by Paul B. Farrell
Seven reasons a 'good' depression beats a new Great Depression
Yes, a depression. Spelled: D-e-p-r-e-s-s-i-o-n. Wake up America, recessions don't work any more. Why?
Get serious folks. We had a 30-month recession not long ago. Eight years later the market's still barely at its 2000 peak, a loser. Worse, we're back in a new recession. But Washington politicians are keeping it a secret, feeding us doctored feel-good statistics as legendary political historian Kevin Phillips wrote in "Numbers Racket: Why the Economy is Worse Than We Know."
So we blindly refuse to bite the bullet and stop our out-of-control spiral into collapse. America needs a big wake-up call ... and it's coming soon, whether you like it or not!
Last November we posted "17 reasons America needs a recession." Today it's far worse, and getting worse still.
Most economists predict it'll take till 2010 to burn off our excess housing inventory. RGE Monitor say Fannie and Freddie bailouts aren't working; they'll soon be "profoundly insolvent" and need to be "nationalized." Treasury Secretary Henry Paulson has no long-term plans, he's a caretaker, plugging holes, anxious to get back to Wall Street's money machine, running out the clock till he turns over the catastrophe he enflamed to a new bunch of politicians and their armies of 42,000 greedy lobbyists.
Lessons learned? Zero. Why? Wall Street, Washington and Corporate America are a one-trick pony with one narrow-minded strategy: Economic g-r-o-w-t-h, bull markets, megabonuses. In good times they tout "free markets." But when greed bombs, these big babies throw free market "principles" under the "Reagan Revolution" bus as their lobbyists go whining to Congress for megabillion taxpayer bailouts and access at the Fed casino's discount window to siphon off more taxpayer money. What hypocritical wimps!
Wall Street and its co-conspirators are doing such a miserable job, America needs a new strategy: Stop all the short-term "hole-plugging." Let go and let an old-fashioned "Good Depression" do the job that our happy-talking leaders refuse to do. Let it clean house and reawaken America to basic values. Otherwise a "Good Depression" will turn into a new "Great Depression."
Here are seven strong reasons favoring this alternative strategy:
1. Yes, an Honest Diagnosis: Soul Sickness in American Capitalism
America's problems are not the economy, not markets, nor even politics. The endless bickering campaign is distracting us from facing our real long-term problems. Yes, our economic pains are real, but they're just symptoms. Since 2000, America has seen a relentless, sickening overdose of bad news: stupidity, deceit, corruption and even evil behavior. Americans are n-u-m-b, suffering post-traumatic shock syndrome.
The real problem is our thinking, our brains -- something deep in our cosmic soul, says Jack Bogle's "The Battle for the Soul of Capitalism." We lost our values, our moral compass.
2. Yes, Time to Admit This Really Is Like the 1930's Great Depression
Comparing today with the Great Depression has become common sport. In a Newsweek special "Seeing Shades of the 1930s," Daniel Gross writes: 75 years ago "Wall Street, after two terms of a business-friendly Republican president, self-immolated on a pyre of greed, incompetence and excessive optimism."
Like Dr. Scott Peck says in "The Road Less Traveled:" "Life is a series of problems. Do we want to moan about them or solve them?" We need to grow up, stop whining, roll our sleeves up and solve real problems.
3. Yes, a Good Depression Would Reveal Self-Destruct Bubble-Thinking
In a recent Atlantic article "Irrational Exuberance" author Robert Shiller warns: "Bubbles are primarily social phenomena. Until we understand and address the psychology that fuels them, they're going to keep forming."
Housing inflated 85% in a decade: "Historically unprecedented ... no rational basis for it." Today there's a huge excess housing inventory, higher-credit mortgages are now in jeopardy, the write-offs are now projected at $2 trillion -- on top of a $3 trillion war, $10 trillion federal budget, and more.
Bubble-thinking is contagious; it will trigger a pandemic. Shiller says "few people seem immune to boom thinking. The recent bubble grew so large partly because the very people responsible for the financial system's oversight came to share the general public's rosy expectations."
Unfortunately our leaders are still ignoring the underlying problem: Nothing is being done about "our psychological vulnerability to bubble-thinking."
Shiller then warns of a new megameltdown: "We recently lived through two epidemics of excessive financial optimism. I believe we are close to a third episode, only this one will spread irrational pessimism and distrust -- not exuberance ... our economic problems will become much worse than they need to be, and our social problems will multiply."
4. Yes, a Good Depression Will Stir Outrage, Force Real Reforms
In a recent Wall Street Journal article, Jim Grant, Forbes columnist and respected editor of the Interest Rate Observer, framed his title as a question: "Why No Outrage?" Why? He notes: "Through history, outrageous financial behavior has been met with outrage. But today Wall Street's damaging recklessness has been met with near-silence, from a too tolerant populace."
Tolerant? No, n-u-m-b! "Human progress seems to be the likeliest culprit." Fear-driven, we prefer the devil we know to a new one. Yet while "Wall Street may be sweating to fill out this year's bonus pool," Grant worries that Wall Street will run "itself and the rest of the American financial system right over a cliff." A Good Depression brings outrage.
5. Yes, Good Depression Forces Wall Street to Think Outside the Box
In a great Bloomberg Markets feature, "No Easy Fix," we're told Wall Street's "profit formula has hit a wall ... Wall Street's money-making machine is broken and efforts to repair it after the biggest losses in history are likely to undermine profits for years to come."
Merrill Lynch is a good example: It is selling 615 million new shares, a 38% dilution, while hanging on to "$30.6 billion in crummy derivatives," says Dennis Berman in the Wall Street Journal. Merrill's stock is about half the 2004 price of $55. Merrill "needs to come up with $2.8 billion in new profit, not sales, to get back to its 2004 per share earnings levels. That's $43,000 in new profit for each of Merrill's 65,000 employees."
Unfortunately, Merrill's cash cows (off-balance sheet gimmicks, derivatives, repackaged asset-backed securitization) that made megabucks the past decade "have largely disappeared. That puts the burden on Merrill's old-line businesses -- brokerage, asset management and investment banking."
Solutions? Cut costs, steal market share or "gradually start to take on more risk on Merrill's trading desks, which produced the bulk of the $30 billion in losses the past 12 months."
Warning: Expect more desperate, high-risk and stupid moves: A new BusinessWeek report says Wall Street's already lobbying Congress to raid America's $2.3 trillion "pension honey pot." Warning: These are the same greed-is-good Gordon Gekkos that brought us the last two rapid-fire meltdowns. Stop them before they turn the next into a Great Depression.
6. Yes, a Good Depression Can Prevent America's Decline and Fall
In "The Price of Liberty: Paying for America's Wars," Robert Hormats, Goldman Sachs international vice chairman, traces America's wartime financing from the Revolutionary War to present. Today we're "relying on faith over experience, hoping that sustained growth will erase deficits and that the ballooning costs of Social Security, Medicare and Medicaid will be manageable in the coming decades without difficult reforms."
Former U.S. Comptroller General David Walker put it in more ominous terms: "There are striking similarities between America's current situation and that of another great power from the past: Rome." They fell for three reasons "worth remembering: declining moral values and political civility at home, an overconfident and overextended military in foreign lands, and fiscal irresponsibility by the central government."
And Pulitzer Prize winning geographer Jared Diamond takes an even broader historical view in "Collapse: How Societies Choose to Succeed or Fail:" Many "civilizations share a sharp curve of decline. Indeed, a society's demise may begin only a decade or two after it reaches its peak population, wealth and power." He draws historical parallels with America in the past decade.
Warning: Wall Street's next meltdown won't be a mere statistical recession. Our monetary system, our financial system and our tax base are burning out. Like our overextended military, we are handicapped in our ability to face new threats, much as were Rome, the Mayans and other great civilizations.
7. Yes, a Good Depression Will Shock America's Warring Soul
President Bush said he's a "war president." The American economy is a war economy driven by our warring soul. We spend 54% of the tax dollar on war, 47% of the world's total military spending. A half century ago President Eisenhower warned of this "military industrial complex" that's running America into bankruptcy.
Today, our economy thrives on war and disasters, generating such "spectacular profits that many people around the world" are convinced America's "rich and powerful must be deliberately causing catastrophes so that they can exploit them" says Naomi Klein in "Shock Doctrine."
Klein's snapshot of Wall Street's soul is disturbing: "An economic system that requires constant growth, while bucking almost all serious attempts at environmental regulation, generates a steady stream of disasters all on its own, whether military, economical or financial. The appetite for easy, short profits offered by purely speculative investment has turned the stock, currency and real estate markets into crisis-creation machines"
Pray for a Good Depression ... before they trigger another Great Depression.
2008年8月13日 星期三
Some Live Without Credit Cards - Could You?
by LaRita Heet
Is there life without credit cards? And if so, is it worth living?
In today's instant gratification world, the thought of forgoing credit cards in favor of a cash-only lifestyle seems as foreign as mailing a handwritten letter through the post office: We know some people do it, but it's hard to understand why.
Yet there are those who have declared, "Enough is enough!" and dedicated themselves to lives sans credit cards.
According to the Fair Isaac Corp., creator of the popular FICO credit scoring model, about 20 to 25 million people in the United States do not have any credit. An additional 30 to 35 million U.S. residents have a minimal amount of credit history, according to Fair Isaac statistics. These figures mean that approximately one in five Americans do not have access to traditional credit.
The Federal Reserve Board Survey of Consumer Finances of 2004 showed that as many as one in four U.S. consumers live without credit cards. This triennial study of approximately 4,500 respondents showed that 74.9 percent of those surveyed had credit cards. José Garcia, senior researcher at Demos, a national, nonpartisan, public policy research organization, divides noncardholders into two groups: those who are unable to obtain credit cards, and those who choose not to use them.
No Credit, No Choice
According to Garcia, many of those without credit cards simply do not qualify for credit due to bad credit, no credit, immigration status or another reason.
Gail Cunningham, senior director of public relations for the National Foundation for Credit Counseling (NFCC), says such mixed feelings over credit cards are common. When, during NFCC debt-counseling sessions, debt-ridden consumers -- many of whom have already had their charging privileges suspended by the lender due to non-payment -- are asked to cut up their credit cards, the reactions are often extreme. "Some people are like, 'Give me those scissors! I never want to see plastic again,' while others will clutch one of their cards close to their heart and say, 'I loved this card,'" says Cunningham.
No Credit by Choice
Fifty-eight percent of credit cardholding households surveyed in the Fed's Survey of Consumer Finances had balances on their cards, and until a few years ago, J.D. Roth and Ashkan Amouzegar were among them. Roth, 39, of Portland, Ore., has charted his foray into a credit cardless lifestyle on his popular personal finance blog, Get Rich Slowly.
Amouzegar, 30, a Portland, Ore., resident and business consultant in merchant financial services, made the decision to stop using credit cards two years ago. Though the anti-credit card crowd decline plastic for reasons ranging from anti-debt religious convictions to extreme wealth (and lack of "need" for credit), Roth and Amouzegar stopped using credit cards to help rein in their spending habits and control their finances.
Amouzegar -- who once had 12 credit cards -- used to think nothing of using his plastic to buy his friends rounds of drinks and expensive dinners. Once, he confesses, he even took a monthlong trip to Paris with a friend -- and the entire trip was charged on his credit card.
"Through college and after, I used credit cards religiously and part of the problem was my irresponsibility of using it incorrectly. Most people, I think, don't view credit cards as a loan from the bank, but as extra income, and I viewed it as, 'Oh, my Citibank has a $5,000 limit' -- I thought it meant, 'I have $5,000 to spend now,'" says Amouzegar.
Amouzegar, now only two years away from being completely debt-free, chose to not only discontinue using his cards but to cancel all the accounts, including his "emergency card." The downside of no credit cards is that, even though financial experts advise consumers to save from three to six months' worth of income in an emergency savings fund, Amouzegar says, "Well, for a lot of people, that's not realistic. If there is a major car repair or something happens, what do you do if you don't have that emergency card? Knock on wood, I haven't been in that situation yet, but you never know when your refrigerator is going to go out. You never know when your car's going to blow up, or that you need to fly somewhere due to a family emergency."
NFCC's Cunningham agrees. "None of us has a very well-polished crystal ball to know what tomorrow's going to hold, and this person not using credit might think, 'I don't care; I'm not going to need credit in the future,' but we really don't know that," she says.
Like most non-credit cardholders, Amouzegar uses his Visa-logo debit card in those situations that traditionally demand a credit card: renting a car, booking a hotel room, purchasing airline tickets and making online purchases.
He has run into occasional glitches renting cars with his debit card, as on a recent vacation. "The downside was, when I went to Maui, they would have done a charge authorization on a credit card, but since I didn't have a credit card, they did it on my debit card, so they basically held $250 until I returned the car. So that tied up $250 out of my checking account."
Turned Off
In 1998, GetRichSlowly's Roth paid off his high-interest credit card debts with a lower interest rate home equity loan and now pays a single monthly payment. "When I did that, I made a vow to myself -- and I promised my wife -- that I was going to cut up my credit cards, and I did," says Roth. "It's perfectly possible to live a happy life without credit cards. They're not a requirement. It seems to me that in our society, we get hung up on the fact that we must have credit cards, but it's just not true."
"The reality is that the practices of credit card issuers can be harsh on individuals," Demos' Garcia says. "It is those types of practices -- tricks and traps -- that I think will stop consumers. I think we're seeing it more now due to that -- that people, after a bad experience with a credit card, have stopped using them."
Although it's easy to blame the banks for high credit card bills, skyrocketing interest rates, and never-decreasing card balances, Amouzegar says that while card-issuing banks may be "crafty," they are not dishonest. Instead, it's the fault of the cardholder when debts get out of control. "Those people might just be making minimum payments on a really high interest rate. I would question, 'How did that interest rate get sky-high?' Did they make a late payment before? Interest rates don't just automatically go to 18 percent or 24 percent -- there has to be something done by the cardholder to trigger the rate to go from a preferred rate all the way up."
Revolving vs. Nonrevolving Credit
Before canceling credit card accounts, stop to consider the long-term implications on your credit score, says NFCC's Cunningham, noting that both revolving credit (in the form of credit cards) and nonrevolving credit (in the form of installment loans, such as auto loans, mortgages or other fixed-rate loans) are factored into a person's credit score. "The elements that are weighed to create your credit score include a review of different types of credit, and how you handle those. For instance, a credit card is going to demonstrate how, if you pretty much have an open-end except for a credit ceiling, you can charge varying amounts each month, thus your payment each month is going to be different, and they like to see how you handle that, versus a fixed-rate loan," she says.
Those who have paid off and then canceled their credit card account may end up "hamstringing" future efforts to obtain credit, because that old account will eventually rotate off your credit report after a period of time (usually seven years), says Cunningham. "It's better to leave it open, because this is another element that is weighed in the credit-scoring model: They like to see longevity. They like to see that you've had an account open for a long time and handled it responsibly."
Closing a credit card account can also adversely impact your credit rating by changing your debt utilization ratio -- the amount of money you owe as compared to your available credit. For example, if you close an account with a $1,000 credit limit, your overall available credit number will lower, consequently skewing your debt utilization ratio.
The Bottom Line
Ask any personal finance expert, and she will agree that credit cards themselves are not the cause of anyone's debt. Instead, it's the misuse of credit that is to blame. Cunningham jokes about a sticker some debtors apply to their mirrors, which states simply: "You're looking at the problem."
Many people, once they've paid off their debts, are anxious to jump back on the credit card express to Debtville, says Cunningham. "A lot of people want to re-enter the world of credit simply because we live in a credit-dominated society."
"I think the most important thing is, get your credit card and pay it off at the end of the month," Garcia says.
According to Demos' research, many of those who don't pay off their balance in full every month simply cannot afford to, says Garcia. An increased cost of living, a set income and the lack of a financial safety net lead a lot of people into deepening debt, Garcia says. "So it's not as simple as wanting to pay your credit card off. But if you can, pay it off. That way, you have a revolving line of credit, which is very useful. It's short-term loans. Take the money upfront and then pay later so you don't pay any interest rate or fees. But again, that's not necessarily the reality with a lot of Americans and low-income individuals now that we're close to a recession."
Will Amouzegar rejoin the Land of the Plastic once he's paid off his debt? "No," he says without hesitation. "I personally don't have the restraint to not view credit as extra income. I think that after the process of having been in debt and paid it off, I think I've learned my lesson, but still the temptation is there."
"Ultimately, credit card companies are really a game, and you really have to be an educated consumer, and I think, be aggressive with them, because they bank on you not having knowledge," says Amouzegar.
The Alternatives to Credit Cards:
* Visa or MasterCard debit cards: Though a MasterCard or Visa debit card is typically a good credit card substitute, the downside is that, when it comes time to reserve a hotel room or rent a car, there's a good chance that the hotel or rental card agency will create a $200-$500 or more "hold" on the debit card, and leave you with significantly less available cash in the bank.
* Emergency fund: Financial experts recommend saving an emergency fund of three to six months' worth of living expenses in case you face an unexpected job or financial crisis.
* Installment loans from banks or credit unions: There are different installment loans available for different situations. The interest rates will be is fixed, with a set payoff date.
Is there life without credit cards? And if so, is it worth living?
In today's instant gratification world, the thought of forgoing credit cards in favor of a cash-only lifestyle seems as foreign as mailing a handwritten letter through the post office: We know some people do it, but it's hard to understand why.
Yet there are those who have declared, "Enough is enough!" and dedicated themselves to lives sans credit cards.
According to the Fair Isaac Corp., creator of the popular FICO credit scoring model, about 20 to 25 million people in the United States do not have any credit. An additional 30 to 35 million U.S. residents have a minimal amount of credit history, according to Fair Isaac statistics. These figures mean that approximately one in five Americans do not have access to traditional credit.
The Federal Reserve Board Survey of Consumer Finances of 2004 showed that as many as one in four U.S. consumers live without credit cards. This triennial study of approximately 4,500 respondents showed that 74.9 percent of those surveyed had credit cards. José Garcia, senior researcher at Demos, a national, nonpartisan, public policy research organization, divides noncardholders into two groups: those who are unable to obtain credit cards, and those who choose not to use them.
No Credit, No Choice
According to Garcia, many of those without credit cards simply do not qualify for credit due to bad credit, no credit, immigration status or another reason.
Gail Cunningham, senior director of public relations for the National Foundation for Credit Counseling (NFCC), says such mixed feelings over credit cards are common. When, during NFCC debt-counseling sessions, debt-ridden consumers -- many of whom have already had their charging privileges suspended by the lender due to non-payment -- are asked to cut up their credit cards, the reactions are often extreme. "Some people are like, 'Give me those scissors! I never want to see plastic again,' while others will clutch one of their cards close to their heart and say, 'I loved this card,'" says Cunningham.
No Credit by Choice
Fifty-eight percent of credit cardholding households surveyed in the Fed's Survey of Consumer Finances had balances on their cards, and until a few years ago, J.D. Roth and Ashkan Amouzegar were among them. Roth, 39, of Portland, Ore., has charted his foray into a credit cardless lifestyle on his popular personal finance blog, Get Rich Slowly.
Amouzegar, 30, a Portland, Ore., resident and business consultant in merchant financial services, made the decision to stop using credit cards two years ago. Though the anti-credit card crowd decline plastic for reasons ranging from anti-debt religious convictions to extreme wealth (and lack of "need" for credit), Roth and Amouzegar stopped using credit cards to help rein in their spending habits and control their finances.
Amouzegar -- who once had 12 credit cards -- used to think nothing of using his plastic to buy his friends rounds of drinks and expensive dinners. Once, he confesses, he even took a monthlong trip to Paris with a friend -- and the entire trip was charged on his credit card.
