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Case study: Starting with less than zero

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I am not a trained financial expert. I'm not an accountant, I'm not a financial planner, and I'm not a stock broker. What's more, I've made many many money mistakes on my own financial journey. As a result, I've always been reluctant to sit down with people and go over their budgets.

That seems to be changing.

In March, I spent a couple of hours talking with a friend about her financial situation. A few days ago, another friend asked if I'd be willing to meet with him in the near future to puzzle through his budget woes. And yesterday, I took three hours to chat about money with my friends Wally and Jodie.

As always, I've changed names and certain identifying features in the story that follows. Unless I have explicit permission to share details, I do my best to protect people's privacy when I write about their intimate financial lives.

Wally and Jodie have recently begun dating. He's in his early forties (and recently divorced); she's in her late twenties. They both work in food service, and have done so all of their lives.

Their trouble — and the reason they asked me for help — is that they cannot seem to make ends meet. They work hard but never have anything to show for it. In fact, they feel like they're falling further and further behind.

“Can you help us?” Wally and Jodie asked.

“I can try,” I said. “Let's look at your numbers.” [Read more…]

Spare change: Awesome articles from elsewhere

The best lifehacks for poor people

A detailed guide to using the cash envelope system for budgeting

"I don't think we owe college to our kids. Does that make me a bad father?"

Fight burnout with both saving and spending

Will divorce devastate your plans for financial freedom? [podcast]

How to decide whether to relocate for a job

How to know if your partner is financially "cheating" in your relationship

Customer service chats are watching you type before you hit "enter"

Are you an imitator or an initiator?

How [real] CEOs manage their time

Find an archive of all past spare change links on Pinboard.

How one young couple budgets and plans for the future

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This month's theme at Get Rich Slowly is relationships. All month long, we're focusing on how money affects our interactions with family and friends — and how family and friends affect our interactions with money.

A couple of months ago, I shared a series of career interviews that the Khan Academy has been producing on an ongoing basis. Each interview consists of three or four separate videos exploring what it's like for different people from different fields to manage their households.

Last week, the Khan academy published a joint interview with a married couple: Julia (a registered nurse) and Michael (a construction business owner). They interviewed each partner separately, then brought them together to talk about how they budget and plan for the future.

When Julia and Michael got together, Julia was the sole breadwinner for the family. Michael was still going to school and he was trying to start his construction firm. When they learned Julia was pregnant, they shifted gears. Julia went on maternity leave and Michael found a job at an auction house. They've been living on one income their entire marriage, but that will soon change as Julia gradually re-enters the workforce.

Julia and Michael used to live in Boulder, Colorado, but city life didn't agree with them. Plus, costs were too high. They chose to move in with Julia's parents in the country, which gave them a lifestyle they preferred and allowed them to save money.

In the interview, Julia and Michael break down their income and expenses. (Their largest expense — by far — is $600 per month for transportation!) They also describe why they've made certain decisions

“We wish we knew how expensive life was. Having a kid is very expensive,” Julia says. “Rent is expensive. When we didn't live on the farm, it was unaffordable for us. One of the most important things we've learned is to invest in yourself. It's okay to invest in your education because that's improving you down the road, improving your financial outlook.”

If you want to see more from this couple, here's Julia talking about what she does (and how much she makes) as a registered nurse and here's how she got her job (and what she plans to do in the future). Here's Michael discussing what his job is like and how he got his job.

As I said in December, I think this library of videos is an excellent resource, especially for kids who might be trying to decide which career to pursue.

College Grads: How to Increase Your Salary

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My oldest son recently asked: “What can I do to make sure I get a big, fat salary when I graduate?” He's a sophomore eyeing chemistry as his career.

Having spent his summer working nearly 60 hours a week in a warehouse, I think he's suddenly come to realize the full-court advantage of a college education.

So I took his question to the mat. How can a student leverage college experience in order to maximize his or her salary after graduation?

After talking with other parents, friends in human resources and school counselors, I came up with seven suggestions.

How to increase your future salary

1. Recognize the value of education

The more education you receive, the better your chances for a higher starting salary. Here are the 2014 median earnings of young adults aged 25-34, according to the National Center for Education Statistics:

  • $25,000 with no high school diploma
  • $30,000 with a high school diploma
  • $49,900 with a bachelor's degree
  • $59,100 with a master's degree

2. Choice of degree and college

When you talk to many high schoolers, it becomes clear that one of the top career choices is engineering. They also want to matriculate at an elite school or a top engineering school. Many parents have the same goal in mind, but does it really matter?

It does. Both in degree and school choice.

The 2015-2016 College Salary Report ranks over 1,000 public and private schools by their salary and degree potential. Cards on the table, I wish we had known about this as we were picking colleges. (The good news is that we have one left in high school who will benefit.)

3. Don't underestimate the power of professors

Professors stay in contact with generations of students, many of whom rise to management positions. There, they often have control over department purse strings, head counts and a certain sway with recruiters and talent resource officers.

If you develop a solid relationship with a certain professor, you can benefit from their knowledge and ability to network with well-connected alumni. This can make quite a difference in how vested your future employer feels in you and your story, which could potentially translate into an opportunity to impact your salary.

4. Internships while in college

The depth of your knowledge and industry experience can help strengthen your resume and possibly lead to a bump in starting salary when compared to fellow students with little or no experience. Term and summer internships can help you demonstrate your value to a potential employer.

Basically, your goal is to have a job lined up and waiting for you as you walk across that stage, diploma in hand, and finally leave college. But again, it's the internship experience and more professional resume which can result in a higher starting salary. Internships without salaries are very common, so take those opportunities to make less as a student and more as a graduate.

