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Can You Be Too Frugal?

March 31, 2011 Leave a comment

Is it possible to be too frugal?  I think so. With most things, moderation is key.  An MSN article discusses several ways that bring too frugal can do more harm than good.  Cutting out certain items so you can save money may not be the best idea.  The article focuses on nine ways the being frugal can cost you including avoiding regular medical check ups and being underinsured.

But keep in mind that being overly frugal may not just have a negative impact on your finances, it may also have a negative impact on your mental well-being.  There are people who save and save and avoid spending money on enjoyable experiences because they believe that their financial goal is to amass as much money as possible.  But they end up missing out on a lot of fun things in life.  If you’re overly frugal you may want to ask yourself, “Why am I hoarding my money?”  I’ve been guilty of holding on to my money to the point where I’ve missed out on some great opportunities.  I’ve skipped concerts and other enjoyable events because I didn’t want to pay and I didn’t like the idea of parting with my money for something that was not a necessity.  But when I look back, I know that my money would have been better spent on an experience that would lead to great memories.  I wouldn’t have missed that money in the long run but I certainly regret missing the experience.  Now, I make it a point to think about my entire financial picture and understand why I may be hesitant to spend that money.

The point is that spending money isn’t a good or bad thing and saving money isn’t a good or bad thing.  You need to plan and save for your future but you also have to live your life.  You have to understand why you’re spending money and why you’re saving money to make sure that it makes sense for you.

Five Steps to Your Financial Future

January 7, 2010 Leave a comment

So now that we’re about a week into the new year, I’m sure we’ve all had a chance to think about our goals and resolutions for the new year.  Maybe you’ve picked the same resolutions you had last year because you didn’t get around to making those things happen.  It takes a lot of energy to really stick with your resolutions.  If it didn’t we would have already made these improvements in our lives.  But, there are steps we can take to make ourselves more successful than not.

I’m a big fan of The Happiness Project Blog, written by Gretchen Rubin.  I have a special place in my heart for her because like me, she’s a former lawyer who gave up practicing to pursue her passion.  But I really like her because she doles out great pieces of information to help you improve your mood and your life.

One of her more recent posts gives five tips for planning effective resolutions.  I urge anyone who has a goal but who hasn’t been able to stick with it to take a look at the post.  The post takes you through the steps of not only selecting your resolutions but coming up with a concrete plan for how that will happen.

A lot of people come to me and say “I want to feel more financially stable” or “I wish I didn’t lose sleep over money.”  But the real question is:  What does that mean for you?  Does that mean starting a 529 plan for your child?  Saving more for retirement?  Saving up an emergency fund?  Eliminating credit card debt? What specific goal(s) do you need to reach to achieve that stability or to get that good night’s sleep?

Still need some help articulating what you need to do?  Here are some important steps that you can take to get closer to achieving your 2010 financial goals:

1) Track your spending through financial software, a spreadsheet or just simple pen and paper.

2) Write down your important financial goals so that you’re reminded of them throughout the year

3) Reduce debt by creating your own payment plan and/or reaching out to your creditors to ask for reduced interest rates and payments

4) Set up an automatic savings system to get you to that six to nine month of emergency savings

5) Make sure you’re setting money aside for retirement in a 401(k), 403(b) or an IRA

6) Make it a plan for the entire family to be money conscious.  If you are changing your money habits but your husband or your children or a parent you support is spending like it’s 2007, have a talk with them about establishing new money habits. 

And finally, the most important thing is to do something!  Anything!  It can be overwhelming to overhaul your entire financial life and financial philosophy.  If you feel you’re chest seizing up when you sit down to think about your finances, pick one achievable step  and get it done.  It really is about baby steps.  And don’t be afraid get help if you need it.  There is help available to assist you in getting your money in order.  You don’t have to do it alone – but you have to do it. 

Good luck!

Take (Some of the) Pain Out of Saving

November 6, 2009 Leave a comment

I lot of people ask for my help because they want to increase their financial fitness but have a hard time cutting back on purchases.  Cutting out your daily caffeine fix or saving money may be difficult but there are ways to make these things a little less painful.

Real Simple magazine has a great article called How to Save Money Without Giving Up Too Much.  If you need some good tips on ways to cut spending while minimizing the pain of cutting back, check it out.   Whether you’re looking to boost your savings a bit or if you need to come up with a debt reduction plan, these tips can give you a great place to start.

How much money is slipping through your fingers?

November 5, 2009 Leave a comment

thumbnailHave you ever purchased something and then later realized that you wish you hadn’t made the purchase?  

Sometimes I get overly excited about a purchase.  I FINALLY found that denim skirt I was looking for.  Yeah, maybe it’s a little baggy at the waist but I can make it work.  Right?  Um, maybe not.  I think many of us have similar experiences.  But the question is, do you take the time to return that item?

Do you stop by your local coffee shop on your way to work to buy a fancy latte or an overpriced cappuccino and find yourself only drinking half of it?

The next time you make a purchase, think about if it’s really worth your hard earned money.  Take a look at your credit card statement or bank statement and look at the expenditures.  How many of the expenses listed could you have done without?  How much money did you waste because of boredom or laziness?

And while you’re thinking about your daily expenditures, think about ways that you can curb that spending.  Keep a card in your wallet (either close to your cash or your credit card) that says “Do you really need this?”  Perhaps that little reminder will make you think twice about spending your precious dollars.

Categories: Saving, Spending

What Motivates You to Save?

November 4, 2009 Leave a comment

piggyDo you regularly save some of your income each month?  Do you put all or a part of your yearly bonus into a CD or

savings account?  Do you do anything in particular to motivate yourself?

A new study, discussed in this Wall Street Journal article, found that people who were reminded about saving money by mail or text message actually increased their savings balances by 6%.  People who were reminded of their specific goals in those messages increased their savings by almost 16%.

While your bank may not offer these reminders, there are ways encourage yourself to save so that you can get closer to achieving your goals.  

1. Email reminders.  If you type “email reminders” into Google, a number of options will pop up.  You have your pick of free email services that you can set up to remind you of your dreams and goals.

2. Calendar reminders.  If you’re the type of person who is a slave to your planner, whether paper or electronic (don’t be ashamed – I’m that type of person), try making notes that will remind you of your financial goals when you look at a particular day.  If your pay check is deposited on a Wednesday, every other week, make a note on that day in your calendar.  Remind yourself of your goals so that you aren’t tempted to spend that money.

3. Personal finance software.  There are several services available that let you track your finances online.  These programs can keep you up to date on where your money is going.  Some of these products will let you know when you are over budget in a particular area so that you are automatically reminded that you needed to cut back on spending.  If you’re interested in learning more about some of the financial software that is currently available, check out this article from Slate.com.

3.  Get a money buddy.  This is a bit less technological but it works with other types of goals so why not saving?  Pick a friend that you trust and who is also trying to save more money.  Support each other in your savings efforts and help each other when the urge to spend on a non-necessity creeps up.  You don’t have to disclose your entire financial situation to your friend but you can share enough so that some one is holding you accountable for your goals.

Happy saving!

Categories: Saving, Spending