Saturday, March 3, 2018

Inspiration from 7 Up, Lauren Oliver, Julien Baker, and More

Once a month (or so), I share a dozen things that have inspired me to greater personal, professional, and financial success in my life. I hope they bring similar success to your life.

1. Thoreau on happiness

“Happiness is like a butterfly, the more you chase it, the more it will evade you, but if you notice the other things around you, it will gently come and sit on your shoulder.” ― Henry David Thoreau

I spent a lot of years of my life chasing happiness, believing that I could somehow build a “happy” life. What I learned is that such an endeavor is basically impossible.

Instead, you should try to build a life that’s in line with what your values and principles are, and what you’ll find is that happiness naturally bubbles up as you get closer and closer to that destination.

Happiness is a side effect of doing something worthwhile. When you do worthwhile things, happiness occurs naturally. If you chase happiness for happiness’s sake, you’ll never actually catch it.

2. 7 Up

From the Wikipedia entry on the series:

The Up Series is a series of documentary filmsproduced by Granada Television that have followed the lives of fourteen British children since 1964, when they were seven years old. So far the documentary has had eight episodes spanning 49 years (one episode every seven years) and the documentary has been broadcast on both ITV and BBC. In a 2005 Channel 4 programme, the series topped the list of The 50 Greatest Documentaries. The children were selected to represent the range of socio-economic backgrounds in Britain at that time, with the explicit assumption that each child’s social class predetermines their future. Every seven years, the director, Michael Apted, films material from those of the fourteen who choose to participate. The last installment, 56 Up, premiered in May 2012; Apted has stated that filming for 63 Up will occur in late 2018, for release in spring 2019. Apted has also been reported as saying: “I hope to do 84 Up when I’ll be 99.” The aim of the series is stated at the beginning of 7 Up as: “Why do we bring these children together? Because we want to get a glimpse of England in the year 2000. The shop steward and the executive of the year 2000 are now seven years old.”

The video embedded above (if you can’t see it, you can reach it by clicking on the link) is the full documentary 7 Up, which covers the fourteen children as they were in 1964, as seven year olds. Each subsequent entry in the series revisits most of the children at seven year intervals in their lives, as things go in different directions for them.

I watched these for the first time as a marathon in around 2002, when 42 Up was the newest entry available; I watched the entire series again a few years later after 49 Up was released, and yet again with the making of 56 Up. Each time it utterly charmed me and left me thinking about the fragility and difficulty and beauty of human lives.

A few days ago, a friend of mine pointed out that all of the films were freely available on Youtube, so there’s no reason not to dive in. This Youtube list contains the entire series, starting with 7 Up and continuing through 56 Up, the most recent entry.

3. Lauren Oliver on the whole of people

“I shiver, thinking how easy it is to be totally wrong about people; to see one tiny part of them and confuse it for the whole.” — Lauren Oliver

I feel like this is a good quote to pair with 7 Up, actually. In that series – and in fact, throughout our lives – we get only relatively small glances at these people. We see only little slivers of their lives. Even with the best efforts of the filmmakers, this would be true; a filmmaker visiting a person for a few days once every seven years cannot capture their true nature.

Yet, as I watch those films, I can’t help but draw some conclusions. I think I would be friends with some of them, and I’d probably avoid other ones.

Those quick takes may or may not be accurate. I’m making them based on really limited information about a person. I might be seeing that person at their best or at their worst. I might be seeing a quirky moment that’s not emblematic of them as a whole. It’s impossible to really tell.

What I do know is this: some of the worst mistakes I’ve made in life have been due to snap judgments about people, almost all of them more negative than they ever should have been. I drew some very negative conclusions about people and guided my behavior regarding them based on very little information mixed in with my own ideas and assumptions, and it has cost me many potential dear relationships over the years.

The tiny part of a person that you actually see is a pretty poor representative of the whole.

4. Jerry and Marge Go Large

This article by Jason Fagone chronicles the store of Jerry and Marge Selbee, who, in their retirement, discovered and then exploited holes in the Michigan and Massachusetts state lottery systems.

I found myself reading this article one evening while Sarah was busy grading papers, and I couldn’t help but mention to her that this is literally the kind of thing that I can see us doing in retirement.

We’re both curious people who like to understand how systems work. We aren’t afraid to take big leaps of faith on things that we feel certain about.

I’d like to think that Sarah and I, in our later years, will go on a lot of quirky adventures, like Jerry and Marge.

I’m also sharing this because it’s just a fun story, a well written one by Jason Fagone. This one’s really worth your time.

5. Benjamin Franklin on apologies

“Never ruin an apology with an excuse.” – Benjamin Franklin

One of the hardest things to do is to genuinely apologize when you’ve made a mistake and not turn it into an excuse or an avenue for blaming others. Anything beyond “I messed up” is simply a way to deflect blame off of yourself and, in the process, make the apology a lot less valuable.

An apology that ends up being nothing more than a redirection of blame or an excuse of a mistake is a worthless “apology;” in fact, you’re often leaving things in an even worse state because the other person perceives that you won’t own up to your mistakes.

When you mess up, apologize sincerely without excusing your mistake or blaming others. Admit that you messed up, state that you’re sorry for it, and that you want to do what you can to make it right and to make sure it won’t happen again. Make it clear that it’s on you, not on anyone else.

It’s hard to do that. It’s much easier to just shovel the blame onto someone or something else. If you do that, though, you eliminate virtually all of the meaning of the apology and look pretty weak to boot.

6. Michelle Knox on talking about your death while you’re still healthy

From the description:

Do you know what you want when you die? Do you know how you want to be remembered? In a candid, heartfelt talk about a subject most of us would rather not discuss, Michelle Knox asks each of us to reflect on our core values around death and share them with our loved ones, so they can make informed decisions without fear of having failed to honor our legacies. “Life would be a lot easier to live if we talked about death now,” Knox says. “We need to discuss these issues when we are fit and healthy so we can take the emotion out of it — and then we can learn not just what is important, but why it’s important.”

This whole video harkens back to a big theme I’ve come to really understand in my life in the last few years. The best time to talk about something is when you’re as far away from emotion as possible regarding that thing.

So, for example, don’t talk about death when you’re sick. Talk about it when you’re healthy and vibrant, so there’s as little emotion as possible in the subject.

When you’re talking to your parents about aging, don’t do it at their moment of weakness. Wait for a time of strength, when they’re feeling as healthy and unemotional as possible, and then have that discussion.

Don’t talk about a marital problem when you’re both riding the wave of that problem. Talk about it when you’re getting along well and you’re far away from that problematic area emotionally.

This is a key life lesson, one that has stuck with me over the years, and this video really highlights that idea.

7. Roy T. Bennett on self-improvement and criticism

“Let the improvement of yourself keep you so busy that you have no time to criticize others.” ― Roy T. Bennett

Unless criticism is asked for, criticism of others is rarely a worthwhile endeavor. It achieves very little and often has the opposite effect of what you desire, with the recipient ignoring the content of what you’re saying and just being upset with you.

Hold it in. If you don’t have something worthwhile to say, then don’t say it at all.

That doesn’t mean that one should never criticize. A person should definitely criticize from time to time, but it should generally be at the invitation of the person who seeks criticism and is looking for ways to improve.

“Brutal honesty” doesn’t achieve anything worthwhile.

8. Julien Baker – NPR Tiny Desk Concert

From the description:

In March of 2016, just a handful of months after her debut album Sprained Ankle was released, Julien Baker came and played a quiet, thoughtful Tiny Desk concert that went on to become one of our most popular and certainly one of the most-talked-about Tiny Desk Concerts of the year. (It’s now approaching two million views on YouTube alone.)

Fast forward to the summer of 2017, when I heard that a new record was imminent. I don’t usually ask an artist back for a second Tiny Desk Concert simply because they have a new release — but for Julien, I had to make an exception. With all the love that surrounded her first visit to the NPR offices, I reached out to ask if she would be willing to do something different this time around. Last fall, she delivered.

All the songs for her return to the Tiny Desk come from last year’s Turn Out The Lights. Just a few weeks before the album’s release, she came to Washington; we tuned our piano, she brought violinist Camille Faulkner. The first two songs, “Hurt Less” and “Even,” were accompanied by Camille, with Julien on piano for the opening tune and acoustic guitar on the second. It’s quite stunning, as she sings:
Putting my fist through the plaster in the bathroom of a Motel 6
I must have pictured it all a thousand times
I swear to God I think I’m gonna die
I know you were right I can’t be fixed, so help me

For the last, Julien put together an arrangement of “Appointments” that begins on electric guitar, which then was looped as a backdrop to her on piano and voice. Julien Baker is a massively talented songwriter with a deeply caring heart and a perfectionist streak — all of which delivered to her a career-making year. We are so thrilled to have her return. Set List “Hurt Less” “Even” “Appointments”

She’s just fantastic. Well worth a listen.

