and 5) service or activist or civic goals.
  • Learn more: www.patsyminkfoundation.org

Soroptimist Live Your Dream Awards

Soroptimist awards more than $1.6 million each year to approximately 1,200 women, and scholarships through them can be used to pay any expenses related to attaining a higher education, from tuition to books, to childcare and transportation.

  • Eligibility basics: Women who provide the primary financial support for themselves and their family, already enrolled in or accepted to an undergraduate degree program or a vocational/skills training program. Applicants cannot already be Soroptimist members.
  • Application process: Open through Nov. 15 for current awards cycle.
  • Selection notes: There are three levels of cash awards — local, regional and international. Selection starts on the local level. Awards range from a few hundred dollars at the local level, up to $10,000 at the international level.
  • Learn more: www.soroptimist.org

SR Education Group Community College Scholarship

SR Education may only award two $2,500 scholarships a year, but it’s one of the easiest applications around. And while the program has recently been opened to both women and men, a basic search of finalists and winners shows that the majority of the awards are still given to women.

  • Eligibility basics: Students who are U.S. residents and enrolled at a public community college, junior college, technical college, or city college, and working toward a certificate, diploma, or degree. Applicants, however, cannot live in Rhode Island, Guam, Puerto Rico or the Virgin Islands.
  • Application process: Applications due Nov. 5 for the 2017 cycle.
  • Selection notes: Aside from some basic personal information, applicants need to write 300-500 word responses to two questions about their goals and financial need.
  • Learn morewww.sreducationgroup.org

Women’s Independence Scholarship Program

Created in 1999, WISP focuses on helping women survivors of intimate partner violence who want to pursue education in order to provide for themselves and their children.

  • Eligibility basics: Direct survivors, in “desperate financial situations,” must have been separated from their abusive partner for a minimum of one year to a maximum of five years.
  • Application process: Applications accepted on an ongoing basis.
  • Selection notes: Funder gives priority to those seeking education from state-supported colleges or universities and technical/vocational schools. And they note that the application is lengthy: “Do not be discouraged!” Awards are typically around $2,000.
  • Learn more: www.wispinc.org

Final Thoughts

The five scholarships above are some of the most well-known and longest-running programs around, and they’re pretty general — in that you can apply no matter your area of study or where in the U.S. you reside. But let this be just a jumping-off point for your research. Many businesses, foundations, and community organizations offer smaller scholarships if you live in their ZIP code, or want to study a certain field.

The Rankin Foundation’s resources section is a great starting point for other options, including more than a dozen other scholarships for women. Seek out local women’s societies that may apply to your educational pursuits, such as the Society of Women Engineers or the Educational Foundation for Women in Accounting. And of course, don’t limit yourself to scholarships for women – apply for any and all you might qualify for; our scholarship guide can help.

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Friday, December 16, 2016

Eight Little Things to Always Remember When You’re Shopping

I have a little note that I continuously update and save (using Evernote) that’s full of little tips and strategies that I learn about or think about and want to include in a post at some point. Eventually, I wind up with a big collection of them … and I realize that many of them really don’t fit into an organized article.

Here are eight of those ideas, little strategies for shopping so that you’ll spend less money and wind up with fewer things that you don’t really need.

The best place to make a decision about whether or not to buy something is before you ever enter the store. Yes, I’ve written many times about the value of a grocery list, but it goes even further than that. You should never walk into a store without the intent of buying something and without knowing almost exactly what you’re going to buy.

Why? Stores are designed to convince you in infinite subtle ways to buy stuff that you didn’t plan on buying and that you don’t really need. That’s their purpose. If it was not their purpose, stores would be designed much differently, with the most commonly desired goods right near the front or even with a warehouse “picker” type system. Those types of systems are efficient for customers, but that’s not what retailers want – they want you to buy.

So, view every trip inside a store as a mission. You’re going in there to buy something specific. Know what that specific thing is before you ever step foot in there. Don’t go in there to be social. Don’t go in there to hang out. Go in there to buy and get out. Find your entertainment and your social time outside of stores.

When you’re buying something that’s discounted, you’re not saving money. You’re just spending a little less. It’s still spending and it’s still knocking down your net worth. Businesses like to tell you how much you’re “saving” when buying something at a sale price. Why, if something is originally $99.99 and they knock it down to $49.99, you’re saving $50! Right?

That’s actually not accurate at all. Unless that item was something you absolutely needed, you’re not saving money by buying the discounted item. You just happen to not be spending quite as much. Your net worth is still going down in order to afford something you don’t really need.

The reality is that a sale price should only figure into your consideration once you’ve already decided to buy the item. At that point, you’ve essentially committed to spending whatever the price of the item is, so a sale price in that situation actually is saving you a little money.

Customer rewards programs are okay, but there are tricks involved. Customer rewards programs are designed by companies to retain their regular customers and keep them coming back into the store. They usually require you to spend a certain amount at a store over several visits in order to earn some sort of perk, like a free sandwich or a free lunch. For example, our local pizza place has a coupon on each box that, when you get ten of them, entitles you to a free large pizza of your choice.

There are two catches to watch out for. One is that many such programs want your personal information, and when they have it, you’re going to receive junk mail. This is particularly true of email addresses, so my strategy is to have a “junk email” address that I check only rarely that I use for signing up for such programs. I’ll check it to see if there are any ongoing deals when I’m considering going out to eat, for example, as the email inbox is usually loaded with all kinds of offers.

The other is that you shouldn’t use a customer rewards program as a reason to spend money. In truth, it’s much like a sale as described above; it does save you money, but only if you’ve already committed to buying the product. It’s far cheaper, for example, to make a meal at home than it is to go out to eat. It’s almost always far cheaper to bargain hunt than to “not worry about it” and just go to a familiar store with a customer rewards program.

When buying online, always do a reverse image search of anything that claims to be a picture of the original item. Whenever I see an item on eBay or Amazon Marketplace or another website with an image that claims to be of the original item, I copy that image and use Google Image Search to search the internet for that image.

What I’ll often find is that the same exact image has been used elsewhere, which is a sure indication that the picture I’m looking at is not the original item, and when that happens, I do not buy the item.

Note that this is only true for items that aren’t new. If they’re new and in original packaging, a distinct picture is pretty unnecessary; I only use it on a used item where the condition is an important factor.

When you’re buying something nonperishable that you use with any frequency at all, the only price that matters is the cost per unit. The sticker price truly doesn’t matter on a big bundle of toilet paper, for example; all I look at is the cost per sheet. The same is true for things like dishwasher soap and garbage bags and rice and countless other items that we gradually use over a long period of time.

Look at the cost per ounce or the cost per pound or the cost per bag or the cost per sheet. Don’t worry about what the actual sticker price is; instead, minimize the cost per unit.

Why? You’re going to use a certain amount each time you use that item regardless of which package you buy, so if you buy the package with the lowest cost per unit, it’s going to cost you the least amount over the long haul. A jumbo container of garbage bags might cost $30, but if the cost per bag is lower, you’re going to spend less over the long run. A container of 200 garbage bags for $30 is a better deal than 50 garbage bags for $10 every time (provided they’re the same brand).

