responsibility

Tuesday’s Tip: Break the Bad

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Everywhere I go, I hear new year’s resolutions being flung around as freely as candy from a parade float. People are vowing to make changes to better themselves, their lives, their communities, and even the world. However, the most common goal, by far, was to lead a healthier lifestyle, which encompasses a multitude of different options ranging from losing weight to exercising more to breaking bad habits. And that got me thinking . . .

Breaking a bad habit is tough to do. I know, first hand, how hard it is, but I also know how wonderful it feels to be successful – in more ways than one. I confess that I used to smoke. (There it is, folks.) I tried to quit several times, but always seemed to give in eventually. I was smoke-free for quite a long time before having kids and during my pregnancy, then started again when they were about 6 or 7 months old. It was easy to blame it on stress, of course. Then, when they were almost 2, I finally managed to quit altogether and have been rid of the habit for over ten years. Don’t get me wrong, there are days I seriously wonder why the heck I ever quit! Then I think about all the progress I’ve made as a runner, how much I love it, and how smoking would completely ruin it, and I decide it’s not worth it. So, you could say that I’m enjoying the health benefits of being a non-smoker.

Just recently, I noticed a sign at the corner gas station advertising a sale on cigarettes: $6.85 per pack. Wow! I couldn’t believe it. That’s a lot more than I used to spend over a decade ago. And that got me thinking about the cost of being a smoker now. What would I be paying if I were still smoking? When I got home, I grabbed a calculator and did a little experiment to find out the financial benefit of not smoking. I know the cost per pack varies depending on location, but I live in the Chicago suburbs, so I’m going to use the average for this area, which is about $7.50. Ok. Let’s see. I used to smoke about 10 cigarettes per day. That means it would cost me $3.75 per day . . . times 365 days . . . that comes to $1,368.75 per year. If I smoked a pack a day, then the cost rises to $2,737.50 per year. Really? I was amazed at the numbers starting at me from the calculator. I instantly thought of a few things I could do with an extra $2,700 per year. Then, just for kicks, I multiplied that number by 5 . . . $13,687.50 saved in 5 years. Holy cow! Then I took one step closer to ridiculous and calculated the savings for 10 years. I nearly fell off my chair! $27,375. Amazing! Do you know how much house you could pay off with that money? Or you could buy a nice little car! You could save it for a rainy day . . . or college . . . grad school . . . vacations . . . retirement . . . The list goes on and on.

And what about other costly habits? I could think of a couple. How much could people be saving by kicking those bad boys to the curb? They don’t even necessarily need to be bad for you, like smoking was, for me. What about that iced coffee on the way to work everyday? Or eating out for lunch everyday? Or even twice a week? How about takeout dinners? Shopping every weekend? Blah, ba-blah, ba-blah . . . Please understand that I’m not suggesting we all become hermits, eat ramen and rice for the rest of our lives, deprive ourselves of things we need, and never do anything fun – we gotta live, right?! The trick is to be sensible about it.

Moral of the story: breaking a bad habit, or any habit that drains your pocketbook, could potentially save you more money than you think. Don’t believe me? Pick a habit . . . do the math. See what happens. The truth lies in the numbers. Cutting out a habit, or at least scaling way back, could mean some serious extra cash in our pockets. I don’t know about you, but I like that!

Tuesday’s Tip: Set Your Credit Report Straight

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Last week I wrote about our recent experience with credit card fraud. My husband and I took the necessary steps to make sure our credit, and our good names, were secure by cancelling our credit card, getting a new one, and obtaining credit reports for each of us. Then, someone who had read the post asked me what to do if something was wrong with the report . . . if there was information that was incorrect. What to do?