9. Inspirational notes

For the last several months, about once a week or so, I’ll stick a note inside of one of my children’s backpacks. It’s a note card in an envelope with their name on the front, and on the inside, I just write a short note saying something I admire about their character and how I hope they share that with the world.

It takes me about ten minutes or so to do this. I just stop for a little bit, think of some truly worthwhile characteristic that one of my children possesses, and then I’ll write about it.

I’ll tell a quick anecdote about when I saw that characteristic used in a positive way, how I am incredibly proud that I’m their parent when I see them using that aspect of themselves, a gentle encouragement to use that characteristic in other aspects of their life, and a general reminder that I love them. That’s it – nothing fancy.

I know that my kids have read the notes because of comments I’ve overheard, but not one of them has said a word about them to me. I do know that they’re read, though, and I do know that they’re thought about, and that’s enough.

Will it make a positive difference? Maybe. I think it will, given enough time.

Don’t just get inspired. Be an inspiration.

10. Muhammad Ali on the pebble in your shoe

“It isn’t the mountains ahead to climb that wear you out; it’s the pebble in your shoe.” – Muhammad Ali

It’s often one or two little details that make the difference between success and failure.

You might be able to perfectly nail everything else you need for a diet, but it’s that mid-afternoon wave of hunger that you thoughtlessly indulge that undoes things.

You might have perfect control over your spending except for that one little linchpin. Maybe’s it’s online spending at a particular website, or maybe it’s regular splurging on food.

Whatever it is, there’s often some little detail that puts a big scratch on the beautiful surface of your progress.

The thing is, it’s far more meaningful to stop and pull that pebble out of your shoe than to keep on running for a little bit longer and just quit. Fix the little problems before they become big ones.

11. Marily Oppezzo on the creative benefits of going on a walk

From the description:

When trying to come up with a new idea, we all have times when we get stuck. But according to research by behavioral and learning scientist Marily Oppezzo, getting up and going for a walk might be all it takes to get your creative juices flowing. In this fun, fast talk, she explains how walking could help you get the most out of your next brainstorm.

Going on walks is unquestionably my most powerful creative tool. I don’t have anything else in my repertoire that really compares to it. It’s part of the reason why winters are often very hard in terms of writing productivity – the weather rarely cooperates with the kind of long outdoor walk that I enjoy.

While I enjoy winter in small doses, I wouldn’t be surprised at all to find Sarah and I living further south in the winter months when we are older. I think it agrees much better with both of us.

Still, I can’t laud walking enough if you’re trying to piece through a difficult idea in your head or you’re trying to brainstorm some solutions.

12. JFK on strength

“Do not pray for easy lives, my friends. Pray to be stronger men.” – John Fitzgerald Kennedy

Hoping that the future will become easier won’t really help very much. It’s very likely that the future won’t become easier.

Instead, recognize that your life right now probably is easier than it will be in the future and plan accordingly. Work a little harder today so you don’t have to work quite as hard tomorrow. Save a little money today so you don’t have to scramble tomorrow.

Don’t hope for an easier life. Work for a stronger you.

The post Inspiration from 7 Up, Lauren Oliver, Julien Baker, and More appeared first on The Simple Dollar.

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Friday, March 2, 2018

The Purpose of Your Life Isn’t to Make More Money.

Yesterday, I wrote an article on how to accelerate the growth of your net worth. From top to bottom, the article is chock full of great personal finance advice, and if you follow all of it, I virtually guarantee that the growth of your net worth will accelerate over time.

There’s one big piece missing from that puzzle, though. Why?

Why exactly are you hunting for acceleration in your net worth? What do you want to do with that money? When your net worth is accelerating, what good will it do you?

For some, simply watching that number grow is enough. It can become a representation of one’s life efforts, a clear indication that a person has worked hard and made wise choices with his or her money. Being a millionaire or a multi-millionaire might just be a label that a person really strives for and derives great value from, and there’s nothing wrong with that.

For me, though, the labels that really matter are father. Husband. Community leader. Friend. Writer. Things like that. Those are the labels I am interested in having. Those are the labels I want people to use when they talk about me.

None of those have anything directly to do with money.

For me, the reason for thinking about and improving my net worth is to make me better at all of those other labels that I care much more about. I worry about my financial picture because I know that having a good financial foundation makes me a better father. It makes me a better husband. It makes me a better community leader. It makes me a better friend. It makes me a better writer.

Having a healthy emergency fund, no debt, and some money saved for retirement means I’m not worried about making sure that my kids have food to eat. I know that they will have the educational resources they need, and that they’ll be able to participate in any activities that they so choose.

Having a healthy emergency fund, no debt, and some money saved for retirement means that if something unexpected happens to my wife, things will be okay. Whether it’s a job loss or an unexpected illness or a marital concern, we will be able to be at each other’s side and focus on overcoming that problem, not on financial concerns.

Having a healthy emergency fund, no debt, and some money saved for retirement means that, in the moment, I can truly focus on being a friend or being a community leader without any sort of financial stress or concern diverting my attention.

Having a healthy emergency fund, no debt, and some money saved for retirement means that I can take some career leaps that I might not otherwise be able to take, because I know our financial state can survive a downturn in income for a while if things don’t turn out well.

In short, a financial foundation isn’t meaningful on its own; a financial foundation is meaningful because of how it supports other areas of your life and opens new doors in those areas.

When I step back and calculate my net worth and see how it has grown over the last several months, it unquestionably feels good, but that “good” feeling comes from knowing that the areas of my life that I truly care about are secure and well supported and that security grows all the time.

Furthermore, financial success means more and more opportunities in those areas are now available to me. I can honestly consider ideas like taking a year off from work to write a novel and shepherd it through the publishing process. I can envision scenarios that might otherwise seem disastrous – like a serious illness for my wife that causes her to leave work for a while – that our family can now just roll through. I don’t have to worry about financial apocalypse if one of our children struggles with their choices after high school – we’re ready to handle whatever may come.

Money is not a purpose in and of itself. Money is a foundation that enables security and opportunity in all of the areas of life that you care most about. To me, that’s the reason to care about your net worth, to shoot for growing your financial foundation, and to be proud of the positive direction you’re taking.

In one simple number, my net worth is a symbol of my day-to-day commitment to those things I care most deeply about. Our net worth is going up because I’m making daily choices to ensure that it keeps moving that way, and because it is going up, I know that those areas of my life that I care about are secure and strong and can withstand unexpected events and surprising choices.

How much is too much? For me, the answer to that question is pretty simple as well. I know that I’ve put too much emphasis on accumulating wealth and not enough in the other areas of my life when I look at that balance and honestly regret things left undone. I don’t really have that feeling at all – sure, I can think of a thing or two that I might have done differently, but there’s nothing that truly fills me with regret. There is no aspect of our financial turnaround, as of yet, where I look at our financial state and think, “Gee, I wish I had done this other thing instead of building this backbone of security and springboard of opportunity.”

There will probably come a time in my life when I do feel that way, and that’s a point at which I need to do some serious reflection about my financial choices going forward. Are there now things that I can do with this financial foundation that weren’t possible before, things that enable me to really live out those core things and core roles that I value?

All I can say is that it’s not yet happened in any significant way, and I don’t see it happening any time soon.

In the end, it all comes down to one simple idea: the purpose of your life isn’t to make more money. The purpose of your life is to figure out who you want to be in this world, and then use your personal finances to maximize those roles.

I want to be a good father, a good husband, a good friend, a community leader, and a good writer. I want to be known as a listener, as a person who helps out and leads when needed, as a person with worthwhile ideas.

Personal finance success merely helps me do all of those roles as well as possible. When I make choices that help out my finances, I reinforce all of those roles. When I make bad financial choices, I undermine all of those roles.

The purpose of your life isn’t to be financially successful. It’s to be personally successful, and financial success goes a long way toward propping up that kind of personal success.

Good luck.

The post The Purpose of Your Life Isn’t to Make More Money. appeared first on The Simple Dollar.

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Thursday, March 1, 2018

How to Accelerate the Growth of Your Net Worth

David writes in:

As per your suggestion I have been tracking my net worth over the past year and it has gone upward (good!) in an almost perfectly straight line (bad!). Based on your articles and my own intuition, shouldn’t it be accelerating and going upward in a parabola shape?

