Wednesday, February 28, 2018

On Failing at Your Big Goals, Money or Otherwise

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Good luck!

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

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Tuesday, February 27, 2018

Twenty Frugal Ways to Get Yourself Out of a Bad Place

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Good luck!

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

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Use a Credit Freeze to Stop Identity Thieves Cold

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

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

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

How a Credit Freeze Protects You

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

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

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

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

How to Freeze Your Credit

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

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

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

Equifax Credit Freeze

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

TransUnion Credit Freeze

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

Experian Credit Freeze

  • Freeze or thaw your Experian credit reports here.

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

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

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

Related Articles:

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

The post Use a Credit Freeze to Stop Identity Thieves Cold appeared first on The Simple Dollar.

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Monday, February 26, 2018

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

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

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

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

Until then, misery.

On with the questions.

Q1: Finding health insurance

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

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

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

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

Q2: Dealing with food inflation

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

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

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

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

Q3: Thinking about job offer

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

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

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

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

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

Q4: Enough shopping around?

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

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

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

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

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

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

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

Q5: Return of premium life insurance

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

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

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

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

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

Q6: Craigslist scammer

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

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

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

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

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

Q7: Debt after death

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

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

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

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

Q8: Costco math

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

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

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

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

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

Q9: List of principles

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

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

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

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

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

Q10: Rolling over 401(k)s

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

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

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

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

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

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

Q11: Frugal solution to car salt

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

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

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

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

Q12: Reflecting on spending mistakes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1. There Are Many Ways to Pay for College

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

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

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

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

On the other hand…

2. Other Financial Goals Require Money Now

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

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

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

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

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

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

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

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

3. There Are Other Ways to Invest in Your Child

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

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

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

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

Don’t Feel Guilty About Making College a Lower Priority

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

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

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

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

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Sunday, February 25, 2018

How Much Will It Cost Us to Switch to a Mediterranean Diet?

The Mediterranean diet can fix several of a consumer’s problems, but not their budget.

Incorporating dietary staples of many countries bordering the Mediterranean Sea, the Mediterranean diet places heavy emphasis on plant-based foods (fruits and vegetables, whole grains, legumes, and nuts) and swaps in oils for butter, herbs and spices for salts, and fish and poultry for red meat.

When my wife proposed it this year — as we have a few weddings coming up and enjoyed a bountiful holiday season — my initial response was “of course, that’s what I always ate.”

Yet that isn’t at all how I ate – it’s how my grandparents ate. The Notte family traces back to what is now Albania, where we were simply Notes, but made their way to Naples after Albania’s battles with the Ottoman Empire took a turn for the worse. My maternal grandmother, a Ferraro, is descended from iron workers in Modena. When their descendants came to this country in the early 1900s, they brought simple peasant cooking with them: Every cooked recipe seemingly began with a thin coat of olive oil and garlic, every antipasto course featured a small bowl of nuts.

But U.S. culture had an influence. The Italian bakeries in Northern New Jersey still use bleached flour for their best-selling loaves and baguettes, not whole-grain. Fresh pasta gave way to dried and mass produced flour versions. Pork neckbones and stock gave way to ground-beef meatballs and mystery-meat sausage. Garnish that was more akin to salsa became heavily sugared sauce. Food snobs now sniff at the “red sauce” restaurants where Mediterranean immigrant families catered to American tastes, but there’s no defending the nutritional disparity between the Old World and New World approaches to “Mediterranean” foods.

The Mayo Clinic has found that the traditional Mediterranean diet reduces the risk of heart disease, lowers low-density lipoprotein (LDL) cholesterol — “bad” cholesterol — and reduces incidence of cancer, and Parkinson’s, and Alzheimer’s diseases. While culture may have played a part in the slow deviation from the true Mediterranean diet,  so did price and economics.

Before my wife and I take up the diet this year, I wanted to delve into the finances of it and see just how much it costs to change these eating habits. For the sake of this article, I’m sticking to prices at Safeway/Albertsons  (the stores where we regularly shop) and excluding bulk items from warehouse stores.

Butter vs. Olive Oil

  • Darigold Butter: $2.99 per pound
  • Signature Select Extra Virgin Olive Oil: $6.99 for 16.9 ounces

A tablespoon of butter is equivalent to 3/4 of a tablespoon of olive oil. Thus, a 32-tablespoon pound of butter is equal to 24 tablespoons of olive oil. Those 24 tablespoons add up to 12 fluid ounces. That makes butter roughly 25 cents per fluid ounce, while the corresponding entry-level olive oil is 43 cents an ounce. That’s a nearly 42% premium just for swapping out some butter. Thus far, the budgetary fears are confirmed.

