Frankly, it was easier not to talk about it and, as with much of life, the path of least resistance won out.

Eventually, we came to a financial crossroads. We began to have some difficulty paying our bills and we eventually realized that we needed to make some changes to how we used our money.

At first, though, we argued a lot about money. We were in a tough spot. We weren’t close to the nebulous goals that we had talked about. In fact, we were pretty far from them. Even worse, neither one of us wanted to take much blame for the problem. I think we both felt some private guilt for the situation we were in, but neither one of us wanted to admit that guilt to the other party.

It was a perfect recipe for arguments.

How did we get past it, then? For us, success in discussing financial issues came down to setting a few ground rules.

The first one – and this is the biggest one – is simply to constantly remind ourselves that the person sitting across from the table is a human being. Humans make mistakes. Humans strive for better things, but don’t always achieve them. Humans have desires and wants and feelings. Humans aren’t perfect. Humans don’t always do what others want them to do. Humans wish to be understood and accepted and loved by others, even when they mess up.

The person that you’re sitting across the table from has pride and regret and dreams, just like you do. They might not match exactly what yours are, but they’re real nonetheless.

This is a mental trick that goes a long way toward piercing through anger and disappointment, particularly toward someone you love.

The second one is that whenever you bring up a flaw you see in the other person, bring up a flaw in yourself or don’t mention it.

When someone comes to the table with a litany of things that you’ve done wrong, it can feel very much like an attack. When you feel attacked, you’re going to respond with either fight (you get angry) or flight (you shut it out). Neither outcome is good for a healthy discussion.

So, how does this work? Before we have any really deep money discussions, we put some thought in before the talk. We sit down, make some notes about what we want to say, and work through things beforehand. Part of that is a requirement that we self-analyze and look for our own mistakes as well.

It’s awfully hard to come to the table as an inquisitor when you’re holding a long list of your own mistakes.

Note that you don’t necessarily have to keep this purely within money mistakes. Often, overspending and other financial errors are tied to other aspects of marital life, even in ways you don’t initially see. Don’t be afraid to bring your own mistakes in other areas to the table.

It can also help reinforce the first tactic. By making a list of your own mistakes, it becomes easier to realize you’re not perfect either and that helps you relate more to the person across the table that you’re seeing flaws in.

Remember, this isn’t a trick so that you can compare your “small” mistakes to your partner’s “huge” mistakes. The point is that you’re both human, you both make mistakes, and you’re going to work through fixing those mistakes together by mutually reinforcing each other toward better habits.

A final tactic: if you’re going to mention numbers or “facts,” do your homework first. Never, ever, ever bring up a number or a figure that you can’t immediately back up with detailed evidence.

If you’re going to talk about credit card debt, have credit card statements at the ready. If you’re going to talk about mutual overspending, have that credit card statement itemized in advance.

Remember, though, you need to bring your own mistakes to the table, too. This means showing your partner the places where you’ve made poor decisions, even if it’s painful.

These three tactics have helped Sarah and I navigate some very difficult discussions in the past without letting our emotions get the better of us. When you humanize your partner and you humanize yourself, it’s hard to get incredibly angry.

The post Talking About Money Issues Without Fighting appeared first on The Simple Dollar.

Communicating well with these people is incredibly valuable. It opens the door to understanding each other better and, often, putting you both in a better financial position.

You might want to haggle with a retailer to get a better price – and the retailer also scores a sale.

You might want to talk to a friend about becoming a money buddy – and your friend might find value in having someone to talk to about money as well.

You might want to talk to your spouse about coming up with a debt repayment plan.

You might want to talk to your boss about getting a raise.

While this all sounds great, there’s one big problem. It’s the eight hundred pound gorilla in the room. Talking about money is fairly hard.

Money is one of those subjects that tends to come packaged with a lot of social rules and mores. It’s not a topic that people tend to feel comfortable discussing, particularly when the subject is first broken in conversation.

For me, there’s also the issue of being an introvert. I often generally feel uncomfortable when talking face-to-face with people. I prefer to be quiet unless I know the vast majority of people in the room.

How can someone overcome these barriers to start a valuable money conversation? Here are some tactics that I use for any conversation about money.

Think about the worst case scenario if you speak up. What’s the worst outcome of this situation? You’re going to pay retail price? A friend is going to say that they’re not comfortable talking about money? Your boss is going to say money is too tight? Almost all of these “worst case” scenarios are exactly the same as if you said nothing at all. In other words, there’s almost nothing but upside from speaking up.

Minimize outsiders. I find that it’s much easier for me to broach a topic that I’m uncomfortable with if I minimize the people I’m speaking to. If I’m going to talk to my wife about money, it works best if it’s just me and my wife. If I’m going to talk to a friend about money, it works best if it’s just me and my friend. I generally don’t bring up money in group settings.

Give the other person an easy out. I do this in most non-haggling situations. I start off by saying that if you don’t want to talk about this, it’s cool, but that it’s a topic that I think we might both get something out of. I also usually make it clear that I’m nervous because, often, admitting I’m nervous makes me less nervous.

Have the facts in hand. If you’re going to be talking about specific facts, have those facts in hand. If you’re going to talk about your finances with your spouse, have the necessary statements and other info printed out and in your hand before you begin talking.

Have the goal in mind, too. Figure out what you want out of the conversation before you even start. If you’re going to haggle, have the price you desire in mind before you start. If you’re going to look at finances with your spouse, know what sort of outcome you desire (a debt repayment plan, maybe).

Don’t beat yourself up over a “worst case” result. Just because haggling fails doesn’t mean you should never do it again. Just because a friend doesn’t want to talk about money doesn’t mean you shouldn’t talk about money with your spouse. A bad result is just that, a bad result. It doesn’t mean you should completely abandon the idea of talking about money.

Get over the fear. Talk. You’ll be very glad you did.

The post The First Word Is Always the Hardest appeared first on The Simple Dollar.

Recently, “Gary” sent an email asking a similar question:

I read your this post about sucessful marriage every month. I was wondering if you can create such step-by-step guide for friendships.

I have lots of acquaintances but I am not good at making very close friends. It could be that I am not very open with my emotions and also influences from my parents but I can’t seem to make close friends.

Gary’s question is borne out of a number of recent posts on The Simple Dollar about the power of friendships and relationships – a topic that we’ll be expanding upon over the next month and a half with the book club reading of Never Eat Alone.

But what do you do after you’ve met someone and you want to actually build a lasting friendship? Lasting friendships are often the backbone of our social lives and help us in countless ways throughout our professional and personal lives. They come through for us when we need help, plus they provide the constant support and companionship that a friendship can provide.

Building strong friendships comes easily to some – and not so easily to others. Here’s what I’ve learned about building long-term friendships.

First, friendships wither without regular attention. If you don’t keep in touch in some fashion with a friend, they quickly become an “old friend” – someone that you might be able to rekindle a friendship with, but someone who’s not really an active part of your life. Sometimes, that happens due to a change in interest or in lifestyle (having children can often cause this), but quite often it happens unintentionally, particularly among people with very busy schedules.

On the other hand, regular attention to a friendship is the essence of building up a lasting friendship. This doesn’t mean you have to have a friend at your house every day to keep a friendship strong. Instead, it means that without regular contact, a friendship will fade.

What’s “regular contact”? There’s no exact recipe for it, but I usually define it this way: if I don’t have some idea of what my friend is doing in two weeks, I’ll get in touch with them.

Intrigued? Here are my fifteen rules for building lasting friendships with people.

Keep multiple lines of easy communication open. The more tools you have for keeping track of someone, the better. If you have their cell number, save it – you can easily text them or call them. If you have their address, pop it into your address. If they’re on Facebook, friend them. If they’re on Twitter, follow them. This allows you to keep track of what’s going on in their life – and makes it much easier for you to contact them very quickly. The more lines of easy communication you have, the simpler it becomes to simply get in touch with them at your convenience, which lowers the barrier to continued communication.

Make sure it’s easy to contact you, too. This is why I’m on Twitter and Facebook (and other social sites as well) – it makes it very easy for people to contact me. I keep an eye on both services (to see what my friends are doing), but equally important, I drop my own updates on these sites (so that my friends can see what I’m doing).

If you use such services and you’re silent on them, you’re engaging in a one-way conversation – and how interesting is that? Your contribution is absolutely vital – people who are following you or have friended you want to hear what you have to say.

Another tip – mention that you’re on such services in the footers of your email. Add a link to your Twitter feed or your Facebook page.

Make contact regularly, but be worthwhile. Part of the reason I follow lots of people on Twitter and friend lots of people on Facebook is so that I can keep track on what’s actually important in their lives. Few things bug me more than people who contact me without having anything to say. “Hi, how are you, I am fine, what are you doing?” contacts simply aren’t very interesting and they don’t sustain conversation.

Keep an eye on what your friends are up to and if you have something interesting to contribute to what they’re doing or saying, contribute it. Send them a message or an email, or give them a ring. If what you have is actually useful, you’ve taken another step towards cementing a real relationship.

Quite often, the thing you have to share isn’t a material item, nor does it cost anything other than a bit of time. Usually, it’s information. Most human relationships revolve around the exchange of information with one another, and if you provide lots of good information, then you’re a lot closer to being a good friend.

