Saturday, November 26, 2016

Can a CD Loan Help You Build Credit or Tap Emergency Cash?

Here’s an approach to establishing, building, or repairing credit that few people are likely aware of: a CD loan.

More specifically, the process usually involves opening a secured credit card with a bank or credit union, which is backed by your certificate of deposit (CD). But that’s just one of the potential uses for what’s often referred to as a CD loan.

Such loans are also an option to consider when you need to tap some quick cash, and other sources of funding, such as a traditional loan or credit card, are simply not available.

The downside, however, is that fewer and fewer banks offer CD loans these days because the financial institution typically does not make much money on them. Not to mention that, in the age of low interest rates and high-yield online savings accounts, very few people even have CDs anymore, according to financial experts. What’s more, such loans are capped by the amount of cash in the CD.

“There’s a lot of limitations to them,” says Scott Vance, of North Carolina-based Trisuli Financial Advising. “But this is one of the possible tools you could consider if you need funding for something.”

Here are the key things to know about CD loans.

What Is a CD Loan?

First, for those who may be unclear, a CD is a time deposit account that involves tying up a sum of money for a fixed term, during which the money earns interest. Typically, the longer you agree not to touch the money, the higher the interest rate you’ll earn.

CD terms can be a month, three months, six months, or as long as three to five years. And here’s the key point – there’s a penalty for removing the money before that term has expired.

A CD loan however, allows you to borrow against the money you’ve deposited, without penalty.

Why Use a CD Loan?

There are various reasons to consider this approach to obtaining quick cash. Vance says he has seen clients opt for a CD loan when a sudden, unexpected need for money arises.

“When a client has a large amount of cash tied up in a CD, rather then totally cash out the CD and pay penalties, they can take a loan against that CD,” he explains.

This approach avoids the early withdrawal fees associated with a CD, yet still provides you with the emergency cash needed.

However, it’s important to note that the bank will charge interest on the CD loan. So it’s a good idea to be clear regarding how much interest you’ll be paying and whether this approach really makes the most financial sense.

“I had one client who had a lot of money tied up in three- to five-year CDs. And the roof on their house got damaged and needed to be repaired. They needed more cash to pay for the repairs then they had on hand,” explains Vance. “The interest rate for the CD loan in that case was less then a signature loan, or even a credit card.”

Using a CD Loan to Build Credit

Yet another use for CDs is building or repairing your credit. In this scenario, the money in the CD is used as collateral for a secured credit card or line of credit from a bank or credit union.

Ronit Rogoszinksi, a New York-based certified financial planner and founder of Women & Wealth Solutions, used a CD loan to help her college-bound son open his first credit card and establish credit. She describes it as a simple process that made sense for a teen who did not yet have any credit history.

“When he went off to college, we wanted him to have a credit card,” explains Rogoszinksi. “He applied for a major credit card and was declined.”

Rogoszinksi took matters into her own hands by opening a $500 CD at a small, regional bank that offered secured credit cards. The bank put the money into an 18-month CD, which was used as collateral for the secured credit card provided to her son.

This approach served several purposes, says Rogoszinksi. It allowed her son to establish a credit record, while also teaching him that there would be a penalty if the credit card was used inappropriately – in the form of his parents losing their $500.

“If you either have no credit or you have a child going off to college, and you don’t want them getting a regular credit card, this is a good option,” says Rogoszinksi.

Like other financial advisors, Rogoszinksi notes that few banks offer CD loans or lines of credit anymore. The most likely places to find them, she says, is regional banks and credit unions.

But the bottom line is that you still must come up with the money to put into the bank as collateral, if you don’t already have a CD established. And before taking this approach, make sure a CD loan is your best option.

“Good luck finding a bank still does them,” says Rogoszinksi. “And if you do find one, make sure to read the terms of the loan very, very carefully… A CD might earn 1% on a good day. If you’re going to borrow against it, find out what the fees are. And if it ends up being a loan that charges 10%, don’t do it. It’s not worth it.”

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Friday, November 25, 2016

Flexible Holiday Gift Ideas for a Frugal Person

Around this time of the year, I get messages and emails from folks who are struggling to figure out gifts for the frugal person in their life. What do they get for the person who is very careful with their money and doesn’t seem to want anything?

It can be a real challenge. I know that people in my life sometimes struggle for gift ideas for me (they’ve told me so), mostly because the handful of obvious interests I do have are fairly niche interests and they don’t know what to buy within those interests, and I also seem completely disinterested in more typical “men’s gifts.”

How do you buy a gift for a person with such a frugal mindset? Last year, I wrote a gift guide for frugal people that included a bunch of specific ideas:

A Slow Cooker
Freezer and Oven-Safe Storage Containers
A Chef’s Knife
A Knife Sharpening Stone
A Cast Iron Skillet
A Safety Razor (and a Box of Blades)
Good Rechargeable Batteries (and a Recharging Kit)
Bed Sheets
Good Food and Beverage Items
Specific High Quality Tools
Specific Camping or Hiking Gear
Homemade Items

While those are all great gift ideas, they’re also somewhat impersonal. Unless a person happens to be into a specific area of interest or actually needs one of these items, these gifts might very well end up unused.

This year, I’m offering a different approach, one that takes into account the person you’re giving the gift to. Here are some ideas that work well as gifts for frugal people.

A gift card that’s very focused on their hobby. Generally, I think gift cards are a poor gift because they come across as “unthoughtful,” but if you choose a gift card that’s very targeted toward their hobby, it can actually turn into a very nice gift.

A frugal person is typically someone who is very careful about spending money on their hobby. They find ways to enjoy their hobbies with minimal expense, even though there may be items that they could buy that would enhance their hobby. For example, an avid book reader (of which I am one) would enjoy a gift card to an independent bookstore.

Why not just give them a gift card to, say, Amazon? A frugal person is going to look at that and think of utility. They’re going to use a general-purpose card on general-purpose expenses. They’ll use an Amazon card to stock up on toothpaste.

Using myself as an example, a gift card to a niche retailer that focuses on the board gaming hobby, like Coolstuffinc, is a great gift because it encourages me to actually get something related to my hobby rather than using it on a normal shopping trip as I would with a gift card to, say, Target. Knowing about this hobby of mine is something that anyone who spent much time around me could easily figure out.

A well-researched reliable quality upgrade to an item they use regularly. If you’re close to the person that you’re giving the gift to, spend some time looking at the items that they actually use all the time. Are any of them worn out? Are any of them cheap or cheaply made? If you can identify such an item, spend some time researching a truly well-made reliable upgrade for that item and you have yourself a stellar gift.

