values

4 Ways Couples Can Tackle Money Goals Together

Denise Hill — Wed, 02 May 2018 09:00:08 +0000

The "relationship goals" meme revolves around the idea that — at least in the world of social media — your relationship is envied by singles and mediocre couples everywhere. And whether you realize it or not, a big part of having a successful marriage and reaching that "goals" status is figuring out the financial aspect of your relationship.

Money itself isn't a homewrecker. It's other issues — like communicating about money, your relationship with it, and your values associated with it — that cause problems. Establishing a strong money management system within your marriage can be tricky. Here are a few things you and your spouse can do to set and achieve financial goals as a couple.

Establish financial core values

Like it or not, your spending habits directly reflect your values. You say you want to save and get out of debt, yet you eat out five nights a week and upgrade to the latest gadget as soon as it hits the market, despite the cost. And while you may feel that lack of discipline is to blame — and it is to some degree — the truth is you don't value saving enough to actually do it.

As a couple, you should sit down and write out the core values that will govern your lives together. Most of these values may not directly relate to money, but they all relate indirectly. For example, if you value open and honest communication, that should trickle down to your finances. You have to commit to communicating openly and honestly about spending habits, earnings, debts, etc. And you shouldn't "hide" money from one another.

Be honest with your spouse and yourself when establishing your value system. Some things sound nice, but they may not be a part of your value system. And that's OK. If your spouse values something — such as saving — that you don't, be flexible and compromise a bit. The same is true if you have a "spender" spouse who values spending money on entertainment. You've got to give a little. You value what you value. There shouldn't be shame or judgment attached to it. The key is finding balance and learning how to get your spending habits to accurately reflect your value system. (See also: 8 Things I Learned About Money After Getting Married)

Have joint financial goals

The second thing you and your spouse should do is establish financial goals together. An easy way to do this is to look at your life goals — long- and short-term. Align your finances with those goals.

As a couple, what do you want to accomplish? Do you want to retire early? Live a debt-free lifestyle? Have a small army of children? Travel the world? Care for aging parents? Start a business? Go on a second honeymoon? Once you've established your life goals, your money goals will emerge naturally. You and your spouse just have to fill in the details.

How will you save to afford that Jamaican getaway? Will you get side gigs, cut back, or follow some other plan for saving? The key here is to align your financial goals with your life goals. And then work diligently to achieve them. (See also: The 7 Worst Money Mistakes Married People Make)

Assign money management roles

After you've established your core values and set some financial goals, it's time to address the details of handling your money. A great way to relieve tension and help ease the financial power struggle is to assign money management roles within your marriage.

One of the best things about marriage is that you have a teammate. In most marriages, one spouse enjoys certain activities, while the other spouse doesn't. One may be a cleaner and the other one loves to cook. One loves yard work and the other is a decorator. One may be a planner and the other one likes to live spontaneously. The point here is to make the most of each other's strengths and preferences.

Assigning roles and tag-teaming your finances is a great way to make each other feel valued and quickly accomplish your money goals. If you are a shopper and your spouse loves to budget, allow them to manipulate the numbers while you make it work in the grocery store. Both tasks are equally important. Shopping — which is different from just buying stuff — is an underrated skill. Budgeting, saving, and shrewd shopping are the trifecta of good financial stewardship and will accelerate your journey to achieving your financial goals. (See also: 3 Simple Ways to Split Bills With Your Spouse)

Have at least one joint account

Having a joint bank account is more intimate than sex for some couples. It's a big step and the ultimate sign of trust. It puts you in a place of vulnerability. And being that vulnerable can be tough.

The key is to take baby steps toward your goal of sharing the same account. It begins in your own mind. Examine fears, perceptions, and past experiences that have left you skittish in this area. See what you can do to talk yourself into being open to the idea.

Once you're open to the idea, it's time to engage in honest communication about it. It can be a very difficult subject, but you have to have the conversation.

Once you've heard each other's fears and misgivings, you can move forward and establish ground rules and procedures. You could create an account together just to pay bills or strictly for saving. See how that goes and move forward from there. There is no one-size approach to mixing love and money, but you do have to be open-minded and at least give your partner an opportunity to earn your financial trust.

Sharing an account can do wonders for your marriage and help you reach your financial goals much quicker. When done correctly, it creates an atmosphere of transparency and accountability. It also promotes the team concept.

If you've established your core values, established long- and short-term financial goals, and have clear roles, making the step to sharing an account will be much easier. Again, this is a difficult bridge to cross for a lot of couples. Remain patient with yourself and with your spouse. And do what is best for your marriage and situation. (See also: 6 Things You Should Know About Joint Checking Accounts)

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Authenticity Could Make or Break Your Small Business

Denise Hill — Mon, 16 Apr 2018 08:30:10 +0000

Owning a small business is no small feat. There are hundreds of articles written on how to effectively market yourself, attract customers, and drive traffic to your website. With so many gimmicks and tricks out there, it can feel impossible to determine what you should actually do in order to be successful.

The best piece of advice I have found that works for all successful small businesses is: Just be you.

