Other People’s Priorities Don’t Have to Be Your Priorities
Kelly writes in:
In the past three months, I’ve paid off all but $2,000 of my credit card debt. I feel happier about my money than I have in a long time. The only problem is that my social life seems to be falling apart. I don’t have as much interest in the things my friends are spending their money and time on and I find myself doing other things a lot. What do you suggest?
Bear with me for a second as I go down a bit of a strange road.
I’ll admit it. I’m not a good housekeeper, and neither is my wife.
Yes, we keep our house reasonably clean and we make an extra effort to clean when guests come over, but on a day to day basis, housework is lower on our priority list than it seems to be for many other people that we know. Quite often, we do minimal cleanup during the week and wait until Saturday for a real housecleaning – and, even then, we don’t scrub the walls or things like that on a regular basis.
Our priorities are simply different. There’s no wrong or right about it. Some people value housecleaning more than we do. A few of our closest friends spend literally hours each day on housecleaning because keeping their house sparkling is a very high priority for them.
So what’s a high priority for us? Time with our kids and with each other. Learning new things. Finding ways to have fun without spending a mint.
If we were to simply follow the lead of some of the people in our social circle, we would probably spend more than we do. One of my closest friends is becoming a small-scale land baron. Another one buys lots of Leroy Nieman serigraphs and, on occasion, original art. Yet another close friend really, really values his three automobiles.
Our money goes towards financial stability, because that’s what we value.
Placing that value highly, even if it’s not in line with what our friends seem to value, hasn’t damaged our deepest, most important friendships. You don’t have to value exactly what others value – you just have to respect it.
Instead, our friendships are usually based on the things we do have in common. Almost all of our friends really enjoy hosting and attending evenings full of board games, usually with a potluck meal. Even though there’s a variety of political perspectives, we all value political discussions that don’t turn into insults, so we often discuss politics together in a setting that would often result in arguments and fights. We all value reading and learning new things. None of us, at this point, is in a bad financial state, as we all have our debts under control.
For all of the things we do differently, we have those key things in common. You don’t have to do what your friends do, and you don’t have to value all of the same things that your friends value.
If you value living frugally, that’s fine. You don’t have to spend like your friends do. Instead, find ways to accentuate the things you do have in common. What do you both value? That’s the basis of a strong friendship.
Kelly, it seems to me that you’ve adopted stronger financial practices as a significant value in your life, and that’s great. It’ll help you to stay afloat no matter what the river of life sends your way.
The question is what else there is in your life. What other things do you value? How do you spend your spare time? What do you think about? There’s a good chance that these things still overlap with your friends – and if they do, seek ways to spend time with them that match up with those values.
You might find that your values actually are pretty far away from some of them and that your friendship was really only based on one value, one that you’ve moved away from as you’ve grown as a person. That’s fine – I discovered that myself when I started re-evaluating my life. If that happens, it simply means that it’s time to start socializing in ways that will help you meet people that match up well with your current values.
I firmly believe that if you surround yourself with people who mostly value different things than you do, you will be unhappy. I also firmly believe that if you seek out groups of people with which you share at least some values, you’re likely to build great relationships and friendships. Even better, if you can seek out multiple groups in this way – a group that matches one value you hold dear and another group that matches another value you hold dear – you’ll not only build friendships and relationships, but you’ll be able to make some powerful connections, too.
Good luck!
Continue reading Other People’s Priorities Don’t Have to Be Your Priorities …
From The Simple Dollar.
Why Was My Credit Limit Lowered?
Jennifer writes in:
Yesterday, I received a notice from [my credit card company] that my credit limit had been lowered from $10,000 to $4,000 on my primary credit card. I was immediately worried that my credit had been damaged by identity theft, so I checked it on annualcreditreport.com and there was nothing there at all. I’ve always paid all of my bills on time and my life has been pretty much normal and unchanged for a long time. Why would they make this change? I’m not concerned about reaching my credit limit, but that reduction in my limit does alter my debt-to-credit ratio, which could negatively impact my credit rating.
Jennifer describes a pretty typical scenario today. A credit card company sends a letter out of nowhere, for no obvious reason, announcing a significant drop in one’s credit limit.
