April 2010 - Posts - The Dollar Stretcher
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The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

April 2010 - Posts

  • Facing Our Problems

    Most of our 'problems' are really nothing more than undealt with discomforts. The moment we get up the resolve to look them in the face and do something about them, they vanish. Our real problems are the ones we are afraid to look in the face.
    - Rabbi Shraga Silverstein

    The the question that I'd have to ask is why are we so reluctant to face our problems? What is it about us or the problem that causes us to avoid any confrontation? Let's try looking at a few of them for clues on how to change our behavior.

    What is it about certain problems that make us afraid to look at them? Based on my own experience I'd have to say that there are some problems that seem too big to solve. For instance, owning a home that's worth thousands of dollars less than the mortgage. A big, immovable mountain of a problem.

    Then there are the problems that we know how to solve but don't want to make the necessary changes in our life. I know of families that rarely cook at home because no one who lives there has learned to cook. Facing the problem means that someone is going to become responsible for learning how to and then providing a homecooked meal. If you just ignore the problem you don't have to face making a decision about cooking.

    There are other problems that truly scare us. Some baby boomers are afraid to face their retirement. They've neglected retirement savings and now they're afraid that it's too late to do anything about it.

    College students have a similar problem. Many of them know that they shouldn't be using student loans and credit cards to be charging pizza. But, they tell themselves that since they're still in school that they're not required to be responsible yet. So they don't face up to the problem that they're creating.

    Is there an answer? Well, we can take Rabbi Silverstein's advice and force ourselves to confront our problems head on. One way to make that easier is to not try to solve the whole problem in one day. Take the 'too big mortgage' as an example. You don't need to pay all of it off now. What's needed is the money to make the next monthly payment. Breaking the problem into small tasks makes it much easier to face. You're not facing the whole problem. Just the little piece that you need to handle today.

    I'm no psychologist, but it's probably true that success breeds success. So for each day that you face a problem you make it easier to face it again tomorrow. After a few days the problem is vanquished (even if you might need to keep after it for years - as in paying off your mortgage).

    I'd love to know what you think of being afraid to face our problems. Do you have a story that would be instructive or inspiring? If so, please share it with us via email or comment on it here.

    Keep on Stretching those Dollars!


    This first appeared in Financial Independence a free daily enewsletter dedicated to helping you to take control of your finances. Click Here to subscribe and begin your journey to Financial Independence!

  • A Special Treat

    Hello to all my Frugal Friends!

    As you know, one of the things I like best about my job is that I get to meet a lot of nice people. One of those is Tawra Kellam from "Living On a Dime". We've been running her articles for quite some time (since Feb '00).

    Tawra and I were talking awhile back and we worked up a special treat for you. We're going together to bring you Living On A Dime's Grocery Shopping On A Budget e-course AND The Dollar Stretcher's e-book at a dramatically reduced price.

    Until midnight on May 14th you can get both of these great money saving collections for 70% OFF (yes, you read that right)! We both know how important saving is this year. So we wanted to create something that would truly help your bottom line.

    Here's where you can grab your copy and save 70%.

    As Tawra and I talked we wanted to do something that went beyond the typical. So we decided to add 6 additional money-saving e-books into one super offer.

    • Bonus 1: Eating Healthy On A Budget e-booklet - Don't follow the crowd! Eating Healthy On A Budget shares houghts on eating healthy without dumping the contents of our purse on the counter at the grocery store.
    • Bonus 2: Is Eating Out Eating You Up? e-book - Eating Out is one of the biggest reasons for personal debt in America. Is Eating Out Eating You Up? looks at the cost of ating out and provides great alternatives that cost significantly less!
    • Bonus 3: Grocery Savings e-book - Save over $10,000 in a year - Stop throwing your money down the garbage disposal! Grocery Savings includes lots of useful tips to help you reduce your grocery bill. Many people see dramatic savings after using the tips from this e-book.
    • Bonus 4: Kids' Recipes e-book - The Kids Recipes e-book provides you with useful recipes for food and craft items to keep your kids busy through the summer.
    • Bonus 5: Crock Pot Recipes - The Crock Pot Recipes ebook contains 470 recipes that you can toss into the crock pot for an easy meal that's ready just when you need it!
    • Bonus 6: 224 Meals In A Hurry e-book - 224 Meals In A Hurry gives lots of delicious recipes to get you in and out of the kitchen in a hurry so that you're not tempted to eat out... AGAIN!

