Becoming an entrepreneur: How to avoid disaster

I read an inordinate amount of things from online. While I do frequent one or two social networking sites (Facebook and LinkedIn mostly), the vast majority of my reading is made up of blogs somewhat tied to personal finance. I frequent a number of high volume blogs, but I find the more interesting and quirky stuff comes from stay at home mom's and debt laden college students looking to share their stories and maybe get a couple of AdWords click throughs to line their pockets. These people typically have well below 100 readers.

The most common theme I seem to find is a strong desire to make money through unconventional means, like blogging or starting a small business. While I believe these people have their hearts and minds in the right place, you inevitably see a wide array of failed plans, plots and schemes.

This is a shame. These one person microbusinesses run from desktop computers and raw ideas are not necessarily bad. All too often people just make a couple of cardinal mistakes and let their potential fall to the wayside. While these microbusinesses may not exactly earn these folk a $100,000 a year income, they could make a poor situation a little more bearable and foster a sense of intellectual curiosity that could potentially lead to self improvement. I've convinced myself through research and positive feedback that my newest endeavours won't fail due to negligence.

Here are a couple of points I've seen made in the past and some I've made myself.

• Time: A lot of small time entrepreneurs have lots of ideas. Ideas can be thought of in a wide array of situations. On the bus, while in the shower or while doing a particularly mind numbing work related task. This is great, but if you feel you need to allow an idea to grow the primary ingredient is time.
  
  You need time to flesh out ideas without distraction. You need time to set up the framework of your microbusiness venture. And you need to sit down with pen and paper and work out a timeline.
  
  This is how microbusinesses fail the fastest and hardest. If you don't have enough time to maintain an endeavour such as a microbusiness, you wind up wasting the hours you initially invested in it to begin with. Not only that, but you find yourself disheartened against future experiments.
  
  So when you start a small money making project, make sure you start as tiny as possible so you don't become overwhelmed.
  
  
• Capital (money): This is the life blood of any business. And you'll need a lot of it if you intend on starting your own hole in the wall restaurant or retail space. But the good thing about being a small time entrepreneur is that you don't really need it. A lot of people don't realize this and wind up investing a fair bit of hard earned money into a venture that will ultimately fail.
  
  Try your best to invest as little money as possible in the beginning. Utilize tools already at your disposal, you'll find a surprising number of them. If you need business cards for your brand new apartment decorating business, don't have them professionally made. But instead use some card stock and your old laser jet printer that's been sitting in the closet for three years.
  
  If the venture ultimately fails and you invested little to no money, you'll wind up in a better position to try another idea out in the near future both mentally and fiscally.
  
  
• Motivation: This is a finite resource. You start with a lot of it but eventually your supply becomes depleted.
  
  It's easy to become disheartened when you don't see immediate success. Or your immediate success turns out to be a bust. If you're going to do anything, remain as motivated as humanly possible. If you plug away at something eventually it'll play off, no matter what is it.
  
  If you have a partner, meet with them frequently to discuss possibilities. If you don't, discuss the situation with a friend you know will support you. Set small and realistic goals you know you'll be able to meet with a little work and celebrate them.
  
  
• Research: All too often not enough of it is done. Do a lot of it and do it weekly. It's nice to have the time to build your newest eco-friendly creation, the intelligence not to spend $5,000 advertising it right away and the motivation to make a thousand of them, but if you don't do your homework you'll inevitably find yourself abandoning your venture. Whether your items or services are over priced, don't fill an immediate need or may not be as clever as you think you'll find all three of your most precious resources depleted.
  
  
• Promotion: You need to be seen. Humans are hardwired for networking and if you're working under the radar you're not going to find any success in any microbusiness. All the time, money, motivation and research in the world isn't going to do you a lick of good if you toil in the dark.
  
  Promote yourself and your project. It can be just to family and friends if you want, or you can take out a newspaper ad. But the important thing is to be seen.
  
  
• Failure: Sometimes it is inevitable. But that's okay. Failure is part of life and just because your microbusiness didn't take off now doesn't mean it can't take off six months from now. And it certainly doesn't mean you should forgo future experiments with earning an extra little income on your own.
  
  Sometimes the situation is beyond your control. But it's always a learning experience for next time.
  

If you have additional points to make, post them in the comments and I'll place a permanent link to your blog in my side bar.

Sales: Likely garbage

Often a slave to the retail industry since I first stumbled into the adult world, I've come to the frank and sudden realization that sales and rebates are almost always bad things. While hardly ever bad for the retailer, the consumer is all too often lulled into a false sense of self satisfaction before being clubbed in the back of the head with hidden fees, costs and other money grubbing garbage. While it's to be expected that retailers should try to improve their bottom line at all costs in order to remain in business, all too often is the consumer's ignorance preyed upon.

Let's examine a fictional chain of businesses. We'll call this national franchise Bob's Appliances. Bob, the owner of this franchise doesn't actually produce anything. He doesn't need to. The service his corporation provides is customer service, product knowledge and the convenience of having sixty blenders under a single roof for you, the consumer to gawk at and wonder which will produce the best milkshake.

So Bob purchases all of his wares directly from the manufacturer in large quantities. The manufacturer, knowing that Bob will sell through his stock quickly and place another order will provide him their merchandise at a fixed cost. Bob will then mark up the sales price so that when he sells a blender he'll be able to pay for things like shipping costs, rent and his vacation to Greece.

Which is understandable. Bob needs to do this in order to stay in business and pay his employees. But let's say Bob gets some competition. Larry opens up a rival appliance warehouse down the street and starts offering his blenders at a cheaper rate than Bob. He does this because he's a prudent business man.

He does, after all want to make a living. He needs to put his kids through college and pay for his wife's new rose bushes. Bob, worried about his own savings account starts dropping the prices of his blenders to compete with Larry's.

This all sounds great for the lucky sod who wants a cheap blender. But it's not terribly good for Bob and Larry. Soon they're selling blenders for pennies above the prices they originally paid for them. The manufacturer, worried that Bob and Larry are going to drive one another to the poor house and leave them with no middle man to peddle their blenders is left with only one recourse. They set certain guidelines their merchandise can be sold with. They politely inform Bob and Larry that unless certain conditions are met, they're going to stop selling to them.

This is where the manufacturer's "suggested retail" comes in. Suggested retail is, simply put the lowest any given item can be sold under normal circumstances and most major manufacturers practice this sort of behavior. Cusinart, All Clad, T-Fal, Krups, Euro-Pro, Kitchen Aid, Yankee Candle, et cetera.

This provides a boundary for Bob in the future. He knows that his competition can only go so far with its prices, which were kindly set by the manufacturer to assure that even at the minimum sales price some profit was to be had.

This balances things out a bit. But it opens up a whole other world of pain. Just how far should Bob set his prices above the "suggested retail" given to him? Twenty percent or five? Well, nine times out of ten it'll depend on what exactly Larry the devious competitor is up to. Which is probably a sale.

Sales do not break all the rules. They simply create the illusion of such. There are still price guidelines in place you just don't see how little retailers pay for the items they are reselling for you.

Imagine seeing a blender that's usually sold at Bob's for $100. But this week it's only $30. How can Bob possibly profit from this? Simple. He bought it for $5 and jacked up the price to make it seem like he's taking a loss by "practically giving" the blender to you. The suggested retail? Oddly enough, it's $20.

The biggest question I get asked is "When will this item be on sale?" The retailer I work for is thankfully somewhat sane, so my answer is always "Never. We have 'every day' low prices." Which sounds corny and makes people think they're being ripped off, but it couldn't be further from the truth. Sales create an atmosphere of misinformation about the actual value of a product. You shock the person with a borderline crazy high price and slap a sticker on it saying you're going to be a real swell person this president's day weekend and sell it for a quarter of that.

Not only is this manipulative, but in my opinion outright despicable. Especially when retailers go into overdrive and make it their business to have sales. They'll simply hold a sale every month and jack up their prices astronomically high the rest of the time. A prime example of this is Macy's and Kohl's. Not only does this make it impossible to shop when a sale isn't around, it also makes it impossible to shop when there is, simply due to the fact that it herds customers like cattle through the front door all at the same time.

