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Saving Money Isn’t Work: It’s a Mindset Shift

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When I’ve given speeches at community groups, I’m often surprised to hear, “This sounds like a lot of work.”

It’s hard to know what to say to this. Do I say:

–       “But it’s worth it.”

–       “Not really”

or even,

–       “Maybe a little work, but it focuses your mind on saving instead of spending”

None of these approach the truth. Saving money isn’t easy or hard….it’s a complete mindset change.

 

Finding Opportunity Where You Don’t Expect

 

As I wrote in Can’t Save? Write it Out, Bitches!, often, we don’t look hard enough for opportunities. I took a quick trip to the store yesterday for bread and ketchup to work on my famous sloppy joes (well, not yet famous, but I’ve not given up). Without thinking, I jumped in the car and paid full-on retail for both of these items.

In today’s world, with my iPad sitting on the counter, it wouldn’t have been hard to find a coupon. In fact, a look this morning (that took less than three minutes) found me $.50 off the bread I purchased and $.25 off the ketchup. Lots of savings? No, but by changing my mindset and doing this all the time, I can find tons of opportunities, no matter where I am.

 

–       Saving on insurance with comparison sites

–       Saving on airfare and hotels with online discounters

–       Saving on food with Tesco vouchers

–       Saving on restaurants with newspaper coupons

 

It’s easy to find ways to save, but instead of just grabbing the keys and leaving home, you need to take a few minutes.

 

It isn’t frugal as much as it’s smart

 

I’ll be the first to tell you that I have no interest in saving $.75 on bread and ketchup. However, if it’s the same ketchup and bread, the same hotel room, the same airline, and I don’t have to take significant time to find the deal…that’s not about saving $.75. It’s about learning to treat money with respect.

So, the next time you grab the keys to head to the store, think for a moment. Could I look for deals online? Could I find aggregator sites that would help me get this done better/cheaper/quicker (or all three at the same time?). Could I be saving daily with discount codes, coupons and deals for the same stuff I was going to buy anyway? Better yet, could this be the Roth IRA contribution you weren’t able to make this year because you “didn’t have any money?”

Photo: Saad Faruque

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Behind on Your Bills? 5 Easy Steps to Sanity

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Impossible? You can do that…but you can’t keep doing the same thing you’ve been doing.

I was talking to my friend Tony last week. “I can’t seem to get ahead,” he said. Every time something good happens, something bad comes along to knock me back down.

I remember this feeling. When I spent an entire year with little income, it seemed like every time I did something good, like get a credit card below the maximum, my muffler would be dragging behind my car.

How did I get ahead? How did I counsel my clients in this situation to get ahead? Put away the firehose.

When the fires from debt collectors are all around you, it’s easy to panic. They make good arguments. You read well-meaning pieces telling you how your credit is gonna be screwed for at least seven years if you don’t pay this bill NOW. Even though you’re avoiding the phone, you still see the caller I.D. You know exactly who’s calling, and the pit in your stomach grows bigger and bigger.

One night I came to a realization. I couldn’t sleep, so I’d grabbed a beer and a movie and was sitting staring at the screen. It hit me.

I was screwed anyway, so why was I sitting awake, worried about debt collectors? I’d never kill the fire unless I started walking toward the actual furnace.

That day I forgot about the debt collectors. I actually laughed at one guy when he threatened me. Do you know how empowering that is? At the time, I think he thought I was some deadbeat nutjob. But once I realized that he couldn’t hurt me, I became stronger.

My New Debt Payment Plan:

1)      We set up automatic savings. From then onward, whenever money came in ¾ went to debt and ¼ went to build a reserve.

2)      I scheduled financial meetings with Cheryl so we were on the same page (at the time she paid the bills and I took care of the debt repayment people…for the first time we were doing it all together).

3)      Instead of solving every fire by throwing cash at it, we started to get creative. Our weekends were spent going to garage sales for school clothes for the kids. Pot luck game nights at our house became a boon (people would all bring over food and nobody would take it home…we’d eat other people’s leftovers for a good part of the week).

4)      When things broke I learned to fix them myself. I’m an oil change and vacuum cleaner repair expert.

Maybe they didn't all look great, but I saved a ton of money!

Maybe they didn’t all look great, but I saved a ton of money!

5)      I began bringing work home to cut down on daycare bills. Sure, it took me longer to get stuff done with twin five year olds running around, but I adopted the motto that I can “sleep when I’m dead.”

Every dollar we came in under our original “budget” went to debt. It didn’t matter that our budget wasn’t balancing. I could starve a little today. I didn’t want to live this way forever.

I can definitively point to that day as the time when things turned around for me. Did things get better right away? Ha! Of course not! They got worse, as you would expect. The second I put down the fire hose, we were consumed by the little brush fires. But I was finally moving toward the actual furnace, and was able to turn the tide much faster than if I’d just kept trying to handle all the little problems.