One big effect that such a drop has is that it alters your debt-to-credit ratio, as Jennifer mentions. Simply put, your debt-to-credit ratio tells what percentage of your credit limit across all of your credit cards you’re actually using. So, let’s say Jennifer had a $3,000 balance on her $10,000 card – that’s a 30% debt-to-credit ratio. When the company drops her credit limit, she then had a $3,000 balance on a $4,000 card – that’s a 75% debt-to-credit ratio. The higher your debt-to-credit ratio, the more negative impact it has on your credit score.
This type of behavior seems alien, particularly after a decade where credit card issuers would commonly raise credit limits without you even asking. What gives?
The reality of the credit card industry has changed. For one, the econmic downturn has seen a large spike in the number of people who have simply defaulted on their credit card bills, not bothering to pay them. For another, the Credit Cardholders’ Bill of Right Act recently became the law of the land, restricting some of the business practices of the credit card companies.
Credit limits are not a right. Another issue is that many people, particularly after the last decade of rampant growth in credit limits, view their limits as something of a right and when credit card companies reduce those limits, their rights are somehow being infringed. In truth, that’s not the case at all – your cardholder agreement makes it very clear that your credit limit and your interest rate can be changed at any time.
So how do they decide when to lower your limit?
They watch what you buy via data mining. Every time you make a credit card purchase, the credit card issuer’s computers store a record of that purchase (you’ll see such information on your bill). Obviously, this is a wealth of information, one that they can use to figure out all sorts of things, such as where you live (so that if you suddenly make a rash of purchases elsewhere, they can throw a block on the card).
They draw conclusions based on what you buy. Another thing that they do is watch what you buy. They look at the places you normally shop and draw conclusions based on that.
Let’s say Jennifer normally shops for clothing at, say, Banana Republic (I don’t know this, I’m just creating a hypothetical example). Based on this, the credit card company would conclude that she fits the profile of an average Banana Republic customer, meaning she has a fair amount of discretionary income.
Now, let’s say Jennifer is suddenly a bit worried about the economy. She and her husband decide to curb their spending and she starts doing things like buying soap at the dollar store with her credit card.
When the credit card company analyzes the data, looking for spending changes that might affect credit limits, they’ll observe from their data that Jennifer is spending a lot less at the Banana Republic and a lot more at the dollar store. That means she’s got a different spending profile – one that signifies the potential for financial trouble.
They act in accordance to those conclusions. Given their recent problems with people defaulting on credit card debt, they take pre-emptive action and reduce her credit limit.
To Jennifer, this seems sudden and unfair – and for good reason. She’s likely not in any true financial trouble at all and is simply choosing to be a bit thrifty in these uncertain times.
What can you do to protect yourself? The truth is that Jennifer should avoid being in any kind of position where such a credit limit change has any impact at all on her. In other words, don’t be reliant on that piece of plastic. Use it as a tool instead of as something you need to have.
One big way to do that is to never carry a balance on your card. If a bill comes at the end of the month, pay it off. If you’re thinking of making a purchase where you wouldn’t be able to do that, you can’t afford that purchase. Wait a few months and save up the cash.
This not only keeps your debt-to-credit ratio pretty low, but it also leaves you out of any sort of “danger” from the credit card company adjusting your limits or your interest rates. More importantly, though, it prevents you from building up a significant amount of debt on the card, which can be very, very difficult to pay off.
Use your credit cards wisely and changes like what happened to Jennifer will have little or no impact on your life.
Continue reading Why Was My Credit Limit Lowered? …
From The Simple Dollar.
For My Readers
As many of you know, I shut down this blog, as it was no longer fun for me.
Upon request, I am putting it back up as an archive so that people can find recipes and whatever other information they were looking to implement.
I will no longer be posting here.
I will be writing at my old blog, A Fine Collection of Lint and Fuzz, about once per week and am the Wednesday contributor to Frugal Hacks. You are all welcome to continue to follow me at both of those blogs.
I enjoyed this blog for a long time, and I thank you all for that.
Comment not published? Check out my comment policy.
Copyright Under $1000 Per Month, 2009-2010
Continue reading For My Readers …
From Under $1000 Per Month.