"Through college and after, I used credit cards religiously and part of the problem was my irresponsibility of using it incorrectly. Most people, I think, don't view credit cards as a loan from the bank, but as extra income, and I viewed it as, 'Oh, my Citibank has a $5,000 limit' -- I thought it meant, 'I have $5,000 to spend now,'" says Amouzegar.
Amouzegar, now only two years away from being completely debt-free, chose to not only discontinue using his cards but to cancel all the accounts, including his "emergency card." The downside of no credit cards is that, even though financial experts advise consumers to save from three to six months' worth of income in an emergency savings fund, Amouzegar says, "Well, for a lot of people, that's not realistic. If there is a major car repair or something happens, what do you do if you don't have that emergency card? Knock on wood, I haven't been in that situation yet, but you never know when your refrigerator is going to go out. You never know when your car's going to blow up, or that you need to fly somewhere due to a family emergency."
NFCC's Cunningham agrees. "None of us has a very well-polished crystal ball to know what tomorrow's going to hold, and this person not using credit might think, 'I don't care; I'm not going to need credit in the future,' but we really don't know that," she says.
Like most non-credit cardholders, Amouzegar uses his Visa-logo debit card in those situations that traditionally demand a credit card: renting a car, booking a hotel room, purchasing airline tickets and making online purchases.
He has run into occasional glitches renting cars with his debit card, as on a recent vacation. "The downside was, when I went to Maui, they would have done a charge authorization on a credit card, but since I didn't have a credit card, they did it on my debit card, so they basically held $250 until I returned the car. So that tied up $250 out of my checking account."
Turned Off
In 1998, GetRichSlowly's Roth paid off his high-interest credit card debts with a lower interest rate home equity loan and now pays a single monthly payment. "When I did that, I made a vow to myself -- and I promised my wife -- that I was going to cut up my credit cards, and I did," says Roth. "It's perfectly possible to live a happy life without credit cards. They're not a requirement. It seems to me that in our society, we get hung up on the fact that we must have credit cards, but it's just not true."
"The reality is that the practices of credit card issuers can be harsh on individuals," Demos' Garcia says. "It is those types of practices -- tricks and traps -- that I think will stop consumers. I think we're seeing it more now due to that -- that people, after a bad experience with a credit card, have stopped using them."
Although it's easy to blame the banks for high credit card bills, skyrocketing interest rates, and never-decreasing card balances, Amouzegar says that while card-issuing banks may be "crafty," they are not dishonest. Instead, it's the fault of the cardholder when debts get out of control. "Those people might just be making minimum payments on a really high interest rate. I would question, 'How did that interest rate get sky-high?' Did they make a late payment before? Interest rates don't just automatically go to 18 percent or 24 percent -- there has to be something done by the cardholder to trigger the rate to go from a preferred rate all the way up."
Revolving vs. Nonrevolving Credit
Before canceling credit card accounts, stop to consider the long-term implications on your credit score, says NFCC's Cunningham, noting that both revolving credit (in the form of credit cards) and nonrevolving credit (in the form of installment loans, such as auto loans, mortgages or other fixed-rate loans) are factored into a person's credit score. "The elements that are weighed to create your credit score include a review of different types of credit, and how you handle those. For instance, a credit card is going to demonstrate how, if you pretty much have an open-end except for a credit ceiling, you can charge varying amounts each month, thus your payment each month is going to be different, and they like to see how you handle that, versus a fixed-rate loan," she says.
Those who have paid off and then canceled their credit card account may end up "hamstringing" future efforts to obtain credit, because that old account will eventually rotate off your credit report after a period of time (usually seven years), says Cunningham. "It's better to leave it open, because this is another element that is weighed in the credit-scoring model: They like to see longevity. They like to see that you've had an account open for a long time and handled it responsibly."
Closing a credit card account can also adversely impact your credit rating by changing your debt utilization ratio -- the amount of money you owe as compared to your available credit. For example, if you close an account with a $1,000 credit limit, your overall available credit number will lower, consequently skewing your debt utilization ratio.
The Bottom Line
Ask any personal finance expert, and she will agree that credit cards themselves are not the cause of anyone's debt. Instead, it's the misuse of credit that is to blame. Cunningham jokes about a sticker some debtors apply to their mirrors, which states simply: "You're looking at the problem."
Many people, once they've paid off their debts, are anxious to jump back on the credit card express to Debtville, says Cunningham. "A lot of people want to re-enter the world of credit simply because we live in a credit-dominated society."
"I think the most important thing is, get your credit card and pay it off at the end of the month," Garcia says.
According to Demos' research, many of those who don't pay off their balance in full every month simply cannot afford to, says Garcia. An increased cost of living, a set income and the lack of a financial safety net lead a lot of people into deepening debt, Garcia says. "So it's not as simple as wanting to pay your credit card off. But if you can, pay it off. That way, you have a revolving line of credit, which is very useful. It's short-term loans. Take the money upfront and then pay later so you don't pay any interest rate or fees. But again, that's not necessarily the reality with a lot of Americans and low-income individuals now that we're close to a recession."
Will Amouzegar rejoin the Land of the Plastic once he's paid off his debt? "No," he says without hesitation. "I personally don't have the restraint to not view credit as extra income. I think that after the process of having been in debt and paid it off, I think I've learned my lesson, but still the temptation is there."
"Ultimately, credit card companies are really a game, and you really have to be an educated consumer, and I think, be aggressive with them, because they bank on you not having knowledge," says Amouzegar.
The Alternatives to Credit Cards:
* Visa or MasterCard debit cards: Though a MasterCard or Visa debit card is typically a good credit card substitute, the downside is that, when it comes time to reserve a hotel room or rent a car, there's a good chance that the hotel or rental card agency will create a $200-$500 or more "hold" on the debit card, and leave you with significantly less available cash in the bank.
* Emergency fund: Financial experts recommend saving an emergency fund of three to six months' worth of living expenses in case you face an unexpected job or financial crisis.
* Installment loans from banks or credit unions: There are different installment loans available for different situations. The interest rates will be is fixed, with a set payoff date.
2008年8月12日 星期二
A Cold, Hard Fact: Prepare for Higher Heating Costs Now
by Suze Orman, MONEY MATTERS
There's another big housing bill in your future. No, I'm not talking about your potential taxpayer share of the recently passed federal housing bill if we ultimately get stuck with the tab for bailing out Fannie Mae and Freddie Mac.
Prices Heat Up
What's on my radar right now -- and should be on yours -- is what it's going to cost to stay warm this winter. I realize it's probably sweltering where you live right now, but, as with all financial matters, you need to look down the road to see what might be coming up. And the news is not good, my friends: The same pain at the gas pump you've been dealing with for months is going to play out in your home heating bills.
According to the Energy Information Administration (EIA), a gallon of heating oil this winter could be 40 percent more expensive than it was last winter. And it's not as if last winter's heating bill was cheap; if the EIA forecast plays out as expected, a gallon of heating oil will be about 85 percent higher this coming February than it was two years ago.
Not worried because you use natural gas? The news is just as bleak, as prices are forecast to be about 45 percent higher this coming winter. Those of you relying on propane could face an even steeper increase. Electricity? Well, it's going to be a relative deal: The forecast is for retail electricity to be just 10 percent higher this winter compared to last. But let's face it, that's still a steep climb.
Clearly, it's time to get serious about a strategy for managing this winter's higher heating costs. Here are some steps to take:
• Get On a Manageable Payment Plan
Check in with your utility company now to see if there are any special payment plans available to avoid bill shock in the depth of winter. You may be able to switch to a plan that spreads out your payments across the entire year rather than having a big hike in the winter.
Of course, that means a higher average monthly bill in the temperate months. But the idea is that your budget can handle that easier than a huge hike in the winter.
• Winter-Proof Your House
Spend a day getting your home ready for winter to trim a few hundred dollars off your energy bills. I'm not going to suggest big-ticket projects such as re-insulating the roof; that's a great cost-saver over time that makes tremendous sense if you have the money to do it, of course, but your budget is probably already pretty stressed right now. I'm talking about small outlays that can net you big savings.
Start with the programmable thermostat. If you get strategic about lowering the temperature in the day when you're not around and late at night when you're tucked under the comforter, you may be able to cut your heating costs by 20 percent. That can go a long way toward offsetting this year's higher utility bills. You can pick up a programmable thermostat at any home-improvement store for $50 or so.
While you're at the store, pick up some caulking and weather-stripping supplies. Spend a few hours plugging up any gaps in your heating ducts and blocking out window and door drafts. These steps will save some serious money.
• Look for Hidden Savings Opportunities
I'm not a big fan of penny-by-penny budget-watching -- life is too short and free time too fleeting to spend it poring over a spreadsheet. But I do think everyone should take a serious look at their spending patterns at least once or twice a year and reevaluate their position, especially right now, when living costs are through the roof.
You know where I'm going with this: A cell phone plan or cable plan that may have been affordable a year or two ago could be a great place to find some hidden savings to deal with today's budget crunch. I bet many of you could easily reduce these bills by a combined $100 a month if you shifted to a less-inclusive plan. So no more inertia, no more excuses: Go online or brace yourself for an annoying call to customer service and get the switch done today.
If you have an emergency savings account to handle any unexpected costs, I'd also recommend you look into raising the deductibles on all your insurance coverage. It's a great way to reduce your premium costs by at least 10 percent. Again, it takes one call to lock in permanent savings.
• Give Yourself a Break for the Holidays
Talking about winter gets me thinking about the holidays and the gift trap I see so many of you fall into. Invariably, in January and February I'm inundated with calls and emails from people with an expensive gift-giving hangover: They're staring at big credit card bills they have no way of paying off.
If you wait until December to start thinking about holiday gifts, chances are you'll just whip out the card and make plenty of last-minute purchases. An alternative is to rope your family (and friends) into a conversation now about how you can all come up with a more manageable gift-giving plan.
Having a talk now, months before the holiday frenzy, makes for an easier conversation. Don't be shy or apologetic -- living within your means is something to be proud of. One obvious move is for all adults to agree that they don't need to exchange gifts. Keep the focus on the kids. But really, does every aunt, uncle, and grandparent have to shower every kid with a gift? I don't think so. How about one special group gift to each child instead?
Don't worry about what the kids will think. Spending more money than you can afford on gifts for them isn't a sign of love. Besides, instituting a new family-wide tradition that takes planning and thought and involves everyone is the sort of positive energy that should define the holidays. To say nothing of the financial benefit it will produce this winter, when energy costs are sky high.
There's another big housing bill in your future. No, I'm not talking about your potential taxpayer share of the recently passed federal housing bill if we ultimately get stuck with the tab for bailing out Fannie Mae and Freddie Mac.
Prices Heat Up
What's on my radar right now -- and should be on yours -- is what it's going to cost to stay warm this winter. I realize it's probably sweltering where you live right now, but, as with all financial matters, you need to look down the road to see what might be coming up. And the news is not good, my friends: The same pain at the gas pump you've been dealing with for months is going to play out in your home heating bills.
According to the Energy Information Administration (EIA), a gallon of heating oil this winter could be 40 percent more expensive than it was last winter. And it's not as if last winter's heating bill was cheap; if the EIA forecast plays out as expected, a gallon of heating oil will be about 85 percent higher this coming February than it was two years ago.
Not worried because you use natural gas? The news is just as bleak, as prices are forecast to be about 45 percent higher this coming winter. Those of you relying on propane could face an even steeper increase. Electricity? Well, it's going to be a relative deal: The forecast is for retail electricity to be just 10 percent higher this winter compared to last. But let's face it, that's still a steep climb.
Clearly, it's time to get serious about a strategy for managing this winter's higher heating costs. Here are some steps to take:
• Get On a Manageable Payment Plan
Check in with your utility company now to see if there are any special payment plans available to avoid bill shock in the depth of winter. You may be able to switch to a plan that spreads out your payments across the entire year rather than having a big hike in the winter.
Of course, that means a higher average monthly bill in the temperate months. But the idea is that your budget can handle that easier than a huge hike in the winter.
• Winter-Proof Your House
Spend a day getting your home ready for winter to trim a few hundred dollars off your energy bills. I'm not going to suggest big-ticket projects such as re-insulating the roof; that's a great cost-saver over time that makes tremendous sense if you have the money to do it, of course, but your budget is probably already pretty stressed right now. I'm talking about small outlays that can net you big savings.
Start with the programmable thermostat. If you get strategic about lowering the temperature in the day when you're not around and late at night when you're tucked under the comforter, you may be able to cut your heating costs by 20 percent. That can go a long way toward offsetting this year's higher utility bills. You can pick up a programmable thermostat at any home-improvement store for $50 or so.
While you're at the store, pick up some caulking and weather-stripping supplies. Spend a few hours plugging up any gaps in your heating ducts and blocking out window and door drafts. These steps will save some serious money.
• Look for Hidden Savings Opportunities
I'm not a big fan of penny-by-penny budget-watching -- life is too short and free time too fleeting to spend it poring over a spreadsheet. But I do think everyone should take a serious look at their spending patterns at least once or twice a year and reevaluate their position, especially right now, when living costs are through the roof.
You know where I'm going with this: A cell phone plan or cable plan that may have been affordable a year or two ago could be a great place to find some hidden savings to deal with today's budget crunch. I bet many of you could easily reduce these bills by a combined $100 a month if you shifted to a less-inclusive plan. So no more inertia, no more excuses: Go online or brace yourself for an annoying call to customer service and get the switch done today.
If you have an emergency savings account to handle any unexpected costs, I'd also recommend you look into raising the deductibles on all your insurance coverage. It's a great way to reduce your premium costs by at least 10 percent. Again, it takes one call to lock in permanent savings.
• Give Yourself a Break for the Holidays
Talking about winter gets me thinking about the holidays and the gift trap I see so many of you fall into. Invariably, in January and February I'm inundated with calls and emails from people with an expensive gift-giving hangover: They're staring at big credit card bills they have no way of paying off.
If you wait until December to start thinking about holiday gifts, chances are you'll just whip out the card and make plenty of last-minute purchases. An alternative is to rope your family (and friends) into a conversation now about how you can all come up with a more manageable gift-giving plan.
Having a talk now, months before the holiday frenzy, makes for an easier conversation. Don't be shy or apologetic -- living within your means is something to be proud of. One obvious move is for all adults to agree that they don't need to exchange gifts. Keep the focus on the kids. But really, does every aunt, uncle, and grandparent have to shower every kid with a gift? I don't think so. How about one special group gift to each child instead?
Don't worry about what the kids will think. Spending more money than you can afford on gifts for them isn't a sign of love. Besides, instituting a new family-wide tradition that takes planning and thought and involves everyone is the sort of positive energy that should define the holidays. To say nothing of the financial benefit it will produce this winter, when energy costs are sky high.
2008年8月3日 星期日
Four Habits of Financially Peaceful People
by Laura Rowley
Last week, I reported on the results of a new survey by Yahoo! Finance and Decipher, which found many Americans struggling with anxiety in their financial lives. This week, I'll take a look at some people who have found financial peace -- and the habits they share.
1. They know exactly where their money goes.
Danny Kofke, 32, has been a special education teacher in suburban Atlanta for a decade. He wrote the book "How to Survive (and Perhaps Thrive) on a Teacher's Salary" based on his experience supporting a family of four on $37,000 a year.
"The number-one reason people are so far into debt is they don't know where the money is going," says Kofke, who is married with two daughters, ages four and one. "When we got married, we walked around with a pad for a month and wrote down everything we spent. After that we used a cash system -- we pulled $200 a week out of the ATM and left it in jar in our apartment. It's so much harder to spend the green stuff than swiping a piece of plastic through a machine."
When friends ask for advice, Kofke shows them how their money evaporates in drips and drops. "It's not the huge purchases, it's everyday occurrences they don't think twice about -- eating lunch out every day, going to the movies every week, or getting overdraft charges because they don't balance their checkbooks," he says.
Keep it simple: Write down every penny you spend for one or two months, examining those numbers and setting priorities. I use online software called Mvelopes to track my spending electronically; other people like Quicken or Microsoft Money. Find the method that works for you and stick with it.
2. They know what they want their money to do.
Financially peaceful people focus on two or three big goals they value, set a timeline, and then break the goal into smaller steps. They automate their savings through a weekly or monthly electronic transfer to a savings account, or by participating in a 401(k) plan. Meanwhile, focusing intensely on your own goals helps you avoid competing with the Joneses.
"I had a plan to retire," says Nicholas Fiduccia, a former computer hardware designer in Silicon Valley who recently left the workforce at age 50 and now lives in Oregon. "Sometime around 2000, I decided it was time to think about hanging up my career. I made plans by reading investment books, talking to money-wise friends and professionals, and attending retirement classes. Today, my philosophy is pretty simple: low-cost, diversified index funds, rebalanced every two years."
Similarly, several years before they had children, Kofke and his wife decided she would quit teaching and stay home with them full time. "We worked four years on one salary and put as much of her salary away as we could," he says. "We never got used to that second salary, so the loss of her income doesn't affect us as much."
3. They either don't carry revolving debt, or have a specific plan to pay it down.
"Plan your work and work your plan," says Mary Lena Anderegg, 65, a retired teacher who lives in Georgia with her spouse of 33 years. "Our first goal was to own a home outright in fifteen years, and in seven years we did. You have a lot more freedom to stamp your foot and say, 'This is how it shall be' if you own the land you're stamping your foot on."
Anderegg's husband was a homebuilder, and together they bought and flipped real estate back in the '80s, moving five times. That enabled her to get a Ph.D. with no debt. They lived on 30 to 40 percent of their income -- growing vegetables, hosting kids' clothing swaps, cutting utility bills, buying and maintaining used cars, and doing part-time or consulting work, putting the extra toward long-term goals.
In 1992, Anderegg's husband had a heart attack that left him unable to work -- and $40,000 in medical bills their health insurance didn't cover. "We wiped our savings clean because didn't want to incur debt," she recalls. Because they lived on less than half their earnings, they were able to make it on her salary -- and pay off the medical bills in just three years.
In 2000, they retired; they bought and fixed up a home near the ocean, and have traveled to Europe and Japan -- all with no debt. "Our rule is ‘If you want it badly enough to save for it, it's probably worth having,'" she says.
Small changes make a huge difference in banishing debt. If you put $1,000 on a credit card at 18 percent and make just minimum payments, it will take 12 years to pay off and cost $1,100 in interest. Put $20 more a month toward that card and it would be paid off in two years and a few months, with only $226 in interest. (Check out this calculator to see how an extra payment affects your payoff time.)
4. They invest in their job skills, and don't expand their lifestyles as fast as their salaries.
Rodger Oren was laid off in 2000 from an information technology position with a large manufacturing firm. "With my wife working, we had structured our expenses to live on the lesser of the two salaries," he says. "I could have bought a bigger house and better car, but I didn't. As a result, we didn't lose our house, auto, or incur debt from the ordeal."
Oren says he has always lived below his means thanks to the inspiration of his parents, who endured the Depression, and by watching manufacturing jobs disappear in his native Pennsylvania.
"I remember guys who were fifty-five years old coming out of McDonalds at shift changes" because it was the only job they could find after the steel mills closed, he recalls. "You can't live paycheck to paycheck -- you can't do that to yourself. I don't have as much as I would like, but I do sleep well at night regarding finances."
Oren banked his severance pay and jumped almost immediately into a college teaching job. By consulting on the side, he made 60 to 80 percent of his old salary, and kept hunting for IT positions. "I probably sent out thousands of resumes; I lost count," he says.
Ultimately, maintaining his career did require a temporary adjustment: He lives in Tennessee; his wife and two sons -- one starting medical school, the other in high school -- live in Georgia. "I'm ex-military, and sometimes you have to make sacrifices," says Oren, who served four years in the U.S. Air Force. "It's no different than if I was deployed somewhere." In the meantime, they visit back and forth on weekends and plan to reunite in two years, when his younger son graduates.
