As I began to get my financial situation under control, I began to find a few new problems.

First and foremost, even though I knew it made sense to start saving money regularly, actually making myself do it every week was a trick. I would often forget about it, or I’d talk myself out of it when the time came, convincing myself to throw it toward a debt or some other goal.

Second, I was simply not very organized when it came to bills. I’d get a bill in the mail and put it in a place where I’d hopefully remember it when it came time to pay bills, but even then, bills would sometimes slip through my fingers due to simple forgetfulness.

Thankfully, I found a very simple solution to both problems at once.

Bank on Autopilot
To put it simply, I began to trust my bank to handle both of these things for me.

Of course, in order to actually do this, you must have a bank with a robust online banking system. You need the ability to pay bills directly online as well as establish account-to-account transfers online. I use ING Direct, which allows both quite easily.

The first step I took was to simply set up an automatic weekly transfer from the primary checking account to a savings account. At first, it was a small amount, but over time it grew and grew. Eventually, I added transfers to other savings accounts for other goals, transfers for my children’s 529 accounts, and so on.

The key is to start off with small amounts that aren’t disruptive to your regular finances. You don’t want to start off with an amount that will force you to stop the transfers because of inadequate funds. Start with a small amount, then build from there.

Many people are hesitant to even start because they’re afraid of overdrafting. If that’s your concern, then the problem isn’t with the automatic transfer. The problem is with other money management choices in your life – bad spending decisions and so on. If you’re not willing to save for the future, your life will always be like the present.

The second step was to automate regular bill payments. Right now, I automate almost every bill we have save our energy bill and our cellular bill. Every other bill is a regular amount, so I have our bank set to automatically pay these amounts on a schedule. I don’t have to lift a finger for our mortgage payment, our insurance payments, our trash removal, our water and sewer payments, or anything like that. It’s all automatic.

Both of these moves contributed greatly to my personal finance success. The first one pushed me to start building a strong emergency fund and, eventually, to save for other goals. The second one helped me to get more efficient with my bill paying tactics, leaving late bills in the dust.

Simple moves, big improvements. That’s the kind of personal finance that can change a life.

The post Eight Minutes to Financial Success – Minute #8: Bank on Autopilot appeared first on The Simple Dollar.

At the low point of my personal finance situation, I spent a long night sitting with my infant son in a dark room, wondering what would happen next. It was during that night that I realized I was failing that poor child and that I needed to start making better decisions with my life.

It wasn’t just my son, though, that convinced me to follow a different path. My wife played a huge role, as did the children we had later on. My close friends played a big role, as did my parents.

It was the sum of all of those relationships that pushed me to make some major changes in my life. It was not a matter of wanting to disappoint them or to make them proud. It was my desire to always hold up my own end of the bargain that was my relationship with each of them.

Bankruptcy and financial despair did not equate to me holding up my end of those bargains.

Who Do You Love?
The real value of this understanding came from looking seriously at my life. Who were the people that genuinely cared for me? Who were the people that I was genuinely responsible for? In other words, who were the core people in my life that I truly loved and who truly loved me, and what did that really mean?

It’s an interesting question, isn’t it? What does it mean to have someone out there that you really care for – and that really cares for you? Your parents. Your spouse. Your children. Your closest friends. What does that relationship actually call you to do in your own life?

As I thought about each of the key people in my life, I began to see that, over and over again, improving myself improved my relationships with each of those people.

Improving my financial situation helped me to provide for my children and helped me to make a better life for my wife. It also helped me to add to the long-term sense of security felt by my parents.

I could make similar statements about various other aspects of life, from improving my own health, improving my own attitude and social skills, and so on. In each case, self-improvement led to better relationships.

How do you start down that path? Put aside a moment and make a list of the people you genuinely love – and you know genuinely love you. It might be a long list, or it might be a very short one. In either case, simply write down those names.

Now, look at each of those names and think to yourself how that relationship is improved simply by your improvements in managing your finances. You’ll be surprised how many good things simply come from this one personal change. You can also look at that list through the eyes of any other personal improvements you want to make.

For me, I found great value in putting pictures of those loved ones in key places, like taped to the bottom of the rearview mirror in my car or wrapped around my credit cards. Seeing those images would remind me of my relationships to these people – and how those relationships benefit from sensible personal finance choices from me.

The post Eight Minutes to Financial Success – Minute #7: Who Do You Love? appeared first on The Simple Dollar.

