Tuesday, October 31, 2017

Personal Finance Success and the Road to Happiness

When I first started really turning my financial life around, I was of the genuine belief that doing so was going to bring about incredible positive change in my life. I envisioned this glowing future where all of the things I was worried about in life had melted away.

We were going to live in a beautiful house. I was going to have a low-stress job. My marriage was going to be great. My children were going to be great. Everything was just going to be great in this future where I no longer had financial worry hanging over my head.

One of the realities I figured out over the ensuing five years or so is that even though I was making incredible strides when it came to improving my financial state, it really wasn’t making me happier.

Don’t get me wrong – I felt far better about our financial state, and we were undoubtedly in a more stable financial situation with a lot less financial stress hanging over our lives.

But was I happier? Was everything just like that beautiful picture that I envisioned?

Sadly, no, it wasn’t.

Things were better, unquestionably. I didn’t have that financial worry hanging over my head. I had a really flexible job that provided me with wonderful opportunities. I had a great marriage and three wonderful young children at home.

Yet, I still wasn’t really happy. I still didn’t have that “Instagram life” that I wanted so badly.

I had all of the pieces that I thought I could ever want, but I wasn’t happy.

So, I made another series of changes. I sold The Simple Dollar, for one. I dove into some other passions for a while. I tried seeking out new social circles.

The end result of those changes? No change.

I still never had this happiness that I thought personal finance success would bring me. I never found the endless joy that I thought all of this would bring into my life.

What was missing?

If my underlying goal in seeking personal finance success was to achieve personal happiness, was all of that a failure? Was the elimination of debt and everything else just a waste of my time?

Over the last year or two, this has really been at the forefront of my thinking about finances. What have I really gained from paying off all of our debts and saving at a high rate? Am I really better off as a person because of it? Am I a happier person because of it?

Lately, I’ve finally figured out a few things that come close to answering those questions, something that I’ve been hinting at in a lot of posts recently.

First and foremost, personal finance success alone is not a key to personal happiness, but it is a very useful tool for nurturing it. Do I feel happier because I made a ton of personal finance improvements in my life? Not in any direct way. However, have the things that I gained from personal finance improvements put my life in a better place? Absolutely.

Let me spell out what I mean, as clearly as possible.

Finding Sustained Happiness… or Not

I don’t think that sustained happiness – a true day-in-and-day-out sense of existential joy – is something that many of us ever truly find in our lives. My heart simply does not flip over and over again all day long, bathed in a pool of constant joy, and I don’t believe a life situation exists where that can ever be the case.

For a long time, I tried to chase that sense of sustained joy. I believed that a lot of different things would help me find it – my personal finance changes being a big part of it, and things like having a “perfect” marriage or a “perfect” parenthood also were parts of it – but the truth is that sustained joy will never arrive.

It seems like a pretty big disappointment, doesn’t it? After most of an adult life seeking some elevated form of lasting happiness, I’ve come to the conclusion that it just doesn’t exist.

It’s important here to note what I’m actually saying, though.

I’m not saying that my personal finance journey was fruitless. Not in the least.

I’m not saying that life is devoid of joy. Not in the least.

I’m simply saying that I was too busy rushing through a journey with a mirage at the end and, because of that, I missed the real answer along the way.

The real answer is simple: the best life you can build is a fertile field upon which joy can bloom regularly, but it takes work to cultivate that field.

Let me repeat that: the best life you can build is a fertile field upon which joy can bloom regularly, but it takes work to cultivate that field.

Make Your Garden Grow

I’ve come to really think of life as being a lot more like a garden, much like our humble vegetable garden out behind our house. The most joyful moments in the garden are when you stroll out there and find some fresh produce, which turns out to be a delicious result of quite a bit of work.

To enjoy that fresh tomato, one had to turn over the soil. One had to fertilize the soil as well, with compost made over a period of time. One had to start a tomato plant in the house under a grow light, then plant the little plant out in the garden on a warm spring day. You have to weed around it and then, eventually, cover the ground near it with straw and newspaper. You might have to put up a fence around it to keep animals out, and you might have to spray a little bit of soapy water on the leaves to keep certain pests and diseases at bay.

Eventually, though, that work pays off. You find yourself with a bunch of tomato plants, producing a bounty of delicious tomatoes.

Life is like that, in a lot of ways. Most of life is about cultivating a situation so that true joy can spontaneously arise with some frequency from your efforts.

For example, you might cultivate strong personal finances so that you’re not burdened by money stresses and so that, when an opportunity comes around, you can jump on board that opportunity.

You might cultivate a lot of great relationships by giving freely of yourself, so that you always have friends around and so that when you need a helping hand, at least a few hands will be extended your way.

You might cultivate personal health through diet and exercise, so that your body remains strong and you’re able to enjoy a much wider range of activities for a much longer period of your life.

The important thing to note here is that none of these paths lead to a life of sustained happiness and joy on their own. Instead, they lead to a life where there are more opportunities for moments of true joy.

The journey of a lifetime isn’t a direct path to happiness, because life doesn’t provide that. Instead, life’s path, if given proper cultivation, leads to a place where happiness naturally grows and bubbles up frequently.

This is a huge realization that I missed out on for many years. I kept looking for some kind of ideal life, when what I actually had is a life that was slowly producing more and more joy bubbling up naturally from the work I had put in. I was looking for some kind of perfection, and that was causing me to miss out on countless good things.

Here’s another great realization: there is a lot of inner joy that comes from the process of cultivating, if you look for it. If you look around during the actual journey, you’ll find a great deal of joy along the way. It’s not that different than the feeling of peace that many people get when weeding their garden. You don’t need to directly have that sweet fruit in your hand to know that you’re bringing your garden to a better place, and the process itself is kind of meditative and calming.

All of this thinking has led me toward a few big conclusions about the road to happiness and the role that personal finances play on it.

Building the Road to Happiness, One Brick at a Time

As I said earlier, I don’t think there is a state of perfect, unbridled happiness in life. Instead, we find happiness in individual moments which come about as the result of the effort we’ve put in to build a good life, and finding contentment in that process makes life quite good.

How do you do that, though? What’s the recipe for the road to happiness if that’s true?

I don’t know if the “bricks” in the road are the same for everyone, but I can certainly comment on many of the elements in my own life that are a part of building that fertile ground for happiness and help me to find contentment during the journey.

Choose to spend less than you earn and do wise things with the remainder. I want to start off by mentioning personal finance here. It is a key element for many reasons – it provides foundational resources, it melts away stress – but I’m going to come back to it in detail later on in this article, I promise.

Actively choose to be positive about things and actively choose to look at the glass half full. Most things that happen in life have good things about them and bad things about them. Rather than dwelling on the negatives, deal with them only enough to handle the damage caused and to ensure they don’t happen again. Focus instead on the positives – look at the good things brought into your life.

I make a conscious effort to separate wants from needs and intentionally downplay the wants in both thought and practice. Rather than having a life that’s steered by trying to acquire things that I don’t have, I try to focus instead on using the bounty of things that I do have. If I find myself wanting something new, I reflect instead on the access I have to many, many other things to enjoy, and I ask myself whether I really want that thing and why I want it. I also delay wants by adding those desires to a “wish list.” Those tactics tend to melt away most wants, which in the end mostly just create negative feelings.

Try to nudge my work towards things you care about, so that your work is as meaningful as you can make it. My entire decision-making process regarding The Simple Dollar was to nudge it along a path where I could focus on the things I really do care about – writing articles that were full of meaningful content to help people with personal finance and life decisions and perhaps lead them to reflect on their own lives with a positive outcome – and away from things that I do not, like managing ads and keeping servers running. This can be done in almost any career path by intentionally choosing jobs and projects that are interesting and meaningful to you compared to the other options, while trying to avoid both idleness and overwork. Evaluate things through that lens as often as possible.

Try to cultivate lots of relationships, understanding that not all of them will become deep social connections. Having an abundance of relationships in your life means that you’ll have a constant stream of relationships that are in bloom, relationships that offer up social engagements and opportunities and help when you need it. Relish the fact that you can give those things to your friends as well.

Actively work on maintaining those relationships. Building a lot of relationships is fine. Maintaining them is a different story. It is very easy to allow relationships to wither on the vine, not because of any sort of malice, but because more urgent things pop up in your life. Yet, time and time again, I find that it’s the relationships that I put effort into maintaining that end up bearing wonderful fruit in the long run.