The important thing to remember is that thoughtfulness, time, and research is what really matters here. If you’re looking for a quick gift solution, this is not the way to go. Instead, if you’re willing to spend a few hours really researching a gift and then spending a little to get a truly well made and reliable upgrade item for that person, you’re going to get that happy response that people always want when they give a gift.

Again, using myself as an example, I would love a really well made paring knife. I’ve had a Victorinox one for a long time, which is a great “bang for the buck” option, but an extremely well-crafted paring knife designed to last practically forever would be great. I cut up vegetables constantly with my paring knife. Again, someone who spent much time in my home probably saw me with a paring knife and may have heard me mention such a thing.

A consumable gift of a food item that they enjoy. Think of the foods and beverages that your recipient typically enjoys. Do they enjoy wine? Craft beer? Cured meats? Cheese? What do you actually see them eating or drinking?

Take those things you’ve actually witnessed that person enjoying and run with it. If you’ve seen that person enjoying craft beer, for example, head down to a craft beer store or a liquor store and ask for some recommendations. The same is true with wine. If you’ve seen them enjoy cured meats, stop at a butcher shop and pick up some jerky or salami for them.

The key is to base this gift on things you’ve actually seen that person enjoy. Don’t think about what you might like or what you think an average person would enjoy. Try hard to think about what they would enjoy.

For myself, a six pack or a bomber of unusual craft beer would always make a good gift, as would a soup mix or an unusual type of cheese.

An “experience” gift. An “experience” gift is a gift that leads directly to the person doing something rather than owning something. For example, tickets to a concert would be an experience gift, as would a certificate to take a cooking class.

Much as with the hobby gifts above, these types of gifts line up very well if they’re chosen with that person’s particular hobbies and interests in mind. If you got a pair of football tickets for a die-hard football fan, for example, then that gift would be cherished; for a non-football fan, though, they would become items to quietly sell on StubHub.

For me, for example, tickets to a baseball game would provide a great “experience gift,” as would a trip to a gaming convention.

A membership card or season pass that grants free entry to a place that might interest them. This is something of a continuation on the idea of an “experience” gift, but a season pass or a membership card to a particular attraction that might merit repeat visits can make for a really fantastic gift.

Again, this works best when you take that person’s interests in mind. If you have a friend who always wants to visit an art museum when they visit a city, then a membership to the local art museum (if they don’t have one) is a good gift idea, but for someone who shows no interest in art, it’s not the best idea.

For myself as an example, an annual family pass to the Living History Farms would be a wonderful example.

What if they might already have it? Think of a way to find out that information in a conversation. There are many ways to do this. You can ask them for advice on how they prepare vegetables, for example, if you want to get a good look at their knives. You can call them up and ask about art museums in the city and then figure out if they have a pass to the best one pretty quickly.

What if I don’t have a strong sense of their interests? This can often be true if you’re buying a gift for a relative that you don’t see very often, or if your interests don’t overlap all that much. You might literally have no idea what that person’s interests are, even if you love and care for that person.

The easiest way to figure this out is to simply browse their social media profiles. Almost everyone alludes to at least some of their interests on social media, so you can usually figure out at least a thing or two that they’re interested in on there.

If that area of interest alone isn’t enough, take that area of interest and incorporate it into a conversation with your gift-giving target. Get them to talk a little about their particular interest and pay attention. You’ll almost always find something to work with in their words.

In the end, the thing that matters to a frugal person isn’t stuff, it’s a bit of your thought and time. A frugal person is far more likely to appreciate a cheap but well-considered gift than a showy and expensive but ill-fitting gift. Put in a little bit of thought and you’re almost never going to go wrong.

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Hatchimals, ‘Unicorns,’ and Other Scarcity Marketing Tactics to Avoid

Just last week, I had a conversation about leggings that blew my mind. After receiving an invite to an online LuLaRoe party, I asked the host how the whole thing worked.

She said I just needed to join the Facebook group and then bid on the leggings I wanted. Simple enough, right? Funny thing is, the party also included a second component I couldn’t quite figure out – a competitive bidding process over special leggings known as “unicorns.”

Now, I’m not an expert, but here’s what I recently discovered: Some LuLaRoe leggings are called “unicorns” because they’re rare. Some of these leggings have actual unicorns on them, while others simply have popular patterns that devoted consumers apparently crave.

They crave these patterns so much, in fact, that they’re willing to get into bidding wars on Facebook to secure a pair. Upon learning these details, I burst into hysterical laughter. By myself. In my living room. Envisioning grown women bidding crazy amounts on “rare” leggings sounded especially funny for some reason.

Unfortunately, I quit laughing after Googling “LulaRoe unicorns for sale.” Across websites like PoshMark, eBay, and, people were selling these babies for $70 or more!

Scarcity Marketing, and Why it Works

While this all sounded crazy to me, it only took me a moment to realize the genius behind this strategy – and what I was witnessing. Scarcity marketing is a clever tactic employed by companies everywhere, spanning nearly every industry that sells services or retail goods.

The concept behind this marketing ploy is a simple, manipulative twist on supply and demand: Limit quantities of whatever you’re selling to generate a forced scarcity, thereby creating a perception that it’s rare or valuable. Once consumers have bought in, you can jack up the price – and the profits – as long as you’re careful not to flood the market.

“Scarcity is often used to bolster sales, but it can also be used to create massive brand lift,” writes Sujan Patel in Forbes. “It plays on the customer’s fear of missing out.”

Promotions like daily deals, product limitations, and one-time only sales create a sense of urgency and leverage scarcity, he explains. Promoting some items as “out of stock” is another way to show scarcity, mostly because it shows consumers your product was so popular it sold out. Examples of creating scarcity he offers include:

  • Amazon Fire TVs running out of stock within a week after launch
  • Nintendo shorted the production of the Wii game console
  • Apple delayed shipping by two weeks or more on the iPhone 5 just minutes after it launched

Some of this might be due to poor planning in supply and demand, notes Patel, but it makes you wonder how companies use this tactic to their advantage.

The Way Scarcity Marketing Affects the Way We Shop

The reality is, most of us encounter scarcity marketing nearly every day. Tell me, when’s the last time you read or hear something like:

“Only X left then they’re gone for good!”

“Offer available for a limited time only!”

“This event will sell out fast!”

“These are the lowest prices of the year!”

Heck, half of my kids’ toys use scarcity marketing as their main marketing ploy. The tiny toasters, blenders, and cupcakes known as Shopkins are the best example I can think of. These miniature toys use packaging that disguises half of the Shopkins you’re actually buying, creating an element of surprise kids love. On top of that, Shopkins creators Moose Toys labels the miniatures with terms like “rare” and “ultra rare” to add another layer of mystique. The goal, of course, is to convince consumers to spend more of their money in pursuit of these scarce finds.

