Recently, I sat down to make a list of the key pieces of advice that I wanted to make sure to clearly pass along to my children. Part of my role as a parent is to fill in the gaps that they don’t learn in school, after all.

As the list grew, I found some of the items to be very useful and some perhaps not so useful. A handful of them rose to the top of the list, though.

Here are five really useful pieces of advice that have served me very well in many different aspects of my life. They’ve helped my career, my personal relationships, my finances, and my personal growth as well. May you find some value in them, too.

1. Smile a lot. Be nice, too.
Over the long haul, people gravitate toward others that they perceive as being happy and pleasant and gravitate away from people who are negative. If you make a conscious effort to be kind to everyone and keep a smile on your face regularly, the net benefits will really add up over time in the form of better relationships with people and a stronger social reputation.

I use two little tactics here that work really well. I try to keep several things in mind that naturally make me smile and I think about them regularly, particularly when I see or meet other people. Thinking about a hug from my youngest child brings a smile to my face really quickly and I can draw on that in mixed situations to mask any uncertainty I might be feeling.

Similarly, if I don’t have something nice to say, I don’t say it. I usually try to think of something nice to say, though. Sometimes, when criticism is called for or asked for, I give it, but I include the positive aspects as well. The simple act of having the courage to put yourself up there for criticism deserves respect and a kind word.

2. A daily routine that makes you feel healthy and energetic makes the rest of the day much more productive, making up for the time you invested.
For a long time, I thought the idea of spending half an hour exercising in the middle of my work day was a terrible idea. I viewed it as half an hour of vanishing productivity.

Over time, what I found was that after exercising, I focused really well. I felt better and that made it easier to just bear down on the task at hand. I didn’t get distracted nearly as much and I wound up usually being more productive over the course of an entire day than a day where I didn’t exercise.

Find room for some exercise and for an actual healthy meal. The rest of the day will be more productive because of that break and because you’re treating your body well.

3. Just start doing what you want to do. If you have a job you don’t like, view that job as your “funding phase.”
If you want to be a writer, write. If you want to be a sportscaster, volunteer to do voiceover work for tapes of high school games. If you want to make films, get out your camera and write a script.

Just do whatever it is you dream about doing. Try to do it at least a little bit each day.

Yeah, most of us have a job that doesn’t revolve whatever it is that we want to be doing. View that job as your “funding phase.” It’s how you’re investing time to finance what it is that you really want to be doing.

Taking this to heart might mean sacrificing some free time. Trust me – it’s well worth it.

4. Good. Inexpensive. Fast. Pick two.
Any task you take on in life is constrained by a lot of factors. How long will it take? How much will it cost? How good is the result? Almost always, you end up having to choose good results with regard to two of those factors and expect a bad result for the third one.

You can fix a good and inexpensive dinner, but it probably won’t be fast. You can get a good and fast dinner, but you’ll probably pay a lot for it. You can make a fast and inexpensive dinner, but it probably won’t be a great dinner. Which do you choose?

You can apply this to work tasks as well. I am constantly making this choice with my professional life and the projects and tasks I take on. The only way I can do something really well and do it quickly, for example, is to hire people to help out, which makes it expensive. Similarly, I can do a task quickly and without help, but it won’t be done with a high level of quality. I can do it myself with a high standard of quality, but it will take a long time. Which do I choose?

Knowing that you’re going to have to make that choice in advance makes it easier to make decisions and plan out your ife.

5. You are the average of the five people you associate with the most.
Make a list of the five other people you associate with most in your life. Consider a particular trait shared by all of those people, and rank the other five. Most of the time, you’ll be right around the middle of that list if you included yourself on it.

In other words, our performance and our life is in many ways dictated by who we spend our time with. We become like the people we associate with the most.

Thus, the best way to improve yourself is to make a conscious effort to associate with people who are strong in a particular area where you want to improve. If you want to read more, hang out with other people who read. If you want to get in shape, hang out with people who make physical fitness a part of their life. If you want to be frugal, hang out with the frugal people, not the big spenders.

They’ll rub off on you.

The post Five Little Pieces of Advice That Changed My Life appeared first on The Simple Dollar.

You write a lot about how there’s a deep connection between less clutter and financial success.  I don’t get it at all.  I think the opposite is true because when you clear out a bunch of stuff you would just have the space for a lot more.

This is an issue I’ve discussed to a certain extent in both of my books.  I think there’s a deep connection between personal finance success and clutter, and there’s no better time than now to break it down.

What Is Clutter?
You’ll see many definitions of clutter out there, but the one I typically use is pretty straightforward. Clutter is anything in your life that you have inadequate time to enjoy or inadequate space to store.. 

When you’re juggling so many relationships that the truly important ones are withering on the vine, you’re experiencing clutter.

When you jam all of your papers somewhere because you don’t have time or the space to store them, you have clutter.

When you’re embarrassed to let someone see some part of your home because of the piles of stuff you have jammed in there, that’s clutter.

When you burn fifteen minutes digging through junk drawers looking for the one thing in there you actually have any need for, that’s clutter.

When you have shelves jammed full of videos or DVDs or CDs or books or video games or old magazines that you’ve barely touched in months but you keep telling yourself you’ll get around to someday, that’s clutter.

What Clutter Eats
Clutter eats time.. The more things you have, the more time you spend maintaining them.  Stuff.  Commitments.  Relationships.  That means less time to enjoy the things that are genuinely important to you.

Clutter eats space.. The more stuff you have, the more space you need to store it.  That means a bigger apartment or a bigger home or a storage locker.  Those things mean more rent or a bigger mortgage and more time lost to cleaning and maintenance.

Clutter eats money.. Most stuff has a financial cost.  The more stuff you have, the more hard-earned money you’ve dumped into it (and the less time you have to enjoy each item).

The Solution
The solution, of course, is to pare down.  That’s harder than it sounds, because people often have a deep attachment to their stuff.  Here are five tactics that work.

Use rental services.  If you’re a film buff and accumulate DVDs, join Netflix.  If you do the same with books, join a library.  Video games?  Gamefly.  Music?  Napster.  This allows you to enjoy a library of what you most enjoy for about the cost of one purchase every two months without accumulating stuff.  

Empty your clutter attractors.. The junk drawers.  The closets.  The garage.  Pull out everything and keep only what you might actually use again.

Realize that you are not your stuff.. Many people self-define by the stuff they have.  You are not your car.  You are not your house.  You are not your gadgets.  Normal people who like you do so regardless of the stuff you’ve accumulated.

Move to a “one in, one out” philosophy.. Whenever you acquire a new item, an old one has to go.  This allows you to focus on quality upgrading than accumulating tons of mediocre stuff.

Date it.. If you don’t touch a non-decorative and non-sentimental item in a year, why are you keeping it?  Once, I started over with our DVD collection, putting them all in a box.  We dated the box one year in the future.  Whenever we wanted to watch a movie from that box, we pulled it out, watched it, and put it on our rack.  After a year, why not just sell the contents of the box?

The best part of decluttering is that you usually earn some money back from doing it via garage sales or secondhand shops.  Sometimes, decluttering can even open the door to less expensive housing.

There are many great decluttering tactics.  I highly recommend the Unclutterer blog for countless great ideas for decluttering.

The post Decluttering and Your Money appeared first on The Simple Dollar.

I’m a senior in college and will be graduating in May. I’m extremely blessed in that I will be graduating with no debt – a scholarship provided all of my tuition expenses, and my parents were able to cover room and board. I’ve had several jobs, including one on campus, and I’ve been able to hoard that money in a savings account. I have a credit card, but I ALWAYS pay the full amount each month. I feel extremely grateful for the opportunities I’ve been provided.

The reason I’m writing is that, for my graduation gift, my parents and I are working together to create a “Wisdom Book.” Essentially, I have asked all of the people in my life whom I love and admire to write down what advice they would like to give about life, love, money, etc. to a recent graduate like myself.

Would you recommend any specific questions to ask?

