Saturday, January 28, 2017

Twelve Strategies for a Successful “Meal Prep Day”

One common strategy for saving money on food that shows up in a lot of frugality books and on many frugality websites is the idea of a “meal prep day,” sometimes simply called “meal prep Sunday” because people often use a Sunday to do it.

On that day, the idea is that you’ll do all of the prep work for several meals all at once, getting those meals to the point that all you essentially have to do is reheat them in order to eat them.

So, for example, you might fully prepare a lasagna on a meal prep day by cutting up all of the vegetables, cooking the noodles, preparing the various layers, and layering all of the ingredients in a 9″ by 13″ pan so that you’re ready to stick it right in the oven… but you don’t stick it right in the oven. Instead, you cover the pan and put it in the freezer.

Then, a day or two before you actually want to have that lasagna for dinner, you take it out of the freezer and put it in the refrigerator to allow it to thaw. When you get home from work that evening, just pre-heat the oven, put the lasagna in there for 45 minutes or so, and go about your business. Very soon, you’ll have a homemade meal on the table.

You can follow almost this exact same blueprint for almost anything you’d cook in a slow cooker, bake in the oven, or even things you might grill. We’ve used it for preparing items for the grill (so that we just pull them out of the freezer, then straight to the grill), preparing soups and stews for the slow cooker (we just empty a container into the slow cooker in the morning, turn it on low, and leave for the day), preparing casseroles of all kinds, and even preparing the main ingredients of other meals, like cooking and seasoning the meat and/or other protein for tacos.

There are several advantages to using a “meal prep day.”

First of all, the entire purpose of “meal prep day” is to encourage eating at home. Eating at home is virtually always far cheaper than eating out, as you’re not paying for all of the labor and service and building costs and the additional profit margin that goes into a meal eaten at a restaurant. Because you’re making a lot of meals to eat at home, you’re going to save a lot of money.

Second, a “meal prep day” allows you to buy ingredients in bulk. If you’re making several copies of the same meal, or making several meals with overlapping ingredients, you can buy those shared ingredients in bulk and save yourself quite a bit of additional money.

Third, by preparing several copies of the same meal, you’re being more efficient with your time. Rather than boiling pasta for lasagna four times, you’re only doing it once and cooking four times the noodles at once. Rather than getting out the cutting board and chopping a single onion for a single meal and then cleaning the cutting board and knife, you’re getting it out, chopping enough onions for a bunch of meals, and then cleaning the board and knife, saving you several rounds of washing. Simply put, preparing a bunch of meals at once is just far more efficient than making them all separately.

Finally, by having a bunch of ready-to-go meals on hand, you reduce the amount of labor required on busy weekday evenings. Many families, particularly those where all adults are busy with jobs and careers, struggle to put a meal on the table in the evening, and the process often results in either some other important activity being abandoned or a pricy meal from a restaurant. Having a home-cooked meal in the fridge or freezer provides a third option, allowing people to balance evening activities and free time with the desire to have an inexpensive home-cooked meal.

Here are twelve strategies for getting your own “meal prep day” off the ground with great success.

Strategy #1 – Plan Out Your Meals and Shopping Beforehand

When you start in on your “meal prep day,” you should have every single ingredient in the cupboard or pantry or refrigerator and every single recipe laid out right in front of you. If you don’t, then you’re not prepped for meal prep day.

The first step in meal prep day should actually take place a few days beforehand, when you select a few recipes and decide how much of each you’re going to make. Are you going to make six batches of beef stew? Where’s the recipe? What ingredients will you need?

From there, you need to make a giant grocery list that incorporates everything you’ll need from all of those recipes, and do that shopping a day or two before your big meal prep day. This will probably be expensive, but the thing to remember is that you’re making a ton of meals all at once.

For example, the last time I did a meal prep day, I spent $325 on ingredients. However, I made four to five batches of seven different meals, each with enough food content to feed my family of five and provide lunch leftovers for Sarah and myself for at least a couple of days. Let’s say I averaged 4.5 batches of 7 different meals, and each batch covered 8 people’s individual meals. That’s 252 meals, which means that the average meal cost was $1.29 a pop. Yes, I dropped $325 dollars, but my family was then covered for 252 meals.

Strategy #2 – Synergize Your Ingredient Preparation

One effective strategy is to make sure that at least some of the recipes overlap in terms of ingredients so that you can prepare lots of that same ingredient in one batch.

I like to use onions as an example here. We eat a lot of meals with onions in it, so what I like to do is choose several recipes that include diced onions. Let’s say a lasagna recipe asks for one small yellow chopped onion that’s caramelized, and a soup recipe calls for it as well. I’m making five batches of each, so that’s ten small yellow chopped onions.

I weigh them at the store and realize that ten small onions weighs about the same as six large onions, so I buy the six large onions in a bundled bag and save some money. Then, when I start the meal prep, I chop all of the onions at once, then caramelize all of those onions at once in a skillet.

Boom – all of the onion prep for ten different meals is done at once, saving me a lot of time and a little money.

Strategy #3 – Do Those Little Prep Tasks a Day or Two Early, If You Can

With that onion example above, I actually did that on a Thursday evening rather than on a typical meal prep Saturday. I had about an hour and a half free on Thursday evening, so I just chopped all of the onions and sauteed them, then put all of those sauteed onions into a big container and put them in the fridge.

Yes, I could have easily done that on my normal meal prep day, but because I happened to have a block of time free, I could actually take care of that specific small task earlier in the week. The sauteed onions will keep perfectly well in the fridge for a couple of days, after all, and then I can just pull them out and use them immediately in recipes on my actual meal prep day.

That’s why it’s a good idea to make a checklist of such tasks that you’re going to have to do on your meal prep day. Once you’ve figured out the recipes and identified some synergies between them, identify some shared tasks between the recipes, like chopping up onions or chopping up celery or dicing potatoes or cutting up stew meat. Then, if you find yourself with a bit of spare time in an evening, do that task early and save the results in the fridge. It’ll save you time on your actual meal prep day and it can really cut into the sense of being overwhelmed on that day.

Strategy #4 – Give Yourself Plenty of Time

No matter what you do, do not put yourself in a time crunch on a meal prep day. Don’t. Do. It.

If you’ve got a weekend day where you have an appointment in the late afternoon or something like that, don’t use that day as a meal prep day.

The reason’s simple: something is likely to go a little bit wrong and take you longer than you expect. It happens almost every time. If you’re on a very tight schedule, you’re going to suddenly find everything going off the rails. If you start rushing, something else is going to go wrong, and something else, and something else.

Do not take on a huge amount of meal preparation like this within a tight time window. Small things will go wrong, and then they’ll lead to bigger issues if you’re in a time crunch.

Instead, select a day where you don’t anything going on the whole day, then start early enough so that if things go perfectly, you’ll have some significant free time at the end of the day. That way, if things take longer than you expect – and they probably will – it’s not a problem in any way.

Strategy #5 – Make Sure You Have the Needed Containers

Another thing to consider is whether or not you have adequate containers to store all of the food you’re making. Do you have enough baking dishes to store all of your planned casseroles? Do you have enough freezer-ready soup containers to store all of the soup?

For casseroles, we use these Glad OvenWare 9″ by 12″ pans. They’re inexpensive and highly reusable and work great in the freezer.

For soups and stews, we use these reusable deli soup containers. Again, very reusable and freezer friendly.

For things like sandwiches and burritos and individual meals, we use a mix of freezer Ziploc bags and these individual meal containers. Again, freezer friendly and highly reusable. That’s kind of the theme here.

Those container options alone should store almost anything you might want to consider making on a meal prep day.

Strategy #6 – Make Sure You Have the Storage Space, Too

You’ve got food. You’ve got containers. You’ve got a plan. Make sure that you have plenty of space to actually store all of the stuff you’re making.

If you have a deep freezer, you should at least verify that you have enough space remaining in there to store everything you’re making. We can store at least a month’s worth of meals in our freezer, so that’s handy.

If you don’t have a deep freezer, you’re going to be using the smaller freezer on top of or on the bottom of your refrigerator for long term storage. I wouldn’t prep more than a week’s worth of meals unless you’re single and prepping lots of small individual meals.

Remember, you can keep a couple day’s worth of prepped meals in the fridge without freezing them. There’s nothing wrong with preparing a meal on Saturday and leaving it in the fridge to finish cooking on Monday or Tuesday, for example.

Strategy #7 – Label EVERYTHING!

One of the most important elements of my meal prep days is a Sharpie marker and a roll of masking tape. Nothing goes into the freezer without being labeled with those tools.

I just tear off a piece of masking tape, affix it to the container, and write today’s date and the contents of the meal. I’ll usually mark things with a “V” for vegetarian and a “V” with a circle around it if it’s vegan, so that I know what I can/should pull out for specific situations with guests.

So, if I made a batch of root vegetable stew, I’ll mark it with something like “1/24/2017 – Root Vegetable Stew – V” with the V in a circle if the stew is actually vegan.

I’ll also often put another strip or two on the item and describe what needs to be done to finish prepping. For example, on a pan of lasagna, I might write something like “Bake 350 F for 50 min uncovered after 1 day thaw in fridge.” The goal is to minimize the amount of thinking or work that I have to do when I pull that item out to use it.

Strategy #8 – Make Your Soups Thicker Than Usual

One thing I’ve learned from my meal prep days is that almost everything ends up giving off moisture in the freezer. In the case of soup, the water just escapes the vegetables and makes the soup a bit more runny.

My philosophy with soups is to make them a bit thicker than I normally would before I freeze them. I use a little bit less liquid than normal or else I add just a touch of corn starch to thicken the liquid.

That’s because, in the freezer, the vegetables in the soup will give off just a touch of moisture, adding to the water in the liquid. Thus, when you heat it up again, you’ll actually have a bit more moisture in the broth, making it seem more “normal.”

Remember, you can always add a bit more liquid when you’re reheating it if you think it needs it, but you can’t remove liquid at that point without ditching flavor.

Strategy #9 – Make Your Burritos With Rice or Potatoes

One of my favorite meal prep items is breakfast burritos. I usually make burritos with scrambled eggs with a lot of vegetables and other items cooked right in the scrambled eggs. (My personal preference is mushrooms, onions, green peppers, and a little bit of diced tomato.)

However, if I use just that mix, the burritos are going to be very watery when I cook them later on. So, my secret ingredient in breakfast burritos is to mix in some shredded potatoes and/or rice into the mix, mostly to absorb the extra liquid. Another good strategy is to cook the ingredients of the burrito down before you ever add eggs, so cook the onions to a translucent or even caramelized state first and make sure there’s basically no liquid in the pan.