Exchange contact at least once every two weeks. I don’t keep track of this intensely – it’s merely a good rule of thumb with a good principle behind it. If I haven’t sent a message to someone recently, I’ll pay extra close attention to what they’ve been saying and look for some avenue for following up. If they’re not involved in online social networks, I will often spend some time attempting to recall what their most recent concerns were, then follow up with those concerns and see how they’re doing.

Direct contact is key to sustaining a friendship. While it can be useful to pay attention to what they’re saying publicly – and they’re likely following you, too – direct contact is still necessary and useful. You might be up to date with what someone’s doing, but contacting them directly by phone or other means is still the key piece of maintaining (and slowly building) a friendship.

Fill up your social calendar. You should strive to fill up your social calendar as much as you can with plans with friends (and others). A meal eaten alone is an opportunity lost – a chance to catch up with a friend, build another friendship, or get together with a larger group.

Pencil in your lunch breaks. Have friends over for dinner and a movie or a game. Once a week or so, host a dinner party and invite a mix of people. If you get invited to things, make an effort to go.

In short, start keeping a calendar and strive to fill it up with as many social activities as you can, particularly ones where you’re setting up events directly with specific friends (or attending larger events with friends). The more full your social calendar is, the more friends you’re building relationships with.

I confess that I have some difficulty doing this. My biggest challenge is that many of my closest friends are spread across the world, far away from where I live, and I sometimes find it challenging to open the door to new friendships. However, I do know from experience that it works – the more full your calendar is, the more strong friendships you’ll build.

Be helpful When a friend asks for help, this is the time to really cement a friendship. Be there for that friend. Help them in whatever way you can. Often, the best thing you can do is just listen without interjecting your own thoughts. Sometimes, though, you may be able to help by completing a task or sharing some information.

As long as it’s reasonable, always step up to the plate when a friend calls you. Such actions are the building blocks of lasting friendships.

Don’t hesitate to ask for help – but do it with tact. First of all, don’t expect help. Sometimes the difficulties of the lives of others means that they can’t help you with your situation, even if you’ve helped them in the past and even if they’d like to.

Second, ask in a personal way. It’s fine to broadcast your need on a service where people have chosen to follow you (like Twitter or Facebook), but don’t just send out a blanket email to all of your friends. Instead, contact the people you really need help from individually, by email or by phone (or even by stopping by). Make it clear that you want their help, not just that you’re seeking help from anyone for a problem you have.

Often, such requests go a long way towards building a relationship as well. Direct requests like this show that you do value a friend’s help and input and will make them quite happy to contribute, especially if the help you’re asking for is simple for them.

Celebrate their important moments in a special way. Don’t hesitate to host a party for someone on a major birthday or milestone. Don’t be afraid to take a friend out to dinner (or put a lot of work into preparing one of their favorite meals) to celebrate their new job or their engagement. Stepping up to the plate and making an extra effort to celebrate a friend’s big moments is often just as important as being there for them when there are problems.

Listen. If you’re saying more than 60% of the words in a conversation with a friend, you’re talking too much. Draw them out and get them to participate by asking questions of them. Listen to what they have to say and don’t interrupt them, even if that’s how you naturally converse. Then follow up based on what they have to say.

People want to be heard and to see that their ideas and thoughts have value to others. When you run roughshod by talking all the time or not actually listening, you’re running roughshod over that and damaging the friendship. If you think doing this is boring – then perhaps you don’t want this person as a friend, but as someone who merely follows you.

If a friend stops replying to your contacts, don’t be insulted – it’s often hard to understand what’s going on in their life. If that relationship is important to you, keep the window of communication open. Send emails on occasion, even if they don’t reply. Give them a call just to see what’s going on. Express some concern, but don’t intrude unless you know the person intimately. Look for a sign that they need help before you intervene.

Sometimes friendships die out. Friendships are based on mutual interests and commonalities. Over a long period of time, your own shared experiences may become those commonalities and you’ll have a lifelong friend, but quite often friendships die out or go dormant. Don’t be dramatic or overwrought about it.

One sure sign that you should perhaps let a friendship rest (and devote time to building other friendships) is if you’re doing virtually all the work in terms of making contact. It may be that the friend’s interests have changed and they have moved on to another part of their life’s journey. Back off and see what happens, but in the meantime, fill your time with other friends.

Never force a friendship to continue. It’s unhealthy for both people. Instead, let it drift away and grow dormant – perhaps in the future, opportunity will cause it to bloom again.

Good luck, Gary.

The post Some Thoughts on Building a Successful Friendship appeared first on The Simple Dollar.

Of course, I had not done any such thing, but I attempted to make amends. I provided my supervisor with all of the passwords and information that was needed to get onto the laptop and fix any access issues.

By Monday, she still hadn’t been able to get onto the laptop and openly accused me to my face in front of the rest of the team of tampering with her work.

By Tuesday, the problem had been resolved: there were several faulty keys on the keyboard, so her attempts at entering passwords were failing. Once the keyboard was replaced, everything worked like a charm.

At the next meeting, our supervisor opened the floor to her to give a public apology to me, since she had basically insulted my character in front of everyone by implying I was tampering with her work. Her “apology”? “I’m sorry that you feel hurt by my attempts to get the laptop working.”

I was just flummoxed by this. Needless to say, I did not trust her at all after that. My supervisor was also shocked, and he helped to ensure that I wouldn’t have to work with her and, within a few months, she had moved on.

If she had stepped back and issued a sincere apology in that situation, her entire situation would have been different. A heartfelt apology would have left me feeling sympathetic for her struggles with work and gone a long way towards repairing any rifts in the workplace, not just between myself and her, but between herself and everyone else there who thought the accusation was a bit over the top. I might not have fully trusted her, but I wouldn’t have felt the need to avoid her, either.

Instead, she chose the insincere route – and it cost her her job and burnt a lot of bridges, too.

Real apologies consist of three parts.

The Accuracy
An apology that actually works is one that shows that you have real insight into what you did wrong and the effects of that mistake. Doing that well takes some introspection and some willingness to admit that you do have specific faults.

When you realize you’re in a position where you need to apologize, step back for a bit and look at the situation. What exactly did you do wrong? It might be easy to point to a specific thing, but is that actually just one little piece of a larger thing? Figure out both pieces and think about what you really should apologize for. Careful consideration almost always leads to a more meaningful apology.

Another big piece of the puzzle is a willingness to fix the problems that caused the faux pas – and to clean up any problems that have resulted from it. Identify those problems – and take a stand on your own to fix them. Actions speak far louder than words, after all, and if you show you’re working to fix the mistake, that often means at least as much as the words in your apology.

The Delivery
There are three key points you need to get across when you deliver your apology.

“I did something wrong.” A real apology is an admission of fault. You made a mistake somewhere along the way – if you had not made a mistake, you would not be apologizing. Most of the time, we’re able to see what we did wrong – and a big part of apologizing for that wrong is an ability and willingness to state that wrong in front of someone else. If someone is encouraging you to apologize to someone else, that means you made a mistake, even if you don’t recognize it – and if you don’t, it’s time for some real introspection.

“What I did hurt you – and I recognize that.” Your fault, the one you admitted to, caused pain or difficulty for someone else. You need to recognize that if you want your apology to matter at all. This is the core of the apology – you’re telling that person that you do actually recognize that your mistake has caused them misfortune, and it is their misfortune that is at the center of the discussion, after all.

“What can I do to make amends?” Most of the time, an apology is sufficient for beginning to rebuild trust. Sometimes, however, more may be needed – perhaps you need to speak to someone else to repair a reputation, or maybe you should fix an item that you broke. Reaching out and offering to make these amends (and if you don’t know what they might be, offering to do what it takes) goes a long way towards cementing the sincerity of your apology.

The Sincerity
Most important of all, if you can’t be authentic about any of the above parts, don’t apologize at all. An insincere apology is transparent and does nothing to repair the situation. All it does is further damage your own reputation, not only in terms of the person you’re “apologizing” to, but to anyone else who hears about it.

Another note: a sincere apology never, ever expects an apology in return. An apology in the form of “I apologize, but I expect you to apologize in return” is not an apology – it’s a request for someone to apologize to you. It’s inauthentic, and everyone involved will see right through it – and think far less of you for having done it.

If you feel you should apologize, but you don’t understand why, don’t attempt an apology. Spend some time in reflection on the situation until you really understand why you’re apologizing. Never apologize until you’re ready – doing it beforehand not only fails the person you’re apologizing to, it fails you as well, with potentially devastating consequences.

That old maxim is still true: if you don’t have anything good to say, don’t say anything at all.

The post The Art of the Apology appeared first on The Simple Dollar.

In the article, I discussed a number of the benefits and drawbacks of this move. Clearly, it was cheaper than the cost of our land line on paper, but our land line was part of a bundled service with our telecommunications provider, and dropping the land line wouldn’t actually save us that much at all on our total bill. Although it appeared to be pricey on paper, dropping that land line would also cause us to lose our “bundling” discount, and the two almost completely counteracted each other.

So, for the time being, we’ve kept our land line, but I’ve continued to use Skype for many business-related calls.

