Tuesday, January 31, 2017

A Financial Cleanse?

An old dear friend of mine has an absolute fascination with the idea of “cleanses.” She’s constantly trying out juice cleanses and organic fruit cleanses and other such things, with the idea of clearing her body and mind of “toxins.”

I’ll be the first to admit that I doubt the usefulness of juice cleanses and other such strategies for improving one’s health, as the human body is already a pretty effective cleanser of almost anything we put into our bodies. The idea of purging “toxins” by drinking a bunch of fruit juice is not something I’m personally into. Having said that, there is a lot of benefit in terms of making good health choices for yourself. You can drop excess weight, which has a ton of health benefits, and you can make lots of choices to improve your heart health and so on.

The idea of “cleansing” yourself (in the form of better blood sugar numbers, lower triglycerides, lower blood pressure, and so on) by making better dietary and exercise choices and even better mental practices such as prayer and meditation is something that is backed up by medical science. So, although I’m not on board with the idea of purging “toxins,” I’m strongly on board with the idea of treating your body well by running it through its paces and ensuring you’re putting healthy things in it.

Here’s the thing, though: the idea of a “cleanse” applies really well to other areas of your life beyond your physical body. A period of de-stressing, meditation, prayer, time spent outside, and intentional relaxation can do wonders for your mental health, providing something of a “mental cleanse.” You can do the same with the contents of your closet, removing all kinds of stuff and “cleansing” your possessions.

Naturally, the same idea works with your finances. You can give your finances a “cleanse” as well, getting rid of unnecessary things and practices that are clogging things up and keeping you from reaching your goals.

Here are five cleansing practices you can put into practice right away that will improve and simplify your financial life.

Cleansing Your Wasteful Spending: Live Off of a Small Pool of Money for a Week (or a Month)

One financial trap that many people find themselves falling into is losing track of where all of their money is going. Money slips between their fingers in drips and dribbles, quarters and ones and fives and tens, and before you know it, it adds up to a lot of money. But where did it go? It’s often unclear, because many of those little drips and drops of money are completely forgotten.

It’s not that different than a diet, really. Many people who diet wonder why they’re not losing weight, but it’s because they eat little forgettable snacks throughout the day that, individually, don’t add many calories to a daily caloric intake, but over the course of a day add up to quite a lot of calories. Then, even if you’re careful at meal time, you’re still often eating plenty of calories and the weight isn’t disappearing.

It’s those little forgotten “treats” that undo your forward progress, and it’s time to cleanse them.

Here’s what you do. At the start of the week – say, on Monday morning – withdraw a certain amount of cash from the ATM. Choose an amount that won’t leave you starving, but won’t give you so much money that you won’t have to make any choices. You can do with that cash whatever you like, but it must pay for your food and for any gas beyond what you need to commute to work. If you get any “treats,” it comes out of that cash. If you want to buy anything online, you have to put that much cash back into your checking account (because you’re likely using a credit card or cash). See how far that money takes you.

A few things will happen.

One, you’ll begin to really notice all of the little ways you spend money. You might buy lunch with the swipe of a card normally, but if you do it with cash, you’ll notice the supply of cash dwindling. You might stop for a morning coffee… but then your cash supply for the week dwindles. All of those expenses become more real when you see them sucking money out of your supplies.

Two, you start to make some choices. You might decide to skip out on eating lunch out of the office today and take leftovers instead so that you’ll still have $20 to go out this weekend. You might decide to stop your coffee shop treats for the week and drink the office coffee instead because it’s really not that much of a difference. You might order water at the restaurant. You might decide to eat dinner at home on Wednesday night instead of grabbing some takeout.

Three, some of those choices will be easy and others will be hard. Maybe eating at home is easy. Maybe taking your lunch each day is hard. Maybe skipping out on your morning coffee on the way to work is easier than you thought. It’s different for everyone. Pay attention to what’s really easy to skip and what isn’t.

At the end of the week, reflect on those experiences. Which choices were easy? Stick with those choices going forward, because those are examples of ways where your spending wasn’t generating much value for you. Which choices were hard? You might want to restore some of those.

In the end, what you’ll find is that you’ve eliminated some forgettable expenses and kept the ones that matter. Repeat this cleanse every once in a while and try to stick with the results of it for smarter use of your money.

Cleansing Your Credit Cards: Cut Down and Consolidate Your Plastic

Roughly 38% of American households carry some form of credit card debt, and in those households, the average credit card debt is over $16,000, according to survey data from ValuePenguin. That’s an astounding number. Furthermore, the average credit card holder has 3.7 credit cards to his or her name.

Those statistics paint a risk-filled picture of the average American’s use of personal credit. Holding four credit cards presents an elevated risk for identity theft, as your account information is (typically) held by four different card issuers. That means four different databases (at least) within which your information can be compromised and your card number can be stolen.

It also paints a picture of debt. The average credit card interest rate hovers around 15%, so $16,000 in credit card debt generates $2,400 in interest payments annually. That’s money that simply vanishes.

$2,400 a year disappearing into the ether, along with a heightened risk of identity theft? That’s something to clean up.

First, get started by learning how to live without credit cards. Rely on using your debit card only instead of using credit for your purchases. If you can’t afford something using just your checking account, then you have to start making choices about what’s important. Cleanse your spending habits, in other words.

Second, start consolidating your credit card debt by transferring your balances with the highest interest rates to other cards. See which of your cards offer low balance transfer offers and take advantage of them. Do everything you can to reduce the interest rates on your cards. Then, take advantage of those lower interest rates to actually start paying off your balances.

Finally, close out some of your credit cards. Hold onto the oldest card, as it’s important for establishing the length of your credit history, but close out all of the others aside from the one you use the most. Stick with the one with the best bonus program for your needs and strive to reach a point where you’re paying off your card in full every month.

Cut down your credit card debt. Cut down your number of credit cards, too. Together, they’ll provide a real boon for your financial future by reducing the amount of money you lose to interest while also reducing the chances of identity theft and the potential damage that could be done by an account intrusion.