Photo: Official U.S. Navy Imagery

My Love Doesn’t Shop At High End Stores

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…well, maybe it shops there (sometimes), but if it’s in love with me it brings a coupon.

Let’s talk about a certain Hallmark holiday coming up around the corner, shall we? The one with hearts and roses?

Before I was married, I had a girlfriend who ONLY shopped at name brand places. She was her mother’s daughter, completely. They’d fly to Chicago (nearby) or New York…even Paris once, just to shop. When she came home, she was always the best dressed person in our circle of friends, by a mile. We were in Levis and she was in Nicole Miller.

I’m not sure I was a fit for this woman (well, it appears I wasn’t now, doesn’t it?). I am comfortable feeling comfortable. I’m not ripped jeans and NASCAR tee-shirt comfortable, but I’m realistic. I have bigger goals for my money, and fashion wasn’t important enough to justify the cost….

I wasn’t worried about my wallet. I was worried about all the cool stuff I really wanted that I wouldn’t be able to have. I value a nice (but moderately priced) home, great vacations, and education (…and for me, it’s education for education’s sake. I dig learning new stuff.) While I certainly had to look the part as a financial advisor, there was no way I was buying a $2,000 suit. Now, I work from home. Does it matter which designer I wear? Hardly.

An important lesson my richest clients taught me (the ones who were completely in love with their spouse or significant other and who never appeared rich, but who went on the world’s COOLEST vacations), was that looking rich and being rich are two totally different things. Also, these people didn’t love their mates because of the amount of money they brought to the table, or if they were wearing THAT designer’s clothing. They were there for each other. Valentines Day around my richest clients? It was nearly always completely ignored.

I’m not a fan of Valentines Day in a bah, humbug, kind of way. I’m not a fan because love doesn’t shop at those high end stores. It doesn’t have a price tag. Yet, walk into any mall in the world and you’re likely to see a display with the line, “Show her how much you care.”

I care by:

– Spending time.
– Being thoughtful by getting my head out of my work and talking about her.
– Making dinner for us (not just that day, but ANY day).
– Handling her half of the daily chores.
– One of my special (and admittedly not very good) massages.
– Talking about the big goals we really want with our money.

Save your money for big experiences and goals. Don’t be distracted by a Hallmark holiday and baubles.

The right gift at the right price for Valentines Day? Don’t put a pricetag on it at all and I think you’ll both be happier.

Speaking of happier….I’m not sure $100 will make you happier, but it’s a ton more fun being sad with a fresh C-Note in your hand, isn’t it? Check out our new contest:

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Joe’s Top Movies of 2012

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Like movies? Want to save money? You’ve come to the right place!

If you’ve listened to the last segment of our 2 Guys & Your Money podcast, you’ll know that I watch a TON of films (37 last year, according to this list). Living in a small town in the middle of nowhere gives me limited entertainment options, so the one really big entertainment expense is an afternoon at the local Cinemark. In fact, if you’re ever in Texarkana on a Tuesday and at the earliest show time, you’ll usually find Cheryl & I there. Stop and say “hi.” You’ll know us: we’re usually the only people in the theater.

When a show doesn’t come to town or we get busy and miss things, we try to make it up by catching shows on Netflix (though this year my Netflix watching was mostly television shows).

I put together this list to save you money. While I’m not a critic or a pro, why not share info, right? I always cringe when a friend goes and sees a movie I knew stunk BEFORE they went. I wished I would have told them to save their cash.

That’s why I’m posting today.

 

Why watch films that stink?

 

While you might not agree with all of my picks, I think you’ll be able to tell from my comments whether you might like them or not. I’ve also tried to highlight films that are “Joe’s quirky picks” instead of “highly recommended.” Some of my top picks I wouldn’t recommend to everyone. Some of the bottom stuff is fine (although the bottom five here are absolute garbage).

Also….know those films that critics hate but you end up liking? Study the middle to bottom of the list here carefully. While there are some stinkers, others just didn’t rise to the level of other films, but are still ones that I’d watch. I’ve tried to make good recommendations in the comments on each flick.

So, here it is. The top films WE SAW in 2012 (not necessarily films made in 2012….AND I’m including films I’ve seen in 2013 that were nominated for an Oscar in 2012, so you can check out those as well).

 

Joe’s 2012 List of Films (all 37, from best to worst)

 

Numero Uno

Numero Uno

 

1) Silver Linings: Playbook – I love great characters. If I told you what this movie is about, you probably wouldn’t see it. However, the characters are so well developed that it’s impossible to leave the theater without liking this film. I was happy to see the Academy Awards agreed with my love for this film, by giving it a ton of nominations!

 

Lincoln

 

2) Lincoln – I didn’t see Daniel Day Lewis. I saw Abraham Lincoln. That’s an achievement. While there is little action in the movie, you’re on the edge of your seat for the whole 2+ hours. Excellent film, and for most, it’ll be their favorite of 2012, I’m sure.

