March 2010 - Posts - The Dollar Stretcher
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The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

March 2010 - Posts

  • My Name Is Not Jones

    I find it fascinating how occasionally two ideas converge to create something new. I had that happen this morning. Early in the day I was reading something that reminded me that each one of us is a truly unique individual. We each have our own fingerprints that are different from all others. We each have a DNA code that belongs only to us. And, we each have a mind with memories, thoughts and feelings that isn't duplicated anywhere. That's really nothing new. We've all heard it before. But, it is pretty amazing when you stop to think about it. According to the U.S. Census Bureau the world population is over 6.3 billion people! And, every one of them is different!

    The second part came as I was looking for items for the "Frugal News" section on The Dollar Stretcher.com front page. I found one that quoted Goodbye to the JonesesThe London Telegraph. It said that Britons were victims of 'chronic dissatisfaction' because they were struggling to keep up with the Joneses. The research showed that people were only happy if they were financially better off than the people that they spent time with. If they had more money, a bigger home or a faster car than their friends, all was well. But, if they didn't (and most people don't), then they were unhappy. The result was that they spent more time working trying to catch up to their neighbors and were unhappy while they were doing it.
    Now, it doesn't take a Rhodes scholar to see that's dumb. Think about it. If I'm unique, what will make me happy should be slightly different than you. Just because I get the same house or car that you have I'm unlikely to be happy. Wouldn't it make sense to spend time figuring out what would make me happy instead of working harder to buy what you have or something slightly bigger?
    Instead it appears that people just assume that they will be happy if they have a little bigger house than their friends. So they enter a lifelong race to see who can buy the biggest, fastest, mostest stuff! Talk about a foolish way to waste your life!
    So what can you do about it?
    Start by asking yourself if you've recently made purchases to keep up with the Joneses. Here are some possibilities: toys (boats, entertainment systems, skis, etc), clothing (designer anything), bigger home, fancier car, more exotic vacation, biggest collection of ______, etc.
    Next, ask yourself what would really make you happy. Don't think just in terms of stuff that you can buy. Maybe seeing birds in their natural setting would bring joy to your life. Or maybe you want to have time to spend reading under a towering oak tree. Let your mind roam free.
    Once you decide what would make you happy, make a list of what you would have to do to make that happen. It might take time. Maybe money. Perhaps some help from your spouse. Begin to ask yourself if you can make it happen.
    Then go for it! Don't worry if you drive a 12 year old car that your friends kids you about. A new one will not make you happy. It's not your goal! Pursue your goal. That's what will make you happy!
    What happens if you have a goal that's way to big for your checkbook or physical abilities? Then think along the same lines but a little smaller. Too old to become an astronaut? Then start saving for a trip to the Kennedy Space Center. Can't climb Mt. Everest? Spend time studying those who have through books and videos. Don't be surprised if these smaller goals don't bring you closer to your dream than you had imagined.
    It's surprisingly easy to get rid of 'chronic dissatisfaction'. All you have to do is to decide that your name isn't Jones and stop thinking about getting what other people want!

    What do you think about keeping up with the Joneses? Please share your thoughts. I'd love to see your comments!

  • Tooth Fairy Payouts Up 13%!

    Just this morning I had one of those 'shake your head moments'. You know the ones. Where you scratch your head and go "huh?".

    I was updating "Frugal News" for the website and looking at all the different news items. One from Consumer Reports said that the Tooth Fairy payouts were up 13%! Who knew? I didn't. Of course, I'm not sure I needed to know either.

    It turns out a dental group in Minnesota polled 1,500 adults. So just in case you were wondering whether the economy was having any effect on the price of baby teeth you can relax. According to the survey 86% said that the economy has no bearing on the Tooth Fairy.

    Keep on Stretching those Dollars!


  • A Puzzle

    One thing that's puzzled me over the years of dealing with people and their money (and there have been quite a few of them!) is why people make financial decisions that are not in their best interest.

    You see that most of our economics is based on the assumption that you and I will try to get the most for our money. We might not always be successful. And, sometimes we'll be misled or even cheated. But, overall we'll generally get the best deal on any purchase and, if we're selling, get the best price for our item. The assumption is believed to be true for both individuals and for companies. At least that's what I learned in school.