Try to look at most situations through the eyes of other people who are involved in it. Rather than focus on how someone may or may not have slighted me, I try to consider the situation through their eyes. Honestly, most of the time, it quickly becomes obvious that they did not even notice any sort of perceived slight. It’s easy to forget that human beings have a spotlight of focus in their lives and, quite often, you’re not in that spotlight. They aren’t slighting you – you just don’t even enter into their conscious thought. Applying that kind of “put yourself in their shoes” thinking as often as possible is very valuable.

I keep a gratitude journal. Each day, I write down five things I’m grateful for that I noticed or that happened to me that day. Some days, I’ll write even more. Why do this? It’s a day-in day-out reminder of how many good things my life already has for me. It really breeds appreciation of the goodness of my daily life.

Make a consistent effort to show gratitude toward others. This can take the form of simply saying thanks for the things that people do for you during the day, but it can also take the form of writing thank you notes for bigger favors and just for being a good influence in your life. It can also extend back to doing those things for people in your past who mentored and helped you.

Choose positive things to say in conversation, almost all of the time. Rather than dwelling on negative thoughts and perspectives about things, look for positive things to say. Jump in when the conversation is a positive one, or avoid saying much (or find an easy way to redirect) if the conversation has a negative tone.

Carve out time for the things that interest me. In my case, I literally block out times for my hobbies and passions and interests. On my daily and weekly schedules, I devote a little time each day to hobbies and a significant chunk of at least one day a week to them.

Try to take care of your body. A healthy body you can rely on is invaluable. Be more thoughtful about what you put into your body, and spend some time and energy exercising as well, in whatever way works best for you.

Try to take care of your mind, too. You can achieve this by getting adequate sleep. Another invaluable technique is to practice focused meditation, which is like doing bicep curls for your mind. Just simply focus on your breath for a couple of minutes – breathe in, breathe out – and bring your mind back to your breath when you notice it wandering. Do this a few times each day. It really is like bicep curls for your mind.

Try to find positives in each of those things, even when it’s hard. Sometimes, it’s hard to find positives when you’re doing something that isn’t really fun or when the outcome isn’t what you hoped for. It’s very easy to get lost in a sea of negative feelings. Don’t let that happen. Look for the positives in your most difficult outcomes. You might be sore, but that’s your body getting stronger. A friend might not be communicative, but you have a lot of other friends and that might just be that one friend’s style. Look for the positives, above all.

The Key Role of Personal Finance

The thing to remember in all of this is that personal finance might not be the absolute key to happiness, but it is a really powerful foundational layer. Having your finances in order is like putting an extremely rich batch of compost into your garden of life.

Having strong finances dissolves stress, which helps your mind and body. A lot of modern stress revolves around money concerns. How will you pay your bills? How will you afford this or that? If you take a better approach with your money by trimming down the unnecessary and asking yourself what you really want or need and putting money away for the future, that stress melts away. Low stress encourages positive health outcomes (both mental and physical), helps build relationships, makes it easier to rest, and makes it much easier to focus and to see the positives in life.

Having strong finances creates opportunities. It enables you to take on challenging career moves (like, say, walking away from a career in research to be able to write from home so you can spend more time with your family and write things that feel meaningful… not that I know anything about that). It enables you to actually reach out and touch big dreams, like taking your family on a truly amazing vacation. It enables you to take advantage of things that pop up, like buying a $10,000 collection from someone selling them at a fire sale price of $2,000 because they need cash.

Having strong finances creates a positive “snowball effect” of financial health. When your finances are strong, you can do things like buying a car with cash so that you don’t have to pay interest on the loan. You can pay off your credit card in full each month because you’re spending less than you earn, so you’re never accruing interest on there. It becomes easier and easier to save for the future because you’re not losing money to interest, to late fees, and so on.

In other words, being strong in the personal finance department doesn’t create happiness itself, but it is a huge part of a strong foundation upon which happiness can grow. You just can’t expect to be happy simply because you have money in the bank.

The Road Forward

It takes a lot of time to do the things listed in this article. Quite often, you’ll find yourself investing a lot of time and energy into things that don’t seem to be bringing any immediate joy. I have two suggestions there.

First, think about both your progress to date and the positives of where you want to go. In the middle of getting in better shape, for example, consider where you started and how you look and feel now, then think about what things will be like if you stay on this path. Things are better now, and they’ll be even better then.

Second, seek out joy – or at least contentment – on the path itself. Find exercise that you enjoy. Find products that you enjoy. Find low calorie foods that you enjoy. Find joy even in the hard work, because it is a joyful thing to create things you can be proud of. Don’t worry so much about outcomes – think instead about the moment and what you can do that’s good right now that happens to also be good going forward.

Good luck!

The post Personal Finance Success and the Road to Happiness appeared first on The Simple Dollar.

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Your Credit Information and the End of Privacy as We Know It

The recent Equifax data breach has many people talking about privacy and what you can do to protect your personal information. While it’s true that you should try to safeguard your private data from people with bad intentions, it’s also true that there’s a very good chance your information is going to be exposed at some point.

Equifax’s data breach alone just put the personal information of some 145.5 million U.S. consumers at risk. According to reports from Identity Theft Resource Center, over 1 billion records have been exposed in data breaches since 2005 – and that’s just the breaches that have been made public.

With such massive numbers of exposed records, not to mention all the information we willingly give away online, it’s safe to assume that your information isn’t private any longer, and perhaps hasn’t been for a very long time.

The question therefore becomes: What should you do to protect yourself in this world where “data privacy” is an endangered species? What you can’t do includes hitting some sort of metaphorical “delete” button and removing all your information from the cyber world. Although, that would make for a great app!

Your Responsibilities

Most of us are understandably angry about the never-ending string of high profile data breaches. After all, in the case of the credit bureaus specifically, you don’t recall giving permission for any company to collect your account management habits or the other types of information that appears on your credit reports. Yet like it or not, the credit bureaus can legally collect, store, and sell your information without your permission if they obey various federal and state laws when they do so.

The Fair Credit Reporting Act (FCRA) is the primary federal statute that serves to protect you and your information where credit reporting is concerned. Among the many rights that the FCRA confers upon you is the right to expect to see only accurate information on your credit reports. Unfortunately, that’s not always the way credit reporting works.

Credit reporting errors and fraud exist. When such issues occur, the result is that inaccurate and potentially unfair information could show up on your credit reports, lowering your credit scores and often making it difficult to qualify for the financing and services you desire and deserve.

However, you may not realize that it’s always been your personal responsibility to check your credit reports for accuracy. In an age where the privacy of your information is no longer a certainty — and perhaps even nonexistent — that responsibility is more important than ever.

Routine credit checks might not necessarily prevent fraud or credit reporting errors, but they can make you aware when something goes wrong so that you can take steps to correct the problem.

Protecting Your Credit

Your credit identity is ground zero when your personal information has been stolen. Credit fraud is the easiest way to monetize that information. As such, identity theft is one of the biggest threats you may face when your personal information is stolen.

Identity theft occurs whenever someone steals and uses your personal information to impersonate you or to open fraudulent accounts in your name. Although it’s difficult to fully protect your personal information, you can take steps to protect your credit reports. If a crook manages to steal your info but cannot actually open any fraudulent accounts in your name, then you’ve avoided the problem of cleaning up the aftermath.

Placing a credit freeze on all three of your credit reports is perhaps the best way that you can protect your credit from fraud, especially if you believe your data may have already been compromised. When you freeze your credit reports, they are actually taken out of circulation, preventing new lenders from accessing them. As a result, if someone applies for a fraudulent account in your name, the application will be denied. If the thieves cannot qualify for an account in your name, then they’ll simply move on to the next victim on their list.

Related Articles:

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

The post Your Credit Information and the End of Privacy as We Know It appeared first on The Simple Dollar.

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Monday, October 30, 2017

Questions About Bad Credit, Obligations, iPhone X, Restaurant Reviews, 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. Bad credit and property sales
2. Escaping paycheck to paycheck
3. Wealthy obligation to community
4. Warm everyday socks for winter
5. iPhone X question
6. Dissatisfied with discount grocers
7. Box of old bills
8. Amazon Camperforce thoughts?
9. Cheap popcorn popper
10. Taekwondo question
11. Handling a bad restaurant experience
12. Fall and winter reading recommendations

Winter has come suddenly and quickly to my area. In the last week, seemingly overnight, temperatures went from being in the 60s to being in the 30s. I quickly started to transition to my winter wardrobe, much faster than expected.

