Blissfully Domestic

Thoughts on steps to becoming Debt-Free

The Simple Dollar is a great site for those of us who don't want to have to sort through a bunch of complicated formulas and tables to get to the core of debt and financial issues.

What follows is a listing of the first 10 (of 37), of what Dave Ramsey refers to as Peace Puppies along with thoughts from Trent, at The Simple Dollar:

1. Avoid “stuffitis” - the worship of “stuff” In other words, don’t buy stuff you don’t need and soon you’ll find yourself breaking free of the desire to buy lots of unnecessary stuff.

2. Plant seeds - give money away to worthy causes Dave is very much into charity and it comes through strongly here; I find that I agree with his viewpoint on charitable giving, though.

3. Develop your own “power over purchase” Develop some willpower when you go shopping and simply don’t buy stuff that you don’t need or that you didn’t intend to buy when you went into the store.

4. Find where you are naturally gifted - enjoy your work and work hard I agree with this; even if your main job is not suited to your natural talents, find time to follow them and build them up into something you can enjoy while working hard at it - success always follows this.

5. Live substantially below your income  This is the key to financial success summed up in five words.

6. Sacrifice now so you can have peace later The same sentiment is worded better by Dave when he says, “Live like no one else so you can live like no one else,” which basically means spend some time living as cheaply as possible so you can build a truly strong financial base.

7. You can always spend more than you make  Spending on credit is extremely dangerous over the long haul.

8. The borrower is the servant to the lender, so beware!  Debt is also extremely dangerous.

9. Check your credit report at least once every two years Doing this ensures that there aren’t any nasty surprises if you ever need to use your credit report to secure a loan, or even something as mundane as securing lower insurance rates.

10. Handle credit report corrections yourself If you find a mistake, call up the credit reporting bureau yourself and find out what you need to do to get it fixed; you’re the one with the interest in getting it right here, not anyone else.

Do you struggle with any of these? Have you found a method for making any of these steps easier? Feel free to share!

Teaching Young Children about Money

Anyone struggling with financial issues will usually say the same thing: I wish I had known more about money before.

While we know that our children need to learn to count, read and write, we mustn't forget the important life skills, especially when it comes to finances. These days, children are being solicited for credit cards at younger ages. Heck, even Dora the Explorer has a credit card that children can go "shopping" with in a play grocery store (now there is something Dora should have been taught: don't purchase groceries on a credit)

So how do we teach our children finances, especially when we may be in the process of (re)learning about them ourselves?

Here are some links to help you sort through it:

Forbes.com - Teaching Kids about Money [be sure to click on the link at the bottom of the article Seven Tips to Teach your Child About Money]

Family Education has a thorough listing of activities for teaching your child (of any age) in a hands-on way. And when I say thorough... yeah... it covers it all. A very impressive list.

Young Investor teaches saving, investing, planning and earning money.

Moneyopolis is a site for middle school-aged children.

Practical Money Skills for Life is a site geared towards older children. But there are some activities for young children here.

This post from the University of Minnesota Extension office is very well-written and covers what to teach young children.

and Dave Ramsey has many resources for teaching kids about money, including Junior's Clubhouse.

Do you have great ideas or suggestions for teaching our children about money? Do you have questions about it? Leave a comment and/or head over to the forum.

Avoiding Impulse Spending

In a previous post we discussed ways that retailers market their products to try and inflate the amount we drop while we shop. Now that you are aware of these tactics, what are you to do?

Let's take a look at the suggestions from Financial Peace University. The following thoughts on each suggestion are from Getting Finances Done. I felt that the thoughts on each summed up the points perfectly.

1. Wait over night before making a large purchase (being defined as $300 to $1,000 depending on how much money you make). Many of the large, multi-hundred dollar purchases people make are surprisingly impulse purchases. This happens particularly when people receive large lump sums of money such as a bonus. They go on a shopping spree and before they know it have spent the money on things they may not care that much about. The simple act of waiting overnight to make the purchase will deter most frivolous impulse purchases. Once the excitement of the moment has worn off, your brain actually thinks about it and realizes you’d rather spend the money elsewhere or even save it.
2. Understand the difference between needs and wants.  You don’t need the wide screen 60″ LCD TV.  You might really, really, really want it, but you don’t need it.  Your needs are food, shelter, clothing, and transportation.
3. Never buy anything you don’t understand. If the sales person can’t explain it in terms you understand, don’t buy it. Buying things you don’t understand inevitably will cause you to buy something that doesn’t really fit your needs.
4. Consider the opportunity costs (what else could you do with the money). Opportunity cost is an economic term defined as the most valuable foregone alternative. Put in layman’s terms, what else could you do with your money? For example, if you spend $1,000 on the TV, what will you not be able to buy with that $1,000? Maybe there’s something else on yo ur list of wants that you’d rather have even more. I frequently experience regret from buying several smaller items and realizing later that I could have saved that money to buy a bigger item that I want significantly more than the smaller ones.
5. Seek the counsel of your spouse. As painful as it may be, two minds are better, or at least more reasonable, than one. Unless you are spending personal money, you should consult your spouse on all major purchases anyway. A spouse can offer a different perspective and can often bring to your attention other uses for the funds or other alternatives that may meet your needs at a lower cost.