You want the burritos to seem rather dry when you put them in the freezer. If they seem wet at all, they’re going to be soggy afterwards. The same is true for things like enchiladas and lasagna.

Speaking of soggy lasagna…

Strategy #10 – Get Your Cooked Pasta/Noodles as Dry as Possible

If you’re making any dish with pasta in it, you’ll find that the relative dryness of the pasta makes a huge difference as to how moist the meal is when you’re cooking it again after a stay in the freezer.

If you pull the noodles straight out of boiling water and use them immediately, everything will be wet. If you strain them, you’ll still probably find more dampness than you want in your casserole.

The solution is to get those noodles as dry as you can before using them. You may want to even consider using “oven ready” noodles in their dry form for things like lasagna; though I don’t like their texture, they will help to ensure things aren’t too damp in there.

My usual strategy for lasagna and other meals with pasta is to lay out the noodles on parchment paper after I cook them and then dry them off even a bit more with a paper towel before I put them in the casserole. I also cook down whatever liquids I’m using – if I’m using a marinara sauce, I cook it down in a saucepan before using it to get rid of some of the liquids, or I make my own with a large proportion of tomato paste. Sometimes, I’ll even use a bit of corn starch to thicken it even further.

These steps help keep a lasagna from being runny after some time in the freezer.

Strategy #11 – Leave One of the Meals You Prepped for Dinner That Evening

Whenever we take on a meal prep day, we leave one meal completely unused and in the refrigerator; that’s the meal we use for dinner that very night. We usually just choose a batch of whatever meal we’re most excited about from the meal prep process.

This means that after everything is done and cleaned up, we don’t have to prep yet another meal for supper. We just grab one of our prepped meals from the fridge and toss it in the oven or into a pot and we’re ready to go.

It’s a nice way to end a long day of meal prepping.

Strategy #12 – Consider Doing It Socially

A final tip: a big meal prep day is a great thing to do with a friend or two. Invite a friend over for the day and do all of this meal prepping together.

My strong suggestion is to have one of the two of you plan out all of the recipes and then split a shopping list between the two of you. You each buy the ingredients on that list, then one friend comes over with the ingredients they bought and the containers they want to use in a laundry basket (for ease of carrying) along with any other items or tools needed, like an extra bowl or two.

Then, just make huge batches of everything! Make ten batches of soup at once in a giant stock pot, then dole it out a ladle at a time into ten different soup containers! Make eight pans of lasagna at once!

Not only will you have an extra set of hands for all of this, you’ll also have someone to hang out with and socialize with throughout the whole process.

Final Thoughts

A “meal prep day” can save you enormous amounts of money and time if you can commit to setting aside an afternoon solely to handling advance meal preparation. If you can, the savings from bulk buying and from eating so often at home, plus the time saving from synergizing so much cooking, will end up providing a huge benefit to your financial and personal life.

Good luck!

The post Twelve Strategies for a Successful “Meal Prep Day” appeared first on The Simple Dollar.

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Friday, January 27, 2017

Fifteen Frugal Date Nights

Although my wife and I have been married for almost fourteen years (and we dated for six-plus years before that), we still put effort into keeping romance alive in our life. We box out time to spend together without our kids. We do things that we both enjoy and sometimes we each do things that the other one primarily enjoys.

We call these our “date nights.” Once or twice a week, we’ll pencil off an evening just to do something together, as soon as the kids are in bed. Usually, we’ll try to do it on a day when we can sleep in so that we can stay up late without crashing, giving us a few hours together.

The key here is that we intentionally wall off periods of time to spend just with each other. What we actually do is less important than the fact that we have this time saved just to spend together. That is the key to making a frugal date night work and the key to making it worthwhile. It’s the time spent together that keeps our marriage strong.

Our “date nights” are usually pretty cheap. We’ve come to realize over the years that the fun in a date night comes from being together, not in doing something expensive. While it’s fun to go to an expensive restaurant every once in a while, most of our best date nights are found doing simpler things together.

Many of our “date nights” are date nights at home. This is because of the constraint of having children. Going out means finding a babysitter for the children (most of the time), which adds an additional cost, plus many activities outside of the home bear a cost as well.

Over the last few years, I’ve kept a list of our “date nights.” What follows are the distinctly different dates that we’ve had over that period. Obviously, we’ve repeated many of these, and many others are just slight variations on these ideas.

These “date nights” keep the magic of our marriage alive and strong. It’s not because each idea is amazing and brilliant and infinitely memorable, but because we spend the time together, focusing on each other.

I hope you’ll find some value from trying the ideas on this list.

We pop a bunch of popcorn and watch a movie or binge-watch a Netflix series under a big blanket together. This is our most common “date night,” simply because it’s so convenient after a long day. One of us will put the kids to bed while the other one finds something to watch and pops a bunch of popcorn and flavors it all up a little bit and gets a blanket or two out so that the other can just run down to the family room, hop on the couch, and we’re cuddled up watching a movie together or a series together.

We go for a long walk under the stars. On nights when the kids are sleeping over at the houses of friends (we usually try to stack such events together), we’ll go on a walk together around the neighborhood and out into the country under the moonlight, just talking about our lives and whatever else comes to mind.

We make some kind of special yummy treat together. We’ll bake cookies together, or we’ll bake bread together, or we’ll make scones together for breakfast the next morning. We’ll get the ingredients out, talk together as we’re assembling the item, bake them in the oven, and perhaps split a portion of it when it comes out of the oven. It’s an excuse to talk and to do something with our hands together and, in the end, we’ve produced something tasty to eat.

We pack a lunch, go to a state park, and hike to a secluded spot for a picnic. This is our “default” date when we don’t have our children in tow. We’ll pack a meal in a backpack in the morning, go to a state park within an hour or so of our home, and head out on a trail. Usually, we’ve done a bit of research to find out if there’s a reasonable spot for a picnic at a nice vantage point, with a table or at least a bench or, at the very least, some open area to spread out on a blanket. We’ll leisurely hike the trail, talking about life and enjoying the scenery, then we’ll reach our destination and share that meal together, and then eventually stroll back.

We work on a big art project together. Not too long ago, we spent an evening together talking about life and drawing a giant city map for a game we’re playing with our kids. We alternated between discussing buildings and locations and layouts with discussion of what was going on in our lives. It was one of the best evenings we’ve spent together in a very long time. We’ve had similar evenings where we painted miniatures and drew pictures, too.

We go to a free concert in the park. Occasionally, there’s a free concert in our town or in a neighboring town. If the opportunity presents itself, we’ll pack up an evening picnic and a blanket in our picnic basket and go to the concert. We’ll eat a picnic dinner together on the blanket and watch the sun go down and the stars come out while musicians play their songs.

We play a board game together, usually while splitting a bottle of wine. If we have a bottle of wine in our wine rack, we’ll often pull out a board game or two and play them while slowly sharing that bottle of wine. We’ll make moves on the board, play cards to the table, talk about life, and get a little goofy together.

We curl up under a blanket together, each of us with a good book in hand. We’re both avid readers, so sometimes a date night just consists of getting out a giant blanket, cuddling up on the couch, and reading our respective books. We’ll get all warm and cozy under the blanket and lose ourselves in our books as we’re cuddled together.

We sit on the back porch with some music playing quietly with a bottle of wine between us. This is akin to our board game night, except with soft music and the stars over our heads instead of a game between us on the table. We talk about life and love and everything else and simply enjoy each other’s company.

We work on a home improvement or repair project together. Sometimes, we’ll identify a small home repair task or other task, like repairing a drywall hole or fixing a child’s toy, and we’ll do it together. This involves us figuring out how to do it, then one of us taking the lead and the other acting as an assistant. We’ve replaced faucets, repaired toys, patched drywall, cleaned up marker disasters, and many other things over the years.

We do something active together, like play tennis. We live fairly close to a very nice park with a tennis court, so more than once we’ve gone over there and played several games of fairly low key tennis, batting the ball back and forth and laughing at each other’s miscues. It’s a friendly game that gets our blood pumping; it’s often connected with a walk under the stars.

We tour expensive homes when they’re having an open house. More than once, we’ve dressed up fairly nicely and went on a tour of a house during an open house, just to see what the nice house was like. Often, it was an excuse for us to end up talking about what aspects of home layouts and designs that we liked, because we’ll eventually end up buying or building a different home.

We go geocaching. This is a “date night” that we end up falling back on if the weather is nice and we wind up having our children along, but sometimes we do it by ourselves. We simply go to Geocaching.com, find a list of a few local geocaches, and then go find them and see what’s there. It’s a great way to go on a little journey together to see a familiar area from a new angle or explore somewhere new.

We build a fire in the backyard and roast marshmallows. We have a fire pit in our backyard, so if we happen to have some extra wood to burn, we’ll start a small fire in the fire pit and roast some marshmallows. We both get involved in getting the fire going, and then we’ll get chairs out and sit side by side, watching the fire crackle and keep us warm in the evening when there’s a touch of chill in the air, and we’ll make a marshmallow or two and eat them together.

We build a giant blanket fort. This sounds absolutely ludicrous, but it’s incredibly fun. We just gathered up every blanket in the house and turned two rooms in our house into a gigantic blanket fort. We hid in there with flashlights, fixed up inevitable repairs, and giggled like little children again.

A “date night” isn’t about spending money, it’s about spending time together. A good relationship thrives on togetherness, not money or stuff. Put each other first, and not only will you have a strong connection, you’ll also have strong finances, too.

Good luck!

The post Fifteen Frugal Date Nights appeared first on The Simple Dollar.

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Thursday, January 26, 2017

31 Days to Financial Independence (Day 24): Investing and Saving for Education

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 discussed steps that people need to take in order to use their “gap” money – the difference between their income and their spending – to begin saving for a robust retirement.

Today, we’re going to look at another major goal that many people have for their lives: saving for future educational expenses, both for their children and for themselves.

It’s the dream of many parents to save up enough money so that their children can go to a great college, yet parents often discover that achieving that goal is much harder than it seems. Is it an achievable goal? Is it even a worthwhile goal?

Many other people reach a point in their adult lives where they consider going back to school to continue their education, whether to obtain a master’s degree or to head down a new career path. Is that an achievable goal? Is it even a worthwhile goal?

Both of those matters rest upon the shoulders of a similar set of issues and questions. Is it better to save in advance for a college education? Or is it better to wait and rely on loans? Are there alternative strategies for achieving the training needed for work outside of the typical college route? How much of a child’s college education should a parent actually pay? If you’re saving for future educational expenses, how should you do that in a financially optimal way?

