This article is by editor Linda Vergon.

Gina Bean wrote in about her friend’s credit situation. Her friend has a car loan with a $936 balance. She doesn’t have a credit card – because she only earns $21,000 a year and doesn’t want to go into debt. But she’s frustrated because she recently checked her credit score and it was 583. She recognizes that the late payment she made on the car loan would bring down her credit score, but she was surprised to learn that it was also lowered because she doesn’t have a credit card.

“… honestly, I have NO DESIRE to have a credit card!!! So any advice would be very much helpful. I am at a loss right now! Do you have any advice for people with bad or no credit scores and how to function in society? [Are there] any resources to address this topic?”

Last June, we asked the readers How do you monitor and improve your credit?, but we haven’t asked how you can function with bad credit or no credit. And while Gina’s friend’s credit will improve naturally over time (as long as she continues to make timely payments), she still has to make it to that point somehow because life comes at you whether you have credit or not.

One plan of action

  1. First and foremost, Gina’s friend needs to put an emergency fund together so she can handle what life throws at her. People find it easier to respond to an emergency if they have a credit card to fall back on; but since that’s not the case, she definitely needs to make an emergency fund her first priority.
  2. If she hasn’t already done so, her friend needs to scale back on her lifestyle wherever she can. Perhaps she can start tracking what she spends so she can get a real look at where her money goes. Another good move in this direction would be to create a budget – but in any event, the more discipline she can bring to her finances, the better.
  3. The discipline is important because she needs to start saving for the larger purchases she will need in the future. For example, we have no idea how reliable her car is; but it’s a sure bet that she will need to replace it somewhere down the road. If she can arrange her life so that she earns more than she spends, she can start to save money for bigger purchases like a car.
  4. If her friend’s credit was lowered because she has a limited credit history, she may want to rethink her decision to swear off credit cards in the future. She can search for a secured card that reports the activity to all three credit bureaus every month. That way, she can work to improve her credit without much temptation to go overboard.

Most people want good credit so they can purchase big-ticket items – on credit – without having to wait to save up for them. But Gina’s friend doesn’t seem to fit that description. I think she may have other reasons to be concerned about improving her credit, like reducing her insurance premium or not having to keep funds on deposit with her utility provider. She may even live in a state where her credit could factor into an employment situation. Whatever her reason, improving her credit score is a good goal to work toward. Meanwhile, she needs a way to navigate through life’s challenges.

Aside from continuing to make timely payments and not making any more purchases, what advice can you offer about how to function with bad credit or no credit?

This article is about Credit scores

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Note: This article is from J.D. Roth, who founded Get Rich Slowly in 2006. J.D. recently launched the Get Rich Slowly course, a year-long guide on how to master your money. His non-financial writing lives at More Than Money.

Last weekend, Kim and I went out to breakfast. The only other table in the small restaurant was a party of four youngish women who were laughing and having a good time. They were having such a good time, in fact, that it was impossible not to overhear their conversation.

“My dad is such a cheapskate,” one of the women said. “Last week, I drove my parents to Salem. I had to stop for gas, so I just pulled into the first service station I saw. ‘Are you sure you want to buy gas here?’ Dad asked. ‘It’s more expensive than the place down the street.’ What a tightwad! He doesn’t get that my time is valuable too. I’m not going to drive three blocks just to save a few pennies.”

The other women laughed.

“My parents are like that too,” offered a second young woman. “The other day, my mom was giving me a hard time because my husband and I like to go out to eat. We invited them to join us at Andina but she said they’d pass unless we went someplace less expensive. Can you believe that? It’s not like my parents are poor. They’re millionaires!”

Again, the other women laughed.

“My parents are millionaires too,” chimed in a third woman, “but you’d never know it. They don’t spend their money. And they’re always getting on my case about the money I spend. I’m like, ‘It’s my money. Get over it.’”

Her friends nodded in agreement, and the conversation moved on. A while later, the waitress brought them their check.

“Oh crap,” the first woman said. “I didn’t bring the right credit card. This one’s maxed out.”

“I’ll cover you,” said one of her friends. “But I’ll need you to pay me back. I have just enough money to last me ’til payday.”

“How’s your new house?” asked one of the other women.

“It’s great,” she said. “We have so much room! I just wish we could afford to furnish it all right now.” Her comrades murmured in agreement.

“Wow!” Kim said after the women had left. “That was insane. You ought to write about that.”

“I will,” I said. “I will.”

Breaking taboo
It’s all too easy to condemn people like this as shallow and short-sighted. That they don’t get the connection between their spending habits and the fact that they’re struggling with money is obvious. It’s also obvious that they don’t understand that one of the reasons their parents are millionaires is precisely because they’re frugal. Being rich doesn’t mean you spend more on gas when you don’t have to or that you go out to eat in fancy restaurants all of the time. Rather, when you watch how much you spend on gas and you’re careful about which restaurants you choose, you tend to build wealth.