My weekend planning has always followed the same general structure (at least since I graduated from college). I’ll sit down with Sarah on Friday evening, we’ll throw a few ideas off the top of our head, we’ll pick one or two of them, and that’s what we’ll do. Saturday and Sunday follows that same general structure, though Saturday’s options usually revolve around chores.

Before my financial recovery, the options we’d throw out were often expensive ones. “Let’s go golfing Saturday afternoon.” “How about we go over to Jordan Creek on Sunday?” (Jordan Creek being the relatively expensive shopping area in the Des Moines Metro.) “How about dinner and a movie on Saturday night?”

The problem was that by just relying on the ideas that came off the top of our head, we were by default preloading ourselves with activities that were fresh in our minds from marketing. We’d listen to the radio on the way home on Friday night and hear talk of a great new movie or restaurant. I’d drive by the golf course on the way home. She’d hear an ad for Jordan Creek on the radio.

Since these happened to be the easy ideas to recall, they were usually the ones we did. It wasn’t because they were the “best” options, they were just the options that popped into our heads.

I know that my parents did much the same thing. I also know that a lot of our friends did the same thing, too.

So, what’s a better solution?

Make a Weekend Plan
The approach that works best for us is simply “pre-loading” our usual weekend activity brainstorm with activities that are free or extremely low-cost.

Of course, to do that requires both some forethought and some research. My solution to this is to simply keep a “note” on my phone that lists such activities.

How do I find them? It’s pretty easy – it’ll only take a minute or two with your web browser by just visiting three websites.

First, visit the website of your municipality’s parks and recreation department. Many cities have parks and recreation departments that have lots of free activities for all skill levels. You can also find out about trails, facilities, parks, and other such features of your community that you might not know about that are well worth exploring and utilizing.

Next, visit the website of your municipality’s library. Libraries have tons of resources available to you for free if you just step up to the plate and take advantage of them. Free books, free CDs, free DVDs, free magazines, free classes, free meetings – it’s all there, just waiting to be used.

Finally, look for the “community calendar” for your city. Just search for the name of your city in Google and add the phrase “community calendar” behind it. You’ll find a listing of great activities in your area going on in the near future, many of which are free.

Beyond that, you should try similar searches for communities near you. We often utilize resources in neighboring communities and often use things in the Des Moines area as well.

Of course, while I’m doing this, I’m usually taking some notes. Even better, I’ll do this while Sarah and I are brainstorming. Instead of merely relying on whatever half-baked ideas pop into our head, we turn instead to some options that aren’t expensive.

That doesn’t mean we don’t do anything “fun,” which is a response I often hear to suggestions like this. All we do is look at the free activities first. If one of them registers as “fun” to us – and one of them usually does – we do that. That way, we’re doing something fun without spending money.

Even better, this contributes to a sense that not spending money is the norm, and that spending money is the abnormal activity, which is also something worth demonstrating to our children.

The post Eight Minutes to Financial Success – Minute #6: Make a Weekend Plan appeared first on The Simple Dollar.

When I worked at an office about thirty minutes from my home, my usual daily commute took me by an electronics store, a game shop, two bookstores, a coffee shop, and a few other interesting places. Unsurprisingly, I was often tempted to stop for something on my way home, whether it was coffee, a new book, or something else. Even when I didn’t stop, simply going by those places made me think about stopping there and build up my desire to do so a little bit more.

When I started to take a real look at how I was spending my money, I began to notice just how often I was stopping on my way home from work for some sort of treat. It was a very consistent money leak – week in and week out, I was stopping off for things I didn’t really need and, honestly, couldn’t really afford.

My solution was simple. I changed my route home from work. Instead of traveling by all of those shops, I plotted a new route which took me by a hospital, through a residential neighborhood, and onto a stretch of open road before arriving home. The only places to stop along this new route for things to buy were a pair of gas stations. Not only that, the new route turned out to be a mile shorter than my normal route, so I wound up reducing my gasoline usage, wear and tear on my car, and time during a normal commute.

Amazingly, not only did my incidental spending drop rapidly, my desire to spend on many of the most common temptations dropped rapidly, too.

Reroute Your Commute
When many of us figure out a route to work for the first time, we often mentally “set” that route as the one to take every single time. Usually, it’s a route that just incorporates as much roadway as we already know, which often means that it goes by stores that we’ve shopped at before and the like.

It shouldn’t be much of a surprise to learn that such routes are usually not the optimal route, for two reasons.

