Money for the Rest of Us

This time of year we’re bombarded by: “Buy, Buy, Buy” along with “Give, Give, Give”. There is much talk about Black Friday, and many links to Amazon gifts we recommend. Even in the non profit world end of the year appeal letters are being sent by every nonprofit in the universe. And I wholeheartedly encourage you to donate money to these organizations. But, don’t stop there. This year, Take Action.

Here are five reasons why getting off your ass and doing something good this holiday season will help your pocketbook:

1. When You Feel Better You’ll Spend Less. By volunteering at an organization you’ll feel better about yourself. When you feel better about yourself you’ll spend less money.
2. Time Spent Helping Others = Time Not Shopping. When you’re volunteering somewhere it means that you can’t be shopping at that point in time.
3. Seeing Others’ Circumstances Will Help You Remember What’s Important. I’m not telling you that volunteering will make you renounce shopping, but it will help you to remember that the holidays aren’t all about gifting. This time of year is about spending time with friends and family and those you love.
4. It’s Tax Deductible (sort of). Ok, this one is a little bit of a stretch, but when you volunteer somewhere, various expenses are tax deductible (like transportation to and from the site.) This site details some valuable information about what is tax deductible when volunteering.
5. When You Volunteer You Don’t Have to Give Money. I like to give money to organizations that I care about, but frankly, there are just too many to go around. So, volunteering is a great way to ease the strain on my pocketbook, and give time instead of dollars.

Giving money is a great thing to do this time of year. But, it’s just as important to give time as it is to shell out those dollars. When you donate your time to an organization those you are helping will benefit, and it will help your wallet.

So, just get off your ass and do something this season. It’s easier than you might think. And far more rewarding.

I’ve been thinking lately that Personal Finance Bloggers must be control freaks. Who else would spend so much time thinking about money? Who else would bother to create elaborate budgets? Who else would meticulously count every cent they earn, spend, and save? Who else would not only do these things, but then write about them?

Yes, I think Personal Finance bloggers must be control freaks. I know that I’m a control freak. Once, I was talking to a pilot about how I don’t like flying and he said, “Well, you must like to be in control of things. Because I find that most people who don’t like flying don’t like it because they can’t control (or even see) what is going on.” I just laughed because it was so true. Better yet, it’s actually helped me be less afraid of flying because I know why I’m scared and I’m able to relinquish control of the situation.

Being a control freak when it comes to money can be both a good and bad thing. It’s good because it helps us to “keep control of our finances” and avoid spending too much. As control freaks we know where are money is going and how to keep it going to the “right” places. Generally, we control freaks have our finances figured out.

But, we also worry and think more about money than the average non-control freak. In doing this we spend less time doing and thinking about the things we care about.

Recently, someone very dear to me called me out on my control freak-ness when it comes to money. Something to the effect of “Who cares if we go $40 over our budget for dining out this month? We can afford it and it’s a special occasion. So why be cheap?” This really got me thinking. Is it worth it to be so concerned about money?

I’m in the fortunate enough position where if something tragic happened I would be able to manage for a few months. (And I’m sure, if it were that tragic, with the help of friends and family I could make do much longer than that.) So, why should I be so concerned about money? Isn’t it better to enjoy my todays, so long as it doesn’t dramatically impact my tomorrows?

The Festival of Under 30 Finances, (May Graduation Edition) has arrived! The question was: “What’s one piece of financial advice you wish someone had given you when you graduated from college? (Or if you haven’t yet graduated, what do you think you’ll struggle with most and need advice about when you graduate?)”

We had several thought provoking answers:

Congratulations, May Grads! posted at Grad Money Matters included the following advice: “For high school grads: Go to college and get a degree in a major that will result in a good high paying job and For college grads: Postpone major purchases for at least one or two more years.”
and

Best Credit Card and Money Advice for College Grads (Ask Mr Credit Card’s Blog) posted at Ask Mr Credit Card’s Blog advice included: “Pay Your Credit Card Bills Fully and Your Other Bills On Time and Run Your Finances Like a Business.”

The Digerati Life answered:

The one piece of financial advice I wish someone gave me was to learn more about how to properly diversify through asset allocation. Though I did learn how to invest in the markets right after I graduated from college, I believe that I didn’t receive a thorough understanding of the concepts of asset allocation and diversification. I simply practiced what the current financial magazines of that time taught me, but such information wasn’t grounded on strong theory. I should have been given some classic financial books early on such as “Random Walk Down Wall Street”. If I had, I would have done a better job with my investment portfolio and track record then.

and added this post: How Much Credit Have You Turned Down? Maybe Half A Million Dollars Worth

On to the rest of the carnival:

Housing

Michael Emilio presents College Life: Is it Better to Live On-Campus or Off-Campus? posted at South Florida Realtor.