Be authentic. Be genuine. Be true to who you are and work to ensure your business embodies and reflects this. Authenticity is the thing that can make or break your business.

Don't be obsessed with making a profit

I love supporting small businesses — and not just because I own one. I love the personal touch and the intimacy that comes with working with small business owners. As you think about your business, especially while your business is in its infancy, you've got to take your focus off the bottom line. Turning a profit has to come second behind establishing good business practices and customer rapport. Remember, people come to you for a product or service, but the experience is what brings them back.

As a "for profit" entity, making money is on the mind of every business owner, as it should be. But for the truly successful small businesses that have stood the test of time, profit is never the number one goal. If you operate with integrity, put the customer first, do a decent job, and stay true to who you are, the profits will come.

This also means that there will be times when your profits may suffer. If you make a mistake, refund the customer's money, and do the job again — for free. This shows that you genuinely care about the customer and about the product/service you provide. (See also: What Small Business Owners Can Learn From Top Forbes Entrepreneurs)

Let your love for your craft show

If you're in business just for the money, it'll show. And you won't be in business long. Pause for a second and think about a business or service you've sworn off. Think about that horrible restaurant server, drive-thru attendant, or cabdriver that made you swear you would never use that business again.

Now, consider what made you so angry. For most of us, it all comes down to how we were treated and how we were made to feel during the experience. Some waitstaff aren't in love with what they do. But the really good ones love people and want to ensure that you have a pleasant experience while you are at the restaurant.

Passion translates. You can see it. You can feel it. You can sense it whenever you are around someone who has it. As a business owner, if you don't love what you are doing, you may want to consider alternate employment. Allow your passion for your craft to show. Take extra time and care to show your customers that you're not just out for a quick buck. The service you provide is also a labor of love.

Surround yourself with authentic people

Who you hire, your business associates, and even your friends affect your ability to remain true to who you are. Think back to the era of the stereotypical "used car salesmen." They were categorized by their willingness to do and say anything to separate you from your cash. They were despised, ridiculed, and became a caricature for the disingenuous.

If you surround yourself with people who are constantly following the trends, doing what is in, and live life by an ever-changing set of rules, that is what you will do. As a business owner, your word truly is your bond. We no longer do business in a "handshake" environment, but you should operate as if you do. Your word should be solid. Everything you say (website, correspondence, contracts, marketing, etc.) should be the clear and simple truth.

It is also important to be true to who you are because you attract people who are similar. If you make a habit of being shifty and sly, you'll attract shifty and sly people. And this is dangerous for a small-business owner. (See also: How to Hire Your First Employee)

Establish core values and stick to them

Your mission and vision should articulate who you are and what you believe. They don't need to be catchy, erudite, or full of words that have no real meaning. Sounding good and being good are two different things. People are smart enough to quickly spot the difference.

Establish who you are as a business. Determine what you believe, how you will operate, and say exactly that. No fluff, no sleazy catchphrases. Just open, honest, and direct communication. Cute and corny may attract customers, but it won't keep them. Trends will come and go, but who you are at your core shouldn't change.

As your business grows, you may find yourself drifting in a direction that isn't you. When this happens (and it will), stop, regroup, and rechart your course. The key that underpins your success in business and in life is to be genuine and remain authentic.

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This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Secret to Better Money Management May Be in Your Past

Sarah Winfrey — Mon, 20 Nov 2017 09:30:10 +0000

It's easy to feel out of control with your money. It happens to the best of us. But whatever the reason you're feeling this way, it's important that you regain your footing and, maybe even more importantly, that you regain your feeling of control. After all, if you don't think you can fix the problem, you probably won't even try.

Your first line of defense is financial education. It will help you understand what actions you need to take to get back on track. But there's another tool that could boost your motivation to carry out those actions. A recent study by scientists at Creighton University shows that harnessing nostalgia can help you get in touch with your feelings, which you can use to regain control over your finances.

The power of nostalgia

The Creighton team carried out an experiment. Dr. Brad Klontz, along with his fellow researchers, divided study volunteers into two groups. One half attended a standard financial literacy presentation where they learned about saving money. The other half was told to bring an item (or a picture of an item) that they considered nostalgic.

The latter group was led through exercises to help them come up with positive feelings and memories tied to their objects or photos. They were asked to name these emotions, identify the values that went along with these emotions, and understand how these same values formed the basis for their future savings goals.

Over the next few weeks, the "financial literacy" group saved 22 percent more than they had saved before. That, in and of itself, is a significant number. But the "nostalgia" group saved 67 percent more — three times more than the control group. It would seem nostalgia and the emotions that go along with it have a lot of power when it comes to how we handle our money! The researchers theorized that the powerful emotions associated with the nostalgic object provided a deep, positive incentive for saving. Participants were able to make direct connections between saving money and the things they value most in life.

Harnessing nostalgia for yourself

If you are feeling out of control with your money, here are some steps you can take to engage your emotions via nostalgia and get back on track.

1. Find an item that has nostalgic value to you

This can be anything, as long as it is important to you. It can be an item from childhood, something passed down from a family member, something you found, or maybe something you purchased on vacation. If you don't have an item that fits the bill, go through old photographs until you find one that is especially meaningful.

