Saturday, September 16, 2017

The Negative Domino Effect (or How to Handle Murphy’s Law)

Earlier this week, I had a really difficult spell of writer’s block. I spent far too long writing a paragraph or two, being dissatisfied with it, deleting it, and trying again. Even when I was happy with something, I’d find myself in that same loop again and again.

I simply wasn’t very productive at work, and given that my posting schedule basically requires that I finish a post pretty much every day, having a day where I don’t really complete any work isn’t a good result.

I have a flexible schedule, though. I can just write in the evening, right?

Well, it turns out that the evening was already full of scheduled activities that, if I backed out of them, I’d be letting other people down. So, I took care of those things, but I was a little stressed out about the work issues. I always do. I wonder if my ability to write fairly good content quickly is fading away and my stress starts to tick upward.

I didn’t sleep particularly well.

The next morning, the internet went out (it was fixed quickly). Then the air conditioning failed (this wasn’t – see below).

Ordinarily, again, those things wouldn’t be a problem, but after a day of no real writing and a night of poor sleep and deadlines facing me down, I was pretty stressed out and frustrated.

Later that day, my daughter decided to go to the park behind her piano teacher’s house to play instead of walking straight home, meaning that in the middle of supper prep I had to go figure out where she went.

I was stressed from all of the other things. I didn’t handle it well. I burnt supper to a crisp. I wouldn’t have done that if I wasn’t stressed out from all of the other things.

So, we tossed supper in the trash (a waste of money) and grabbed Subway sandwiches on the way to another appointment (again, more money thrown at the problem in a pinch).

The next day, the air conditioning repairman was supposed to show up, but instead of doing so, he called and said he was sick and gave me a list of about five things I could do myself to try to fix it. I was already dealing with being far behind schedule with work, so I tried doing some of those things as quickly as I could (when I was already stressed) and nothing worked. So, after even more time wasted, I ended up instead going with an expensive but reliable air conditioning repair company, who had someone at my house quickly but charged me almost twice as much as the other company would have cost. Again, more money, down the tubes.

All of these things spiraled out from one single negative event – an unproductive day at work in the face of a deadline. That single event added stress to my life, which led to poor handling of later events, which eventually led to a number of costly decisions.

The moral of the story? Sometimes, negative events have a domino effect. One negative event can change your day onto a more negative path, which can have progressively larger impacts, particularly when you face more personal challenges. Your stress level escalates, you’re less equipped to handle those challenges as they come, and things spiral downward.

Unfortunately, that negative domino effect often becomes expensive. You end up trying to put an end to the biggest challenges and regain control over the situation and that usually means tossing money at the problem in order to have someone step in and solve a problem for you. Maybe you pick up food instead of preparing a much less expensive at home. Maybe you call a repairperson or take your car to a shop… and maybe it’s a shop you’re not familiar with. Maybe you buy an airline ticket at the last second, or you rent a car at the last second.

This “negative domino effect” happens to all of us at some time or another. When it happens, it’s difficult. It feels like everything’s going wrong at once. Plans evaporate. Money evaporates. Time evaporates. You’re stressed out.

What can you do?

My solutions for these problems boil down to two categories – things to do in the moment, and things to do afterwards before another negative domino effect happens.

During the “Negative Domino Effect”

If you find yourself in a period where negative events seem to be compounding on each other, there are a few things you can do to cut down on the negative impact without just throwing money at the problem. Here are four tactics that I always use.

Ask your social network for help. Whenever I find myself struggling with a series of unfortunate events, I turn to my social network. I’ll ask our friends across the street if they can watch our children for a few hours. I’ll ask other friends if they can take care of a pet for a day or two. I’ll ask friends for recommendations, or whether they can stop and pick something up for me.

The friends that matter – the ones you can really rely on – are the ones that will mostly step up when you’re in a pinch. They’ll help. They’ll watch your kids. They’ll watch your pets. They’ll loan you a car.

Just ask. The worst that can happen is that you invest thirty seconds in a request just to hear them say “no,” which just puts you back where you started. On the other hand, if you hear a “yes,” then you’ve suddenly taken a concern off your plate, which makes you more ready to handle the other challenges in a mini-crisis.

Don’t be afraid to drop less important commitments during challenging circumstances. It really is okay if you can’t get your child to soccer practice once. It really is okay if you miss the first thirty minutes of a community meeting. It really is okay if you have to skip out on a dinner party.

Look at the commitments you’re facing, choose the one or two that are least important, and simply step back from them. It’s okay – it’s not going to be the end of things if you don’t get your child over to the school in time to fill balloons for the penny carnival. It’s going to be all right if you don’t have time to fix a perfect gourmet dinner one night.

Take those things completely off your plate and you’ll find that it’s suddenly much easier to handle the remaining items.

Eat healthy foods when possible; if you’re picking up food, pick the healthiest options possible. One of the biggest components of a negative domino effect situation is stress. As the events collapse onto each other, you begin to really feel the effects of stress on your body and mind. Those effects open you to things like poor decisions, poor emotional response, and potential illness.

Obviously, in a stressful situation, you can’t just wish the stress away, but you can make your body better at handling that stress by feeding it good material to work with. Eat healthy foods during a crisis situation so that you’ll maintain as much energy as possible and a clear head.

Sometimes, good food isn’t convenient, though. If you’re forced to get food fast, stop by your local store’s produce section for healthy finger foods rather than heading to a fast food drive-thru, for example. Drink water rather than soda.

Do your best to get adequate sleep. This goes right along with the advice to eat healthy food – the goal here is to ensure that you’re physically and mentally prepared to handle bursts of stress without making poor decisions and without illness or physical breakdown.

It is very, very tempting to “borrow” against sleep time during a stressful period, staying up late to take care of tasks so that you don’t feel so behind. The drawback is that in the next few days, you’ll be so much less productive when tired that you’ll lose any advantage you gained.

Go to bed. Seriously. If you are up late reading this while trying to figure out how to handle a negative domino effect in your life, go to bed. Get the best night of rest that you can. Tomorrow, you’ll be far more refreshed and far more able to handle what life throws at you if you go to bed now as opposed to staying up later.

Afterwards – and Before the Next One

Those strategies are useful ones for dealing with a confluence of negative events, of course, but the most valuable steps you can take for dealing with such crises is to prepare for them in advance so that you’re not flooded with problems and stress all at once.

Crisis moments will hit you sometimes. That’s a given. Prepare for them now, when life is calm. Here’s how.

Build up an emergency fund. This is the number one most important thing you can do. You need to have cash stowed away in your savings account for times when everything falls apart. A credit card isn’t good enough – what exactly do you do if your card is stolen or your identity is stolen? Cash is king, and it’s time to prepare.

My preferred way of establishing an emergency fund is to simply instruct my bank to transfer a small amount of money each time there’s a significant deposit into my checking account. So, for example, each time there’s a deposit of $250 or more, put $25 into your savings account. Many banks can do this type of thing (or something similar).

That way, you never have to see that money in your checking account. It’s quietly and efficiently ferried away into savings and you don’t even have to think about it until a crisis – or, worse, a big pile of crises – happens.

Prep some “quick meals” in advance. We have a family of five, so simply “grabbing a quick meal on the run” turns out to be a pretty expensive proposition, one that we prefer to avoid most of the time. However, there are times, particularly when bad events pile up, where we simply need a quick meal, and it’s at those times that just throwing money at the problem becomes very tempting if you don’t have a quick meal already on hand.

That’s why we almost always have several meals in the freezer that require nothing more than heating up and serving. We have freezer bags full of soup that can be quickly thawed and heated in a microwave or on the stovetop, casseroles that simply need baked in the oven, and burritos that just need microwaved. We prepare these in advance on lazy weekends and slowly consume them during the normal course of life, but we really rely on them when things don’t go according to plan.

(Of course, you have to remember that such meals are there. I’ll fully admit that sometimes I’ll forget about freezer meals in the middle of a crisis, but I always feel a sense of relief when I remember them.)

Use your social network to find reliable repairpeople that you can trust in a pinch. My family has a list of repairpeople that we trust – a good local mechanic, a good local heating and cooling business, a good plumber, a good electrician.

We didn’t find these people by calling around in a panic during an emergency. We found them during calmer times, by asking for recommendations from friends after such emergencies. What people do they use in a pinch? Have those people provided good service at a reasonable price?

Just ask around your social network. Post the question on social media to your friends – “Local friends, who do you use for electrical work and are you happy with them?” “Local friends, who do you use for car repairs and maintenance and are you happy with them?” You can add something like “Feel free to message me directly if you don’t want to comment publicly,” as some friends may not want to criticize a service in a public way but may want to directly warn you against using it.

When your friends need help, go out of your way to help them. Friends remember which of their friends steps up when they ask for help. They remember which ones show up to help move furniture. They remember which ones will take their kids in an emergency. They remember which ones bring over food after an emergency. Just like you remember those things.

I know which of my friends will always have their doors open for our children in an emergency. I know which of my friends have come through for us in a pinch before. I know which of my friends showed up to help us move. Honestly, I’m much more likely to help them when push comes to shove.

However, if any of my friends ask me for help, I do my best to help them. If any of my friends seem to even be in need of help, I offer help to them.

I don’t expect help in return – this isn’t a quid pro quo thing. What I do expect, though, is that I’ve built a solid friendship with a lot of people and, thus, when I’m in a difficult situation, many of them will come through and help me. Not all, by any means, but many. If I call many of my friends and ask for their help, most of them will help. That makes a huge difference in a crisis situation.

So, when things are good for me and challenging for a friend, I just reverse that equation. I try to help, just as I would hope a friend would if (and when) I find myself in a challenging situation.

Rethink your commitments and step back from the least important ones. Part of what makes a crisis situation really difficult is that many people, especially families with children, book themselves to the brim with commitments. Then, if anything goes wrong, the house of cards starts to quickly collapse.

If you find yourself in a situation where even a minor unexpected event can send a lot of other things crashing down, you’re in a situation that isn’t sustainable over the long term. You’re going to find yourself regularly skipping commitments and regularly failing to meet expectations with other commitments. In short, you end up looking unreliable while also feeling overburdened and overstressed.

You’re far better off with a smaller set of commitments that you can excel at, ones that are flexible when something goes wrong. If you’re in fewer commitments, a challenge in one area of life doesn’t immediately start disrupting other commitments. It’s much like spacing the dominos further and further and further apart before knocking them over – eventually, they’re spread far enough apart that knocking one over doesn’t cause a cascade.

Simply go through the commitments in your life and identify a few that don’t really produce any value for you. That doesn’t mean that those commitments are bad or valueless, just a recognition that you can’t commit back with your full heart as often as you’d like. If you commit to something and then find you can’t always give it what it deserves, it’s a good time to consider scaling back.

This can be a tough conversation, don’t get me wrong, but it’s one that will put you in a better place, especially when things get challenging.

Final Thoughts

Life gets difficult for all of us at some time or another. An unexpected event happens, and then the consequences from that event cause another unexpected problem, and then something else unexpected happens, and before you know it, your stress level is through the roof and you’re considering just tossing money at the problem to gain at least some semblance of control.

Stop. Breathe. Use some of the techniques earlier in this article to regain some sense of control in the moment, then, when things are better, use the other techniques to ensure that the domino effect doesn’t knock you down the next time it comes around.

Good luck!

The post The Negative Domino Effect (or How to Handle Murphy’s Law) appeared first on The Simple Dollar.

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Friday, September 15, 2017

I was possibly hacked in the Equifax data breach. Here’s what I did.

By now you’ve probably heard that more than 143 million Americans were affected by a massive Equifax data breach. And I was one of them.

Equifax is one of the three major credit bureaus, along with Experian and TransUnion. These agencies are the gatekeepers of your credit report, which means they have access to all of your credit information – name, birth date, social security number, credit credits, loans, and more.

Fortunately (or unfortunately) for me, this isn’t my first credit hacking rodeo. My information may also have been compromised during the 2013 Target, Michaels, and BlueCross BlueShield hacks.

So, here’s what I did…

I checked if I was potentially impacted using Equifax’s TrustedID website.

If you haven’t done so yet, check if your information may have compromised using Equifax’s TrustedID website. When I put in my information, I received this message: “Based on the information provided, we believe that your personal information may have been impacted by this incident.” Equifax will only tell you if you “may have been impacted” or you “were not impacted,” so it’s not a 100% guarantee. Additionally, some people have reported getting random results when entering made up names and information.

I requested my credit reports (but only got one so far).

Next, I put in a request through AnnualCreditReport.com (the only authorized website to request a copy) for all three of my credit reports. After trying on and off for a few days, though, I’ve only managed to get one because increases in requests are overwhelming the sites. Experian generated my report immediately. TransUnion keeps giving me a message that they’re overwhelmed and I should check back later. Equifax doesn’t even load anything at the moment. I’m going to keep trying to get all three, but for now, I reviewed everything on the Experian report in detail to make sure there’s nothing suspicious.

I set a one-year fraud alert on my credit reports.

Once I had my credit report, I set a fraud alert through Experian. You can set an active duty alert for up to one year for free. If you’ve been the victim of identity theft and have a valid identity theft report, you can set an extended fraud victim alert for seven years. The good thing is that you only need to set an alert with one credit bureau, and they have to alert the other two by law. Alternatively, you could also set a credit freeze where all three credit reports will be taken out of circulation and require you to provide a PIN anytime there’s an inquiry. Equifax is currently waiving all security freeze fees for a limited time.

I did not sign up for Equifax’s free TrustedID Premier Credit Monitoring.

Equifax is offering one year of free credit monitoring; however, I decided not to opt in this time. First, one year isn’t that long (though having a year of credit monitoring is better than having no credit monitoring at all). Secondly, there’s some confusing language in the terms of service that may or may not preclude you from joining a lawsuit against Equifax. Lastly, the service will only monitor your Equifax report.

I signed up for credit monitoring service.

As a kid, I saw the LifeLock commercials and wondered who was paying for this product. It turns out the answer is the adult version of myself! Identity theft is becoming way too common – 1 in every 16 U.S. adults was an identity theft victim in 2016 – and I’ve been possibly compromised too many times in recent years. I researched the best credit monitoring services and decided on LifeLock for my needs. There is a cost involved, but, for me, that is money invested in ensuring that my future financial goals can become a reality.

Obviously, when your information is potentially compromised, there are a lot of things to consider – including the possibility that it may amount to nothing. If you’re worried about the long-term effects of the Equifax data breach, there are steps you can take to protect yourself, and at the end of the day, you’re not alone. More than 143 million of us are in this together!

What are your biggest concerns when it comes to the Equifax data breach? Tell us in the comments below!

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Get Exclusive Groupon+ Access with a Visa or MasterCard

Earlier this month, Groupon announced new savings service Groupon+ (Groupon Plus), exclusive to Visa and MasterCard holders. Eligible cardholders can enroll for free and access cash back offers of up to 30% at local restaurants and other “neighborhood favorites.” And the best part is, there’s no need to print out coupons or hand over your phone at the end of a meal; Groupon+ deals are “voucherless.”

When you sign up with Groupon+, you’ll receive cash back on your monthly statement every time you visit one of over 1,500 participating restaurants, located in over 23 markets across the U.S. All you have to do is pay for your meal with a Visa or MasterCard. All Visa or MasterCard credit or debit cards are eligible for Groupon+.

How it works

Simply log into your Groupon account and search for Groupon+ deals. When you find a great deal, click “claim,” and add your Visa or MasterCard to your account, if you haven’t done so already. That’s all it takes. The Groupon+ deal is ready for immediate use, and you’ll receive a confirmation email containing instructions on what to do next.

Rewards still apply

The new partnership creates an interesting opportunity for rewards-minded Visa and MasterCard cardholders. You’re still able to earn rewards as normal, while spending anywhere between 5 and 30% less on claimed Groupon+ deals.

If you’ve got the , issued by Visa, you already earn 2X points per dollar spent at restaurants worldwide. Sign up for Groupon+, and you’ll be able to earn that high rate of rewards in addition to a Groupon+ statement credit at eligible restaurants. If you’re a travel-minded foodie, then you can pair the with a Groupon+ and earn additional cash back on top of the usual 2X the miles per dollar spent.

The fine print

Debit card transactions will qualify for Groupon+ only when they are processed as credit transactions. (That means using a signature to purchase instead of a PIN.)

The following types of Visa and MasterCard cards are not eligible for Groupon+:

  • Corporate cards
  • Purchasing cards
  • Prepaid cards (including insurance prepaid cards and government administered prepaid cards)
  • Healthcare cards
  • Visa Buxx

Additional restrictions will vary by deal.

Future deals

Groupon+ doesn’t just apply to food, either: Groupon has announced plans to move beyond restaurants and into the beauty, retail, and home service industries. Stay tuned!

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How the Other Half Lives

My wife and I have a relatively vibrant social circle, filled with all different kinds of people. Some of them like to come over to play board games, while others love to swap six packs of our latest home brews. Some love potluck dinner parties, while others prefer to go out occasionally to really nice restaurants. Some like comedies, while others prefer dramas.

There are moments when some of our friends do things that bring forth bits of jealousy in our hearts. We’re friends with one couple that takes at least one amazing trip each year. We have another friend that has an absolutely spotless Tesla Roadster. Another close friend lives in what I can only describe as a mansion, but it’s done incredibly tastefully and it actually feels like a home.

It is really easy to find myself sometimes caught up in a feeling of jealousy and envy. I would love to travel to Shanghai for two weeks. I would love to cruise around in that Roadster whenever I felt like it. I’d love to live in a house that looks like it leaped out of the pages of Architectural Digest.

Here’s the reality, though.

47% of Americans would have to sell something to be able to cover a $400 emergency, or would completely fail to cover it at all.

78% of Americans live paycheck to paycheck, meaning that if they missed a single paycheck, they would struggle to be able to make ends meet.

71% of US workers identify themselves as being in some level of consumer debt.

If you cross-check that with incomes in America, that means that there are a lot of people earning well over $100,000 per year who are living paycheck to paycheck and are dealing with credit card debt.

The reality is that most of the people in your life that you know are in some form of credit card debt and would massively struggle if they missed their next paycheck. Half of the people you know, give or take, would completely fall apart if hit with a $400 unexpected expense due to the fragility of their financial lives.

What does that mean in terms of day-to-day living? I’ll quote the first article I linked to above:

“I know what it is like to have to juggle creditors to make it through a week. I know what it is like to have to swallow my pride and constantly dun people to pay me so that I can pay others. I know what it is like to have liens slapped on me and to have my bank account levied by creditors. I know what it is like to be down to my last $5 —literally — while I wait for a paycheck to arrive, and I know what it is like to subsist for days on a diet of eggs. I know what it is like to dread going to the mailbox, because there will always be new bills to pay but seldom a check with which to pay them. I know what it is like to have to tell my daughter that I didn’t know if I would be able to pay for her wedding; it all depended on whether something good happened. And I know what it is like to have to borrow money from my adult daughters because my wife and I ran out of heating oil.”

Dread. Shame. Swallowing pride. Worry. Stress. Secrets.

It’s not the financial challenge itself that’s the problem. It’s the incredible negative impact that the financial challenge brings into your life.

It brings stress and worry, which makes it harder to feel good every day. Stress makes it harder to sleep well at night. Stress makes it easier to emotionally respond to things, often not in a positive way.

It brings dread and avoidance of simple things in life like checking the mail or using your credit card at a restaurant. It means subtly rethinking countless little choices every day, to maintain an elaborate dance around the realities of your financial life.

It brings shame, in those moments when you have to confess your financial mistakes and you have to let someone down because you couldn’t control your spending impulses.

It brings secrecy, which is like poison to relationships. When you’re constantly hiding something from your partner or from someone else you deeply trust, it becomes hard to look at yourself in the mirror. It becomes impossible to be the person you want to be in those relationships.

My goal here is not to look down at those people in those situations; in fact, I truly and sincerely hope that every single one of them finds a way to break into financial stability as soon as they possibly can. Instead, they’re here to serve as a reminder of what’s hidden behind the trips and the nice cars and the beautiful houses and the iPhone Xs.

For me, at least, if it comes down to a choice between a beautiful house with a debt load that keeps me awake at night or a house half that size that leaves me feeling at peace and without debt every night, I’m going to choose the latter. I’ve lived on both sides of that coin – give me the smaller, plainer house any day of the week.

If it comes down to a choice between wonderful trips overseas each year paired with a constant fear that my credit card is going to be declined and a constant dread at checking the mail and a constant dance to avoid losing face in those kinds of everyday situations versus a backpacking trip to a national park and no need to dread or fear or dance, I’ll choose the less flashy trip and the life without dread or fear.

If it comes down to having that Tesla Roadster but also having to get down in front of my son and tell him that we just can’t afford his band instrument this year or driving a comfortable and reliable car while also ensuring my child can live out his dreams without worry, then we’re going to be listening to Frere Jacques in a late model used car all year long.

If it comes down to having an iPhone X but having to hide the bill from my wife and make secret payments or being able to have a trusting relationship along with my old phone, then I’ll take the cheapest smartphone I can find, any day of the week.

I’ve been on both sides of almost all of those examples. I’ve been the person with all of the expensive stuff, and I’ve also been the person with the cheaper stuff. What I’ve learned is that the expensive stuff is fun for a little while, but it doesn’t bring you lasting joy.

What does bring you lasting joy is having as little stress as possible and as much freedom as possible in your daily life.

The freedom to not dread checking the mail and to not worry about picking up the phone is well worth not having the absolute latest smartphone.

The ability to sleep well at night without financial worries bearing down on me, even when things like a car repair are on the horizon, is well worth having a nice family vacation instead of an extravagant one.

The simple peace that comes from knowing that life can hand us a few pretty hard sucker punches and we’d be able to handle it and keep rolling is well worth living in a somewhat smaller but still nice house.

The little reminders of the peace and low stress of solid finances are constant in life. They form an underlying sense of contentment, one that I never felt during the times in my life where I spent money with reckless abandon.

So, when I feel that pang of jealousy toward the things that my friends have, I simply close my eyes and remind myself of the baggage that often comes along with such choices. Would I give up the low stress and contentment that my life currently has to add those things that my friends have? Nope.

That doesn’t mean I look down upon their choices. As far as I can tell, they’ve managed their finances to be able to afford it. I just know that in the reality of my own finances, I probably wouldn’t be able to pull those things off, and so I’m left with a choice.

Do I choose the extravagant perks, or do I choose low stress and contentment?

I’ll choose the latter every single day of the week. Perks come and go, but contentment stays with you. Low stress stays with you. A good night of sleep stays with you.

I will never again do anything that stands in the way of those things.

So, if you ever find yourself feeling jealous or envious, remember that, for the vast majority of Americans, those perks that you’re feeling jealous of come with a lot of baggage – stress, dread, fear, sleepless nights, and a lot of other things you can’t see on the surface. Then, remember that perks fade away pretty quickly and that contentment lasts.

Then ask yourself again whether you’re making the right choice.

You’ll likely find, like I often do, that the jealousy and envy fades, and you’re left with just contentment with your own life and true happiness for your friends and the pleasures that they enjoy.

Related Articles:

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Thursday, September 14, 2017

Seven Strategies for Efficient Hobby and Entertainment Spending

One of the core principles that guides my financial life is the idea of finding the best “bang for the buck” for every dollar I spend. I try to seek out products that have the features I actually need for the lowest price, and I also consider things like the time cost of reusing things or the time cost of stopping at another store to save $5.

In terms of stuff where I’m almost entirely concerned with function, this is actually pretty easy. For example, what do I want out of a kitchen garbage bag? I want one that doesn’t rip with any consistency and allows me to carry my trash out to the trash can with minimal effort. What’s the cheapest bag I can get that fulfills those needs? That’s the bag I buy and keep buying.

Where things get trickier is when we move away from things that are needs (or nearly needs) into things that are pretty clearly “wants,” like entertainment and hobbies. How exactly do I figure out “bang for the buck” for those nonessential things that are mostly just there to provide pleasure and improve the quality of my leisure time?

It’s a question that I struggle with a lot. I budget a certain amount each month for hobby and entertainment spending for myself, and I want to be sure I’m getting the most value out of those dollars. How do I do that?

I’ll be the first to admit that I don’t have a perfect solution to these questions, but I have figured out a few things along the way. Here are some of the techniques I use to make better choices with my entertainment and hobby dollars, even if they’re not necessarily perfect choices.

The Cost of an Hour of Quality Leisure

One of the first things that I like to think about is, when I buy an item for my hobbies or for entertainment, how many hours of enjoyment am I going to get out of that item?

For example, let’s say I buy a book and read it once. I’m going to get five to twenty hours of enjoyment out of the book (depending on the length). If that book costs $10, then I’m spending somewhere between $0.50 and $2 per hour for enjoyment. If I check it out from the library instead, that cost goes to “free,” but then I’m restricted by the need to return it to the library.

However, if I buy a book just to put it on the shelf and never read it (or to just leave it on my Kindle), the cost per hour of enjoyment is infinite.

Let’s look at another example. Let’s say I buy a board game that takes an hour to play and I play it five times. The game cost $20, so I get $4 per hour of enjoyment from that game. (However, I’m active in local game trading, so I’m likely to trade that game for another one, and keep doing so until I find one that I think I’ll consistently play for many years to come, so the real cost of a game I actually play is usually much lower than $4 per hour.)

However, if I buy a game just to put it on my shelves and never read it, then the cost per hour of enjoyment is infinite.

As a frugal person, I want that “cost per hour of enjoyment” to be as low as possible. So, for that to happen, I need to be spending my entertainment and hobby dollars on things that I’m actually going to use and enjoy. If I spend it on things that I just stick on a shelf, that’s a gigantic waste of money.

So, unless something is truly a rare find, I leave it on the shelf unless I’m highly confident I’m going to use it in the near future. I can always buy it later if I’m ready to actually enjoy that item.

Rule #1 – Don’t buy stuff that you’re not absolutely sure you’re going to use.

You Don’t Have Time for Everything

If I have an hour or so of free time to myself, I’m likely to read a book, unless the weather is nice, in which case I’ll go outside and probably go on a walk.

If I have two or three hours of free time, I’ll go to a park and go on a hike if the weather is nice, or play a board game if it’s not nice. The presence of other people might sway this; I might end up enjoying a board game with them or watching a movie with them or something.

If I have a free afternoon, I’ll often cook something or prepare some food and beverage items for the future. I’ll make a batch of homemade sauerkraut or a batch of homemade beer. If I have friends around, I’ll play a long board game with them if they’re interested.

In other words, what I begin to notice is that I definitely have a hierarchy of things I like to do in my spare time.

If I have adequate time, I’m likely to prioritize some sort of food hobby, followed by board games, followed by hiking, followed by reading a book. As my time constraints change, my priorities change because different things become more fun than others.

The reality is that a lot of my free time is in short blocks, except that I block off one weekend afternoon and evening for focused leisure time. What that means is that I simply don’t have nearly enough time for everything that I want to be doing.

The hobby I’m able to devote the most time to in a given week is reading, because reading is much easier to break up into smaller blocks. However, the hobbies I most desire spending time on are cooking, board gaming, and hiking. I simply don’t have time blocks for them.

What does that mean? In my head, my yearning for those hobbies that I don’t have as much time for as I would like grows and grows and sometimes influences how I spend money. I will convince myself sometimes to spend money on a hobby that I’m not finding the time for, and that purchase is almost always at a high dollar-per-hour rate.

Those purchases are almost always mistakes, too.

As much as it hurts, I have come to terms with the fact that I don’t have the time to invest in some of my hobbies that I would like. The other commitments and responsibilities in my life do not leave long afternoons or evenings to play board games or make gourmet food items. What that means is that I consciously make the decision to spend less on those hobbies and instead relish the equipment that I have when I do find time to explore them.

Rule #2 – You don’t always have the time to do everything that you want. Come to terms with that and accept that some time-intensive hobbies may have to take a backseat in your life for now, and thus you shouldn’t keep throwing money at them.

Time Wasters

The internet is loaded with time wasters. Games, both in the browser and on smartphones, can suck down your time. Message boards can be a black hole of time.

The catch, of course, is that time that you devote to time wasters

Here’s a question I’ve started to ask myself when I realize that I’m playing a time-wasting game or I’m going down a rabbit hole on a message board or in internet searches: am I really getting any value out of this time? Would I rather be doing this than, say, reading a book or engaging in another hobby I love?

If the answer is “no,” then I find something else to do. Anything productive. Is there a work task I should be doing? I kill distractions and work on it. Is there a personal task I should be doing? I take care of that if it’s possible in my current situation.

Why? My time has real value, and the reality is that when I waste my time on something unimportant, it’s really just sucking away time from the hobbies that really matter to me. If I spend an hour reading internet comments on a political article, that’s a hour I’ve lost that could have been spent doing something productive, so that I could then tack an hour onto the time I spend on Sunday afternoon engaging in a hobby that takes more time.

In other words, the more time I waste on time-wasting activities, the less time I have to spend on meaningful entertainment and hobbies and the more split up that time is going to be.

I use that as a pretty powerful motivational tool. One strategy I often use is to come up with a pretty aggressive to-do list for the day. I mark the stuff I have to get done as high priority, then I have a bunch more lower priority items. I make a deal with myself – if I can knock out all of those lower priority items, then I add time to my leisure block on Sundays. Usually, if I’m really productive during the week, I feel just fine spending time on the weekends making a batch of home-brew beer or going on a hike or playing a long board game. If I’m not productive, my hobby time on the weekend is eaten up by life tasks that I have to manage, so I end up only being able to enjoy activities with low time commitments.

So, what does that have to do with spending money effectively on hobbies? If I’m more efficient with my time during the week, I have more time in my life for some of the more time-intensive hobbies, which means that the cost per hour of enjoyment of purchases of those hobbies goes down. In other words, if I work on being more productive, I get to have more time for the leisure activities that mean the most to me and it makes more sense to spend money on items for them.

It all comes back to time wasters. The more effective I am at cutting those things out of my life, the more of my time I can spend on things that I value more. In this case, I’m replacing meaningless entertainment with quality leisure time spent on hobbies and entertainment that really mean something to me. My time has real value, and when I waste that time, it’s really not much different than throwing cash out the window.

Rule #3 – The value of your time is real, too, and some things are a better use of your time. Figure out which things aren’t very useful and cut them out of your life. This makes every dollar you spend on your hobbies more effective, because you’ll get more time and use out of those items.

Diminishing Returns

Let’s say, hypothetically, I have no unread books at home, but I’m interested in reading one. If I go to the bookstore and buy one, I’m going to start reading it immediately.

Let’s say, on the other hand, that I have 20 unread books at home and I’m in the middle of one. If I go to the bookstore and buy one, I’m going to add it to my pile of unread books, which now total 21, and when my current book is finished, I’ll choose one of those 21 to read.

One of those two stories depicts a smart use of hobby money, while the other does not.

What’s the difference? Diminishing returns. The more items I already have at home that I either haven’t used yet or would strongly consider using again in the near future, the less value I get out of a new purchase.

Think about it. If you have a bunch of unwatched series and movies on Netflix, you’re getting much less value out of buying a Bluray or a DVD than you would if you had a completely empty queue on Netflix. You’re just adding hours 101 and 102 to your already existing backlog of 100 hours of viewing. If you have several unplayed or underplayed board games in your closet, you’re getting much less value out of buying a board game than if you don’t have any unplayed games. The same is true of video games.

“But what if this new item is something I’m really excited about?” That may be true – you might be more excited about that item on the shelf than you are about something at home. But, if that’s the case, ask yourself this: wasn’t there a time when you were similarly excited about that item at home? It faded, didn’t it? Why won’t your excitement about this item fade as well? The truth is that excitement borne in the heat of the moment almost always fades. When you feel more excited about something you spy on the store shelf compared to unused stuff at home, keep that in mind and wait a little while before making that purchase. Take a long, hard look at the unenjoyed stuff you already have at home, and then ask yourself whether the new purchase makes sense.

Rule #4 – Don’t spend hobby and entertainment money when you already have a bunch of unused or barely used stuff at home.

Rule #5 – The return you get for adding another item to a collection gets smaller as the collection gets larger.

The Free Factor

There’s one additional factor that’s been on my mind lately: the free factor. Simply put, some hobbies and entertainment options are free, so how can you really compare them to other options that cost money?

For starters, I usually compare free options to the options I already have in my home. The fact is that items I already own are items that are essentially “free” from here on forward, so they’re equivalent to free options. If I grab a board game off of my shelf, it’s essentially free to play it – the cost of it has already been paid and I’m not making any kind of spending decision. Thus, from the “free” perspective, going to a free community concert and playing a game I already own have the same cost.

The real decision about spending money on a hobby comes down to whether or not to enjoy free things or things that you’ve already bought versus buying more things to enjoy or going to paid experiences.

The frugal side of me wants to put a “premium” on the side of the free options, and I should – if I can have a good time with what’s free or what I already have on hand, then I should do that.

There’s a big factor I’m not considering here, though: the value of my time. Every time I spend an hour doing something, that experience has a value that, in theory, I can translate into dollars per hour. Reading a book in a quiet comfortable chair might be worth, say, $5 for an hour. However, playing a board game with a good friend might be worth $10 for that experience.

Not all experiences are the same, either. For example, if I’m curled up with a free book that I’m moderately interested in reading, it might be worth $3 for that hour, but if I’m really into the book, that hour might be worth $10 to me in terms of the joy I get in my life.

When you pay for entertainment or hobby items, what you’re actually doing is chipping away at the value of the time you spend. If it takes me ten hours to read a $10 book, then it needs to be at least a little better than my free options, but not enormously so.

So, here’s the point: free activities and entertainment have some real value, but they don’t trump everything; the key is knowing how much everything is worth to you. Of course, you can’t actually sit down and figure out how much an hour spent reading a book off your shelf is worth to you compared to reading the current bestseller you most want to read, but you can think about it and get a rough internal sense. I’ve found that if I spend some of my spare thoughts considering things like this, I end up making far better decisions about when to do something that’s free (or that I’ve already paid for) versus doing something that costs money.

Rule #6 – Free things are nice, but they don’t trump everything else; you can’t account for the “cost per hour” with them because of the value of your time.


A final factor worth mentioning is the patience factor. Suppose a new book comes out by your favorite author and you’re really, really excited to read it. You’re on the wait list at the library and you’ll get to read it for free in three months, but you could just spend $18 right now and start reading it immediately.

Comparing those two options, it could be easy to build a case for buying that book right away, but here’s the thing: those aren’t the only two options in the world.

You could spend the next three months reading other books from the library or other books on your shelves, for example. If this is the newest book in a series, you could catch up by rereading the previous books.

If you look at it that way, you’re not spending $18 to move from not reading anything to reading this new bestseller; instead, you’re paying $18 to move from reading the best book currently in your collection or at the library to reading this bestseller now versus three months in the future.

That’s not nearly as good of an entertainment bargain – in fact, it’s a pretty poor one.

What it reveals is that patience is a huge virtue when it comes to entertainment spending and sometimes with hobby spending, too. Waiting just a little while and enjoying things you already have access to in the interim often reveals giant bargains – you can borrow it for free or buy it for just a buck or two. Not only that, desires often fade out over time, meaning that you eventually won’t want the item nearly as much as you do right now.

So, when should you buy? My core principle is to write down that desired item and then wait a month, and in the interim I enjoy things I already have. If I still want it after that month, I start shopping around for it. The vast majority of the time, the desire for that item has faded.

Rule #7 – If there’s even the slightest doubt, it’s almost always better to wait with a hobby or entertainment expense.

Final Thoughts

Throughout this article, I’ve pointed out seven rules that I use when spending money on hobbies and entertainment. Let’s look at them again.

Rule #1 – Don’t buy stuff that you’re not absolutely sure you’re going to use.

Rule #2 – You don’t always have the time to do everything that you want. Come to terms with that and accept that some time-intensive hobbies may have to take a backseat in your life for now, and thus you shouldn’t keep throwing money at them.

Rule #3 – The value of your time is real, too, and some things are a better use of your time. Figure out which things aren’t very useful and cut them out of your life. This makes every dollar you spend on your hobbies more effective, because you’ll get more time and use out of those items.

Rule #4 – Don’t spend hobby and entertainment money when you already have a bunch of unused or barely used stuff at home.

Rule #5 – The return you get for adding another item to a collection gets smaller as the collection gets larger.

Rule #6 – Free things are nice, but they don’t trump everything else; you can’t account for the “cost per hour” with them because of the value of your time.

Rule #7 – If there’s even the slightest doubt, it’s almost always better to wait with a hobby or entertainment expense.

Taken together, those rules are pretty effective ones at guiding you away from bad entertainment and hobby spending choices, and most of the time, that’s all you need. The simple ability to say “no” when faced with a tempting hobby spending choice that really isn’t a smart decision is one that will usually be all that you need.

How do you find the best choices, though? That’s a much more difficult question to answer, because everyone has different passions and interests. Even people within the same hobby will have very different answers.

My suggestion? Let these rules guide you away from the poor choices, and let your own heart guide you to the best choices. Together, they’ll help point you to effective hobby and entertainment spending.

Good luck!

The post Seven Strategies for Efficient Hobby and Entertainment Spending appeared first on The Simple Dollar.

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What You Need to Know About American Express’s New Delta Card

American Express and Delta enjoy a strong partnership. We consider the to be one of the strongest airline cards on the market today, offering cardholders the best travel perks available.

Now they’re teaming up again, with the new . There’s no annual fee — that’s unusual among airline cards — and it comes with high rewards rate and a considerable signup bonus. If you’re a periodic Delta flyer, or even just an occasional traveler, this might be one of the top cards for you.


  • 2X miles per dollar spent on all Delta purchases, including flights booked, SkyClub® membership or passes, in-flight purchases, and more
  • 2X miles per dollar spent at all U.S. restaurants
  • 1X miles per dollar spent on all other eligible purchases
  • 20% savings in the form of a statement credit on eligible Delta in-flight purchases (food, beverages, audio headsets)
  • Earn 10,000 bonus miles after spending $500 on purchases within your first three months of card membership

cardholders can gain access to American Express Travel Insiders, a vacation-planning service that connects travelers with local experts and personalized itineraries all across the globe. They’ll also have exclusive access to Card-member only events, including Broadway shows and concert tours. Other perks include American Express’ Global Assist Hotline, available 24/7, as well as car rental loss and damage insurance.

The fine print

The welcome bonus offer is not available to applicants who currently have or have had one of the following cards within the past 90 days:

  • Delta SkyMiles® Credit Card
  • Gold Delta SkyMiles® Credit Card from American Express
  • Platinum Delta SkyMiles® Credit Card from American Express
  • Delta Reserve® Credit Card from American Express

The Blue Delta SkyMiles® Credit Card from American Express has no annual fee, but it does charge a 2.7% foreign transaction fee on purchases outside the U.S. If you’re looking for cards with $0 foreign transaction fees, check out our list of the Best International Credit Cards.

Another Delta/American Express option

The Blue Delta SkyMiles® Credit Card from American Express is an ideal option for casual travelers that want to earn rewards for an occasional vacation. If you travel often or are looking for a more luxe travel experience, the could be the better choice for you. The perks you’ll get — which we’ve highlighted in our Best Airline Cards of 2017 list — are more than enough to offset the $95 dollar annual fee.

Here’s how the cards compare:

Delta/AmEx card comparison

Card Annual fee Rewards rate Special perks
  • 2 Miles per dollar at US restaurants, and purchases made directly with Delta
  • 1 Mile per eligible dollar on all other purchases
20% savings in the form of a statement credit on eligible Delta in-flight purchases of food, beverages, and audio headsets
$95 (waived first year)
  • 2 Miles per dollar spent on purchases made directly with Delta
  • 1 Mile per eligible dollar spent on all other purchases
  • 20% savings in the form of a statement credit on eligible Delta in-flight purchases in the form of a statement credit
  • Priority boarding
  • Check your first bag for free
  • Earn a $50 statement credit after you make a Delta purchase with your new card within your first 3 months

All in all, the is another appealing offering from Delta and American Express. It’s a perfect fit for those who only travel a few times a year and want a strong rewards program with no annual fee.

The post What You Need to Know About American Express’s New Delta Card appeared first on The Simple Dollar.

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Finding Your Financial Flow

Over the past few years, I’ve developed an insatiable appetite for financial literature.

What you notice after finishing your 20th or 30th personal finance book is that things get to be a bit repetitive. This is especially true of the books that are aimed at a general audience. You can read only so many chapters titled “What’s Going on In Your 401(k)?” before the texts become visual Ambien.

And yet, I continue to devour personal finance books, because there’s always at least one worthwhile thing in every volume. There will be one nugget of wisdom, one innovative strategy, or one way of looking at the world I’d never considered before.

After finishing “The Financial Planning Puzzle” by Jason Silverberg, I knew that it fell into the latter camp. It doesn’t offer many new ideas, but it had one chapter that really sparked my interest and made me rethink an aspect of my financial life.

Finding Your Financial Flow

The notion that stood out to me is the author’s insistence that learning about money, and putting a financial plan into action, can be genuinely fun.

For the first 24 years of my life, I thought anything personal finance-related was a drag. Maybe it was seeing the dull looks on my parents’ faces as they went through the bills at the dining room table, or the tedium I felt learning how to write a check, or the fact that the banks I visited were so quiet, sterile, and ominous.

But, if I had to pick one thing that colored my view of money, it’d probably be the commercials in the ’90s for Pacific Life Insurance. I have early memories of my favorite sporting events being interrupted by commercials full of soft music, jargon I couldn’t understand, and a huge blue whale. I wasn’t sure what a mutual fund was, but I could sense it had to do with money. I was so bored by the end of the commercials that they sometimes made me turn off the TV altogether. For a 10-year-old, that’s saying something.

I later went on to take a class in high school that covered basic economic principles, and it was as dry as you would imagine. It extinguished any flicker of interest I had in the topic. I wandered out of the classroom each day with glazed-over eyes and a faint hope that everything would just sort of work itself out once I became a real adult.

That class would have done well to take a page out of Silverberg’s book. He makes the case that figuring out a financial plan at a young age can be empowering, engaging, and challenging.

He unabashedly refutes the notion that financial planning should be boring, dry work. He doesn’t even consider it as a possibility. Buoyed by a relentless enthusiasm, he implores the reader to see how empowering it can be to put a financial plan into action.

He does so by deftly tying together two different components he believes are necessary to develop a good plan: Visions and values.

Your visions are your dreams. If you don’t know what you want, there is no way you can achieve it. It sounds obvious, but so often we drift through life, unwilling to take the time to figure out what it actually is we want. This is not to say that your wants won’t change, but if you don’t start somewhere, you can’t even keep track of when they change!

Your values are the core beliefs that drive all aspects of your life. Again, we all know deep down what our values are, but if we completely divorce them from our financial planning, the process can seem distant and abstract. On the other hand, if we keep our values in mind, using them as guideposts and motivators, we will be more driven to save, invest, and increase our financial knowledge in service of our values. If, for instance, you’re a parent of young children, you might put a heavy emphasis on saving for their college education.

According to Silverberg, defining our vision and values will naturally lead us to take action. This can be a small step, like cutting out cable in order to save on your monthly bills, or a big one, like starting a search for an entirely new living situation in order to slice your rent in half.

What I like about this section is that Silverberg is not dogmatic, saying you must complete one task before taking on another. He emphasizes that any action, however small, is still positive. He also encourages a zen approach to the entire financial planning exercise, saying, “Focus on the actions, not the outcomes. In the end, you control the actions, not the results. The more consistent you are with the actions, the greater the probability of achieving the desired outcomes.”

To the author, there can be nothing more rewarding than putting a plan in place that will help you achieve financial freedom. Even if your plan is as simple as “I need to get out of debt,” you can still think through the possible strategies, research all the actions you can take, and lay out a path forward to make your vision a reality.

The average person puts more effort into finding the best slice of pizza in town than they do in thinking about how to make their money grow, and it clearly lights a fire under Silverberg. His passion pours out of the page, and anyone who reads this part will likely entertain the idea of figuring out a personalized, sustainable financial plan.

He insists that brainstorming, developing, and implementing a financial plan that will help you achieve your life’s purpose can bring about a flow state. He defines flow as: “A mental state in which we are fully immersed in a feeling of energized focus, total involvement, and sheer enjoyment in the process of an activity. It’s when our purpose, values and actions are all in alignment.”

That’s an elegant way of describing the concept of flow, and I totally agree with his assessment. I’ve gotten to that state playing sports or creating art, but I’d never stopped to think about whether I’d been there while thinking through my financial future. After finishing this chapter, I realize that I definitely have, and that others can, too.

This is an empowering thought. Paying the bills doesn’t have to be the low point of your week if you’re keeping the big picture in mind and working toward a goal that means something to you. When I’m having financial discussions with my wife, and we passionately discuss what’s important to us while coming up with creative ways to achieve our goals, I feel like I’m in a flow state.

After reading this chapter, it hit me that there are few more engaging activities than creating, assessing, and following through on a financial plan. It has inspired me to be even more clear about what I want, and more energized to put my plans into action.

Because really, what could be boring about figuring out how to grow and protect your life savings so that you can achieve your dreams? Always putting off those discussions would be like buying a grocery cart full of perishable goods, bringing them back to your apartment, and then saying, “Meh, I don’t want to put any of these groceries in the refrigerator. Too boring. I’ll just leave everything out and see what happens.”

He wraps up this intriguing chapter with an illustration: 
feedback loop

The “feedback loop” portion of the drawing refers to the idea that when you achieve a flow state, “you end up creating a feedback loop of happiness,” and you’re more inclined to have continued discussions about the state of your financial plan.

Silverberg feels that it’s only through our societal conditioning that financial planning takes on a foreboding and onerous quality. All it takes a subtle shift in mindset, a slight reframing of your priorities, and a defining of your purpose in life to turn a daunting task into an exciting one.

Summing Up

While not revolutionary by any means, “The Financial Planning Puzzle” has an interesting spunk to it. The author is clearly genuine in his desire to help people learn about money, and his enthusiasm is infectious.

If nothing else, it’s worth checking out the chapter on flow. It provides great insight into how we as a society can take back the joy that should inherently be found in dealing with a topic that’s essential to achieving our dreams, yet many of us consider to be intimidating or boring.

Related Articles:


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Wednesday, September 13, 2017

How to Plan (& Provide) for a Child with Special Needs

Nobody likes to attach a dollar amount to the joys of raising a child, but the fact remains that it can be quite expensive. This is especially true when it comes to raising a child with special needs. In fact, one study funded by Autism Speaks estimated the average lifetime cost to be $1.4 million for a person affected by autism. And that’s to say nothing of the other forms of special needs, which can include blindness, Down syndrome and ADHD.

With planning and preparation, you can help to ensure your child has the help they need, now and for the future. There are lots of organizations and services out there that can make the cost more manageable. In this guide, we’ll walk through some of the steps you can take to help you provide for your child. With this information — and the help of qualified professionals — you’ll have the tools necessary to make informed decisions for your child’s future.

Table of contents

Planning for a lifetime
Hit the ground running (Child’s Birth – Age 3)
On to public school (Age 3 – Age 18)
Spreading their wings (Age 18 – 22)
Life after school (Age 22+)
Passing the torch

plan-for-a-lifetime Planning for a lifetime

A report released by the US Census Bureau found that 2.8 million American families had reported raising two or more children with a disability. According to the CDC, autism affects 1 in 88 children. And, based on the findings of the National Down Syndrome Society, 1 in 700 babies born in the US is diagnosed with Down Syndrome. These figures can seem daunting, but there are things you can do to ensure your child’s needs are met.

We’ve put together an in-depth look at ways parents can plan for their child’s lifetime. These tips are divided up into important milestones in your child’s life for easy reference. Remember, this information is not a substitute for consulting a financial professional; it’s a resource to further your understanding so you can make informed decisions.

Download the checklist

hit-the-ground-running Hit the ground running

Child’s Birth – Age 3

You can never quite be ready for every eventuality when it comes to a child’s special needs. Every child is unique. However, there are things you can do after the birth of your child, and even before, that can make a huge difference down the road.

Ask about Early Intervention

The sooner you can ask your pediatrician about Early Intervention, the better. For those who don’t know, Early Intervention is a system of services for babies and toddlers with disabilities or developmental delays. Early Intervention services can entail teaching physical and cognitive skills such as crawling and problem-solving, along with communication and social skills like listening and playing.

These areas of focus and what they entail may vary based on your child’s level of need. Your local pediatrician might be able to point you in the direction of services available in your area. You can also explore online resources for more information. By getting a leg up on this research, you’ll be able to estimate the level of investment and budget this into your financial planning.

Estate planning and special needs trusts

Planning for your child’s welfare after you’re gone is important, but there are differing schools of thought on whether to draft a will with a special needs trust or not. The tricky thing about wills is that they can interfere with your child’s eligibility for Supplementary Security Income (SSI) and Medicaid coverage. If the will bequeaths a substantial sum of money to your child, it could disqualify your child from receiving any additional government aid.

In order to avoid this, many parents opt for special needs trusts, which appoint a trustee (a designated friend, family member, or lawyer) control over the estate left to the beneficiary (your child). Because the trustee has total control over the funds, your child can continue to be eligible for government aid if he or she needs it, without losing access to the trust. Whichever path you decide to take, make sure you consult with a financial professional for advice specific to your situation.

Look into life insurance

Taking out a life insurance policy can be a little tricky, but it’s worth it. After all, you want to make sure your child is provided for in the event of your passing. Take some of the stress out of choosing a policy by finding a reputable financial advisor — and asking about terms of payment upfront. You may not want to work with an advisor that receives commission on policies they sell, as they might be more motivated by the money than your concerns for your child’s future.

As to how much of a policy to take out, this will depend on what you need covered. For example, you might require a larger policy if you want your child’s caregiver wages covered along with your funeral expenses. Again, a financial advisor can help walk you through this.

Additional takeaways

  • Don’t forget to include any other children you might have in your budgetary agenda.
  • Start thinking about designating a legal guardian. You may not know the full extent of your child’s diagnosis or whether they will need a guardian at this state, but it never hurts to have a few candidates in mind.
  • Refrain from opening any savings or investment accounts in your child’s name, as this could affect their eligibility for Medicaid and SSI later on.

on-to-public-school On to public school

Age 3 – Age 18

By this time, you might be starting to understand your child’s diagnosis a little better. This understanding is invaluable, as it can help you advocate on your child’s behalf as they graduate from home-based Early Intervention into individualized education. As your child continues to grow, you will gain more insight into their special needs and be able to adjust your financial plans accordingly.

Build bridges with your community

Take the time to meet with your community leaders and establish a rapport with the local school faculty. You should definitely make it a point to speak with your local law enforcement and emergency services about your child’s special needs. Accidents happen, and if your child is unable to speak for themselves or articulate their feelings, a simple misunderstanding could turn disastrous. There are resources available online that go over what your child needs to know about the police and ways you can introduce yourself to them. Community organizers might also have insight into further financial aid you can look into for your child’s needs.

Get involved in your school community

There’s no reason you should have to go through this alone. In fact, you might find there are plenty of families in your area going through something similar. Speak with your school’s principal or reach out to community organizers in your neighborhood for information on parent support groups or educational workshops. This is a great way to develop bonds with other like-minded individuals as well as gain some important insight from parents of older children. In turn, this will assist you in determining the proper amount of financial aid your child will need.

Review finances regularly

About every 2 or 3 years, you should review your finances to determine if you are on track to achieve your goals. As your child grows, you’ll be able to develop an idea of what resources he or she may need. You may find that you no longer require such a large life insurance policy, or you may discover that more is required. Keep track of your spending, including any out-of-pocket expenses for your child’s care. Plan and project for the worst case scenario, since you never know what unexpected expenses may arise. Also, remember to budget for the rest of your family — and your retirement.

Determine eligibility for SSI and/or Medicaid

At about 14 or 15 years of age, it’s time to determine your child’s eligibility for SSI and/or Medicaid. As of 2005, your child’s available assets need to be less than $2,000 to qualify. If your child’s assets exceed this threshold, speak with a Certified Financial Planner (CFP). They will be able to assess your situation and guide you through the process of shrinking or allocating any excess assets that prohibit your child’s eligibility.

For more information on applying for SSI and Medicaid, consult the following:

Choose a legal guardian

In case something happens to you, it’s important to designate a legal guardian for children under the age of 18. However, depending on your child’s needs, he or she may need ongoing help and guidance as an adult. In the event that you feel your child cannot make important life and financial decisions on their own, a guardian will need to be appointed. Most states have their own preferences and legal requirements for what constitutes a legal guardian. In most cases, the preference will be for an adult parent to take on the role or, if this is not possible, an adult sibling or a close family friend. Guardians are supervised by the court to prevent any potential abuse of trust.

Additional takeaways

  • Medicaid and SSI aren’t the only government programs that your child could be eligible for. Spend some time online looking into additional special needs support programs.
  • Don’t forget that it’s okay to plan for your own retirement while you’re figuring out your child’s financial future.
  • Think long and hard about who you would designate as a legal guardian. There are plenty of guides online that can help you make this decision as well as suggest alternatives to guardianship.

spreading-their-wings Spreading their wings

Age 18 – 22

Your child is no longer, legally, a child. Depending on their diagnosis, they may even be ready to enter the world of college. There’s a lot to consider, including whether your child will stay in school and if they will require additional support. This is also a great time to review items we have previously touched upon.

Appoint a guardian or an alternative

If your child needs help making important decisions, financial or otherwise, and you have not yet appointed a guardian, then now is the time. However, just as there is no one-size-fits-all solution to special needs funding, there are degrees of need when it comes to guardianship. In fact, you might not even need a guardian when a durable power of attorney may suffice. This is perfect for situations where your child can make decisions on certain matters but may benefit from occasional guidance.

Consider workshops and adult education

In some cases, college may not be an option, but that doesn’t mean your child has nothing to contribute or can’t make their own way. Speak with your local school administration to determine if there are any opportunities to attend employment or educational workshops. Organizations like The Douglas Center offer these and more, and there are many others like it that can give your child the opportunities to lead full and productive lives. The cost of tuition for enrollment in organizations such as these will vary. A lot of it will come down to your child’s level of need. Will they be staying overnight? If so, there’s room and board to consider. Financial aid opportunities are available to help defer these costs.

Doublecheck research on government aid

The previous section spoke to how you can determine your child’s eligibility for government aid (SSI and Medicaid). At this point, it’s a good idea to reevaluate that research to ensure your child is still eligible. Once your child turns 22, they will be out of the public school system, and that’s the time that these aid programs and services kick in.

Additional takeaways

  • Make sure your child’s assets are not in excess of $2,000, as this will render them ineligible for SSI or Medicaid. In the event that this occurs, look into ways of shrinking those assets or transferring them to a trust.
  • Get acquainted with any local organizations that work with the government to provide aid. Learn how these organizations work so you can strengthen your voice of advocacy for your child.
  • In some cases, a child with special needs can live in their own space. Now is as good a time as any to start equity on a second home. If your child needs room to grow, then consult the real estate market and work closely with a real estate agent to find a living situation that addresses your child’s needs.
  • In addition to any residential needs, you should also evaluate whether or not your child has any transportation requirements. If your child is eligible to drive, make sure you budget for that as well.

life-after-school Life after school

Age 22+

By this point, your child is out of the public school environment and really coming into their own. There’s still time to look into additional support groups and services but, for now, your focus should be on reviewing your estate plans and balancing your child’s financial needs with your own.

Reevaluate your life insurance policy if necessary

By now, you know the extent of your child’s needs and should have a pretty good idea about the size of the policy. Still, it never hurts to dot every “I” and cross every “t,” so take some time to make sure your policy is just the right amount for your child and their needs. Do not be afraid to consult with a financial expert on these matters, as well.

Review estate plan and/or special needs trust

Make sure everything is in order as far as your will or special needs trust. It never hurts to double-check these things. Also, remember not to open any accounts in your child’s name or bequeath an inheritance in any manner that will put your child over the $2,000 asset cap, or you could affect their eligibility for support later on. Instead, consider a special needs trust. If you’ve already established one, re-evaluate the terms to ensure you’re happy with the arrangement of the appointed trustee and the manner in which funds are dispensed.

Take account of expenses and liabilities

Itemize all of the expenses you can think of that your child will have to handle or manage in your absence. By organizing this information, you can gain a better perspective on what your child will deal with financially and make any necessary adjustments to your financial trajectory.