With regards to the specific question, I don’t think I would ask a specific question at all. Instead, I’d simply ask the following:

What single piece of advice do you wish you had heard when you were about to graduate college?

The truth of the matter is that you never quite know where a great piece of advice might come from. A financially well-off person that you might expect to give you investment advice might have that one perfect piece of relationship advice for you. At the same time, you might get a great piece of career advice from someone you’d never think of as a career guru.

What advice would I give in response to this question?

Follow your heart, always. Use your brain to give yourself as much security and safety as you can as your heart wanders. That means when you earn money, save some of it. Build up a big emergency fund in a savings account, then start investing some of it into the stock market with some index funds. Similarly, when you have a chance to pick up a new skill of any kind, jump on it. When you have the chance to establish a new relationship with someone, jump on it. The more relationships you have, the more money you have, the more skills you have, the easier it’s going to be to follow your heart. If you don’t do these things and take the easy path, you’re going to find yourself throughout your life being tied down to your circumstances, watching great opportunities pass you by, and that will leave you with nothing but regret.

And now, I’d like to open up this very question to my other readers for their comments. Please leave a comment and answer the big question:

What single piece of advice do you wish you had heard when you were about to graduate college?

The post Life Advice to a Graduating College Student appeared first on The Simple Dollar.

Some readers have expressed surprise at this response. Either they seem shocked that I wouldn’t simply give them an answer to their question, or they seem almost insulted that I would somehow imply that they weren’t being forthright about their situation.

There are multiple things at work here.

First, most personal finance solutions aren’t as simple and one dimensional as one might think at first. There are many, many factors that are in play when one tries to determine the best move for their situation: age, health, psychology, current financial state, current employment state, goals, future plans, ongoing relationships – even things as mundane as the amount of free time one has.

As a result, many situations simply don’t have a simple off-the-cuff answer. It’s quite likely that, in a short telling of your story, you’re leaving out some key information, intentionally or otherwise.

Second, I’m not an expert. While I’ve read a ton about personal finance and have actively applied that to my own life (which is what I write about here), I have very little experience taking that same knowledge and applying it to other situations. I think there’s value in sharing my own experiences – and I do believe that others can take home lessons from those experiences – but, frankly, I’m not trained in the nuances of evaluating the experiences of others. All I can share is my experience and the lessons that have come from that.

So, what’s the solution if you do need an answer to a financial question?

First of all, it is reasonable to write your situation in detail. It’s similar to the reason that people journal – quite often, simply recounting and describing your own experience and situation can open up your own mind to revealing the correct answer.

I honestly believe that this is the biggest reason people write to me. They simply need to write it all out, and once they’ve done that, they want to share it all with someone – but not with someone they know personally.

Don’t overlook things, either. No matter what the situation, you should include all the basics – your current financial situation, your health, your goals for the future, even the amount of time you have to seek new solutions. Every significant factor in your life is important for solving financial problems.

Often, just this process alone – writing everything out – will reveal the answers you need. I know that quite often I find the answers I’m seeking while writing a post for The Simple Dollar. I’ll start an article about my own situation, turn the pieces over and over in my mind, do some additional research, and by the end of the article, it’s clear to me where I should be going with things.

What if the answer isn’t obvious? Your best first step is to talk to someone you personally trust, but it must be someone that you’re willing to lay out all of the facts to or else talking will get you nowhere. You must be willing to open the books to this person in order to really tap their wisdom.

In many situations, this can be the best approach, as the person you trust likely has some insights into your personality that no advisor could bring to the table.

Of course, there are many situations where this isn’t appropriate, either. Such personal advice mostly works best when figuring out general plans, not specific investment choices. Once you get down to the specifics of financial choices or legal options, you should turn to a financial advisor or a lawyer. Here are a few tips for finding a good one.

First, you should always retain the final decision in any situation. You are hiring these people for their expertise to help you make the right decision, not to hand them the responsibility. That responsibility still rests with you and it always should. Never give full autonomy to an advisor to make choices for you. Instead, if they give you an explanation you don’t understand, ask them to explain it better. You’re paying them to provide you with their expertise, not provide you with more confusion.

Second, if you’re seeking a financial advisor, look for a fee-only advisor. A fee-based or commission-based advisor both have other interests that they bring to the table – namely, they want you to invest in whatever investment they can earn a big commission on, and that’s often not the best investment for you. Instead, seek out advisors that operate based only on fees – they may be a bit more costly up front, but you can be sure that they’re not trying to sell you a product. For your fee, what you get is their best advice, unhindered by the need to shill for a product.

Third, hit up your personal network for recommendations for both lawyers and financial advisors. This goes both for positive and negative (stay away from…) recommendations. You’ll often be surprised at the responses you get from friends and relatives you trust when you ask them for suggestions on lawyers and financial advisors – they may offer strong (and accurate) recommendations that you didn’t expect.

Finally, do not hide key information during this process. I know quite well that it’s tempting – usually out of personal pride – to hide key painful pieces of information when asking for advice. Don’t. Provide all of the painful information up front, and be an open book for additional questions. Don’t. Hide. Anything.

In the end, make sure the advice passes your smell test. Do your own investigation into the advice you get and make sure that it does make sense, no matter what the source. Multiple sources for your information are always good.

Good luck!

The post Desperately Seeking Advice appeared first on The Simple Dollar.

This brings us to a question from reader “Mandy” who is going through a similar dilemma:

I recently ended a lengthy relationship with a person who used my credit recklessly. I am now left with about $30K in debt, almost all of it high interest. My personal credit is very poor, so I’ve been rejected for a personal loan from the credit union and have no way to consolidate that debt.

This leaves me with two options: tap into my 401(k) (which has a balance of about $40K) or borrow money from my family. I’m currently 34 years old and have a job that pays well enough that I can make the payments on the debt fairly easily, but building any sort of emergency fund is very slow and I’m unable to make much of an extra payment on the debt.

What are your thoughts?

If I were Mandy, my first plan of attack would be to call all my creditors directly. Call up every single lender and every single credit card company and play a little hardball with them. Request a rate reduction from each one. If you hear “no,” ask to speak to a supervisor. Tell them you’re going to have difficulty paying the bill. Ask if there are any balance transfer offers available to you.

In short, seek out everything you can do to get the debt itself into better shape. You’re likely to hear a lot of “no,” but even a few “yes” answers sprinkled in there will make all the calling worthwhile and take some of the heat off of your shoulders.

The next thing I’d do is look for sources of liquidation in my life. Do you have any items you could sell to help reduce some of that debt? Do you have a car in the driveway that you rarely drive? Do you have some old collectibles with significant resale value? If you can liquidate some things and use those to pay off the worst part of the debt, you’re likely in far better shape.

Once you’ve done these things – and assembled a debt repayment plan – and you’re still in a harrowing situation, then it’s time to consider the choice between borrowing from family and draining your 401(k). Neither choice, incidentally, is a good one.

A note: when I repaid my own debts, I did tap into a supplemental 401(k), though I left my primary 401(k) alone. My employer required all savings beyond the amount they would match to be placed into a distinct supplemental account, and I was contributing 2% beyond their match. It wasn’t much, but I did make the choice to tap it.

So, which is it: borrowing from family or tapping the 401(k)?

The first thing I’d do before making that choice is to carefully look at my debt repayment plan and figure out how much I actually need to borrow. Likely, you don’t need to borrow the whole $30K. Instead, you just need to eliminate some of the debt, getting rid of just a few of the monthly payments.

Once I had a grip on the amount that I needed to borrow, I’d collect all of the work I had put in thus far and talk to the person I wanted to borrow money from. Lay out everything – no hidden secrets. Let them know your exact situation from top to bottom.

Doing this will do two things. First, it will make that person into something of a mentor for you. That person knows your situation – they can become a helper (offering up good ideas) and a cheerleader (pushing you along to success). Second, it will make clear to the person you wish to borrow from the seriousness of the situation – and your seriousness in tackling it.

Having done all of this groundwork, and even given the general concern I have with lending money among friends and family, I would ask for a loan from a family member before tapping my 401(k).

