Understanding life

Times are tough, but saving money isn't. Just decide what you can do without. Here are 8 common but unnecessary purchases you don't need.


1: Jeans

The average woman owns 8 pairs or more. Even at 75% off put them back.


2: Box Covers

Research has shown tissue works fine without a cover.



3: Big Box Bulk

If you don't use it, it's not a bargain. It's a waste.



4: Air Fresheners

If your house stinks, clean it. That should take care of the odor.



5: Detox

Teas, colonics, even Japanese foot pads claim to detoxify your body. Your liver and kidneys do that for free.



6: Home Exercise Equipment

Most of it ends up unused, and there are far cheaper ways to hang up wet socks.



7: Satellite Navigation

The vast majority of drivers know exactly where they're going. If you don't, online directions are free.



8: Gag Gifts

Gag gifts are only funny once. And they're not even that funny. No refunds. Same goes for cutesy knick-knacks.

Thank you for your attention!

The turning of the calendar is both arbitrary and powerful. Each day is just another day, but when the year resets we feel like the slate is cleaned and we can begin anew.



Here are five ideas to help you get a good start for 2010--not just a new year, but the start of a new decade.


1. Set up a savings plan.

Ever since the financial tsunami swept all before it in September 2008, many people have saved furiously. That's a good thing, but there's a temptation to lose that discipline once the storm clouds start to break.



While the economy remains fragile and many people are still out of work, signs of recovery are becoming more and more apparent. Among your New Year's resolutions include a savings goal that is a function of your regular income, even if it's not a large amount of money. Maintaining the discipline is crucial. The amount of savings can grow over time.


2. Build a rainy-day fund.

Advice on how to save for retirement or your kids' college is plentiful. Less plentiful is guidance on what kind of rainy-day fund you should have.


A rainy-day fund, which your savings plan can feed, should cover about six months of income. It's a form of personal insurance, valuable in these rapidly changing times.


This fund should be kept in safe and easy-to-tap assets. Laddering certificates of deposit out six months is one way.


That means buying CDs of one month, two months, etc. to six months. As each CD matures you buy another six-month CD to keep the ladder in place.


3. Migrate to a debit card or to plastic that must be paid each month.

Cutting up credit cards makes a lot of sense and eliminating all credit-card debt makes even more sense. The interest rates associated with credit-card debt can easily overwhelm the returns you can get elsewhere.


But the world is moving away from cash at a rapid clip. The notion of having no plastic is barely feasible. Try buying a plane ticket with cash and see what that sparks in the government computers.


So what kind of card to have? A debit card acts just like cash, which makes it the best option. You can spend only what you have.



Second best are charge cards that require payment in full each month. Ever since I paid off my last credit-card debt in 1996, I have only used a charge card or a debit card. It gets tough, especially around big events such as Christmas. But it's nice to not have a tempting and expensive option in the wallet.


4. Rebalance your investments.

Last year, rebalancing meant adding to stock exposure after a year of steep stock losses. That notion felt mildly crazy at the time, but it proved wise.


That's because stocks rallied from the March lows and put in a remarkably strong year. Now, most of us are probably too heavy on the stock side of the equation. Moving some of the money into bonds or even cash to regain balance would be prudent.


5. Plan to reward yourself.

New Year's resolutions usually don't stick and a big reason is that it's all like eating sawdust. Go on a diet, save money, don't spend. We start the year like ascetic monks and by February we discover that the monastic life isn't for us.



Therefore, it's important to have one resolution that is fun. A little sugar with the vinegar.


For myself, it means saving up money for a special family trip later this year. This saving is in addition to the savings plan established in the first resolution.



If we keep the first four resolutions, we'll reward ourselves for getting the new decade off to a good financial start.

Thank you for your attention!

Overspenders?

In most situations, it is easily possible for a person to spend substantially less than they earn. So what causes a person to spend more than they earn?

The answer is hidden in that phrase. Overspenders stretch their definition of what’s important to them to cover a lot of things.

I’ll use myself as an example. Back in my overspending days, there were a lot of optional things in my life that I defined as being important enough to throw my money at. I went golfing a lot. I bought gadgets by the truckload. I bought more video games than I could ever possibly play. I bought carts full of books.

The end result was twofold. First, I often didn’t have time to actually enjoy all of the stuff I had bought. Second, because of all of the spending, my life was in a rough place.

My definition of what was important in my life was skewed. I had elevated too many things to the threshold of “permission to spend freely.” Because of that, I spent much more than I needed to spend, but I had too many things in my life to actually thoroughly enjoy the things I was spending money on.

The solution? Cut back. Ask yourself what things you most enjoy doing and toss the rest of it. Look for ways of minimizing the costs of the things you do enjoy.

