Wise Bread (Kate Luther)

Surprising Things That Can Kill Your Credit

Kate Luther — Thu, 02 Feb 2012 11:36:28 +0000

When it comes to credit scores, we're all very familiar with the damage a late payment can do to your credit "worthiness." We also know that having too much debt is bad as is having no credit references at all.

But surely that can't be all that affects your credit score, right?

The truth is, there are several things that can tank your credit, some of which just might surprise you. (See also: 6 Credit Card Services You Don't (Usually) Need)

Sneaky Inquiries

When you apply for a new credit card, you expect an inquiry to show up on your report. This is known as a "hard" inquiry, and too many of these within a 12 month period will lower your score.

But filling out that Visa application isn't the only way to generate a hard inquiry. If you use a debit card when you rent a car for example, many rental agencies will check your credit before approving the transaction, and since few of us read all the fine print, you may not realize it's happened until it's too late.

Likewise, opening a new checking account will also typically generate a hard inquiry (even though you're not applying for credit) as will applying for new phone service and — surprise! — requesting an increase on an existing account. Unfortunately, many consumers assume that credit card companies simply look at their own payment history to determine approval for increases, but the fact is that your existing creditors are monitoring your credit score on a regular basis.

Now, only the hard inquiries generated by a request for an increase will ding your score — those periodic "checkups" are considered soft inquiries and don't cause a penalty. But that doesn't mean that they can't still hurt your credit, bringing us to the next item on this list...

Changing Your Ratio

When a creditor approves an application for credit, they will continue to monitor your score to ensure that your credit worthiness doesn't change. And again, these soft inquiries don't count against you. But should the creditor decide that you no longer meet their requirements, they can lower your credit limit or worse, close your account. By the time you realize it, the damage has already been done.

Your credit score depends greatly on the ratio between how much credit you've used and how much you have available. So, if you have an account with a $2,000 balance for example, and you've charged $400, then you've used 20% of your available credit, and anything up to 30% is considered to be responsible credit management.

But let's say that the credit card company decides that you no longer meet their standards and as a result, they lower your limit to $250 (yes, they can do that — I speak from experience). Now, instead of having a credit ratio of 20%, you're suddenly maxed out as far as your credit report is concerned, and your score will drop considerably as a result.

If they decide to close the account instead (yes, they can do that too), you not only suffer the ding for a high credit utilization ratio, but you also lose the benefit of that available credit once you've paid the balance off. Remember, your utilization ratio is based upon your total credit available, so when an account is closed, it reduces the amount of credit you have access to. And the less available credit you have, the higher your utilization ratio will be.

This is also the reason that financial experts discourage balance transfers. Debt-conscious consumers will often transfer their credit card balances to a new card with a lower rate, thinking that they're making a smart move, but this can actually have an adverse effect on your credit.

Not only do you suffer the ding for a hard inquiry to secure that new, lower-rate account, but you'll also skew your utilization ratio if — like many consumers do — you close those higher-rate accounts after the balance transfer is complete.

Let's say for example, that you have two cards, each with a $1,500 limit and a $200 balance. That gives you a utilization ratio of about 13% ($400 used / $3,000 total available). Then let's say that you get a new, lower-rate credit card with an additional $1,000 limit, and you shift your $400 outstanding balance to that new card. You now have a credit utilization ratio of just 10% ($400 used / $4,000 total available), but the minute you close those two older accounts with the higher interest rates, your ratio goes down the tubes.

Instead of having $4,000 in available credit, you now only have $1,000. Your ratio goes from an impressive 10% to a whopping 40%, and that's bad, bad, bad.

Applying for the Wrong Type of Credit

Many consumers think that any kind of credit is good, and for those trying to rebuild their credit scores, getting approval on in-house financing plans might seem like a step in the right direction.

Unfortunately, that's not the case.

These "local" finance plans — like those you see advertised by furniture stores and car dealerships — are considered to be "second class" credit...that is, credit for those who can't get it anywhere else, and this makes you look like a high risk to potential creditors.

In addition, because these in-house programs don't issue you a revolving limit, your available credit is typically the amount of your purchase. So, when you finance $1,000, it appears as a maxed-out account on your credit report and affects that all-important utilization ratio we were talking about before.

Skipping Out

When it comes to late payments, it's not just your credit cards that you have to worry about. Those old library fines, parking tickets, and unpaid balances on your book club can also hurt you if the company decides to use a collection agency to resolve the account.

And once the collection hits your credit report, you and your score are stuck with it for seven years.

Swearing Off Credit

After having a few bouts of credit card debt in my early twenties, I swore I would only pay cash for my stuff and never use a credit card again. But knowing the importance of having credit, I kept a few accounts open and just locked the cards away. I thought I was being smart... I thought wrong.

When you don't use your credit — as in, ever — there's no payment history for potential creditors to evaluate and after an extended period of time, your creditors may close your account because of inactivity, both of which can make it harder for you to secure credit when you need it.

In addition, if you do ever decide to use one of those cards, you may find that your purchase is declined because it's outside of your "usual" spending habits. Of course, this can be resolved, but not without some embarrassment as you step out of the checkout line to call your credit card company.

The Moral of This Story?

Managing and protecting your credit score is most certainly a pain, but it's a necessary one. Use your credit, but use it wisely, and always ask about credit checks before securing new services...even (and especially) when those services seemingly would have nothing to do with your credit.

But most importantly, monitor your score. The only way to know what's being reported is to check it yourself and then dispute any information that's incorrect.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

How to Improve Your Memory (and Even Get a Little Smarter)

Kate Luther — Fri, 13 Jan 2012 11:24:13 +0000

My mother forgets things.

Not everything of course, but a lot. She can still recall the names of her friends from high school for example, and she remembers every embarrassing thing we did as kids... but ask her what we talked about five minutes ago, and you're out of luck.

What's really crazy is that I can't tell you when it happened. In fact, from my perspective, it was almost overnight. It's as if her brilliant mind blew a fuse — one minute she was fine and then — POP — the next minute she wasn't.

And now my mother forgets things.

But we're not beaten yet.

From mental exercises to food, I've been doing a lot of research into what helps people improve their memories, boost their brain power, and even stave off dementia. So whether you just want to get better at remembering names or want to keep your brain healthy for years to come, follow these suggestions. (See also: 5 Tips for Remembering Names)

Diet

The idea of eating for your intellectual health is nothing new, but this new development with my mom caused me to take a second, harder look at which foods do what.

The brain, it turns out, is made up of fatty tissue, so it requires quite a bit of fatty acids to function properly...but not just any fats will do. The popular Omega-3s are a good start, boosting your brain power as well as your immune system (while providing a whole host of other health benefits), so eat plenty of fatty fish (such as salmon, tuna, and shrimp), nuts (walnuts and almonds are wonderful), and leafy greens.

Supplements are good too — certainly better than nothing — but experts still agree that adjusting your diet is the best way to get the nutrients your body needs.

And speaking of leafy greens, the darker ones, such as spinach and chard, do a great job of controlling your homocysteine levels. Homocysteine is a non-protein amino acid that in normal levels apparently causes no harm. But elevated levels have been associated with Alzheimer's Disease as well as cardiovascular disease and a few other serious health concerns. To control your homocysteine levels, you should eat plenty of the dark, leafy greens and take both folic acid and B-vitamin supplements. Incidentally, whole grains are a great source of B-vitamins and give you a healthy dose of magnesium too — an essential mineral that is crucial to living cells. Magnesium deficiencies have been linked to a wide variety of diseases and disorders, including cardiovascular disease, asthma, diabetes, and yes, dementia.

Antioxidants also play a big part in your mental health, so think blueberries, garlic, olive oil, pomegranates, and those popular acai berries everyone is talking about. In general, the darker the fruit, the more potent the antioxidant properties, so eat from this food group as often as you like.

Cocoa power also contains a powerful antioxidant...more powerful than green tea even, so try sprinkling some on top of your coffee or mixing with your milk.

And since we're talking about coffee, having a few cups of java in the morning has actually been shown to be an effective deterrent against dementia and other cognitive diseases. And it's not just the caffeine — coffee apparently has some mystery compound in it, according to Science Daily Magazine, that interacts with the caffeine to protect against Alzheimer's. How much is enough? Studies show that moderate amounts — 4 to 5 cups a day — is sufficient to provide the health benefit.

And last but not least, that daily glass of red wine really does have its perks. In addition to helping ward off heart disease, red wine also contains some very powerful flavanoids that boost blood flow to the brain. Don't like red wine? Opt for grape juice instead.

Exercise

Getting as little as 20 minutes of physical activity each day can help ward off Alzheimer's and other cognitive diseases. Exercise delivers oxygen and nutrients to the brain cells and also increases your levels of BDNF, a chemical that encourages growth and survival of new neurons.

Exercise also improves the quality of your sleep, another must for those delicate neurons.

Stimulation

We've all heard the suggestions that exercising your brain is the easiest way to improve your mental power...and that little tidbit is actually true. But to get the most benefit, you need to engage in mental exercises that require your brain to work.

Learning a new language or a new musical instrument, for example, forces your brain to create new pathways and form new neurons. The result is improved mental capacity. Crossword puzzles and other brain games work equally well, but here's the catch...once you've mastered the task, it's no longer challenging, and your brain doesn't have to form those all-important neurons to keep up.

The key, then, is to keep your brain working by challenging yourself with new puzzles, activities, and areas of learning. The more you broaden your horizons, the better off your brain will be.

And in case you're wondering, yes — video games are beneficial too. In addition to increasing hand-eye coordination, those who play video games at least three to four hours a week have better depth perception, pattern recognition, and overall mental dexterity. You'll also find that you process information a little faster too.

Memory Hacks

Whether you're stepping out to the store or trying to remember the name of the person you just met, these quick tricks can help you remember information faster and easier.

Use Visual Cues

Linking an image to something you need to remember is an easy way to trigger that memory later when you need it. For example, my mother's license plate used to begin with PBJ. I love peanut butter and jelly sandwiches, so I used that image to remember the number on her plates. And clearly it worked... that was some 15 years ago and I can still pull it up with no problem.