Going through your pantry and cupboards once a month is the best way to save on groceries. Virtually every time I go through my cupboards with an open mind, I end up finding enough odds and ends to make several complete meals and to provide the parts of several more meals. The reason is that when I find a big bargain at the grocery store, like jars of good pasta sauce for $1 or boxes of pasta for $1 or something like that, I’ll stock up a lot and then, over the next few weeks, I’ll forget that I have an abundance of those things.

Cleaning out the pantry usually solves that problem. I’ll often “bundle” items I find together into sensible meals, putting a package of pasta with a jar of pasta, for example, or putting stir fry sauces right next to the rice container. I’ll then make a big list of all of the complete – or close to complete – meals that I already have in the pantry and draw from that list in my meal planning for the next week or two.

This also keeps me from having items with a long shelf life – but not an infinite shelf life – from ever expiring in the back of the pantry, and it keeps us from having herbs and spices go stale, too.

Try to stretch out the time between shopping trips to the length of time that fresh foods stay fresh in our fridge and pantry. For most of our fresh items, that’s usually somewhere between a week and two weeks, so I try to plan things so that the items that go bad the fastest get used first and the other items stick around for a while in the crisper.

The longer I can wait between grocery shopping trips, the less time I have to spend in the store overall and the more efficient I am when I actually have to go on one of those grocery shopping “mega trips.” The less time I have to spend in the store, the less likely I am to put impulse items in my shopping cart, which means that we spend a lot less on groceries.

Take pictures of every receipt you get with your smartphone. This is a strategy I’ve switched to recently. I used to keep all of my receipts in my pocket, but I often found that I would lose them or drop them somewhere along the way and so the record would sometimes be incomplete.

If I just use my smartphone to take a picture of every single receipt as I pick it up, I always have a record of my spending. Since I use You Need a Budget to track our family’s spending and future planning, having all of those receipts in one place is really useful.

To be specific, I take pictures of my receipts with Evernote, which stores them in a note that I can easily access from my computer later on. It sticks around there until I enter the information into You Need a Budget.

Hopefully, you can take at least one of these tips and do something useful with it that will help cut back on your costs the next time you go shopping or help you make better decisions with your money going forward. Good luck!

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Why Do You Need a Down Payment, Anyway?

When it comes to navigating through life, there are certain financial traditions and transactions that are difficult to avoid – among them paying taxes annually, saving money for retirement, and setting aside money for a down payment, whether it be for a home, car, or any other major purchase.

There inevitably comes a point when we have our sights set on a big-ticket item we’d like to finance with a loan, and closing the deal requires shelling out a substantial amount of hard-earned money up front as a down payment.

It’s a prospect that can be intimidating, unnerving, and altogether off putting. But, as many financial experts point out, understanding the ins and outs of down payments can make a substantial difference in the long-term success of the purchase you’re preparing to make.

What’s a Down Payment and What Types of Purchases Require One?

To be clear, a down payment is cash that’s paid upfront in an expensive purchase. It typically covers a small percentage of the purchase, with the remainder often being financed in some way.

By far the most well-known purpose of such a down payment is the purchase of a home. But that’s hardly the only use for such a sum of money.

“A down payment is money you’re putting toward an item or a service. It could even be money you’re putting toward a layaway purchase in a store,” explains Lori Askins, of New York-based BR Finance Solutions.

The Standard Down Payment

For a home purchase, the down payment is typically 20% of the home’s selling price. That means if the property is listed for $400,000, the standard minimum down payment would be $80,000.

While there are exceptions to that rule, which we’ll get into below, they’re becoming less frequent in the wake of the housing market collapse of 2008, which revealed many risky and unsound mortgages being offered by financial institutions across the country and led to a historic wave of foreclosures. These days, banks and other lenders are more likely to stick to the 20% rule of thumb.

For an auto loan, however, it’s much harder to pinpoint a standard down payment, experts say. Some people strive to put as much money down as possible or even pay in cash. But with so many dealer financing promotions aimed at getting customers behind the wheel of a new car, if there is a standard down payment, it’s rarely in the 20% range.

“I haven’t seen someone put 20% down on a car ever,” says Ronit Rogoszinski, a certified financial planner and founder of the New York-based Women & Wealth Solutions. “The amount I typically see is 10%, because a car is a depreciable asset. It has already lost its value when you drive it off the lot, so it’s a very different mindset in terms of what kind of money you want to put into something that depreciates from day one.” (That said, if you owe more on your car than it’s probably worth, make sure your auto insurance policy covers that gap in the event you total the car. )

More Exceptions to the 20% Rule

When it comes to home purchases, there’s a handful of cases when the buyer is not required to provide a 20% down payment.

For instance, first-time home buyers could be required to provide as little as 3.5% down, thanks to the Federal Housing Administration, a government agency that assists mortgage lenders with making loans to such individuals. By guaranteeing a portion of the loan, the FHA frees banks to lend to people who may have less money on hand for the down payment or who have lower credit scores. Many states and cities offer their own low-down-payment programs for first-time buyers as well.

Yet another exception to the 20% rule is mortgages for active duty and retired members of the military, who have access to zero-down payment VA loans through the Department of Veterans Affairs, says Askins.

There are also instances when a stellar credit history can translate into a smaller down payment being required. “If you have really amazing credit — and when I say amazing, I mean excellent, tier-one credit — then you may be eligible to put less down,” says Askins.

Why Banks Prefer a Larger Down Payment

There’s a reason for the 20% rule of thumb. The way banks see it, they’re still protected if a home’s value drops by up to 20%. What’s more, a buyer who puts down a big chunk of money has more skin in the game, so to speak.

“The down payment encourages home buyers to not walk away from their mortgage, because you don’t want to lose all that money you put down,” says Askins. “For the banks it’s less risky when there’s a larger down payment. They know you’re more likely to follow through if you just invested 20% of a $400,000 mortgage, as opposed to someone who put put zero down.”

What’s more, a bigger down payment gives the buyer more power when it comes to finalizing the the details and terms of a mortgage, says Rogoszinski. You might be able to score a lower interest rate if you offer to put more money down.

“The more you bring to the table, the better you can negotiate other features,” Rogoszinski explains. “Sometimes with big banks it’s black and white, but there might be smaller places where you can negotiate.”

How a Down Payment Affects Your Purchase

In general, when financing a purchase, a bigger down payment also means your monthly payments will be lower, and you’ll ultimately pay much less in interest.

For example, take that $400,000 house. If you’re able to put down $100,000 (25%) instead of $80,000 (20%), your mortgage payment would drop by almost $100 a month, and you’d pay about $35,000 less in interest over the life of the loan, assuming a 30-year fixed-rate mortgage at 4.0%.

And there’s yet another reason why a 20% or greater down payment is your best bet, specifically with regard to home purchases. That reason is something known as private mortgage insurance (PMI). It’s a part of the home purchase many first-time buyers are not fully familiar with.

Home buyers who don’t have a 20% down payment are required by the lender to purchase additional mortgage insurance, which has a significant impact on your monthly out-of-pocket expenses. PMI, which is designed to protect the lender in the event you default on the loan, is just like any other insurance, meaning you must pay a monthly insurance premium. And the payments can add hundreds of dollars to your monthly mortgage bill.