2. Think about how you got that item and why it's important to you

Remember the moment you found or received the item (or took the photograph). Think about the people you were with or the poignancy of the moment. To the best of your ability, take the time to actually relive the moments in your life that have made this object or photo so important to you.

3. Name the feelings that go along with that item and your memories of it

Giving your feelings names can help them feel more concrete, rather than abstract and ethereal. When they are concrete, they are more useful to you as you continue this exercise. It is perfectly fine to have multiple feelings about your object. For instance, something your grandfather passed down to you may make you feel excited, because he chose you for this item, but also loving because of the relationship you had with him.

4. Identify the values that underlie these feelings

Once you pinpoint your feelings, you can identify the values that provide their foundation. If something came from a grandparent, it may be tapping into your value of close family ties. Something that reminds you of childhood could be important to you because you value wonder and joy and you haven't felt those things in a long time. An item from a trip could be important because it reminds you that you value excitement and adventure.

5. Connect these values to a financial game plan

When our finances are out of control, most of us know what we need to do to get them in line again. However, it's hard to find the motivation to do that when we feel hopeless and helpless in the face of financial stress. Connecting our values to the actions we know we need to take can help us find the motivation to actually tackle them.

Think about those values you identified. If you value the safety and security of a stable home, that can motivate you to do what is necessary to provide financial safety and security in your own home. If you value adventure, it can motivate you to make the changes necessary to get your money under control now, so you can afford more adventures later. If you value joy, spend some time thinking about how you will feel when you are out of your financial hole.

It's never too late to take control of your money. When you harness the power of nostalgia and emotion, you may find yourself making and sticking with financial decisions that you have struggled with before. This, in turn, will help you make even stronger decisions until your money is completely under your control again.

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This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Conversation Tricks That'll Get You Out of a Political Discussion

Amanda Meadows — Tue, 09 May 2017 08:00:08 +0000

Between election fallout, constant political news, and the occasional public controversy highlighting our country's ongoing crawl toward social justice, it's hard to keep quiet. At the same time, just because people are shouting doesn't mean you should, too. There is a way for you to engage smarter, especially when you know how and when to leave a conversation altogether. Here are six conversation hacks that'll save you from a political battle. (See also: 4 Financial Reasons to Keep Your Political Views Private)

1. Excuse (or recuse) yourself

There will be times when you are too close to the topic to see crystal clear. Let's say someone tells you that the Congressperson you voted for has duped you. No one wants to feel like a rube, so naturally, you would want to argue why that is not the case. Stop, and take a deep breath. People say, "a hit dog will holler," but if you don't holler at all, you've withheld the thing that person wanted: the satisfaction of getting a rise out of you. By ignoring the prompt to engage, there will be an unbearable awkward silence, and someone will change the subject.

What you can say

"Hey, as a [blank], I think you know what I think about [topic]. I'd love if we could talk about something on which we agree and enjoy our time together."

"If your goal is to convince me that you're right about [topic], that's not going to happen today. I'd appreciate if you respected my views."

"I'm a little too close to this subject to fight fairly on this one, so maybe we can just exchange some articles online and consider each other's views privately?"

2. Find the source and de-escalate

Figure out why the fight is taking place. Is this a repeat of another previous argument on a hot-button issue? If so, then whoever initiated must not have felt heard the first time. Acknowledge that and work toward a goal together. Is this fight about basic facts that can be proven? Remember that facts matter. If the person you're speaking with does not have evidence to back up their claims, this argument will go nowhere. Does someone just want to feel more informed than you? That's an arms race that will only lead to a damaged relationship. Give them the opportunity to share their information and thank them. Understand where the other person is coming from and take a moment to go back to the start and make a common goal.

What you can say

"I'm glad to know where you stand on this, but is there a reason why you chose to talk about this now?"

"I understand what you mean, because we have talked about this issue before. Is there something new you want to add?"

"I know we both want to have civil discussion about this, but we might feel better if we first establish what we agree on and go from there."

3. Pump the brakes at hate speech

Arguments can get heated, and in a tense moment, someone might express some ugly thoughts. No one likes confrontation, but it's hard to avoid if you are the victim of or a bystander to hate speech. Usually someone who spouts hate thinks they will get away with it because everyone must agree with them — or are afraid to disagree. Politely speak up, which might prevent this in the future. Then, comfort any possible victims in the room however you can. Everyone else in the room will be glad you did.

What you can say

"Party foul! What did you just say about [blank]?"

"No, that is actually not true and I'm really saddened to hear you say that."

"Is that something you really believe? I thought you knew better."

To victims: "Excuse me, I saw/heard what happened and I'm very sorry you had to endure that. What can I do to help?"

4. Know when to flee

Is someone exploiting an opportunity to turn a friendly discussion about current events into a dramatic inferno of rage? Perhaps someone you know likes to make controversy and is looking for a way into a fight. Don't let argument hobbyists push your buttons. Take a breath, then make a decision: Do you want to engage on this, or would you rather flee the scene? Don't forget that you do have that choice.