Assuming that there is no change in a person’s spending or professional income and assuming that they are spending less than they earn and doing something productive with it, then over a long period of time, yes, that person’s net worth should start to accelerate. As that person pays off debt, he or she will be able to devote more and more money each month to paying off the balance of debts and less and less to paying off interest. Eventually, that debt is gone and that money goes toward investments, which start to grow on their own as the returns on your investments are reinvested and begin to earn on their own…

That’s not happening in David’s case, though. Why not?

Without knowing more about David’s story, I can’t 100% diagnose exactly what’s happening, but there are usually a few things going on when a person is expecting their net worth to grow rapidly and it’s not.

Let’s see if we can figure out what’s going on with David’s story, and perhaps, along the way, uncover how anyone can accelerate their net worth growth.

Are You Calculating Net Worth Correctly?

Calculating net worth is really simple. All you do is add up the value of all of your assets – your home, your cars, your valuable possessions, the balances of your checking and savings and investment accounts – and subtract from that the amount of all of your debts – your student loans, your mortgage, your car loans, and so on. Easy enough, right?

The trick, of course, is making sure that you’re covering everything in this calculation and calculating them accurately. For example, if you own your own home, getting an accurate read on the value of that building can be tricky. You can rely on tools like Zillow to give you an estimate, but it’s imperfect. The same goes for your car – it’s a ballpark estimate at best and your car is constantly depreciating to boot.

My solution? I simply calculate my net worth once every three months, attempting to get a fresh new estimate on our home value and the value of our cars. I’ve been doing this for more than ten years, and aside from a couple of bumpy quarters, we’ve always beaten the previous quarter, often matching the percentage growth of the previous quarter.

Are You Still Spending Less Than You Earn?

If you’re sure that you’re calculating your net worth correctly, you need to move on to some bigger questions, like whether or not you’re still spending less than you earn. If your net worth is only going up at a slow rate – or going down – then the culprit is likely that you’re spending almost as much as you bring in (or more).

If you want your net worth to grow, you have to be spending less than you earn. If you want it to grow at any sort of impressive rate, you have to be spending a lot less than you earn. There’s no magic trick. There’s no secret. If you want to build wealth – and net worth is about as good of a measure of personal wealth as there is – you have to spend substantially less than you earn.

Figure out what you’re spending If you’re not sure whether you’re actually doing that or not… well, you’ve uncovered the first big problem! Sit down for a moment and figure out exactly how much income you brought home in the last month, then look at your bank statements and your credit card statements and see how much you’re spending over that same period. If those numbers are pretty close to each other, your net worth isn’t going to be growing very quickly at all.

The truth is that if you want to see big long-term changes in your financial state, you’re going to have to do something different than that. There are a lot of approaches to this age old problem.

Start a budget. Budgeting can be a pretty intimidating thing for most people, as it involves having to categorize all of the spending that you do and then use that data to set healthy spending targets for all of the different spending areas in your life. Thankfully, there are a number of apps out there that make this easy.

My favorite for years has been You Need a Budget 4th Edition, which does a splendid job of helping people enter expenses categorize them, and then use those results to make a useful spending plan for the month to come. They also offer a cloud-based version.

Another option is Mint, which does a good job of syncing with all of your accounts and providing a singular view of your finances, but often incorporates “offers” into your financial views that can guide you to some less-than-optimal spending choices. Ignore those and Mint is a great tool.

Quicken is the “grandaddy” of these types of software packages and is probably the most feature-rich of the lot.

I don’t have a strong recommendation among them aside from saying that You Need a Budget has always met my needs well when I outgrew my own homemade do-it-yourself spreadsheet.

Put a strong cap on your non-essential spending. Once you’ve assembled a budget using your real spending data, the key thing that it provides for you is some guidance on where your money is actually going. In truth, it tends to go into two areas – essential spending and non-essential spending. Most of your cuts are going to come from the non-essential side, and it won’t be easy.

This is where frugality pops in. Frugality is all about getting the maximum value for your dollar, no matter how or where you use it. When you start putting caps on your spending, you’ll have to start looking for more effective ways to get the things you enjoy in life. Try exploring store brand versions of the things you ordinarily buy. Seek out free and low cost hobbies, particularly alternate versions of the things you already do, like checking out books from the library instead of using the bookstore.

What About Your Income?

If you look at the question of “spending less than you earn” from the other side of the coin, you’ll recognize that your income also plays a vital role in things. The more you earn, after all, the easier it becomes to spend less than you’re bringing in and the easier it is to have a nice gap between the two numbers. If you increase your income without increasing your spending, suddenly you have a lot more money with which to pay down debts and invest for the future and your net worth is going to take off like a rocket ship.

Of course, improving your income isn’t as easy as flipping a switch. There are really two ways to improve your income: improve your hourly rate for the time you’re currently working or work more hours.

Improving your hourly rate This centers around moving forward in your current career, whether that comes in the form of a raise at your current job, a promotion in your current workplace, or a new job entirely. Each of those opportunities requires a different path.

Getting a raise If you have a few good performance reviews in your pocket and you can point to projects that you helped bring to a successful conclusion, you’re probably ready for this step. If not, work on really nailing a performance review or two.

Once you have a clear paper trail of success, sit down with your supervisor and work out a plan that will lead you to getting a significant raise beyond merely your typical annual cost of living raise. In many workplaces, this might take the form of an extra jump in a standardized pay grid, for example. Don’t go in with the approach that this raise should just be handed to you – instead, look for what you can do to make this raise easily justifiable for your boss, as he or she is likely to have to justify it to their boss, too. This plan might involve more education, another good performance review, or some other standard that you and your supervisor can agree upon.

Getting a promotion This varies quite a lot depending on the internal mechanisms for promotion in your workplace, but you need to make it your objective to make sure you hit every requirement needed for that promotion. This is something you can start on today – identify the promotion you want and start hammering out the things you need to have to move into that better position.

Getting a new job This centers around two things: bolstering your resume so that you appear to be a good candidate for the job you desire and building relationships with people who might be able to help you get that new job. Start by looking at job listings for the type of job you’d like to have and then make it your goal to perfectly match those requirements. At the same time, start building relationships with other people in your field, both in your current workplace and in your city or local area. Are there any professional groups or professional meetings you can start attending and getting involved with?

The other alternative, of course, is to work more hours, whether that takes the form of a part time job or a side hustle. Both paths lead toward more income, but at the cost of hours that you could be spending on other things.

Has Your Spending Level Changed?

If your net worth is staying level as you’re paying down debt, then there must be some sort of change going on in your spending habits elsewhere. What exactly are you doing with your money?

One of the biggest temptations that people face as they move through their financial lives is handling lifestyle inflation. When you have a few extra dollars in your checking account, it’s so easy to just spend it on something on the spur of the moment – a cup of coffee, a little treat, a meal at a restaurant.

The trick, of course, is that if you do it once or twice or three times in short order, it goes from being a treat to being a normal routine. Your day starts with that $5 latte. Going out to eat or grabbing takeout becomes the norm, rather than making a simple meal at home.

At that point, the more expensive routine becomes the normal routine and the baseline cost of your life just went up.

If you find that you’re barely making ends meet, especially after just receiving a raise, look for instances of lifestyle inflation. What things do you do routinely that you didn’t do a few years ago? What things do you do routinely that have a less expensive alternative? What things do you buy routinely that have a less expensive alternative?

Explore those alternatives. Look for ways to wind back the clock on your lifestyle inflation. Try eliminating, cutting back on, or finding alternatives for those things you’ve uncovered. You may just find that they’re not really contributing all that much to your life, but they are contributing to your financial difficulties.

Are You Doing Something Smart with the Excess?

Another reason that your net worth might not be accelerating is that you’re not doing anything smart with the difference between what you earn and what you spend. If that money is just sitting in a checking account somewhere, it’s not going to help you accelerate the growth of your net worth. Instead, try these approaches.

Maintain a reasonably sized emergency fund. You should have some cash set aside for emergencies, but it should be just a reasonable amount – somewhere around one month of living expenses for your family for each dependent you have. Having this cash on hand will greatly minimize the negative impact on your finances from unexpected events.

Pay off your debts in a reasonable and logical fashion. The most sensible approach to paying off your debts is to make minimum payments on all of your debts, then the largest possible extra payment on whichever debt has the highest interest rate. This will ensure that you’re minimizing the amount of interest you owe next month.

Once you have your high interest debts (everything over 10% interest) paid off, start contributing to your other goals. Put some money aside for retirement each paycheck, whether in the 401(k) or 403(b) plan at work or in your own Roth IRA. Don’t get overly stressed about what particular investment to choose – just choose the Target Retirement Fund closest to the year in which you’ll turn 65. That’s easy enough.

The best part? The money you put aside for retirement will slowly accelerate as the investments earn a dividend and then that dividend is rolled right back into the investment, meaning next time it’ll earn a little more dividend… and then a little more… and then a little more!

