Archive for the ‘implementation’ Category

A Debt Reduction Carnival

August 6, 2007

Our First Carnival.
Warning: Many exclamatory statements ahead. I guess we’re just excited, excited, excited about hosting our first ever debt reduction carnival. It certainly has been inspirational to be a part of the debt reduction community, really.

Would You Consider Helping Another PF Blogger?
We’ve learned a lot. So, sit back and click. Would you mind? The pf community is a great place for otherwise scarce information about debt reduction. Pf bloggers are making a public commitment to debt reduction — a powerful motivator. Perhaps you will post something to the next carnival, respond in kind? Since you’re reading this, it only makes sense.

[If the previous paragraph reads like utter dross — please pardon, there’s a reason, to be explained in a later post about marketing that exploits our deepest, largely unconscious needs. Look for it on Wednesday, most likely.]

For the record, these are in absolutely no particular order! Enjoy.

Two Investment Mistakes:
I’m partial to this post, perhaps because it looks into two mindsets, cognitive rules of thumb, heuristics, that can get us into trouble when investing. That’s psychology folks. So read on… It’s hard not to want to spur someone on that has just started a pf blog, whatever the focus — debt reduction, money management, frugality, investment. Check it out!

Building A Better Snowball:
Is it possible to resist such a title. This is an awesome post. If you haven’t read it yet, get thee to consumerism commentary and check it out. It’s got Pink Floyd, it’s got a killer financial plan for getting out of debt, it’s got a credit reduction calculator, did I mention it’s got a plan. For my money, setting up the emergency fund is key, this message cannot be crowed off the rooftops enough. Check it out!

When You Put Your Mind to It:
Clever Dude is not kidding. He shares his method for destroying $58,000 in debt. There’s hints galore for even the most world-weary debt gladiator. One of my favorites is “We Fix Things Ourselves.” It doesn’t take much — not that I’ve done it — to change the oil in your car, does it? Check it out!

Free Credit Reports, A Cornucopia:
Hustlerama offers no less than 15 ways to get a free credit report. Not that I’ve actually ever done this, but this could be the inspiration that finally puts me over the edge. I’m actually kind of worried that some of our behavior has led to some nasty credit comments. Maybe not. An important step in reducing debt: Know where you are, financially. (And for the not-faint-of-heart, scroll down about halfway down his homepage and look in the left gutter — something to roil the emotions of any debt reductionist.) Check it out!

Alternate Income Streams:
I’ve ventured into this area, but think it is underutilized. An occasional CD sold on amazon has bought me the occasional lunch. At businesscreditcards, the focus is New Media Ways to Raise Capital. Some tips you’ve probably not considered. If you’ve got a little time, these could really pay off! Check it out.

David On Finance:
Has got some well considered thoughts on when to consolidate debt. He also uses the phrase “raw power”, which I think is highly under-used in the pf world. If it was good enough for Iggy… David makes some excellent points about credit unions (not always…) and extra payments (ah, the power!). Check it out!

Grad Money Matters:
He calls them myths. I call them heuristics, cognitive shortcuts, rules of thumb. Well, some of them, anyway. There’s a goldmine of good advices and links here. I particularly like what he’s done with the I’ll-never-get-out-of-debt-so-I’ll-give-up mindset. Check it out!

Mighty Bargain Hunter, Putting Things in Perspective:
This is a refreshing post that puts a little forest into the viewfinder (rather than trees). Your debt needs the context of your life. Not other people’s lives. An important thing to be reminded of, that. Check it out!

Sex for $3:
Can you beat that for a deal? Another whale of a post from one of the funniest bloggers around. If you’re not conversant with the ways of Bianca and Basil, you’re in for a treat. Check it out!

OOPS: It appears that the Bizarros have “scrapped” their blog. I’m not sure what this means, but hope it’s temporary. The link may not work. Sorry.

A Book Review. Now I Want to Read This Book.
Books are invaluable motivators for re-focusing. Get it at the library or one of those great used books sites (I kick myself when I think of all the new books I’ve bought — used books are simply no longer the coffee-stained acid-ravaged items we encountered in less-than-savory warehouses.) And of course, Trish at blogging away debt is a certified maven of personal finance. Check it out!