Use Acronyms

When I need a few things from the store, I try creating a word using the first letter of those items. For example, if I need milk, eggs, and tea, I might use the word "MET" to help me recall which items I need to buy. Obviously, sometimes the letters won't cooperate and try as you might, you just can't form an actual word. In those cases, improvise. I once remembered brisket, bread, cilantro, celery, and soda by memorizing BBCCS — as in BB's and CC's. The letters didn't have much meaning for me, but it was enough to help me remember what to buy.

Use Lists

Trying to remember three or four items at the grocery store is one thing...it's quite another when that list grows to 10 or 15. There's nothing wrong with making a list, and in fact, making those lists takes the pressure off of you to remember every little to-do or to-buy that might cross your path. Given the amount of information we process on a daily basis, that's probably a good thing.

Say It Out Loud

When meeting someone for the first time, say their name out loud as soon as you learn it. This helps reinforce the face (image) with the name (detail) for future recall. Incidentally, this little trick works equally well with non-human recall too, so feel free to employ this tactic anytime you need to remember a set of details or specifications.

Write It Down

If you read a chapter in a book, you can probably recite the overall gist of the content, but when you write it down, you'll find that your recall is much more detailed. This trick comes in quite handy when you're studying for a test, memorizing a speech, or just need to remember something important.

Obviously, there's no guarantee that you won't still forget things from time to time, and as of this writing, there's still no fool-proof cure for degenerative diseases such as Alzheimer's. But we're getting there. And in the meantime, just think of how healthy and happy you'll be when you implement these new habits.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

6 Easy Ways to Get Back on Track

Kate Luther — Tue, 12 Jul 2011 10:24:08 +0000

We all have those days — days when we're feeling uninspired and unmotivated, when we just can't seem to get anything going and have the energy level of a snail.

Now, days like this aren't so bad if they happen every once in a while, but once you start procrastinating, it's really hard to stop. And suddenly, what started as an off day turns into a full-blown rut.

Fortunately, there are some things you can do to reclaim your motivation. Here are six easy-but-effective ways to get yourself back on track. (See also: Goal Setting, Defined and Deconstructed)

1. Eat That Frog

This is actually just a clever version of some age-old advice. No, you don't actually have to eat a frog (much to my children's relief!) — you just have to pick the worst thing on your to-do list and tackle that project first.

Why?

Because until you do, it will sit there looming in your subconscious. You know you have to do it, and you're loathing every minute it's going to require. But as long as you're thinking about the frog you have to eat, you can't fully focus on anything else.

So eat that frog, and the rest is cake.

2. Jump the Shark

In the entertainment industry, "jumping the shark" means that a TV show has reached its peak. The actual "jumping" is a moment in the series when it's clear that the writers are really reaching to come up with something new and interesting for your favorite characters to do.

Obviously, jumping the shark usually marks the end for television shows. But in your personal life, jumping the shark is actually a solid practice. Unlike television series, we're not always spending time thinking about how to make our lives new and fresh week after week. Quite the contrary, we spend most of our waking hours going through the same motions we've gone through for years. Is it any surprise that we start to lose interest and focus after a while?

Jumping the shark is all about shaking things up — really reaching and exploring all the possibilities. What's the craziest thing you can think of? If you could do anything, what would it be? What's something you'd like to try but seems way out of character for you?

In a television series, the writers have limits on what their characters can do and become. But your character is still developing, and it's up to you to push the envelope and find your shark.

3. Make a Commitment

Sometimes all it takes to get going is one small step. So take that step. Pick out one task and commit to spending 30 minutes on nothing else. No breaks, no distractions, no multi-tasking. For the next 30 minutes, you're going to give this one project your full attention. When that 30 minutes is up, you can take that break and go back to procrastinating if you choose, but chances are, you'll find the motivation you need to keep on going.

Apply this same strategy to all the items on your to-do list, and see how many you can cross off using 30 minute intervals. The more tasks you complete, the more motivated you'll be to finish the rest.

4. Prioritize

When you've got a lot to do, it can be hard to figure out where to start. This is the perfect breeding ground for procrastination.

Instead, break your tasks down into smaller, manageable projects, and then prioritize. Which items really need your attention first? Which items can be completed quickly and crossed off the list?

Formulating a game plan gives you the starting point you need to move forward, and once you get going, the rest is easy.

5. Organize

It's hard to get anything done when you're surrounded by clutter. I'm speaking from personal experience on this one. As a freelance writer, I spend a large amount of time sitting at a desk that's often covered with papers, mail, books, and whatever else might find its way there. The result is that I spend quite a bit of energy and time moving things around so that I can work. And even if I'm not moving things around, I'm still aware of the clutter and that clutter blocks my creative energy.

The solution, of course, is to get organized. File those papers, put pens and pencils in a cup...you get the idea. Organize your work space — be it your desk, your garage or your kitchen — and you'll find that it's easier to tackle your list of to-do's.

6. Ask for Help

Just because the items on your list are your to-do's doesn't mean you can't ask for help. Quite the contrary, recruiting others to assist a great way to get motivated and get the job done. Ask your neighbor, your co-worker, your kids, or your spouse to pitch in. Make some of your bigger projects a group effort and then watch the work get done. Just be sure to return the favor.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

4 Ways to Have a Better Day

Kate Luther — Mon, 28 Feb 2011 12:01:08 +0000

Yesterday was a great day.

The weather was warm, the sun was shining, and my hair actually did something semi-normal. I checked several things off my to-do list, I tried a new recipe (and it worked!), and I managed to clean out my closet to boot. (See also: Finding New Recipes Without Paying for New Cookbooks)

All in all, I'd give it two thumbs up.

Of course, not every day ranks quite so well. Despite our best efforts, sometimes things just won't go our way, and the more we push, the more the Universe seems to push back.

This tug-of-war is often the beginning of an ugly little cycle that can cause us to spiral down into a black hole of anger, despair, and frustration.

And the angrier we get, the more things seem to go wrong.

The reason for this cycle is simple: That negativity you're generating can only breed more negativity, meaning that it's almost impossible to accomplish anything good when we're busy raging against the woes of the world.

As a result, that bad mood of yours makes you more likely to start an argument, stub your toe, break a dish, and lose your keys. And until you shake that negative energy, you're probably going to see more of the same.

Fortunately, days like this don't have to be a total loss. Here are four ways to turn things around and have a better day.

Retreat

When my kids act up, I give them a time out. Time to sit and think, time to catch their breath, and time to relax and reboot. And on most occasions, this strategy works. So, why wouldn't it work for grown-ups too?

Taking a time out gives you the opportunity to rethink your current state of mind. Okay, so things aren't going your way, but is it really the end of the world? Is this really how you want to spend your entire day? Is there something more positive you could be focusing on instead?

A brief retreat is often all we need to stop the cycle and gain some new perspective. Take a walk, take a nap, or simply shut your office door. Remove yourself from the company of others and relish your quiet time alone. You may not resurface as optimist of the year, but it will give you time to collect your thoughts and calm your mind, two key components to getting through the rest of the day.

Release

If you find yourself lashing out at everyone who crosses your path, it might be time to get that anger out of your system. For some, this could mean having a good cry or calling your best friend to vent. For others, it might mean going to gym and unleashing on a punching bag.

Whatever your vice, just remember to keep it under control. Getting things off your chest can be therapeutic as long as you don't let it get out of hand. There's a fine line between letting off some steam and working yourself into a frenzy, and if you're not careful, you'll end up in a worse mood than when you started.

Fake It

Zig Ziglar once wrote "You can't feel your way into a new way of acting, but you can act your way into a new way of feeling," and in many cases, this mentality actually works.

Forcing yourself to act as if things are great can often leave you feeling much better, even though your circumstances haven't really changed. As William James said, "We don't sing because we're happy...we're happy because we sing." Fake a positive outlook long enough, and you'll often find that you're no longer faking.

Flip It

If you're wondering how in the world you're going to pretend that your bad mood doesn't exist, this is a good place to start.

Years ago, my husband and I found ourselves in a bit of a financial pickle. A series of unforeseen events had ravaged our savings. We were suddenly living payday to payday, and those checks were stretched very thin.

Needless to say, the stress was enormous, and my initial instinct was to wallow in my own despair. We had worked hard to get to where we were and then BAM! Just like that, we were back to square one. It wasn't fair. It wasn't fair at all. And I wanted someone to do something about it.

Of course, then I realized that I was that someone. As unfair as the circumstances might've been, they were still circumstances that needed to be dealt with, and I essentially had two choices: I could moan and groan about the unfairness of life, or I could find a way to make things better.

I chose the latter and found myself a part-time job. It wasn't long before things started looking up again, and we had a little breathing room in our finances. We also learned a hard but valuable lesson about money management and planning for our future — a lesson we might not have learned otherwise.

In addition, this part-time gig turned out to be more lucrative than I would have ever imagined and was effectively my first step toward leaving the corporate world and venturing out on my own.

It wasn't easy, of course, and I can't say that I was ever thrilled about working two jobs at that point in my life, but knowing I was taking control of the situation was a feeling I wouldn't soon forget.

That experience taught me how to say "It is what it is" and move forward, something I find very useful when things aren't going my way. Yes, the circumstances might still suck, but if I can find a way to flip the situation and turn it into something positive, I know I'll get past whatever obstacle might be standing in my way.

Do you have a tip that works for you? If so, share it in the comment section below.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Lessons We Can Learn From Blockbuster's Demise

Kate Luther — Mon, 04 Oct 2010 13:00:12 +0000

There's a common perception among business owners that adding an online presence to an already existing brick-and-mortar business is a no-brainer.

That's not surprising. Marketing gurus have been touting the power of the Internet for years and given its exponential growth and success, there's been no reason to argue that strategy. But the recent bankruptcy of the video giant Blockbuster has caused many of those same experts to take another look at that philosophy as we try to figure out what went wrong. After all, Blockbuster should have been the easy winner in the video rental war, certainly beating out its smaller — and online only — rival, Netflix. Instead of coming out on top, Blockbuster has been reduced to a case study. Netflix on the other hand, is as stable as ever, currently trading well above $100 per share.

So, what went wrong? Does this mean that going online isn't a good idea after all?

Quite the contrary — having a web presence is still a very smart move and remember, it wasn't the website itself that resulted in Blockbuster's demise. Instead, their fall is being attributed to a number of factors that range from excessive operating expenses to a lack a proper planning to, well...a severe case of complacency.

