Monthly Archives: February 2010

Don’t Allow Loss of Loved One To Lead You To Poor Financial Decisions

Posted on by  at  5:00 am
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The following post is from Neal of WealthPilgrim.com. After reading the article, be sure to sign up for free at Wealth Pilgrim to receive more from Neal.

I just took a call from a client grieving for her husband of 42 years.

She’s understandably under tremendous emotional stress.  Frankly, I was amazed at the efficiency with which she was approaching her situation.

Within a few weeks of his death, she had already calculated how much her income would be reduced.  In fact, that was why she called me. Her money and marriage were inextricably meshed.

She was distraught over the loss of her husband….and at the same time…very concerned when she calculated that her income would be reduced by $35,000.  In fact, she sounded worried sick about it.  She was even talking about selling a prized antique car that she loved dearly in order to make up for the short-fall.

I’ve known this woman (a Ph.D.) for about 20 years and I can vouch for her warmth, high intelligence and rational behavior.

That’s why I found it odd that she completely overlooked the fact that her expenses were about to drop more than her income.  We went through everything together and calculated a monthly savings of over $4,000 due to reduced medical expenses.

Also, my client completely overlooked the fact that her husband had an insurance policy that she could make a claim on.  (This was a universal life policy my client’s husband had purchased more than 40 years ago.  Of course, I can’t stand whole life or universal and this was an example why — my client’s claim would mean she’d get a whopping 1.96% return on her money.)

Why am I bringing this up?

First, while my client was fortunate enough to have time to prepare for her spouse’s death, we all don’t have that luxury.  I strongly suggest that you write out a “survivor’s plan” today.

You can take your time to improve it.  Tweak it. Whatever.  But put something together today.

Second, calculate reduced income and expenses. Have a realistic scenario of what it would cost your survivor to live on and what resources will be available.

Third, and perhaps most important, expect to be in shock and incapable of making rational decisions.  Expect it.  Know that you (or your spouse) are going to have to face this situation sooner or later. When it happens, you will simply be incapable of making smart decisions.  Honor your marriage and money.  Have a backup person and don’t make it your adult children.  I strongly suggest you use a non-relative because it would do no good to rely on another person equally impacted by the loss.

If you have ever read my story, you know that my parents did none of the above.  The result was the complete destruction of my immediate family.  I take this stuff really seriously as a result.

While the worst that could have happened to my client was that she would have sold her car when she really didn’t have to and worried over nothing, I know the results can be much more devastating. Take a few minutes right now and take care of this.

Frugal Living Could Change Your Life

Posted on by  at  5:00 am
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This is a guest post from MoneyNing, who quit his job to help people turn their finances around by offering insightful personal finance tips. His family is expecting a daughter in one month, and he is currently running a contest to see who can guess his daughter’s birth weight and date here. Go join in the fun, and see if you can win!

Adopting frugal habits came natural to me, but it wasn’t until recently did I realize what a difference it made. Being frugal literally changed my life.

Many people equate being frugal to sacrificing, and understandably so. Not ordering a drink during dinner when you want to is tough. Not buying a new gadget the day it comes out even though you are drooling all over it takes discipline. And not buying a new car when all your friends upgraded takes a mental focus not many possess.

I know, because I used to wonder why I do it too. But guess what? Frugal living is not sacrificing at all. Trimming your bills may sound like a necessity to you, but having control of your expenses gives you options. I quit my job to work on my business, and one of the main reasons why I was brave enough to take the leap was because our family had minimal expenses. I knew our frugal habits would allow us to live below our means, even if things got tough. Would you feel that way if you had the chance?

Deciding to Give Up the 9-5

I wish I could tell you that I had a million dollar business on the side when I resigned, but in reality, my side business was generating only 30% of the income from my primary job. All I know was that my job wasn’t something I wanted to do for the rest of my life, and my business was something I loved working on. If I could only make the numbers work out, I would quit in a heartbeat.

