They went on to say, “I mean, think about it. Does a day go by that you don’t use your credit card four or five times a day? Coffee shop on the way to work, lunch, grocery store and gas station on the way home.”

I suppose they are right; we do seem to use our credit and debt cards several times a day. I guess we could just as easily use cash. Well, maybe not just as easily – after all, those card readers at the gas pump are pretty convenient.

The question is, would we spend cash so easily? The bigger question is, why are we consuming so many things every single day? Can we not go a day without buying something? That’s the question I’ve been asking myself lately, and I’ve made it sort of a challenge.

A “No-Spend” Wednesday

Yesterday was a good example. We had breakfast at home, as we typically do. No stops by Starbucks on the way to work. At work, I drank water and avoided the vending machine (not hard to do since I’m trying to eat better, but the occasional diet soda is still my weakness).

Lunch was a brown bag from home – a roast beef sandwich, a portion of cottage cheese and a water. After dinner at home I ignored the the blitz of “deals” that often hit my inbox – Amazon’s deal of the day (yeah, the 32BG thumb drive for $22 was tempting), a $1.99 movie rental opportunity, etc.

Fortunately, my wife agreed to a “No-Spend Day,” too, so her and the kids made it a point to avoid some of the infrequent treats they enjoy throughout the week like the once-a-week visit to Sonic after school to grab a half-priced drink. Sure, it would have only cost them a couple dollars, but we were making a point not to spend any money. Not even $1.00!

Lessons Learned from a No-Spend Day

The exercise has made us more aware of two things: we have a lot of little money leaks in the average day. And two, we need to find more activities that don’t cost money. My kids are ahead of the adults on this one – they have already asked about going to the library this weekend to stock up on some new reading material.

The weather has improved to the point where doing things like taking a picnic to the park once again sounds enjoyable. My son has asked me to start taking him fishing (a sneakily expensive hobby, but very low cost once you have the basic equipment).

We are also on the lookout for things to do nearby that don’t cost much, or are absolutely free. These may be community events or events sponsored by local businesses. Check the Living or Community section of your local newspaper to find out what’s happening in your area.

So, to wrap things up, I challenge you to schedule a no-spend day in the very near future. It’s sort of like a fast, but instead of giving up solid foods you’ll be giving up spending money, just for a day.

You may find that by stringing a few no-spend days together, or dedicating a day of the week as a “no-spend day” every week, helps you significantly reduce your monthly expenses. 

Disclaimer: I own no stock in Visa or Mastercard

It’s also shocking to realize that Big Tobacco – the same industry we thought we got rid of years ago – is quietly raking in some serious profits. A lot of these profits are coming from overseas markets, but Big Tobacco is still advertising here at home. After 40 years of decline, the smoking rate in the US has flat-lined for the last five years.

I’ve heard plenty of feedback this week on my recent spate of infographics, so take what you will from this one. I personally am floored by the lot of the statistics and I think that, like the other infographics I’ve posted, this one should help expose just how large the Tobacco industry is and how much it affects you and your family. Enjoy!

In the heat of the holiday shopping season, I’m taking a moment to consider where I spend my hard earned money. You might be familiar with the status: Walmart’s the largest grocery store in the U.S., the largest retailer in the world, the leader in global corporate revenue and the largest employer in existence. Still, these facts don’t do much to demonstrate the reach of this superpower.

Check out our graphic demonstrating the Weight of Walmart, and if you find the statistics as shocking as we do, please share it with everyone you know:

If you’ve been following the news, you know that Big Food successfully lobbied this week to have pizza sauce considered a vegetable under school lunch rules. The industry also managed to block most of the nutritional changes that to school lunches that doctors and dieticians had been recommending for years, virtually guaranteeing that America’s schools will continue to serve processed, unhealthy garbage to our children. If you didn’t know that Big Food wields disproportionate influence in America today, reading this infographic will be a great wakeup call.

Oh, and don’t blame me if your Turkey doesn’t taste quite as good on Thursday…

Update: Thanks to Mike for the heads up about the AOL/Time Warner error. The graphic has been fixed.

The “It” could be a Christmast gift, a new car, or a gift for themselves. Regardless, there will be a lot of mental number-crunching going on.

Some Thoughts on Affordability

Over the years I have come to loathe the very question of affordability. 99 times out of 100, if you have to stop and ask if you can afford something, you probably cannot afford it. Why do I say that?

Because affordability has been so mangled by marketers and creative financing that few actually stop to do a logical calculation.

Think about it…if I asked you if you could afford a new $40,000 car, what would your response be? What if I asked if you could “afford” a $500 monthly car payment. Chances are more would respond in the affirmative to the second question.

The new car deal offered is really the same. What you don’t consider is that by taking on the 84-month payment plan, the car will really cost you $43,000 when you add interest payments (even at today’s low financing rates).