Oren shifted from manufacturing to the health-care sector and is working on his doctorate at night. When the IT security officer left last year, Oren volunteered to take on his duties for the learning opportunity.
"It increased my marketability; you always have to keep contemporary skills, look at the marketplace, and know where the trends are moving," he says. "With globalization, we have no idea what's going to happen -- you have to be fleet of foot, nimble, and adaptable."
For more habits of financially peaceful people, see my blog.
Last week, I reported on the results of a new survey by Yahoo! Finance and Decipher, which found many Americans struggling with anxiety in their financial lives. This week, I'll take a look at some people who have found financial peace -- and the habits they share.
1. They know exactly where their money goes.
Danny Kofke, 32, has been a special education teacher in suburban Atlanta for a decade. He wrote the book "How to Survive (and Perhaps Thrive) on a Teacher's Salary" based on his experience supporting a family of four on $37,000 a year.
"The number-one reason people are so far into debt is they don't know where the money is going," says Kofke, who is married with two daughters, ages four and one. "When we got married, we walked around with a pad for a month and wrote down everything we spent. After that we used a cash system -- we pulled $200 a week out of the ATM and left it in jar in our apartment. It's so much harder to spend the green stuff than swiping a piece of plastic through a machine."
When friends ask for advice, Kofke shows them how their money evaporates in drips and drops. "It's not the huge purchases, it's everyday occurrences they don't think twice about -- eating lunch out every day, going to the movies every week, or getting overdraft charges because they don't balance their checkbooks," he says.
Keep it simple: Write down every penny you spend for one or two months, examining those numbers and setting priorities. I use online software called Mvelopes to track my spending electronically; other people like Quicken or Microsoft Money. Find the method that works for you and stick with it.
2. They know what they want their money to do.
Financially peaceful people focus on two or three big goals they value, set a timeline, and then break the goal into smaller steps. They automate their savings through a weekly or monthly electronic transfer to a savings account, or by participating in a 401(k) plan. Meanwhile, focusing intensely on your own goals helps you avoid competing with the Joneses.
"I had a plan to retire," says Nicholas Fiduccia, a former computer hardware designer in Silicon Valley who recently left the workforce at age 50 and now lives in Oregon. "Sometime around 2000, I decided it was time to think about hanging up my career. I made plans by reading investment books, talking to money-wise friends and professionals, and attending retirement classes. Today, my philosophy is pretty simple: low-cost, diversified index funds, rebalanced every two years."
Similarly, several years before they had children, Kofke and his wife decided she would quit teaching and stay home with them full time. "We worked four years on one salary and put as much of her salary away as we could," he says. "We never got used to that second salary, so the loss of her income doesn't affect us as much."
3. They either don't carry revolving debt, or have a specific plan to pay it down.
"Plan your work and work your plan," says Mary Lena Anderegg, 65, a retired teacher who lives in Georgia with her spouse of 33 years. "Our first goal was to own a home outright in fifteen years, and in seven years we did. You have a lot more freedom to stamp your foot and say, 'This is how it shall be' if you own the land you're stamping your foot on."
Anderegg's husband was a homebuilder, and together they bought and flipped real estate back in the '80s, moving five times. That enabled her to get a Ph.D. with no debt. They lived on 30 to 40 percent of their income -- growing vegetables, hosting kids' clothing swaps, cutting utility bills, buying and maintaining used cars, and doing part-time or consulting work, putting the extra toward long-term goals.
In 1992, Anderegg's husband had a heart attack that left him unable to work -- and $40,000 in medical bills their health insurance didn't cover. "We wiped our savings clean because didn't want to incur debt," she recalls. Because they lived on less than half their earnings, they were able to make it on her salary -- and pay off the medical bills in just three years.
In 2000, they retired; they bought and fixed up a home near the ocean, and have traveled to Europe and Japan -- all with no debt. "Our rule is ‘If you want it badly enough to save for it, it's probably worth having,'" she says.
Small changes make a huge difference in banishing debt. If you put $1,000 on a credit card at 18 percent and make just minimum payments, it will take 12 years to pay off and cost $1,100 in interest. Put $20 more a month toward that card and it would be paid off in two years and a few months, with only $226 in interest. (Check out this calculator to see how an extra payment affects your payoff time.)
4. They invest in their job skills, and don't expand their lifestyles as fast as their salaries.
Rodger Oren was laid off in 2000 from an information technology position with a large manufacturing firm. "With my wife working, we had structured our expenses to live on the lesser of the two salaries," he says. "I could have bought a bigger house and better car, but I didn't. As a result, we didn't lose our house, auto, or incur debt from the ordeal."
Oren says he has always lived below his means thanks to the inspiration of his parents, who endured the Depression, and by watching manufacturing jobs disappear in his native Pennsylvania.
"I remember guys who were fifty-five years old coming out of McDonalds at shift changes" because it was the only job they could find after the steel mills closed, he recalls. "You can't live paycheck to paycheck -- you can't do that to yourself. I don't have as much as I would like, but I do sleep well at night regarding finances."
Oren banked his severance pay and jumped almost immediately into a college teaching job. By consulting on the side, he made 60 to 80 percent of his old salary, and kept hunting for IT positions. "I probably sent out thousands of resumes; I lost count," he says.
Ultimately, maintaining his career did require a temporary adjustment: He lives in Tennessee; his wife and two sons -- one starting medical school, the other in high school -- live in Georgia. "I'm ex-military, and sometimes you have to make sacrifices," says Oren, who served four years in the U.S. Air Force. "It's no different than if I was deployed somewhere." In the meantime, they visit back and forth on weekends and plan to reunite in two years, when his younger son graduates.
Oren shifted from manufacturing to the health-care sector and is working on his doctorate at night. When the IT security officer left last year, Oren volunteered to take on his duties for the learning opportunity.
"It increased my marketability; you always have to keep contemporary skills, look at the marketplace, and know where the trends are moving," he says. "With globalization, we have no idea what's going to happen -- you have to be fleet of foot, nimble, and adaptable."
For more habits of financially peaceful people, see my blog.
2008年6月26日 星期四
Graduating to a Happy, Financially Secure Future
by Laura Rowley of Money & Happiness
Every year around this time, the New York Times prints a roundup of commencement addresses. I always find a little inspiration there to cut out and stick on my office wall. This year, its author J.K. Rowling's address to Harvard grads about the benefits of failure -- although if I were to nominate a group for the "least likely to fail" award, it would probably be that audience.
In any case, I had some thoughts for my own commencement address. Here's what I would tell the class of 2008 about money.
Believe the Clichés
Personal finance advice is so similar, and so often repeated, it's become a cliché:
• Live within your means.
• Set up an emergency fund with three months of living expenses.
• Stay out of debt.
• Join your company's 401(k) plan or open an individual retirement account; set aside at least 10 percent of your pre-tax income every year.
• Invest in a diversified portfolio of mutual funds to help your money grow over time, and make sure you're not paying too much in fees.
Clichés are easy to take for granted and easy to tune out. But here's the truth: Believe these clichés. Because if you actually follow the advice, it will transform your life.
The Roaring 20s
I'm convinced that real happiness comes from identifying your values, and then being brave enough to expend your strongest talents and best energy in their service. I think genuine happiness comes from naming what you care about most deeply, setting priorities around those values, and then translating them into real, concrete goals. Money is one instrument in the toolbox of resources and people and experiences that help you journey down that path toward the person you were meant to be.
Your 20s represent a personal finance paradox: You have the most financial power that you may ever have because of the phenomenon of compounding. (Someone who saves $2,000 a year for retirement between age 21 and 30 and then stops will have a bigger nest egg than someone who starts at 31 and saves until they're 65.) At the same time, your 20s can be a bit of a bust in terms of figuring out why you were put on the planet.
It's a confusing decade -- you charge out of college knowing everything and ready to rule the world, and spend the next decade realizing you know almost nothing at all. Then, in your 30s and 40s, you recognize that it's OK to know almost nothing -- and is actually a finer way to approach life, because you really listen to and learn from other people, take risks, and benefit from mistakes and failure. (If you continue to simply know everything, you don't grow and become an arrogant bore.)
The Ghosts of Purchases Past
So here's the problem: Many people lurch around in their 20s trying to establish their identities. One day, you pick up a magazine or see a television show that suggests one can establish an identity by buying $500 designer shoes. Or $900 designer golf clubs. Or some other stupid thing that costs a whole lot less to manufacture than you paid for it. Because you weren't just paying for straps of leather or sticks of iron but for an identity attached to a lifestyle that somebody made up in a brainstorming session in an advertising firm somewhere in New York, or in a scriptwriting meeting in Los Angeles.
And this isn't entirely your fault. You're bombarded with signals to buy in a way previous generations were not. There are 1,000 cable channels telling you on a daily basis that your face, body, home, and possessions are in need of an extreme makeover. Technology and credit card companies have made it effortless to act on those impulses.
And then you get into your 30s and 40s and have a better understanding of who you are and why you were put on the planet. You're now ready to use money as a tool to help walk down that road. That's when your 20s can come back to haunt you. Maybe you're still paying the credit card for the $500 shoes and the $900 golf clubs (or for all the money spent in chic bars showing off the shoes, and at golf courses showing off the clubs).
Reality Bites
So you had some fun, but now you're playing catch up. That's usually when the magical thinking starts. You do things like buy a house with an adjustable rate mortgage (because you didn't save up a home down payment). Or you listen to some guru who tells you to put everything you have in gold or oil, or to buy stocks on margin or speculative real estate with no money down.
And maybe you have a couple of kids, and the media that told you to buy the shoes and golf clubs is now suggesting you invest in Suzuki violin lessons, private tutors, and traveling sports teams.
You're scrambling to save for retirement, scrambling to meet your rising mortgage payments, getting in deeper on that credit card to take a few fun vacations with your kids before they grow up and leave you, and God knows how you'll pay for college (since the gold-oil-stocks-real estate thing didn't work for you the way it did for the guru).
And it's really hard to follow your deepest values, and pursue that thing you were meant to do and become that person you were meant to be, because you're really stressed out about money.
Happiness Gained
I was a naïve kid from the Midwest living in New York City in my 20s -- naïve enough to believe all those clichés my father told me about staying out of debt and saving for retirement. So I did both -- it was just something I made a requirement, as routine as brushing my teeth. (And I had a lot of fun at the same time; I just bought my shoes at sample sales, frequented bars with free happy-hour buffets, and traveled to Europe on a shoestring.)
And when I was 37 (which happened a hell of lot sooner than I expected) and working 14 hours a day in television with two kids under age three, I could walk away from my full-time job and start my own thing. My values had shifted, and I knew I had to find a better balance between work and family. I had the luxury of using money to journey down the road in pursuit of my values -- not because I had a big win in oil or gold or sold a bazillion get-rich-quick books, but because I had stayed out of debt and consistently saved for almost two decades.
And that has made me happy.
Commence with Being Happy
So here's my advice:
• Live within your means.
• Set up an emergency fund with three months of living expenses.
• Stay out of debt.
• Join your company's 401(k) plan or open an individual retirement account, and save at least 10 percent of your pre-tax income every year.
• Invest in a diversified portfolio of stocks and bonds to help your money grow over time, and make sure you're not paying too much in fees.
Believe in the clichés. Follow the advice, make it as routine as brushing your teeth. Because one day it will open up a world of options, and transform money from a potentially huge source of stress into a resource to help you follow your values -- and hopefully figure out why you're on the planet.
Every year around this time, the New York Times prints a roundup of commencement addresses. I always find a little inspiration there to cut out and stick on my office wall. This year, its author J.K. Rowling's address to Harvard grads about the benefits of failure -- although if I were to nominate a group for the "least likely to fail" award, it would probably be that audience.
In any case, I had some thoughts for my own commencement address. Here's what I would tell the class of 2008 about money.
Believe the Clichés
Personal finance advice is so similar, and so often repeated, it's become a cliché:
• Live within your means.
• Set up an emergency fund with three months of living expenses.
• Stay out of debt.
• Join your company's 401(k) plan or open an individual retirement account; set aside at least 10 percent of your pre-tax income every year.
• Invest in a diversified portfolio of mutual funds to help your money grow over time, and make sure you're not paying too much in fees.
Clichés are easy to take for granted and easy to tune out. But here's the truth: Believe these clichés. Because if you actually follow the advice, it will transform your life.
The Roaring 20s
I'm convinced that real happiness comes from identifying your values, and then being brave enough to expend your strongest talents and best energy in their service. I think genuine happiness comes from naming what you care about most deeply, setting priorities around those values, and then translating them into real, concrete goals. Money is one instrument in the toolbox of resources and people and experiences that help you journey down that path toward the person you were meant to be.
Your 20s represent a personal finance paradox: You have the most financial power that you may ever have because of the phenomenon of compounding. (Someone who saves $2,000 a year for retirement between age 21 and 30 and then stops will have a bigger nest egg than someone who starts at 31 and saves until they're 65.) At the same time, your 20s can be a bit of a bust in terms of figuring out why you were put on the planet.
It's a confusing decade -- you charge out of college knowing everything and ready to rule the world, and spend the next decade realizing you know almost nothing at all. Then, in your 30s and 40s, you recognize that it's OK to know almost nothing -- and is actually a finer way to approach life, because you really listen to and learn from other people, take risks, and benefit from mistakes and failure. (If you continue to simply know everything, you don't grow and become an arrogant bore.)
The Ghosts of Purchases Past
So here's the problem: Many people lurch around in their 20s trying to establish their identities. One day, you pick up a magazine or see a television show that suggests one can establish an identity by buying $500 designer shoes. Or $900 designer golf clubs. Or some other stupid thing that costs a whole lot less to manufacture than you paid for it. Because you weren't just paying for straps of leather or sticks of iron but for an identity attached to a lifestyle that somebody made up in a brainstorming session in an advertising firm somewhere in New York, or in a scriptwriting meeting in Los Angeles.
And this isn't entirely your fault. You're bombarded with signals to buy in a way previous generations were not. There are 1,000 cable channels telling you on a daily basis that your face, body, home, and possessions are in need of an extreme makeover. Technology and credit card companies have made it effortless to act on those impulses.
And then you get into your 30s and 40s and have a better understanding of who you are and why you were put on the planet. You're now ready to use money as a tool to help walk down that road. That's when your 20s can come back to haunt you. Maybe you're still paying the credit card for the $500 shoes and the $900 golf clubs (or for all the money spent in chic bars showing off the shoes, and at golf courses showing off the clubs).
Reality Bites
So you had some fun, but now you're playing catch up. That's usually when the magical thinking starts. You do things like buy a house with an adjustable rate mortgage (because you didn't save up a home down payment). Or you listen to some guru who tells you to put everything you have in gold or oil, or to buy stocks on margin or speculative real estate with no money down.
And maybe you have a couple of kids, and the media that told you to buy the shoes and golf clubs is now suggesting you invest in Suzuki violin lessons, private tutors, and traveling sports teams.
You're scrambling to save for retirement, scrambling to meet your rising mortgage payments, getting in deeper on that credit card to take a few fun vacations with your kids before they grow up and leave you, and God knows how you'll pay for college (since the gold-oil-stocks-real estate thing didn't work for you the way it did for the guru).
And it's really hard to follow your deepest values, and pursue that thing you were meant to do and become that person you were meant to be, because you're really stressed out about money.
Happiness Gained
I was a naïve kid from the Midwest living in New York City in my 20s -- naïve enough to believe all those clichés my father told me about staying out of debt and saving for retirement. So I did both -- it was just something I made a requirement, as routine as brushing my teeth. (And I had a lot of fun at the same time; I just bought my shoes at sample sales, frequented bars with free happy-hour buffets, and traveled to Europe on a shoestring.)
And when I was 37 (which happened a hell of lot sooner than I expected) and working 14 hours a day in television with two kids under age three, I could walk away from my full-time job and start my own thing. My values had shifted, and I knew I had to find a better balance between work and family. I had the luxury of using money to journey down the road in pursuit of my values -- not because I had a big win in oil or gold or sold a bazillion get-rich-quick books, but because I had stayed out of debt and consistently saved for almost two decades.
And that has made me happy.
Commence with Being Happy
So here's my advice:
• Live within your means.
• Set up an emergency fund with three months of living expenses.
• Stay out of debt.
• Join your company's 401(k) plan or open an individual retirement account, and save at least 10 percent of your pre-tax income every year.
• Invest in a diversified portfolio of stocks and bonds to help your money grow over time, and make sure you're not paying too much in fees.
Believe in the clichés. Follow the advice, make it as routine as brushing your teeth. Because one day it will open up a world of options, and transform money from a potentially huge source of stress into a resource to help you follow your values -- and hopefully figure out why you're on the planet.
2008年2月14日 星期四
What's in Your Wallet?
By Tamara Holmes
Your wallet is stuffed with crumpled currency and raggedy receipts while loose change clutters the floor of your car. That doesn't have anything to do with your ability to build a sound financial future though, right?
Wrong. The way you handle your day-to-day cash speaks volumes about your money personality, according to personal finance experts.
"Our outer financial life is really created and deeply affected by our unconscious beliefs about money," says Brent Kessel, author of "It's Not About the Money."
So how do you know what your beliefs are? Think about how you keep your wallet:
Money's there ... somewhere -- You have money in your wallet, but you never have any idea how much. But who cares, if you can't find it or can't find enough, just whip out one of your many credit cards or debit cards.
"Such behavior is what I call the 'head in the sand' -- an ostrich," says Manisha Thakor, a Chartered Financial Analyst and co-author of "On My Own Two Feet."
People who don't know how much money they have in their wallets may also be unaware of what's in their bank accounts or even their 401(k)s.
"These are people who are afraid to see what the reality of their financial situations is," Thakor says. "You may know where the pile of bills is, but you just don't want to open them."
However, there's a danger in this behavior. You may be tempted to overspend or even pull out a credit card if you aren't aware of how much you have available, says Patrick P. Astre, author of "This Is Not Your Parents' Retirement."
The key to changing is biting the bullet and facing your finances, says Thakor. You may not have as much money as you wish you had, "but it's really empowering if you know where you're starting from," she adds. Try keeping a written tally of how much money you have (and how much you owe) to get comfortable with your financial situation.
Running on empty -- Your wallet is usually empty because you can't seem to keep cash in it for long. No matter how many times you go to the ATM, you'll find yourself staring into an empty wallet again very soon and wonder where the money went. Similar to the person whose head is in the sand, this is the person who is making money but they have no idea where it's going, says Astre.
However, unlike the "head in the sand" personality type, this person likely wants to know where the money is going and may be frustrated by an inability to stop spending. The key to changing is to start paying attention to the things you do, advises Astre.
"Be aware of your spending patterns and keep a notebook," he adds. While you may not change your spending habits overnight, take a realistic first step, telling yourself: Within three weeks, I'm going to know exactly where my money goes.
Chaotic cash -- The bills in your wallet are all crumpled up and in no particular order. There's change in the bottom of your pocketbook or even in the floor of your car. Someone who treats money cavalierly often does not respect money or may not even care about finances, says Thakor. If you leave money around, you're basically saying it's not important enough to put it in a safe and protected place.
Sometimes that lack of respect comes from a subconscious level, says Astre.
"Very often people sabotage themselves because they think they don't deserve money. It's a thing where, 'my parents worked hard all their lives and now I'm making $150,000 and I don't deserve it.' So subconsciously, they sabotage themselves," he says. The key to changing this behavior is recognizing the buying power of the money you've been discarding. Try adding up all of the miscellaneous bills and coins on a regular basis. You might amass enough money to start giving your "spare change" a little respect.
Unruly receipts -- Your wallet is stuffed with receipts, but there's no sense of order to them and you never really do anything with them. This is the person who is trying, says Thakor.