Well, it happens. In fact, what I didn’t elaborate on last week was that there was a discrepancy on two of my reports. When we looked at the reports, we noticed that there was a credit card listed that didn’t belong to me. Upon closer inspection, we discovered that the credit card had been opened October 1st of 1980. 1980?!?!?! How in the world could I have opened a credit card in 1980? I was 8 years old for cryin’ out loud! It was a good thing that whoever owned the card paid on time every month, but still . . . it wasn’t mine. I tried to think of any reason why this would be on my credit report, but nothing came to mind. And it made me a little nervous . . . I wanted it off my report! I called the numbers listed on the reports and asked what I should do to remove it. One representative I spoke with asked me a few questions, then simply told me it would be removed and that she’d send a confirmation email. The other rep I spoke to was really nice and even looked into it a little further for me. She told me that I was an “authorized user” on the card. I asked her what that meant. She said it meant that I had authorization to actually use the card, but that it wasn’t in my name. I wasn’t the owner. I had to laugh, then, when she told me that my maiden name was associated with the card and the last reported address on the card was my dad’s! So, I thanked her for taking care of it for me . . . and then promptly called my dad. 🙂

Moral of the story: If you get a credit report and find that something’s amiss, don’t panic – but don’t wait. Set it straight.

Experian, Trans Union, and Equifax will give you the option of disputing information you feel is erroneous. There’s a section on the credit report that informs you of your rights, how you can combat identity theft, and how to contact them if you want to file a dispute. In some cases, you can click on a button to file a claim, or you can call their toll-free number and talk to an actual person. You might find that it’s something related to a family member, like I did, or you may find that someone could be using your information illegally. In any case, it’s a good idea to get your yearly (FREE) credit reports, pay attention to anything that seems fishy, and report it immediately. You have rights. Fight for what’s yours.

Good luck!

Tuesday’s Tip: Hold It In!

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With the weather in Chicago turning (much!) colder, my husband and I had our yearly conversation about how to keep electric and heating costs down this winter. Not that our bills are outrageous. In fact, ours seem to be lower than a lot of people we talk to, but it takes a little effort to keep them under control. Still, we want our family to be comfortable, so when our daughter came to us complaining that she had to pile six blankets on her bed to keep warm at night, we were concerned. Hubby and I looked at each other. The window? And not just any window. A set of three large windows, actually, that take up virtually one entire wall of the bedroom. Without a word, we both trudged up the stairs to assess the situation. Our hands hovered over every joint, edge, and seam of the windows, searching for the tell-tale draft we were sure was turning our little girl into an icicle. We couldn’t find it, but we did notice how very cold it was. The giant wall of glass provided no insulation from the cold that secretly seeped into the room.

What to do . . .

Well, way back in the day, when I was in college (and, no, I’m telling how far back) my roommate and I shared the top floor of a century-old house with windows facing every direction to the outside world. It was great when it was sunny, filling the apartment with warm sunshine. But during the winter, the wind’s icy fingers crept into our little home, making the radiators moan with the effort of keeping us warm. We asked our landlady what to do and all she offered in the way of advice was to stuff towels along the seams and hang old blankets from the curtain rods. Huh . . . yeah, ok. Sure. That’ll work. We tried it anyway, but didn’t like the fact that the blankets blocked out the natural light, making us feel like we were living in a dungeon. And it didn’t do a very good job of stopping the drafts from finding other gaps in the window sills. So, we asked our parents. They suggested putting plastic over the windows. We did, and it worked. It wasn’t perfect, but we were much warmer and, subsequently, happier knowing we weren’t going to have to take a blow dryer to our toes in the morning anymore.

So, my husband stopped by the hardware store on his way home from work the next day and picked up a package of insulating wrap. It was only about $8 or $10 and was made for large windows and patio doors. After dinner, we set out to keep our daughter from freezing while she slept. Start to finish, it took us about 45 minutes. We took down the valances and curtains, wiped the surfaces, then rolled the double-sided tape along all the edges. Next, we carefully placed the plastic around the window, trying not to make any wrinkles. Then my husband waved my hair dryer over the entire surface until the plastic was taut. Then we replaced all the curtains. Done. The next morning, our daughter gleefully informed us that she was so warm that night that she had to take off her socks and shed a blanket or two. Naturally, we were relieved and glad we wouldn’t be treating her for frostbite.

Surprisingly, the process of insulating windows with plastic isn’t very difficult. Plus, it’s an inexpensive way to block drafts and chilliness while holding the heat in, which will save you money on heating costs. You can even see through it. If you have drafty windows, but can’t afford to replace them just yet, consider installing these plastic insulating wraps to your windows. You can find them at hardware, grocery, and discount stores. (Chances are they’re on sale right now.) They also come in several different sizes with everything you need to protect your windows, including instructions. You supply the hair dryer. It’s an easy, inexpensive alternative to freezing to death or going broke.