The only exception to this it honest clearance sales after big, time sensitive events. Retailers are still making a profit on every sale, but they're genuinely motivated to move the product so they can make room for higher ticket items. This is why buying Christmas decorations on December 27th is smarter than December 1st. Or purchasing a humidifier in the middle of April is probably wiser than January 5th.

I'm not saying that one should forsake materialism because of asinine markup habits, but I am saying to be reasonable about it. Because in the end of things the amount you "saved" might not really be an appreciable amount at all when you think about it.

The dreaded homelunch

There was a time when I used to work in an office environment for nine hours a day, five days a week, fifty one weeks a year. It was a pretty grueling experience to say in the least. My days were made up of high pressure deadlines, keyboarding and a fair amount of incompetent technophobes yelling at me because they couldn't exactly wrap their heads around the whole purpose of having secure passwords and anti-virus software.

Needless to say the best part of my day was almost always the lunch hour. Sixty sweet minutes of peace and quiet to do with what I please and enjoy a nice meal. And with the missus in the next office over we could take a leisurely break together. And maybe vent at one another as to why, exactly our boss felt the need to be such an arrogant waste of skin.

Because it was a busy office environment in an area populated by office buildings, real estate brokerages and banks there was a dangerous temptation. It was called "the strip" and it was glorious. A mere sixth of a mile down the busy seven lane artery that could have passed for a major highway were more places to eat than stars in the sky. Everything from the usual fast food garbage to upscale twenty dollar sandwiches. If you felt like anything at all on any particular day of the week, you could find it, order it and consume it in less than an hour.

And man, oh man. Would that seven lane motorway clog like a low flow toilet at 11:55 every weekday, without fail.

I'm pretty ashamed to admit that we'd waste a good $60 every week on lunch. That's more than half of our current food budget for two full weeks, breakfast lunch and dinner included. We did this for more than half of a year. Our rough estimates put this at around $1,500 of pure excess. Sure, the food was marvelous and the stress relief was great. But not only were we wasting an extraordinary amount of money, our waistlines were also exponentially increasing. I gained 30 pounds at that job, due to eating out and sitting on my ass all day, typing.

Now that I work from home for the vast majority of my work week I have full access to every household appliance in my home in addition to my fridge and pantry. Lunch is no longer a problem. There's no temptation to go out, as I live in the boonies.

But I did start to get serious about being frugal before I left the office grind. While there was still a little bit of excess involved, it was far more manageable. Here are some of the tips and tricks I experimented with.

• Don't change your life style all of a sudden
  If you're used to eating out, you're going to get withdrawals it you all of a sudden stop and switch to the loathed Peanut Butter & Jelly sandwich at your desk. Going out for Thai with your work buddies is far more appealing.
  
  So continue to do it, but work on scaling yourself down. Form a rough budget and evaluate your performance on a week to week basis. But don't get depressed if you go over budget once in awhile.
  
  Start bringing your lunch on your less stressful days and enjoy a nice time out on the more head grinding days. Eventually over time whittle it down so you only go out one or two days a week.
  
  
• Remove temptation
  It's depressing to see a group of your coworkers go out to your favorite lunch canteen. It's downright torture to see (and smell) them get delivery. Curb your potential torture by taking your lunch break earlier than most of your peers, if possible. Leaving the building altogether works well if you don't mind being a little antisocial. I used to bring a good book to my car and read in the spring and summer months.
  
  
• Snack
  Okay. Not all of us can be antisocial nerds and read under a tree when the clock strikes 12. Let's say you need to go out on a daily basis, if only to chat with your friends and coworkers and get a little bit of socializing in.
  
  Have a snack about an hour before lunch time and order something relatively small when you do go out. Since you won't be famished, you'll be less likely to order something off the menu that could feed a cow.
  
  
• Don't drink soda
  Soft drinks like Pepsi and Mountain Dew are mostly carbonated water. Which is essentially tap water with a bit of gas dissolved into it. I once knew a woman who managed a restaurant for a number of years. She informed me that soft drinks have an enormous third party markup. It costs the average restaurant about $0.03 to provide you with a frosty cold Pepsi. Which is why most establishments tend to offer free refills. Likely because they're charging you about $2.00 for something that costs them three cents. The same is more or less true for coffee.
  
  So if you find yourself as a fast food joint or elsewhere, simply drink water. You'll be cutting down on empty calories and saving yourself a bit of money.
  
  
• Utilize the microwave
  Microwaves are more common than toilets nowadays. There was a time when I lived off of Hot Pockets. Granted, they were still incredibly unhealthy and still cost me $2.50 a box, but that sure as heck beat going to McDonalds and buying a $6.50 double quarter pounder.
  
  You don't even have to buy microwavable convenience meals. Microwaves in the work place allow you to bring pretty much anything you can fancy for lunch, be it left overs from the night before or something you whipped up that morning.
  
  
• Utilize icepacks
  Say you're on the run more often than not and a microwave is not always an option. There's nothing chaining you down to just sandwiches. So long as you have a lunch bag and an icepack there are a number of things you can eat cold and on the run.
  
  Some ideas include:
  
  
  • Pasta Salad
    
  • Chicken Salad (Maybe with left over chicken from the night before?)
    
  • Gazpacho
  • Waldorf
  • Veggie Wraps
  • Fruit Salad
  • Left over pizza (I prefer it cold, honestly.)
  • Left over fried chicken (Fried chicken is excellent cold, that's way it makes excellent picnic fodder.)
  • Potato Salad
  • Tortilla chips and salsa (or Spinach dip)
    
  
  So long as you can dice it and shove it inside of a tortilla or a tupperware container, you can bring it and eat it cold.
  
  
• Set aside dinner portions
  Regardless of what I'm having for dinner on any given night I try to put an extra portion into a piece of tupperware before I sit down to eat. This could be anything from mashed potatoes of taco filling. This stops us from eating it and it gives me something to work with for the next day's lunch.
  
  There's no rule saying you have the have an exact duplicate of your previous night's dinner. Roast chicken can be diced up and put into a salad. Taco filling can be mixed with rice and corn. Roast beef can be sliced thinly and placed into a wrap. Mashed potatoes can be mixed with cheese and sour cream, et cetera.
  
  
• Don't underestimate the power of carbs
  I love carbohydrates. They're tasty and extremely filling. Whenever I work outside of my home for a long period of time, I always bring some seasonal fruit and a slice of breakfast bread with me. The breakfast bread will keep me filled for a long time while I bust my hump. The same is true for any complex carb, be it pasta, potatoes or a big hunk of pumpernickel.
  

So long as you make an honest effort to try to curb your unhealthy and wasteful lunch habits you'll succeed, if only a little bit at first. But it's not incredibly difficult.

Video Roundup: Credit, debt and the whole shebang

There was a period this winter when I simply did not watch television. Which is not to say that I'm one of those folk who like to pretend that I'm awesome because I prefer books and newspapers. But because of two very important factors sort of beyond my own control.

When we were living beyond our means we signed a contract with our cable provider and the good folks at TiVo. So we've been unable to cut those expenses completely from our budget. We signed a binding contract informing them that we'd pay a certain rate. If we broke it we'd incur all sorts of lovely fees and fines, which essentially would make the whole cancellation process moot. I love television, cable and having a DVR. But it's spoiled me a little.

Now I cannot stand watching commercials. So when our TiVo started to malfunction and not record properly, I found myself at a loss. I could watch straight television. But who has time to sit through commercials and arrange their schedule to catch programs? Not me, that's for sure. Working two jobs made it nigh impossible to watch anything besides the morning and evening news.

So we simply stopped watching television. Then we rediscovered the brilliance of having a broadband connection. Soon I was watching full length documentaries on Google Video and all my favorite programs from the network websites. Our living room for half the year is a 3 season porch, so eventually we just stopped going into the living room, leaving the TV in the cold. Another reason not to watch television.

Now that we've moved the television to our winter living room and fixed the TiVo I often find myself watching internet programming more often than not. Since I'm nerdy you should know for certain that I'm going to watch documentaries most of the time.

Here's a short list I've compiled in my journeys that coincides with the niche this blog occupies. I've found them invaluable, I think you will too.