People have been conditioned to think in monthly terms. Subscription fees, membership dues, car payments, and a host of other expenses are presented in monthly terms.

If you have a gym membership and they sent a letter reminding you it was time to renew with a bill for $359.40 you would probably call to cancel. But what about $29.95 per month? Sounds more palatable, doesn’t it?

One of the best exercises I can recommend to help gain control of your spending is to convert monthly expenses to a yearly cost. It will immediately help you gain perspective that a monthly bill just doesn’t provide.

Here are a few examples from my own household pre-financial turnaround. You can guess the things I immediately cut to help jump-start our get-out-of-debt plan.

• Gym membership. $29.95 per month. $359.40 annual cost.
• Lawn treatments. $42.50 per month. $510.00 annual cost.
• Expanded cable package. $80.00 per month. $960.00 annual cost.

Rather than guessing, I’ll just tell you that we cut all three of these items, and in the process saved over $1,800 that year – which just happened to be the lowest balance on one of our credit cards. In theory, we eliminated that debt simply by eliminating those three expenses, and our lifestyle didn’t really change that much.

Signing Up for Lifestyle Servitude

In addition to considering financial costs when questioning affordability, there should be other considerations when evaluating large purchases.

The fantastic book by MJ DeMarco, The Millionaire Fastlane, refers to a phenomenon called Lifestyle Servitude, whereby we erase more and more of our freedom by creating lifestyle debt.

Here’s how DeMarco describe the vicious cycle of Lifestyle Servitude:

1. Work creates income.
2. Income creates lifestyle/debt (cars, boats, designer clothes).
3. Lifestyle/debt forces work.
4. Repeat…

Sound familiar? How many of you have traded freedom for affordability? Yeah, me too. But part of maturing, financially, is being able to recognize that giving up our freedom for affordable payments is not a game worth playing, long term.

I don’t often wish for financial mulligans (except for the opportunity to go back and save half my income), because I am who I am largely due to how I’ve managed (or mismanaged) my finances in the past. The best lessons are often learned the way. However, if I had it to do over again, I’d love to start with a clean slate – no income, no payments, no debt.

As my income increased, I would not burden it by adding payments for things I really could not afford. I would save, pay cash, and continue to enjoy the freedom to move from place to place, or job to job, without worry over continuing to make payments for my stuff.

I would carry this philosophy into car and home purchases, and any other large expense in my household. If I couldn’t afford to pay cash for a new home, I would rent. If I couldn’t afford a new car, I’d buy a cheap, used one.

If I could not easily afford to cover a year of expenses, I wouldn’t add any new ones (cable, XM radio, gym memberships, etc.). How much different would life be had we taken that path when just starting out?

Sounds radical doesn’t it? Not quite normal. But what is normal? I’ll leave you with yet another great quote from The Millionaire Fastlane:

“Normal is waking up at 6am, fighting traffic, and working eight hours. Normal is to slave at a job Monday through Friday, save 10%, and repeat for 50 years. Normal is to buy everything on credit. Normal is to believe the illusion that the stock market will make you rich. Normal is to believe that a faster car and a bigger house will make you happy.”

Well, when you put it that way, I’m quite happy not being normal.

I suspect one day the entire second half of the year will be devoted to Christmas shopping, which is a sad commentary, on many levels, about our addiction to consuming and present buying.

Now that Scrooge has said his piece, let’s address specifically the issue of how to handle Christmas presents when you are not in a financial situation to buy anything for loved ones.

Setting Realistic Expectations

First, we must establish that we are all adults, and adults should, in my opinion, have very minimal expectations of receiving gifts from extended family members. Expectations should decline further given this is still a tough economy, and most people are more interested in saving their money than spending it.

Further still, a good many people are recovering from a layoff, or are still unemployed, so any reasonable person would expect that family not to buy gifts for other family members, and instead try to have a modest Christmas for their children, etc.

Having said all of that, I recognize that gift giving, and a lack of the ability participate, is the cause of much holiday anxiety. I can certainly understand that where children are concerned.

Gifts as an Expression of Love, Not a Holiday Obligation

As a parent, I want my children to enjoy a nice Christmas, and I want them to have a couple nice gifts from Mom and Dad (in addition to anything delivered by Santa). But sometimes you just have to be realistic.

If it comes down to paying the power bill or buying Christmas gifts for cousins, coworkers and friends, we’re paying for lights and heat. If it comes down to making a mortgage payment or buying electronics and toys for the kids, well, it would be silly not to pay the mortgage.

Seems so reasonable in writing, doesn’t it? But it is something people all over will struggle with this Christmas because reason doesn’t often play a big role in spending decisions, particularly around the holidays. And marketers know it. They prey on our emotional  ties to holiday gift giving and have convinced a good many of us that to forgo the purchase of presents is to show a lack of love for someone you care about. Baloney!