Tuesday’s Tip: Keep Your Balance!

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When people ask me about my book and what it does, I tell them that it’s a kind of ‘workbook’ that’s designed to help them set up their very own Roadmap and learn how to effectively manage their money. How? they ask. I say that it asks them to take a good, hard look at how they spend their money, to set priorities (goals) for themselves, and to stick with it. The book teaches them how to do these things as well as how to set up their Roadmap and how to use it on a regular basis. It helps them keep track of their money – where it’s going, where it needs to be, and what to do with the rest. Sometimes the next question that comes up is How do you know how much money you’re supposed to start with? I then explain that they’ll start with whatever amount is in their account – which is usually followed up by How am I supposed to know how much is in my account? And I say, Well, you’ll need to balance your checkbook.

It’s then that I fear I’ll have to use CPR. They inhale sharply, their hands fly to their chests, their eyes widen, and their mouths gape in horror at the mere thought of having to balance their checkbooks. I reach out to them. I try to steady them with a calming hand on the arm. Occasionally, I have to remind them to breathe . . .

As terrifying as it may sound, balancing your checkbook is one of the first, necessary, steps to setting up your Roadmap and getting control of your finances. You have to make sure all of your debits (outgoing money) and credits (incoming money) are completely accounted for, included in your checkbook, and the balance matches what the bank says you have. This can be particularly difficult if you’ve never balanced your account before, or if it’s been a really long time. But in all honesty, once that’s done, it’s much easier to keep up with it if you balance every time you get your statement. (And if you’re not sure how to do it, there are usually instructions on the back that walk you through it!)

Having a current and accurate balance is needed when setting up and using your Roadmap, but it’s also incredibly important to note that it will also help you find any discrepancies, mistakes, or unauthorized use of your account. In this day and age of identity theft, you can’t be too careful with your money! No one at the bank is monitoring your account, and the computer simply spits out your statement, which means it’s up to you to be on top of it. And the best way to do that is to keep your balance up to date and accurate.

I’ve had many, many conversations about money management and finances, and I can tell you right now that one of the most important, and simplest, things you can do for yourself is to keep track of your money on a regular basis. Balance your checkbook every month, keep your Roadmap updated, and once you get the hang of it I’m certain some of that anxiety will start to slip away and you’ll feel much better knowing that you’re in control. It’s a balancing act, but I know you can do it.

Tuesday’s Tip: Invest for Your Future

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As the last post regarding what to do with your tax refund, I’d like to suggest beginning to set aside some money for you. I’m assuming that you’d rather not work until you’re 96, so now is the time to stash away some cash for your retirement. Some of you may think ‘Oh, I’m too old to start saving for retirement’, or ‘I can barely get by on a daily basis, how the heck am I going to save for the future?’. Well, guess what? It’s never too late. And if  you’re in a pickle, financially, then it’s time to fix up the engine so you can get behind the wheel and go where you’d like to go.

If you participate in a retirement savings program through your company, like a 401(k), good for you. That’s fantastic. But to be honest, I wouldn’t necessarily count on that as your sole source of income after you retire. In this day and age, you need to cast your net a little wider to ensure you don’t have to eat peanut butter and jelly for the rest of your life.

There are several different coffee cans to toss your spare pennies into, like bonds, CDs, mutual funds, stocks, money market accounts, IRAs, and such. (I’m not going to give you any kind of advice about which ones are performing well or suggest that you buy into any one fund or stock. I’m merely pointing out that you have options.) These types of investment opportunities are separate from a company-sponsored 401(k), so it’s up to you to decide how much money you want to invest – and then you make the deposits. You can do that monthly, quarterly, yearly – whenever you have some extra cash to throw at it. That’s why I suggest using your tax refund money to get you started. If you don’t need it, why not put it to good use? But let me throw in a word of caution: if you’re going to make this one of your priorities, make sure that you keep up with it. There’s no sense in opening an account if you’re never going to contribute to it.