What you can say

"I'd love to focus on [original topic at hand]. I'm not interested in arguing with you."

"I hear what you're saying, but I can't have this discussion right now."

"Hey, I'm just here to [whatever you were doing]. Sorry."

5. Don't be a Devil's Advocate

Are you ever in a conversation where most people agree, then someone goes, "Well, just to play Devil's Advocate here...." and everyone's eyes roll? Don't be this guy. Arguing the point opposite of the person in front of you for its own sake is not only insincere, but it can be needlessly cruel in certain circumstances. Read the room, take stock of who's listening, and ask yourself whether this argument is warranted. If someone is doing this to you, there's no reason to argue back unless you wish to do so.

What you can say

"Is this how you actually feel? If not, why would you make this argument?"

"I'm pretty clear on the opposing arguments on this, thank you."

"Please don't insult my intelligence by assuming I don't understand the other point of view."

6. Don't abuse your power

If you're the senior manager, the older sibling, the parent, or any other position in which you may have some power over the others in the room, please acknowledge that position before things get heated. Regardless of your politics, telling others what to think makes you a bully. Bullying family members and coworkers will ultimately cause you to lose the respect of the very people from whom you desire it. Use your power to lead the discussion with wisdom.

What you can say

"I hope you know that while I am your [blank], I do not expect you to agree with me."

"It's none of my business what you believe, unless you think it is relevant to share with me."

"I'd love to keep this conversation free of opinion and speculation, please. We all want to respect each other after this, don't we?"

This article is from Amanda Meadows of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Ways Your Money Can Support Your Values

Emily Guy Birken — Tue, 25 Apr 2017 08:30:08 +0000

Giving to charity is an important line item in my family budget — but it's only one line. There are far more charitable organizations that I want to support than I can possibly give money to.

But what if there were a way to support your values without having to free up more money to give to charity? In fact, there is a way. You can do the same things you always do with your money — bank it, invest it, spend it on utilities, and shop — all while providing important financial benefits to the causes you care about.

Socially responsible robo-investing

I'll never forget the stricken look on my financial adviser's face when I told him I was uncomfortable with big oil, tobacco, or firearms as investments in my retirement portfolio. He took a deep breath and told me that I would probably have to be a little flexible about that if I wanted to maintain my passive investment strategy. The only other option would be to individually choose the investments I wanted so that my money was aligned with my values. Not only would that be expensive and time consuming (someone would have to do the stock picking), but it would not necessarily grow my money.

Passive investors like me now have the option of investing in funds that only go to companies we approve of. The new robo adviser OpenInvest offers investors the ability to personalize the specific issues they care most about. You simply create an "issue profile" that narrows down the types of companies you would either like to invest in or steer clear of. The robo adviser's algorithm then creates a basket of about 60 stocks that match your values and should match the returns of the broader market.

Your money grows just like it would with any investment, but you are supporting companies that reflect your values. (See also: 5 Stocks to Buy If You Love the Earth)

Cellphone activism

It's hard to imagine life without your cellphone — which makes it an excellent tool to help support your values. Simply changing your cellphone provider can make paying your bill part of your activism.

Whether your politics align left or right, you can switch to an activist cellphone carrier that will use a portion of their profits to fund important causes. Credo Mobile is a mobile and long distance provider that has donated $83 million to various progressive nonprofit groups since its inception in 1985. On the right, Patriot Mobile offers conservatives the opportunity to choose the organization that a portion of their monthly phone bill will be donated to.

In both cases, the mobile carrier allows you to keep your phone and phone number when you make the switch. You are already paying for your cellphone usage; why not have the money fund causes you care about?

Shop your values

Amazon has become the most convenient way to handle shopping in the modern age, but did you know it can also be the most convenient way for you to donate to charities you love?

AmazonSmile is exactly like the Amazon store you already know, with the exact same prices and fees, and the exact same login you already use. But when you sign on with AmazonSmile, you are allowed to choose any one of over a million 501(c)(3) charitable organizations to benefit from your shopping. Each time you make a purchase, AmazonSmile gives 0.5 percent of the purchase price to your charity.

While not all purchases are eligible for AmazonSmile, the vast majority are. In addition, there are occasionally limited-time special promotions that increase the donation percentage.

Once you have signed up with AmazonSmile, just make sure you start any Amazon shopping from that page to keep your donations going to your favorite charity whenever you shop.

#BankBlack revitalizes communities

You might remember seeing the rapper Killer Mike on MTV in 2016 asking 1 million people to open a savings account with a black-owned banking institution. That helped start the #BankBlack movement, which is credited with bringing $50 million in new deposits to black-owned banks over a six-month span in 2016, according to the Huffington Post.

But banking with a black-owned financial institution is more than just a hashtag. These institutions were once the only places where African Americans could expect fair treatment when discrimination was rampant in the banking industry. Nowadays, black-owned banks offer access to necessary banking services in distressed neighborhoods, while also providing economic revitalization.