“People, when they come to the table to look at mortgages, are surprised when they get hit with PMI. Unless you have 20%, you need to factor in PMI,” says Rogoszinski.

It’s also important to note, says Rogoszinski, that until you build up 20% equity in your home, you’re not allowed to take advantage of refinancing (which can lower your monthly mortgage payment if interest rates drop.)

But once you’ve achieved this 20% equity benchmark, you can hire an appraiser to have your home assessed and provide the report to your mortgage holder. If the house is in good condition, you may be allowed to eliminate the PMI, saving still more money each month.

Saving Up for a Down Payment

One last parting bit of advice from the experts. Accumulating a 20% down payment for a home purchase, or anything else, can be an uphill battle for many people. But try tackling it little by little, over time, to make it more manageable.

“Put it into a savings account and pretend that account doesn’t exist. Pretend it’s invisible, and over time the money will accumulate,” Askins says.

Related Articles:

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Thursday, December 15, 2016

31 Days to Financial Independence (Day 18): Improving Your Income at Your Current Job

“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 finished off the “cost-cutting” portion of building your path to financial independence by examining how exactly to incorporate the many frugal tactics shared in this series into your life.

Now it’s time to move onto the other half of the “spend less than you earn” coin: earning more money, and we’re going to start with your job.

Most of us work for an income, and most people in that group have someone who is their primary employer – an ordinary job, in other words. You work, you do what your boss says, you get paid, then you use that income to make ends meet and save for the future.

We’ve spent most of the series thus far really focusing on how to get maximum value out of the income you already have. Those strategies do an effective job of increasing the gap between how much you spend and how much you earn so that you can do effective things with that remaining money, but that’s only part of the story. The other powerful way to increase that gap is to raise your income.

Improving your income is a tricky thing to consider because it doesn’t have the immediate results that frugality has. You can’t do a certain thing and immediately get the positive results from it, as you can with frugality.

However, improving your income has several major advantages, one big one being the fact that there’s really no cap on improving your income. There’s only so much spending you can cut before you really can’t cut any more; there’s really no ceiling on how much you can earn if you make good choices.

As with spending less via frugality, the more you earn, the more money you’re going to have left over for achieving your big financial goals, such as financial independence. So, no matter what your situation is, finding more income is going to be helpful.

I’m going to use myself as an example here. When I first began my financial turnaround, I recognized that no matter how much I scrimped and saved, there was only so much I could cut from my spending. You can only extract so much water from a rock, after all.

As I began to realize how important additional income was going to be in terms of paying off our debts quickly and getting us ready to buy a house as fast as possible (as our second child was on the way and we needed more space), I started to really bear down on my options for additional income. I not only talked to my boss about how I could move up on the pay scale at work (she suggested a lot of performance-oriented methods), I also spent my spare time launching several side businesses, one of which eventually grew into this very website you’re reading right now.

Without that increase in income – which, honestly, was nice but it wasn’t life altering amounts of money – it would have taken much longer to pay down our debts. I threw every dime of that extra income at our debts and then at our savings for our house and, thanks to the acceleration provided by that additional income, we were able to move in before our second daughter was born without being crushed by debt.

Cutting back on your spending is key, but taking steps to improve your income is a big key, too. You’re going to need both sides of the coin on the road to financial independence.

What follows is a list of strategies that focus entirely on increasing your income at work without increasing your work hours. Obviously, working more hours is going to result in more income, but the goal here isn’t to just add to your already overburdened life. Instead, the focus is on improving your true hourly wage – the amount of money you get to keep for every hour invested in work and work-related activities like commuting.

Let’s get started with a central principle you’ll always want to keep in mind.

Never forget that both you and your employer want to get maximum value for your time and money. It’s easy to see the employer-employee relationship from your perspective. You want to get paid, right? We all want money in our pockets. The thing is that many people lose sight of the employer’s part in that equation, and it’s when you lose sight of what your employer is bringing to the table in this exchange, it becomes very difficult to ever see an increase in your salary or in your hourly wage.

Your employer basically wants to get the most value they can out of each hour that they pay an employee. If you’re not doing anything more than a newly-trained person off the street can do, there’s no reason for an employer to pay you more than an entry-level employee. If you want to be paid more, the question to ask yourself always is how can I make my hours here more valuable for the employer so that it makes sense for him to pay me more to keep me, because switching to an entry-level person would be a loss? In other words, what value are you adding to deserve more pay?

Don’t ask for a raise until you have clear evidence of sustained strong performance. This follows right along with the previous strategy. If you don’t have any evidence that you’re doing anything better than someone they could pull in off the street, your employer has no reason to give you a raise of any kind. They’re not going to pay you more just because you’re a special butterfly. That’s not how the world works.

If you’re thinking of charging into your boss’s office to get a raise, make sure that when you do, you have some clear-cut evidence and things you can point at as proof that you’re doing your job well and providing much more value to your employer than someone fresh off the street. If you can’t do that, you’re not giving your boss a reason to say “yes.”

Know what’s realistic. Almost every job comes with a pay range that an employee can expect from that job. No matter how good your performance is, you’re not going to exceed the high end of that bracket very often.

However, knowing where you land in the range of reasonable wages is very important, as it gives you a sense of what you can ask for and shoot for in terms of raises in the future. If you have a lot of room to grow, then many of the strategies below make sense. If you don’t have a lot of room to grow, you may want to be considering a job switch or a career switch or moving to the next rung up on your career ladder.

Have a sit-down with your supervisor about job performance. This is where you start. Just ask for a few minutes of your supervisor’s time and ask about your job performance. Remember, you’re not really looking for things that you’re doing well, but things you can improve on that will set you apart from the crowd.

Go in there with a notebook and take notes when your supervisor is talking. Write down every single action you can possibly take that is mentioned by your supervisor as a way to improve your performance, even if it seems trivial.

Ask about extra steps you can take to maximize your job performance. Is there any training you can take that would make you more effective at your job or make you eligible for better pay? Can you take some evening classes that might contribute to better performance? Maybe there are online tools that your company provides that can help.

Devoting some of your spare time to improving your job performance now can often improve your true hourly wage down the road, making every hour you work more valuable than before. That’s usually a great investment.

Take your performance reviews seriously. Many workplaces have a regular performance review where you sit down with your supervisor and go over your workplace contributions over the past few months or the past year. It’s easy to just blow them off when you’ve been there for a while. Don’t.

Performance reviews often amount to a supervisor going through a checklist of things that basically describe optimum performance for your position. If you can make a case for all of the things on that checklist, you’re going to have a glowing performance review, and if you have a glowing performance review or two under your belt, you have a great case for getting a raise.

Use feedback from your performance reviews as a checklist for future work. Whether it’s a meeting with your supervisor or a performance review, you should be using it as an opportunity to come up with a list of things you can improve on and things you can do to be seen as a great performer in your job. If you’re not coming up with things, ask questions. Ask what you can do better.

In the end, you should walk out of there with a list of things you can do to improve. Take that list seriously. Use it as a checklist over the coming months to become a stronger employee, one that will sit down next time and have an absolutely glowing review which you can then use as leverage to make your case for a pay increase.