Raising Deductibles to Save Money on Insurance: Does It Work?
One common, painful bill that we all face is the insurance bill. Whether you’re talking renter’s insurance, homeowner’s insurance, or automobile insurance, the bill feels painful because it’s not something we can often directly see the benefit from. It just comes in handy when something goes wrong.
One of the most common tactics that you’ll see in cost-cutting articles is calling up your insurance company and requesting an increase in your deductible – the amount you have to pay before the insurance kicks in.
On the surface, this works well. If you increase your deductible, your premiums (the amount you pay each month/quarter/year) will go down, meaning your monthly bills are lower. You can chip hefty percentages from your insurance bill just by making this move.
One of my long-time readers, Jeanne, has been writing to me about insurance this week. She has considered doing this, but something is convincing her that it’s not the best move:
I understand that raising a deductible will lower your premiums. But why do we have insurance in the first place? Doesn’t raising the deductible through the roof defeat the purpose?
The first thing to note here is that the purpose of insurance is to insure that you’ll survive financially due to an unforeseen event. We don’t have homeowner’s insurance because it’s fun – we have it because it will help us start over with a new home should our house burn to the ground. Without it, most of us would financially sink. The same goes for renter’s insurance – it’d be tough to lose all of your possessions in a fire without any way to recover. Again, with automobile insurance – if you total your car without insurance, you might be sitting holding just a car loan and nothing to show for it.
Obviously, if you have a ton of money, insurance on smaller things is a lot less important. People with huge bankrolls have no need to carry full insurance on their cars – they just cover the parts that might worry them or that they’re legally required to cover.
Saving money by raising a deductible assumes that you have the cash on hand to cover the deductible in such a situation. If you raise your auto deductible from $200 to $1,000, you’ll see a big drop in your bill, but if something goes wrong with your car, you’re going to need that $1,000. If you don’t have that $1,000 in an easy-to-access place, then you’re in real trouble.
The solution is simple: if you have a well-funded emergency fund in a savings account somewhere, you can raise your deductibles some without worry. A well-funded emergency fund means a minimum of a couple months’ worth of living expenses, plus more if you have dependents. If you have that kind of cash that can be accessed with ease, then by all means, raise your deductibles.
Won’t this cost me more in the long run? Many people who consider this ask themselves whether such a move will cost them more in the long run. After all, if they’re having to come up with a lot more money on each claim, are they really saving money overall?
The average homeowner makes an insurance claim once every nine years. If you raise your deductible on your homeowners’ insurance by $1,000, you only need to save about $120 a year in your premiums in order to create a net savings on average – and, likely, you’ll save a lot more than that.
Similar math exists for other types of insurance. The claims made are so infrequent that you only have to save a little bit on each insurance payment to make up for the additional cost on the deductible.
The key, though, is making sure you have the emergency savings to handle that higher deductible. If you don’t have that, make it a priority before you consider making changes to your insurance policies.
Continue reading Raising Deductibles to Save Money on Insurance: Does It Work? …
From The Simple Dollar.
The Simple Dollar Time Machine: February 20, 2010
Many newer readers of The Simple Dollar haven’t been exposed to the hundreds of great articles in the archives of the site, so this is a weekly series that highlights the five best posts from one year ago this week, two years ago this week, and three years ago this week. I call it … the Time Machine.
One Year Ago (February 14 – February 20, 2009)
Using a Gratitude Journal as a Personal Motivator to Save Money and Enjoy Life I’ve been using one of these for quite a while. It really, really helps to step back very regularly and ask yourself what matters in your life.
Struggling with the Guardianship Question Guardianship is an issue that all parents have to struggle with at one time or another. Who do you choose to take care of your children if you suddenly pass on? It’s not an easy question.
Bulk Breakfast Burritos: Convenient, Cheap, Healthy, and Easier Than You Think I love these things! We make batches of them fairly regularly and I thoroughly enjoy them for breakfast in the mornings.
Ten Vital Tactics for Making the “Money Talk” Work The “money talk” is when you sit down with your partner and discuss financial issues for the first time (or for the first time in a long time). It can be painful – but it doesn’t have to be.
