Survival of the Fittest
September 30, 2011 by admin · Leave a Comment
As hard as we try to control our environment, the reality is that things are always changing; things that are beyond our control. Adaptability becomes the great separator between surviving well, getting by, and being destroyed. How we choose to move forward, and how well we anticipate and adjust to circumstances makes all the difference to the outcome. Those things we do control. Survival mode isn’t a bad thing; it actually forces us to be more creative and look at our challenges with urgency (and perhaps, a fresh eye). Consider examining your worries and see what creative solutions you can come up with. Be an active participant in your life, and don’t wait for the ceiling to come crashing in before acting. Anticipate well and make your move before you need to, in order to strengthen your chances for success. Here are some actions you can take now:
Increase Job Security. One of the greatest fears in a weak job market is being laid-off. In addition, there are jobs that are being exported overseas. Worrying and complaining about this won’t change the situation. Take this time to formulate a Plan B, and be wise to the writing on the wall. If your job (or your spouse’s job) is always dangling by a thread, it’s time to look at the skills acquired and the contacts made. Can this experience translate to another industry? For example, an unemployed teacher might pursue a career as a corporate trainer, which requires the ability to communicate and instruct.
Consider freelance or consulting opportunities available (provided your employer doesn’t forbid this). Would an investment in more education or training improve your job prospects? Is there a side business that can be started with little or no capital (ideally, that would allow you to keep your full-time job)? Maybe you have been itching for a change and want to explore a passion. Or, maybe you see a need that isn’t being filled in the market right now. Again, use the experience and skills you already have to turn this into something profitable. Brain storm, and write down everything you can think of, no matter how far-fetched it may seem. You may end up with a clear idea of where you should be personally and professionally.
Tap Resources. Local colleges and universities and libraries have education and job placement counseling. There are small business development centers that offer free mentoring to start-ups, including assistance with fleshing out your idea, developing a business plan, marketing and management issues. Career Zone and Job Zone can help you match your talents with prospective careers. There are resources for retired/mature workers looking to transition back into the workforce. Women and veterans have agencies dedicated to working with their needs. The Small Business Administration, SCORE, and the US General Services Administration are some websites to explore.
Work Hard. This sounds obvious, I know. But, how we invest our time has a lot to do with our success. Two hours of television watching could be better spent planning a new business, or going to school to get additional training. Of course we all need to unwind and recharge, but find the time to invest in getting “fit” for the challenges that may lie ahead.
Budget Wisely. A budget is only as good as the information you put in it. That is why you have to keep track of everything that you spend and everything that you make. Only by tracking every little expense can you see where the “fat” is. Saving/investing must be a line item in your budget. Make room for it by cutting unnecessary expenses. Every month, you should aim to put away at least 10% of your income (more, if you can). If you are contributing to a retirement plan at work, this money would count toward the 10%.
Refinance. With fixed mortgage rates at unbelievable lows, you can immediately improve your cash flow by refinancing. The key here is to pocket the difference, not spend it. This money should be used to fully fund your retirement, or to build up the emergency fund. If you are branching out into a business, some of these funds can be used in that manner. This money should strengthen you, and not be used to buy more stuff.
Pay Down Credit Card Debt. Get healthy and shed as much of this debt as you can. You should aim to pay off more than just the minimum and look to consolidate the debt to one lower rate card. Talk to your card company and try to negotiate a better rate. If you still have high rate cards, be sure to pay them off first. Of course, stop using credit cards for any new purchases.
Delay. Again, if you are nervous about job security, or debt is creeping up on you, put off purchasing anything you don’t really need. Don’t eat out, don’t go on a vacation, don’t buy a new car, don’t indulge in anything that you would consider something you want (a manicure) versus a need (an annual check-up).
Difficult times provide a chance to examine your life and to truly grow and benefit from the experience. Preparing for survival mode will strengthen you and, more important, give you confidence when you do rise to the occasion. Suddenly you will see possibilities that otherwise you might have never considered. Growing pains aren’t easy to bear, but they are necessary for survival.
Making Your Own Luck
September 22, 2011 by admin · Leave a Comment
“What’s your goal?” My husband’s question was simple, but I didn’t know if I should bother to share my complete answer, because it seemed unreasonable.
We hadn’t started our family yet, which was a goal of ours. But I wondered if winning Lotto was the only ticket to my other dream: to be able to stay home with our kids for as long (or short a time) as I wanted. Back then, my earnings were almost five times his salary and I doubted we could sustain ourselves on his take home pay alone, especially with the added costs of a baby. Sharing this thought with him might have made him feel badly; instead it motivated him.
”That’s it? That’s the goal?” Tony said, as if he had known it all along. “OK, give me some time, I’ll figure it out.”
I had it drummed into my head from friends and colleagues around me, who were enslaved to the double-income household: “There’s no way you can live on one salary – especially a teacher’s salary.”
Quietly I worried that I had given him a goal that was not within reach. I thought, maybe I could stay home for a year at most. I even started to accept that option, if it came to that. Thankfully, it never did. The more naysayers there were, the more determined he was to make a viable plan.