The post Tap My 401(k) or Borrow From Family? appeared first on The Simple Dollar.

If you find yourself in this situation and don’t know what to do, here are some practical steps you can take to get started on the road to recovery.

First of all, don’t bury yourself in guilt and shame. Everyone makes mistakes in life, and you’re certainly far from the first one or the only one. I was in a situation that was quite desperate once upon a time.

Also, realize that there are solutions to your problems, no matter how bad the challenges are. Just because you don’t immediately see the answers doesn’t mean that the answers aren’t there. There are answers, and there is a path to a better situation.

The biggest step you can take is to explain your entire situation to someone and ask them for ideas. This is why checking your shame at the door is so important – in order to be able to talk to someone else about your situation, you need to minimize the shame factor and be willing to lay it all out there.

That being said, be careful about who you choose to advise you. Don’t choose someone that you feel as though you must hide pieces of the story from, or else they won’t be able to offer you strong advice. Similarly, it must be someone you trust who will try hard to offer you a valuable and accurate opinion and help you piece things together.

Similarly, do not ask this person for money, and make that clear up front. Many people will enter such a discussion with some serious concern that it will turn into a money request, so make it clear up front that you don’t want a dime – just some strong advice. Then stick to that pledge, no matter what. Their advice will be more valuable than whatever pocket money they could hand you, anyway.

Don’t be insulted by the advice they give you. If you’re in this bad of a situation, the advice you’ll hear is going to hurt. Expect that, and don’t be insulted by it. The person giving the advice is not trying to hurt you, they’re trying to help you to get in a better position.

Get multiple opinions, if you can. The more input you have, the more likely it is that you’ll find a path leading towards financial freedom. Thus, it makes sense to find multiple people to give you advice about your financial direction.

Start making the small changes now. Stop spending wasteful money now, even if you haven’t figured out the big solution yet. If you’re worried about making ends meet, but dropping $10 a day on lunch eating out, join the brown bag club. If you’re in dire straits, avoid going shopping or charging you credit card. Make those little changes now to pave the way for a brighter financial future.

When implementing solutions, check your ego at the door. One of the best things a person can do is to commit strongly to frugal living, and that might mean giving up some status symbols in your life for a while. Don’t let that drag you down, and really attempt to appreciate the smaller things you can do for yourself.

Don’t be afraid to move on to professional help. Sometimes, you may need to consult a professional (an advisor or a lawyer) to get your situation straightened out. If the people you talk to point you in this direction, don’t hesitate to go forward with it, because the longer you hesitate to make change, the harder it will be.

The post When All Hope Seems Lost… appeared first on The Simple Dollar.

I went through the notes I collected on all of the books and tried to filter out the ten universal truths about personal finance shared by a large number of the books. Here’s what I found.

Spend less than you earn. This is the number one key, and it shows up again and again in almost every personal finance book that I read. You are never going to get ahead if you spend as much as you earn or more than you earn over any lengthy period of time.

Sit down with all of your accounts and figure out where you’re at. Every day you don’t have control over all of your accounts and can’t really estimate how bad the situation is is another day you’re going to be chained to your job and worried at night about it. Spend the time to sit down, spread everything out, and figure up your total financial picture. There are a lot of different ways to do this – I think that just listing every account you’re aware of (and the balance of that account) is the best way to get started.

Set small and big goals. Small goals are ones like commitments to not spend any extra money this week. Big ones are goals such as paying off all of your debts. State the goals clearly and effectively, and keep track of your progress towards these goals so that you’re constantly in the fold of something bigger than the minutiae of your day to day life.

Get a small emergency fund before you do anything else… The first step in any financial turnaround, once you’ve stopped spending more than you make, is to build up a small emergency fund so that you don’t have to put a minor crisis (like car issues, for example) on your credit card. $1,000 is a pretty common target number.

… then eliminate all of your high interest debt. After you have a small emergency fund, start dealing with your high interest debt immediately. There are differing opinions on how to do this, but the general consensus is you should start with either the highest interest debt (fastest route to recovery if you’re committed) or the smallest balance debt (provides success of some debt elimination the fastest).

Check your credit score regularly to make sure nothing bogus shows up. Go straight to annualcreditreport.com to get your report via the FTC. Don’t use other sources, like freecreditreport.com, which act as a middleman and tack on extra stuff for the same service.

Put at least 15% away for retirement (including what your employer matches). Some books say to put away 10%, but they often mention in the fine print that they’re not including employee matching in that number. Generally, to be on the safe side, you should be putting away at least 15% into your 401(k) and/or your Roth IRA.

Automate what you’re doing. If you’re investing, automate the investments and have a certain amount moved over from your checking each month. If you’re saving for a goal, automate transfers into your savings account. Automate as many of your bill payments as you can. The less you have to remember and encourage yourself to do, the better – plus, it takes extra effort to not do it once you’ve set it up.

Similarly, always look for ways to reduce your required spending each month/year. Any method you can find to reduce your monthly bills is incredibly worthwhile. Even simple things, like swapping your light bulbs for CFLs, buying EnergyStar appliances, and canceling some of the unused options on your cell phone plan and your cable plan, will really add up over time.

Invest extra money into low-cost broad-based index funds unless you have tons of time to do research. Almost a majority of the books indicated that this is by far the best way to invest. Just buy some Vanguard or Fidelity index funds and sit on them until you have a need for the money. Better yet, keep buying in regularly in an automatic fashion. If you have a ton of time for research and homework, you can make somewhat better money in individual stocks, but they’re riskier and require much more time investment.

These are the nutshell ideas behind many of the books I read, and these ideas usually pop up in some form in almost every single personal finance book. Why? They’re universal truths – or at least as close to truths as you’ll find in the world of personal finance.

The post 52 Books, 52 Weeks: 10 Fundamental Personal Finance Ideas appeared first on The Simple Dollar.

The more I thought about the question, the more I realized that the answer isn’t as obvious as it seems at first, so I’ll progress through my ideas about that question.

My first and most obvious answer is the personal finance resources that I read regularly, like personal finance books, blogs, magazines, and so on. Most of the raw personal finance information that I absorb comes from these sources.

But that’s the easy answer. Where do I really get my personal finance advice? To me, advice means more than just absorbing information from others – it also includes the situations where people provide direct comment on my own life and how I live it.

In that light, my biggest source for financial advice is my wife. She might not be the most informed individual about how to eke out an extra percentage from my investments, but she does know me – who I am, what our situation is, and where we’re going. Often, I’ll collect the data I need for various points of view and then present them to her, and together we talk through the situation and determine a plan. When I’m trying to make a decision about my financial situation, she is the first person that I turn to.

If that’s not enough, I turn to my parents. They generally offer lots of good arguments for staying the course in whatever I’m doing, simply because things have turned out all right so far since I began turning my financial ship around. Before then, I didn’t really talk to them at all about my finances, but I’ve come to find them to be excellent advisors when I’m troubled. I’m also coming around to talking to my mother- and father-in-law about things, but since my relationship with them is still relatively young, I sometimes don’t ask such strong questions of them.

After that, I listen to my readers. Quite often, if something is still troubling me, I’ll voice that concern in the form of a post here at The Simple Dollar and then take all of your comments to heart. Often, writing the post makes the answer clear; other times, I’ll rely on your comments for guidance. Often, you say what I’m already thinking; other times you rip my ideas to shreds. Either way, you aren’t afraid to pull punches and call me out when I’m getting overly confident or am looking down an inconsistent path.

If that’s still not enough, I turn to meditation and/or prayer. I take in all of the advice that I’ve heard and spend some time in deep meditation. The answer – the truly right answer – then comes from within. I won’t debate whether that’s a subconscious thing or a supernatural thing, but I find that such steps are often the key to me finding the right answer.

Those are my key sources for financial advice. I start with information (books, magazines, blogs), talk to those who love me, reformat that question as an article that addresses my readers, read the responses, then take all of that and meditate on it. In the last year, these sources have served me incredibly well.