That brings us to a suggestion from reader “Joe”:

I haven’t had a land line in nearly 5 years and haven’t missed it in the least. In the past 6 months, I’ve also switched to one of the low-cost cell phone providers for huge savings each month. By not having the land line, I’m saving about $40 a month, and by going with one of the low cost providers with unlimited usage I’ve gone to having a $45 a month cell phone bill. Total savings is about $80 to $100 a month versus having one of the pricier wireless providers and a landline at the same time.

Joe’s comment spurred me to do a serious re-evaluation of the telephone lines in use in our household. After all, our monthly telecommunications bill regularly runs into the three figures, including broadband internet, cable, a land line, and our cell phones.

What can we actively reduce from this expensive monthly mix?

The first step for figuring this out is accurately evaluating what we need. To do this, I started keeping careful track of the actual usage of our landline and our cell phones. Here are some key questions we asked ourselves during this process.

Were we actually taking advantage of the portable nature of our cell phones? Are we actually using them as truly mobile devices, meaning are we using them a significant amount outside of the home? If we’re not, then a prepaid cell phone may be all we need to take care of any mobile needs, reducing the monthly bill. From our evaluation, it appeared as though the majority of our cell phone usage was at home.

Were we truly taking advantage of our unlimited plans, or is our call volume low enough that we’d be better off with a plan with limited minutes? We were able to accurately track this by carefully examining our bills – both land line and cellular – over the last few months. How much were we using on each? Were we far below our limits? It turns out that we have never been close to our usage caps on our cell phone, so we requested a change to a different plan that will save us about $10 per month.

Were we using text messages significantly enough to pay for a plan for those, or would we be better off paying per message? This one was easy for us – we were only using a few texts per month, so we called and requested a switch to a “pay per message” plan that will save us $5 or so per month.

Is our cell phone service (while at home) as reliable as our land line service? In our case (luckily), the answer is yes. We live rather close to a tower that seems to be used by several providers, so almost every cell phone provider has stellar service from our home.

Do we travel significantly? With a three year old and a one year old at home, travel isn’t a normal part of our lifestyle, but it’s an important question to ask. The more travel you do, the more important a cell phone would be in comparison to a land line.

Taking all of these factors into consideration, the clear route for us (for the time being) is to wait until our contract expires, cancel our cell phone service, and get prepaid phones. This is our tentative plan, one that we’ll keep in mind as we monitor our phone usage over the next several months.

What’s the take-home message here? Walking carefully through your usage of such services can often point you towards ways to save money. Keep in mind what you’re actually using and what you actually need and you’ll eventually be led to the best deal for you.

The post Is It Time to Drop Your Land Line? appeared first on The Simple Dollar.

[...] In short, we are going to have to be out of our house by October 24. We’re going to move in with [my brother] and his family for a while and then later try to find a place to rent.

We made bad money mistakes and we know what we did wrong. We should have never bought our house. We should have never got that mortgage. We just tried to make the best life possible for [their eight year old son].

So here’s my problem: we haven’t told [our eight year old son] about this yet. We don’t know what to tell him or where to even start. This is the only home he remembers living in.

My mother thinks we shouldn’t tell him anything. We should just say were moving to a new place and we’re going to live with [my brother] for a while.

But [he]‘s smarter than that. He knows there is something going on and he won’t fall for it.

What should I tell him?

This email (which, admittedly, I edited a fair amount to protect the privacy of Peggy, her son, and the rest of her family) caused a more painful reaction for me than anything I’ve read since I’ve started writing The Simple Dollar. I look at my almost three year old son and I can’t imagine having to explain to him in a few years why we have to move out of this house that he’s grown up in.

Needless to say, over the last few days since I received the email, I’ve spent a ton of time thinking about Peggy’s situation. It’s the first reader email I’ve brought up with my friends, and I also mentioned it on Twitter, just to try to get more angles and perspectives on it.

My first reaction was to agree with Peggy’s mother and encourage Peggy to simply not talk about it. It’s a very frightening time when you’re losing your home. I can’t imagine explaining it to a child. You’re in some ways ripping away one of their basic elements of security in the world.

Some further reflection brought me to a different conclusion, though. My thoughts actually began to turn around when I was taking my son to daycare. He’s just a bit short of three years old. We stopped at a gas station on the way because gas was clear down to $2.89 and I wanted to fill up my tank.

I told him we were going to stop at the gas station and he asked if we needed gas. I told him that we didn’t, but that I wanted to get gas now because it was really cheap – that way, we could have more money left over to buy other things. He immediately shouted, “So we can buy more pizza with wheels!” (His favorite food is a plain cheese pizza with black olives on it – pizza with wheels.)

My two year old son understood the basic idea of budgeting: sometimes you need to spend less on some things so that you can afford other things. In the end, that’s the basic reason why one would lose a house to foreclosure. Conceptually, an eight year old should be able to understand it.

I asked a few people I know who are actually parents of children between the ages of seven and nine how they would handle it, and they almost all provided passionate arguments on behalf of candor with the child, confirming my idea that candor is really the best approach here. To a certain point, of course.

If I were in Peggy’s shoes, here’s what I would do.

First, I’d spend a lot of quality time with my child right now. Even more than you do right now. You’ll need a strong bond with your child to make this go smoothly. Why? Your child needs emotional touchstones, and you need to make yourself the strongest touchstone you can during this time so that the transition is easier. It is at least somewhat likely that your child sees your current home as a touchstone, and it’ll be very hard for your child to separate, so you need to provide another rock for your child to lean on.

Spend some evenings at the park or out and about in the community doing things together, just you and your family. You can spend some evenings at home, of course, but don’t spend all of them there – try to cement that bond with your child independent of location.

Second, I’d cement the concept of a home as something you buy and sell. Point out where other houses are for sale and explain that someone is trying to sell that house. If you see a “SOLD” sign, point out that someone has bought that house from someone else that’s trying to sell it.

This firms up the idea that it’s a normal thing for people to buy and sell their houses. Be candid about it and answer the questions that your child might have. Given Peggy’s timeframe, I’d try to do this several times in the next few days.

Third, I’d use some candor to explain the situation to the child. Simply tell the child that the family needs to live in a smaller house because the house they live in now is too expensive. They don’t have enough money to keep paying for that house. Do it in a caring way – a serious talk, but without overwhelming emotion and no aggression at all.

Your child is going to have questions. Answer them as simply as you can. You don’t have to get into the nuances of ARMs. Just say that we got to make little payments on the house at first, but now the payments are bigger and we have to choose between things to spend our money on. My two year old could largely understand this and several other parents have assured me that their seven, eight, and nine year olds could get it, too.

Finally, make the changing experience seem as fun as you can. Get your child involved in packing things up. Take pictures of box contents together for easier packaging. Be there for your child if your child has a hard time with this – the child might or might not get upset during the process.

The most important thing is to be there for your child. You are that child’s constant through this difficult time of change. Take that very seriously, because your child will probably really need that emotional safety at this time.

The post Talking to a Child About Home Foreclosure appeared first on The Simple Dollar.

Since then (about two years), we went from living in a crackerbox apartment to owning our own home. We’ve eliminated somewhere around $30,000 in debt (and rising fast). Even more importantly, we worked together to find options that made us both happier in terms of our careers and home lives and we settled in on some big goals. We’re on the same financial page, too – we both have a pretty strong grip on our current financial state.

How did we make this transformation happen? It’s a transformation I’ve alluded to on here before and one that many readers have asked about. Here’s how we did it – and how you can do it, too – step by step.

Step One: The Moment of Change
My moment of change was very specific: a long night holding my infant son and realizing that I needed to make some financial changes in my life. After that, I became really committed to change – I read tons of personal finance books, sold off a bunch of my stuff, and so on.

The only problem was that this was a personal epiphany – not one that my wife had shared with me. I already had my individual moment of change, but my wife had not. So, all I asked her was this: “Could we sit down and figure out where we’re at in terms of saving for a house?” She was a bit uncomfortable, but she agreed, and we sat down and simply talked about it.

I think, for her, the revelation that we were so far away from ever having a house of our own, even though we were making solid money, was the moment of change. I remember a Saturday afternoon a few weeks after my own revelation, sitting at the kitchen table with my wife as our son napped, going through our financial statements. More than anything, I remember her reaction as we rubbed away at the surface of things, looking at the stupendous amount of debt we shared and how small the assets we held actually were, and I remember saying, “We’re not going to be able to get a house any time soon. We’re not even close… we’re in trouble.” And I remember her shuffling through all of the papers, collected together for the first time, with a really worried look on her face, the kind of worry that I’ve almost never seen.

The important part – the part that made all of this work – is that we experienced this moment of change together. She knew I was scared. I knew she was worried. And because of that shared experience, we realized that we needed to work together to make some big changes in our life.

This is a difficult talk to have for many people, so here are some tips on getting started and how to follow up on it to reaffirm your relationship.

Step Two: A Commitment to Honesty
Prior to that talk, we never paid any attention to each other’s bills. If a credit card bill came in the mail with my wife’s name on it, it was simply something I didn’t touch, and vice versa. I had little grasp on her financial state and she had little grasp on mine.

We decided that this had to end – we needed to be fully on the same financial page. We adopted a new policy: anything that came in the mail could be opened and looked at by either one of us, no questions asked. If we talked about any money issues, we were allowed to say what was on our minds without any consequences in terms of hurt feelings or anything like that.

