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December 2010 - Posts - The Dollar Stretcher
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The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

December 2010 - Posts

  • Crossing the Frugal Line

    The beginning of a brand new year. We'd like to think that means that we have a blank slate. That we're able to put last year behind us and not pay it any more attention.

    But, that's not always true. For instance, if I gained 10 pounds last year it's not as if they disappeared at the stroke of midnight on December 31st. Those pounds are still hanging on to my waist with a death grip!

    Or if I accumulated some debts in 2010. I still owe that money. And will until I manage to pay it off plus any interest and any penalties that apply.

    So what's all the buzz about the new year? If I'm still overweight and owe money has anything really changed? Yes, I think so.

    New Year's is, at least to most of us, a boundary line. It separates the past from the future. And, as such, its easier for us to separate the things that we used to do (overeat and overspend) from the things that we will do (eat and spend properly).

    That's not to say that some artificial line makes change any easier for us. Change is often hard. Especially change that requires us to be more responsible. But having a line, even an artificial one, that helps us separate the past and future is still helpful.

    So if you find that there are changes that you want to make in your life there's no better time to get started. Today is a great day to begin. Go ahead and make those changes that will make your life better in 2011. We'll do our best to encourage you along the way.

    One last thing, before you get into this week's issue. We're starting something new in The Dollar Stretcher Community. We're calling it "Price Watch" and we'll be asking your help to find sales and special offers on a variety of products. You can check it out here.

    Keep on Stretching those 2011 Dollars!

    Gary

  • The Wrong Currency

    I don't get to travel much. Or, more correctly, I'm not that fond of travel. In either case only a couple of times in my life have I been outside of the U.S. So I'm not an expert at currency exchanges. But I do know that having the correct currency is essential if you're going to complete a transaction successfully.

    For instance, years ago my wife and I visited Mexico. Some places would allow you to make purchases in dollars. But, many required pesos. In those places you couldn't use your dollars to make a purchase.

    I remembered that the other day. It occurred to me that there are times in our financial lives that we try to use the wrong currency and we can't complete our transaction.

    Here's an example. A book that my wife and I shared about improving your marriage stated that each person had a 'love language' and to please your partner you needed to know what that language was. For instance, my wife's language was service. So if I wanted to demonstrate love to her the currency I would choose would be service (i.e. filling up the gas tank on her car). Other things might be appreciated, but they would be the wrong currency and wouldn't be regarded as highly.

    Or can you relate to this case? Suppose that I'm feeling disrespected at work. My boss just doesn't recognize how much I contribute. So I stop at the mall on the way home and do a little shopping. I spot a good looking necktie and buy it. After all, I deserve it! But, will that tie really make me happy? What I needed was respect. A tie is probably the wrong currency and won't fill that need.

    Have you ever considered why you make the purchases you do? Not the required things like filling the gas tank and paying the mortgage. But the clothing, entertainment, and other non-essential spending. You may have a 'need' but are you using the right currency to meet that need? It's quite possible that a purchase is the wrong currency.

    So if you find yourself looking at your credit card statement and wondering why did I buy all thise stuff you might want to ask if you're using the right currency. It's just possible that you're spending dollars, but that they can't buy what you're really needing. And recognizing that could be the biggest financial event of your year. In fact, it could change your whole financial future.

    I'd love to hear other 'currency exchange' stories. If you have one please send me an email. Who knows? You might help someone identify their own currency exchange problem.


  • Walking Away From Your Home?

    An interesting article on  the MSNBC site says that more people are willing to walk away from their homes if they owe more than the home is worth. According to the study cited, 48% said they would turn their backs in that situation. 

    I can certainly understand why they'd feel that way. And given the right circumstances, that could be the best financial decision that they can make. The hit to their credit on a bank agreed short sale is less than the hit on a foreclosure.

    But, the study leads to some interesting conclusions. Estimates say that 24% of all mortgages are upside down. And, 60% of all homes have mortgages on them. So if you do the math (60% of all homes X 24% upside down X 48% who are willing to walk away), about 7 homes in 100 are owned by people who would be willing to walk away from them.  That's a lot of homes!

    I'm not a real estate expert, but I think that it's safe to say that we'll be dealing with foreclosed homes for the next few years. And, that any economic recovery that depends too much on a rebound in housing prices isn't going to happen any time soon.

    What does that mean for you and I? Well, don't expect home prices to go up soon. In fact, depending on where you live, they could drop another 10% before finding a bottom. 

    If you're selling your home expect to be competing with vacant foreclosures. That means that you'll probably need to be very competitive on pricing. 

    Fortunately some areas have been relatively unaffected by the housing bubble and collapse. But, for many of us, managing the financial asset called 'home' will continue to be a challenge for the forseeable future.

  • The Smartcar Hauler

    Sometimes you see something that just makes you wonder what's going on. Yesterday I had one of those events. Across the street from our office is a self-storage facility. Once a month they auction off the contents of units that have been abandoned or where the owners have fallen behind in their rental fees.

    Many bidders show up with big vehicles to carry away anything they've purchased. Pickups are common. So are trailers. I can't help but pay attention because they tend to park in our office lot and all along the street in front of the office. It's a bit of a nuisance but not a big deal.

    Yesterday I was in the middle of a conference call, watching all the trucks jockey for parking. When what shows up but one of those tiny Smartcars! The kind that look like they'd hold the driver and maybe one or two bags of groceries.

    My initial reaction was to laugh. Someone didn't get the concept. But, then it occurred to me that maybe they had a different plan. Maybe they had someone with a truck waiting if the were the winning bidder and needed to haul something.

    My point is this. I want to be willing to look outside the normal for an answer to my financial problems. I probably won't find it there often, but occasionally the best answer for me might be much different than the common solution that most people use. So I need to willing to look different (even dare I say foolish) in search of solutions that will work for me and my family.

    So here's to my anonymous friend in a Smartcar. I don't know whether he bought anything, but I like his willingness to break out of the mold!

    Keep on Stretching those Dollars!

    Gary

  • Jobs Forecast

    USA Today has an interesting article on the forecast for various job categories on a state by state basis. Even if you're comfortable that your job is safe it should be of interest to you. And, if your job is in jeopardy or you're unemployed/under-employed you definitely will want to check it out.

    One thing that the article doesn't address is that technology and the passing of time are changing the nature of the job market. Many jobs that used to be plentiful and high paying don't exist anymore. If you've been laid off from one of them, it's very unlikely that you'll be called back. So even if it's not mentioned in the article, you can use the forecast to see what's predicted for your job category in your state. 

    Depending on what you see it might be time to consider changing professions or locations. Something that's much easier to do before you get to the end of your unemployment benefits and savings.

    Keep on Stretching those Dollars!

    Gary

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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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