The post Where Do You Get Your Financial Advice? appeared first on The Simple Dollar.

I wish now that I had the chance to do some things differently, but such chances only come along once in a lifetime. Knowing what I know now, here are five pieces of advice that I’d offer to anyone in high school or fresh out of high school about what’s available to them.

Don’t go straight to college unless you’re absolutely sure
One of my biggest regrets in life was that I went to college directly out of high school. I didn’t have even the faintest inkling of the opportunities available to me, so I just followed the general advice of everyone around me, which was to go to college and get started on that career immediately. I went there without the maturity I really needed to make it work, nor a good idea of what I could get out of college. I treated it as an extension of high school – and because of that, most of my years as a student were largely wasted.

If you can’t explain clearly why you’re going to college (and the generic “to get an education” doesn’t cut the mustard), you shouldn’t go to college – yet. If you’re a bright person, the answers will eventually come to you and you’ll tackle it with the right mindset, but going to college without any real goal in mind, especially straight out of high school, is a waste of your time and money – and that of your parents.

Note that I’m not saying that one shouldn’t go to college – just that one shouldn’t go to college without a purpose.

Spend some time figuring out what you’re passionate about – but don’t waste time
A friend of mine took a “year off” after high school to “find herself,” but she actually spent it not doing much of anything at all. She worked at a fast food restaurant and apparently read a lot for that year, finally starting college fifteen months after high school graduation.

If you’re thinking of spending a year or two before college evaluating your life (something I strongly encourage), spend it doing something deeply fulfilling. Don’t just spend it working to earn tuition or spending money. Here are some things you can potentially do:

Volunteer Find a volunteer or other community service organization and get involved big time. Take ahold of a project within it and push it through to completion or some level of success – it will teach you a lot about people and leadership.

Work an internship Spend some time doing internship work for something you’re passionate about, even if it is just photocopying pages or washing dishes. You’ll get exposure and experience and you’ll also find out if it’s right for you.

Commit to a large-scale creative project If you’re musically inclined, write and record an entire album. If you’re a writer, write an entire book. Paint a set of canvasses. Whatever it is, if you’re passionate about it, do it on a larger scale than you’ve tried before.

Travel and experience new things
My plan for both of my children, provided they are interested, is to give them an ATM card, a backpack, and a ticket to DeGaulle Airport for their high school graduation. Even better, I’d like to do it in conjunction with the parents of a few of their closest friends. It is the absolute perfect time in a young person’s life to explore the world and figure out some things about themselves.

It took me a very long time to figure out who I actually was – I didn’t really figure things out until almost six years out of high school, and that was just the first revelation of many. Part of the reason is that in some ways I didn’t really escape where I came from, so it took some significant time for me to view myself independently and figure out who I really was.

Whatever career you choose, don’t chase money – chase passion
Lots of people will make statements like “you need to major in X because that’s the only way you’ll make $40K straight out of college.” Ignore it. If you’re truly passionate about your topic, you’re going to be among the top people in it simply because of the love and devotion you’ll show, compared to many others who are just there at the behest of others.

Not only that, your passion for the subject will continually reflect well on you. Think of people you know who are passionate about what they’re doing – almost always, you see them as a success or, at the very least, the passion is very clear.

The real key? Learn how to stand on your own two feet – and learn exactly who you are and what you’re passionate about. Do this actively, and with commitment. When you’ve got that figured out, the college decisions and what to do when you get there will become far more clear – and you’ll end up with a happier life over the long haul.

The post Thinking About College After High School? Four Points of Advice That You Probably Won’t Hear From Your Guidance Counselor appeared first on The Simple Dollar.

I’ve puzzled over how to answer this for months, knowing what I want to say but realizing that this issue is bound to get me in some hot water from some segment of my readership. However, it’s a really worthwhile issue to discuss, so here goes.

It’s not necessary, but it is useful for men and women to receive different personal finance advice. Why? Men and women simply think differently, and a big portion of personal finance success is psychology. Even if there is a clearly optimal way to manage your finances, it still takes psychological effort to achieve it, and if men and women think differently, the advice that will help them achieve it will be different.

So let’s look at this a bit more closely. From that article:

Men tend to do better with tasks requiring more localized processing, such as mathematics.

For example, John Doe would likely be better at tasks such as number-crunching a budget and developing an investment plan.

women are better at integrating and assimilating information from distributed gray-matter regions of the brain, which aids language skills.

Jane Doe would likely be better at making good shopping choice (evaluating a lot of disparate types of data) and keeping the family in line with the family budget (communication and language skills).

Is this an absolute? Of course not. Many women are good at investing and many men are good at shopping and managing a budget. However, the default cognitive bias points the genders in specific directions.

The truth is that there is no “perfect” personal finance advice for everyone. Each person will find advice that works for them. It’s much like dieting. Better yet, it’s like playing The Sims – I play it much differently than my sister-in-law does, but my wife tends to play more like me than her sister. We’re all unique, though, and we all respond to different situations and events differently.

So if everyone has different personal finance needs, how can one possibly find something that will help them? Just keep looking until you find a voice or a set of answers that makes sense to you. It might be a book (like Your Money or Your Life), it might be a blog, it might even be someone on television or radio. Also, you don’t have to blindly follow everything someone says – just use the pieces that fit with you and make an effort to try to understand as much as you can.

The post Should Men And Women Receive Different Personal Finance Advice? appeared first on The Simple Dollar.

Hopefully, Kathy’s story will strike a chord with some of you as well, and you can offer some advice to them. Here’s Kathy’s tale, along with my thoughts.

My boyfriend and I have been fans of The Simple Dollar for some time now, and really respect and aspire to the lifestyle you write about. The reason I am writing you now, for the first time, is because over the past few weeks we have come to realize that we are on the whole very unhappy with our current situation.

We’re both under 25, have been together for over 5 years and live in the Greater D.C. Metro area. We’ve both got computer science degrees from prestigious New England schools and I have a masters in information security assurance. My boyfriend is a software developer and I’m a consultant and our combined income is well over 100k. We’re making all the right moves in terms of saving (well over 30% of what we’re making) and maintaining a debt free life (aside one very manageable student loan and a car which will be paid for in a few months).

Before we even get to the problem, it’s pretty clear that Kathy and her boyfriend are in a very good financial state. If they’re living in D.C., are debt free, and have marketable degrees and already have workplace experience, the world is truly their oyster.

And we’re miserable. We don’t feel as though we are in the right place at the right jobs to be living the kind of life we want. Everyone around us seems to be very content sitting in traffic for 2 hours a day to get to their jobs where they work 60 hour weeks, so that they can afford another sports car, a $500,000 one bedroom condo and a few more inches on their TV.

They’ve also made a conscious decision to reject a consumerist lifestyle. This sounds just fine to me, living in Iowa driving my eleven year old truck.

After many long conversations we’ve identified the things that make us happy in life and have made the decision that we will do everything in our power to be well on our way down the path toward those things in a year. We want to be closer to nature, and we’d love to be able to afford a modest home. I’d also love to be someplace with a sense of community where I could volunteer my time. As far as jobs go, we’re far less picky, we’re just hoping to find something to support ourselves and eventually a family, but ideally use our skills and have some sort of impact on the world.

So, let’s look individual at the things they want.

They want to be closer to nature. That likely means living in a much smaller town than the D.C. Metro area. If you want nature to be easily accessible, you’re probably looking at living in a town that has at most 100,000 residents – and likely much smaller.

They want to be able to afford a modest home. This also points toward a move to a more rural area. I can’t speak for other regions of the country, but much of the Midwest is very affordable.

They want to live in a place with a sense of community. This, again, speaks towards a smaller town, probably one that’s near an affluent area. A great place to look for this is to look for a small town that’s outside an affluent or educated area, such as a small town within 20 minutes of a college town or a technically adept city. These tend to foster communities of intelligent people who want to live in a small-town environment and often include thriving volunteer work and community activities, both in that small town and in the larger city nearby.