It’s not always an intentional marketing strategy — but a limited supply can sure fan the flames of a nascent fad. At this exact moment, parents all over the country are also scrambling to find a new toy called Hatchimals. These stuffed animals that kids can coax into hatching from an egg were in stock as of late October, but they’ve become the “it” toy for the holidays, and they’re all but gone now. A message on the Hatchimals website explains it all:

“The consumer response to Hatchimals has been extraordinary, exceeding all expectations. Some of our first shipments have already sold out. While additional product will hit retail shelves in November, we anticipate this inventory will also sell out quickly. We have increased production and a whole new batch of Hatchimals will be ready to hatch in early 2017. This is a special season and we don’t want anyone to be disappointed, nor do we support inflated prices from non-authorized resellers. We are working on creative solutions to help kids and their parents withstand the wait. In the interim, some retailers are developing pre-sale and/or rain-check programs for redemption in January.”

If you want one bad enough, though, you can pony up $150 or more to buy Hatchimals on eBay – that would have retailed for about $50 otherwise. The worst part is, parents are the ones feeding this frenzy, not kids. “It’s a craze fueled by competitiveness — parental competition,” consumer psychologist Kit Yarrow tells Money. “It’s not about the product, it’s about winning and obsessiveness.”

Of course, scarcity among kids’ toys is nothing new. In the 1980s, parents practically stormed the stores to get their hands on Cabbage Patch Kids. And old “Today Show” clip shows newscasters explaining the phenomenon, describing lines that were hours long, fights breaking out in the aisles, and parents bribing store managers to be first in line for a new doll.

Why the craze? Because Cabbage Patch Kids were released in limited numbers, and mostly individualized with their own name, look, and birth certificate. It all worked similarly to the LuLaRoe leggings and Shopkins of today. Make something artificially scarce and “special,” and people will line up in droves to buy it. They always have, and perhaps they always will.

The Bottom Line

The fact that retailers want us to spend more on regular stuff that’s purposely made “scarce” is a given, but that doesn’t mean we have to buy into it. Just like anything else, we have the power to decide how we spend our hard-earned dollars, and whether rare leggings, toys, or electronics are worth the splurge.

The best way to avoid overspending for items that aren’t really better, I think, is to spot scarcity marketing and avoid it. It all boils down to the reality of your spending. Do you or your kids want the item because of what it does, or what it represents? Are you buying something because you want or need it, or because you’re scared you’ll miss out? It’s like when you walk into Kohl’s and see that nearly everything is 50% off. But if you save 50% on something you didn’t need in the first place, you didn’t really save anything.

The next time you get pulled into a last-minute deal or a special sale, ask yourself if the item is even worth it. Are you spending more out of a sense of urgency, or could you wait and find a better deal later? And if you find yourself getting ready to pay $70 for a pair of leggings, shut down your computer… and walk away.

Related Articles

Have you ever bought into scarcity marketing? How do you spot scarcity marketing and avoid it?

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Thursday, November 24, 2016

31 Days to Financial Independence (Day 15): Trimming Your Spending – Apparel and Services

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

Last time, we continued looking at the average American family budget, going through each category and examining how one could trim the cost of typical expenses in that category. Here’s the “average American family budget” that we’re looking at, along with links back to the earlier entries on those specific areas:

Housing – $10,080
Transportation – $9,004
Taxes – $7,432
Utilities – $7,068
Food – $6,602
Insurance (including things like pensions) – $5,528
Debt Payments – $5,252
Healthcare – $3,631
Entertainment – $2,564
Cash Contributions – $1,834
Apparel and Services – $1,604
Education – $1,138
Vices – $775
Miscellaneous – $664
Personal Care – $608
TOTAL – $63,784

Today, we’re going to skip over cash contributions (a really vaguely defined category without a lot of room for straightforward cost cutting) and take a look at apparel and services. As you can see from the budget above, the average American family spends $1,604 per year on apparel and services, which averages out to about $140 a month. Remember, however, that this “average American family” includes single adults, married couples without children, and families with children, too. In other words, a single person is probably coming in below that, whereas a large family (like ours) is probably coming in above that.

So, what constitutes “apparel and services”? Obviously, clothing falls into this category, but so do things like dry cleaning, shoe repair, and tailoring.

Exercise #14 – Trim Your Apparel and Services Spending

The rest of this article consists of a long list of specific tactics that you can use to trim your apparel costs. As with the other savings articles in this series, it’s important to remember that everyone lives a somewhat different life and thus some of these tactics are going to seem useful and sensible to you, while others will seem like a stretch to you, and still others won’t apply at all. That’s okay. Ignore the ones that don’t apply. Make an effort to adopt the most sensible ones. Then, give the others a trial run and see if it’s something that can work for you. Commit to some of the challenging ones for thirty days and see if they work, or apply them during the relatively rare situations when those costs come up.

Remember, your overall goal is to cut back hard on the areas of life that are less important to you – the shallows – so that you can afford the “deep” areas of your life both today and tomorrow. Keep that in mind as you read each tip. Is this tip cutting back on something that’s really important to me, that amounts to a core life value? If not, why not cut it so that I can afford those things that really matter?

Let’s dig in.

Never go clothes shopping without a plan. This is true for any shopping excursion, of course: you should never go shopping unless you have a very strong grasp on exactly what you plan on buying. That way, you have a “mission” to undertake when you enter the store. You’re looking solely for the items that match what you’re looking for.

Doing this cuts down drastically on wandering and browsing, and stores of all kinds are designed to get people to buy more things when they wander and browse, particularly things that they don’t need and barely want. That’s the purpose of almost every feature of a modern store, from the layout to the ambient music to the location of particular items to the displays. It’s all about converting a “wanderer”/”browser” into a buyer, regardless of their desires.

You can short-circuit that by having a plan. Make up your mind as precisely as possible before you enter the store in terms of exactly what you need to buy and focus entirely on executing that purchase as efficiently as possible. That way, you have far less focus left over for unplanned purchases, which are often money dropped straight down the drain.

Switch to a “flexible” professional wardrobe. This is a strategy I used quite successfully during my last few years of professional work. In short, I essentially had a handful of “mix and match” elements that all went together pretty well to create the impression that I had a lot more clothes than I did.

For example, I had a few pairs of very basic dress pants, several fairly basic dress shirts, and a number of ties that didn’t clash with the shirts. By mixing and matching these, it gave the impression that I had more clothes than I did. This would have been even easier if I were in an environment to wear a jacket to work, as mixing and maxing shirts, ties, and jackets that don’t clash with each other makes your wardrobe look huge when it’s not really all that big.

Try to choose clothes that go reasonably well with lots of other things and you simply don’t need as many clothes because everything goes together. It’s easy to just throw together an outfit if everything matches.

Buy well-made and long lasting items if you’re buying new items. Some of the strategies on this list are for buying used items. Used items come with the implicit understanding that they’re not going to last forever and that’s okay – that’s part of the deal when spending a fraction of the cost.

When you’re buying new, however, look for brands that have a reputation for being very long lasting and sturdy and spend a little more for them. A shirt that will last ten years is worth paying 50% more for compared to a shirt that will last two or three years.

Spend some time researching brands that have a reputation for long-lasting apparel and make those brands your focus. At the same time, know how to identify well-made clothes. Learn to inspect seams and cloth to make sure that the items are going to last.

If you’re less fashion-conscious (like me), buy a repetitive wardrobe of stuff that just fits and works. My wife says I dress like Mark Zuckerberg. I take that as a compliment. For those unfamiliar, Mark Zuckerberg is the founder of Facebook, a billionaire many times over, and a person who essentially wears the same thing every single day. His closet is mostly just full of duplicates of the same items.

If you have a particular outfit that looks reasonably good on you and fits you well, just buy several copies of the same outfit whenever you find it on sale and wear them until the items wear out, then repeat. Since I work from home, I wear a plain t-shirt and jeans every single day, so I just buy well-made jeans and t-shirts when they’re on sale and wear them forever. It works really well for me and keeps the cost low.

When clothes become worn out, save them for “around the house” use. When a shirt becomes worn out, don’t throw them out. Save them instead for days when you’re going to be at home taking care of household tasks or just relaxing. Wear that old t-shirt or even that old dress shirt on those days. There’s nothing wrong with wearing a beat-up dress shirt to weed the garden or to walk the dog or to wash the windows or to do laundry. There’s nothing wrong with wearing an old t-shirt when you’re cleaning out your car or doing the dishes or helping your child with a school project.

As long as the clothes cover your body and are comfortable to wear, they’re perfectly fine to wear around the house.

When they’re too worn even for that, make a “rag bag.” Eventually, clothes become just too worn to even wear around the house. T-shirts and socks and other items eventually get holes in them or tear along their seams and they’re just not wearable any more.

In that event, convert them into rags. You can just toss them into a bin in the garage to soak up messes or cover the ground if you have to lay down. You can cut up t-shirts and hem the edges to use as cleanup rags and dish rags around the house. This saves on buying rags or paper towels and gets even more value out of your most used clothes.

When you shop for clothes, start at the secondhand store (particularly ones near or in upscale neighborhoods). Here’s a secret about secondhand stores and thrift stores: you don’t go shopping for the junky stuff. You ignore all of that. Instead, you browse through the shelves and hangers for the items that are stuck in there inexplicably, the items that are in great shape and on sale for a buck or two. There are always items like that in thrift stores and secondhand shops. You just have to look.

The ratio of junk items to quality items is much better at thrift stores and secondhand stores that are near upscale neighborhoods because people from those neighborhoods go to the nearest secondhand shops to offload their stuff, so you can go in there and often pick up things that are essentially new.

Sell off the nicer clothing you don’t regularly wear. Most people eventually build up items in the back of their closet that they don’t wear. Perhaps it’s uncomfortable. Perhaps it just doesn’t fit well. Perhaps it’s just not as well “liked” as other items in your closet.

Whatever the reason, if you’re not wearing it, you should sell it and get some value out of it. If it’s a nice article of clothing, take it to a consignment store. If it’s more worn, donate it. Even if you aren’t directly compensated, you’re still freeing up room in your closet.

Buy clothes for future seasons at the end of the current season. Quite often, as stores transition from stocking clothes for one season into stocking clothes for another season, they’ll have big sales on the clothes for the previous season to avoid having to send them back to the manufacturer. It’s almost always better for the store to actually sell the item at a discount than return it.

Take advantage of this. If your winter wardrobe needs a refresh, wait until the later winter months to buy clothes to refresh it. If your summer clothes need a refresh, wait until the later summer months to refresh it. You’ll find that retailers of all stripes have the clothes you need on sale right when you’re ready to buy.

Take advantage of tax-free holidays. In my state, the first weekend of August is a tax-free holiday on apparel, meaning you pay no sales tax on apparel items bought during that three day period. Stores take advantage of this and compete with clothing sales to maximize the number of customers that come in the door.

Because of that, it’s a perfect time to buy school clothes and do a bit of a wardrobe refresh. We often start by going to thrift shops the weekend before and buying clothes there, then fill in the holes in the wardrobes by hitting the clothes sales during the tax free weekend. We can often refresh our entire wardrobes for a fraction of the price of shopping for clothes on normal weekends.

Don’t assume “everything’s on sale” if you’re at an outlet mall. Outlet malls have a reputation of being places to find nice bargains, but the truth is that many outlet malls are just retail stores for their specific brands. While you might find some discounts, you’re making a big mistake if you treat everything there as being on discount.

If you’re going shopping at an outlet mall, keep your price guard up and make sure that things are actually at “outlet prices” before you buy. If you’re not saving much by shopping there, don’t buy there; you can often find better bargains by simply using the other strategies in this article.

Avoid clothes that require extra care as much as possible. One of the biggest money sinks of a professional wardrobe is upkeep. It can cost a lot to keep your clothes dry cleaned or to take on special cleaning practices yourself for specific garments. Even if there is no additional cost, there’s often additional time involved.

The best strategy here is to make sure that the garments you buy don’t require any additional care, particularly if that additional care requires you to pay for special services like dry cleaning. Just avoid such garments entirely and find other solutions for your wardrobe. Buying and wearing such clothes just turns into a time and money sink which you really can’t – and shouldn’t – afford.

Don’t buy expensive workout clothes. While it can be tempting to buy special clothes for working out, don’t do so unless there’s actually a need for it. A t-shirt and a pair of shorts or sweatpants is all you need for almost any workout activity.

Yes, there may be special cases where particular articles of clothing are useful or necessary for specific people or for specific workouts, but if that need isn’t there, don’t invest the money. Just wear a t-shirt and shorts. It’s pretty standard gym apparel and it won’t cost you an arm and a leg.

Swap services with a friend that can sew. If you need to adjust or hem an article of clothing, that might mean a trip to a tailor if you don’t know how to sew yourself (or don’t have the materials for it). That can be very expensive indeed.

A much better strategy is to become friends with an amateur who sews for a hobby and swap services with that friend. Offer to watch their children for an evening in exchange for a simple garment adjustment. Offer to fix their computer and clean off their viruses and popups in exchange for the labor portion of a major garment adjustment. You get the idea.

Swap clothes with similarly-sized friends. Many people buy clothes simply because they want to change their look a little. They want to experiment with new colors or patterns or designs.

One way to do that is to find friends that are very similar to yourself in size and do a closet swap. Simply exchange a bunch of items from your closet for similar items from your closet. Suddenly, you have a bunch of new clothes to wear and it didn’t cost you a dime!

Make simple repairs yourself. If a button falls off of a shirt, it’s not time to call a tailor nor is it time to throw away that garment. It’s time to get out a needle and thread and spend fifteen minutes fixing the problem.

Simple issues like a loose hem or a button that’s fallen off are issues that almost anyone can resolve themselves with a needle and a bit of thread. It’s not difficult to sew on a button or fix a loose edge somewhere – the ability to stick a needle through cloth several times and tie a small knot is pretty much all you need. If you need more help, look online.

Be proactive with simple repairs. Rather than fixing an article of clothing with minimal effort, be a little proactive. Sew that button on securely rather than just using minimal thread. Better yet, secure all of the buttons on that shirt with an extra bit of thread, because if one came loose, it’s likely that others will come loose as well.

Dry your clothes slowly. Instead of loading up your dryer and turning it on high to blast-dry your clothes, consider a slower approach. Hang them up on a line in your basement or use a drying rack or, at least, use a lower heat setting in the dryer.

While this might seem like an energy-saving tip, it’s also a clothes-saving tip. Think of the lint in your lint trap in your dryer. Do you know why it becomes so full? It becomes so full because the action of the dryer is literally beating fibers out of your clothes, causing them to wear out far faster. You don’t get “lint” when you line-dry or rack-dry your clothes and you get a lot less lint at a less intense dryer setting.

Come back next time when we cover all of the remaining categories at once – education, vices, and miscellaneous expenses!

The post 31 Days to Financial Independence (Day 15): Trimming Your Spending – Apparel and Services appeared first on The Simple Dollar.

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Wednesday, November 23, 2016

Finding Something New on the Long Financial Journey

Here’s the truth: when you set a big financial goal for yourself, most of the new discoveries and new behaviors occur at the start of the journey. You bury yourself in knowledge, learn quite a bit, figure out a plan that works well for you, put that plan in place, automate it as much as you can (by having money taken out of your check and so on)… and then you wait. And wait. And wait.

For some people, that waiting can be very difficult, for two reasons.

First, it can feel like there’s less opportunity in their day to day lives. Whenever you take on a financial goal, particularly once you first exit the “honeymoon” period (the part at the start of any new endeavor where you’re having fun learning and trying new things), you’re going to find that you’ve allocated your resources differently and that usually means you have less resources left behind for “free spending” compared to what you had before you started. That can feel disheartening. It can easily twist in your mind into a sense of being very restrictive, giving you a strong sense that you’re missing out on opportunities and life experiences.

Second, it can feel like the progress is really slow and you’re helpless to make it go much faster. Often, once you’ve set up a financial plan, it’s just a matter of rolling through the months and years. The plan is on autopilot. You’ve set it up and it’s running along in the background, but it’s going to be a very long time before you see results.

When you combine those two factors, the road to financial success can seem like a very long drive on a Kansas highway. The hours roll by, but the horizons seem endlessly flat and the destination is still so far ahead that you can barely see it. You feel like there’s nothing new under the sun at all.

In the end, you can start to become disconnected from your goal and from what you’re doing to progress toward it. Disillusionment can begin to creep in, which makes it easier and easier to give up.

What can you do?

For me, a big part of the solution has been to constantly look for new things on the long financial journey. While my financial plan is pretty much locked in place at this point, it actually relies on a bunch of things in my life not actually changing from the way that they are right now. Those factors, from my family to my career, from my personal beliefs to the individual tactics I use each day, are not perfect. They’re never perfect.

Thus, I’ve found that an essential piece of ongoing financial success during the “set it and forget it” part of the journey is to dig into those underlying factors and see what I can do to improve them.

I like to use a house analogy for this. I’ve got blueprints for a house and I’m in the process of ordering parts and waiting for them to be delivered. While I wait for that delivery, I can just sit in place and stew on my thoughts, or I can look for ways to make that house better. I can look at where the foundation is going to go. I can look for new construction or architectural ideas. Yeah, I might end up changing that blueprint a little bit, but what I’m going to end up with is a better house than before, probably one that’s built faster, too.

Here’s how I’m constantly trying to “improve my blueprint” and find something new under the sun during this journey.

Learn (and Think) About the “Why”

Why exactly am I on this financial journey to begin with?

It’s a simple question at first glance. I want to retire early and have the freedom to do lots of things at that point.

But the longer I look at the question, the deeper it becomes.

Why do I want to retire early? Why do I want some sense of freedom in the future? What kind of freedom do I want? Why do I not have that freedom or some aspect of it right now?

And it keeps going deeper.

Why do I desire things that are different than what I have right now? What is it that I really value the most? Why do I emotionally respond to things the way that I do? Why do I make the choices that I make?

Very quickly, you start running into some very challenging questions, ones that aren’t easy for anyone to answer. They lead directly into reading about philosophy and psychology and spirituality.

I find myself reading a great deal of philosophy right now, particularly stoicism and transcendentalism. I read a lot about the information age and how it’s changing our brains and our desires.

More than that, I think about those things. I look at my own life through lots of different lenses and the lives of others through those lenses.

And, over time, I gradually begin to answer those deep questions to my own satisfaction. It turns out that those answers are never exactly the same for anyone, but by reading the thoughts of people who have deeply pondered those questions, you can shape your own answers and build them into something strong.

Once you start having real, concrete answers to those questions, you start to see how the changes in your foundation actually change your day-to-day life and your big financial plans. You start walking right back up the ladder of those questions until you can really answer that “why” question in a way that really means something for you.

It’s a journey that never really ends. There’s always a new way of looking at things.

I tend to view this journey as being like a rough-edged rock. You have some vague idea of the core of your values, but the edges are very rough. Learning about things like philosophy is like tossing that rock into a rock tumbler that, over time, gradually smooths out the edges and lets the underlying aspects get exposed. It’s a long process, but the stone at the end is beautiful. It’s something you’re proud of. It’s something you can build on.

Try polishing the rock that is your underlying values and see where it takes you.

Try New Tactics

I’ve been reading about, writing about, and trying all kinds of money-saving tactics for many years now on a near-daily basis. The reality is that, when I see a new list of tactics, I’ve usually already tried the vast majority of them. That’s okay.