This means, of course, packing up a lot of my summer clothes for several months. When I do that, I usually evaluate them and get rid of some of the ones in terrible shape, as I often wear clothes for longer than I should. The ragbag will get a refill very soon.

On to your questions…

Q1: Bad credit and property sales

I have a horrible credit score and dismal credit because when I bought my current house two years ago I incurred about $40K in debt (credit cards) and *believed at the time* that I would “simply” sell my VA home and pay off this debt. Two years later, that was a bad decision. I have a CA house with LOTS of equity that I want to sell but I need a backer who can pay the mortgage while it’s being sold in case the tenants move out, leaving it empty. With such a bad credit score (which will INSTANTLY go up once this property sells and everything gets paid off), to whom can I turn? NO traditional lenders will touch me…my score is lower than my shoe size. Only hope is selling the CA house. Please help.
– Tim

The truth is that without good credit very few financial institutions will talk to you about an arrangement like this. You’re asking someone to take on the risk of your property in exchange for what, exactly? What benefit would your “backer” get out of this arrangement?

You might find a bank that would loan you money based on the equity of the property, but it would require you to have very good credit, which you don’t have.

To put it simply, in order to get your credit back, you have to take on this risk yourself, and the best way to do that is to build up a cash emergency fund so that you could handle a few months of rent if tenants move out on your own. Your other option is to just sell the property as quickly as possible without that type of protection, but you probably won’t make as much on the property.

Q2: Escaping paycheck to paycheck

I bring home $3300 a month. $1000 of that is gone right away to pay off my debts: a car loan, student loan, and credit card. Then after paying rent, the electric bill, the phone bill, car insurance, and a small contribution to my Roth IRA, plus groceries and other necessities, I’m always scraping the bottom of the barrel by the end of the pay period. I’ve tracked my spending and I’ve cut back where I could, but I was already living pretty frugally. I’m tired of living paycheck to paycheck. I already work 40 hours a week and don’t have the energy for a second job. For my field, I actually get paid a higher-than-normal salary, so switching jobs would result in a pay cut, and I love my field so I’m not interested in switching careers. I’m 40 years old and with $30k in debt I feel like I’m going to have to live this way for a long time. It’s pretty discouraging. Any advice?
– Nadine

Without seeing a bigger picture of your finances, it’s hard to give advice. For example, when I see “car loan,” I always ask myself how new that car is. When that loan is gone, are you going to keep driving that car or just get a new car with a new loan? Hint: if you want to get ahead, you keep driving that car for as many years as possible after that loan (and, even better, keep socking away part of that monthly car loan payment so that you can pay cash or mostly cash for your next car).

When I see “other necessities,” I ask myself how much of a “necessity” those things are. I have no idea of knowing that without seeing what those “other necessities” are.

Here’s the truth: to get ahead, you have to spend less than you earn. There is no magic secret other than that. The choices a person has to make in order to spend less than they earn are sometimes hard ones. I have friends who have done things like couchsurf for a year or live in a tent or drive a 20+ year old car with a piece of pine board as a temporary “bumper.”

I can’t tell you how to get there without a much fuller picture of your finances. All I can tell you is that you have to really consider what is actually a necessity.

Q3: Wealthy obligation to community

What do you think of the idea that people who build their own healthy finances are obligated to take care of the community that supported them along the way? Like, if you become a millionaire, you should give back to the schools that educated you, the parks you used for fitness and for thinking, etc.? Is that a real obligation?
– Andrew

This is an idea called “noblesse oblige,” which is French for “nobility obligates.” It’s the idea that “nobility” extends beyond entitlements and extends to social responsibilities.

We don’t really have nobility here – the closest thing we have to it is wealth, as we’re a (representative) democratic capitalist society. The people who have enough wealth to not work for a living are the ones who have adequate resources to give back to the places and people who helped get them there.

I think the idea is a wonderful one, and ideally, I hope it is one that people who achieve financial independence and significant wealth can ascribe to. The question is whether it is a requirement. My feeling is this: if someone takes the rewards life has given them and uses them in a way to become financially independent and then does not replenish those resources (and, ideally, make them even better than before), that person is a person that I have little respect for, but I don’t think they’ve made a choice that should be illegal.

I’ll be the first to admit that one of my biggest biases is against ostentatious displays of wealth, like an obscenely expensive car. When I see things like this, while I appreciate the aesthetic beauty of the car, I see someone that, in my eyes, has violated the general principle of noblesse oblige, and I tend to think less of that person. On the other hand, the wealthiest person I know in day to day life spends most of his time doing community charitable work – he’s the person I probably have the most respect and admiration for out of everyone I actually know, and someone that I’ve actually wanted to interview for this site. That person is living the principle.

So, for me, that idea is one that earns respect, but I don’t think it should be strictly required.

Q4: Warm everyday socks for winter

Been reading your site for many years. Just moved to northern Iowa from Louisiana and it is really cold here! What do you do for keeping warm, esp. socks and shoes?
– Daniel

Most of the time in winter, unless I’m going to be trudging through snow or spending a long time outside, I wear normal shoes or hiking shoes with really good socks.

When the weather isn’t too cold, I usually wear merino wool socks. My preferred ones – and the ones I’m slowly migrating my entire sock collection to – are hiking socks from Darn Tough Socks. These are a perennial entry on my Christmas wish list for the last few years, as I slowly replace all of my socks with them. They’re kinda expensive, but a single pair is usually a very simple gift that people can give me that isn’t too costly and it’s one that I’m usually thrilled with. (Note that I rarely wear socks in the summer at all.)

What do I do on really, really cold days? I double-layer those socks, with an older, slightly looser pair on the outside and a newer, slightly tighter pair on the inside. I don’t particularly like super-thick socks. I try to avoid them, in fact. I’d rather wear a double layer of thinner wool socks if it’s super cold.

On a day when I’m going to be trudging through snow, I do have a pair of winter boots. These are the current versions of the ones I have, which are several years old. I wear a thick Carhartt Arctic winter coat that I’ve had for about fifteen years, similar to this one, that I bought during a going out of business sale. For most of my clothing, I just layer and layer on the coldest days, with a t-shirt and then a long-sleeved t-shirt, and then a sweatshirt, and then that coat. I’m often sweating in there, even when it’s well below freezing. I’ll wear sweatpants under my jeans as well, and sometimes even an additional layer under that.

Right now, in the early part of the cold season, things will be pricy. My suggestion for your first winter is to get through with cheap stuff and layers, and then stock up at the end of the season when things are on sale (March or so).

Q5: iPhone X question

Where is the cheapest place to get an iPhone X?
– Susan

The cheapest place to get an iPhone X is the year 2020 when the price has come down to a reasonable level.

Right now? Don’t buy an iPhone X. Period. It is pretty much a shining beacon of overspending to be an early adopter of something that’s only marginally better than what’s available.

Is it a nifty phone? Sure. Is it worth $1,000 when there are $200 phones available that do 95% of the same things? No.

Furthermore, there aren’t any secret iPhone X bargains unless a particular mobile company is subsidizing the cost to get a new customer, in which case you’re probably switching away from the best phone service in your area, which isn’t worth it.

Q6: Dissatisfied with discount grocers

So I followed your suggestion and tried shopping at Aldi and also at Save-A-Lot. I haven’t gone to those places in the past because of bad reputation and now I know why they have it. At Aldi it was hard to find anything because the products seemed to be put out at random. There were bread items put in three different places in the store. When I got to the checkout the checkout lady just threw stuff that I had bought and tossed a bunch of apples on top of my bread and then said I couldn’t return it and that I should have grabbed the bread if I wanted it to be treated specially. At Save-A-Lot it was really dirty and there was only one checker while the line was 20+ people deep nd I ended up just walking away from my cart. The little bit you save isn’t worth it.
– Angela

Every local store is different. The Aldi nearest my house is really nice and clean and the aisles seem pretty well organized, though they’re laid out in a way I consider a bit strange at first glance. That being said, I’ve had a horrible experience at Aldi in the past.

The key here isn’t that you decided to shop at Aldi or Save-A-Lot, but that you checked them out and tried to judge them reasonably. It seems like you have legitimate issues with the discount stores near you, which would make the choice to shop elsewhere a reasonable choice.

I don’t do all of my grocery shopping at Aldi (or Faraway, the other nearby discount grocer). I do go to other places sometimes, mostly due to selection at Aldi and Fareway, which is sometimes limited. No store is perfect. However, those stores form the backbone of our family’s grocery shopping.