Salt vs. Spices

  • Plain Table Salt / Morton’s Kosher Salt: 89 cents for 26 ounces / $2.89 for 16 ounces
  • Basil, Oregano, Ginger, and Paprika: $3.29 (0.69 ounces), $2.79 (0.75 ounces), $4.99 (2 ounces), $4.49 (2.12 ounces)

There is no way that anything in the spice rack is going to match the cost of salt. The latter is plentiful, sold in tremendous bulk, and weasels its way into everything. Spices are rare enough that people accidentally discover new continents just to find a way to cut down the time and money it takes to procure them. A part of me wanted to throw minced onion or garlic into this mix, but seeing them at $1.10 and $1.70 per ounce, respectively (as opposed to 3 and 18 cents an ounce for granular and kosher salt) made me realize the futility of it.

Beef vs. Fish

  • Ground beef, 93% lean: 1.5 pounds for $5.99
  • Atlantic salmon: 1.5 pounds for $10.49

We live in the Pacific Northwest, which has its own salmon right in its backyard, but a similar cut of Alaskan sockeye would set us back more than $13. Yes, you can swap salmon for beef burgers fairly easily in the kitchen, but it isn’t so easy on the wallet. The comparison would be a bit more favorable if we were substituting for, say, a 1.5-pound chuck steak ($11.99) or flat-iron steak ($14.99), but I’ll admit that ground beef accounts for roughly 98% of our red-meat consumption.

Beef vs. Poultry

  • Ground beef, 93% lean: 1.5 pounds for $5.99
  • Jennie-O ground turkey, 93% lean: 1 pound for $3.99

Now this is our more likely substitution, and it’s a wash. We’ve used ground turkey before, and while it doesn’t excel in burgers or meat loaf, it doesn’t make a half-bad meatball. It’s a fine filling for tacos or burritos, but I’m fairly certain that those get the boot during the Mediterranean diet.

Beer vs. Wine

  • Guinness Draught: Six-pack of 11.2-ounce bottles, $9.99
  • Underwood Pinot Noir: 750 milliliter bottle, $10.99

I’ve been covering the beer industry since 2010 or so, and my basement beer fridge is being slowly emptied for this endeavor. Since a recent trip to Ireland, Guinness Draught has been a favorite and, at 125 calories per 11.2-ounce serving, it’s one of the least heavy beers you can drink. However, small servings of red wine are typically allowed in the Mediterranean diet, and five ounces of a typical Oregon pinot noir has roughly 120 calories. While losing all of that grain and adding some antioxidants may help, we’re going to stop short of calling a wine substitution “good for you.”

Whole Grain vs. Regular Pasta

  • Barilla Angel Hair Pasta: $2.49 a pound
  • Barilla Whole Grain Angel Hair Pasta: $2.49 a pound

That isn’t a mistake, but it also isn’t the rule. Pasta makers have gotten wise to the drift toward whole-grain pastas and offer a bunch of them. However, if you try this same experiment with a box of Safeway’s store-brand spaghetti ($1), the price difference is more pronounced.

And if you don’t trust the big pasta makers, it gets costly. Just eight ounces of Ancient Harvest Supergrain spaghetti will cost you $4.49, or 56 cents an ounce. That’s nearly $9 a pound and a significant increase over just about any other spaghetti on the market.

Fruits vs. Berries

  • Jonagold apples: $1.10 each
  • Strawberries: $4.49 a pound

The Mediterranean diet likes plant-based foods, true, but it also loves antioxidants and frowns on carbohydrates. Prices will fluctuate throughout the year, but strawberries and Jonagolds are some of the best bargains you’re going to get in either category. But each Jonagold apple is 130 calories with 34 grams of carbohydrates, including 25 grams of sugar. A cup of strawberries, meanwhile, contains just 48 calories, with 7 grams of sugar, and 12 grams of total carbohydrates. With roughly four cups in a pound of whole strawberries, the difference between servings of the two is roughly two cents more for strawberries.

The verdict: While some elements of the Mediterranean diet, like olive oil and spices, will certainly add some weight to our grocery bill, most of these switches will hopefully have a bigger impact on our waistlines than our bottom line.

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Friday, February 23, 2018

On “Falling Off the Wagon”

There have been so many times over the years when I’ve been caught up in the heat of the moment and spent more money than I should have. I either splurged on something completely forgettable or I bought something that I really didn’t need and wouldn’t have even wanted had I given it more reflection.

Sometimes, it’s easy to fall into a small pattern of this behavior, when I slip into a little routine of spending money without any real consideration. I’ll buy this thing or that thing and, at first, it’s well within my “hobby money” for the month, but then I’ll just not be paying much attention to it or I’ll be involved in something that’s gobbling up my attention and focus and the next time I really think about things, I’ve overshot my plans by a lot.