• Videojug: Credit and debt defined
• Videojug: Managing debt
• Videojug: Financing your car
• Google Video: Money as Debt
• YouTube: Destination Debt

While they're all very informative and a good way to spend a couple of minutes Destination Debt is probably the best out of them all, detailing how predatory and manipulative credit card corporations can be, especially to college students. Sounds kind of familiar, doesn't it?

Doing your reading: An important step

We all dread signing contracts. They usually mean we're going to be spending an inordinate amount of money on something. Without question, this is the most dangerous situation you can ever been in, at least in the world of personal finance. You're signing a crucial document that may or may not be able to break you.

Whether it's for any type of loan, a savings account or a credit card you're asked to authorize certain legal mechanisms. Most of these mechanisms are legal requirements put into place by Federal and State agencies to protect both parties involved. As such, most contracts are designed to both fulfill a legal obligation (i.e. binding you to a deal) and explain itself in full, elaborate detail. They're often highly technical documents and a lot of people often find themselves at a loss.

They take one look at an intimidating wall of text, lists and addenda before shuddering. Which is an absolute shame, because that terrifying piece of paper holds your fate. It may be uncomfortable and tedious to look through it word by word, but it is your responsibility as a consumer to do just that.

Which sounds like common sense, right? It's an accepted fact that reading any contract before putting pen to paper is not only a good idea, but suicidal otherwise. So then why do so few people do it? Can you think back to when you applied for your last credit card? What about your last car?

Did you read the contract in full detail? Or did you get the jist of it from your significant other? Or did the sales representative fill you in on the meat and potatoes? Chances are you settled with the far more comfortable option of nodding and grinning. If not, power to you. You've set a very positive example.

If you did nod, grin and autograph with only a slight understanding of the terms and conditions, I'm not out to attack you. I've done it myself on many occasions prior to present. It's far too easy to appear you know what's going on and just do what you're told.

But consider some of the things attached to most loan contracts.

• Loan amount, interest, finance charges
• Down payment amount, requirements and information
• Payment schedule, late payment charges
• Refinancing options or lack there of
• Early payment penalties
• If collateral is being offered, what it is
• What happens if you fail to consistently make payments
• If you have to pay collection costs, towing fees (for a defaulted car) or trash out fees (if a defaulted home)
• If the lender is within their rights to seize other assets should you be unable to may consistent payment
• Terms of the security of the loan

That's a lot of critical information. But let's say you trust the profession who's presenting you with an elaborate contract. Let us say he's your best friend and you've known him for thirty years. He'd never put you into a position to screw you over.

Even if the terms of the loan are favorable for you, did you ever consider misprints or typos? Depending on the flexibility of the contract it's quite possible it would be riddled with typos. Sure, simple typos like "paymnt pln" are relatively benign. But who's to say the individual working on the contract prior to your arrival wasn't rushed? Who's to say they didn't mix up two unrelated documents and instead of your nice 3% annual interest rate you're now stuck with 10%.

Or instead of the proper mailing address there's a 1 in front of your street number and all your mail is actually going to the anti social guy down the street, including payment coupons.

Or maybe you didn't think it possible for a shady bank to seize your car after only two missed payments.

The same is true to a slightly lesser extent with credit cards. Consider these usually universal bits of data typically included on any given credit card application:

• Annual fee
• Annual Percentage Rate (APR) for purchases and balances
• Whether the interest rate if fixed or variable
• Interest rate and how much higher it can get if you are a bad customer
  
• Minimum payment percentage
• Credit limit
• Penalties, fees and actions that can be taken with missed payments
• Penalties, fees and actions that can be taken with exceeded maximum spending limits
• Fees and actions for cash advances

My advice? Obtain any piece of paper you are required to sign at least one day in advance so you can read it over and check for errors and things you do not fully understand. This will allow you to do it at your leisure in a comfortable environment, instead of at a table full of angry lenders. And never sign documents that contain blank spaces in the body unless it's been written in with pen by an individual you can shake hands with.

Not only is it your right to take as long as you need to examine a legal document, but it is also your right to have it explained to you in full detail. So ask questions until your mouth is dry if need be.

Any individual not willing to allow you to read over your contract in full is attempting to hide something. As such you should always take your business elsewhere, even if it means a slightly higher interest rate or larger down payment.

Just remember the hardships you've had in the past and remember, you don't want to repeat those months/years. Do you?

Arming yourself: The car

This short series will likely consist of between 4 - 5 posts spread out over the course of several months. All will deal with ways to aggressively solve your money problems. Some of them are designed more for your mental well being than anything, which is admittedly a big part of the problem. But some of them will be a bit more practical, while others take a more "out of the box" approach.

If you're in the process of paying off your debts there is bound to be a point where you are capable and willing of switching into an aggressive mode to finally put those outstanding balances to rest. When you enter into this arena you're going to need a couple of tools of the trade to grease the wheels of economics.

Up until now you've managed your budget to varying degrees of success, you've cut your expenses back and you're monthly payments are starting to tip above the minimums. Now is the time to start bringing the hurt to those scary numbers.

A tool often over looked by those within financial crisis is the car. A car loan will likely be the second largest loan the average person will take out during their life time next to a home mortgage.

Both loans are typically secured debts, unsurprisingly. Simply put, a secured loan is one you enter into wherein some form of collateral is offered. This is to assure the lender that if you are unable to make successful payments, they have a shiny new toy they can resell to pay off your delinquency.

Because of this fact, the car and home mortgage are payments that likely take precedent over everything else in your life. For good reason, too. You don't want to lose your car or your home and you don't want that terribly ugly "repossessed" mark on your credit report.

But wouldn't it be nice to knock one of them out of the park? Paying off a $250,000+ home loan while you're in the hole is likely impossible. But car loans are a different story. It's substantially less than a home loan.

Depending on your model, credit score, interest rate and payment plan your monthly payments can average between 200 to 500 dollars every month. If you were able to reclaim that money, it's just like getting another job. You have an extra $6,000 a year to throw at your creditors.

So, do just that. If it's within your means and the remaining balance on your car isn't sky high, focus on it. Pay it off as soon as you can. When your monthly statement comes in, tack another $100 onto each check you cut. Even more if it's even remotely feasible.

And after it's paid off, drive it until the wheels fall off.

A lot of people are programmed to start shopping for a new car after their old one is paid off, or heaven forbid, before their old one has been completely paid off.

Sometimes this is necessary. Often it is not. Car loans are relatively short term, typically only 2 or 3 years. This is not the life time of an automobile. Chances are the dealer you trade it to is going to resell it to some poor guy after it's been cleaned and tuned up.

This is the point where people sigh and say: "But I won't have to worry about repairs on a new car.."

Which is a very valid point. But if you pay off your car completely and it is fully in your name, you don't have those ugly monthly payments any longer. You have less debts attached to your name, and thus your credit score increases.

So, as long as your repairs do not meet or exceed your previous monthly payments, you are saving money. You can then use that extra cash to pay off some of your other debts

Shelling out $500 to a repair shop may seem like a lot, but you're likely not going to be doing that every month. And since you have direct control of the vehicle, if for whatever reason it begins to cost more in maintenance that you're comfortable spending, you're completely free to trade it in for a new one.

Be frugal by staying healthy.

Health care is a complex issue in the western world, especially within the United States. It's a very big, expensive subject that a lot of people don't really pay attention to all that much. Sure, if you're following the presidential race even remotely you know it's talked about a lot. And a good number of people like to pretend that it's an important issue.

But more often than not this is just to save face, the issue is given plenty of time, but not quite enough thought that it really deserves in the end of things.

People talk about it a lot, but like education and fiscal responsibility, nothing really materializes out of it. Which is a shame, because it's an issue that every single human being has to deal with on a daily basis.

Because of the aging baby boomer population, the medical industry is exploding. Nurses, doctors, technicians, pharmacists and every kind of support personnel you can imagine are in high demand. This means a lot of new, relatively highly paid professionals in the industry need to be paid.

This means rising costs. Which is fine if your budget is large and your bank account is even larger. But lower middle class John and Jane Smith often find themselves in a crunch. Sometimes medical treatment is completely unavoidable, sometimes it's not per se, but it's definitely needed in a maintenance fashion.

Even with insurance and careful planning medical costs alone are enough to bust a meticulously planned and followed budget wide open. This is why it's not only economical to keep yourself running on all cylinders, but common sense.