All of a sudden, those advices about saving X% of your income doesn’t seemed vague anymore. I began to understand. My ability to save 50% of my take home pay meant having my boss breath down my neck daily or being able to work for myself.

What Do You Think about Frugality?

You could argue that it’s irresponsible to quit and do something you love, and it might be:

  • If I had a car payment, I probably couldn’t leave
  • If I had a mortgage to pay, I probably would’ve stayed
  • If I had debt to pay, I was probably tied to my job
  • If I had high expenses, I would probably not make it
  • If I had no savings, it would probably be too risky

Justifying all the luxuries that you are currently paying for is easy, but you may never know what you are missing. As luck would have it, my business is thriving, and I am making more than I ever did in my life while working at home.

The Real Life Changer

We are expecting our first child named Sara. She will be growing up with much more love from her father because he doesn’t have to travel out of state for work 3-5 days every single week.

Frugal living not only changed my life, but hers too. You may not realize it now, but saving those few bucks could change yours one day.

Money Discussions Every Couple Should Have

Posted on by  at  5:00 am
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I’ll be away from the blog for a few days, but fortunately a few blogging friends have offered up some excellent guest posts to keep you busy.
Leading things off is Craig Ford, who writes about issues related to faith and finances at Money Help For Christians.  Get a free copy of his eBook, Money Wisdom From Proverbs when you subscribe to his newsletter.

I love Socrates.  The genius of Socrates was his ability to ask questions.  He made a reputation as being a person who taught simply by asking well focused questions.

So taking a cue from this Socrates we’re going to try and help you improve your money relationship with your spouse simply by asking questions.  At times a well framed question can be more effective than a perfect statement.  Financial togetherness cannot occur in marriage until you open your heart, open your ears, and listen to your spouse.

First, a note about setting.  Try asking these questions in a non-threatening environment.  Consider talking about them across the table at a restaurant, while holding hands on a relaxing walk, or during a quiet moment on the couch.  Don’t try and ask these questions at the end of a hectic day or in the office with so many papers that are demanding your attention.

Second, a note about your disposition.  It is quite possible that when you ask these questions you will be surprised or shocked at the answers.  Don’t take things personally.  Let your spouse feel free to express their opinions.

Questions To Consider Asking Your Spouse

  1. Did your parents talk to you or teach you about money?  Did they have a similar approach to money or did they often disagree?  Are your money management habits more like your mom or your dad? Why?
  2. How much money did your family have?  Do you remember an occasion where you felt like you were rich/poor?
  3. Is there anything you would like me to learn to do better or differently with money?  Would you say I’m frugal/cheap or a flagrant spender?  Do you wish I’d learn to loosen up with money or spend it more freely?
  4. Are your comfortable (emotionally) with our current debt level?  Do you think we’re on the right track as far as debt repayment?  How much debt are you comfortable with?
  5. What is a “major purchase”? How much would I need to spend, without consulting you, to make you upset?  What kinds of purchases do you think we should both consult each other regarding?
  6. How do you feel about wives earning more than their husbands? Why?  Do you have any issues or concerns regarding how much we each make?  Do you think I make enough money?
  7. Is there one thing that you dread when it comes to money?  What is your greatest financial fear?  What do you think can be done to help minimize the possibility of that fear becoming a reality?
  8. Have you ever thought about starting your own business?  How would you fund it?  What would you do if you could do anything in the world?
  9. Imagine that you’ve won or saved a million dollars.  What would you do with it? Why?
  10. What would you like retirement to look like?  Where would you live, in what kind of house?  What work, if any, would you be doing?

It is quite possible that you will be surprised and shocked by some of the answers you hear.  So what do you do now with these responses.  After asking some of the questions above, you’ll have a good idea about the level of financial oneness you and your spouse enjoy.  You should have been able to identify some areas of marital strength and even some places that have room for improvement.

Now you have a hard job.  Start to humbly and patiently address these sensitive money issues.  If you feel overwhelmed, seek outside help as counseling can be a great way to heal a broken marriage.