The truth is, there are a number of things that Blockbuster could have done differently and while your company's fiscal footprint may not be nearly as big, there are still lessons to be learned.

A website is just a website

Simply having a website doesn't automatically make it successful and by the same token, there's no guarantee it can save a struggling business. I can't count the number of clients that have come to me wanting a website, only to become frustrated when they don't see an immediate increase in sales.

Success on the web requires the same research, effort, and attention as your physical location — something that many brick-and-mortar businesses overlook. While Blockbuster's website was certainly more than just a static presentation it was at least for a while, neglected and somewhat painful to manuever. Blockbuster took several years to actually integrate their online offerings with their physical storefront and then discovered after the fact that running such a program would cost much more than they had anticipated.

As a result, they increased the prices of their Total Access program while simultaneously decreasing the benefits, upsetting many of the loyal customers they had in their existing base. Netflix of course, had already figured out how to streamline online delivery and reduce expenses, making them the obvious alternative for disgruntled Blockbuster customers.

Don't just follow the crowd

Blockbuster wasn't just slow to enter the world of online video rental, they also failed to capitalize on their unique selling proposition once they arrived.

With a large and loyal customer base, Blockbuster should have entered the online arena like gangbusters, touting the obvious advantage they had over Netflix — rent online, return at the store. But Blockbuster didn't do that. Instead, they made their grand entrance by copying what Netflix had already done...except that Netflix was doing it better and cheaper.

By the time Blockbuster got around to distinguishing themselves from the competition, Netflix had gained quite a bit of steam, not to mention quite a few of Blockbuster's customers.

A leader can be toppled

But perhaps the biggest mistake in the Blockbuster saga is their obvious reliance on their past success.

For years, Blockbuster was the frontrunner in video rentals and unfortunately, this "can't touch us" kind of success affected their ability to see the bigger marketing picture and thus, the potential threat that Netflix posed.

The world as we know it, is changing. Customers are looking for easier, more effective ways to get things done and technology has been happy to oblige. As a result, companies from every industry are having to rethink their marketing approach, giving serious consideration to the possibility that their biggest rival might not be the competitor down the street, but rather a faceless, virtual store with lower overhead and a clear understanding of how the internet and its users work.

Even law firms and CPAs, industries that were once seemingly exempt from such traditional marketing concerns, must now compete with do-it-yourself software programs and downloadable forms, both of which offer the client the same end result but at a fraction of the cost. This sink or swim ultimatium has become painfully clear: either join the technological revolution or be left far behind.

It's no longer enough to simply offer a set of services or products — you must be diligent in your efforts to show customers why your version of those services and products are better than the alternatives.. even (or perhaps especially) when those alternatives are online, non-personal solutions.

The bottom line is that the marketing gurus were right — you must have a website to compete. But it will be your ability to embrace this new way of doing business — not the virtual real estate itself — that determines your ultimate success.

Written by Kate Luther and published on Wise Bread. Read more Entrepreneurship articles from Wise Bread.

Do You Need an Estate Plan?

Kate Luther — Tue, 15 Jun 2010 13:51:40 +0000

Say the words "estate planning" and what typically comes to mind are extravagant estates worth millions of dollars. Estate planning is for celebrities and the very wealthy, right? I mean, the average working guy or gal can make do with a standard do-it-yourself Will.

Well, not necessarily.

One of the benefits of being a freelance writer is that I get to work with a variety of different clients on a variety of different topics. And in the process, I learn quite a bit about subjects I had never explored before, estate planning being the latest.

What I found is that estate planning is much more than just divvying up your coin collection and jewelry. Quite the contrary, there are a number of issues that a good estate plan can address.

A living trust for example, can provide you with a way to offer incentives to your heirs for personal accomplishments. Want to ensure your son or daughter goes to college? Make that a condition of receiving their distributions. Want to teach your children the importance of carving out their own place in the world instead of just relying on their inheritance? A trust allows you to do that as well.

You can also use a trust to provide for disabled dependents without affecting their eligibility for government assistance programs, and depending on how you structure your trust, you can ensure that your assets stay in the family, even in the face of taxes or a divorce.

Heck, there's even a specialized trust to protect your pets after you're gone.

A financial Power of Attorney allows you to designate someone to speak on your behalf if you become disabled or incapacitated and are unable to handle your own affairs. A Healthcare Directive provides the same protection in regard to your healthcare and medical decisions.

But estate planning doesn't stop there and this is what really won me over.

A good estate plan also encompasses all the non-financial aspects of your life, like the old photo album in the top of your closet, grandma's quilt that lies at the foot of your bed, the tapes you made of Great Aunt Ethel's family stories and all the memories and knowledge that up until now, you've been carrying around in your head.

In short, creating an estate plan is about leaving a legacy...not just a few bucks and the deed to the house.

That's all well and good you say, but I don't have enough of an estate to worry about.

Are you sure?

The problem with not having an estate plan is that you're still going to pass on someday. And when you do, the courts will step in and make all these decisions for you. That means that if property needs to be sold to pay creditors or taxes, you won't have a say over which property is used to cover those expenses. And someone must oversee the distribution of all your belongings, a process known as "probate." If you haven't designated that person yourself, then the court will make the designation for you and there's no guarantee you'll agree with their choice or the way your belongings are divided among your heirs.

Of course, by then, it would be too late to do anything about it.

Now, I know that no one likes to think about a time when they're no longer around but the truth is, it will happen whether we're ready or not. And I've realized that when that day comes for me, my kids will need to know where the important documents are. They'll need to know that I have life insurance and savings accounts as well as journals I've created for them over the years and keepsakes that are stored in my great-grandmother's hope chest. Personally, I kind of like the idea of taking care of things before I go...after all, that's what Moms do, isn't it?

Written by Kate Luther and published on Wise Bread. Read more Personal Finance articles from Wise Bread.

5 Tips to Acing An Interview

Kate Luther — Fri, 05 Mar 2010 17:00:02 +0000

Before I embarked on my new life as a freelancer, I had both feet firmly planted in the Corporate World.

With my DayPlanner in one hand and my resume in the other, I had big visions of the corner office, the corporate expense account, and business cards with some impressive executive title. Needless to say, I have had more than my share of interviews. And although the whole process can get a little nerve-wracking at times, I did learn some useful tips along the way.

1. Be Unique

This is by far, the biggest tip I can give anyone who's looking for a job and I'll tell you why it works: Everyone looks the same on paper. Anyone reviewing your resume has also reviewed hundreds of other resumes, both in relation to the job you're applying for as well as any other positions they might have open. As a result, they've seen the words "Objective" and "Work Experience" more times than they can count and honestly, it all becomes a haze after a while.

So here's what you do — you stand out. You don't look like everyone else. Maybe you accomplish this with a not-so-standard kind of paper or something equally as subtle. As for me? I went all out. I created a website with a fun "10 Reasons You Should Hire Me" quiz and turned my resume into a full-color tri-fold brochure.

Yes, there were times when someone else was just clearly more qualified than I was for the job but I'll tell you this — I ALWAYS got a call-back for that coveted interview and even in the instances where I didn't get the job, I almost always got offered a different position in the company. Why? Because they liked me too much to just let me go somewhere else.

2. Learn the Art of Resume B.S.

There is truly an art to writing a resume, and if you're not sure of where the line between fact and fiction lies, here it is: While you should never blatantly lie on your resume, it is acceptable and even expected to make your previous positions sound absolutely amazing.

It doesn't matter how menial, how common or entry-level that position might have been — you were an expert at it and turned it into an important component of the company.

I once reviewed a resume for a girl who had a position that sounded something like this:

"...responsible for managing all corporate duplication equipment and overseeing document distribution for Fortune 500 firm..."

Her job? She was a copy clerk. And I knew that when I read her resume. But she obviously took her job very seriously and anyone who can make something that impressive out of a copy clerk position was worth another look. Incidentally, I hired her.

3. Never Say Can't

Along the same lines as Rule #2, while you don't want to commit yourself to skills you truly don't have, there are ways to diffuse a lack of knowledge in a particular area.

Instead of saying "I don't know how to do that" or "I don't have that skill" say something like "I haven't used that particular software/system but I have used X, Y, and Z so I'm sure I'll have no problem." The point is to replace "can't" with something more positive such as "I can learn it," "I can do it," "I can figure it out."

4. Look 'Em In The Eye

During one of my stints in Corporate America, our CEO ordered every employee to attend an on-site course on Business Communication. Most of the seminar revolved around identifying personality types and learning to match your conversation to the other person's natural type. It was interesting, but what really stood out for me was the coach's tip to always look people in the eye. It conveys the trustworthiness and confidence that prospective employers look for.

This is actually harder than it sounds, especially when you're nervously trying to close a big deal or in this case, make it through an interview. So here's the tip I learned, one that has served me well: If looking them in the eye makes you uncomfortable, look at the bridge of their nose instead. They can't tell the difference and you'll come across as being direct, honest and confident.

And while you're staring at the bridge of their nose, lean in (conveys interest in the conversation) and be animated. Smile, show concentration, even surprise if they tell a story that calls for it. The goal here is to turn your interview into an enjoyable, invigorating "meeting."

5. Use a Strength as Your Weakness

It's not unusual for your interview to include some probing questions, such as "What is your biggest strength?" and the more dreaded "What is your biggest weakness?"

Most people have an easy time talking about their strengths but what on Earth should you say about your weakness? The answer? Pick a strength and talk about its downside.

For example, if one of your strengths is that you take pride in your work, then you could say perfectionism is your weakness. Likewise with being detail oriented — perfectionism is a perfect weakness to compliment that strength. Then you go on to say how you're able to "manage it" really well and have actually been able to turn it into a bit of a strength by using that higher standard of yours to produce stellar work.

My choice typically revolved around my pet peeve — that's not my job. This always made the interviewer smile (because it was their pet peeve too) and ask, "well, how is that a weakness?"

I responded by telling them how it was my instinct to "go the extra mile" and help someone with whatever it was when I knew it was something I could do. It just made more sense to me than to pass the buck to someone else. Of course (and here's the weakness part), in the Corporate World, there are departments and divisions so you have to be careful that you don't step on someone else's toes or disrupt the normal accepted process for getting that certain something done.