Q7: Box of old bills

I recently came across a box of old bills from 2007-2009 back when I wasn’t very organized. Is there any reason to go through these or can I dispose of them?
– Connie

The general rule for saving old bills is to wait seven years and then dispose of them, so you should be okay getting rid of them.

If I were you, I’d either burn them or find some way to bulk shred them. A box of old bills like that would say “big bonfire” to me – I would take them out in the backyard, fill up our covered fire pit with them, and burn them all on a day with little or no wind.

Why do that? It’s a little bit of identity security, that’s all. It’s all about keeping your private info safe.

Q8: Amazon Camperforce thoughts?

Do you have any thoughts or insight about Amazon Camperforce? My wife and I are retired and live in our camper. We have enough money but are often bored and want to feel productive and wouldn’t complain at having a little more money. We are still very able bodied.
– Jeffrey

For those unaware, the Amazon Camperforce program is a temporary worker program run by Amazon that targets people just like Jeffrey and his wife – “retired” people who are still able bodied and are able to easily migrate, which usually means people living in RVs or campers. The program essentially fills up campgrounds in warm-weather areas with such workers, who provide seasonal help at Amazon warehouses during the holiday season.

There are some advantages and disadvantages. The advantages are that it’s work that pays reasonably well (and covers the cost of your campsite and utilities) and it’s usually done in an environment with a lot of people in a similar situation. The disadvantage? It doesn’t pay a ton and it’s fairly hard work.

From comments from other readers in the past, it often seems to attract people in their sixties who chose a RV/camper lifestyle and found it difficult to make ends meet after making the switch. Their program is often used as a backdrop for stories about people who may never be able to fully retire.

I can’t say whether it’s a good program for you or not, but it’s definitely worth looking into.

Q9: Cheap popcorn popper

We eat popcorn 2-3 times a week when watching TV. We microwave bags of it. I was at the store and looked at the cost of a big container of kernels and its way cheaper. We started using brown paper bags and it works okay but you end up throwing away the bag afterwards so there’s still extra cost. What’s the cheapest way to pop popcorn well?
– Carrie

All you actually need is a microwave-safe bowl and a plate. Just put about a quarter cup of kernels into the bowl, cover it with a plate, and microwave on high for about 5 minutes, until you can count to five between pops. If you want butter, you can microwave it quickly afterwards and drizzle it on top – same with salt.

The only drawback is that you need to be careful when removing this from the microwave as some steam builds up under the plate, and when you remove it for the first time it can be hot. Be careful!

I don’t really know any reason to do it any other way if you have a microwave available.

Q10: Taekwondo question

You’ve mentioned a couple of times that you’ve started taekwondo classes. What’s the scoop?
– Mandy

My children and my wife have been in taekwondo for a while as a family activity. I didn’t join because our youngest son wasn’t old enough, and then when he was old enough, I had a conflict that kept me from the classes. Now that it’s over, I decided to join up and do it with my family, since we already have a family package for classes. (I’m far behind them in belt rank.)

I’m mostly doing it to help with balance and general physical condition. I take the approach that if I’m not breathing heavy and sweating profusely at the end of a session, I’m wasting my time, so I push myself really hard at the start and am usually exhausted near the end.

The interesting part is that it’s actually pretty mentally strenuous, too. They do a ton of simple moves at the start intended to get everyone out of breath, mixing together repeated kicks with things like planks, and then when everyone’s tired, they jump to combination moves that you have to think through a little bit, which is even harder if you’re sweating a ton and panting.

The contact is extremely limited – most of what we’re doing is self-defense and escape oriented. The class isn’t focused on beating each other up. To put it in “Karate Kid” terms, the class is way closer to Mr. Miyagi than Cobra Kai Dojo – perhaps comically so.

The cost is pretty low and you can go to as many classes per month as you want, so the cost per class for our family is actually below the $1/hour mark (I calculated this). I’m pretty happy with that considering that it’s something that’s getting us all in better shape and helping with family bonding through a shared activity.

Q11: Handling a bad restaurant experience

What is the best way to handle a poor restaurant experience? Going online and raging about it seems childish but the restaurant shouldn’t have any kind of good reputation.
– Stephen

You need to figure out what your goal is. What sort of outcome do you want for the restaurant and for yourself? Do you wish for that restaurant to have diminished business? Do you want recompensation for yourself? What is the goal here?

No matter what you choose to do, being calm and unemotional about it is usually the best approach. Online reviews that get overly emotional, at least for me, tend to not be trusted, as the emotional response often seems to exceed the stated problems, so you’re left wondering what things are being unsaid or hidden. Be calm, state the facts, and let the reader make up their own mind about it.

If you’re looking for compensation from the restaurant, talk to them directly about it. Some restaurants will, in fact, try to make things right if there was a truly bad experience.

If that doesn’t work, you can share online reviews of the restaurant, but write them calmly and seriously, outlining your full situation and making sure to note what they did right in addition to what they did wrong. The more rational and calm you are, the more trustful your review seems to many people (myself included).

Q12: Fall and winter reading recommendations

What personal finance / personal growth books are on your reading list this fall and winter? I’m going to be spending part of this winter housesitting in an area where travel is going to be restricted which is going to give me a lot of time to read so I am looking for a few books to take with me and really think about.
– Adam

I don’t really think about recommending the latest and greatest books, but what I can do is look through my library waiting list (books I’m waiting to reserve) and recent ones on my bedside table and point to a few I’m excited to read in the next few months.

The biggest one is probably Principles by Ray Dalio. It’s really a three part book. The first part is a memoir of Palio’s life, through his career as a hedge fund manager and through some interesting twists and turns after that. The second part is a lengthy section on life principles, and the third is a section on professional principles. It’s a long book, but I’ve read excerpts from it and I’m highly interested in reading it. I’d love to see similar books from other leaders.

Another one I’m interested in is Discipline Equals Freedom by Jocko Willink, which looks at the Navy SEAL training program and makes the case that the best way to build a free life is through personal and mental discipline, so that you can make strong choices in everyday life and build the life you want.

I’m also planning on reading The Soul of Money by Lynne Twist, which is about the difficulty of balancing quantitative and qualitative analyses of money. Is it all about the dollars and cents? How much does one’s feelings play into it? Where’s the right balance?

A final one that’s been on my bedside table for a while but I’m hoping to read soon is Unshakeable,/em> by Tony Robbins, a book that wasn’t even on my radar until I heard an incredibly sensible interview with him about the book a few months ago, where he made an extremely effective case for index funds. I’m still not sold on the book, but I think it’s worth a read.

I’m also planning on reading a prerelease copy of Meet the Frugalwoods: Achieving Financial Independence Through Simple Living by Elizabeth Willard Thames, but that’s not really applicable to you since it’s not coming out before the winter kicks in.

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.

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How to Save on Holiday Travel

Don’t let the cost of transportation keep you from your loved ones during the holidays.

If you’re like most families, you love to travel for the holidays, but hate the high cost of air travel. This is especially true if you have to make an international flight with a family of four or more. Luckily, there are things you can do in both the long-term and short-term to help offset those costs.

For the long-term

When it comes to air travel, one of the best things you can do to curb the cost is to use a travel credit card. Many of these feature rewards that grant you miles on your everyday purchases. One example of this is the , which helps you gain miles without needing to adjust your spending habits.

Here are some examples of purchases you could make and the miles you’ll accumulate:

1. Gym membership


On average, we spend $40 to $50 a month on a gym membership. For the sake of this exercise (pun intended), we’ll assume the higher end of the spectrum. If you were to use your to pay for that membership, then you would have 1,100 miles in 11 months. This might not sound like much, but keep reading…

2. Daily coffees


Based on a study featured on CBS News, it was determined that the average amount a person spent on coffee reached $65 per month. This was based on the average price of a cup of coffee from Dunkin Donuts, Caribou Coffee, and Starbucks. If you charged 11 months’ worth of coffee to the right travel credit card, you could have 1,430 miles. Hardly enough for a flight, but it’s all starting to add up.

3. Cable TV


A fair amount of people still pay for cable television and if you’re one of them, then you could be paying on average $80 or more per month. If you were to use a travel credit card on those monthly bills, you could come away after 11 months with as many as 1,760 miles.

4. Electricity


According to the United States Energy Information Agency (EIA), the average American electric bill came to $114.03 a month in 2015. While your own monthly bill will vary on your location, weather, and household, let’s use this figure as an example. If we round this estimate up to $115 and pay it all off with a travel credit card, you’re looking at a possible 2,530 miles.

