Wise Bread (Lana Goodrich)

Looking Closer at Savings Strategies

Lana Goodrich — Sun, 13 Jan 2008 20:51:27 +0000

Most articles about saving money talk about the thousands of little ways you can trim costs from your daily life. Other articles weigh paying down debt first against setting up an emergency fund, or talk about the benefits of paying off your mortgage early. But let’s get to the heart of the matter – how do you like to save your money? All savings strategies have advantages and drawbacks, and coupled with your unique personality, you may find one savings strategy works best for you.

Lump Sums
The benefit to putting aside money in lump sums is that you rarely miss it. Big money may come your way from a variety of sources, like a tax return, a company bonus, an inheritance or a gift. Most of the time, this money is somewhat unexpected. Or at the very least, you’ve been getting along fine without it. You didn’t have it to spend yesterday, and if you tuck it responsibly away somewhere, you won’t have it to spend tomorrow.

What’s the disadvantage to this tactic? Well, you can become too dependent on the lump sums that you get messy with your budget. Or maybe you use them as a crutch because you have difficulty putting money aside with any regularity. Putting aside a pile of cash can cover a multitude of sins – for instance, going six months without an emergency fund, setting aside your tax return, and then slowly draining it on unnecessary things only to repeat the same behavior with next year’s check.

Automatic Savings
With the rise of internet savings accounts, this has become a popular and easy option. Automatic savings is when you have a specific amount of money taken out of your bank account regularly and put into savings. Companies like ING Direct, HSBC Direct, WaMu and many others allow you to open an internet savings account with as little as one dollar. (A quick search will help you find the best internet savings account for you.) Your own brick-and-mortar bank or credit union may even allow you to transfer money automatically from your savings on a weekly, bi-weekly or monthly basis. Many personal finance gurus will tell you to “pay yourself first,” and with automatic savings, this becomes a no-brainer. Just like finding $10 in the pocket of last year’s winter coat, your savings will add up quickly and unexpectedly. Chances are, you won’t even notice it’s gone from your budget.

On the other hand, your savings may become so much of a no-brainer that you fail to save more when you need to. With internet savings accounts, there may be a longer lag-time for retrieving your money than you’re used to – and that can mean trouble if you don’t have the credit or additional savings to float you by those few business days in an emergency. Putting savings on autopilot can be truly beneficial to both your mind and your bank account, but sometimes being more conscious of your financial efforts pays off in the long haul.

One Penny at a Time
A penny saved is a penny earned, or two pennies earned, depending on who you talk to. Fifty years ago, this was the only way to do it, saving money pennies or dollars one at a time, filling out the paperwork to put it in the bank or dropping coins one by one into an old coffee can. If you’re beginning to clean up your financial life, doing it “the hard way” can be either a pro or a con.

Pros: No pile of change is safe. Conscious savings means that every returnable can, every half-full piggy bank, every quarter rescued from the laundry cycle becomes an opportunity to add just a little bit more to your savings. It also means that you get a dose of feeling good every time you set out with the task of depositing your savings – and you could do that as often as you wanted to. With your savings never far from your mind, you’ll stay on track with your financial goals. Consciously saving can work in many mediums, from internet savings accounts to stuffing money under the mattress (though I don’t recommend that last one – bad interest rate!).

Cons: It can be easy to forget, brush it off, or set it aside until suddenly you realize you’ve already spent the money on something else.

I personally find that some mix of all three strategies works best for me. Saving lump sums is an easy way to kick-start a goal or make huge strides on an existing one, and automatic savings gets extra cash out of my spending budget before I slip up and buy a new DVD. Saving one penny at a time is great when times are tight. I’ll raid the couch, take bottles back, sell a few old CDs and hunt down friends who owe me a couple bucks.

Whichever strategy you choose, you’re doing something good for yourself by getting or keeping your financial life in control. These strategies work just as well for setting up an emergency fund, paying down debt or saving for a family vacation as they do for long-term savings.

What other savings strategies work well for you?

Permalink | 5 comments | Lana Goodrich's blog | Channel: Budgeting

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Pessimism Pays - Why Expecting the Worst Can Save You Money

Lana Goodrich — Sun, 06 Jan 2008 20:33:33 +0000

By Lana Goodrich

What’s the first thing people tell you when you start feeling down in the dumps? “Don’t worry – things will get better!” But sometimes, being too positive is just a one-way street to being unprepared. Here are four common worries and why dwelling on them can help you save cash.

“What if I lose my job?”
You’re right to worry. The economy is on shaky ground, and you could be fired or laid off due to any number of circumstances. Take it for granted that you’re going to leave your job eventually. This is a good time to set aside money for an emergency fund and put aside at least three month’s living expenses. Update your resume, C.V. or portfolio so that they’re current and they highlight your best work. Network with acquaintances and put your feelers out for similar jobs – even if you have no intention of leaving quite yet. Being ready is the best way to bounce back.

“What if I get into a horrible car accident?”
No one wants to think about what would happen if they were hurt or killed in an accident – but you should. Make sure you have life and disability insurance. Write your will or establish a trust for your family and detail where all your assets should go. Establish who you’d like as your power of attorney if you ever end up in the hospital and unable to make your own decisions. Bad things happen to people of all ages. Being young is no excuse for not being prepared for an emergency.