It is really tempting sometimes, especially in that moment where I’m realizing how bad I messed up, to just say it’s not worth it. I’m sitting there feeling like an idiot because I spent more than I should have on ill-considered purchases and, undeniably, I’ve taken some backwards steps on my spending. I tell myself that it would all be a lot easier if I didn’t think about this stuff.

But then I think a little more, and a few things come into my mind.

The Actual Impact Is Small

It feels like a big mess in the moment, but when I really step back and look at it, it’s not that big of a mess.

Since I’ve started my financial turnaround, I’ve spent literally hundreds of thousands of dollars less than I’ve earned. A bad splurge might be on the order of $100 or, in rare cases, a few hundred dollars.

While the impact of that mistake looks big in terms of my weekly or monthly finances, it’s really not that big in terms of the huge progress that I’ve made over the years.

I like to think of this in terms of climbing a mountain. Over the last decade, I’ve climbed 10,000 feet up a mountain. I just lost my grip and slid about 10 feet down. Is that really an excuse to give up? Is that really an excuse to stop using all of the tactics that got me up this far?

If I look around, I’m still in a good place, just not quite as good as I would have been had I been more sensible about things. If I stay off the wagon, I go down from where I’m at now. If I get back on, I keep going up.

This is an important principle to remember no matter where you’re at on your financial journey or any other major life change. If you back away from the tactics that successfully got you to where you’re at, you’re going to go right back to where you were.

The key, as always, is to remember that past mistakes don’t really matter too much other than informing us on how to avoid them going forward. We can’t reclaim the past. We can’t relive a moment in which we made a mistake. All we can do is move forward from the place we’re at to a better place using what we’ve learned from those mistakes.

Thankfully, most mistakes really are small ones. A $100 financial misstep isn’t going to drown the financial progress of most people. While it is unquestionably a step in the wrong direction, it’s not back to square one. The same thing is true when it comes to a dietary mistake or breaking a bad habit. You are not back to square one. One mistake in the last six months is still light years better than where you were at.

Now, what are you going to do from here?

It Might Be a “Relief” in the Short Term, But…

During those moments when you realize that you’ve fallen away from your good habits and you’re feeling guilty about all of your missteps, there’s this voice in your head that’s telling you that this really isn’t a mistake, that it’s a good thing, that it’s a relief to not have to be the “better” person, that it’s far more enjoyable to do things in this “worse” way, that it would be such a relief not to have to follow those hard habits.

It’s a really compelling argument in the short term. This line of thinking absolves you from the guilt of your mistakes and gives you internal permission to just completely give up on your progress. In this moment, people often go over the top in their indulgence. People go on spending sprees, rebound from their diets, completely stop going to the gym, and so on.

The thing to remember is that this is purely the short term part of your brain talking. While it might be enjoyable on some level to just completely undo your positive progress, you’re quickly going to be right back where you started, with all of the old stresses and worries that you were trying to escape in the first place, except that now you’re even older and it’s even harder to climb out again.

Your brain is shouting out all of the short term benefits of your bad habits from the past while ignoring all of the stiff long term consequences of those bad habits. Don’t buy into it. Step back and breathe for a while, and give yourself a chance to think of the long term. Where were you at a year ago? You were most likely in a worse place than you are right now. Do you want to go back to where you were a year ago? I really, really doubt it.

If you focus yourself on the short term when it comes to your personal habits and routine choices, you’re almost always going to wind up in a very bad place. We only make good choices when we consider the long term with at least as much weight as the short term.

The short term thinking stays in bed instead of getting up to go to the gym. The short term thinking gobbles down another piece of pizza instead of recognizing that they’re not hungry any more. The short term thinking spends money on forgettable things because it’s an expression of “freedom.”

Why Did It Happen? How Can I Make It Not Happen Again?

Whenever I find that I’ve fallen “off the wagon” on a personal journey that I’m on, the first question I usually ask myself is why did this happen. Why do I now find myself in this position, when not too long ago things were moving along wonderfully? What changed? Where was that bump in the road that I hit?

When I find myself here, I go searching for solutions. I want to know why things went wrong. I want to know what kind of conditions caused me to give up my good habits and resort to bad ones.

Then, I want to know what exactly I can do to avoid recreating those conditions. What exactly can I do to ensure that I don’t wind up right back in the situation and the mindset that cause me to “fall off the wagon”?