5. Negotiate your offer

Often, new graduates are afraid to ask for more when presented with an offer of employment. They are nervous, excited and don't know how the “game” is played with a prospective employer.

If you have more than one job offer, it's a little easier to leverage them to land your dream job at a higher salary. But if the salary is non-negotiable, you could still ask for a signing bonus, a monthly transit pass (where applicable), and additional personal time off/vacation. If an employer wants you bad enough, (s)he might throw some perks your way. But you have to ask for that.

Here's another tip for any job seeker: Go in knowing your full worth. It's common for an employer to ask what you made at your last job or what your salary expectations are. The big secret is that it doesn't matter at all! You should be judged on your qualifications, work ethic and credentials — not on your last salary or what you think you might be worth. Get to know the salary standards for your industry and go in with a confident attitude.

6. Get something published

Write something and get it published in a trade journal. Assist a professor on a technical paper that (s)he plans on submitting for peer review. Having a paper trail and building a case for or against something in your future profession can help get you noticed and perhaps highly sought after. You can turn that notoriety into cash on signing day. Athletes do it. You can too.

7. Network

Don't wile away the time in high school. Start networking now. And in college, keep networking. This is a good time to find out what your friends' parents do. Network with those parents, especially the ones in the same field you are pursuing. But even if they aren't, they might have friends, former classmates or relatives who are in that profession which can provide valuable leads.

Great networking opportunities include LinkedIn, industry association events, local business groups and fundraisers for community causes. Let's take an example. A graduate who lives in Chicago, majoring in communications might meet potential employers by joining a few of the public relations and marketing groups on LinkedIn, attending a Public Relations Society of America luncheon, getting involved with the entrepreneurial center at a local community college and lending a hand at a nonprofit where they can meet business supporters, board members and community influencers.

So skip a few frat and sorority parties and spend some time making a case for why you should be hired upon graduation and why you should receive a higher salary than some of your peers.

I'm proud that my son has the foresight to ask what he can do to improve his standing upon graduating from college. Now it's up to him to act so he can get the big, fat salary he wants.

7 surprising results when you pay your kids for chores

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One of our parenting goals is to rear frugal kids. Take care of their stuff. Spend wisely. Save for a rainy day.

Making the goal is easy, but implementing the goal? Definitely harder.

How our (current) allowance system works

Over the last couple of years, we've been experimenting with the best ways to teach our kids to manage money. What I've learned is that it's best to keep our system flexible as the kids mature and develop more skills. So we decided that our system will probably always be subject to change so we can accommodate their growth, but here's how our family's allowance system currently works:

Family Allowance System

  • Each child has a spiral notebook.
  • Every day, write down the jobs they need to complete. This includes things they need to do for music lessons or school. Add in things that help the entire household run more smoothly.
  • They check off each task as they complete it.
  • If they complete all their jobs, write in the standard pay rate. If they don't? Nada.
  • At the end of the week, total each day and pay them.
  • They must give 10 percent and save 10 percent in their savings account, but the rest is pretty much up to them.

It's not without challenges

I say that what they do with the rest of their earnings is “pretty much up to them” because sometimes we have to intervene a little bit. (See the shoe example below.) So that's a bit of a challenge, but there's other issues to tackle too. If you pay your kids for chores, do you have similar challenges to ours?

Challenges of paying your kids for chores

  • Finding the balance between having enough jobs for them to do, while still allowing plenty of play time and down time.
  • Deciding how much to pay them — enough so they're motivated, but not too much so they stop being hungry for more money-making opportunities. (But how much is that?)
  • Figuring out what they should be responsible to pay for themselves
  • Thinking through whether any restrictions should be placed on what they can buy.
  • Defining age-appropriate expectations.
  • Teaching a healthy relationship to money.

7 surprising results when you pay your kids for chores

This isn't a perfect system, but I wanted to share what surprised me. And you may notice similar things too.

1. They take better care of their stuff.

Boy taking care of his shoes

Our current system actually started when I decided the kids needed to buy their own tennis shoes for school.

When I bought their shoes, they didn't take care of them. To say the least, our kids' shoes weren't looking good at the end of the last school year. For the 2015-16 school year, it was time they bought their own shoes.

I figured out how much I would need to pay them each day in the summer so they would be able to pay $50 or so for a pair of tennis shoes and still have about $100 left over after their giving/saving money.

In the spirit of keepin' it real, I need to tell you that this was too overwhelming for my eight-year-old. She often didn't complete her jobs for the day, because she just wanted to play. She squeaked by with enough money for shoes, but had very little left over. She also doesn't seem as interested in caring for her shoes. Maybe she's not developmentally ready for this?

On the other hand, our 11-year-old takes GREAT care of his shoes. He rarely wears them outside just to play. Multiple times he's told me that he wants to make them last as long as possible.

2. They make some choices based on quality vs. quantity.

Girl shopping for shoes

Going back to the shoe example, I explained that I had learned that cheaper shoes weren't always the best value. However, they could choose their own shoes and spend as much (or as little) as they wanted. They bought more durable shoes.

Not all their purchases are as mindful yet, though.

3. They prioritize their own wants and spending.

Young girl washing car

If they ask for anything extra, I'll usually ask them to buy it.

If they really want something, I don't mind chipping in. But almost 100 percent of the time, they either didn't really want it enough in the first place or they easily make a plan to get it.

For example, my daughter's school book fair was last week. She didn't have quite enough money for the book she wanted, so she asked for extra jobs to earn more. She eagerly did enough jobs to earn enough to make up the difference.

4. They manage their time better.

Young boy procrastinating at piano

Slowly, I'm starting to see them plan their afternoons better. While they still have plenty of days where they play first, they've started working on their jobs first most days.