Stock piling became the first part of the strategy; generating investment income was the other component. We lived as if his salary was the only income we had, and aggressively saved and invested my salary and bonus. That is not to say that we didn’t enjoy ourselves. We made time for some travel; we ate out at restaurants within reason – but the savings/investing came first; what was left over was ours to play with. We put off starting a family until we felt we were on solid ground.
An interesting thing happened along the way. We had the opportunity to buy a small cabin in New England for a great price; it was very tempting and we came close to doing it. It was affordable based on our total income; but ultimately it would have taken us off our goal. When another opportunity presented itself — to move farther from New York City (where I worked) to an area we loved and where we wanted to raise our family– we struggled with the idea. I didn’t want all our savings/investing to dry up because this house was more expensive than the one we were living in. After careful consideration of all the numbers, Tony figured we could swing it, provided I was still willing to commute an extra 2 hours each day until we started our family. With trepidation, I agreed.
Then we faced a series of unexpected events. For starters I became pregnant and soon we found out we were expecting twins. Almost immediately, I ended up on bed rest. Short-term disability gave way to long-term disability, which was less than my salary (although I wasn’t spending any money commuting). When our sons arrived a full two months early, we were stunned. After more than two weeks in the neonatal intensive care unit, they were released to come home – but with all sorts of equipment (like an apnea monitor to detect the cessation of heart beats or breathing and caffeine to keep the heart beat rate up). To add to all this tension, I had used up all my leave and was due back almost as soon as the boys came home from the hospital. I still can’t say how I would have been able to leave my babies under those circumstances – or who we would have asked to take on such a grave responsibility. I am just so thankful that Tony thought to ask the question about my goals – and that I dared to utter it out loud. Otherwise, our backs would have been against the wall.
Many times, there isn’t one right way to reaching a financial goal. Sacrifices, compromises, and non-negotiable items differ by household. The point is the goal kept us focused and shaped all the decisions we made – we passed up opportunities to spend our money in favor of getting us closer to what was our top goal. Most important, had we not planned this out, I would have been headed back to my four-hour roundtrip commute; our preemie babies occupying my every thought. Some call it luck – but I know Tony’s careful planning and our commitment to reaching our (seemingly unreachable) goal had a lot to do with the blessings that came our way.
The financial wisdom I would like to impart is: Don’t be afraid to look at your dreams – even if they seem impossible to reach. Instead of thinking about why you can’t get where you want to go, ask how you might get there. Do this, and down the road, you may find yourself being referred to as the “lucky one”.
Setting the Right Example
September 15, 2011 by admin · Leave a Comment
If there’s one thing that parenthood has bestowed on us, it’s the desire to be a better person. Suddenly with a pair (or pairs) of little eyes watching you closely, you become more aware of your habits (good and bad), your diet, your manners, and your temper – because someone is learning from you. Well, there’s a biggie that most of us haven’t given much thought to: money. For those of you with small ones, consider this time as good behavior training because even if your kids are too little to notice now, recent research indicates that children as young as 8 are ready to learn about money; and, the greatest impact on their knowledge is not any course they can take (if you can even find one) but on the behavior they observe at home. The study went on to say that behavior modification in older children is difficult; the key is to catch them early. So even though many of you have younger children, it’s never too early to get your household on track. This way, the practices your children adopt will be healthy ones that will come naturally to you. These simple first steps will lay a solid foundation:
- When we have dessert, it’s served after dinner – When a child sees that Mom or Dad doesn’t always immediately gratify their retail purchasing urge, it teaches that not everything you want is needed, or some things are worth the wait. With toddlers, the currency can be giving up the bottle or diapers to “buy” something that they want. Having older children partake in saving for a portion of a pricey purchase can help teach them about setting goals and working toward achieving them, as well. In addition, they will start to understand the sacrifices you make to afford your lifestyle.
- Make sure your eyes aren’t bigger than your stomach – Showing children that bills are paid in full and on time sends them the signal that they need to keep a handle on how much they spend. As you write the checks, let them know what you are doing and why you need to pay it on time. If carrying credit card debt is something they don’t see in life, it makes them less likely to abuse the cards themselves. This lesson is the single most important one to your future financial well-being.
- If …. Then … Lessons – Show your kids the power of choices and the consequences to get across budgeting basics (e.g., “If we buy this flat screen TV, we won’t have enough for food.”).
- Do as I Do – There are no greater imitators than kids. If they see you balancing the checkbook (even though they are not sure what that is), they will grow up knowing that is part of an adult routine. As they get older, you can even enlist their help in calling out the check numbers.
- Make Saving a Game – When they are really young, nothing is more fun than the clink of change in a piggy bank, or a change sorter. As they get older, encourage kids to put away a portion of any gift money they get, as well as dedicating a portion to gifting. When they are old enough to get a bank book of their own, take them down to the bank. It will be a day they remember.
- Story telling – Do you have a family member who overcame adversity (such as coming to this country with no money) only to live a successful life? Let them know that Grandpa started up his business with nothing in his pocket. Better yet, let him share the story. Kids love to hear true stories, and they’ll be better off for having heard these words of wisdom.