This stuff is obvious, even to a casual observer.

What’s more interesting to me is that that these young women had easy access to folks who are successful with money. Yet rather than pick their brains or learn from their behavior, they make fun of them! This is more common than it ought to be. In fact, most of the people I know who struggle with money have role models whom they could learn from — but don’t.

In some ways, I sympathize. I used to be one of these people. When I was deep in debt, I was surrounded by folks who had things figured out (including my wife!) but I never bothered to ask them what I was doing wrong. It was only once I hit rock bottom that I finally reached out for help.

Today, it’s different. Now I know that one of the best ways to improve my personal finances is to talk to others who have done what I want to do.

You see, it’s taboo in our culture to volunteer financial advice. It’s rare that a person will speak up to tell you what you’re doing wrong. And when they do, you probably resent it. It’s likely that your brother or your best friend is well aware of your weaknesses, but is unwilling to mention them for fear of offending you.

But if you take the initiative, if you ask your friends and family for financial advice, that taboo doesn’t apply.

The best $20 you’ll ever spend
If you want to know how to improve your finances, choose a financial role model and take them to lunch. Pick somebody you trust. Most of the time, these folks are obvious. They’re the ones who never complain about debt, the ones who’ve accumulated a lot of savings. (Sometimes they have a nice house and nice car, but not always.)

In some cases, these role models might be family members or close friends. If you feel comfortable asking these folks for advice, do it. But you might feel more at ease if you talk to somebody who’s merely an acquaintance: a neighbor, a colleague, a mentor. (In my case, I’ve learned a lot from my real millionaire next door.)

Invite your role model to lunch. Explain that you want to pick their brain about how they’ve managed to do so well with money. Tell them you want some advice.

Before you meet for lunch, prepare some specific questions. Do you want to know about investing? About increasing income? About cutting costs? Start the conversation by sharing your story — where you’ve come from and where you want to go. Be honest. Be realistic. If you’re in debt, say so. Next, ask the other person about their story. How did they achieve their financial success? Based on their experience, what would they do if they were in your shoes?

Take notes. If the other person offers advice, don’t take it personally. Listen with an open mind. Don’t get defensive. If there are extenuating circumstances, feel free to share them but don’t try to explain away every problem in your life. A lot of times, things that seem like external barriers to you are actually internal barriers.

At the end of the meeting, ask your role model if they have specific recommendations for your situation. Pay the bill, thank them, and go home to think about what you’ve learned.

Not just for beginners
This exercise isn’t just for people in debt. It’s also great for folks who are learning to invest, or for those who want to boost their income. When I thought I might like to get into rental properties, I invited a friend to dinner to ask him how he started investing in real estate. I’ve had dozens of readers take me to coffee so they could get my advice on their financial situation.

If you want advice about how you could improve your finances, ask your friends.


This article is by staff writer Holly Johnson.

As many of you know, my husband had a career crisis that left him unemployed for several months last summer. It was scary, but we learned a lot from the experience — including the fact that the grass isn’t always greener and that we really needed to learn to be happy with what we had. And, beyond that, we now feel blessed that he found a new job he likes, even though it required us to move to a pricier area.

Downsizing to save

But moving isn’t always all fun and games. In fact, buying and selling a home can have serious financial consequences that last for years or even decades. Since we knew that ahead of time, we thought long and hard about what we could do to ensure the move was good for us not only emotionally, but also financially. So, to diminish any financial consequences caused by the move, we used the opportunity to downsize into a reasonably-priced, smaller home.

That tradeoff has been well worth it in my eyes. I hardly notice that we lost 400 square feet when we moved, and I mostly made up for it by de-cluttering and being smart with the space we do have. However, I did stress at first about how our monthly expenses might change. What would the utility bills be like? And would our grocery bill be comparable to what it was before? Those kinds of questions caused many sleepless nights in my house for some time — as if the move itself wasn’t stressful enough.

But there was one bill I wasn’t quite prepared for before we made the move — yeah, you guessed it – the price of daycare. I knew it would cost more than it did where we lived before, but I still wasn’t quite prepared for what that really meant. That was, of course, until I started calling around to get a general idea.

The daycare bomb goes off

The first daycare we looked into had a location that could not be beat. It was directly outside of our new neighborhood. I instantly had visions of us walking there each day, holding hands and stopping at the little park on the way home. But with a fancy building and a huge outdoor playground, I knew it would be costly. But how expensive would it be? I wasn’t sure.

Unfortunately, I quickly learned they charged $450 per week for full-time care for two kids. In other words, almost $2,000 per month.

The second center we considered was recommended to me by a friend I know from high school.

“They teach baby yoga and Spanish,” he gushed as he explained all the extra perks they included in the deal.

That sounded great, but could I afford it?