Too many times, they ran out of time before completing their jobs for the day. The only thing worse than not getting paid for doing nothing is to do some of the jobs and not get paid for it!

5. They look for entrepreneurial opportunities.

Teenaged boy mowing lawn

When our family complaint department gets complaints of low wages, I say I'll accept proposals for a raise for additional responsibilities. So far, I haven't received any proposals.

However, the kids are looking for opportunities to earn money from others.

I love to see their minds mull over the possibilities. And I love to discuss their ideas — How will you find customers? How much do they want/can they afford to pay you? Why would someone pay you when they could do it themselves?

6. This cuts down on conflict.

Brother and sister raking leaves together

In my opinion, the best thing that's come out of tying their chores to money is that it takes nagging out of the picture (almost – hehe).

At this point, they know they need to do their entire list to earn money. While I still get annoyed if I have to pick up their stuff or dry the dishes, I say to myself, “Their consequence for not putting their backpack away is not getting paid. A lecture is no longer included.”

Er, at least that's how I want to be. Nagging and lectures come so easily, that I'm still working on that. But I'm getting a lot better. I still whip out lectures when the situation calls for it, but I try to let consequences be the lecture in most situations.

7. As they manage their money, they're learning about sales tax, interest, prices, and bank deposits.

Boy opening savings account at bank with parents

Having money to save and spend naturally helps introduce financial concepts to them. They now know they need to consider sales tax in addition to the list price (and shipping if they are ordering online). They look at their bank statements and see the measly interest added to their accounts.

They also seem to be making a connection between their efforts to earn money and what something costs.

While we have a long way to go and we're still making a lot of mistakes, I am happy with the improvements this system has made to our home and their knowledge about money.

If you pay your kids for chores, what positive results have you noticed that surprised you? Do you face any challenges about allowances?

What sparked my investigation into medical identity theft

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When the oral surgeon recommended that our daughter have her wisdom teeth removed, we thought we knew what to expect both medically and financially. Morgan's two sisters underwent this procedure in the past, and we adopted a brave “Let's get this over with!” attitude as we scheduled her operation.

We expected the least painful part of the procedure to be the surgery bill because the girls are covered under both their parent's dental insurance. It was an unpleasant surprise to learn from the oral surgeon's billing manager, “After checking with your insurance, we estimate that your daughter's surgery will cost you about $1,200 out-of-pocket since she has exhausted nearly all of her benefits this year.”

Something was wrong!

It was late in the day when we discovered that our insurers were planning to deny benefits, and we wracked our brains that evening trying to imagine why, with double insurance, Morgan lacked coverage. Had we forgotten about treatments she received? Were we mistaken about dates when she received services? Could the insurance company records be incorrect? Or, might this be something more sinister, such as medical identity theft?

Medical identity theft

The Federal Trade Commission (FTC) explains that “A thief may use your name or health insurance numbers to see a doctor, get prescription drugs, file claims with your insurance provider, or get other care. If the thief's health information is mixed with yours, your treatment, insurance and payment records, and credit report may be affected.”

Medical identity theft's most damaging outcome occurs when a victim receives an incorrect therapy or medication due to the co-mingling of the victim's health history with that of the thief's. The financial consequences can be painful as well, including:

  1. Higher insurance premiums due to your apparent high benefit usage.
  2. Calls from debt collectors demanding payment for services you never received.
  3. Damage to your credit report that results in your inability to secure a loan or causes an employer to think twice about hiring you.
  4. Benefits denied until you pay your deductible.

Relief — a simple error brought to light

In our case, multiple phone calls to our daughter's dentist and both insurance companies finally shed light on why benefits appeared to be exhausted: Morgan's twin sister, Margaux, had received several dental treatments during the past year. When the oral surgeon's office called to verify coverage, two girls with the same date of birth and same first initial and last name were confused by the insurance representative who erroneously reported that Morgan's benefits were tapped out when she actually had more than enough available to cover the surgery.

The misunderstanding was corrected after less than an hour's work on the phone, but had this been a case of medical identity theft, we might have had to pay $1,200 for her procedure and may have struggled for months to clear up false patient records.

Having experienced the worry associated with a potential medical identity theft, and the relief when we discovered our daughter's health records were safe for now, we became vigilant about doing what we could to prevent and detect this type of crime.

[Read how you can prevent medical identity theft and protect your finances and health history: The identity theft no one is talking about.]

How to navigate relationships as your finances change

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Have you ever lost a close friend because your financial situations were too different? Maybe your friendship started when you were on similar financial ground, bonding over bowls of ramen noodles, for instance. But once out of college, your first job paid a lot more than theirs did; or perhaps, the shoe was on the other foot — you're still flipping burgers and your friend is working in the corporate world with a bigger paycheck.

Benjamin Franklin once cautioned:

“Beware of little expenses; a small leak will sink a great ship.”

But that's not the only ‘ship' finances can affect. As you improve your financial situation, you may find that your friendships change too.

While not every relationship (oops, I did it again!) can be saved, you can patch most holes in your friendships by being aware of common problems.

The financial icebergs in your relationships

Despite their best efforts, people often unconsciously compare themselves to others.

I am in better shape than he is.

The food in my shopping cart looks more healthy than that junk food over there!

I am saving more than the average, because I am naturally gifted with money management skills.

Need I say more?

Maybe you don't have these thoughts. If not, that's great! But seeing someone who is more successful in anything can trigger unpleasant — and unhealthy — emotions in your own mind.

Guilt, jealousy, and fear

When you see someone who is exercising more often than you do, does it make you feel guilty about your own lack of exercise?