Frugality is often said to be miserable because you have to give up so much. In reality, frugality means not giving up the things that are actually important to you. The trick is stepping back, looking at your life, and figuring out what things are important and what things are not.

Cheapskates?

On the other side of the coin are cheapskates, a role that I’ve almost fallen into a time or two over the past few years.

Cheapskates apply principles of penny-pinching to every aspect of their life, even the important ones. Although they have financial stability in their lives, they do it at the expense of other elements of their life that could add a great deal of value.

Here’s an example from my own life. I love to read books. I read several books a month beyond what I review on The Simple Dollar.

For the better part of a year, I refused to buy a single book. Instead, I just reserved books that interested me at my local library and patiently waited for them.

Several titles came out that I was eagerly anticipating. I was able to read some of them fairly quickly (within three months) of their release. Others? I’m still waiting.

Even more noteworthy is that at least two of the books I checked out and read during that period were books that I strongly fell in love with and wanted to read again (and I was quite sure I would read them many times in the future, as I love returning to books that really make me think).

But I was cheap. I didn’t buy these books. I resolved to just check them out at the library when they became available again.

One Saturday afternoon, I was sitting at home, having just finished a book. I looked at my unread books and realized that the book I most wanted to read wasn’t there – a book I had read before and returned to the library after thoroughly enjoying it. The library didn’t have it, either. I checked on Amazon and realized I could have the book for just $7. And I talked myself out of buying it.

That’s when I realized I was being a cheapskate. I was avoiding spending $7 on something that I knew would give me many hours of enjoyment now and quite a few hours of enjoyment later on, plus it would be a book that I could recommend to friends and loan to them while they loaned me books as well. To not spend $7 on something I cared so deeply about – and it was a $7 I could easily afford – was pure cheapness.

It’s okay to spend money on things that are truly important to you. In fact, it’s good, because spending money specifically on things truly important in your life directly raises your quality of life much more than any other way you could spend your money.

Reading is important to me, so I’m no longer afraid to spend money on it. Yes, if I see a book I want to read, I’ll check to see if the library has it and read it from them first. Yes, I use PaperBackSwap religiously. But if those outlets don’t connect me with a book I’m passionate about, I’m no longer scared to go to the bookstore and pick up that book that I want. Doing so raises my quality of life quite a lot.

The Winners Are in the Middle

The best place to be is at that place between the overspenders and the cheapskates. People who know what’s truly important to them and aren’t afraid to spend money on it enjoy a higher quality of life than people who spend themselves into debt (adding a lot of stress and challenge to their lives) and people who never spend a dime (missing out on things that they truly value in life).

What are your central values? What’s really, truly important to you? Give yourself some permission to spend in those areas without worry – but then lock down the ship in the other areas of your life.

Thank you for your attention!

Each housing market is regional and varies greatly from the other. Still, there are indicators home owners can rely on to see whether their home values are about to rise. Here are four.


1.The Unemployment Rate

It's quite simple: Without a job, you can't buy a home.


And as the unemployment rate rises, fewer individuals are capable of purchasing a home. That decreases the demand for homes, which drives prices down.


Also, see if local businesses are hiring and if large corporations are moving into the area. More jobs leads to more employees who end up increasing demand for real estate in the area.


2.Rising incomes

House hunters who want to dig a little deeper can look at the average or median change in income among households in a particular neighborhood.


At a minimum, confirm that incomes are being adjusted for inflation (or ideally rising). Homeowners who have stagnant or decreasing salaries may not have much cash left over after they pay their mortgage; as a result, they might not maintain their homes or stay on top of repairs, which could lower a home's value and even its neighboring homes' values.


3.Declining inventory

In most areas where "For Sale" signs are common, home prices are far from recovery.


In general, when more than 2% of homes in a neighborhood are selling at the same time, inventory is high. As the number of homes for sale decrease, sellers have more leverage and a better shot at getting an offer close to their asking price.


4.Shrinking list-to-sales price ratios

Look at list-to-sales price ratios, which is the difference between the listing price of a home and the price at which it sold. If the price difference is shrinking for an area that suggests the real estate market is improving.

Thank you for your attention!

Aside from the fact that I’m able to use the notebook to write down my ideas – my career’s bread and butter – a pocket notebook constantly comes in handy for many other financial reasons as well. (FYI, I usually just keep a simple small Mead reporter’s notebook in my pocket, along with a good pen that doesn’t run out of ink.) Here are fourteen ways I use that notebook to directly save money.

1. Write down sale prices. If you spy an item on sale but you’re not really sure how good of a sale it is, jot down the item and the sale price. Later, you can research that price and find out if it really is a great bargain. This is particularly useful when shopping for gifts or for specific expensive purchases.