And viola! I've just given them a weakness — something I strive to work on — that basically says I'm a "team player" and do "whatever it takes" to get the job done.

The bottom line is that you want to be the person they don't soon forget. The person who stands out — the one who they can see themselves working with on a daily basis. To do that, you have to be more than just another resume...

As in love, you don't want to be the one they can live with...you want to be the one they can't live without.

Amazon.com Widgets

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

5 Easy Ways to Save in 2010

Kate Luther — Fri, 25 Dec 2009 14:00:28 +0000

If there's one thing we've all got on our list of New Year's resolutions, it's to save money. But we all know that's often easier said than done.

After all, it's hard to save when money is tight to begin with...and after this year, "tight" is putting it pretty generously. But even if you're living payday to payday, even if you think you've squeezed all the blood out of the proverbial turnip, there are a few ways to save that don't require any major lifestyle changes. Want to know what they are? Here's five easy ways to save some dough in 2010.

1. Reduce paper, save dollars.

In addition to killing the trees and cluttering up the planet, paper costs money. Maybe not large sums per purchase, but over time, it all adds up. The solution? Cut down your paper usage and keep that extra cash instead. For starters, try saving your online receipts and confirmations to your hard drive or a CD instead of printing them off. And while you're at it, use an online recipe service to store your favorite concotions instead of printing those off as well. Your recipes will be easier to find, and not only will you save on printer paper but you'll also save on printer cartridges too. And let's be honest...you'll reduce your clutter in the process. Another paper reduction tip — use cloth hand towels instead of the paper kind and rinse them out after each use to keep them fresher longer.

2. Change your thermostat setting.

In the winter, turn it down five degrees — in the summer, increase by 5. It may not seem like a big difference but you'll save a decent amount on your heating and cooling costs over the year. In fact, the U.S. Department of Energy suggests that you pay an additional 2% to 3% for every degree of heat and air conditioning you use.

3. Clip coupons.

No one wants to be the person who holds up the grocery line while they rummage through a wallet full of coupons, but a little smart clipping can go a long way. Start by making your list before your go shopping and then take only the coupons you'll need — not your entire stash. Here's another tip: be sure to compare the savings you get from the coupon with the price of the lesser, no-name brand to be sure you're really getting the most for your grocery bucks.

4. Eat out.

Yes, eat out. Not every night of course and certainly not at the pricier places, but there are some instances when it's cheaper to eat out than to make your own. For example, pizza can be a relatively cheap meal for a family of four with the right coupons, while making your own pizzas at home can get quite costly. Burgers on the dollar menu are another good example of eating out with your budget in mind. Yes, I know these aren't the healthiest choices but if you're planning on burgers or pizza anyway, then why not save a few bucks in the process? Other dishes such as spaghetti and steak are typically cheaper to cook at home so just do the math when you're planning your menu.

5. Enroll in the tax-advantaged plans at work.

If you've been putting off joining your company's Healthcare Savings Account, now is the time to reconsider. Tax-advantaged plans such as this offer immense savings for you and since it doesn't cost your employer anything, even the smallest companies can offer it. Depending on your company, these plans can cover everything from health care costs to child care expenses, education and even transportation. To enroll, you'll have to designate a portion of your income to be withheld each month but this money is taken out "pre-tax," meaning you won't pay taxes on the income and if you're right at the threshold of higher tax bracket, the deduction could be just what you needed to lower your bracket and reduce the amount of taxes you have to pay.

No, these five frugal tips won't make you a millionaire, but they will put a few extra dollar in your pocket and give back some control over your financial picture. And that, as the commercial says, is priceless.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Forgiven Debt Isn't Really Forgiven At All

Kate Luther — Tue, 22 Sep 2009 13:00:09 +0000

If you've been struggling with the rest of the economy, chances are you've been forced to rethink your financial priorities. And as a result, credit cards are often the first thing to go.

The good news is that once you get behind, many credit card companies will offer to "settle" your account, some for as much as just 40% of your original balance. And if you're looking at a large chunk of credit card debt, making it go away for 40% of its value sounds like a pretty good deal.

But before you write that check, there's a little detail you need to know: in many cases, credit card companies can report that unpaid amount to the IRS and – this is the kicker – you'll have to declare it as income.

Wait a minute, you're saying. We made a deal. I settled that account and I even have a letter from my credit card company saying it was "settled in full." I shouldn't have to pay anything else.

And to that extent, you're right... you don't have to pay anything else... at least not to the credit card company.

But using the same laws that allow the IRS to tax you on gifts and prizes, if the unpaid portion is more than $600, the IRS considers it to be income and that income is reported on a Cancellation of Debt Form 1099-C.

That means that while your debt with the credit card company has been satisfied, you may stil have to pay Uncle Sam for getting such a great deal.

For example, let's say you had a $2,000 debt that you settled for 40% or $800. Your unpaid balance – the amount the credit card company agreed to "forgive" – would then be $1200.

At the end of the year (or whenever they do their reporting), the credit card company would report that amount to the IRS as a "forgiven debt" and send you a 1099-C to file with your individual tax return.

Now, whether or not you'll actually pay taxes on that amount will of course, depend upon your individual situation and the amount of debt being forgiven.

For most, a $600 increase in income isn't going to make a big difference in your taxable income but a bump of several thousand dollars just might. And if you consider that the average household has just under $10,000 in credit card debt and access to almost $20,000, it's not hard to see where a generous "settlement" offer might be considered during hard times.

Fail to report this amount and you could set yourself up for an audit.

This rule does not apply to certain types of debts such as those resulting from VA benefits, qualified farm debt, debts canceled in bankruptcy. It also is not applicable to debts that have been charged off so if your credit card company has sold the debt to a collector and written it off as a "bad debt," they cannot report the debt as "forgiven" on a 1099-C.

So, what can you do?

While it's tempting to cut a deal with credit card companies, you may end up paying more than you bargained for. In addition, even though the credit card company notes that the account was "settled in full," that is not the same thing as "paid in full" and the difference will be noted on your credit report.

There are however, some alternatives. Most credit card companies would desperately prefer for you to get back on your feet and pay your bills so many are offering various payment programs to help you manage your debt while times are tough.

Also remember that a credit card company will hold your account for at least six months before writing it off so if you're only a few months behind, you may still be able to avoid the collection agencies.

Another option is to enlist the help of a consumer credit counseling agency. However, before you sign up, make sure the agency is reputable and be sure you understand how participating in the program will affect your credit.

It might take a little extra work on your part to get out from under your debt, but at least you won't have to pay Uncle Sam any more at the end of the year.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

The Secret Really Does Have A Secret (or Ten Tenets for Arranging Your Rich - Part 3)

Kate Luther — Tue, 23 Jun 2009 06:47:05 +0000

There's been a ton of debate over whether or not The Secret is worth your time, so let's put it to rest right now: The Secret really does have a "secret", but most of us are missing it.

For those of you that aren't familiar with The Secret, its message isn't really new. In fact, there's some world-renowned self-help gurus that have been preaching about manifestation for years.

And this is where the debate begins: are we really to believe that we can simply manifest things into our lives? That if we "desire" wealth, then wealth we shall have? That everything that happens to us is the result of our own thoughts, whether conscious or otherwise?

Well, yes and no.

See, some people read this and say, "ok, so all I have to do is meditate on money and I'll get rich".

Um..no.

And yet others read this and say, "oh, please... I didn't ask for the flat tire. I didn't ask to have the flu and I certainly didn't ask to work a crappy job for minimum wage."

And I see your point. I wouldn't ask for those things either.

But the secret to manifesting money (or anything else for that matter) isn't some magic mojo that makes good things just "appear" in your lap.

Quite the contrary, the idea behind positive thought is that it motivates you into positive action. And with positive actions, you're much more likely to see some positive results.

Years ago, my husband and I went to the West End in downtown Dallas to enjoy a leisurely lunch and just walk around. If you've never been to the West End, it was a little self-contained area full of retail shops, bars, restaurants and even a movie theater. The roads were brick and cars weren't allowed on the main street so you could just walk up and down without worrying about getting ran over by some guy trying to make the light.

Anyway, as we were coming out of the restaurant, we noticed a large group of people standing in the street cheering and clapping. Curious, we ventured over to see what was going on.

At one end of the crowd was a stack of cardboard boxes and I mean, they were stacked - maybe 8 foot high. At the other end of the crowd was this guy - shorter than me (I'm 5'6"), hunched down like a runner might be while waiting for the race to start.

Everyone's yelling and we're standing there trying to figure out why. And then it hits me:

He's going to try and jump those boxes.

No way, I'm thinking. There's just no way.

The guy jumps up and down a few times then takes off running. About halfway, he launches into a couple of flip-flops (head over feet over head), hits the ground hard with his feet and jumps into the air, somersaulting over the boxes.

The boxes never moved.

My point? Well, besides the fact that it makes for a really good story, the only difference between me and that guy was that I looked at the boxes and said "no way". But he looked at them and said, "yeah, I can do that."

Yes, he probably had quite a bit of practice but he had to have that positive perspective in order to even attempt it. I've wanted to do an aerial (cartwheel with no hands) since I was in grade school yet I never really put any effort into making that little wish a reality for me. Obviously, visualizing myself doing such an impressive feat is nice but if I really want to add this little trick to my resume, I'll need to go outside and physical practice until I get it right.

And the same is true here.

Manifesting wealth doesn't stop with a little meditation or a money-oriented mantra. The idea of "drawing wealth to you" doesn't necessarily mean that a million bucks will just magically appear in your bank account. And if it does, you might wait on spending it... I hear the banks are pretty good about finding those kinds of errors lickity split.

What it does mean however, is that maybe you begin to attract new opportunities to increase your income and thereby grow your overall wealth. Maybe you get a new job offer. Maybe you make the leap and launch that online store you've been talking about. Or maybe you just get really committed to saving and paying off your debts. In any case, you're going to see some positive results.

Yes, to manifest wealth or anything else for that matter, you must first believe that you deserve it. Why? Because if you don't stop that nagging little voice in your head that can't stop whining about how bad everything is, you're never going to be able to approach life with a fresh perspective. This is where the meditation and positive thinking comes in. You are literally "opening" yourself up to new possibilities. You are saying to yourself and the Universe that you're ready to start living again instead of just going through the motions.