When your friends tell you they just paid off their mortgage — before they turned 30! — do you feel a little … jealous?

If you see someone who is getting their life together, are you scared that you may lose their friendship?

So far we've covered, guilt, jealousy, and fear. But many more emotions can threaten your relationships. Especially where money is involved. It helps to remember that, if you have these emotions, your friends are sure to have similar emotions too.

Keep friendships afloat by going first

Sometimes it's hard to have an honest conversation with yourself, let alone anyone else.

I'll give you an example. That example of friends paying off their mortgage in their mid-20s? Guess whose friends they are? I'm not proud of my behavior, and it's embarrassing to admit this in a public forum, but I do want to show my human side.

When I found out my friends paid off their mortgage, I said, “Wow, that's great!”

But this is what I thought: That is just not fair that they already have their mortgage paid off. Why can't we have our mortgage paid off?

Lots of whining went on in my head. Embarrassing. And then I stopped whining and started undermining our own mortgage-paying progress.

That's what comparison does to people, folks. It helps NO ONE.

What does help? Honesty. Openness. Good communication.

And just being happy for the success of others. For my friends, paying off the mortgage was a significant accomplishment. Once I got beyond myself, I was really proud of them.

I also have to realize that, while I can be proud of them and wish that we too have paid off our mortgage, I can still be satisfied with our own progress. After all, our mortgage is almost 50 percent paid off. Could we have paid off more? Of course. I can use our friends' example to inspire us to work harder at paying it off. But it doesn't work to compare our results to theirs.

Throwing out a life preserver for your relationships

1. Be the person you want your friends to be. If you see your friends making good choices, applaud them. Great job paying off your student loan! Or, hey, I know it wasn't easy to stay at the office and eat your PB & J in the break room when everyone else went out for lunch.

2. Show your human side. Do you have friends who seem to make the best financial decision every time? Maybe you seem that way to your friends. If you are the first one to admit your mistakes and missteps, don't be surprised if your friends start to share their own financial disappointments.

3. Deepening your relationships by sharing your challenges can actually provide accountability. For example, if you know your friend is trying to keep her food budget in check, and she knows you are trying to build your savings account, you can encourage each other to keep meeting your goals. When you have built trust in your relationships, you won't be afraid to admit your mistakes, and you'll have the encouragement to keep going.

4. If you want to preserve your friendships, keep the lines of communication open. If your friends are feeling threatened by your financial success, just keep talking. Start small, stay open, and encourage your friends by noticing their financial successes.

5. If they ask for financial advice, give it humbly. If you want to give them a recommendation for a personal finance blog or a personal finance book, be careful how you present the opportunity. Again, consider how you would like to receive advice on one of your problem areas.

How to know it's time to abandon ship

Sometimes relationships don't succeed. Years ago, I had a great friend. We had so much in common: We talked every week and often exercised together. When she moved away, I naturally missed her friendship.

Throughout the years, we've kept up our friendship, even though our lives are different. However, I can see our paths continuing to diverge. We see each other less and less often, and I think it's just a matter of time before we become acquaintances.

An older, wiser friend once told me that people come into our lives for seasons and reasons. Sometimes — as callous as this may sound — friends serve their purpose and then move on.

How will you know?

  • Do you want to keep up the relationship?
  • Is it too stressful?
  • Do you feel like you are giving too much or making most of the effort?
  • Are you making progress with building trust or deepening communication?

Only you will know the answers to these questions and whether it is time to move on.

Every relationship has bumps, especially one in which you're not on equal financial footing. While it's okay to move on from challenging friendships, you also don't want to miss the chance to develop great friendships that can help both of you become better at handling your finances.

Have you maintained friendships with different finances? Share your experience and wisdom below!

Getting real (and serious) about your financial future

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Have you ever wanted — really wanted — to change your financial situation but, when you tried, you felt like you were slogging through wet cement or trying to turn a huge ship around? You got exhausted and stopped, right?

Change is like that.

You can change — and you can also make it easier for yourself. But first, are you clear about why you want to change?

Clarify your reasons

I assume you have already spent some quiet time contemplating why you want to improve your financial situation.

Why do I say that?

Because if improving your financial situation were easy, you would have done it already. But you haven't, and I am guessing you haven't because your current lifestyle and habits are making it tougher than it should be. (Even though it's still not easy to change any way you slice it.)

There's no shame if you haven't been successful yet, by the way. Who is completely successful right out of the box when it comes to finances? It takes practice. It requires persistence and a willingness to educate yourself and even experiment sometimes.

Still, there's a reason you want to improve your finances — a goal of some sort. If you can make your goal crystal clear, it helps to keep you focused and, well, motivated. The “why” is your fuel.

What do you want to change?

After you decide why you want to change, consider what you want to change. You're focusing on your financial situation, but get laser-like and concentrate on what you want to accomplish first.

  • Do you want to increase your savings account balance?
  • Do you want to cut your spending?
  • Are you trying to simplify your life?
  • Have you decided to increase your income?

As I look at this list, I want to do all these things. But what do I want to do first? Pick one (or another option entirely). Now, how are you going to change?

Your budget — an easy way to identify problem areas

Problem areas usually start to surface when you change what you're doing. And when it comes to finances, an easy way to discover a problem area is to start reviewing your budget.

Your problem area(s) will be different, but how will you know there's a problem in the first place? Well, it's important to measure your progress. But another way to know is if it meets this criteria: It's getting in the way of what you want to change.

For example:

  • Are you spending a huge amount in rent because you want to?
  • Are you traveling to expensive places because you want to?
  • Are you eating out often at restaurants because you want to?