Since black-owned banks specifically market to the African American communities that are disproportionately unbanked or underbanked — meaning they rely on check cashing services and pawnshops for their banking needs — opening an account with a black-owned bank is an excellent way to put your money to work for social justice.

The Blackout Coalition offers a map of black-owned banks and credit unions across the United States, so you can find one near you. Alternatively, if you are not in an area with a local black-owned bank, OneUnited is an online bank that is also the nation's largest black-owned bank.

Put your money where your values are

Not everyone has money in the budget to support the social programs they are most passionate about. But making a few tweaks to how you bank, invest, call, and shop will allow you to make the world a better place without spending any more money. You'll feel good about how your money represents your values, and your favorite causes will benefit from your choices. It's a win-win.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Things in Your Garage That Have Serious Re-Sale Value

Ashley Marcin — Wed, 17 Jun 2015 15:00:29 +0000

Can't fit your car in the garage? It might be time to do a deep cleaning. Before anything hits the trash though, take a step back: there are probably a number of items you have stowed away that could earn you some impressive cash. Check out the ideas below, and feel free to share your tips of the trade in the comments. (See also: 6 Old Things in Your House That Have Serious Re-sale Value)

1. Big Ticket Items

A brand new generator might set you back between $200 and $2,000 from my latest survey of prices at a popular home improvement chain. My dad has a portable generator he bought when my parents lived way out in the country. Now that they've moved to a more central location, it gets little use and he wants to sell it. Sound familiar? Consider the value. I searched "used portable generator" on eBay and discovered around 75 hits with prices ranging from $50 to $2,400 for items in good condition.

Other big ticket sellers might include snow blowers, ride-on mowers, and even motorcycles or cars. The trick is assessing a fair value and finding the right place to sell. Kelley Blue Book is always the first place to check with vehicles. For the rest, try looking at similar listings in your local paper, Craigslist, eBay, or even on donation valuation charts (as a loose guide). When we bought our house last year, the couple who lived here planned to downsize. They sold their snow blower in two days for $350 by simply placing it outside the garage with a cardboard sign.

2. Camping Gear

We have a whole shelving unit full of camping stuff in our garage. There's anything and everything from lanterns to tents to portable cooking devices to cots and much more. Other frugally minded outdoorsy folks would surely appreciate the care we've taken to keep our gear in working order, so we might try to sell a few things this year. In fact, we bought our large family tent used for a couple hundred dollars — so we know the system works.

If this arena interests you, try sites like GearTrade, where you can buy and sell camping wares or just get insight on appropriate pricing if you'd rather sell yourself. Some items in "excellent" condition attract up to 99% of their original value. There are also a couple area camping groups on Facebook I might contact about larger things to avoid shipping.

3. Hand Tools

Let's face it, most of us aren't super handy. But that doesn't stop the hand tools from streaming in as gifts from well-meaning friends and family. Rather than hold onto a tool waiting to be inspired, try selling it. Take this Bosch 18-Volt Hammer Drill, for example. It retails at $219, and a few days ago I found a used one on eBay for $150. This number accords with the $131 average price for used hammer drills listed on Statricks. And it would make a solid return (a little over 55%) on something you might not have touched in over a year.

Keep in mind that certain brands of tools resell better than others, including DeWalt, Bosch, Ridgid, Makita, Milwaukee, Hitachi, Porter-Cable, Skil, and Delta. In other words, that entry-level saw you got a great deal on new might not seem as appealing on the used market. Along with quality, your buyers will be inspecting these tools for wear and tear, so check for any crimped cords or other issues and price accordingly.

4. Building Materials

Most of us have bought and sold on Craigslist, but have you heard about DiggersList? Those of you into DIY and home improvement might want to take a look. You can sell your surplus building supplies (or find some to purchase) and get a good portion off the original price. Anything back is better than waste, right?

You can sell your doors, pavers, flooring, wall tile, appliances, circuit breakers, and much more. If you'd rather not list online, try taking out an ad in the classifieds or contacting a local carpentry club. Then consider donating anything you don't sell to a Habitat for Humanity ReStore.

5. Outdoor Toys

Children outgrow their playhouses and other outdoor toys quickly, so they clutter garages like crazy. Not only can you earn back a good portion of what you paid (depending on the condition) — but the used toy market for items like these is refreshing with each generation of kids born into the world. Before having a yard sale, try local Facebook groups, Craigslist, and even re-sale stores like Once Upon a Child.

I recently sold a sand box my daughter didn't use much for $30, which is 75% of what I paid for it new. Not only that, I found an eager buyer in less than fifteen minutes on a Facebook mom group. I also took a whole bin of old toys (including a bike, wagon, and other outdoor ride-on) to Once Upon a Child and walked out a half hour later with $121.

What old junk in your garage have you turned into serious cash?

This article is from Ashley Marcin of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Times It's Actually Okay to Be Underwater on Your Home

Tim Lemke — Mon, 11 May 2015 15:00:11 +0000

In the last decade or so, it's become quite common for people to find themselves underwater on their home loans. When real estate values plummeted around 2008, millions of people ended up owing more than what their properties were worth. This led to mass foreclosures and big financial problems throughout the country.