But this is where most people stop.

They've meditated. They've practiced some positive self-talk and then they wait. Anyday now... money is just going to start falling out of the sky. It will... I visualized it so it will happen.

Unfortunately, when it doesn't rain money, they get discouraged and one of two things happens: either they meditate harder (I'm just not doing it right) or they throw in the towel and come away with an even poorer outlook than they had going in (see? even the Universe is screwing me over!)

What they should do instead is start looking for ways to turn those visualizations into real actions.

This is what our greatest mentors have meant when they said "I make my own luck".

You make things happen. You look for new ways of doing things and new ideas that could put you a little further along on your metaphorical path. You open yourself up to the notion that "anything is possible" and at some point you realize that anything is.

And that is when things will start to happen.

Not because you visualized them in your head but because you put yourself in a position to take advantage of new things when they come along.

So, what does all this have to do with "living large on a small budget"?

Well, maybe the budget doesn't have to be so small after all. Maybe "living large" also includes getting the most out of life which would certainly be achieved by taking new risks and opening yourself up to new opportunities.

Or maybe, just maybe, it really is an essential step in arranging your rich. After all, how many millionaires do you know who got that way by thinking "I can't"?

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Diva On A Budget - Living The Good Life When Your Fortune Isn't So Great

Kate Luther — Sun, 29 Mar 2009 00:16:01 +0000

I am a firm believer that a little self-indulgence makes for a happier, healthier you. This is especially true for women (no offense, guys), who are at a much higher risk of 'self-sacrifice' during stressful situations than men.

How so, Kate?

I'm glad you asked.

When stress strikes, both men and women produce three hormones - cortisol, epinephrine and oxytocin. The first two are produced in relatively equal amounts between genders. These hormones raise blood pressure and blood sugar levels, triggering the 'fight or flight' response. But it's that third hormone - oxytocin - where women have cornered the market.

Oxytocin essentially negates the effects of cortisol and epinephrine by stimulating emotions and promoting a woman's need to nurture. This is why most women react to stress by reaching out to others and nurturing their social circle, a phenomenon researchers are beginning to refer to as 'tend and befriend'.

Yet, while this might seem to be a much healthier way to deal with stress, the problem is that women often place the needs of those 'others' - be it family, children or friends - above their own, a result of our equating self-esteem with our ability to care for and protect the ones we love. The result is that self-sacrificing behavior I mentioned earlier and if left unchecked, it can be very detrimental.

This is I'm guessing, how the 'super woman' mentality was born and why as ridiculous as it might be, is still very alive today. We cook, we clean, raise kids and work a full-time job. We'll handle the carpooling, the soccer practices and the PTA. Of course we want some help. But don't you dare suggest that we need help or imply we can't do it ourselves.

So, with our biology lesson now out of the way, you can see why a little self-indulgence is so important for the sanity of the female population... we need to treat ourselves once in a while, no matter how small those 'treats' might be.

But alas... money's tight and your calendar is way overbooked. What's a super woman to do?

Fortunately, there are a number of ways to treat yourself like the diva you are without breaking your budget:

Make your own spa.

For me, self indulgence often meant a $25 pedicure twice a month and if you haven't painted your toes recently, then stop reading right now and get to painting... go ahead... we'll wait until you get back. See there's absolutely no better ego booster than pretty toes - seriously. And the foot massage that came with the pedi wasn't too shabby either. Unfortunately, there's typically 10 other things that I need to spend that $25 on and so the pedicure gets put on the backburner. But there's no need to pay money to a pro to get the pampering you deserve. In addition to painting those tootsies, you can make lavish and luscious spa treatments right in your own kitchen.

You can refresh dull, tired skin for example by combining 2 tablespoons avocado with 4 teaspoons of honey and 1 egg. Mix well, apply to your face and leave on for 20 to 30 minutes.

Or for a delicious skin smorgashbord, try this moisture and anti-oxidant rich recipe:

Mix the following (a food processor is probably your best bet):

1/2 honey dew melon (no rind)
2 slices of pineapple (no rind)
12 green grapes
1 peeled banana
1 peeled kiwi

This can be applied to your face and/or your body and is great for removing dead skin, moisturizing, soothing and protecting. Its literally an all-in-one mask for your skin.

Like a good body scrub? Here's one of the best:

2 cups of ground coffee
1/2 cup sugar or sea salt
3 teaspoons of scented massage oil

Mix together and scrub onto your skin using a circular motion to help improve circulation while removing those dead skin cells. The result is silky soft skin that smells delightful.

What about your locks?

To give hair a big shine boost, try a concoction of mashed banana, 3 drops of almond oil and the juice from two lemons diluted in a liter of water. Apply to dry hair and leave for 15 minutes before shampooing out.

If your hair is dull and dry, apply a mixture of 1/4 cup olive oil with 1 egg to dry hair. Cover with a shower cap and a warm towel (in that order). Then sit back and relax for an hour or so while your hair soaks up some moisture.

For these and more good-for-you spa recipes, check out these websites:

SpaIndex.com

MommySavers.com

SpaLivingForHealth.com

Save Up To Splurge

There's no reason that a diva can't throw a little money around without blowing her budget and fortunately... there's an easy way to do that. Follow the age-old advice of paying yourself first by setting aside even 10 bucks a paycheck - whatever you can afford will do and it doesn't even have to be the same amount each time.

Then when you've saved up enough, you can schedule that day at the salon, buy those $80 shoes or whatever it is that strikes your fancy.

Buy Smart

My sister-in-law is a fashionista when it comes to purses. And I'm not talking just any run-of-the-mill handbag... no, no, no. She likes the quality stuff - Coach, Gucci, you get the idea. Unfortunately, she - like the rest of our beloved family - have champagne taste and a coca-cola pocket book.

Ah, but that didn't stop sis - she's found some amazing purse bargains by shopping ebay and other discount outlets that carry those classy bags but at a fraction of the price. Some good sites to try? Besides ebay, check out ModaBell.com and IndulgenceHandbags.com.

Pull out your library card.

Or, if you don't have one, there's no time like the present. How does a library card give you diva status? Well, think about it... where else can you read the newest novels and bestsellers without paying a dime? But don't stop at the fiction section... your public library has books on just about every topic you can imagine so if you want to learn a foreign language, talk intelligently to your car mechanic or question your stock broker on their choice of mutual funds for your portfolio, you'll find plenty of resources to help you do it.

And let's face it... there's nothing sexier, nothing more diva-ish than knowing your stuff.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Bouncing Back When There's No "Bounce" Left

Kate Luther — Wed, 07 Jan 2009 05:17:48 +0000

We all have our ups and downs. We've all faced some pretty depressing odds and come out on top.

But sometimes, it feels like you just can't get ahead, no matter how hard you try. So what do you do?

Here's how to bounce back when the "bounce" is all gone.

Breathe. When stress rears its ugly head, we tend to hold our breath, figuratively if not literally. We tense up, we dig in, and our body kicks into survival mode while our mind races in sheer panic. What will we do? How will we survive? When will we see the light at the end of the tunnel? But what you need to do, above all else, is breathe. Just breathe.
Breathing allows you to think, it allows you to focus and it helps combat anxiety, something that more and more of us are claiming as an affliction. So, when you feel that "holy #&@*%" starting to set in, stop. And then breathe.

Count your blessings. A very old friend of mine used to say "so what... they can't take away my birthday." I've come to live by this motto. Before you try to analyze your situation, count your blessings, be it your good health, your loving family or your close network of friends. Do you still have a job? Do you have a roof over your head? If the entire world went to pot, could you go home again or join forces with a friend?
Seriously... what's the worst that could happen? Would you survive if it did? Its much easier to face your impending disaster when you've got all your "good stuff" backing you up.

Get Real. We all know the serenity prayer - change what you can, accept what you cannot, and be able to know the difference between the two - and its good advice to live by. Life is what it is. Yes, that's one of those "easy to say" statements but make it your mantra and you'll find it much easier to face problems with a clear head and a calm heart.
Figure out what options are available and then focus on those that will actually "better" your situation. We can all rant and rave for example, but will that really bring us closer to a solution. Anger, fear and doubt will never serve you. Instead, keep your head and look for viable options to turn things around.

Play Offense. If you watch football then you know that the offense's primary objective - besides actually scoring - is to dominate the ball and there's a reason for this strategy. One of course is that if we have the ball, the other team's offense doesn't but more importantly is that running around chasing offensive players makes a defense very, very tired.
Why?

Because the offense knows what play they're about to run - the defense on the other hand is simply "waiting to see what happens" and then reacting as the play unfolds. This can get exhausting very quickly and its equally tiring when its your approach to life.

Instead of reacting as events unfold around you, try taking the offensive approach. There is nothing more motivating than coming up with a new idea or plan that will make things better. If money is the issue - and isn't it always - then perhaps now is the time to start putting that new business idea of yours into action or take that second job that you've been tossing around. The point is, take control. Get the ball back and start driving down the field.

Formulate a plan. There is nothing more supportive than having a plan of action that you believe in. Pool your resources. Get back to basics. Implement a new budget or start sending out resumes. Whatever it is that you need to do, write it down and start putting things into action. When you have a gameplan, then you have a much better idea of what to expect.
Yes, the collection calls may still come or the layoff might still happen but you'll be "expecting it" instead of cringing in that "wait and see what happens" mentality.

And last but not least, remember to hang in there and look on the bright side. This isn't after all the first time you've hit a roadblock and I'm willing to bet that it won't be the last. Did you know for example, that we've had around nine recessions (including our current one) plus the Great Depression and that's just in the last one hundred years? And what do you know... somehow, we managed to pull through. I'm not saying its always easy and I'm not saying we shouldn't be concerned, but the reality is that everything works in cycles... And if you're "down" now, then there's no where to go but up.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Looking On The Bright Side: How to Find A Silver Lining In The Current Financial Crisis

Kate Luther — Sun, 19 Oct 2008 19:20:50 +0000

There was a standard mantra in my house when I was growing up: "make the best of what you've got". If we were between paydays, that might mean eating grilled cheese sandwiches or eggs and biscuits for dinner, taking our lunch to school or foregoing that new outfit at the mall. To my Dad, it meant finding a way to make due in order to avoid even the smallest expenses. And my Dad lived what he preached, tying knots in his broken shoelaces and sewing up holes in his socks.