Is the reason you're spending money based on your own perceptions and the perceptions of others? In other words, look at what you are spending money on because you want to and what you are spending on because you think you have to.

Parts of your budget can also be greedy — consuming more of your money that it should. A standard to measure your own spending against is the Balanced Money Formula.

Change habits/lifestyle to decrease spending

If any of your budgeting categories appear bloated after comparing it to the Balanced Money Formula (or something else like your own budget method), tackle that bloat first. Cut back the portion sizes. This is easier said than done, but…

Even if your budget is in check, you can still find ways to improve your lifestyle.

To make this lifestyle change easiest, focus first on the areas where you spend the most. For me, that's our housing.

So I would ask myself these questions:

  • Why are we living in our current home?
  • Does our home choice coincide with our current lifestyle?
  • Could we live more cheaply elsewhere?
  • What about renting instead of owning?

Most likely, housing is probably your largest expense too. Making changes to where you live is a big deal, but sometimes this choice can catapult you into the next stage of personal finance.

What do I mean?

Finding the inspiration to change

If you read the recent article on Andrew and Amanda Argue, you learned that they lived in expensive downtown Miami before moving to less-expensive Orlando. Now they gallivant around the globe, most recently residing in Costa Rica, a place with a reasonable cost of living. And their monthly expenses? Around $2-2,500/month.

If you do move to a less expensive house or area, you may find that move indirectly affects other parts of your budget.

Here is a small example from my own life.

  • My first job out of college paid well for a recent graduate. After about three years, though, I got burned out from the schedule and took a different job that paid $5 less per hour. Everyone at this job earned less than my previous co-workers, and it showed. All of us ate out less, went on fewer vacations, wore less expensive clothing, among other things. I also couldn't save as much money, but I think the concept is still worth thinking about.
  • The Argues noted similar experiences when they moved away from downtown Miami and the expensive cars driven by their coworkers.

You may decide not to change your housing. That's fine, of course. But once you've decided what to change, you need to figure out how to change it.

Remember that wet cement I talked about earlier? You're just about to step in it…

Make changes easier to implement

We need to make this as easy as possible.

To make changes easier to implement, eliminate choices in other areas of your life. You have already decided where to focus your time and energy, right? By doing so, now you know where NOT to focus your time and energy.

Here are some examples of making life easier (assuming these areas are what you're NOT concentrating on):

  • If you don't enjoy taking minutes each morning to decide what to year, create a personal uniform, by wearing the same type of clothing every day. Or, wear the same five outfits each week.
  • Although we all have to eat, here are a few ideas for how to spend less time in the kitchen. Create a master shopping list. Meal plan the same meals every week, or if you want more variety, $5 Meal Plan can help. Amanda Argue spent anywhere from eight to 10 hours cooking on Sundays each week to make it easier to pack her lunch and eat at home. This prep time doesn't always have to take so many hours, but it could include cutting up vegetables, prepping lettuce, making green smoothie packets, making freezer meals, cooking once/eat twice by doubling the recipe and freezing the second, or making those salads-in-a-jar that I keep seeing on Pinterest and haven't made yet.
  • Note when you are short on time. Then, when you have extra time, prepare for those times when you have less margin in your life. For instance, maybe your very-busy times are certain times of the year (or certain times of the week or month). Our CPA and his wife work together in his office. Obviously, tax time is a very busy time for them. She compensates by putting meals in the freezer at the end of the year, so they have quick, healthy meals when they're working much longer hours when January comes around and they're in the thick of tax season.
  • Similarly, note when you are tired. If you're worn out on your commute home after a long day at work, you're vulnerable. That is NOT the time to decide what to eat when you get home. It's too easy to turn into a drive-thru and get some fast food. As Amanda Argue admits, “We ate at restaurants we didn't even like!” For me, gift-buying — if it's to be a thoughtful gift, anyway — must take place when I am feeling energetic. Otherwise, everyone gets cash or gift cards. Simply put, I spend more money for a gift that usually misses the mark.
  • If you're tired of turning down invites from friends because you need to rein in spending for entertainment, why not be the one to initiate the social plans? (Naturally, you'll choose a less expensive activity, right?)

If you want to make significant progress at turning your financial life around, it can really help to find strategies that make these changes easier. These ideas include reminding yourself why you want to change, evaluating your budget to identify where your budget's problem areas lie, deciding which parts of your lifestyle to change, and then — of course! — making those changes easier to implement.

With some focus, mindful spending, and hard work, you can make progress toward your goals.

Do you find it difficult to change your financial situation? Have you changed your lifestyle to make improving your financial situation easier? Tell us what helped you reach your goals in the comments!

7 things camping can teach you about money

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My wife and I are new to camping. Well, it sure seems that way. When we came to America over 30 years ago, we bought Kermit, our green camping van, which we took coast to coast three times.

original camper 500

We were young, our hair still had color. And we (being students) had time enough to see all the states (except, for some unexplained reason, West Virginia). But then, what I playfully call the American experience got hold of us: Work, work, work — no vacations, trying to get ahead, not being as financially responsible as we should have been. Before we knew it, 30 years had gone by … and we had forgotten such a thing as camping even existed. Because of work, our travels changed to ritzy resorts all over the place where we usually stayed for free (long story).

So, when my wife retired, our question changed from “What can we cram into a few days?” to “How are we going pass a whole year?” We knew the answer to at least part of that question when her Swiss nephew and his family came to the U.S. for their annual vacation. Because vacations in Switzerland are typically five weeks or more and our nephew's family wanted to tour several of our national parks, we offered our home as a place from which they could stage their adventures.

sidlers camping

Jarred by an example of minimalism

They are 40-somethings with two kids, and they took with them the minimum you would need: tents, lanterns and a utensil or two. They got carried away by a million mosquitoes, rained out of their tents by several rainstorms, and then baked to a crisp by the ferocious summer sun we know all too well in the West. But … you couldn't wipe the grins off their faces with a Brillo pad!