Something was financially wrong in our lives, and our best hope for fixing the problem was each other. We realized that every secret we kept from each other and every feeling we kept inside for “tact” was blocking us from going where we wanted to go. But where did we want to go?

Step Three: Shared Dreams and Individual Dreams
We spent a lot of evenings then talking about our dreams. What did we want to do with our future? We shared a dream of having another baby, hopefully a little girl and of someday owning a home. We had a lot of different dreams, too: I harbored dreams of being a self-employed writer and I also wanted to take some wonderful international vacations when our children got older. My wife had different dreams: she wanted to live way out in the country, she dreamed of being in our own house before our second child was born, and she harbored some long-term dreams of going back to school to pursue her master’s degree.

These were nice dreams – and surprising ones, too. In some ways, we had similar visions of where our lives were going, but in other ways, our dreams were very different. One thing we both realized, though, is that our dreams weren’t going to happen if we didn’t make some changes. We were throwing away our dreams on $50 meals, piles of electronics, tons of books, and lots of other unnecessary stuff.

Step Four: How to Compromise Without Giving Up Your Dreams
We tried to figure out which of these dreams were the most important to us. We decided to buy a less-expensive house first, live there for a while, then eventually build a house in the country like the one my wife dreamed about. We decided to go ahead and have a second child as well, and we recognized that in order to live out our other dreams, our first step was to get financially stable, with our debts gone and a healthy emergency fund. Without those things, we wouldn’t be able to have the freedom to allow me to chase writing dreams or for my wife to ever go back to college.

Our first step was to focus in on the dreams that we actually shared. That meant we decided to focus intently on our dreams for a house – that became priority number one.

Our second step was to builld a firm financial base for the things we wanted to do down the road. If we actually wanted to do things like take great vacations, look at new career directions, and eventually buy a patch of land in the country and build our dream home, we couldn’t continue to throw money down the rat hole of expensive debt repayments and stuff we didn’t really need.

Step Five: Turning Dreams Into Long-Term Goals
As we talked about these dreams, we realized how effectively they led straight into some medium and long-term goals. Here are the four big ones we committed to early on.

Our first goal was to build an emergency fund. We wanted to get a few months’ worth of living expenses in the bank so that our plans wouldn’t be derailed by things like car repairs.

Our second goal was to get our spending and debt both under control. Basically, this meant eliminating high-interest debt while weaning ourselves from a life filled with purchasing.

Our third goal was to start saving for our down payment and eventually buying a house. Once we built up that emergency fund and eliminated some of our most onerous debt, our savings would be redirected towards a down payment.

Our third goal was to smooth out any bumps in our credit report and maximize our credit scores. This meant paying every bill on time and getting our debt-to-credit ratio in shape.

Step Six: Turning Long-Term Goals Into Short Term Goals For Both of You
These sounded great and we both knew that achieving these goals was what we really wanted, but they were so huge and so nebulous that we realized we’d never make it based on these ideas alone. So we set some short term goals to help us with the day-to-day reality of things.

I found weekly goals helped me the most. I’d make pledges like “only one after-work stop this week” or “only $20 in entertainment spending this week.” I found that with small goals like this, I could accomplish them easily and also easily see how they were helping with the big goals. Plus, if I achieved the goals for a few weeks, I found that this new behavior was quickly becoming my normal habit.

My wife functioned better with monthly goals. She’d target things related to monthly bills, like “make a $300 extra payment on this credit card this month.” Then she’d use a gut check each time she went to spend to help her get things more in line. This doesn’t mean she abandoned all spending (neither did I), but seeing how this little move really fit into a bigger context really helped.

Filling our weekends with frugal projects helped, too. We did things like purge our media collections, install CFLs everywhere to cut down on energy use, learn how to cook at home and prepare foods for the upcoming week, find free things to do in the community, and so forth. We instituted money free weekends to teach us how to entertain ourselves together without spending money.

We constantly talked about and shared our successes on little goals – and big ones, too. It was great having a partner committed to the same things I was committed to. Without her, it would have been much more difficult to succeed.

We also looked for simple ways to move forward on our other goals as well. I was already committed to writing 1,000 words a day, but I didn’t really share it much at all and it wasn’t focused – it was mostly haphazard journal writing. I made more effort to share my writing with others, and with my growing passion about our financial recovery, I started The Simple Dollar to just practice my writing and share the experiences with others. I didn’t think that this would ever be a significant success – I mostly started it just to work on my own writing and share what I was thinking about.

Doing these things together encouraged us both to stick with it – not only were the goals short and manageable, but we both had cheerleaders and we both saw how they fit into our bigger dreams.

Today is the day to get started. Sit down with your spouse, find some shared inspiration with that person, set some goals together, then work together to make it happen.

The post Shared Dreams: How My Wife and I Got on the Same Financial Page appeared first on The Simple Dollar.

No matter what you do in life, communication will earn you money.

You’re a person working in a cubicle on hard problems. The ability to present your work to the boss during performance reviews will make or break you. The ability to present your work to coworkers will help your project go better. The ability to talk to peers at conferences will open up new connections and possibly new career paths for you.

You’re a person who’s involved with artistic work. Your ability to sell your work relies on your ability to communicate. In many cases, your work itself relies on an ability to communicate – art speaks, does it not?

You work at a minimum wage job at a burger joint. Good communication skills get you to the front counter, where the work is typically more varied and more interesting and you have the opportunity to show off customer relations skills to the manager, who will begin to value you as a key employee, leading to potential raises and better scheduling.

You’re standing at the bus stop. Other people are waiting around, mostly just fidgeting. Keeping quiet will earn you nothing. Starting a conversation with the guy in the business suit holding a copy of one of your favorite books might start a valuable friendship.

Here are ten things you can do immediately to improve that skill.

Introduce yourself to others as often as is reasonably possible. If you’re in a situation where you’re in close public quarters with others that you do not know (like a meeting room, a party, or a dinner table), introduce yourself to them, and initiate some conversation. Likely, if you’re sitting there quiet and nervous, they’re feeling the exact same way. Even in the worst case scenario – the conversation doesn’t go well – at the very least, you got some conversational practice out of the deal.

Make a concerted effort to remember names well enough that you can call them by name later. Always ask for people’s names and try very hard to remember them. At the end of the conversation, get a business card from them and, later, jot what you can remember about them down on the back of the card – the occasion in which you met, any key information that stands out, etc. If you can’t get a business card, jot their name down in a notebook with similar information. This will help you remember. Then, if you think you might be meeting that person again, review the information a bit before you go. This will help you immediately have an impact on them the next time you meet.

Take every opportunity you can get to speak in front of a crowd and give presentations. If you’ve got an opportunity to speak in public, always take it. Not only does this force you to know how to organize your thoughts and communicate them to others, it provides countless opportunities to open up interactions with people who share your interests and concerns.

Put extra care into explaining your work to others. Whenever you have a chance to explain your work to others, put in plenty of care so that they’re able to understand it without their eyes glossing over. Comment your code. Think of everyday analogies for what you’re doing and use them. Try as hard as you can to avoid technical talk unless the situation specifically calls for it. In short, the better you can explain what you’re doing to a layman, the better you’ll appear not only to upper management, but to people in future interview situations.

Share what you know about your work as widely as possible.
It’s always worthwhile to start a blog covering your professional area. Not only does it give you an opportunity to sort through your thoughts and concepts, it also allows you to share your ideas with a wide world. Plus, doing it regularly simply makes you a better communicator. Here are five great examples of strong professional blogs:
Joel on Software is written by Joel Spolsky, a software developer
Seth’s Blog is written by Seth Godin, a marketing consultant
Jeffrey Zeldman Presents is written by Jeffrey Zeldman, a web developer
DennisKennedy.blog is written by Dennis Kennedy, a lawyer
Doctor David’s Blog is written by Dr. Davide Loeb, a pediatric oncologist

Compliment others sincerely. If someone does something well, compliment them, and do it sincerely. Most people go through the drudgery of their workday and their daily life without realizing that people sincerely appreciate their efforts. Thank people for the effort they put out for you, from the company president all the way down to the janitorial staff. Thank the administrative assistant who helped you get your paperwork filed. Compliment the person at the beauty salon who just got an excellent new hair style. I even go so far as to tell people that I see on the street that they look beautiful today or that they’re wearing great clothes (“I love that jacket!”). Even if it gets you nothing more than a thank you, you’d be shocked how often such things come back around in the long run.

Participate in social groups where you have a high likelihood of meeting new people. Find a group or two that match your interests or beliefs (faith, community service, books, etc.) and get involved. Go to those meetings and make an effort to meet new people there. Take leadership roles.

Attend conferences and conventions with the goal of meeting people. Don’t attend conferences in order to listen to the talks. Attend conferences to meet people. As soon as you’ve decided to go to a conference, see if you can get involved in the organization a bit. Help run a session, or be a “substitute” speaker if one is needed. During the rest of the meeting, make an effort to meet people who share your specific interests and work on building the beginning of friendships with them. If you’re eating alone at a conference, you’re wasting that conference.