2. Make ongoing grocery lists. During a given week, I’ll make efforts to prepare several meals at home. As I’m doing this, I’ll often come across items that we need to replenish in our pantry – for example, last night I discovered we were nearly out of extra virgin olive oil. Similarly, I was down in the basement over the weekend and noticed that we were out of furnace filters – something that was very easy to immediately note. If I have a notepad with me at all times, I can add that item easily no matter where I’m at. Then, since my shopping list is complete, I don’t have to do any “wandering” at the store, helping me save time and drastically reduce impulse buys.

3. Do warehouse club price comparisons. My family often shops at Sam’s Club for many household staples, like toilet paper. Whenever we’re considering making a purchase in bulk, we’ll jot down the Sam’s Club price, then compare it to the normal price we pay at our usual grocery store. Quite often, Sam’s Club is less expensive, but not always. Checking the price lets us know whether or not this item should be purchased at the warehouse club or not.

4. Record great gift ideas. When I’m interacting with a friend or a family member, they’ll often drop a hint of some kind indicating a Christmas or birthday gift they’d like to receive. If I note that idea immediately, I can often give myself plenty of time to bargain-hunt for that specific item, enabling me to get that person a gift they’d really like for the lowest possible price for me.

5. Record contact info for potential clients or new acquaintances. Whenever I’m at a community event, I almost always meet someone interesting who wants to see my website, has a website of their own to share, or wants to keep in touch for some reason. Having a handy notebook makes this easy – I can either jot down my own information and share it (if I don’t have a business card, of course) or jot down their information and keep it.

6. Write down recipes or other food ideas. My parents and in-laws subscribe to tons of magazines and also have extensive cookbook collections. Sometimes, I’ll be browsing through them and see something really intriguing that I might want to prepare in my own kitchen. With my notebook at the ready, I can jot down this recipe, often giving me a great idea for a low-cost meal to prepare at home.

7. Leave a note for someone. Ever stopped by someone’s house when they’re not home and wanted to leave a reminder for them? If you have a notebook in hand, it’s easy to just slip a note under the door, turning a useless trip into a useful one and often helping you salvage a poor situation.

8. Make a simple price book. If you’re trying out a new store, record the prices of some of the items you buy most frequently – milk, eggs, bread, vegetables, fruit, and so on. Then, use that information to compare the prices of this new store to the one you regularly shop at. Is this new store offering better value for the things you buy? Finding the store that offers the best prices on your staples can make a huge difference in your routine food spending.

9. Exchange insurance information. In a fender bender, it’s often vital to exchange insurance information with the other person in an accident. I’ve been in accidents before where the other person was attempting to get off the hook because they didn’t have paper with which to exchange such information. With a notebook right in hand, such excuses won’t matter – information can easily be exchanged and repairs can commence as quickly as possible.

10. Write down a phone number on a “for sale” item. Perhaps you see someone selling their car (or some other large item) themselves with a phone number in the window. If you’ve got a notebook, it’s really easy to jot down the necessary information so you can call the person up later when you have appropriate additional research in hand to ensure that you’re getting a good deal.

11. Keep a “master list” of preferred brands. Consumer Reports often ranks the quality of various household items – toothpaste, shampoo, trash bags, paper towels, etc. – as well as the “best buys” for each one. Having this information in hand can help you easily get the best bang for your buck when you’re standing in the store trying to decide which item to buy.

12. Write down things you want instead of buying them, as per the “thirty day rule.” The “thirty day rule” is pretty simple. Whenever you’re tempted to make a major purchase, instead of buying, just remember the item, put it back on the shelf, and walk out of the store. Give yourself full permission to buy the item in thirty days if you’re still actively wanting it or thinking about it. I actually suggest jotting down the item if you want. Later, you can research the item a bit, figure out if it’s what you really want, and if the thirty days go by and you still want it, you can carefully comparison shop and get the best bargain you can find for it.

13. Keep a detailed errand list. There are always errands that need to be run, ones that are often important to good financial health. By keeping an ongoing errand list in your notebook, you can kill two birds with one stone – for one, you don’t forget them, and for two, you have access to that list all the time, particularly when you’re actually out and about.

14. Make an omnipresent “big goal” reminder. Since I use my pocket notebook all the time, one great technique I’ve found for keeping my mind in the right place is to start off the notebook by writing my big goal on every single page of the notebook. At the bottom, I write “Are you helping yourself get the country house today?” Writing it on every page of the notebook takes a while, but that action alone pounds the message into my head. Then, whenever I look at the notebook, I see that reminder in my own handwriting and it keeps me on a better path.

To put it simply, I couldn’t live without that pocket notebook. It’s an essential part of my personal and financial life.

Thank you for your attention!