Darius presents How much worse can housing get? posted at Related to Mortgage.

Steve Leung presents How Home Buyers and Sellers Get Trapped in Straw Scams posted at Silicon Valley Real Estate Blog at 1SiliconValley.com.

Stock advice/investing

FMF presents The Greatest Enemy of a Good Investment Plan posted at Free Money Finance.

Tyler presents How Not To Make Money In Stocks Guaranteed! posted at Dividend Money.

fletchlives presents Sometimes You Should Roll The Dice posted at fletchlivesforecasts.

Alvaro Fernandez presents Trading psychology and Trader Performance posted at Brain Fitness.

Saving on Household Costs

Marshall Middle presents Update: Step by Step guide to Saving Money on your Comcast High Speed Internet posted at How to Make a Million Dollars.

The Frugalist presents How to Save $500 a Year on Gas - 27 Tips and Tricks posted at Frugalist.

How to Save Money while Still in School

Ted Reimers presents How to save money in College posted at CampusGrotto College Blog.

For the self employed/bloggers out there

Jimmy Atkinson presents How to Avoid Being Audited When You’re Self Employed posted at Ask the Advisor.

Robinson Go of Good Blog Advice presents 8 Shrewd Ways to Optimize Google AdSense posted at Rob’s Blog: Advice for Bloggers.

Where to Work

Robinson Go of Good Blog Advice presents 8 Shrewd Ways to Optimize Google AdSense posted at Rob’s Blog: Advice for Bloggers.

Paying Off Student Loans

David presents Graduating? Different Ways To Start Paying Off Your Student Loans. posted at My Two Dollars.

Interest Rates and Credit Cards

Jeremy presents Lower Your High Interest Rate posted at ASAP Credit Card.

Planning for Health Issues

Big Cajun Man presents Cancer, now that I have your attention posted at Canadian Financial Stuff.

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I’m hosting the next Festival of Under 30 Finances.  The question is:

What’s one piece of financial advice you wish someone had given you when you graduated from college? (Or if you haven’t yet graduated, what do you think you’ll struggle with most and need advice about when you graduate?)

Please submit your articles through this submission tool by May 16 at midnight.  The carnival will be posted on the 18th.

As recent graduate, I couldn’t wait to start earning some money. Unfortunately, with the lack of financial education in schools, the only guidance I had was what I received from my parents and what I read. That only gets you so far. With all the advice dispensed this time of year, I thought a little bit more couldn’t hurt. Moreover, I gathered up some input from other twenty-something bloggers and included that here as well. Enjoy!

1. Find a something that you enjoy and do it for a living. This tip was originally find a job that you enjoy, but I realized that many people don’t consider the way they earn a living a “job.” If you find a job you truly enjoy, the money will follow. At least that’s what everyone says. I know I enjoy helping people (like doing service work). Even if I don’t do this for a living there are other ways to help people. Here are some suggestions on how to do that on a small budget.
2. Spend less than you earn. This goes hand-in-hand with getting out debt. Getting out of debt can be a huge challenge that can take some people years and years. Be patient and persistent and you will overcome it. Grad Money Matters offers some great advice on how to get out of debt.
3. Save. There’s great beauty in compound interest. If you need convincing that you should start saving now, take a look at this chart. Here’s a good post from I Will Teach You to Be Rich about saving and budgeting.
4. Have fun. Just because you’re not in college doesn’t mean you can no longer have fun. Here are some tips from others on spending less while having fun. Remember you don’t have to be totally cheap to have a good time. Read this post from Ramit if you need to be convinced. Here’s some advice from Grad Money Matters on Frugal Ways to Spend Time with Friends. Noah from Okdork offered this advice: “Pre-party. Drink a little before you go out, taxi to the place and you just saved a ton of money on drinks. Or bring a flask to the bar.”
5. Wear Sunscreen. This is very cliche, but it’s true. If you don’t have your health you can’t effectively take care of yourself or your finances. Find an activity that helps you stay in shape and participate in it frequently. This can be anything from running, to tennis, to yoga. Just take the time to take care of yourself.

I wrote this top 5 post as part of Problogger’s Top 5 group writing project. I’ll link to some other personal finance top 5’s later this week.