    The last few years I've become more aware that often people don't do what's best for them. Sometimes they spend (or save) irrationally. They make financial decisions that even they know aren't in their best interest. But somehow they seem unable to do anything else.

    If I look at my own financial decision making I like to think that I'm rational. Yes, sometimes I spend money when I shouldn't. But, it's not unconscious. I'm aware that a choice is being made to buy extra comfort, convenience, or... I'm also aware that sometimes I too reluctant to spend money. Buying used when new would better suit my needs.

    Based on my email, I know that I'm not the only one making decisions like these. What I'm beginning to wonder is whether most of us are irrational in our financial decisions at least some of the time.

    What's your take on the question? Are people generally logical in their financial decisions? Are they a mixture of rational and irrational depending on what day of the week it is? Or could they even be largely illogical in choosing their financial path?

    I'd love to hear your thoughts on the subject. Who knows, maybe we'll all learn something that can help us be more successful in managing our finances.

    Keep on Stretching those Dollars!


    This post originally appeared in "Financial Independence" - a free daily look at what it takes to take control of your money. To subscribe click here


  • The Foreclosure Rental Trap

    A record 2.8 million U.S. properties began the foreclosure process in 2009 (according to ForeclosurePulse.com). It appears that there's no end in sight. And, while the focus has been on families losing their residence, there's a subplot that's gone largely unnoticed. Innocent renters are often hurt when banks foreclose on their landlords.

    Nationwide it's estimated that about one third of properties that are being foreclosed are not owner occupied. And, while some of those are second homes, many are rentals. It's probably pretty safe to say that at between 25 and 30% of foreclosures are occupied by a renter. So about 750,000 renters were in foreclosed units last year.

    What does foreclosure mean to the renter? If the bank forecloses on your landlord they take over the property. Their goal is to protect their financial interest. Sometimes that hurts the renter.

    Historically, banks wanted the owner to vacate a foreclosed property. That meant the renter, too. So even renters who had leases were suddenly being thrown into the street. Without any legal recourse.

    In May, 2009 the "Protecting Tenants at Foreclosure Act" became law. The main part of the law guaranteed that tennants could stay until their lease was up. Those on a month-to-month get 90 days.

    Today, in part because of the law and in part because it's bad business to chase away paying renters, banks are allowing more tenants to stay in foreclosed properties. Often they'll use a management company. Some managers are more responsive to renter needs than others.

    So what can a renter for protection? Unfortunately, even with the new law, their options are fairly limited.

    It's hard for a renter to determine if his current or potential landlord is in financial trouble. There is one website that can check an address for you. It's not 100% certain. They only report what their records show. But, you'll want to avoid any properties on their list.

    In some counties, court records are available online. Checking your county's website can be a real eye-opener. You can check your landlord by name (or by company name). Look for any pattern that shows financial problems. Make sure you look for liens and mortgages against the property you rent.

    If the bank does notify you that your landlord is being foreclosed, contact the local housing agency. They'll be in the best position to tell you which local, state and federal laws apply to your situation. Among other things you'll need to know who should get your rent checks and who to call for a leaky faucet.

    As a tenant you can sue the former landlord for lost deposits and rent. But the small claims process can take months. Plus you're trying to get money from someone in foreclosure. The odds of getting your money back are pretty long.

    The trickiest time for a renter is when the landlord expects to be foreclosed. Some will collect rent and make no effort to make their mortgage payment. They'll also avoid doing any maintainence. This can go on for months. That's why it's a bad idea to prepay your rent in this economy. If you have next month's rent available, better to put it into an insured savings account until the rent is due.

    If you're looking for a rental, beware of landlords who seem overly anxious to get you into their unit. Some are attempting to use renters' first/last/deposit to keep themselves afloat financially. Reputable landlords will check your credit and references. Failure to do so could be a sign that they're just after your deposit. Time to run!

    Bottom line? It's important for a renter to check out the landlord. The tools aren't particularly good, but they can help you avoid some obvious problems. And, if you do find that your landlord is in foreclosure contact the bank and housing agencies to see what steps you need to take to protect yourself.

    Keep on Stretching those Dollars!

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Gary is a former financial planner and purchasing manager who edits The Dollar Stretcher website <www.stretcher.com> and newsletters. You can follow Gary on Twitter.com/gary_foreman
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