5. Dining out


In our own analysis of Americans eating out, we found that the average person can spend upwards of $232 on meals outside of the home. While this can add up to quite a chunk of change, sometimes it can’t be helped. However, if you were to pay for those meals with a , you’d be banking some major mileage. After 11 months, you’d have 5,104 miles.

6. Pet expenses


It’s tough to put a price on a pet, but there’s no denying the simple truth that owning one – especially a dog or a cat – can be expensive. One particular breakdown for a dog examined food, toys, emergency funds, and even pet insurance before arriving at a monthly cost of $338.61. At about $339 a month for 11 months, you could end up with 7,458 miles.

7. Retail gas


In an exclusive analysis put together by the Oil Price Information Service for CNNMoney, Americans were spending $368.09 a month on average (2011) on gas. While there are so many factors to consider that can either raise or decrease this figure for you, let’s roll with it. After 11 months, paying with a travel credit card, you would have something to the tune of 8,118 miles.

8. Groceries


Which brings us to food, arguably the largest monthly expenditure of any American family. According to the United States Department of Agriculture, the average family of four on a low-cost plan could pay upwards of $836.20 a month. Were you to cover those costs with a , that would come to 18,414 miles in 11 months.

The result…

So what does this look like after 11 months of using the on everyday expenses? Well, after 11 months, you would have something close to 45,914 miles, but that’s not all. Many of these travel credit cards come with signup bonuses and, in the case of the Capital One® Venture® Rewards Credit Card, you would add an additional 50,000 miles.

In all, you would have 95,914 miles. And after you’ve paid for your flight, you can redeem those miles for an account credit of $959.14. That’s enough money to cover the cost of two or more domestic flights. You could also afford one international flight or, at the very least, shear off a huge portion of the cost.

For the short-term

If you’ve waited until the last minute, don’t worry. There are a few things you can try in order to make your holiday travel a little more affordable.

1. Book flights on ‘off’ days

Booking a flight on Tuesday, Wednesday, or Saturday could make a big difference when it comes to the cost of your ticket. Generally, these are considered to be the cheapest days to travel as they are statistically the least popular among consumers.

2. Break up the band

If you’re a family of four, you might consider splitting up into two groups each with a parent and a child. Sometimes it’s a lot easier to book two cheap seats during the holidays (at the last minute), not four all together.

3. Go by city, not airport

Sometimes you’ll find more options and better variety in prices if you search for flights based on city instead of specific airports. Adjusting your search will often yield a larger listing of airports in the area you can use to compare prices and find the right one for you.

4. Shop on a Tuesday afternoon

We already talked about the “off” days to go shopping for flights and if you need to get more granular, try Tuesday at 3 p.m. EST. This is recommended because many airfare sales are usually filed late Monday evening.

Airline credit cards

In addition to travel credit cards, we’ve also covered the best airline credit cards. These can help you save on holiday travel even when you don’t have a full year to accrue mileage.

Southwest Rapid Rewards® Plus Credit Card

The has a signup bonus where you can earn 40,000 bonus miles when you spend $1,000 on purchases in the first three months of opening an account. Based on those earlier estimates of monthly costs, it shouldn’t be any trouble to reach that threshold within a month.

Blue Delta SkyMiles® Credit Card from American Express

The features a signup bonus of 10,000 bonus miles after you spend $500 with your new card during the first three months. That’s an easy enough goal to reach within a month and can help lessen the financial blow when putting it toward airfare.


These numbers were determined taking the average monthly cost of common purchases, adding them together, and then multiplying by 11 months. We rounded the cents to the nearest dollar for figures that were not solid dollar amounts.

The aforementioned additional 50,000 miles was determined by adding up those monthly costs and multiplying by three. The amount exceeds $3,000 and, based on the signup bonus, you can earn 50,000 miles when you spend $3,000 using the card within the first three months of opening an account.

The bottom line

Whether you’re stuck at the last minute trying to save on a holiday trip or you have an entire year to save up miles, holiday travel doesn’t have to break the bank. There are lots of things you can do to curb the cost, as well as rewards programs you can take advantage of to make holiday travel easier and more affordable. Don’t let the steep costs of travel keep you from enjoying the holidays.

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Five Scary Liability Claims That Could Haunt You Long After Halloween

If you want a good scare on Halloween, all you need to do is contemplate the financial risk you’re taking if you don’t have adequate homeowner or renter liability coverage when visitors come calling.

Liability claims stemming from injuries are common. When ghosts and goblins arrive on your front porch, you’ll have greater peace of mind if you have a liability policy that can protect your assets.

It’s financially risky for homeowners and even renters not to carry adequate personal liability coverage, said Bob Courtemanche, senior managing director at the Risk Strategies Company insurance brokerage and risk management company. “We live in a litigious society and people are prone to file lawsuits more than ever before if they feel that they have been harmed by your alleged negligence,” he said.

It’s a good goal to have enough coverage to protect your net worth. A standard homeowners or renters policy will cover your legal fees if there’s a judgment against you — but only up to your policy’s limits. That means you could be held personally liable in a legal judgment for any costs your policy doesn’t cover. Liability limits generally start at about $100,000, but that’s not always enough to protect your assets.

If you don’t have money to pay a liability claim, which in some cases can exceed $1 million, a court could garnish your wages or go after your personal assets, leaving your credit ruined, explained San Diego attorney Evan W. Walker. “In short, it can be devastating.”

Here are five scary liability claims that could haunt you long after Halloween has come and gone:

1. Swimming pool and spa injuries

If you own a swimming pool or spa, you can be held liable if you fail to take precautions to prevent drowning or other injuries. According to a report from the Consumer Product Safety Commission, there were, on average, about 5,900 pool or spa-related hospital emergency department-treated nonfatal submersion injuries in the U.S. each year from 2014 through 2016. There were 356 pool or spa-related drownings each year from 2012 through 2014 involving children under age 15.

2. Accidents in the home

Even if a person comes onto your property without your invitation, you can be held liable for their injuries if you’re judged to be negligent. In 2014, 20.2 million Americans, or one in 16 people, experienced an unintentional injury in the home that required aid from a medical professional, the Insurance Information Institute (III) reports.

3. Dog-bite claims

If you own a dog and it bites someone, you should be prepared to face a liability claim. Dog bites and other dog-related injuries accounted for more than one-third of all homeowners insurance liability claim dollars paid out in 2016, costing more than $600 million. The average cost paid out for dog bite claims nationwide was $33,230 in 2016.

4. Intoxicated guests

As a Halloween party host, you could be held responsible if you served a guest enough alcohol to become intoxicated and that guest caused injuries to himself or others.

Anyone who serves alcohol at a party needs to be very conscious of the risks, said Lisa Lindsay, the executive director with the Private Risk Management Association. “Should someone leave their party under the influence and injure themselves or others, [the host] may be named in a lawsuit,” she said. “Proper insurance coverage ensures there is coverage for defense costs and coverage for a judgment.”

5. Attractive nuisances

Homeowners have a legal responsibility to make sure their property contains no “attractive nuisances” that could interest and cause harm to children, but it’s hard to foresee all accidents. Each year about 50,000 children are sent to hospital emergency rooms because of injuries on home playground equipment alone, says the U.S. Consumer Product Safety Commission.

Other examples of attractive nuisances include untended construction sites, wells, drainage ditches, appliances that could trap a child inside, and trampolines.

Protecting your future

As people move into middle age and accumulate property and wealth, they can’t afford to play trick-or-treat with their assets. They typically have much more to lose than they did in their 20s. People who don’t have enough homeowner or renter liability coverage are taking a big chance, said Lindsay.

Adequate personal liability coverage “is an absolute must for everyone,” she said.

Related Articles:

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Sunday, October 29, 2017

How to Handle People Who Hate Your Frugal Lifestyle

While frugal people often get a bad rap for being “cheap,” it’s usually due to misunderstanding more than anything else. Oftentimes, non-frugal folks assume those who are more careful with their money just “don’t know how to have fun” or haven’t learned to enjoy the finer things in life. Or they might assume someone who doesn’t spend freely must be poor, or have squandered money in the past, or are just plain miserly.

Yes, there are plenty of folks who are frugal out of necessity – and if you’re just getting by on a low income, frugality is definitely your friend.

But if you ask a frugal person what drives them to be judicious with their spending, often it has nothing to do with those preconceived notions.