Cleansing Your Food-Buying Habits: Adopt Once-a-Week Grocery Shopping

In our busy lives, it’s very easy to fall into a routine of eating takeout for every meal or haphazardly shopping for a few groceries at Whole Foods on your way home. Rather than putting a focus on food shopping, you instead use it to fill in the blanks in your busy life, buying restaurant items and groceries as needed rather than with any sort of coherent plan.

Here’s the thing, though: having a coherent plan will not only save you a bundle, it will also save you time over the long run, believe it or not.

Try this approach instead.

First, identify a discount grocer near you. Look for an Aldi, a Fareway, a Save-A-Lot, or a Price Rite – those are discount grocers popular in different regions of the country.

During the next day or two, figure out a few recipes that you can easily prepare at home. Choose really easy recipes, ones that are hard to mess up, like pasta and sauce, soups, or simple fajitas (basically any meats and vegetables you like wrapped in a tortilla). When you’re considering such meals, take a look at the flyer from the discount grocer you selected and see what items they have on sale for those simple recipes, and then base those meal choices around those on-sale food items. For example, you might try to make a sweet potato chili if sweet potatoes are on sale, or you might choose a particular pasta sauce if it’s on sale.

Once you’ve figured out four or five easy meals that line up well with the flyer, make a grocery list. Simply make a list of everything you need to buy to pull off all of those meals. You can store it however you like – I like to either use a pocket notebook or to simply store it in Evernote or Paprika (I use Paprika if I’m doing more complex recipes; Evernote if I’m doing really simple stuff; and my pocket notebook if my phone is out of juice or close to it). Plan to make large batches of these meals, enough so that you have leftovers.

On your way home from work one night, stop at that discount grocer and buy all of the stuff on your list. Head home, unpack all of it, and then make the easiest meal you listed. Pasta with sauce and a small salad can be done in twelve minutes, for example, and it’s about as easy as can be. Prepare enough so that you’ll have a meal or two left over, and when you’re done, put the extra meal in a storage container of some kind. Take it to work for lunch the next day.

Basically just repeat this plan four or five nights out of the week. Make a simple meal, make enough for leftovers, take the leftovers to work for lunch sometime in the next day or two.

What you’re going to find is that your food costs shrink rapidly if you follow this plan, and you’ll also find that it’s a lot easier to just go home and make a really easy supper if you know what you’re going to make and have the stuff on hand for it. You can also adopt a strategy of using a slow cooker for things like soups, as you can put most non-pasta soup ingredients in the slow cooker before you leave for work, turn it on low, and come home to soup that’s ready to eat (or to have pasta tossed in to cook for another half an hour or so).

The thing is, you’re still going to be eating good, tasty stuff. You can be pretty picky about your ingredients and still save a lot of money if you make a meal plan, use a grocery list, and use a discount grocer as your primary source for groceries. It just requires a different food routine than you’re used to.

Cleansing Your Possessions: Do a “Closet Cleanse”

Almost all of us have a closet or two that’s stacked completely full of stuff. Extra clothes, items from abandoned hobbies, papers, things that you saved from college and should really toss but are still there for sentimental reasons… it’s amazing what can wind up in a closet.

One of the best ways to clean up your life and help your finances is to purge those closets and get rid of some items. Not only will it make your living space feel a lot less congested, you can often get a nice financial return on the items you’re selling.

Again, this cleanse is a simple one, though it’ll take some time to implement all of it.

Just choose a weekend afternoon where you can put aside a few hours of free time, then pull everything out of that closet. Once you have it out, go through each individual item and decide whether or not you really need to keep this item. Will you use it again realistically in the next year or so? If it represents a memory, is it really a memory that requires saving a physical object? Are you really ever going to return to this hobby? Are you really ever going to wear this item again?

Be honest with yourself. Don’t keep stuff because you have good intentions. Only keep stuff if you’re truly and honestly going to use it going forward.

Ideally, what happens is that you put a few items back in the closet, but most of it doesn’t get returned. At that point, it’s time to sell off some stuff.

Many individual items are perhaps sold easiest on Craigslist to local buyers. Other items, such as DVD or CD or perhaps even book collections, are best sold on the Amazon Marketplace using Fulfillment by Amazon. You may find it best to donate some items as well to places like your local clothing pantry or Goodwill store. Some better clothing items might sell at a consignment shop. There’s always the option of a yard sale for all of the remaining items, too.

The goal here is to obtain some value for the items that you’re no longer keeping. I tend to view items that just sit in storage as having almost no value whatsoever, so any value that you recoup from them is not only a financial benefit to you directly, but also frees up space in your home and also makes it easier to move in the future. It’s truly a “cleansing.”

Cleansing Your Debt: Make a Debt Repayment Plan and Stick To It

Many Americans find themselves with all kinds of debt, not just credit card debt. Many people face, car loans, student loans, mortgages, personal loans, and debts of other kinds on top of their credit card debts, and those debts can add up to a real problem that restricts your financial and lifestyle choices.

If you have hundreds or even thousands of dollars a month in debt payments, your choices become restricted. You have to have a good paying job or else you’re going to quickly find yourself not only with disastrous credit and with creditors hounding you, but also in potential legal trouble as well. Some types of debts, such as many student loans, never go away, even if you file bankruptcy.

It restricts your day to day financial choices. It restricts where you can live. It restricts your career choices. It simply clogs up your life.

It’s time to clean it out.

You can start by making a simple debt repayment plan. Just make a list of all of your debts and order them by the annual interest rate, with the debt featuring the highest rate at the top of the list (it’s probably a credit card).

Take steps to consolidate some of those loans, if possible. Look into student loan consolidation that locks in your loans at a low interest rate. Look into zero interest credit card balance transfers. This might result in a reorganization of the list, and that’s perfectly fine.