If you are interested in learning more about curtailing impulse spending, you can listen, online, to Dave discuss it here and here. Dave is always fun to listen to.

(sources: DaveRamsey.com and Getting Finances Done; photo source: Unhindered by Talent )

How Marketing Affects our Spending

This week and last, Jennifer, our Frugal Diva, wrote a very thorough list of ways that marketers appeal to our emotions at the grocery store. From placement (eye-level or not), to the ways we relate to numbers (Buy two get two free!), we are bombarded by sly tactics and methods that years of research has taught retailers.

All of these things work to take money from our wallets and place them into theirs. It wreaks havoc on our bank accounts, if we are not careful.

The four main ways that we are sold to are:

Personal Selling - we've all heard of demographics. Research tells marketers what appeals to certain groups. And as information is collected from us, databases are created to help pinpoint more information about those demographics. Marketers carefully review that information to be able to target very specific groups for their items.

Financing - Commercial after commercial tells us that we can take it home today with no payments until ________ or 90 days same-as-cash, but what this really means is "We are gonna make a lot of extra money off of you". Some businesses make more money off of the financing than they do from the item they are selling you.

TV, radio and internet - The number of daily marketing impressions the average person is exposed to has increased from 500 in 1971 to over 4,000 today. We are constantly bombarded with ads and savvy marketing. How many annoying product jingles go through your head on a daily basis? That's good marketing!

Product Positioning - Brand recognition, shelf position, color and packaging. I admit that this is one that I fall for frequently. I love all of the pretty colors and packaging and sometimes find myself arguing with myself over a purchase based simply on the package. Ridiculous, I know. That's savvy marketing. Think too, of all of those little items placed right by the register: sodas, trial size items and candy become impulsive buys if we aren't careful.

What are we to do? We can become experts of Buyer Beware. Next week: We'll discuss What to Do to become a more savvy shopper.

For now, head over to the forums and let's discuss marketing ploys we've fallen for.

Relating with Money (Money and Marriage)

You don't have to be struggling financially to understand that money can be a strain between men and women in a marriage. Considering the fact that two people raised in two different environments are suddenly placed under the same roof and told to play nice and share, it's no surprise that conflict will arise.

But pretending it's not an issue won't do. So what are we to do?

When it comes to money, there are two types of people: nerds and free-spirits. Nerds approach money with spreadsheets and calculators. Free Spirits use the spreadsheets to stick their gum in. They feel controlled by a budget.

Which are you?

I am definitely a free spirit. When my husband approaches me with numbers, my eyes glaze over and I have to fight the urge to stick needles in my eyes. That's how much I hate numbers.

As half of a couple, we need to remember that we are on the same team. With that being said, finances need to be addressed as a couple. Consider it a Budget Committee Meeting. The budget is initially set up by the partner with the natural gift, but then both partners sit down and discuss it.

Some points to remember as you sit down together:

• The meeting shouldn't go longer than 17 minutes - table it and come back to it later.
• Nerds make a proposed plan and bring it to the meeting. They give it to the free spirit and then shut up and let them look at it. Nerd needs to remember that this is a meeting and not a budget summit.
• The free spirit has to show up, act like an adult and give positive feedback.
• Free Spirit must change something on the budget (in other words, can't just look it over and say "yeah, okay..." or "whatever you want to do"...)

When we can sit down and talk it through, it makes it easier to follow through.

Which are you and how have you learned to deal with it in your marriage? Come discuss in the Forum.

Did you know that there is a group at Blissfully Domestic Living where you can meet and discuss any thoughts and/or questions you have about any of the things discussed on this topic? Head over and join us!