Saturday, January 27, 2018

Books with Impact: Walden

The “Books with Impact” series takes a deeper look at specific books that have had a profound impact on my financial, professional, and personal growth by extracting specific points of advice from those books and looking at how I’ve applied them in my life with successful results. The previous entry in this series covered Voluntary Simplicity by Duane Elgin.

I was first introduced to Walden by my high school English teacher, who told me more than once that it was something I should revisit throughout my life because it would read much differently at different stages in my life experience and intellectual growth. He was completely right.

Walden is a book written by Henry David Thoreau and first published in 1854, in which Thoreau describes his experience of spending two years, two months, and two days living in a small house that he built himself on the shore of Walden Pond, near Concord, Massachusetts. He spent that time in near-solitude, rarely seeing another living person and doing most life tasks for himself.

Walden compresses that experience, for narrative purposes, into a single year, and the book’s overall purpose is to make the argument that being close to nature, being comfortable in solitude, and spending a lot of time in contemplation combine together to transcend the “desperate” existence that most people feel in their day to day lives.

So, why is this a “book with impact” that’s being discussed on a personal finance site? Walden essentially boils down to an argument for the benefits of self-reliance and minimal spending, of spending time in contemplation and enjoying nature rather than in the artificial environments we create for ourselves. In an era where people spend hours upon hours daily staring at screens and being constantly distracted, in a world where money woes bring untold stress and the vast majority of Americans live a paycheck to paycheck existence, Walden‘s message is a powerful one.

Having said that, let me forewarn you that reading Walden is a slow process. Thoreau writes in a very dense fashion and sometimes will rapidly hop around from serious analysis to sarcasm and flights of fancy. He also uses somewhat dated language; while I personally find him much easier to read than other authors of the 19th century, it’s not fully written in modern language. I consider the effort to be worth it, but this is one of those books that deserves to be read slowly with a little notebook open beside you to jot down interesting ideas and thoughts, which you’ll find constantly while reading it.

The full text of Walden is freely available via the Project Gutenberg website; you can simply click here to start reading. If you prefer to read it in the Kindle app on your phone, you can open the mobile page for Walden and, in most mobile web browsers, just click on the Kindle link and it’ll automatically open in your Kindle app so you can read it like any other e-book and your place will be saved.

What follows are some of the interesting ideas that I took note of during my most recent reading of Walden, ones that I felt were particularly relevant for the modern challenge of spending less, finding personal independence, and being in control of our resources and of our mind.

But men labor under a mistake. The better part of the man is soon plowed into the soil for compost. By a seeming fate, commonly called necessity, they are employed, as it says in an old book, laying up treasures which moth and rust will corrupt and thieves break through and steal.

Thoreau’s point here is that we sacrifice a lot of our lives working in order to earn external rewards, and those external rewards fade quite quickly.

Think of the many, many things we buy, use for a while, and then discard, or the things that we buy and don’t even use at all.

Think of the piles of stuff stowed away in our closets that we don’t use and will likely never use, that we’ll probably eventually throw away or sell for a pittance or let our children deal with.

What is the good in working for all of that stuff? Why not work for the internal things? Why not work instead to have a great sense of peace and security? Why not work so that you have the time to understand the world more deeply and feel at peace with the big questions in life?

The thing is, working primarily for those internal things often means that you don’t have to work nearly as hard. You don’t really need much to provide basic care for yourself, and if you then spend most of your energy on finding true inner contentment… well, isn’t that a pretty good life?

It is hard to have a Southern overseer; it is worse to have a Northern one; but worst of all when you are the slave-driver of yourself.

This is a quote that marks the timeframe in which Thoreau wrote Walden. While he is unquestionably an abolitionist, he’s also aware that slavery does exist and talks of it as an ongoing human condition in widespread use, which is true for his time.

However, his core point here is that we are often the worst of all masters to ourselves because we can never escape that slavery. Wherever we go, we’re there. If that voice in our head is a cruel, critical master, full of nothing but contempt for the people that we are, that’s perhaps the cruelest outcome of all.

It is hard to find joy when your internal voice is constantly criticizing you.

It’s also easy to fall into situations where we’re tempted to find easy solutions to that criticism. If the voice in your head is shouting at you that you’re not good enough in some way and then a product comes along telling you how it will improve that very thing, it becomes incredibly tempting. The marketer and that foul voice in your head are working in tandem to empty your pockets.

The mass of men lead lives of quiet desperation. What is called resignation is confirmed desperation. From the desperate city you go into the desperate country, and have to console yourself with the bravery of minks and muskrats.

From the debts we owe to others to the critical voices in our head, from our desire to keep up with the people next to us to our desire to find pleasure because we “deserve” it, we’re often rushed along through life, through a series of hard choices that we sometimes feel stuck in.

The thing is, those chains never really go away. I can find temporary peace when I go on a long hike in the woods, but the internal monologue comes with me, as do many of the worries of life.

The only escape from it that I have found is to turn away from materialistic aims and try to soothe the feelings within to the best of my ability, to eliminate as many sources of stress and worry from my life as I can, and to drink deeply from the natural world (those long hikes, for example) and from great books.

Those things don’t cost money at all, but they do require some realignment of life’s priorities, often in an uncomfortable way.

For more than five years I maintained myself thus solely by the labor of my hands, and I found that, by working about six weeks in a year, I could meet all the expenses of living. The whole of my winters, as well as most of my summers, I had free and clear for study.

This is the culmination of what Thoreau’s earlier points are. He essentially works for about six weeks out of the year and earns enough in those six weeks by his own effort to pay for his expenses for the year. The other forty six weeks, he spends it in “study,” which, as we learn later on in the piece, means spending time in nature, in reading, in contemplation, and in the company and worthwhile conversation of people of his own choosing.

This is a very true expression of the often-quoted saying “work to live, don’t live to work.” Work is a necessary act for him, providing just enough so that he could get on with living.

He didn’t work to accumulate material possessions. He didn’t work to acquire property or to appear better than the neighbors. He didn’t work to acquire the latest gadgetry.

He worked so that he could spend his life doing things that brought him peace and contentment – spending time in nature, reading, contemplating, and having good conversations with thoughtful people.

What things do you do that truly do bring you peace and contentment? You’ll probably find that, if you take this seriously and back away from what you think you’re supposed to say, your answers involve very simple things, too. Mine involve reading and spending time in nature, just like Thoreau; I also find a ton of contentment in playing challenging games (like chess, for example) and in time spent with my family, teaching my children life skills and sharing experiences with my wife and with my children.

These aren’t activities that require tons of activity or tons of possessions. A lot of my possessions are centered around things that have little to do with the things in my life that provide the most peace and contentment.

As I preferred some things to others, and especially valued my freedom, as I could fare hard and yet succeed well, I did not wish to spend my time in earning rich carpets or other fine furniture, or delicate cookery, or a house in the Grecian or the Gothic style just yet.

In the end, Thoreau valued freedom above all else – freedom to spend his time in the way that he most saw fit, in the things discussed above that brought him peace and contentment.

What keeps you from doing this? Why is your life not centered around investing the bare minimum time needed to enable you to spend the rest of your life engaged in the things that bring you the most peace and contentment?

It is so, so easy to come up with weak answers to that question, justifications for why we don’t live this way. Instead of listening to and following those justifications, perhaps our lives would be better off if we ignored those justifications a little and strove for freedom instead.

In short, I am convinced, both by faith and experience, that to maintain one’s self on this earth is not a hardship but a pastime, if we will live simply and wisely; as the pursuits of the simpler nations are still the sports of the more artificial. It is not necessary that a man should earn his living by the sweat of his brow, unless he sweats easier than I do.

When I read this, I am reminded of the fact that when I am not pressed up against the wall with financial demands and workplace issues, work is often quite enjoyable. There are few things I’ve enjoyed more in my life than being deeply engaged in a project, calling forth my whole mind and spirit to really accomplish something challenging, and feeling great when it happens.

Work is joyful in that context. It becomes drudgery when we have to earn certain high levels of money in order to pay our bills and pay off our debts, which usually means that in order to earn enough to make that happen, we have to submit ourselves to doing a lot of things we really don’t enjoy. We often end up facing a lot of stress and anger, both from our coworkers and from ourselves.

The best route out of this that we have at our disposal is to be minimal in our spending. What do we really need? Is going beyond that worth exposing ourselves to more of the stressful and negative aspects of work? Is it worth earning less to have more joyful work?

Every morning was a cheerful invitation to make my life of equal simplicity, and I may say innocence, with Nature herself.

By choosing a life of minimal need and want, Thoreau found a deep peace that caused him to awake cheerful at the promise of the day ahead.

He didn’t have much in terms of wealth or possessions, but he had what he needed and valued most: freedom. He had basic shelter, food, nearby access to clean water, clothing, a warm place to sleep, and he was surrounded by opportunity to engage in the things that really lifted his spirits.