"You want to know how to keep tabs on your money -- otherwise you would have thrown the receipts away. But you just can't take it to the next step to get them all organized and do something with them. You are like the person that buys all the latest exercise equipment but doesn't get around to using it," she says.
In order to change this behavior, you've got to get organized. Take a day to come up with a filing system for your receipts so you know what to do with them at the end of the day. If you're never going to use the receipts to track your spending, what's the point of keeping them in the first place?
File-folder funds -- All of the bills in your wallet are lined up from largest denomination to smallest (or vice versa). You have an idea of how much money you have at all times and you know what's available to spend.
"These are the people who have a firm grasp on how much they are spending and how much they are saving," says Thakor. If you exhibit this behavior, you probably have good financial habits. However, there still may be some potential for financial misteps.
Taken to the extreme -- having all the dead presidents right-side up and facing the same way in order of date, for example -- could mean you "could have a problem allocating enough money toward fun," Thakor says.
Identifying what your behavior is telling you about your beliefs about money is only the first step. Continuing to monitor your financial habits is key, says Kessel. Make note of the changes you make to your behavior as well as the times you fall short.
"One of the biggest mistakes people make is they think, 'now I have this new wisdom about my money life and therefore my problems are solved,'" says Kessel. Change takes time, Kessel advises, "but the moment you have a new awareness about what was driving your money behavior, your thinking begins to shift."
Your wallet is stuffed with crumpled currency and raggedy receipts while loose change clutters the floor of your car. That doesn't have anything to do with your ability to build a sound financial future though, right?
Wrong. The way you handle your day-to-day cash speaks volumes about your money personality, according to personal finance experts.
"Our outer financial life is really created and deeply affected by our unconscious beliefs about money," says Brent Kessel, author of "It's Not About the Money."
So how do you know what your beliefs are? Think about how you keep your wallet:
Money's there ... somewhere -- You have money in your wallet, but you never have any idea how much. But who cares, if you can't find it or can't find enough, just whip out one of your many credit cards or debit cards.
"Such behavior is what I call the 'head in the sand' -- an ostrich," says Manisha Thakor, a Chartered Financial Analyst and co-author of "On My Own Two Feet."
People who don't know how much money they have in their wallets may also be unaware of what's in their bank accounts or even their 401(k)s.
"These are people who are afraid to see what the reality of their financial situations is," Thakor says. "You may know where the pile of bills is, but you just don't want to open them."
However, there's a danger in this behavior. You may be tempted to overspend or even pull out a credit card if you aren't aware of how much you have available, says Patrick P. Astre, author of "This Is Not Your Parents' Retirement."
The key to changing is biting the bullet and facing your finances, says Thakor. You may not have as much money as you wish you had, "but it's really empowering if you know where you're starting from," she adds. Try keeping a written tally of how much money you have (and how much you owe) to get comfortable with your financial situation.
Running on empty -- Your wallet is usually empty because you can't seem to keep cash in it for long. No matter how many times you go to the ATM, you'll find yourself staring into an empty wallet again very soon and wonder where the money went. Similar to the person whose head is in the sand, this is the person who is making money but they have no idea where it's going, says Astre.
However, unlike the "head in the sand" personality type, this person likely wants to know where the money is going and may be frustrated by an inability to stop spending. The key to changing is to start paying attention to the things you do, advises Astre.
"Be aware of your spending patterns and keep a notebook," he adds. While you may not change your spending habits overnight, take a realistic first step, telling yourself: Within three weeks, I'm going to know exactly where my money goes.
Chaotic cash -- The bills in your wallet are all crumpled up and in no particular order. There's change in the bottom of your pocketbook or even in the floor of your car. Someone who treats money cavalierly often does not respect money or may not even care about finances, says Thakor. If you leave money around, you're basically saying it's not important enough to put it in a safe and protected place.
Sometimes that lack of respect comes from a subconscious level, says Astre.
"Very often people sabotage themselves because they think they don't deserve money. It's a thing where, 'my parents worked hard all their lives and now I'm making $150,000 and I don't deserve it.' So subconsciously, they sabotage themselves," he says. The key to changing this behavior is recognizing the buying power of the money you've been discarding. Try adding up all of the miscellaneous bills and coins on a regular basis. You might amass enough money to start giving your "spare change" a little respect.
Unruly receipts -- Your wallet is stuffed with receipts, but there's no sense of order to them and you never really do anything with them. This is the person who is trying, says Thakor.
"You want to know how to keep tabs on your money -- otherwise you would have thrown the receipts away. But you just can't take it to the next step to get them all organized and do something with them. You are like the person that buys all the latest exercise equipment but doesn't get around to using it," she says.
In order to change this behavior, you've got to get organized. Take a day to come up with a filing system for your receipts so you know what to do with them at the end of the day. If you're never going to use the receipts to track your spending, what's the point of keeping them in the first place?
File-folder funds -- All of the bills in your wallet are lined up from largest denomination to smallest (or vice versa). You have an idea of how much money you have at all times and you know what's available to spend.
"These are the people who have a firm grasp on how much they are spending and how much they are saving," says Thakor. If you exhibit this behavior, you probably have good financial habits. However, there still may be some potential for financial misteps.
Taken to the extreme -- having all the dead presidents right-side up and facing the same way in order of date, for example -- could mean you "could have a problem allocating enough money toward fun," Thakor says.
Identifying what your behavior is telling you about your beliefs about money is only the first step. Continuing to monitor your financial habits is key, says Kessel. Make note of the changes you make to your behavior as well as the times you fall short.
"One of the biggest mistakes people make is they think, 'now I have this new wisdom about my money life and therefore my problems are solved,'" says Kessel. Change takes time, Kessel advises, "but the moment you have a new awareness about what was driving your money behavior, your thinking begins to shift."
Your Cheating Wallet Will Tell On You
By Laura Rowley of Money & Happiness
According to a new survey by Yahoo! Finance and research firm Decipher, about half of people in serious relationships have committed some kind of financial deception. Their activities include lying about the actual cost of a purchase or hiding it from their partners; covertly running up credit card debt; or maintaining a secret savings stash.
Women are more likely to be dishonest about money than men (or at least admit to it in the survey): 55 percent of women versus 41 percent of men say they've committed financial infidelity. Secrets and lies tend to occur most often among couples in the 35-to-44 age bracket, the study found.
Underlying Problems
"Money is just a symptom," says Belinda Fuchs, a CPA and founder of the financial coaching firm Own Your Money in Boston. "It's really about the underlying lack of communication, stress, and everything else happening in the relationship. You just want to be careful when you start the whole covering-up thing -- because it's like a thread in a coat that starts unraveling."
Sometimes the relationship comes undone: 7 percent of men and 12 percent of women have broken up with a partner because of money-related duplicity, the survey found.
One of the biggest causes of secret spending is the covert payback, says Fuchs. "There's something their spouse did that they get to pay themselves back for -- maybe he was away traveling for the last four days and she had to deal with everything at home, so she feels like she deserves it," says Fuchs. "But people often feel guilty afterward. They're blaming and complaining, and then they're ashamed."
A Hard Landing
That was the story for Chris Matier, a 34-year-old father of two, who says he racked up $22,000 in debt in 18 months after his wife gave birth to their first child.
Matier was 24, and had been married for four years. "We were living in Colorado, which is a great place to be when you're young -- hiking and adventures," says Matier, a middle school teacher and freelance writer. "When a baby comes, there's a shift of priorities in your relationship that's pretty severe. At that moment I didn't understand my new role as a father; there was something wrong with me, some kind of resentment."
Some of the debt occurred because his wife had left work to get her master's degree, and they never adjusted their budget. But a good chunk came from tech gadgets, CDs, videogame systems, and other toys, Matier says.
"It was hidden right out in the open -- she's not interested in gaming, so she didn't know how much was involved," says Matier. "She would see me watching wrestling on TV, but didn't know it was pay-per-view that cost $30. She was absorbed in our new life, waking up in the middle of the night to feed the baby. I took care of the bills. I knew I was screwing up, but it doesn't hurt until you land."
Matier crash-landed one afternoon, ironically enough, while he was out shopping. A debt collector called seeking payment for a medical bill that his wife thought had been paid. "I can remember the look of hurt very clearly," he says. "It was betrayal. I was a cheating spouse, but not by standard definition. She forgave me as soon as she knew I was genuinely sorry -- that took an hour -- but she was mad for a really long time."
Open Up
In some cases, money secrets are motivated by good intentions: One partner may want to protect the other from anxiety or stress. But this puts undue pressure on one person, and leaves the other ignorant about their financial reality -- a huge risk in the event that something happens to the partner running the show.
"I've talked to couples where the wife is totally stressed about money, and keeps it under wraps in an attempt to be strong and keep the family together, and the husband is clueless," Fuchs says. "He has no idea they are under such financial challenges."
Fuchs suggests sharing the information in a nonjudgmental way: "'This is situation I'm in; I need help, let's work together,'" she says. "Be accepting and loving of your partner in working through whatever your challenges are -- put it out on the table. I've seen huge breakthroughs when people take the open and honest approach."
A Costly Struggle
Openness can be tough for couples engaged in a power struggle over finances. Colleen Dennis, 54, who asked that her real name not be used, works full time at a university on the West Coast. She says that although she's financially responsible and has a healthy retirement portfolio, her husband questions every purchase she makes.
"Although I make a good living, he still sees everything I purchase as money out of our family's pocket," Dennis says. "So if I buy something of personal value, like clothes, I hang them up right away, take off the tags, and hide the shopping bag.
"He never spends a dime unless totally necessary, wearing his pants until they have holes in them," she adds. "I don't think you should put off living today for 50 years down the road. I went skiing recently -- it cost $60 for the bus and the lift ticket -- and he had this feeling that I shouldn't be spending that money."
Extended Childhood
After 20 years of marriage, their finances remain in separate silos; neither knows how much the other actually has. "He wants to combine our finances," Dennis says. "I don't want someone standing over me in a paternal way saying, 'No, you can't buy that today' or 'Why did you buy that?' He says I don't trust him. I feel threatened, and don't feel like I'm being treated as an equal."
Dennis says her husband grew up in an extremely frugal family. He started working at age 12 and put himself through college. In his teens, he had an accident while driving a friend's car -- and his savings was wiped out by the repair bill.
Childhood money experiences percolate through adult relationships, says Olivia Mellan, a Washington, D.C., psychotherapist who has specialized in money therapy for 25 years. "Money is symbolically loaded for most people," she says. "It represents love, power, security, control, happiness, self-worth."
A Common Financial Vision
Mellan advises couples to discuss how money was handled in their childhoods, and listen without judging. Create separate lists of short-, medium-, and long-term goals, then compare notes and set priorities. If that doesn't help, it may be worthwhile to see a therapist who specializes in money issues, or a financial planner with a specialty in money psychology.
Instead of fibbing, counselors say, negotiate a personal zone of privacy: How much is OK to spend without asking the other person? The Yahoo! Finance survey found that 45 percent of respondents agreed that it was fine to spend $100 to $500 without consulting their partner; a third said $100 or less was acceptable.
Couples who are open and honest about money are the ones who "have a larger vision of what they are working toward," explains Fuchs. "Their daily decisions are OK because they know where they are going and why. When couples aren't aligned on a larger vision of where they are going, that's when you get into skeletons-in-the-closets kind of activity."
According to a new survey by Yahoo! Finance and research firm Decipher, about half of people in serious relationships have committed some kind of financial deception. Their activities include lying about the actual cost of a purchase or hiding it from their partners; covertly running up credit card debt; or maintaining a secret savings stash.
Women are more likely to be dishonest about money than men (or at least admit to it in the survey): 55 percent of women versus 41 percent of men say they've committed financial infidelity. Secrets and lies tend to occur most often among couples in the 35-to-44 age bracket, the study found.
Underlying Problems
"Money is just a symptom," says Belinda Fuchs, a CPA and founder of the financial coaching firm Own Your Money in Boston. "It's really about the underlying lack of communication, stress, and everything else happening in the relationship. You just want to be careful when you start the whole covering-up thing -- because it's like a thread in a coat that starts unraveling."
Sometimes the relationship comes undone: 7 percent of men and 12 percent of women have broken up with a partner because of money-related duplicity, the survey found.
One of the biggest causes of secret spending is the covert payback, says Fuchs. "There's something their spouse did that they get to pay themselves back for -- maybe he was away traveling for the last four days and she had to deal with everything at home, so she feels like she deserves it," says Fuchs. "But people often feel guilty afterward. They're blaming and complaining, and then they're ashamed."
A Hard Landing
That was the story for Chris Matier, a 34-year-old father of two, who says he racked up $22,000 in debt in 18 months after his wife gave birth to their first child.
Matier was 24, and had been married for four years. "We were living in Colorado, which is a great place to be when you're young -- hiking and adventures," says Matier, a middle school teacher and freelance writer. "When a baby comes, there's a shift of priorities in your relationship that's pretty severe. At that moment I didn't understand my new role as a father; there was something wrong with me, some kind of resentment."
Some of the debt occurred because his wife had left work to get her master's degree, and they never adjusted their budget. But a good chunk came from tech gadgets, CDs, videogame systems, and other toys, Matier says.
"It was hidden right out in the open -- she's not interested in gaming, so she didn't know how much was involved," says Matier. "She would see me watching wrestling on TV, but didn't know it was pay-per-view that cost $30. She was absorbed in our new life, waking up in the middle of the night to feed the baby. I took care of the bills. I knew I was screwing up, but it doesn't hurt until you land."
Matier crash-landed one afternoon, ironically enough, while he was out shopping. A debt collector called seeking payment for a medical bill that his wife thought had been paid. "I can remember the look of hurt very clearly," he says. "It was betrayal. I was a cheating spouse, but not by standard definition. She forgave me as soon as she knew I was genuinely sorry -- that took an hour -- but she was mad for a really long time."
Open Up
In some cases, money secrets are motivated by good intentions: One partner may want to protect the other from anxiety or stress. But this puts undue pressure on one person, and leaves the other ignorant about their financial reality -- a huge risk in the event that something happens to the partner running the show.
"I've talked to couples where the wife is totally stressed about money, and keeps it under wraps in an attempt to be strong and keep the family together, and the husband is clueless," Fuchs says. "He has no idea they are under such financial challenges."
Fuchs suggests sharing the information in a nonjudgmental way: "'This is situation I'm in; I need help, let's work together,'" she says. "Be accepting and loving of your partner in working through whatever your challenges are -- put it out on the table. I've seen huge breakthroughs when people take the open and honest approach."
A Costly Struggle
Openness can be tough for couples engaged in a power struggle over finances. Colleen Dennis, 54, who asked that her real name not be used, works full time at a university on the West Coast. She says that although she's financially responsible and has a healthy retirement portfolio, her husband questions every purchase she makes.
"Although I make a good living, he still sees everything I purchase as money out of our family's pocket," Dennis says. "So if I buy something of personal value, like clothes, I hang them up right away, take off the tags, and hide the shopping bag.
"He never spends a dime unless totally necessary, wearing his pants until they have holes in them," she adds. "I don't think you should put off living today for 50 years down the road. I went skiing recently -- it cost $60 for the bus and the lift ticket -- and he had this feeling that I shouldn't be spending that money."
Extended Childhood
After 20 years of marriage, their finances remain in separate silos; neither knows how much the other actually has. "He wants to combine our finances," Dennis says. "I don't want someone standing over me in a paternal way saying, 'No, you can't buy that today' or 'Why did you buy that?' He says I don't trust him. I feel threatened, and don't feel like I'm being treated as an equal."
Dennis says her husband grew up in an extremely frugal family. He started working at age 12 and put himself through college. In his teens, he had an accident while driving a friend's car -- and his savings was wiped out by the repair bill.
Childhood money experiences percolate through adult relationships, says Olivia Mellan, a Washington, D.C., psychotherapist who has specialized in money therapy for 25 years. "Money is symbolically loaded for most people," she says. "It represents love, power, security, control, happiness, self-worth."
A Common Financial Vision
Mellan advises couples to discuss how money was handled in their childhoods, and listen without judging. Create separate lists of short-, medium-, and long-term goals, then compare notes and set priorities. If that doesn't help, it may be worthwhile to see a therapist who specializes in money issues, or a financial planner with a specialty in money psychology.
Instead of fibbing, counselors say, negotiate a personal zone of privacy: How much is OK to spend without asking the other person? The Yahoo! Finance survey found that 45 percent of respondents agreed that it was fine to spend $100 to $500 without consulting their partner; a third said $100 or less was acceptable.
Couples who are open and honest about money are the ones who "have a larger vision of what they are working toward," explains Fuchs. "Their daily decisions are OK because they know where they are going and why. When couples aren't aligned on a larger vision of where they are going, that's when you get into skeletons-in-the-closets kind of activity."
2008年2月12日 星期二
Want to Get Rich? Be (Moderately) Happy
By Laura Rowley of Money & Happiness
Some people believe that earning the most money will make them incredibly happy. What they probably don't know is that being incredibly happy may not earn them the most money.
A new study finds that when it comes to financial success, you're better off being a moderately happy person rather than someone who's chronically ecstatic.
Mild Is Beautiful
Researchers at the University of Virginia, the University of Illinois in Urbana-Champaign, and Michigan State analyzed several sets of data in a paper recently published in Perspectives on Psychological Science. Their conclusion: Mildly happy people -- those who rank themselves a 7 or 8 on a life-satisfaction scale of 1 to 10 -- achieve more than the blissful 10s.
"The people in our study who are most successful in terms of income, education, and career are mildly happy most of the time," said Ed Diener, a psychology professor at the University of Illinois.
Numerous studies have found that happy people enjoy an advantage over malcontents: Cheerful people earn more, enjoy better health, have closer relationships, and live longer, among other benefits. But in this case, researchers wanted to explore how happy you need to be to get those perks. Do the 10s enjoy the highest well-being in all areas of life?
Emotional Rescue
The answer is no -- and there may actually be a downside to scoring at the top of the scale. In a survey of more than 100,000 people in 96 countries, for example, the 8s on the 1-to-10 scale perform best in the realm of achievement.
Diener surmises that the 8s benefit from the creativity and energy of happiness, which help them stay committed in the pursuit of long-term goals and overcome obstacles along the way. But the 8s also maintain a touch of worry, stress, or internal dissatisfaction that motivates them to strive for more.
"Emotions steer our behavior, and they are there for a reason -- to help us function better," says Diener.
Swiss psychologist Norbert Semmer, for example, studied people who were dissatisfied with their work, following them over a period of time. Not surprisingly, these workers were more likely to quit their jobs and find a new situation. While a few people were simply chronic complainers, many of those studied were happier in their new workplace. In other words, negative emotions played an important role in improving their circumstances.
Sociability Trumps Money
Among the studies reviewed, researchers analyzed a survey of college freshman in 1976, who were asked to rank their happiness. Twenty years later, a follow-up survey of the same people found that those who scored in the top 10 percent in well-being reported average salaries of $62,681, compared to $54,318 for the bottom 10 percent. But the next-to-happiest group was earning the most: $66,144. Analyses of long-running panel studies from Australia, Germany, and Britain produced similar results.
On the other hand, if you define success in terms of relationships, the joyful 10s are the clear winners. In a survey of current college students, the "very happy" group was more gregarious and ranked higher in self-confidence, energy, number of close friends, and time spent dating. (Those who ranked themselves merely "happy" had higher grade point averages, attended class more frequently, and were more conscientious.)
"The 10s are more sociable and positive, so people like them," says Diener, and the global survey demonstrated similar results. (I interviewed several millionaire entrepreneurs this week and they all ranked themselves 10s. Energy, confidence, and relationships may be the key. See my blog for that story.)
To Misremember Is Divine
The effusively happy tend to look at their relationships through rose-colored glasses. In a separate study of dating couples not included in this paper, Diener's research team randomly beeped participants while they were with their partners, and asked them to write down how happy they were. Then they surveyed them at a later time about their relationships.