One, if you’re using a route that goes through the commercial district each day, you’re opening yourself up to the temptation of spending money every day. Even if you don’t stop, you’re still subjecting yourself to tons of roadside advertising just by driving through.

Two, there is almost always a better route that will save you time and distance on your commute, resulting in some financial savings.

How do you make it happen? The process is actually really simple.

Just start up Google Maps and map your route to work. Sometimes, the route will match your normal commute – sometimes it won’t.

Either way, try to identify at least three alternate routes you could take to and from your place of work. Google Maps offers a handy feature of allowing you to “drag” the mouse pointer around and quickly adjust your route.

Seek out a route that avoids commercial areas, preferably one that also shortens your commute a bit or, at the very least, doesn’t add to your commute.

Even if your route seems relatively straightforward and not fraught with temptations, you can still gain some benefit from finding a more optimal route for your commute. If you can shave one mile off of your daily commute each way, you’re saving 500 miles per year. In a 25 mile per gallon car and gas prices at $3.50 per gallon, that’s $70 on gas savings alone. Add on top of that the savings on maintenance, oil changes, and wear and tear, it really adds up.

To me, this was another deceptively simple step. Not only did it start slowly saving me money and time due to the superior route, it also cut a routine connection to coffee shops and other temptations on my way to and from work. I started desiring these things less, too, so I found myself indulging less often even during non-commute times. A little shift makes a big impression.

The post Eight Minutes to Financial Success – Minute #5: Reroute Your Commute appeared first on The Simple Dollar.

Even after making the physical credit cards difficult to access, I was still left with another problem: Amazon One-Click ordering.

Although it was now really difficult for me to visit the bookstore and spend with reckless abandon, I could still just browse around Amazon, see a book that I wanted, and within two mouse clicks, find that book on its way to my doorstep. The same was true for a few other online retailers that would fill me with temptation. I also had a PayPal account with the username and password stored as a cookie on my computer so that if I visited a retailer with PayPal accepted as a payment, I’d just click twice and the item would be on its way.

Again, it’s vital that I make some sort of simple move to add to the wait time between the impulse to buy something and actually ordering it, so that I have time to more carefully consider the purchase.

The solution is simple: disrupt that easy transaction.

Minimize Electronic Temptations
This is really a two-step process, but neither one should take you more than a minute at most.

First, go to the website of any online retailers where your credit card information is stored and delete that information. For many of you, this might mean just Amazon.com, so it’ll take you just ten or fifteen seconds to do it.

Why do this? If Amazon (or another retailer) does not have your credit card information, the process of ordering an item from them becomes much more difficult. You have to actually pull out your credit card and enter the information manually before you can make a purchase, and since such retailers are selling almost entirely inessential products, that’s usually more than enough time to talk yourself out of unnecessary expenditures.

Second, use the password management tool on your web browser to delete the passwords of your most tempting online retailers. With Firefox, it’s simple – just go to Tools, then Options, then Security, then Saved Passwords to manage the list. With Internet Explorer, just go to Tools, then Internet Options, then General, then Browsing History: Delete… to remove them. Chrome, Opera, and other browsers have similar tools.

Why do this? It puts up another subtle obstacle against easy online purchasing. It forces another delay between the impulse you have to make a nonessential purchase and the actual purchase, giving you more time to reflect and make the best long-term decision for you and your family.

Simply put, the purpose of this activity and of the previous two activities is to strip yourself of the convenience of impulse buying. The harder it is to buy impulsively, the more aware you’ll become of how often you actually do it – and it’s more often than people think. You’ll also start spending less, of course.

There’s a further effect, though, one that took me a long time to realize but which is very, very important. If you get used to applying forethought to your impulsive purchases, eventually you begin to apply that same forethought to all purchases. You start thinking carefully about your electric bill instead of just paying it without thought, which leads to finding methods to cut energy use. You start thinking carefully about your food bill instead of just wandering through the store and grabbing whatever you see, leading to grocery lists and meal plans.

Every one of those steps is a money saver, and on the whole, they add up to a lot of saved money. Underlying all of it is mindfulness, and these kinds of little steps increase your mindfulness when it comes to spending.

The post Eight Minutes to Financial Success – Minute #4: Minimize Electronic Temptations appeared first on The Simple Dollar.

Once I had the credit cards out of my wallet, I found that I was forced to think about my purchases more carefully when I was out and about. However, the problem was not solved when I was at home.

The challenge, of course, was the internet. I’d visit a website, see something interesting, and then find myself quickly whipping out my card and typing in the number.