What more does one really need in life? What are we chasing that’s more than this?

We must learn to reawaken and keep ourselves awake, not by mechanical aids, but by an infinite expectation of the dawn, which does not forsake us in our soundest sleep. I know of no more encouraging fact than the unquestionable ability of man to elevate his life by a conscious endeavor.

Thoreau was strongly encouraged by the ability of a person to improve themselves by their own continuous and conscious effort. We are all capable of being more than we currently are if we choose to direct our efforts in that way.

We can be better people. We can find contentment. We can be healthier and more virtuous. It’s up to us.

There is no magic machine that will do those things for us, either. In the end, it is our own choice that will make us better. You can have all the workout machines in the world, but it is still up to you to choose to exercise. You can have the best alarm clock in the world, but it is still up to you to rise out of bed in the morning.

What will you make of yourself? Remember, you don’t need stuff to do this – you already have everything you need.

With a little more deliberation in the choice of their pursuits, all men would perhaps become essentially students and observers, for certainly their nature and destiny are interesting to all alike. In accumulating property for ourselves or our posterity, in founding a family or a state, or acquiring fame even, we are mortal; but in dealing with truth we are immortal, and need fear no change nor accident.

Thoreau is making a subtle argument here for being a lifelong learner. If we spend at least some of our time learning new things and contemplating those new things into a deeper understanding of the world, and then we share at least some of the truth that we uncover, we’re doing something truly timeless, far more than collecting wealth.

Think about it this way. What will have a more profound affect on the world – buying a latte at Starbucks, or spending an hour learning about something new that unlocks understanding in your head which you’re able to share with a few people? Which will have a more profound and lasting effect on you?

His argument that ideas are timeless and things are far from it is one worth thinking about.

I learned this, at least, by my experiment: that if one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours. He will put some things behind, will pass an invisible boundary; new, universal, and more liberal laws will begin to establish themselves around and within him; or the old laws be expanded, and interpreted in his favor in a more liberal sense, and he will live with the license of a higher order of beings. In proportion as he simplifies his life, the laws of the universe will appear less complex, and solitude will not be solitude, nor poverty poverty, nor weakness weakness. If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.

In this final quote, Thoreau is making the point that if a person rushes toward their dreams, that person is in danger of losing them if there is not a firm foundation underneath them.

What is that firm foundation? Well, certainly, a financial foundation is part of that. Knowing that your meals and shelter is secure for the foreseeable future is undoubtedly going to help make things more secure in your life.

It’s more than that, though. Another part of a foundation is that you have a good character and good values to rest your life endeavors upon, so that your own personal failings don’t undermine everything you’ve worked for. Yet another part is the things you’ve learned, and another part is the core relationships you have.

It is easy to strive for great things in life – a beautiful house, a booming career, a wonderful partner. However, if you ignore the foundations under them – a strong character that won’t fail you, good values, a firm sense of your finances, strong and healthy relationships, a good understanding of the world – the great things you build won’t suddenly fall apart underneath you.

It is worth pointing out that I took note of many other things while reading Walden – thoughts on human relationships, on morality, on appreciation of nature, on doing things for myself, on the power of reading challenging books. Walden is far from one-dimensional; in fact, it reads more like a series of essays that are interconnected by the overall narrative of life on the shore of Walden Pond.

This is not the easiest read in the world, but it offers up a great deal of value if you take it slowly, read it in pieces, jot down a few notes, and reflect on them. It will open up some very deep thoughts about one’s direction in life and how one should participate in the modern world and what one owes to themselves. Those are weighty questions, indeed, but they form the true foundation of personal finance.

The post Books with Impact: Walden appeared first on The Simple Dollar.

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Friday, January 26, 2018

How to Help a Financially Irresponsible Family Member or Friend

There’s an older friend of mine who has a son that he loves dearly, but the son just takes blatant advantage of the situation. He stops by to see his father only when he needs a handout, and although those visits are somewhat friendly, it’s really obvious that the son is mostly just there with his hand extended. The father opens up his wallet and hands over his cash and, almost as quickly, the son races out the door to do other things, leaving a deflated father sitting in a chair wondering what went wrong.

It’s a common experience. A friend or family member struggles greatly to get their finances in order. They fail repeatedly. They fall into a pattern of just asking family members and friends for “help” to get through a “rough patch,” but never change the underlying behavior.

You want to help that person – you seriously do – but it begins to feel like financial help is just pouring money into a bottomless pit with no real change. You feel used and taken advantage of, and the other person makes you feel like you are nothing more than a bank for them to tap. It’s not healthy for either one of you.

That gut feeling of nothing ever changing is usually the correct one. People who fall into this kind of cycle in their life are very rarely helped by continued financial assistance. Rather, continued financial assistance is almost always used to perpetuate the personal and financial mistakes that led to needing financial assistance in the first place.

However, this doesn’t mean that you want to abandon these people, and it’s fear of conveying that sense of abandonment that often keeps people handing out money against their better judgment.

Here’s the cold truth, though: just handing over cash doesn’t help the person you’re trying to help, and it certainly doesn’t help you. You need to find a better path going forward, and here’s how to do it.

Make a clean break – no exceptions. As of today, you’re no longer going to just hand cash over to a financially irresponsible family member or friend that comes knocking for a handout. It’s over. It doesn’t help that person, as evidenced by the fact that they keep coming back. It doesn’t help you, as evidenced by the fact that your money keeps vanishing. A new path has to be found, and it starts now.

This does not mean that you will no longer help your family member or friend, but that the help will become non-financial in nature. This brings us to the next point…

Decide how you will help non-financially before communicating that clean break. How exactly will you help this person that you care about without just handing over cash? That’s a tough question, and it depends a lot on the person’s character and the situation that they’re in.

You might find it best to simply offer a friendly ear and meaningful advice. You might be able to offer some sort of non-financial help, like giving someone a ride to work or simply having them over for dinner once a week or help them research ways to find more help. Consider what you can actually do – not give, but do – to help that person find a better path in their life, one of independence.

When you communicate that you are no longer going to help financially, make it extremely clear with no wiggle room. Don’t make it sound like you’re not handing over cash this week but you’ll do it next week. Make it abundantly clear that you cannot afford continued financial assistance and that the assistance is not bringing about any sort of meaningful change in their life, as they keep coming back for more.

This is a permanent change. Make that very clear. Don’t leave any wiggle room.

At the same time, make it very clear what kind of help you will offer instead. This needs to be done in parallel, or even given first, because without it, you’re giving off signs of abandoning that person. That’s not the goal here. The goal is to transition to non-financial help if they need it.

Talk about what you will do for that person, something that you should have already considered and decided long before the conversation takes place. You will give them a ride to work. You will help them fill out job applications. You will have them over for dinner on Sundays. You will watch their daughter while they go out looking for work. You will take care of their pets if they go into rehab. Those are non-financial things that you will commit to in order to help them.

If you’re concerned about retribution or other negative emotional responses, have others present when you have this conversation. Sometimes, people are scared to have these kinds of conversations because they are worried about the emotional stability of the person they’re talking to. If this is a real concern for you, consider having this conversation when others are present or else at least when they’re quickly available, such as having someone else in another part of your home while the conversation is happening, or having this conversation in public.

It can be very difficult to deal with strong emotional reactions or emotional instability from someone you care about. Often, they’re purely reacting on the emotional response in that moment, in which they see a financial source disappearing, and that’s often very difficult to handle, especially when you’re missing a longer-term perspective on life.

If you are in a situation where you are providing financial assistance to someone out of a sense of fear, this is a situation you need to escape from for your own safety. Consult other people in your life and have support for you ready as you cut that financial link. It needs to be done for your own long-term safety and freedom.

Come through consistently with the non-financial help. If you’ve promised some form of non-financial assistance, such as driving that person to work or taking care of a few of their obligations while they go job hunting, come through with your offer. Show up and take care of what you promised to take care of.

If you can’t manage to do that, then this becomes less about cutting financial ties and more about cutting ties altogether. You are choosing to change the nature of that relationship and when that changing nature is uncertain, if you aren’t abundantly clear in your actions as to what the new terms are, your actions can describe something that you may not want. The other person may just interpret it as abandonment in their time of need and walk away from you entirely.

If you promise something, come through. Be sitting outside their home in time to drive them to work. Have yourself ready to go for child care when they drop off their daughter. Make a good meal on Sunday evening. Be there to listen when they stop by or call you. Don’t make your promise of non-financial assistance be an empty or meaningless one.

The thing to remember throughout all of this is that persistent financial assistance for a financially irresponsible family member or friend doesn’t help either one of you. It keeps them from seeking a path to true independence and personal success, and it keeps you from all of the opportunities that life has to offer. Cutting that financial relationship gently and carefully, while still showing love and compassion, is a key step for both of you to find the success that you both want in life.