Some participants reported being happier in retrospect than they had felt in their moment-to-moment account. "People who misremembered in a positive direction were more likely to be together six months later," Diener says.
In other words, the 10s tend to idealize their partners and look for the best in them, leading to more enduring and upbeat relationships. Alternately, the lack of satisfaction that drives the 8s to want more in their work lives might also prompt them to be more critical of their partners, to more readily see their faults -- and to be more willing to look around for something better.
A Positive Negative
But while relationships are better for the joyous, it turns out that there's a big deficit to perpetual euphoria: Super-happy people don't live as long as the moderately happy, according to a long-term study of gifted children. "We were shocked that the happiest people didn't live longer," says Diener.
He speculates that the most upbeat people may not take symptoms of illness seriously, or may follow a physician's recommendations in a halfhearted way. Or they may take foolish risks, such as the active 77-year-old Californian who went biking during a heat wave and later succumbed to heat stroke.
In addition, just as the physiological arousal associated with chronic stress takes a toll on health, so too can the sustained arousal of intense positive emotions, Diener suggests.
"People who chase continual emotional highs will usually fall short because the biological cards are stacked against their being able to sustain this emotional intensity," he writes in an upcoming book on well-being. "In the quest for continuing intense positive emotions, some individuals turn to drugs."
Pursue Happiness at Your Own Pace
The upshot? If you feel generally satisfied with your life, your work, and your relationships most of the time, think twice before buying into the self-help movement and its search for a continuous streak of "peak moments."
"Happiness, like spirituality, is partially a private pursuit, defined by individuals based on their personal values," says Diener. "Be wary when people tell you to live for the moment, to strive for an exciting life, or that you ought to be happier. Chasing super-happiness is a mistake that can lead you astray and be self-defeating."
Some people believe that earning the most money will make them incredibly happy. What they probably don't know is that being incredibly happy may not earn them the most money.
A new study finds that when it comes to financial success, you're better off being a moderately happy person rather than someone who's chronically ecstatic.
Mild Is Beautiful
Researchers at the University of Virginia, the University of Illinois in Urbana-Champaign, and Michigan State analyzed several sets of data in a paper recently published in Perspectives on Psychological Science. Their conclusion: Mildly happy people -- those who rank themselves a 7 or 8 on a life-satisfaction scale of 1 to 10 -- achieve more than the blissful 10s.
"The people in our study who are most successful in terms of income, education, and career are mildly happy most of the time," said Ed Diener, a psychology professor at the University of Illinois.
Numerous studies have found that happy people enjoy an advantage over malcontents: Cheerful people earn more, enjoy better health, have closer relationships, and live longer, among other benefits. But in this case, researchers wanted to explore how happy you need to be to get those perks. Do the 10s enjoy the highest well-being in all areas of life?
Emotional Rescue
The answer is no -- and there may actually be a downside to scoring at the top of the scale. In a survey of more than 100,000 people in 96 countries, for example, the 8s on the 1-to-10 scale perform best in the realm of achievement.
Diener surmises that the 8s benefit from the creativity and energy of happiness, which help them stay committed in the pursuit of long-term goals and overcome obstacles along the way. But the 8s also maintain a touch of worry, stress, or internal dissatisfaction that motivates them to strive for more.
"Emotions steer our behavior, and they are there for a reason -- to help us function better," says Diener.
Swiss psychologist Norbert Semmer, for example, studied people who were dissatisfied with their work, following them over a period of time. Not surprisingly, these workers were more likely to quit their jobs and find a new situation. While a few people were simply chronic complainers, many of those studied were happier in their new workplace. In other words, negative emotions played an important role in improving their circumstances.
Sociability Trumps Money
Among the studies reviewed, researchers analyzed a survey of college freshman in 1976, who were asked to rank their happiness. Twenty years later, a follow-up survey of the same people found that those who scored in the top 10 percent in well-being reported average salaries of $62,681, compared to $54,318 for the bottom 10 percent. But the next-to-happiest group was earning the most: $66,144. Analyses of long-running panel studies from Australia, Germany, and Britain produced similar results.
On the other hand, if you define success in terms of relationships, the joyful 10s are the clear winners. In a survey of current college students, the "very happy" group was more gregarious and ranked higher in self-confidence, energy, number of close friends, and time spent dating. (Those who ranked themselves merely "happy" had higher grade point averages, attended class more frequently, and were more conscientious.)
"The 10s are more sociable and positive, so people like them," says Diener, and the global survey demonstrated similar results. (I interviewed several millionaire entrepreneurs this week and they all ranked themselves 10s. Energy, confidence, and relationships may be the key. See my blog for that story.)
To Misremember Is Divine
The effusively happy tend to look at their relationships through rose-colored glasses. In a separate study of dating couples not included in this paper, Diener's research team randomly beeped participants while they were with their partners, and asked them to write down how happy they were. Then they surveyed them at a later time about their relationships.
Some participants reported being happier in retrospect than they had felt in their moment-to-moment account. "People who misremembered in a positive direction were more likely to be together six months later," Diener says.
In other words, the 10s tend to idealize their partners and look for the best in them, leading to more enduring and upbeat relationships. Alternately, the lack of satisfaction that drives the 8s to want more in their work lives might also prompt them to be more critical of their partners, to more readily see their faults -- and to be more willing to look around for something better.
A Positive Negative
But while relationships are better for the joyous, it turns out that there's a big deficit to perpetual euphoria: Super-happy people don't live as long as the moderately happy, according to a long-term study of gifted children. "We were shocked that the happiest people didn't live longer," says Diener.
He speculates that the most upbeat people may not take symptoms of illness seriously, or may follow a physician's recommendations in a halfhearted way. Or they may take foolish risks, such as the active 77-year-old Californian who went biking during a heat wave and later succumbed to heat stroke.
In addition, just as the physiological arousal associated with chronic stress takes a toll on health, so too can the sustained arousal of intense positive emotions, Diener suggests.
"People who chase continual emotional highs will usually fall short because the biological cards are stacked against their being able to sustain this emotional intensity," he writes in an upcoming book on well-being. "In the quest for continuing intense positive emotions, some individuals turn to drugs."
Pursue Happiness at Your Own Pace
The upshot? If you feel generally satisfied with your life, your work, and your relationships most of the time, think twice before buying into the self-help movement and its search for a continuous streak of "peak moments."
"Happiness, like spirituality, is partially a private pursuit, defined by individuals based on their personal values," says Diener. "Be wary when people tell you to live for the moment, to strive for an exciting life, or that you ought to be happier. Chasing super-happiness is a mistake that can lead you astray and be self-defeating."
2008年2月11日 星期一
15 Money Moves for Tough Times
By Dana Dratch of Bankrate
While economists debate whether the country is in a recession, consumers are being buffeted by skyrocketing prices, growing debt, layoffs, the subprime lending squeeze and a stock market roller coaster.
While you may not be able to control the price of oil or the prime rate, there are some simple things you can do to shore up your finances, safeguard your future and ride out whatever the economy throws at you.
Here's a list of ideas that hopefully will help you get through any hard times, plus tips if the hard times have already hit your household.
Dealing with hard times
1. Eliminate the nonessentials
2. Start a go-to fund for emergencies
3. Consider cutting back (rather than cutting out) for some expenses
4. Safeguard your current job
5. Be on the lookout for your next job
6. Keep your debt load light
7. Barring a complete personal financial meltdown, continue funding your retirement
8. Swap extraneous spending for smart long-term moves
9. Investigate refinancing
10. Re-examine your insurance
11. Adjust your withholding allowance
12. Reward yourself
13. Ask for an extension on your car loan
14. Get an extension on the mortgage
15. Talk to a mortgage counselor
1. Eliminate the nonessentials. One way to avoid putting spending on automatic pilot: Write down everything you buy and the price. Then go through the list and "be brutal," says Nancy Register, associate director for the Consumer Federation of America.
Ric Edelman, Certified Financial Planner and author of "The Truth About Money," agrees.
"You need to make sure you're not spending any money that doesn't absolutely, positively need to be spent," he says. "A lot of people are spending money frivolously on wants they consider needs."
If you have kids, "It's a great time to explain wants versus needs," says Linda Sherry, director of national priorities for Consumer Action.
2. Start a go-to fund for emergencies. The average family will face up to $2,000 a year in unexpected bills, says Register. For families already stretching to pay the bills, those surprises can trigger long-term financial problems. While you can't plan what or when, you can have money set aside just in case.
"You need to really boost your cash reserves," says Edelman.
His recommendation? Aim for one year's living expenses in an assortment of liquid vehicles, like a bank account, money market account and short-term CDs.
One way to kick-start that fund: Shave off 10 percent of your take-home pay every time you get a check, says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.
Keep it liquid and make saving automatic. Look for a money market account that pays the highest rate you can find, says Register. Want to make sure you're consistent? Arrange to have the money deposited electronically.
Deposit any "extra" money you receive, like that birthday check, bonus, tax refund or raise.
3. Consider cutting back (rather than cutting out) some expenses. Depending on your current situation and concerns, it might make more sense to just scale back.
"It's much more effective if people cut back rather than cut out," says Cunningham, "because it's the change in behavior that's so tough."
Examine services you're paying for and not fully using, like the cell phone plan with unlimited texting or the premium cable package. Are there less expensive options that would make you just as happy? Would bundling (buying several services from the same provider) save money?
Make it a family discussion, says Cunningham. "That way, everyone is pulling in the same direction."
4. Safeguard your current job. Remain engaged and enthusiastic, keep a high profile and network, network, network.
Make yourself visible "as someone who wants to be part of the team," says Martin Yate, executive employment coach and author of "Knock 'Em Dead 2008: The Ultimate Job Search Guide."
Three keys to making yourself invaluable: First, analyze how much you save or produce for the company. And don't be afraid to let higher-ups know what a key role you're playing in company success.
Second, stay current with the latest developments, continuing education and technology in your field.
Third, participate in at least one local professional organization. Not only will the connections help you in your current job, they can also make securing the next one much easier.
"It immediately gives you a relative, professional network for your search," says Yate.
5. Be on the lookout for your next job. Just like a corporation, you have to ensure your own financial survival, says Yate. If you believe that your company or job is in jeopardy, update that resume, reach out to your network, hit the job boards (anonymously) and ignite your job search.
6. Keep your debt load light. Use credit only if you are paying off balances in full every month. Otherwise, switch to cash, checks or debit cards, says Cunningham. "That way when the money's gone, the spending stops."
7. Barring a complete personal financial meltdown, continue funding your retirement. "Retirement is going to come," says Edelman. "You need to be ready for it."
8. Swap extraneous spending for smart long-term moves. You can live another month without a new DVD player, but servicing your car or home heating system could net you a nice savings through fuel efficiency and keep you from having to shell out for expensive repairs later.
9. Investigate refinancing. If your credit is good and you're planning to stay in your house for a few more years, refinancing could be a smart move.
Prime rate loans are the lowest they've been in two years, so investigate if a refinance could save you money every month, says Edelman.
Do the math and analyze what it could save you.
10. Re-examine your insurance. You don't want to be underinsured or overinsured. The key is to have enough to cover you at the best rate you can find. Shop your policies, set your deductibles at the highest amount that you can comfortably pay out of pocket and make sure you're getting credit for everything appropriate, like having car alarms, air bags and a good driving record, says Cunningham.
11. Adjust your withholding allowance. "The average refund is well over $2,000," says Cunningham. And most people "could use an extra $200 every month," she says.
The goal: Pay exactly what you owe. You can use the withholdings calculator at IRS.gov to determine what your withholding amounts should be. Then make the correction with your employer.
"You can do that at any time of year," says Cunningham.
12. Reward yourself. Hold out a little discretionary money that you can use for fun.
If you have an unexpected windfall, like a raise, bonus or tax refund, "Treat yourself with some small part and save the rest," says Cunningham.
Another trick for monthly family treats: At the end of the day everyone in the household puts their pocket change in a big jar. Says Cunningham, "At the end of the month, you'll have $20 or $30, and you'll never miss the money."
And if things get really bad...
13. Ask for an extension on your car loan. "Typically, they will do this once or twice a year," says Cunningham.
How it works: Instead of making your regular payment this month, the lender would tack an extra month onto the end of your loan period. But you won't get off with a zero payment this month, warns Cunningham. You still have to cover the interest.
14. Get an extension on the mortgage. Some home lenders will let you do something similar for your mortgage, says Cunningham. The downside is, while it will help you if you're trying to make up for a short-term problem, (like a large, unexpected bill), it's not effective if you've got a long-running situation, like regular medical bills, a resetting interest rate you can't handle or a long stretch of unemployment.
To work out such a deal, contact the loss mitigation unit in the mortgage department of the company servicing your loan, says Allen Fishbein, director of housing and credit policy for the Consumer Federation of America. Other typical department tags: home preservation or foreclosure avoidance.
15. Talk to a mortgage counselor. Just as you can get debt counseling help, you also can get mortgage counseling. What to look for: a nonprofit service with counselors who are HUD-certified.
They can examine your situation and offer some options like renegotiating your mortgage or getting a rate freeze on your loan that will help you keep your home. They can also negotiate with your lender on your behalf. You can search for counselors on the HUD Web site or call the Department of Housing and Urban Development at (800) 569-4287.
However, not all counselors can be trusted. "Beware of foreclosure rescue companies or organizations that bill themselves as counseling organizations" but are for-profit, says Fishbein.
There is actually some good news for homeowners as a result of the lending crisis, says Fishbein. If you're willing to be pretty candid about your situation, "there may be more options" available than you realize, he says. "Lenders are doing things they traditionally haven't done to keep people in their homes."
While economists debate whether the country is in a recession, consumers are being buffeted by skyrocketing prices, growing debt, layoffs, the subprime lending squeeze and a stock market roller coaster.
While you may not be able to control the price of oil or the prime rate, there are some simple things you can do to shore up your finances, safeguard your future and ride out whatever the economy throws at you.
Here's a list of ideas that hopefully will help you get through any hard times, plus tips if the hard times have already hit your household.
Dealing with hard times
1. Eliminate the nonessentials
2. Start a go-to fund for emergencies
3. Consider cutting back (rather than cutting out) for some expenses
4. Safeguard your current job
5. Be on the lookout for your next job
6. Keep your debt load light
7. Barring a complete personal financial meltdown, continue funding your retirement
8. Swap extraneous spending for smart long-term moves
9. Investigate refinancing
10. Re-examine your insurance
11. Adjust your withholding allowance
12. Reward yourself
13. Ask for an extension on your car loan
14. Get an extension on the mortgage
15. Talk to a mortgage counselor
1. Eliminate the nonessentials. One way to avoid putting spending on automatic pilot: Write down everything you buy and the price. Then go through the list and "be brutal," says Nancy Register, associate director for the Consumer Federation of America.
Ric Edelman, Certified Financial Planner and author of "The Truth About Money," agrees.
"You need to make sure you're not spending any money that doesn't absolutely, positively need to be spent," he says. "A lot of people are spending money frivolously on wants they consider needs."
If you have kids, "It's a great time to explain wants versus needs," says Linda Sherry, director of national priorities for Consumer Action.
2. Start a go-to fund for emergencies. The average family will face up to $2,000 a year in unexpected bills, says Register. For families already stretching to pay the bills, those surprises can trigger long-term financial problems. While you can't plan what or when, you can have money set aside just in case.
"You need to really boost your cash reserves," says Edelman.
His recommendation? Aim for one year's living expenses in an assortment of liquid vehicles, like a bank account, money market account and short-term CDs.
One way to kick-start that fund: Shave off 10 percent of your take-home pay every time you get a check, says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.
Keep it liquid and make saving automatic. Look for a money market account that pays the highest rate you can find, says Register. Want to make sure you're consistent? Arrange to have the money deposited electronically.
Deposit any "extra" money you receive, like that birthday check, bonus, tax refund or raise.
3. Consider cutting back (rather than cutting out) some expenses. Depending on your current situation and concerns, it might make more sense to just scale back.
"It's much more effective if people cut back rather than cut out," says Cunningham, "because it's the change in behavior that's so tough."
Examine services you're paying for and not fully using, like the cell phone plan with unlimited texting or the premium cable package. Are there less expensive options that would make you just as happy? Would bundling (buying several services from the same provider) save money?
Make it a family discussion, says Cunningham. "That way, everyone is pulling in the same direction."
4. Safeguard your current job. Remain engaged and enthusiastic, keep a high profile and network, network, network.
Make yourself visible "as someone who wants to be part of the team," says Martin Yate, executive employment coach and author of "Knock 'Em Dead 2008: The Ultimate Job Search Guide."
Three keys to making yourself invaluable: First, analyze how much you save or produce for the company. And don't be afraid to let higher-ups know what a key role you're playing in company success.
Second, stay current with the latest developments, continuing education and technology in your field.
Third, participate in at least one local professional organization. Not only will the connections help you in your current job, they can also make securing the next one much easier.
"It immediately gives you a relative, professional network for your search," says Yate.
5. Be on the lookout for your next job. Just like a corporation, you have to ensure your own financial survival, says Yate. If you believe that your company or job is in jeopardy, update that resume, reach out to your network, hit the job boards (anonymously) and ignite your job search.
6. Keep your debt load light. Use credit only if you are paying off balances in full every month. Otherwise, switch to cash, checks or debit cards, says Cunningham. "That way when the money's gone, the spending stops."
7. Barring a complete personal financial meltdown, continue funding your retirement. "Retirement is going to come," says Edelman. "You need to be ready for it."
8. Swap extraneous spending for smart long-term moves. You can live another month without a new DVD player, but servicing your car or home heating system could net you a nice savings through fuel efficiency and keep you from having to shell out for expensive repairs later.
9. Investigate refinancing. If your credit is good and you're planning to stay in your house for a few more years, refinancing could be a smart move.
Prime rate loans are the lowest they've been in two years, so investigate if a refinance could save you money every month, says Edelman.
Do the math and analyze what it could save you.
10. Re-examine your insurance. You don't want to be underinsured or overinsured. The key is to have enough to cover you at the best rate you can find. Shop your policies, set your deductibles at the highest amount that you can comfortably pay out of pocket and make sure you're getting credit for everything appropriate, like having car alarms, air bags and a good driving record, says Cunningham.
11. Adjust your withholding allowance. "The average refund is well over $2,000," says Cunningham. And most people "could use an extra $200 every month," she says.
The goal: Pay exactly what you owe. You can use the withholdings calculator at IRS.gov to determine what your withholding amounts should be. Then make the correction with your employer.
"You can do that at any time of year," says Cunningham.
12. Reward yourself. Hold out a little discretionary money that you can use for fun.
If you have an unexpected windfall, like a raise, bonus or tax refund, "Treat yourself with some small part and save the rest," says Cunningham.
Another trick for monthly family treats: At the end of the day everyone in the household puts their pocket change in a big jar. Says Cunningham, "At the end of the month, you'll have $20 or $30, and you'll never miss the money."
And if things get really bad...
13. Ask for an extension on your car loan. "Typically, they will do this once or twice a year," says Cunningham.
How it works: Instead of making your regular payment this month, the lender would tack an extra month onto the end of your loan period. But you won't get off with a zero payment this month, warns Cunningham. You still have to cover the interest.
14. Get an extension on the mortgage. Some home lenders will let you do something similar for your mortgage, says Cunningham. The downside is, while it will help you if you're trying to make up for a short-term problem, (like a large, unexpected bill), it's not effective if you've got a long-running situation, like regular medical bills, a resetting interest rate you can't handle or a long stretch of unemployment.
To work out such a deal, contact the loss mitigation unit in the mortgage department of the company servicing your loan, says Allen Fishbein, director of housing and credit policy for the Consumer Federation of America. Other typical department tags: home preservation or foreclosure avoidance.