For me, though, reading a list of tactics to find two or three that I haven’t tried before is actually worth it because trying those two tactics and figuring out if they make sense or they’re cost-effective really does “liven up the game” a little bit. I enjoy that discovery process. It’s actually quite fun to find a better way of doing things, a more cost-efficient way of doing things.

I’m at the extreme end of this, having written and experimented with frugality tactics on a weekly basis for literally a decade of my life. For others, the ratio of repeats is going to be lower.

For me, this simple technique checks a ton of boxes.

First of all, it provides new experiences. I’m going to be doing something different that I haven’t done before. That’s fun in itself. In the process of trying out new frugal techniques, I’ve learned to cut my own hair, made my own soap, made pasta from scratch, tried iced coffee with ice cubes literally made of coffee, and dozens and dozens of other things that were well worth trying, even if they didn’t all stick. I’ve made new friends, entertained my children, and taken care of countless household responsibilities along the way. Trying something new is almost always interesting, even if you conclude that it doesn’t fit for you.

At the same time, it potentially results in a better method of doing things. Lists of frugal tips have improved how I boil pasta, how I prepare beans, how I wash windows, and countless other things. Either I’ll find a technique that works better than before at the same price or I’ll find a technique that works just as well as before at a lower price. In either case, I’m better off, and that actually happens more often than not.

The point? Try stuff. Even if a long list of tactics seems old hat, dig out the five or so you haven’t tried before and give them a shot. See if they fit for you.

Build Up the “Earn” Side of the Equation

No matter how perfectly your financial plan is set up, it can almost always be disrupted in a positive way through entrepreneurship and good career moves. If you raise your income level, you’re either going to be able to achieve your goal far faster than before or else you’re going to be able to elevate your goal to greater heights than ever before.

One approach is to focus on your current career path. What can you do to get great job performances that might lead to a raise or a promotion? What challenges can you take on that will build your resume for a better job? Can you take on more hours? Can you look for a professional mentor who can help guide you in your current situation? Can you simply just stop idling at work, find things to work on, and be more productive? All of those things not only provide a new focus, but they also result, in the long run, in more income.

Another approach is to focus on building a small side business of some kind. There are infinite side businesses you can start, from gardening for vegetable sales to starting a Youtube channel, from a lawn care business to writing ebooks. Spending a healthy portion of your time on a side gig can build a daydream into something that produces real, significant revenue throughout the year.

Both routes provide a new set of challenges that, upon succeeding, will provide benefits that directly accelerate your already-existing financial goals.

Final Thoughts

The journey to your financial destination can seem long and dull, but that’s only if you accept your current mindset as being beyond question, your current tactics as being more than good enough, and your current earnings and career options as deeply satisfying and incapable of improvement. Since almost no one can claim those things as all being true, it’s very likely that the path to your financial destiny involves many options for new directions and new experiences.

Good luck!

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Do Employee-Owned Companies Make for Happier Workers?

Your boss would love for you to feel like you have a stake in the company. After all, loyal employees put in longer hours, produce better work, and stick around for more years than those whose feelings about the organization can be summed up with a resounding, “Meh.”

There’s just one problem: With job security a thing of the past, and workers changing jobs a median of every 4.2 years, per Bureau of Labor Statistics data, the average worker would be crazy to get too dedicated to their employer.

Unless, of course, that worker owned part of the business.

It’s not as crazy as it sounds. The number of employee-owned businesses has been on the rise for the past few years. In 2013, businesses with ESOPs (employee stock ownership plans) accounted for “about 12% of the private sector workforce,” according to U.S. News & World Report.

“I predict significant growth in the number of ESOPs in the next five to 10 years,” due to retiring business owners opting for tax-advantaged plans, Corey Rosen, executive director of the National Center for Employee Ownership (NCEO), told the Christian Science Monitor.

Current employee-owned businesses include Vermont-based King Arthur Flour, Boston’s Harpoon Brewery, and even large employers like Lifetouch, Penmac, and Amsted Industries.

How Employee-Owned Businesses Work

An ESOP isn’t as simple as just handing over the company to the employees. Rather, employees receive an ownership interest, often over time. The National Center for Employee Ownership explains: “Companies set up a trust fund for employees and either contribute cash to buy company stock, contribute shares directly to the plan, or have the plan borrow money to buy shares. If the plan borrows money, the company makes contributions to the plan to enable it to repay the loan.”

The company’s contributions are tax-deductible, according to NCEO, and employees only pay taxes on the contributions once they receive their share of stock upon retirement or when they leave the company. At that point, they can sell their stake in the company.

In practice, setting up an ESOP can be complicated, depending on what owners were doing for their employees beforehand. For example, Entrepreneur detailed how Kim Jordan and Jeff Lebesch of New Belgium Brewing switched to an ESOP. (Breweries seem especially apt to adopt the model.) Originally, the pair had created a phantom deferred compensation plan; when they decided to switch to an ESOP, “they honored the original plan until all account-holders’ ESOP balances were larger than their phantom balances.” Later, Lebesch left the company, and Jordan and the rest of the organization bought him out — ultimately increasing the employee-owned shares.

Are Employee-Owned Companies Happier Places to Work?

Still, as a business owner, dealing with the complex financial wheeling and dealing might be worth it. Although it’s hard to quantify worker happiness, employees at ESOP companies provide plenty of anecdotes suggesting that having a stake in the business makes people feel better about going to work.

Doug Miller, a warehouse technician at New Belgium Brewing, told PBS: “[Other jobs are] a job and you’re just coming in and you’re punching the clock and you’re doing your job. Here, you just do it more because you’re working for yourself. Like, I don’t work for New Belgium. I am working for Doug Miller. I am working for people who work here. That’s the difference.”

Workers at other employee-owned businesses display a similar sense of investment and belonging.

“When it comes down to crunchtime, we’re a team,” Susan Becker, a receptionist at King Arthur Flour, told the Christian Science Monitor. The Monitor notes that King Arthur Flour, which was family-owned from 1790 to 1996, has grown from five employees to 160 employees since it became employee-owned.

It only makes sense that workers would be more invested in the company if they’re, well, literally invested in it.

“It’s easy to see why,” writes Darren Dahl at Forbes. “Employee-owned companies tear down the walls that have traditionally pitted management against labor, which typically results in a very collaborative and transparent culture where everyone is pulling for the same goals.”

Have you ever worked for any employee-owned company? What was it like? Tell us about it in the comments. 

Related Articles

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Tuesday, November 22, 2016

Financial Success and Ethical Consumption

Donna writes in with a great question:

Hi Trent!

I am really struggling with balancing ethical consumption with my dreams of financial success. Quite often, getting the most “bang for the buck” for a product involves buying from a company that cuts a lot of ethical corners in terms of their products. […] Looking for some insights into how to balance those concerns.

First of all, let’s look at what ethical consumption actually is. From Wikipedia:

Ethical consumerism (alternatively called ethical consumption, ethical purchasing, moral purchasing, ethical sourcing, ethical shopping or green consumerism) is a type of consumer activism that is based on the concept of dollar voting. It is practiced through ‘positive buying’ in that ethical products are favoured, or ‘moral boycott’, that is negative purchasing and company-based purchasing.

What does that mean in real world terms, though?

Ethical consumption just means that you choose not to buy products from companies that do things you consider unethical and you choose to, whenever possible, buy products from companies that do things in a way you consider ethical.

Let’s say, for example, that MegaCorp makes a particular brand of popular discount laundry detergent. The chemicals used in making the detergent is harsh and it is discovered that MegaCorp not only is exposing every employee in their company to these chemicals with no protection whatsoever, but they’re also dumping that chemical into a river that provides drinking water for five million people and they’re doing their best to cover it up. Meanwhile, Beautiful Babies LLC offers diapers that are hand made by well-paid artisan craftsman without chemical treatment, and zero waste is being produced from the Beautiful Babies factory. There are several ethical and moral reasons why a person might choose to buy diapers from Beautiful Babies rather than MegaCorp.

It’s important to note that not everyone subscribes to the exact same system of ethics, so I’m going to do my best to avoid pointing fingers at specific companies in this article. Instead, I’m going to try to use hypothetical examples that use extreme moral and ethical standards so that the difference is clear cut, like the one above.

So, what’s the problem here? It makes sense to not buy products from companies who do things that morally and ethically disgust you.

The problem is that companies that cut moral and ethical corners can often produce products at a lower price than companies who do not cut such corners. In the diaper example above, MegaCorp isn’t having to deal with the expense of handling that chemical waste or providing adequate protection for their employees, which enables them to sell diapers at a lower price than Beautiful Babies.

This comes into conflict with many of the core principles of frugality and financial improvement. One of the best strategies for financial self-improvement is to seek out the maximum bang for the buck with every purchase in order to conserve your financial resources to get out of debt and build a better future, right?

So, imagine you’re a parent who is trying to do just that – build a better financial future for yourself and your children. You’re standing in the diaper aisle and the box of MegaCorp diapers costs half as much as the box of Beautiful Babies diapers.

Which do you buy?

It’s not easy because you’re feeling two different deeply held values smashing against each other. On the one hand, you want to put you and your family on the strongest financial path, so the low price on the MegaCorp diapers looks really tempting and the high price of Beautiful Babies diapers is worrisome. On the other hand, the behavior of MegaCorp disgusts you deeply and you feel as though you’re rewarding that behavior by buying that product, so the MegaCorp diapers take on a negative light, and you also want to reward the ethics of Beautiful Babies so they take on a more positive light.

It’s an issue that anyone with a social conscience eventually deals with, and if you’re also invested in your financial future, you’re going to deal with it over and over again.

How do you resolve it? It’s not easy, I can say that for sure. It’s something I’ve struggled with many, many times over the last several years as I try to make purchases that simultaneously make financial sense and align well with my values.

Here are some of the strategies that I use.

Think Deeply About Your Values and Define a Few Very Clear Ethical Rules

Let’s say, hypothetically, that you’re upset by the notions of sweatshop labor and of chemical dumping into rivers. Those are two things that upset you deeply because you value paying people fair wages and keeping public resources clean.

Let’s say one company is known to be dumping several tons of industrial waste a year into a river just upstream of a major American city. Their primary competitor, on the other hand, keeps their factory clean, but it’s an overseas factory employing workers for $1 an hour under cramped conditions without proper safety gear.

Which company’s products do you buy if you have to buy one?

It’s not easy, is it? If you really care about both of those values, both companies might seem repugnant.

That’s part of the challenge of ethical consumption. Every single company in the world is likely doing something that you would ethically disagree with. Maybe they’re not paying their workers adequately. Maybe they’re not trading with their supply chain fairly. Maybe their factories produce a lot of waste. Maybe their factories run on unclean energy. Maybe their products feature a lot of wasteful packaging. Maybe they have hiring practices that you don’t like. Maybe their board of directors/CEO/president are involved, collectively or individually, with political causes that you disagree with.

Ethical consumption, in the end, means buying products from a company that is doing something that bothers you less than the behavior of another company. It’s going to be comparative, because no company is perfect.

What does that mean for you? You have to decide which particular values are most important to you and how they relatively rank. Do you buy products based entirely on their environmental impact? What about how they treat their workers? What about how hard they bargain with their suppliers? What about the sources of their energy? What about the political actions of their senior executives and directors? Which of those questions (or the others you might imagine, depending on what you personally care about) is truly the most important to you? Where do other questions rank behind it?

That’s going to seem incredibly hard at first. There may be a wide array of values that you care about deeply. However, if you don’t have a pretty strong sense of how those values compare for you, it becomes essentially impossible to make comparisons. If you don’t know how you feel about the importance of paying fair wages versus the importance of cutting down forests, how will you compare two different paper product companies, one of whom is involved in clear cutting while the other strongly underpays their workers?

Here’s why this is important. If you are not clearly pushing a central value or two with your ethical consumerism, your “voice” becomes deeply muddled and almost meaningless. If you’re trying to balance a dozen issues you care about, you’re going to constantly be compromising some of those issues with every purchase and your ethical purchases aren’t going to send any sort of clear message to anyone.

In the end, you need to decide on one or two issues you care about the most and upon which you make your buying decisions, while other factors become “tiebreakers” of a sort. If you don’t do that, then your ethical consumption won’t lead to any sort of change that you might want to see.

Let’s say, hypothetically, you’ve decided to support products that are made in America from ingredients provided by American suppliers if possible and you’re willing to pay extra for things that are made in America from American suppliers.

How much is that really worth to you? Are you willing to double the price of an item in order to make sure that it’s American made? Triple the price? Does that extend to literally everything you buy, or are you mostly concerned with a particular type of good, like clothing?

Again, this comes down to what exactly ethical consumption means for you. You’ve defined a central value that you care about the most in the previous step, but now you’re trying to figure out what it’s actually worth to you and how far you extend it.

Also, as before, it’s easy to just take a lazy answer here and say that you’re just going to generically “buy American,” but that doesn’t actually mean anything because if you’re not hitting a precise target with your purchasing dollars, your message becomes muddled and you quickly end up compromising what you value.

For many people who aren’t wealthy and are trying to build financial success for themselves, I think the most effective route is to define a few ethical rules that they’ll follow regarding some specific types of goods and then follow those rules regardless of dollar amount. That way, you can actually say something meaningful with the dollars you spend instead of just muddying the message and saying nothing at all. For other types of products, don’t worry about it because the ethics and morals you’re expressing with the purchase are likely to be muddied.

Cut Through the PR

You’ve decided on a few very specific buying rules that you’re going to follow. That’s great! If you stick to those rules, you’ll actually be making an ethical statement with your purchases.

The next step is to make sure that you’re actually following those rules, at least to the best of your ability. It’s time to start really researching specific companies and products related to those buying rules that you figured out.

Let’s say, for instance, that you decided to buy clothing made in America with supplies made by Americans, even with a price premium. That means you need to find companies that manufacture everything from t-shirts to underwear and coats to shoes that are made in America with supplies made by American. Time to do some real homework to identify those companies!

Many companies out there will issue press releases that tout that their product subscribes to particular common values out there, like “made in America.” Those press releases are often very selective in their claims, making the best “made in America” case that they can make but often excluding elements that might undermine that claim. For instance, they might show pictures of American workers working at that American factory, but if all they’re doing at that factory is stitching together two bolts of cloth imported from a foreign sweatshop, is that really “made in America”?

Dig deep. If you find a potentially good company, figure out where their factories actually are. Figure out where they buy their supplies.

You’ll probably find that companies that tout a particular value aren’t always 100% perfect in regards to that value. That’s okay. What you’re looking for is companies that are obviously trying to be far better than their competitors regarding that particular value.

As you go along, you’ll likely find some brands that claim to follow a value but really don’t do a good job of it and you’ll find other brands that do follow that value really well. Save all of this research. Start a document with links to all of this stuff. It’s more valuable than you might think at first.

The end result of all of this is that you’ll typically find a small handful of companies that are really the best in class in terms of their efforts to follow the value you care about. You need to not only support these businesses with your dollar, but champion them.

Make Your Voice Heard (But Be Polite)

It’s one thing to be an ethical consumer yourself and make purchases that really follow a particular value. It’s another step entirely to share that information with the world in a meaningful way that can persuade others. For every single person that you can persuade even a little bit to make a purchase that’s more ethical, you’ve amplified your personal ethical consumption.

The best way I’ve found to do this is to share the word with your friends in a polite fashion on social media. Simply state that you’ve made a personal choice to follow a specific ethical rule in your shopping because it’s important to you and in trying to follow it, you’ve discovered a handful of companies that really follow that ethic. List those companies, along with the evidence, and then point out that many other companies in the same field fall short and list many of the common reasons they do fall short.

You should share this in every place where it’s reasonable: places where people are listening to what you’re saying, like Facebook, and places where people are discussing the types of goods you’re thinking about, like specific messageboards where you’re already a member.

Be polite about it. Don’t demand that others follow your lead. Just share the information because you think they might find it useful. Share it all at once in a big batch and only provide an update if you’ve found a number of new companies. Don’t make it the only thing you talk about. In other words, be polite and reasonable about the whole process and others will actually listen when you do speak.

Think of it this way: by talking about your decision to buy something ethically and the research you’ve done into companies you’ve found that cater to that ethic in a polite fashion, you’re amplifying the value you get out of every extra dollar you spend on those more ethical purchases. You’re not only personally supporting companies that do those things with your dollar, you’re also using your voice to persuade others to check out those companies and perhaps spend their dollars in that fashion.

Change the Boundaries of the Question

Let’s change gears a little bit and move away from simply being a more effective consumer to bring about the change you want to see.

Another effective strategy for ethical consumption is to simply change the boundaries of the question in your life. In other words, if you’re buying products from an industry loaded with companies practicing ethics you don’t like, can you change your life a little bit so that you don’t need those products at all?

Let’s jump back to that comparison between MegaCorp diapers and Beautiful Baby diapers from earlier. Rather than having to make the choice between cheap and ethically concerning diapers or expensive and ethically pure diapers, maybe the choice is to simply not buy those kind of diapers at all and just use cloth diapers.

Maybe instead of trying to decide between several different clothing brands to add to your wardrobe, the solution is to not buy any of them and just go with a smaller wardrobe.

Maybe instead of buying a computer game that would support an unhealthy developer ecosystem or buying a game from a developer that has taken ethical stances you disagree with, you just choose to not buy any at all and play some of the games you already have in your library.

Maybe instead of continuing to buy electricity from an energy company who is doing basically nothing to make themselves sustainable, you decide to invest in solar panels or a small wind turbine to generate some or all of your own power.

In short, maybe there is a way to remove yourself from the buying equation if all of the options are either unacceptable in their ethics or far too expensive. Do you have to buy this product at all? Are there other options, particularly ones that might pay off over the long term?

Make Things Yourself

This is something of an extension of the previous idea, but it holds very much true.

Let’s say, for example, that all you can find for a particular vegetable at the store is an imported version of that vegetable coming from a farm in another country grown under who knows what kind of soil conservation and who knows what kind of pesticides or herbicides. Rather than buying that product, you might simply choose to start a garden for yourself.

Let’s say, for example, that you’re at the store looking at a cake mix and you have no idea what half of the ingredients are. Rather than buying that cake mix, you just buy flour, butter, baking powder, eggs, sugar, and some milk and make a cake from those ingredients yourself (a cake mix is really just flour, sugar, baking powder, a dash of salt, and trace amounts of flavoring to which you add milk and eggs and maybe butter). I have a friend who makes her own “cake mixes” from those ingredients and stores them in Ziploc bags until she needs them, for example.

You can make many of the things that you buy in a store yourself from more basic ingredients, ones that might be easier to source. It’s easier to figure out where flour and butter come from than to figure out the sources for all of the ingredients in a cake mix, for example.

Another advantage of this approach is that it is often cheaper to make things yourself than it is to simply buy that item in the store. Not only does this route make it easier to control the ethics of a particular item that you use, it can be a money saver. This is part of the reason that many people have their own gardens, for instance.

Final Thoughts

In the end, there are really two main approaches to ethical consumption.

One is to simply define a handful of clear ethical rules that you’re following, research them thoroughly to find products and companies that follow those rules, and then share that evidence loudly and clearly. This maximizes the “ethical value” you get out of every extra dollar you have to spend.

The other approach is to look for ways out of the question entirely by finding other products that fulfill your needs or simply making those products yourself.

Regardless of the path you choose for solving your ethical consumption dilemma, remember that simply throwing money at the problem doesn’t really help your situation long term. If you’re going to spend more to be ethical, make sure that it actually is ethical, that there’s not another path that doesn’t involve that extra spending, and that the results of your investigation are known to others.

Good luck!

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