About My Wife, Sarah The Simple Dollar wouldn’t be here if it wasn’t for her.
Two Years Ago (February 14 – February 20, 2008)
Training Wheels: Why I’m Spending Less and Less Time Managing my Personal Finances Once you have your finances properly in order, it takes much less time than before to keep them working the way you want.
Defeating Superman Syndrome: How to Progress Beyond the “Need” to Be the Financial Hero This was actually a pretty major step in my own financial journey.
Financial Independence: Defining It and Figuring Out How to Get There What does financial independence mean to you? It has very different meanings for different people.
Little Income, Big Debts: Managing Your Money in Your College Years The financial realities of a college student are much different than they are in other stages in life – and thus different concepts are needed to manage money appropriately.
Nine Techniques for Developing Patience Patience is a key part of surviving the long slog of financial recovery. Here are nine ways to cultivate patience in your own life.
Three Years Ago (January 31 – February 6, 2007)
The Art of the Thank You Note A well-timed handwritten thank you note can make all the difference when it comes to securing a job or cementing a personal relationship.
10 Options To Consider Before Getting A Payday Loan Payday loans are financial poison. Here are ten things to try before even considering one.
A Fascinating Look At Edward Bellamy, Inventor Of The Credit Card I really enjoyed researching and writing this article. It let me dig deep into an area I often don’t get to touch on on The Simple Dollar.
15 Things You Can Do Right Now To Help Your Career Yes, right now. You can make a difference sitting at your desk or standing in your workstation.
Is It Unamerican To Invest In International Funds? Does The Question Even Matter Any More? Here, I address nationalism and investing. I tend to think that globalism is here to stay, myself.
If you’d like to browse through more of the archives, visit the chronology, where all posts are listed in chronological order.
Nine Ways to Get More out of The Simple Dollar
This is kind of a FAQ for new readers and is posted each week along with the Time Machine. Here are nine great ways for new readers to dig deeper into The Simple Dollar.
1. Subscribe by email or RSS. Visiting The Simple Dollar’s website is great, but for many people, it’s more convenient to receive the articles in another form. It’s easy to join 60,000 other subscribers and get The Simple Dollar’s content by email or in your RSS feeder (if you’re unfamiliar with RSS, check out Google Reader.
2. Comment. Each article on The Simple Dollar has lively discussion. Just click on the green square in the upper right of each article on the website and join in!
3. Read my story of financial meltdown and recovery. The Simple Dollar isn’t based on what I’ve read in books or learned in school. I’ve made a lifetime of financial mistakes – The Simple Dollar is a record of what works for me during the process of getting my life on a better track.
4. Download my free 49 page e-book. Everything You Ever Really Needed to Know About Personal Finance On Just One Page is completely free. It summarizes all of the key lessons I’ve learned along the way about personal finance in one tidy package – in fact, all of the main principles can be found right on the cover.
5. Follow me on Twitter – or other social networks. I post tons of interesting articles, quotes, follow-up material, commentary, and other material on Twitter. Follow me! If you’re unfamiliar with Twitter, it’s essentially an open discussion forum for people to share ideas and thoughts with other like-minded folks – you just choose the people you want to listen to and their ideas and thoughts are all delivered to you on a single page.
I also participate on several other social networks. Feel free to check me out on del.icio.us (it’s where I collect links, from which I select the ones that appear in my weekly roundups), wakoopa (what software I use), GoodReads (what books I’m reading), Facebook, and FriendFeed (which aggregates everything). I also have an irregularly-updated personal site, TrentHamm.com.
6. Dig through “31 Days to Fix Your Finances.” 31 Days to Fix Your Finances is an article series that outlines how you can get a grip on your finances over the course of a month.
7. Send me your questions and suggestions. Send me an email and let me know what you’re thinking, what you’d like to see, and any questions you might have. I try to respond to as many emails as possible and I read them all. I may even use your question in a future article!
8. Become a “Friend of The Simple Dollar.” If you find the stuff on The Simple Dollar valuable and are willing to spend five minutes or so a month to help me out with small things, please consider signing up to be a “Friend of The Simple Dollar”.