Good luck!

The post How to Help a Financially Irresponsible Family Member or Friend appeared first on The Simple Dollar.

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Thursday, January 25, 2018

Are Free Checking Accounts an Endangered Species?

Bank of America announced this week that it has ended its essentially-free eBanking account, moving the last of those customers into the bank’s Core Checking accounts instead.

The eBanking service wasn’t a technically a free checking account, but it was pretty close – because it was quite easy to get around the fees. As long as you agreed to get statements electronically and avoided going to a real-live bank teller, the $8.95 monthly fee was waived.

By contrast, Core Checking charges a $12-a-month maintenance fee that’s more difficult to avoid – especially for low-income customers. To dodge that fee, account holders need to jump through more, higher-priced hoops, either keeping a minimum balance of $1,500 or more, or getting at least $250 direct deposited each month.

The change has sparked outrage and backlash, but as much as I’d love to hate on Bank of America, they’re more or less just doing what all the other big banks do. As The Atlantic notes, Wells Fargo, U.S. Bank, and others have scaled back their free (or de facto free) checking options in recent years. And most Americans probably haven’t noticed.

That’s because the big loophole in this racket – the way most of us avoid paying obnoxious fees for a checking account that yields little or no interest whatsoever – is to link up a direct deposit to your account. And that’s a pretty easy thing to do… for most traditional workers.

The trouble is, not everyone has this option at work – and it’s often the poorest Americans who don’t, and thus get stuck paying such fees. A 2017 study by Bankrate showed Americans earning less than $30,000 a year pay three times as much in bank fees each month.

Using Direct Deposit to Avoid Checking Fees

Banks don’t want customers keeping a stale account open indefinitely with just a few bucks in it. After all, they make their profits by lending your money to other people and charging them interest on the loans, and through various fees when you use your account.

But if they know you’ve got a consistent cash infusion coming in via direct deposit, they can feel more comfortable lending more money out, and they know you’re going to use the account regularly to access your cash – eventually paying an ATM fee here or there, or using your debit card to make a purchase.

So they crave a steady, electronic deposit. For most Americans, that’s no problem: If you hold a typical salaried job, or even if you receive government benefits, it’s pretty easy (or in the case of Social Security and VA benefits, mandatory) to request electronic direct deposit instead of receiving a traditional check in the mail.

However, not everybody draws a regular paycheck or gets paid electronically. If you’re self employed, your income might fluctuate wildly, and there’s no single payroll department you can ask for direct deposit. If you work for cash, tips, or on a per-diem basis, it can be tricky to meet the direct deposit requirement as well.

Alternative Ways to Get a Direct Deposit and Avoid Account Fees

If you don’t have a regular paycheck coming in, here are some other ways you might be able to meet the direct deposit requirement to waive your checking account fees (check with your bank to make sure):

Side hustles: If you’re able to earn some money on the side through sharing economy services — driving for Uber or Lyft, for example, or hosting visitors through Airbnb – you’ll generally be paid electronically through direct deposit.

Person-to-person transfers: Share an apartment? Have your roommate set up a direct monthly transfer for their share of the rent using a service like Venmo or Zelle. Some banks will consider that a direct deposit.

Automatic savings: If you have a free online savings account with a bank such as Ally or Capital One 360, you could set up automatic transfers to your checking account that might qualify as direct deposits. Of course, you’d ideally be moving money the other way — automatically stashing a few hundred dollars a month from checking into savings — but this method could nonetheless help you avoid a maintenance fee if you’re between jobs or decidedly entrenched with your brick-and-mortar bank.

Better Bet: Open a Free Checking Account Online

But why go through all that hassle, when free checking accounts do still exist? You can open a free checking account – one that will even pay you a small bit of interest – through an online bank, with no fees or minimum balance.

Capital One 360 and Ally Bank are two of the biggest names in online banking, with good options for both checking and savings accounts. Capital One 360 has some physical banking (and cafe) locations around the country, which gives them a slight edge if you happen to live near one.

Here’s what you can expect with a truly free checking account from an online bank:

No fees or minimum balances: Most online accounts have zero maintenance fees, and don’t require you to keep a minimum balance. Both Ally Bank and Capital One 360 offer a free book of checks, too – a courtesy my physical bank never extended to me – and free or cheap ($0 to $5) refills.

Large ATM network: Both Ally Bank and Capital One 360 allow fee-free ATM withdrawals from a network of more than 39,000 Allpoint ATMs, which you can find in convenience stores, pharmacies, and other locations. Ally will also reimburse you for up to $10 of other ATM fees per month.

It helps to have a smartphone: Perhaps the trickiest thing about using an online checking account, particularly if you don’t have a direct deposit option at work and you’re living paycheck-to-paycheck, is depositing paper checks. It’s super simple, if you have a smartphone: Just snap a photo of the signed check within your bank’s app and fill in the deposit information. If not, you can still deposit a check by mail, but that will take a few days (a tough wait if you need the money soon). Capital One 360 users can deposit checks at some Target stores as well as Capital One locations.

The best part is, instead of threatening to bilk you with monthly maintenance fees, these accounts actually pay you. Both Ally Bank and Capital One 360 offer competitive interest rates on their free checking accounts – a feature you rarely find at a legacy bank unless you’ve got upwards of $20,000 dollars in your account.

Don’t put up with checking account fees.

The moral of this story is, you don’t need to pay Bank of America (or any other banking giant) for the privilege of letting them use your money to make more money.

If a free online checking account doesn’t meet your needs, because you don’t have a smartphone, typically need access to your money more quickly, or simply cherish face-to-face banking – remember to check out local credit unions in your area, which are often more community minded and run less like a profit-crazed financial Goliath.

Here are some more resources if you’re looking for low-cost banking or free checking options:  

The post Are Free Checking Accounts an Endangered Species? appeared first on The Simple Dollar.

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Planting Seeds for the Future

When I was in college, I would often visit the office of my college mentor on Friday afternoons after my last class. He was a kind elderly professor who would direct me to sit down, quietly light up a pleasant-smelling pipe with his window open (he came into the habit of smoking a pipe when such things were permitted on campus, but occasionally enjoyed the practice with his window open on a breezy day even after they were outlawed), and would ask me questions about my life, listening intently and occasionally share nuggets of really valuable advice.

I miss him greatly.

He shared lots of useful ideas over the years, but one of the most valuable things he ever shared with me was the idea of planting seeds for the future.

Basically, he encouraged me to spend some time every day doing something that would not pay off any time soon and might not ever pay off in any way. Don’t expect anything in return from it, but know that some of those seeds that you plant will eventually bloom into something wonderful, and some of those wonderful blooms will come back into your life, often when you least expect it, to lift you up.

It’s a practice that I’ve tried to do ever since then, with varying degrees of commitment and constant effort. I followed the practice quite a lot in my later college years and at the very start of my professional life, let the practice fall to the side for several years as I dealt with the start of my marriage and having children, and I’ve picked it up again in the last few years.

Why did I pick it up again, you ask? I picked it up again because I saw how well it worked.

There were a few times in the last several years where something that I once did for someone with no expectation in return came back into my life and lifted me up unexpectedly. In each case, it was a “seed” planted years and years ago, and in each case, it was something that I had completely forgotten about until I was reminded of it.

There were also a few times when I saw something going on in someone else’s life, a great thing, that I played some role in starting. I discovered someone on the periphery of my life who was on a far better trajectory than they would have otherwise been on. Not only did that simple fact alone lift my heart, I came to realize that those people were often going around planting seeds as well. Even more than that, I was often indirectly lifted by their good fortune and by the seeds that they had planted themselves.

Those seeds in bloom have helped people I know find new career opportunities, new love interests, new spiritual practices, and many other things. Beyond that, some of those people have helped me to find financial, professional, and personal opportunities in my own life, and have helped my family, too. Beyond that, I’ve seen other people “pay it forward” in various ways that have lifted yet other people in my life, and beyond that is a ripple effect that has improved the entire community I live in.

That’s a pretty powerful effect for something that typically just takes a few minutes here or a few minutes there.

I’ll give you one very specific example, something that happened to me just a few months ago, but the story starts much earlier.

In 2003, I went to a conference related to my job at the time, and at that conference, I spent about two hours, split across two or three days, talking to a person who seemed to be struggling with a career path forward. I mostly just listened to this fellow and gave him a little bit of encouragement and asked a few tight questions. We met during a poster session and then ate breakfast together for a couple of days and that was it. I literally never saw him again, as for some reason we didn’t exchange contact information.

About six months ago, I was at a tabletop gaming convention when out of nowhere, someone shouted, “Trent? Trent!” It was him, and not only did he remember my name, I came to find out that our conversations had changed the direction of his life. He went home, thought things over, and made some major changes in his life. He wound up being involved in the board game publishing industry. He gave me a gigantic hug and then loaded down my arms with a bunch of free games from his booth and proceeded to tell everyone within earshot about how I had changed his life. I felt awkward and overwhelmed by it. However, I’ve found myself playing some of those free games with my children and I’ve had a few wonderful conversations with him in the interim.