    Regular readers know that I don't often encourage you to spend money. But this time I want to make an exception. I really think that Tawra and I have come up with a package that can help stretch your income in a big way.

    So go here right now and claim your copy TODAY!

    Keep on Stretching those Dollars!


  • Eucalyptus Drive

    Last weekend my son played a youtube 911 call for me. Had to admit that it made me laugh.

    Now just for the record, I haven't checked whether this is a real 911 call. Frankly, I doubt it. But, even if it's a fake, it IS funny.

    Later on I started to think about it. Here's a guy who has a problem (his wife is injured) and needs some help. But getting help isn't as easy as dialing 911. In fact, if he doesn't choose wisely how to get that 911 help, he could make the situation even worse.

    It may be a stretch, but I think that sometimes face a similar situation with our finances. We have a problem. And, we want help to fix it. But sometimes the help isn't as easy as we'd like. For instance, suppose that we're having trouble keeping up with our mortgage payment. Dealing with the problem could mean a short sale and  moving to a more affordable home. We don't like that choice, so we take cash advances on our credit cards so we can make our mortgage payment. Just like our 911 caller we've come up with an answer that might seem to make sense, but really only makes the problem worse.

    The moral of the story? Don't drag your wife to the next block for 911 help. There's a good chance that you'll only make her injuries worse. In fact, you might even kill her. But, that's a different joke and we're not going to do it here!

    Keep on Stretching those Dollars!


  • Financial Garbage In, Garbage Out

    Most of us are familiar with the phrase "garbage in, garbage out". I believe it started in the computer world, but it quickly was applied to many other areas. I'd like to try to apply it to one more.

    We all know that this is a rough economy. Even if we haven't lost our job or had hours or wages cut, we know someone who has. And, we're concerned that it might still happen to us. The news is full of troubling forecasts. Any time that two or three people gather someone will want to talk about the bad economy. It's gotten so that 3/4ths of the articles submitted to us for publication begin with a comment about the 'bad economy'.

    Now, I'm not for denying the truth. Unemployment near 10% and underemployment hovering around 20% means that this isn't the best of times. And, many folks are seriously upside down in their homes and having trouble keeping up with mortgage payments. Delinquent credit card accounts and bankruptcies are at very high levels. That's simply a fact.

    But, should that be the focus of our lives 24/7? Recently I had a friend tell me that he was consumed by his financial troubles. It occupied his thoughts from the moment he got up to the time he went to bed. Hundreds (thousands?) of troubling thoughts ran through his mind.

    In the original 'garbage in' meant bad data. Data that was erroneous or false. I'd like to expand that to mean 'not healthy' or 'not helpful'. Isn't thinking continually about the bad economy a way of putting garbage in our minds?

    Clearly if our mortgage company is calling about our past due mortgage we need to talk to them. And, it would be wise to think about what options we had and which choice is best for our family. I'm not saying that we shouldn't deal with our problems.

    But, after a certain point, doesn't more discussion about the economy just add to our problems? Once you know that the unemployment rate is 9.7% you don't need to be reminded of it hourly. That doesn't add to your knowledge or ability to solve a problem. That tends to focus your mind on how difficult the problem is, rather than what solutions are available to you. In effect, you've started putting 'garbage in' and that leads to 'garbage out'.

    So what's the solution? Collect the facts relevant to your situation. Acknowledge their truth. Then turn to possible alternative solutions. Focus on those. Are you better off continuing to pay the existing mortgage, trying to refinance with the lender, going for a short sale or letting it fall into foreclosure? Revisiting the unemployment rate will not help you with find the best answer. That's just the input to get some garbage out.

    Keep on Stretching those Dollars!


  • Scholarships for Children of Service Personnel

    As most of you probably have guessed, I'm big into financial education and education generally. I really believe that many of our financial mistakes happen just because we don't know any better.

    Many other financial writers feel the same way. One of them, Vernon Williams (a past contributor to The Dollar Stretcher), is trying to do something about it. Not only is he trying to promote higher education, he's made arrangements with the American Legion to contribute to the scholarship fund for children of our service personnel who have given their lives since 9/11.