Was I influenced by certain people? Maybe I need to reconsider my friendships if they’re discouraging me from being my best self, and consider new ones. It may be time to actively start seeking out new relationships and friendships that build me up into the person I want to be. It can be hard to find them, but a good place to start is at community events and meet ups, such as ones hosted by the local library, local churches or other religious groups, or

Was I influenced by excessive “discipline” or denial of things I enjoyed? Maybe I need to consider “ratcheting up” my standards in a particular area. What I mean by that is that if I feel extremely denied in one area of my life and it’s making me feel miserable, it’s probably worth it to loosen things up in just that specific area. Spend some time really thinking about how you can do things differently in a way that makes you feel happy.

Was I influenced by other challenges in my life and used this overspending as a stress outlet? Maybe I need to investigate new methods for handling stress. (For me, the most effective methods are plenty of sleep, a daily mindful meditation session, daily journaling, and intentionally saying “no” to less important tasks.)

Was I influenced by certain places and situations? If so, I need to figure out how to avoid those places and situations. It might involve simply no longer shopping at a certain store, or avoiding certain activities. I had to drop my “after work” drinks with friends that I used to indulge in because I found that those places and situations were dragging me in a very bad direction.

This kind of thinking requires time and evaluation, but it’s well worth it. You’ll almost always lead yourself straight to a better solution to the struggles you’re facing.

My Favorite: What Would The Person I Want To Be Choose To Do?

This is hands-down my favorite approach to the “falling off the wagon” problem.

Falling off the wagon of any self-discipline doesn’t mean that you’ve suddenly altered your ideals in any way. What it means is that, for a while, you didn’t live up to the standards of the person you want to be.

The person you want to be has their head on straight. The person you want to be makes wise financial choices and wise health choices. The person you want to be does a lot of things well.

Think about the person you want to be. Would that person do the things you’re doing? If not, then why on earth are you doing them?

Here’s the nice part: the more you try to emulate the actions of the person you want to be, the more you become the person you want to be. The emulation becomes more and more natural over time.

That doesn’t mean you’ll be perfect at it. None of us ever are. I don’t think anyone on earth ever gets to be exactly the person they want to be.

It’s the effort that matters, though. Few things in life feel better than realizing that you’ve basically been living up to the standards of the person you want to be. It’s not about the individual things you’ve done, but the simple fact that overall you’ve been living up to your principles and standards for yourself. That feels good. That feels really good.

Whenever I fall off the wagon of any discipline I’ve chosen for myself, whether it’s good spending habits, being a great parent, achieving long term goals, whatever it might be, I ask myself what the person I want to be would do right now. What would he do? Then, I do just that.

Because I want to be that person. After all, he’s the person I want to be. I start by acting just like him, and that choice is always the choice I’m facing right now.


This goes back to the short term versus long term idea expressed above, but it’s so important that it deserves its own section.

So often, when we fall off the wagon, it’s because we desired some sort of short term freedom that we felt was missing in our life. We want to have control over our situation in that moment, and we often feel like the best expression of that control is to do something that seems to be the most purely enjoyable option.

We’ll tell ourselves that freedom is staying in bed instead of going to the gym. We’ll tell ourselves that freedom is buying that thing that we want so much instead of just walking on by it. We’ll tell ourselves that freedom is eating that last slice of greasy pizza instead of putting the napkin on our plate.

The thing is, freedom is already there; the simple fact that we do have a choice is what freedom is. Freedom is having the option to stay in bed or to get out of bed. We’re free to choose. Freedom is having the option to eat that piece of pizza or not eat that piece of pizza. We’re free to choose. Freedom is having the option to buy that thing or not buy that thing. We’re free to choose.

However, the choice to buy that thing has an impact on freedom. When we choose to spend our money on something we don’t need, we actually reduce our options. We essentially give up all of the other things we could have done with that money and, very likely, we also give up some future options as well.

If I take $40 and buy a cool new board game, that means I no longer have access to the other options that the $40 represents. Since I didn’t put it away for the future, I also reduce my options down the road.

When I step back and look at the big picture, I realize that freedom is the choice itself, the fact that I can choose to spend or not to spend if I want to. When I choose to exercise the option to spend, I’m actually cutting off some of my future choices. I better be quite sure that I’m making the right choice, but making up my mind about that has nothing to do with personal freedom.

I always have the freedom to choose. Choosing to spend isn’t an expression of freedom any more than choosing not to spend; in fact, it might be a less free option over the long haul.

The Perfect Is the Enemy of the Good

It is really easy to fall into a mindset that a single mistake means the end of everything you’ve worked for. If you screwed up for a day, you tell yourself that it means that you can’t really do this, that you’re not good enough.

What you’re missing out on is the fact that you’re saying that perfection is the only possible way forward, and that just isn’t true for anything.

Perfection is basically unattainable for anyone. No one is truly perfect at anything they do. People stumble and fall down all of the time, even if you don’t see it. In fact, usually you don’t see it, because people rarely show their faces of weakness to the public. They want to show their strengths.