I have to tell you. My first reaction to their minimalist approach was the line Tom Arnold delivered in the movie “True Lies”: “I've got two words for that. In. Sane!” No way was my creaking body doubling like a pocket knife and sleeping on the ground between the cactus and the ants.

Reassessing our assumptions

But then someone mentioned that uniquely American invention called the pop-up camping trailer. Long story (and it is a long one) short: We bought one last fall for $2,300 and stuck our toes in the camping water. Before Christmas, we went to Death Valley, California, and earlier this month we went to Moab, Utah. Along the way we learned a lot. The first time we set up camp, it took an hour and a half. Last time, we got it down to just over 20 minutes! We're still not what you would call savvy campers, but we're definitely getting there … slowly.

As we drove back over what I think is the prettiest stretch of interstate in the country (I-70 between Grand Junction and Denver), I got to thinking about what we've been learning and how it applies to managing money. Here are my takeaways.

7 things camping can teach you about managing money

1. It's always possible to save money. You can camp for $80 a night without batting an eyelid. But you can also camp for free. The only difference is your tolerance for DIY and your dependence on indoor plumbing.

We looked at the supposedly nice campsites and observed that they typically just had hundreds of enormous rigs packed together like sardines, with no space, view or anything to do with the outdoors. Essentially, they appear like urban apartments to me, just with a different address.

On the other hand, there are scenic campgrounds aplenty, costing from $5 to $15 a night. (It's $20 along the coast.) It takes a little research to track them down, but that work pays off with the money saved.

Here is our site. (That little white dot bottom right is our little camper, from across the Colorado River.)

site 1a

Not too many Hyatts or commercial campgrounds offer a setting like that, or a view from the dinner table like this:

site 2

The best part to me was our old, retired, creaky bones could sit on decent chairs, sleep on soft, king-sized beds perched high off the ground, and eat at a proper table.

site 5

For $5 a day with our Senior Pass!

Were we younger, it would be $10 a day. (Being old has its benefits, as we pointed out earlier, but even $10 a day is hard to beat.) The very first camping trip we took (with friends showing us the way) was in a national forest … and it was free!

In life, there are also plenty of opportunities to save money and pile it into your savings account if you put your mind to it. You can decide to eat out less, drive less, live in cities/suburbs with lower insurance rates, endure a little heat or cold. If you look for reasons not to save, of course you will find them; but if you look for ways to save, you'll find those too. It all depends on where you focus your attention.

2. It takes a bit of work to save money. This is true for any expense, as pointed out above. With camping, you do everything yourself — the maid service, the laundry, the maintenance, utilities, etc. — but you save a ton.

In life, the same is true for many things. Doing your own gardening, washing your own car, doing your own nails — there are pages of ways to save by doing the work yourself. When you do splurge and go out for a nice dinner, for example, self-park rather than use the valet.

3. You usually have to sacrifice something to save money. As the saying goes, you get nothing for nothing. In our case, we sacrificed air conditioning and maid service. Moab in June is, shall we say, not the coolest place on Earth. However, we endured nothing like the family in the picture above did. We were fortunate to have a short blast of rain every afternoon to cool things off. (Hooray for our waterproof camper!)

In life, the same applies: a smaller home, smaller car, lower end of the fashion ladder. These sacrifices all translate to savings; the payoff comes in the future if you keep at it and build your savings account and investments.

4. Saving doesn't need to mean extreme deprivation. It's not like we had to eat toads or anything like that. In fact, we brought along pretty much what we would have eaten at home. (Okay, maybe a few meaty treats for the grill slipped into the cooler by themselves. But we made them pay. haha!) And on the final night, we had to use some bug spray to fend off a few pesky mosquitoes. But that was about it.

Staying in a smaller home is not the same as having to sleep in your car, and eating more vegetables because they're cheaper than meat doesn't mean you have to die of hunger. If you apply #2 above, it's amazing what options are out there to save without reverting to extreme deprivation.

5. You can have fun while you save money. There are always other things to do. We elected to drive around and that used up gas, but there are several other activities which cost nothing. We scouted out the area for other campsites and I remember one lady sitting by the picnic table at her site, just reading, as the Colorado River flowed by before her. I felt a wistful pang: I wish I had thought of that.

I still wrestle with the mindset that if I take the time and effort to come this far, I had better cram my days full of sightseeing, by golly. But really, what's wrong with sitting by a picnic table overlooking a river flowing by and doing, well, nothing? Some people bike, others hike, and many float down the river in their canoes. They're all fun activities that really don't cost that much.

The same applies to real life. We don't have to spend every weekend in a movie theater or at a ballgame eating $8 hot dogs to find enjoyment.

6. A money-saving mindset can lead to experiences you would miss otherwise. If we didn't decide to save money on our travels, we'd never have met the little girl who loved our little dog so much she insisted on inviting it to her next birthday party.

camper doggie

If you apply this to regular living, you find that, for instance, playing board games with friends is a terrific way to add memories and build relationships.

Call me old, but I have come to realize that, when you look back in life, it's the relationships we remember, the happy times of laughing that really matter.

I once had one of the coolest cars in the country, but over time that joy has faded compared to the happy times I've spent with friends and family (and we're blessed that we're friends with most of our family).

7. Saving money always leaves you feeling better. This is true in many ways. We are pretty proud that our week in Moab cost us not much more than $20 in accommodations. Not only is it nice to have some money that otherwise would have disappeared into something that's gone now, but there is a sense of achievement that's hard to put your finger on. “Yeah, look at that: we were able to score such and such.” We've been to Disneyland many times, but the one we remember best is the one where we got in for free because we did some work for them and an employee gave us her pass for the day.

Why is that? I don't know. All I know is that every time we find a way to save on something, it imparts that little warm glow of: we did all right! Landing a deal with a low-cost cell phone contract just makes us feel better. Saving just does something inside.

To be honest, I wasn't convinced “they” would be able to turn me into a camper. But now that I see how much cheaper it is, the lack of air conditioning is more than made up by the rest of the experience. Same with all those saving choices we made when we went into our “emergency catch-up” savings mode.

Has camping taught you about managing your money? Please share if your perspectives have changed about camping or about how you manage your money in the comments!

11 ways to entertain your kids this summer for free (with stuff you already have!)

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Are you frantically trying to smother the “I'm bored”s at your house too? Most of the country is knee-deep in their kids' summer vacation now, and our house is no exception. Keeping our children entertained and out of mischief is a full-time (and, if I'm honest, a little overwhelming too) job. When I start feeling frazzled by sibling fights and whining, I want to cope by going somewhere and doing something that costs money.

But that's not always necessary. I mean, when I was your age, I was never bored — Oops. Sorry about that. I got confused about who my audience was there for a second.

What I really mean to say is that these ideas are for when you either can't get out right then or your budget can't handle another outing. So basically, these tips might help you save your sanity as well as save some money the next time you start hearing “There's nothing to do!” Pull out some of these tricks, and keep everyone happy … for two or three more hours.

Make your own paints

Sometimes making the art supplies is just as much fun as using them, so here are a few ideas that pull double duty.

  • Cornstarch finger paint. Boil 4 c. water in saucepan. Dissolve ½ c. cornstarch in the boiling water and stir. Let the mixture come to a boil again. Cool. Add food coloring, if desired.
  • Flour and water finger paint. No cornstarch? Try this one: Mix 1 c. flour and 1 c. cold water. Add 3 c. boiling water and bring to a boil again, stirring constantly. Add food coloring if desired.

Customize the art experience

To increase the sensory experience, add coarse materials to the completed paint, such as play sand, cornmeal, oatmeal, rice, salt, tapioca, or glitter. Also, change out the type of painting instrument. Your child can use fingers, of course, but don't overlook crumpled paper used like a stamp. Other ideas are cotton balls, feathers, leaves, small twigs, empty roll-on deodorant bottles, paint rollers, Q-tips, sponges, string, even old toothbrushes. Instead of painting on paper, try swirling the paint on foil.

  • Cut and paste picture fun. If your child is learning colors or letters, try this free activity. Gather up old catalogs or magazines, tape, scissors, and paper. Have the child cut items out of the printed material and tape them on the paper, using different themes. For instance, cut out 10 items that start with A; or one item for each letter in the alphabet; or only items that are blue.
  • Coffee filter snowflakes. Fold a round coffee filter into fourths or eighths. Cut snowflake designs, being careful not to cut through all the folds. Mix food coloring and water. Dip one corner of the snowflake in one color, then another, until it is completely colored. Open the snowflake and lay it on a newspaper to dry.

Twist it toward science

  • Instant volcano. Fill the bottom of one small paper cup with baking soda and set it on a plate. Place red food coloring on top of the baking soda. Poke a dime-sized hole in the bottom of a second paper cup and place it upside down over the first cup. Pour vinegar into the hole until the volcano starts to erupt.(Note: My kids loved this, but it wasn't exactly successful. We used Styrofoam cups and, as I poured the vinegar in, the “lava” poured out between the cups as well as the top. We'll try taping the cups together next time or use stiffer cups.)
  • This activity gets you bonus points because you have to enjoy fresh air and exercise to find a bunch of Queen Anne's Lace. Once you have your flowers, add water to several clear vases or jars. Put a different drop of food coloring in each jar. Add the flowers to each vase and watch what happens!
  • Measuring materials. Empty uncooked rice or dried beans into a bowl. Set this bowl and other empty bowls, along with spoons, and soup ladle, and measuring cups on the floor (or outside). Let the child pour and measure the rice. Of course, make sure the child is old enough to know not to put these things in his or her mouth.

The active life

  • Button basketball. Have each child decorate one paper cup with crayons, stickers, or markers. Once decorated, make a small hole near the lip of the cup. Tie one end of a piece of string to the button. Tie the other end of the string through the hole in the cup. The child holds the cup, swings the button up, and tries to get the button in the cup. (Another version of basketball, the sock toss. Toss rolled-up socks in a bucket or basket for points.)
  • Create a squishy ball by placing a balloon over the end of a funnel and fill it with ½ c. sand, salt, flour, rice, or cornstarch (or make different squishy balls with different fillers and make the child try to guess which filler is in which balloon). Squeeze out any air and tie the balloon shut.
  • For a game made up (I think) by yours truly, use sidewalk chalk to draw a huge circle on the concrete next to your garage. Fill this circle with other concentric circles and add points to each of the circles. Toss a ball on the roof of the garage and try to get the ball to roll off into one of your circles. First one to 500 wins! I call it “Bulls-eye,” no patent pending.
  • Puppet show. Have the children decide on a story and then make a puppet for each character of the story. Use paper plates, crayons, scissors, tongue depressors (or popsicle sticks?), and glue to create each puppet. The children can then present their story. One person will need to hold a flashlight so it shines on a bare wall as the children hold their puppet in front of the light to act out the story.

Boredom has a funny way of striking at the least convenient moments — but this summer, you can slow down for a couple of days by offering some of these activities instead of looking for the kind of entertainment that costs. If these fail to provide you any relief, you can always fall back on my favorite standby: a fort made by couch cushions, blankets, and sheets! And there's always the community pool if you have one…

Is boredom (from your kids or you) one of your triggers for spending money outside your budget? How do you cope with your new summer schedule?

Life after debt — experimenting with financial balance

written by — published (updated ) 18 Comments

I first became part of the Get Rich Slowly community six years ago. I lived in Austin, Texas, at the time and had to travel a lot between jobs. I say that I drove a scooter to save money on gas; but really, it was because I couldn't afford a reliable car. The fact it cost me less than $2 to fill up my tank for a week was definitely an added bonus.

I was working multiple jobs to pay off student loans and looking for answers after I reached the top of that mountain. But thanks to everything I learned here, I finally got totally out of debt. How did I do it? Through multiple sources of income and some tough budgeting decisions, I hustled my way into the commendable financial hat trick:

  • I learned to budget and spend sensibly.
  • I eliminated my debt.
  • I built up an emergency fund and started saving regularly.

What it's like to put debt reduction front and center

I put paying off debt at the forefront of my existence. I got a little burst of dopamine every time I saw my debt number go down. I furiously cut every expense I could out of my budget. As a single guy, most cuts were easy to for me to make, like buying new clothes or fancy drinks with friends. However, some cuts were far more challenging:

  • Not flying home to help take care of my mom after her knee surgery
  • Missing my best friend's theater opening in New York City
  • No more artisan tequila on the shelf (OK, maybe this one was less of a sacrifice than the other two, but it was still a tough one!)

What it's like to be done with debt

After a couple of years digesting and living as closely as possible to many of the cost-saving tenets advocated on Get Rich Slowly, I was able to send off my last student loan payment!

I remember the first scooter ride I took after clicking “Submit.” The air smelled different, sweeter even. I wanted to throw my arms out wide to celebrate like something out of Shawshank Redemption. Instead, I dutifully gripped the handlebars because a scooter crash is hardly a good way to celebrate.

Life after debt?

I remember getting home that day, sitting on the back porch, and thinking “Now what?” So much of my brain was taken up with getting my financial life in line that I never stopped to ask myself the question, “Am I happy?”

“What's money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do.”

-Bob Dylan

I spent so much of myself getting out of debt that I didn't have much left when the debt was gone. Happiness and financial aptitude are obviously not mutually exclusive; but for me, after missing holiday after holiday away from my family because of work, it definitely seemed like they were.

Paying off the last of my debt felt great, but it gave way to asking myself new questions:

  • Are my financial decisions getting in the way of my happiness?
  • Is successful financial management coming at too high a cost?
  • What is work/life balance for me?
  • Do I get to see family enough?

Experiment to find balance

I'm not trying to throw a wrench into your financial life. J.D. Roth always says, “The road to wealth is paved with goals.” I know J.D. would agree that a sound financial life is an extremely worthwhile goal, but it isn't the only one. Managing our financial affairs is not an activity divorced from all other aspects of our lives.

Yes, pursue your financial goals — but don't forget about your personal goals and ambitions in the process.

Opening to this new horizon of thinking, I tried to even the scorecard between finances and other life goals. There is so much out there to be striving toward, not just seeing the number in your savings account go up.
Would your life be better balanced if you were to…

  • Spend more time with your family and friends?
  • Devote more time to your local community?
  • Become more politically active?
  • Take a class to learn something new?
  • Change the way you divide the income-generating and child-caring roles in your family?
  • Spend more time outside?
  • Switch jobs?
  • Switch locations?

This isn't about making a huge downshift. This isn't about quitting your job and moving abroad. Resist the temptation to go for a silver-bullet solution. Instead, try a series of small experiments. Here's a few ideas:

  • Try living without a car for a week.
  • Try a month of no purchases. Keep your debit card swipes to the basics, like food.
  • Explore dropping just one shift at work each week, or maybe leaving a few hours early one day.

The five-minutes-more experiment

Small changes matter. I realized that, although I was making strides toward financial wealth, I was lacking richness in time. Gone was my debt, but so were my Sunday morning strolls and nursing a cup of espresso for hours. One of my mini experiments involved lingering five minutes more whenever I could. If I didn't have a place I had to be, whenever I would get up to leave somewhere, I'd sit back down for five more minutes. The only rule I had was that I couldn't pick up my cell phone in those five minutes. I had to simply be.

Yes, I do think that time poverty deserves its own Wikipedia page; but for many of us, our time poverty is a frame of mind. The free time I did have was spent stressing about how plentiful it wasn't, which isn't much fun at all. So I'd try to fill that time with yet another activity. The five-minutes-more experiment shifted my relationship with time, making it less of a commodity in a way that made me stress about it less. With this small experiment, I didn't have more time, but the time I did have felt so much better.

Bigger changes need to happen too

“Spending more time with friends and family costs nothing. Nor does walking, cooking, meditating, making love, reading or eating dinner at the table instead of in front of the television. Simply resisting the urge to hurry is free.”

-Carl Honoré

Once I reclaimed my time five lingering minutes at a time, I dropped my evening shifts at one of my jobs. This allowed me not only to work less, but to work more efficiently. Dropping those shifts at one job meant that I performed better at another, which led to an increase in pay. In the end, I realized that even if everything is adding up on paper, it doesn't mean anything unless the system is working for you.

In other words, manage your finances, but don't let them manage you.

Are your finances more balanced than your life? What small experiments can you do to reclaim some of your time?