 

argo

 

3) Argo – Intense, fun, and a true story I’d never heard all wrapped into one. Ben Affleck’s best work yet (and I loved The Town).

4) Zero Dark Thirty – If you saw Katherine Bigelow’s last film, The Hurt Locker, this is more of the same. Hated Hurt Locker? Don’t see Zero Dark Thirty.

5) Bernie – Jack Black is totally NOT Jack Black in this movie, and this is the best performance by Shirley MacLaine since Guarding Tess. It’s about northeast Texas. Want to see where I live? Watch this movie!

6) Ruby Sparks – What a clever little film. At first you’re pretty sure this is a knock off of the Will Farrell movie Stranger Than Fiction, then it morphs into something totally unique. A young man dreams up the perfect girl and writes about her…until she comes alive.

7) Skyfall – This film exceeded my expectations. Bond is definitely back with Daniel Craig. He’s 2-3 so far (two good films and one poor film).

8) Dial M for Murder (Netflix) – I love Hitchcock and FINALLY saw this one (Vertigo is one of my all time favorites). Excellent rental.

9) The Avengers – I really liked Captain America, Thor, and Ironman 1. Ironman 2 was dull. This was the best of all of them, in my book.

 

john-carter

 

10) John Carter – Every year I have a surprise in my top 10, and while Ruby Sparks might qualify, this is probably the film everyone’s heard of but nobody saw. John Carter was hailed as the biggest Disney flop (and one of the biggest flops, period) of all time. That’s a marketing problem, because this was a worthwhile film. Well made, acted, and a ton of fun, the fact that many audiences won’t see this movie makes me sad. (Some said it was a Star Wars rip off….this was a story dating to the earliest sci-fi days….if anything, Star Wars ripped this material!).

11) In Bruges (Netflix) – Hilarious dark comedy about two gangsters laying low in Brussels. They check in at a bed and breakfast while they wait for their boss to call. Laugh out loud funny in part, and incredibly violent and dark at the end.

12) The Hunger Games. Loved the books. The film is a worthy companion.

13) Frankenweenie – Tim Burton creates another animated masterpiece that’ll stand alongside Nightmare Before Christmas.

14) The Trip (Netflix) – Here’s the film that’s high on my list, but it’s slow, plodding, and really nothing happens. If you aren’t into strong characters and British humor, stay away.

15) Jack Reacher – Might be Tom Cruise’s best work in a long, long time….barring the last Mission Impossible, which I thought was clever.

16) Life of Pi – This film is a good “go to a coffee shop and talk about after” flick. I don’t know, though….it didn’t speak to me like it did others.

 

Pirates

17) The Pirates! Band of Misfits – One of the few animated films I laughed out loud all the way through. Hilarious work. Good family film.

18) Premium Rush – What a big surprise this was. I had no idea what this film was about…and it was a fun action ride featuring Joseph Gordon-Levitt, an actor who’s really coming into his own.

19) The Hobbit – I hoped this would be #1 before I saw it. Although it was my kind of movie, if you haven’t read the Hobbit, I can’t imagine how you wouldn’t be bored silly.

20) My Architect: A Son’s Journey (Netflix) – My favorite documentary of the year is written and narrated by the son of Louis I. Kahn (architect). He never knew his father much, and now tries to find the spirit of his dad by retracing his buildings and career. I love architecture, but it’s a poignant look into a man’s life from someone’s point-of-view who should have been closer to his dad.

I'm sure this would have been #1, had I thought to add it to the Netflix queue!

I’m sure this would have been #1, had I thought to add it to the Netflix queue!

21) One for the Money – I’m a Janet Evonovich fan, and this film, while not wonderful, was a great popcorn movie. It’s a Friday night and you don’t want to think? Here’s your choice.

22) Hope Springs – A film about an older couple having marital relations problems? I’d tell you to save your money if it weren’t Tommy Lee Jones, Meryl Streep (Golden Globe nomination) and Steve Carrell. It’s funny, sad, and keeps you interested.

23) Conan O’Brien Can’t Stop (Netflix) – This documentary follows O’Brien as he’s prepping and performing his tour after losing the fight for the Tonight Show. It’s easy to see how versatile, obsessed, and attention-craving he is in this piece.

24) Trouble With The Curve – Another flawed script that’s saved because a) it’s a baseball movie and I’m a sucker for all of those; and b) Clint Eastwood, Amy Adams, and Justin Timberlake bring it home. I’ll say this: not into baseball? Pass.

25) Restrepo – Documentary following soldiers in Afghanistan. Want to see the plight of these soldiers? Watch this. If you saw The Hurt Locker, you know what you’re in for.

26) The Campaign – First, I laughed hard. I’m into politics. I think if you aren’t into politics, you might laugh, but you won’t get some of the more pointed political junkie humor. Blackhawk down! Ha!

27) Dark Shadows – A “small” film with little expectations. It’s Tim Burton being Tim Burton. If you liked Edward Scissorhands, this is more of the same.

 

Selma Hayek

 

28) Here Comes the Boom – Two parts of this film I really liked: 1) Selma 2) Hayek.

29) Mirror Mirror – First, let me tell you, there was nothing else on that week at our local theater. 2nd, this was a goofy, fun version of Snow White…far better (and less embarrassing) than the other version that appears further down this list.

30) The Bourne Legacy – Another good popcorn movie with holes the size of bowling balls in the plot. Be warned: they introduce a new bad guy with only 30 minutes to go in the film. Normally that’s death for a movie, but somehow this one overcomes it.

31) The Master – I know it’s listed WAY down my list, but three actors received Academy Award nominations….and I totally agree with that assessment. Phillip Seymour-Hoffman, Juaquin Phoenix, and Amy Adams just kill it in this story that tells the story of guy who sort-of-resembles the creators of Scientology (I’m told). If you love seeing actors save crappy material, go see this film. It’s clear that all three main characters are well executed. The story? Not so much.

32) The Dark Knight Rises – Bane was so, so, so boring as the main villain. If it weren’t for Anne Hathaway (Catwoman) the film would have been a total loss.

 

These last 5 films were a waste of time:

 

33) Atlas Shrugged (Part 1) (Netflix) – I love Ayn Rand and this book is one of my all-time favorites. The movie is a slow, convoluted mess.

34) Swingers (Netflix) – I think I missed it and am too old. I never saw this and heard it was a “cult classic.” After finally seeing Donnie Darko last year and absolutely lovin’ it, I was excited….but this flick didn’t do it for me.

Snow-White-And-The-Huntsman-Poster

35) Snow White and the Huntsman – I couldn’t stop laughing during the “serious” parts. If the film had two more stupid speeches about how “important” upcoming events were going to be, instead of just doing them, I would have walked out.

36) The Lorax – This movie sucked. They took one of my favorite Dr. Seuss stories, added “bad guys” and made it a misplaced message film. Pass.

37) Take Me Home Tonight (Netflix) – This escaped theaters in only a week. It looked like a fun throwback to the 80’s, so we popped some popcorn and turned it on. Halfway through we turned it off, because I would have been better off watching a porno with my kids than a film with sex, violence and drugs (and all presented as FUN!). Embarrassed to say that I even started watching that with my family….

What do you think? Some too low? Too high? Let’s fight out where I’m wrong with these in the comments below!

5 Savings Tips You Wish Someone Had Told You Earlier

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There are many ways to obtain a little extra cash when it is most needed, from log book loans and second mortgages to working freelance, to much more unlikely scenarios, such as winning the lottery! It’s always better to try and save cash than hope for the lottery windfall. Here’s five of the most useful ways to ensure there is money there when you most need some:

 

Budget! It’s surprising how many people let budgeting pass them by, even if they are mentally sold on the idea. Once you’ve overcome the remarkably large hurdle of actually sitting down with pen and paper, the basic concept is simple: track what you earn and make sure your expenses don’t outpace your earnings. The very first time you carry out this exercise, you’ll be surprised at how many “little expenses” add up. Often, you’re surprised by some of the numbers. Your energy bills might be higher than you’d expected, or gasoline for the car is more than you’d thought. Once you create a plan to bring those demands under control, you’re well on the way to making tangible savings.

Put savings first. Too many people think they can’t save because “there’s not enough money left over at the end of the month”. This is putting the cart before the horse. Spending nearly ALWAYS expands to eat away whatever amount is in your bank account, so it’s vital to decide how much you wish to save before beginning to spend, spend, spend. Typically, it’s a good idea to set aside a minimum of 5-10% every month for savings, either consciously, or by directing your bank to automatically siphon off the sum into a separate savings account. Once that is done, then you can apply the remainder of your income to your budget!

Cut your energy bills. A major household expenditure is gas and electricity. Fortunately, with many different providers out there, it’s reasonably simple to go online and change suppliers – after first using price comparison sites to find out whose offering the cheapest tariffs. Be sure to repeat the exercise every few months to take advantage of market competition.

Pay down your debts. Debts are the single biggest drag on personal finance, and eliminating them is a massive step on the road to saving. When resolving to pay off debts, start with those commanding the largest interest rates – and remember: these are not necessarily the largest debts. Credit cards generally come with relatively hefty interest rates, so they are an excellent place to start, but all personal circumstances are different, so list your debts and their attached interest rates from highest to lowest, to see where the axe should fall first. Some people start with the lowest balance and work from there (Dave Ramsey’s “snowball” method). This has been proven to help people psychologically pay down debt, but may cost you more in interest over time.

Watch how you shop. Make an “audit” of your next trip to buy groceries by studying the till receipt. Strike off the ready meals and processed foods and resolve instead to get your fruit and veg at the market. The ingredients are much cheaper there, and with the help of easy and quick online recipes you’ll soon be eating more healthily – and saving a remarkable amount every month into the bargain!