You are doing good. One misstep in, say, two months is incredibly good, especially compared to where you were at. Saying that the only acceptable pace is no missteps ever is basically a guarantee that you’re going to fail in your initiative.

You messed up once in two months. Think about where you were at a year ago or a few years ago. How often did you mess up in a two month period. Can you really compare the two and say that you are not doing quite good right now? Can you really say that you’re a “failure” after doing that well?

Pick yourself up, dust yourself off, and keep moving forward. You’re doing good, you’re doing far better than before, and that’s a far more healthy standard than perfection.

The Journey Isn’t Complete

One final thing to consider when you’ve fallen off the wagon is that your journey isn’t over yet.

Think about your journey as being like a pioneer crossing the plains in the 1800s along the Oregon Trail. You started off in Independence, Missouri and are aiming to eventually arrive in your Willamette Valley.

Right now, you’re somewhere past Fort Kearney, in the wilderness, and your wagon just hit a bump. Are you going to give up and stay here, so far short of your goal, with no idea of the lay of the land? Or will you repair that wagon and keep going westward, heading toward that Willamette Valley of your dreams?

If you prefer, you can also harken back to that mountain climbing analogy from earlier. You’ve scaled up several thousand feet… but have you really achieved what you came here to do? Is this really the spot where you’re going to give up, when you know you have the tools to keep going?

If you’re going to fall short of your goals, do it for a real reason, not just because of a momentary setback or a bump in the road. That’s an excuse. Your true destination lies ahead of you, and it is far closer than it was when you started. In fact, if you’ve been making good financial moves, you’re probably accelerating toward it on the back of fewer debt payments and more returns on your investments.

Your journey isn’t finished yet. The finish line is closer than ever. Don’t give up now.

Final Thoughts

Whenever I hit a bump on my path, I usually find that some combination of these tactics works well for me. Personally, I get a lot of value out of thinking about what the ideal version of me would do, but all of these strategies have helped me at some time or another.

The key thing to remember is that a bump in the road is just that, a little bump. It is not the end of anything. It’s just another part of your journey.

Good luck!

The post On “Falling Off the Wagon” appeared first on The Simple Dollar.

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Thursday, February 22, 2018

How to Get Maximum Value out of a Personal Finance Book

My preferred way of preparing new ideas and posts for The Simple Dollar is that, once a week or so, I head off to the local library with a notebook in my backpack. I’ll go to the new release section and grab any books remotely related to personal finance that I see there, and then I’ll snag a book or two from the personal finance, business, and psychology sections that look interesting (along with the latest issues of any financially related magazines). I’ll reserve a study room for a few hours, go in there, get out my notebook and pen and a bottle of water, and just start reading.

My goal, of course, is to extract ideas that I can either research further or think about further or try to implement in my life to see whether or not they work. So, I’ll often browse through the books, reading different passages that look interesting, and write down an idea or two in my own words as anything pops out at me. If I start quoting an idea or I feel it’s really novel, I’ll write down the name of the book and the page I found it on so I can mention it in an article or look it up later.

At this point, I have a very, very good understanding of the basic personal finance advice that I’ll get out of any book. What I’m looking for now are related ideas and fresh takes and approaches that maybe I haven’t considered before.

That wasn’t always the case, though.

It wasn’t all that long ago when personal finance seemed basically impossible to me. I mean, I intuitively understood what you should be doing – a person needed to pay their bills and so on, and there are a lot of opportunities to spend money in stupid ways – but those ideas didn’t really click together into anything meaningful. Instead, I found myself slipping deeper and deeper into a financial mess.

A little later, I was in the same boat when it came to investing. I understood basic ideas like “buy low and sell high” and that you could make money in the stock market, but how did one do that and why? My first baby steps into investing were, at best, stumbles.

In both cases, I managed to figure out my path forward at the local library. Back then, there weren’t many personal finance websites out there that provided things on a level that really clicked with me, so I turned to books. I still think that books are unmatched for learning about a new subject, as they collect and organize the basics of what you need to know about a topic better than anything else, but the internet can definitely supplement that when needed.

The thing is, when you are feeling really uncomfortable about personal finance and go to the personal finance section of your library and look at those books for the first time, it’s intimidating. How do you even know what to pick? And once you have it, how do you not just feel overwhelmed by it?

That’s what we’re going to talk about today.

Picking a Good Personal Finance Book for Your Needs

So, you’re standing there at the personal finance shelf at your local library, or in front of the shelf at your local bookstore (if you’re there, I’d encourage you to go to the library instead, but to each his own), or looking at the endless listings on Amazon. How do you figure out which book you should even read?