Not by a long shot. In fact, putting my kids in the second daycare would consume nearly all of my take-home pay. No thank you.

Still, I got lucky. Even though the traditional daycare centers here are relatively expensive, there are many smaller in-home daycares still offering full-time care at a price most families can afford. After conducting some research, I found a small, in-home daycare that would take my kids for about half the cost of what I would pay elsewhere.

And while it isn’t exactly the daycare of my dreams, I had to take it. After all, what other choice did I have?

When you can’t afford daycare

My friend Cat, on the other hand, found herself unable to afford daycare after her husband, a medical student, was assigned his residency just outside of New York City. The young mother of newborn twins, Cat is lucky to stay busy at home with freelancing jobs and her website, Budget Blonde. However, that doesn’t mean the situation is without its challenges.

“It’s much harder than I imagined, and I had a lot of trouble adjusting at first,” she told me. “I’ve learned that I have to get work done between 6 to 9 in the morning and between 7 to 12 at night when they are in bed.”

According to Cat, the average cost for full-time daycare in her county comes in at around $13,214 per year for a newborn. And she’s got two. My wallet just shuddered at the thought.

Since she can’t afford traditional care, Cat has a mother’s helper who stops by a few times a week to watch the kids while she works. It isn’t much, but living in a high-cost area means that is all she can afford for now.

The growing cost of daycare

It’s no secret that the cost of daycare is spiraling out of control and consuming more of the average family budget with each passing year. A recent study illustrated how a single parent working a full-time minimum job no longer earns enough to put two kids in full-time daycare in most cases, meaning that daycare would consume his or her entire paycheck — not leaving so much as a penny for housing, food, or anything else. To add insult to injury, another study shows that daycare now costs more than the average cost of in-state college tuition in 31 states.

Since women are more often the ones electing to stay home with the kids, the scarcity of affordable daycare often results in a disproportionate effect on their ability to earn, according to The New York Times. Sociologist Joyra Misra even refers to the phenomenon as “The Motherhood Penalty,” a term used to describe the financial sacrifices women face when they step away from the workforce to raise kids.

When women give up too much

But some experts believe that women should think long and hard before deciding how to deal with the stay-at-home quandary. In fact, financial expert and author Laura Vanderkam believes that staying home to raise the kids could do more financial harm than good over the long run.

“You don’t just lose the income you’d earn during the years you stay home, you lose seniority, skills, and connections, which affect your lifetime earnings,” she told me in an interview. According to Vanderkam, one study showed that women who take three years out of the workforce can lose as much as 37 percent of their earning power for the duration of their careers.

That’s why she says it is important to think beyond a simple point-in-time analysis and look at the big picture.

“If you keep working, eventually your salary will rise and your childcare expenses will fall,” she says, adding that many women consider paying for childcare as an investment in their lifetime earning potential.

And it isn’t only about your career, says Vanderkam. “Kids need time and money. Over time, investing in your career will help you earn the resources that will give your kids lots of opportunities: to travel, to go to the colleges they choose, to take music or sports lessons that help them figure out their passions.”

Laura Vanderkam has a good point. Stepping away from the workforce might save you money while your kids are young but cost you in ways you may never have never dreamed over the course of your career. Still, some women — like the theoretical parent working a minimum wage job I mentioned earlier — have no choice. When faced with paying for daycare or having a place to live, there simply is no debate.

A double-edged sword

With the cost of daycare spiraling out of control, it seems that any decision a family makes has consequences. The parent who stays home with the kids might be sacrificing their long-term career goals, and the parent who continues to work might be missing out on most of their take-home pay for years to come. With those options, it’s no wonder that many working parents struggle to get ahead while their kids are young than spend decades making up for lost time. After all, what other option do they have?

That’s why Vanderkam and other experts believe it is important for working parents to consider options beyond the normal 9 to 5. “There are lots of jobs that look a little different, and there’s no reason to view this as an either/or situation,” she says. “Often, flexibility matters more than the total hours you work. If you can choose which 40 hours to work, you may find working full time to still be a pretty doable lifestyle.”

Unfortunately, not all parents have the option for flexible work hours, which can leave them facing a double-edged sword with immeasurable consequences on both ends. And even though the fact that kids are “only young once” might serve as consolation to some families, it certainly doesn’t make the growing costs of daycare any easier to stomach in the meantime. That’s why it is important to weigh the pros and cons of your situation and figure out what works best for your family in the short term and in the long term. Decide what you are willing to go without to get the kids through the early years. Then formulate a plan to make the transition as painless as possible.

“Working or staying home with kids is a very difficult decision, and it’s important to look at the whole picture, not just the first few years,” Vanderkam says.

How does your family cope with the growing costs of daycare? What sacrifices did you make when your kids were young?



This article is by staff writer April Dykman.