For example, there are a ton of frugal people whose bank accounts are brimming with cash – the “millionaire next door types” who have socked away money for years.

Other folks choose a frugal lifestyle because they want to maximize the money they earn. Some deeply abhor waste, or choose frugality to reduce their consumption and lessen their impact on the environment. And some people live frugally because they want to simplify their lives – when they’re not spending money, they have less to stress about.

But if there’s one thing for certain, it’s this: Our frugality confuses the heck out of people who don’t “get it.”

When you’re not frugal, it’s hard to understand why others don’t spend the way you do – or why they choose to go without when they can clearly afford more. Unfortunately, some people hate frugality and look down on it – and really, that’s where the problem lies.

Three Ways to Deal With People Who Hate Your Frugal Lifestyle

Almost anyone who’s lived a frugal lifestyle has faced a naysayer or two somewhere down the line. Maybe it’s a co-worker who makes fun of your older, paid-off car or your refusal to go out for drinks. Or a sibling who criticizes your simple, affordable home. Perhaps you have an acquaintance who looks down on your choice of clothing, or a neighbor who thinks you really need to “spruce up the place” to make your property as attractive as theirs.

Whoever the person is – and no matter what they say – it’s important to stand your ground.

Here are some ways to deal with the haters who may not appreciate your frugal tastes:

#1: Focus on your goals.

While choosing to be frugal isn’t the easiest decision to make, it’s a lifestyle that comes with too many upsides to count. When you spend wisely and waste as little as possible, you tend to have more money to save and spend on important goals.

Obviously, more savings can help you sleep better at night – and even provide a safety buffer if you lose your job or face a loss in income. And when your expenses are lower, you have fewer bills to worry over.

Or maybe you’re frugal so you can afford to travel the world. By spending less on housing, food, and entertainment, you can afford to traverse the globe while also saving steadily for the future that will inevitably come.

Either way, focusing on these goals is the best thing you can do to stay on track. A non-frugal friend may not understand your desire to have a fully-funded emergency stash or to pay for your child’s college education, but that doesn’t make these goals any less worthy.

Focus on the future and on your goals, and that will help ward off any negative feelings from people who might criticize you.

#2: Know that some people will never understand.

Many Americans are so caught up in consumer culture that they can never truly understand why someone would choose not to spend. They’re so busy buying and upgrading their lives that they can’t imagine any other way.

On the flip side, frugal people are inherently different, mostly because they usually have a goal in mind. Either they’re saving for the future or paying off their house, or socking away money to try and retire early (or at least on-time).

People who don’t focus on personal finance may not appreciate these goals at all, mostly because they don’t tend to think that far ahead. Keep in mind that up to 78% of U.S. workers live paycheck to paycheck, and that nearly three out of four full-time workers say they’re in debt. Further, more than half of Americans have less than $1,000 in savings.

When you consider these statistics, it’s easy to see why regular people don’t understand your early retirement goals or your devotion to living debt-free. It’s not their reality – not even close – so of course they won’t “get” why you’re so focused on the future.

As a frugal warrior, you don’t have to understand the way people think or spend – and you probably couldn’t care less. But it’s equally important to realize that it’s not your job to make people understand why you’re frugal. Some people never will, and that’s perfectly okay.

#3: Meet them halfway.

Out of experience, I can say that some of the backlash frugal people get is because others feel you’re isolating yourself or refusing to participate. A good example from my own life is when, many years ago, I refused to participate in Christmas gift exchanges because I believed (and still believe) they’re a waste of money.

Here’s how I see gift exchanges: Everybody buys a random, impersonal $20 gift and exchanges that gift, so we all end up with something we didn’t want. In my mind, this is akin to setting $20 on fire, so I’ve never wanted to participate.

Of course, family members haven’t always loved that – and I think some of them misinterpreted my feelings to mean that we didn’t want to be a part of the group. That’s why, over the years, I’ve softened on situations like these where everyone wants to participate except for us.

That’s not to say that you should spend money you don’t want to just to make other people happy. Instead, try to see your frugality from the perspective of an outsider. Sometimes, spending the $10 or $20 to participate in a group event can go a long way to ensuring family harmony or mending a long-term friendship – and that’s a sound investment.

The Bottom Line

If you’re sick of dealing with people who seem irked by your frugal lifestyle, remember that it’s more about them than it is about you. Sometimes people might see your success as their own failure, and the fact you’re making financial progress may serve as a painful reminder to them that they’re not.

It’s your life and your goals that matter, and there’s power in not caring what other people think. As you forge forward with your frugal lifestyle, keep your eye on the prize and don’t let negative opinions get you down.

Haters may always hate, but you don’t have to listen.

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:

How do you deal with people who don’t like your frugal lifestyle? Please share in the comments below. 

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Saturday, October 28, 2017

Effective Frequency: Why Ads Might Impact You More Than You Think

Yesterday, I published an article entitled The Commandment of Treating Yourself, in which I lauded the virtue of caring for yourself but pointed out that it was a virtue that’s easily manipulated by advertisers to convince you to buy things you don’t really need. In the end, I concluded that the most powerful form of self-care is time, and the way to find that isn’t through buying products, but through smartly de-committing.

One thread that really runs through that article – and others that I’ve written before on how marketers and advertising can manipulate you – is the simple idea that marketing actually works. Many people simply don’t believe that it does. They are of the belief that they’ve seen every advertising trick in the book and that they don’t even see the ads any more.

However, what most people don’t realize is that marketers account for that exact mentality. They really, truly don’t mind if you don’t notice the advertisements. At all.

Recently, I came across a quote from a well-known book on advertising called Successful Advertising by Thomas Smith. This passage indicates clearly why marketers really don’t mind that you don’t notice ads most of the time.

“The first time people look at any given ad, they don’t even see it.
The second time, they don’t notice it.
The third time, they are aware that it is there.
The fourth time, they have a fleeting sense that they’ve seen it somewhere before.
The fifth time, they actually read the ad.
The sixth time they thumb their nose at it.
The seventh time, they start to get a little irritated with it.
The eighth time, they start to think, ‘Here’s that confounded ad again.’
The ninth time, they start to wonder if they’re missing out on something.
The tenth time, they ask their friends and neighbors if they’ve tried it.
The eleventh time, they wonder how the company is paying for all these ads.
The twelfth time, they start to think that it must be a good product.
The thirteenth time, they start to feel the product has value.
The fourteenth time, they start to remember wanting a product exactly like this for a long time.
The fifteenth time, they start to yearn for it because they can’t afford to buy it.
The sixteenth time, they accept the fact that they will buy it sometime in the future.
The seventeenth time, they make a note to buy the product.
The eighteenth time, they curse their poverty for not allowing them to buy this terrific product.
The nineteenth time, they count their money very carefully.
The twentieth time prospects see the ad, they buy what is offering.”

Now, let’s step back for a moment and think about what actually constitutes an ad.

An ad might take the form of a normal advertisement – a page in a magazine, or a banner ad.

An ad might take the form of a glowing “news report” about the product.

An ad might take the form of a Facebook posting or a Twitter posting inserted into your news feed.

An ad might take the form of a product placement within a program that you’re watching, one that the camera just happens to focus on for a second or two.

An ad might take the form of a testimonial from an actual friend of yours, one who is trying to perhaps start a multi level marketing “business” like Amway or take advantage of some affiliate marketing.

An ad might actually run across a bunch of those things, all at once.

The thing is, most marketers understand that you tune out a lot of ads. You don’t notice most of them. That’s why they rely on repeating ads over and over and over again – if you notice only a small percentage of advertisements and product placements and Facebook insertions and news reports, if they create a ton of those things, you’ll eventually notice some of them and the idea will be placed in your head.

Humans are very good at spotlight focusing, meaning that they pay a lot of attention to a narrow thing at any given moment, and most of the time ads will fall outside of that spotlight of focus. However, sometimes ads slip into that spotlight, no matter what we do, and if we notice a particular ad enough, it’s been shown over and over again that we’ll think more highly of that product and are more likely to buy it.

Advertising works. Marketing works. If it didn’t, companies wouldn’t invest billions into advertising and marketing.

Effective frequency explains why you often see the same ads over and over again, spread in various forms across your television, your smartphone, your computer screen, the middle of the programs you watch, and even sometimes in the words of your friends. It’s because, as the quote above makes clear, repeating a particular message and showing a particular product over and over eventually pushes people over a threshold of knowing about the product and desiring the product enough to buy the product.