 

More about personal finance:

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5 Simple Steps to Kick 2013 Into High Gear

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Happy 2013, everyone!

It’s time to take yourself a little more seriously and step up your game. My cousin, a year younger than me, had major heart surgery a couple weeks ago and nearly lost his life on the operating table. Not to be all melodramatic, but it was another close-to-home reminder that time is a finite beast. If you’re going to leave your mark on the world (or just on your little private Idaho), 2013 is the time to make changes.

Here’s the gameplan we’d use when practicing financial planning with clients back in “the day” and it’s also what I’m using this year to shift up a gear:

1)   Write out clear, actionable goals. I like Maria at The Money Principle’s post about themes. Start with an idea generally of what you want to do, then drill down toward specific tasks.

My 2013 theme is about tying up loose ends and focusing harder on core tasks. I haven’t yet crystalized completely the theme (it should be more succinct than what I have so far), but that’s not bad news. I’ve been thinking about it constantly, and this action gets the right thoughts in my little noggin’.

My main goals are simple: I have the first draft of a book written, and I’ve let it sit for about 9 months. Why? I have no idea. Other priorities. But now’s the time to finish that project. I’ve run marathons now for two years. I’d like to run one faster than ever. I’d also like to try an ultramarathon. I need to focus on cooking healthier food at home and have a more regimented plan. On the website side, we’ve talked about creating some products. These need to be launched in 2013.

2)   Direct deposit to your savings account. Everyone direct deposits money into their checking account…and immediately drains it. Reconfigure your system so that you direct deposit to savings. Manually move money to live on over to your checking account.

While this seems like a little step, it’s a huge change. Now you’re saving automatically and having to think every time you spend money. You’re a conscious consumer, rather than an auto-spender.

3)   Protect your downside. I know this for a fact: bad stuff that you don’t expect will happen in 2013. I don’t know where it’ll come from, so the best course of action is to look for Achilles Heels and apply duct tape. Do you have an emergency fund? Is your insurance up-to-par? Is the budget tight?

I need to adjust Cheryl’s life insurance (adjusted mine in 2012). Our will is now six months from being out-of-date (my children will be 18 years old…how the hell can that be? They were just babies yesterday….). I also have to begin “landing the plane” with my kid’s investment funds, so they’re ready when and if I need them for college expenses.

It’s also time for me to get home and auto quotes again. For some, checking out Insure 4 a Day may be a good idea. They offer a variety of cheap short term car insurance options dependent on your requirements.

4)   Focus on energy, not time. I agree with Jim Loehr and Tony Schwartz in their book The Power of Full Engagement on this one: the key to optimum performance is to manage your ability to crank stuff out. As workers, we’re like tennis players: we compete year-round. It stands to reason that we can’t be great every moment of every day. We should gear up for those times when there are “big tournaments” in our life and focus on those days.

I’m working on a model day that better uses my energy and shelters that time I need for key tasks. I generally experience great creativity in the morning and low energy around 3 pm, so I’m reconfiguring my day to take advantage of that morning time and guard against the afternoon letdown. I’m also focusing more on my diet to avoid those crashes (just as soon as I finish these chocolates….).

5)   Create surround sound. The best way to stay motivated is to surround yourself with people, books and podcasts that keep your mind on those activities that’ll help you achieve your dreams. Schedule meetings with your planning partners, spouse, and close mentors. Don’t just say “I’ll talk to people more often about my plans.” That doesn’t happen, does it? Set a time in your calendar and stick to it.

We created the podcast for this reason. I enjoy casual talk about subjects I’m interested in, not hard core discussions. I couldn’t find many chatty money podcasts (Planet Money is probably the closest I’ve found), so we created one. If you’ve listened to our show you know: it’s more about equating money with fun and less about deep drilling.

Biographies work well for me, too, to create surround sound. I don’t know why, but I particularly love books about chefs. Maybe it’s because they have to be in-the-moment so much. I loved Kitchen Confidential by Anthony Bordain (don’t read this book if you don’t like foul language and discussions about illegal activities). Currently I’m polishing off Restaurant Man by Joe Bastianich. Both of these are great looks into the world of business, written passionately by someone who knows their craft inside-out.

This list could be 100 points long, but if you practice those five above as you walk into 2013, you’re going to move faster, with more energy, and with fewer distractions.

ON that note, how about $100 Amazon money or cash to start your year off right! That’ll buy a bunch of groceries, books or mp3 players…..

Photo: TheBusyBrain

 

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Post-Holiday Distress: Did You Spend Too Much?

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Stop. Take a deep breath. That feeling of dread? It’s just the holiday spirit leaving your body with each passing breath. It’s your own fault… everyone knows not to look at the receipts on the day after!