Alternately, simply having them out and easily available meant that sometimes I’d just slip one in my pocket when I was out and about, using it to buy gas and, often, to buy unnecessary things. While not having the cards in my wallet helped greatly with impromptu impulse purchases, it didn’t help when I talked myself into being impulsive before I even left the house.

It was time to move onto stiffer measures.

Block Your Cards
The goal, in the end, is to make sure that every time you purchase something on credit, you’re giving that purchase some careful thought. Removing your credit cards from your wallet is a good first step, but if they’re just sitting in a drawer and easily accessed, additional steps are needed.

My solution was simple: I blocked my card use by making their usage more difficult using various physical and emotional means.

Here are three techniques I used, all with degrees of success.

Freeze them
Just take out a freezer-safe dish (a large Ziploc freezer bag can work pretty well for this), add some ice cubes to it, then put your credit cards on top of the ice cubes. Add water until the credit cards are completely submerged, then put the container in the freezer. What you’ll end up with is a giant ice cube that has your credit cards in the middle.

In order to retrieve your cards, you’re either going to have to melt the large ice cube or you’re going to have to smash the ice cube, likely making a pretty good mess. In either case, you’re going to have to spend some time doing this, forcing you to think about the reasons for which you’re trying to get these cards out of the ice.

Hide them
Another option is to simply hide the cards in a hard-to-reach place in your home – or in a safe external place, like your safe deposit box.

For me, a great place to hide stuff is in our attic. The only way to access the attic is through a portal at the top of our bedroom closet, which is essentially impossible to access without a ladder. Thus, to get into the attic, I have to go to the garage, get a ladder, carry it up the stairs to the bedroom, set it up, climb up there, open the attic portal, get into the attic, then rummage around for the things I’m looking for.

During this process, I have plenty of time to think about why I’m retrieving the cards and, often, I can talk myself right out of it.

Wrap them in pictures
A final approach that worked for me was to use an emotional block of sorts. I simply take a 4″ by 6″ snapshot photo of my children and use it as a “wrapper” for each credit card by placing the card in the center of the back of the photo, then folding the edges so that it forms something of an “envelope” around the card.

When I do this, whenever I go to retrieve a card, I’m forced to look at the pictures of my kids, who really are the inspiration for many of the positive choices I make in my life. Their picture tells me that I should really consider making a better choice, both for their sake as well as for my own long-term viability so that I can be there for them.

Obviously, you can use whatever picture you’d like for this purpose: an image of a long term goal you have, someone you deeply love, or anything else. The key is to use an image that will make you hesitate before using that card.

The key here is to slow down your ability to just grab a credit card and use it, forcing you to think more carefully about your purchases in real time. Such a move will do nothing but help you if you’re struggling to get your spending under control.

The post Eight Minutes to Financial Success – Minute #3: Block Your Cards appeared first on The Simple Dollar.

Those of you who watched the television series Seinfeld are probably familiar with the term “Constanza wallet.” It refers to a wallet that’s ridiculously overstuffed with cards and other paraphernalia; eventually, it explodes at a very inopportune time, sending cards and receipts and other detritus all over the place.

While the idea of a “Constanza wallet” is humorous, the truth of it isn’t so humorous. My own wallet was such a mess for many years. Inside it, one could find multiple bank cards, several credit cards, wads of receipts, and other miscellany.

Of course, what I found is that if I was always carrying all of these cards, I would always have an easy way to buy anything I wanted impulsively. I could just grab the first credit card I found and put whatever item I’d just discovered onto the plastic.

The end result? Big piles of credit card bills, resulting in an overstuffed mailbox to go along with my overstuffed wallet.

Cleanse Your Wallet or Purse
Obviously, one powerful technique to stop such impulsive purchases is to simply make those impulses harder. For me, this is something of a two-step procedure (with the second step occurring tomorrow), but the first step is quite simple.

Dump out your wallet and/or purse. Put one single bank card back into the wallet and/or purse, along with your basic identification and other essential cards.

That’s right, leave all of the other plastic at home when you go out. This way, you don’t have the ability to convince yourself that you can afford the item you’re looking at because you don’t have an array of means to pay for it easily.

It’s far better to leave the house with a single bank card than with credit cards. A bank card puts a limit on your spending that matches the cash you actually have. You cannot buy things on credit – it’s linked straight to your checking account.

Knowing that there’s such a tight limit on your spending makes you think twice about the things you’re thinking about buying.