There is no exact recipe for effective frequency. Sometimes, only a single exposure to an is enough. At other times, it can take many exposures to an ad. The Business Dictionary defines it as “Advertising theory that a consumer has to be exposed to an ad at least three times within a purchasing cycle (time between two consecutive purchases) to buy that product.”

John Philip Jones, an emeritus professor of advertising at Syracuse University, said in a 1997 paper: “Effective frequency can mean that a single advertising exposure is able to influence the purchase of a brand. However, as all experienced advertising people know, the phrase was really coined to communicate the idea that there must be enough concentration of media weight to cross a threshold. Repetition was considered necessary, and there had to be enough of it within the period before a consumer buys a product to influence his or her choice of brand.”

The important thing to remember here is the core concept. Effective frequency simply refers to the idea that a person has to be exposed to an ad many times for it to be effective, partially because many ads are unnoticed and partially because repetition of the noticed ads embed them in your head. So, advertising firms repeat ads, place products, and stick other forms of marketing for a product everywhere until you notice them – and you eventually will.

I’ll give you a recent example of this. In my spare time, I read a number of websites related to personal development. I listen to podcasts on the topic, read forums on the topic – in short, I really enjoy learning about it and reading what others have to say about it.

The thing is, whenever someone wants to pitch a product at people interested in personal development, you can tell because that product pops up everywhere. That doesn’t mean that the product is bad per se; it just means that someone involved in the product believes in it enough to spend a lot of money on a marketing campaign. They either think it’ll make a ton of money in the short term or that it’s the start of something that will last for a very long time.

A recent example of this is Leaderbox. It’s one of those subscription box services that have popped up in the last few years, but this one is being run by one of the foremost podcasters in the field of personal development, Michael Hyatt. The box comes out monthly and contains two books on leadership and personal growth, along with supplementary materials and a private online discussion forum.

Don’t get me wrong, there’s nothing particularly wrong with this product. I think that the sticker price on it is excessively high, but the content seems compelling – it’s effectively a well designed book club for leadership and personal growth books.

For me personally, it’s something that I would describe myself as semi-interested in. I love to do deep readings of those types of books, taking notes and looking at what I can apply to my own life, but I vastly prefer to just get such books from the library (which is free, far better than the high cost of Leaderbox) and read them at my own pace. This lets me choose my own books, read at my own pace, and best of all, it’s free. So, the idea of Leaderbox is something I’d call semi-interesting to me, but not enough that I’d actually buy it.

The advertising campaign for Leaderbox, however, is extremely effective. Mentions and ads for Leaderbox kept showing up again and again in the things that I look at. I probably missed the first half-dozen references to it. Then, at some point, I saw it on a website that I was reading and I thought, “Hmm… that seems interesting.” Then it popped up somewhere else. And somewhere else. Then a few people mentioned it in a discussion forum that I participate in. Then a particular podcast I listen to talked about it a little.

Thus, my awareness of it snowballed.

The funny thing was, this repetition gradually inched me from something I wouldn’t consider at all to asking myself whether I actually was interested in it and whether or not it would qualify as a business expense and whether or not I could sensibly afford it.

Why did that transition happen? Honestly, it was effective frequency. The fact that it kept popping up over and over again forced it onto my radar when it otherwise wouldn’t have had a single thought from me.

Again, remember, I’m not bashing Leaderbox in any way. I’m simply pointing out that it has a very effective marketing campaign behind it, one that lifted a product out of what would have been vague awareness and apathy from me to actual consideration of the product. That would never have happened without an effective marketing campaign.

So, what can you do about effective frequency? If it’s a given that you will eventually be exposed to multiple impressions of a particular ad campaign, what can you do to keep that campaign’s influence on your spending at a minimum?

Here are five things that I personally find very effective for reducing the power that pervasive marketing campaigns have in steering my spending.

First, constantly question whether or not a product would actually benefit you beyond what you already have. Ask yourself whether this is something that’s really going to provide anything beyond what you already have access to? If it does provide something “extra,” is that “extra” worth the additional cost?

For example, with the subscription box mentioned above, the only real additional value that I would get for the cost is the reading guide and access to an online discussion forum, one that I could probably start myself. I’d also have the physical books, but I could honestly check them out from the library. Is that worth the high monthly price? Not for me, it isn’t.

Once I broke down what I was actually getting for my dollars, the product seemed less compelling.

The key for me is to compare it to what I already have access to and then look only at the extras beyond that that the product was giving me.

So, for example, if you’re drooling over the latest smartphone, stop and compare the difference between that phone and the one you already have. Is it really sensible to pay $700 for another 0.25″ of screen space and a little bit more storage space for games that you’ll play once and forget about?

When you start looking at things through the lens of what it actually brings you that you don’t already have, a lot of products don’t really look all that great.

Second, buy store brands as a default. My default isn’t to buy a name brand I’ve heard about, ever, when there’s a store brand alternative. I only switch away from that if it’s not actually doing what I want.

That simple move eliminates a lot of the decision making that I’ll do in a grocery store or department store. I don’t have to decide between fifteen different kinds of ketchup. I just buy the store brand and keep moving.

The thing to remember is that it’s when you stop and try to make a more nuanced decision that marketing rears its head. The simple truth is that you remember the name brands and those products and think a little more highly of them thanks to effective frequency, not because they’re particularly good (they might actually be good products, but that’s not why you remember them or think highly of them most of the time).

Third, stop and think outside of your normal situation whenever you’re about to spend money. If you’re about to buy a product in a store, put it down for a few seconds and think about whether you really need it. If you’re buying a product online, close the web browser before clicking on the “buy” button. Give yourself a breather and a change of scenery before buying. This is particularly true if the item is a big ticket item.

Why do this? Simply changing one’s scenery often changes one’s train of thought regarding a particular item. Effective frequency works best when a repeated message carries you on a wave right to that purchase. Stepping out of the situation takes you off of that wave, at least for now.

One technique I like to use is to maintain a “wishlist” of items that I’m really interested in. Rather than buying the item, I add the item I’m excited about to my “wishlist.” I actually keep that wishlist in Evernote so I can add to it no matter where I’m at. This helps because it leaves me with a sense of taking action on that item in the moment, which takes the edge off the desire to buy.

Later on, maybe once every month or two, I’ll review the wishlist. Guess what? I usually discover that almost everything on there has faded in terms of my interest and I feel completely fine deleting almost all of them. The ones that remain are things that I might actually consider buying, but I feel okay doing bargain hunting for those items at that point.

Fourth, spend more time on “slow” media rather than “fast” media. The idea of “slow” media and “fast” media is one that I’ve been developing on my own recently and it’s one that I think is really helpful in terms of controlling effective frequency.

“Fast” media is media that’s delivered quickly in bite-size pieces. Think about short online articles, social media updates, quick segments on 24 hour news channels, any program interrupted by commercials, and so on. Those things are designed to hook your attention for only brief spurts, usually just long enough to deliver the briefest of information and also slide an ad view in there in that burst.

“Slow” media is media that comes in a longer form. Think about books, feature-length movies, television shows that are designed to be binge-watched, and so on. These things are designed to hold your attention for longer spans and are less prone to constant interruption and distraction. Ads don’t interrupt your books when you turn the page and, aside from a bit of product placement, they don’t show up in films or long-form television shows, either.

Spend more time enjoying “slow” media than “fast” media. Keep a book on your phone or in your pocket or purse and read it while you’re waiting or have a few minutes of down time instead of browsing pointless websites. Cancel your cable subscription and get your news from long-form written articles that are well researched. Yes, it takes a bit more effort to focus on such things, but in doing so, you’re taking a major step to knock back the effectiveness of frequency.

Finally, be aware that effective frequency exists and notice it. Simply being aware of a marketing trick takes away at least some of the power. When you notice that you’re seeing the same messaging over and over, recognize it for what it is. It’s just effective frequency at work. It’s just an ad agency using one of the oldest tricks in the book.

Again, pointing back at that example with the subscription box, it wasn’t until I realized that they were using effective frequency that I really began to question why the concept was slowly becoming more intriguing to me. Simply being aware of the trick being used takes away some of the magic, just like understanding the sleight of hand of an illusionist eliminates the mystery.

That’s the real secret to piercing the veil of many advertising tactics, not just effective frequency. Watch for them. Be aware of them. Take steps to distance yourself from them. The more you do that, the less effective those tactics become.

Good luck.

The post Effective Frequency: Why Ads Might Impact You More Than You Think appeared first on The Simple Dollar.

