Start by Researching Cars Online

Before you even step foot into a dealership, you’ll need to do your homework. If you walk onto a car lot and don’t have much of an idea as to what you want, the salespeople will smell the blood in the water. This doesn’t mean they will automatically try to put you into the most expensive vehicle, but you’ve given them a blank canvas to where they can make a bunch of different vehicles and features look like great options, and the better everything sounds to you when you haven’t done your research may lead you to buying something you don’t necessarily need.

So, start by narrowing down your choices. If you have a particular brand in mind, go to their website and explore the models. Compare features with what you need and keep a list of the most probable choices. If you don’t have any allegiance to a specific brand you’ll want to explore the style of car you’re interested in across various manufactures.

While narrowing down your choices to a handful of vehicles is a good start, that doesn’t mean anything until you dig into the reviews. Search for reviews online, check Consumer Reports, Edmunds, or any number of sites to get the real dirt on your options. Every vehicle looks great on a manufacturer’s website, but after they have been put through objective tests you may realize that some have very poor safety ratings, poor reliability, complaints about features or performance, and so on. After reviewing your choices you’ll likely come away with just a couple of suitable options, which is good.

When you’ve decided on your short list you’ll be better equipped to go to the dealer and ask specifically to see a certain model or two and you aren’t left with the salesman to waste your time trying to show you anything and everything on the lot.

Don’t Compromise

If you’re buying new, do not compromise. If you know exactly what you want in your vehicle, don’t let the dealership convince you to settle on something else just because they have it on the lot and can get you out the door today. Believe it or not, dealers don’t stock everything on the lot. They might only have a handful of the model you’re interested in, and the features and trim levels will vary greatly. The dealer wants to reduce inventory, so they will do anything they can to convince you the one on the lot is just about as good as the one you really had in mind. Maybe the one on the lot has a sunroof even though you didn’t want it, or it came with leather interior instead of cloth, they will make it sound like you’re going to get a deal by taking that one off their hands. Chances are the deal is not as great as it sounds, and second of all, you’re settling for something you went into the purchase knowing you didn’t really want. So ultimately you’re getting something you didn’t really want, or spending more than you wanted to on features you didn’t really need. If you’re buying a new vehicle, any dealership who wants your money will find an exact match, even if it’s hundreds of miles away and has to be delivered. When I bought my car the closest one they could find with the features I requested was two states away, but they got it just fine.

Here’s a quick personal story. I just bought a new vehicle a couple of months ago. Our family needed to get something a little bigger now with the two kids, and with the ability to get an employee discount it made sense to buy new. So, I did exactly what I’ve described above. Over the course of many weeks I researched our options, read the reviews, and finally settled on a specific make and model. Then I went to their website and used the “build your own” feature that most sites have and built it exactly how we wanted it. Then I printed it off and took it to the dealership.

You’d think this would mean I’d be in and out in a matter of an hour or so, but boy, you’d be wrong. Even though I walked in with a printout stating exactly what I wanted, the salespeople were relentless. First, they insisted that I should opt for a low miles used model from last year. They pulled out all the stops about why it was a better idea, but it took 20 minutes just to convince them I didn’t care and wanted what I wanted. Then, they of course take me out on the lot to show me the few new models they had, but guess what? None of them were what I said I wanted. Wrong color, wrong trim level, completely missing features I specifically asked for, and the list goes on.

Already fed up, I told the salesperson I wanted to speak to somebody else since he wasn’t listening to anything I had to say and just wanted to sell whatever they had available. It was already getting late and they said the guy I wanted to work with would be in tomorrow. So, after wasting all the time I just had to come back the next day. I go back in and this salesperson does actually listen, but it’s still an incredibly painful process. I sit at his desk for over an hour while he searches for vehicles in their online database to find a match. Even through this grueling process, he continues to try to sell me something I don’t want. Telling me I don’t need feature X or for only $1,000 more I can just get it all by upgrading to the premium trim level, and all sorts of garbage. He finally found one, but I was ready to jump across the desk and beat the guy by the time it was all said and done.

In hindsight, it probably would have been a good idea to just leave and try another dealership, but having already invested so much time with this one and not knowing if the next one would be the same way, I stuck it out. The bottom line is you shouldn’t compromise just because it’s easier for them or it will speed up the process. You’re making an important decision and spending a lot of money, so get exactly what you ask for.

Read more: Your Car is Making You Poor

Know the Purchase Price

Newsflash! The price the salesman gives you isn’t the best price. They aren’t going to come out and right off the bat and offer you the lowest possible price they can go with. That’s not how anyone does business, so it shouldn’t be a surprise car dealers don’t operate this way either. It’s true there isn’t a lot of margin to work with in new vehicle sales, but that still doesn’t mean you can’t negotiate.

The worst thing that can happen is you try to negotiate lower and they simply won’t budge. There’s no harm in that. If you want, you can try your best poker face and say you’re not interested at that price and proceed to leave. If they beg you to sit back down, you’ll know there’s room to work on price. If they don’t seem to care and let you go, they are either a poor salesperson, or they literally were at rock bottom.