15. Talk to a mortgage counselor. Just as you can get debt counseling help, you also can get mortgage counseling. What to look for: a nonprofit service with counselors who are HUD-certified.
They can examine your situation and offer some options like renegotiating your mortgage or getting a rate freeze on your loan that will help you keep your home. They can also negotiate with your lender on your behalf. You can search for counselors on the HUD Web site or call the Department of Housing and Urban Development at (800) 569-4287.
However, not all counselors can be trusted. "Beware of foreclosure rescue companies or organizations that bill themselves as counseling organizations" but are for-profit, says Fishbein.
There is actually some good news for homeowners as a result of the lending crisis, says Fishbein. If you're willing to be pretty candid about your situation, "there may be more options" available than you realize, he says. "Lenders are doing things they traditionally haven't done to keep people in their homes."
2008年1月2日 星期三
How to Cash in on a Warming Planet
By Adam Aston
Set aside, for now, the really complex and costly financial implications of climate change. Ignore the tricky abstractions of carbon trading. Forget the worries over flooded cities and the ins and outs of renewable energy.
Instead, consider just a few everyday money-making ideas created by the warming of our planet. For example, oenophiles could short the stocks of vintners in drought-prone areas such as Australia or California and bet on upstarts in Canada and England, where new wineries are sprouting as temperatures rise. Or, since ski resorts are seeing less and less snow, it might make sense to buy and hold manufacturers of snowmakers.
Of course, the potential of climate-change investing goes far beyond mere curiosities. A growing number of advisers to big institutional investors and high-net-worth types are sizing up companies based on how likely they are to benefit from rising energy prices, stricter regulations, and changes to the natural world ranging from freshwater shortages to new disease patterns and more chaotic weather. Since public opinion is increasingly driving U.S. policymakers to act, analysts' climate predictions need not be perfectly prescient to pay off. "Perception drives valuations," says Edward M. Kerschner, chief investment strategist for Citi Global Wealth Management (C), who recently made public a list of some 90 "climate consequences companies" he believes could excel as the climate changes and limits on carbon emissions multiply.
If there's a whiff of familiarity to investing in climate change, that's because some of its key elements have already attracted attention. Pure-play renewable energy stocks, for example, make up a big slice of the new climate change offerings and have seen meteoric gains over the past year. The difference is that climate change strategists make their picks from a larger pool, including everything from small-cap alternative energy startups to globe-spanning conglomerates, as well as a few decidedly nongreen plays. Given the breadth of companies in this space, "there's significant opportunity for actively managed funds," says Michael Herbst, a mutual fund analyst at Morningstar (MORN).
HOT OPTIONS
Consider HSBC's (HBC) Global Climate Change Benchmark Index, which tracks 300 equities, spans 34 countries (11 of which are emerging markets), and includes small, medium, and big companies. Simulations of the 45 months prior to its September debut show the index would have beaten the Morgan Stanley (MS) Capital International (MSCI) global index by 70%. In November, HSBC launched a fund in Europe that focuses on a subset of about 60 companies from the index. A U.S. version, the GIF Climate Change Fund, is due by April.
Deutsche Bank's (DB) DWS Climate Change Fund beat HSBC to the American market last November. It mirrors the German DWS Klimawandel fund, which since its launch last February is up 10.4%. For DWS's U.S. offering, expect somewhat pricey expense ratios of 1.75% to 2.5% of assets.
For a lower-cost approach, stock pickers can follow the pros' logic and make their own calls. Luckily, evaluating equities on their potential to capitalize on climate change is easier than untangling the complexities of global warming. A useful approach is to split the opportunities into two broad groups, explains Mark Fulton, climate-change strategist at Deutsche Bank Asset Management: mitigation and adaptation.
The first basket includes products and services that slow the flow of greenhouse gases by using less energy or by substituting clean energy for fossil fuels. That's why so many renewables such as solar and wind show up in the new climate-change funds and indices.
As of September, for example, the top 10 holdings in DWS Climate Change Fund included nine that either produce carbon-free energy or help conserve fossil fuels: solar energy (LDK Solar (LDK), SolarWorld, Umicore, and First Solar), wind energy (Acciona Energia and Gamesa), electric efficiency specialists (ABB (ABB) and Emerson Electric (EMR)), and an electric vehicle maker, Tanfield Group.
Fulton's second category includes opportunities to help the world adapt to the effects of the changing climate. This group may offer hidden values in some more obscure sectors. DWS's fund, for example, owns Veolia Environment, a water-services specialist that can help parched regions adjust. Citi's Kerschner, likewise, predicts growth for Leighton Holdings, an Australian engineering contractor that is building a growing number of plants that make seawater drinkable.
SHADES OF GREEN
If anything, the greenest of investors may be put off by aspects of climate-change investing. Citi likes big nuclear plant operators such as Entergy (ETR) and Exelon (EXC), despite worries over their waste, since their reactors crank out huge volumes of juice with virtually no greenhouse gases. Fluor (FLR), a U.S. engineering construction giant, makes the cut since it's positioned to benefit from demand for new power plants, regardless of whether they're powered by clean gas, controversial nuclear, or even not-so-clean coal.
Many of the top picks among the adaptation plays are cheaper than mitigation stocks. Ormat Technologies (ORA), a leader in renewable geothermal energy, has a pricey p-e ratio of 41, based on 2008 earnings. But in the less glamorous auto sector, makers of mileage-boosting technologies may outsell competitors more reliant on gas guzzlers. By this logic, France's PSA Peugeot Citroën, which builds Europe's most fuel-thrifty fleet, stands to beat out U.S. rivals as global demand for eco-vehicles rises. Its p-e is just 9.
An upside to these broad climate-change funds is that they expose investors to plays of all sizes, in both developed and emerging markets. But tracking such a diverse portfolio requires unusually broad expertise in complex energy, technology, and cross-border markets, notes Angus McCrone, chief editor at New Energy Finance, which tracks green markets. Regulatory reversals can also dent returns. As U.S. lawmakers debated the recent energy bill this fall, renewable stocks were whipsawed on each rumor that beneficial tax credits would disappear or expand.
Set aside, for now, the really complex and costly financial implications of climate change. Ignore the tricky abstractions of carbon trading. Forget the worries over flooded cities and the ins and outs of renewable energy.
Instead, consider just a few everyday money-making ideas created by the warming of our planet. For example, oenophiles could short the stocks of vintners in drought-prone areas such as Australia or California and bet on upstarts in Canada and England, where new wineries are sprouting as temperatures rise. Or, since ski resorts are seeing less and less snow, it might make sense to buy and hold manufacturers of snowmakers.
Of course, the potential of climate-change investing goes far beyond mere curiosities. A growing number of advisers to big institutional investors and high-net-worth types are sizing up companies based on how likely they are to benefit from rising energy prices, stricter regulations, and changes to the natural world ranging from freshwater shortages to new disease patterns and more chaotic weather. Since public opinion is increasingly driving U.S. policymakers to act, analysts' climate predictions need not be perfectly prescient to pay off. "Perception drives valuations," says Edward M. Kerschner, chief investment strategist for Citi Global Wealth Management (C), who recently made public a list of some 90 "climate consequences companies" he believes could excel as the climate changes and limits on carbon emissions multiply.
If there's a whiff of familiarity to investing in climate change, that's because some of its key elements have already attracted attention. Pure-play renewable energy stocks, for example, make up a big slice of the new climate change offerings and have seen meteoric gains over the past year. The difference is that climate change strategists make their picks from a larger pool, including everything from small-cap alternative energy startups to globe-spanning conglomerates, as well as a few decidedly nongreen plays. Given the breadth of companies in this space, "there's significant opportunity for actively managed funds," says Michael Herbst, a mutual fund analyst at Morningstar (MORN).
HOT OPTIONS
Consider HSBC's (HBC) Global Climate Change Benchmark Index, which tracks 300 equities, spans 34 countries (11 of which are emerging markets), and includes small, medium, and big companies. Simulations of the 45 months prior to its September debut show the index would have beaten the Morgan Stanley (MS) Capital International (MSCI) global index by 70%. In November, HSBC launched a fund in Europe that focuses on a subset of about 60 companies from the index. A U.S. version, the GIF Climate Change Fund, is due by April.
Deutsche Bank's (DB) DWS Climate Change Fund beat HSBC to the American market last November. It mirrors the German DWS Klimawandel fund, which since its launch last February is up 10.4%. For DWS's U.S. offering, expect somewhat pricey expense ratios of 1.75% to 2.5% of assets.
For a lower-cost approach, stock pickers can follow the pros' logic and make their own calls. Luckily, evaluating equities on their potential to capitalize on climate change is easier than untangling the complexities of global warming. A useful approach is to split the opportunities into two broad groups, explains Mark Fulton, climate-change strategist at Deutsche Bank Asset Management: mitigation and adaptation.
The first basket includes products and services that slow the flow of greenhouse gases by using less energy or by substituting clean energy for fossil fuels. That's why so many renewables such as solar and wind show up in the new climate-change funds and indices.
As of September, for example, the top 10 holdings in DWS Climate Change Fund included nine that either produce carbon-free energy or help conserve fossil fuels: solar energy (LDK Solar (LDK), SolarWorld, Umicore, and First Solar), wind energy (Acciona Energia and Gamesa), electric efficiency specialists (ABB (ABB) and Emerson Electric (EMR)), and an electric vehicle maker, Tanfield Group.
Fulton's second category includes opportunities to help the world adapt to the effects of the changing climate. This group may offer hidden values in some more obscure sectors. DWS's fund, for example, owns Veolia Environment, a water-services specialist that can help parched regions adjust. Citi's Kerschner, likewise, predicts growth for Leighton Holdings, an Australian engineering contractor that is building a growing number of plants that make seawater drinkable.
SHADES OF GREEN
If anything, the greenest of investors may be put off by aspects of climate-change investing. Citi likes big nuclear plant operators such as Entergy (ETR) and Exelon (EXC), despite worries over their waste, since their reactors crank out huge volumes of juice with virtually no greenhouse gases. Fluor (FLR), a U.S. engineering construction giant, makes the cut since it's positioned to benefit from demand for new power plants, regardless of whether they're powered by clean gas, controversial nuclear, or even not-so-clean coal.
Many of the top picks among the adaptation plays are cheaper than mitigation stocks. Ormat Technologies (ORA), a leader in renewable geothermal energy, has a pricey p-e ratio of 41, based on 2008 earnings. But in the less glamorous auto sector, makers of mileage-boosting technologies may outsell competitors more reliant on gas guzzlers. By this logic, France's PSA Peugeot Citroën, which builds Europe's most fuel-thrifty fleet, stands to beat out U.S. rivals as global demand for eco-vehicles rises. Its p-e is just 9.
An upside to these broad climate-change funds is that they expose investors to plays of all sizes, in both developed and emerging markets. But tracking such a diverse portfolio requires unusually broad expertise in complex energy, technology, and cross-border markets, notes Angus McCrone, chief editor at New Energy Finance, which tracks green markets. Regulatory reversals can also dent returns. As U.S. lawmakers debated the recent energy bill this fall, renewable stocks were whipsawed on each rumor that beneficial tax credits would disappear or expand.
Some Financial New Year's Resolutions
by Anya Kamenetz of Generation Debt
It's 2008 - and time to make a fresh financial start.
Simply ringing in the new year at midnight just doesn't do it for me anymore. I have a six-year tradition of greeting the dawn on New Year's Day. There's nothing like a cold, clear January sunrise to make you really believe in new beginnings.
Not that new beginnings are in short supply during the Gen Debt stage of life. Most of the young adults I know already have lives that are jam-packed with transitions: graduating college, starting grad school, changing roommates, changing jobs, changing cities, changing relationships. Even relatively small shifts like taking out a loan, getting a promotion at work, or dealing with the holidays can add stress to our lives. Check out this scale to see just how many "Life Change Units" you've piled up in the last year.
No matter what changes you might be experiencing, the new year is an excellent time to take stock of your personal, professional, and financial lives. According to a Harris Survey commissioned by Yahoo!, 65 percent of Americans who make a financial New Year's resolution vow to eliminate or reduce debt. Here are some of my own monetary resolutions for the year.
Spend lean and green
With the Bali climate conference taking place in December, a big energy bill in the Senate, and Al Gore accepting the Nobel Peace Prize for his efforts to help solve the climate crisis, awareness of our impact on the environment is at an all-time high. Recently, I had an inspiring conversation with TLC's Peter Walsh (the host of that cable network's "Clean Sweep") in which he pointed out that every purchase we make includes "buying in" to the manufacturing, transportation, and packaging of the product.
The earth's future belongs to young people like us, and that's why I'm trying hard to buy less, buy used, buy local, and buy green. This doesn't always mean purchasing the cheapest thing in the store - certainly not if it's going to wear out and need to be replaced right away. It means making conscious spending decisions, choosing items that are beautiful enough to give you joy and well-made enough to last a lifetime.
For more motivation, watch this very informative animated Web lecture, "The Story of Stuff."
Monitor your credit score
I had a ding on my credit score early last year due to a missed bill while I was out of the country, so I've been ordering my credit scores from MyFico.com for $15.95 a pop every six months.
This is an excellent place to start getting a handle on your financial life. (You can also go to Annualcreditreport.com to get your free credit report as required by federal law, but it doesn't include your score.) The credit report shows all the revolving accounts you have, such as credit cards, student loans, and car loans. It shows your payment history and the number of credit inquiries made in the last year -- for example, if you signed up for a new cell phone account or applied for a car loan, a company may have pulled your file.
If you see any mistakes on your account, you'll need to send a letter disputing the charge. MyFico does a good job of explaining which actions (like paying off your cards) can help your score and which actions (like maxing out your cards) can hurt it. But don't sign up for the extras like credit-score monitoring services (which alert you monthly, weekly, or even daily to changes in your credit) -- they're of dubious value.
Rediscover pencils, paper, and cash
Financial management is increasingly taking place online. This fall I've been trying out some of the different free online financial planning services aimed at younger folks, such as Mint, Geezeo, and Wesabe.
These sites centralize all of your accounts in one place, which makes things easier for you if you have multiple credit cards or student loans. For me, what works best is to have one bank account, one credit card that I use, and one brokerage account. Each of these institutions sends me a monthly e-statement, reminding me to go over the books.
As useful as online tools can be, 2008 is going to be the year of the analog for me. Just last week I was trying to figure out a discrepancy in my credit card bill, and I ended up writing down and adding up all the charges for the last three months. I was shocked to realize that on the credit card I "never use," I had made over $250 worth of purchases. There's nothing like pen and paper to make money clear and concrete.
I also vow that January 2008 is going to be the month I try out the envelope trick. If you want to get a clue about how much you're spending on incidentals, go to the ATM at the beginning of the week and distribute the cash into envelopes marked Food, Travel, Entertainment, Pharmacy, and Miscellaneous. When you go to a store, take out the cash from the right envelope and put in the receipt. No more cash? No more movies or pizza slices until next week.
Get proactive about saving
Pay yourself first. Your first priority is paying down high-interest debt. Then you want a $2,000 emergency fund (invested in a money market or e-savings account earning 4 percent-plus) and a retirement account. If you're a savings pro, purchase a 12-month CD (topping out at 5 percent interest) as a way to save for medium-term purchases like a vacation or a car. If you devote 10 percent of your income to savings, you'll be a happy camper.
Take control of retirement planning
If you're in your 20s and you don't have a 401(k) through your employer, do not pass go. Open a Roth Individual Retirement Account right now. There is no minimum amount to open the account.
Once you open it, there is the question of how to invest the funds. This can be surprisingly simple. I originally opened my IRA with my bank in 2004. I had asked for my retirement savings to be invested in "low-cost" mutual funds and trusted the friendly, helpful representative at the bank to provide them.
This year, in an attempt to diversify, I also purchased some overseas mutual funds with Vanguard, the market leader in low-cost investing. In the process, I learned that I should be looking to invest in "no load" mutual funds with an "expense ratio" of 0.75 percent or less.
It turns out that for an average, long-term investor, low administrative costs and commissions are far more important to your returns than the "performance" of the fund or how well your stocks do in any one year.
In fact, those who simply purchase very low-cost index funds -- a broad sampling of stocks from the entire market -- are far ahead of the game.
"I have yet to meet a retiree that couldn't have met his or her retirement goals just with market returns," Paul Merriman, the editor of FundAdvice.com and an investment adviser at Merriman Berkman Next in Seattle, told "The New York Times" earlier this fall.
So I decided to switch my IRA into low-cost, no-load index funds. It was very frustrating to learn that my existing account didn't provide no-load options, and that the "low cost" mutual fund I was signed up for actually had a high expense ratio of 1.75 percent.
I'm now in the process of moving my IRA over to Vanguard so I can keep my investing costs as low as possible, and opening a SEP IRA (Simplified Employment Pension IRA) so I can increase the amount I put away. Fidelity is another often-recommended broker with lots of resources for retirement planning.
Get ahead of tax time
An old-fashioned receipt spike, like you see in a restaurant, will help collect business-related receipts for better filing in chronological order, whether you use an online tool to record expenses or not.
Set conscious goals
It's natural to get stressed out when thinking about money. What helps me deal is to picture positive long-term goals. What's your vision for the year? Improving your credit score 20 points into the "good" range? A fully funded retirement account? Getting into "good standing" with Sallie Mae? Opening your bills right away instead of tossing them?
Write your goals on Post-It Notes and stick them next to your desk or on your bedside table. Or set up an online calendar reminder to pop up in a month or two.
When my reminder comes up on Feb. 1, I'll re-read this column to see how on-track I am. If anyone else has financial resolutions, please leave them in the comments; you're more likely to keep a public pledge.
It's 2008 - and time to make a fresh financial start.
Simply ringing in the new year at midnight just doesn't do it for me anymore. I have a six-year tradition of greeting the dawn on New Year's Day. There's nothing like a cold, clear January sunrise to make you really believe in new beginnings.
Not that new beginnings are in short supply during the Gen Debt stage of life. Most of the young adults I know already have lives that are jam-packed with transitions: graduating college, starting grad school, changing roommates, changing jobs, changing cities, changing relationships. Even relatively small shifts like taking out a loan, getting a promotion at work, or dealing with the holidays can add stress to our lives. Check out this scale to see just how many "Life Change Units" you've piled up in the last year.
No matter what changes you might be experiencing, the new year is an excellent time to take stock of your personal, professional, and financial lives. According to a Harris Survey commissioned by Yahoo!, 65 percent of Americans who make a financial New Year's resolution vow to eliminate or reduce debt. Here are some of my own monetary resolutions for the year.
Spend lean and green
With the Bali climate conference taking place in December, a big energy bill in the Senate, and Al Gore accepting the Nobel Peace Prize for his efforts to help solve the climate crisis, awareness of our impact on the environment is at an all-time high. Recently, I had an inspiring conversation with TLC's Peter Walsh (the host of that cable network's "Clean Sweep") in which he pointed out that every purchase we make includes "buying in" to the manufacturing, transportation, and packaging of the product.
The earth's future belongs to young people like us, and that's why I'm trying hard to buy less, buy used, buy local, and buy green. This doesn't always mean purchasing the cheapest thing in the store - certainly not if it's going to wear out and need to be replaced right away. It means making conscious spending decisions, choosing items that are beautiful enough to give you joy and well-made enough to last a lifetime.
For more motivation, watch this very informative animated Web lecture, "The Story of Stuff."
Monitor your credit score
I had a ding on my credit score early last year due to a missed bill while I was out of the country, so I've been ordering my credit scores from MyFico.com for $15.95 a pop every six months.
This is an excellent place to start getting a handle on your financial life. (You can also go to Annualcreditreport.com to get your free credit report as required by federal law, but it doesn't include your score.) The credit report shows all the revolving accounts you have, such as credit cards, student loans, and car loans. It shows your payment history and the number of credit inquiries made in the last year -- for example, if you signed up for a new cell phone account or applied for a car loan, a company may have pulled your file.