Being underwater on your home is rarely a good thing, but there are some cases when homeowners can get through unaffected as long as they are responsible and otherwise in good financial shape.

Here's a look at some cases when owing more than you own is not the worst thing in the world:

1. If You Have No Immediate Plans to Sell

The best advice for anyone who is underwater on their home is to stay put. It's obviously hard to predict what life may throw at you, but if you've purchased a home with the intention of staying in it for a long time, being underwater on your mortgage doesn't matter too much. This is especially true if you have a fixed-rate mortgage and are making the monthly payments without trouble. Someone who continues to live in a home really doesn't need to worry about its value. If you keep making payments, you'll eventually own the home free and clear, no matter what happens to real estate values.

2. If You're Working to Make Your House More Valuable

You might find yourself underwater, but if it's because you've spent money to boost the overall value of the home, it's probably okay. Maybe you renovated the entire kitchen or even added a family room or bedroom. Maybe you spent money to finish the basement. This money should be viewed as an investment that will pay off down the road. Just make sure you continue making payments on the mortgage in the meantime, as you wait for the value of the home to shoot up.

3. If the Home Is Generating Healthy Rental Income

If you're renting out the home and have tenants with good credit, being underwater is okay. If you're lucky, the rental income will meet or even exceed the mortgage payments. Be sure to have a plan if the rental income goes away, however.

4. If You Want to Offset Capital Gains

Generally speaking, selling a house for less than you paid for it isn't a good thing. But if the house is not your primary residence, there may be ways to save on your taxes by selling at a loss. If you own a rental property for more than a year, you may be able to sell it at a loss and have this count as a reduction of your income. This is called a section 1231 loss, according to the IRS. You can also use a capital loss to offset a capital gain, if you made a profit on another property. Note that this only works for investment properties, not for properties serving as your primary residence.

5. When Your Property Taxes Will Be Reduced

One of the silver linings about seeing a house decline in value is that you might pay less in property tax. If you're paying 1.25% annually in property tax, and your house has declined in assessed value by $50,000, that's a $675 savings. If your plan is to stay in the house for a long time, then you should be pleased to pocket a little bit of extra savings. Note that in these cases, there may be a difference between the home's market value versus the local government's assessed value for tax purposes, so check with your municipality.

6. If You Are Getting a Good Return on Your Money Elsewhere

These days, interest rates are so low that there's less of an incentive to make extra mortgage payments. You may feel tempted to boost your payments to ensure that your equity is more than what you owe, but if you have no plans to sell immediately, you may be better off placing that money in the stock market or other investments. As long as you continue making payments on the house, you may find that earning a 9% return from an index fund is a better deal than pumping the mortgage.

Have you ever been underwater on a home? How did you deal with the situation?

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The 7 Worst Travel Values

Aaron Crowe — Tue, 21 Apr 2015 17:01:57 +0000

Treating yourself to a vacation should be just that — a treat. And treating yourself by paying extra for some things you normally wouldn't splurge on, such as a massage on the beach or an overpriced cocktail with a view, should be considered a normal part of some vacations.

But some travel expenses — from small to big — just aren't worth the money. Even some things travelers believe actually save them money are also bad deals. Here are seven of the worst travel values we could find. (See also: 10 Things You're Paying Too Much for When You Travel)

1. Visiting Popular Locations in Peak Season

Sometimes you can't get around this, especially if you have children. If your family is set on going to Hawaii, Disneyland, or another popular resort during summer vacation, then plan on paying more as you compete with the masses for flights, hotel rooms, rental cars, and anything else you need. (See Also: 7 Popular Vacation Spots Not Worth the Money)

2. Room Service Breakfast

It sounds like a good idea at night before you go to sleep: Check off a few items on the doorknob menu, and in the morning breakfast will be delivered to your door. While you may save time while getting ready for the day in your room, you probably won't save any money.

Look closely at the room service menu and you'll not only see inflated prices for nearly everything, but delivery charges are usually exorbitant, too. The hotel restaurant is usually a cheaper alternative, and if that doesn't work for you, find someplace else nearby that serves breakfast. (See also: 19 Things Tourists Overpay For)

3. Not Doing the Math on Credit Card Points

If you have a hotel credit card that gives you reward points for spending, it can be a smart way to get a free room for a few nights while you're on vacation. But different cards and loyalty programs offer different values for their points. Before you choose where to spend your points on (or even which travel reward card to sign up for), do your research to figure out which program has properties and award flights where you want to go. (See also: Which Airline Loyalty Program Has the Best Value for Their Miles?)

4. Perks That Cancel Each Other Out

Stacking perks is a great idea, but sometimes they can cancel each other out, and you won't get as great of a value as you thought. For example, using Hotels.com coupons prevents users from collecting its Welcome Rewards. And using one of its coupons that's worth less than 9% is actually worth less than using the reward points.

Its Welcome Rewards gives users a free night for every 10 when collecting rewards, essentially giving 11 stays for the price of 10 — roughly a 9% savings. Therefore, finding a coupon worth 10% off or more is a better deal than collecting reward points. But if the coupon is less than 9%, then the rewards points offer better savings.