Each month, make a minimum payment on all of the debts on your list, then do everything in your power to not only avoid adding to any of the debts, but make the biggest possible extra payment you can to the debt on top of the list. Make that balance drop through the floor. Hopefully, sooner rather than later, you’ll pay off that top loan! Cross it off and start hammering the loan that’s now on top of the list.

Use the other “cleansing” strategies on this list for help. Take the money you’re saving from your food buying cleanse and apply it to this debt repayment plan. Take the money you made from selling off your closet contents and use it to hammer the top debt, too.

What you’ll find, sooner rather than later, is that this cleanse rewards you in terms of lower stress and in terms of a much greater range of life and career possibilities.

Final Thoughts

I may not believe in “toxins” or food cleanses, but there is a great deal of value in stepping back, reassessing areas of your life, and making moves to improve what you take in, what you keep, and what decisions you make. Improving those areas is all about “cleansing” your life, leaving you in a better state than when you started.

Good luck!

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Four Habits of People With Great Credit

Are you trying to earn and maintain excellent credit — as in a score greater than 800? Do you want to live with the peace of mind that comes from knowing your credit can no longer hold you back from the things you want to provide for yourself and your family?

If so, then studying and copying the behaviors of people with great credit is a fantastic place to start. Here are four habits common among the top credit achievers.

1. They Never Miss a Payment

According to the creators of the FICO credit scoring system, 95% to 96% of the highest credit score achievers have zero delinquencies (a.k.a. late payments) on their credit reports.

People with great credit scores have clean credit reports, it’s that simple. Both the FICO and VantageScore scoring systems will hammer you if you mismanage your credit obligations to the point where your credit reports become polluted with derogatory information.

While this may seem rather obvious, it’s important to understand exactly what having a clean report entails. Clean credit reports are free from negative or derogatory information of any kind. Many consumers incorrectly believe that an occasional late payment here or there is no big deal. However, those with great credit almost always develop the habit of viewing late payments as completely off limits.

Other derogatory items that people with the best credit scores tend to avoid include collection accounts, charge-offs, settlements, bankruptcies, judgments, and tax liens.

If you already have derogatory information on your credit reports, the good news is it has an expiration date. Most derogatory items must be removed from your credit reports after seven to 10 years, per the Fair Credit Reporting Act. Additionally, as negative information becomes older, it will have a diminished impact upon your credit scores.

2. They Carry Low Credit Card Balances

The highest credit score achievers have an average balance-to-credit-limit percentage of 7% on their credit cards, according to FICO. That means for every $10,000 of credit limits, they’re only using $700 in the form of a balance.

There are two ways to maintain a really low usage percentage, or what’s more formally called revolving credit utilization: You can truly keep your balances low, or you can maintain really high credit limits.

Or, if you’re smart, you’ll do a combination of both. And, if you want to win across the board, you’ll maintain low balances, high credit limits, and no more than one or two cards with a balance at any given time.

3. They Only Apply for Credit Sparingly

According to FICO, the highest credit score achievers have not had any hard credit inquiries, indicating credit applications, in the last nine months. They also have not opened any new accounts within the last 15 months.

People with great credit do not allow their credit reports to be pulled often, but instead apply for credit sparingly and only when they actually need it.

Having said that, you never should be afraid to check your own credit reports, since doing so cannot damage your credit scores. This is true for both the FICO and VantageScore scoring platforms.

4. They’ve Used Credit for a Long Time

The average age of the accounts on the credit reports of the highest credit score achievers is 128 months, according to FICO — or more than 10 and a half years.

It is no secret that higher credit scores are awarded to consumers who have longer credit histories. People with great credit typically have older, more seasoned credit reports – a long history of using credit responsibly. This also means that they have a habit of not opening new lines of credit too frequently, as each new line of credit lowers the overall average age of their accounts.

This is a harder habit to emulate, of course, as you cannot control time. But it does show the benefit of beginning your relationship with credit early on if possible. And as your credit reports get older, your credit scores, both FICO and VantageScore, will improve because of nothing more than time passing.

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, January 30, 2017

Questions About Psychology, Repetitive Meals, CDs, Sore Throats, 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. The psychology of saving money
2. To refinance or not?
3. Parents selling off possessions
4. Highly repetitive meals
5. Personal growth and development books
6. Breaking online shopping addiction
7. Breaking free from excessive frugality
8. Spousal debt and rocky marriage
9. Large collection of CDs
10. Inexpensive tutoring for high schooler
11. Frugal sore throat strategies
12. Finding reliable lawyer

The Super Bowl is this coming weekend and with it comes a few invites to various Super Bowl parties. I’ll be honest – I have very limited interest in football (I follow baseball and enjoy watching an occasional basketball and soccer game, but football has almost no interest for me) and my wife has literally negative interest (she can’t watch it because of the head injury issue; it turns her stomach).

So we go to Super Bowl parties and intentionally seek out people who aren’t very interested in the game for conversation. We might watch the halftime show or we might find ourselves in another room talking about something else entirely.

I have a few friends that are hung up on the idea of why someone would ever go to a Super Bowl party if they don’t like the Super Bowl. For us, the key term is “party,” not “Super Bowl.” The Super Bowl is just an unimportant reason to go hang out with friends and have some great conversations, whether there’s a football game on or not.

If you’re on the fence about going to such a party, go. Look for people who aren’t completely engaged with the game and hang out with them if you’re not into football. You already have things in common with those people – you have friends in the group that were close enough to invite you both, but you’re not particularly into football. Chances are, if you ask each other some questions, you’ll find that you have even more in common.

Q1: The psychology of saving money

I need advice on the psychology of saving money. Each month I divert money from my paycheck directly into my savings account. Conventional financial advice says: “If you put the money directly into a savings account, you won’t miss it.”

I have read dozens of personal finance articles where they give this advice. But the part that no one has addressed is: How do you keep that money *in* your savings account? I can easily log in to my bank account online and just transfer that money into my checking account, which I often do. To me, the money is not “out of sight, out of mind” (i.e. in savings), it is just in a different account that I can easily access!