If you were smart, you planned ahead. You created a holiday account at the beginning of the year so by the time November rolled around, you had cash on hand for cherry-picking the best deals.

If you were smart, you stuck to your budget and didn’t let stress, competition, irresistible deals, or last-minute price hikes to knock you off your plan. You made a list of people and charities you wanted to recognize, set a price per gift, stuck to your list, and got your shopping done early.

That’s if you were smart.

But if your candy cane and cookie euphoria is dissipating with every thought of your credit card statement, you’re not alone. It’s engrained in our culture: Thanksgiving is to overeating as Christmas is to overspending – lavish spending you’d never consider otherwise.

The pressure to GIVE is powerful; our senses may leave us entirely. When we shop, we anticipate the warm embrace and feeling of joy WE create when a gift is received. It’s awfully noble. But if you’re like me, today is the day you watch your kids and realize just how little use your gift will get (I will never buy a robotic pet again!).

So what’s next?

Budgets are fluid. They require constant reevaluation. If you overspent, it’s time to reconsider your budget for the coming months. You won’t be able to see any viable options without a clear picture. If you didn’t before, go back and write down what you spent.

Chances are, it’ll make you feel better. You’ll realize that, while you had a bad month for your budget, you aren’t completely out in the cold. Because, you see, most of the year… You were smart.

If you’re not feeling better, take solace knowing that it’s possible to mount a comeback.

A few years back, holiday spending tipped my credit card balances over the edge. I wasn’t smart. I thought I was – it makes sense to open up store credit cards to save 10%, right? Wrong. It wasn’t until too late that I realized I wouldn’t be able to make the minimum payments on so many cards.

I knew enough to see that with accumulating interest, everything I could afford to pay towards my various credit card bills would be going straight into the creditors’ pockets while my debt level remaind constant. Classic debt spiral.

What did I do? Consolidate. Debt consolidation sounds ominous, but it’s far worse for your credit to fall behind on payments. You can take advantage of low interest rates on balance transfers and merge your debt to one account, or seek a consolidation loan to pay off your principal balances. If you have good credit history, you may be able to achieve a lower interest payment or a longer payment period. Managable. You can handle that.

The moral of the story? I’ll say it again:

Stop. Take a breath. Enjoy what’s left of the holidays. You’ve got options.

Photo: TopGold

Thanks to Jennifer Willard for taking over the blog responsibilities today while Joe & OG search for more egg nog. Jennifer has a new blog, Crayons & Coins. She also writes for Credit Guard, a non-profit debt counseling company.

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Budget Nightmares: What Are You Doing At 2 A.M.?

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When I left The Citadel (go Bulldogs!) to attend Michigan State (go Spartans!), I said goodbye to a lucrative track and cross country scholarship. I felt bad, but the writing was on the proverbial wall. My coach had given me “one more year” to run better at the end of year one, and I promptly pulled a quadricep muscle early into the fall campaign. I’d been a guy they thought was a (quoting the coach), “Diamond in the rough” anyway. Turns out I was pretty much just rough.

Immediately, I had money problems. My parents couldn’t afford to pay for MSU. I had this general notion that financial aid would cover everything. Imagine my bitterness  when I found out that my dad made too much money to qualify for any need-based aid.  My loan package quickly swelled as my first course of action was to get through school quickly. When I realized what a mess these loans would be, I made the tough decision to become a part time student working three jobs.

Here’s how I made that decision:

During one of my money woes, I tuned in to my favorite late night money talk show hosts on the radio: a guy named Bruce Williams. He sounded like that knowledgeable grandfather who’d give you either an arm around your shoulder or a swift kick in the butt. Maybe listening to him was the idea behind our podcast….I don’t know.

One night, drowning in my own debt and hopeless money situation, I heard a woman call in to the show. She and her husband both worked hard, but they weren’t making ends meet. Bills continually piled up and their reserves dwindled.

“What are you doing at 2 a.m.?” Bruce asked.

The woman stuttered. “What do you mean? We’re sleeping!”

“Why are you sleeping at 2 a.m. when your bills are getting further and further behind?”

The woman quickly answered, “We need all the sleep we can get so we work well at our job in the morning.”

Bruce sighed. “So you’re saying you need your job worse than your house and car? Then why don’t you sell your house or car?”

“I can’t sell my house or my car. Then I wouldn’t have any place to live!”

“My point exactly,” he said. “So, if you like your house and your car, what are you doing at 2 a.m.?”

“What are you getting at? I can’t do more than I’m doing.”

The radio host laughed. He had this chuckle that always sounded a little sad. “What I’m getting at is that you have serious money problems, but you don’t want to change anything. If you’re serious about solving your money problems, you’ll get a night job too, or you’ll find ways to make more money at your day job.”

The woman quickly interjected, “We’re both at the top of our pay scale. That’s why we need to hold on to these jobs.”