Adding up these points, I would encourage them to look at small towns within a 20 or 30 mile radius of smaller Midwestern cities, particularly those that house a university. In many places, these usually have an abundance of jobs for technically inclined people, but make small town living quite easy. For example, I live within an hour of several decent-sized cities in Iowa, including Des Moines, and yet my backyard has a cornfield bordering it, and there are a lot of technical jobs in this area.

We want to be living a simpler life and because doing what we were “supposed to” up until this point has lead us to very stressful, complicated lives, we’re not really sure where to even start. We’d love to pack up the car, drive across the country (something we’ve always wanted to do, always had the money to do, but never had the time to do) and eventually wind up in our new town.

That’s an awesome plan, especially since you have the freedom of youth on your side.

But how do we find this new town and should we lock down work first? What about health insurance? Should we go down to the courthouse and get married just to increase the odds that we’ll both be insured? Is there any way for people in our situation to purchase affordable insurance to make sure we’re covered for the few months of instability a move like this would cause?

If you buy into the idea I presented above, here’s what I would do:

Make a list of potential matching cities in the Midwest. Look up the state schools for the Midwest, then identify ones that potentially have a thriving research program in areas you might be interested in. This generally means that there are lots of spin-off companies in the area. You should also look for job listings at monster.com for smaller cities in the Midwest – not necessarily to find a job, but just to know who employers are in those areas that might match with your skills.

Narrow down that list. Try to narrow this list down to two or three, then investigate those cities in detail. Are there small towns nearby with palatable housing markets? Are there community features that interest you, both in the larger town where you may find work and in the smaller town where you would live? Most likely, the right place will start to become clear for you.

As for the health care, I would look into COBRA – it’s likely that you can extend your current health care package for a while after you leave your current jobs. Then, when you’re re-employed, get a health care plan that matches what you need.

And more fundamentally, in the long run, will this be a good decision? By staying where we are, we’ll probably both have six figure salaries in a few years, but during those years, we’ll be stressed, won’t have the time to do the things we enjoy and won’t be able to afford a place of our own. Alternatively, if we make this move, we’ll both likely take huge pay cuts (both to our yearly salaries and likely to our lifetime earning potential) and won’t be able to save nearly as much, but we’ll be happy now, rather than in 40 years when we can retire.

It won’t be the big cut that you think it is. Let’s say you can get a 2,000 square foot family home in the D.C. Metro area for $600K. In the Midwest, you can easily find them for under $200K. Consider the difference in those house payments, and you’ll see where most of the difference in salary actually goes.

Any, and all advice you could give us would be greatly appreciated. Right now we’re looking at about 10 months to make a major life change, and while this thought is daunting, we’re willing to do everything necessary to make it happen.

Living in a Midwestern small town isn’t the right thing for everyone, but from my perspective, it sounds like the right thing for you two.

Do any of you have thoughts for Kathy?

The post Making A Major Life Change: Is It Time For Kathy To Abandon The City? appeared first on The Simple Dollar.

Last night, I spent some time thinking about the things I wish she knew right now at this point in her life so that she wouldn’t go on to make horrendous mistakes with her finances later on like her uncle did. Here’s what I came up with, and they’re probably applicable to any high school student with a level head.

Do not carry a credit card balance. It’s okay to get a credit card, but pay off the entire balance each month. If you’re tempted to use it to buy something that you can’t otherwise pay for, don’t. Period. Let’s say you buy a Nintendo Wii and a few accessories and put $400 on your credit card, then only make minimum payments for a year. On a typical “first” credit card with a 19.9% APR, you’ll have just watched $80 vanish into thin air. Now, multiply that by twenty and you’re looking at the situation that the “average” American is in, watching literally thousands a year just vanish because they carry a credit card balance.

Put a small amount in the bank each week and forget about it until you’re about to make a big purchase or a true emergency comes up. Let’s say you can put $5 in the bank every week starting on your 16th birthday. That adds up to $260 a year, so if you cash out at your 26th birthday, you’ll have deposited $2,600. But it gets better – you can easily get a savings account that earns 5% interest. You’ll actually get out $3,352. The bank will give you $752 over that time.

Learn how to learn. Most high school classes are pretty easy for a bright person and don’t require much effort to get through. It’s really tempting to take easier options and not worry about it; instead, always take the hardest one you can take. It will force you to learn how to learn, a skill that will serve you well the rest of your life.

Start a side business. My niece already has a small babysitting empire, but most teenagers can find a way to earn some money. Many parents in my area encourage their kids to get jobs – instead, I encourage kids to start a side business. Mow lawns. Trim hedges. Scoop snow. Start a topic-oriented blog (meaning a topic that isn’t you that others might find interesting).

Take a leadership position. Join an organization and make an effort to be involved with it. Eventually, take a leadership position in it. Why? Learning how to manage people and make choices that affect others is another skill that will serve you throughout your life – and if you learn how to do it well, it will make you a lot of money.

There is no such thing as a free lunch. If someone is offering you something for free, there’s usually something they’re getting out of it in return. A free t-shirt is probably an advertisement. A free web service is likely littered with ads in some fashion. The better you are at spotting why things are being given away for free (or for really cheap), the smarter you’ll be about buying things and the less you’ll spend in the process.

If you’ve discovered something you enjoy and you’re actually good at, do it a lot. Almost always, there’s a way to make money from a highly developed skill. Anything from playing a guitar (music can be marketable, teaches hand-ear and hand-eye coordination and dexterity) to playing a sport (leadership skills, health) can work. It’s especially nice if there’s an obvious career path from it, but don’t let that limit you. Even better, if you can find a way to turn that thing you do into a side business, you might be setting yourself up for the long haul.

The post Seven Pieces Of Financial Advice For A High School Student appeared first on The Simple Dollar.

My parents are immigrants/refugees from Vietnam. When they arrived here in Australia, they both took jobs and lived an extremely frugal lifestyle, sending all savings to my mother’s side of the family, who still remained in Vietnam. Before butchers realised that some people actually eat stuff other people may discard, they sold these “scraps” for an extremely low cost. So, they lived on broths and stews made from stuff like chicken feet. (I would say instant ramen was more expensive at the time.)

This was in the 1980′s. My sister was born in the early 80′s, my brother, late 80′s.

In 1990, I was born, and my mother’s side of the family immigrated to here shortly before my birth. Upon my brother’s birth and mine, my mother left work to take care of us.

Throughout my younger life, this is pretty much all the detail I knew about my family’s time before my birth, chicken feet and all.

Before my enlightenment on finance, I didn’t think about it much, but for most of my life you could say that I was spoilt. It was done for my benefit, so I could get a good education. Both of my parents didn’t get very far in school.

We still only have one source of income, and that’s my father. My sister moved out, and my brother and I do not have jobs, as well as my mother.

We always had and we still get a fair amount of stuff. Several computers, game consoles, many games and DVDs, 5 or 6 TVs, 3 surround sound systems and several DVD players, double beds.. it just goes on. and it’s been going for probably over 12 years. All on credit cards. We took out another home loan to paint the house. (I objected to this, due to money, and this house containing a few unique properties..).

My dad repairs extra cars on the weekend for some extra cash, which is spent on food. After living a poor childhood and super-frugal life in a new country full of opportunity, who can blame him?

My mother’s side of the family are basically idiots. After they immigrated here, they never helped us, and they still occasionally ask for money. (we always refuse.) They’re not exactly good at finance either. They took out a home loan and threw the money around. We clearly sponsored the wrong side of the family to move over.

I’m about to finish/fail Year 12, and hit with depression. I’m currently not trying to find a job, nor am I interested. I have tons of dreams I wish to fufill, but it all conflicts with the financial situation, so I sit here confused and lost, going nowhere. I’m quite sensitive to discouragement, so I have discarded a fair number of pursuits.

Next year, this should all ease up a little, when my mother takes up a job and if my sister moves back in. But where does that leave me? How do I save everyone?