Tell Them To Support Your Financial Wishes

Posted on by  at  6:00 am
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This article is by Adam from Money Relationship. Subscribe to his site to get updates about his journey out of $150,000 in debt.

We all have those friends that always want to head out on the town and spend. Whether it’s taking large vacations or wanting to eat out every week, they just seem to be made out of money. So, how do you tell someone who likes to spend that you are on a strict budget?

My wife and I have friends that like to spend and it’s hard to tell them no when they ask us to tag along. We don’t want to alienate them to the point that they don’t want to see us again. So, I thought it would be beneficial to think of a few ways to handle the situation if it should every arise again. Here are some strategies that I thought might be useful:

Learn to Say “No”

You might think that saying no is an easy concept but it’s not. When that person is standing right in front of you and you are thinking of ruining their plans, it’s hard to just say no.

It’s probably not best to just say “no” and then leave it at that. Try saying something like, “I’d love to do that, but right now we are really trying to watch our spending.” If they don’t understand that then maybe it’s time to find some new friends.

Tell Them Your Financial Goals

If they are still giving you a rough time after you said no, maybe it’s time to tell them your financial goals. If you are trying to get out of debt or saving for a down payment on a home, tell them. It may actually even inspire them to create their own financial goals.

You don’t want to get too personal with your goals though. In other words, don’t tell them that you are $150,000 in debt and just can’t afford to do anything for the next 7 years. That just might scare them off a bit.

Invite Them Over and Control the Situation

This is a strategy my wife and I use. When all else fails, invite the couple over to your place. If you are in your own domain, you can control the expenses a lot better. Cooking a meal for your guests can be a lot cheaper than eating out. Since your guests originally wanted to spend money on going out, have them bring over the drinks. Even those are cheaper when bought at the store vs. a restaurant.

Go to Places or Do Things For Free

Another great solution is to do things with your friends that are free. My wife and I live really close to Washington DC and there are a ton of things to do there for free. Whenever we have relatives or visiting friends in the area, we recommend heading into the city. There are a ton a free museums and monuments to check out. You can pack a picnic lunch and take mass transit.

Here are a few more things you can do with friends for free:

  • Hiking and biking
  • Picnics
  • Volunteering
  • Game night
  • Pick up a team sport
  • Much more!

How do you handle situations where you friends want you to spend but you don’t have the money?

Weekly Roundup – Social Media Edition

Posted on by  at  5:00 am
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I am what you call a late adopter. New things come out, I see them advertised, I yawn and go about my business. Then months later (sometimes years) I eventually get around to rediscovering those items and finding that I actually find them useful and kick myself for not joining earlier. This sums up my experience with social media.

I avoided the whole MySpace/Facebook scene for a long time and saw little value in things like Twitter and the like. However, I now understand the value in connecting with people in a more informal online setting than blog comments.

So, over the last few months, I’ve been trying to reach out to more readers in an effort to share things not really meant for a personal finance blog. I’d love to connect with you, and if you are a slow adopter, I’d encourage you to sign up and give it a shot.

Become a Frugal Dad Fan on Facebook

Follow Me On Twitter

The Frugal Roundup

29 Semi-Productive Things to Do Online When Trying to Avoid Real Work. Have you ever hopped online to do something and then come to find you got absolutely nothing done in an hour? Happens to me all the time. At least next time I can say I did something at least semi-productive! (@Marc and Angel)

How to Show Someone You Love Them Every Day. Although Valentine’s Day is this weekend, you should always tell that special someone that you love them. Get this free eBook to learn how. (@My Super-Charged Life)

Do Kids Inherit Frugality? Yes, to a degree. Kids model the behavior from examples they see most often, and parents have the best opportunity to model frugal spending decisions. (@Money Smart Life)

11 Ways We Dove Into Debt and How We’re Digging Out. Matt shares some all too common factors on how he and his wife accumulated their debt. (@Debt Free Adventure)

Best of the Rest