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Yesterday I wrote about being treated differently because you are young and the economic consequences for companies who treat their young customers differently than their older ones. Not only do the offenders lose out when they discriminate, but as young people know, they too lose when they are treated differently because of their age.

Here are 5 ways that I’ve found that work well to prevent age discrimination (and essentially appear older than you are):

1. Use the Phone. When you call people they can’t (usually) tell your age. If you speak well (see tip 5) the person you are talking to will assume that you are older than you are.
2. Email. Like with the phone, the customer service representative has no idea if you’re 14 or 84. Moreover, I like this method because you can present all of the facts and requests before you get a response. On the phone, after you complain the customer service person will likely offer a “solution” before you can, but in email you can say “…and your company overcharged me for x,y, and z. I request that you remove these charges and credit my account with an additional $10 for the inconvenience this has caused me.” (You’d be surprised how many times this actually works.
3. Dress Nicely. Unfortunately, to be treated the same as a 40-year-old in jeans, you have to wear black pants. Look professional and you will get treated like a professional and not a twenty-something. (I personally hate doing this more than anything. Shouldn’t people treat me the same whether I’m in sweat pants or a skirt suit?)
4. Tip well. I try to always tip 20% (unless the service is absolutely horrid). Sometimes this means over-tipping, but I’m entirely convinced that if all twenty-somethings tipped really well, service people would start treating us better.
5. Choose your words wisely. When you are speaking don’t use words such as um, like, and slang. Keep your voice calm, yet be firm. Be clear in what you’re asking for.

I’m sure this list is not complete, so if you have any more ideas, pass them on.

Day-to-day we all are blatantly or unintentionally judged or discriminated against for various reasons. But there is one form of discrimination that makes me angrier than all others: ageism.

I hate it when people treat me poorly because of my age. Yes, part of the reason I hate it is because I don’t like being treated unfairly; but there is a bigger reason why I despise ageism.

It just doesn’t make sense to treat young people poorly! It doesn’t make sense socially; we should treat everyone equally. And it doesn’t make sense economically.

Young people may not make a lot of money right now. But they control more money than any other group. What do I mean by saying that they control more money than any other group? Well, they have some spending power now, AND they control all of their future spending power. And what we experience right now, when we’re twenty-something, will influence us 30, 40, 50 years from now.

When I experience great customer service I remember it. For instance, when I was around 16 I was going to the mall and my mom asked me to get some links removed from a watch for my brother. The first jeweler I went to looked me up and down and said snidely, “We only do that if you purchased the watch here.” But, the second jeweler I went to said “We’d be happy to do that for you.” And, they didn’t even charge me for the service. I still remember that jeweler and I think of them whenever I consider buying jewelery.

Likewise, there are companies and restaurants that have treated me so poorly I will never go back. In DC there is an extremely nice restaurant called 1789 which we once ate at for a special occasion. The waiter did the absolute minimum he had to do to take or order and plop our food in front of us (all the while waiting hand and foot on the older couple at the next table.) A certain airline (American, if you must know) has also treated me extremely poorly– never via email or on the phone, only to my face. I wonder why…

Places that treat me differently because I am young lose not only my business in the recent future, but for the next 70 years (or however long I live.)

Let’s just think about this for a minute. I spend approximately $2000 on plane tickets a year. Assuming I live until I’m 80, I still have 57 more years to buy plane tickets. For me alone, assuming that my amount of travel doesn’t change, that plane ticket prices don’t change, and not accounting for inflation: American Airlines has lost $112,000 because they treated me poorly. But, it’s not just about me. I will someday have an impact on tickets my spouse, children, friends, and business buy. Conservatively, in today’s dollars; American Airlines probably will lose over a half a million dollars in revenue from treating me poorly (on several occassions) because I am young.

Now, let’s assume that American Airlines was also ageist against other young customers and lost those young peoples’ business because of it. According to US census data from the year 2000 there are 20.5 million people in my 5-year age group (that of 15-19 years old at the time the 2000 census was taken. Today those people would be 22-26 years old.) Let’s just say that 1/10 of 1 percent (.001) were also discriminated against by American Airlines (that’s 20,500 people). Assuming they too have $500,000 worth of spending power on plane tickets over the course of their lifetimes, we have a grand total of 10 Billion 250 Million Dollars (that’s 10,250,000,000) that one company lost because they didn’t treat their young customers the same way they treated their older customers.

Quite honestly, I didn’t even expect the number to be that high. We are only looking a very small number of people in a very narrow age range. But, it just goes to show how dumb it is to treat young people differently.