If you see any mistakes on your account, you'll need to send a letter disputing the charge. MyFico does a good job of explaining which actions (like paying off your cards) can help your score and which actions (like maxing out your cards) can hurt it. But don't sign up for the extras like credit-score monitoring services (which alert you monthly, weekly, or even daily to changes in your credit) -- they're of dubious value.
Rediscover pencils, paper, and cash
Financial management is increasingly taking place online. This fall I've been trying out some of the different free online financial planning services aimed at younger folks, such as Mint, Geezeo, and Wesabe.
These sites centralize all of your accounts in one place, which makes things easier for you if you have multiple credit cards or student loans. For me, what works best is to have one bank account, one credit card that I use, and one brokerage account. Each of these institutions sends me a monthly e-statement, reminding me to go over the books.
As useful as online tools can be, 2008 is going to be the year of the analog for me. Just last week I was trying to figure out a discrepancy in my credit card bill, and I ended up writing down and adding up all the charges for the last three months. I was shocked to realize that on the credit card I "never use," I had made over $250 worth of purchases. There's nothing like pen and paper to make money clear and concrete.
I also vow that January 2008 is going to be the month I try out the envelope trick. If you want to get a clue about how much you're spending on incidentals, go to the ATM at the beginning of the week and distribute the cash into envelopes marked Food, Travel, Entertainment, Pharmacy, and Miscellaneous. When you go to a store, take out the cash from the right envelope and put in the receipt. No more cash? No more movies or pizza slices until next week.
Get proactive about saving
Pay yourself first. Your first priority is paying down high-interest debt. Then you want a $2,000 emergency fund (invested in a money market or e-savings account earning 4 percent-plus) and a retirement account. If you're a savings pro, purchase a 12-month CD (topping out at 5 percent interest) as a way to save for medium-term purchases like a vacation or a car. If you devote 10 percent of your income to savings, you'll be a happy camper.
Take control of retirement planning
If you're in your 20s and you don't have a 401(k) through your employer, do not pass go. Open a Roth Individual Retirement Account right now. There is no minimum amount to open the account.
Once you open it, there is the question of how to invest the funds. This can be surprisingly simple. I originally opened my IRA with my bank in 2004. I had asked for my retirement savings to be invested in "low-cost" mutual funds and trusted the friendly, helpful representative at the bank to provide them.
This year, in an attempt to diversify, I also purchased some overseas mutual funds with Vanguard, the market leader in low-cost investing. In the process, I learned that I should be looking to invest in "no load" mutual funds with an "expense ratio" of 0.75 percent or less.
It turns out that for an average, long-term investor, low administrative costs and commissions are far more important to your returns than the "performance" of the fund or how well your stocks do in any one year.
In fact, those who simply purchase very low-cost index funds -- a broad sampling of stocks from the entire market -- are far ahead of the game.
"I have yet to meet a retiree that couldn't have met his or her retirement goals just with market returns," Paul Merriman, the editor of FundAdvice.com and an investment adviser at Merriman Berkman Next in Seattle, told "The New York Times" earlier this fall.
So I decided to switch my IRA into low-cost, no-load index funds. It was very frustrating to learn that my existing account didn't provide no-load options, and that the "low cost" mutual fund I was signed up for actually had a high expense ratio of 1.75 percent.
I'm now in the process of moving my IRA over to Vanguard so I can keep my investing costs as low as possible, and opening a SEP IRA (Simplified Employment Pension IRA) so I can increase the amount I put away. Fidelity is another often-recommended broker with lots of resources for retirement planning.
Get ahead of tax time
An old-fashioned receipt spike, like you see in a restaurant, will help collect business-related receipts for better filing in chronological order, whether you use an online tool to record expenses or not.
Set conscious goals
It's natural to get stressed out when thinking about money. What helps me deal is to picture positive long-term goals. What's your vision for the year? Improving your credit score 20 points into the "good" range? A fully funded retirement account? Getting into "good standing" with Sallie Mae? Opening your bills right away instead of tossing them?
Write your goals on Post-It Notes and stick them next to your desk or on your bedside table. Or set up an online calendar reminder to pop up in a month or two.
When my reminder comes up on Feb. 1, I'll re-read this column to see how on-track I am. If anyone else has financial resolutions, please leave them in the comments; you're more likely to keep a public pledge.
2007年12月30日 星期日
Thirty-Five Minutes to Riches
by Asa Fitch, Amanda Gengler, Josh Hyatt, and Ismat Sarah Mangla
Find out your credit score
Time it takes: 7 minutes
Know how lenders see you. Take seven minutes to download a free credit report at annualcreditreport.com. (For year-round monitoring, get a report from one of the three major credit bureaus every four months.) If you spot an error, notify the bureau (online, by phone or by mail) and the creditor (call and also send a letter). You won't find your credit score here, so when you request a report from Equifax, pay $7.95 for your FICO score, the most commonly used score. The range is 300 to 850 - 700 and above is good.
Raise your credit score
Time it takes: 8 minutes
It takes time to recover from major credit lapses, but you can do two things fast that will improve your credit score. Both will lower the size of your outstanding debt as a percentage of your total borrowing power.
1. Pay down a balance. 2. Call your issuer and ask for a higher credit limit. And don't spend it.
Triple the return on savings
Time it takes: 10 minutes
Do you have cash going nowhere in a checking or savings account? Bank money-market accounts typically pay less than 1%. You can open a savings account with HSBC Direct that recently paid 5.05%. No minimum balance is required.
With your driver's license and Social Security number handy, visit hsbcdirect.com and click on Sign Me Up. You'll be walked through screens to enter personal information. Want to fund your account immediately? Have a check with your bank account number and routing code handy to authorize an electronic transfer.
Stop junk mail
Time it takes: 5 minutes
Call 888-5OPTOUT to remove your name from credit issuers' mailing lists. The result of that five-minute talk with a computer? Fewer temptations and a mailbox filled with letters, not offers for pre-approved cards.
Most important, you'll cut the risk of an identity thief raiding your mailbox or garbage can and applying for credit in your name. Stolen paper mail accounts for 9% of identity fraud cases, according to Javelin Strategy & Research.
Note: Because we're talking credit bureaus, you'll have to provide your Social Security number. It's okay.
Freeze your credit
Time it takes: 25 minutes
Doing this prevents anyone from issuing credit in your name. (You, of course, can temporarily lift the freeze when you need a loan.) Nearly 30 states allow freezes even if you haven't been an ID theft victim. In some states you'll pay about $30 to place or remove-temporarily or permanently- the freeze. Go to consumersunion.org/securityfreeze.htm for instructions.
Haggle down your credit rate
Time it takes: 8 minutes
Dial your issuer and ask for a lower rate. If your credit score tops 720, do not be satisfied until your rate is less than 10%, says Curtis Arnold of CardRatings.com. Your biggest weapon: Make it clear that you'll stop using the card if the issuer refuses. Our reporter, helped by the fact that she's been a good customer for seven years, got the rate on her Discover card cut by four percentage points.
Upgrade to a better card
Time it takes: 30 minutes
Rewards, rates and fees change often. So search CardTrak.com to make sure you have the best deal. Among the lowest-rate cards on the site recently: Simmons First National Bank in Arkansas (800-636-5151) offers a fixed rate as low as 7.25% with no annual fee to consumers who have excellent credit.
Add to your 401(k)
Time it takes: 3 minutes
You signed up for your plan right after you found the office vending machines. Now do more: Raise your contribution by a point. Save 10% of a $50,000 salary in your 401(k) and you'll have $1.4 million in 35 years, assuming 8% returns and 4% annual raises. Ramp that up to 11% and you'll earn around $140,000 more.
Call your plan or visit your 401(k)'s website. At 401(k)s administered by Fidelity, for example, raising your contribution takes all of three minutes.
Manage like a pro
Time it takes: 4 minutes
If you have a diversified portfolio, a run-up in one asset class can throw your mix out of line, increasing risk and eroding returns. An unrebalanced $10,000 portfolio of 80% stocks and 20% bonds would have grown to $21,620 over the past 10 years.
If you'd rebalanced annually, you'd have $22,213, or $593 more - and taken less risk to get there. Retooling a 401(k) is easy: With a big plan administrator like Fidelity or Hewitt, rebalancing online takes minutes. In a taxable account, simply direct new money into the lagging fund categories.
Buy a forever portfolio
Time it takes: 25 minutes
Putting together a complete fund portfolio was once a time consuming chore. Nowadays target-date funds, which adjust the stock and bond allocation to smooth returns as you near a "target" retirement year, do it for you in minutes. Many 401(k)s offer them.
For direct investments, use the low-cost options from Vanguard (800-851-4999) or T. Rowe Price (800-638-5660). At vanguard.com, click on the tab labeled Research Funds and Stocks. Find the fund that corresponds to your planned retirement year, then download and look over the prospectus. Next click on the Buy This Fund link and follow the instructions. Have your checkbook ready to deposit funds electronically.
Find promising funds
Time it takes: 5 minutes
You can cut through the 8,000 or so mutual funds out there by sticking to the MONEY 70. Or run a screen for similar funds at morningstar.com (click on the Funds tab and go to the Mutual Fund Screener link). Pick a category, and then limit expenses to less than the category average. Next screen for funds whose managers have five years of tenure or more - greater experience is linked to better performance. Cut funds that failed to beat their five- or 10-year category averages.
Track your returns
Time it takes: 35 minutes
It's a pain to figure out how your investments are doing, especially if your money is scattered among several accounts. Spend 35 minutes setting up the portfolio tracker at portfolio.morningstar.com (you must first register at the site) so that you can start calculating your own rate of return. For a Web tool that can be clunky, Morningstar's tracker is particularly well designed and easy to use. You will, however, have to update it when you reinvest dividends or buy more shares.
Find out if you're paid enough
Time it takes: 15 minutes
Before you can make your case for a raise, you need something to measure yourself against. Salary.com offers Salary Wizard for free. Plug in your title and zip code and you'll get the median pay in your area for comparable positions. Or spend 10 minutes filling out a questionnaire with more variables, such as the size of your employer, and get 12 pages of data by buying a Personal Salary Report for $29.95 to $79.95 (the price varies by title).
Run a retirement plan
Time it takes: 5 minutes
On the road to riches, the key question is whether you're on track for financial independence. So pull out your retirement and investment account statements, plus projections for any pensions. Running that simple math can be surprisingly valuable: Researchers have found that people who plan for retirement have a higher net worth than those who do nothing.
Estimate your life insurance
Time it takes: 35 minutes
How much coverage is enough? For a fast ballpark estimate, multiply your annual income by five. With 35 minutes you can use the detailed calculator from the Life and Health Insurance Foundation for Education (life line.org). You'll be asked for your assets and debts, plus answers to tough questions like how long your family would need income after your death. If you find you need more coverage, get a quote on a term policy in five minutes at accuquote.com.
Learn your tax bracket
Time it takes: 20 minutes
Knowing what rate you pay on the last dollar you earn can help you to, among other things, pick a taxable vs. a municipal bond fund. Pull out your most recent 1040 and look for taxable income (line 43 in 2006). Adjust for any big changes in your income or the deductions you expect to take this year, then find where you fit in at irs.gov (search for "2007 federal tax rate schedule").
To choose between a muni and a taxable fund, divide the muni's yield by 100% minus your tax rate. If that number is higher than the taxable yield, go tax-free.
Escape late fees
Time it takes: 6 minutes
Why mess with checks and trips to the post office? Why risk a late payment when, according to Consumer Action, 85% of credit-card issuers impose penalty rates that average 24.5% if you're late on one or two bills? Pay bills online at your bank. First register at the site. Then gather your bills. Many bank sites have a pull-down menu of merchants; select yours and enter your account number. Or plug in the name, address and account number manually.
Write bounce-proof checks
Time it takes: 9 minutes
The median fee for bouncing a check recently hit $27.50, according to Bankrate.com. Call your bank or visit its website to sign up for overdraft protection. With that service, the bank will cover your check with money from a linked savings account. It may cost you $10, but that's less than half the charge for insufficient funds - not to mention what the payee demands.
Get bank alerts
Time it takes: 4 minutes.
Avoid bounced checks and spot ID theft early by having your bank notify you when your balance falls below a certain level or when there's unusual activity in your account. Citibank, for example, offers alerts via e-mail or text message. To activate them, log into your online account and select Account Info and then E-mail and Wireless Alerts. You can add up to two e-mail addresses and a mobile-phone number for alerts. Use the menu of options to designate what updates you want.
Pay less in auto insurance
Time it takes: 7 minutes
Simply raising your deductible can save you up to 30%. With an old car, drop your collision and comprehensive coverage when the car is worth less than 10 times what you pay for the insurance. Or shop for a lower premium at insweb.com, an easy-to-navigate comparison site. You'll be guided through five screens of information such as driving history, car make and model. A few minutes later the site will give you the lowest quote from its database (which doesn't include all the biggest insurers). Agents will also e-mail or call you with quotes from other insurers.
Double-check your taxes
Time it takes: 35 minutes
Next April remember this: Before you seal the envelope or tap the key that whisks your return to the IRS, spend 35 minutes looking for easy-to-spot errors. Overlook a dependent (the one at college may count) and you could owe an extra $1,000 in taxes. Transpose your Social Security number and your refund may never arrive. Did you sign your return?
Keep more of your paycheck
Time it takes: 30 minutes
A generous tax refund means you are overpaying the government. To have fewer dollars plucked from your paycheck, claim more exemptions on your W-4 form (to see if you can, use the withholding calculator at irs.gov). Print out a W-4 at the IRS site or from your company's intranet. With last year's tax return, a pay stub and a calculator handy, filling out the worksheet on page 2 takes about half an hour.
Get a tax break for day care
Time it takes: 35 minutes
Make this the fall that you finally sign up for a flexible spending account for healthcare and dependent-care expenses. Your boss takes pretax dollars from your paycheck; you tap the account for contact lenses, day care and the like.
Pay less for your cell
Time it takes: 1 minute
Know what your employer hates? Raises. What he likes? Perks that cost him nothing. At some firms, employees qualify for cell-phone discounts of up to 20%. To see if you get a Verizon discount, go to verizonwireless.com/getdiscount and plug in your e-mail address; for AT&T, go to wireless.att.com/home.
Cut drug costs
Time it takes: 16 minutes
Many employers use a pharmacy benefit manager (PBM) such as Medco or Caremark to administer prescription drug coverage. Call your PBM or go to its website (have your prescription drug coverage card handy) to check mailorder prices and sign up.
No more waiting rooms
Time it takes: 15 minutes
Can't get in and out of the doctor's office in 35 minutes? You can see a physician's assistant or a nurse practitioner in about 15 minutes, or so, says MinuteClinic, one of the largest of the chains of walk-in medical centers cropping up in pharmacies or stores such as Target or Wal-Mart. That's fine for basic ailments like earaches, strep throat and pinkeye. Your insurance may not be accepted, which could leave you footing the entire $59 ear-infection fee. But you can stop by at lunch and not miss hours, or even a day, of work.
Burn more calories
Time it takes: 30 minutes
Nibbling an extra 100 calories a day will pack on 10 pounds in a year. Doing moderate exercise for 30 minutes a day will prevent that gain - and save you money. Obese Americans spend 26% more out of pocket on health care than normal-weight workers, according to a study in Health Affairs. They also take nearly twice as many prescriptions and earn $1.42 less per hour.
Be like Buffett
Time it takes: 35 minutes
It takes seven seconds on a high-speed Internet connection to download Berkshire Hathaway's annual report (available at berkshirehathaway.com/reports.html). Reading Buffett's letter to shareholders might take a full 35 minutes. The wisdom therein could put your investing head on straight for 35 years.
Save for college
Time it takes: 35 minutes
A state 529 college savings plan is the best way to invest for your kid's higher education. With one check, you can buy a diversified portfolio that becomes more conservative as your child nears school. See Money Magazine's guide to 529s in every state (link below).
Stick with your local 529 if it's a Money pick. But if your homegrown options are fee-laden and offer no local tax breaks, go with the Utah Educational Savings Plan (800-418-2551; uesp.org). Click on the Forms tab and download the program description and "form 100." Figure on 15 minutes to read, 19 minutes to fill out the agreement, one minute to fax.
Automate your savings
Time it takes: 10 minutes
If a $10,000 minimum investment is keeping you out of mutual funds, you have a quick work-around. Lots of funds let you in for much less if you agree to have your investment automatically taken out of your bank account. With T. Rowe Price's automatic asset builder (troweprice.com), you can invest in T. Rowe Price Blue Chip Growth (TRBCX), T. Rowe Price New Era (PRNEX) and many other exemplary funds with just $50 a month.
Get credit, even in a crunch
Time it takes: 15 minutes
Apply for a home equity line of credit. Don't tap it now unless you must (average rates are 8.75%). But in an emergency - say, when you've lost your job - you may find it tougher to qualify. Start by calling your bank, but go to bankrate.com to compare its offer with those from other nearby lenders.
Read your mortgage
Time it takes: 30 minutes
Only now are many borrowers with risky loans finding that they misunderstood the terms. First pull out the one-page Truth in Lending Disclosure your lender gave you: The APR on it is the best estimate of what you are paying. Lower rates mentioned in other loan documents are likely come-on offers. If your rate is variable, scan the adjustable-rate disclosures section of your mortgage for the date it changes and the highest it can go. Examine every page for the words "prepayment penalty."
Stop overpaying on your mortgage
Time it takes: 9 minutes
If you carry private mortgage insurance but now have 20% equity in your home, see whether you can cancel. Your mortgage servicer (the phone number is listed on your bill) usually must oblige if your down payment and principal payments exceed 20% of your home's original value. Many will do so if rising prices have pushed your equity to 20%.
In this case, canceling will take longer: Most mortgage companies require an appraisal, which costs around $300. But at homegain.com, realestateabc.com or zillow.com you can get an idea of whether your home value has risen enough to justify a call.
Create an insurance record
Time it takes: 29 minutes for a 2,200 sq ft home
Walk around your house with a camera. Shoot closeups of your jewelry, artwork and other valuables. If disaster strikes, this proof of what you owned will speed your claim and help you get a better settlement. Keep copies of the video or photos in your safedeposit box or elsewhere outside your home.
Curb impulse buys
Time it takes: 10 minutes
By one estimate, two-thirds of all purchases are unplanned. To keep impulse shopping in check, ask the clerk to hold your wished for item, then take a 10-minute stroll. Next ask yourself whether you truly need this sweater/video game/golf club and how you'll pay for it.
Spend consciously
Time it takes: 35 minutes
At the grocery store, you're up against tempting displays and smells in every aisle. To avoid being ambushed, you need to follow a strict plan. Take 35 minutes to make a shopping list that follows the layout of the store (no straying) and calls for stocking up on sales items. To see the specials at stores nearby, enter your zip code atmygrocerydeals.com.
Slash recurring charges
Time it takes: 10 minutes
It seemed like a good idea - for just $16.99 a month, you could rent three DVDs at a time as often as you wanted. But how often is that really? Scan your credit-card statement for those automatic monthly charges you normally just pay. Ask yourself whether you're getting your money's worth. How often do you go to the $75-a month gym? How about that cheese-of-the-month club? Cancel what you're not using.
Boost your mileage
Time it takes: 7 minutes
About half of car owners don't test the air pressure on their car tires often enough, according to the Rubber Manufacturers Association. The recommendation: Do it once a month or before any long trip. The payoff: Properly inflated tires improve your fuel economy by 3.3%. You can buy a pencil tire gauge for less than $10. Check the pressure when your tires are cold. If they need air, head to a gas station within a mile of home.