If you make those moves in order without accumulating any new debt, you’ll find that your net worth should be accelerating in the right direction.

Are You Doing All of These Things Consistently?

The true key to financial success isn’t doing all of these things once. It’s doing all of these things consistently over an extended period of time – years and decades. Spend less than you earn. Invest the difference by building up an emergency fund, then paying off high interest debt, then investing for the future. If you’re doing that over and over again, every quarter, every year, every decade, your net worth will accelerate.

The key is consistency. Automate as much of this as you can. Set up an automatic contribution to your emergency fund. Set up an automatic contribution to your 401(k) or 403(b) or Roth IRA. Pay as many of your bills as automatically as you can. Set aside some money automatically into your savings each month so that you’ll make a big extra payment on your highest interest debt. The key is to never give yourself a chance to make a dumb spending move.

You can carry that thinking forward into moves like cutting up your credit card (or at least hiding it away), deleting your credit card number from online accounts, and choosing to simply avoid places where you might spend money during your leisure time.

Taken together, those steps will automatically ensure that you’re spending less money and putting those extra dollars into smarter places.

Final Thoughts

The individual steps needed to make your net worth take off like a rocket aren’t hard. The trick is actually making them happen in your life, and doing lots of them at once. It’s the people who manage to succeed at pulling off several of those simple steps at once that manage to see great results when it comes to their net worth, and they begin to quickly see the kind of acceleration promised by the power of compound interest.

You’ll see it for yourself with just a little more focus on making smart choices with your spending and then putting that extra money aside for your future.

Good luck!

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Are On-Demand Movie Rentals Really Cheaper Than the Theater?

Sunday night’s Oscars are supposed to be a celebration of Hollywood’s best and brightest, but they’re also a reminder of the cost and overall state of a night out at the movies.

Both the Academy Awards and Sundance Film Festival are designed to bring a little warmth into a cold winter, but the $8.97 average cost of a movie ticket in the United States has moviegoers a bit heated for other reasons. According to the National Association of Theater Owners, that price is nearly 25% higher than it was a decade ago. Meanwhile, the 1.23 billion tickets sold last year in the U.S. was the lowest head count at the movies since 1992.

While giant multiplexes have brought the total number of movie screens in the United States to an all-time high of nearly 40,400, the number of actual theaters sits at 5,750. That’s up from an all-time low of 5,683 in 2012, but still well below the 7,500 that existed two decades ago.

We realize that on-demand services have made it easier to rent movies at home (or on just about any device you please), and have reduced the price of movies for those willing to wait — but is it still the most cost-effective option?

We chose three common ways to see movies — first-run theaters, second-run theaters, and on-demand pay-per-view — to determine just how much the price of movies is changing American theatergoing habits, and if there isn’t a better way for moviegoers to experience the films they love without being charged an Oscar winner’s paycheck to do so.

First-Run Theaters

As you’re probably aware, that $8.97 average ticket price varies wildly not only by market, but by theater location. The Empire AMC 25 on 42nd Street in New York just off of Times Square, for example, starts its adult tickets for Black Panther at $16.29, though early-morning matinees can be seen for around $8. That same film at the AMC Classic Cobblestone in Des Moines, Iowa, however, gets $9 for an adult ticket, with a $6 matinee. Big chains like Regal and Cinemark have similar disparities across the country.

Theater chains have attempted to pad higher ticket prices by offering amenities like comfier seating, extensive food and alcohol options (in some cases, delivered to your seat), and enhanced audio and video options (Dolby sound, 3D, IMAX). To some, they constitute added value; to others, they just make high prices higher.

However, there are ways to whittle the price down beyond just skipping the concessions counter and shrugging off upgrades. Costco, for example, sells four-packs of fixed-price tickets to AMC theaters for $35.99 (which excludes customers in New York, New Jersey, or California) or $42.99 (for those higher-priced locales).

Whether or not a $9 or $11 ticket constitutes a deal will depend largely on the market you’re in (as it will for Regal Cinemas or Cinemark tickets with a similar deal). But it’s already above the national average, and the deal doesn’t improve in bulk, so even a 10-pack will offer the same price.

Another worthwhile approach is skipping the big movie chains altogether and finding an independent theater. One-screen locations like the Cinemagic Theater, Moreland Theater, Roseway Theater, and St. John’s Theater in Portland, Ore., for example, show first-run films in a slightly less tech-savvy setting for $7.50 to $8 adult general admission and $5.50 to $6 for matinees — with discounts throughout the week.

Other independent theaters, like the Coolidge Corner Theatre in the Boston area, will offer memberships that either knock a few dollars off the price of admission and concessions, or give you free admission and some popcorn. The more movies you see, the more of a value it becomes (25 movie tickets at a $3 discount pays for a $75 annual membership).

And if you want vengeance on both Hollywood and the theaters, there’s always MoviePass. For $9.95 a month, you get to see as many movies as you want at participating theaters and free up money for concessions and upgrades. However, MoviePass buys up tickets and doesn’t make it easy for theaters to opt out. Nobody knows how that’s going to play out for theaters – but going to see two new films a month for $5 apiece might work out just fine for frequent moviegoers.

Second-Run Theaters

In the Pacific Northwest, the McMenamins chain of brewpubs also runs a handful of second-run theaters that charge between $2 to $4 per showing — or nothing if you stay at a room in its Kennedy School grade-school-turned-hotel.

Independent second-run theaters like The Academy and The Laurelhurst show slightly aged films like Coco and Murder on the Orient Express for $3 to $4 while serving beer, wine, pizza, and even sushi. They’ll also show monthly schedules of themed classics and, in the case of the Academy, will babysit your children during weekend shows.

While the emergence of multiplexes and the shrinking window between theatrical and on-demand release has pressured second-run theaters, they still have enough life in them for AMC to dub certain theaters AMC Classics and charge as little as $1.99 for second-run showings in places like Fort Collins, Colo. That said, the $2 theater has been around for ages, and isn’t necessarily helped by AMC Classics locations that charge up to $5.99 for second-run films. Remember that price…


For on-demand movies on cable, satellite, or streaming services, including Amazon’s Prime Video or Walmart’s Vudu, $5.99 is the magic number for newer and more popular releases. Occasionally, you may see a $2.99 discount on a film like the Oscar-nominated World War II epic Dunkirk, or a 99-cent rental on an independent film like Good Time (which Amazon makes available for free to Prime members).

But there’s a catch for much of the on-demand content: For cable and satellite, you’ll need a subscription to access those on-demand films. According to the Leichtman Research Group, the average monthly cable bill is $85 and the average monthly satellite bill is $100. That basically leaves services like Amazon Prime Video or Vudu — which also require a monthly bill for Internet service. Broadband service can range from $40 to $80 a month in urban areas, but rural Internet customers know the price can reach well above $100 for service good enough to stream an HD movie.

While $5.99 for the cost of streaming a movie into a room with a family of four would be a fine deal on its own, the folks viewing those movies almost never consider the cost of the infrastructure bringing them in.

To actually make that film “cheaper” than at a second-run theater — or even a discounted first-run movie — you’d have to wait for it to move to a streaming service you’re already paying for (and Netflix and Amazon Prime’s monthly payments have each risen in the last year).

Say what you will about a $16 showing of Black Panther: At least it isn’t charging you an ongoing $60 a month just for the chance to rent it.

Related Articles: 

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Wednesday, February 28, 2018

On Failing at Your Big Goals, Money or Otherwise

A reader recently included a line in an email that I wanted to share with all of you.

“Failing at a big financial goal isn’t so bad. It’s kind of an uphill failure, because you’ve still got fewer debts and some money in the bank even if you don’t succeed at everything.”

This matches up wonderfully with what I’ve learned about failing at well-designed big goals: even in failure, you wind up in a better spot than where you started.

If you fail at a big financial goal, you likely have fewer debts and more money in the bank than you would otherwise.

If you fail at a big professional goal, you likely have a better resume and more professional contacts than you would otherwise.

If you fail at a big health goal, you’re likely in a better place health wise than when you started.

The key, of course, is to design your goals well from the start so that, even if you fall short, you receive some benefit from your attempt at that goal.

So, how do you design a goal from the start so that failure doesn’t mean a bunch of invested time and energy without any sort of fruition?

First of all, you focus on the process. The biggest question you should always ask yourself about a big goal is “What can I be doing each day to move myself a little closer to that destination?”

So, for example, with a financial goal, you can move yourself a little closer each day by making a smart spending decision. You can choose to not eat an expensive lunch, for example, or you can choose to make dinner at home and pack up some leftovers for the next day.