Starting early in their lives will make all the difference, and it will be time well spent for all of you. Remember: They are watching.
School Year’s Resolutions
September 8, 2011 by admin · Leave a Comment
September may be the ninth month, but for anyone with children, it feels like the start of school marks the beginning of the year. Why wait until January to make resolutions that you know will benefit you and your family right now? An added bonus is that you can get the kids on track by setting a good example. While each family has its own challenges, there is a common theme that most families struggle with: planning and organization. These two issues permeate every aspect of our lives and also greatly impact personal finances and household budgets. By taking steps in the right direction, you can start to feel more in control which begets calmness. Isn’t that a wonderful way to start the school year? Below are some of the most common School Year’s Resolutions and tips on how you can take steps in achieving these goals.
Eat Healthier.
Getting dinner on the table while juggling extra-curricular activities and homework can often lead to poor choices (as in unhealthy and expensive take-out). TIP: The simple act of meal planning before you shop for groceries can greatly decrease what you will buy and what you will spend. Using the local flyer as your guide for sale items, make up a week’s worth of healthy dinners and lunches. Shopping with Pea Pod and other delivery chains may also save time and money, as old shopping lists are saved and a running tally of the grocery bill is ever-present. There will be time to gather your coupons, further reducing the bill. Whether you order on-line or physically go to the store, the one simple step of meal planning with the flyer will ensure you buy the best-priced items and will have ample food for all your meals. Furthermore, when you have a menu pre-set, you are less likely to pick up a pizza.
Organize Closets, the Garage and Pantries.
Wherever stuff lurks there is the potential to save a lot of money. How many times have you had to run to the store to buy something you know you have but couldn’t find (such as scotch tape, a hammer, a flashlight, etc.)? TIP: Group like items as you would in a store. You don’t need to spend a fortune on organizing supplies. Old shoe boxes, clear storage bags, over the door hooks and bags can all help consolidate items based on their use. Gift wrapping supplies, from scissors, tape, paper, bows, and generic cards can all be placed in one shopping bag; common household tools like measuring tape, flashlights, screw drivers and hammers can be placed in a box. Designate a space in the coat closet for umbrellas, hats, scarfs, and gloves so you are not left scrambling the first morning there is inclement weather. Don’t forget to extend this exercise to the food pantry, as well. Then you will know what you need (or don’t need) next time you food shop. When you are organized, less time and money will be spent by your household, guaranteed!
Purge Papers.
From school handouts, to artwork, to junk mail and personal files – paper piles up and things get lost. TIP: Set-up a binder book or expandable file for each child that will house the class contact list, book orders, assignments, handouts, invitations, and artwork that you want to keep (consider framing or hanging a bulletin board to post larger items). Toss junk mail as soon as it enters the house and get removed from mailing lists. Keep an eye on your financial files, as well. Here’s what to keep and what to shred:
- Keep only the current year’s payroll stubs, which can be shredded after you get your W2 and verify that your annual compensation amount is correctly reflected.
- Provided you do not need them to support income tax filings, bills and canceled checks that have already been reflected in your current bank statement can go after a year (exception: hold receipts indefinitely for warranty-items or large ticket purchases for insurance purposes).
- Bank statements. Keep the monthly statements for the year. After you file tax returns, hold on to any checks that relate to your tax preparations (housing/mortgage related expenses, payment of taxes, or business expenses) and your year-end statement. Get rid of the rest.
- Investment statements. For retirement accounts, keep records of all non-deductible IRA contributions to prove that you already paid taxes on these monies. Keep quarterly statements of all investment accounts and make sure the year-end statement matches up before disposing of the quarterly statements. Keep records of purchases and sales of securities for capital gain tax purposes.
- Taxes: Keep seven years’ worth of income tax records and supporting documents (receipts, checks, W2s, 1099s, etc.).
- Credit card receipts. Keep receipts to reconcile against your monthly bill. After verifying that the balance due is correct, shred all but those receipts you need for tax purposes.
- Housing Papers. Keep all documentations relating to the purchase or sale of property for at least six years after you no longer own it. Keep receipts pertaining to all household improvements for tax purposes.
Get in Balance.
Many parents and children are so over scheduled that life has become a series of running from one place to the next (which often results in a “drive-thru” dinner). Take an inventory of the activities and events your household participates in and decide which ones truly fit your family’s need for balance and recreation. Eliminating some may be a sanity-saver and a budget booster.
Making some small adjustments, such as these, can result in a less harried home life. When you know what you are making for dinner, and you know where everything is, there are far fewer last minute errands to the store. When the schedule isn’t jam-packed, you can actually enjoy dinner together and show your kids that down time is to be savored. When the precious commodities, time and money, are preserved, you will feel more in charge of your life and less a part of the rat race. Perhaps you’ll be inspired to stay healthy as a family, and use this found time to go for an after-dinner walk or bike ride. Your kids will function better in a calmer environment, and you’ll be more present to guide them through life’s daily challenges without all the distractions.
As they quietly learn from you, maybe, just maybe they will even be encouraged to make some resolutions of their own.