If you find yourself in a debt laden situation it's even more dire. Every penny needs to be thrown at the growing monster in your closet. You can't be bothered to throw money at a medical bill, or on over the counter medications week in and week out.

So stay frugal by keeping yourself healthy and happy. Here's a small, concise list I've drawn up for myself to keep my money out of the doctor's pocketbook.

Do you have a unique way to cut costs by living healthier? Post in the comments section and I'll link back to your blog in my next post!

1. Eat better and greener, but cheaper: Eating organic sounds great, but it's going to weigh down your grocery bill. If you're willing and capable of eating all organic food, go for it. I'm neither willing or capable of spending that kind of money for that narrow of a product niche.
   
   Make a list of your weekly food requirements. Now check off the ten most expensive things. Now check off the ten most consumed things. Chances are you don't need those twenty things to get you through the work week and into the weekend. Some of the cheapest foods are the best for you, and some of the most expensive are the worst.
   
   Some of the cheapest and best include unprocessed rice, whole seasonal fruits and vegetables and bulk nuts.
   
   Your grocery store likely stocks a surprising amount of local produce. If it's local and on the shelves, chances are it's fresher, cheaper and better for you than anything shipped in from Chile or Vietnam.
   
   When you buy processed foods you're paying more for the processing than the foods themselves. You're paying for them to be ground up, mixed with a bunch of crap, wrapped in non biodegradable plastics and shipped to you.
   
   With whole foods and produce you're only paying for them to be picked and shelved.
   
   And do I really need to elaborate as to why skim milk is a better alternative to Pepsi?
   
   
   If you're eating foods that are as a whole better for your body, your body is going to have the ammunition it needs to ward of disease.
   
   And hey, if you're eating right you hardly need to spend all that money on vitamins and supplements, do you?
   
   
2. Don't skip meals: It's easy to do, especially if you're living on a fixed budget. But you'll quickly find yourself either digging into a convenience food half way to your next meal (which is an unexpected cost and likely not too healthy), but you'll tire a lot more easily. Your body will begin to burn materials that take a lot more energy to burn.
   
   And if you're working overtime to appease American Express, you're going to need every ounce of energy you can muster.
   
   
3. Cut caffeine and nicotine out of the picture: Some people can't live without coffee or their cigarettes. Which is a shame, because at that point they're an addict. Cigarettes cost an enormous amount of money, especially if you're a heavy smoker.
   
   And while caffeine may on occasion give you the boost you need to get through yet another 16 hour day, it's usually buddied up with lots of refined sugars (which will promote future dental work) and fattening substances (which will reduce your energy in the long term). Neither of which are really desirable bed fellows.
   
   
4. Exercise: It doesn't have to be a lot and you don't have to become obsessive about it. And no, I'm not going to suggest you get a gym membership or any special type of machinery to promote positive habits.
   
   Those things cost money. Which is fine, they're good products and services. But the point behind this article is to live healthier to prevent you from spending money.
   
   Simple exercises will keep you occupied and burn excess calories. Take a walk around the office once every hour or so. Do some light yard work on the weekend. Wash your car by hand.
   
   I live in an area with community mailboxes, at the bottom of a hill. It's a good walk.
   
   It doesn't have to be a lot, but the more you move around the better you'll feel.
   
   
5. Sleep more: And whenever possible. Your body and mind needs to stay rested in order to perform the reasonably complex tasks that bring in the dough every week. So stay rested and relaxed above all else. Especially if you're working a second job.
   
   Take a power nap on your lunch break, go to bed slightly earlier if possible, take a nap when you get home.
   
   You're not going to want to do anything, including work, if you're exhausted all the time.
   
   
6. Wash your hands, reasonably: I'm not asking you to become a germaphobe and wash your hands every five minutes. That'll leave you defenseless for when you actually do catch a superbug, as what happens to most people during flu season.
   
   But occasionally washing your hands will reduce the chance of nagging illnesses that may cause you to miss a day or two of work. Even rinsing your hands is better than nothing. But don't over do it.
   
   
7. Stay hydrated: Keep a reusable water bottle around you whenever you're in one place for a reasonably long time. Like at a desk or a cash register. Keep it full of water. If you keep yourself hydrated, you're less likely to splurge on a $2 soda from a vending machine every other day. It'll also help with your digestion and weight loss, should you need it.
   
   If you really can't stand drinking water, try drinking unprocessed fruit juices. Good things to look out for are not from concentrate, no added sugars, %100 fruit juice and unblended juices.
   

I'm not suggesting a whole life style change by any means. But if you stay ahead of the game you'll keep yourself up and running, and earning those much needed paychecks.

Discrimination: Cut it out

Imagine you find yourself one day sitting down at a bank, dressed quite professionally with a beautiful leather portfolio in hand. You have a detailed business plan prepared to offer the loan officer. You've spent months on your small business model and quite frankly, you believe you can just swing it. This plan will make you rich.

All you need is some starting capital. A little cash to grease the wheels of business so you can start getting to work.

The loan officer sits down in front of you, takes a quick look at your loan application and cracks a smirk. They look up with a bemused expression that screams "You're kidding me, right?"

But why? Your credit is superb. You're an intelligent person, fully capable of making adult decisions.

The loan officer chuckles a little bit.

"You're kidding me, right? You're way too old to learn this stuff."

You're livid. You can't believe what you're hearing. How can something be so bigoted, close minded and small? And isn't it against the law to behave in such a fashion?

You're right, loan discrimination is quite illegal.

That is, when it's directed at you from someone else. You're on your own when you impose it on yourself. You'd be surprised at the kind of limitations people put on themselves simply to get out of having to do something that's just a little uncomfortable.

They think they're too old to relearn their own finances. Or maybe they're not smart enough. Or they're the wrong gender. Or that the spouse will take care of the issue.

These people just nod and go along with everything an authority figure says. But truth be told, if you're capable of living on your own, you are capable of handling everything from a monthly budget to a small business loan.

Humans are incredibly adaptable creatures. We can learn and relearn a multitude of things right up until the thinker stops churning, and there's nothing stopping you from doing just that. It doesn't matter if you're just entering the world of personal finance, or you're 78 and your spouse (who handled every detail for the past 50 years) has just passed away. It doesn't matter if you're a high school drop out, if you work minimum wage or if you're a man or a woman.

You wouldn't stand for discrimination against you, yet a surprising amount of people impose it on themselves on a daily basis. They chuckle and dismiss critically important tasks simply under the proverbs "You can't teach an old dog new tricks" or "I'm no mathematician, numbers make me uncomfortable."

It's not so terrible for these people if they have someone with their best interests in mind, a spouse or relative who handles all the dough. But it's the equivalent of someone spoon feeding them.

They are not adults. They are fully grown humans. I should know, I was one not too long ago.

It also leads to a dangerous situation when this personal finance manager isn't around. The self discriminated individual develops a "Yes" syndrome. They've trained themselves to believe that they're incapable of handling money out of a day to day basis. And they've ignored everything the spouse or relative has been doing because of the simple fact that they haven't needed to. So they don't know anything.

And when someone who does know the ins and outs confronts them, rather than asking embarrassingly obvious questions, they simply nod, sign and say "yes" over and over again. This is incredibly dangerous because (a) contracts signed by someone too ignorant to read and understand them fully are still valid and (b) the authority figure going on and on about the highly technical subject of finances has their own best interests in mind, not the signers.

More people need to adopt the modus operandi of refusing to be embarrassed. When someone explains something highly complex and technical and asks "Do you understand?" it is imperative that the truth be told.

They're paid to explain these things. And if the subject is still not understood after their explanation, they did not do their job well. Ask again. And again if necessary. Require a full understanding and explanation, always. It's even more crucial if you're putting pen to paper and signing a contract. It sounds extremely obvious, but it's so easy to gloss over it and sign just to get the lender to shut up and stop your embarrassment.

But in the end of things it is your responsibility and yours alone to educate yourself. And if discrimination doesn't fly with you, stop imposing it on yourself.

How to improve your credit score

So you've had a less than stellar couple of years. Maybe you were irresponsible with your finances. Maybe a life altering emergency came out of the blue and threw your life into disarray. Or maybe you've even married someone who happens to not like paying their bills fully and on time. It happens to everyone once in awhile.

Even though you're a better person because of it, those misadventures are still going to be an ugly stain on your credit report. How long? Well, it'll of course depend on how bad the situation really got and exactly what happened, but chances are it's in the neighborhood of 7 years. Maybe even longer if something exceedingly stupid happened.

That's a long time. If those credit report stains occurred when you were 23, they'll still haunt you until you're in your 30s.

Even if your balances get paid off in full, on time (eventually...), the period you were delinquent in will still haunt you. Simply being late on payments is enough.

So truth be told, if the blemishes on your credit report are factual (meaning you actually did blow off paying American Express for 8 months), there's no way to remove them. Sure, there are a number of shady corporations out there who claim to make your credit report squeaky clean. But they're not even going to want to talk to you before they have a hefty consultation fee in their pocket.

And guess what? That's all that's going to happen, you giving them your money. They'll say they'll make everything better, but they won't. If you have bad credit for whatever reason, no one can eliminate your history.

You earned that metaphorical scarlet letter, and you're going to have to wear it until it either disappears after 7+ years or you're going to have to take matters into your own hands. Right now.

The latter is of course the most preferable.

So how does one go about proving themselves to be a good little consumer, worthy of a mortgage, car or small business loan? I've come up with a small list of things to improve your score. This is by no means a tell all of tell alls. There are many ways. You'll never be stuck in the same spot forever. There are always steps you can take to repair the damage, even if you can't erase it altogether.

Have I missed something? Say so in the comments and I'll gladly link back to your blog in my next post!

• Deal with your current problems: Deal with all outstanding debts as quickly, politely and efficiently as humanly possible. Funnel every spare dime into this task. The longer you put off a payment, the more damage you're causing. If possible (and only if possible) consider paying off your big financed debts with more than your monthly due. In example, you owe $500 this month on your car, but you still have $8,000 left until the car is fully paid off. Send them $650 for this month if you can spare it after your other expenses and savings account.
  
  
• Keep your job: Few people realize this, but your employment is also taken into account when you apply for a credit card or loan. Ideally lenders look for 1+ years of employment at a place of business. This shows them you have job security and you'll be able to make your monthly payments on time.
  
  A good trick for this if you regularly find yourself out of work (i.e. you're an independent contractor, you work seasonally, your job market is experiencing a downward trend, et cetera) obtain a part time job and stick with it.
  
  Even if you work 5 or so hours a week on occasion, you'll still be able to put it down as income. And once you hit a year you'll be golden, so long as you stick with it.
  
  
• Stay put: Another aspect that's looked at when you apply for a credit card or a loan is how long you've lived at your current residence. Has it been 18+ years? Has it been a week? A dirty trick those with serious issues like to pull is racking up a debt and then skipping town.
  
  So the longer you've lived someplace the better of you'll be. Just remember to pay your rent / mortgage on time while you're at it. They may contact your landlord / lender to verify your status.
  
  
• Enroll in a secured credit card program: I cannot stress this enough, do not even consider this until you are looking to rebuild. If you have an addiction to plastic, credit and impulse buying, wait until you've over come those demons before even thinking about this. While it's harder to get yourself into trouble with this, it is still possible.
  
  In a nutshell, a secured credit card is a lot like renting an apartment. You pay a security deposit in addition to some (usually small) annual fees. The amount of your security deposit directly reflects your credit line. If you mess up, poof. Your deposit has been funneled into your payment and your credit line is zero.
  
  Credit companies offer this specifically for people looking to build or rebuild their credit. It allows you to show yourself capable of acting responsibility with less risk to the lender.
  
  Just remember to pay off your balance in full every month. And shop around for the secured credit card that suits you best. (Read more...)
  
  
• Take out a small secured loan: A secured loan is essentially the same as a secured credit card, just bigger. Just remember, the bank is giving you a chance. Don't ruin it, or you'll find yourself without the collateral (your car, home, boat, et cetera) and another bad mark on your credit report. (Read more...)
  
  Always pay your balance due in full, on time without fail. This will do wonders for your credit score.
  
  
• Pay off all of your debts: Yes. Even the ones who have written you off as a deadbeat. Your efforts will be appreciated and they will reciprocate by improving your score.
  
  
• Consider keeping some credit cards: After everything is said and done and you've definitely over come your spending demons, consider keeping a couple of the better credit cards active with zero balances. This may help.
  
  But to remove all possibility of abuse keep them at home, away from the computer.
  
  
• Double check your work: After you've handled everything obtain a copy of your credit report (preferably for free). You can do this if you've been denied for a loan or a credit card by contacting the rejecting party and requesting it within a reasonable time frame. They must comply. This is U.S. law.
  
  Or you can visit www.annualcreditreport.com. This website is run by the three major credit reporting corporations. You may obtain a copy of your report for free, once every 12 months.
  
  Look it over. Do you see anything that's odd? Mistakes are not unknown. Someone may share your name, your identity could have been stolen at some point, your guardians could have unethically used your name in place of their own, et cetera. Dispute the inaccuracies. Rectify those you've missed.

It's quite surprisingly not a large hurdle to over come. You just have to apply a fraction of your brain power and time to the subject and you'll be on easy street should that be your destination.

Lenders: Not the money police

You can get a loan for virtually anything you can imagine. Homes, snowmobiles, cars, sheds, if you can name it someone out there is willing to cut you a check for it, so long as you pay them back with a nice, healthy interest rate.

This is not necessarily a good thing. It more often than not breeds irresponsible spending. Think of most of the reasons why someone would need to take out a loan. Chances are the list you'll compile, whether it's short or six pages long will mostly contain items people want, versus need. A vacation to Caribbean, a new boat, a second home in the mountains, et cetera.

It may be a bad connection to draw, but I like to think of it as a toddler being denied a toy until after he finishes his vegetables. He wants the toy now, and often enough he'll try to get it and throw the consequences to the wind.

So what if his parents punish him for making a poor decision?

But you're not a child and lenders are not your parents. This is not how the real work works. It is not the responsibility of the loan officer to be the money police. They're in business for a reason, to take your money so they can pay their own bills.

It doesn't matter what type of loan you'd like to take out. Irresponsible or not, if you have the credit history to back up your claim that you're fully capable of paying it off you're going to get the loan.

As long as your monthly debt does not exceed 50% of your net income or 35% of your monthly gross income, 9 times out of 10 your loan is going to be accepted under one term or another. Sure, you may end up paying a pretty high interest rate. Or you may be advised to refinance this or that. Sure, the loan officer may have personal reservations about giving you a loan for $5,000 so you can go on a ski vacation with your fiance.

But business is competitive. They know that if they reject your request you're more than likely just going to drive down the street to another, maybe less credible bank.

Which admittedly is the most likely scenario. So as long as you do not pose a significant default risk the money is yours.

But if you have the credit history to back up the fact that you'll repay the loan, what's the big deal?

It's not a big deal per se, but it puts you into a situation where you could potentially harm yourself severely. The lender isn't going to look out for you. That's not their business. They're not your friend. They don't care about you. They only care about being repaid.

It's your business. In the adult world of personal finance no one but you is going to look out for your best interests. Your lender, whether it's a bank or a credit card is not going to make sure you have a comfortable emergency fund or research the fact that while your employer of ten years is a really nice guy, he's about to declare bankruptcy and lay you off.

There is only one way to avoid getting yourself into trouble, but thankfully it's easy. If you don't need it (i.e. a car to get you to work, home repairs to keep you under a roof), don't borrow it.

Instead do what you did when you were a little kid, save. You remember that, don't you? The world of a child finances, scraping together every nickel and dime so they can afford something small and mundane, like a lego set.

The same logic carries over to the adult world. If you instead put your money into savings account not only will you not have to pay finance charges, interest rates and worry about the unforeseen (being laid off, medical issues, a car accident, et cetera) but you'll also get a small amount of interest from the savings account itself. So you'll end up with more money than you started with.

Sure, it's a piece of common sense, but it bears repeating. The most important aspects of one's personal finance is typically the easiest to understand. So long as you logically examine your wants and needs with a grain of salt, you'll do fine.

Juggling Jobs: It's okay

I've found this is true time and time again as I speak with my fellow indebted bloggers and readers. They're struggling to come up with enough money to pay all the bills coming from every which way, but they're doing it at the cost of their mental well being. They hate their jobs, but they feel they can't really afford to quit simply because of the fact that would mean even more money issues. They're getting large quantities of stress from both directions. While this can be motivating in the short term, it's really not a healthy way to live in the long term.

Everyone seems to think that you have to have a full time job and everything else has to be supplemental. That's not true one bit!

Consider me six months ago. I had a full time, well paying desk job. But I hated everything about it. I hated my boss, I hated the environment I was in, I hated the 35 minute one way commute, I hated the stupid little nit picking stress it caused.

But it paid pretty well. It was the best paying job I'd ever had. But it wasn't enough. So I returned to the drudgery of retail as a part time night job. But that didn't fix things at all. I went to my second job every night mentally exhausted. It only caused more stress, and more stress into a dire financial situation is a deadly combination.

So what did I do? I found a higher paying job that provided less hours, but I got to work from home. I bumped up the hours at my retail job that was right around the corner from my home and I put in my two weeks notice.

I'm in no way advising that you leave your current full time employer right at this moment if you're stressed beyond belief. But if you are, I'd definitely advise you to use some critical thinking about the issue.

Here are some points to keep in mind:

• Later benefits: Job juggling 2 - 4 part time jobs may lead to benefits at a later date. You always have a form of backup if you find yourself unemployed at one. If you only work one job and you get laid off, you typically have to scramble for two weeks to find another source of income.
  
  The logic also works in reverse. It also gives you the financial freedom to simply dump one job if it becomes too much of a drain on your mental well being.
  
  
• References Galore: If you're a hard worker a number of part time jobs versus one full time job may lead to an expanded resume and references sheet in the future so long as you keep them in your field of expertise (if you have one.)
  
  Remember, being a shift manager at Wendy's may not sound glamorous, but it gives you the ability to say you have managerial experience when you apply for something a bit more to your liking.
  
  
• Benefits: Many part time employers don't offer benefits to their employees. Does this worry you? It shouldn't. You just have to look a little harder. Here's a small list of part time employers that do.
  
  • Hospitals
  • Colleges / Universities
    
  • Lowes
  • Home Depot
    
  • Starbucks
  • Fedex / Fedex Kinkos
  • UPS
  • DHL
    
  • Costco
  • Barnes and Noble
  • Borders
    
  • Trader Joe's
  • JC Penney
  • Walgreens
  • Target
    
    
  Keep in mind that you can quite likely find many more mom and pop places that offer a benefits package to part timers in your local area. The fact that no part time position will come with benefits is a myth.
  
  
• Offsetting lower wages: It's likely that if you take on part time jobs you're more than likely going to take a hit in pay. That's fine. Some ways to offset it (and actually save / earn more in the process) are:
  
  
  • Save fuel. If you're used to a 30+ minute commute, restrict your new multiple job hunt within a smaller circle. Try to plan it so you only work one job a day and that job is within a 15 minute commute.
    
    
  • Save expenses. A lot of people go out to lunch with their coworkers. Cut back. Bring your own lunch. Or work while eating if possible.
    
    I skip lunch at my second job as much as possible.
    
    
  • Stay relaxed. The hustle and bustle of your new multi job life style may get to you. If you're working more than one job a day, try to schedule your commute plus a small decompression buffer in between. Bring a book or magazine and give yourself a couple of minutes to rest before jumping into the fire again.
    
    Consider a quick nap if possible.
    
    You're doing this for a reason. It can pad your pockets more and provide you with a sense of self satisfaction, but only if you let it.
    
    
  • Don't get in a rut. Again, you're doing this for a reason. Pick jobs that benefit you, not the other way around. Apply for jobs that you enjoy, or get a hidden benefit out of.
    
    For example, many food service jobs offer free meals to employees. (A quick point on this, you might not want to find yourself employed at your favorite place to eat. After 6+ months of working there you'll likely get a little tired of the menu. I'm not allowed to eat at Subway simply because of this. ) Many retail jobs offer hefty discounts on merchandise. Some may provide you with a useful skill you can add to your resume. Keep your mind open.

So long as you play your cards right you can greatly reduce the stress of your work life so you can focus on more important things (like paying that Discover bill). I know things may seem bleak, but you're not chained to any one job. You're free to do what you please, just make sure that coincides with an intelligent and well thought out decision.

You know you have a problem when..

A surprising amount of people have addictive personalities. They just tend to gravitate toward and focus on specific things. These things may give them enormous amounts of joy, or they may just take the edge off of life. It of course depends on the person, their addiction and their surroundings.

It isn't necessarily their fault. Addiction is often hard wired into someone's personality. So it may just be the type of person they are, and hell, their addiction can just as easily be benign versus disastrous.

And addiction doesn't necessarily have to deal with drugs or alcohol. Sure, those are the most common and dangerous. There is a chemical dependence involved. But often someone will just have a mental addiction. Something materialistic that drives their rush, a little shiny hand to throw a little switch in their brain.

I've met people addicted to coffee, diet coke, food in general, exercise, children's toys and books. They're items they cannot live without, and when they reach rough times these vices become bleeding arteries.

It's the same case with people addicted to credit cards. These people, partially through environmental reasons (i.e. lender advertising) and partly through their own deficient faculties (i.e. "I really, really like QVC...") often find themselves in trouble time and time again.

It's my hope to compile a short, concise list in today's post to assist those who may not yet recognize they have a credit problem. Some of these may seem obvious and some may require you to think a little harder. Such is typically the case.

Have a point you'd like to add? Comment and I'll link back to your blog in my next post!

You know you have a problem when...

1. You spend more than 20% of your income (after taxes) on your debts.
   
   
2. You apply for another credit card because your credit line is not high enough on your existing card(s).
   
   
3. You find yourself paying the minimum amount due more than once within five billing cycles.
   
   
4. You've used your credit cards to pay for basic necessities (rent, utilities) not out of simple convenience, but because you lack the funds in your checking account.
   
   
5. You've used your credit card to pay off another credit card.
   
   
6. Lenders begin calling your home looking for their money.
   
   
7. Lenders begin calling your place of employment looking for their money.
   
   
8. Credit collection agencies begin calling your home looking for your lender's money.
   
   
9. Credit collection agencies begin calling your place of employment looking for your lender's money.
   
   
10. Attorneys begin calling your home looking for the credit collection agencies. Et cetera.
    
    
11. Your car loan lender calls up out of the blue and asks you what your typical work hours are and where you typically keep your vehicles.
    
    
12. QVC is on speed dial.
    
    
13. A major online retailer (amazon.com, ebay.com, et cetera) is your home page.
    
    
14. You are denied for a loan. If you did not have a problem, you should have no problem obtaining a substantial loan.
    
    
15. You find yourself without utilities for short periods of time, because you failed to pay and they were disconnected.
    
    
16. You've rationalized your excessive spending in any of the following ways:
    
    
    • Life isn't worth living if you can't enjoy yourself.
      
    • I need it (You need precious few things, it's more likely that you want.)
    • Only this one more time. (Saying this implies that even in your own mind you've established a repeating pattern.)
    • But it's on sale. (Something, somewhere is always on sale.)
      
      
17. Fights have broken out in your relationship over irresponsible spending.
    
    
18. You've been in a relationship that has ended over irresponsible spending.
    
    
19. You find yourself being kept awake at night because:
    
    
    • You bought something you regret
    • You regret not buying something earlier in the day
    • You don't know how you're going to survive the next work week
      
      
20. If asked to name everything you've bought with your credit, you fail to remember much of your spending.
    

Of course these are just a few of the tell tale signs. There are many more, and while you may have found a couple of these points do apply to you, you may not necessarily have a spending problem. But if you're looking for ways to determine if you do, that's likely reason enough.

A savings account: Because life likes to mock you

(Been a long day? Don't feel like reading? Want - the minus sign blues on the go? Click here to download and listen to an mp3 of this post, read by yours truly.)

Graphic and ominous image aside, I'd like you to take a journey with me. A tool I often like you use here on - the minus sign blues is the human imagination. It's such a powerful instrument to get ones point across if it is actively stimulated.

So, imagine something for me, will you? I can't possibly ask you to close your eyes, but you get the concept. Right?

You and your partner in debt have just put your heads together. You've finally joined forces to eliminate your money issues. You're getting tough on the issue at hand. There's budgeting in one direction, paying off credit card balances in another, and a whole mess of self satisfaction.

You think you're doing pretty good. Creditors have stopped calling for the most part, you don't worry yourself sick in the middle of the night and best of all, you feel a sense of self respect you haven't felt for a long time. You feel like you're a responsible adult now, not just like you should be one.

One frosty cold New England morning you wake up, flip the coffee machine into the "on" position and head on down to the bathroom for your shower. Groggy eyed you turn the water on to a pretty hot setting. It's very cold in the house.

You disrobe, shiver and step into the shower.

The next split second is one part sheer, eye wided shock, one part epic shrinkage and one part very loud vulgarities.

Your water heater is dead. You don't have the money for a new one.

Welcome to my world two weeks ago.

Every single financial help book details this extensively, but it bears repeating. It doesn't matter what it is, always contribute some sum to a savings account. Out of every single paycheck, whether it's $10 or $100 or $1,000.

Our problem was not one of total ignorance, but of bad timing. We've recently regained control of our finances and with it we've begun making semi-regular contributions to our savings account. The problem is, disaster stuck us when we were nearly as vulnerable as we could have been.

Consider it a kick to our gut as we were struggling to stand up.

It takes time, patience and discipline to maintain a savings account. This is especially true in the face of epic debt and some very large, angry minus signs. You're often tempted to dip into it to come to zero yourself out at the end of the work week. But if you absorb anything from this blog at all, let it be this.

But no matter how scared straight we've become with our finances, that hardly helps us now. And sure, we may have a couple hundred dollars in the account. But what does that pay for? Maybe a single rent payment, or two months groceries.

Certainly not $5,000+ for a new water heater and installation, and with our credit problems already as bad as they are, can we afford to make our big red number 40k instead of 35k? Absolutely not.

Planning for the future is an essential aspect of our survival. We would have had more in the account had we not dipped into it to meet a credit card payment or two. Suddenly a late charge doesn't seem terribly bad.

Fortunately we had relatives to come to the rescue. It's been a rough couple of weeks with frosty cold showers, but we should eventually get our new water heater.

But what if we didn't have anyone willing to foot the $5,000+ bill? What if it was something a bit more life threatening than a water heater melting down?

What if it was a car accident, or a sudden loss of employment? What about a house fire? We're going to call this a warning shot across our bow. The cold showers should serve to wake us up, both physically and metamorphically.

We were not prepared. Are you?

I hope so.

Pay for things in hours, not dollars.

I touched on the fact that credit cards breed a disconnection with one's finances in an earlier post. While I did explain at length that it is typically a good idea to pay for things with other, just as conventional methods (cash, debit, check) there are a couple of other ways to go about limiting yourself if you find yourself subconsciously (or consciously..) vacant when it comes to your spending habits.

It's a trick a lot of expensive self help books like to mention, but I've yet to see it published online. Mind you, I'm sure it's floating around on the internet somewhere. The problem is finding it. So I thought I'd make it accessible to those who may happen upon this post.

Sometimes cost means a lot, sometimes it doesn't. I believe there is a cut off point, hardwired into each individual's brain where a cost simply stops registering an emotional reaction. I like to call it the "common sense over-reaction." Your brain simply goes kaput once numbers start registering high enough.

This can and will occur, even if the individual is shelling out single dollar bills for a new plasma screen TV.

Let me elaborate.

Assuming you have some financial freedom that allows you to spend some of your hard earned money how you like, you'll often find yourself making compromises to yourself or your other. Consider it a misdirection.

Let's construct a scenario. You're shopping for a new television at Best Buy. You walk the infamous line of dolled up entertainment centers blasting out Toy Story on HD Surround Sound. You need a new TV, and you can luckily afford a pretty good one.

You see a lot of costly set ups. One's for $650 with free delivery, one's $990 with bundled surround sound, one's $2,500, but it comes with a sweet little DVR and a $100 gift certificate.

So you examine all of your options and you pick the first one. It's a pretty nice television and hey! you get something free!

Sure, you probably made one of the more responsible picks. But did you really register how much $650 dollars really is? Sure, it was the cheapest. But it was also right next to sets that went all the way up to $2,500.

To steel your heart and desires a little, consider your income and apply it to any large purchase. Instead of $650, calculate how many hours you're going to need to work in order to pay for that television.

For the sake of having a round number, let's say you make $10 an hour. That means you're going to have to work 65 hours in order to pay for that television in full. That's about two work weeks. Before income taxes. Before sale taxes. Before interest (if you pay on credit, shame on you).

Consider what you do for a living. Whether you're a handyman or a tech support representative, do you really want to bust your ass for two weeks for a single really cool television? Is it really worth it?

It's certainly your money. You may do whatever you like with it, but all of a sudden $650 looks like a lot more now, doesn't it?

The same logic applies if you make double that. Consider you make $20 an hour. Maybe you want a fishing boat. Well, before all of the other associated costs, would you be surprised to know that a $6,000 dollar fishing boat with trailer costs you over two months of pay? Is it worth it? Maybe. Maybe not.

It's a fun little trick to apply to other things you may buy, too. How many hours of toiling away at the office in order to go out to dinner to spend $50? How many weeks spent selling vacuum cleaners to get that beautiful new snowblower?

And hey, if it helps you at least once, it's worth the consideration and a little bit of simple math.

The Holidays: Good gifts for them.

Welcome to part 2 in the epic debt holiday tip list. So we've explored good gift ideas for you and yours, however much you'd prefer iPhones and Coach purses, you must admit the ideas were fitting.

But now it gets easier. I've found that it's a whole world of difference getting someone something cheap and asking for someone to buy you a cheap gift.

No matter how poor you are, holiday shopping is occasionally required. Whether it's to obtain access to a Yankee swap wherein free food is served, or to please your significant other come holiday morning. The whole world can't stop simply because Discover is having a happy holiday with your paycheck. And happy they are.

By no means is this a complete list to shopping cheaply. Have a couple of additions? Post in the comments! I'll link back to your blog in my next post!

• Put more thought into gifts: A cheap thoughtful gift is often worth more than an expensive thoughtless one. Now that you're poor you need to consider the person you're shopping for a bit more now. You'll appreciate it come your bank statement and they'll appreciate it come their witness.
  
  
• Book Gift Sets: For the recipient that likes to bake/cook frequent library book sales, discount department stores (Building #19, Dollar Tree, Family Dollar, et cetera) and try to pick up a discontinued cookbook. That in itself is a little spotty, so dress it up a little. How? Well, if the subject of the book deals with cooking with chocolate, buy a bag of baking chocolate. If the subject of the book deals with soups and stews, buy a dollar store ladle and skimmer.
  
  The same is true with most other interests. Do they enjoy dogs? You can probably find a cheap dog training book and a cheap, good looking collar if you look hard enough.
  
  Pairing the gift with the person's personality, plus multiple small and themed gifts will often result in delighted surprise.
  
  
• Bake cookies: Are you decent behind the stove? No? Is your significant other? Okay, that works too.
  
  Holiday themed cookie tins, ribbon and cookie essentials are cheap. So a couple of days before the big day, bake up a batch of their favorite cookies. Whether it's oatmeal raisin, peanut butter or chocolate chip everyone has a favorite cookie. Trust me on this one. And the best part of it all? The materials you do need pretty much come straight from your food budget, if you need any at all. For an extra level of flair make them memorable by making them enormous.
  
  Most kitchens have flour, sugar, vanilla extract, baking powder and a rolling pin. So what's keeping you?
  
  Do they like brownies more? Essentially the same stuff, get to cooking!
  
  
• Candy Jar: Whether you already have the supplies at home (ideal), or if you need to go out to a craft store, this idea is still easy and cheap. Buy assorted, individually wrapped candies of a variety the recipient will like. Good ideas include peppermints, kissies, caramels and bubble gum.
  
  Now make a decorative jar, wrap it up and wham.
  