I spend a lot of money on food. (More than I spend on my mortgage.)

Part of it is need, of course. But much of it is want, because I’m both an enthusiastic cook and a health nut. I view food as a cross between health care and hobby. And I know I’m fortunate to be in a position to buy things like freshly pressed olive oil and porcini mushrooms. I know that not everyone has that option. For some people, food is about survival. They have to stretch their food budget as far as they possibly can. Sometimes they go to bed hungry.

Being realistic

From time to time, I read GRS comments asking for advice for people who are struggling just to make ends meet. They can barely afford to eat, let alone save a six-month emergency fund or open a Roth IRA.

Comments like those always stay with me, but I’ve shied away from writing about those topics because I feel awkward doling out advice on something I know nothing about. I don’t know what it’s like to struggle to put food on the table. I’m not a teacher or a social worker who witnesses struggles like that.

And I certainly didn’t want to repeat McDonald’s blunder, when it created an unrealistic sample budget for its minimum-wage workers, inadvertently proving that its workers couldn’t live on a McDonald’s salary. The budget estimate didn’t include line items for heating or child care, so you know it was just a little out of touch and completely unhelpful to its minimum-wage workers.

But last weekend I came across an article about Leanne Brown, and I immediately knew I would share her story on GRS.

Eating on $4/day

Brown moved from Canada to New York to pursue a master’s degree in food studies. While volunteering with food access programs, she noticed that people in the federal Supplemental Nutrition Assistance Program (SNAP) were eating a lot of processed and unhealthy foods.

“It really bothered me,” she told NPR. “The 47 million people on food stamps — and that’s a big chunk of the population — don’t have the same choices everyone else does.”

Part of the reason why they don’t have the same food choices is that the average SNAP benefit per person is $133 per month for food. That works out to roughly $4.30 per day.

Another problem is that to feed a family on $4 a day, you have to cook. And you have to cook in a way that most of our grandmas used to cook, knowledge that many people didn’t inherit. For instance, cooking an entire chicken is more cost-effective than buying individual cuts, especially if you use every bit of the bird, even making stock from the bones. But when I started cooking, I had no idea how to cook and carve an entire chicken let alone how to make stock. My education came from copies of Cook’s Illustrated and lots of trial and error. And before I taught myself how to cook, I didn’t know how to really use up all of my groceries. For instance, I used to throw away stale bread. Now I know how to make like an Italian grandma and throw it in some pappa al pomodoro. But of course, I have leisure time to cook, and food is my hobby. Some people don’t have time for hobbies. Instead, they have two jobs and kids to raise.

Finally, another big problem Brown noticed is that the recipes already out there for eating cheaply didn’t look or sound very appealing. She described them as “photocopied a bunch of times from a 1970s church cookbook, and not very inspiring.”

So Brown set out to create a solution to these problems, writing Good and Cheap: How to Eat Well on $4/Day, a cookbook for people on a tight budget.

Eating well, on the cheap

Brown’s book features recipes and ideas for eating well on $4 a day, with each meal priced by the serving.

It also offers advice about how to stock a pantry with meal-building basics like garlic and dried beans, how to use leftovers, and options for substitutions, especially when it comes to produce. “I’ve gotten so many emails — heartwarming, heartbreaking emails — from people who tell me what this would have meant for them, growing up, to have guidance like this,” she told National Geographic’s The Plate.

And, it’s a nice-looking book, with recipes like vegetable jambalaya and savory summer cobbler. You know, stuff that real humans would actually want to eat.

But how do you get this resource out to the people who need it most?

Crowd-funding for a great cause

Brown first made her book available as a free PDF. “I created this book at the capstone project for my MA in Food Studies…” writes Brown in her book. “After I posted a free PDF on my website, it went viral on Reddit, Tumblr, and elsewhere — almost 100,000 downloads in the first few weeks!”

Realizing she was solving a real pain point for a lot of people, Brown started thinking about how to reach more of the people she was writing for. For instance, someone without a computer or Internet access can’t download and cook from a PDF.

So Brown created a Kickstarter campaign to help fund printed copies. “The expensive part of printing books is the initial setup; the cost of each additional copy is fairly low,” she wrote on her campaign page. The more books people bought, the more she could donate or sell at a huge discount to organizations that support low-income families on SNAP.

The result? Her $10,000 campaign ended with $144,681. That translates to more than 26,000 copies for nonprofits at $4 per book, plus more than 6,000 additional copies donated by her Kickstarter backers. The books will ship in September, according to Brown’s site.

So in conclusion, Leanne Brown is my newest food hero. And although the Kickstarter campaign is over, you can still download her free PDF, donate money, buy a print copy, or buy a copy and donate a copy at www.leannebrown.ca/cookbooks.

Editor’s note: An earlier version of this article said the average SNAP benefit per family was $113 per month.  The correct figure is $133 per month per person.


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