If this sounds like something you’d be interested in doing, then hop on the computer and do a little research. Visit the websites of different investment firms in your area, find out what they have to offer, and then make an appointment. A professional financial planner can answer any questions you may have and will give you advice about the best places to put your hard-earned cash.

And just so you know – he or she will probably ask you what your goals (a.k.a. priorities) are in life. Maybe now would be a good time to brainstorm . . .

Tuesday’s Tip: Invest in Your Home

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If you own your home, you know that the projects seem to be never-ending. There’s always something that needs to be fixed, painted, or replaced. Things wear out. It happens. But the real problem comes when you have to scrounge up enough money from somewhere to buy a new water heater because your old one unexpectedly handed in its resignation all over your floor. The trick is to have some money on hand for The Unfortunate. You may not have a lot to spare, but earmarking some is certainly something to think about doing so you’re not panicking if an emergency arises.

But what about the things you’re planning to do? Maybe you’d like to get new kitchen appliances . . . or new flooring . . . or new furniture . . . or you need to paint a few rooms . . . the list can go on and on. If you’re eyeing that fridge you saw in the ad, then grab a calculator and do a little math. How much is it? How much is it on sale? How much do you need to set aside each month (or paycheck) so that you can buy it in 3 months? 6 months? Do you need new carpet in the family room? Measure the room. Find the square footage. Shop around and compare prices. How much would it cost to carpet the room? How much do you need to save each month to have it installed in 4 months? 8 months? A year? Do they offer some favorable financing? Or maybe a deal offering no interest, no down payment, etc.?

If you’re contemplating a home improvement project, do a little research and little investigating. Look into different types, models, prices, value, or selection. Be on the lookout for sales and discounts. Then, do the math. One of the principles of The Money Roadmap is to set aside a predetermined amount of money for each of your priorities on a regular basis so that it’s there when you need it. If you do your detective work, then you’ll have a much better idea of how to accomplish your goal. If it’s something that can be achieved with your refund alone, then give it some serious thought. If it’s a more expensive endeavor, then use some of your tax refund to get started, then add to it regularly until you’ve met your goal. Consider it a sort of ‘down payment’ on what you’re working toward.

Your home is your living space . . . work space . . . family place . . . hiding place . . . you name it. So put your money to good use and make it yours.

If you’re interested in learning more about how to have more control over your money, check out my book The Money Roadmap: You choose the destination AND the way! Good luck to you! You know where to find me if you have any questions!

Clearance Cash-in

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In light of the outdoor environment of my new job as an Education Guide, I decided I needed to get a coat that would withstand the elements. I had an unused gift card from Christmas, a 20% coupon, and a little extra time, so I went shopping. (Which is not my forte, by the way.) I, luckily, found exactly what I wanted right away – a 3-in-1 system jacket in an awesome, bold green color. I noticed that it was on clearance for $40, originally $200. Wow! Ok. I’m liking this . . .

But my gift card was for $50. Hmm . . .

So I went to another section of the store and took a peek at the clearance racks. (Also something I am not good at – ick!) But I figured I could use some sturdy pants or maybe a shirt or two that would be appropriate. I found two pair of cargo pants, but alas, they were too big. Then I couldn’t find any others in my size. Bummer. But as I quickly scanned the racks for colors I liked in fabrics that were suitable, I found four shirts. Also on clearance. One was $7.20, another was $4.80, and the other two were $3.20. Ok . . . I was done. I didn’t want to overdo it.

I got to the register. I placed my items on the counter and the very nice cashier began ringing everything up. I handed over my 20% coupon and my $50 gift card. I nearly fell over when she told me how much I owed . . .

69¢

As I stood there in stunned silence, she smiled at me, handed me the receipt, and cheerfully told me I had just saved $225.28. “Have a nice day,” she said with a smile. I picked up my chin, managed a “Thank you. You, too,” and moved forward, quickly checking to make sure I hadn’t drooled all over the counter. I checked the receipt just to make sure I wasn’t hallucinating, then smiled.

Yes, I think I will have a nice day . . .

Tuesday’s Tip: Invest in Your Kids

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In this week’s installment of ‘what to do with your tax refund’, I’d like to suggest that you invest in your children. Invest in their futures. “You mean, like, save for college?” Well, yes. And no. There’s more than one way to give your kids a helping hand. Even if you don’t have kids, but will, keep these thoughts in mind for future reference.