When people talk, listen and ask occasional questions. Most people prefer to talk about themselves and their own interests much more than listening. If you’re having a one-on-one conversation, most people tend to feel best about it when they’ve done about 60-65% of the talking. That means that you’ll almost always make for a better conversationalist if you shoot for 35-40% of the talking. The best way to do that is to just listen carefully to what the other person is saying. Watch them – don’t let your eyes wander. Ask an occasional question or two. This doesn’t mean you should be silent, but it does mean you should let the other person do the brunt of the talking.

Talk about your own mistakes before ever criticizing others. If you’re ever in a position to criticize others, always be up front with your own mistakes, foibles, and flaws. You will never come off well if you try to create an air of perfection around yourself while criticizing others. It’s never a bad idea to lead with an anecdote about a mistake you’ve made in the past, even in interview situations (of course, there you’ll want to continue by explaining how you fixed the mistake, if reasonable). Trying to come off as perfect makes you seem less human and thus criticism from you seems much less palatable. Show some flaws – you’ll come off better in the end.

The post The One Skill That Will Earn You Money, No Matter What You Do appeared first on The Simple Dollar.

My first temptation was to buy her some sort of gift to “make up” for my mistake. I know what sorts of things she likes, so I browsed through some sites and found a couple of great items that I could give her that would patch things over.

But then I came to my senses.

Buying my wife something won’t make up for a mistake I made. In fact, buying her something right now would just send a message to her that I view her love and respect as something that can be bought.

The only way to deal with a poor decision or with a marital rough patch is through communication. If your partner is upset with you, especially if you really can’t understand why, don’t get mad. Listen. Talk through the problem. Ask questions. Figure out what you can do so that the mistake doesn’t happen again. Let your partner know that you truly do love him or her, and that you aren’t a perfect person, and that you made a mistake. Then, try to take all of that into your own heart and make improvements within yourself.

Buying a gift and not talking about the problem? That just paints the wrong kind of picture. It merely shows that you view your issues as something that can be wiped away with money. And they can’t.

Fortunately, I’m a lucky enough man to have a wife who is very forgiving of my inequities. In fact, if she’s reading this right now, I wouldn’t be surprised if she were scratching her head, trying to remember what exactly I’m talking about. At least, I sincerely hope that’s the case.

Marriage isn’t easy. No relationship is truly easy. There are always going to be times when you do something stupid and rash and make someone else upset by your poorly-considered actions. What makes a relationship work isn’t how you avoid such mistakes, it’s how you handle them.

Whenever you’re in a situation where you’ve made a mistake and you’re trying to patch things up, don’t spend your time buying flowers or making grandiose promises about great things to come. Instead, remember just four words:

You can’t buy love.

Then head home, sit down, and have a real conversation. Instead of trying to buy away the problem, try to solve it with real understanding, love, and compassion instead.

The post You Can’t Buy Love appeared first on The Simple Dollar.

What is Skype?
Skype is a service that allows you to use your computer and high-speed internet connection at home to place telephone calls anywhere in the world for a very cheap price. The plan we’re testing, for example, allows us to make unlimited calls within the United States and Canada (both land line and mobile phones) and an hour’s worth of international calls each month for $2.95, plus unlimited free calls to anyone with a Skype account and their computer turned on. If you want to buy an entire year’s worth, you can get a year’s worth of unlimited free long distance in the United States and Canada for $14.95.

It’s not a scam, it’s completely legit. Skype just uses the internet instead of the telephone system to send phone calls.

Wow! Are there any drawbacks?
There are several, and their severity depends on your situation. For us, they’re pretty minor.

First, this service only allows you to make calls out. For calls in, you have to pay for an additional service, called SkypeIn, that gives you a phone number. Calls to that phone number will pop up on your computer like an instant messenger window – you just click answer and you’re good to go.

Second, you need a microphone of some sort to hear your speaking. I originally used an old Bluetooth headset (headphones with a voice mic that connected easily to my computer), then later I started using a webcam for this purpose. The point is you need some sort of microphone to pick up what you’re speaking and speakers or headphones to play it back to you. Yes, this would mean you’d sit at your computer and carry on a conversation near it without an actual telephone. If you want to actually use a telephone-like device, they make those as well, but there’s an additional cost. We have one and it works well throughout our house – it pretty much functions like a normal telephone.

Third, the voice quality is almost always great, but sometimes breaks up. It depends entirely on the quality of your internet connection. I have never had a call break up at all, but others with low-speed connections or poor internet providers.

So what would be a good setup to replace my home phone?
First, you need a high-quality internet connection. If you can’t just get internet without phone in your area, then Skype won’t really benefit you unless you’re making a lot of long distance calls and would just use this to save on long distance. If you can get internet without phone, that’s an even bigger bonus for using Skype – you save money automatically each month. Your internet connection must be a fairly high quality one, though, or else calls will be choppy. One way to try it out is to download Skype and play with the free service to see if it works for you.

Second, you need a method to speak and receive the voice data from Skype. This means either a microphone or webcam and computer speakers or headphones or a wireless Skype phone (like this one). Hopefully, you already have at least one of these options.

Third, you actually need the Skype program and an account there – it’s a lot like instant messenger, so if you can use your instant messenger program, Skype’s not hard to figure out. It’s auto-detected every device I’ve tried to use with it without skipping a beat – I just ran Skype and it identified the items.

Fourth, unless you have a very expensive Skype-only telephone, Skype requires your computer to be on and connected to the internet. That means there is an energy cost. You can mitigate this by using some clever tactics to reduce home computer energy use, but if your computer’s not on, you can’t receive or make calls. That’s a varying-level drawback depending on your lifestyle.

If all of these requirements fit you, Skype can save you quite a bit of money even just on long distance charges or minutes on your cell phone. If you’re around the house and have a strong internet connection, it’s essentially unlimited long distance to the United States and Canada for $14.95 a year – that’s a great bargain.

Are you using it?
Yes, indeed. My wife and I have started using it a lot at home. I’m sold and am ready to drop our land line to use only Skype, but my wife isn’t quite there yet, mostly because it seems like such a strange concept and she wants a longer test period – plus, she’s not used it nearly as much as I have. My calculation is that this drop will save us about $45 a month when we actually go forward with it, which I believe is just a matter of time until my wife is comfortable enough with it (I’m letting her make the call entirely herself, based on her own judgement – she knows I’m ready to switch, so we’ll switch when she’s ready).

Skype is an option well worth considering, especially if you’re a heavy phone user. Each situation is different, but if you have the things necessary (most importantly, a high speed connection at home), you can eliminate a land line and/or save a lot of minutes on your cell phone package by using Skype.

The post Some Notes on Our Experience with Skype – And Why It Will Work for Some and Not for Others appeared first on The Simple Dollar.

For my wife and I, these discussions started about a year before our wedding. We just talked casually about things, such as merging checking accounts and saving a lot in our supplemental retirement plans. We mused about kids a bit, with a general consensus of waiting for a least a year after our wedding.

Big mistake.

For most of the first few years of our marriage, our financial planning and organization was chaotic at best. We were often doing things in completely contradictory ways, like making separate grocery lists and both shopping on our way home from work, or refusing to budget or merge checking accounts because we both wanted control. We made the mistake of not talking these issues out and figuring out a way to make things work for us and, as a result, we created our own fallow earth where only seeds of financial disaster could take root.

Here’s what I wish I had done.

Figuring Out the Right Time to Talk
There is no simple rule to determine the exact moment to have that first financial heart to heart. The real key is figuring out when the time is right for you. Here are some indicators that you should schedule that talk sooner rather than later.

You’re personally holding off financial plans because of the other person. For example, are you thinking about buying a new car, but are waiting to see if the relationship progresses before making that choice? Are you thinking of moving to a new apartment? Maybe you’re even postponing an important decision about your career. This is a sign that on some level you’re thinking very seriously about the long term with this person, and that means it’s time to start talking about that long term.

You’re left feeling uncomfortable on a regular basis by the other person’s financial habits. Does your partner spend more than you like? Is he or she too much of a tightwad? Does that person not take the appropriate time and effort to manage the details, like making sure that overdrafts don’t happen? If these issues are cropping up and bothering you, it’s time for a talk.

Your spending and your partner’s spending are less coordinated than they should be. This is something that was a clear warning sign for my wife and I as we got closer. We’d both stop on our way home from work and buy milk, winding up with two gallons in the fridge (and one usually going bad before it was finished). We’d both buy stamps. We used to have to pay rent at an office and, more than once, we both went to that office and paid rent or the month. This is a sure sign that something’s out of whack and it’s time for both of you to get on the same financial page.

You’re about to be faced with a major financial issue or milestone. If your relationship is serious and you’re about to be met with a major crisis, like an impending pink slip, a huge financial settlement, or a job offer in a faraway place, now is the time to have a serious talk with your partner about your shared future.

You’re about to make a lifelong commitment to each other. If nothing else has triggered a money talk, an engagement ring should. If you’ve committed to marriage, one of the first things you should work out about your future lives together is how the money should work.

Do Some Prep Work
Don’t just sit down at a meal with your partner and say, “Let’s talk about money.” That’s not fair to either one of you, and you’re likely to come out of such a discussion at least as unclear as you were before. Here are some tips for making it work.