Whenever you make that kind of a choice, you’re directly saving money, which can directly be used to build up an emergency fund or pay down a debt. That money persists, even if you choose to give up on your goal tomorrow.

The same thing is true with a professional goal – if your goal is to earn a promotion, then your “every day” step is likely putting aside some time for professional development and/or professional networking. Even if you reach a point a year from now where you didn’t get that promotion, you still have a bunch of strong professional relationships and a stronger resume than you ever had before, both of which will put you in a better place than you were before.

If it’s a health goal, every day you chose to exercise and eat a healthier diet is a step in the right direction. When you decide to stop, you are healthier than when you started, even if you didn’t achieve your overall goal.

Second, you set up some milestones along the way. For example, if your goal is complete debt freedom, you may have set up some milestones that involve paying off a specific debt. Milestone #1 is paying off your highest interest credit card, then milestone #2 is paying off your second credit card, then milestone #3 is paying off your smallest student loan… you get the idea.

If you set up some milestones along the way and achieve them, then you’ve achieved some tangible goals even if you didn’t hit the full target. While you may have been aiming for debt freedom, simply paying off your two credit cards made a significant difference in your life.

With a health-related goal, you may have a milestone of five pounds lost. Milestone #1 is a total of five pounds lost; milestone #2 is a total of 10 pounds lost; and so on. If you achieve the first few milestones on that measure, then you’ve found some level of success even if you didn’t happen to reach the biggest goal.

With a professional goal, you might set up milestones around the number of professional relationships established. Your first milestone might be ten relationships, while your second might be 25 relationships. Whatever you set up, those relationships will still exist and won’t go away even if you decide that the overall goal isn’t the right move for you.

Third, a failed goal can usually teach you a lot of valuable lessons moving forward that you can apply to revised goals or to entirely new goals. A failure is often a fertile breeding ground for greater success because you can draw on what went wrong to help you figure out better plans for the future.

For example, you might come to realize that you set a completely unrealistic goal the first time around, one that you can’t possibly achieve over a long period of time. If you had a great first month of spending less than you earn and based all of your future milestones off of that, you probably are setting yourself up for failure because you don’t yet see a lot of bumps in the road that will inevitably come. Hitting those bumps, learning about them, figuring out how to succeed even in spite of them – those are all incredibly valuable, but they can often mean complete destruction of your goal.

The same thing is true of a weight loss goal. You might lose five pounds in the first week or ten pounds in the first two weeks, but quickly come to realize that such a pace is completely and totally unsustainable, but if you’ve already set an audacious weight loss goal according to that pace, you may simply fail at your big goal. Along the way, you probably learned a great deal about what works for you for weight loss, but you were held back by the audacious numbers.

Finally, failing at your big goals usually helps you to set better goals going forward. A failed personal finance goal, for example, might inform you that certain financial and frugal tactics simply don’t work in your life and that your proposed pace is overly optimistic.

A failed professional goal might show you that basing too much of your goal’s success on the hands of others is a bad idea and will help you formulate a goal over which you have more control the next time.

A failed health goal might show you that you’re still learning regarding the impact of your day to day choices on your overall health, but it’s very likely that you’re now in a better spot than ever before to identify sensible goals.

The core message here is simple: don’t view yourself as a failure because you took on an audacious goal and didn’t quite make it. Instead, look at what you gained from the attempt. You gained a healthy fraction of the success that you actually wanted to achieve. You gained a better understanding of yourself and what kinds of goals work best for you. You identified healthy milestones that you can use for your next attempt. Most of all, you probably have a vision of how to create a goal that’s similarly powerful but much more approachable and likely to succeed than before.

Good luck!

The post On Failing at Your Big Goals, Money or Otherwise appeared first on The Simple Dollar.

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Tuesday, February 27, 2018

Twenty Frugal Ways to Get Yourself Out of a Bad Place

I’m kind of a cyclical person. I’ll go for a month or two where I just feel great and happy all the time, and then I’ll hit a rough spot where I’m frustrated and unhappy with myself. I find myself being far less productive, and I end up wasting a lot of time not doing anything of value at all.

When I’m in that kind of state, it isn’t fun. I’m not happy with myself. I often feel like I’m putting on a mask of happiness when interacting with people around me. I sleep more, and find I often get sick more, too. I often find myself overspending via online shopping, too.

There are several things that I do to shake myself out of this bad state, none of which involve spending any money. I usually find that a few days of filling my time with these things really helps and I’m back to my typical demeanor.

Please note that I am not a doctor or a therapist, just someone who gets a mild case of the blues sometimes and has found some good ways to get himself out of them. If you feel listless and sad on a frequent basis, you should talk to a doctor.

Go for a walk outside. Get up from whatever it is you’re doing, put on appropriate clothing, and go for a walk around the block. Let some sunshine hit your skin. The combination of those little pieces – simply moving around, getting some vitamin D from the sunshine, changing your environment a little, allowing the sunshine to affect your serotonin levels – will naturally lift you up a little, especially if you’ve spent a lot of time inside lately. I have a “mile walk” that I often take even on cold days; I can complete it in fifteen to twenty minutes depending on my pace and I almost always end up feeling better afterwards.

Visit a natural area, preferably one with trees. You can easily do this in conjunction with a walk if you live near a park. If not, drive to a park somewhere and go on a walk in that park. Just wander around in a natural environment for a while, which gives you all of the benefits of a normal walk, plus there’s a little something extra that one finds in a natural environment, particularly a wooded one. There’s a ton of historical and scientific evidence that “forest bathing” offers some nice mental health benefits. I know that, for myself, a slow walk in the woods almost always leaves me feeling more “together” than before.

Get some mild exercise – anything that you enjoy doing that gets your heart pumping and your breath elevated for a while. This is another thing that you can combine with a walk if you so choose. Just raise your walking pace until you’re at the point where you’re breathing heavier and your heart rate is up and you’re maybe sweating a little bit. If there’s a different exercise you prefer, do that instead – maybe it’s squats or planks or push-ups. The goal is to simply convince your body to release a big pile of endorphins, which feel really good.

Call a friend or family member and have an actual conversation. Don’t just text them or like their social media posts. Call that person up and have an actual conversation with them. Simply say that you wanted to hear their voice, or perhaps reference something they shared, or simply ask how they’re doing. Listen. Ask questions. You’ll get off the phone and feel a lot better about yourself and about the world in general.

Invite a friend over to do something at your house. It really doesn’t matter what you do. It’s simply an opportunity to have some face to face social time with someone, where you positively interact with each other. Invite that person over for a simple dinner or to plan for some future event or to work on crafts or to work on a home repair or home improvement project. Whatever it is you choose to do, the key thing is to do it with someone else. That basic social interaction will do wonders for lifting your spirits.

Change a few elements of your daily routine. Instead of listening to the same radio station on your commute, listen to something different. Have something unusual for lunch. Instead of just watching television in the evening, do something else with that free time. Make something a bit unusual for supper. Just change up some of the elements of your ordinary workday and see how it makes you feel.

If you have a pet, curl up with that pet. Spend some quality time with your pet. Encourage your dog to climb up next to you and take a nap by your side while you pet him or her. Do the same with your cat. If you have another type of pet, spend some time with it, simply talking to it and taking care of it in some fashion. The act of caring for and bonding with a pet releases a lot of positive chemicals inside of people.

Focus on just the big three, and don’t worry about the rest. Identify the three big things you want to achieve today and simply don’t worry about anything else. Just focus on getting those done, then recognize that today was a pretty big success and just fill the rest of your hours with whatever comes to mind, knowing that you’ve taken care of the big things in your day.

Do a mindful meditation or prayer, and repeat it every day. This is one of those things that might help a little when you do it, but the benefit comes from making it a daily practice. Just spend five or ten minutes in a comfortable place with your eyes closed, focusing on your breathing or on a simple phrase or short prayer. Whenever you notice your attention wandering, bring it back to your breathing or to that phrase or prayer. That’s it. Over time, you’ll find that it brings you a great deal of peace, but it’s not something that happens overnight.

Eat some fruits and vegetables. It is so easy in this modern world to get into a routine of eating convenient foods that don’t contain many fruits and vegetables at all. Making an effort to include fruits and vegetables in your diet can go a long way toward balancing your food intake and leaving you feeling healthier and more naturally balanced.

Fill up a couple pages in a journal with whatever comes to mind. This is a common journaling practice that I’ve found incredibly valuable in my own life. You just sit down in the morning with an open journal before you and try to fill up three pages with your thoughts. Just write whatever comes to mind. You can also set a timer instead and just strive to write for that length of time. What this does is it forces you to address whatever is on the top of your mind at a slower and more well considered rate. As you write down thoughts by hand, you have to think them through a little more, and because of that you often find yourself reaching deeper conclusions than you otherwise would. Again, this is a great daily practice.