Build and maintain positive workplace relationships. Unless you have the personality of a saint, you’re not going to strike up a great relationship with every single person in your workplace. You don’t have to. Just make sure that your relationship with everyone is positive.

One great technique that always works is to make sure you know everyone’s name and a few things about them and then ask them about those ongoing concerns whenever you see them and listen to the answers. If you know that the new guy in accounting is just gaga about his kids, learn their names and ask about them and listen, and then eventually ask about how they’re doing. You’ll naturally be thought of in a positive light if you have lots of conversations where you let other people have the floor, listen to what they say, and remember a little bit.

Avoid negative talk about coworkers like the plague. Every workplace has office talk, and that office talk is often the home of negative gossip. You can listen if you’d like, but avoid spreading any yourself. Resist any and all urges to speak negatively about any coworker unless it is directly to their face in a one-on-one environment.

Negative talk does nothing but inflame negative feelings. Even worse, word of your negative talk often makes its way back to the person you were insulting and damages that relationship. If you talk negative about people behind their back, it’s very likely that others are doing the same to you and it’s going to damage your workplace relationships. A damaged workplace relationship is one that you’re not going to be able to rely on as you try to raise your performance level and it’s one that’s likely to reflect poorly on you to the supervisor that you’re trying to impress.

Don’t waste downtime. When there’s downtime at work – and there’s at least a little downtime at almost every job – it’s tempting to just burn that time goofing around, talking to coworkers, looking at your phone, taking a nap, or almost anything else that you could possibly do on an extended break.

Instead of looking at downtime as a chance to slough off, look at it as an opportunity to take care of some of those things on your list of suggestions from your performance review. What things did your supervisor tell you would lead to great performance? Fill that downtime with those things.

If you have downtime anyway, find workplace problems that need to be solved and solve them. Again, almost every workplace has workarounds to handle ongoing problems that no one has invested the time to actually fix correctly. If you find yourself with a block of downtime, use it to address that problem.

Doing this shows several very powerful things. It shows that you’re observant in the workplace and are able to identify problems. It shows that you’re able and willing to figure out how to solve those problems. It also shows that you have the initiative to carry through that solution to make things better for everyone.

It’s generally a good idea to talk through workplace problems like this with coworkers and even your supervisor just to make sure that it really is a problem and not just something you don’t understand.

Volunteer for challenging tasks. Often, there will be situations where a challenging task comes up and someone needs to take it on. These are often challenging tasks or else tasks that no one else wants to do.

While you shouldn’t volunteer every time, raising your hand and stepping up to the challenge some of the time is a great way to build your reputation at work. It gets a difficult task done, which is something that will please your supervisor, and you can simply tell your coworkers that someone needed to step up to the plate and you didn’t mind taking it on this time, which can help with your relationship there as well.

Document your work. As you work through all of the suggestions from your performance review and also occasionally volunteer for extra challenging tasks, document those efforts. Keep a little pocket notebook with you and take note of the extra efforts you’ve put in to make things better at work.

Don’t document your ordinary work responsibilities. However, you should document significant extra tasks that you take on and anything above and beyond the normal call of duty that you did, particularly anything related to suggested improvements from your performance review.

Before your next review, use this documentation to come up with a report on yourself listing the things you did to address your performance as well as all of the significant extra tasks you’ve taken on, with dates. This is easy if you’ve been noting the extra tasks and extra effort along the way. If you can say “I stayed late to help close 17 times in the past six months,” that really helps make your case, especially when you can back that up with dates.

When you ask for a raise, stay focused on the workplace. Believe it or not, branching off into the multitude of reasons why you need a raise often hurts you, because it takes the conversation away from your job performance and into areas where your employer can “get away” with offering general life advice without having to give you a raise.

Focus on what you actually achieved within the bounds of the workplace, how that exceeds the standards of performance that your boss has laid out for you in the past, and use that alone as the basis for why you deserve a raise. Don’t give your boss an opportunity to reroute conversation away from the question of a raise or why you deserve it.

If your boss can’t give you a wage raise, consider asking for other benefits that can help you in other ways. Maybe you can simply ask for more flexible hours to help you with some of your other life demands, such as being available for your children or having time to take on another job or start a side gig. Perhaps you can ask to work from home a day or two a week, or you can try for something that one of my coworkers used to utilize, a schedule of nine 9 hour days followed by a Friday off, which amounted to him working 9 hours a day with every other Friday off, giving him regular three day weekends.

While these things won’t help you directly make more money, they will free up time for you to do other things in your life that you might not otherwise be able to do. You might have time to start a side business or work at another job or simply reduce your dependence on expensive child care. These things don’t cost the company money, but they do save you money, so it ends up being a functional raise for you.

Next time, we’ll talk about strategies for getting promoted within your current workplace so that you can earn a higher income.

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Everyone Knows Fortunes Are Won and Lost at the Company Holiday Party

Want a promotion in 2017? The company holiday party is your time to shine.

Most of us have a love-hate relationship with the annual office gathering. On the one hand: free hors d’oeuvres and booze. On the other hand: free embarrassment, when the free booze leads you to take a header on the dance floor and split your pants in front of the boss.

Mandatory fun is always less, well, fun than the spontaneous kind. But if you play your cards right, your holiday party experience can be embarrassment-free and boost your career at the same time. You might even enjoy yourself.

Here’s how to do it.

1. Don’t drink your face off.

There’s a reason every holiday party guide includes an admonition not to drink too much. What seems like a good idea when you’re a few free drinks into the evening might turn out to be a career-ruiner. This is especially true if you’re imbibing to take the edge off some social anxiety.

Boozing it up might make it easier to endure a conversation with your boorish coworker, but it also might encourage you to start emulating his behavior. When it comes to managing social situations in a professional context, you need to have your wits about you.

2. Make new friends.

People who have friends at work tend to be more productive and produce better work than those who keep their personal life rigidly separate – but the company holiday party isn’t necessarily the time to reinforce those bonds. After all, you can plan a team happy hour anytime, or just grab a bite to eat during the week; the holiday party is a rare chance to hang out with people you don’t know that well or rarely interact with.

Cross-team bonding is important, because no one works in a vacuum. Even if you rarely talk to sales and see IT people only when your computer freezes, your job depends on theirs and vice versa. You’re all engaged in the same goal of making your company a success.

Chatting with people you don’t know gives you a unique opportunity to see some of their perspective. You might discover a whole other point of view on the company’s products and services, or learn something about the organization’s goals that you never knew before. (You might also learn that your company is about to have layoffs, which is equally valuable – if less delightful to hear at the holidays.)

Making new friends in other departments can benefit your career in the long run, as well. You never know when there might be an opportunity in another department or if one of your coworkers will end up managing at a competitor someday. Make connections with other teams, and they might think of you when the time comes to hire.

3. Have a plan.

If you want to use the company holiday party to get ahead, you need to set some goals ahead of time. Start by determining what you want to accomplish. Are you hoping to make a good impression on the new CEO, or connect with people who’ll be working on your biggest project next year, or just talk to three people you’ve only met in passing?