It’s a tangled mess of questions and matters to resolve and they end up becoming something that people put off and put off until suddenly their child is leaving for college and they’ve saved very little or until they’re standing in a career crossroads.

At those late points, the options are limited and many of the best opportunities have already been taken off the table.

Don’t let yourself wind up in that position.

Exercise #24: Planning and Saving for Education

Although there are definitely some action steps to be taken later in this exercise, much of this centers around reflecting on your own situation and figuring out whether saving for education makes any sense for you and your family. It’s not an easy “yes” or “no” question, so let’s start by untangling the knots together.

Do you think you should pay for the entirety of the college education of your children? If not, then how much should you pay for? This is a fundamental question that people need to ask themselves as they begin to drill into the question of saving for education.

Sarah and I have come to the conclusion that we’re willing to pay for a portion of our children’s education, but not for all of it. Here’s our rationale for that mindset.

On one hand, we both found it valuable for us to have some “skin in the game” during our college years, in that we understood that we had a personal financial stake in our college performance. Without that personal stake, it would have been easier for both of us to not take college seriously. We couldn’t just fail out without real personal financial consequence; it was our burden, too.

At the same time, we both recognize that college is incredibly expensive and that large student loan payments are a huge burden to overcome in your early professional years. It restricts your professional choices. It restricts your life choices. It forces you to make other financial choices that are suboptimal, like altering the decision as to when it makes financial sense to buy a house.

Our goal, then, is to pay for a portion of our children’s college educations, but not all of it. We expect them to pay for a large portion, likely a majority portion, of it themselves.

Answering this question now sets up some expectations for what you should be able to save for your child’s education. There is no “right” or “wrong” answer here. Some parents may want to pay for all of their child’s education. Some may choose to pay for most of it. Others may choose to pay for half or a little less. Some may simply want to cover just a small portion.

Why is that important? Well, US News and World Report, relying on Department of Education numbers, estimates that a four-year college degree will cost about $200,000 in 2030. If you’re planning on paying for all of it, then you need to be saving $200,000. If you’re shooting for half, that’s a $100,000 target. That’s an enormous difference, one that’s going to change your strategies for saving.

So, what’s your target? Are you going to try to pay for the whole thing? In that case, expect to be putting aside about $500 a month from birth until age 18. Are you going to pay for half of it? That’s going to be about $250 a month from birth until age 18. (This is, of course, assuming you’re investing in something that’s going to earn a 7% return).

Figure out your philosophy now, because your philosophy here directly influences how much you need to save each month.

Are you going to return to school in the future? And, if so, what might that look like? When would you go? Would it be full time, or would it be in the form of weekend and evening classes? Would your current employer be able to pay for some of the cost or would all of the expense be coming out of your pocket?

The truly important question here is whether or not additional education is in your future. Are you considering earning a higher degree to jumpstart your current career? Are you considering a career shift that will push you in a completely different direction and require a completely different degree? How likely are those things?

If those things are likely in the future, then saving for your education in an appropriate account now is a bright idea. It will save you quite a lot on your education expenses later on with no tax penalties.

The drawback, however, is that if you end up not getting an education and you don’t have anyone in your life to transfer those savings to (something we’ll get to in a minute), then you’ll get hit with an additional tax penalty when you use the money you’ve earned in that account.

So, here’s the deal: if you’re pretty certain that some form of additional education is in your future, you’re better off saving for it now in an appropriate fashion than you are waiting around. If you’re much less certain, saving up for it in an account without specific education benefits is probably a better all-around choice.

A 529 college savings plan is far and away the best vehicle to use for college savings, whether for you or for your child. If you are certain – or at least very confident – that post-secondary education is in the future for you or your child, the best tool you can use to start saving now for that future education is a 529 college savings plan.

A 529 plan is not all that different from a savings account on the outside. You deposit money into it, just like a savings account, and you can take money out later when you need it, just like a savings account.

There are a few differences, however, and two of those differences are really beneficial for education.

First of all, when you start a 529 college savings plan, you must name a beneficiary. The beneficiary is the person for whom the plan is designated to be used for in order to pay that person’s expenses. So, for example, I have three separate plans for each of my children, and in each plan, a different child is named as the beneficiary.

You can change beneficiaries among siblings without any tax consequences (and grandparents can move accounts among first cousins of the same generation), which is a real benefit for parents with several children or grandparents with lots of grandchildren. If, say, your oldest child doesn’t need their full savings, you can change the beneficiary to another child without tax consequences.

Second, while money is in a 529 account, you can designate it to be invested in stocks or bonds or real estate or other things in order to earn a better return. You can always just leave it in the form of cash and earn a steady slow trickle of interest, just like a savings account, but if you’re going to be leaving money in there for very long at all, you probably want options that offer a better return.

Third, when you withdraw money from a 529 plan for educational purposes, you don’t have to pay taxes on the investment return within that account. So, let’s say you put in $1,000 when your child was born and it grew to $3,000 by the time your child is 18. If that child takes out that money and applies it to tuition, that $2,000 in investment gains is tax free. If you save in other ways, that $2,000 is going to be taxed, eating away at your gains.

There is a drawback, however. If you take out money for non-educational purposes, you have to pay taxes on the gains, plus an additional tax penalty. What this essentially means is that you really shouldn’t put money into a 529 plan unless you’re quite confident that you’re going to be using that money for educational purposes at some point.

It’s worth noting here that grandparents, family members, and friends can contribute directly to 529 plans. This actually makes it very easy to centralize college savings and gifts intended for college savings for children.

If you or your child receives scholarships, you can make a tax free withdrawal from a 529 plan equal to the amount of that scholarship to use as you like. Let’s say, for example, that you’ve been saving up for your child, but then your child receives a National Merit Scholarship and has their tuition paid for. At that point, you can consider the option of taking some money out of the account for other expenses without any taxes at all, or else you could leave it in there for potential graduate school expenses.

Similarly, if the beneficiary dies or becomes disabled, there is no penalty for withdrawing the money. A 529 really does offer a ton of advantages when you’re saving for college, even if things don’t turn out the way you plan.

Finally, 529 plans often have special tax benefits if you open a plan in the state where you live and your state collects income tax. For example, in Iowa, if you use their College Savings Iowa 529 plan, your contributions are tax deductible if you’re an Iowa citizen paying Iowa state taxes.

Each state runs its own plan, with some variations between them. You can generally join a plan from another state if you prefer, but some states offer particular benefits for using the money from that state’s plan for education spending in that state or offer tax benefits as described above. Different states also use different investment houses on the back end of the plan. In general, however, using the 529 plan in your own state is usually perfectly appropriate if you’re unsure.

You can start saving in a 529 for your child before that child is even born. You do this by setting up a 529 plan with yourself as a beneficiary and then change that beneficiary after the child is born. However, when you change the beneficiary on the account from a parent to a child, it’s considered a gift and is subject to the usual tax rules of gifts, meaning that you need to keep the gift below the gift exclusion. In short, keep it under $13,000 and you’re fine if you’re not giving any other cash gifts that year, or keep it under $65,000 and you’re fine if you give no other gifts in the next five years.

I did this exact thing with my own children, as I started a plan for each of them before they were born and changed the beneficiary after their birth.

529 plans are usually built up through regular automatic transfers of money. When you sign up for a 529 account, the plan usually will have you set up an automatic transfer program from your checking account to that new account. That automatic transfer will take whatever amount you designate directly out of your checking and put it into the 529 account at whatever rate you designate.

So, for example, you might want to set up a $100 per month transfer (which would get you to roughly $40,000 if you start as a newborn and keep going until the child is 18), or $25 a week (which would get very similar results). You might choose to do more or do less. Once you set it up, though, it’s all automatic. You don’t have to think about it.

Automatic savings is the best way to save for any serious future goal. It takes the day-to-day decision making process out of your hands. You no longer have to decide after each paycheck whether you want to save money for that goal. You no longer have to remember it. It just happens automatically, and you have to put in effort to stop it.

Keep it simple when choosing investments. As with retirement, one area that often stymies a lot of people and keeps them from actually getting started is uncertainty about investment choices.

When you sign up for a 529 plan, you’re often bombarded with investment options. You can leave your money in cash. You can put it into stocks. You can put it into bonds. You can put it into real estate. You can even mix things up amongst all of those categories. Not only that, there are often many options within those broader categories, too.

In an effort to try to find the best option, people often get “locked up” by the sheer number of options and then fail to make any decision. They just put it off, and because of that, they fail to take advantage of the most valuable years of investing – the first ones.

This is a situation where “the perfect is the enemy of the good.” You are far better off choosing a “good” investment at random and starting now than twiddling your thumbs and putting it off and eventually finding a “better” one later.

For one, if you put it off, you miss out on contributions. Right at this very moment, you’re as far as you’ll ever be from the day you need that money, which means you have the most possible time for the power of compounding to help you earn a lot. The longer you wait, the less your investing dollars will earn because they’ll have less time to grow.

For another, within a 529, you can always change options later. If you do eventually find a “better” option, you can move that money around within your account.

If you’re unsure where to even start, almost every 529 plan has a pretty good default choice that anyone can use. It’s usually called a “target date” fund. Just figure out which year you or your beneficiary is likely to start using the money you’ve invested, then choose the “target date” fund that matches that year and put all of your money in there.

A “target date” fund automatically balances your investments for you so that you have more risk and more reward when you’re far from that date so that you can potentially earn more (with some risk), but that risk lowers as you get closer so that you don’t unexpectedly lose a lot of your balance. It’s a nice balancing act, and a “target date” fund does that for you automatically.

The perfect is the enemy of the good, and a target date fund is almost always a good option. Put your money there if you’re unsure what to do with it.

The sooner you sign up, the better off you are. The reason is simple. The sooner you sign up, the more time you have to make regular contributions to the account, so your total contributions will be higher between now and the start of college. Similarly, you’ll also have more time for those investments to grow, meaning your returns will be better, too.

For example, let’s say that you found an investment that earns 7% per year. You have a newborn child, and you’ve decided to save $100 a month. If you start right now, you have eighteen years of contributions and 18 years of growth. That $100 per month is going to grow to about $42,000.

Wait just one year, though, and that $100 a month will grow to only $38,000.

That’s right, waiting just one year on a $100 a month savings plan will cost you more than $4,000 when your child reaches college age.

The take-home point? Start saving sooner rather than later. You’ll be aided both by having more contributions in there as well as having more time for your investments to grow.