Were we poor? Actually, no. We weren't rich by any means but as middle class families go, we were doing pretty good. My Dad just had a different perception of what qualified as a legitimate need for spending money and had no qualms about foregoing material luxuries in order to keep a few extra dollars in his bank account.

Now that I'm grown and have a family of my own, I've realized that maybe Dad wasn't so far off the mark after all - don't tell him I said that, of course - he'd never let me live it down.

Granted, he went to the extremes to avoid spending money but his basic idea was right on. And the reason it worked is that he wasn't worried about wearing the "right" clothes or driving the "right" kind of car. He would have never spent $100 bucks on a pair of sneakers - not when he could get shoes that worked just fine at PayLess or WalMart for a mere ten-spot.

Which brings me to the point of this article: as bad as the economy is, maybe there's a bright side after all.

Now, before you start typing out angry comments to this post, hear me out. I'm not saying that losing your job or your house is a good thing, although I've known lots of people who lost their job and then later discovered it was the best thing that could have ever happened. But that's another blog.

Nor am I saying that we don't all deserve to live the "good life", because we most certainly do. But what exactly defines the "good life"? Is that really measured by our net worth or isn't it more based on the amount of happiness that we derive from our existence on any given day? And as we all know (and as we've seen), if there's one thing money can't buy, its happiness.

What I am saying is that this dismal economy has forced many of us to come back down from the clouds and start being realistic about the way we look at money.

And maybe that's not such a bad thing.

Our society has become a people of convenience. Our food is processed and microwaved so that we don't have to waste time cooking it. No-one carries money anymore - instead we just charge our purchases on that magical credit card because it allows us to worry about how to pay for the item later. That same mentality is a big contributor to the mortgage crisis we're now seeing as millions of borrowers bought houses they really couldn't afford because greedy lenders gave them a way to "bump" the higher prices to a future date through creative financing called adjustable rate mortgages and balloon notes.

As a result, we not only stopped seeing the "big picture" but we became oblivious to its existence at all. We have been focused on the "here and now", with the idea that the "here and now" was intended only to appease our flights of fancy without regard to the price we might have to pay later. Don't believe me? Just look at the environment. If that's not arrogance, I don't know what is.

We distorted the proverbial "American Dream" to become something that represented an obnoxious amount of wealth that was free of any scruples or morality. And as long as Corporate America was willing to let us charge and extend our financial obligations, that skewed American Dream stayed in tact.

But we should have known better.

It doesn't matter who you are or how rich you are, reality will always come crashing in. Its just a matter of time.

And that's what happened here.

Our main export is actually debt - yes, debt... about $700 billion per year in financial securities that until recently were backed by a seemingly booming economy. But now that our economy is struggling, those financial securities aren't as appealing to foriegn investors which makes our economy worse, which makes our securities less attractive and so on and so on. But what's really sad is that we didn't diversify our incomes like we did our portfolios. America doesn't really "make" a ton of other things so when selling debt stopped generating cashflow, we had nothing else to take up the slack.

The trickle down effect of the Wall Street fiasco is that your average Joe and Jane are suddenly faced with limited incomes and rising prices. Ridiculously rising prices I might add - I saw a guy bringing back a roll of foil at the grocery store the other day - it seems the store had failed to give him the sale price of $7.95 and instead charged him the full price of $9.59. $10 for a roll of aluminum foil? It better do the cooking for me.

My point is, now everyone's feeling pinched and not just in the "two more days to payday" kind of way, but more of the "what the hell are we going to do now?" kind of dilemma.

And that's a scary place to be.

But before you throw your hands up in the air, take a deep breath and relax. While its doubtful that the big conglomerates have learned their lesson from this experience (visit AIG), you and I can actually come away from this with a new and enlightened perspective while managing to keep the shirt on our back. Its just going to require a little shift in perspective.

For starters, while I don't want to encourage not paying your bills, the truth is that creditors are much more likely to work with you if you're falling behind. Stay current on your obligations and you aren't as likely to see that accomodation. So if you're staring at thousands of dollars in credit card bills, you need to make some decisions about your priorities.

Your mortgage, your utilities and your grocery bill all come first. If you can pay something on the credit cards, great. If not, then you need to come to that realization and accept it. Yes, your credit score might tank before this is all over but take it from someone who knows, you can rebuild that credit. Its a long and winding road, but trust me when I say it can be done.

Once you've got your priorities in place, you need to learn, as my father did to make the best of what you've got. Its okay if we can't buy all the latest gadgets on the market. Its okay if we need to keep driving the same car beyond two or three years. In fact, pay that puppy off and discover what its like not to have a car payment at all.

Downsize where you can and believe it or not, start saving. Seriously... even if its only $10 a payday. That little emergency fund could definitely come in handy some day and if nothing else, it will give you a sense of security and accomplishment, something we could all use right now.

Stop putting in so many hours at the office and start looking at the millions of other ways to make money. The truth is, there's still money out there. Its not as free-flowing but I can tell you as a freelancer, that this month may well be one of the best I've had this year.

The reason is that I diversified my skills and branched out into areas I don't normally tackle. And I'm being rewarded for those efforts with enough funds to cover all my obligations. Did I strike it rich? No, but I do have a little breathing room which is really something considering where I might have been instead.

You can do the same. Maybe start your own virtual assistant business. Clean out that garage and start selling on eBay. Go sling drinks at your local bar on the weekends. The point is, take action. Don't just sit there biting your nails wondering where the money will come from. The opportunities are there - you just have to act on them.

And if you think now is not the time to start a new business, think again. Many small businesses are pulling in the reigns and downsizing. They're cutting services and products because they want to control costs. But you don't have any overhead and if you play it smart, you can keep it that way making any money you earn pure profit.

Cancel your gym membership and start running or walking in your neighborhood instead. If you've got the space, grow your own vegetables - lettuce, cabbage and broccoli are a few good winter varieties to start with. You can even plant a tomato plant in front of a sunny window in your house and enjoy fresh tomatoes all winter long. Don't think that will make a difference? Oh yes it will. At about $2 per pound where I live, tomatoes can do some damage to a grocery bill.

If possible, wash and iron your own clothes instead of taking them to the cleaners. Learn to cook again instead of dining out and discover the beauty of a PB&J sandwich and a glass of milk. Examine your lifestyle - can you rent DVD's instead of going to movies? Can you spend a Friday night playing cards with friends instead of going out on the town? There's is no shame in saying "I can't afford that right now" and certainly not in saying "I don't need that right now".

Look around, take stock and re-evaluate how you approach your money. You don't have to tie knots in broken shoelaces but you can start making changes in what qualifies as a necessary expense. You'll likely find that while your "cuts" aren't always pleasant, they are usually doable and make a noticeable contribution in your quest to survive our economic catastrophe.

And then when the economy does finally bounce back (and it will) we'll have adopted an entirely new way of living. One that doesn't depend upon the greediness of others but relies solely on our own creative energies and practical state of mind.

And then perhaps, we can start teaching that lesson to the powers that be.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Book Review: Personal Development for Smart People: The Conscious Pursuit of Personal Growth

Kate Luther — Sun, 12 Oct 2008 03:28:55 +0000

Some books draw you in with mystery and suspense. Others keep you hooked with drama or intrigue. And then there are some that just manage to really hit home and make you say "Ah-ha!"

Such is the case with Personal Development for Smart People by Steve Pavlina. Using what Steve calls "personal growth from high-level concepts to practical actions", Personal Development for Smart People goes beyond just setting goals and takes us much deeper into the human psyche.

Now, for those of you who may not be a fan of concepts such as the Law of Attraction, keep reading because this isn't your everyday "think it and you'll receive it" kind of book.

Instead, Steve approaches some of the tougher questions that deal not only with our own individual satisfaction but also how we connect to the Universe around us. And interestingly, this approach takes away our ability for self-denial and puts us back into the driver's seat of our own lives.

Using seven fundamental principles - truth, love, power, oneness, authority, courage and intelligence - Steve encourages us to approach life by asking the question "where is the path with a heart?". This enables us to stay focused on the things that really matter and steer clear of mindless preoccupation for the sake of avoiding the things we're not ready to deal with yet.

And perhaps that's one of the reasons I liked this book so much.

Its not that you have to change everything in your life right now. In fact, its quite okay if you aren't yet ready or equipped to change those things that aren't in-line with your dreams and ideals. But you do at least, need to acknowledge that the conflict exists and more importantly, that you'd like the changes to occur.

"Whenever you're faced with a part of reality you don't like, and you feel powerless to change it, the first step is to accept the truth of your situation. Say to yourself: This situation is wrong for me, yet I lack the strength to change it right now."

And in case you're wondering, this was just the first of many "Ah-ha!" moments for me. How many times do we continue going through the motions, knowing somewhere deep down inside that it isn't really what we want but because we feel unable to change it, we just pretend it doesn't exist?

Does acknowledging this kind of "Truth" make things better? Oddly enough, I think it does. I think when we stop lying to ourselves about who we are versus who we'd really like to be, it makes it much easier to see where we need to adjust our course.

Its so easy to fall into the many traps of our modern-day society. There's peer pressure to keep up with those darned Joneses all the time and we're constantly being told by our political and religious leaders what's right and what's wrong without any real thought being given to whether or not those opinions mesh with our own. Instead, we often follow along, trying to fit in with a particular party, clique or class.

But in doing so, we've agreed to let someone else do the driving on our behalf and then when things don't turn out the way we like, we feel surprised and certainly betrayed that our driver didn't get us to the destination that we wanted.

But Personal Development for Smart People puts all of this right back at our own doorstep which, I'll admit, can be a scary concept but its definitely one worth examining.

The book is divided into two parts, the first dealing with the seven principles and what they mean. The second part delves into actual application and gives you ideas for applying these universal principles to all areas of your life, whether its bad habits you'd like to break, health you'd like to improve or money you'd like to make.

When I finished reading, I felt a little less stressed and certainly much more focused and "in control" of where I'd like to go next. My problems and concerns hadn't magically disappeared but I felt like I was much more equipped to tackle them head on.