Do you have a psychological trick where I can make myself forget about that money in my savings account?
– Anna

The trick is to put it into another bank entirely. Open up an online savings account at somewhere like Ally Bank and set it up to automatically transfer, say, $25 a week from your main checking account. Then, just forget about this account as much as you humanly can. If you get an ATM card, put it in a place out of the way somewhere.

This becomes a savings pool that you never actually have to see. You can’t access it through the ATM card of your normal bank. You can’t write checks from that account, either. You can’t access it at a teller window, either. The only way you can get at it is by logging onto that account and actively issuing a transfer, and if that account is barely on your mind to begin with, this won’t happen very often.

Let that account grow. Only use it in an extreme emergency to transfer cash to your checking account.

That’s really the only emergency fund strategy that’s ever really worked for me.

Q2: To refinance or not?

I’m trying to decide if refinancing my student loans is in my best interest. I’ve already paid off approx. $7,500 in loans in the 2 1/2 years since I graduated. I made my usual minimum payments and put all my additional payments towards my high interest loans. I have approx. $21,600 remaining at the following interest rates:
$3,135 @ 4.259%
$1,870 @ 6.550%
$8,908 @ 3.15%
$1,890 @ 6.55%
$4,983 @ 3.610%
$816 @3.610%

At the refinance rates advertised (which are usually variable), I’m not sure if refinancing would make a big enough dent in my interest payments to be worth it. That said, I work in the private sector and will not qualify for any federal forgiveness programs. I plan to kill my two 6.55% loans this year.

Would refinancing would help me save money? Also, at what point (if any) would it be beneficial to start aggressively paying off the lower-interest, but higher balance loans over the lower balance higher interest loans? Those seem to be costing me a lot more in interest.
– Mindy

You can certainly shop around for refinancing, but the only loans that would probably benefit from it are the two loans at 6% or above, and those are the ones you should be paying off first anyway. If you’re making any extra loan payments, it should be on those loans.

For the loans at 4.25% or below, refinancing likely won’t squeeze any savings at all out of them. Again, you can certainly look into refinancing offers, but the savings won’t be tremendous if you can score any at all.

With interest rates that low, shopping around for refinancing probably isn’t the best use of your time. It really only helps if you’re looking at a big pile of loans that are at 5% or above, and that really doesn’t describe your situation at all.

Q3: Parents selling off possessions

My father is 83 and my mother is 81. They are still of sound mind and fairly sound body. Over Christmas, they told us that they were going to spend 2017 selling off almost all of their possessions so that it would be easy to clean out their house when they pass away or move to a retirement home, which is incredibly thoughtful of them and completely in line with the humble nature in which they lived their life.

I volunteered to spend a couple weekends a month to help them. I am a 55 y.o. widowed woman whose husband died several years ago leaving me with enough life insurance money to no longer have to work, so I have plenty of free time. So time isn’t a strong factor here, but I do want to be on a pace to eventually get things done.

I want to help my parents get the best return on their money for their possessions. Do you have any good strategies for these types of things? I don’t mind investing significant time into this.
– Connie

Whenever you’re selling off a bunch of used items, you can always earn a little more by investing more time in the selling process. However, there comes a point where additional time earns you less and less as you approach something close to the best offer you’ll get for the stuff and additional time spent seeking a better offer isn’t earning you much at all. There might be someone out there willing to offer you $5 more for the item, but if it takes 20 hours to find that person, is it worth it? At some point, you’ve got to say “it’s not worth it” and accept that you’re earning a bit less than maximum because the time needed to find the person willing to pay more isn’t worth it.

So, how do you even start? First of all, I would go through and start cataloguing all of the items they want to sell. Choose a room, then go through everything in there and make sure they want to sell those items, then sell off everything there is to be sold.

I would not even consider shipping larger items. If it won’t fit in a box you could easily mail, I would sell it only via Craigslist (requiring someone to come and pick it up) or a yardsale. Don’t deal with shipping large items, as it’s always very expensive and troublesome.

Evaluate each item that seems like it might have value individually. Use the internet to your advantage and try to figure out the used price for each item that might have individual value. If something is worth more than a couple of dollars, sell it online using eBay or Amazon Marketplace. If it’s not, sell it locally on Craigslist and charge just $1 for it.

Just move from room to room this way. One strategy I’d employ is to spend a weekend day making an inventory of all of the items in a room, taking digital pictures of anything anyone might want to see an image of, then spending evenings and weekends where you’re not at your parents’ house selling them online. Then, the next time you visit them, spend a day packaging up the items for shipping. Then rinse and repeat the whole process.

Q4: Highly repetitive meals

Do you have any strategies for saving money and time for someone who eats the same meal over and over? My husband is happy eating rice, beans, and chopped up sausage four or five times a week or more and would even eat it for breakfast. We usually just cook a bunch of rice every few days and keep it in the fridge. Other advice?
– Nina

If I were you, I’d do the same thing with the beans. I’d cook a whole bunch of beans on, say, Sunday, and keep them all in the fridge.

In fact, what I’d actually do is make a very large pot of this meal that he loves, making it all the way to completion, and then I’d get a whole bunch of individual meal containers like these (I actually use them myself) and prepare individual meals of this rice/beans/sausage meal. Put four of them or so in the fridge and the rest in the freezer and let him eat them to his heart’s content.

If he eats these meals so often, I would buy dry rice and dry beans in bulk whenever possible. If you’re not using dry beans, switch to doing so as it’s far cheaper than using canned beans and if you’re cooking a ton at once it actually won’t be much more work than opening many cans. The same is true with rice – if you’re using Minute Rice or something like that, switch to bulk dry rice and figure out how to cook it well. Buy your seasonings in bulk and also buy your sausage in bulk – you may want to consider talking to a meat locker to see if you can bet sausage like he likes in a bulk order and freeze what you’re not using at the moment.

Just make sure that he is eating some other things, too, for nutritional balance!

(I actually like spiced red beans and rice, much like your husband, but I also add a bit of okra to it myself, and I’ve made lots of individual containers of it in the past… I smell a future article idea!)

Q5: Personal growth and development books

I’ve decided to commit to reading two books a month in 2017 on personal growth and development. I have four or five already chose and I am emailing some people whose opinions I trust for some suggestions for this list. I plan to read anything that’s suggested in duplicate! Could you please share five or so non-finance personal growth and development books that you recommend?
– Alvin

This is like drinking from a fire hose for me. I love reading personal growth and development and psychology and philosophy books of all kinds.

Here are five I’d probably recommend to anyone. Outside of finance-related books, these five have probably had the best positive impact on my life.

How to Win Friends and Influence People by Dale Carnegie is a spectacular read if you ever regularly feel uncomfortable interacting with people and wish you were better at it. This book is basically a step-by-step manual for introverted people, explaining how to improve your social skills. I found it invaluable.

The One Thing by Gary Keller and Jay Papasan is probably the best book to read if you ever feel like you have 25 big goals you’d like to achieve but can’t ever make progress on any of them. It’s essential reading for a person with ambition and goals but without a strong sense of direction.

Getting Things Done and Making It All Work, both by David Allen, were key in terms of actually figuring out how to translate the things I needed to balance in my daily life and my big central goal into a strategy for focusing and actually accomplishing things each day. Getting Things Done was more strictly practical, while Making It All Work was more philosophical; I think they make for great complementary reads.

The Obstacle Is the Way by Ryan Holiday is a wonderful book that distills the very useful practice of stoicism into modern life, using the principles to help a person mentally handle the challenges of life and succeed not only in spite of obstacles, but because of them. This is a book that’s densely packed with ideas, so it’s well worth a slow read.

Q6: Breaking online shopping addiction

I am hopelessly addicted to online shopping and I don’t know how to break the habit!

Whenever I think of something that I want if it isn’t expensive I just go on Amazon and buy it in like five seconds. I get it just with two or three clicks. Even at other websites I just enter my password unconsciously and can complete an order in like fifteen seconds.

I usually regret the order but then it’s too late. Half the time I forget the order until it arrives at my door.

Don’t know how to break the addiction! Credit card bills are breaking me!
– Maxine

If I were you, the absolute first thing I would do is cancel the credit card you have memorized. Call them up and close the account or, at the very least, request a different card number and close the old one.

What this will do is break your ability to “one click shop” on Amazon as well as your ability to enter the credit card data online from memory.

When you get the new card, put it up. Don’t use it regularly. Start living solely from your checking account, without using your debit card online.

Yes, you’re going to be breaking yourself of online purchasing. It’s going to be difficult. There will be stuff that you believe that you need online. You don’t need it. Cut all of it out for now.

Spend some time living just off of cash and without any online purchases at all. See where that leads you.

This next question is almost exactly the opposite of Maxine’s question, so I thought it’d be fun to put them side by side.

Q7: Breaking free from excessive frugality

I am a 44 year old single male. I work as an engineer and make $86,000 per year. My job is exceedingly stable.

I live in a small one bedroom apartment that is functionally the loft over the garage of an elderly couple. I cook all of my own meals. I mostly just read and go on walks and jogs and go bicycling on the weekends. I have a few friends in the bicycling club and we have actually gone on group bicycling trips/vacations together the last few years. I’m not very social but I am happy with that.

Last year, I managed to save just shy of 83% of my income. I have enough money to retire in 3 years if I want to and have enough investment income to match my current salary but I spend only a small fraction of it as it is. But honestly I don’t know what I would do with all of that time.

I guess what I’m saying is that lately I’ve begun to feel like I am excessively frugal and I am trying to figure out how to break free from that excessive frugality. I feel like I am in a life rut and my low spending is part of the reason why.

Do you have any suggestions? I find your columns to be wonderful reading and you seem to have many insights into personal finance and how it intersects with psychology and philosophy.
– Evan

I have two suggestions.

First, I would start trying out new activities in your spare time. Try checking out the various civic groups in your town just to see what they do and what they’re like. You can likely find a list of them on your city’s website. I would also visit Meetup and see what groups are in your local area and visit a lot of them, even if they don’t seem perfectly up your alley. The goal is to try things you’re unfamiliar with and see what sticks.

What you’ll eventually find is that there are things that you are drawn to doing. Don’t be afraid to dig deeper into new things that you discover during this process. There will be some things that click and more things that won’t, but it’s worth the process to find the things that click.

Once you find some new things, spend money on the things you spend time on. That’s a great principle to apply to your spending. I often figure that for every hour I purposefully spend on a particular activity, I’m okay spending $2 supporting that activity. You may even want to shoot for more than that, given your strong savings habits.

If you use that philosophy with reading, for example, you’ll probably be able to afford a new book for every one that you actually read from cover to cover. If you apply that to, say, board games, if you spend 20 hours playing games, you can probably afford a new one. If you spend 500 hours biking in a year, you’re probably okay investing $1,000 in a sweet bicycle. It really clicks well with almost every hobby.

Q8: Spousal debt and rocky marriage

I have been married for four years. When I married my husband, he was full of ambition and the two of us had great careers. In 2015, my husband’s previous employer went belly up, leaving him without work. Since then, he has become extremely bitter. He halfheartedly searched for work for a while but now he doesn’t even bother. I come home from work and while he has usually done some household chores, he’s usually camped out in front of the TV and very grouchy and doesn’t want to hear about my day. Our conversations are more and more limited and extremely negative.

We have been living off of my income for the last several months and part of that has been used to pay down his student loans. He refuses to put them into forbearance.

I love the man he used to be and not this grouchy leech. I am getting more and more frustrated with our marriage. The thing that keeps me sticking with it right now is that I know the man I used to love is in there and I see him peeking out sometimes.

I don’t know what to do. What would you do if you were in my shoes?
– Kelly

If I were in your shoes, I would basically tell my spouse exactly what you have written above. Tell your husband flat-out that you don’t mind that he is unemployed, but you do mind that he is unmotivated to do anything to fix that situation. I don’t think any spouse would be angry with their partner actively searching for a job, so tell him that.

Make it clear that you married a strong man who took care of life’s challenges, not a shell of a man who sits on the couch and looks for others to blame for his problems.

Be aware that there may be psychological problems involved here. This sounds like there may be some level of clinical depression involved, so you may want to give him an ultimatum that involves either searching actively for work or seeking medical help. If he’s willing at all to do either, then help him do it and get him there. If he’s unwilling to do either, then I would consult a marriage counselor as a first step to see whether this marriage is salvageable.

Q9: Large collection of CDs

What does one do with a large collection of CDs? I have about 500 CDs from my college years when I was a music addict and worked at the college radio station. They’re all in boxes and I just listen to Spotify nowadays. I can’t find a store that will even take them. Do I just take them to Goodwill or Salvation Army and get a donation receipt?
– Alex

If I were you, I’d make sure each CD was in the correct case with original art and in good shape and is still listenable, and then make a giant list of those CDs.

Once that’s done, I’d send all of those CDs to Amazon in one bulk shipment to be sold on the Amazon Marketplace as “Fulfilled by Amazon” items. When you do that, Amazon handles all of the shipping for you to individual buyers, but takes a cut of each purchase.

Here’s a description of the Fulfilled by Amazon program. It’s just about perfect for what you’re wanting to do here.

Q10: Inexpensive tutoring for high schooler

My son needs a math tutor. He is in tenth grade. Tutoring services are expensive around here and I can’t afford them. Any suggestions?
– Eric

The first thing I’d do is touch base with your social circle and see if there are any adults or children older than your son who might be willing to tutor him in math, then negotiate with that person directly for a fee that you’d both be happy with.

I have multiple friends who tutor high school and college-aged students in their spare time. Many of them negotiate directly with the students or their parents for a rate that’s lower than what tutoring services charge but pays the tutor more than they get from the service. They’re effectively cutting out a middleman for the benefit of both.

If you’re checking on people, don’t be afraid to ask for some evidence of their math skills, as you don’t want to pay someone who doesn’t have some level of mastery over the material.

Q11: Frugal sore throat strategies

My throat is incredibly sore and I cannot afford to miss another day of work. Feel tired too. How do I make it tolerable? My job mostly involves picking orders at a warehouse.
– Nathan

On days when I have a mild cold and don’t feel well, I have a bunch of little strategies that I use.

I usually start the day off with a healthy breakfast, something with protein and fruit in it. Eat an egg or toast with peanut butter on it and pair it with a banana or an orange. That combo does a lot to improve a sense of feeling good throughout the earlier part of the day.

Don’t drink coffee first thing in the morning. Wait until you’ve been up a couple of hours before drinking some, and then drink some more in the early afternoon. Yes, the first couple of hours might be a little rough, but you’ll get more benefit this way.

Be up front with your boss that you’re not feeling 100% today but that you’ll be doing your best. Most bosses are understanding of this, particularly if you’re reliable and a regularly solid performer.

Take your breaks outside and get some fresh air and sunshine. Don’t just collapse in the breakroom. Eat lunch outside if at all possible, too.

After work, go straight home and go to bed after eating something. Seriously. Bed rest is the absolute best thing you can do to help your body fight off a cold.

If you want to take a medicine, cough drops can help the roughness of a sore throat, but use a potent one like Fisherman’s Friend. A simple over the counter painkiller can help a little, too – I usually take Advil, but Tylenol can help.

Good luck!

Q12: Finding reliable lawyer

I need to find a reliable local lawyer to help me read through a contract and see if there are any loopholes that could be a ripoff. What do I look for?
– Shawn

In general, I’d trust my social circle more than anyone else. Simply ask all of your local friends whether or not they’ve had any experience with local lawyers, particularly in terms of reviewing a contract. Follow any recommendations you get.

When I’ve done this in the past, I’ve usually been loaded with suggestions.

You’ll find that when you ask for help in an area where someone can actually offer genuinely helpful advice, people will almost always jump at the chance to help. This is one of those opportunities. Talk to your coworkers, your friends, and your family and you will find some great suggestions.

Good luck.

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 Psychology, Repetitive Meals, CDs, Sore Throats, and More! appeared first on The Simple Dollar.

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Is Shopping at Walmart Worth the Savings?

I’ll never forget the day my daughter and I spent 53 minutes in line at Walmart. It started innocently enough. My seven-year-old needed a new set of flip flops for our fall break trip, but we were also nearly out of food essentials like bread and milk. To save time, we opted to combine both shopping trips into one. And oh boy, what a mistake that turned out to be.

Arriving at the Walmart near my home didn’t set off any alarms. It was late Saturday morning, and the parking lot was only around half full. Since it’s normally packed from front to back, I thought this was good news.

Once we got inside, however, things quickly went downhill. Beyond the initial produce section of the store, aisles were crammed with shoppers and their carts. Each section of the store required a few minutes of queuing before you could get started, mostly because you had to wait for other carts and families to get out of your way.

Traffic jams were all over the place. Disgruntled shoppers angrily waited their turn, seemingly helpless to finish their shopping lists. We threw some final items in our basket, stopped by the shoe department for my daughter’s flip-flops, then headed to the front of the store.

The scene in front of our eyes at that point was almost unbelievable. Although the store easily has dozens of aisles, only around 10 of them were up and running. Begrudgingly, we pulled our cart into a winding line about 10 shoppers deep.

Alas, the 53-minute countdown would begin. That’s how long it took from the moment we got into line until the moment we paid our bill. I know because I was bored and annoyed enough to time the whole thing on my cell phone.

By the time I pulled out of the parking lot, I was livid. I mean, seriously. Since when should a trip to your local Walmart take up two hours of your Saturday?

Other Reasons I Try to Avoid Walmart

I love saving money, and Walmart does have some awesome prices. Still, there are plenty of reasons I tend to avoid Walmart like the plague.

The glaring, fluorescent lighting makes me feel uncomfortable, as does the fact my local Walmart has zero windows to the outdoors. At my local store, the aisles are cramped and messy, the bathrooms are so gross I intentionally avoid them, and a cloud of sadness always seems to hang over the store.

The employees always seem to be trying their best, but they are chronically understaffed. You couldn’t find help or ask anyone a question even if you wanted to, mostly because “help” is nowhere in sight. It’s not the employees I blame, however. We all know Walmart is known for underpaying its workers and leaving stores staffed with skeleton crews.

All that aside, there’s another reason I won’t generally bother with Walmart – pricing. Prices at the store are only nominally better than what I can pay at nearby grocery stores, making Walmart an even worse deal when you factor in the hassle and stress.

Walmart vs. Kroger: What’s the Difference?

In the central Indiana community where I live, we have all sorts of grocery chains to choose from. Within a 15-minute drive of my house, I can choose to shop at Meijer, Walmart, Kroger, Fresh Thyme Market, or Marsh Supermarket. A 20-minute drive opens up options like Trader Joe’s, Whole Foods, and several different boutique grocery stores.

Most of the time, I end up at Kroger. Why? Because it’s easy, the lines are never long, and I love their generic products. There are two Kroger stores within 15 minutes of my house, meaning I can stop there no matter what side of town I’m on. The prices are good, both stores offer great, fresh produce, and one store even has its own olive bar.

What’s more, at Kroger, the prices are on par with Walmart’s — and they can be even cheaper at times.

Case in point: After a long hiatus from the store, my husband and I took the kids to Walmart last week. We needed something you couldn’t pick up at Kroger along with ingredients for chili and some other groceries, so we decided to combine both trips into one. Here’s what we bought at Walmart, along with how much we paid:

Walmart Prices

  • Gallon of milk: $1.59
  • 2 dozen eggs: $1.98
  • Generic pasta: $0.99
  • Soy crumbles: $3.29
  • Large can of tomato juice: $1.99
  • Package of celery: $1.99
  • 2 cans of diced tomatoes: $1.69
  • 1 yellow onion: $0.99

Total: $14.51

A week later, I priced out these same ingredients at my local Kroger store just for fun:

Kroger Prices:

  • Gallon of milk: $1.79
  • 2 dozen eggs: $1.58
  • Generic pasta: $0.99
  • Soy crumbles: $3.99
  • Large can of tomato juice: $1.99
  • Package of celery: $1.49
  • 2 cans of diced tomatoes: $1.18
  • 1 yellow onion: $0.99

Total: $14.00

So yeah, prices at Kroger were extremely similar, and even slightly cheaper on a few things — cheaper overall, in fact, at least on this trip.

But the biggest difference you get at Kroger has nothing to do with pricing — it’s the experience. Where Walmart is notorious for having long lines and few employees to help, my local Kroger makes it easy to zip in and out. Almost all of the lines are open at all times, and they have additional employees who bag groceries and speed up the process. Not only that, but Kroger employees seem happier and the store is much cleaner.

Prices may occasionally be higher on some items, but it’s possible to get a good deal on nearly anything at Kroger if you buy generic. And since Kroger and most other grocery stores have weekly sales, you can save even more if you plan your menu around the produce, meats, and staples on special pricing. And no matter what, I have never waited longer than 15 to 20 minutes in line at Kroger  — or any grocery store chain other than Walmart, for that matter.

Final Thoughts

Is shopping at Walmart worth it? For me, at this point in my life, I would have to say no. While I love saving money as much as the next guy, I can no longer stomach the crowded aisles and long waits.

Yeah, maybe I could save an extra couple of bucks by swapping Kroger for Walmart each week, but I’d rather trade those nominal savings for a better, less stressful shopping trip. An hour of my life is worth more than the five bucks I may or may not save by shopping at Walmart.

As most of us know, saving money isn’t everything. Money is and always has been important, but so is your time and maintaining your sanity.

Related:

Do you shop at Walmart to save money? Why or why not?

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Sunday, January 29, 2017

How and Why to Tell Your Kids ‘No’

Do you ever get sick of telling your kids “no” all the time? Do you feel bad saying “no,” even though you know you should?

This is me, 24/7, 365 days per year. My five- and seven-year-old girls ask for at least 100 things per day, and get a big fat “no” around 95% of the time.

It’s not that I don’t want my kids to be happy; it’s that they ask for crazy things. My oldest has a list of expensive toys and gadgets she asks for every day.

A cell phone at age seven? No. Your own laptop? No. This mechanical dog thingy that’s 99 bucks? No.

Then there’s the regular stuff they ask for. On any given day, they ask if they can have snacks at least 15 times. I’ll be cleaning up the dinner table, and they’ll ask if they can have a snack.

“Nooooooooo!”

“Can the dog get on my bed?”

“Nooooooooooooo!”

“Can I take my Baby Alive in the bath tub?”

“Nooooooooooooooooooo!”

By the end of the day, I get so sick of hearing myself say “no” that I’m desperate to tell them yes.

Saying ‘No’ to Save Money

Sometimes I say “no” because their requests are unreasonable, but other times it’s mere self-preservation. If my kids made the financial decisions around here, we’d be living in a van down by the river.

I mentioned my kids wanting pricey gadgets before, but that’s just the start. They also want us to have new cars, a bigger house, and pretty much anything they see advertised on TV.

Worse, we’d go out to dinner every night if they called the shots. They like my cooking, but they’d still rather have pricey meals at restaurants like Benihana, Chili’s, or Outback Steakhouse any day of the week.

My youngest loves sushi. My oldest asks for crab legs all…the…time. Keep in mind, she’s only had crab legs once…and it was several years ago!