List five things you’re grateful for, and do it every day. This is another practice that gets better and better if you do it every day. Simply make a short list of five things that you’re truly grateful for. They can be small things, like the smell of freshly-poured coffee or the feel of warm sunlight on your skin, or they can be big things, like the love of your life. Just think of five things that make your life better and write them down. Then do it again tomorrow. And the next day. And the day after that.

Get a good night of sleep – not too little, not too much. Many Americans sleep too little, getting five or fewer hours of sleep a night. Others sleep too much, getting ten or twelve or more hours per night. The best balance for virtually all people is somewhere in the middle – seven to nine hours of sleep in a given night is pretty healthy. Start striving for that. If you’re sleeping far more than that, start using alarms to awaken yourself earlier. If you’re sleeping less than that, stop setting an alarm altogether and start going to bed earlier.

Watch your favorite movie, or re-read your favorite book. This is a comfort thing. Re-watching your favorite movie or re-reading your favorite book allows you to go through charted territory again, but it’s joyous territory. You know that media will make you think and lift your mood, so let that happen. Explore those familiar stories and ideas again and let them bolster you again.

Sign up for a volunteer shift at a local charity. While volunteering is all about helping others, there’s also an undeniable benefit that comes along with it – you feel good about yourself, too. It’s not so much a pride thing, but a sense that you’re truly making the world a better place. Volunteer Match is a great place to start this process, as the tool will help you find volunteer opportunities near you.

Help out someone in your life that you know could use a helping hand right now. You can take the same volunteerism approach but apply it to the people in your own life. Who in your life could really use a helping hand? Do you have an elderly relative or friend who is having difficulty getting things done? Perhaps you have another friend who is struggling with the blues even more than you are. Maybe you know some new parents who are burning the candle at both ends. Whatever the case, put some of your time aside and give those people the help they need. Help an elderly relative with some household chores. Visit a lonely friend. Help a new parent by running some errands for them or watching their new infant for a while. You’ll make a real difference, and it’ll feel pretty good.

Take a break from social media. Social media is often filled with people showing off the highlight reels of their life, mixed in with very negative political vitriol. Neither one is particularly good for a personal sense of happiness and well being. So, take a break from it. Log out of social media, delete the apps, and simply stop checking it for a while. You may just find some happier results in your life.

Take a long, warm shower, then brush your teeth and com your hair and put on some deodorant. Sometimes, the simple process of cleaning yourself up, putting on fresh clothes, and making yourself a little more presentable to the world can leave you feeling quite good about yourself and those around you. A shower and a bit of hygiene can really liven a person up.

Clean a room in your home. Choose a room in your home that’s a bit messy and put in the effort to clean it up. Put things away, vacuum the carpet, wipe markings off the walls, dust, change some of the wall decorations, you get the idea. Your goal should be to make the room feel fresh and alive instead of dreary and stale. That simple practice can really go a long way toward improving the state of your home.

If you’re in a relationship, hold onto your partner for a while. Even her hand. Just grab your partner’s hand and hold it for a while, or put your arm around your partner, or rest on your partner’s shoulder or lap. Just be close to your partner in whatever way works the best for you and your partner. That type of closeness unlocks a number of positive psychological and physical effects that can go a long way toward lifting your mood.

These strategies offer a repertoire of tactics that can help you get out of a sad phase in your life. They’re not foolproof and they certainly won’t work for everyone, but they often work for me.

Again, as I stated earlier in this article: Please note that I am not a doctor or a therapist, just someone who gets a mild case of the blues sometimes and has found some good ways to get himself out of them. If you feel listless and sad on a frequent basis, you should talk to a doctor.

Good luck!

The post Twenty Frugal Ways to Get Yourself Out of a Bad Place appeared first on The Simple Dollar.

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Use a Credit Freeze to Stop Identity Thieves Cold

It’s been just over six months since the now infamous Equifax data breach of 2017. To refresh your memory, this massive data breach potentially exposed the personal information of some 145.5 million U.S. consumers. The exposed data included names, addresses, Social Security numbers, and dates of birth.

Of course, the Equifax data breach is not the only reason  you need to be concerned about the security of your personal information. While Equifax’s massive hack was understandably upsetting to consumers, it’s certainly not the only data breach that may have put your personal information at risk. The disturbing truth is that nearly 1,600 data breaches were announced publicly in 2017 alone, according to the Identity Theft Resource Center.

The need to protect your credit from identity thieves only becomes more important with each passing year. Thankfully there are a number of actions you can and should take to protect your personal information and your credit from bad guys. And of all the credit protection strategies out there, the most effective one by far is a credit freeze — especially when you suspect your personal data has been compromised.

How a Credit Freeze Protects You

According to the Fair Credit Reporting Act, your credit reports can be accessed by anyone who’s deemed to have a “permissible purpose” to request them — that includes lenders who wish to view your reports as part of an application for new credit. The trouble for lenders is that they can’t easily tell if it’s you who’s applying for a new loan or credit card — or a crook who’s fraudulently applying for financing in your name.

A credit freeze, also called a security freeze, can help to solve this problem. When you place a freeze on your credit reports, you essentially lock your reports so that new lenders cannot access them without your consent. Unlike a fraud alert, which lasts for 90 days and simply requires businesses to verify your identity before issuing new credit to you, a credit freeze essentially takes your credit reports out of circulation until you say otherwise.

If you’ve placed a freeze on your three credit reports and an identity thief tries to open a fraudulent account in your name, the lender who attempts to process the phony application wouldn’t be able to access your credit report; they’ll get a message back that your report has been frozen.

As a result, the application will be denied, preventing the fraudulent account from being opened. The thief may still be in possession of your personal data, but your credit freeze will prevent them from using that data against you to open unauthorized accounts.

How to Freeze Your Credit

Placing a freeze on your credit reports is simple and inexpensive. The quickest way to request a freeze is online, though you have the option to freeze your reports over the phone or via mail as well.

If you do opt to freeze your credit reports, it’s also important that you do so separately at each of the three major credit reporting agencies: Equifax, TransUnion, and Experian. If you neglect to freeze your credit with all three bureaus, you’ll still be vulnerable.

Below are some links to help you get started putting your credit reports on ice at each credit bureau:

Equifax Credit Freeze

  • You can freeze your credit with Equifax here. In the wake of their massive data breach, Equifax is waiving any fees on credit freezes through June 2018.

TransUnion Credit Freeze

  • To freeze your credit with TransUnion, start here. TransUnion also allows a less intensive credit lock, which you can turn on and off in real time online.

Experian Credit Freeze

  • Freeze or thaw your Experian credit reports here.

Once you place a freeze on your credit reports, you’ll be issued or be asked to choose a PIN. Remember to save all three of your PINs, because you will need them in the future to “thaw” your reports when you wish to apply for credit yourself — or in any other situation where someone will need to access your credit reports. In some states, a credit freeze expires after seven years, but in most cases, it lasts until you request the freeze to be lifted.

Depending on your situation, you may be required to pay a fee to both place AND lift a credit freeze. Fees can vary per state, but they generally fall between $3 and $10.

That’s a small price to pay to avoid identity theft, especially if you believe your data has been compromised. And if you’ve already been a victim of identity theft (and have a police report to prove it), then placing and lifting a credit freeze can be done free of charge.

Related Articles:

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

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Monday, February 26, 2018

Questions About Food Inflation, Craigslist, Costco, Principles, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. Finding health insurance
2. Dealing with food inflation
3. Thinking about job offer
4. Enough shopping around?
5. Return of premium life insurance
6. Craigslist scammer
7. Debt after death
8. Costco math
9. List of principles
10. Rolling over 401(k)s
11. Frugal solution to car salt
12. Reflecting on spending mistakes

I’ve had a rip-roaring winter cold the last few days, the first one I’ve really had in a long while. As I write this, I mostly just want to go right back to bed and get a good batch of sleep.

I wish I had some sort of magic formula for feeling better until a winter cold has passed, but I simply don’t. It just takes a few days until your body’s immune system figures it out and eliminates it.

Until then, misery.

On with the questions.