Again, it never hurts to ask, and if you don’t even bother to throw another number out there you could be leaving easy money on the table. To get a rough idea of what a fair purchase price is, go ahead and head on over to Kelley Blue Book and plug in the specifics for the vehicle you’re interested in. It will tell you how much you can expect to pay, what the average price is, and so on so that it gives you a frame of reference. You may only be talking about a few hundred dollars on something you’re spending $30,000 on, but hey, money is money, so go in prepared.

Know Your Trade-In Value

If you’re trading in a vehicle for a new one, you absolutely, positively, must do your homework on the trade-in value first. It’s common knowledge that you get screwed when you trade in. That’s just the way it works because the dealer has to buy it cheap enough so that after they clean, prep, and make any minor repairs, they can then put it on their lot, where it might sit for months, and make some money. And that’s fine, there’s nothing wrong with that because selling a car yourself may get you a better sale price, but you have to do all of the work yourself and who knows how long it will take to sell it. So the tradeoff is that you give up the premium on sale price for the convenience of unloading it immediately.

Even so, with most vehicles you’ll have hundreds, if not thousands of dollars in bargaining when it comes to the trade-in price. When they give you a trade-in value, they aren’t going to come out with their best offer right out of the gate, so unless you know what a fair value for your car is, you could accept what they have to say and leave a lot of money on the table.

So again, start by going to Kelley Blue Book. There you can enter the details about your vehicle and get a fair trade-in value. This doesn’t mean that will be the price you get, but it at least gives you a ballpark of what you should be expecting. For example, say you pull up your vehicle and KBB says a fair trade-in value would be around $5,000. Now, say you’re at the car dealer and after they take your vehicle around back and look it over, come back and say they will give you $3,000. That should be a red flag right there and tell you there’s room to negotiate. Had you not done your homework you may have accepted that offer even though you may have been able to negotiate them up to $4,300.

Back to my recent purchasing experience, this is exactly what happened. I looked up my trade-in vehicle and found a fair value for trade would be about $4,200. When we discussed the trade, they told me they would only give me $3,000. Armed with my knowledge I told them we’d have to get closer to $4,000 since that’s a fair price. After throwing a few numbers around and a manager’s approval, they settled on $3,900. That’s $900 that could have easily gone out the window had I not spent five minutes online educating myself before just taking what they had to say for granted.

Secure Financing Before Shopping

Dealers love to handle the financing for you. While the salesperson may not get a direct cut if you finance with them, the dealerships do have relationships with local lenders and they receive incentives if they can push financing through their lenders. This doesn’t mean that all financing deals provided by the dealers will be a terrible deal, but there’s a very good chance you can do even better on your own if you don’t mind doing a little legwork.

Start by getting quotes from banks and lenders where you already have a relationship. It’s usually as simple as a quick phone call, stopping into a branch, or even going online to get the information you need and possibly even get pre-approved. The key to starting with lenders you already do business with is they usually give existing customers better rates.

If the rates aren’t all that stellar, then start shopping around to other financial institutions. Credit unions are a great place to look because they often have some of the lowest loan rates out there. If you can become a member, it may be worth is just for the auto loan rate alone. But at the very least after shopping around a bit you’ll know what the going rates are so you’ll know whether or not what the dealer is offering is a decent rate or not.

Better yet, once you find a good rate, go ahead and do the pre-approval. This will lock in a specific rate, give you a credit limit, and provide you with enough so that you can walk into the dealer basically saying you’ve already got the money and can cut a check today. No more haggling or trying to be pressured into something else. Even if you decide to go with another lender or decide to not buy the car entirely, you aren’t out anything.

Don’t Miss: 5 Mistakes You Can’t Afford to Make When Buying a Car

Back to my car-buying experience again… Before even step one way back at the beginning of this piece, I had already shopped around for rates and found Chase to offer the best rate. Even better than my credit union. How? Because of all of my banking relationships through them. Knowing I was locked in at 2.4% if I wanted it, when I was at the dealership I told them to go ahead and run the numbers to see what they could get me. Obviously, if they could do better, I’d probably go that route. But I had the ace in the hole knowing I could just call my bank and get a check for the car that day if need be. Sure enough, they couldn’t beat it. In fact, the best they could offer me was 3.5%, which oddly enough was through Chase. Of course the dealer is probably getting a few basis points as a kickback and that drives up the rate a bit, but bottom line is you’re not out anything by letting the dealer shop for rates for you, but you’re probably better off doing that on your own even before it gets to the time of trying to finance your purchase.

Putting It All Together

We’ve covered a lot here and it’s obvious the car purchasing process has many opportunities for snags. But if you stick to a plan and do your research ahead of time, you’ll be in the best possible position to come away with a great deal.

1. Figure out what vehicle you want before you go to a dealership. There’s enough information online to keep you busy for weeks, so spend a little time from the comfort of your home gathering what you need and narrowing down your choices. You’ll still want to test drive before you buy, but if you eliminate all the duds before you go in, you’ll skip all the time wasted with salespeople trying to steer you in a certain direction and possibly get sold something you don’t really want or need.
2. Don’t Compromise. When you’re buying new, you’re literally in the driver’s seat. You can get a vehicle exactly how you want it, no matter how much the dealer wants to push you toward a similar model on the lot. If you’re investing this much money into a long-term purchase, you are in no condition to let someone else tell you what you can or can’t have.
3. Know your purchase price. Go into the process knowing what the vehicle you want should cost. This will at least alert you to any issues if the price they want to sell it for is way off the mark. Then, go ahead and negotiate. The worst that can happen is they don’t budge, but if you don’t try, you’ll never know if you can get a better price.
4. Know your trade-in value. The worst thing you can do when trading in a vehicle is to have no idea what a fair price for your trade is worth and then accepting whatever they offer. Used car sales are where dealerships make their money, so they are in the business of buying low and selling high. That means you won’t get the best offer right out of the gate, so knowing what a fair price is will help you negotiate something better.
5. Secure financing first if possible. Don’t let the dealer dictate the financing. At the very least shop around so you know what the going rates are. And if you can find an attractive rate, likely at a place you already do business, get pre-approved and ready to go so you can speed up the financing process once you’ve found a vehicle. It never hurts to let the dealer try to find financing, but they can’t come up with a good deal and you’ve already got financing lined up with another lender, you won’t be pressured into something costly at the last minute.

There you have it. While every vehicle purchase is different, if you follow this general outline you’ll be putting yourself in a position where you’re far more likely to get the best deal and avoid getting run over by a salesperson because you didn’t do your homework ahead of time. Buying a car is certainly a big decision and often a stressful situation, but if you take the right steps from the beginning it will be quick and painless.

I’m always on the lookout for non-traditional ways of making money.  The one thing that I know is that plenty of opportunities exist as long as you keep an open mind.  Here are five absolutely insane ways to make money.

1. Sell your hair.  If you have long hair that hasn’t been chemically treated, there are a number of places online where you can sell your tresses.  Human hair can go for thousands of dollars so before your hairdresser sweeps that floor, ask them if they’ll carefully set your hair aside so you can take it home with you.
2. Sell your blood plasma.  Blood plasma is a necessity.  Clinics are willing to pay premium prices for your donations.  If you’re looking to make a quick buck, it’s worth seeing if any of these types of centers exist in your city.
3. Buy beer and cigarettes.  Age compliance shops are prevalent.  The point is to get a business to card you before selling you alcohol and tobacco.  Companies pay big money for this type of research.  They want to make sure that their employees are asking for ID each and every time someone comes in to buy beer or cigarettes.
4. Be a test subject.  Clinical research studies can provide you with extra income.  If you qualify for a study, you are often compensated for your time and participation.  Keep in mind that clinical research studies do have their negatives.  Do your research before volunteering to test an experimental drug or procedure.
5. Wrap your car in advertisements.  Drive around town promoting your favorite products and services.  Car wrapping is a legitimate source of income.  If you qualify, you’ll receive a monthly stipend and all you have to do is gas your car or truck up and go.  Now, how cool is that?

For more weird and wacky ways to make money, pick up a copy of 101 Weird Ways to Make Money: Cricket Farming, Repossessing Cars, and Other Jobs With Big Upside and Not Much Competition by Steve Gillman.  You’re sure to find inspiration in the pages of that book.  I know I have!

What does building up an emergency fund, paying off debt, and saving for retirement all have in common? They all need to be done, and sooner rather than later. The problem is that for many people, all three of these issues are competing for the same resources. Your money only goes so far, so you need to prioritize.

So, how do you decide where to focus your efforts? There is a lot of advice out there and no simple answer. Some people suggest that you need to tackle that debt above all else. Savings and retirement be damned, but you need to pay off those credit cards. Others say you should really focus on building up an emergency fund first and foremost and tackle debt and/or retirement later once your emergency savings has been established. Everybody seems to have their own philosophy and can make good arguments for each.

The Pros and Cons of the All or Nothing Approach

Depending on the advice you take, you’re probably going to be focusing most, if not all of your efforts on one particular area. Before you settle into a plan of attack, make sure you know the benefits and drawbacks of using this approach.

Pros

The good thing about focusing your efforts entirely on one area is you’ll see the greatest improvement in the shortest amount of time for that particular goal. If it’s paying down debt, obviously the faster you pay it down, the less interest you pay, and the sooner it’s paid off. The same thing goes for building an emergency fund or investing for retirement. The sooner you can put that money into action, the faster it can get to work.

Cons

With the obvious benefit, there are clearly some drawbacks. By focusing your efforts on one area, you’re subsequently neglecting other areas. If you’re putting all of your money into debt reduction, your emergency fund and retirement accounts will suffer. And what happens if you’re aggressively paying down debt but have an unexpected emergency? If you don’t have much of an emergency fund, it could in turn simply mean you’re going to rack up more debt. Or if you’re putting all of your efforts into building up that emergency fund because you’ve been told that is most important, it could backfire when your seemingly good credit card suddenly changes their terms and lower your limit or raise your interest rate.

Prioritizing Your Goals

If you’re like most people, you have to think about how you can work towards each of these goals at the same time. In tough economic times like these, the emergency fund is very important since a job loss could be right around the corner. Although, if you have debt to pay off it is obviously wise to knock that out — especially since many companies are changing terms and credit is harder to come by. And then you have to consider investing for retirement. Stocks have come off their recession lows and have been on a run that puts their returns above historical averages.

It isn’t easy when you’re faced with so many choices and limited resources. So, you have to prioritize. Your priorities will be unique, so the general advice you hear telling you what to do isn’t always going to be the best option for you. So, take a look at your situation and see which areas are most important.

For example, if you have virtually nothing in the bank in terms of savings, your emergency fund is probably going to be pretty high on the priority list. But if you have a month or two worth of expenses in the bank, even though it may not be up to your target level yet it could be less important depending on your debt and retirement situation. And don’t forget about interest rates and the type of debt you have. The type of debt you have along with the rate you’re paying can play a big role in determining how to prioritize those payments. Lastly, think about time frame. If you could eliminate your debt in just a few months by putting all your resources towards it, that’s one thing. But if it would take a few years, you have to weigh the opportunity cost, which is much greater in that situation.

Diversify Your Attack

When investing, you typically diversify. You will use index or mutual funds to diversify across stocks, maybe invest in some bonds or real estate, and so on. You do this because you’re trying to minimize risk. Without a crystal ball or relying on luck that’s about the best approach you can take. Well, deciding how to allocate your funds towards these different goals is no different. Without a crystal ball you don’t know what the stock market is going to do, or whether or not you’ll need to tap into your emergency fund, so you’ll want to diversify this money as well.

What happens if you neglect saving for retirement while you focus on your emergency fund or debt for 2 years when history shows us this was one of the best investment opportunities in decades? What if you aggressively invested for retirement only to lose more money while you’re still left with nagging debt and little or no savings? If you wouldn’t bet your entire portfolio on one stock, you probably shouldn’t bet your financial future on just one goal.

Go back to your priorities and use this as a basis for how to allocate your funds. Obviously, direct the bulk of the money towards the most important goal, but make sure you’re still putting something towards the other goals. Maybe this means you’ll only be saving $20 each week into your emergency fund for a while, or your retirement plan contributions are just 3% of your income, but make sure you’re doing something.

Why This Works

Focusing your efforts on multiple goals at a time does a couple of things. First, it puts in place a habit. Disregard the amounts for a moment and just consider the act of putting money towards all three of these goals. The idea here is to get into the habit of automating these processes so you end up not having to even think about it. So what if you’re retirement account is only growing by $50/month while you tackle more pressing issues, at least you’re doing something and it requires no additional effort on your part. It is much easier to slightly change something that’s already in place rather than start up from scratch down the road.

The second reason is that you’re hedging your bets. Without knowing exactly what the future holds, you just have to make sure you have all your bases covered. Hindsight is always 20/20. If you invested all your spare money into an emergency fund for 2 years while never needing it only to see the stock market take off and leave you in the dust, you might look back and think that was stupid. Or if you spend every penny trying to pay off some debt only to find yourself in an emergency without a dollar in the bank, you’re going to look back and think it wasn’t a good idea.

If you take some of the guesswork out of it and prioritize while still doing something to further your other goals, you won’t find yourself in as dire of a situation or be kicking yourself down the road because of a lost opportunity.

Assess Your Situation

Take a few minutes and look at your situation. See how you’re doing relative to your priorities. Keep in mind that priorities change, and while your plan may have been the ideal plan of attack a year ago, things may have changed to place importance on something else. And don’t forget about some of the benefits that may have changed over the past year or two. Maybe your job now does have a 401(k) match, or maybe your company eliminated it. Or perhaps your credit card company increased the interest rate. And let’s not forget the pitiful interest rates on savings accounts in the past year. All of these things can impact how you should allocate your money today.

Types of Unclaimed Property

The most common types of unclaimed property are deposits for utilities, such as gas and water service, and property or money left in safety deposit boxes or inactive savings, checking and certificate of deposit accounts for three years or longer. Insurance payouts and refunds are also common forms of unclaimed property, as are uncashed annuity, dividend, estate, trust fund disbursements. Unused gift certificates may also turn up as unclaimed property, along with uncashed payroll, traveler’s and cashier’s checks and money orders. State tax refund checks often go unclaimed when people move out of state.

Claiming Property

Many states have searchable databases of unclaimed property on their treasury department websites. Websites such as Missing Money and the National Association of Unclaimed Property Administrators (NAUPA) also provide access to state unclaimed property databases. If you are the owner of the property, provide your name, Social Security number and current and all previous addresses. If the information you provided matches information attached to any property in the database, you will be able to claim it online and the state will mail a check to your current address, usually within two weeks. If the information does not match, or the state requires more information, you will be given instructions on the additional documentation you must provide.

Just under half of the states do not offer online searching and require search requests by mail. If you are the owner of the property, write a letter requesting a search for any unclaimed property in your name. Include your full current name, maiden name and any other previous names, your Social Security number, current and previous addresses and your phone number so the state can contact you if necessary. Mail the request to your state’s treasury department. The state will mail acknowledgement of your claim request within 60 days, but it can take up to 90 days from the date of acknowledgement for the state treasury to process and approve your claim and mail a check to you.

If you are an heir, you cannot make a claim online and must make the claim by mail. You must provide the above information about the owner and yourself and must provide documentation that proves your relationship to the owner and your right to claim the property. Such documentation most often includes birth, marriage and death certificates, but your state treasury department can give you more specific documentation requirements. If two or more people have a legal claim to the property, each of them must prove their identity and relationship to the owner and sign the release documentation.

No state imposes a statute of limitations for unclaimed property. This means that owners can always claim their property no matter how many years have passed. It also means that heirs can claim the property of a deceased relative many years later, as long as they are able to prove their relationship to the owner and their right to claim the property.

Search Tips

To search effectively include common misspellings or variations of your or the deceased owner’s name. Include middle names and initials. Search under maiden names or other previous names that may have been used in business or other financial matters.

One interesting thing about this generation are the competing financial concerns. Generation X, now in their 30s and 40s, are stuck in the midst of a terrible economy and high unemployment while trying to balance saving for retirement, raising a family and saving for college, paying down debt, and worrying about aging parents. It’s no wonder this generation is so stressed out.

Unlike older generations who didn’t take on a mountain of student loan debt and likely had at least some sort of pension to help with retirement, this generation is entirely on its own. That means taking on the full responsibility of trying to fund a retirement nest egg, putting children through college, and just trying to stay afloat in this economy.

In 1979, when the oldest Gen Xers were teenagers, the sole retirement plan for 62 percent of the workers was a traditional pension, according to Employee Benefit Research Institute (EBRI). By 2005, when most of the Gen Xers had joined the workforce, that number had flipped: 63 percent of employees found themselves covered only by voluntary 401(k) plans.

Robert O’Neill, a senior vice president at Charles Schwab who oversees the firm’s Gen X initiative, said Schwab found that Gen Xers often don’t understand investment basics. Many, for instance, don’t realize that an investor can contribute to both a 401(k) plan and an IRA. This might help explain why 82 percent of Gen Xers have no IRA, according to a Schwab survey. It’s simple things like this that have a profound impact on finances for years to come.

All of that being said, I did uncover an interesting tool that helps you think about where your priorities fit compared to others like you. Betterment has an interesting thing called Money Mea$ure-Up. You simply plug in your age and sex, and it will pull up some data that shows what others in this demographic are up to. And if you’re one of those who are a bit behind the curve when it comes to saving money, you can check out my post on why Betterment might be a good option for you. To get you started, they are offering a fee $25 bonus for signing up.

So, check it out below:

Competitive scholarship packages, revamped dining plans and tickets to free sporting events make getting an education even more desirable in tough economic times.  In fact, while many colleges and universities have hiked the cost of tuition, parking and activity fees, five campuses across the nation continue to provide exceptional perks that you, the student, can’t afford to miss.

A Fresh Approach to Going Green

In an attempt to reduce its carbon footprint and to make better use of the school’s limited parking spaces, the University of New England (UNE) in Maine offers incoming freshman $480 Gary Tiburon bicycles along with bell helmets and locks for leaving their cars at home. Those students wanting access to a vehicle can opt to accept a gift card good for 28 hours of free Zipcar usage in place of the bikes. The school has two of the cars available to use by the hour or by the day. For upperclassmen, campus shuttle service and discounted limo and taxi service takes the guesswork out of getting around UNE without a vehicle.

In California, Stanford University’s Commute Club pays its members $282 dollars a year for carpooling, taking mass transit, bicycling and/or walking to campus. Like UNE, the school has Zipcar access for students needing a vehicle for an afternoon or a day. Up to $96 in driving credit makes this car-share service affordable and ideal to individuals who only need a car a few days a year. Other benefits include complimentary Enterprise Rent-A-Car vouchers, online Ridematching service and emergency rides home.

Tools to Succeed Right From the Start

What could be more enticing than a free computer and printer on your first day on campus? Freshmen at Wake Forest University in North Carolina line up in droves to pick up their hardware from campus officials at orientation. Each and every student, despite major and economic status, is entitled to the superb swag.  College-based software comes pre-loaded on the computers making homework a snap and note-taking as easy as turning on the power switch. Upgraded computers are available junior year and the laptop and printer are yours to keep even after you have graduated.

The Comforts of Home

The Lula Bell Houston Laundry facilities at Davidson, an elite liberal arts school in North Carolina, provides free drop-off and self-serve laundry services to all of its students. Clothes are washed, dried, pressed and placed on hangers by Ms. Houston herself, and the campus has offered this distinct service for over eight years. Dry cleaning and alterations are available at an additional cost.

Hitting the Slopes After Hitting the Books

Students at Michigan Technological University (MTU) feel like their student activity fees are well worth their cost. For $64 a semester, anyone with a campus ID can hit the slopes and ski or snowboard for free at Mont Ripley Ski Slope. Golfers and tennis players can polish up on their skills by visiting the Portage Lake Golf Course and the Gates Tennis Center, while other students take in a play or concert at the Department of Visual and Performing Arts or participate in intramural sports. A welcome treat after a long day of studying, the Experience Tech initiative has received rave reviews from students who find the cost of participating in school and community events hard on the bank account.

The Ultimate Investment is Your Future

For most young people, college is a time for self-discovery, cultivating friendships and earning real-life experience as well as enough credits to graduate. Determined to help their students succeed, schools like UNE, Stanford, Wake Forest, Davidson and MTU are on the cutting edge of academic ingenuity and provide the latest technology to anyone who is willing to take the plunge and further their education at one of the colleges’ campuses.

Now think back for a minute and look at a larger purchase that did give you pause. It could have been that forty dollar dinner out, a new TV, or even a video game. Did you think about whether or not you could afford it? Did you make justifications as to why even though it wasn’t in your budget you could still make it work? Unfortunately, if you’re asking yourself these questions, the reality is that you truly can’t afford it.

Affordability = Opportunity Cost

When you’re asking the affordability question, what you’re really debating is opportunity cost, even if you don’t realize it. That’s because affordability has to do with deciding whether or not making a purchase is worth what you have to give up elsewhere. When you buy a two dollar cup of coffee you’re not faced with the affordability question because you already know that aren’t really sacrificing anything elsewhere (unless you’re deeply in debt, buying the coffee on credit, and only lying to yourself, but that’s another discussion).

When it comes to a larger purchase and you begin to question if you can afford it, you’re really debating whether or not that purchase is worth what you will be giving up. What you’re giving up isn’t always obvious. Sure, you can put a price tag on it and know that’s how much it will cost, but your subconscious is factoring in things like how it will affect your retirement saving goals, how it will mean it takes longer to pay off credit card debt, how it means less money saved up for college, and so on. Even though you might be just thinking about the money in the bank while standing in the check-out line, all of those factors and more are what is going through your head even if you aren’t thinking about them specifically.

Affordability is far more than wanting to buy something that costs $200, seeing you have $400 in your savings account, and telling yourself you can afford it. I’m sure you’ve seen this many times yourself, where you clearly have more than enough money set aside to make the purchase without hesitation, but you still find yourself questioning whether or it’s a good idea. That’s because something in the back of your mind is telling you that it might not be truly affordable. Even if you can’t put your finger on why, take that as a mental cue that you should step back from the purchase for now and reassess it.

Affordability Relies on What Ifs

As you talk yourself through the affordability question it is framed around today, or the status quo. You tell yourself that as long as your life continues how it is right now, you can surely afford it. But the real question surrounds the “what ifs.”

What if:

• You lose your job or receive a pay cut?
• Insurance premiums go up?
• There’s a financial emergency?
• The stock market tanks and you lose a lot of money?
• Insert any unexpected thing here…

How many times does life chug along perfectly without any bumps in the road? Almost never, so if your telling yourself that you can afford something now, only to know that if any of the what ifs were to happen you’d be in trouble, you’re only lying to yourself. If something was truly affordable you’d know that the decision to make that purchase wouldn’t adversely affect you.

Would you regret buying a two dollar coffee last week if you lost your job today? Of course not, because those two dollars wouldn’t even make a dent in that loss of income. Would you regret buying a $2,000 HDTV last week, depleting much of your emergency savings, if you lost your job today? You better believe it. If you bought that same HDTV last week but used funds specifically set aside for it and still have three months worth of expenses in your emergency fund and then lose your job, how would that ultimately affect you?

As you can see, it’s not what you buy or what might happen in the future. It’s what you buy and how well you are prepared for the future, and knowing what you’re giving up by making each purchase. You can buy luxury items if you aren’t robbing Peter to pay Paul. But if you get that feeling in the back of your mind telling you there are other priorities to take care of, it’s time to listen, even if your bank account balance is making it look like it’s easily affordable.

The Affordability Acid Test

“If you have to think about whether or not you can afford it, you can’t.” Use that as your affordability acid test with each purchase. If you go to buy something and the thought of whether you can afford it or not never even crosses your mind, then chances are it’s truly affordable. But any time you find yourself thinking about whether you can afford it or not, even briefly, STOP. The mind works in mysterious ways and it is trying to tell you something. You may not visualize a bunch of flashing lights or bells going off telling you that you can’t afford to rob potential future retirement savings, or that the money really needs to go towards credit card debt, or that something unexpected may be in your future, but if something is giving you pause, stop and listen to what it is saying.

Many people think that this strategy means you can only buy stuff if you have a bunch of cash sitting around. That’s not exactly true, nor is it the point. The point is to think critically about what you buy, and more importantly, understanding exactly what making that purchase will take away from other areas of your finances. It’s good to know that if you buy something today it may negatively impact you in the future, but it’s better to know exactly what it will impact and how so you can take the steps needed to make up for the shortfall.

What often happens is that we spend so much time trying to find the single best solution that the opportunity cost of delaying the decision often outweighs the benefit of finding that single best option. This is paralysis by analysis. It is when you spend weeks, months, or even years putting off a major decision while you examine every option available, only to miss out on most, or all of the benefits that could have been realized if you just chose any option from the beginning.

A Few Examples

This is quite common when it comes to finance. We are bombarded with choices. Deciding how much to invest, how much put toward debt, what bank to use, what credit cards to use, what stocks or funds to invest in, what tax strategies to implement, and the list goes on. For every seemingly simple choice, there are often hundreds of possibilities. Just look at the difficulty in selecting a savings account. You have local banks, dozens of online banks, and then you have to look into what the interest rates are, what fees there may be, what features you may or may not need, and before you know it you’re putting off saving for weeks or months while you fret over finding the absolute best option.

It is even worse when you start talking investments. How many times have you said you were going to start, or even simply increase your 401(k) contributions only to put it off for months or a year while you look at all of the various investment choices, try to figure out when the best time to invest would be, and get confused by fees? Even if this isn’t you, I have a few friends who have done this. One guy I know stopped contributing to his company 401(k) a few years ago because money got tight. That’s understandable, but about six months after stopping those contributions he came to me for advice about where to start putting that money back to work. So I gave him a few suggestions. A few months later he comes back and admits he still hasn’t started and is still “learning about the market” and wants to make sure he makes a good investment. I insist he just starts putting that money into the account, even if it’s just in the cash fund, but there’s no sense in waiting.

Guess what? It is almost three years later and he still hasn’t started back up with his 401(k). The excuse? He’s still unsure of the best possible way to invest that money. So he has gone three years without putting a dime away toward retirement, missed out on reducing his taxable income, and missed out on putting that money to work. That is three years that can never be given back. The time is gone. But he still continues to hem and haw thinking that by making the single best decision it will be better than making just an average decision.

Pick an Option and Run With It

Instead of wasting your time constantly analyzing your options, just do some basic research and then go with it. You can always change later and there’s virtually nothing set in stone, so why worry so much about it? If your goal is to finally open an online savings account and start putting money into an emergency fund, don’t waste a week trying to pick the absolute best bank. Because you know what usually happens? You tell yourself you’ll be ready next week. But then next week turns into next month. And next month turns into six months, and before you know it you’ve wasted a year and you’re even further behind than you were when you started.

Seriously, if you end up with a bank that is ten basis points less than another, what is the worst that can happen? I’ll tell you. You’ll probably miss out on less than ten dollars in interest over the course of a year. When you think about it that way, is it worth delaying weeks, months, or a year just to squeeze out a couple extra dollars? It isn’t the end of the world if the bank you choose happens to have a slightly lower rate or changes their fees along the way. Remember, you can always simply change banks later, and that’s far better than doing nothing.

The same can be said when it comes to anything else. If you need a credit card, you certainly want to seek out some of the best options so you can get cash back, rewards, or a great interest rate. But after narrowing it down to a few options, just pick one and go with it. And when investing, the same general rule applies. You’re probably not out there putting everything on the line on a single stock and instead using diversified funds of some sort, so get your plan and go out there and invest. Who cares if the fund you end up in has fees a fraction of a percent more than another one. Who cares if it underperformed its benchmark by 0.5 percent last year. The fact that you invested the money at all will far outweigh the opportunity cost of waiting while you try to squeeze every last penny from your decision.

Something is Better Than Nothing

If you take anything away from this post, know that something is better than nothing. If you want to save money, just pick a bank and start saving. You can always move your money later, but taking action and putting that money to work, even if it isn’t the absolute best option available, is better than doing nothing at all. Don’t be like my friend who has let three years go by while he sat on the fence unsure of what to do. Time gets away from all of us, even with the best intentions. So don’t let tomorrow turn into next week, and next week turn into next month, or next month turn into next year. It’s time to grab the bull by the horns and put your plan into action. The worst that can happen is you miss out on a few bucks, but that’s far better than missing out on much more simply because you became paralyzed by so many choices.

The cost of living has risen dramatically over the last decade while wages have remained stagnant. For many couples planning to have children, it may no longer be financially possible, as the average cost of raising a child through age 18 is upwards of $250,000 today.

However, if you still intend to have children in spite of the staggering economy, consider the following to determine whether or not you will actually be able to afford yourself and your prospective children.

Lacking Healthcare

Due to the poor economy, many employers have scaled back or altogether abandoned their healthcare plans, leaving the financial responsibility of such plans in the hands of families. Healthcare plans don’t come cheap, and not having a plan can be just as costly should a family member have to enter the hospital. Even the cost of having a child alone is outrageous with the average hospital child birth costing around $7,500 for a 24 hour stay. Even if you have insurance, you will likely have a deductible, co-pay, or co-insurance to pay, which could still mean you’re on the hook for thousands even if insurance picks up the bulk of the tab.

Increased Transportation Costs

Rides to and from school, soccer, dance, and whatever other extracurricular activities your children may become involved in will definitely require gas, and the price of a gallon of gas will only continue to rise. While this may be a cost that you don’t consider to be a big one, consider how much you spend on gas alone only going to and from work �’ that amount will definitely double with kids, especially when you trade in your coupe or small sedan for a larger vehicle.

Increased Food Costs

Every aspect of the food industry has increased in price. The higher the cost of food, the more expensive it will be to feed additional mouths at the dinner table. If you already find yourself appalled by the amount you spend on food solely for you and your significant other, you may want to consider what  having children will bring to the table. Not only do they eat a lot, but in their teen years they can become downright bottomless pits.

Lower Household Incomes

The average household income has decreased by nearly 7 percent over the last decade meaning that more households are having to get by with less money although everything around them is costing more. Even though your income may drop, the costs of raising a child don’t.

High Child Care Costs

Child care expenses are the biggest complaints amongst parents as many can spend as much as 20 to 30 percent of their salary on child care alone. The necessity of having dual incomes for many families means finding care is a requirement. Not only does the expense of child care make some parents feel as though they are working solely to keep their children in day care, but it also puts a huge drain on a working couple’s dual-income. Instead of preparing for retirement or taking the occasional vacation, couples instead have to funnel their extra income into childcare.

In addition to the above costs, birthdays and annual holidays also bring up additional expenses as kids want the latest and greatest gadgets and toys.  If you think you can go without a little yourself from time to time – such as downgrading that 4G smart phone plan to one of the cheaper prepaid phone plans – affording children may not be so difficult.  However, the cost to raise a child is still astonishingly high.

For those interested in having children, the financial prospects don’t look good. Unless you either have a high salary or are willing to forgo your retirement fund, which you should never do, having children may not be a financially sound option in today’s economy. However, having children is a highly rewarding experience and it is far more than a financial decision. While children can create a financial burden, the joy they add to your life is often priceless. Even so, having a child is a major decision and it should not be taken lightly. If you take the time to plan accordingly you can also make sure it’s a good financial decision as well.

Back to the Basics

Like a conflict during football season, going back to the basics usually solves your problem.  Same thing goes with relationships and bouts about money.  Who’s in charge of managing the finances?  Who’s in charge of budgeting?  Who spends the most and who wants to save for something big?  These are questions that any couple needs to consider when resolving conflicts about money.  Get back to the basics and find common ground.

A tip I’ve been given from mentors in my own life is to throw away all preconceived notions given to you by family and friends.  Your relationship becomes your new “family” and you get to set the rules.  Don’t let past experiences decipher what is the rule of law within your personal finance life.

Ground Rules Need to be Set

I recommend that couples talk about finances at the very beginning of their dating lives.  However, some people wait until their honeymoon.  Which ever case may be, talking about finances and getting the conversation started is often times the biggest battle.

If you’re a newly married couple, you need to lay some ground rules.  These ground rules will help the two of you better communicate and avoid any unnecessary conflict.  Sit down and decide how the two of you will manage money and how money will be spent.  This is where a budgeting tool like Mint.com comes in.  For many couples, seeing their money visually helps a lot.  I happen to love visual pie charts myself!

Don’t try to hide spending habits.  Get everything out into the open and take charge of the situation.  Lying about something now will just come up again later down the road.  It’s not worth it.  If one person in the relationship loves going out to Starbucks and the other likes buying expensive meat at the grocery store, talk it out an decide whether or not these types of items are affordable.

Compromise or Else

Sometimes, a compromise will be your resolution.  As a couple, you need to find common ground and resolve the conflict.  This is where a budget comes in.  Seeing the money on paper can provide a common vision for a couple and move things forward with what’s important when it comes to spending money.

At the end of the day, you might never come to a compromise.  In this case, the worst thing to do is to give up.  Seek out counseling and and keep the conversation going.  Letting things stall could wreck havoc on your relationship.  Fighting about money is just flat out not worth it.  Seek out people that have been around the block a few times.  Chances are there are countless people waiting to share their wisdom with you.

Relationship Building Through Finances

Treat money like a strength building tool for your relationship.  Like in life, doing things together and seeing a goal conquered will bring the two of you together.  Don’t let a conflict go to waste.  Use it as a time to work out kinks in your relationship and grow stronger together.  Work as a team and you will soon find yourself conquering other goals on your list!