Make a list. Obviously, you want to approach the actual event with a bit more spontaneity – in other words, don’t blurt out, “THIS WAS NICE, BUT I NEED TO MAKE TWO OTHER NEW FRIENDS, SO BYE!” – but knowing roughly what you’re hoping to accomplish will help you get off on the right foot.

It’s also a good idea to think about what you don’t want to happen at the party. For example, if you know your coworker is about to get the boot, and you have the worst poker face in the game, now might be the time to discretely avoid them. The same goes for colleagues who tend to monopolize the conversation and might not let you mingle.

Finally, decide roughly when you’d like to call it a night – and keep it on the early side. Your mother was right: Nothing good happens after midnight. Go home earlyish, and you can enjoy hearing about what your coworkers got up to… without having to endure the hangover and potential fallout that accompanies their misadventures.

Related Articles:

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Wednesday, December 14, 2016

Price-Drop Protection: This App Will Shake Down Retailers for the Money You’re Owed

Many of America’s biggest retailers have generous price-matching policies to make consumers feel better about making a purchase without hesitation. If you buy an item at Home Depot, for example, and it goes on sale a week later, you can bring in your receipt and be refunded the difference. Many stores will also match competitors’ advertised prices.

Since stores change their prices all the time and no one wants to overpay, price-matching makes people feel better about pulling the trigger on a purchase – particularly a big one, like a snowblower or dishwasher. But the truth is, most people forget about or can’t be bothered to follow up on the refunds they’re entitled to. (Have you really gone back to Amazon.com to double-check the latest price on that coffeemaker or toy you bought last month?)

The other truth is, people are entitled to a lot of such refunds. “Nearly every retailer has a low-price guarantee, but most shoppers don’t realize they can get a refund if the price on a purchase drops,” said Eric Glyman, founder and CEO of Paribus, an app that works to secure refunds for consumers. Paribus estimates that consumers miss out on up to $15 billion a year in price-drop refunds that are rightfully owed to them.

That’s why Glyman, a 26-year-old Harvard graduate who worked retail jobs in high school, founded Paribus. The app, now owned by Capital One, reviews e-receipts in your email inbox and continually searches for price adjustments on any items you’ve purchased. When it finds a price drop, Paribus files a refund claim with the retailer on your behalf, and the money gets refunded to the credit card used to make the purchase — behind the scenes, without any effort on your part. The app also checks for rebates and missed promotional codes that could have been applied to your purchase.

Paribus is free to use, but keeps 25% of any refund it successfully recoups for you. So if the price on that coffeemaker dropped $10 the next day, and Paribus was able to secure the refund, you’d get a credit of $7.50 on your statement. The app currently works only with about two dozen online retailers, but they include some of the biggest names in shopping: Amazon, Costco, Home Depot, Best Buy, Target, Walmart, Macy’s, Kohl’s, Apple, Sears, Gap, Old Navy, J.Crew, Zappos, and others.

More than 700,000 people are currently using the app to save more than $1 million every month, according to the company. Doing the math, that’s only a bit more than a buck a month. But when it comes to free money, every bit helps. And it adds up — especially during the holiday season, when Paribus expects to refund its users more than $2 million.

While the company says there are multi-layered defenses embedded throughout Paribus and Capital One architecture to ensure that customer information is protected, consumers worried about security or privacy can simply create a separate email address designated for their online shopping, and allow Paribus to access only that email. (I find this strategy helpful regardless, so my personal inbox isn’t flooded with promotional emails from every retailer I’ve ever visited.)

Consumers are already on the defense against savvy online retailers, many of whom use dynamic pricing — rather sinister algorithms that automatically adjust prices depending on a user’s ZIP code, device, or browsing history – to get you to pay more for the same item. Every algorithm that works in our favor, then, is a nice tool to have.

Related Articles:

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Some Thoughts on Subscription ‘Crates’ and Monthly Delivery Clubs

Connie writes in:

What are your thoughts on things like “coffee of the month” clubs or crates? Are they good gifts or do they just send junk?

This started as a mailbag question and, as my answer grew and grew, I realized that this question deserved its own separate post.

First of all, what is Connie asking about specifically? She wants to know about subscription services that send items in the mail on a regular basis – usually monthly – to the recipient. These have taken off in popularity recently as “crates,” which are often collections of small items centered around a theme like the Loot Crate, whereas the older style “X of the month club” sent you a single item or perhaps two items based on the theme, like the jelly of the month club.

I’ve received several of these subscriptions as gifts over the years, as has my wife, and we’ve contributed to buying subscription gifts for others, so I’ve experienced the contents of many different subscription boxes. In general, I would not recommend them as a gift, with some exceptions.

I’ve found that subscription clubs only really prove to be good gifts and provide reasonable value if a few factors are true.

First, the person has to be mildly interested in what the subscription club delivers, but not too big of a fan. For example, my wife has tried two different “coffee of the month” clubs in the past – Driftaway Coffee and Craft Coffee – and she enjoyed both of them. However, she’s a coffee fan and not a coffee fanatic. She uses a pretty ordinary drip coffee pot.

On the other hand, I have a good friend, David, who is a coffee fanatic. He has hundreds (possibly thousands) of dollars invested in his coffee equipment and is very meticulous about the exact types of beans that he wants. On the surface, you might think that a “coffee of the month” club might be a great gift for him, but it turns out that it’s actually a pretty poor gift, because he’s very selective about the beans he uses and he’d probably just give away most of the shipments because they weren’t the variety that he prefers.

The same thing is true with me and some of my key hobbies. I’m passionate about board games and about books, but I would not enjoy either a “board game of the month” club (like Board Game Bento) or a “book of the month” club. I’m fairly picky with regards to both types of items at this point because my passion for both reading and playing board games has driven me deep into the hobby.

In general, if you would be wary about picking out a specific item related to a person’s obvious interest, then a “crate” or a “X of the month” club isn’t a great gift.

Second, a more general interest crate tends to provide a bunch of items that the recipient doesn’t want, so they’re usually not worthwhile either. My prime example in this category is Loot Crate, which offers to deliver a monthly box of “geeky goodness,” but the problem with “geeky” is that it is so broad and covers so many more specific interests that most of the contents of the box fail to hit the mark with the recipient.

A friend of mine receives this and generally finds one or two items in the “crate” worthwhile each month, and it’s usually things that he wouldn’t buy himself and is of lesser value than the sticker price on the entire crate. The rest of the crate is either given away or becomes trash can fodder after a while.

So, crates and “monthly subscription services” tend to only hit the mark when they not too general and also when the recipient isn’t a “superfan.” What else?

Third, the stuff that’s delivered has to actually be quality stuff. Many crates and subscription bundles deliver boxes full of stuff that, frankly, mostly gets thrown away by almost everyone that receives it. Some of them are very good, but others? They’re really low quality, filled with things that are obviously being dumped at a discount price by the manufacturer because it’s not good or are blatantly inadequate samples.

The best approach to figuring out whether a crate or monthly subscription is worthwhile or not is to read lots of reviews and listings of the contents of various crates. You’ll often be surprised that many of the more well known and heavily promoted ones have awful contents because, clearly, the companies involved are spending their money on marketing and are trying to collect a nice profit.