The first thing you need to do is figure out what you want out of this book. Where do you want to be when you’re done reading this book? Do you want to have a plan in place for getting rid of debt? Do you want to have a bunch of ideas on how to cut back on your spending? Maybe you just want to understand where all of your money is going and why. Maybe you just want to try to get rich.

Whatever the reason is, figure that out before you ever start looking.

People come to personal finance books for a lot of different reasons, and your reason is no more right or wrong than anyone else’s. The thing to remember is that just as people come to personal finance books for a lot of reasons, the books are written for a lot of reasons. Some books are really focused on how to get out of debt. Some books are really focused on helping you build better spending habits. Others are focused on simply forging a better connection between your money and your life choices. Others really focus heavily on wealth building.

Here are a few of my own recommendations for specific niches.

If you’re looking for a book on paying off debt above and beyond anything else, I’d point to The Total Money Makeover by Dave Ramsey, which I discussed in a 12 part series in the past.

If you’re looking for a book on building a stronger connection between your life choices and your money, I’d point to Your Money or Your Life by Joe Dominguez and Vicki Robin, which I discussed in a thirty (!) part series in the past.

If you’re looking to learn the basics of investing, I’d point to The Bogleheads’ Guide to Investing by Mel Lindauer, Taylor Larimore, and Michael LeBoeuf, which I reviewed at length in the past.

If you’re looking for a book to help you teach your kids about money, I’d point to Raising Financially Fit Kids by Joline Godfrey, which I also reviewed at length in the past.

These aren’t the be-all-end-all of choices, either. These just happen to be ones that I found a lot of value in when looking at finances from a particular angle, and they’re certainly not the only ones that are good in those niches. The key is to figure out what you want and pick a book that matches.

The truth is that most of the books you’ll find in the personal finance section of a library are going to offer solid advice that’s perhaps simply tweaked to aim at a particular problem or at a particular type of reader, such as women or young adults or seniors.

There are a few things I recommend avoiding, however.

Don’t bother with books that have outsized claims on the cover that seem beyond reasonable possibility. Books that claim you’ll be a millionaire in short order are probably not worth your while.

Don’t bother with books that “predict” things about the future, like a huge stock market surge or a complete collapse of some market. Those things might be interesting, but they shouldn’t be the basis for sound individual personal finance.

Don’t bother with books that really strike you as targeting people besides yourself. If you’re younger, don’t read a book obviously targeting retirees. If you’re older, don’t read a book obviously targeting people in their twenties. I shouldn’t have to say this, but I’ve found a surprising number of people read a personal finance book that isn’t even trying to speak to them and then wonder why it isn’t helpful.

Almost everything else you’ll see in the personal finance section is probably a worthwhile read. Choose one that seems to speak to you and check it out.

Getting the Most Value Out of That Book

So, you have this great personal finance book at home, but what now? It looks long and fairly intimidating, with a lot of pages and probably some charts here or there.

Over the years, I’ve read tons of books covering topics that intimidated me and I’ve figured out a few ways to turn them from intimidating tomes into something really useful that I’ve been able to base a lot of ideas and personal choices on. My goal with such books is always to absorb as much information as possible into my way of thinking, even if it takes quite a while. It can sometimes take me a long while to read a book I’m really trying to understand and absorb, and that’s perfectly fine. That’s what library renewals are for.

Here’s what I do.

I set aside some time each and every day to read the book. Every single day, there’s a chunk of time I’ve set aside for reading a book that I’m trying to absorb and understand; usually, it’s a book that’s verging on “over my head” when I pick it up for the first time. I set aside an hour each day for this because it’s really important to me. If this isn’t something that’s natural for you, I suggest setting aside 15 minutes a day to start with. Set a timer for this if you think it’ll be helpful – pretty much any smartphone in the world can do this. Also, regarding your smartphone – put it in “do not disturb” mode (here’s how for Android and for iOS) and put it screen-down on the table so you’re not distracted by it.

When you sit down to read, grab a notebook and a pen and have them open beside you. The reason for this is that you’re going to be writing down things in your own handwriting. You’re not going to type them or just try to remember them. Why? Taking notes by hand has a huge benefit for absorbing the information into your thinking and recalling it later. It absolutely blows away not taking notes at all. It absolutely blows away taking notes by typing. Do it by hand. It’s worth the time.

As you read each section of the book, start a new section in your notes. If the book is broken down into short chapters, have a section for each chapter. If the book is broken down into longer chapters with subsections, have a section for each of those chapter subsections. I usually just write down the name of that section and draw two boxes around it so that it stands out as a new section in my notes.

If you see a new idea you want to remember, write it down in your own words. Don’t just copy it out of the book. Think for a bit about the idea and read it a few times if needed, and then write it in a way that feels more natural to how you describe things. This will make you think about the idea and that will embed it in your brain. I usually start off the writing down of a new idea with just a little dash to separate it from other notes.