Too many people equate love with a tree towering over a stack of paper-wrapped presents. Too many people stack those presents higher and higher in an effort to make up for some lack of emotion they failed to show loved ones all year around.

An absent mom or dad often buys lavish gifts to make up for not being there for baseball games, piano recitals and open house at the new school. Successful kids often send expensive gifts to mom and dad to make up for never calling or stopping by to visit.

The reason I selected the photo above to accompany this post was not because the people depicted appear broke (although it was taken circa 1930, and I suspect they didn’t have a lot of money), but because the grandmother and great-grandfather show a lot of love their grandchildren through the simple act of sitting in the floor and playing with them on Christmas morning.

The photographer even comments that the dump truck he and his brother received were enjoyed for many years to come, probably because they came from someone who loved them so – not because they were especially expensive toys with flashing lights and computerized voices, etc.

Gifts aren’t all bad. After all, a nice gift can be an expression of love, if it is thoughtful and from the heart, not just because it is expensive.

I challenge everyone this year to go into Christmas shopping with a new attitude. Don’t feel an obligation to buy for everyone on your Christmas list. Feel an obligation to find a thoughtful, inexpensive way to mark the holiday season by telling someone you love and appreciate them.

Think about that person as more than just a name on your shopping list. What motivates them? What are they passionate about? What have they expressed an interest in over the last year? A “gift” for them could come in a tiny box, or be a big experience, and neither have to cost a lot of money.

It may take just a little planning or creativity on your part, but if done right, it will be more memorable than anything you find in a store.

Please share your Christmas shopping strategy with us in the comments below, and also look for more discussion on the subject of Christmas shopping at our Facebook page and Twitter feed.

Quantity vs. Quality

Explaining the value of something to kids is a difficult task, especially when they are very young. Kids do not inherently understand the values we place on things, and instead instinctively desire things that are pleasing to them. For instance, if you asked a toddler to choose from three coins, a dull penny, a new nickel and a shiny dime, they would likely choose the nickel. Why? Because the nickel is shiny, and bigger than the dime.

Kids don’t understand that the dime is worth twice as much. Now ask them to choose between a quarter and ten pennies. They’ll usually take the pennies simply because there are more of them.

We take these same lessons with us into adulthood. Sure, we’ve all heard that good things come in small packages, but for the most part we want bigger and better (and more). A bigger house, a shiny car, more money, and newer gadgets. Most people crave these things without stopping to think about their real value. It’s not entirely our fault.

Since the time of hunters and gatherers humans have always valued quantity. Whether it is storing berries for the winter, or adding to our expansive collection of DVDs, human beings perceive a larger quantity of something to be more desirable. However, if you stop and consider the stress the accumulation of these things creates in your life, you may be able to reverse this thinking.

“More is the Mantra of the Ego”

Dr. Wayne Dyer had a great line in one of his PBS presentations, Change Your Thoughts, Change Your Life:

“Our ego tells us that who I am, my identity, is with what I accumulate. So we become accumulation masters. More is the mantra of the ego.”

He went on to explain that the more we accumulate, the more we worry about our possessions. We worry that they may become stolen, or lost, or coveted by someone else.  We worry about their storage, and their insurance, and their maintenance. All these worries create stress in our lives. So how do we go about ridding ourselves of this stress, and our possessions accumulated over the years of feeding our ego?

Give It Away

Dr. Dyer recommends something drastic – giving it all away. Or, if not “all,” deciding what your most prized possession is and giving it away.

I’m a little more practical, even though I understand the psychological benefit of simply giving away your stuff. As a compromise, I recommend selling some of it first, either in a yard sale, on eBay.

Use the proceeds to pay off debt, or add to your emergency fund. What you don’t sell can then be given away to family members, your church, a charity, or to a complete strangers.  Imagine how good it would feel to hand over your prized DVD collection to a shelter, or to donate your Xbox 360 and 10-game library to a local Children’s Hospital.

A few years ago I sold my prized possession, a Chevy Silverado truck that I had fallen in love with at a local car lot. I could not afford the truck at the time, and was sacrificing in other areas just to make the truck payment and increased insurance costs. The experience forever cured me of car fever, but the profoundness of that experience did not stop there.

As the new owner handed over the cashier’s check (with a loan attached) I could literally feel the stress transferring from me to him. He even looked a little anxious about completing the purchase, probably because of the new loan he just took on with his bank, and knowing that his insurance, property tax, and gasoline expenses were all about to increase.

On the other hand, I was the one eliminating a car payment, reducing my insurance expense, and dropping the cost of an annual car tag.

By the way, three years after selling that truck I became debt free and bought another truck – this time with cash. So just because you give up something to sacrifice for a period of time, it doesn’t mean you have to part ways forever. It was a temporary solution to help us win with our finances.