(I’m trying very hard not to name names here, as I’m not in the business of trashing specific products, but you won’t have to look too hard through specific crate reviews to find ones that provide subpar stuff. I’d rather give space to things I actually find value in than space to things I think are poor.)

If you’re considering getting a subscription service or a “crate” subscription for someone as a gift, my advice to you is simple: do your homework, both on the person and on the service. I wouldn’t give a subscription to someone who is really picky or obsessive about a particular topic, nor would I just give someone a general-purpose subscription. I’d also do some homework on the subscription service itself to make sure that it ships quality goods.

In general, the best subscription boxes I’ve found were matched to a notable but not obsessive interest for the person (like my wife and her Driftaway Coffee) and consisted of quality items, which I found out through research.

If this sounds like a lot of effort, well, it is. There are a lot of landmines out there when buying a gift like this, as many services are junk and many others, while good, are just a poor fit.

A much better approach in many cases is to simply do some homework on the person and then find a gift that matches that specific person. You’re much more likely to find a specific item that the person would like and they’ll really appreciate the thought involved.

I would basically never buy such an item for myself. I would vastly prefer to pick out items on my own and bargain hunt for them. These services, in my opinion, work well as gifts when carefully matched to the recipient and researched for quality.

To close, I’m going to list the crates and subscription services that I personally have used and found to contain quality items that matched the recipient well, or services that have been used by my friends, along with who they would match, because I know I will receive some inevitable questions in that regard.

Both Driftaway Coffee and Craft Coffee are very good “coffee of the month” subscriptions, perfect for someone who appreciates good coffee but isn’t necessarily someone with a $1,000 coffee maker.

My children have greatly enjoyed a year’s worth of Tinker Crate, Doodle Crate, and Kiwi Crate. Each of these is effectively a “project in a box,” with the Tinker one focusing on engineering type projects, Doodle focusing on art projects, and Kiwi being appropriate for younger children. All three have been solid and enthusiastically enjoyed by our children; I’d rate Doodle Crate as the best of the lot as it is basically jumpstarted two hobbies for my daughter. These are solid children’s gifts, in my opinion.

A friend who is pretty much constantly sketching and drawing and she absolutely adores Artsnacks, which is a monthly subscription service that delivers art supplies. She’s basically the type who goes into an art supply store and is curious about everything in there, but is willing to sketch on anything with anything on hand. In other words, she’s pretty much the perfect match for a kit like this. She reports that the contents are almost always great quality and there’s always a variety, but some months it can feel like the contents of the box didn’t add up. She also reports that it’s only good if you work in a lot of different media, so if you’re specifically only into drawing with watercolor pencils or something, this won’t be good.

My father-in-law reports that the Craft Beer Club delivered a great product with lots of variety, but that it’s probably somewhat expensive compared to just picking out twelve bottles at a store and that it would only be enjoyed by people who enjoy pretty much every variety of craft beer; if you don’t like, say, porters or IPAs, those would go to waste. This seems like a somewhat expensive but fun gift for a craft beer fan who enjoys variety.

Quite honestly, every other subscription service I’ve tried or my friends have shown me – and I’ve seen quite a few – has not stood out to me as a real value in any way. So, I’ll go back to my final suggestion: Do your homework and lean toward picking out a specific item you discovered yourself rather than a subscription service. Only get a subscription service if you know it’s providing good quality stuff and you know it’ll be a hit; otherwise, you’re paying good money to have overpriced junk delivered to your friend.

Related Articles:

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Productivity Apps Are No Match for a Simple Timer

There are roughly 17 trillion apps and computer programs that promise to improve your workflow, keep you on task, and help you get things done. As a Type A person who’s always looking to be more productive, I’m the prime target market for these apps. I’ve tried many of them, and the same thing always happens:

  1. A quick burst of dopamine as I dive into something new.
  2. A period of a few days where I devote myself to learning all the ins and outs of the app.
  3. After about a week, I get frustrated or bored with the app, stop using it, and ultimately delete it.

There is one app (looking at you, Evernote) that I’ve spent hours trying to fit into my life on multiple occasions. I’ve downloaded and then deleted it four or five different times. Every time I read a new blogger touting Evernote’s ethereal ability to increase their productivity, I decide to give it another shot. But it never quite meshes with the way I like to operate, and it always ends up in the trash heap. I’m just happy I’ve never splurged on the premium version.

This isn’t to say that these sorts of apps aren’t helpful to many people. I’m sure they are. I just want to put forth the notion that the time I’ve spent researching, downloading, learning, and then dismissing these apps has caused me to be far less productive over the years than if I’d simply disregarded apps all together.

Here are a few reasons why 99.9% of apps are a net negative on my productivity, how even the act of searching for them causes me problems, and how I use simple, timeless methods to stay on task instead.

Paralysis by Analysis

If I go into the iTunes App Store and search for “productivity,” I’m soon faced with a dizzying array of choices. Day planners, calendars, note takers, list makers — it goes on and on. I can spend hours perusing the selection, reading reviews, and wondering why one app has 4.2 stars and the other one has a 4.3 rating

Next thing I know I’ve downloaded two meditation apps and a picture editor, having forgotten about the task I even wanted an app for in the first place.

This, it goes without saying, is not a productive use of my time. It would take a miracle for whatever app I downloaded to save me the time I just wasted in the iTunes Store.

It Didn’t Used to Be Like This

I’m not a Luddite by any means, but I do like to think back on how great, accomplished people from past centuries managed to be so productive with such limited technology.

Any fan of the hit musical “Hamilton” has learned about how Alexander Hamilton wrote almost every single one of the famed Federalist Papers over a one-year period. He pumped out thousands of pages of compelling text, by hand, while also practicing as a lawyer. My lawyer friends of today can barely keep their eyes open after work, let alone think clearly enough to craft papers that would help shape the constitution of a new nation.

How did he do all this, without using Evernote, Scrivener, or Workflowy? He must have at least used the famed “Get Things Done” method, right? Nope. He just set aside time to write and stayed focused. While of course Alexander Hamilton was a singular talent, I think a big part of the equation was that he lived in a time in which entertainment wasn’t as easily accessible and smartphones weren’t ubiquitous.

Now, we live in a world filled with temptation and distraction. Our attention is fragmented among many competing devices, and this has a real effect on our brains. We can look at the effect of merely getting notifications on our phones to prove this point. A 2015 study in the Journal of Experimental Psychology showed that getting a notification on your phone while performing a task “significantly disrupted performance on an attention-demanding task, even when participants did not directly interact with a mobile device during the task.”

The same phone that should in theory be making you more productive and efficient is sabotaging your productivity at the same time. Furthermore, no study is needed to prove that the act of going on your phone to search for an app can easily spiral out of control. I tend to jump on my phone with noble intentions only to find myself, within 15 minutes, watching a YouTube video of a man trying to beat a Kodiak bear in a hot dog eating contest (the bear wins, easily…).

So, how can we start to combat these negative effects, while also becoming less reliant on the next great app to save us from our inefficient ways?

Use Simple Tech That’s Always Been There

One thing that improves my overall workflow is taking small breaks away from the computer to stretch and rest my eyes. Knowing myself, instead of installing an app that tells me when to stand up and stretch, I just set alarms on my phone. Just the act of setting the alarm helps to keep me focused as well, because I know a quick break is coming soon.