If you have a thought that you come up with on your own, write that down, too. So, if you’ve read a few ideas and they’re clicking together with something else in your head, write that down, too. I usually preface those with a + sign instead of a dash, because that means it was my ideas crossing with what I was just reading about.

If you see something you want to take action on, write that down, too! Noticing a theme here? As before, when you see that idea that you want to take action on, rewrite it in your own way so that it makes the most sense to you. I preface these things with a big ! so I can look for things I might actually do later on.

If you have a question or a word that you don’t understand or an idea you want to know more about, write it down. Lead that one off with a ? so you can quickly see that it’s something you don’t know about.

At the end of a section or a short chapter, summarize it in your own words. I usually do this by writing SUMMARY and surrounding it in a box, then following that up with one or two sentences outlining the main point of that section in my own words. A lot of personal finance books like to include a summary at the end of a chapter, and that’s fine, but it’s still worthwhile to do it in one’s own words.

When the timer goes off, stop. You can keep going to an obvious stopping point if you’re close, but at that point, just close the book and notebook and put them aside.

Sometime later on, when you have a few minutes, look through your notes. Look up the answers to any questions you may have had and jot down an answer in your own words near that question. If you have any potential actions, add them to your to-do list or take care of them. Other than that, just read the notes.

Then, just repeat all of this, each day.

When you’re done with the whole book, put the notebook aside for a week or so. Return the book and let it breathe.

Then, spend some time going back through all of the notes after a week or two has passed. Think about all of that stuff, and then, at the end of all of your notes, write several sentences summarizing the book as a whole.

If you do this, you are going to remember the book really well. The ideas in it are going to burrow deep in your head, and you’re much more likely to start taking natural action based on the ideas in the book. That’s exactly what you want from a personal finance book. You want it to alter your thinking a little and move you to a natural mindset that’s more responsible when it comes to your finances.

The thing is, this takes time and patience. At fifteen minutes a day, this will take a few months to get through a reasonable book. That’s fine. It’s not a race. It’s far better to actually read and absorb one good book than it is to flip through the pages of ten without remembering anything about it.

When I’m completely finished with a book, I’ll often take pictures of all of the pages of notes and save them in Evernote for long-term storage. Evernote makes the notes searchable. I have an Evernote notebook for almost every nonfiction book I’ve ever read since I started doing this. It also means I don’t have to physically keep the notebooks if I don’t want to – I usually just fill them up and then toss them.

Final Thoughts

Remember, the purpose of reading a book is either for entertainment or to absorb the ideas, or possibly both. I’ll assume that if you’re reading a personal finance book, you’re probably looking to absorb ideas, and if that’s the case, this structure will do a fine job of that. It works incredibly well at embedding ideas in your head that will stick around for the long haul, which is what you really want when you’re trying to make changes to your financial life and gain a deeper understanding of your finances.

This process will take time, but you’re going to get far more value out of the time spent really absorbing one book than the time you would spend rapidly reading two or three books. Do a deep dive – you won’t regret it!

Good luck!

The post How to Get Maximum Value out of a Personal Finance Book appeared first on The Simple Dollar.

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Half-Price, Not Half-Baked: Save a Fortune at the Bakery Outlet

Every couple of weeks my partner visits what he calls “the used bread store.” That’s wiseguy-ese for “bakery outlet,” and those visits save us a ton of money.

Multigrain bread for $1.50 (and sometimes less). An 18-pack of good-quality hamburger rolls – not the gummy supermarket-brand ones – for $1. Flour or corn tortillas almost always on a “buy one, get two free” special, which means getting up to five pounds of tortillas for a dollar. Giant bags of restaurant-style white corn tortilla chips for 50 cents.

Why is this stuff so cheap? Two words: supply, demand.

When bread products don’t sell fast enough, markets return the overflow to the bakery. Although bread can taste fine close to its best-by date, consumers tend to go for the longer-dated stuff.

Not that you’re seeing only “old” bread at bakery outlets. Sure, some is within a day of its sell-by date. Yet we routinely buy breads and rolls with four to six days left on the clock. Not that it matters, since we throw it into the freezer and take it out as needed.

You can save some serious coin this way. Suppose your household goes through two loaves of multigrain bread each week and you’re paying $3.29 per loaf at the supermarket. Now suppose you could get the same brand of bread for $1 a loaf.

Do the math: $4.58 times 52 equals a little over $238 in savings per year – and we haven’t even gotten to the fun part of the store yet.

