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What to Do When There’s More Month Than Money

You’ve lost your job or for some other reason don’t have enough money to pay all of your bills. Which bills should you pay first and which ones can slide for a while?

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Here’s a basic rule of thumb according to the Boston-based National Consumer Law Center in its book, Surviving Debt:

“Always pay essential expenses and debts first. If any money is left, you can decide which nonessential debts, if any, to keep in your expense budget.”

An essential debt represents a serious obligation that if not paid could produce severe, even life-threatening consequences.

Do not make payments on nonessential debts when you have not paid essential ones even if your nonessential creditors are breathing down your neck.

Please do not misunderstand! I am not suggesting that you should just walk away from your financial obligations. You must pay your creditors, you must pay your bills. To not pay them is not an option. Of course it is not ideal to let some of your bills slide for awhile. But your situation is what it is. In time, as things improve (they will) you will be able to get caught up completely. But for now, you need to know how to get through this month.

Once you’ve determined which debts are essential, prioritize them according to the severity of the consequences you will suffer for non-payment. Here is a guide to follow, listed by priority.

On Saving Money and Spreading Manure

As you may know, the mission of this blog is to discover ways to save time and money every day. You help me by sending me your great tips, tricks and ideas—I help you by boiling it all down for you here. That answers the “what,” but what about the “why”?

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Why should anyone be concerned about saving money? Have you ever thought about that? Why do you want to save money? Who cares?

While you’re pondering that for yourself, I thought I’d share with you the ultimate reason that saving money is so important to me, personally.

But first let’s define terms.

“Saving money” has two definitions, which some people use interchangeably:

1) Spending less than I would have because an item is on sale or it’s a particularly good deal as in, “Wow, I just saved $37 on these really cute boots that were regularly priced $225 but we on sale for just $188!”

2) Accumulating money in a safe place as in, “I save $100 a month by having it automatically transferred to my savings account.” 

Easy Ways To Boost Your Income

My Dear Readers: I love when you forward EC to friends and family. But sometimes, instead of clicking “forward,” you hit “reply.” That sends it back to me! I have a better idea: Instead of using your email provider’s “forward” button, look above. See the buttons with icons for Share, Tweet and Pin? There’s one more and it’s a little envelope icon. Click on THAT to forward this post to a friend. It will work every time, and you’ll help unclog my inbox. Thanks! m

Of all the people I know and love, I can’t think of anyone who wouldn’t welcome a small income boost this month–or any month, for that matter. Whether you’re between jobs, figuring out how to cover an unexpected bill or hoping to stash more cash into savings, get your creative juices flowing with these ideas.

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DON’T OVERINSURE. You need term life insurance (8 to 10 times the annual income of the single breadwinner; in a two-income family, insure each spouse for 6 to 8 times annual gross salary). But you can confidently cancel duplicate coverage: credit card life insurance, mortgage life insurance, accidental death and child life.

Caution: Get a term life policy first if you don’t have it, then cancel the duplicates. Don’t leave even a tiny gap between coverage.

The Boost: Add up what you’re paying for credit card life insurance, life insurance on the kids and the mortgage, plus any riders you have for accident insurance. What was offered to you for “just pennies a day” is probably more like $100 a month. Or more.

CALL YOUR AUTO INSURER. Has your teenage driver brought home a great report card? Most auto insurance companies will knock about 10 percent off the top if an insured teen maintains a 3.0 GPA. Is there an educator in the family? Mercury Insurance and others give credentialed teachers and educational administrators a discount. If you have a bachelor’s degree in an engineering or a science-related field (biochemistry, mathematics and more), Mercury offers a discount. Insurers also give discounts of 20 percent or more when you insure all of your cars with one company.

Nothing Down Can Mean Big Trouble

The signs are everywhere … “Same As Cash!”, “No Down, No Interest, No Payments Until Next Summer!” or a very popular one these days, “0% Interest on Balance Transfers until 2017!”

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Maybe you’ve fallen for these promises in the past or are tempted to do that now. With retailers and banks so anxious to improve their bottom lines, deals like that are showing up everywhere, it seems.

The only way it might be smart to take advantage of no-interest financing and/or a no-payment period is if you are 100 percent sure you will pay the purchase or credit-card balance in full before the end of the promotional period. Otherwise, you might as well stuff pennies in your nostrils now because you’ll end up paying through the nose.