Next time, we’ll look at investing and saving for other goals, like down payments.

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Five Mistakes New Managers Make

Management training at most companies is a one-day seminar — if you’re lucky. As a result, a whole lot of new managers go directly from staff to boss, without much preparation in between. The situation creates a lot of opportunities to make mistakes — ideally the kind you learn from, not the kind that derail your career.

The only upside is that you, as a new manager, are hardly the first person to be in this position. Learn about the mistakes others have made, and you might be able to skip right to the part where you look like you know what you’re doing.

Mistake No. 1: Trying to be everyone’s best friend.

If you ascended from the ranks, it’s only natural to have a few uncomfortable moments when you realize you’re the one who’s supposed to tell people what to do. Don’t let that discomfort encourage you to pull a Michael Scott and insist on being best friends with your colleagues.

Your reports don’t need a best friend; they need a manager. That doesn’t mean callously pursuing the company’s goals at their expense; in fact, one of the most important things a manager does is support their team’s individual career aspirations. But it does mean understanding that you’re going to have to make unpopular decisions. Don’t invest in being liked. Invest in being effective, supportive, and honorable.

Mistake No. 2: Confusing authority for leadership.

Technically, your team has to do what you tell them to do. In actuality, they’re not going to do it very well if they don’t feel inspired.

The way you motivate employees is by setting goals and boundaries and then being worthy of trust. This means doing what you say you’re going to do, giving clear expectations, allowing people to meet those expectations without micromanaging them, and being willing to change your mind when you receive new information. All the job titles in the world can’t give you more authority than a team who genuinely believes in you.

Mistake No. 3: Letting the problem children dictate the tone of the team.

The squeaky wheel gets the grease, as they say, but you’re not operating an oil change station. Some of the best employees are often opinionated, stubborn, and insistent on their point of view — but that’s very different than an employee who complains constantly and contributes little.

Differentiate between people with strong opinions and people with negative energy. The former will give you some of your best ideas; the latter will drag everyone down with them.

Mistake No. 4: Doing everything yourself.

Especially if you’ve moved up within an organization, you might have a few tasks in your unofficial job description that are less managerial and more reflective of your previous role. Minimize that as much as you can by delegating to the appropriate team members.

But that’s not the only way in which you can wind up doing work that’s best delegated to others. Watch yourself for the tendency to take on extra tasks because “it’s just faster if I do it.” That might be true — today. But in the long run, it’s always more efficient to train others to do things themselves.

Mistake No. 5: Listening too little… or too much.

The best managers are good listeners. You never know where the next big idea will come from or when you’ll learn about a potential problem — hopefully in its early stages, when you can do something about it.

But having an open-door policy can’t mean literally leaving your door open 24/7 (or 8/5, if you’re good at work-life balance). Plan one-on-one meetings with your staffers and keep them. Make yourself available to listen on a regular basis otherwise. But set boundaries to protect your head-down time as well, even if that means blocking off time in your calendar to simply get some work done.

You can’t focus on your team if you’re mentally obsessing over your rapidly growing to-do list.

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Wednesday, January 25, 2017

Buying Foods Based on Cost Per Calorie

Recently, I came across this infographic that listed a bunch of different foods, separated by category (fruit; vegetables; fats, nuts, and seeds; fish, poultry, and eggs; whole grains; beans and tofu; red meat; and dairy) and sorted within those categories by the cost per cup or cost per 100 calories, depending on the item. (The truly low-calorie items, which were the vegetables and fruits, were listed by cost per cup, while the other more calorie-dense items were listed by cost per calorie.)

Below, I’m going to list out the top ten finishers in each area.

Fruit: Watermelon ($0.17 per cup), bananas ($0.21 per cup), apples ($0.28 per cup), oranges ($0.34 per cup), pears ($0.42 per cup), honeydew melons ($0.45 per cup), plums ($0.48 per cup), nectarines ($0.49. per cup), mangoes ($0.52 per cup), and grapes ($0.62 per cup)

Vegetables: Potatoes ($0.19 per cup), carrots ($0.25 per cup), iceberg lettuce ($0.26 per cup), cabbage ($0.27 per cup), onions ($0.28 per cup), romaine lettuce ($0.40 per cup), radishes ($0.41 per cup), sweet potatoes ($0.43 per cup), spinach ($0.52 per cup), and collard greens ($0.57 per cup)

Fats, Nuts, and Seeds: Canola oil ($0.02 per 100 calories), corn oil ($0.03 per 100 calories), sunflower oil ($0.03 per 100 calories), shortening ($0.04 per 100 calories), peanut oil ($0.04 per 100 calories), olive oil ($0.05 per 100 calories), peanut butter ($0.05 per 100 calories), coconut oil ($0.07 per 100 calories), safflower oil ($0.07 per 100 calories), and peanuts ($0.08 per 100 calories)

Fish, Poultry, and Eggs: Eggs ($0.19 per 100 calories), chicken breast ($0.54 per 100 calories), tuna ($0.58 per 100 calories), trout ($0.59 per 100 calories), farmed salmon ($0.65 per 100 calories), turkey breast ($0.86 per 100 calories), tilapia ($1.04 per 100 calories), wild salmon ($1.32 per 100 calories), shrimp ($1.67 per 100 calories), and halibut ($2.97 per 100 calories)

Whole Grains: Oatmeal ($0.09 per 100 calories), steel cut oats ($0.12 per 100 calories), brown rice ($0.14 per 100 calories), quinoa ($0.16 per 100 calories), wheat bread ($0.18 per 100 calories), and bulgur wheat ($0.41 per 100 calories)

Beans and Tofu: Pinto beans ($0.05 per 100 calories), great northern beans ($0.05 per 100 calories), lentils ($0.07 per 100 calories), navy beans ($0.07 per 100 calories), black beans ($0.07 per 100 calories), kidney beans ($0.09 per 100 calories), and tofu ($0.59 per 100 calories)

Red Meat: Bacon ($0.18 per 100 calories), Italian sausage ($0.35 per 100 calories), pepperoni ($0.36 per 100 calories), beef brisket ($0.37 per 100 calories), ground beef 90/10 ($0.39 per 100 calories), salami ($0.43 per 100 calories), pork loin ($0.54 per 100 calories), lamb chops ($0.75 per 100 calories), bison ($0.84 per 100 calories), and sirloin steak ($1.00 per 100 calories)

Dairy: Whole milk ($0.11 per 100 calories), 2% milk ($0.13 per 100 calories), cheddar cheese ($0.15 per 100 calories), cream cheese ($0.19 per 100 calories), mozzarella cheese ($0.21 per 100 calories), Parmesan cheese ($0.29 per 100 calories), yogurt ($0.37 per 100 calories), cottage cheese ($0.50 per 100 calories), Greek yogurt ($0.61 per 100 calories), and feta cheese ($0.61 per 100 calories)

That’s a lot of data! How can you use it effectively?

Let’s start with a few principles. Ideally, a balanced diet will draw from all of these categories, perhaps a bit more heavily from the fruits and vegetables and maybe the beans and whole grains categories, too, with a lesser amount coming from the other groups. You want to mix things up to get a balanced diet. Similarly, you’re going to want to mix things up within categories to ensure a varied diet, both for your nutrients and for your palate. Of course, at the same time, you want to spend less at the grocery store.

What you can do is use this information along with the grocery store flyer to plan your meals for the week. Ideally, what you’ll try to do is focus on meals that are easy to prepare that are made up mostly of ingredients that are on those lists and also ingredients that are on sale.

Let’s say we’re planning breakfasts for the week, for example. One thing you might notice from this list is that oatmeal is pretty cheap – it’s $0.09 per 100 calories for rolled oats and $0.12 for steel cut oats. That’s cheap. You’ll also notice that bananas ($0.21 per cup), apples ($0.28 per cup), and pears ($0.42 per cup) are all also pretty cheap and all work really well as an additive to oatmeal.

So, for a couple days a week (at least), have a bowl of oatmeal for breakfast with a different fruit chopped up in it. You might also vary things by using whatever fruit is on sale that would go well in oatmeal (like peaches, for instance). You can have a cup of cooked steel cut oats with half a cup of chopped bananas in it for a roughly 325 calorie breakfast with a total cost of $0.34.

You might also notice that eggs are cheap, at $0.19 per 100 calories. That’s a good food to have semi-regularly for breakfast. Bacon is similar, at $0.18 per 100 calories, and that makes for a reasonable occasional breakfast food, too. Two strips of bacon and two eggs is roughly 300 calories (depending on how you cook them) and the total cost is going to be about $0.55, for instance.

What about lunch? You could have a small grilled chicken breast (250 calories, or about $1.25) and whatever vegetables you like along with it, adding about another quarter, or turn it into a sandwich with wheat bread for another quarter. Put a slice of cheese on it for about another fifteen cents.

Or, you could have a tuna salad by tossing a can of tuna (about $0.50) with a bit of olive oil (about $0.05) and a few seasonings (a penny or two) and mix it with a cup of spinach (about $0.50) or iceberg lettuce (about $0.25). You’re talking lunch for under a buck.

For a snack, eat some peanuts or some fruit (like an orange) or have a piece of bread with some peanut butter on it. All of those are at most a quarter or two.

Dinner offers you lots of options. Have a salmon fillet ($2 for a 300 calorie filet) or a turkey breast ($2 for a 300 calorie piece of turkey breast) with some veggies on the side ($0.25 a cup or so, depending on what you choose). Make a soup with some ground beef in it (maybe $2-3 across a large pot of soup) and use lots of beans ($0.05 to $0.09 per 100 calories of beans, which means you can eat a LOT of beans) and save the leftovers. Make yourself a black bean burrito with a tortilla (maybe $0.25), lettuce (probably $0.10 for the amount you’d put on a huge burrito), onion ($0.05 for the amount you’d want on a big burrito), a bit of cheese (maybe $0.10), and a ton of beans (again, a few cents). Those are all dinner options for just a dollar or two, made up of stuff from the lists above, and there are many, many more options and combinations.

The thing is, all of these examples come from just options on those lists. If you use your grocery store flyer and also include sale items where the prices on other items come down into this range, you add a lot of week-to-week variety here without adding much cost.

These principles enable us to feed our entire family of five breakfast for about $2, lunch for about $3-4, and dinner for about $5 if we’re careful. That’s a monthly food budget of about $300 for a family of five.

Now, naturally, we do buy a lot of items not listed above and incorporate those into our diet, but we use the ingredients above as a default and use them as the basis for a lot of our meals. Oatmeal with fruit in it is a very common breakfast, as are eggs and a piece of whole wheat toast. We have very simple lunches all the time. We eat a lot of dishes with beans in them, including as side dishes in tons of meals.