It was a seed that was planted, one that I completely forgot about until the blooms caught me by surprise.

Over the years, I’ve learned that a few planted seeds helped me to get my first job out of college. A few planted seeds helped me to get through a rough spot in my relationship with my wife-to-be, probably the most difficult patch we’ve ever had. A few planted seeds helped The Simple Dollar to become successful. One particular planted seed helped to start the ball rolling on what turned into one of my child’s closest friendships.

Seeds I planted long ago, with no expectation of anything in return other than the hope that someday it might be paid forward to someone, have consistently lifted my life personally, financially, professionally, and spiritually.

So, how do you plant seeds like this?

First of all, a good seed is one that purely benefits someone else. When you can do something that can help someone else find a better track in life, you’re planting a perfect seed. There are many ways to do that, as we’ll get to in a moment, but that’s the core idea here.

Second, don’t expect returns. The vast majority of seeds you plant won’t develop into anything at all, at least not anything that you notice. It’s very likely that the seed is caught by the wind and drifts far away from you, or it’s planted in infertile soil. That’s okay. Never expect anything in return. Do it for the sole good of helping someone else out.

Third, plant lots of them. Don’t do this once or twice over the course of a week and give up on it. Make this a regular practice and plant lots of seeds everywhere, no matter where you go.

Finally, be patient You might plant a seed every day for six months and see nothing. That’s okay. Many things take a very long time to germinate. Some are forgotten. Some leave your life entirely. It’s all perfectly fine.

Need some ideas? Here are twenty five seeds you can start planting all over the place in your own life.

25 Seeds for the Future

Seed #1 – Help someone with a simple errand. Help someone with something as simple as picking up a few items for them at the grocery store or dropping off a package for them. Mow someone’s lawn for them while they’re traveling or pull a box off a friend or neighbor’s front step and shoot them a text to let them know you picked it up before a thief could. If you’re out blowing snow at 5 AM, blow the snow off their driveway, too. Little thoughtful tasks like that make an enormous difference.

Seed #2 – Help someone move. If you know a friend is going to move soon, offer to help him or her with the move. You can help them fill up their car or their moving van, and help them unload if they’re moving locally. If they’re moving far away, you’ll help make a difficult transition a little easier and be a final positive reminder of a stage in their life.

Seed #3 – When you see someone struggling, offer to just listen. Often, people who are really in a tough spot just need someone to talk to who will listen. Just offer to be that ear. Say, “Sounds like you’re in a tight spot. I don’t know what I can do to help, but I can listen.” Follow that up with an offer to meet for coffee somewhere, and foot the bill if it’s easy for you.

Seed #4 – Take care of a parent’s child or someone’s pet when that person is facing a true emergency. If someone is dealing with a major life crisis, just step in and take care of their pets or their children automatically. Simply say “I’ve got your pets” or “I’ve got your kids” and tell them not to worry about them at all and you’ll take care of it. Make it seamless for them.

Seed #5 – Sign up for volunteer work. You’d be surprised how many life seeds get planted when you’re engaged in volunteer work. Not only do you sometimes plant seeds in the lives of the people you’re serving, but you’ll sometimes do the same in the lives of the people you’re working with. The simple act of service makes an enormous difference.

Seed #6 – Call someone you love and make the conversation entirely about them, by listening and asking questions rather than talking about yourself and your feelings and situation. It’s easy. Just call them up and ask how they’re doing, then listen intently. Ask lots of follow up questions. Answer any questions they have in return, but avoid turning the conversation into being all about you. Listen, ask questions, and leave that person feeling really valued.

Seed #7 – Check in consistently on a friend or loved one who you know is struggling. Checking in on a struggling friend or loved one isn’t just a one-time thing. Make it into a routine. Send a quick message once every day or two just to make sure they’re okay when things are really bad, and then maybe reduce the frequency a bit when the core crisis has passed – but don’t let the ball drop until everything is really good again.

Seed #8 – Step in to take over household chores during emergencies and personal crises. Bring someone a fully prepared dinner or stop in to prepare it for them (give them notice, but just tell them you’re going to do it). Take their trash can out to the roadside for them. Take a small burden off of already burdened shoulders and it will be remembered.

Seed #9 – Give a strong, positive personal testimonial or reference about someone else. Giving someone a strong reference when they haven’t even asked for it, generally when that person isn’t even around, not only helps plant a great seed in that person’s life, but it can also plant a seed in the life of the person you’re giving the recommendation to if that person is a good fit. Speak positively of others when they’re not around.

Seed #10 – Offer to review someone’s work before they submit it and review it carefully and thoughtfully. If someone is really stressed out about submitting a paper or finishing off a big project, offer to just look it over for them to see if you notice anything amiss. Pay close attention and try to find any minor details that need fixing, as an attention to detail is a demonstration of care, but do it in a way that’s very complimentary of the total package.

Seed #11 – Make a meaningful connection between two people in your life with the sole intent of those two building a healthy relationship independent of you. If you recognize some overlap or connection between two people in your life who may exist in very separate social spheres, seek to make that connection in some fashion without being overly aggressive. In other words, don’t try to be a “matchmaker” and set up blind dates, but just speak positively about the other person when speaking to someone. This leads into the next seed…

Seed #12 – Organize mixed dinner parties where you take care of all of the details and make it as easy as possible for people to attend. A mixed dinner party is where you invite people from different spheres of your life to a dinner party where they can meet each other and enjoy interesting conversation and maybe form the foundation of a friendship. The easiest way to make that work is to simply plan a dinner party on a particular day with all details taken care of – just give everyone a time and a place and what they need to bring, if anything. Choose potentially compatible people and think about some good conversation starters to nudge things along.

Seed #13 – Make someone’s favorite comfort food for them when they’re sick. Few things help more than delivering a pot full of homemade chicken noodle soup to a family with a few sick people at home. They can fill up a bowl and easily microwave it and a good pot will cover several meals. Simply showing up with it makes it so easy for them and so easy to accept, too.

Seed #14 – Write a handwritten thank you card for people in your life who have done something meaningful for you. Handwritten thank you notes are always a good move when someone helps you out, but they’re also a good move as a simple method of thanking a mentor or someone who may have played a foundational role in your life. Consider writing a few. If nothing else, it’ll make the recipient feel really good.

Seed #15 – Keep your home orderly so that you can tell people that your door is always open to them and mean it. Many people who struggle with organization find that they’re very reticent to inviting guests over. Overcome this by making a conscious effort to keep things clean and then make it clear to people that your door is always open to them, so that you feel joyous and ready to help when someone stops by.

Seed #16 – Take care of chores and errands for an injured or sick person; don’t ask, but tell them what you’re going to do. If a friend breaks their leg, for example, tell them that you’re going to mow their lawn for them on Saturday (or Sunday if there’s rain). Don’t ask if they need help – suggest something that you’re highly confident that they’ll need help with and say that you’re going to do it. That way, they don’t feel like they have to ask, and they see you as a very helpful friend.

Seed #17 – If you know someone is struggling with a particular issue, take the time to write some heartfelt and genuine positive advice for them. I do this regularly. If I know someone is struggling with something, I’ll simply write them a note that says, “Hey, I know you’re struggling with X. It isn’t easy and I’m always here to listen. Although my experience was a little different, I went through something kind of like this once a while back, and Y and Z helped me to get through. I’m going to give you a ring at X o’clock tonight just to see how you’re doing.”

Seed #18 – If you know someone is struggling to find work, send out feelers on your own social network to help them find work. Consider what skills they have to offer, then ask around and see if anyone you know has some sort of job opening they’re aware of for people with that particular skill set. This happens surprisingly often, and when it does, you can change a lot of lives at once.

Seed #19 – When someone you know creates something, share it far and wide. If a friend creates a new website or starts a podcast or makes an amazing woodworking project, share it. Let people know about it and how awesome it is. They’ll appreciate it and you may end up finding new fans for them.

Seed #20 – Draw a teenager into conversation and listen to what they’re saying. If you see a teenager sitting off to the side at a social event, sit down with that teenager and draw them into conversation if you can. If they start talking, listen in a very focused way and ask good follow up questions. Don’t bury them in your own advice, either; keep it on them unless they ask you for what you would do. Trust me, people remember who listened to them in their moments of feeling like an outcast.

Seed #21 – Write a note to someone in your own handwriting just telling them what they mean to you. This is a great way to touch back with a beloved old friend or a family member who has meant a lot to you over the years. Simply write about the things that person has done for you and how those things have made a profound difference in your life. This isn’t a thanks so much as a remembrance of who helped you.