9. Email a great article you find to a friend. Find an article that you think your friend would love? At the bottom of each article, you’ll find a link that says “Email this” – just click on that, type in your friend’s address, and send it right along to them!
Continue reading The Simple Dollar Time Machine: February 20, 2010 …
From The Simple Dollar.
The Gradual Shift
When I hit my financial bottom, I realized that a lot of things in my life needed to change. I went through my closets and sold off a lot of my entertainment collections. I started trying out every frugal tactic under the sun. I created a debt repayment plan and hammered some of my debts with the money I made from the sales and from the frugality.
Yet the biggest shift – naturally choosing not to spend money at every opportunity – was much more of a gradual change. I didn’t wake up one morning with complete success in this area. In fact, it took quite a while before my “default” mode when I went into a bookstore was not to buy a book. It took a long time before I stopped putting unnecessary stuff into my shopping cart.
Why did it take a long time? For one, the old ways were my normal behaviors. It was just the way I had done things my entire adult life, and bulldozing those patterns – especially bulldozing a lot of patterns at once – is easier said than done. For another, I still derived a lot of personal short-term comfort from those choices. I got a nice rush from owning a new book or something like that in the short term – it was only later on when that book was read (or sitting unread on my shelf) and I realized that it had gobbled down $15 or so that I felt bad about it.
What caused an overall mind shift away from that? Obviously, from the subject of this post, it was a gradual shift. However, there were three big key elements that convinced me to break the habits of unnecessary spending in my life.
First, I focused in on one or two key areas where I had a lot of money leaks. For me, the big one was the book store. I love to read, don’t get me wrong, but buying three or four new books a week isn’t exactly a habit that creates long-term financial security.
So, to start with, I really focused on my book-buying habit. I went on a lengthy sabbatical from bookstores. I just didn’t buy any new books.
The effect of this is that it forced me to discover and utilize other methods for feeding my book-reading hobby. I found PaperBackSwap (one of my first orders from there was the remaining four Douglas Coupland novels I’d never read, for example). I rediscovered the library – and I started utilizing the waiting lists for big new releases. I started swapping more books with friends as well.
By the time I gave up on the book store sabbatical, I found that my tendency to buy books with reckless abandon had been broken. I still pick up a book on occasion, but more often than not, it’s one that I’m pretty sure I’m going to read multiple times and thus mine extreme value from.
Second, I tried to be mindful of spending in other areas but I didn’t beat myself up over failures. I found that, time and time again, if I beat myself up over a mistake, I would be much more prone to just repeat that mistake.
A much better approach for me was to simply say, “I made a spending mistake. That’s okay, though – one mistake doesn’t break me. What can I do in the future to not repeat that mistake?”
From there, I’d try different things. I eventually adopted a new driving route to work, for example. I altered my evening routine so that I’d often have a lunch packed for me to take to work the next day so I didn’t have to eat out each day.
I was mindful of my mistakes and I constantly experimented. Sometimes things would click and just work. Sometimes I’d repeat a mistake a few times. It was a learning process.
Finally, I got more involved in communities and interpersonal relationships that didn’t value spending. I started spending more time with some community groups while spending less time with my buddies that were spending money left and right in a seemingly never-ending game of one-upsmanship. I focused a lot on a small handful of personal relationships with people who reflected where I wanted to be with my life and didn’t focus as much on relationships that pulled me away from that ideal state.
Over time, I found myself doing less “going out with the boys” to do expensive things and more evenings inviting people over to our house to play board games. I found myself filling my evenings with community meetings instead of going out with people who spent most of their time being negative. I joined groups that matched my interests instead of just trying to keep up with the others in my usual gang.
The people I surrounded myself with began to gradually reinforce good spending behaviors instead of reinforcing bad ones. I no longer felt a social need to have the latest and greatest thing – and that helped a lot.
A final tip that helped: I reduced my mass media consumption. I’m not talking about the advertisements – I’m talking about a lot of the content itself. Shows where people demonstrate unbridled excitement at the possibility of winning some material item. Magazines that talk breathlessly about the latest and greatest product. Whenever I see those things, I just toss them out. I have no need to be influenced by what other people want.