The vast majority of meals consumed by our family come in at well below $1 per person. That means that, even when we splurge sometimes for meals, we still don’t have a large food bill. (Even better, the splurges are meaningful and memorable; if you have a treat every day, it isn’t special any more and it ceases to be a treat.)

My challenge to you for reducing your food costs isn’t to make every meal cheap, but to make your ordinary meals cheap by sticking to ingredients from these lists and from your grocery store flyer. Make most of your meals using these cheap ingredients and your food expenses will be very cheap on the whole. That way, when you do splurge on other foods, you’ll still keep your overall food costs low for the month.

By all means, enjoy a steak with your wife on a Saturday evening or go out for dinner with the family on Sunday or have a date night every once in a while. For the rest of your meals, though, keep them cheap and simple. Not only will you be healthier, your wallet will be, too.

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Airport Lounge Access Is Sweet, Sweet Luxury – But Can It Save You Money, Too?

The fact that we can fly to the other side of the world never ceases to amaze me. After enduring an initial trip to the airport, you can check your bags, board your aircraft, and be on your way. And if you’re lucky, you might even sleep through the entire flight – falling asleep in one land and waking up in another world.

While this all sounds great, there’s more to flying than pure joy and adventure. For all its conveniences, air travel is also a huge pain.

Arrival at the airport usually leads to a flurry of queuing – first to check your bags and check in, then through security. If you’re lucky enough, you’ll get to your gate in a decent time. But then, it’s cramped seating, constant announcements over the intercom, and gross airport food until you queue (once again) to board your plane. And once you land in your destination, it’s usually more queuing and even more hassle.

Escaping the Stress of Travel with Airport Lounge Access

Enter the airport lounge: a type of travel oasis tucked away in the corners of airports across the world. While airport lounge access can’t save you from long lines or the hassle of flying, they do provide a welcome respite from the business and stress of airport travel.

Sounds amazing, huh? Unfortunately, airport lounge access isn’t free. One of the most popular lounge programs, Priority Pass, offers access to 1,000 airport lounges across the world and starts at $99 for an annual membership. On top of that, members pay $27 per visit for themselves and guests. A Standard Plus membership costs $249 per year, yet comes with 10 free lounge visits and $27 guest visits. A Prestige membership costs a staggering $399 per year, but includes unlimited visits. Also note that most airport lounges offer one-time day passes for $30 to $50 per person.

After spending hours, days, or even weeks stalking travel booking websites to save $100 on your flights, the notion of giving back all those savings probably doesn’t sound too appealing.

But while lounge membership certainly comes off as expensive, some travel credit cards offer airport lounge access as a cardholder perk – making your quiet airport escape close to free. Plus, lounge access comes a lot more than just a place to escape. On top of peace and quiet, lounge access also comes with:

  • Complimentary snacks and appetizers
  • Free drinks, including certain types of alcohol
  • Newspapers and magazines
  • Free Wi-Fi
  • Shower facilities

Some airport lounges are better than others. For example, Centurion Lounges, which you can access if you have The Platinum Card® from American Express or The Enhanced Business Platinum® Card from American Express OPEN, are known for offering appetizers and full buffets of food, along with premium drinks and plenty of extra snacks. The Centurion Lounge in Miami even offers guests 15-minute massages and manicures as part of the experience, provided you have enough airport time to make, and wait for, an appointment.

Could Airport Lounge Access Actually Save You Money?

With so many benefits, you might be wondering if lounge access is a good or bad deal, or if (gasp) it might even save you money. As someone who makes use of airport lounges frequently, I would say it really depends. But for my family, lounge access has been a lifesaver – both when we’ve traveled as a couple and with our young kids.

Last year, for example, my husband and I got stuck at the Miami airport for nine hours starting at 9:00 a.m. Since we have American Express credit cards, we headed straight to the Centurion Lounge for the day. Once we arrived, we ate breakfast, completed some work with the free Wi-Fi, then stuck around for lunch. And since our plane wasn’t scheduled to leave until around 6:00 p.m., we also had dinner in the Centurion Lounge.

Not only did we save anywhere from $60 to $100 by not having to pay for airport food all day, but we saved our sanity, too. Sitting at the gate for nine hours would have easily made me crazy!

Another time, we endured a few long days of traveling with our kids. Since we got the Chicago airport early, we had a few hours to kill at the lounge there. That meant plenty of snacks and drinks for all of us before we boarded our plane. During a three-hour layover, we had lunch and snacks again. And when our plane was delayed a few hours, we wound up turning the airport lounge snacks into dinner. If you have purchased food at an airport before, you know buying lunch and dinner for four could have easily cost us $100.

But, it’s not just families who can benefit from airport lounge access. Frequent travelers who spend a lot of time in airports are more likely to benefit from airport lounge access based on visit frequency alone. If you travel at least a week every month and experience long layovers, for example, having a place to shower and eat a free meal with drinks can easily lead to savings over time.

Should You Ever Pay for Airport Lounge Access?

If you don’t travel very often and don’t have any rewards credit cards, it might be difficult to get much “bang for your buck” from airport lounge access. With the Standard Priority Pass membership, you’ll pay $99 per year and $27 per visit. Unless you’re going to spend hours in the lounge and drink your weight in alcohol, it’s doubtful you’ll come out ahead.

If you travel all the time, on the other hand, paying $399 for unlimited visits could absolutely be worth it. If you visit a lounge and eat a meal five times per month saving $20 every time, it would only take 20 airport visits over four months to come out ahead.

In my opinion though, the best way to get airport lounge access as a frequent traveler is to sign up for a travel credit card that offers it. The new Chase Sapphire Reserve card, for example, offers access to more than 900 airport lounges worldwide with complimentary Priority Pass™ Select membership. And obviously, the card itself offers plenty more travel benefits that can be immensely helpful, including trip cancellation/interruption insurance, primary auto rental coverage, and of course, Chase Ultimate Rewards points.

As mentioned above, the The Platinum Card® from American Express and The Enhanced Business Platinum® Card from American Express OPEN both offer Centurion Lounge access and the Global Airport Lounge Access Program, which includes access to over 1,000 airports around the world.

Plenty of other cards come with their own airport lounge access program, including the Citi Prestige® (at least for now), Ritz Carlton Rewards Card, and Citi Executive® / AAdvantage® World Elite™ MasterCard®. Before you sign up for any of these cards, make sure you understand their benefits, how you might access them, and whether any annual fees are involved.

The Bottom Line

If you travel often enough to take advantage, airport lounge access can improve your travel experience and save your sanity. And, who knows – it might even save you some money in the process. As always, it makes sense to run the numbers before you purchase a membership or sign up for a rewards card that offers this perk. How often you can use this benefit will make a huge difference in how much value you’ll get out of a membership.

Airport lounge access may make air travel easier to stomach, but it only helps when it doesn’t cost an arm and a leg.

Holly Johnson is an award-winning personal finance writer and the author of Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.

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Have you ever visited an airport lounge? Do you think lounge access saves you money?

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Tuesday, January 24, 2017

The Magic of Hedonic Adaptation

If you’re wondering what on earth hedonic adaptation is, keep reading. It’s a fancy term for something that’s actually pretty straightforward.

The other day, I happened to find myself at a Whole Foods.

Now, I don’t have anything whatsoever against Whole Foods. I think they sell a ton of good products there. Having said that, most of the products at Whole Foods are rather expensive variations on things you can get at discount grocers or fall into the category of a specialty food. You can get everything you need to feed yourself at your local discount grocery store for half the price or less than a similar quantity of food from Whole Foods, though the stuff from Whole Foods might be more varied and so on.

In short, Whole Foods sells more expensive versions of things that you need.

As I walked through the aisles there, I couldn’t help but realize that there were a lot of products in the store that I used to buy regularly. I drank a bottle of kombucha almost every day, for example. I used to buy sauerkraut regularly. There were a lot of cheeses and craft beers and organic veggies and chocolate bars and other things that I knew from the labels. I was a very regular customer of a food co-op that was near my old workplace and they carried many of the items that Whole Foods carries.

Back in the day, I used to buy all of that stuff as a matter of course. But I do a lot of things differently now.

I make my own sauerkraut, for one. It costs about $2 to buy enough cabbage to make four liters of sauerkraut. In the store, it’s often several dollars to buy one liter of it and even more if you buy a particular variety.

I make my own kombucha. It costs about the price of four teabags and a few spoonfuls of sugar to make half a gallon of kombucha – pennies, in other words. A bottle of kombucha in that store is about $4 and I can make enough to fill several bottles for maybe $0.50 – and I have far more control over the flavors and such.

I don’t drink craft beer very often any more. It used to be a daily occurrence; now it’s something I drink perhaps once every week or two. It moved from a regular daily staple to a treat and I appreciate it much more now. I don’t each much chocolate, either.

I mostly buy veggies from the farmers market nowadays, or grow them myself. I pay about half as much.

I don’t buy the nice soaps or the vitamins or any of that other stuff, either. I use a minimal amount of cheap soap each time I shower and I just eat a well-rounded diet so vitamins aren’t very useful, either.

(I still like good cheese, though, but I rarely buy it – it’s a treat.)

The thing is, ten years ago, I would have filled up my cart at Whole Foods and thought nothing of it. I would have gone home and used all of the stuff that I bought and thought of all of it as completely normal, as if it were the baseline for my life.

Today? I bought literally two items, and they were both blatant treats, something very special and out of the ordinary, and I spent less than $10.

(Yes, one of them was cheese.)

The reality is that we spend substantially less on food today as a family than we did ten years ago. Ten years ago, our family consisted of two adults and a toddler. Today, it consists of two adults, a preteen, and two elementary-aged children.

What changed? The big change was that we redefined the baseline of our life. The normal natural flow of our day-to-day life consists of extremely inexpensive staples.

For example, we often eat meals that cost far less than $1 per person for ingredients. The other night, we actually prepared a bean soup and homemade breadsticks that fed the five of us with leftovers for about $1 total in ingredients. It’s pretty much impossible to find even the smallest item at Whole Foods for just $1.

Let me be clear, I’m not picking on Whole Foods at all. They sell upscale versions of ordinary staples and there’s certainly a place for that.

However, the place for that isn’t as the baseline for food consumption in my life. It’s an “occasional treat” kind of thing, but the day-to-day groceries that I use in my life are bought at a discount grocer or a farmers market or come from our garden.