  
• Planting kit: Have someone who has a green thumb? Build them a planting kit, something they'll be able to use come the warmer months. You can buy seed packages at Home Depot for $0.50 a piece, small terra cotta planters for $1.50 a piece, and you can likely find some cheap gardening supplies at your local dollar stores. Try a spade or a small watering can.
  
  Want to add a little extra, personal flair? Craft stores such as Michael's sell small sets of paints and wooden accessories. Paint the terra cotta planters and make a couple of small planter signs saying such things as "Basil" and "Man Eating Patuna."
  
  
• Themed Gift Basket: So you know the person you're shopping for pretty well? Make a gift basket for them. Reuse an old basket you have sitting around the house or purchase one cheaply at a dollar store. Now fill it with discount bin and dollar store items the person will like.
  
  Ideas can include soaps, lotions and bath salts or hot cocoa packets, marshmallows and peppermint candies.
  

These are of course the tip of the iceberg. But with a little thoughtfulness and a couple of bucks in spare change, you can survive the holiday season without coming off as a total cheapskate.

Co-Signers: Don't drag them down with you.

Co-signing is when two or more people enter into a loan together for the purpose of paying it off jointly in the near future. On the surface it seems pretty mundane and every day. The word itself crops up often enough to make it a household word, right? It's at least as common as the words mortgage, co-pay or liquidated assets.

So it doesn't seem like that big of a deal when a bank asks for you to obtain a second (or third) person to co-sign on a future loan. This could be for your small business, home repairs, a car. Anything really, so long as it can be tacked onto an interest rate you can typically get a loan for just about everything. So you don't think twice about it before going off to pester a relative or friend to just sign a little piece of paper to get the ball rolling.

And hey, you're likely going to ask someone you trust, right? Someone you respect as a person, probably a close relative like a sister or a father. Or a close friend, someone who knows you're a good person at heart.

So they jot down their signature, a date and a social security number. They enter into a binding contract with a corporation whose business is to, gasp, make money. They nod dimly at the grim bank agent explaining the nitty gritty details behind the contract.

Your friend or relative knows you need their help, so even as the bank agent explains the situation they just nod dully, keeping you in mind. After all, they've known you for years. You'd never get them into trouble, right?

Wrong.

The situation is simple. If a bank is asking for another individual to co-sign on your potential loan, they believe you are incapable of paying it off. After checking out your credit history, income and other outstanding loans they come to the conclusion that you cannot possibly pay them back in a timely manner.

They are likely a large, multinational corporation who specializes in lending. They have legions of employees and third party vendors at their disposal. They are in the money industry and if they are in business to offer you the loan to begin with, chances are they are very, very good at it.

They don't want to turn away a willing client. Clients pay the bills and keep their CEO fat and happy in the Hamptons. So if they're outright rejecting you without another signature, there is good reason.

They're looking to cover their own ass because they feel you will fail.

Listen to them. Chances are if you're in a dire financial situation it is for good reason. This is not to say that you're a bad person because you were rejected for a loan, just bad with money. Use it as a learning experience, not as fodder for self pity.

It's one thing to enter into a risky situation for your own benefit if you are the only person at risk. But it's quite another to enter into a risky situation for your own benefit at the expense of your relative or friend.

The bank is asking for a co-signer so they have some insurance you're going to pay your bills on time. And if you fail, through whatever reason, your co-signer is going to have to pick up the slack. All of a sudden they're going to be awash with your dirty laundry.

And hey, if they can't pay, guess what's going to happen to their credit report? It's going to tank. You're going to be spreading your own misery to someone you care about. Someone who just wanted to help you out because they cared about and trusted you.

Keep this in mind when you see the words "co-signer required".

It appeared on your contract for good reason, so investigate it. Obtain a copy of your credit report. You can do this for free, by law, once every 12 months. You can read up on the issue at the Federal Trade Commission's page on the subject here and obtain a copy of yours here.

Once you have your credit report, investigate it. You're going to come across the reason why the bank is requiring a co-signer fairly quickly, whether it's your outstanding credit card debt, your low income job, or your four car loans.

But instead of hunting down your best friend, rectify the issue completely before attempting to reapply for the money you requested earlier. And at that point only enter the agreement by yourself, or with your spouse. If it's for personal use, it should be personally paid off, don't you think?

Recycling: Likely unnecessary

Willow made a very valid comment in the consolidation versus counseling thread that I just so happened to notice. My apologies for the delay in a link. You can't go wrong with financial management and food, I'll tell you what.

A couple of days I was listening to NPR during my little commute to work. The host was interviewing the founder and CEO of Stonyfield Farms, Gary Hirshberg. The corporation is a relatively environmentally concerned organic yogurt manufacturer. They're really into recycling their containers. But kind of recently they up and decided to simply stop selling their yogurts without plastic lids.

The lids were recyclable and made of recycled materials. So why would an environmentally friendly company go ahead and make the decision to stop using recycled materials?

Simple. Because even though the lids were recyclable and made wholly of recycled materials, their existence was wasteful and attached to a large carbon footprint. Confused? Let me elaborate. I'll get the cheap skate stuff in just a moment.

Whenever something is manufactured it produces something called a "carbon footprint." This essentially is the amount of carbon that was pumped into the atmosphere to produce it. This includes transporting raw and finished materials (by land, air or sea) and the actual production of the item.

So what, you think. Recycling helps the environment!

True. But only on items already existing in the environment, if it reduces production of that same item later on. It takes more carbon emissions to recycle something. You need to transport it to the recycling center, you need to process it, and you need to transport it to its final destination. And you need to do it safely. No way around it, recycling still produces pollution while attempting to reduce it.

The logic of Stonyfield Farm? Emphasize on the first R in Reduce, Reuse, Recycle. Not too many people realize it's in that order for a good reason. It's the cheapest, easiest and most logical order.

If you reduce your needs you're actually doing more to the environment than you are when you reuse something. And when you reuse something you're doing more for the environment than you are if you'd recycle something.

People tend to simply latch onto the recycling itself because it looks pretty. People get to see you do something helpful, and you get to feel better about yourself.

The same is true of those in unsavory financial situations.

How? Well, carbon emissions come with a price tag. Whether it's gasoline in your car, the soda in your can or your bottle of Gatorade, it's going to cost you something. A lot of people save their recyclables in the hope of cashing them in for a return on their spending. But they fail to realize they would have helped themselves and mother earth even more simply by just reducing their needs to begin with.

Let's examine some recyclables, shall we?

• Cans: These carry one of the highest return investments imaginable. You suck the sweet, sweet nectar out, crush the can and throw it into a garbage can for the recycling center. You might make $0.02 per can. That's great, but you probably spent $0.50 or more on it to begin with.
  
  If you reduced your needs and instead drank a glass of water or fruit juice instead, you not only would be saving money, but reducing pollution. Not to mention it's probably healthier for you than anything that was in the can.
  
  
• Glass Bottles: The logic for bottles is exactly the same as it is for cans. You're going to get a return on your recycling bottles, but if you had simply refrained from purchasing the glass to begin with in lieu of something else that was cheaper and used less materials in its construction you'd save even more.
  
  
• Plastics: Depending on the grade and quality of the plastic, simply fall back to the next R, Reuse. Sure, you made the mistake of buying a bottle of water for $2.00. Instead of moping about, depressed at your own stupidity, just reuse the bottle. Fill it with tap water.
  
  
• Paper Products: While possible to reduce (stop buying magazines), reuse (scrap paper), paper products typically wind up being unavoidable. So you're typically forced to fall back on recycling.
  
  This is fine. Sometimes you need a newspaper, or printer paper. And junkmail is all too common, isn't it?
  
  But have you considered reusing it differently instead? No, I'm not talking about scrap paper or tomorrow's luxury dinner. Pulp it and make your own.
  
  
• Assorted bits and pieces: There are other, more complex bits that are recyclable as well. Take those on a one on one basis. Some can turn you a return on your investment.
  
  Ink cartridges can be returned to major retail outlets for recycling. Some providers offer discounts on future cartridges if you recycle enough. The same is occasionally true for computer equipment and cars.
  

While recycling can earn you a return on your original investment, try to rethink the situation. Sometimes you'll find that reducing your needs and reusing material is far more beneficial to everyone, including your wallet, than recycling.