“You aren’t listening,” Bruce said. It was one of the few times I’ve ever heard him turning angry on the show. “You can’t work like you do, eat like you do and sleep like you do AND expect something to change.”

Unbelievably, she ranted at him. “I can’t believe this. I call you for serious advice and all you do is blame my job, blame my house, and blame me. We’re doing everything we can do and it isn’t getting any better.”

…and she hung up on him!

Maybe she wasn’t listening, but I sure was. I became a substitute paper boy and redoubled my efforts to advertise my disc jockey service better. I went around to fraternity houses and spoke directly with the social chairmen. I made mixed tapes with some cassettes I had laying around and brought them with me (that dates me, huh? I’m glad I didn’t say reel-to-reel tapes….). Later, I found out that my tapes were a hit around the school. More than that, extra money started to trickle into my hands, and my view of my financial situation changed.

 

Here’s what I learned:

  1. I’m in charge of my financial destiny.
  2. Sleep is overrated when you’re in over your head.
  3. Financial planning is easy. It’s either an income problem or an expense problem. If you can’t fix one, you have to fix the other by default or the plan won’t work.

If you’re reading this because you’re in broke week (a term coined by my friend Michelle over at See Debt Run), you can either fix it once today and have to fix it again next month, or you can change your money earning skills or spending habits. For short term needs, you could borrow cash, but remember that this isn’t the final solution: it’s duct tape until you’re able to get on your feet.

While we’re talking about duct tape on your financial situation, how about a cool $100 cash or Amazon money? Would that help you avoid your long term plan for a few more days? Ha! Maybe you can use it to buy a radio that’ll change your life, too….

Enter our gigantic giveaway below:

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Can’t Save? Write It Out, Bitches!

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Okay, I know. The original line in Entourage was “Hug it out, bitches,” but it’s my blog and I’ll twist words for my own devilish devices.

The #1 line people would use in my office back in the day:

“I can’t save money.”

It was usually younger people who’d say this, but not always.

I had one solution, every. single. time.:

“Let’s write it out, bitches!” (…minus the bitches part. That wouldn’t have been great for biz.)

Often, just the process of turning thoughts into visuals can quickly uncover opportunities you never knew you had. Your brain has a love affair with visual cues. Many people become jumbled when they hear words, but if you put pictures in front of them, it’s magic. Heck, that’s why Sherlock Holmes has been so popular. Everyone knows that if you just look a little harder, you’ll find the right clues to solve the mystery.

In this case, adding visuals will help us find money where we thought there was none. It’s like the ending of the mystery: The Great “How Did That $10 Bill Get in My Pants Pocket” Caper.

Sherlock Holmes used simple tools around him to solve the crime. Let’s do the same:

So, let’s play around with this mystery on the nifty little Planwise tool on our site.

 

Meet Steve & Sarah.

 

They are two awesome hypothetical clients of mine. Steve works for Starbucks and earns $2,000 per month. Sarah works as a financial blogger, and (just like the rest of us), is just killing it, making $2,200 per month (inside joke for blogger friends reading this). Both of these numbers represent take-home pay.

Got it? Cool. Let’s interrogate our witnesses.

 

Goal Time.

 

As clever sleuths, we begin by grilling Steve and Sarah about their savings game plan:

1) They’d like a home. Their little apartment is busting at the seams with four people inside. They’ll need $20,000 minimum for a down payment and mortgage closing expenses.

2) They also know that if they start early, they can get education for their children settled. They don’t want to pay for all of their children’s college, but if they can pay half of an in-state university, they’ll be happy.

3) Finally, they want to retire someday, so they decide to set their sites on age 65.

Why is this relevant, Joe? I thought this was a story about being able to free up money?

It is, but until we know exactly what we’re saving toward, Watson, there’s really no sense. Every crime has a motive. Savings goals also have motives. “Why?” is the best question you can ask yourself.

  • “Why are you saving?”
  • “Why do you want that goal so badly?”

Sure, it might not be a concrete goal. You might want flexible money for trips or whatever, but there’s gotta be something driving you to change your habits…something to change your life.

Once we have those on paper, we can use them as evidence of why something today should be cut out.

 

Budget Away

 

To get an idea of their situation, Steve and Sarah quickly jumped on the Planwise tool on our site. It’s only a matter of minutes to add in expenses and produce a graph like this:

 

image

 

 

As they expected when they said, “We can’t save,” the Planwise graph shows them in the hole just over $100 per month. Now that we know the situation today, let’s start looking for visual clues.

Using my mad Sherlock Holmes skillz (you know AC Doyle was fond of “z”‘s, don’t you?) I’d break Steve & Sarah’s expenses into two types:

  • unlikely suspects
  • likely culprits

Example of an unlikely suspect: I could tell them to cut the $90/mo. utility budget. Realistically for a family of four this could get down to $75/mo., but there are easier wins for $15.