Here’s the thing: it was incredibly hard to make that adjustment. When Sarah and I made the decision to cut back to basics in our life, it was hard. I felt like I was giving up all kinds of things in my life that I had come to accept as normal.

I felt upset. I felt miserable. I often debated whether giving up all of these things in my life was “worth it.” I longed to just go to the food co-op and spend $200 on food products, or go to an electronics store and drop $500 on video games and electronics, or just do anything that involved spending money in the way that I used to.

One day, though, I woke up and I realized that those feelings had slowly drifted away.

My idea of “normal groceries” no longer involved shopping at the food co-op, it was shopping at Fareway.

My idea of “normal hobby time” no longer involved going to the bookstore and dropping $50, it involved curling up and reading a book I already had or stopping at the library.

My idea of a “date night” no longer involved an expensive dinner and some sort of expensive entertainment. It now involved going to a local open air market and listening to the free music, or packing a picnic and going to the top of a hill at Ledges to enjoy it with a breathtaking view.

Given enough time, you eventually adjust to the things you do regularly. If you’re constantly frugal and careful with the choices in your life, you eventually start to view the frugal choices as “normal” and the expensive choices you used to make as the abnormal way of doing things. When that happens, it becomes quite easy to live an inexpensive life.

When you adjust upward, to more expensive options, the adjustment can feel pretty easy, especially if you have enough income to have flexibility in your spending. You don’t particularly notice that you’re saving less and less, so you don’t really feel the negative impact of your choices. You just gradually settle into a life with a more expensive “default” setting. You enjoy nicer dinners and shinier cars and better clothes and nicer entertainment and so on and so forth.

It seems wonderful at first, but then the wonder fades and it just seems normal. The only difference is that normal is now more expensive than before. That has consequences: you’re saving less (if you’re saving anything at all), for starters.

However, even with all of the extra perks, your life is still basically the same. You’re going to the same job. You’re living in the same place. You’re hanging out with the same people. You’re engaged with the same hobbies. It’s just a more expensive version of the same old life.

In short, you’re not going to be any happier than you were before. In fact, the opposite is true; by spending more of your income, you’re now saving less. You’re suddenly more prone to financial disasters. You’re making less progress toward your long term goals.

I know this from experience. Over a five year period, I slowly ratcheted my spending upward. I bought higher quality foods. I bought nicer clothes. I went out on nicer dates. I bought lots of things I could have easily borrowed, from books to video games. I “invested” in expensive collections.

Yet, after all of that, I was still married to the same woman. I still had the same job. I still had the same social circle. I still had the same hobbies, more or less. I still lived in the same apartment.

We just had far less money in the bank than we would have otherwise had, which meant that I was more stressed out, less prepared to handle emergencies, more afraid to check the mail, and far less prepared for things like retirement than I could have been.

The transition from spending less to spending more was as easy as could be, though. I honestly barely noticed the changes. Though I did marvel at the new perks at first, they quickly just became the “norm.” It just became my same old life with slightly higher quality versions of the same old things and with a lot less money in the bank and a lot more credit card debt.

During the handful of years after that upward adjustment in spending, I did the opposite. I adjusted downward. I started shopping at discount grocery stores. I ate out far less. I bought a lot of store brand items. Sarah and I moved to a lot of low-cost and free dates. I moved to mostly borrowing books and trading games with friends. I stopped collecting expensive stuff and started collecting experiences.

It was a rough change. I liked my multitude of perks and I didn’t want to let them go. During my weaker moments, I would sometimes relapse a bit.

Yet, after all of those changes, I was still married to the same woman. I still had the same job (at least at first). I still had the same social circle, for the most part. I still had the same hobbies, more or less. I still lived in the same apartment, only changing living quarters when forced to by the arrival of children in our lives.

We just had more money in the bank than we would have otherwise had, which meant that I felt a lot less stress, more prepared to handle emergencies, less afraid to check the mail, and far more prepared for things like retirement than I had been.

The transition wasn’t easy, as I mentioned above, but there came a point after several months when my new routines simply became the “norm.” It was the same old life that I’d had for years with slightly lower quality versions of the same old things – often the difference in quality was completely unnoticeable and even when it was, it was often regarding something that I didn’t really care about all that much. The biggest difference? The money in the bank was piling up.

Those adjustments are both called hedonic adaptation. In a nutshell, as long as your basic needs are met, you’ll eventually adjust to view whatever level of spending you take on as a normal level of spending. If you ratchet it upwards, it’ll be fun riding the elevator upwards, but eventually you won’t notice the joy of it any more because it’s become normal. If you ratchet your spending downwards, it’ll be painful watching minor perks go away, but eventually you won’t feel any pain any more because the new way of doing things is now normal.

You’re going to eventually revert back to the same level of happiness with most of the things in your life. With one big exception, of course: if you spend less, you’re going to be building financial security quite rapidly, and that adds a certain amount of personal peace to the equation.

In other words, you adjust to the things you do regularly. Sometimes it’s difficult to adjust, especially if you take away a luxury or a perk. Once you’ve adjusted, you don’t notice it and you wonder why on earth you considered it a normal thing.

There are a few things worth noting here.

There is a “floor” to this kind of adaptation. When you start crossing the line into cutting things you truly need, it’ll become very difficult. Having plenty of foods that provide basic nutrition is one. Having plenty of clean water is another. Having a roof over your head and a place to store some of your stuff is yet another. Having a way to easily transport yourself to work and to places to acquire food is another. Having a few interests and hobbies is yet another. Having the ability to occasionally treat yourself is yet another. Once you start eliminating those things, you start altering the things that form your basic level of happiness.

That default level of happiness stays more or less the same no matter how big your house is, but you need to have a place to live or else you’re chopping into that default level of happiness. That default level of happiness stays more or less the same whether you’re eating caviar or cabbage, but you need to have your nutrition basics covered or else you’re chopping into that default level of happiness. That default level of happiness stays more or less the same no matter how you get to the store or get to work, but you need to have transportation capability or else you’re chopping into that default level of happiness. You get the idea – your needs have to be covered.

If you’re unhappy now, you’re going to be unhappy spending less, but you’ll also eventually be unhappy spending more. Your happiness level is far more about brain chemistry and daily routines than it is about the relative affluence of the things you buy and own. If you’re seeking happiness by spending more, you won’t find it. You need to seek other ways to find happiness in your life, whether it’s through a job change or a lifestyle change or simply finding a daily routine that works better for you.

For me personally, five things have really helped with personal happiness in the last few years. First, I started blocking off blocks of time in my schedule for my personal hobbies and interests. Second, I have blocks of time with people I care about where I utterly disconnect from my cell phone and social media and concentrate on the people I’m with and the things I’m doing. Third, I pray/meditate daily (I consider the practices to be extremely similar). Fourth, I put conscious effort into building and maintaining strong personal relationships with family and with my key friends, and that means doing things like actually listening to them and offering genuine help where I can without intruding. Finally, I get out and move around as much as possible, ideally in the great outdoors; I walk a lot of local and state park trails. Those things help far more with my personal happiness than virtually any realistic amount of spending.

The transition down is hard, and many people give up. When you’re transitioning downward with your spending, the transition is difficult. When you actually make it and adopt the new lower level of spending as “normal,” things are fine, but until you get there, it can feel miserable at times. You notice the absence of expensive daily routines and you might miss them. You might feel a bit of a reduction in your options while shopping (even though everything you need is still easily available). You might shift away from routines that involve regularly buying stuff into routines of regularly doing stuff and you miss that little burst of pleasure that comes from acquisition.

Those shifts are harder than they might seem at first. At first, you’re often in a “honeymoon” where you’re enjoying the change for change’s sake, but after a while, you will go through a rocky period where you feel at least somewhat deprived. That can bring about a lot of short-term negative feelings and, for a lot of people, they relapse into old spending habits. Many people are unwilling to push through that period of negative feelings about change.

The thing is, once you do push through it, things become normal again. You adapt to your new routines. Your happiness returns to essentially the previous level – or perhaps even a bit higher, since you’ve eliminated some financial stress from your life.

I know that, for me personally, I am far happier now spending less than I was back then when I was spending more. Not only do I have financial stability, I also have figured out a lot of techniques to improve my personal happiness along the way.

So what’s the take home message in all of this?

The message is that if you make spending cuts in your life that don’t fall into cutting needs, you will eventually adapt to those changes and return to your previous level of life happiness. In fact, you may actually find more happiness because the changes will come with less stress.

Why doesn’t everyone do this? There are three reasons, in my view.

First, escalating your spending feels good as you’re doing it because you’re enjoying those perks for the first time. The glow of temporary increased happiness is undoubtedly pleasant, though it eventually fades back to your normal level of happiness.

Second, our popular culture practically revolves advertising and marketing of an expensive affluent lifestyle, so all of our cultural cues point toward spending more money for more and nicer versions of the same stuff.

Third, reducing your spending feels difficult as you’re doing it because you feel those perks leaving, and even though you eventually return to your base level of happiness (or higher), it’s difficult to get there.

Those three things together hold people at their current spending level and gradually push them toward spending more and more and more, even though that path doesn’t lead to lasting happiness and creates long term financial difficulties.

My advice to you? Break through the challenge and reduce your spending. It might be difficult in the short run, but over the long run as you adapt to the changes you’ll find greater happiness and increased financial security.

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Equifax, TransUnion Fined for Deceptive Credit Score Marketing

The Consumer Financial Protection Bureau (CFPB) has ordered two of the nation’s three largest credit reporting agencies, Equifax and TransUnion, to pay more than $23 million in fines and restitution for the alleged deceptive marketing of their credit monitoring subscription products. The remaining credit reporting agency, Experian, has not been fined as part of the CFPB’s action.

In a statement released by the CFPB earlier this month, director Richard Cordray stated, “TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises. Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them.”

But There Really Is More Than One Credit Score!

The CFPB alleges that TransUnion and Equifax deceived consumers about the value of the credit scores they were being sold. The scores these agencies sold to consumers were “not valuable,” according to the CFPB, because neither score — TransUnion’s VantageScore and the Equifax Credit Score — would typically be used by lenders when making loan approvals.

The problem with the CFPB’s position is that the scores sold to consumers are, in fact, valuable, because they’re commercially available and are sometimes used by lenders (if not as often as the more commonly used FICO score).

Further, credit scores, even if they’re not the version being used by a lender, can still be an effective tool to help consumers track the health of their credit. If you have a low FICO credit score, then your VantageScore or your Equifax Credit Score will be low as well. If you take steps to improve your credit, and your VantageScore credit score or your Equifax Credit Score begins to rise, then your FICO score will almost certainly rise as well.