Travelers can also use a rewards credit card to earn points and and use coupons or collect rewards to double down on benefits

5. Paying for Wi-Fi

Putting technology aside can be a good goal during vacation, but sometimes it's not that easy. An Internet connection can help you plan the next day by studying maps and looking for things to do. Unfortunately, travelers are often charged for Wi-Fi access, with $15 for 24 hours of use common.

High-end hotels are more likely to charge for Wi-Fi, while smaller ones are getting the message that guests don't want to pay for such basic services, and usually offer it for free. If you can't get Internet service for free in your room, go to the lobby and have your device search for free access.

6. Guided Tours

With few exceptions, guided tours are often overpriced side trips that you can plan on your own. Tours are especially popular at cruise ship dockings, and can be booked through the cruise line at mega mark-ups. Instead, find a locally governed taxi to take you to the beach — along with a return trip.

7. Saving Money Over Time

Your vacation time is limited, making it a valuable asset that shouldn't be wasted. That hotel on the outskirts of town is probably a lot cheaper than one downtown, but it won't look like much of a deal when you spend an hour on a train or bus to get to the historic center of town.

The same goes for travel. A short flight or train trip in Europe is more expensive than taking a bus or ferry (or both), but it will give you more time to spend exploring Paris, for example.

Don't let these poor values dissuade you from traveling. It just takes a little extra work.

How do you save while on vacation?

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This article is from Aaron Crowe of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Trade Goals for Values

Craig Ford — Fri, 11 Jan 2013 10:48:39 +0000

We are a goal-driven and goal-oriented society; we've been taught to believe that only good things come to those who set goals. Every New Year, those who want a better future get out a pen and paper and set realistic and measurable goals.

While there is a time and place for some types of goals, there is also value in living a goal-less life. Perhaps you've participated the New Year "set and fail cycle" before — set a goal, don't reach your goal, and feel guilty. Promise to do better next year. For many people, goal setting leads to frustration, guilt, and feelings of inadequacy.

The solution? Exploring and clarifying your values instead of setting measurable goals. Not having goals is not the same as lacking direction. Goals come from our values, calling, or bent in life. We all consciously or subconsciously have a destination to which we are traveling.

Goal setting is our attempt to break those bigger vision items into smaller and more manageable sections and segments. (See also: Goal Setting: Defined and Deconstructed)

The Problem: Setting the Wrong Goals

The problem is that we're not usually very good at setting goals that really focus the direction of our life. In 2011, I had the goal of writing a book. I did write that book (The Secret to a Successful Budget), but I also sacrificed a lot of valuable things along the way.

Goals give us such intense focus that it's quite possible that we put on blinders to the things that bring our lives true meaning and true joy. Life is so fluid and unpredictable that perhaps we're better off accepting events as they come rather than trying to control the outcome of a year.

Determining Values Instead of Goals

What if, instead of setting goals, you simply acknowledged your values?

For example, in 2012, I determined that relationships were important to me. As a result, my focus was on maximizing the opportunities I had to spend with friends and family.

The result was that I took three months off and traveled with my wife and kids. I'd take days off work to go and visit friends who happened to be passing through town. Our family attempted to say “yes” whenever we had the opportunity to be with friends or family.

Life is so fluid, so transient, and so fleeting that goals can easily become obsolete or a distraction.

So, what do you value?

If you value fitness and health, then you'll be looking for opportunities to explore and improve your fitness level. Instead of staying, "I'm going to exercise for 30 minutes four mornings a week," you could just simply decide to exercise when given an opportunity. Sometimes that may be in the morning, and sometimes that will be in the afternoon. At times you might feel like an hour run and on other occasions you might rather do a 20 minute workout video.

If you truly value something, it will find expression in your activity — with or without goals.

Let Goals Flow From Your Values

I'm a person who seeks to conform my life with my faith. Thus, honoring God is one of my values. Sometimes I never know how that will express itself at any given time. However, there could easily be a knock at the door or a chance meeting that causes me to do something in light of my faith.

While goals narrow your view, values broaden them. Values allow you to ask if an unpredicted event conforms to your values. How would a person who values family respond in this situation? How would a person who values faith respond in this situation?

Does This Mean You Shouldn't Set Specific Productivity Goals?

The answer depends on your temperament. In life, events often conflict with your goals. That could lead to frustration and disappointment. If you have a habit of failing at goals and the emotional results are negative, then try skipping goals entirely. This might not be a lifelong change, but an experiment in value-oriented living.

As an example, let's return to a discussion about fitness.

A goal says that you'll exercise for 30 minutes every morning at 7 a.m.

While you can value health and fitness, you can also decide that an unexpected activity should trump your workout schedule. As an example, when I'm traveling with family, I often don't exercise.

Why?

During family travels, you're likely out of your normal schedule. With two values (spending time with family and fitness), you may need to decide to do only one of the two. One of the problems with goals is that they can often conflict with each other, forcing you to do too much or causing you to feel guilty. However, value-based decisions recognize the fluidity of life and allow you to make an adjustment based on your circumstances.