Tell me something: What in life is 100 percent certain? Come on … dig deep. You know the answer: Not much!

You have no idea what will happen between now when you fall for the unbelievable deal and six months or a year from now when that gigantic balance is due and payable. If you are unable to come up with the cash before the deadline, the company will be more than happy to convert the balance into payments—under the terms buried in the paperwork you will have to sign to close the deal.

Financing specifics offered through retail stores vary from one company to another; laws that regulate these kinds of consumer issues can vary greatly from state to state. 

Why 88% of New Year’s Resolutions Fail and How to Make them Work

Back by popular demand. Happy 2016!

More than half of Americans, reportedly, make New Year’s resolutions. And 88 percent of those resolutions end in failure, according to a study by British psychologist Richard Wiseman.

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There is a scientific reason for this fail rate that once we understand, we’ll be able to keep our resolutions long enough to make them stick.

The bottom line is that our brains cannot handle New Year’s resolutions. No seriously. It has to do with willpower and our brains’ cells that operate that particular mental function.

The human brain is divided up into sections—each one handling different aspects of brain function. The pre-frontal cortex (the part located at the front behind your forehead) is assigned the tasks of 1) staying focused 2) handling short-term memory 3) solving abstract tasks and 4) willpower.

Here’s the problem: That part of your brain cannot handle all of those things at the same time. It requires a huge amount of focus and willpower to change a learned behavior overnight, which is what a New Year’s resolution demands.

Bad habits are hard to break—and they’re impossible to break if we try to break them all at once. The focus and willpower required are just too much for the human brain. It simply cannot deliver.

The human pre-frontal cortex is like a muscle. It has to be trained. If you joined a local gym, you would never dream of starting out lifting a 300-pound barbell on your first session. You’d start with a 2-pound weight for a 2-minute session, working up slowly to heavier weights and longer periods of endurance.

Finding Money You Didn’t Know You Had

We think we work to pay the bills, but the truth is that most of us spend more than we make on more than we need, which sends us back to work to get more money to spend to get more stuff than we need…and on and on it goes.

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So, here you are facing a brand new year, determined to improve the quality of your life by living below your means. The situation seems perfectly clear—you need to find more money. You have two choices: increase your income or reduce your spending.

Making more money does seem like the most logical way to fix a financial problem. But there are only a limited number of ways to do that.

BEEF UP YOUR PAYCHECK. You can ask for a raise. You can land a new job that pays a lot more than your current job. Or you can get a second (third?) job to supplement your income.

LAND A WINDFALL. I mention this in case winning the lottery or getting a big inheritance is on your list of realistic options for changing your financial picture. I suppose any or all of that could happen, but I wouldn’t count on it. Your chances of being struck by lightning are much better than winning the lottery. As for an inheritance, you be the judge.

Who Stole the Joy?

It was an unusual interview. The woman explained she was writing an article for a national magazine on clever ways to put more joy into the holidays.

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In that I’ve written a book on the subject, she called hoping I would help her with the story. I knew that I could.

In my typical overly excited manner I proceeded to pitch to her one marvelous holiday cost-cutting idea after another—some of them principle-based, others uniquely practical.

It didn’t take long for me to realize that something wasn’t right. One after another, my ideas landed with a thud. She didn’t like them at all.

And that’s when she made a comment that effectively brought the interview to a screeching halt.

She called me a grinch.

Now she didn’t actually come right out and say, “You Grinch!” She said that if she wrote an article encouraging the unthinkable practice of not incurring debt, buying fewer gifts or cutting back in any way, her readers would think she’d interviewed that old you-know-who himself.

While she suggested my ideas would take all the fun and joy out of the season, she assured me it was nothing personal. But still, she called me a grinch.

The Goodness of Candlelight

You want to decorate your home to make it warm and welcoming for the holidays. But you’re stuck with a serious case of “home dissatisfaction.”

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There’s nothing like this week before Christmas to bring us face-to-face with the things we find lacking in our homes. The solution of course would be all-new holiday decorations, furniture, carpet and a crew of painters. Right.

But let’s get real. Are we talking about the state of the house or the heart of a welcoming home? What is it that makes a home warm and inviting? What truly makes a holiday home?

A welcoming home is one that invites holiday guests inside and surrounds them with love and acceptance. A welcoming home becomes the happy center of a family’s Christmas celebration. A welcoming home reaches out to others with light and cheer and delicious smells.