All credit scores, whether they’re free or fee-based, have some value — as they are directionally accurate and tell the same story about your credit risk.

Whether or not the scores consumers purchased from TransUnion and Equifax would be the same credit scores pulled by a lender depends on what scoring system that particular lender uses. Some lenders use FICO, some use VantageScore, some use the Equifax Risk Score, and some use none of them.

However, if a consumer were to have two different lenders pull his or her credit scores on the same day, they would likely receive two entirely different sets of numbers. That’s the nature of our credit scoring environment, which is filled with hundreds of different score options. Even the CFPB acknowledged in their press statement that “No single credit score or credit score model is used by every lender.”

The truth is that no one has a single credit score. Instead there are hundreds of different credit scores which are commercially available to consumers and lenders today. It’s true that FICO enjoys the dominant market share, but there are many lenders that purchase credit scores from FICO’s primary competitor, VantageScore, as well.

Fines and Required Changes

In addition to $5.5 million in fines and over $17.6 million in restitution levied upon Equifax and Trans Union by the CFPB, the two credit reporting agencies are also being required to “truthfully represent the usefulness of credit scores [they] sell” moving forward.

In other words, the agencies must disclose to consumers that the credit scores they are purchasing may not be the same scores which would be used by a lender. But that can be said about any score sold to or given to a consumer.

Related Articles:

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

The post Equifax, TransUnion Fined for Deceptive Credit Score Marketing appeared first on The Simple Dollar.

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Monday, January 23, 2017

Questions About Flipping Houses, Scentsy, Journaling, Intermittent Fasting and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Where should retirement savings go?
2. Buying furniture on credit
3. Buying a house to flip
4. Bonus issue
5. You Need a Budget recommendation?
6. Scentsy and other marketing schemes
7. Intermittent fasting?
8. Leveraging outside interest for raise
9. Overvaluing the now
10. Earning money in Roth IRA
11. Options for journaling
12. Thoughts on prayer

One of the biggest self-improvement projects I’ve ever had for myself is to simply become more focused in my professional productivity. What I mean by that is that I have a certain amount of tasks to complete in a week and some of them require some brainstorming and thinking time, so what’s the most efficient way I can get all of those tasks done with quality results? The reality of my life is that my “work hours” are defined not by the clock, but by the projects I need to get done. If I can get a day’s tasks done in four hours, I can stop working at the four hour mark. If they take me twelve, then I need to work twelve. Thus, more efficient work directly results in more free time for other things in my life.

I’ve figured out that I’m much more productive on work projects in the morning and that my productivity really starts to decline in the afternoon. I’ve figured out that it comes in waves and that I really need a 10-15 minute break every hour or so, unless I can slip into a “zone” where I more or less lose track of time but I’m really productive. Thus, my goal on many days is to slip into that “zone” state if at all possible, but I simply can’t quite pull it off every day. I’ve figured out that there are certain little things that I can do that really help, like meditate/pray and get some exercise and get very hydrated and eat enough so that I’m not hungry but not overly full and turn off my cell phone and close my web browser and put on some ambient techno music. Lately, I’ve figured out that drinking a cup of coffee immediately followed by a cup of green tea can help a little bit.

It’s a constant experiment, though, and it’s something I take notes on. I know that I’m far more productive today than I was eight years ago or so, and that’s largely due to trial and error and sticking with the things that work. I can get about as much done in 4 hours today as I did in 7 or so hours several years ago, which makes a huge difference in my life.

The key, more than anything else, is experimenting, keeping track of what works, and repeating it.

Q1: Where should retirement savings go?

I left my job in 2011 to attend graduate school. I rolled over my 401k proceeds into an IRA and did not contribute any additional money during the two years I was in school. When I started my new job after graduation, I had to wait a full year to contribute to my company’s retirement plan. In the interim, I contributed $100/month to my rollover IRA. I’ve continued to do this for the last few years, and have also been contributing 7% of my salary to my employer 401k. My question is whether I should continue to contribute $100/month to my IRA as I have been, or if I should direct that instead to either my employer 401k or open a Roth IRA instead.
– Jeanine

The first question you need to ask is whether or not your employer is matching any of your 401(k) contributions. Are you getting any matching at all?

If you’re not getting any matching, you should open up a Roth IRA and channel all of your retirement savings into that. Try, if you can, to hit the annual contribution limit of $5,500. If you want to save more than that, turn back to your 401(k).

If you are getting matching, contribute as much as you can to get every drop of matching funds from your employer. If you want to save more, open up a Roth IRA and contribute there.

The reason for this is that you should try to balance your pre-tax and post-tax retirement savings, and it sounds like everything you have right now is pre-tax. A Roth IRA is a post-tax vehicle, which means you won’t have to pay taxes on what you withdraw in retirement, which means your tax rate in retirement will effectively be lower (since you won’t need as much pre-tax income, like work income or money from a 401(k)).

Q2: Buying furniture on credit

My wife and I are looking to purchase several new pieces of furniture for our living room. We aren’t buying anything super high-end and have plenty of cash saved to make the purchase, but we were considering opening a new credit card through our bank with no interest over x number of months and paying the full amount off before the interest kicks in. We are young and have little credit history—so the thought is that every little bit might help increase our score (as long as the credit limit is high enough on the card). Do you have any opinion or thoughts on this?
– Kevin

I don’t see any problem with doing this provided that you spend significantly less than what you have saved for this. Don’t spend more than you have saved; don’t even spend everything you have saved. Then, I’d make minimum payments on the card until a month or so before the zero interest period ends, then I’d pay off the whole thing.

The benefits here are twofold. One, you’ll build credit by having that credit card and by making your minimum payments on it. Two, because it’s zero interest, you’ll be able to leave your money in savings where it will still earn a little bit for you before you pay off the card.

Just don’t spend as much as you have saved. You’re going to want to have some “extra” for an emergency fund if something goes haywire in your life.

Kevin has a second question.

Q3: Buying a house to flip

My wife and I currently rent our home for $850 a month. We chose to rent when we moved here because we didn’t know the area and knew that we would likely have to move again in 3-4 years. I have found a small home that is livable but in need of renovation that is currently priced at $65,000, which would of course mean a much lower monthly payment than our current rent. And, with the money we save, we could put some sweat equity into the home and likely flip it for a moderate gain or rent it out (we live in a fast-growing area where rentals are in demand). However, I’m still hesitant to purchase, because we will likely be moving in less than 2 years. How would you proceed in this situation?
– Kevin

If you have a passion for home improvement and that would become your main hobby, then go for it. If it’s not something that excites you and not something you’d want to do most days after work, then don’t go for it.

House remodeling and flipping is a great hobby for someone who loves those kinds of tasks. I have a friend who is happier than a clam when he’s in the midst of a home remodeling project, for example. For me? It’s something I’ll do if it needs to be done, but I don’t get excited about it (I don’t particularly hate it, either; it’s more like indifference, as I can appreciate it but it’s not the thing that lights my fire).

If you don’t have that passion, this is going to end up being a bad move, as you’re going to feel obligated to invest a lot of time into something that you’re not passionate about for fairly modest gains (you’re going to invest a lot of time and quite a few materials; you’ll get a return but not a huge one for the time you’ve invested). If you’re passionate about it, then you get additional joy from the time invested and that makes the whole project “worth it;” if you’re not, then it’s not worth it.

Q4: Bonus issue

A bit of background, I make just under what would qualify me for HCE which is good that I can put 24K into my 401k (i’m over 50). Recently our bonuses got much larger and last year it was going to put me over the HCE max which meant I was going to be limited to 3.2% of my salary (that’s the average put in where I work).

So dropping from 24K going into 401k to just over 3K was a big issue. Around this time I was offered another job which I considered, talking to the owners of the company I had said that the 401k issue was a big concern for me. They suggested that my bonus be paid to my wife (she also works here) instead of me. Hey, I’m fine with that, they asked me to sign a paper saying to pay her my bonus, which I did.

Is this legal? If not, would it be me or them that would get into trouble?
– Stephen

I was unsure about the legality of this arrangement, so I asked a friend in the legal profession who informed me that it’s likely in a gray area and it depends on the locale and the wording of the agreement.

I would consult a lawyer in your area regarding the legality of the arrangement; lawyer-client confidentiality should keep you safe here, and this is what my legal-minded friend suggested as well.

That’s usually the best route when you’re unsure as to the legality of an arrangement. Check with a lawyer before you sign anything that you’re unsure about.

Q5: You Need a Budget recommendation?

I’ve just read your article where you use YNAB. Now that YNAB has changed to a subscription based, do you still recommend YNAB to new users?
– Carrie

I still use You Need a Budget, but I don’t use the subscription version. I continue to use the older version, YNAB 4, which is still available here. They are no longer officially supporting the old version, however.

I do not and will not use the new subscription version of the product. It has transformed into software that stores your financial data in the cloud, and I have no use for such software. No matter how good their security is – and it is quite good – it simply becomes another potential failure point for identity theft, and I do everything I can to minimize those. A “failure point” is simply any company that potentially has access to your data in such a way that they could be hacked, and every new account you have is another potential failure point.

If the old version ceases to work for me, I’ll go back to using my old PearBudget spreadsheet. I have no interest in sharing my financial data in the cloud with any company more than I have to.

Q6: Scentsy and other marketing schemes

I am curious what knowledge you have with companies such as Perfectly Posh, Scentsy, Thirty-one, being at home businesses that actually make you money. Is it possible? My wife has been part of Perfectly Posh for over a year. I’m not sold on the fact that she’s making money and not just losing money.
– Philip

Perfectly Posh, Scentsy, and many other similar companies all fall under the umbrella of multi-level marketing or network marketing organizations. In a nutshell, those organizations are very difficult for the people on the ground actually selling the product to make a lot of money from unless they are exceptional salespeople, in which case they can find much better paying gigs in actual sales departments.

There are a lot of reasons for this, but the key reason is that such organizations tend to reward those who recruit new salespeople much more than it rewards the salespeople. The people doing the selling on the ground almost always have to invest in the products themselves and then sell those items at a markup in order to make money, but they’re usually losing some portion of that markup to the person that recruited them.

So, let’s say they want to sell items that are listed at $500 in the catalogue. They either have to sell from the catalogue, which is difficult because there’s no product to show and the buyer has to wait for the item to come in, or they have to invest in the product themselves. So, that person has to invest in a bunch of product that they may or may not sell – they may have to spend $300 on that product, then store it in a room somewhere while they sell it. There’s also usually a cut for the person that got them into selling – let’s say it’s another $30. So, they’ve invested $330 in items that they have to sell. If they sell every single item, they’ll make $170. Every single unsold item cuts into that profit. Every single item that they use for promotion or demonstration cuts into that profit. All of the time they invest in selling that stuff reduces the income per hour.