I didn’t do 10 hours of research to determine how many minutes constitutes the optimal break time, how many feet into the distance you should look out your window to counteract the negative effects of staring at a screen one foot from your face, or any other such nonsense. I just set a timer, take a three- or four-minute break, move around a bit, and get back to work.

The great thing about this method is its simplicity. No fancy app needed. Just a timer. In the olden days, the same thing was accomplished with a watch, or even an hourglass. Manually setting a timer will never translate into a best-selling app, but it’s just as effective as anything out there.

Create Time and Space for Doing ‘Deep Work’

Tenured professor and prolific author Cal Newport recently wrote a book called “Deep Work,” which I was inspired to read after learning about it on the Simple Dollar. He makes a compelling argument that the only way to be truly productive is to intentionally make time to do work for a prolonged period of time in an undistracted environment.

When I really want to get things done now, I don’t go searching the app store. I go to the library or my bedroom, and I turn my phone on airplane mode. I set a timer for one and a half hours, and I resolve to focus only on one task during that time. I put on noise-cancelling headphones, grab a cup of coffee, and get to work.

This strategy won’t miraculously make me capable of Hamilton-esque work output, but it at least gives me a routine that I know will bring out my best. I usually find that I get more done during these 90-minute bursts than I would have in five hours had I been free to surf the web and chat on my phone while I was supposed to be accomplishing a task.

Summing Up

After much searching, I’ve come to terms with the fact that I’ll never find that one perfect app that will make me uber-productive. And that’s okay. I think looking for a magic productivity app is like a dieter looking for a magic weight-loss pill. It’s a lot easier to hope scientists can dream up the perfect drug than it is to buckle down, start eating healthy, and follow an exercise regimen.

Similarly, if you’re putting off a new goal or project because you want to use the best possible new app or program to make it worthwhile, you’re just lying to yourself. Accepting that is the first step toward embracing the inner workhorse that lives within all of us, whether we use fancy new technology or not.

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Tuesday, December 13, 2016

Finding Fulfillment for Less

Jack writes in:

Seems to me that frugality is about balancing fulfillment with money in the bank. If you’re cutting off some options because they’re too expensive you’re eliminating some of your most fulfilling experiences. That’s a tradeoff I don’t want to make. If I have the money for something that’s incredibly fulfilling, I’m going to go for it.

Jack is pretty clearly describing a philosophy that many people subscribe to: hedonism. The idea behind hedonism is simple: It’s the idea that seeking maximum pleasure is the highest good and proper aim of human life. In other words, everything you do should be directed toward maximizing your personal pleasure in life.

The philosophy makes sense and, in the short term, it will make for a very fun life. However, there’s a cost behind hedonism.

The Hidden Cost of Hedonism

Whenever you make the choice that gives you the maximum pleasure or fulfillment in the moment, that choice comes with some cost you’re going to have to pay at some point.

Let’s say, for example, that I thought it would be more fun today to spend all day playing a game with a few friends instead of working. In the short term, that’s an awesome choice that contains a lot of pleasure. I’m probably going to have more fun in the moment hanging out with my pals playing a game than I would working.

However, if we stretch that out over the long run, there begins to be a problem. If I’m not working, eventually I’m going to get fired. I’m going to not deliver on my contracted work, they’re going to cease paying me, and then I’m in a real pickle.

While that’s a really obvious example, the truth is that the same phenomenon plays out in almost everything that you choose to do in life. Everything has a cost in terms of time and money.

Every time you choose to spend some of your time, there’s an opportunity cost involved. By devoting your time to one thing, you’re choosing to miss out on the many other things that you could be doing with it.

Similarly, every time you choose to spend some of your money, you’re choosing not to spend it in some other fashion or to save it for the future. You’re choosing to miss out on the many other things you could be doing with it.

No matter what you choose to do with your time and your money, you’re making choices like this. You spend money on one thing at the expense of not spending that money on other things. You spend time on one thing at the expense of not spending that time on other things.

Frugality and Cost

The frugal approach (at least, the approach to frugality that I advocate) is that the best balance of those factors is usually toward finding fulfillment and pleasure with minimal outcome of money so that you spend less of your life working and more of your life doing pleasureful things.

Let’s put that another way. Whenever I choose to spend my free time on something fulfilling, I’m more likely to choose a fulfilling option that costs less money because, by doing so, I have less need in my life to earn money. That means that if I make those kinds of choices consistently, I can have a less stressful career, a job that eats up fewer hours, or, if I take the long term view, I can save up my money and retire much earlier than I would otherwise.

In other words, I choose lower-cost avenues for fulfillment because, in the long run, it puts less stress in my life and reduces the number of hours in my life that I have to work for an income.

I recognize that there are many expensive things in life that can bring a great deal of personal fun and fulfillment. Driving a shiny new car is fulfilling. Going on vacation to a resort in Jamaica is fulfilling and fun. Those things are quite expensive, though, and in the expense of those things, I’m adding months of additional work to the end of my career or I’m choosing to have to take a career path that’s higher stress or more hours to earn more money.

In my eyes, the fact that a national park vacation costs a lot less than a vacation in the Caribbean doesn’t detract from the Caribbean vacation’s value, but it adds a lot to the perceived value of the national park vacation. It adds greatly to the fulfillment factor of that vacation.

I think a look at one of my favorite concepts in personal finance, the fulfillment curve, might make this clear.

A Quick Look at the Fulfillment Curve

One of my favorite topics over the years has been the fulfillment curve. I’ve written about it in detail twice, in Some Thoughts on the Fulfillment Curve and Another Look at the Fulfillment Curve, and I want to bring it up again here because it’s such an important concept.

Take a look at this curve:

Fulfillment curve

The idea here is that the more money you spend on something, the greater your fulfillment gets — to a point. After that, your fulfillment drops to the point that there’s no longer any fulfillment at all.

I wrote up an example of this fulfillment curve many years ago, and I still like it. This is one way to interpret the numbers on that curve in an example of buying a home:

1 – We’re essentially homeless. We live in our car.
2 – We live in an extremely cheap, extremely small old apartment. The rent is extremely cheap, but there’s barely enough room for sleeping space for everyone or room to do anything at all. We’re embarrassed to have guests at all.
3 – We live in a nice apartment or a small house. There’s enough room for everyone to sleep and have meals, but we’re sometimes pinched for space and there’s more clutter than we’d like. We have some of our friends over, but we feel pretty self-conscious about the place and don’t have the dinner parties we’d like.
4 – Our house is just the right size for our family. We feel comfortable having any and all guests over, the housework doesn’t overwhelm us, and the bills are completely manageable.
5 – Our house slightly exceeds what our family needs, but it gives us some room to grow. The bills are slightly painful, but we can manage things. We spend a bit more of our weekends on home cleaning and maintenance than we’d like, but we feel quite proud giving dinner parties and inviting people over.
6 – Our house is a McMansion. We can afford the bills, but just barely, and only if we eat everything at home. The bills make me feel kind of guilty, and there are times where it feels like all we do is upkeep.
7 – We bought a house nine times our annual income on an ARM and it just adjusted. Our house is mind-blowingly awesome, but we’re getting foreclosed tomorrow. We have no equity and we have no idea what we’re going to do. I wish we’d never come here.