You could say most of my family is stubborn, and I am as well, in some areas. I don’t want to live an empty life, and have an empty job. But there is a great amount of weight, pushing me down. I feel helpless.

I need encouragement, and people to support this weight. But being hit with depression, I don’t try very much.

So, here’s the summary. Anonymous is a high school student in a family of immigrants with very poor personal finance choices. Anonymous is trying to figure out what he/she can do to make everything better, but is still in school (and apparently having some difficulty there).

Here’s my advice to Anonymous.

First of all, if your family is not dedicated to finding a better financial track, nothing you can do will really help. They’re deep in credit card debt, buying things like surround sound systems and video games. They’ve been doing this for twelve years, which sounds like it’s become a normal part of life. Until the leaders of the household themselves make a conscious decision that something needs to change, nothing is going to change. Additional money will likely be spent on frivolous things, or spent on credit card debt to free up space for more frivolous spending.

That brings on the next point: do what you can to put yourself in a position to really help later on. This means buckling down, finishing school with the best grades you possibly can, and going to college, even if it means incurring debt. Right now is the time in your life where you are putting foundation stones in place for what you’ll accomplish in life – every minute you spend doing that is a worthwhile minute.

What about the need for encouragement and motivation? Seek to surround yourself with positive things – and eliminate the negative influences from your life. Look at your life and find the pieces that weigh you down and make you feel worse, then minimize those. Also look for things that make you feel stronger and better and maximize those. Don’t look at the immediate, either – focus on the things that, when you reflect on them later, make you feel stronger as a person.

One more tip of advice (something you’ll learn naturally as time goes on): people make mistakes and bad choices. It’s part of life. You will always do better if you look at the positives in people and let the negatives slide a bit. One of the brightest people I know has a big self-confidence problem and a pretty big spending problem – but you know what I see? A genius. I know she makes some bad moves, but I try every time I see her to help her see how brilliant she is.

Those things will lay a foundation for success. After you’ve got them down, then start worrying about the dollars. The first thing is to simply spend less than you make. Do that every time and you will succeed in the long run. Everything else financially really follows from that.

Good luck! You’re young and have the world laid out in front of you – don’t be afraid to take it.

The post Starting Out And Overcoming A Financially Disastrous Background appeared first on The Simple Dollar.

I am thirty years old, college educated, and a certified teacher. For the past several years I have taught school and used that money to buy a house with an ARM. This past January I sold the house. The 18k I made on the sale I rolled over to pay debts.

Last year I took out credit cards and my intention was to sell the house and pay the cards. However, several small things like car accidents, a move to an apartment, and buying a truck took the air out of the plan.

When all was said and done, I still have $4,000 in student loans, and $35,000 in unsecured debt.

Now here is the sad part of my story. I was advised by a friend to “just walk away” from the unsecured debt. “Pay the student loan and forget the rest.” This came from a banker. “In a few years you will not have the unsecured debt. It will be a write off. Disappear for a while.”

Since I am a teacher, I decided to take a job overseas. I was being paid to teach under the table. It was not the best idea. I decided after two months to face the music, come home and start again.

Which leads me to today. I have no money in the bank. I have $35,000 in unsecured debt. My student loans are paid through January–but then I have the payment coming back at me. I have no assets except my truck, paid for, and my laptop. Luckily, my brother is letting me stay at his house while I look for a job.

Any advice you can give would be appreciated.

Before I say anything else, please note that if you have a significant amount of credit card debt, re-read the story above. It could happen to anyone who puts themselves in a shaky financial position.

First of all, I fully understand the logic behind the advice from the banker, but it’s not good advice for the next several years unless you intend to live elsewhere. Why? Doing that will destroy your credit and leave you with harassment from creditors for many years. If you live in a situation where it’s difficult for them to contact you and your credit doesn’t matter, then this might be a good move, though I personally consider it dishonorable to walk away from your debts.

So what can you do in your current situation? Here are the steps I would take to get back on track.

First, I would focus very hard on getting a job, even if it happens to not be a teaching job. Work evenings somewhere so that you at least have some income coming in, then beat the streets for other work during the day.

Next, I would utilize a reputable credit counseling service. This is a significant enough debt situation that most normal debt repayment plans will probably not work. As a general rule of thumb, for-profit agencies are generally less helpful than non-profits. I would start with Consumer Credit Counseling Service, though that’s not a recommendation.

Also, live as cheaply as you possibly can. Don’t spend a single dime unless you have to. Live like you were in college again, eating ramen noodles and living in a tiny room. Focus on getting your finances healthy before raising your standard of living.

Another tip: don’t be afraid to look for charity right now. Talk to local pastors and see if you can at least get some free meals. Don’t be proud – pride right now will cost you.

Perhaps some readers will have additional advice for Amy.

The post (Just Like) Starting Over appeared first on The Simple Dollar.

I’m starting a personal training business, and I’ve been marketing for about two weeks now. I’m waiting for the clients to roll in, but in the meantime, I’m spending all my savings.

At what point do I staunch the flow and get a part-time job to pay the bills? Keep in mind that I would make $10-15 an hour in a part-time job and $75 an hour training. I break even with 5 training sessions a week.

I have about a month before I can’t rely on my savings and HAVE to have some kind of money coming in.

If I were in Walt’s situation, here are the tactics I would use:

I would spend every single day for the next month, from sun up to sun down, marketing my business. I would have a huge pile of pamphlets describing my business and hit every single gym and health food store in the area looking for clients (depending on solicitation rules, of course).

I’d offer a big introductory discount. The one thing you need right now is customers that might become regular paying customers, so offer some ridiculously huge discounts right off the bat. “75% off your first session” or “Buy one session now, get one free later” might be good initiatives. Even better, if you know people who are trendsetters, give them a completely free session in exchange for spreading the word a bit for you.

I’d call every person I know that might be connected to the area of the business. If you’re doing personal training, likely you know people who are physically inclined. Hit up that list of people and let them know that you’re now doing personal training and ask if they know anyone who might be interested.

I’d invest the money in professional-looking promotional materials. Seriously, materials that look professionally designed and printed may be very pricey, but they create an image that your business is serious and that it is of quality reputation, whether it’s true or not.

What about the personal financial situation? Here are some tactics I’d use:

Get a night job. If you’re a personal trainer, you’re probably in good shape. Look especially hard for a job as a night watchman. That way, you can do that job at night, promote your business in the morning to people who might be potential customers, sleep during the day when you don’t have clients, promote a bit more in the evening, then work again. It sounds like a lot of work, but it’ll really pay off if you’re committed to the business. Then, when the business takes off, quit the night job and you’ll have renewed focus on your business.

Get a job where you can cross-promote. How about a job at a GNC or a health food store or a sporting goods place? These jobs might not pay well, but they’ll give you golden opportunities to promote your own business. Most of the time at businesses like these where the business itself is in alignment with what your side business is but they’re not in competition with each other, it’s completely acceptable to promote a side business in this way. If you can just convince one person a month, it won’t be long before you can go back to focusing on the business full time.

These tactics are all things I would use in your position, trying to get a small business off the ground.

The post Taking The Leap Into Entrepreneurship: Where Is That Financial Safety Net? appeared first on The Simple Dollar.

I’m 26 now, and it seems that everyone I know is getting married (including myself). The problem is that my friends and family are scattered throughout the country. If we were to attend each of their weddings, my fiancee and I would be paying for two round-trip flights, plus a hotel room, plus a wedding gift every few months. We simply can’t afford that, but I really wish that we could be at each of those weddings, because some of these people are very close family members and friends. Additionally, I worry about looking rude, because they’ve all found some way to get to our upcoming wedding. Do you have any suggestions for ways to explain politely that we can’t afford it? Is there anything we can do to communicate our love and support without actually going to the wedding? If we have to choose between friends’ weddings (attending some but not others), how can we keep some friends from feeling offended that we didn’t choose to attend theirs? If we do attend some of the weddings, do you have any suggestions for saving money while attending a wedding? Ordinarily we only visit cities where we know we can stay with friends, and we choose our travel times to minimize the cost of travel, but with a wedding those things are out of our control. Any ideas you might have would be greatly appreciated.