What usually happens is that sellers are lucky to break even and, even if they do, they’ve invested so many hours that their hourly wage is measured in pennies rather than dollars. Not only that, there’s a good likelihood that they’ve pressured their friends into buying things that their friends do not really want, which can strain friendships.

It’s just not worth it. However, if your wife has sunk money into product that she has on hand, she needs to sell most of it to recoup what’s already invested.

Also, be aware that such companies use lots of tricks and misdirection to disguise the details of this arrangement and make it look better to new salespeople and outsiders. They use a lot of positive psychology and other techniques to make this feel like a “real business.”

If your wife does manage to easily sell all of this stuff without dinging her friends, then she’s a good enough salesperson that she should get a real sales job and make a lot more money than she could ever make through this system.

Q7: Intermittent fasting?

I’ve been researching intermittent fasting diets to improve my health and cognition. I did a search on The Simple Dollar and noticed you haven’t covered this yet. So, I thought I’d just shoot you an email and the attached article in the hopes that you would consider writing on it.

– Nina

Intermittent fasting is one of many topics that I have considered writing about on The Simple Dollar but I was unable to find enough real evidence or personal experience to really warrant it as a tool for self-improvement or reduced spending.

There is some evidence that intermittent fasting can help with weight loss and health improvement, as summarized in this JAMC article, but the question remains whether it is as effective as simply dieting as normal.

I sometimes intermittently fast just as part of a normal day. I’ll skip breakfast and lunch and eat a fairly large dinner with my family. I don’t notice any real benefits from it, though, other than it definitely reduces my calorie intake for the day provided I don’t just pig out at dinnertime.

Q8: Leveraging outside interest for raise

I have 9-10 years experience in my field and have been at my current employer for almost 3 years. In those 3 years, I have quickly earned a lot of responsibility, rising into a leadership role (although not formally recognized as a promotion), added an extracurricular role by joining the hiring committee, and my company has steadily increased my pay during the 2 yearly performance reviews I’ve had. I enjoy genuine friendships with several coworkers, something lacking at past companies.

The local job market in my field is quite strong currently, especially for those at my experience level. I receive regular inquiries from job-recruiters (usually through LinkedIn, but occasionally they call my office voicemail) and I typically do reply with a short and polite, professional note saying thanks but no thanks.

To date, I’ve gone into all my reviews expecting to be offered a modest pay increase, yet pumping myself up to try to negotiate another 1-2%. I’ve never actually followed through, however, and have accepted the pay increase in the moment, partially because the raise was a bit more than I expected but frankly also because I chickened out.

This year, however, with increased responsibility and a strong demand for my skills, I’m looking for a substantial increase. Should I be prepared to leverage outside interest, even if I have almost zero interest in switching employers? One recruiter claimed that he was referred to me specifically and that his client would offer a $10k+ bump if the interview went well, even without knowing my current salary. Such a tactic would be unfamiliar territory for me and always carries at least some risk. I’m pretty sure I’ve found my long-term “fit” here and wouldn’t want to jeopardize that. Still, these reviews are my only real opportunity to increase pay.

Thanks for any tips or advice in advance.
– Jake

If you have a history of strong performance reviews and there are no job security concerns, there should be no problem in discussing a 1-2% additional raise during a performance review. The best thing you can do is to simply document your case for why you should receive such a raise. I would literally write up a “report” of sorts that makes your case as to why you deserve the raise. Make a list of ten or so bullet points, basically made up of what you describe above, and take it with you to the meeting to give yourself something to refer to when making your case.

Outside interest can be a useful tool for leverage, but it does run its own risk of making you seem disloyal to the organization and that is not worth it when discussing a modest raise like this. It’s better if you’re going in and seeking a 10% or more raise, not a 1-2% raise.

Another tool to consider is whether or not some form of compensation outside of the actual raise might make you happy. What about some increased flexibility in your schedule, or some extra vacation time? Those are compensation tools that don’t directly impact the company’s bottom line but also provide value to you. Think about options like those as well if you’re nervous about asking directly for dollars and cents.

Q9: Overvaluing the now

My biggest financial problem is that I constantly overvalue now. In the moment, I don’t see it, but I see it later all the time. I decide that some small pleasure RIGHT NOW is much more worthwhile than bigger things down the road. Because of that I sometimes wind up in credit card trouble and I have a hard time saving much of anything. Help!!? How do I stop making the same dumb mistake!!?
– Connie

First of all, stop using your credit card. A credit card is like a knife; it’s a great tool in the hands of someone who can use it effectively, but it can also cut your thumb off. If you’re constantly using it to sate short-term desires, you’re closer to the “cut your thumb off” category. Just stop using it for a while. Rely solely on your debit card and keep close track of what’s going on in your checking account.

Second, set up some automatic savings plans that suck money straight out of your checking without you needing to take any action. Set up an online savings account at, say, Ally Bank and instruct them to withdraw, say, $50 from your checking each week. The money in that account becomes your emergency fund and/or your savings for big goals like a down payment on a car or a house. You can do a similar thing to get a Roth IRA rolling for retirement.

What you’re doing is effectively removing the options you have available to you to make those bad decisions in the moment. It’s a lot harder to decide to buy a $200 item if you only have $150 in your checking account rather than an effectively infinite credit card.

Q10: Earning money in Roth IRA

My father has given each of his kids a cash gift in the form of a Roth IRA contribution each year for Christmas. He just kind of handles all of it. He’s been doing it for several years but I haven’t really looked at it ever, but this Christmas he told all of us that we should start looking at our Roth IRAs and make some investment choices. It’s through Vanguard. I currently have $21,808 in Vanguard Prime Money Market Fund. What should I be doing with it?
– Kelly

Given that you seem to be very hands off in terms of personally managing your investing, your best bet would be to move all of it into a Target Retirent Fund. Figure out the approximate year in which you’ll turn 70, and then find the Target Retirement Fund that is closest to that year. For example, let’s say you’re 32 in 2017. That would mean you’d turn 70 in 2055, so you’d want to find the Target 2055 Retirement Fund and move your money into there.

A Target Retirement Fund is basically a mix of investments that’s geared to balance risk and reward as well as possible given that you’re planning to retire around that year. If you’re far away from it, it is high risk and high reward since you have plenty of time to recover from a downturn and you want to ride every rise in stocks and bonds over the coming years; if you’re close to it, it’s lower risk and lower reward to make sure that you’re not hammered at the last minute by a market downturn.

I don’t know exactly how your father is contributing this money. I’m guessing he has a Vanguard account for you that he can log into and make the transfer. If that’s the case, just drop him a note telling him what you did with it and that you’d like any future gifts to go straight into that fund.

Q11: Options for journaling

I’ve been wanting to journal for awhile and was thinking about online journaling for ease of use. I’m still undecided about that and wanted an option for writing myself. I tried searching the archives for what journal Trent uses. I remember him talking about the binding of the one he uses which is a reason he selected it. Could you provide me with that information? Also, are there any good online journaling websites that may be around for a long time that I could possibly download my journals from? This question may have already been asked… the reason why I’m also hesitating to do online journaling is because of possible content that I would be writing about.
– Sandra

I personally do all of my journaling by hand. I find that it has a lot more impact on me personally and on my thinking if I actually write it out with a pen. I tend to think more about what I’m writing if I do it that way. I usually “back up” my journal entries by taking pictures of them and saving them in Evernote, which is protected by a really long password that only I know, but that’s a choice you can make for yourself whether you want to save them in that way.

If I’m buying the journals myself, I just buy college-lined composition books. I can find these for very cheap around the time of back-to-school sales, so I stock up. I can usually buy several for a dollar, so I’ll often buy $3-4 worth and that will last for a LONG time.

However, I fill up lots of notebooks and my family and friends know this, so I often receive notebooks as a gift. My favorite notebook is the Baron Fig Confidant and also their Vanguard. I absolutely love these and prefer them over all other notebooks. I do also use pocket notebooks to jot down reminders, and for those I do splurge a little and use Field Notes because they (usually) hold up really well in my hip pocket; however, there are some special editions of Field Notes that don’t hold up as well. If you buy the basic craft cover versions, they’re great in the pocket.

I don’t really have any thoughts on online journaling tools. When I’ve tried it, I’ve just journaled in Evernote, but I always switch back to doing them by hand because typing those entries just doesn’t have the same impact.

Q12: Thoughts on prayer

You have said before that you “meditate/pray” each day. What does that mean? Do you think that prayer helps with personal finances?
– Dana

In my mind, meditation and prayer are basically the same thing; the only difference is what you’re focusing on. I usually think of meditation as either focusing on some specific aspect of your own body, like your breathing, or phrase that’s meant to inspire calmness or self-improvement. Prayer, on the other hand, uses the same techniques, but tends to try to focus on a short religious passage or verse and tries to be open to spiritual questions. Some people may want to focus on the spiritual while others may not, but I think the same basic technique is helpful for everyone.

What I do is very simple. I choose something to focus on. I find that my breathing is a very useful target. A specific bible verse or even a portion of a bible verse can be a great target. A short quote or phrase can be, too. A concern you’re having can be one, too. Just find a comfortable place to sit or lay down, close your eyes, and focus on whatever your target is. If it’s your breathing, focus on the in and out rhythm of your breath; if you chose a phrase, repeat that phrase slowly over and over in your head; if you chose a prayer or a bible verse, repeat it slowly over and over in your head. Whenever your thoughts stray from that target, don’t get upset; just gently bring your focus back to the target of your prayer or meditation. Start off trying to do this for five minutes, but over many sessions lengthen it.

What does it do for me? It definitely calms me down. I usually feel ready to focus and be productive in the things I have to do. I am pretty convinced that it improves my ability to concentrate and focus, but it’s more of a gradual change there. I usually feel good after I do it. I think it makes me more mindful of my environment, what’s happening around me, and what other people are doing. It is said in many places that it helps with blood pressure and heart rate, though I have no data to back that up. I find that it’s well worth the ten or fifteen minutes you devote to it.

I usually do it for ten minutes at least once a day, and sometimes twice or thrice a day. I feel like it’s a good use of my time.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

The post Questions About Flipping Houses, Scentsy, Journaling, Intermittent Fasting and More! appeared first on The Simple Dollar.

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