Whether you ultimately decide to sell your excess things, or give them away, the value of having less “stuff” to worry about is worth far more than your collection of things. I challenge you to look around your own home and find things adding stress to your life. Free yourself from these burdens and enjoy the benefits of a much simpler existence.

I pushed the mower back into the garage and went inside to vent. My wife agreed that maybe it was time to look for a new mower. The next day I spent my lunch hour “test driving” a Toro zero-turn model which boasted reduced cutting time, better maneuverability, and other such marketing speak.

The summer between freshman and sophomore years of college I worked for a landscaper running a crew to mow residential and commercial lawns. He had one of these mowers and I always thought it would be “cool” to own one. Red flag number one.

While I was checking out the mower, the store associate pointed out that if I opened a store credit card account I would save an additional 10% off my purchase, and get zero-percent interest for 12 months. Naturally, I thought this might be a good idea – save essentially the cost of sales tax and pay it off for free over the next year. Red flag number two!

Taming the Inner Five Year-Old

Nothing against five year-olds, after all I am the parent of one, but they are impulsive personalities. If my son breaks a toy, he just wants to buy a new one. If he loses something, just buy a new one. Adults are a little like five year-olds sometimes, myself included. My trip to the tractor store was in line with the behavior of a five year-old, well, assuming they could drive.

This is what makes being in debt such a slippery slope to slide back in. Just six months or so after paying off our debt, I was actually considering opening a new credit card to save $250 on a lawn tractor, or deplete my savings $2,500 for same. As I sat there, I went through all sorts of rationalizations.

• My current mower is seven years-old
• This new mower would reduce the time I spend mowing the lawn
• This new mower would be much more fun to drive
• It is a pain to take my current mower in for repair, or try to work on it myself
• I don’t want to sink any more money into that old mower

Sounds a lot like the same rationalizations we make when buying a new car, doesn’t it? Fortunately, I took my own advice and decided to walk away. That night, I dragged the old mower out of the garage, removed the mower deck, and took a look underneath. This time I was lucky – just a broken traction drive belt.

With the help of Google, YouTube, and the remnants of my owners manual, I was able to replace the belt myself. While I had the deck off, I put on a new set of blades (I’ll sharpen the old ones and save them to rotate in when the new ones need sharpening), cleaned underneath well, put on a new mower deck belt, replaced the worn out deck wheels, greased the spindles, changed the air filter, changed the oil, and gave it a good cleaning.

When the tune up was complete, I have to say I sat back and admired the old mower. I almost felt a little guilty for wanting to get rid of it. When I consider that it saved me $2,500, I really felt affection for the old tractor. Good thing I ignored that inner five year-old.

This article appeared in the Carnival of Money Stories: The Sakura Spring Edition, and the Carnival of Money Stories: Financial Firsts Edition

Disclaimer: The information below is for entertainment purposes only and should not be used to treat a real health problem or psychological condition. Duh!

What is Financial Inferiority Complex?

FIC is a range of symptoms involving the central common sense system, traveling from the security gland to the heart. Fortunately, the brain is unaffected as those with FIC are typically not using it. If left untreated FIC can cause serious damage to one’s pride and sense of self-worth. Fortunately, there are a host of home remedies for FIC, which if utilized properly, can head off the need more invasive procedures later in life.

What are the symptoms of Financial Inferiority Complex?

Identifying the symptoms of FIC can be difficult, especially through self examination of one’s own habits. Often the affliction is detected by a friend or loved one honest enough to tell you the truth about your behavior. If you know anyone with the following symptoms, or recognize them in yourself, please read on to determine treatment options.

Symptoms include, but are not limited to:

• Hostility towards “rich” friends and associates
• Insatiable appetite for stuff
• Feelings of shame over debt
• Car fever, especially when accompanied by visits to new car lots
• Feelings of anxiety when credit cards are being swiped

Treatment Options

Financial Inferiority Complex presents in various forms, and the best course of treatment often depends on how long the patient has had symptoms, and the severity of those symptoms. For some, prescribing a budget and icing down their credit cards may be enough. For sicker patients, a complete credit card plasectomy may be required, which involves taking scissors to all credit cards in their wallet. This is a risky procedure as the closing of credit cards after surgery may lead to low FICO scores, or in extreme cases no FICO score at all.

The best way to prevent Financial Inferiority Complex is to subscribe to Frugal Dad. The daily dose of financial common sense helps patients cope with the barrage of temptation that surrounds them. But you should not rely on Frugal Dad alone. It is ultimately up to you to be content with your life and your posessions.  Judge your success not on the accumulation of material things, but on the accumulation of relationships built with loved ones. On the impact you have in other people’s lives. Ultimately, that is the only known vaccine guaranteed to prevent Financial Inferiority Complex.