You know the feeling when reach into the pocket of a coat or pants you haven’t worn for awhile and pull out a $20 bill? What would it feel like if you pulled out hundreds of dollars? And what if you found money like that month after month?
It’s not magic—it can be done. Pin holes in your financial life can turn into massive money-gushers. Patching these holes is the key to improving your income.
The problem is that it’s easy to ignore the tiny cracks. We’re busy—there’s the mortgage or rent, car payment, credit cards, insurance, college savings, carpools, vacation plans, retirement accounts, work benefits; kids, dog, guinea pig. So the little stuff happens without our noticing.
What’s the harm in picking up dinner from the drive-thru again? Our lives are so busy and we have to eat.
I did something really dumb that cost me $750. It’s so dumb I’m a little embarrassed to even tell you about it.
Seven-hundred and fifty dollars—that was the price tag on my fancy schmancy progressive eyeglasses. I went for the pricey frame and all the bells and whistles because I do enjoy seeing well. But if you’ve ever worn the “progressive” style of lenses, you know they are not 100 percent awesome for ever task. I have a second pair I call my computer glasses. That means I am switching back and forth quite often.
The pair I’m not wearing I jam in my purse. I also enjoy carrying a fairly large nail file in there—the kind that has fine sandpaper on both sides. The kind that can sand the finish right off polycarbonate lens material used in eyeglasses.
Recent California wildfires serve as a grim reminder of how quickly ones personal economy can change. If the rain of an economic downturn were to fall on you tomorrow, would you know how to find shelter from the storm?
Troubles come and troubles go. Economic recovery is sure, eventually. In the meantime, if you play your cards right, you will not only survive a period of economic decline, you will thrive. Knowing how to survive will help you stave off potential disaster.
DEVELOP YOUR GREATEST ASSET. Your attitude—the way you respond to life and all of its circumstances—is more important than anything. It is more important than the past, than struggle or success, than education or experience. It is more important than how much money you have, how much you owe, what you would like to do or where you would like to go. When you face tough times your attitude will be either your greatest asset or worst liability. The key to changing your attitude is reprogramming your mind. Whatever you choose to focus on is what you will move toward.
ASSESS YOUR RESOURCES. Figure out exactly what you earn, what you own and what you owe. What insurance do you have? How long would it take your unemployment benefits to kick in? Do you have enough cash to bridge the gap?
Back when I was a kid, birthday parties were mostly ho-hum consisting of a few rounds of Pin the Tail on the Donkey and Clothespins in a Bottle followed by Betty Crocker cake baked in a nine-by-thirteen with buttercream frosting. Back then going “all out” meant splurging on a pre-made cake from the local bakery.
These days going all out for a child’s birthday party means something a bit different. Some of the stories are mind-boggling.
Recently, I read about parents in one Minnesota town who rented a bar for a princess-themed party. Children and their parents were invited and instructed to come dressed in tuxedos and formal attire. Guests were picked up in limos. The party included live music and champagne for the adults. The birthday girl was turning 4.
Sure that was an extreme party, but there is no denying that birthday parties for kids are becoming more and more extravagant. You know what I’m talking about. And I get it.
All around the country, newly-minted high school graduates are heading off to college. They’ll be taking a lot of things with them, but we know that financial literacy is not one of them.
If I could spend just two hours with these awesome students, this is what I would attempt to cram into their heads, then pray that it penetrates their hearts:
A BUDGET IS YOUR FRIEND. That means you 1) have a written plan for how you are going to spend your money 2) you use that written plan like you would a road map, consulting it often and 3) you use a site like Mint.com or a pencil and paper to record how you spend every nickel. SallieMae.com has a monthly budget worksheet to help you estimate your costs and keep expenses under control.
GET A FREE CHECKING ACCOUNT. It’s not easy these days to find free checking accounts with no strings attached—no monthly fee, no minimum balance requirement and no minimum deposit. But many banks such as US Bank, do offer free student accounts that fit this criteria. Explore banking options in the city where you will be attending school or find out if the bank or credit union that your parents already use offers free student accounts and has a branch near the college campus.
Erma Bombeck, the late humorist, summed up family relationships when she spoke of “the ties that bind … and gag!” That just makes me laugh because it is such a colorful word picture. Maybe you’ve thought this from time to time: Family—can’t live with ‘em and can’t live without ‘em!
The same thing could be said about credit cards in these very strange times in which we live. Many people can’t live with them but can’t live without them, either.
Who could have foreseen the time when the very thing that has all of the ability to ruin so many lives (I do know a thing or two about that) is the very thing that we need in this digital age.
The relationship I have with my credit card is appreciation on the one extreme and hatred on the other. I have an “appreci-hate” relationship with it. Yes, I said hate. It is a strong word.
The most important thing you can do to make your personal economy strong is to have an umbrella—a Contingency Fund, with at least enough money to pay all of your bills without a paycheck, for three to six months.
Call it $10,000. Weekly, try to save 10 percent of your paycheck. It may sound like a lot, so if you can’t do 10, start with 5 percent or even 1 percent and build up.
Deposit the money automatically into your Contingency Fund; you won’t miss what you don’t see in the first place. Okay, you’ll miss it for the first few months, but soon you really will not miss it.
Until you have a fully-funded Contingency Fund, approach this with scorched-earth determination. No spending on anything that is not necessary or legally obligating until you reach goal.
I’ll never forget the time I asked one of my young piano students what he wanted for Christmas. It was a generic question, a pleasantry. I wasn’t looking for make, model, and serial number, but that’s what I got. He whipped out a 60-page list from his book bag. I gulped, checked to see if this child was serious (he was), and quickly proceeded with his music lesson.
Somehow I think that most of us have a bit of that kid in us. We want it all. And every bank and credit card company out there is affirming the notion and willing to make it happen.
In time, however, we reach the maximum level of satisfaction. And the more we attempt to increase that level, the more difficult it becomes to retain a sense of fulfillment. More becomes less as our feelings of satisfaction diminish.
By the looks of some of our closets and garages, we’ve been doing a pretty good job of trying to get it all. But how much of it satisfies? What portion of what we have is actually contributing to the quality of our lives?