Here’s an example. Imagine you’re standing in a store looking at a $30 item – it could be clothes, it could be a video game, it could be a bottle of liquor. Whatever it is, you want it but you don’t really need it.

If you have a wallet full of credit cards, you don’t have to think twice about the purchase. You just go buy it, usually on credit.

If you just have a bank card, you have to think about that purchase. Is there enough in my account to swing this purchase without overdrafting my account? Will this make my electric or phone bill payment bounce? Do I really need this item after all?

When you have just one card, you force yourself to think these questions about the purchases you make. You don’t have the luxury to buy such things without thinking about them; instead, by simply emptying out your wallet or purse, you’re making sure that in the future, you’re going to have to think a little more carefully about your purchases. That’s nothing but a good thing.

There’s another huge advantage, too: if you only regularly carry one card, then if you ever lose your wallet or are robbed, there’s only one card to cancel and there’s much less danger of identity theft.

That’s not to say that you shouldn’t have a credit card or two. They can certainly be useful at the right time. The purpose of this is to simply make the credit cards less convenient, which means you have to think more carefully about the purchases you’re making and whether they’re worth putting yourself into debt.

What about that pile of credit cards at home? Tune in tomorrow for a suggestion for putting those in a good place.

The post Eight Minutes to Financial Success – Minute #2: Cleanse Your Wallet or Purse appeared first on The Simple Dollar.

This series will run most of this week, but won’t disrupt any regularly scheduled posts (reader mailbags, pieces of inspiration, etc.). Let’s get started.

Back during my heavy-spending days, our apartment was jammed full of all kinds of stuff. Two overflowing racks of DVDs. A closet full of clothes. A small mountain of video games jammed into our entertainment center. Several large boxes full of sports cards and trading cards. A kitchen full of so many unnecessary cooking tools that we couldn’t close some of the cabinet doors. Shiny vehicles out in the parking area.

What I found was that the larger the number of my possessions grew, the lower my overall enjoyment of each item went. It took longer to manage them and clean them. I had less time to enjoy the items. Not only that, the rush of positive feelings I had whenever I added something new was smaller than it was before because it had become such a routine.

Not only that, these items were a huge money sink. If I spent, say, $50 on a game and played it for 50 hours, it wouldn’t be too bad of a bargain. If I spent $50 on a game and only played it for six hours, though, then it was a pretty poor bargain. The more things I had, the less time I had for each item I owned, so the cost per hour of enjoyment of everything went up. I didn’t have time to thoroughly enjoy all of the things I had. Plus, I was floundering in financial trouble.

Something had to change.

Ask Yourself “Do I Need This?”
When you’re at home tonight and feeling really comfortable, set aside one minute and try this simple experiment.

Go to the room in your home where you have a lot of possessions that you can see while standing in the middle of the room. Simply look around the room at these items and, with each one, ask yourself if you really need this item.

Is that item really adding significant value to your life? Is that item just one of many that are backed up in a queue that you mean to deal with/watch/enjoy/play with/wear/use/listen to later? Would your life really be worse in any significant way if you had never bought that item? How about if you sold that item right now?

Time and time again, I’ve found that my life on the whole is far better if I get rid of items that fail that simple test and avoid buying items that don’t pass that test. The items you accumulate have a cost – a cost of money, a cost of space, a cost of time, and a cost of effort. If you’re not getting enough value in return for all of those costs, you’re better off jettisoning that item.

Also important is the fact when you start applying this litmus test to everything in your house, you’ll find yourself decluttering at a rapid rate. The items you do have will become easier to manage, you’ll be more prepared to entertain guests, you’ll be able to sell the items for some extra cash, and you won’t have the push to upgrade the size of your living space.

Once you start applying this test routinely in your own life, it will become second nature. You’ll start looking at all of the stuff you’ve accumulated with a more discerning eye, looking for the things that don’t really add joy (and finding that the removal of those items actually does add a bit of joy over the long run). You’ll also use that same eye as you buy things, making stiffer choices about the items you bring into your home and actually finding time to enjoy the things you do have that do bring value into your life.

In the end, your bank account will thank you. You’ll be spending less on non-essentials without losing any real value in your life (and gaining some space and some time freedom). You’ll be improving your financial state by getting rid of those non-essentials, too.

All it takes is a moment to flip that switch.

The post Eight Minutes to Financial Success – Minute #1: Ask Yourself “Do I Need This?” appeared first on The Simple Dollar.