“What if my future spouse leaves me?”
How about a prenuptial agreement? Oh, I know what you’re thinking. But really, wouldn’t you rather protect your best interests – and your future spouse’s – while you’re in a loving state of mind? Should you end up divorced, you don’t want to spend so much time fighting over a couch that the cost of legal fees could’ve easily bought you another one. Best case scenario, you never use the prenuptial agreement. Worst case scenario, it’s a lot less to worry about if your marriage goes down the drain.

“What if my house burns down?”
If you bought your house with a mortgage, you were required to purchase homeowners insurance, which covers things like damage from fire, lightening, hail and storms. But if you’re a renter, there’s a good chance you may not have insurance. When you rent, the building is insured by your landlord or property management company. If there’s a fire, your landlord is only responsible for the building, not any personal property you lose. A basic renter’s insurance plan replaces personal property and can cost you as little as $10 a month through any insurance agent, such as AAA or Geico.

So tell me, what are your financial worries and how do you prepare for them?

Permalink | 9 comments | Lana Goodrich's blog | Channel: Personal Finance

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7 Cheap Treatments for Year-Round Allergies

Lana Goodrich — Tue, 01 Jan 2008 22:20:07 +0000

By Lana Goodrich

If you’re like me, your allergies don’t always stop with the changing of the seasons. Well into winter weather, I’m still sniffling and sneezing up a storm. The allergy medication my doctor prescribed to me is only available through my insurance at $60 a month. If you too are unwilling or unable to budget more than $700 a year on allergy medication, read on for frugal solutions to help treat your allergies.

Generic Drugs
Many name-brand prescription and over-the-counter drugs have generic counterparts. For example, the generic name for Claritin is Loratadine; the generic name for Zyrtec is Cetirizine Hydrochloride (HCI); the generic name for Sudafed is Pseudoephedrine HCI. These names are of the active ingredients contained in name-brand drugs. Generics are often sold under store brands – for example, generic Claritin at Walgreens is called Wal-itin.

To combat the symptoms of my allergies, I make sure I have three types of generic medication on hand: an antihistamine (like Claritin or Zyrtec), a decongestant (like Sudafed), and an instant decongestant spray (something like Affrin). Generally, I take an antihistamine every day to keep my allergic reactions to a minimum. I take decongestants when I find myself getting stuffed up. And I keep the spray on hand for those times when I’m so congested I can’t breathe through my nose at all.

Generics drugs are a cost-effective way to treat allergies when they’re particularly bad, but sometimes taking pills can be hard on my system. Luckily, there are more natural ways to find relief.

A Neti Pot
Neti pots are a tool used in nasal irrigation – running water through your sinuses to clean them out. Unlike getting water up your nose when you swim, using a neti pot doesn’t hurt or sting in any way.

To begin, you mix a saline solution (salt and water) and fill the neti pot with it. You place the spout of the pot in one nostril, bend down and tilt your head to one side. The liquid runs through your sinuses and drips out the other nostril. This is an Ayurvedic technique used commonly in India to clear the sinuses of mucus and allergens and improve breathing. Because it’s a chemical-free process, you can use a neti pot several times a day to find relief from congestion.

I purchased my neti pot from the local health food store, but you can also order them online. My neti pot came with packets of saline powder to mix with water, but the ingredients in the powder are sodium bicarbonate (baking soda) and sodium chloride (salt), ingredients you can find at home.

You can watch an instructional video on using the neti pot here.

The neti pot can take some getting used to, but it’s worth it. Used regularly, the neti pot can help prevent congestion or recurring sinusitis.

Honey
In the summer months, I go out of my way to eat local honey every day. Though lacking in scientific study, many people believe that eating local honey is a homeopathic way to treat allergies. The idea is that by ingesting honey from the same plants that cause your allergies, your body builds up a tolerance to those particular pollens. This is the same idea used in vaccinations – that a small amount of something can help the body ward off a larger illness.

Disclaimer – honey is not suitable for children under the age of one due to the risk of botulism. Some people may have an allergic reaction to the honey itself. It’s best to start with a small amount of local honey every day and work your way up, if you’re concerned about your reaction. However, if you’re like me and use honey regularly anyway, you might make a conscious effort to have a tablespoon or so of local honey every day, spring through fall. (It’s a delicious routine.) Local honey is generally available at your local health food store or farmer’s market. The bottles will be marked with the location of the apiary where it was made. The closer to you, the better.

Wash Your Pets
If you’ve got both allergies and pets, you probably know enough to keep them out of your bedroom. After all, there’s no good night’s sleep with Fido’s hair all over your pillow. But washing your pets regularly can help keep the dander in their fur down, and dander is what most people are allergic to when they say they’re allergic to animals. People are usually pretty familiar with the idea of washing dogs or sending them to a groomer, but cats can be bathed too. I’m not saying they’ll like it, but with two pairs of hands and a big kitchen sink, you can scrub down the kitties with a gentle shampoo in about ten minutes flat. (If your cats have claws, wear long sleeves and gloves.) Washing your pets regularly can reduce airborne allergens dramatically in your home. And if you’re sick and tired of sneezing, you may even find you don’t mind wrestling the cats into a bath.

General Tso’s Chicken
When you’re so stuffed up you can hardly breathe, eating tends to be a mundane chore. If you can’t breathe, you can’t taste. But if your meal is chock full of chili peppers or horseradish, your sinuses will be clear in no time! Go for Asian cuisines – Chinese, Japanese, Indian and Indonesian all have spicy dishes – or slather a capsaicin-based hot sauce on whatever you’re making for dinner. In a pinch, spicy foods work like a charm. And hey, you gotta eat anyway. Throw on some Tabasco.

Keep a Food Diary
On the other end of the spectrum, some foods can make your allergies worse. By paying close attention to what you’re eating and when, you may notice cause-and-effect relationships between your allergy symptoms and what you’ve recently eaten. For instance, I like to enjoy a latte in the morning, but I swear up and down that after having that much milk, my congestion gets much worse. So when I’m already stuffed up, I have tea instead.

Food allergies and intolerances can present themselves in many ways. You may associate food allergies with throat-swelling or nausea, but if you’re intolerant to a food, it may manifest itself in your asthma or sinusitis.

Clean, Clean, Clean
It’s pretty cheap to vacuum. When you’re stuck indoors in the winter, your familiar surroundings may be the biggest culprit to blame for your allergies. Dust mites, mold and pet dander can keep you sniffling all winter. By ramping up your cleaning efforts, you can effectively cut down your allergic reactions. If you have carpet, vacuum twice a week. Dust everything regularly. Wash bedding weekly, including comforters and pillows. Be aware that humidifiers can house mold. HEPA filters are helpful against animal dander, mold, and pollen (but don’t work against dust mites). HEPA filters are only worthwhile when the windows are closed, or you’ll undo all the benefit of filtering the air. Dust covers on the box spring and mattress can help cut down on dust mites and are available in fabric (not just plastic anymore). With a little extra effort, cold weather and re-circulated air don’t need to result in your suffering.

Allergies can be tricky. Often times, combining tactics and using trial and error can help you find the best way to combat your symptoms. How do you keep your allergies under control year round?

For more information on allergy treatments, check out the following links:

8 Top Ways to Care for Your Allergies Without Damaging the Budget

Breathe Easy this Allergy Season (Whole Foods podcast about allergies and homeopathy)

Medications for Allergies (the basics from WebMD)

Allergy Treatment Begins at Home (tips on cleaning from MedicineNet)

Permalink | 16 comments | Lana Goodrich's blog | Channel: Food and Drink, Health and Beauty, Lifestyle

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5 Ways To Dodge Peer Pressure To Spend

Lana Goodrich — Mon, 31 Dec 2007 15:31:26 +0000

By Lana Goodrich

Your friends have a direct influence on your money. What do you do when you feel pressure from your friends to spend money you don't have?

1) Play host.
Have a potluck or dinner party at your house. Invite your friends over for a cheesy movie marathon and spend the night mocking them. Host a BYOB beer or wine-tasting party. Everyone gets to eat, drink, and be merry for cheap, and unlike a bar, you’ll actually be able to hear the conversation. You look like the gracious host, and no one needs to know you’re trying to save money.

2) Spend more time around your creative friends.
When you hang out with friends who have the newest high-tech gadgets or expensive new cars, you’re bound to feel inferior. Spend more time with your friends who think for themselves. Maybe you've got a friend whose passion is old silent movies or a friend who collects something obscure. You'll get to know your friend better and being around someone who doesn't follow the crowd will force you to think about what's important to you. And you'll probably be inspired to follow your own passions.

3) Blame it on your values.
It's hard to suck up your pride and say to your friends, "I can't go out because I don't have the money." So fib a little. Tell them you've committed to spending more special time with your partner. Tell them you're cutting back on the bar to train for a race. Tell them you've joined a book group and have reading to do. Sometimes replacing one excuse (broke) with another (working on physical fitness) is easier because you're not as emotionally tied to it. And as long as you're telling all your friends about your newfound virtue, you might as well join that book club for real.

4) Change the subject.
Say you're hanging out with a friend who wants to spend the day shopping for clothes. You're still paying the bills from the last time you went shopping. What do you do? Trick her into something else.
"The mall's going to be packed on a day like today. You know you never showed me those pictures from your vacation in Greece?" OR "You know, I have a problem and I'm so distraught. Do you think you could give me some advice?"
It happens all the time - you and your friend have plans to do one thing, but throughout the day you get sidetracked and end up doing something else completely. But this time, do it deliberately.

5) Find new friends.
Don't get rid of your old friends. Just add new ones to the mix – preferably ones who share your financial goals and values. If that's a stretch, at least find friends who can help you focus on something other than spending. When you’re getting to know a new friend, it’s the conversation that counts – not what you do together.

So how do you manage peer pressure to spend when you're around friends who don't share your views on money?

Permalink | 10 comments | Lana Goodrich's blog | Channel: Lifestyle

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