My personal advice would be to not attend any weddings that would require enough financial outpouring that it causes you to have difficulty paying your bills. Here are some important things to remember:

An invitation is not a requirement to attend. It’s merely a statement from the sender that they wish you to attend their event. One should never feel like they have to come to an event.

Honesty is the best policy. If you make a decision that you can’t afford to come, be honest about it. Call the person and explain exactly why you can’t come. If you think that you can’t do this for some reason, then what’s the basis of the “close” relationship that would compel you to go to their wedding in the first place?

Thoughtful gifts mean more than expensive ones. We got many expensive gifts for our wedding, but the two that really stood out were simply very thoughtful ones – and neither of those were expensive at all. Spend some time thinking about the people involved and your relationship to them. Often, a very good idea will eventually occur to you – and often it is one that isn’t particularly expensive, either.

Make every possible arrangement to reduce costs for out-of-towners to come to your wedding. Find places for everyone to stay if they can’t afford a hotel. Host meals for the out-of-town guests. In short, do whatever it takes to reduce the costs for people willing to make the trip to your wedding. This will be greatly appreciated by the people who do attend, and they may be more likely to help you in the same way if you choose to attend their wedding.

Another tip: if you do wish to attend some of the weddings, you should make a clear demarcation between the ones you will attend and the ones you won’t. For example, you may choose to only attend the weddings of people you are related to or just the weddings of people in your bridal party. This way, you avoid any hard decisions that may hurt feelings.

The post A Wedding Dilemma: I Can’t Afford To Reciprocate! appeared first on The Simple Dollar.

I work at a small office and we have lost two employees this year….one left for more salary and benefits and another because they were moving out of state. While I was training one of the new replacements she mentioned her salary, which was $2 an hour more than my own. Now this person’s responsibilities will be equal or less than my own and I have eight years invested in my current position. I decided to discuss this with my boss and this did not go particularly well. I asked for a raise that would at least equal the new employee’s. I was told that I recently had a 50cent/hour raise and that business is slow and that my request could not be granted. When I pointed out the salary discrepancy between my salary and the new employee I was told that it had been difficult to fill the position and my boss had to meet this person’s requirements in order to fill the position. In that case I said I would be giving notice. My boss asked me to reconsider and she would think about raising my salary in 6 months. She asked me to think about it and let her know Monday.

So my question is, how have others in similar circumstances dealt with a situation like this? Any advice for me? Hubby supports my decision to leave if no increase in salary is given, we’ll tighten our budget and deal with it .We currently live on my husband’s salary and use mine for additional savings and the little things that come up.

Let’s isolate the facts here: an employee with eight years’ experience is training a new worker to do a very similar job. This new worker is getting $2 an hour more than the experienced one. When the experienced worker requested a raise, the boss essentially said no and justified the high pay for the new worker by saying the position was hard to fill.

If the boss is telling the full truth about the reason for hiring the new worker, then if the experienced one quits as well, it will cost the company significantly. Not only would they have to hire someone at the higher rate of the new worker, there would also be costs associated with training, plus the loss of productivity associated with moving from an old hand to a new one.

In this case, it pays to play hardball. It makes business sense for that person to pay Bea at least the same as the new worker if she requests it. It also makes business sense for the business owner to not pay Bea the higher rate, but given the alternative of losing an experienced worker, the business owner would decide in favor of the raise.

This, of course, assumes that the business owner is playing fair and also that Bea has a good work record to this point. If either of those assumptions fail, it’s quite possible that Bea could walk out of the job. My feeling is if the situation in the workplace is such that this raise request isn’t met, then it’s probably not a long-term healthy situation. The business owner was able to pay the new worker more – and it would presumably cost that much to fill Bea’s slot – so if Bea is let go, that means the business owner isn’t playing fair (not good) or the business really is in trouble (not good).

Since Bea would be able to quit and survive, my advice to Bea is to keep playing hardball if you believe you are valuable to the business. If you have a good work record and have a plan if you were to lose the job, I would stick to my guns. The other option is to cave, but by doing that, you’re (arguably) making yourself appear like a doormat and likely minimizing potential future pay increases (because the boss will see that you won’t fight for a raise – and thus why should you get any?).

Are there any other suggestions for Bea?

The post The New Person At Work Is Getting Paid More Than I Am! How Can I Handle It? appeared first on The Simple Dollar.

I am in way over my head in credit card debt and a personal loan… about $60k worth and growing.

Maggie has extensive personal debt right out of the chute, ignoring everything else. Likely, with that amount of personal debt, some of it is quite high interest.

I was on disability as of last September thru December for major depression. When it came time to decide if I was going to go back to work, go into long term disability or separate from my company, I did the stupid thing and left. This in actuality was a good thing for my mental well-being, but horrible for my financial situation. I didn’t think I would be unemployed for as long I as I was.

Maggie has some issues with depression as well. While I realize that clinical depression is a pretty severe medical condition, I do also know that debt can be an emotional drain. Also note that not going back to work at her previous job was identified as a good thing for her mental well-being, so it’s fair to conclude that Maggie was very unhappy at her previous job.

I just got a job this past June. So in essence I was without a paycheck since last October. I had a good deal of debt at that point but it was manageable. I was doing odd jobs to pull in money, but it was very small amounts, $100 here and there. I started living on the plastic and used one to pay off the other, etc. I was trying to clean up other parts of my life and get my mental capacity to be stable enough to take on even trying to look for work, which I didn’t really start doing until the end of February and not super seriously until almost April.

Maggie essentially took a six month period here in which she lived entirely on plastic without seriously looking for work. That’s going to be a huge financial drain for anyone. While part of me wants to say that she should have been looking seriously for employment from day one, that’s water under the bridge at this point.

I have a good and stable job right now with Columbia University, but I’m still waiting to become permanent (90 days and all that) and to get benefits.

Now, though, she has a full time job. This should enable her to start making a dent in fixing her earlier financial mistakes.

The problem is that I can’t afford my payments anymore and I am totally maxed out. I am also making less that I was, which is hard too.

In a nutshell, Maggie’s lifestyle for the last several months has far outstripped her income. It’s time to cut back big time.

Action Point #1: Learn how to live cheaper. Cut out every single bit of extraneous spending from your life. Get rid of cable television. Sell your car. Do whatever you have to do to lower your monthly expenses. Here’s a list of forty ways to reduce your monthly spending.

My rent is about 1100/m (i live in ny), phone $62, gas/tolls $350, electricity $80, food $200 and my paycheck at the moment is about 1140 biweekly. However, once the benefits kick in, I’ll have to pay union dues and health care. So potentially, I could lose up to another $200/m.

Her required living expenses right now add up to $1,792 a month, while her income after the benefits kick in is $2,270 per month. That gives only $478 a month in breathing room, and that $478 includes all debt repayment.

Action Point #2: Get rid of some of these expenses. You’re on the campus of Columbia on a daily basis, right? Use internet telephony (get a Skype account) to talk to friends and family and ditch the $62 a month for your phone. If there’s a subway entrance – or even a commuter rail line that gets to Grand Central – near where she lives, she should ditch the automobile, sell it, eliminate that $350 a month expense, and use that money to get rid of some of the most pressing high interest debt.

On top of that, I have MS, so I figure I will have doctor visits and medication that will tack on extra costs to my cash flow. Having the condition also makes it difficult for me to take on a second job because I can’t really handle too much stress or letting my body get too run down. The other problem is that a second job probably still won’t be enough to allow me to make my minimum payments.

Action Point #3: See whether or not your job at Columbia can be used to get treatment at the Columbia University Medical Center. Many universities associated with a medical school have very inexpensive or free care at the university’s medical center. Inquire about it.

The more I keep looking into things, it sounds more and more like I should file bankruptcy. I’m 28. I really don’t want to file, because I’m afraid they’ll touch what I’ve built up in my retirement funds.

There are retirement funds?