Cheaper Treats

Maybe you have a weakness for English muffins or raisin toast but can’t justify spending $2.99 per package or per (smallish) loaf. Perhaps the only way to get bagels in your area is to buy ’em by the bag. Could be that you have a secret weakness for chocolate doughnuts, Twinkies, or Little Debbie snack cakes but can’t stomach the cost. The bakery outlet can hook you up.

Not that you should make a steady diet of sweets, but what’s life without a little sin? If you’re anything like me, you hate to pay retail for dietary transgressions.

You never know what you’re going to find at the bakery outlet. Ours has bags of coffee beans at a price almost as good as Costco’s; sometimes they go on sale, which is when we stock up. When one-pound packages of Twizzlers showed for 50 cents each, we bought 30 pounds — we may have overbought somewhat. (Each of my nephews will get a package in his Easter basket. Dude heaven: a pound of strawberry Twizzlers, and no pressure to share with your brother!)

My partner’s son once found sardines canned in tomato sauce for a buck a can (a very good price here in Alaska, and maybe elsewhere, too). He asked if he could buy all the cans they had for a flat fee. The manager said, “Sure, why not?” and he found himself in possession with a lot of shelf-stable protein. Sometimes haggling works.

Outlets carry a wide range of non-baked goods, too. I’ve seen spices, frozen foods (burritos, barbecued ribs and the like), fish and chicken breading, condiments, grains, and gluten-free baking mixes.

Like salvage grocers, bakery outlets may pick up products that didn’t sell as well as expected, especially seasonal items or those associated with movies. In recent months we noticed an influx of “Star Wars” cookies and ice-cream cones stamped with images of Minions from “Despicable Me 3.”

One of my favorite things about bakery outlets, though, is the chance to try new varieties of bread without much cash outlay. If it turns out that onion dill rye bread sounded better than it tasted, you’re out only a buck or so.

And by all means do try new varieties. Different flavors of breads keep that brown bag lunch interesting.

Where to Find Bakery Outlets Near You

As baked-goods companies reorganize or simply get more efficient with their supply chain management (leaving them with less nearly-expired bread to unload), it’s getting a little harder to find bakery outlets. But the following locations all sell multiple brands of baked goods:

Aunt Millie’s: A Midwestern brand with shops in Ohio, Indiana, Michigan, Wisconsin and Illinois.

Bimbo Bakeries USA: Outlets in 44 states; brands include Arnold, Ball Park, Boboli, Earth Grains, Entemann’s, Freihofer’s, Marinela, Mrs. Baird’s, Oroweat, Sara Lee, Stroehmann, Thomas, and Tia Rosa.

Franz: Stores in Alaska, Montana, Washington, Oregon and Idaho; labels include Seattle International, Seattle Sourdough Baking Co., Alaska Grains, New York Bagel Boys, and, of course, Franz.

Holsum: Outlets in Louisiana, Wisconsin, Pennsylvania, California, Arizona, and Colorado.

Oroweat: Locations in Alaska, Arizona, California, Colorado, Louisiana, Missouri, New Jersey, Nevada, Oregon, Texas, and Washington.

Pepperidge Farms: Outlets in Connecticut, Indiana, Maine, Maryland, Michigan, North Carolina, Ohio, Pennsylvania, Virginia, and Wisconsin.

Schwebel’s: Stores in Ohio, Pennsylvania, New York and West Virginia.

In addition, do a search for “bakery outlet [your city]” since regional bakeries may have second-run locations.

Some Pro Tips

Ask about loyalty cards. In my Seattle neighborhood, the outlet had a punch-card system. When the card was filled up, you got a free loaf of bread.

Look for special deals. That same outlet had “senior day” and “double punch Wednesdays.” Plan your shopping accordingly and stretch your food dollars further.

Improvise. When my partner found bags of hoagie rolls for 50 cents each (eight per bag), we started cutting hamburgers in half and eating them on long skinny rolls instead of round ones. Nobody died. Another time the outlet had a screamin’ deal on big bags of tostada shells; he bought a couple, broke them into pieces and ate them with sandwiches, because ounce per ounce they were cheaper than tortilla chips.

When in doubt, add tortillas. A bowl of leftover chili becomes a heartier meal with the addition of some warm tortillas. Do a search for “dessert quesadillas” and create super-cheap sweets. Flour tortillas can also be used to make pinwheel sandwiches for a potluck, or for a brown bag lunch. Recently we ran out of those hoagie rolls so I ate the last burger between two corn tortillas, which was a little slippery but very tasty.

The Bottom Line

Obviously you don’t want to buy stuff that’s too old to be palatable. Generally speaking, you can save a lot of bread at the bakery outlet. The only difference between those discounted hoagie rolls and the full-price ones at a nearby supermarket was the price. I see no reason not to save 75 percent on the same product.

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

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