Somehow – some way – I’ve raised children who have a taste for the finer things in life. And this is despite the fact we’re debt-free, have only one car, and live in a modest home. Most of our clothing is from garage sales or consignment shops, and my kids only get new stuff around Christmas and their birthdays.

I don’t know how it happened, but my guess is their environment comes into play. We may not have a lot of stuff, but we live in affluent area where most people are well off. And since other kids have “stuff,” they want it, too.

But, I just keep sticking to my time-honored response: “No.” Because no matter what, my goal as a parent is raising adults who can handle real life. Adulthood isn’t easy, but it’s even harder for people who expect everything to go their way all the time. If my kids want to have lots of nice stuff one day, they need to do well in school, get jobs, and pay for it themselves.

The Importance of Saying ‘No’

While I’m confident in the number of times I tell my kids “no,” and I’m fine breaking their little hearts sometimes, I wanted to hear what the experts had to say. So I asked some psychologists whether it’s ok to tell your kids “no” so much.

It turns out, telling your kids “no” is one habit you’ll probably want to stick with if you want to raise responsible, level-headed adults. At least, that’s what Dr. Barbara Greenberg, clinical psychologist and author of Teenage as a Second Language: A Parent’s Guide to Becoming Bilingual, told me.

Kids need to learn to delay gratification, Greenberg said, and that’s impossible when all they hear is “yes.” When they don’t learn to delay gratification, kids grow up with a low tolerance for frustration that can extend well into adulthood, putting them at a distinct disadvantage.

Kids who never hear “no” are more likely to lack empathy for others as well, she said, because their needs were always met instantly and were considered most important. “Imagine being in a relationship with someone who expects a ‘yes’ to everything,” Greenberg said. “That would certainly make relationships difficult, if not impossible.”

Not only that, but kids who never hear “no” may also lack negotiating skills, because they weren’t forced to argue their case in the face of a parent’s “no” verdict.

Finally, we need to learn healthy ways to cope when things don’t go our way – and that doesn’t happen when all you hear is yes. “We must all have the ability to deal with disappointment, which is a resiliency skill,” Greenberg said.

The bottom line: Kids who grow up never hearing “no” for an answer are more likely to lack grit, resiliency, and the ability to cope with disappointment.

The Art of Saying ‘No’

But, are all “nos” the same? Not by a long shot. Another clinical psychologist I spoke to, Dr. Isaura Gonzalez, said most of our negative responses to children’s requests could be lightened up a little.

“We tend to get into the habit of saying no, when we really mean not now, in a bit, maybe later, or after dinner,” Gonzalez said.

As an example, your kid might ask to get on the internet and receive an immediate “no,” when what you really meant was “after you finish your homework.”

If you get tired of just saying “no” all the time, try making your “no” sound like a “yes,” said Karen Lock Kolp, early childhood education expert and host of the ‘We Turned Out Okay’ podcast.

When your child asks to watch a movie, play another video game, or play a while longer with their friends, but now isn’t a good time, give them a negative response that doesn’t flat-out shoot down the idea. For example, “You can play with your friends some more, but not until your homework is done.”

“Doing this communicates no, but without using the word itself,” said Kolp.

You can also substitute phrases that sound gentler if you want, said Greenberg. Responses like “that’s not possible now” or even “maybe at another time” can be helpful when you’re sick of saying “no.”

The bottom line: You can keep your kids in line and teach them resiliency without running around yelling “no” all the time. You just need to learn to rephrase some of your negative responses so kids understand your motives better.

The Bottom Line

According to the experts, I may have the hang of this parenting thing after all. Kids need to hear “no” in some form. Not only does hearing “no” teach them to delay gratification, but it helps them build the grit they need to get through life’s ups and downs.

Plus, there are real-world consequences that come with constantly saying “yes” to kids – and some of them are financial ones. We’ve all seen parents who give their kids everything to the detriment of their own financial lives, and it rarely works out well.

As for my kids, I truly believe they’ll be the world’s best negotiators one day. When I say “no,” they almost always offer to clean their rooms or walk the dog to turn my “no” into a “yes.”

And when my daughter wants to buy something, she’ll find a way to raise the money herself. She offers to do chores for money, and even sells her toys. Right now, she’s making bracelets to sell in our spring garage sale, and she has around 15 completed. Talk about planning ahead!

She may dislike my rules right now, but I’m sure she’ll appreciate it when she grows up able to fend for herself. Until that day comes, I’m sticking with “no” as much as I can.

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

Related Articles:

Do you get sick of telling your kids “no?” How often do you tell them “yes?”

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Saturday, January 28, 2017

Twelve Strategies for a Successful “Meal Prep Day”

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

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

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

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

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

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

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

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

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

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

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

Strategy #1 – Plan Out Your Meals and Shopping Beforehand

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

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

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

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

Strategy #2 – Synergize Your Ingredient Preparation

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

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

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

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

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

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

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

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

Strategy #4 – Give Yourself Plenty of Time

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

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

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

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

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

Strategy #5 – Make Sure You Have the Needed Containers

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

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

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

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

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

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

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

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

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

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

Strategy #7 – Label EVERYTHING!

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

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

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

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

Strategy #8 – Make Your Soups Thicker Than Usual

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

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

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

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

Strategy #9 – Make Your Burritos With Rice or Potatoes

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

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

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

Speaking of soggy lasagna…

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

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

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

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

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

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

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

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

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

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

Strategy #12 – Consider Doing It Socially

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

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

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

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

Final Thoughts

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

Good luck!

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

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Friday, January 27, 2017

Fifteen Frugal Date Nights

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Good luck!

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

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Thursday, January 26, 2017

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

31 Days to Financial Independence” is an ongoing series that appears every Thursday on The Simple Dollar. You might want to start this series from the beginning!

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

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

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

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

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

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

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

Don’t let yourself wind up in that position.

Exercise #24: Planning and Saving for Education

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Related Articles:

The post 31 Days to Financial Independence (Day 24): Investing and Saving for Education appeared first on The Simple Dollar.

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