My family and friends can’t really help me, because no one really has extra cash lying around, and besides that, I’m terrified of telling them, embarassed, ashamed, and hate asking for help.

Action Point #4: Kick your pride to the curb right now. If pride is keeping you from being honest with people who love and care about you, pride is doing nothing more than standing in the way of you moving forward.

Normally, I wouldn’t care and would do anything to get rid of that debt, but my dad handles my IRA’s. He is the bain of my existence, a super control freak, and has the power to easily knock me back into depression.

So there are family issues involved here, too. If you’ve earned the money, how does your dad control your IRA?

Action Point #5: Regardless of your current financial situation, you need to get control over your own money. If you are actually being blocked from accessing or managing your own money, look for legal resolution. Seriously. This is a very unhealthy situation. As a functional adult, you should have control over your own assets.

Once you get control over your own assets, you need to look at the tax penalties for early IRA withdrawal. Generally, you’ll have to pay a ten percent penalty to withdraw this money early (unless it’s a Roth IRA, in which you can take out your own contributions without penalty), but in your situation, it may be worth it.

Is there anything else I can do? Is debt negotiation or settlement a good thing? Is there a way to get my debts down without touching my retirement funds? On top of that, how do I know who’s a reputable company versus people who are trying scam me? I’ve got nowhere to go.

If you declare bankruptcy, your retirement funds are quite likely exempt from the creditors, so that shouldn’t be a concern. If you are truly so far in debt that your IRA funds wouldn’t save you, you should likely consider bankruptcy, because credit counseling is likely not going to save you either.

Right now, you’re in a situation where basic living expenses are eating up 80% of your income and you have ongoing medical expenses as well. Something has to change in this scenario – it’s not tenable in the long term regardless of whether you can dig out of this debt situation. Here are some potential solutions to the situation, but most of them will require you to suck up some pride.

Know how bankruptcy works in your state. You may need to ask for legal help. See if there are opportunities for free legal help available to you as a Columbia employee. Lay out the situation and ask whether bankruptcy is right for you.

Move back home for a while. From the way your story sounds, you do have family that live in the area. Look into moving in with a family member for a few years until you can get your career and your financial situation on track. You can offer to pay rent if that makes the situation more comfortable.

Look at living in a less expensive part of the country. You didn’t specify what your job is, but you did specify it was at a university. Are there universities in the Midwest or South that offer similar programs? There are several good universities in Iowa, for example, that may have jobs in your specialty. If you’re saying “no” to this even without knowing there are jobs available, ask yourself why you’re immediately saying no.

Hopefully, readers will have more good suggestions for Maggie.

The post Walking Through A Financial Horror Story appeared first on The Simple Dollar.

Pets can be wonderful, valuable companions. I was particularly attached to my own dog growing up – some of my best memories are of playing Frisbee with him in the yard for hours every night after school. I’d toss the frisbee and he’d pause for a few seconds, then give chase at top speed, leaping in the air to catch it, then run back to me to be greeted with a playful petting and a scratch behind the ears. He used to sleep in my bed with me, too, right next to me, curled up next to my chest. I know full well how much a pet can mean to a person – and how much a person can mean to a pet.

Pet Considerations First of all, the decision to acquire a pet is a serious one and should merit some careful consideration. Pets require constant upkeep and attention – if you are unsure if you want a pet or do not know the effort involved in maintenance, look for a situation where you can perhaps watch someone else’s pet for a period while that person is traveling. Pets also have a constant cost – vet visits, food, litter, and other costs are regular and consistent.

You should also consider that a pet will begin to look on you as its caretaker and will form a deep bond with you. If you don’t believe that you will be able to care for a pet over a long period of time, you should strongly consider not getting one. A pet should be a long term commitment – if you’re not up for that, then you should strongly consider not getting a pet.

Unwanted Pets However, there’s a serious problem with pet ownership – what is the appropriate thing to do if the pet is no longer wanted by the owner? If this weren’t an issue, there would not be stray pets and pet shelters wouldn’t stay in business. I don’t feel that taking a pet to a shelter is a good choice – pets don’t deserve to live in a cage, ever. Some would argue that once you have a pet, it should be yours forever because the pet is attached to you, but that’s not healthy either – if the owner no longer wants the pet, it’s not psychologically a good situation for the pet or the owner.

I’m a strong believer in pet adoption, similar to how I feel about human adoption – it’s the most humane solution to a situation where a pet is not wanted by an owner, and that’s what I advocated earlier today. If an owner has a pet that they no longer want or can properly care for, or they discover that the responsibilities of pet ownership are a burden they aren’t prepared to handle, that owner should be responsible enough to find a safe, healthy home for that pet.

To summarize, if there are issues in your home and in your life that are causing an uncomfortable relationship between you and your pet (and finances can indeed be one of them), then you should consider selling your pet to or having your pet adopted by a loving family. It’s not good for you and it’s not good for the pet to continue in a stressful environment.

I expect the comments on this post to be quite interesting.

The post Pets and Money appeared first on The Simple Dollar.

I’m 35. I make $30K a year. I lose about $4K of that every year to child support. A divorce (and student loans) has placed me about $20K in debt. The region of the US I live in considers $30K a year a very good income. I have a wife who works part time all year as a bus driver (maybe we’ll be optimistic and call that $12K a year) and filed bankruptcy last year. I also have a 7 year old son, own a beat-up car, and rent a house.

How’s a guy like me, who’s struggling under severe debt, has few options for greater income, but wants to be able to send a son to college and eventually retire, to accomplish his goals?

Fred’s in a situation that a lot of Americans find themselves in at some point during their 20s and 30s. Fred is supposed to be saving for college and retirement, but finding the money for this is like squeezing water from a rock. How is Fred supposed to get ahead? Here are some things I would strongly consider if I were in Fred’s shoes.

Figure out what the biggest goal really is and focus on that. Is the college education the most important goal, or is it retirement? Most would advise not choosing between the two of them, but without a lot of money to work with, one should choose one or the other and try to do that one reasonably well instead of doing both at a pittance. My parents had less income than you did and basically chose to send me to college without major financial support – they bought textbooks for a couple semesters and that was about it.

Live everyday life as though you only made $25,000 a year. Fred mentions that he lives in a region of the country that considers $30,000 to be a very good income. If that’s the case, then living on $25,000 a year should be easily possible. Don’t even allow that extra $5,000 to touch your hands – set up automatic deductions from your paycheck into the accounts that you want – a 529 for your son and perhaps a Roth IRA for retirement.

Learn how to trim some money from your regular expenses. Many people often think they’re doing well with their regular food, electricity, and other bills, but they haven’t sat down and really looked at what they’re spending and whether there are other options. Try making a clear grocery list every time you shop for groceries – and stick to it. Buy items in bulk when it’s cheaper per item. Cut down on junk foods – they’re almost always the really wasteful part of the food bill – learn how to make similar items yourself in bulk and put them in the freezer, making them healthier, cheaper, and tastier.

Here’s an energy example: when you go to buy light bulbs, instead of buying the inexpensive regular bulbs, spend a bit more and buy CFLs – the curly-shaped ones. Stick to the name brand with them, though – Sylvania and GE. Why spend more? They will last for about as long as five incandescent bulbs on average, plus they use significantly less electricity over time. I recommend buying higher wattage CFLs than you’re used to – if you normally get 75 watt bulbs, buy the CFLs that are equivalent to 90 or 100 watts instead.

Always explore opportunities for more income. Many people become complacent with their income at some point in their lives, believing that they’ll never earn more than they’re earning right now, and from the tone of Fred’s comments, it looks like he may have reached that point. Never, ever fall into that complacency, especially with a college degree (which Fred seems to have). Keep your eyes open for opportunity all the time and don’t hesitate to chase interesting ones when they pop up. If you have some spare time, look at starting a side business and even get your children involved, as it can be a way to forge a bond between the two of you.

The post Big Dreams, Small Income: Financial Planning Without A Large Salary appeared first on The Simple Dollar.