Seed #22 – Volunteer for tough tasks in groups you’re involved with. Step up to the plate and do the tough tasks that no one wants to do. The person that does the awful tasks is the person that builds respect and trust within the group.

Seed #23 – Write down useful ideas that others share, and pass along good ideas you have to others. Make yourself into a conduit of good ideas. Make a practice of not only writing down your own good ideas, but the ideas you hear from others, but it goes beyond that. Don’t hoard your ideas. Pass them along whenever they are useful, and give credit to the source.

Seed #24 – Introduce yourself to familiar faces and get to know them by listening and asking questions. If you see someone often enough that their face becomes familiar, introduce yourself and get to know them a little by asking a few questions. Make an effort to remember their name, greet them when you see them, and, if possible, follow up in a positive way on some of the key things they’ve said to you.

Seed #25 – Find someone new in your profession and offer to genuinely mentor them. If you’ve reached a level of success in your career path, identify some new people on your path who show promise and humility and offer to mentor them. Take a direct interest in their career success, talk to them and learn what their goals are, and offer advice and help that will assist them in achieving those goals. Do it not for yourself, but in a genuine effort to lift that person up.

Final Thoughts

What you’ll quickly notice is that many of these seeds come down to a few things.


Offering specific help when you see that it may be needed.

Being humble and giving credit to others.

Connecting people to each other without forcing it.

Expecting nothing in return.

Use those key principles as often as you can and you will constantly plant seeds in life. Most will remain dormant, but some will eventually bloom into wonderful things in your life and in the lives of others around you. The ones that do bloom will repay you everything you’ve invested and far more. Others will bloom outside of the sphere of your life and lift up countless other lives as well.

Make your life into a garden.

Good luck.

The post Planting Seeds for the Future appeared first on The Simple Dollar.

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Slash Your Food Budget With ‘Salvage Groceries’

Recently I bought ground coffee for $1.24 per pound. That is not a typo. All I had to do was overlook the slight dent in the side of the 29-ounce can.

I did. As a result, we got the makings of 225 cups o’ joe for a little less than a penny each.

Searching the “manager’s special” bin at every store is one way we keep the grocery bills down. We call it the “scratch ’n’ dent bin,” because so many of the foodstuffs have had brushes with disaster: scuffed or partially collapsed boxes, dented cans. But some items aren’t damaged at all: They wind up in the clearance bin because they’re seasonal products, close to their sell-by dates (more on that below), or foods that didn’t sell as well as the store manager hoped.

It’s true that some of these things are purely frivolous: gingerbread house kits, chocolate bunnies, holiday-themed cereal, pumpkin spice anything. But as noted above, we got coffee for about a penny a cup this way. Among the things I’ve seen in manager’s special bins are infant formula and baby food, pasta (I recently paid 50 cents for a pound of angel hair, which is an excellent price here in Alaska), cleaning products, diapers, pet food, soups, replacement mop heads, charcoal briquettes, OTC medications, aluminum foil, lard and canned beans, tomatoes, vegetables and fruits.

An entire industry has been built around “salvage groceries” (more on that below, too). We’re not fortunate enough to have one of these stores where I live. However, we do pretty well with manager’s special and clearance bins in supermarkets and drugstores.

My best deals ever were eight boxes of Royal instant vanilla pudding for 9 cents apiece from a Walgreens, and big boxes of aluminum foil and waxed paper for 50 cents each at a Dollar Tree. A discounted bin at a dollar store: frugal nirvana!

Want an even better deal? Find a store manager and make a flat offer on most or all of the whole clearance bin, if it’s got enough items you’ll use. Frugal author Jeff Yeager once told me that “the ultimate proving ground of your negotiating skills is if you can negotiate on groceries.” I’ve never tried this, but maybe you’re braver than I am.

The Dented Can Industry

Salvage grocers around the country also offer the same mix of products found in the manager’s special bin: slightly damaged items, unsold seasonal foods, products that didn’t sell, discontinued products, or even foodstuffs that have undergone a package or label change.

At times there’s not a thing wrong with the “damaged” merchandise. When a pallet of products gets dropped from a forklift, it’s more cost-effective for a wholesaler to sell it all below retail than it would be to separate and repackage the still-good items. As a result, consumers pay fire-sale prices for like-new products.

Keep your grocery list in hand, and don’t overdo it. For example, a big jar of marmalade for 50 cents would be a great deal (especially if your kids just saw the latest “Paddington” movie). But how many jars can you actually use? Don’t walk out with half a dozen unless you really like bread and jam.

It’s important to know what food normally costs. Even if you don’t keep a price book, you should have an idea of what you normally spend for the foods you normally buy. For example, that $1.50 box of cereal isn’t such a hot deal if you’re already able to get that kind of price by matching sale prices with coupons.

Remember to factor in gas costs, too. Going 15 miles out of your way to get dented Peeps is not a good use of your food budget.

And you will see a lot of sweets and snacks, especially after major holidays when treats are being remaindered. But regular supermarket shelves runneth over with empty calories, too. Use the same good sense at a salvage store as you would at Safeway: Stock up on great deals on healthy foodstuffs that you would buy anyway. Doing so can put quite a dent (ahem) in your grocery bills.

(Pro tip: If you’re living on the margins, this can be one of the few ways to get an occasional treat. That 10-cent package of Conversation Hearts isn’t the healthiest thing in the world, but what’s life without a little sin?)

To find stores in your area, check the list maintained by ExtremeBargains.net. Since this is likely not an all-inclusive list, you should also do a search for “salvage grocers,” “discount grocers,” and a recent industry subset, “Amish salvage grocers.”

Too Old? Too Dented?

Generally speaking, foods like eggs, dairy products, and fresh juice should be used by the sell-by date for best quality. Yet milk could still be good after the date on the carton, depending on how often it’s removed from the fridge and how long it sits on the counter.

Sometimes the date may surprise you: I found a “manager’s special” sticker on a package of good-quality cheddar cheese, even though the sell-by date was a few months away. I didn’t ask why was it remaindered; I just bought it.

If you’re buying close-dated meat or dairy, use or freeze it as quickly as you can.

Shelf-stable items can last for quite a while past the “best by” dates on packaging. In this case it’s a quality issue. Recently a friend cleaned out her cupboards and allowed me to take anything I wanted; my partner and I cooked with jarred pasta sauce, canned enchilada sauce, and other products that were two to five years past their prime.

And we haven’t died. Not once.

For shelf-stable items, a sell-by date indicates the end of peak flavor. No universally accepted food-dating system exists in the United States. In fact, expiration dates are not required by federal law except for infant formula.

Sometimes “damaged” means the corner of a box is crumpled or a can’s label is torn. No problem – buy it and save.

If a canned item is leaky or bulging, alert the store manager. But according to the U.S. Department of Agriculture, small dents are probably fine. This USDA fact sheet suggests you avoid any dent “you can lay your finger into,” especially if it’s on a can’s seam.

Other Budget-Friendly Food Sources

Some salvage grocers eschew the scratch ’n’ dent stuff, specializing instead in seasonal items, product overruns (why isn’t anyone buying this butternut squash/chipotle/quinoa soup?) and other inexpensively obtained foods.

Two well-known examples are United Grocery Outlet, a chain of 37 stores in five southern states, and The Grocery Outlet, with more than 280 stores in six (mostly western) states. Such stores also offer produce, meats, dairy, and a good selection of other grocery staples.

When I lived in Seattle, I sometimes shopped at the “Gross-Out,” as we fondly called this chain. Nothing gross about it, though: It was clean, the employees were friendly, the prices at times unbelievably low, and the ever-changing array of products was entertaining.

The trick at the Grocery Outlet – and any salvage store or manager’s special bin – is not to hesitate. There’s no guarantee that an unusual soup or multigrain cracker will be there the next time you shop, or maybe ever again. It’s the luck of the draw, so be ready to pounce if you see something that interests you.

A Few Pro Tips

Use coupons. Not all salvage grocers accept them, but supermarkets and drugstores do. Clearance plus coupon might equal free.

Buy as much as you can store. If the clearance bin has five deeply discounted boxes of pasta, why stop at one? Get all five and you’re set for a while.

Milk can be frozen. If you see a 99-cent gallon of moo that should be sold by tomorrow, remove a cup and a half from the jug and put it in the freezer. Don’t freeze milk in cardboard cartons; instead, pour the milk into wide-mouthed canning jars with a half-inch of headspace for pints and one inch of space for quarts (narrow-mouthed jars of either size need 1½ inches of headspace). Give the milk a good shake once it thaws.

Or forget freezing the milk and make some pudding instead. Bonus frugal points if you paid only 9 cents a box.

Veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.”

Related Articles:

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Wednesday, January 24, 2018

How Frugal People Can Get Tons of Value out of Meetups

One of my favorite things to do when I have a (rare) free evening is check out Meetup.com and see if there is anything happening anywhere near me, or else I’ll check the community calendar in my town and a couple of nearby towns to see if there are any civic events going on.

In both cases, I’m really looking for the same thing – new social events that I can check out where I’ll theoretically meet new people and learn some new things and maybe be exposed to a new hobby or interest.

It was primarily a Meetup listing in 2011 that sparked a massive interest in homebrewing. It was primarily a community calendar listing in 2009 or 2010 that spurred my board gaming passion to new heights. Thanks to various meetups – both literally on the Meetup.com website or on a community calendar somewhere – I’ve learned a ton about my community, learned about making a bunch of different fermented foods, learned how to use a CNC router, learned some great places to backpack and geocache near where I live, and met a ton of interesting people, several of which have persisted as friends in my life.

Total cost for all of those meetups? $0.

For me, community gatherings are some of the absolute best bargains out there for frugal people who are curious about the world and want to meet other frugal and curious people. They’re an opportunity to be social, to learn, and to not spend much of anything (unless a new hobby hooks you, of course). If nothing else, it’s an evening of free entertainment.

Here’s how to get started.

Check out Meetup.com and local online resources.
Your community – and the communities around you – have a ton of social events of all kinds going on pretty much every night of the week. They’re mostly open to the public and almost all are free.

So why don’t you hear about them? You don’t hear about them because most of them, being free organizations, don’t have the media budget to make sure everyone around hears about every meeting. Instead, they rely on tools where people who might be interested will go and find out what’s available in the community.

If you want to know about these things, you have to meet them in the middle and use some of the “common ground” that you have in order to discover such groups. There are a lot of places to look.

Meetup.com is a great place to start, as it provides listings for all kinds of organizations that are often just meetups run by interested parties.
Your community’s website sometimes offers a “community calendar” that lists civic events that city hall has been notified of.
Library websites often list all of the groups that utilize the meeting space at the local library. You should check the website of the library in your town and the websites of libraries serving surrounding communities.
Parks and recreation websites, which serve as the public face for the parks and recreation services in many towns, provide lists of public recreational facilities and services along with mentions of groups that utilize those services.
College and university websites typically have a very robust calendar of public events on them to which the broader community is welcome to participate. This is often a great way to find intellectually stimulating events.
Websites of neighboring communities provide similar listings to the ones provided by your community’s website (or perhaps even more robust listings).
Local Facebook groups, often formed around a particular community, often have announcements of community events and maintain a pretty robust calendar. See if your community has a Facebook group or two associated with it.
Local newspaper websites often include a community calendar or event listing of some kind as well.
House of worship websites and Facebook groups often include a listing of regularly scheduled events and irregular events that you can look into if you’re a member of that faith or curious about it.

Between these options, you’re likely to find a ton of free events and open group meetings in your local area.

Choose several events that fit into your upcoming calendar and schedule them.
If you check out all of those resources above, you’re probably going to find a ton of events, far more than you can ever possibly attend. Even in rural areas, the number of events that can be collected by using all of those resources is quite large; in a civic-minded college town or a larger city, the number can quickly grow to “overwhelming.”

Your first tool for filtering these events should be your own calendar. What evenings are you free in the next week or two? Start looking for events specifically on those evenings and ignore the rest.

Attend the events with an open mind and a desire to meet people and learn.
You’re likely going to find some events that are immediately appealing and many that are not. I urge you to not just consider the ones that are obviously appealing, but also consider ones that are a little outside your normal wheelhouse as well.

Consider events that are related to things you’ve been curious about in the past but never followed up on. Consider events that are connected to good causes that strike you as worthwhile, even if you’ve never been involved with them.

Most importantly, keep an open mind about such events. Go there with an intent to learn more about those things and meet people who are passionate and willing to bring someone new into the fold. You’ll find some people who are deeply engaged who may not be interested in reaching out to a new person, but you’ll also find people who are definitely interested in reaching out to you and getting you involved.

If you didn’t find the event compelling, don’t go back! You’re not committed to anything!
The thing to always remember is that if you attend an event that you didn’t find worthwhile, that’s fine! At the very least, you got an experience out of it and probably an hour’s worth of entertainment of some kind. You’re under no obligation to ever return to that group.

I’ve attended many group meetings and meetups that were nothing like what I hoped they would be, and I simply never went back for another meeting if they were regular groups. It’s okay. Not everything is a good fit for everyone, and trying to make it a good fit is usually frustrating both for you and for the regular members of the group.

Save your energy and time for the things that do click.

If you do find it compelling, become a regular participant.
If you go to a regular meeting and actually find it to be interesting and worthwhile and you’re drawn to go back, go back! Become a regular member and participant in the group.

Not only does it become a regular event in your social calendar, you’ll almost always find yourself building friendships and associations with the other people who are regular members of the group. You may build up a good one-on-one friendship or two, plus you’ll suddenly have a pool of people that you’ll know in the broader community.

You’ll also have an opportunity to delve much deeper into a particular area of interest, which is a great opportunity for personal growth.

Remember, being frugal doesn’t have to mean sitting at home every night. Your community is likely loaded with things to check out and groups to participate in and things to learn about if you open yourself to the possibilities, all of it for free.

Get out there and have fun! Good luck!

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Seven Signs Your Debt Is Out of Control (and What to Do About It)

In a lot of ways, racking up debt has almost become an American pastime. Buying a new living room set? Finance it for 12 to 36 months at 0%. Trading in your car? Well, of course you’ll want to get a new car loan – you can even stretch it out over 84 months to dull the pain. Going on vacation? Just charge it and pay for it later – I mean, that’s what most people are doing, right?

We’re so used to using debt for every purchase that it’s almost unheard of to remain debt-free. And if you avoid debt, you may even be seen as some kind of weirdo.

But, how much debt is too much? For many, there’s a very fine line to tread. While there’s certainly nothing wrong with taking out a mortgage to buy a home, borrow too much and your finances could be stretched paper thin. The same can be said for car loans, personal loans, and credit card debt. No matter whether you qualify to borrow more money or not, there’s a point where you borrow so much you put yourself at risk for financial peril.

Seven Signs Your Debt Is Out of Control

If you’re struggling with debt but aren’t sure whether your situation is manageable or not, here are seven signs you’re in over your head:

#1: You’re barely keeping up with the minimum payments on your debt.

If you have credit card debt coming out the wazoo and regular bills to pay, you may barely keep up with your minimum payments, let alone pay anything extra toward your debt. If this situation sounds like you, it’s very likely you’ve bitten off more than you can chew.

If you’re barely keeping up with minimum payments each month, you need to find a way to lower your monthly obligations or earn more money – there’s really no way around it.

#2: Your debt is growing every month.

Let’s say you’re struggling with debt already, but your balances keep growing every month. Whether you’re making the minimum payments each month or paying down even more than that, if you’re charging more than you pay, you’re boosting your balances with each purchase you make. Paying $600 toward a credit card balance is great – but not if you’re charging $800 in the same month.

In this case, you definitely have more debt than you can handle. And if don’t put a lid on your spending, your finances could quickly spiral out of control.

#3: Your credit score has taken a hit.

One of the biggest determinants of your FICO score is your credit utilization, or the amounts you owe in relation to your credit limits. If you have two credit cards with a total limit of $10,000, for example, and your combined balance is $7,500 between them, your credit utilization is 75%. (You want it to be closer to zero.)

This factor makes up nearly a third of of your FICO score — only your payment history counts for more. Generally speaking, the more money you owe and the higher your utilization, the more likely your credit score will drop.

#4: You’re not saving any money.

If your debts are so overwhelming that you’re not saving any money each month, you’re not alone. According to Go Banking Rates, more than half of American households had less than $1,000 in savings in 2017.

Ideally, you’ll want to have a fully-stocked emergency fund – enough to cover a few months of expenses if you lost your job — or at least $1,000 stashed away to cover a basic emergency. Debts so hard to satisfy that they prevent you from saving any money will likely become a problem sooner rather than later.

#5: You’re living paycheck-to-paycheck.

If you need to wait until payday to cover essential bills each month, chances are good you’re one financial emergency or unexpected bill away from a financial crisis. Keep in mind that it just takes one missed paycheck or financial misstep for your ability to keep up with your bills to fall out of your hands.

#6: Debt collectors have started calling.

If debt collectors have been calling to hound you over unpaid bills, then your debts have definitely grown out of control. Since your debt is in collections, this means you’ve fallen behind and failed to keep up with your monthly payments. Your credit score will start feeling the effects of your default rather quickly at this point, and you need to find a way out.

#7: You’ve borrowed money to pay your bills.

Last but not least, if you’re borrowing money from family and friends to cover your bills, it’s pretty likely that you’re in over your head. You may have trouble repaying these loans unless something drastic changes with your debts or spending habits.

What to Do If You Have Too Much Debt

If any (or all) of the above factors describe your situation, there are plenty of ways you can start on the road to recovery – even though many of your options won’t be easy ones. Instead of struggling, here are some steps you can take to get on the path out of debt today:

Cut your household spending and get on a ‘bare bones budget.’

In times of financial crisis, it’s crucial to cut the fat. When you’re in debt and struggling to pay your bills, this typically means looking for ways to reduce your weekly and monthly spending so you can throw more cash toward your debts.

A bare bones budget requires you to cut out all discretionary spending and focus on paying core housing, food bills, utilities, and debt obligations every month – in other words, not dining out, spending money on entertainment, or buying new clothes for a while. While a bare bones budget can be too strict to maintain as a long-term solution, it can help you get a handle on your debts at the very start of your journey and get you started on the path out of debt.

Make sure you’re paying off your debts strategically.

When you’re juggling too many debts at once, it can be difficult to keep track. Maybe you’re just trying to keep up and constantly paying whatever bill is due most urgently, or you’re paying a little extra on certain bills and not others with no rhyme or reason or real strategy behind it. In this case, it may help to get organized and create a plan of attack.

Start by sitting down with your spouse or partner so you can figure out exactly what your total debt load looks like. Then create a list of each debt you have, the current balance, the monthly payment, and the interest rate.

From there, you can figure out how to approach each of your debts. If you have several smaller debts, for example, you could attack them first using the debt snowball method – and just get them out of your life. If your interest rates are a bigger burden, on the other hand, you could use the debt avalanche and tackle the highest interest balances first.

Either way, it will help to have a full picture of where you’re at so you can decide what to do next.

Consider consolidating your debts with a balance transfer credit card.

If you have a lot of debt at high interest rates, a balance transfer credit card could help you buy some time to make extra headway. These cards offer 0% APR for anywhere from nine to 21 months, and some even come without a balance transfer fee.

If you’re able to choose a card without a balance transfer fee especially, scoring 0% APR on transferred debts could help in a few ways; not only would it lower your monthly debt obligation since you wouldn’t be paying interest, but it could help you pay down debt faster provided you continue to pay at least the same amount toward your debts you were paying before.

If you’re considering a balance transfer offer, make sure to read the fine print before you pull the trigger. Ideally, you’ll want to pursue a balance transfer card that comes with the lowest fees possible and has the longest introductory offer. You’ll also want to make sure you understand any special terms and conditions so you can follow them to the letter.

However, keep in mind that a balance transfer won’t work unless you do. To make the most of these offers, you need to pay down debt with fervor – ideally before your introductory offer ends. If you don’t – and if you’re lax about debt repayment – your introductory offer will end and your credit card’s interest rate will reset, leaving you not much better off than you were before (or potentially worse off, if your debts are now at a higher rate).

Pick up a side hustle to earn more cash.

Another way to lighten the load of mounting debts is to try to find a way to earn more money. If you could earn even a couple hundred dollars extra each month, you would be in a better position to pay down debt faster or start saving an emergency fund.

Picking up a side hustle is one way to earn money on the side while you also work full-time. Fortunately, it’s easier than ever to find part-time work performing a wide range of tasks from assembling furniture to watching dogs, cleaning houses, or delivering groceries. Check out our posts on the best work-at-home jobs and side hustles to try this year.

Likewise, even a temporary cash infusion can help you pay down some balances and get some breathing room. If you have stuff you no longer use laying around the attic or basement, consider selling some items on eBay or Craigslist, and putting the proceeds toward a debt. It’s just a one-time push, but if you can knock off an entire balance, that’s one less monthly bill you’ll have to pay from now on – freeing up more money to put toward your other debts each month.

Stop spending!

The final way to help yourself in your journey out of debt is to stop digging. Unless you do something to change your spending habits, it’s highly possible your debt troubles will get a lot worse before they get better

Consider switching to cash or debit only as you plan your strategy out of debt. It can also help to track your spending for a while to see what your weaknesses and trouble areas are. Either way, your debts aren’t going away – and you could easily make them worse if you don’t rein in your spending.

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 Stories:

How did you know you had too much debt? What did you do about it?

The post Seven Signs Your Debt Is Out of Control (and What to Do About It) appeared first on The Simple Dollar.

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Tuesday, January 23, 2018

Breaking Away from Financial Dependence on Your Parents

In the past, I have looked at how parents can help their adult children move from a state of financial dependence on their parents to a state of financial independence from their parents – https://www.thesimpledollar.com/avoiding-the-trap-of-financially-dependent-children/

But what about that situation from the other side of the equation? What if you are financially dependent on your parents but don’t want to be? Maybe it’s due to personal pride, maybe you are tired of parental interference in your choices, or maybe you want to give your parents more life options. Whatever the reason, moving from financial dependence on parents to financial independence from parents is a big goal and a big step for many.

For me, this was never really a choice. My parents almost entirely cut off financial dependence when I was eighteen and I moved out to attend college. I would stay at their house during semester breaks and they helped with a few things irregularly when I was a student, but even those things faded away within a year or two.

For others, the process isn’t so simple. Many parents are uncertain as to when to cut those ties, particularly following periods in which their children struggle with the challenges of young adulthood and transitioning into professional life. For children, the desire to be independent is sometimes in conflict with other desires, like the security of having easy financial backing and the perceived emotional needs of their parents and of themselves.

Yet there often comes a point where children want financial independence from their parents. Here are some steps for making that happen.

Start Practicing Basic Life Skills

One of the biggest anchors for ongoing financial support between parent and child is the child’s difficulty in managing many of the basic skills of independent adult life. A financially dependent adult child may be reliant on the conveniences of things like having food prepared for them or even things like having someone clean for them or do laundry for them. This might occur because the child is still in the home or because a parent is footing the bill for these services outside the home.

The first big step that should be taken on the path to independence is taking on the responsibility for those basic life skills for yourself. Learn how to prepare your own food. Take responsibility for cleaning up your own possessions and doing your own laundry.

If you live at home, take on some of these tasks for the entire family. Start making dinner on a regular basis. Handle all of your own laundry and even handle the laundry for shared items like towels and kitchen cloths. Clean up your own living area and all shared areas, too.

These basic steps are part of independent living, and the more practiced you are at them, the easier they become. If someone else is handling these things for you, there is some form of expense involved with it when you’re truly independent. Learn how to do them yourself so you’re not reliant on services or on your parents to handle life skills.

Learn How to Live Frugally

The next step is learning how to live frugally and have a grip on your spending choices.

The most important thing to recognize is that frugality doesn’t mean “cheap” or “deprived” – it simply means asking how to get the most value out of every dollar you spend. Many people translate that idea into doing without things they enjoy or alienating people around them, but both of those things are just examples of not considering value very well.

Common smart frugal tactics include choosing to buy store brand versions of common purchases, making things like coffee at home rather than buying it from a shop, using a grocery list when shopping at the store, bargain hunting for the best price on a particular item, closing up the air drafts in your home so you’re not heating and cooling the outdoors and wasting energy, and negotiating a better deal on your cellular contract.

The key is to try lots of frugal tactics, see which ones work well for you, and then do smart things with the savings like, well, making ends meet without parental financial support. The best frugal tactics become lifelong habits that people keep using over years and years and years, with the savings being channeled into accumulating less debt, even if it only amounts to a quarter here and a dollar there.

Here’s a classic article I wrote on 100 great ways to spend less money.

Establish a Budget for Yourself That Comes Solely from Your Own Income

Along with learning how to do things for yourself and get by on less money should come a basic effort to learn how to budget.

A good budget starts with a real look at your spending and your income and how to make that spending fit within your income. You should build it by looking at bank account statements and credit card statements to evaluate how much you spend in a typical month, then compare that to how much you actually bring home. If you find you’re bringing home less than you’re spending, then you need to use your spending record to figure out what areas you should be cutting back on.

The process of actually assembling a budget, by pulling out all of those bank statements and credit card statements, is usually an eye-opener, as it’s often the first time that people sit down and look at how much they’re really spending. Often, it’s a shocker – you find that you’ve spent $300 at the coffee shop or $400 on some kind of entertainment or $1,200 eating out during the last month and it seems almost unreal.

This process is supposed to be hard and may mean that you cut some things that you really don’t want to cut. This is because you’re living far beyond your means. A big part of financial independence is figuring out how to live within your means. That’s often not an easy thing to swallow, and it may mean some radical lifestyle shifts. If you’re not willing to make those shifts, then you’re not ready to be an independent adult.

Find Your Own Place to Live

Another step that’s often a key part of the process of working toward independence is finding a place of your own to live. Many young adults move back in with their parents upon completing schooling for a number of reasons, but that creates a level of financial dependence because the children are usually not assuming the full cost of independent living. Moving out into a place of your own is a major step toward financial independence from one’s parents.