Goals work in a rigid life context, but they provide less value when your life is full of change, transition, and pattern-less living.

Instead of setting new goals in 2013, try evaluating your values, and live a value-focused life instead of a goal-driven life.

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This article is from Craig Ford of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Many Reasons to Make Do with Less

Philip Brewer — Tue, 18 Aug 2009 13:00:05 +0000

Why would someone choose to have less than they could? Lots of reasons. There are as many ways to live large as there are people who refuse to think small. Over the time I've been writing for Wise Bread, I've expanded my list of reasons by quite a bit.

One thing that I liked about Wise Bread right from the start is that it's about living large, and very much not about depriving yourself. The connection isn't always obvious, though, so I thought I'd run down my list. Making do with less helps you live large by letting you:

1) Focus on what's important (by putting less resources into stuff that matters less). This is at the core of how I've chosen to live my life. I have less of what I don't much care about so that I can have more of what I really want. Because my needs are really quite modest, I'm able to do exactly what I want with my life (be a full-time writer) without having to deprive myself. Like most people, there are a lot of things I want--but there isn't much that I want more than living the life I've chosen.

2) Focus on what's important (because the other stuff is a distraction). This resonates for me, too. Everything I buy is not only another thing I have to pay for--it's also another thing I have to find a place for, put away and get out again, use enough to justify the purchase, insure, keep clean and in good repair, worry about getting lost or stolen or broken, and then eventually dispose of.

3) Learn the truth about yourself. Some time back I talked about finding joy in temporary frugality. I compared it to a backpacking trip. Partially it's a means to an end: The less you carry, the further you can go and the longer you can stay. But it's also educational. Some of the things you thought you needed turn out not to be as important as you'd imagined. Giving things up temporarily is occasionally a step toward realizing that you're happier without them.

4) Live more gently on the planet. You've no doubt seen a dozen carbon-footprint calculators. Some people try to use less and waste less simply because they don't want to take more than their share. This resonates with me as well.

5) Obey the commandments of your faith. Many religions make rituals out of having less in the form of fasting and charity. There are a lot of reasons for this. It can change your perspective on what's important, strengthen bonds within the community, and serve as a form of solidarity with others who have less.

I'd like to finish with one reason that's not on the list: To have more later. It's not on the list because, although it does sort of work, this particular motivation often seems to lead to crazy-stupid behavior. It's true that, if you spend your twenties, thirties and forties scrimping and saving, you can probably spend your fifties, sixties, and seventies doing whatever you want--but that makes no sense. Much better, I think, to spend your youth doing whatever you want, constrained only to the extent that you're not committing your future along with your present--i.e. don't run up debts that you'll be paying for years.

It makes good sense to spend less than you earn and save money--it adds to your freedom in the same way that going into debt reduces your freedom. It also makes sense to have a gradually rising standard of living--it's the natural order of things if for no other reason than that as you accumulate durable items they go on improving your life and as your skills grow your value as a worker increases. But to go beyond that--to live in voluntary penury now with the idea that you'll be able to live high on the hog when you're old--is weird, and in my experience doesn't lead to a good end.

There are lots of other reasons to choose to spend less, own less, and use less as ways to live large, even without this one.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

A Budget is Not a Constraint

Philip Brewer — Fri, 13 Jul 2007 00:04:56 +0000

When people resist the idea of budgets, the most common reason is that they view the budget as an unwelcome constraint. That's completely wrong. A budget is not a constraint. A budget is a tool for maximizing pleasure and satisfaction.

That's not to say that people don't operate under constraints. Everybody has limited resources. Everybody has limited time. Everybody operates with a whole constellation of other constraints: legal, moral, and social, from old obligations to family expectations.

My point is that the constraints don't come from the budget. They come from the real world. A budget is a tool for managing your resource use in the face of those constraints.

What a budget does is let you plan how to allocate your limited resources, so that your expenditures align with your values. If you do this without a plan, it's very easy to slip into a situation where your spending doesn't match your values: You can't afford dinner out with your friends because you bought a book (or vice versa).

Unless you make a plan, you find yourself at each decision point with nothing to go on but intuition. It can work to make these decisions purely on intuition--indeed, most people do just that. But unless your intuition is keenly attuned and your resources are abundant relative to your desires, you can do better with a budget.

Creating the right budget is an iterative process. Nobody knows the future, and even people who have a firm grasp of their values will find boundary cases that pose hard choices. So, don't expect your first budget to be perfect. On the other hand, if you've created your budget thoughtfully, then don't pitch it aside the first time it doesn't match what you feel like doing.

When you first start following a budget, you'll probably find yourself exceeding certain budget categories. That can happen for two different reasons: Maybe it's transient urges that lead to overspending, or maybe it's the budget that does not reflect your true values. In the latter case, adjust the budget. In the former, use the budget to help you put the money where it gives you the most joy.

Once you've lived with a budget for a while--once you've found the rough spots and smoothed them down--it can be a source of considerable tranquility. You can be confident that, in your spending, you're living your life according to your values.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: