jellybeans1

http://www.getrichslowly.org/blog/2009/12/25/happy-christmas-everyone/

http://www.getrichslowly.org/blog/?p=8035

Here’s a holiday video from 1950 showing Christmas celebrations around the world: in the United States, England, Holland, France, Sweden, Switzerland, Korea, Japan, Canada, Mexico.

As the spirit of Christmas unites all humanity, men and women everywhere reaffirm their faith in the brotherhood of man. The News Magazine of the Screen presents, from around the world, the spirit of PEACE ON EARTH, GOOD WILL TOWARD MEN.

Happy Christmas, everybody. Have a great weekend.

---
Related Articles at Get Rich Slowly:

• Start Saving For Next Year’s Christmas Today
• Christmas 1950
• The Four Things Children Really Want for Christmas
• Best Dates for Holiday Travel 2007
• Taking a Break

http://www.getrichslowly.org/blog/2009/12/24/is-a-reverse-mortgage-right-for-you/

http://www.getrichslowly.org/blog/?p=8000

This is a guest post from Francine Huff, a freelance journalist and writer at BestReverseMortgage.com and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows. Visit her web sites Huff Writes and Super Savvy Spender.

Whether through recent news articles or over the water cooler, you’ve probably heard something about reverse mortgages. But if you (or a loved one) is considering this type of loan, don’t base your opinion on hearsay. For such a major financial decision, it’s worth getting the facts about reverse mortgages. This type of mortgage can actually be a valuable option for people in the right circumstances and who understand the terms of the deal.

Reverse mortgages convert home-equity into cash
What is a reverse mortgage? If you own a home and are 62 or older, a reverse mortgage is a way to convert some of your home equity into cash. Rather than make monthly payments to your lender, your lender is making payments to you. The money you borrow through a reverse mortgage is paid back, with interest, when you move out of your home, sell your home, or die.

The older you are and the more valuable your home, the lower the interest rate you can get in a reverse mortgage — meaning you can borrow more money.

Why and how do people use the money borrowed through a reverse mortgage? Cashing out home equity in this way can be helpful if you have a fixed income and need more money to pay for household bills, debt, medical costs, home repairs, or other expenses. The money from a reverse mortgage can be paid out as a lump sum, in regular payments, or as a line of credit.

Unlike with traditional mortgage loans, your credit history does not matter with a reverse mortgage. However, the house must be your primary residence, so vacation homes and investment properties do not qualify.

Effect on taxes and government program eligibility
If you’re concerned that the additional money will boost your income tax liability, don’t be. Money obtained through a reverse mortgage loan is not considered taxable income. You also keep the title to the home and can never be forced to move as long as you pay the property taxes and insurance. If you and your spouse take out a reverse mortgage together, the loan isn’t due until both spouses have moved or died.

If you receive regular Social Security or Medicare payments, they won’t be affected by taking out a reverse mortgage. However, your eligibility for Medicaid payments could be affected. Money received from a reverse loan may be considered an asset and could keep you from getting Medicaid.

For example, if you receive $4,000 from a reverse mortgage and spend it all the same calendar month, you can receive Medicaid, according to the National Reverse Mortgage Lenders Association. If you spend some of it and put the rest in your savings account, that’s where you can run into problems. If your total liquid assets exceed $2,000 ($3,000 for couples) the next month, you wouldn’t be able to receive Medicaid.

Are you a spendthrift?
One of the disadvantages of a reverse mortgage is that getting money this way won’t correct poor spending habits. If you have trouble managing your money, a reverse mortgage won’t solve your financial problems.

For some folks, getting their hands on a large sum of cash may result in poor spending choices that could leave them without enough money for basic living expenses later on. Who hasn’t heard horror stories of retirees blowing reverse mortgage money in record time on expensive vacations, meals, cars, and other frivolous purchases? Anyone who really has a problem with debt and managing money may need to speak with a credit counselor.

Credit counseling differs from reverse mortgage counseling, which is mandatory for most reverse loans. This free or low-cost counseling can be done in person or by phone. The goal of counseling is to get detailed reverse mortgage information to help you decide if using one of these loans is a wise choice. Counseling can help you review other alternatives to getting a reverse loan. Find a HUD-approved counselor to talk through your options. Seniors who use reverse mortgages can reap a lot of benefits, but these loans aren’t for everyone.

Your home appraisal
You may not benefit much from a reverse loan if you don’t have enough home equity. When you apply for a reverse mortgage, your home will be appraised to determine its current market value. The more equity you have in your home, the more money you can potentially receive through a reverse mortgage. After the past year’s market performance, it’s worth noting that no matter what happens with the housing market, the amount owed on a reverse mortgage never exceeds its market value at the time a house is sold.

Just make sure you really want to cash out that home equity. When you own a home free and clear, you can leave it to your heirs without too many restrictions in most cases. But with a reverse mortgage, one of the disadvantages is that if you want your heirs to have the home, they (or your estate) must pay off the loan balance first. They also could choose to sell the home and keep any remaining equity after repaying the lender. If they don’t want the home, they can do nothing and the mortgage lender takes the property.

Reverse mortgage disadvantages: Loan fees
Reverse mortgages usually have a lot of upfront costs, so you may want to consider other alternatives to getting more funds if you plan to move from your home in a few years. Some other ways to improve your cash flow are to redo your budget to reduce expenses, get a home equity loan or no-interest loan from a local government agency or nonprofit, or look for grants for homeowners in your area.

One thing to remember is that the US Department of Housing and Urban Development’s Home Equity Conversion Mortgage (HECM) allows you to use the proceeds from to buy another home as your primary residence. So you can use the money from a reverse mortgage to downsize to a less expensive place.

Get the reverse mortgage facts to help you decide
As more seniors have struggled to make ends meet in recent years, reverse mortgages have grown in popularity. Some consumer advocates and legislators say reverse home loans are heading for another meltdown like subprime mortgage loans. Others believe that these loans have a lot of value and can help seniors live more comfortably in their golden years.

It’s up to you to make the right decision based on your personal financial situation. And don’t let pushy salespeople pressure you into signing up for a reverse mortgage without understanding all the consequences. Talk to a counselor to discuss reverse mortgage facts and whether one makes sense for your needs.

J.D.’s note: I know absolutely nothing about reverse mortgages. In fact, before doing research for my book, I had vaguely negative feelings about them. But lots of financial experts I trust think they’re a good option — in some cases. Do YOU know anyone who’s taken out a reverse mortgage? Are they glad they did? Or do they wish they hadn’t?

---
Related Articles at Get Rich Slowly:

• The Right Way to Use a Reverse Mortgage
• Use “Reverse Credit” to Stick to Your Budget
• The Best Ways to Boost Your Retirement
• Daily Links: Yard Work Edition
• Compare the Best Mortgage Rates

http://www.getrichslowly.org/blog/2009/12/23/your-money-thermostat-wheres-your-financial-comfort-level/

http://www.getrichslowly.org/blog/?p=7829

This is a guest post from Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the advisor for The Motley Fool’s Rule Your Retirement service. He contributes one new article to Get Rich Slowly every two weeks.

I must confess to a new habit: I collect discarded ATM receipts. It all started when I walked by the bank in the building next to Motley Fool Intergalactic Headquarters, and found one such receipt blowing in the wind. I was shocked by how little the person had in her/his bank account, and how much she/he paid to get what cash was available.

To see what I mean, check out the stats on seven receipts I’ve recently picked up:

What comes to your mind when you look at those numbers? Here’s what comes to my mind:

• Some people have very small bank accounts. Only one of those accounts is substantial. Of course, this may not be the only bank accounts these people have. But if it is… well, these people are living on the financial edge. I suspect they have other accounts with much bigger balances: their credit card accounts.
• Some people are willing to pay a lot to get their cash. Three of these people paid three bucks. In the case of the last person, that $3 ATM fee was 15% of the withdrawal and 4.5% of the entire bank balance.
• Some people don’t give a hoot about polluting. I don’t dig through the garbage for these receipts; they all have been thrown on the ground. Some people take the time to rip them up and then throw them on the ground (even though there’s a trash slot under the ATM). I have considered the possibility that the receipts I collect aren’t indicative of banking customers in general but a self-selecting sample — specifically, people who have little regard for their community also have little regard for their own personal finances. Just a theory…

What’s your ther-money-stat?
Here’s another theory I have: We each have an internal level of financial stasis that involves having a certain amount of money in the bank, a certain level of debt, and a certain amount of each paycheck going to savings — an internal “ther-money-stat,” if you will. If we somehow find ourselves in a better situation than our regular level of financial comfortability, we turn up the spending. Perhaps it’s due to a raise, or a bonus, or an unexpectedly large tax refund. But as historian C. Northcote Parkinson wrote, “Expenses rise to meet income.”

On the flip side, there’s a level at which we freak out. Our financial condition drops below our internal ther-money-stat, and we swear off restaurants, movies, vacations, and anything but the necessities. (By the way, a difference in these internal levels is one of the biggest sources of conflict between couples.)

If I had just a few hundred dollars (or less) in the bank — as is the case for plenty of people, according to the ATM receipts I pick up — I would immediately cancel the cable and the cell phone, turn down the heat and layer up the sweaters, and likely get a second or third job. I would barely be able to sleep with that little in the bank.

Of course, I don’t know the stories behind these receipts, but my guess is that these folks have a much lower ther-money-stat than I do. The question is, can it be changed? Can someone who is willing to pay $3 to withdraw $20 from a $71.04 bank account turn into someone who would not rest until there’s three to six months’ worth of living expenses in an emergency fund?

I think it’s possible; you GRS readers have told us before what got you to become fiscally fit. But I bet it’s not easy.

Season’s depletings
I suspect that many of us (myself included) tend to get a bit self-righteous when we see evidence of people making bad financial decisions. However, I can’t help — especially at this time of year — to also feel sorry for these low-balance bank customers. There are plenty of people who are experiencing tough times due to no fault of their own. I can even conjure images of parents withdrawing from their measly accounts to buy gifts for their kids. (I’m a sucker for a holiday sob story.)

So whatever the reason for these folks’ modest bank accounts, here’s to hoping that they — and you — have an enjoyable holiday season, and that 2010 brings bigger bank balances to us all.

---
Related Articles at Get Rich Slowly:

• Programmable Thermostats: A Three-Month Review
• Take Small Businesses to the Next Level
• How to Slash Summer Energy Costs
• Cheap Ways to Stay Warm this Winter
• Where’s George? The Dollar-Bill Tracker

http://www.getrichslowly.org/blog/2009/12/22/the-basic-law-of-frugality/

http://www.getrichslowly.org/blog/?p=7956

April’s post this morning about renting designer purses and other luxury items raised a few eyebrows. Because the focus here at Get Rich Slowly is on frugality, it’s not often that we delve into the world of high fashion.

In the comments, for example, Ami wrote:

I thought this was the Get Rich Slowly site, not the fritter your money on fripperies site. For me, Getting Rich Slowly is about changing your mindset about what’s necessary and important, which reduces your list of financial needs.

I think Ami’s comment is spot-on. Smart personal finance is about changing your mindset about what’s necessary and important, about reducing your list of financial needs. But I’ve learned that part of this is finding a balance so that you aren’t ignoring your Wants entirely. As Ramit at I Will Teach You to Be Rich says, there’s a place in every budget for conscious spending.

The basic law of frugality
Last summer, Kris and I had dinner with some of her old teacher friends. (My wife taught high-school chemistry and physics for eight years. She’s been out of the field now as long as she was in it, but we still get together with her former colleagues several times a year.)

During the conversation, one of the women — Linda, who teaches history — revealed that she doesn’t own a computer. She didn’t even have a functional TV until her siblings bought one for her. She’s never felt the need for these things, and she’d rather spend her money on something more important to her, like world travel.

Which is the “better” way to spend your money: world travel, an expensive handbag, or an HDTV? Or should you simply tuck your money into a high-yield savings account? This will come as no surprise, but I don’t think there’s any one right answer.

We each have things we spend on that others think are crazy. Linda is willing to live without a TV or a computer so she can fly to China and Belize and Nepal. Other folks are willing to cut corners on housing so they can afford four surfboards. I buy comic books, but I don’t spend much for clothes.

Are these things frugal? If your goal is to pinch every penny, then no they’re not. But if your goal is financial balance, spending on the things that make you happy is perfectly fine. To me, the basic law of frugality is: Decide what’s important to you. Give yourself permission to spend on these things. Pinch pennies on everything else.

Sometimes you CAN get what you want
I have no concept of fashion. I don’t care about name-brand watches, purses, shoes, jackets, or jewelry. For better or worse (and some would say it’s worse), my style is thrift-store chic. All I want to do is pay as little as possible for basic clothes. But I’m not about to condemn those folks who do like fashion.

If you can afford it — by which I mean you’re not sacrificing your financial goals — and if you’re spending consciously and if you’re comparison shopping and if you’re buying quality…If you’re doing all of these things, then there’s absolutely nothing wrong with buying an expensive purse, if that’s what’ll make you happy.

Frugality doesn’t have to mean sacrificing quality. And it doesn’t have to mean you never buy anything you want ever again. You can’t always get what you want — but you can sometimes!

---
Related Articles at Get Rich Slowly:

• Call for Submissions: Festival of Frugality
• Frugality is Important
• links for 2007-02-09
• links for 2006-11-01
• Is Frugality a Necessary Evil?

http://www.getrichslowly.org/blog/2009/12/22/lifestyle-of-the-rich-and-famous%e2%80%a6on-lease/

http://www.getrichslowly.org/blog/?p=7929

This post is from GRS staff writer April Dykman.

Most of us, at one time or another, have seen a photo of a celebrity with an “it” bag, even if just in tabloids at the supermarket check-out. Most of the time they are over-sized totes, logo prominently displayed, on the arm of an actress or pop star. (Sometimes I wonder if the tinier celebrities could, in fact, fit inside their own handbag.)

And as ridiculous as it might seem, you can bet that if a pop star is carrying a bag, the masses are sure to want it, too.

The problem is the price sticker. Most people can’t afford a $2,000 bag. Besides, usually the Hollywood elite, who can afford these bags, receive them as gifts (think product placement).

Riches for rent
I’m a bit late to this party, but I recently learned that one can rent designer bags, sunglasses, and jewelry. Yep, companies like Avelle, Bling Yourself, and Wear Today, Gone Tomorrow will rent merchandise by the likes of Chanel, Hermès, Louis Vuitton, Prada, Chloé, Herve Leger, and more. For a monthly fee, you can carry the “it” bag.

One site, for example, will rent a vintage Birkin bag for $600 per week. The cost to buy a vintage Birkin is about $17,000 (I’ll give you a moment to stop choking…mmkay, better now?). A Coach bag that retails for $350 can be rented for about $30 a week, or $20 per week if you keep it for a month. And so on. You also have the option to buy anything you rent and can’t bear to return, and there’s insurance available if you’re worried about a cosmo spilling on your rented Gucci.

The arguments for renting
According to the companies, renting allows people to enjoy items they can’t afford to buy. Also, if someone decides they need a change, they can send the item back and choose something else.

Some members say that the monthly membership is actually less than what they spend on bags and jewelry in a given year, and that they wind up with less Stuff, since the items go back into circulation for others to borrow.

Fair enough.

My arguments against
Full disclosure? I think it’s nuts. Let’s take that Coach bag, for example. It costs $350 retail, or it can be rented for $20 per week. In about 4-1/2 months, the amount spent renting the bag could be saved to purchase it.

No, it can’t be returned on a whim. No, it can’t be exchanged at will. But it is more cost-effective to purchase one or two quality handbags and own them indefinitely. If you continued to rent bags at $20 per week, in one year the total amount of fees would come to $1,040.

More disclosure? I don’t necessarily have a problem with $350 handbags. If that sounds like an insane amount of money to pay and/or you couldn’t care less about fashion, that’s good news for your pocketbook. Do what works for you and spend your money on what matters to you. If, however, you do love a little fashion in your life and you believe in quality over quantity, forget bag rentals and abide by these guidelines:

• Choose a handbag in line with your discretionary income. There are nice things at most price levels.
• Wait for a sale. Salespeople are always happy to put you on their mailing list, which will alert you to store sales and special events.
• Check out online discount retailers like Bluefly.
• For in-store deals, try T.J. Maxx, if there’s one nearby. I am always surprised by the quality brands they carry—at a fraction of the cost in the boutique stores. Be sure to check out your item carefully for marks and scratches, since the merchandise isn’t handled with kid gloves.
• Pay for it in cash (or put it on a credit card that you pay in full at the end of each month).
• Purchase something classic. If it’s trendy, you probably won’t love it by next season.
• Baby the heck out of it. Get it professionally cleaned if you aren’t sure how to do it yourself.
• Store it carefully. Fill the bag with tissue to hold the shape, and place it in a plastic bag when not in use.

I wasn’t able to find much about company profits, but since these rental companies continue to grow and add new products for rent (clothing, jewelry, golf clubs), I assume they’re doing well. But it’s not for me.

If I’m being dismissive and overly critical, feel free to comment and tell me so! Have you ever rented a luxury item through a monthly membership fee? If not, would you try out a service like this?

---
Related Articles at Get Rich Slowly:

• Ask SmartMoney: Rollover IRAs, Auto Leases, Kids’ Savings
• The Pastoral Lifestyle: A Life Removed from Day-to-Day Concerns
• Use a Lease Option to Lock in Low Home Prices
• Reader Story: Two Approaches to Car-Buying
• Luxury Car or Practical Car?

http://www.getrichslowly.org/blog/2009/12/21/your-turn-how-to-share-your-financial-stories-with-grs-readers/

http://www.getrichslowly.org/blog/?p=7921

The always-opinionated Tyler K. wrote this morning expressing something I’ve actually been thinking about myself. He said:

I wish more people would write about things they’re actually doing. I’m absolutely bored to tears lately with personal finance articles about which on line bank has the lowest interest rates, or which credit card has the most rewards points, or “here’s a list of N things that might be useful in some situation but is really just a filler post”.

I wish more people would write, “I did X, here’s how, and here’s why I think it turned out to be worthwhile or not.”

I think part of the problem is that, at a one-person blog at least, it’s very difficult to keep creating new articles about the things you’re doing. Eventually you’ve covered your entire life (or at least all you’re willing to share). So what do you do then? Close shop and go home?

My own solution has been to reduce my role around here and bring on additional writers. (My role has been pretty scant while I’ve been working on my book, but that’ll be over soon, so I should be able to have a more active voice.) Get Rich Slowly has featured guest writers since the very beginning, but now there are two staff writers to share their journeys. (And who knows? Maybe we’ll bring on more.)

But I’d like to do two things to supply more of this meaty content Tyler craves:

• First, I’m going to create a regular weekend slot for “reader stories”. These will generally be success stories, but they can be tales of woe, as well. If you’ve tried something with money and want to share it with GRS readers (whether you succeeded or not), this is the place to do it. I’m not going to edit these very heavily, but just let them stand as raw tales of how you folks manage money.
• At the same time, I’m going to search for great guest posts. If you want to contribute an article, drop me a line. But please note that I’m much more selective about guest posts than I used to be. I just don’t have the time to edit, so if your article needs work, I’m going to send it back to you. Also, GRS readers have made it clear they don’t like easy “lists of stuff”. That’s not to say you can’t do a list, but make it useful.

In both cases, I’m going to give preference to material with practical how-to advice: How to open an IRA, how to build your own clothesline, how I sold my used car, and so on. GRS readers love real-life stories. (For a great example of the sort of post I’m after, see G.E. Miller’s recent article about how he cut his Comcast cable bill by 33%.)

One final note: After years of posting about 12 items per week, I made a conscious decision this fall to reduce the number of articles on the site. This was partly because I knew I’d be spending all my time writing Your Money: The Missing Manual, but it’s also because I was getting a lot of e-mail asking me to reduce the pace to just a post a day. Turns out I like the slower pace (about 8 items per week). We seem to have better conversations.

But what do you think? That’s what’s important.

If you’d like to share a success story or a guest post, please drop me a line. I may be slow to respond, but rest assured I will see your e-mail. (And Tyler K.? Here’s your chance to put your money where your mouth is! I expect to see an article or two from you…)

---
Related Articles at Get Rich Slowly:

• Reader Success Story: Debt Free on $2,000 a Month
• Tip’d: A Community for Financial News, Ideas, and Tips
• Reader Survey: How Do You Cope with a Limited Income?
• The Ultimate Cheapskate’s Book Contest
• Ads Are NOT the New Online Tip Jar

http://www.getrichslowly.org/blog/2009/12/21/action-beats-inaction/

http://www.getrichslowly.org/blog/?p=7903

This article is the 13th of a 14-part series that explores the core tenets of Get Rich Slowly.

Five years ago, I was a different man. I had no savings, retirement or otherwise. I was literally living paycheck-to-paycheck on $42,000 a year. (Meaning: I had between $0 and $20 every time I got paid.) I was over $35,000 in debt. I had a job I hated because it had no meaning in my life. I spent my free time watching TV and playing computer games — especially World of Warcraft.

I didn’t like my life, but I did nothing to change it.

Fast-forward to today. Now I have an amazing life. I’m out of debt. I have more than $20,000 in emergency savings, I max out my retirement accounts every year, and I made more than I ever have in my life in 2009. Best of all, I earned my money doing something I love: Writing about money. My work is meaningful; it helps other people while I’m helping myself. I no longer watch TV or play videogames in my spare time, but instead walk marathons and pursue other ambitious projects.

What changed? Well, to put it bluntly, I got off my ass and started doing things.

Overcoming resistance
It’s easy to read about personal finance (or any other area of self-improvement) and to say to yourself, “Yeah. That sounds nice. I really should spend less on eating out. I really should exercise more. I really should open a Roth IRA.”

It’s easy to say these things to yourself, but few people actually follow through. They talk the talk, but they don’t walk the walk. Instead, they sit on their hands, afraid to take action. They procrastinate because that’s what seems easiest. (And sometimes they actively try to interfere with those who are bold enough to make changes in their lives.)

In The War of Art, Steven Pressfield writes about defeating procrastination — and the other things that prevent us from fulfilling our dreams: fear, rationalization, self-doubt. Pressfield calls these dream-killers Resistance. He writes (with some formatting help from me):

Most of us have two lives. The life we live, and the unlived life within us. Between the two stands Resistance.

Have you ever brought home a treadmill and let it gather dust in the attic? Ever quit a diet, a course of yoga, a meditation practice? Have you ever bailed out on a call to embark on a spiritual practice, dedicate yourself to a humanitarian calling, commit your life to the service of others?

Have you ever wanted to be a mother, a doctor, an advocate for the weak and helpless; to run for office, crusade for the planet, campaign for world peace, or to preserve the environment?

Late at night have you experienced a vision of the person you might become, the work you could accomplish, the realized being you were meant to be? Are you a writer who doesn’t write, a painter who doesn’t paint, an entrepreneur who never starts a venture?

Then you know what Resistance is.

Resistance comes from the war inside you: from lack of confidence and fear of failure.

Action beats inaction
The best way to defeat Resistance is to actually do something, if only for ten minutes a day. Tell yourself that you’ll move toward your goals for ten minutes a day. If you don’t succeed, do it again. Keep going until you do succeed.

It doesn’t matter if your actions are small. It doesn’t matter whether your actions are “right”. It doesn’t matter if you make mistakes. In fact, it doesn’t matter if you fail along the way. It doesn’t matter if there are other “better” things you might have done. All that matters is that you do something — that you start moving in the direction of your dreams.

• You can only afford to pay off $10 per month on your credit cards? Do it.
• You can only pay 1% of your income into a high interest savings account every month? Do it.
• You can only put $100 into your Roth IRA instead of the full $5000? Do it.

Do what you can, and do it today. Stop rationalizing. Stop saying, “I’ll do this next week”. The best time to start any positive course of action is now. This isn’t just New Age self-talk; it’s the truth. Start saving now. Start exercising now. Start writing your book now. Start spending time with your family now.

Your life can be amazing, but the only one who’s going to make that happen is you.

For more on this subject, see these past articles:

• How to build confidence and destroy fear
• How to beat the procrastination habit
• The power of “yes”: A simple way to get more out of life
• Action Girl’s guide to living

This is the 13th of a 14-part series that explores my financial philosophy. These are the core tenets of Get Rich Slowly. Previous parts included:

• Tenet #1: Money is more about mind than it is about math
• Tenet #2: The road to wealth is paved with goals
• Tenet #3: To build wealth, you must spend less than you earn
• Tenet #4: Pay yourself first
• Tenet #5: Small amounts matter
• Tenet #6: Large amounts matter, too
• Tenet #7: Do what works for you
• Tenet #8: Slow and steady wins the race
• Tenet #9: The perfect is the enemy of the good
• Tenet #10: Failure is okay
• Tenet #11: Financial balance lets you enjoy tomorrow and today
• Tenet #12: Nobody cares more about your money than you do
• Tenet #13: Action beats inaction

Look for the final installment of this series next Monday.

---
Related Articles at Get Rich Slowly:

• Closing the Gap Between Dreams and Reality
• Announcing Blog Action Day 2007
• Some Final Thoughts on Work, Education, and Fulfillment
• What’s the Next Action?
• The First Three Steps to Financial Freedom

http://www.getrichslowly.org/blog/2009/12/20/start-saving-for-next-years-christmas-today/

http://www.getrichslowly.org/blog/?p=7824

This article is by staff writer Adam Baker. Baker recently listed the Top 10 Money Movies of the Decade. Baker and his family are spending their holiday season hiking around the south island of New Zealand.

I have some potentially shocking news for you: Christmas is coming! No, I’m not talking about the one in a few days; I’m referring to the one that’s coming just twelve months down the road.

Far too many people — including me — let Christmas sneak up on us. Suddenly, somewhere around late October or early November, it hits us: Christmas is right around the corner and our budget is going to have to catch up.

I hate to break it to you, but Christmas takes place on the exact same date every year. There’s no reason it should have the opportunity to surprise us or our budgets.

So this year, even before Santa makes his rounds, give yourself an early present by taking the following steps:

1. Review this year’s spending. Take stock of the budget you had this year. How much did you spend? How many people were on your list? Are you happy with this number, or would you like to raise or lower it next year?
2. Estimate next year’s Christmas budget. Based on your level of contentment with this year’s spending, determine an amount for next holiday season. Is your immediate family growing or shrinking (moving away, maybe)? Are you determined to make more homemade Christmas gifts next year to save money? Decide now.
3. Divide your estimate by 12. Obviously, this is to reflect contributing once a month for each of the twelve months of the year. If you have a unique budgeting system that works, you could break this down into biweekly (26) or even weekly (52). Apply it to whatever system works best for you.
4. Automate regular withdrawals. Regardless of whether you choose weekly or monthly, have the funds transfer at regular intervals into a separate account. Many of you already have systems for automated savings and can just plug in next year’s Christmas starting now. If you don’t yet have a system, try creating a specific account that is liquid, but inconvenient to get to. You may want to test out on online savings account.
5. Start today! By making your first payment now, you’ll be finished with monthly payments in November. That’ll give you plenty of time to finalize any last-minute gift shopping. The longer you put it off, the more you are going to have to set aside each month.

I don’t want to zap all the fun out of your holiday season. But by starting to save for next year’s Christmas today, your wallet will be thanking you for the early gift this time next year!

Courtney and I wish you and your family a happy and healthy Christmas holiday.

---
Related Articles at Get Rich Slowly:

• Christmas 1950
• links for 2006-12-01
• Happy Christmas, Everyone!
• Daily Links: Christmas Vacation Edition
• Ask the Readers: Best Part-Time Holiday Jobs?

http://www.getrichslowly.org/blog/2009/12/18/five-festive-christmas-cookies-to-share-with-family-and-friends/

http://www.getrichslowly.org/blog/?p=7864

What’s Christmas without cookies?

A plate of warm Christmas cookies can help you bond with the neighbors, and taking a tray to the office is a sure way to win points with your co-workers. Christmas cookies can also be a fun part of frugal holiday gift-giving.

Every year, Kris and I assemble holiday gift bags to give to our friends. We fill these with candy and cards and candles and books and other small things we’ve gathered year-round. And we always include lots of home-made cookies.

This Sunday, Kris will spend all day in the kitchen with her sister Tiffany and friend Eila. They’ll be on a cookie-baking bonanza. They’ll use some classic recipes, of course, but this year they’ll also be making one of Kris’ new discoveries: the Oreo truffle. She’s already made two batches for friends and co-workers, and they’ve drawn rave reviews.

Because it’s the last weekend before Christmas — and because the video post I’d originally planned for today has run into technical difficulties — Kris has agreed to share five of her favorite Christmas cookie recipes. Yum.

The first recipe makes a festive cookie:

The second recipe makes a frugal Christmas cookie:

The next Christmas cookie is a fancy cookie (er, candy):

The fourth recipe features a family-friendly Christmas cookie:

And the final Christmas cookie recipe makes a fun cookie — the afore-mentioned Oreo truffle. These are pure evil:

One of these days, I really will compile a GRS cookbook. (Maybe Trent and I could join forces.) I’d love to share the favorites from our kitchen. (Well, it’s mostly Kris’ kitchen, of course. I’m mainly just there to chop onions and make clam chowder.)

Until then, what are your favorite Christmas cookie (and candy) recipes? Do you have any special traditions that go with the baking — or the sharing? Are any of your Christmas cookies especially frugal? Share your tips below!

(And don’t forget to leave out a plate of cookies for Santa!)

Photo by Ana Branca.

---
Related Articles at Get Rich Slowly:

• Daily Links: Circus Animals Edition
• The Four Things Children Really Want for Christmas
• Ask the Readers: Favorite Frugal Christmas Ideas?
• Black Friday — Or Not?
• Five Fantastic Frugal Tips for Christmas

http://www.getrichslowly.org/blog/2009/12/17/ask-the-readers-do-you-buy-christmas-gifts-for-your-spouse/

http://www.getrichslowly.org/blog/?p=7739

This article is by staff writer Adam Baker. Baker recently listed the Top 10 Money Movies of the Decade.

At this point, I hope you’ve done most of your Christmas shopping (and/or making). Only the brave or the foolish have yet to form a holiday shopping plan of attack. *looks around* Alright, so I have a minor confession to make: Courtney and I don’t buy gifts for each other.

To put it more bluntly, we just ignore the issue. We vaguely talked about it (albeit a couple years ago now), but somewhere in the mix we started assuming that we wouldn’t exchange them.

If I remember correctly, we actually did exchange at least a little something before our daughter was born. We never were big purchasers, though. I’d say we might have exchanged one or two small gifts at most during the dating years. These days, it seems as if every year we have a new excuse to skip exchanging (and certainly purchasing) presents.

Take this year for example. We’ll be spending Christmas backpacking around the South Island of New Zealand. Over the couple days around Christmas, we’re splurging for a bit more expensive lodging than normal to have internet access (for family back home mostly). We’ve decided this will be our gift.

Last year, we were saving for our big trip and decided to not exchange or buy gifts for each other. The year before that, we were getting ready for the baby. Before that it was the wedding. My point is not to give you my life story (although it does seem a little busy now that I write it), but to show how it was so easy for us to fall into a routine.

And it’s not necessarily all bad. But I’d be lying to say there wasn’t part of me that wishes we had a slightly different policy for Christmas gifts. It would be cool to see what Courtney would get me if left to her own brainstorming. And I’m sure she’d be eager to see what I’d come up with.

I guess we want to make certain we don’t buy into the consumerism hype. We’re trying to keep our possessions extremely minimal and light while traveling, but that doesn’t automatically exclude everything from our wishlists.

A couple options I thought up for our married-life Christmas approach:

• Keep things the same. Keep focusing on the our project type of mentality. Focus on doing something special together like an event or activity, but that is mutually planned (and thus has no surprise).
• Exchange gifts without any restrictions. We know people who fall into this category. Each spouse is trusted to spend or alternatively get creative in whatever way they see fit. There’s no similar budget set ahead of time or planning out of the gifts at all. This would be particularly hard for us to do as we have 100% joint finances and wouldn’t consider changing that.
• Exchange specific pre-planned gifts. A lot of people we know fall into this category, as well. They buy each other gifts, but in reality each spouse actually picks out their own. That seems kind of lame to me, especially when it’s between two spouses. It’s basically just allocating more splurge money for yourself. That’s fine, but its not really what we are looking for.
• Exchange gifts under budget restrictions. This seems like the most realistic option for us. We already define a set amount for ‘blow’ money each month. By increasing this slightly for Christmas and purchasing our gifts in cash (if possible), we could still have surprises even with joint finances. We could set the restrictions low if we wanted to focus on being creative to save money.

I’m not afraid to admit that a bit of consumerism would be a little refreshing for us. Actually, exchanging a reasonable gift (probably just a single decent one) wouldn’t be the end of the world — and it might add a little enjoyment to the process.

Obviously, we wouldn’t want to fall off the other side of the wagon and go crazy at the local mall. (Although this seems unlikely given our borderline scroogish history.)

Even if we decided to continue to forgo spending money or even exchanging gifts at all, I’d like to become a little bit more targeted with our approach. Maybe we could pay for a babysitter and spend the evening volunteering in some way together. At the very least we could look back and say, we did XYZ for Christmas two years ago.  That seems better than we were saving up for our trip or we bought some bedding for the crib.

Who knows…maybe I’m just suffering from a bit of the consumerism fever this year around. What do you think? What system do you and your significant other employ for swapping Christmas gifts? Do you have any creative ideas we can adopt?

J.D.’s note: I’m going to make an embarrassing public confession. I’m the lamest husband ever when it comes to gifts. I want to give Kris something thoughtful and nice — but I don’t. This year, especially, I’m the king of lameness. Kris ordered matching luggage for us. I’m paying for half. That’s our Christmas gift exchange. I feel like I need some sort of intervention, so I’m eager to hear your advice for Adam in the comments.

---
Related Articles at Get Rich Slowly:

• Black Friday — Or Not?
• The Four Things Children Really Want for Christmas
• Five Fantastic Frugal Tips for Christmas
• December 24, 1958: A Six-Dollar Christmas
• Start Saving For Next Year’s Christmas Today

http://www.getrichslowly.org/blog/2009/12/16/how-i-cut-my-comcast-cable-bill-by-33-without-losing-any-service/

http://www.getrichslowly.org/blog/?p=7836

Last week, I wrote that you can negotiate anything. This guest post by G.E. Miller gives a real-life example of using negotiation to save money. For more from G.E., check out his personal finance blogs 20somethingfinance.com and microfrugality.com.

For the third of the country who has no choice but to turn to Comcast for cable television, the thought of price haggling is about as appealing as a root canal. Comcast has a notorious reputation for being unwilling to make their customers happy. Customers of other monopolistic cable outfits across the nation know the feeling.

However, the potential savings that can come from limiting a monthly subscription expense can be enormous. What’s a frugal personal financier to do?

Dealing with your local cable superpower doesn’t have to be an intimidating process. And as evidenced by the ease in which I recently cut my cable/internet costs by a third during a short online chat without losing any service whatsoever, you may have similar success.

With television service competition increasing and unemployment rates still trending upward, consumers are looking to slice discretionary expenses and service providers may be feeling the pinch to keep them on board. There’s no better time to ask than now. Here’s my actual chat with a Comcast rep (whose name has been altered to Rizzo to preserve his anonymity). Afterward, we’ll discuss some universal price haggling techniques to better prepare you for your interaction.

So what can you take away from this chat transcript? There are a few universal haggling techniques that are applicable to just about any price haggling scenario.

1. Don’t be afraid to ask. Asking to cut my bill worked. Amazed at how simple it was to cut more than I was aiming for from my bill immediately, I asked for an even bigger cut. That request was denied (not to my surprise or dismay). Truth be told, I’m not sure that any of the techniques I used triggered the better offer, but I do know one thing — had I been afraid to simply ask for the price break, I would have never gotten one. Rule number one is to overcome your fear and just ask.
2. Be pleasant. Congeniality is king when interacting with CSRs. Being rude only infuses CSRs with the desire to deny your request. CSRs aren’t paid near what they should be, and probably don’t have the highest job satisfaction levels. If you can appeal to their gentler human-side, you win. Spit fire at them, and they will slam the door on you with pleasure.
3. Refer to the competition. I had heard that Comcast was motivated to be a little more giving with the entrance of AT&T U-Verse cable into the marketplace (at lower prices). I’m not sure that it helped in this specific case, but referencing the competition specifically or generically (if its offerings are weaker) rarely will hurt you.
4. State the facts. More than anything else, I wanted to lower my cost, and that’s what I asked for. Someone I know had received a better price than I was paying and I stated that fact.
5. Do your research. Knowing what kind of promotions the company is offering to new or exiting customers is essential to getting the best deal. When it comes down to it, if you can quit your service and then re-start it the next day at a cheaper price, the company knows it has little incentive to let you leave without matching that offer.
6. Look for special circumstances. I’d heard that working with Comcast online chat representatives often yielded better results because the reps weren’t actual Comcast employees, and therefore had lesser incentive to play the hard line. That’s why I chose the online chat route versus the phone.
7. Let them make the first move. Before the chat, had I not received a cost break, I was willing to cut my service levels. I didn’t offer that right away, and it turned out that I didn’t need to. Don’t show all your cards right away.

When I need to call back in, I now have two additional pieces of information that I can take into the negotiation process based on this statement form the CSR: “The Internet Code is only good for 6 months. That’s the best price I can offer you for internet. However, you can check back on us again next quarter to check if there’s another promotion available to you.”

I now know that Comcast has promotions available on a quarterly basis. I also know that there are “codes” for both Internet and cable. Both pieces of info should help me in future negotiations. Hopefully, they’ll help you as well.

Have you had similar success haggling with your cable company or ISP? What do you attribute it to? What kind of a break did you get on your bill?

Previously at Get Rich Slowly, G.E. has shared articles on the compound return marathon and what to look for when buying a home. If you’d like more cost-savings tips, check out 20somethingfinance.com or microfrugality.com. If you liked this article on how to cut your monthly subscription costs, check out G.E.’s Ooma review. The Ooma has allowed him to cut his monthly phone bill by $30 per month.

---
Related Articles at Get Rich Slowly:

• Your Turn! How to Share Your Financial Stories with GRS Readers
• Save Money by Asking for a Lower Rate
• Reader Question: Methods for Tracking Expenses?
• How 15 Minutes Saved Me 15% on My Television Bill
• Money Hack: Prepay Your Monthly Bills

http://www.getrichslowly.org/blog/2009/12/15/don%e2%80%99t-let-irregular-expenses-wreck-your-budget-or-drain-your-emergency-fund/

http://www.getrichslowly.org/blog/?p=7793

This post is from GRS staff writer April Dykman.

Right before our Thanksgiving trip, the AC went out on our vehicle. $600 later, we had a functioning AC. What a way to start a camping trip. 

The good news was that we had the funds set aside for that specific reason—auto repairs. We’ve never used one of our targeted accounts before, and now that we have, I can attest that they are a fantastic idea.

Obviously the repair would cost the same whether it came from a big account labeled “emergency fund” or a targeted one called “auto repair.” We’re out $600 either way, so why bother with separate, targeted accounts?

Two reasons:

1. By paying from a targeted account, the three-to-six months emergency fund (EF fund) isn’t tapped. We look at the EF as money for major or unforeseeable expenses only.
2. Paying for repairs is never a joy, but it’s easier when the money was there for that purpose.

It’s extremely easy to set up targeted EFs, and they’ll save you a great deal of frustration and headaches when faced with irregular expenses.

Step one: Calculate a reserve for targeted EFs
Once you are free of consumer debt and have a comfortable EF, start creating targeted EFs for expenses that are inevitable, but irregular. For example, we have a savings account for property taxes. That’s a regular, yearly expense we can count on having to pay. We also have a good idea of exactly how much we’ll pay.  A targeted EF is different because it’s meant for expenses that will hit at some point, but you don’t know exactly when or how much you’ll have to pay.

Here’s how to start creating your targeted EFs:

1. Gather your expense history for the last 12 months.
2. Calculate how much you spent on irregular expenses, such as car maintenance, medical bills, and home maintenance. You’re looking for expenses that you know you’ll have at some point, it’s just a matter of when.
3. Divide the sum for each category by 12.
4. Save those amounts each month to build up enough savings to handle the expense. Or, if you don’t have that much room in your budget, save up what you can in each category until you hit your reserve target.

Make sure you don’t confuse the purpose of your accounts. Saving for a car is not the same as saving for an auto repair for a vehicle you currently own. That said, try not to create too many targeted EFs. Make the categories broad, if needed. We only have two targeted EFs right now, and we’ll add a third for home maintenance next year.

Step two: Create sub-accounts
My favorite method for targeted savings accounts is creating multiple accounts at ING Direct, which I learned about here at GRS. Other banks probably offer similar setups. As you set up each account, label it for its specific purpose.

Bonus points: Automate it
Put your savings on autopilot to avoid the temptation to spend the money elsewhere. We started our auto repair savings account by setting up automatic deposits of $100 per month. In no time the account was big enough to cover our recent repair.

This is not a perfect method. Just because we only spent $600 on auto repairs this year doesn’t mean we won’t have a $1000 repair next year, but at least some money will be saved up to help cover the expense.

Peace of mind

One last benefit I want to mention is that when you’ve already predicted and accepted that you’ll have these irregular expenses, and you’ve set aside money for them, it is less aggravating when they occur. If we had to pull money from our three-to-six-month emergency fund, I would have started off our trip thinking about how quickly we could replace the funds, and where we could cut back to do it as soon as possible. Or worse, if we didn’t have any savings to cover the repairs, we’d be scrambling to figure out how to pay for it. Maybe we wouldn’t be able to go on the trip. Instead, I left feeling relieved that the money was there and a car repair didn’t blow our budget.

Peace of mind isn’t a tangible benefit, but to me, it was the best one of all.

Do you have separate accounts for irregular expenses, or do you have one big emergency fund?

J.D.’s note: As I write The Book, I’m amazed at how often I refer back to the idea of targeted emergency funds. I find them useful in Real Life, too. It’s so much less stressful to pull from your home-repair fund to fix a leaky roof than to drain your main emergency fund…

---
Related Articles at Get Rich Slowly:

• Use a Personal Escrow Account to Budget for Non-Monthly Expenses
• Use a Freedom Account to Prepare for the Unexpected
• Budgeting with an Irregular Income
• Ask the Readers: How Much in an Emergency Fund?
• Ask the Readers: Emergency Fund or Debt Snowball?

http://www.getrichslowly.org/blog/2009/12/14/the-personal-finance-hour-episode-29-the-christmas-show/

http://www.getrichslowly.org/blog/?p=7812

Ho ho ho. Christmas is coming, and the goose is getting fat.

On today’s episode of The Personal Finance Hour, I’ll join Jim from Bargaineering to discuss the highs and lows of the holiday season. What are your favorite Christmas traditions? To whom do you give gifts? How do you set a shopping budget? Do you buy year-round — or have you not even begun to shop? And which is your favorite reindeer? (I’ve always been partial to Comet.)

This show will air live at 3pm Pacific (6pm Eastern). It’s much more entertaining for everyone when you call in to participate. We’d love to hear your tips for a happy (and frugal) holiday season. Call us at 1-347-327-9144 to share (or join the rowdy crew in the chat room).

The Personal Finance Hour
There are a few ways you can catch The Personal Finance Hour. You can listen through an audio feed at the show page, or you can also listen through this widget:

We’re also on iTunes! You can subscribe to The Personal Finance Hour as a weekly podcast by following this link (which will open iTunes).

Jim and I do this most Mondays — and we hope you’ll join us. We think this is a fun way to connect with readers and to help everyone learn more about money management. You can catch The Personal Finance Hour live at 3pm Pacific (6pm Eastern) nearly every Monday.

---
Related Articles at Get Rich Slowly:

• The Personal Finance Hour, Episode 3: Finding Balance
• The Personal Finance Hour, Episode 4: Couples and Finances
• The Personal Finance Hour, Episode 2
• The Personal Finance Hour, Episode 11: Frugal Weekend Fun
• The Personal Finance Hour, Episode 25: Why Does Everyone Hate Budgeting?

http://www.getrichslowly.org/blog/2009/12/14/nobody-cares-more-about-your-money-than-you-do/

http://www.getrichslowly.org/blog/?p=7778

This article is the 12th of a 13-part 14-part series that explores the core tenets of Get Rich Slowly.

I’ve read a lot of stuff lately about how scammers take advantage of other people. (Here, for example, is a brief summary of seven psychological tricks con artist use.) It’s easy to think that those who lose their money are just unfortunate suckers. That’s not always true. Often they’re folks just like me and you who get talked into thinking somebody else knows more than they do.

On some level, the same thing happens all the time with bankers and brokers and real-estate agents and even with friends and family. These folks may not be con artists, but we’ve all allowed these other people to tell us what we ought to do with our money. We let ourselves believe that they’re able to make better decisions about our financial situation than we are.

Sometimes they can — but mostly, they can’t. Or won’t. Because the truth is, your money just isn’t as important to anyone else as it is to yourself.

One of the most powerful lessons you can learn is that nobody cares more about your money than you do. When you realize this, when you take responsibility for making your own financial decisions (instead of letting others make them for you), it can bring a tremendous sense of power and control to your life.

Trust no one
If your real-estate agent says you can afford a particular house, don’t just take her word for it. Run the numbers yourself. Set your own budget for a mortgage, don’t just trust the mortgage broker or the bank. Of course they think you can afford more — they have commissions riding on it!

If your insurance salesman tells you that whole life is better than term, don’t just take his word for it. Do your own research. Find out what’s right for your situation. (Hint: It’s probably term.) Of course he wants you to buy whole life — he’ll make five to ten times more than he would if you bought term.

If your lawyer tells you to create an living trust in addition to a simple will, don’t just take her word for it. Dig a little deeper. Learn what a living trust is. Find out why people use them. Ask yourself if this makes sense in your circumstances. You may very well decide to have your lawyer create a living trust — or you may decide that $800 is better spent elsewhere.

If the salesman at the Mega Mart argues that you should take out an extended warranty on your new 180″ deluxe dilithium-drive television, don’t just take his word for it. He has zero motivation to give you advice that’s in your best interest. His advice is based on what’s in his best interest, which means more money in his pocket.

If your favorite personal-finance blogger urges you to invest in index funds, don’t just take her word for it. Read up on the subject yourself. Though it’s unlikely that a blogger is going to profit from your investment choices, it’s very possible that her investment goals and your investment goals are different. Maybe she’s well off and merely wants to match market returns. Maybe you’re young and would like a little more risk. Use the blogger’s advice as a starting point, but do your own reading, your own planning, and make your own investment decisions.

When you see an ad on television or on a blog or in a magazine, don’t just believe what the marketing copy tells you. Of course the latest Thneeds are the best! That’s what all ads say, right? Big corporations don’t have your best interest at heart. All they care about is the bottom line. To get the facts on quality and performance, check out impartial reviews through Amazon and Consumer Reports — and your friends.

The truth is out there
Don’t get me wrong. I’m not saying that it’s bad to talk to a financial planner or to use a real-estate agent to buy a house. You should absolutely have a team of financial advisers. Heed the advice of experts. Listen to what they have to say. But don’t follow their recommendations blindly.

The advice that others give you is almost always in their best interest — which may or may not be the same as your best interest. Never forget this. Don’t do what other people tell you just because they have authority or because they have a silver tongue.

Read. Research options. Understand the pros and cons of every choice. (Because every choice will have its pros and cons.) Don’t become obsessed with perfect, and be willing to make mistakes. Realize that what’s right for one person may not be right for you.

And, especially, never make a financial decision under time pressure. If somebody tells you this is a limited-time offer and you need to act fast or you’ll miss out, then miss out. It’s almost always the best choice. (Creating time pressure is one of the oldest tricks in the book, and an easy way to get people to go against their own best interest.)

Know what’s important to you and why. Use this knowledge to set goals. And use these goals to direct your choices. When you have a why, it’s easier to trust your own judgment.

Do these things, and you’ll appreciate that nobody cares more about your money than you do.

This is the 12th of a 13-part 14-part series that explores my financial philosophy. These are the core tenets of Get Rich Slowly. Previous parts included:

• Tenet #1: Money is more about mind than it is about math
• Tenet #2: Goals are the gateway to financial success
• Tenet #3: Spend less than you earn
• Tenet #4: Pay yourself first
• Tenet #5: Small amounts matter
• Tenet #6: Large amounts matter, too
• Tenet #7: Do what works for you
• Tenet #8: Slow and steady wins the race
• Tenet #9: The perfect is the enemy of the good
• Tenet #10: Failure is okay
• Tenet #11: Financial balance lets you enjoy tomorrow and today
• Tenet #12: Nobody cares more about your money than you do

Look for a new installment in this series every Monday through the end of the year.

---
Related Articles at Get Rich Slowly:

• The Perfect is the Enemy of the Good
• The Perfect is the Enemy of the Good
• Ask the Readers: What Can I Do If My Girlfriend Isn’t Serious About Money?
• Follow-Up on the 63-Page Credit Card Agreement
• Budgeting for Non-Budgeters: The 60% Solution

http://www.getrichslowly.org/blog/2009/12/13/give-your-wealth-away-an-argument-for-a-secular-tithe/

http://www.getrichslowly.org/blog/?p=7772

This is a guest post from Sierra Black, a long-time GRS reader and the author of ChildWild, a blog where she writes about frugality, sustainable living, and getting her kids to eat kale. Previously at Get Rich Slowly, Black told us about sweating the big stuff and the pitfalls of buying in bulk.

My mother’s family is Catholic. They’re working class people from Buffalo: nurses, drugstore clerks, steel mill workers. Even though they never had a lot of dollars, they always gave 10% of what they had to the church. Like taxes, that 10% was just something they paid out before spending a dime on themselves.

As an adult I became the first college graduate in my family and adopted the position most of my educated, liberal peers seemed to hold toward charity: give a little, when you can, and feel guilty about not doing it most of the year.

For most of my 20s, I was living beyond my means. With every dollar being spent before it was earned, giving even a few dollars felt like a huge pinch in my messy budget. I was haphazard and frankly not very generous with my giving.

Overall, liberals tend to give less to charity than conservatives. Religious people like the ones I grew up with give more than my secular humanist friends. The working poor are, as a class, the most generous group in America, reliably giving away 4.5% of their income. The middle class are the least generous, giving just 2.5% on average.

In addition to making me and my friends look bad in the conservative press, statistics like that are, as George Will put it, “hostile witnesses” to the idea that “bleeding-heart liberals” actually care more about the poor and disadvantaged than our conservative counterparts.

According to the American Enterprise Institute, the single biggest predictor of a person’s charitable giving is religion. People who go to church every week give more money, more consistently.

I think it’s time to make secular tithing a middle-class trend. Those of us who don’t go to church every Sunday may not have the easy, deeply ingrained tradition of giving my great-grandmother had when she put her little envelope in the offering plate each week. That’s no excuse for not giving our share. It’s not right for the affluent and secure to let responsibility for maintaining the social safety net rest on the backs of those most likely to need it.

Last year, when I got serious about straightening out my spending habits, I wanted to make charitable giving, like saving, a key part of my financial future.

I adopted something akin to the “balanced money formula”. Instead of allocating 30% to wants, though, I drew up my formula like this: 50% for needs, 10% for charity, 20% for savings and 20% for wants.

My money is not balanced. I’m working hard to repay a pile of credit card debt and continuing to fine tune a frugal lifestyle. My needs and debts suck up most of our income. Because all the “extra” money goes into savings and debt repayment, I’m still living as if we were on the edge financially. Giving hurts. I do it anyway. Every week.

I’m not tithing yet, but I am moving towards it. Here’s how:

• As our income increases, I spend the new money in a “balanced” way. A year ago, my husband and I were living on one salary — his. As I’ve added income to our household with my freelance work, I’ve allocated 10% of those dollars toward charitable giving, 20% to savings, 20% wants and 50% to needs.
• As our debts decrease, I’m beginning to split our debt snowball. Snowballing debts is great. I’ve seen some people argue for splitting the money that’s freed up when a debt is paid off between paying down the next debt and adding to an emergency fund. I’m doing this with giving too. This month, I pay off a credit card that had a $35/month payment. I’ll put $3.50 into my charity fund, $7 into savings and the rest toward the next debt I’m attacking. I do this with frugal changes too: split the saved money between charity, savings and debt reduction.
• I make the giving automatic. Remembering to do stuff is not my strong suit. To stay consistent with my giving, I’ve signed up for recurring automatic withdrawals from my bank account. There are organizations, like Just Give, that will help you coordinate automated or one time gifts to many different organizations.
• I’m teaching my kids to give. My kids use jars to split their allowance into categories for giving, saving and spending. They’re too young to tell yet what lasting impact that might have, but I’m hoping it will get them into the habit of giving some of their money away every time they get paid. A habit it took me 30 years to grow into.
• Giving small counts big. Charities can use their membership rolls and total numbers of donors to solicit large grants from individuals and foundations, and to earn matching grants. Because of this, the difference between giving $10 to a charity and giving them nothing is a lot bigger than the difference between $10 and $20. I make a lot of small donations to different organizations I like, to spread out my impact.

There are many good organizations doing vital work in the world that depend on charitable gifts to run their operations. These range from the Red Cross to the World Food Program to local groups.

The end of the year is often a time charities need dollars most. To encourage holiday season giving, many have created fun holiday gift programs. My favorite is Heifer International’s famous gift catalog, which lets you “give” a cow or a beehive or another livestock animal to a family in the developing world. In reality, of course, what you give them is the money to run their organization, which then distributes livestock to needy families at a local level. It’s fun to read their catalog though, and Heifer has one of the lowest overhead ratios of all the large charities.

In closing, a note: Expressing concern about what a charity is going to do with your money is a terrible excuse for not giving. Very few charities are outright frauds, and even the inefficient ones will put more of your dollars toward a good cause than your bank will. If you want to be sure you’re getting the most bang for your charitable buck, though, you can investigate organizations at a charity watchdog site before giving.

Note: Get Rich Slowly does not take a stand on religious or political issues. Respectful discussion of these topics is fine; please keep the comments up to their usual high-quality standards.

---
Related Articles at Get Rich Slowly:

• Could Tithing Lead Some Americans to Lose Their Homes?
• Enough is Enough: Wealth is What You Make It
• What Should a Billionaire Give, and What Should You?
• A Contrarian View: Why I Love a Huge Tax Refund
• Charity Navigator: Your Guide to Intelligent Giving