Do some reading first. If you’ve never read a David Bach book, Smart Couples Finish Rich is definitely a worthwhile read. Head down to your local library and check it out, then encourage your partner to give it a read, too.

Compile your own “financial balance sheet” and have your partner do the same. Get the balances on every account that you hold – both debts and savings – and make a list of all of them. Subtract your debts from the money you have to get an estimate of your net worth. This is a great way for you to get in touch with your real situation, and having the opportunity to show this to your partner – and have your partner do the same – will be a really valuable eye opener for both of you.

Schedule time. Plan for a couple hours (at least) for you to talk about things. Don’t do it impromptu – give yourself and your partner some time to get the needed information together and to spend some solitary time thinking about goals and desires.

Make a list of the stuff you want to cover. Both of you should do this, making separate lists. Think of every money question you have that concerns you and write it down, then use that list as an effective agenda. Your partner should do the same – just list out everything, then use it as part of the agenda for the talk.

Tips on the Talk Itself
Most of the general tips for a talk with one’s spouse also apply here:

1. Start off talking about goals.
2. Admit your own mistakes.
3. Look your spouse right in the eye, and hold their hand.
4. Be goal-oriented.
5. Look at numbers – but don’t judge.
6. Be fair. If/when your spouse admits to overspending, don’t blow up at them.
7. Create goals that you both agree on.
8. Create plans to reach those goals.
9. Agree to talk about it regularly.
10. Do something romantic afterwards.

Since this is really the first time you’re talking about money in a serious way, a few additional tips are in order.

Figure out who the “money leader” should be. In most relationships, one person is usually responsible for making sure the bills get paid on time and other such basic financial tasks. Figuring out which one of you will do that early on will save a lot of pain later.

Lay your complete financial situation on the table. Yes, even that credit card debt you haven’t mentioned to your partner yet. Everything. Soon, you’ll be in a situation where a windfall can lift you both and a debt can sink you both – be open about all of it.

If you don’t understand, ask. The key to a good relationship is good communication, and if you can’t ask questions about things you don’t understand, you’re revealing another potential problem. Don’t hesitate to ask a question if you’re seeing something that doesn’t add up.

Talk about the major financial obstacles that you see in the future. Where do you want to live? In what kind of domicile? Do you want children? Do you want to retire early? Do you want to work independently? What things do you envision for your future that will affect the life choices both you and your partner will have to make? Lay it all out there and just flesh it out – the conversation will lead itself.

Go through all of the questions you prepared in advance. Those questions will lead your discussion in healthy directions – follow where they lead you.

Don’t walk away with hurt feelings. There are a lot of ties between money and emotions, and you’re probably going to get your hackles raised more than a time or two during this talk. Afterwards, do something together that’s very separate from the topic as a way to heal. Just spend some good, quality time together and don’t let any hard feelings that came up during this talk fester into something worse. Work through them, and remember that you do love and care for this person even if you’re not on the same page yet when it comes to money.

The post The First Money Talk: The When and How of a Conversation Every Couple Needs to Have appeared first on The Simple Dollar.

Given all that, I can tell from conversations with her that, to a degree, she’s lost right now. I am the only person in her extended family that went to college and got extensive exposure to a life outside of our hometown. She has that same mix of introspection and intelligence and parochial attitudes and thoughts that I see in my own writings from my high school years, and though I made a lot of good moves from there, I made some bad ones, too.

I’ve decided, then, to have a talk with her over the Christmas holiday. Rather than doing the typical “preachy” thing, I’m going to basically talk to her as though she’s an adult and preface it with the simple fact that I recognize that she will probably make it “out,” too, and let her know that I think the world is her oyster.

Here are the points I want to hit.

Listen to your heart above all else when deciding what to do. Your mind’s job is to mold your heart’s desire into something great, but without that desire and passion, nothing will happen. If she enjoys math as much as she seems to, she should give mathematics a try in college. I allowed myself to get talked out of that very major by people who were under the stern belief that I couldn’t “do” anything with it – and I’ve regretted it ever since. If you know what you’re passionate about, just follow that – your passion will make you great at it and your mind will figure out how to make a living with it.

Debt will become your prison if you let it. The only way you’ll live your dreams is by spending less than you earn from day one. Never, ever get trapped into “needing” some sort of consumer item – it will come to you eventually if you really want it and keep up with the “spend less than you earn” philosophy. What’s the big payoff? When you’re in your thirties, you’ll be riding high without a worry while everyone else on your block will be drowning. If you hate your job, you can quit – the rest of them will be trapped in place.

You will make mistakes – don’t make them into excuses. Everyone’s going to mess up a time or two – I know I sure have. The danger, though, is to use that mistake as a crutch or an excuse to not do your best. When you mess up, admit to yourself and anyone else you need to that in fact you did mess up, and figure out exactly what you can learn from it, then move on with life. You’ll do so much better at every avenue of life if you do things that way instead of passing the buck.

Be nice to everyone, even the people who seem “below” you. What goes around comes around, and thus the more kindness you share with others, the more it will come back to you. Reject any urge to belittle or be snarky towards others and find ways to compliment them and lift them up. If you take a moment to lift the spirit of someone and do it regularly, it will come back to you in some way that you likely cannot foresee.

The highest paying job is rarely the one you want. In my life, the higher the salary, the more stress and responsibility the job has brought to my life. Each person has a different sweet spot in there, but I’ve rarely seen a person whose best fit is the highest paying, highest stress job. Salary isn’t everything – don’t just go for the job that pays the most. This is even true right now, in high school – the most useful and valuable ways to spend your time are likely on a volunteer basis.

Will it matter right now? Probably not. What I hope for, more than anything, is that at some point afterwards, something I’ve said will click in her mind and she’ll make a better choice than I did, and that alone will have made our conversation worthwhile.

The post A Talk With My Niece appeared first on The Simple Dollar.

One of the most difficult topics to discuss was money issues, largely because of the taboo nature of it. In fact, it took us years to break down that final wall, even though we had found a very strong and deep comfort level when it came to other topics, and we both found that when we finally started communicating about money, it was incredibly valuable.

What did I learn from this experience? Without a doubt, it is far better to talk about money sooner rather than later when your relationship gets deeply serious. Here are some guidelines – and some specific topics to discuss – for when the time comes to talk about such things. You’ll be glad you did.

Before You Get Started…

First of all, realize that total honesty is the only answer here if you expect to have a long, lasting, and loving relationship. Once you finally get up the courage to address these issues, don’t hold anything back. If you find yourself biting your lip or tucking away a little piece of information or two, you’re creating a relationship of mistrust. I’m not talking about things like not telling your partner about their Christmas gift, either – it’s rather obvious where the line is in this case.

Expect some disagreement as well. You’re likely going to have very different feelings on how money should be handled in your relationship. If you find yourself being truly honest and meshing well, consider yourself lucky. Very lucky.

Don’t expect to answer these questions immediately, either. Often, fundamental financial decisions aren’t made in an afternoon. If something seems like it’s building to a serious disagreement and you’re not making any progress, let a few weeks pass before talking about it again. During that time, try hard to see the situation through your partner’s eyes and understand why they want things to be that way.

For some couples, these topics might be very easy and you might find that you’re both in very strong agreement. For others, each question might be grounds for conflict. Likely, you’ll find yourself somewhere in the middle, and that’s perfectly normal and healthy.

Twelve Things To Talk About

Where do you see us being in five years? Ten years? Twenty five years? Try to flesh out as much as you can here, but realize that the future isn’t set in stone. The reason for discussing this is so that you have some idea what the dreams and the goals look like for each other.

What does our complete financial state look like? Lay everything out. Every debt. Every drop of income. Everything. Don’t hide that $4,000 credit card statement, as you’re just building a foundation on top of a lie.

Should we share our money or maintain separate accounts? Who should be the primary caretaker of the accounts? Many people will argue that any married couple should combine all accounts – my wife and I did not come to that conclusion. Talk it out and figure out what’s right for you.

When do we intend to make major shared purchases, like a house? How much do we intend to spend on such a purchase (roughly)? This is one area where people often just assume that their partner sees things the same way that they do. It’s not true. My wife and I, for example, had very different views on when a house purchase was appropriate, and my wife was ready to buy three years before I was even willing to consider it.

Are children a possibility? Although this is a very deep emotional decision, it’s also a financial one as well. Make sure you’re on the same page when it comes to children, because while having a child is a deeply fulfilling endeavor, it’s also a very expensive one, often more expensive than people without children even realize. It also means some significant lifestyle changes, too.

Are we both committed to our career path? Sometimes, the support of a spouse provides a strong situation for one member of a marriage to make a career leap they would not have otherwise considered. This is a great discussion point.

Are we both saving for retirement? When’s the retirement target? This was one financial issue that my wife and I talked about quite a bit before we were married, especially since we both were already putting away a substantial amount into 401(k)/403(b)s. Just make sure that you’re both aware of what the other is doing and that you realize that without putting money away for that inevitable day, you likely will never retire.

Do we want an urban, suburban, or rural life? You might think the answer is self-evident, but it’s often not. Take Kathy’s story from a while back – she and her spouse at first thought urban living was self-evident, but after getting married, they began to talk about things and realized that perhaps it wasn’t the obvious answer that they thought it was and then began plotting a move to a much more rural setting. If they had talked things out first, they might have moved rural right off the bat, saving themselves substantial time, money, and happiness.