And that's really the whole point.

In the introduction, Steve says that the

"goal of this book is to teach you how to bring all areas of your life into alignment with these universal principles [the seven mentioned above]. This requires injecting truth into your relationships, aligning your career with love, and bringing power to your spiritual practice. This is what it means to live as a conscious, intelligent human being."

After reading Personal Development for Smart People, I'd say he met that goal and then some.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Too many online accounts? You need an aggregator.

Kate Luther — Thu, 07 Aug 2008 02:15:07 +0000

From Twitter to Digg, emails to IM and let's not forget all those social networking sites, its easy to get bogged down just by logging on.

Fortunately, you can keep your online socialite status without sacrificing productivity in the process. If you've got too many online accounts, there's just one thing to do: aggregate them, baby!

Fuser

The first thing we want to do is pull all of our various lines of communication together in one simple place. Fortunately, Fuser allows you to do just that. You can link a whole range of email addresses, including Gmail, Yahoo!, Hotmail, AOL and even POP3 accounts to Fuser so that when you log in, you see all of your emails in one inbox. Fuser indicates which email came from what account and you can respond or file them away in custom folders you create.

Fuser will also aggregate your MySpace and Facebook accounts so that you can receive your messages and comments from the Fuser interface. And as if that weren't enough, you can also link your Twitter account to keep up with what fellow Twitterers are doing and send new tweets as you like.

Pidgin

It used to be that ICQ and MSN IM were the top ways to chat real-time online. Now there's a whole host of IM providers and if you're like me, you probably have an ID with every single one.

To avoid having upteen different IM windows open on your desktop, you need something that will allow you to manage them all at once.

Enter Pidgin, a downloadable application that works with sixteen - count em, sixteen - IM applications, including AIM, Google Talk, ICQ, IRC, MSN, MySpaceIM, Yahoo! and Zephyr to name a few.

Just download the application, create your account - yes, its free! - and start linking your various IM apps to Pidgin to manage.

ProfileFly

For those of you who want to promote your online profile, there's ProfileFly. This web-based service allows you to link to a variety of online profiles, including MySpace, Hi5 and Facebook, along with Twitter, Last.FM, Flickr, your multitude of social bookmarking sites and of course, your blogs, your IM accounts and even various email addresses.

You can add as many or as few as you like and when you're finished, you've got something that resembles a MySpace profile only it ties in all your various social efforts around the web.

The profile is searchable and if you include your email or IM accounts, the public can see them and can use them to contact you.

Definitely not for the shy or anonymous-oriented but if you really want to be the social butterfly, then hey... ProfileFly can certainly help.

Profilactic

Profilatic is another social networking aggregator/promoter but with a lot more flexibility and it works with a whopping 186 social sites plus you can add as many custom sites as you want. It also works with WordPress so you can add a "lifestream" (which is another way of saying profile) to your blog. Profilatic features feeds from your various sources - blogs, twitter, MySpace, etc - and it provides link so that friends and stalkers know where to find you on the web. You can see mine here .

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

5 Ways to Cut Your Grocery Bill

Kate Luther — Wed, 06 Aug 2008 01:08:22 +0000

If you're like me, a trip to the store for a loaf of bread or a gallon of milk can easily run $30 to $40 bucks. Has inflation just really gone up in my neck of the woods? No... I just always seem to find other things I need.

But now that we've moved to the country - and I mean, really out in the country - running to the store is more than just a quick jaunt around the corner. In fact, going to the grocery store means "going into town" and that's somewhat of an event all by itself.

So, to save on gas and to avoid multiple trips to the store, I decided to rethink the way I shopped. Here's five easy ways to cut your grocery bill and get the most from your shopping trip:

1. Make a list. Okay, you've probably heard this one before but I'm going to expand on this idea a bit. Before you start listing items, sit down and plan your meals for the upcoming week, even if you're just planning to have sandwiches one night. Now go through your fridge and cabinets and determine what items you need to make those meals. Next, you'll want to add any staples that you're out of - i.e., flour, sugar, bread, milk, etc. - and anything else you want to include. While you don't have to be obsessively organized to make this work, it does make the process easier if your cabinets have some sort of order to them.

2. Know what you can spend. Before you place one thing in your shopping cart, you should know exactly what you plan to spend. And as you put an item in the cart, write down its price beside the item on your list (it's easier if you round up). When you're through shopping, add it up and see how you did. You'll be surprised at how much you spent, especially if you didn't implement Rule #4 (see below).

3. Not on the list? Don't buy. There are two ways you can work this one: either you agree that you won't buy anything if it's not on your list or you allow yourself, say, three extra items in case you forgot to add something. You can also note the item so you can add it to your list next time, although you'll often find that by your next shopping trip, you don't want the item as badly.

4. Eat before you go. There's nothing worse than shopping on an empty stomach, especially when so many grocery stores now include gourmet delis with delicious aromas wafting through the air. Make sure you only shop on a full stomach to avoid spending more because you're hungry.

5. And last but not least...pay attention. This is perhaps the most important tip you can use to save on your grocery bill. Because believe it or not, grocery stores have a motive for every aisle, every endcap and even the overall design of the store.

For example, the deli, the produce aisle, and the flowers and gifts are typically placed near the front of the store so that you have to pass them to get to the rest of the aisles. These placements are there for three reasons: 1) if the fruit and vegetables look good, then we can assume the rest of the store must be the same high quality, right?; 2) regardless of what we really plan to eat, the majority of us have intentions of eating "better". So, if we buy some apples or bananas that weren't on our list, it's okay because we're doing something good for our bodies; and 3) If you're in a hurry, you're less likely to buy extra goodies. Providing a tempting deli and some eye-catching, colorful produce is an easy way to slow you down and get you into a "shopping mood".

You'll also find that endcaps often feature sale items but also include similar or related items that aren't on sale. Charcoal, for example, might be the heart of the sale but then that makes you think of hamburgers, hot dogs and oooh... how about some steaks?!

Front store displays entice you to buy things you might not have looked at otherwise, including everything from a gigantic bag of Cheetos to a cheap t-shirt with a fish and "Kiss My Bass" on the front.

Checkout aisles have magazines, candy, batteries and a whole slew of other random things in one last attempt to get you to fork over more cash. And if you're not buying, you can bet that the candy and big bag of balloons catches the attention of your kids.

The bottom line?

Even the best budgeter often finds that groceries fall into a gray area and that's because we have such a hard time tracking and estimating what we'll spend from month to month. But with a little planning and a little willpower, you can get everything you need at the store without spending a penny more than you planned.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

3 Ways to Travel Free (Or At Least Really Darned Cheap!)

Kate Luther — Wed, 18 Jun 2008 17:52:18 +0000

How would you like to get out and "see the world"? Visit the Carthage Ruins or spend a week just hiking across Europe. Paris, Italy or maybe the Bahamas... there's really just no end to the places you can go.

Now, I know what you're saying - those places cost money and technically you'd be right. While traveling is certainly one of the more exciting ways to spend your time, airfare and hotel rooms can add up quickly and with the economy the way it is... well, it looks like Aunt Tessie's farm is about all the traveling you'll be doing anytime soon.

But there are ways to get around those big travel expenses without sacrificing your fun. In fact, with these tips you might just find that your trips become all the more adventurous!

House Swap - Seriously. Swap your house with someone else for a week, a month or how ever long the two of you agree to do so. House swapping is actually a pretty popular way to travel and it has quite a few advantages to staying in a hotel. For starters, most house swappers make their various amenities available to you so you'll have a functional kitchen which means you can save money by buying a few groceries and eating in and you won't go home with a big bag of dirty laundry because you can wash your clothes before you go. Those "amenities" also often include a car, jet skis, boats and other cool things that you'd have to rent otherwise. Another advantage is that while you're manning the ship in their house, they'll be watching over yours as well which means that your property isn't left vacant and theives are less likely to try to venture in. No more packing up your valuables when you leave and no more vacating the room so that the cleaning staff can change your sheets. And instead of those goofy connecting rooms for the kids, you can keep your family under one roof for the entire trip. To learn more about house swapping, check out InterVac or The International Home Exchange Network.
Cruise For Free. Yes, free! Those big cruise liners take pride in providing a variety of entertainment and activities for their paying guests. Provide some of that entertainment or activity and you could sail the seas for free. Traditional entertainment includes singing, dancing and of course acrobatics but don't think for a minute that the list stops there. Magicians are very popular on cruises as well as comedians and jugglers. But again, the list doesn't stop there. Don't let a lack of artistic talent keep you off that boat - cruise lines are also looking for a variety of "enrichment" instructors, meaning those who can teach something fun and/or enriching such as arts and crafts, painting, yoga or even how to trace a family tree. The idea is to come up with something that's inexpensive for you (you'll have to provide any necessary supplies) while giving the passengers a unique opportunity to learn something new. Teach them to mambo or jitterbug. Give them a crash course in Spanish or French. Show them how to write a best-selling novel or how to meditate properly to gain eternal peace. Whatever your niche, think about how you could share your knowledge and turn it into a class for others. Then market that course to the cruise lines. You can also check out Cruise Ship Jobs to help you get the most from your efforts.
Study For Free, Live Abroad. Universities tend to believe that an education obtained abroad is one of the most enlightening ways to learn and our government tends to agree. As a result, there are a number of grants and scholarships available for students that want to study in a foreign country. If you want to tap into government funding, you'll have to find a school that has a domestic branch in the States as any credits you obtain must be able to count here at home as well. That said, there are also work-study programs that don't come with those restrictions so if you don't need the government funding, you're pretty much free to go anywhere you like. Check out American Institute for Foreign Study for more information.

And there you have it. Three creative ways to seriously cut your travel expenses and tap into the vast opportunities that await you when you see the world. Granted, these ideas aren't as conventional as just booking your own hotel room but then let's be honest... life without a little adventure isn't really "life" at all, now is it?

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

To Tax or Not To Tax: That Is The Money Market Question

Kate Luther — Sat, 03 May 2008 17:09:42 +0000

As America’s love affair with self-investing continues to grow, so does our fascination with tax-free accounts. Don’t believe me? See for yourself. The next time you’re in a conversation, try working the words “tax free” into your conversation and watch the ears perk up. Admit it. We despise taxes. We loathe them. So much so in fact, that Uncle Sam made not paying those taxes a crime. So the idea that we can legally earn a buck without sharing it with our dear old uncle is well, deliciously criminal.