In most things in life, I shoot for somewhere between a 3 and a 4, probably closer to a 3, on the fulfillment curve. That’s actively my target, because I view any option where I spend less money as having some “bonus fulfillment” attached as I described above.

Many people tend to shoot for a little over a 4 and end up somewhere near a 5 on the fulfillment curve. These are people who are stretching their finances to the breaking point. If you’re living paycheck to paycheck, in my opinion, you’re above a 4 on the fulfillment curve in many areas of life and the stress of living paycheck to paycheck is bringing down your overall fulfillment.

If you give me a choice between a 3 and a 5 on that curve, I will choose the 3 every single time. I would far rather have a house that’s a bit smaller than I’d like than one that’s bigger than I would like, because the smaller house means fewer hours devoted to it and much lower costs, both of which maximize my free time and minimize my stress. I can basically modify that sentence for anything in my life from which I draw fulfillment.

Finding Fulfillment for Less

So, how do I find fulfilling experiences and things for a low cost? This post actually started off as just a long list of things that I find deeply fulfilling that don’t cost very much. All of the things listed below are things that bring me a lot of personal fulfillment with relatively little cost. Many of them are obvious substitutes for other things that I could be doing.

I strongly encourage you to try out some of these strategies for finding fulfillment for less money. See which ones work for you. Some of them might not click and that’s fine, but I will say that the more fulfilling things for little cost that you can put into your life, the more fulfilling and less stressful your life will become and, over the long haul, the more free time you’ll have to boot because you’ll have less long-term financial demands and can retire earlier or switch jobs easier.

1. I meditate/pray each day for ten or fifteen minutes, after which I almost always feel fulfilled and refreshed.

2. I go on walks and short hikes in local parks. My favorite place in the world for hiking is Ledges State Park in Boone, Iowa, which I know like the back of my hand at this point. When the weather is decent, I try to go on a hike there or at another nearby park at least once a week.

2a. My absolute favorite places to vacation are our national parks. I can spend days and days and days in them, exploring new trails, taking photographs and little videos of things I discover, and just relaxing in a completely natural surrounding. While international travel definitely has appeal to me, I actually find more lasting fulfillment exploring Shenandoah or Acadia or Glacier or Yosemite or Yellowstone.

3. I make food from scratch quite often. Making things like pasta, bread, pasta sauces, casseroles, beer, and many other things from basic ingredients is incredibly fulfilling. Start with simple things, like dicing up tomatoes and a few vegetables to make a sauce. It’s often much less expensive than buying the equivalent at the store.

3a. I love the flavor of fresh foods, particularly fruits and vegetables. There is nothing more satisfying on my plate than items that have either come straight from our garden or a neighbor’s garden and moved to our plates as fast as possible, but barring that, items from the produce section turned into snacks and meals makes for a fulfilling meal for me. Fast food and other things are okay, but they’re mostly just fuel and not really fulfilling.

4. I write down the things I’m grateful for in my life. Make a list of five or 10 of them, and do it regularly.

5. I wall off blocks of time to get “lost” in actually doing my hobbies. This isn’t about buying new things for my hobbies or anything else. I like to curl up with a book when there’s no requirement to be anywhere else or do anything else. I like to play board games or card games with my friends.

5a. I read challenging books that I know from the beginning are going to challenge my understanding and how I think. There’s almost nothing more fulfilling to me than reading a book that challenges my way of thinking and introduces me to new ideas that I have to slowly grasp and wrap my mind around.

6. I also wall off blocks of time to do something with my children that’s completely focused on the thing we’re doing. I literally turn off my cell phone completely and leave it somewhere where I can’t see it for a while and make a genuine effort to get lost in whatever I’m doing with them.

6a. If I’m being honest, my favorite activity with my kids is coloring. I love taking a sheet of paper and making an elaborate doodle on it, or else taking a page from an “adult” coloring book and just getting lost in filling in all of the space with color and pattern.

7. I like the taste of water, as cold as possible, and maybe with a slice of lemon or lime or orange in it. There is no other beverage I would rather have in the entire world. What I like to do is fill up a water bottle, put a slice of a citrus fruit in it, put it in the freezer until it’s just about to freeze, and then drink it down.

8. I love the smell of coffee. I actually don’t like drinking it, but I love the smell of it when my wife grinds beans in the morning. I would actually be disappointed if she switched to buying a Starbucks on the way to work.

9. I have “passive conversations” with people, which means that I intentionally shut down the part of me that just wants to say things that I think and not really listen to what the other person is saying. I ask a lot of questions and listen. What I find is that when I do that, I tend to not only understand the other person better, but they tend to like me and even trust me more. I even sometimes look up people who I’m interested in and have such a conversation with them, an idea that I picked up from Brian Glazer; he calls them “curiosity conversations.”

10. I try to “get lost” in whatever task that I’m doing. If I’m going to take on a task that’s going to take a while, I shut off distractions as much as humanly possible and focus just on the task at hand. If everything goes well, I get “lost” in that task – I lose all sense of time and location and just get so absorbed by the task that time just zips by. Whenever this happens, I feel incredibly fulfilled. This connects back to other things I’ve listed here, particularly reading.

11. I love to work in our small garden. Again, I often try to get lost in what I’m doing so that time passes without notice and I’m absorbed in the task.

12. I love exercising enough so that when I get up the next morning, my body is a little sore but still functional. I like to breathe hard for a while and stress my muscles, but not reach a point of feeling utterly miserable. The exact exercise doesn’t matter – I usually do a workout from Darebee – but I really like playing soccer with people in the park if I get a chance.

13. I love doing volunteer work, when I know that some task that I’m doing actually provides some tangible benefit to the life of someone who’s really in need. I personally feel drawn to the issue of hunger in the community where I live. The fact that somewhere in the area of 30% of the children in my children’s school district are food insecure at home shakes me to my core, and taking action to do anything to help reduce that statistic and be sure that children in my community have enough to eat and clothes on their back is very meaningful to me.

14. I love having long conversations with my wife about the world, about our philosophy on living, about the things we’ve learned, about the things we’d like to change, about our parenting strategies, about anything. I find the meaningful periods of time with her to be deeply, deeply fulfilling.

15. I feel deeply fulfilled when I can take an idea in my head and, over the course of several hours, translate it into something meaningful on a sheet of paper or in a computer program. I’m creating something and that feels great.

Those things are honestly enough to fill almost all of my waking time, even my work time.

Final Thoughts

I live a life that I consider to be deeply fulfilling, and those fulfilling elements generally come from spending time, not money. By consciously making that decision and filling my life with genuinely fulfilling activities, I can afford to have a super-flexible and low-stress job that still keeps me on the path to early retirement.

I’m fulfilled now because I have a life full of fulfilling things and a job that doesn’t consume my time or my patience. I’ll be fulfilled later because I’ll be able to walk away from working for money a lot earlier than I might have ever believed.

That, to me, adds up to a fulfilling life for less. It’s a path that I’m happy with every single day.

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