If you currently live with your parents, one of your first major goals on the path to financial independence should be finding a place of your own to live. Figure out what that will cost, assemble a budget, and see what you can find.

If you find that the cost of a place to live on your own is prohibitive, you have a number of options. One option is to seek roommates and live in a shared apartment or house. Another option is to consider moving to a less expensive area where you can still find work.

One common argument against this is that renting is “throwing your money away” and by living at home, a child is able to save for a down payment on a house. If that is the parent-child arrangement and the child is saving a monthly amount that’s equal to or greater than the cost of living in an apartment and contributing to the chores of the house, then it becomes more of a co-living arrangement and less of a financial dependence situation.

Stop Using Your Parents for Anything Other Than a “Last Resort” When Solving Problems

Another challenge on the road to financial independence from one’s parents is the ongoing temptation to use your parents as an immediate fix to all problems. If you are living a financially independent life, then your parents should only be a “last resort” for serious problems and shouldn’t be relied on for anything more than advice or simple non-financial help.

When a crisis strikes in your life, can you handle it on your own? Try to figure out how to solve issues on your own without parental intervention, especially financial intervention.

If you’re consistently finding that you do not have the financial resources to handle emergencies in your life, then you need to start building a personal emergency fund. Contributions to this fund should be part of your monthly budget, and you should be moving that money into a savings account that you never touch except in the case of a genuine emergency. One good approach is to have that account be held at a bank that you don’t regularly use – an online bank like Capital One 360 or Ally is a good choice.

Use Ongoing Financial Support Solely for Debt Elimination

You may find that, during this process, your parents insist on maintaining financial assistance for you. That’s fine. Your goal should be to live solely on your own means, and what your parents choose to do should be independent of that.

If you do receive regular financial gifts from your parents, use that money to make extra debt payments and nothing else. If they give you $500 a month, write an extra $500 a month check to your student loan company and try to live on what you bring in.

Using their income for lifestyle “perks” is a continuation of financial dependence, as you’re living a life that’s beyond your means.

Cut Costs

Although I mentioned frugal living before, I’m coming back to this here because it’s so important. You have to know how to cut costs, and that doesn’t just mean buying store brands and skipping out on a night at the movies with your pals.

Assuming you’ve made a budget, as suggested earlier in this article, you should strive to be cutting every single line of expense in that budget. How do you cut back on your food costs? How do you cut back on your electric bill? How do you cut back on housing costs? How do you cut back on transportation costs?

There are lots of things you can do with almost every category of your budget. You can call service providers to get bills reduced or find better plans. You can learn to handle tasks yourself. You can use mass transit or a bicycle instead of a car. You can intentionally choose lower cost options for almost everything.

This needs to be a mantra for you. How can I live a joyous life while spending less? Look at everything. Leave no stone unturned.

Don’t Use Credit Cards During This Transition

Credit cards can be an enormous financial crutch. If you can’t live through a month or two without adding to your credit card balance, then you are going in the opposite direction of financial independence. A consistently growing credit card balance means you’re financially dependent on credit cards.

The best solution during a period of time in which you’re trying to become financially independent from your parents is to just completely eliminate credit card use from your life for the time being. Cut up your cards and don’t use them at all. Delete your number from online sites. If you have something that must be paid using a credit card, use a prepaid card or an alternate system.

If your answer to this is “I can’t…” then you’re not living a financially self-sufficient lifestyle. The only reason a person would need a credit card is if they are spending more than they’re bringing in or are living so close to the edge that they need the card to make it to the next paycheck. In either case, the real solution isn’t credit cards. The real solution is tightening your budget.

Look for Part Time Work or “Side Gigs”

If you’re not currently bringing in enough money to make financial independence possible, then you need to start looking at ways to bring in more money. One very efficient way of doing this is to get an additional part time job or start some kind of “side gig.”

There are almost always part time jobs available, no matter where you’re at. It might take a bit of legwork to find them, but they’re out there. It just might not be what you expect or initially want.

As for a “side gig,” your focus should be on things that quickly translate to income, even if it’s not particularly efficient. Doing things like Fiverr generally offers a pretty low return on your money, but it does have the flexibility of being available whenever you have a spare hour or two.

The goal here is to find ways to get more money into your pocket now so you can begin to move toward independence.

Don’t View a Job as “Beneath You”

Many people, particularly those freshly out of college, view many job options as “beneath” them. They won’t consider working entry-level retail and thus won’t even bother applying for such a job, preferring instead to be jobless.

Don’t. That’s a mistake. No job is ever “beneath” you if you have goals in life.

Yes, working in entry-level retail might not be the glamorous job you were hoping for, but it keeps money coming in. It helps you pay bills and start paying down your debts. Having a couple entry-level jobs can add up to enough to let you start moving toward independence. Plus, most entry-level jobs have the advantage of being off your mind the second you clock out, so you can retain your focus for other things (like a hunt for a better job) when you’re elsewhere.

Switch to a “Career” Mindset

Another trap that many financially dependent people fall into (and even some people who have broken free of their parents) is viewing their job as nothing more than a job – a place where you give some time and energy and receive money in return and that’s it.

Never, ever treat your job as solely that kind of an exchange. Instead, look at it as a piece in a larger puzzle of a career, even if the job is very entry level or not even in your actual desired career path.

Here’s a question to ask yourself about any job: beyond the income, what can you get out of this job to fuel your next professional step, one that may lead to better pay or opportunity for advancement? Can this job help teach you leadership? Communication? Can it give you good recommendations? Can you learn any marketable skills here? Is there a way to advance in this path?

Almost every job has something you can add to your skill set and something you can add to your resume. Those things go beyond just collecting a paycheck. Look for them. Execute them.

Set Clear Goals for Yourself

Where exactly do you want to be in one year? Three years? Five years? Now, what’s the difference between where you’re at now and those places? Making up that difference is your goal. The gap between where you are now and where you want to be is the very foundation of a good goal.

Start setting some goals for yourself, but rather than making them all about the destination, focus on the journey. What do you need to do in order to make this happen? Focus on that. Your goal shouldn’t be to get a $50,000 job in two years. Instead, you should ask yourself what you need to do to maximize the likelihood of getting the job, and then make your goal oriented around nailing those steps.

Define a few key goals in this way, focusing on the steps you can take care of to make them happen. Good goals are specific (meaning it is abundantly clear what exactly you’re doing), measurable (meaning it is very clear whether you’re succeeding or not), actionable (meaning it is all about action you take, not about what others are doing), and time-bound (meaning that you have a certain deadline – preferably a tight one – to take care of it).

For example, you might have a goal of completing two career-oriented certifications in the next two months. That’s a great career-oriented goal! You might have a goal of living only on your own income and building a $200 emergency fund in the next month. Again, that’s a great goal for independent living!

Set goals. Keep your eye on them, every day. Take actions every day to move toward those goals. That’s the only way you’ll get there.

Talk to Your Parents and Involve Them in This Process

As you move toward independence, it’s important to remember the other stakeholder in this process – your parents. You need to talk to them openly and involve them in this process, all the way along. Candor is needed here. Be clear that you wish to become independent and ask them for ideas on your goals and plans.

What you’ll find, the vast majority of the time, is that your parents will become allies on this journey. Almost always, your parents want you to find independence and want to help you get there, and dependence only occurred because they wanted to shield you from some of life’s rough edges. Showing that you’re trying to take this on yourself is a sign of maturity that most parents will relish.

You’ll probably hear a lot of compliments during this process, but you’ll also hear some criticism, too. Your parents may not love your plans and may offer suggestions. Take their criticism seriously, even if it hurts. Try to figure out how that criticism translates into something meaningful that you can take on.

Respect Their Wishes, But Make Your Own Decisions

Remember that parents come in all shapes and sizes. Some will be clingy, while others will push you out the door. Some will be very hands on while others are hands off. Some will be very supportive and helpful, while others may be narcissistic and mostly interested in their own feelings.

Respect who your parents are and what their wishes are, but in the end, these are your own decisions. Use their input as a tool and even as a guide, but don’t allow them to make the decision, especially if you feel it’s wrong for you. If they can’t rationally explain why they want you to do things a certain way, then it’s a sign that you should trust your own reasoning.

Your goal here is your independence. Ideally, you can do this while maintaining a great relationship with your parents, but that’s not always a given. Respect what they’re saying, but make your own decisions. After all, this is your life.

Final Thoughts

Eliminating financial dependence on your parents is a huge step toward your own financial independence. It allows you to stand on your own two feet and fully make decisions on your own behalf, and it allows your parents to break free too and use their resources fully on their own life journey.

It’s not going to be easy, but the rewards for everyone involved are tremendous. It’s a new level of freedom for you and, surprisingly, a new level of freedom for your parents, too.

Good luck to all of you!

The post Breaking Away from Financial Dependence on Your Parents appeared first on The Simple Dollar.

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