The moral of this story is: if anything, treat young people better than old people! We twenty-somethings have more money to spend than any of your other current customers.

(This post was originally titled “Ageism, Twenty-Somethings, and 10 Billion Dollars.” Then as I was writing, I thought about the one sector that figured this all out a long time ago. And boy did they profit from it….)

It happens to nearly everyone, your wallet gets lost or stolen and you panic. Where do you begin and what do you do? Addressing the problem of a stolen wallet can seem overwhelming, but if you follow the three steps below, you should be well on your way to a having new wallet with new cards with as minimal hassle as possible.

First, however, a caveat: You should report the wallet as lost or stolen as quickly as possible. The longer you wait the more difficult the situation will become.

1. Call your credit card companies and banks. For each credit card or ATM card in your wallet, call the issuer and report the item as lost or stolen. Most banks and credit card companies are very friendly about this and will help you through the process of canceling the card, getting a new one, and reporting any fraudulent charges that may have already occurred. You’ll have to answer a number of questions and may even have to fax in some other proof of identity (like a utility bill), but it all depends on the issuer. Also, if you need cash instantly many banks will allow you to take a certain amount out (usually around $200) if you go to the local branch and speak with someone.
   Think about what other cards were in your wallet. Call your department of motor vehicles, insurance companies and any other company whose card you might have had in your wallet. Though uncommon, it’s possible that the finder/thief will go to the movie store and check out (and never return) several movies or video games in your name.
2. Call one the three credit bureaus. Call either Equifax, Experian, or TransUnion. You can ask them to issue a fraud or security alert that is either temporary or permanent. This alert will not deny you any credit, nor will it affect your credit score. It will only force any companies requesting credit to further verify your identity before issuing credit. You only have to report to one of the credit monitoring bureaus as they are required to share information with the other two.
3. File a police report. This can be the biggest hassle because it requires that you go to the local station and fill out some paper work. Filing the police report may be required by credit card companies or banks if there have already been fraudulent charges.

If you take these three steps as quickly as possible usually you can get new credit cards and ATM cards within a few days and the entire issue can get cleared up within a month.

Extra tip: It’s a good idea to always leave one credit card or ATM card at home. You don’t need to be carrying all cards at all times; and that way, if your wallet gets lost or stolen you will still have another form of payment.

Queercents has an awesome post about taxes for twenty-somethings.  If you still have yet to think about your 2006 taxes check out this post.

I find that one of my problems as a young person trying to plan for the future is that I’m young and retirement (and even a real adult life with a house, family, kids) seems like such a long way off. How much of my fun here and now should I put off so that I am comfortable later on in life?

One of the first things that comes to mind is a quote from the book Tuesdays with Morrie (an amazing book, check it out if you haven’t read it):

“Life is a series of pulls back and forth. You want to do one thing, but you are bound to something else… A tension of opposites, like a pull on a rubber band. And most of us live somewhere in the middle.”

That is how I feel with my financial planning– sometimes I’m pulled towards saving as much as I possibly can so that later in life I will be financially independent and other times I feel like throwing caution to the wind and saying “screw it, I may die tomorrow so I might as well make the most of today.”

I think that many of us feel this pulling back and forth in our financial planning. But in order to come up with a plan we have to reconcile our options and figure out what we are comfortable with.

For me, that point of comfort is about 20% of my income. I could be saving more, but then I would be cutting some things out of my life that I just am not comfortable with. For instance, I love traveling. I love seeing new sights, meeting new people, immersing myself in new cultures, experiencing new foods. About 10-15% of my income each year goes towards traveling. And I would rather cut my food budget in half and eat ramen than cut down on my travels.

And that 20% of my income going into savings? I can justify that amount to myself, the amount that is not being spent on the here and now, because I plan to spend it on traveling in the future. That is my real financial dream. To have enough money when I retire to be able to take as many trips a year as my spouse and I want. And I will get there by saving 20% of my income now (which isn’t much these days, but will hopefully be more in the future).

Having goals that you can visually picture– such as a goal of visiting Australia– makes it much easier to justify saving than it would to have a goal that isn’t visual– such as being rich (what am I going to picture in my head, sitting in bags of money?). Think of what you love and set financial goals around these passions.

This post was written in response to this week’s Festival of Under 30 Finances:

“What are your real financial dreams? If you want to become rich, how do you actually plan to get there. Will you still be young enough to use that money or will you be too old to really use it?”