Additional takeaways

  • Continue to include any other siblings (even those without special needs) into your financial planning.
  • Maintain a healthy balance between providing for your special needs child and your own eventual retirement. Don’t assume the government will handle all of your child’s expenses.
  • Don’t forget about inflation when you are factoring in your child’s life costs and projecting the amount of money you’ll need to save up for retirement.

passing-the-torch Passing the torch

It’s a sad fact of life that children often outlive their parents, but it can be scary for parents leaving behind a child with special needs. If you have been reviewing your estate plans and your finances, your child should have the tools necessary to carry on after you have passed away.

Continue reviewing of estate plans and finances

If you’ve been following this guide, you’ve been reviewing your financial assets, savings, and estate plans. Now is the time, if you haven’t already, to sit down with your attorney and review all of these necessary documents and policies to ensure your child has what they need after you’re gone. These documents should include policies on healthcare proxies, your child’s appointed guardian, the will, any trusts, etc.

Review ownership of assets and beneficiaries

Take stock of your assets and determine what you’ll leave in your child’s care that will most benefit their lifestyle. You’ll also want to review your life insurance policies, as well as any other services you’ve found that will help support your child long after you’ve passed away.

Additional takeaways

  • Consider utilizing a special needs trust as a means of dispensing a sizable inheritance. By doing this, you ensure your child receives all that they are owed without the government withdrawing their aid.
  • While ensuring your child has what they need, you may have to push your retirement date back a few years. Be flexible, and don’t be afraid to seek the help of a financial planner if you have questions.

providing-a-long-and-healthy-life Providing a healthy life

It can be difficult to determine what your child will need when they are first born. Instead, it’s recommended that you spend the first couple of years living in the moment and understanding your child’s special needs before making any huge decisions. Once your child starts getting into public school and graduates from Early Intervention, you’ll have a clearer understanding of their diagnosis and what you’ll need to do to ensure their financial future. Beyond that point, you’ll need to reevaluate your financial goals and plans accordingly.

Keep a careful record of your spending and your income and consult with financial professionals on matters regarding your estate and life insurance policies. And remember that this guide is not a substitute for a professional consultation. Use this guide to familiarize yourself with the financial hurdles of raising a child with special needs so you can discuss your child’s future with reasonable expectations.

Additional checklist

We have also put together an additional checklist that condenses this guide into a series of the more pressing items and matters to consider. You can download the checklist by clicking below.

Download the checklist

The post How to Plan (& Provide) for a Child with Special Needs appeared first on The Simple Dollar.

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Will the New iPhone 8 and iPhone X Be Worth the Investment? (Nope.)

A few days ago, I was reading the news when I stumbled on an article I found both interesting… and appalling. CNBC explained that the new iPhone models would likely be more expensive than ever because of their pricier components.

But, how expensive?

The new iPhone 8, available for pre-order beginning this Friday, Sept. 15th, will start at $699 for the base model with 64 GB of memory. The 256 GB version costs $849. The larger iPhone 8 Plus, meanwhile, will cost $799 (64 GB) and $949 (256 GB).

But wait, it gets better: Apple just announced a special-edition, 10th anniversary iPhone X to be released in November. That one starts at a thousand bucks (well, $999), and extra memory can ratchet the price up to $1,149.

For a phone.

While that in itself is absolutely outrageous, it was CNBC’s commentary on the price that made me angry. Apparently, consumers needn’t worry about the cost of their new device.

Why? Because they can just finance it! “The price shouldn’t worry most consumers, though,” the author said. “Wireless carriers are adept at hiding sky-high prices in monthly device installment plans that are easier to swallow. Apple also finances its phones, allowing customers to pay off the full cost of a device over a year or more.”

This explains so much about the American psyche and why we constantly struggle with money. This finance-anything mindset is the reason the average indebted family had more than $16,000 in credit card debt this year, and the average new car loan is up over $30,000.

Heaven forbid any of us get in the habit of saving for what we want. Just roll it into a monthly payment plan and drain your bank account slowly instead. We do it with cars, clothes, electronics, and furniture… so why not our phones, too?

Why a $1,000 Phone Isn’t Worth the Investment

Obviously, I’m being facetious. I am sick and tired of companies hawking overpriced wares accompanied with clever payment plans that obfuscate the real cost. But I am even more tired of Americans falling for it over and over again, hook, line, and sinker.

And no, I’m not talking about your mortgage or your student loans, either. Most of us have to borrow money to purchase a home, and for many of us, student loans were essential to get through college.

I’m talking about the “extra” stuff in life. The $1,000 phones, the leather sectional sofas financed for 24 months, the flat-screen televisions on a payment plan, and of course the new vehicles with monthly payments of $500 or more spread out over 60 or even 72 months (or even longer).

The common denominator with all of these items is that they all depreciate quickly. Furniture, clothing, electronics, and cars are worth increasingly less each year after you buy them until – poof – they’re finally worth nothing. And that’s usually right about the time you pay them off.

And, don’t fool yourself into thinking a new iPhone will be any different. Sure, you can sell a two-year-old phone on Flipsy or eBay for a couple hundred bucks once you’re ready to upgrade, but the money you pay will mostly disappear into thin air.

An iPhone is not an investment, nor is it meant to be. Even worse, buying a new iPhone could actually keep you from building real wealth.

How Much Could Your New iPhone Really Cost You?

If you’re on the fence between upgrading your phone or riding it out with the old one a little longer, you should think long and hard about financing your decision (or paying the $699 to $1,149 outright).

Not only will your phone be worth considerably less than you paid for it in a few short years, but you could miss out on the opportunity to build wealth – especially if you’re in habit of financing new phones over and over again for years.

Let’s take a look at how that math might work out. While the iPhone 8 and iPhone X aren’t available for purchase just yet, pricing and financing options are available on Apple’s website.

When it’s available in November, an iPhone X will start at $999, or $41.62 per month for 24 months. (While I’ll reiterate that it’s patently outrageous to pay this much for a phone, at least the 0% financing means you’re not paying interest on it to boot.)

Now let’s assume you keep that phone for two years, then resell it and upgrade to to the latest version, and repeat the upgrade cycle four more times. We’ll also assume — generously, given past experience — that new top iPhone models hold that $999 price for the next 10 years.

You’ve scored a new iPhone every two years for 10 years at this point, all while making a steady monthly payment on your phones of around $41.62. Also remember, that is on top of the amount you’re paying for actual cell service. This is just for the device itself.

An iPhone can fetch an average of about 30% of its original value on the resale market after two years, so if you’re methodical about selling your old phones (instead of passing them on to family members or leaving them to rot in an old drawer), each phone will cost you about $700 net after all is said and done, or $29 a month. Over 10 years, that means you’d pay a whopping $3,500 for five different cell phones.

Think that’s not a big deal?

Well, now let’s imagine you chose a different path. Instead of upgrading your cell phone every two years, you stuck with older, cheaper models instead. Each time your phone died or broke, you bought a cheap, unlocked model from any carrier for around $100. Your phones never had the best or newest technology, but you survived. Better yet, you invested your excess phone budget instead.

Here’s the long-term financial impact that choice could make:

  • If you invested that $29 a month for 10 years instead of shelling it out for new phones, and it earned a 7% return, you’d have $4,808 — and an old cell phone. That’s a combo I’d be happy to have in my purse.
  • Even if you stopped investing after 10 years, and simply left that money sitting in your account for another 20 years, your decade of using old phones would be worth $18,605 to you in retirement.
  • And what if you kept investing that $29 a month for all 30 years, getting by on cheap, used phones the whole time (you know: the ones with the standard-definition holograms instead of the new HD models)? You’d be looking at an extra $32,872 three decades from now.

This is what can happen when you let your money work for you instead of purposely letting it work against you. By investing your money, you can put the power of compound interest on your side. But if you spend it on depreciating assets like new iPhones instead, it will disappear.

The Bottom Line

The new iPhones are coming, and they’re more expensive than ever. But the message we’re trying to get across here isn’t really about this year’s iPhone models or how much they cost – it’s about what you give up when you choose to finance luxuries instead of saving for the future that’s coming whether you like it or not.

These particular phones might be all the rage right now, but there will surely be an iPhone XX if we wait long enough. Only you can decide whether to mortgage your future to get your hands on the latest technology – or whether to save for the future instead.

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.

Related Articles:

Are you going to get the new iPhone 8? Why or why not?

The post Will the New iPhone 8 and iPhone X Be Worth the Investment? (Nope.) appeared first on The Simple Dollar.

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