It takes time – at least, it did for me. Good luck.
Continue reading The Gradual Shift …
From The Simple Dollar.
$7 (or less) Slow Cooker Suppers
Molly Makes $7 Slow Cooker Suppers is finally here! I’m so excited about this cookbook! It’s been a long time in the making and that’s because of all the extra work we went to. This cookbook is over 160 pages and, like $5 Dinners and $3 Desserts, lists cost breakdowns for each recipe. But this time we went even further!
Every single recipe was taste tested and includes comments and tips from our testers. Not only that, but over half the recipes include photos from our test kitchens. These aren’t prettied up magazine-style photos, but pictures from real life moms just like you! And to make things even easier for you, both the Table of Contents and Index are linked to take you right to the recipe you want. Click, print, and start cooking!
Don’t believe me? Check out this sample.
And if you haven’t already purchased Molly Makes $5 Dinner and $3 Desserts, you can get a special price on our Frugal Family Dinners Combo Pack.
Continue reading $7 (or less) Slow Cooker Suppers …
From Econobusters.
Freebies and Coupons Group, Come Join!
I’ve recently been granted to take over the freebies group, 1000 Quality Freebies, a long time Yahoo freebies group.
http://groups.yahoo.com/group/1000_Quality_Freebies
The group’s owner had disappeared long ago, leaving the group to spammers posting yucky stuff. Over the course of three to four days, we have deleted hundreds of thousands of messages (all of them!) to totally start [...]
Continue reading Freebies and Coupons Group, Come Join! …
From Frugal Simplicity.
In the Bathroom
Touring Tuesday is up and running. Today, you get to look at my bathroom. Fun stuff, huh?
Above is the view from the door as you enter. The bathroom is 5′x6′. It has a sink, toilet and shower stall. The bathroom in our old apartment had a toilet and full tub, but no sink, so it’s a trade-off.
If you fold towels in three one way, then in three the other way, they fit on the back of the toilet.
This is Brad. He’s been with us a long time.
On the door we have some artwork of friends and family. The Thomas potty cover is hanging by Velcro.
Some of you will be very proud of me. We had a tall narrow set of drawers below the light that held all sorts of stuff. I went through and decluttered and decluttered and was able to eliminate it. It’s now part of my craft corner, but that’s a whole other story.
The light in the bathroom has not worked for a long time. We keep meaning to tell the landlord, but forget whenever we see him. So, the lamp is working fine for us.
This is my only real complaint about the bathroom. Those aren’t bugs squished into the floor, they are burn marks. There are some on the sink, too. I don’t quite understand why someone was smoking on the toilet and decided to put their lit cigarette on the floor… on several occasions. Maybe that’s why it’s a non-smoking building now.
You might want to check out my newcomment policy .
Copyright Under $1000 Per Month, 2009-2010
Continue reading In the Bathroom …
From Under $1000 Per Month.
Balance the Equation
I subscribe to receive emails from the website Simplify 101. An email last week sparked a “lightbulb moment” for me. I quote: ” . . . become mindful of the things you add to your home and life. For each thing you add, decide to remove something old. So, if you add a new shirt to your closet, take out an old one. If you add an exercise class to your weekly schedule, subtract the equivalent amount of time from another activity such as web-surfing or watching T.V.” (emphasis mine)
For a long time I’ve actively practiced this “equation” when it comes to belongings and purchases, and it works beautifully. But I have honestly never thought about how it applies to time management. I’m so guilty of stuffing more and more commitments and expectations into my days and weeks, and then wondering why I can’t get everything done. I’m SO glad for this lightbulb moment! So, I find myself looking at my current commitments and expectations using my “mantra” Evaluate, Prioritize . . . then Organize.
It hasn’t taken me long to figure out that something(s) got to go. Remember, for every new time commitment you add, decide what you’re NOT going to do, in order to free up that time. Balance the equation.
And remember to rest. After 6 days of Creation, God rested. Cycles of rest are woven into creation and throughout Scripture. Why do we think we can do without it?
Do you struggle with that balance? Any tips or success stories to share with our readers?
Continue reading Balance the Equation …
From Econobusters.