But as WiseBread investors know, what’s good and tax-free for one investor isn’t always the right choice for another and this holds true with all your investing venues, right down to choosing a money market fund.

Most money market funds are taxable and invest in things like Treasury Bonds and CD’s but there’s also a decent selection of tax-free funds that invest in the short-term obligations of tax-exempt entities such as your local government. While the yield from these tax-free investments are a bit lower than their taxable counterparts, any return you receive is typically exempt from our friendly Uncle Sam.

So which is better?

To determine the right investment for you, you need to take the tax issue out of the equation. Your taxable versus your tax-free as it were and luckily, there’s a pretty easy formula to help you make your decision.

Tax-free yield / (1.0 – your tax bracket) = Tax-free equivalent

So, let’s say we’re considering two funds: a taxable fund that pays 2.5% and a tax-free fund that pays 2.0%. If your tax bracket is 20%, your equation is going to look like this:

2.0 / (1.0-.20) = 2.5

In this instance, the tax-free equivalent is 2.5%, the same yield as your taxable fund. But lower the tax bracket to 15% and the results work out a little differently:

2.0 / (1.0 - .15) = 2.36%

That’s a .14% less return than the taxable fund. But what if you increase your tax bracket to 25%?

2.0 / (1.0-.25) = 2.67%

Now the tax-free fund is clearly the better choice, all other things (like expense ratios and investment selections) being equal.

Of course, neither of these investments will be your key to retiring early and realistically, a one-year CD is currently offering a higher return than MMF's. But that's not always the case and as we know, a good portfolio is one with some diversification.

The bottom line? Know how to get the most from your investing dollars which, after all is what smart investing is all about.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

The Same Actions Will Produce The Same Results (Ten Tenets for Arranging Your Rich: Part 2)

Kate Luther — Thu, 17 Apr 2008 02:00:57 +0000

A while back I posted the first of what I promised would be "Ten Tenets to Arranging Your Rich". And wouldn't you know it, right after posting Tenet #1, things got a little crazy and life interfered with my blogging plans. Go figure :)

In any event, I think we're back on track now and as promised, we've got nine more tenets to go. So, without further adieu, here's tenet #2:

The same actions will produce the same results.

I love this little quote for a couple of reasons: 1) its just so very true and its been proven over and over again in history, politics, love and yes, money.

The second reason I like this saying is that it tells you everything you need to know to fix the problem. Its not just inspirational... you don't have to decipher the meaning of the flying eagle and the sun setting behind the mountains... no, this one's pretty darn clear:

The same actions will produce the same results.

What does that mean for you?

Well, that depends upon how you want to apply it to your life. If your car runs out of gas every time you think you can make it a little further, then perhaps you should start getting gas sooner.

If your spouse stops talking to you everytime you go on a rant, perhaps you should consider some anger management or communication courses.

And if you're still living payday to payday even though you've done everything you're "supposed" to be doing, then perhaps you should do something different.

As awestruck as I am with mankind's potential, we tend to be serious creatures of habit. As we venture out into the world of endless opportunity, we quickly find ourselves a safety zone and then concrete ourselves in it.

We may complain about it, we may whine about it but the truth is, we have no real intentions of ever leaving it.

Why would we? Its predictable. And if there's one thing we don't like, its the unknown.

So, instead of seeing what's really out there, we'll stay where we know what to expect, all the while wondering why we just can't seem to get ahead.

But its hard to get ahead when you've stopped moving forward.

I spent many years working for one company or another, doing everything I knew I was "supposed" to do. I thought that by climbing the corporate ladder, I would one day have the money I needed to do all the things I wanted to do. So, I made sure I always met expectations, even exceeded them on a regular basis and by all accounts, did "well".

But remember Tenet #1? "Rich" is very relative . So, despite my steps up the corporate ladder, I was anything but rich.

I left early in the morning and I got home late at night. I missed many of my son's "firsts" because I was always working. And all those personal enrichment plans I had? There was just no time and in all honesty, the idea of pulling out the paints or tilling up a garden was the last thing on my mind. All I wanted to do was collapse on the couch.

I was no longer working for a living. I was living to work.

By the time I walked away from the corporate world, I was making $60,000 a year plus expenses but I had no freedom. I enjoyed a cushy office downtown but I had no room to run. I had business cards and an expense account, but the real me was nowhere to be found.

So I walked. I did something different. And you know what? I got amazingly different results.

Was it scary?

Absolutely! Change always is. And even now, there are times when a client doesn't pay when they should or my flow of new projects just seems too slow. But every time I think I might considered going back to the corporate world for that steady paycheck, I immediately remember what I'd be giving up.

I find time to garden just about every day. I'm home when my kids arrive from school and if I feel like sleeping in, well... who's to say I can't?

No, I'm not saying everyone should quit their jobs... unless of course, that's what you really want to do. What I am saying is that if you continue to approach life in the same manner you always have, you're going to get more of the same results you've gotten so far and if you're reading this, I'm assuming you'd like those results to be different.

But your boss isn't going to decide that you should have a shorter work day or Fridays off or a siesta break every afternoon. Your paychecks are never going to surprise you by being substantially more than they're supposed to be and while I'll never say "never", waiting to win the lottery is probably not a good strategy for success.

If you want to arrange your rich, you're going to have to make some changes. You have to make them - they won't do it on their own. They might be small, they might be big. Maybe you need to save more, spend less, change jobs or invent that little doohicky that no one can do without. Whatever it is, do it. Make the change. And start enjoying the rippling effect they create in your life. :)

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.

Ten Tenets for "Arranging Your Rich" - Part 1: Rich is Relative

Kate Luther — Wed, 20 Feb 2008 00:39:07 +0000

Paul Michael wrote a great article about the idea that "rich can be arranged" .

I liked that idea so much that I started looking at exactly how one starts the arranging process. And so, I asked myself, "how can I arrange my wealth today?" Not just ideas that would generate some money but more the approach itself. Does my outlook matter? Do I have a plan? Would it matter if I did?

After much thought and a Snickers bar, I realized that there are in fact some guiding principles to arranging your own wealth. Ten, in fact. Ten important "tenets" to keep you grounded and on track as you begin the "arranging" process.

However, being the wordy person I am, these tenets turned out to be much longer than I had anticipated, making for a rather lengthy read. So, to break things up and to give you something to look forward to, I'm going to post one a day. Think of it as a 10-day course to arranging your "richness" :)

Ready to get started? Here's Tenet #1:

Rich is relative.

A few weeks ago, someone got the bright idea to ask the political candidates to define "middle class". You can imagine the range of answers and if you accept them all, then middle class is anywhere from $25,000 to $200,000 a year (no specifics on number of family members or other variables).

And the truth is, they're all probably right. Most of the population sees themselves as being "middle class", even if their neighbors don't agree.

Why?

Because except for the really wealthy, most of us struggle financially in one sense or another. Maybe we can afford expensive cars and homes but we don't have much in the way of retirement and college funds. Maybe we enjoy many of the luxuries life has to offer but we're also ridiculously deep in debt. Maybe we just live in pricier neighborhoods or spend more in gas on our commute. Whatever it is, most of society is painfully familiar with the worry that comes with making ends meet.

Want to test that theory? Read Catherine Shaffer's post, Is Six Figures Really That Much ? and you'll see what I mean. Where one family struggles with a six-figure income, another family scoffs because they're making it on less than $50K a year.

Which means your "rich" isn't necessarily my "rich" and vice versa. But what it also means is that our definition of rich goes well beyond cold, hard cash.

Because after all, its not really the money that we want. Its what the money can buy. No one really drools about having a million dollars in the bank without thinking about the things they could do with that green.

Which means that "rich", is more than just having money, its also equally about being able to enjoy that money.

But the problem with money is that there just never seems to be enough to enjoy. Regardless of how much we make, we still seem to struggle.

Why?

With the exception of winning the lottery or inheriting millions from a long lost relative, most of us experience a short, slow growth. A raise here, a bonus there and over time, our income will grow from $20,000 to $30,000 to $40,000 in small, barely noticeable increments.

But so does our spending. And that's why your perceived "rich" will never quite be enough.

I'm going to date myself here but when I was all of 19, I got a job as an underwriter trainee making just over $13,000 a year. We didn't have a ton of bills, no mortgage, no kids, just a car payment and a stereo system we financed at one of those rent to own places (that's another blog in itself).

But while we weren't broke, we weren't rich either so I did some calculating. "If I could just make $20,000 a year," I told my man, "we'd be rich".

Well, guess what? $20,000 came and went but it was no big milestone in my financial life. Because by the time my big "rich" marker rolled around, I had increased my spending to match those annual raises. I wasn't rich... I was just living within my means and working longer hours to do it.

And there was the real sticker - not only was I not rolling in dough, but I was working harder and longer to achieve the same basic results.

And this is why rich is so relative. Not only do you need to define how much your rich is, but you also need to define the "richness" you'll expect to gain from your added wealth.

Want me to say that again?

Let's say you think that $100,000 a year would be your "rich". Ok, fine. But what do you have to do to make that $100K? Is it going to take more time out of your day? I mean, you could work three jobs and probably give your income a nice boost, but is it worth what you're giving up?

If you think that having more money means that you'll have more freedom to travel or take a cooking class or whatever it is you want to do, think again. In the corporate world, more income typically also means more responsibilities and you'll be expected to stay until the job is done. So, before you start following the almighty dollar, be sure that your strategy for arranging your rich doesn't require you to give up what little free time you have now.

Secondly, if you're going to shoot for $100,000, then you need to decide what that extra money will do for you. Remember, you're not likely to get it all in one lump so you need to be able to earmark those added funds so that they don't get lost in your day-to-day expenses. If you don't, you'll come to rely on the extra cash and you'll adjust your spending to match it. And that means that at the end of the day - like me - you'll be working longer and harder to achieve the same basic results.

The bottom line? If you want to arrange your rich, forget living within your means. Learn to live below them and learn to balance your net worth with your life's worth.

Written by Kate Luther and published on Wise Bread. Read more articles from Wise Bread.