Let’s look at those more likely culprits instead:

– $1,200 Rent. If they can find cheaper digs, this could save them huge dollars. I know….this isn’t popular with people, but it’s the biggest expense on the sheet. It should be thrown into question.

– $150 Mobile Phones. If we could find a way to make this $50, we’d quickly save $50.

– $85 Cable TV. Easy win if they disconnect cable.

– $200 Personal Care. When I’d point to this one, someone in the house would always sigh. For some, giving up their relationship with the hair stylist is like telling grandma you won’t be coming to Thanksgiving. That’s huge money, and can be easily cut.

– $80 Gifts (I’ve called it “shopping” in the Planwise tool). If you aren’t reaching your goals, giving gifts should take the back seat.

How did I find these ones? Generally, they’re bigger numbers. Second, I reasoned what the smallest number could possibly be. By just surveying the list for the biggest numbers and eliminating the ones that can’t be reduced quickly, I came up with a strategy to share with my client.

Sometimes experience helped here (you’d see clients get really creative with their budget), but generally it didn’t. I just learned to look more closely at every number and ask “Why?”

 

What They Decide

 

In this scenario, they’re happy cutting gifts back to $25 (kids parties are more difficult to cut than you’d imagine) and eliminate cable tv.

That makes the Planwise graph look like this:

 

image

 

They now have $30 per month in their hot little pockets and a balanced budget, right?

Wrong.

Without goals, the Steve and Sarah’s of the world always choose to cut just enough to get to even.

Unfortunately, they also need savings and adequate insurance. We’ll have to cut more, but not until we find out how much more.

That’s because there’s not a reason for them to save more than they really need. Why continue saving money if there are things they’re cutting now that they’ll enjoy?

See how fun it was writing it out?

Another day we’ll use the Planwise tool to check out Steve & Sarah’s ability to save for a house, education and retirement.

What planning tools do you use to project your savings needs? When looking for money, what you you bitches found by writing it out?

Photo: shining.darkness

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5 Methods I’m Contemplating to Avoid American Airlines this Fall

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Just my luck.

Reliable news organizations such as the Wall Street Journal and CBS News are asking an important question: Is American Airlines a trusted travel source this holiday season? According to the CBS piece, American Airlines cancelled over 300 flights two weeks ago, purportedly due to disgruntled employees. Yesterday’s news about loose seats makes me even more nervous. Whether this is caused by staff sabotage or oversights due to overworked and unhappy employees is irrelevant to me; I think I’ll look elsewhere.

That’s where my trouble begins.

Each November and December we make the trek twice (Thanksgiving and the December holiday season) halfway across the country to visit family in the Midwest.

For many, this is a no-brainer: take another airline. However, in our quest to live in small town America, we moved to Texarkana nearly four years ago. Guess how many airlines service our town?

You’ve got it: exactly one….American Airlines.

So, now I’ve created a list of (hopefully) inexpensive ways to avoid American Airlines. Here are our choices the way I see it:

1) While Shreveport (75 minutes away) offers me nothing exciting unless I’m headed to Vegas or Orlando, Little Rock (two hours) and Dallas (three hours) might give me some interesting options. Experts always recommend checking neighboring cities. In my case, Southwest flies into Little Rock. However, the Little Rock – Detroit trip has never been an inexpensive proposition for some reason. Dallas gives me plenty of possibilities, but between gas, parking and the six hours of combined travel time there-and-back, I’m almost a third of the way to my destination if I’d driven it.

2) So…I’ve scheduled alerts on Hotwire and Expedia to tell me if prices decline in Little Rock or Dallas. I’m not hopeful, but I like the fact that I can electronically monitor rates without having to flip through several websites each day.

3) I’ve also begun the search for discount options. I could try to sell our AA miles and buy miles in other programs, but this is fraught with risk (and I’d still have to drive to Shreveport, Little Rock or Dallas to catch a flight). The last thing I want is to end up with no ticket because I violated the airline’s terms of service. It isn’t against the TOS to swap miles with family (I transfer my AA miles to them while they give me an equivalent on another airline). While there have been times where giving miles in an unstable airline sounded like fun, I can’t do this in good faith to my family.

4) We could drive or take the train. Hold on. I just wrote, “Take the train!” Just a minute while I catch my breath…man, that was funny. I COULD take Amtrak if I wanted to pay a bundle AND arrive just after my retirement date.

Seriously, though, in the past we’ve driven, but that kills two days from the trip, instead of a few hours to fly. The first day we arrive and the initial day back home I’m still tired from all that time in the car. As in the past, if we stick with hotel deals (like on Hotels.com, use gasoline smartphone apps and the awesome Wasi social driving app, we can make it there in 15 hours.

5) For now, I’ve set an alert in Google for “American Airlines” news to follow the situation closely. I have maybe two weeks before I need to pull the trigger on this decision. Hopefully conditions improve and I can just schedule a flight out of Texarkana.

Which would you choose? Any ideas I’ve forgotten?