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How to Get Out of Debt Faster: Balance Transfer or Payday Loan?

Anyone who’s ever found themselves overextended on debt knows what a precarious financial situation that can be. When unexpected costs pile on top of existing debt, it can push a borrower’s finances over the limit. That’s when it may be tempting to take out a payday loan.

The Consumer Financial Protection Bureau defines a payday loan as “usually a short-term, high-cost loan, generally for $500 or less, that is typically due on your next payday.” Essentially, payday loans — also known as cash advance or check advance loans — are designed to cover sudden expenses while borrowers are in between paychecks.

Here’s how payday loans work:

  1. You visit a payday lender and agree on an amount.
  2. You write the lender a post-dated personal check for the said amount, plus fees, to be cashed on a specified date. On average, the typical term is about two weeks.
  3. When that date arrives, the lender cashes the check.

Simple enough. But if you don’t have enough money to repay the lender on time, then interest kicks in. Payday loans usually involve very high annual interest, or APR (annual percentage rate). According to the CFPB, the typical two-week payday loan comes with a $15 per $100 finance fee. Sounds like a 15% interest rate, which doesn’t seem too bad, right? Think again. The personal finance experts will tell you that the annual percentage rate on that “two-week” loan is nearly 400%.

And what happens if you can’t pay the loan back in two weeks? Many payday loans “roll over,” so in two weeks you’ll owe even more. And so it goes.

Whether you’re covering a sudden expense or paying down existing debt, most personal finance experts will tell you payday loans should be an absolute last resort. There are plenty of alternatives, including payment plans, credit card hardship programs, and balance transfer credit cards.

First, use The Simple Dollar’s debt payoff calculator below to determine your payment plan:

I can't pay off my debt! I'm not paying enough each month.

Use slider to see how paying a little extra each month can get your debt paid off faster and save your money

TOTAL MONTHLY PAYMENT0Monthly payment: 0Extra payment: 0
Interest saved by extra payments:0
I can't pay off my debt! I'm not paying enough each month.

Use slider to see how paying a little extra each month can get your debt paid off faster and save your money

TOTAL MONTHLY PAYMENT0Monthly payment: 0Extra payment: 0
Interest saved by extra payments:0
I can't pay off my debt! I'm not paying enough each month.

Use slider to see how paying a little extra each month can get your debt paid off faster and save your money

TOTAL MONTHLY PAYMENT0Monthly payment: 0Extra payment: 0
Interest saved by extra payments:0
I can't pay off my debt! I'm not paying enough each month.

Use slider to see how paying a little extra each month can get your debt paid off faster and save your money

TOTAL MONTHLY PAYMENT0Monthly payment: 0Extra payment: 0
Interest saved by extra payments:0
I can't pay off my debt! I'm not paying enough each month.

Use slider to see how paying a little extra each month can get your debt paid off faster and save your money

TOTAL MONTHLY PAYMENT0Monthly payment: 0Extra payment: 0
Interest saved by extra payments:0
  • Total Monthly Payment
  • Total Principal
  • Total Interest
  • Payoff Date
  • Total Monthly Payment
  • Total Principal
  • Total Interest
  • Payoff Date

How payday loans and balance transfers stack up

Let’s say Alex owes $1,000 in credit card debt. On the week he plans to start paying it off, his car breaks down, and repairs cost another $1,000. Now Alex has to deal with two costs. How to pay?

The choice between a payday loan and a balance transfer gives him these options:

  • Take out a payday loan and commit to paying off the $2,000 he owes, plus fees, in a short period of time
  • Put the additional $1,000 for the car repairs on his credit card debt, then transfer the combined $2,000 to a balance transfer credit card with 0% introductory APR, and pay it off bit by bit over time

At first glance, the payday loan may seem like the better short-term option. But here’s what happens in either scenario:

If Alex Chooses…
Payday Loan Balance Transfer with 0% Intro APR
  • Typical Cost:
    • Equates to APR near 400%
  • Typical Repayment Term:
    • 2-4 weeks (plans vary per lender)
  • Typical Fees
    • $15 per $100
  • Credit Check?
    • No
  • Typical APR:
    • 0% for 15-18 months, then between 10-25% (varies per card)
  • Typical Repayment Term:
    • Not Applicable
  • Typical Fees
    • 3-5% of amount transferred
  • Credit Check?
    • Yes


If Alex Misses a Payment…
Payday Loan Balance Transfer with 0% Intro APR
  • Typical late fees:
    • Additional $15 per 100
  • Additional fees?
    • Rollover Fees
  • Does it hurt credit?
    • Possibly – Lender may report to credit bureaus
  • Typical late fees
    • Capped at $25 per late payment
  • Additional fees?
    • No
  • Does it hurt credit?
    • Yes

APR and fees

It’s important to note that interest is not separate from a loan’s APR. Interest is an additional cost paid for the right to borrow money in the first place. (And it’s usually how the lender makes money.) APR is short for Annual Percentage Rate, and it refers to the total cost of a particular loan, including fees and any other extra costs. While interest and APR aren’t one and the same, interest contributes to a loan or debt’s overall cost and thus is considered part of its APR.

Many balance transfer cards offer an introductory APR of 0% between 15 and18 months, and typically a variable 10-25% afterward. So if Alex manages to pay off his $2,000 balance transfer within the intro APR period, he’ll be able to do so without incurring any interest. If he doesn’t finish paying down his debt before the introductory APR period ends, whatever remains of the $2,000 balance transfer would be subject to higher APR.

Balance transfers often require a fee of 3-5% of the amount transferred, meaning that if Alex transfers his entire $2,000 to a balance transfer credit card, he would pay a $60 to $100 fee.

Because payday loans have to be repaid quickly, they’re designed with notoriously high APRs, again, averaging around 400%. Payday loan APRs can be fixed or variable depending on the lender, but typically debtors incur fees of $15 to $30 per $100 borrowed.

If Alex agrees to a payday loan of $2,000 the finance charges put the actual cost of the loan at around $2,300. Since Alex has to take out a loan to cover his debt in the first place, it’s unlikely he’ll have enough funds to cover the original amount, plus extra. If Alex doesn’t have the funds in his account by his next paycheck, his payments are considered delinquent, and the payday lender will begin charging interest with a high APR.

Once Alex is late, his payday loan lender may offer a “rollover” fee, also known as a renewal fee. Rollover fees typically cost around $45 and simply delay paying back the loan. Payments do not contribute to principal or interest owed. So, if Alex were to pay a rollover fee on his payday loan, he’d be paying an extra $45 to extend the due date until his next payment period.

Credit check

As with any other credit card, balance transfer credit cards require a credit check before approval. The better Alex’s credit is, the more a chance he’ll have of being approved.

Payday loans often don’t require a credit check before approval. Instead of using FICO or other established credit score institutions, lenders utilize a custom creditworthiness score based on the information borrowers provide.

Even if Alex has bad credit, he might be able to get a payday loan, no questions asked. But if Alex manages to pay off his payday loan, his credit score might not go up. If he’s delinquent, his score might go down. Some payday lenders report late payments to major credit reporting agencies.

Other debt consolidation and management options

In addition to balance transfers, alternative methods of paying off debt include:

Assistance programs

Many credit card issuers offer financial hardship and payment assistance programs, including Discover and American Express. Before you consider a payday loan, call the Customer Service number for your credit card issuer and see if you can negotiate a lower interest rate or extended payment plan.

Debt consolidation loan organizations

If you have debt with multiple lenders or creditors, consider a debt consolidation loan company.

These organizations allow borrowers to lump different streams of debt together, often with a lower interest rate. You’ll have fewer debts to worry about and a chance to improve your overall financial health.

Payday loans or balance transfers: Which is better for me?

At first glance, payday loans might seem like a quick and easy solution for borrowers to receive emergency funding in a pinch. However, high APRs and fees, combined with a short repayment term, can make it all too easy for borrowers to get caught in a debt trap.

Balance transfers, on the other hand, offer a less risky way to manage credit card debt. If there’s an emergency, using a credit card and then transferring the debt to a balance transfer credit card to pay it down monthly is a viable option.

A balance transfer card allows you to pay down debt gradually without a lump sum coming due in a matter of weeks, and making timely monthly payments is a great way to rebuild your credit.

Payday loans should only be used once you have exhausted every other option. If you do take out a payday loan, prioritize that debt above all others, and pay it off immediately.

The post How to Get Out of Debt Faster: Balance Transfer or Payday Loan? appeared first on The Simple Dollar.

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