Q1: Finding health insurance

My husband will be switching to a small business which does not offer healthcare. I’m not sure I would be considered a freelancer (I occasionally work as a locum tenens type healthcare provider: my work is intermittent and irregular). Either way, we’ll be losing out health insurance and we don’t know where to find anything that is actually affordable: the only healthcare.gov option in our state is $2500 monthly with a $12,000 deductible [which equates to paying $42,000 a year before the insurance company will pay a dime and we’re healthy, we won’t even come close to meeting that deductible]. We’ll have four kids but our income is too high to qualify us for any kind of discount through the website. Is there any other way to approach finding affordable healthcare? Blue Cross Blue Shield dropped individual plans in our state and I’m finding dead ends every other way. Any suggestions? What are your thoughts on the Christian Health Ministries? It’s really the only affordable option I can find right now and even then I don’t like the idea of paying for well child checks and vaccinations out of pocket.
– Alicia

Unfortunately, health care options in this country are disastrous, especially with people who do not have employer-backed coverage. The fundamental problem of insurance is that people who do not have employer-backed insurance are perceived to be a greater risk than those who do, thus actually finding someone to ensure you when you don’t have such coverage is expensive. The mandate to have insurance wrapped in the ACA was an attempt to fix that, but it only marginally worked.

There really is no good solution in your case. Options for people in your situation are pretty limited. They’re either expensive or limited in most cases.

Christian Health Ministries is an interesting case. While the rates are low, it’s basically a cost sharing service where you’re putting money into an escrow account to pay for the medical expenses of members as they occur, but there is no guarantee of payment and, as you note, what they do and don’t cover is a bit quirky. They do pay out what they have, but if it’s not enough to go around, they simply don’t cover everything. It’s far better than nothing and it is very low cost, but it is not a virtual guarantee of coverage, although it does seem to qualify as coverage for the provisions of the ACA.

Q2: Dealing with food inflation

How do you deal with the cost of food going up when your income is the same? I get a COLA on my pension every year but food goes up a lot more than that and that means I have less for other stuff.
– Esther

Cost of living adjustments these days often don’t match the changes in the cost of food. In some years, food definitely goes up more than a typical COL adjustment. In other years, they’re the same. Your observation is probably true if you live in an area where there is significant growth happening and the overall cost of living is going up faster than the national average.

So, what can you do about it? You can move to an area with a lower cost of living, for starters. That will immediately give you a lot more breathing room in your budget. You can also simply learn to budget your money more wisely.

Another thing I would encourage you to watch out for is a slow elevation in your food tastes. Are you really buying the same stuff you were buying five years ago, or have you slowly slipped into buying more “premium” versions of everything, like coffee or creamer or dishwashing detergent or ketchup? Take a look at the brands you regularly buy now and what you used to buy and see how the prices compare.

Q3: Thinking about job offer

I am 43/M married to 40/F, no kids, paying down a mortgage but no other debt. I make $70K (systems analyst) and she makes $45K (teacher). I like my job well but the pay is not super competitive. Last week, I was contacted by a friend of a friend who offered me a job at his company – I have to apply and interview but the job is basically mine if I want it. Similar work to what I’m doing now, but pay bumps to $93K starting out. New company culture seems fine – a couple of friends say they like it there and I can’t find any horror stories online. What should I do?
– Jeff

Decide what it would take for you to unquestionably stay where you are, then go talk to your current boss about it. Simply tell him or her the truth – you like where you are at, but you have friends who are making more than you for similar work. Don’t mention the job talks. Open with the fact that you’re happy here and stress that you really want to stay, but $25K a year is $25K a year and that’s hard to ignore. State that you want to work together to put a plan in place to get you to a competitive salary. See what the response is.

If the response sees you getting the salary bump you want to the level that would convince you to stay, then you should stay. If you get a negative response or if you get a very minimal offer to stay, pursue the other job offer.

That’s how I’d handle it. If you’re happy where you are, you should definitely tell them what’s going on and give them a chance to match or come close to matching.

Remember, salary isn’t everything and you know you’re happy where you’re at. While you may want the salaries to be closer, don’t just go to where the salary is highest.

Q4: Enough shopping around?

My wife and I decided it is time to move to another bank. Our current bank charges fees for almost anything you can imagine and it’s ridiculous getting hit with $40 in fees each month for normal banking services.

We live in the Chicago area and there are a lot of banks. We have called around to several with local branches and found one or two that are strictly better than our current bank.

How many banks should we contact before we pull the trigger on the best one?
– Steve

You’ve hit upon a good point. A person can basically spend unlimited hours shopping around for a new bank or for other similar things like insurance. When do you stop?

When I am shopping around, I usually keep calling places until I find one that seems like the right one to me. When I find that my attention and focus is drawn back to one particular option, I know I’m close to being done.

At that point, I usually sit on it for a few days, then look through the options again. If I still find that the same option is on top, and I usually do, I go with them.

I don’t have a set number, but there’s almost always one option that starts really looking like the right one.

Q5: Return of premium life insurance

I am looking at life insurance and one company offers a “return of premium” insurance policy. It’s like a normal term life insurance except at the end you get your premiums back if you didn’t die. It costs a lot more than the regular term policy. What’s the catch here?
– Devin

A “return of premium” policy is exactly what you describe. You pay, say, $100 a year for a 30 year term policy and at the end of 30 years, if you’re still alive, they cut you a check for $3,000.

Compare that to a normal term policy that might have a $50 a year premium instead.

Now, the question is, if you just the second policy, can you invest the extra $50 a year well enough to make it to $3,000 by the end of 30 years? By my math, if you put it in the stock market in a broad based index fund returning an average of 7% per year, you would be money ahead with the normal term policy.

There’s a catch, of course: would you actually invest that $50 per year or not? If the answer is truthfully “no,” then there are worse things to do with your money than a “return of premium” life insurance policy.

Q6: Craigslist scammer

I think someone just tried to scam me on Craigslist. They wanted to buy something from me with a check from a local bank. Something about it seemed wrong so I said no and they got really upset. I think they were trying to bounce a check off of me. How do you avoid scammers on Craigslist?
– Julia

You basically don’t avoid scammers on Craigslist. Instead, you just have a few policies that sweep most scammers aside.

For example, have a policy where you only accept cash at the time of sale as a form of payment. You do not accept checks or PayPal or gift cards or anything else. Cash, period.

Stop by your local office supply store and get a pen that’s good for detecting counterfeit cash and take that to the sale with you. Mark some of the bills that they try to use with that marker and make sure they’re legit.

Those two little steps will avoid a lot of the typical scamming going on on Craigslist.

Q7: Debt after death

I was reading an article today about the average American dies with 61k in debt. What happens to this debt? Are relatives supposed to pay the debt?
– Anna

Most of the time, that debt is applied to the estate of the person who died. Their assets are sold off and the proceeds are used to pay off those debts. Anything that remains is then given to the survivors according to the estate plan.

So, let’s say Aunt Marjorie dies and has $61K in debt. You sell off her house and her car and her possessions that weren’t specifically left to anyone and then the proceeds from those sales are used to pay off those debts. This might leave, say, $30K, and that’s then distributed to the beneficiaries of the estate.

This is assuming that all debts are strictly in the name of the deceased person, of course.

Q8: Costco math

We recently renewed our membership at Costco. They now offer two memberships – one for $60/year that’s juts normal and one for $120/year that gets you 2% off everything you buy. My wife just instantly said that we wanted the normal membership and I didn’t make an issue out of it but I went home and ran the numbers and I am not sure that it is a bad deal. Could you help me figure out whether it’s worthwhile?
– Jeremy

For that higher priced membership to be worthwhile, it has to save you more than $60 an a year. To save $60 in a year, that means that you have to buy enough stuff so that 2% of the amount you buy is $60. That amount is $3,000.

So, if you’re going to spend more than $3,000 in the coming year at Costco, the more expensive membership is better. If not, then the less expensive membership is better.

The kicker with Costco – and the reason I lean toward the $120 membership – is that if you save less than $60 over the course of a year, they’ll refund you the difference.

The only real drawback to the $120 membership is the additional up front cost. That $60 may have been more useful to you elsewhere.

Q9: List of principles

In your recent blog post “12 Key Principles for Financial Success in Today’s World” you indicated that you\’ve been making “a giant list of all of…principles”. From your writings, I’ve come to deeply appreciate your life philosophy, not just about personal finance. So would you mind sharing your “giant list” of principles with me?
– Connie

Quite a few people wrote in and asked about this “list of principles” that I’m making. I will probably use it as a Saturday post at some point – on Saturdays, I tend to stray a bit further away from strictly writing about personal finance than I do on other days.

The list of principles is something I’m compiling as part of my ongoing effort to write journals for each of my kids. I’m in the process of writing a journal for each of them that contains a lot of material – reflections on who they are as people, family history, my own life history, advice for life problems that they might face, and a lot of principles to live by. I intend to give them to them when they reach adulthood and are old enough to appreciate it.

I want to convey to them the principles I live by and why so they can hopefully understand me more as a person and also find useful life advice to draw upon if something were to happen to me.

Once I’ve really codified that list, I’ll share it here in a post.