What’s our financial risk tolerance? Can we tolerate short term losses to aim for long term gains? For some, losing some money in the short run is completely fine if it means some years of 20% returns down the road. For others, watching the balance of their investments drop like a rock over years is just too painful. Figure out where you’re both at on this, so that if you make investments from your shared money, you don’t wind up with your money in something far too risky for the other person’s tastes – which can result in a very bitter conflict.

What’s the balance between work and leisure? Some couples might consist of two people that are very career-oriented. Other couples might consist of people who could care less about a career, or perhaps some mix of the two. The only problem comes about when one person’s expectations completely miss the behavior of the partner.

Is a prenupital agreement appropriate? Is one of you bringing far more into the marriage than the other, or expecting to earn far more than the other during the marriage? You may want to discuss a prenupital agreement, but there needs to be an air of honesty here – if you feel one is useful, don’t hold back in saying so.

Are there any known burdens that will likely crop up in the future? For example, does one of you have an ailing parent that may need special care? What about dependent pre-existing children? Do one of you have a major illness that may start showing symptoms? While these are not usually make or break issues, they often provide the basis for some deeply insightful conversations.

Two Books Worth Reading

I strongly encourage any couple that is considering spending their lives together to take the time and each read Your Money or Your Life (the book club of YMOYL might be very useful) and Smart Couples Finish Rich, but do it together. I recommend that each of you read a chapter, then discuss it together.

One technique my wife and I found useful was reading a chapter of such a book aloud on long car trips, with the passenger reading and then both partners discussing the topics. We would just stop and start talking whenever an important point came up, and we wound up discovering a lot about each other.

No matter what you do, though, don’t put off these conversations. They can be the key to establishing a strong foundation for your relationship and building a much stronger understanding of each other. In fact, if you’ve never opened such a door with your partner, today is the best day to do it, because tomorrow it’s very easy to find a reason to put this off.

The post Twelve Important Things To Talk About When Your Relationship Gets Serious appeared first on The Simple Dollar.

I’m still repairing my own finances (I’m out of debt but still working on retirement, I don’t yet own a home though I am 34)… but my parents have NO health insurance and NO retirement funds whatsoever. How does one prioritize such a thing? How would I prevent my parents’ continuing disaster of a life from undermining my own progress? How should I protect their meager assets (one house, no cars, no stocks, no bonds, no savings account, $10,00 cash) from the state before something befalls their health?

This is a situation where the raw financials of the situation rub strongly against cultural and personal values, and these values are going to be vastly different not only from culture to culture, but from family to family. Because of that, advice that would work for one specific family may create enormous problems if directly applied to other families.

Regardless of your family, there is a general framework of things that you can do to help everyone get on the same page that I discussed in detail earlier:

Don’t be angry. Quite often, parents will make statements and suggestions that provoke a sense of anger in the child, even if that’s not their intention. If you find yourself getting angry during this talk, look like you’re thinking, count to ten, and then ask yourself why exactly you got angry. Usually, it’s defensiveness, so ask yourself what you’re defending and why. In many cases, you’re defending a paper castle, something that you’d be better off revealing than hiding.

If their attitude makes you uncomfortable, ask questions. If they appear superior and condescending, ask them calmly if they’ve ever been in an awkward money situation before and how they dealt with it. Ask them how they would deal with your situation given that the past can’t be changed. Do it calmly and rationally above all, because anger is the one element that will cause this conversation to collapse.

Be completely open. If you are hiding things, you will only make things worse. Your life doesn’t have to be an open book, but if something is relevant to the topic, be open about it rather than hiding it. Not only will this answer more of your questions, it will encourage your parents to be more open as well.

Don’t be combative. Don’t enter into a financial conversation perceiving it to be a war, with ground gained and lost. Instead, look at it as a situation to personally improve yourself. The only way people win in conversation is if they gain a greater understanding of the issues discussed, not if they “win” or “lose.” Thus, quite often there’s nothing to argue or feel resentment about.

Ask lots of questions. The most valuable thing you can gain from a conversation is a resolution to the questions inside of you, so ask every question that comes to mind. Not only will you receive answers, giving others the chance to talk and say what’s on their mind will make them more calm and collected as well.

In addition, if you expect the talk to be difficult:

Figure out how you actually feel. Clearly, the reader above has some emotional ties to the situation that are quite messy. “Continuing disaster of a life” is a phrase that indicates some pretty strong negative feelings, and those feelings should be clarified. What do you feel is the right thing to do? If you’re harboring feelings contrary to your stated position, it’s going to be very hard to communicate well and communicate fairly with your family. If you believe something needs to change, have the courage to say so or don’t bother at all. That doesn’t mean you should be rude, merely that you should speak in a way that matches what you actually think is right.

Check your ego at the door. If you’re going to be honest, everyone needs to check their ego at the door. There is going to be some criticism in the air, and if people are adamantly holding onto their pride and their ego, not much will be accomplished.

State your expectations. The best first step to take is for everyone to state what they expect from everyone else. What do you expect from your parents? Financial independence? Planning? What do your parents expect from you? Financial support in their dotage? Likely, these expectations won’t match up and that’s the reason this conversation is happening at all.

The post Parents And Finances: An Uneasy Mix appeared first on The Simple Dollar.

Here’s the process we intend to follow when switching to Verizon; it may be helpful for you in your own cellular plans.

Use your old bills as a basis for what you’ll do in the future. Looking at the last six months of our old bills, it became clear that we are paying for far too many minutes and so we’re looking for a lower-minute plan for our next purchase.

Do the research before you leave. Visit the websites of major providers and know what their plans are before you leave. You should especially know what sort of options you will want on your plan and which ones you don’t want, because salesman will often throw on services you don’t want if you don’t explicitly tell them that these are the only options you want. Also, have some idea of the phones available and what you want.

Know what you want before you walk in the door. For example, we just want a basic calling plan with only a relatively low number of text messages, because that’s what we use now, and also the ability to access a small amount of web data (limited data transfer, for Remember the Milk, for example). We also need new phones, but we don’t need high-end ones or Blackberries or anything like that.

Specify EXACTLY what you want and don’t want in your plan. Make it clear what you specifically want in your plan as soon as you begin talking, then tell them you’re going to browse the equipment for a bit. Why? This gives them a bit of time to think about their commission before you finish off the deal.

Don’t bother negotiating on the service plan. Plan prices are set by the national provider and local stores simply don’t have the option of negotiating with you, so don’t even waste their time. Instead, look for stuff you can ask for instead, like…

Ask for lots of other stuff. Ask for your activation fee to be waived. Ask for some free (or at least reduced) equipment. Since the salesmen typically don’t earn a commission on the equipment, they’re often happy to give a discount in order to seal the deal and get their commission from the plan. They’re going to be thinking “easy commission,” so take advantage of that mindset to get cheap phones.

This is almost exactly what we did when we first signed up for a cell phone service and we ended up getting no activation fee, all of our phones for free (they weren’t low end phones, either), and a few random items in the store for free, too. The guy behind the counter was about ready to explode with desire for getting his commission, so he was waiving everything and giving us all sorts of goodies just to get his commission on the plan we were purchasing.

The post Six Things To Do When Shopping For Cell Phones And Service appeared first on The Simple Dollar.

What are wants and needs? In a nutshell, needs are the things that you absolutely have to pay in order to live and avoid bankruptcy: housing payments, taxes, groceries, commuting costs, and so on. Wants are the things that you spend money on that you don’t explicitly need, like dining out or music.

As a rule of thumb, my wife and I allow each other a certain amount of wants in a given month, because life isn’t fun if you can’t have anything that you want. My wants are usually books, food, and occasionally music; hers are much more varied. By capping our wants at a reasonable level each month (and also with the peer review process on such spending), we often find ourselves saving quite a bit of money each month.

The tricky part is determining whether some of your spending is a have or a want. For example, let’s say we have beef burgundy for supper and in order to make it, we have to buy a new bottle of cooking wine (we generally buy pretty cheap wines for cooking wines, like “two buck Chuck”). It’s not explicitly a need, as you can prepare food at home without it, but it also really stretches the definition of want as well, as things like cooking wine enable us to prepare delicious meals at home that encourage us to eat at home instead of getting takeout or eating out, so in the long run buying a bottle of cooking wine is a money saver for us.

Here’s the process we go through to determine if something is a need or a want:

First, we list all of our spending that isn’t strictly essential in a month. Things that are essential are housing bills, most gas costs, staple foods, medical bills, insurance, and so on. These are things that we have to pay no matter what.

After we’ve made that list, we list everything that’s clearly a want. Entertainment and hobby expenses, dining out, and so on go under this category and immediately go on the want list.

This leaves us usually with a handful of things that we talk about – things like the cooking wine and so on. This process is more organic, but it usually comes down to the following question: would we have spent more money than this had we not purchased the item? With a bottle of inexpensive cooking wine, the answer is usually “yes,” because we likely would have eaten out more often without tools like that in the kitchen, thus costing us more in the long run. We use a similar philosophy to mark things such as CFLs as needs.