If you have visions of sending your kids off to college someday, you may want to consider a higher education savings program. And by ‘higher education’, I mean anything beyond high school. There are several options out there, and that can get pretty confusing, so it’s best to chat with a professional who can sort it all out for you and help you decide which way to go. Every investment firm has people to help you, or you can ask a friend or colleague to recommend one. I’ll be going into a little more depth about these options at a later date, but for all intents and purposes, today, I’m just trying to plant a few seeds for you. One word of advice though . . . start as soon as you can and then stick with it. Or start with your refund and do what you can when you can. Every little bit helps.

Another way to invest in your kids is to get them involved. Use the refund money to pay for music lessons or to learn a sport. Both activities teach kids how to be valuable members of a group, develop fine motor skills, and improve self-confidence. Sports help kids maintain healthy lifestyles and weight, and studies have shown that kids involved in music do better in school. So, not only will your kids be active and engaged, but the skills they’ll learn will teach them discipline, cooperation, and that hard work pays off. Who knows, their talents may even help them into college, if that’s their dream.

If your child is completely against music or sports, there are other options to pursue. There are classes they can enroll in through libraries, park districts, and even local community colleges. If your child has a talent for creating delicious meals, then try a junior chef class. If he or she has a knack for computers, there are many classes that focus on things from program or gaming design to architecture. And if your kid loves photography, try one of those. The possibilities are nearly endless. Talk with your children about what interests them and move forward from there. There are lots of inexpensive options if you spend a little time doing some research.

I could go on and on about the benefits of getting kids involved in all kinds of activities, but I’ll save that for another time, maybe. But for now, I’ll just make the humble suggestion of putting your tax refund to good use by using it to pave the way to self-discovery and to help build their futures . . . whatever they may be.

Tuesday’s Tip: Pay It Down

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So, you’ve got a little money coming back from the government? Good for you! I’m glad to hear it! The question now is what to do with it, right? Hmm . . .

Well, over the next few weeks, I’m going to be posting ideas about that very topic. But first, I need to ask: Did you do your ‘homework’ from last week? Did you make that list of priorities? Things you’d like to do in life? Goals you’d like to accomplish? It’s always a good first step when you’re talking about your money and what you want to do with it.

Today, let’s start with the first idea: Pay it down! Debt, that is.

Debt is simply any money that you owe. Debt can be anything from mortgages to loans of any kind to credit cards. If you’re getting a refund, and you don’t need it just to live right now, then consider using it to pay down any excess debt. I don’t know many people who are without a mortgage payment, and that’s a ‘long haul’ kind of thing, so it’s probably not the best option. But what about a second mortgage? How about a car loan that is close to maturing? Do you have any student loans you’d like to pay off? Have a few medical bills you’d like to get rid of? How about those credit cards? The reason I list these kinds of debts is because these are the most common. And, generally, short-term items take less time to pay off and it’s a lot easier to put a dent in them with extra funds that come your way.

A couple of things, though, if you’re thinking of throwing some money at a loan . . . 1) make sure there’s no penalty for paying it off early and 2) make sure you put the money toward the principal. Don’t just ‘make an extra payment’. You’ll be paying principal and interest. The best way to get rid of the loan and save some money on interest is by paying down the principal. Once you’ve done that, check your next statement and look for the extra principal payment and how it reduces what you owe as well as how it lowers the interest.

If you want to pay off credit card debt, you can do a couple of things. First, take a look at your balances. Is there one that can be paid off immediately with your refund? If so, you may choose to get rid of it completely so you don’t have to worry about that one anymore. If that’s not an option for you at the moment, there’s another way. You can use the money to reduce the balances, and then systematically pay them off one by one. There is a great method to doing this that I’ve detailed in The Money Roadmap: You choose the destination and the way! Check it out!

Before you make any decisions, do a little number crunching and see where your money would be of greatest use. You may not be able to completely eliminate a loan or balance, but reducing what you owe will only help you in the long run. The faster you pay off your debt the more you’ll have to live on or put toward new goals.