Find it cheaper online
Time it takes: 30 minutes
Before you buy anything on the Web (or at a mall), spend a few minutes at a comparison shopping site. Shopping.com and Shopzilla.com both scour the Net for bargains at a large number of online stores, but their results can vary. Looking to buy a Garmin GPS for your car? Shopping.com found one from a top retailer for $357.95; Shopzilla's find was $212.54.
Demand a lower cable bill
Time it takes: 15 minutes
Okay, it's not as simple as that - but almost. Call and complain that your bill is too high; repeat your message calmly ("This just isn't worth it to me anymore"). Make sure to casually use the words "satellite dish" (as in "I wonder how that compares with a satellite dish") or maybe "phone company." This strategy translated into a $20 monthly discount (for a year) in our test.
Save on drinking water
Time it takes: 4 minutes
At $1.50 a pop for a gallon of bottled water at the supermarket, the desire for healthy hydration adds up. By purchasing a water filter, you can cut your family's water costs to 19¢ a gallon. Order a Brita Riviera pitcher at amazon.com for $27. Replacement filters good for two months are $9 each.
Six 35-second solutions:
Time it takes: 35 seconds
1. Say no to a new store credit card.
With rates typically above 20%, interest can wipe out that initial 10% discount. The new credit application will hurt your credit score, and you'll have yet another temptation to spend.
2. Check yes to reinvesting your dividends.
If you'd put $10,000 in an S&P 500 index fund in 1997 and reinvested dividends all along, you'd have $22,446 at the end of 2006. If you didn't, you'd end with just $19,147.
3. Say no to an extended warranty.
It'll cost you $30 to $200, and with electronics so reliable nowadays, you're unlikely to need it. Besides, if your computer breaks in two years, you'll want the new model, not a replacement.
4. Fill your tank with regular.
Premium gas is about 8% more expensive, and no matter what the manufacturer says, cars don't need pricier gas to run smoothly and resist wear.
5. Swipe your debit rather than credit card.
If your purchase will further fatten your balance on a high-rate credit card, you're better off paying with the money that's in your bank account. If asked, say "credit" rather than "debit" and your debit card will be processed over the credit-card network. You'll have more liability protection and less chance of paying a fee.
6. Delete any e-mail asking for account information or your social security number.
It may be a scam. No reputable financial services firm will ask.
Very long read, but lots of useful information.
Find out your credit score
Time it takes: 7 minutes
Know how lenders see you. Take seven minutes to download a free credit report at annualcreditreport.com. (For year-round monitoring, get a report from one of the three major credit bureaus every four months.) If you spot an error, notify the bureau (online, by phone or by mail) and the creditor (call and also send a letter). You won't find your credit score here, so when you request a report from Equifax, pay $7.95 for your FICO score, the most commonly used score. The range is 300 to 850 - 700 and above is good.
Raise your credit score
Time it takes: 8 minutes
It takes time to recover from major credit lapses, but you can do two things fast that will improve your credit score. Both will lower the size of your outstanding debt as a percentage of your total borrowing power.
1. Pay down a balance. 2. Call your issuer and ask for a higher credit limit. And don't spend it.
Triple the return on savings
Time it takes: 10 minutes
Do you have cash going nowhere in a checking or savings account? Bank money-market accounts typically pay less than 1%. You can open a savings account with HSBC Direct that recently paid 5.05%. No minimum balance is required.
With your driver's license and Social Security number handy, visit hsbcdirect.com and click on Sign Me Up. You'll be walked through screens to enter personal information. Want to fund your account immediately? Have a check with your bank account number and routing code handy to authorize an electronic transfer.
Stop junk mail
Time it takes: 5 minutes
Call 888-5OPTOUT to remove your name from credit issuers' mailing lists. The result of that five-minute talk with a computer? Fewer temptations and a mailbox filled with letters, not offers for pre-approved cards.
Most important, you'll cut the risk of an identity thief raiding your mailbox or garbage can and applying for credit in your name. Stolen paper mail accounts for 9% of identity fraud cases, according to Javelin Strategy & Research.
Note: Because we're talking credit bureaus, you'll have to provide your Social Security number. It's okay.
Freeze your credit
Time it takes: 25 minutes
Doing this prevents anyone from issuing credit in your name. (You, of course, can temporarily lift the freeze when you need a loan.) Nearly 30 states allow freezes even if you haven't been an ID theft victim. In some states you'll pay about $30 to place or remove-temporarily or permanently- the freeze. Go to consumersunion.org/securityfreeze.htm for instructions.
Haggle down your credit rate
Time it takes: 8 minutes
Dial your issuer and ask for a lower rate. If your credit score tops 720, do not be satisfied until your rate is less than 10%, says Curtis Arnold of CardRatings.com. Your biggest weapon: Make it clear that you'll stop using the card if the issuer refuses. Our reporter, helped by the fact that she's been a good customer for seven years, got the rate on her Discover card cut by four percentage points.
Upgrade to a better card
Time it takes: 30 minutes
Rewards, rates and fees change often. So search CardTrak.com to make sure you have the best deal. Among the lowest-rate cards on the site recently: Simmons First National Bank in Arkansas (800-636-5151) offers a fixed rate as low as 7.25% with no annual fee to consumers who have excellent credit.
Add to your 401(k)
Time it takes: 3 minutes
You signed up for your plan right after you found the office vending machines. Now do more: Raise your contribution by a point. Save 10% of a $50,000 salary in your 401(k) and you'll have $1.4 million in 35 years, assuming 8% returns and 4% annual raises. Ramp that up to 11% and you'll earn around $140,000 more.
Call your plan or visit your 401(k)'s website. At 401(k)s administered by Fidelity, for example, raising your contribution takes all of three minutes.
Manage like a pro
Time it takes: 4 minutes
If you have a diversified portfolio, a run-up in one asset class can throw your mix out of line, increasing risk and eroding returns. An unrebalanced $10,000 portfolio of 80% stocks and 20% bonds would have grown to $21,620 over the past 10 years.
If you'd rebalanced annually, you'd have $22,213, or $593 more - and taken less risk to get there. Retooling a 401(k) is easy: With a big plan administrator like Fidelity or Hewitt, rebalancing online takes minutes. In a taxable account, simply direct new money into the lagging fund categories.
Buy a forever portfolio
Time it takes: 25 minutes
Putting together a complete fund portfolio was once a time consuming chore. Nowadays target-date funds, which adjust the stock and bond allocation to smooth returns as you near a "target" retirement year, do it for you in minutes. Many 401(k)s offer them.
For direct investments, use the low-cost options from Vanguard (800-851-4999) or T. Rowe Price (800-638-5660). At vanguard.com, click on the tab labeled Research Funds and Stocks. Find the fund that corresponds to your planned retirement year, then download and look over the prospectus. Next click on the Buy This Fund link and follow the instructions. Have your checkbook ready to deposit funds electronically.
Find promising funds
Time it takes: 5 minutes
You can cut through the 8,000 or so mutual funds out there by sticking to the MONEY 70. Or run a screen for similar funds at morningstar.com (click on the Funds tab and go to the Mutual Fund Screener link). Pick a category, and then limit expenses to less than the category average. Next screen for funds whose managers have five years of tenure or more - greater experience is linked to better performance. Cut funds that failed to beat their five- or 10-year category averages.
Track your returns
Time it takes: 35 minutes
It's a pain to figure out how your investments are doing, especially if your money is scattered among several accounts. Spend 35 minutes setting up the portfolio tracker at portfolio.morningstar.com (you must first register at the site) so that you can start calculating your own rate of return. For a Web tool that can be clunky, Morningstar's tracker is particularly well designed and easy to use. You will, however, have to update it when you reinvest dividends or buy more shares.
Find out if you're paid enough
Time it takes: 15 minutes
Before you can make your case for a raise, you need something to measure yourself against. Salary.com offers Salary Wizard for free. Plug in your title and zip code and you'll get the median pay in your area for comparable positions. Or spend 10 minutes filling out a questionnaire with more variables, such as the size of your employer, and get 12 pages of data by buying a Personal Salary Report for $29.95 to $79.95 (the price varies by title).
Run a retirement plan
Time it takes: 5 minutes
On the road to riches, the key question is whether you're on track for financial independence. So pull out your retirement and investment account statements, plus projections for any pensions. Running that simple math can be surprisingly valuable: Researchers have found that people who plan for retirement have a higher net worth than those who do nothing.
Estimate your life insurance
Time it takes: 35 minutes
How much coverage is enough? For a fast ballpark estimate, multiply your annual income by five. With 35 minutes you can use the detailed calculator from the Life and Health Insurance Foundation for Education (life line.org). You'll be asked for your assets and debts, plus answers to tough questions like how long your family would need income after your death. If you find you need more coverage, get a quote on a term policy in five minutes at accuquote.com.
Learn your tax bracket
Time it takes: 20 minutes
Knowing what rate you pay on the last dollar you earn can help you to, among other things, pick a taxable vs. a municipal bond fund. Pull out your most recent 1040 and look for taxable income (line 43 in 2006). Adjust for any big changes in your income or the deductions you expect to take this year, then find where you fit in at irs.gov (search for "2007 federal tax rate schedule").
To choose between a muni and a taxable fund, divide the muni's yield by 100% minus your tax rate. If that number is higher than the taxable yield, go tax-free.
Escape late fees
Time it takes: 6 minutes
Why mess with checks and trips to the post office? Why risk a late payment when, according to Consumer Action, 85% of credit-card issuers impose penalty rates that average 24.5% if you're late on one or two bills? Pay bills online at your bank. First register at the site. Then gather your bills. Many bank sites have a pull-down menu of merchants; select yours and enter your account number. Or plug in the name, address and account number manually.
Write bounce-proof checks
Time it takes: 9 minutes
The median fee for bouncing a check recently hit $27.50, according to Bankrate.com. Call your bank or visit its website to sign up for overdraft protection. With that service, the bank will cover your check with money from a linked savings account. It may cost you $10, but that's less than half the charge for insufficient funds - not to mention what the payee demands.
Get bank alerts
Time it takes: 4 minutes.
Avoid bounced checks and spot ID theft early by having your bank notify you when your balance falls below a certain level or when there's unusual activity in your account. Citibank, for example, offers alerts via e-mail or text message. To activate them, log into your online account and select Account Info and then E-mail and Wireless Alerts. You can add up to two e-mail addresses and a mobile-phone number for alerts. Use the menu of options to designate what updates you want.
Pay less in auto insurance
Time it takes: 7 minutes
Simply raising your deductible can save you up to 30%. With an old car, drop your collision and comprehensive coverage when the car is worth less than 10 times what you pay for the insurance. Or shop for a lower premium at insweb.com, an easy-to-navigate comparison site. You'll be guided through five screens of information such as driving history, car make and model. A few minutes later the site will give you the lowest quote from its database (which doesn't include all the biggest insurers). Agents will also e-mail or call you with quotes from other insurers.
Double-check your taxes
Time it takes: 35 minutes
Next April remember this: Before you seal the envelope or tap the key that whisks your return to the IRS, spend 35 minutes looking for easy-to-spot errors. Overlook a dependent (the one at college may count) and you could owe an extra $1,000 in taxes. Transpose your Social Security number and your refund may never arrive. Did you sign your return?
Keep more of your paycheck
Time it takes: 30 minutes
A generous tax refund means you are overpaying the government. To have fewer dollars plucked from your paycheck, claim more exemptions on your W-4 form (to see if you can, use the withholding calculator at irs.gov). Print out a W-4 at the IRS site or from your company's intranet. With last year's tax return, a pay stub and a calculator handy, filling out the worksheet on page 2 takes about half an hour.
Get a tax break for day care
Time it takes: 35 minutes
Make this the fall that you finally sign up for a flexible spending account for healthcare and dependent-care expenses. Your boss takes pretax dollars from your paycheck; you tap the account for contact lenses, day care and the like.
Pay less for your cell
Time it takes: 1 minute
Know what your employer hates? Raises. What he likes? Perks that cost him nothing. At some firms, employees qualify for cell-phone discounts of up to 20%. To see if you get a Verizon discount, go to verizonwireless.com/getdiscount and plug in your e-mail address; for AT&T, go to wireless.att.com/home.
Cut drug costs
Time it takes: 16 minutes
Many employers use a pharmacy benefit manager (PBM) such as Medco or Caremark to administer prescription drug coverage. Call your PBM or go to its website (have your prescription drug coverage card handy) to check mailorder prices and sign up.
No more waiting rooms
Time it takes: 15 minutes
Can't get in and out of the doctor's office in 35 minutes? You can see a physician's assistant or a nurse practitioner in about 15 minutes, or so, says MinuteClinic, one of the largest of the chains of walk-in medical centers cropping up in pharmacies or stores such as Target or Wal-Mart. That's fine for basic ailments like earaches, strep throat and pinkeye. Your insurance may not be accepted, which could leave you footing the entire $59 ear-infection fee. But you can stop by at lunch and not miss hours, or even a day, of work.
Burn more calories
Time it takes: 30 minutes
Nibbling an extra 100 calories a day will pack on 10 pounds in a year. Doing moderate exercise for 30 minutes a day will prevent that gain - and save you money. Obese Americans spend 26% more out of pocket on health care than normal-weight workers, according to a study in Health Affairs. They also take nearly twice as many prescriptions and earn $1.42 less per hour.
Be like Buffett
Time it takes: 35 minutes
It takes seven seconds on a high-speed Internet connection to download Berkshire Hathaway's annual report (available at berkshirehathaway.com/reports.html). Reading Buffett's letter to shareholders might take a full 35 minutes. The wisdom therein could put your investing head on straight for 35 years.
Save for college
Time it takes: 35 minutes
A state 529 college savings plan is the best way to invest for your kid's higher education. With one check, you can buy a diversified portfolio that becomes more conservative as your child nears school. See Money Magazine's guide to 529s in every state (link below).
Stick with your local 529 if it's a Money pick. But if your homegrown options are fee-laden and offer no local tax breaks, go with the Utah Educational Savings Plan (800-418-2551; uesp.org). Click on the Forms tab and download the program description and "form 100." Figure on 15 minutes to read, 19 minutes to fill out the agreement, one minute to fax.
Automate your savings
Time it takes: 10 minutes
If a $10,000 minimum investment is keeping you out of mutual funds, you have a quick work-around. Lots of funds let you in for much less if you agree to have your investment automatically taken out of your bank account. With T. Rowe Price's automatic asset builder (troweprice.com), you can invest in T. Rowe Price Blue Chip Growth (TRBCX), T. Rowe Price New Era (PRNEX) and many other exemplary funds with just $50 a month.
Get credit, even in a crunch
Time it takes: 15 minutes
Apply for a home equity line of credit. Don't tap it now unless you must (average rates are 8.75%). But in an emergency - say, when you've lost your job - you may find it tougher to qualify. Start by calling your bank, but go to bankrate.com to compare its offer with those from other nearby lenders.
Read your mortgage
Time it takes: 30 minutes
Only now are many borrowers with risky loans finding that they misunderstood the terms. First pull out the one-page Truth in Lending Disclosure your lender gave you: The APR on it is the best estimate of what you are paying. Lower rates mentioned in other loan documents are likely come-on offers. If your rate is variable, scan the adjustable-rate disclosures section of your mortgage for the date it changes and the highest it can go. Examine every page for the words "prepayment penalty."
Stop overpaying on your mortgage
Time it takes: 9 minutes
If you carry private mortgage insurance but now have 20% equity in your home, see whether you can cancel. Your mortgage servicer (the phone number is listed on your bill) usually must oblige if your down payment and principal payments exceed 20% of your home's original value. Many will do so if rising prices have pushed your equity to 20%.
In this case, canceling will take longer: Most mortgage companies require an appraisal, which costs around $300. But at homegain.com, realestateabc.com or zillow.com you can get an idea of whether your home value has risen enough to justify a call.
Create an insurance record
Time it takes: 29 minutes for a 2,200 sq ft home
Walk around your house with a camera. Shoot closeups of your jewelry, artwork and other valuables. If disaster strikes, this proof of what you owned will speed your claim and help you get a better settlement. Keep copies of the video or photos in your safedeposit box or elsewhere outside your home.
Curb impulse buys
Time it takes: 10 minutes
By one estimate, two-thirds of all purchases are unplanned. To keep impulse shopping in check, ask the clerk to hold your wished for item, then take a 10-minute stroll. Next ask yourself whether you truly need this sweater/video game/golf club and how you'll pay for it.
Spend consciously
Time it takes: 35 minutes
At the grocery store, you're up against tempting displays and smells in every aisle. To avoid being ambushed, you need to follow a strict plan. Take 35 minutes to make a shopping list that follows the layout of the store (no straying) and calls for stocking up on sales items. To see the specials at stores nearby, enter your zip code atmygrocerydeals.com.
Slash recurring charges
Time it takes: 10 minutes
It seemed like a good idea - for just $16.99 a month, you could rent three DVDs at a time as often as you wanted. But how often is that really? Scan your credit-card statement for those automatic monthly charges you normally just pay. Ask yourself whether you're getting your money's worth. How often do you go to the $75-a month gym? How about that cheese-of-the-month club? Cancel what you're not using.
Boost your mileage
Time it takes: 7 minutes
About half of car owners don't test the air pressure on their car tires often enough, according to the Rubber Manufacturers Association. The recommendation: Do it once a month or before any long trip. The payoff: Properly inflated tires improve your fuel economy by 3.3%. You can buy a pencil tire gauge for less than $10. Check the pressure when your tires are cold. If they need air, head to a gas station within a mile of home.
Find it cheaper online
Time it takes: 30 minutes
Before you buy anything on the Web (or at a mall), spend a few minutes at a comparison shopping site. Shopping.com and Shopzilla.com both scour the Net for bargains at a large number of online stores, but their results can vary. Looking to buy a Garmin GPS for your car? Shopping.com found one from a top retailer for $357.95; Shopzilla's find was $212.54.
Demand a lower cable bill
Time it takes: 15 minutes
Okay, it's not as simple as that - but almost. Call and complain that your bill is too high; repeat your message calmly ("This just isn't worth it to me anymore"). Make sure to casually use the words "satellite dish" (as in "I wonder how that compares with a satellite dish") or maybe "phone company." This strategy translated into a $20 monthly discount (for a year) in our test.
Save on drinking water
Time it takes: 4 minutes
At $1.50 a pop for a gallon of bottled water at the supermarket, the desire for healthy hydration adds up. By purchasing a water filter, you can cut your family's water costs to 19¢ a gallon. Order a Brita Riviera pitcher at amazon.com for $27. Replacement filters good for two months are $9 each.
Six 35-second solutions:
Time it takes: 35 seconds
1. Say no to a new store credit card.
With rates typically above 20%, interest can wipe out that initial 10% discount. The new credit application will hurt your credit score, and you'll have yet another temptation to spend.
2. Check yes to reinvesting your dividends.
If you'd put $10,000 in an S&P 500 index fund in 1997 and reinvested dividends all along, you'd have $22,446 at the end of 2006. If you didn't, you'd end with just $19,147.
3. Say no to an extended warranty.
It'll cost you $30 to $200, and with electronics so reliable nowadays, you're unlikely to need it. Besides, if your computer breaks in two years, you'll want the new model, not a replacement.
4. Fill your tank with regular.
Premium gas is about 8% more expensive, and no matter what the manufacturer says, cars don't need pricier gas to run smoothly and resist wear.
5. Swipe your debit rather than credit card.
If your purchase will further fatten your balance on a high-rate credit card, you're better off paying with the money that's in your bank account. If asked, say "credit" rather than "debit" and your debit card will be processed over the credit-card network. You'll have more liability protection and less chance of paying a fee.
6. Delete any e-mail asking for account information or your social security number.
It may be a scam. No reputable financial services firm will ask.
Very long read, but lots of useful information.
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