    The American Legion is offering Vernon's ebook "425 Ways to Stretch Your $$$$" at a 50% discount off of it's regular price. And, 20% of the receipts will go to the scholarship fund.

    So if you're looking for some great ways to save money and would like to help some worthy families check out their offer on The American Legion site.

    Keep on Stretching those Dollars!

  • What Can We Learn from Frugal Billionaires

    I just recently read an article on billionaires who live frugally. It's a fascinating read. Although I'm sure that 'frugal' to them might be a little different than 'frugal' is for you and me. But, the message is fairly clear. These people, admittedly among the richest in the world, have decided that spending money is not necessarily fun, nor does it bring happiness.

    A quote from Warren Buffett (estimated worth = $47 billion) was really to the point. "Most toys are just a pain in the neck."

    What can we learn from Mr. Buffett and his friends? That once you get beyond certain of life's basic needs (food, shelter) many other possessions don't add to our happiness. In fact, owning some things detracts from our lives. The trick for me (and, perhaps you, too) is to give this some thought before I make a purchase. The question that I like to ask is "will this purchase tie me to maintainence, upkeep, monthly payments (either to pay for the item, or for insurance or subscription fees to use the item) if I buy this thing?" If the answer is "yes" I need to closely look at it. Perhaps the best choice is to live like Warren Buffett and just walk away from the purchase.

    What purchases have you avoided that turned out to be a blessing for your life? Or, on the other side of the coin, which purchases have you made that turned out to be a burden later? We'd love to hear your story.
  • Dollar Today, Dollar Tomorrow

    When I was young I was taught that you had a choice. If you had a dollar you could spend it today or you could save it to spend tomorrow (i.e. the future). If you spent it today you wouldn't have it later. So if something you wanted more came along you couldn't get it. That was the price you paid for spending it today.

    That concept was reconfirmed when I studied economics in college. Naturally, being college, the theory had a fancy name. There it was called "opportunity cost". In other words, if you spend the dollar today you gave up the opportunity to spend it later. Basically the same thing that my parents taught me.

    So I started living by that. The theory was easy to apply. Before spending money it became a habit to think about whether I'd regret that purchase later when I wanted the money for something else.

    After college came a job and greater responsibilities. The theory served me well. But, an extra ingredient caused a bit of a disruption. It came in the form of a little piece of plastic. You know where I'm going. Along with the gas cards I had kept during college in case my old car broke down, I acquired a couple of bank cards that could be used anywhere.

    They promised that if I spent my money today and found something I really wanted tomorrow that I could have it, too. Instead of paying for it with cash, I could use my handy, dandy credit card. And, while that was true, my training allowed me to see the trap. By using the credit card tomorrow I would be giving up my choice for the thing I wanted the day after tomorrow. So there was still an opportunity cost.

    The way that we fought that temptation was to agree that if we couldn't pay the credit card bill off in full each month we'd cut up the card. We were able to keep that promise to ourselves. (I admit I don't know what would have happened if one of us had gotten seriously ill or we both lost our jobs in those early years before we built up some savings. Quite possibly we would have run a balance. But I'm fairly sure that we would have limited our purchases to necessities. Fortunately we never had to face that crisis.)

    A number of years have passed. I still think about opportunity costs when I spend money. But, I've learned something else about the theory. It needs an amendment. It is true that if I spend a dollar today I won't have it to spend tomorrow. But, (here's where the amendment comes in) if I don't spent the dollar today, I'll have more than a dollar to spend tomorrow.

    It may take awhile before that dollar turns into two dollars, but if I keep it for more than a few days, I'll earn at least some interest on it. And, thanks to the benefits of compound interest (read more on compound interest here) if I don't spend that dollar for quite some time it can become many dollars.

    Of course, the flip side is true, too. If I spend both today's and tomorrow's dollars using a credit card, I'll have to pay them back plus the interest I owe. So I need to be very careful about using those convenient plastic cards.

    What's the bottom line? I like knowing that I have a couple of dollars in my pocket. It gives me a sense of security and also means that if I see something that I really want to buy I'll have the dollar to make that happen.

    Do you have a "dollar today, dollar tomorrow" story? I'd love to hear it. The best part of assembling FI each day is sharing the ideas we get from you!

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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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