After this process, reviewing the list of wants helps us keep our eye on the financial ball each month. We usually strive to keep ourselves within our self-imposed allowance – and thankfully, we’re both usually way under the limit.

The post Separating The “Wants” From The “Needs” appeared first on The Simple Dollar.

In short, If you want a healthy and financially sound marriage, get over your hangups about talking about money. Don’t ever be afraid to sit down with your spouse and go over the nickels and dimes of your life. Make sure you define your goals together as a team, not separately. And make sure that you have compatible philosophies on discretionary spending – if your partner spends far more or far less than you’d like, it’s going to cause some discomfort and you need to clear the air.

Along these lines, a reader wrote to me recently with the following problem (edited a bit for grammar and clarity):

My future wife and I are generally on the same page when it comes to finances. We have the same long term goals and she is by no means a rich girl. But with that being said, when she sees a little extra in the joint account, she spends it… I don’t want to go behind her back to sock away a little cash but it may be the only way. Any ideas?

When you dig right down to it, this is an issue about communication. Even though you’re both generally on the same page about financial issues, there’s apparently a communication gap somewhere about what to do with extra money. Here are some potential solutions, some of which I like and others I don’t.

Forget about it. If it’s an insignificant amount, this might be the best avenue. Allow your partner the joy of having a little bit of spending money and just let things be. The only problem with this is if the spending seems to grow over time, which means that there’s a fundamental problem.

Take the money and put it somewhere else without saying a word. This solves the financial problem, but does nothing at all about the communication problem. Eventually, these withdrawals will come out, and it will cause a problem. Why? By doing this, you’re showing a lack of trust with your partner.

Have an open ended conversation about it. Here we have the opposite situation, as this solves the communication problem but merely hopes to solve the financial problem. The talk might help to alleviate some of the communication problems and really help to get your financial perspectives more in alignment, but there’s no guarantee of a solution.

Set an “allowance” for both of you. Another possibility is to set a spending “allowance” for both of you. Start off the conversation on the issue with this proposal. Although this does solve the problem if you both stick to it, when I first proposed this to my wife, it was met with heavy resentment and a sense that I was treating her like a child. If you try this, you need to be very careful.

If I were you, though, I would try this solution. Set up an automatic savings plan into an emergency fund, then don’t sweat the rest. If you’re finding yourself with regular “excess” that can be spent on trivial stuff and it’s making you uncomfortable, suggest sweeping some amount each week or month into an emergency fund automatically. Then, if there’s still some left over, don’t worry about it and just enjoy spending it. What will happen over time is that you’ll subtly adjust your own life to compensate for this extra savings.

Good luck!

The post We Share A Joint Account… But I Don’t Trust My Partner’s Spending Habits appeared first on The Simple Dollar.

Let’s say hypothetically that I’m sitting at work in the greater Des Moines, Iowa area and I want to pick up a delicious pizza from Papa Murphy’s on my way home from work. Unfortunately, though, I can’t call out from work to non-business numbers, though I can receive phone calls. Ah-ha! I go to Google Maps, type in “Papa Murphys West Des Moines IA and see the following:

See the “call” link I have circled in red? If you click that link, you’ll be asked to enter your telephone number. As soon as you click submit, your telephone will ring. Pick it up, wait a few seconds, and you’re connected for free to the business. No charges to you at all, and no outgoing call charges. This is spectacularly useful if you have any sort of long distance charges or if you have outgoing call charges on your telephone, whether it be a land line or a cellular phone.

In general, this technique seems to work for most businesses – I have used it to call dozens of businesses in the last several months and I can only recall one that was not listed using this service. It has been very useful for making restaurant reservations, calling businesses to check on their hours, and so forth. It’s a great way to utilize whatever phone is handy to make calls without eating away at my cell phone minutes and without being dinged for outgoing call charges.

What’s the drawback? So far, I haven’t found a drawback – it’s not always useful, but quite often it can save me some cash.

The post Using Google Maps To Get Free Phone Calls appeared first on The Simple Dollar.

Here are nine social skills you can practice throughout your day that will open all kinds of little doors for you and eventually lead you to financial rewards as well.

Look people in the eye. Whenever you have any sort of interaction with anyone, look them directly in the eye and hold it for just a second or two – don’t let it devolve into a stare. If they return the look, you can hold it for a bit longer. This is a quick way to subtly show the other person that they can have confidence in you.

Smile. Smile at everyone. Smile when you’re looking someone in the eye. Always smile at anyone providing any service to you. Always smile at children and the elderly. If you do it enough, it begins to come smoothly and naturally. This is a quick way to lift the mood of the others around you, and thus they begin to associate you with the positive mood lift.

Remember as many names as you can. Every person loves to hear their name said back to them, because it’s a sign to them that they have value to someone else. Thus, by saying someone’s name to them in a greeting, you’re showing that you remember and value them as an individual. Try as hard as you can to pick up names quickly and then use them when you greet them upon a second or third interaction.

Offer greetings to anyone and everyone. A well placed “good morning” or “good afternoon” can often make all the difference in the world. It innately creates a sense of goodwill in the other person. For example, if you’re starting a new job and can manage to come in the front door, greet the administrative assistant, and say something like, “Good morning, Mike,” you’re already on your way to establishing a healthy and positive relationship with that person.

Ask questions. If you are like me and often have a hard time starting a conversation, ask a question, even if it’s something as generic as “What’s new?” This allows them to feel welcomed into a conversation with you, breaking down any potential barriers. If you can remember a fact or two about the person, this is almost always good fodder for a conversation opener: there’s one person in my office who enjoys the television series Lost, so I often use it as a conversation opener with him by saying, “Did you catch Lost the other night?” This makes people feel comfortable in conversation.

If you don’t know what to say, ask another question. You can usually build from anything that has previously been said with another question. This enables the other person to continue talking, and for most people an invitation to talk and an open ear means that they are being welcomed. That doesn’t mean you should just sit and ask questions, but that if you are completely stuck, ask another question.

Talk about your own mistakes. When conversing with someone regularly, I find it is always useful to eventually admit to smaller mistakes of my own. Mistakes make you appear human, and thus the thing you relate about yourself should regularly include imperfections. If the other person sees you as human and having small faults, you will seem more real and thus they’re more willing to accept you and include you. Keep the mistakes small and real, though; don’t suddenly say something like “Once, I ran the lawnmower over the cat.”

Take an interest in what is important to them. If the conversation starts to go down a path that you know nothing about, don’t withdraw. Instead, admit you know little about it and ask them to explain. Most people eat this up because not only do they get to talk about something familiar, but they get to relate from a position of superior knowledge, which is something many people enjoy. Even if the topic is boring to you, pay attention. Look at the person, smile, and nod. What I do is try to formulate connections to things that do interest me, like if I hear a woman go on and on about her purse, I try to make connections to personal finance and ask something like, “Where did you buy that?” and so on. This makes it appear as though I’m interested in what she’s interested in, but I’m also attempting to leverage my own interests.

Keep clean. I can’t stress this enough: cleanliness is one of the biggest keys to successful social encounters. It makes you appear in a more positive fashion to everyone around you.

The post Nine Social Skills To Practice – Even For The Socially Unskilled Like Myself appeared first on The Simple Dollar.

What value does this have? A letter is very concrete and can be used as evidence of information exchanged between two parties. To a business, a letter means business in a way that a phone call or an email do not. If you need to get your point across and telephone calls aren’t cutting it, a letter is the way to go. Sadly, fewer and fewer people are using this tool, which actually makes the power of a letter today even stronger – it means pay attention even more than before.

When should I send a letter? A letter should be used whenever you have difficulty achieving the resolution that you want by telephone or by electronic communication. For example, if you have bill collectors calling you day and night, the most effective way to ask them to stop is by letter requesting that all contact be in writing (along with a copy given to your lawyer). Another example: if you’re ever disputing a bill, a letter is the best way to get your case across, as an individual who is not serious enough about a dispute to send a letter often won’t get the resolution they want. In both of these cases, a well-constructed letter is the way to go.

What should a formal letter contain? If you are writing a formal letter for the first time, here are the basic elements (along with suggested placements) for what the letter should look like.

Your address should appear in the upper left corner of the page, followed by an empty line, followed by the address of the recipient. This way, the contact information is clear for both parties.

After this, skip another line, center the text, and write Attention: followed by the name and title of the person you are contacting. For example, if you’re writing to Jim Nolan, VP of Customer Relations at a company, this line should be “Attention: Jim Nolan, VP of Customer Relations” … the company name should be understood. Also, this is the only line that should be centered; everything else should be aligned to the left.

Skip another line, then start off with an appropriate address: Dear Mr. Nolan (or Ms. Nolan in the case of a female recipient).

Skip yet another line, then begin your main letter. Keep it brief and stick to the facts; don’t write a ten page tome or else no one will read it. Start off by clearly stating the issue at hand with dates and other specific information, then in another paragraph state the resolution that you wish to see. A final sentence should give information on how to contact you, something like “I can be reached at the address given above or by telephone at …”

Finish with a “Yours truly,” then insert three blank lines, then type your name. After you print it, sign it in pen above your name. Put it in an envelope and send it out.

The post How To Write An Effective Letter – And Why You Should Do It, Too appeared first on The Simple Dollar.