Q10: Rolling over 401(k)s

Item #5 in Helaine Olen’s “Single Retirement Planning Basics” at the end of the article “Retirement Planning for Singles Can Be Extra Tough” (https://amp.usatoday.com/story/83257058/) doesn\’t make sense to me. Assuming the 401(k) contributions are pretax, I prefer to consolidate accounts from different jobs whenever possible with direct rollovers to a single IRA. What do you think? “5. Don’t roll over your 401(k) if you change jobs; just let it be. This will keep the cost basis of your investment lower.”
– Gerry

I think that the issue here is that Helaine is making an extra assumption that’s going unsaid in order to keep the article short, which is a real issue for many publications that aim for a very short word count.

The issue that Helaine is trying to address (I think) is people considering rolling a 401(k) into a Roth IRA, which can cause a tax issue at a time when many people can’t afford that tax hit.

In other words, there are some specific situations where a rollover makes sense, and others where it doesn’t, and this little phrase isn’t nearly enough to explain the difference.

I think that this is a point that should have been explained with more length and it was probably trimmed to hit a word count target. This often happens when an article tries to fit in too many ideas in too small of a word count.

In short, I don’t think you’re doing it wrong, nor do I think the advice is necessarily bad, just under-explained.

Q11: Frugal solution to car salt

What can a person do to keep car wear from road salt from happening? I wash my car constantly during the winter and it’s at just 130K miles and there are already spots of rust on it.
– Jenny

As a lifelong resident of the upper Midwest, the only thing I’ve ever found that keeps rust from winter road salt at bay is constant washing – and I mean constant. If you don’t wash your car after every single winter storm of any kind, you’re basically begging for rust to eventually hit your car.

The only preventive trick I’ve found is to go get your oil changed in the months before winter and ask for an undercarriage coating. They spray on an oil-based solution that helps with keeping rust at bay under your car.

Other than that… just wash it frequently. That road salt is some vicious stuff.

Q12: Reflecting on spending mistakes

You talk about how you reflect on spending mistakes when you’re driving places. Can you elaborate on that a little bit because I’m not really clear on what you mean?
– Derek

I basically apply something known as an after action review to spending choices I made that I regret or at least want to carefully consider to make sure I made the right choice. The idea of an after action review is to carefully consider an action you took in the past and decide both whether it was the right action to take and what is the best action to take going forward.

With an after action review, the first thing you do is you identify what exactly you wanted to happen in that situation. For example, if I bought a big bottle of Gatorade at a gas station, I think through what I ideally wanted to happen when I stopped. I needed gas and I was thirsty and I wanted to solve both of those problems. What would I have ideally done to solve that problem? If everything had been perfect, I would have bought the best bang for the buck gas and I would probably have just filled up a water bottle at a water fountain or from a tap.

Then, you acknowledge what actually happened. I think through what I actually did, step by step. I bought gas that was probably the best bang for the buck gas, then I headed inside without a water bottle. Instead of figuring out what my cheapest option for purchase was, I just grabbed a Gatorade and bought it.

Three, you try to learn from the experience. Where did I deviate from my ideal and why? Well, my big mis-step was heading in without a water bottle in hand. Most gas stations have some way to fill a water bottle, so heading in without one was a mistake. Even without that bottle, I could have found a better bang for the buck beverage than a bottle of Gatorade.

Four, adjust your behavior. When I’m thirsty at a gas station, my goal should be to refill a water bottle from my car, and doing that requires me to keep a water bottle in my car and to remember it at gas stations.

I basically follow that model when reflecting on spending experiences or almost any experience I have in life that I want to reflect on and improve. I use it for social experiences, leadership experiences, and many other things. It not only helps me define a better path forward, it also does a good job of embedding that better set of choices in my head.

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

The post Questions About Food Inflation, Craigslist, Costco, Principles, and More! appeared first on The Simple Dollar.

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Three Reasons New Parents Shouldn’t Stress About Saving for College

Just about every new parent I’ve ever worked with has told me that saving for college is one of their top financial priorities. And I always have some mixed emotions when they say it.

On the one hand, it’s great that they want to prioritize saving for their child and giving him or her all the opportunity in the world. It’s especially admirable given that their budget is likely tight due to all the new expenses that come with young children, and that any savings would therefore require some kind of sacrifice.

On the other hand, I know that I’m going to have the tough job of convincing them that saving for college is probably not the right move. That they should be prioritizing their own needs over their child’s college education.

That may sound selfish. And the truth is that saving for college is a great idea IF you have the money to do so.

But when resources are limited, saving for college should usually be near the bottom of your list of financial priorities. Here are three reasons why.

1. There Are Many Ways to Pay for College

While having savings available to pay for college generally provides your child with the greatest number of choices, the fact of the matter is that there are many ways to pay for a college education.

Here are a few of the options you have available to you:

  • Cash flow: You might be able to pay for some or all of your child’s tuition as if it was just another bill. This is a big reason why some people argue for paying off your mortgage over saving for college. If you time it right, you could get rid of your mortgage payment just as your child reaches college age, freeing up room in your budget for at least some of the bill.
  • Lower-cost schools: While the average cost of a college education continues to rise, there are many schools offering a quality education at a fraction of the cost of the most expensive universities. A good middle ground might be spending a couple of years at a community college before transferring to a more prestigious college, allowing you to save a lot of money and your child to get a degree from the school he or she desires.
  • Scholarships and grants: There are all kinds of scholarships and grants available these days. Applying for this money might be a good project for your soon-to-be college student.
  • Part-time job: You certainly don’t have to bear the responsibility of paying for college alone. Your child could work either before or during college, or both, to help pay the bills.
  • ROTCROTC programs can pay for the entire cost of school, as long as your child is willing to commit to military service after graduation.
  • Student loans: Done thoughtfully and within reason, student loans can provide a good return on investment, since a college degree can increase your lifetime earnings potential. Regardless, they’re available as an option when other routes fail.

The bottom line is that while saving for college is great if you can afford it, you won’t be left without options if you can’t afford to do so.

On the other hand…

2. Other Financial Goals Require Money Now

Most other financial goals do not have that kind of flexibility. They require you to either spend or save money right now, or risk not being able to reach them.

Retirement is a big one. Beyond Social Security, you are completely dependent upon your own savings in order to support yourself once you either want to or have to stop working.

And given that increasing your savings rate is by far the best way to increase your odds of reaching your retirement goals, focusing on that now over saving for college makes a lot of sense, even if it feels selfish.

Here’s another way to think about it: When you’re on a plane, they always tell you that, in the event of an emergency, you should put on your own oxygen mask before helping your children. You have to stabilize yourself before you’re truly able to help your children.

The same logic applies to saving for retirement over saving for college. By stabilizing your own financial future, you’re putting yourself in a better position to truly be able to help your children with whatever they need down the line.

But retirement isn’t the only consideration here. Things like insurance and estate planning are critical tools for protecting your family’s financial well-being, and they require you to either spend money now or go without them.

Even things like traveling to see friends and family, or changing careers or starting a business, have real value and won’t happen unless you dedicate resources now.

Unlike paying for college, most of these other big goals can’t be handled any other way.

3. There Are Other Ways to Invest in Your Child

For some reason, our culture has a laser focus on college as THE way to invest in the future of your children. And while a college education is certainly valuable, it is only one four-year period of your child’s life and is by no means the only way to prepare him or her for the future.

Simply spending time with your child is one of the best investments you can make, and doing so might require working fewer hours, making less money, and therefore having less available to save. And in many cases, that trade-off will undoubtedly be worth it.

There are also plenty of opportunities to help them explore their interests and develop their skills long before college is even an option. In fact, research shows that early education in particular has a number of significant benefits, so it may actually make sense to focus more on that time period than on college.

Regardless of how you do it, just remember that your child has a long life with lots of opportunities available to him or her. And while college may be an important part of that life, it will only ever be one part, and there are many other ways to invest in your child’s health and development.

Don’t Feel Guilty About Making College a Lower Priority

The urge to start saving for college right away is a good one. It means that you care about your child and that you’re willing to make sacrifices in order to secure his or her future.

But you shouldn’t feel guilty about making it a lower financial priority. The fact of the matter is that other responsibilities require more of your money now, and that by handling those responsibilities you’re actually building a stronger foundation that will allow you to more sustainably help your child later on.

Choosing not to save for college right now doesn’t make you bad parent. It might actually make you a good one.

Matt Becker, CFP® is a fee-only financial planner and the founder of Mom and Dad Money, where he helps new parents take control of their money so they can take care of their families.

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The post Three Reasons New Parents Shouldn’t Stress About Saving for College appeared first on The Simple Dollar.

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