Another Lie About Debt:
Here’s another perspective enhancing article. (Or a link to it.) In the circle of linking, I got this one from blogging away debt. I found it so interesting I broke my goal of having 10 links for this carnival. So now we have a nice prime number. Check it out!

Am I Really Ready to Get Out of Debt?
Okay. So Let’s Make It An Even Dozen. NCN submits some interesting points, ready starting points for self-inquiry. I particularly liked the one about being ready to withstand the opinions of others. Let’s face it, turning down lunch because you don’t want to spend money is awkward, in many circles. Check it out!

Comments?
We’ve enjoyed hosting this incarnation of the debt reduction carnival. If there was anything you particularly liked or disliked, we’d like to hear about it.

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Debt Reduction: 7 Crucial Habits to Cultivate

June 19, 2007

The field of psychology has a history of debating just how people learn. Is it through reinforcement? Social modeling? Good examples to follow? What you want to learn is how to cultivate the good personal finance habits so you can eliminate credit card debt and get on with your life. You want this. I think I can help.

  1. Reward yourself. The sooner after the thrifty behavior the better. Rewarding yourself before, during, or some time remote from the behavior will not have the desired effect — creating a positive reinforcing association with the habit you are trying to cultivate.So reward yourself right after you defer the impulse purchase, make a menu plan, buy gas in the wee hours of the morning… Make sure the reward is something you love, ice cream, playing soccer, spending time with the kids, whatever it is for you.
  2. In the beginning, reward yourself often. If you are just beginning to develop habits they require constant reinforcement in order to stick. This is in the beginning. So for the couple of weeks reward yourself as often as you can, again, as close to immediately after the desired habit as possible. We start to believe, somewhere in our brains, that looking for bargains actually causes ice cream to materialize.After a couple of weeks you need to taper off the rewards, otherwise they become meaningless. But in the beginning, continuous reinforcement is powerful. It is the strongest reinforcement schedule for establishing a habit. This is well documented by lots of empirical research.
  3. Make your rewards non-routine. When I say non-routine, what I really mean is unpredictable. After continuous reinforcement, which has limited utility, unpredictable rewards are the next strongest reinforcement schedule.A good example? Slot machines. This is why people get hooked. The reward is unpredictable, but it comes, and that has a powerful effect on people. This is not to say that routine rewards are not good, they are fine. But mix it up a little.
  4. Make it a ritual. This may seem to contradict the last point, and in a way it does. But ritual has its own power. Going for gelato after the kids clean their room every Saturday may not be, strictly speaking, as reinforcing as a random treat, but it sure will work miracles on Saturday!More importantly ritual provides continuity in our lives, comfort in order, and helps us focus on what we value. I would not rely solely on ritual, as it is not the most powerful reinforcer, but having a ritual or two can be very powerful.
  5. Join a community with similar debt reduction goals. Truly the internet is fantastic for this. You can go to personal finance blogs and read about things that people on the outside generally are very reluctant to talk about, including their big financial blunders, how much money they make, how they choose to spend it, how they got into credit card debt, and what they are doing to get out of it.Community offers a variety of food for thought, ways of looking at things you might never have come up with on your own, handy tips, as well as the emotional support that comes from knowing your predicament is not yours alone. Do not underestimate the power of being able to identify with people you like and respect.
  6. Find a debt guru. I am not a big fan of gurus. They tend not to live up to their initial radiance. So gurus aside, find someone you like and respect who has walked the walk for longer than you. It might be someone you’ve known personally for ages, or someone you strike up a rapport with on a personal finance blog. It’s probably more effective if you actually know the person in actual time and space. Have an appreciation for their personality and how they make their finances work for them.I know a lady in her late 60’s (I’m guessing) that I’ve known since I was about five years old. I now recognize her as being a titan of frugality. We saw her during our vacation. She offered to take us and the kids out to lunch. She said “we can go to [crappy chain] or [a local Chinese restaurant].” That part was a no-brainer. The chinese food was good and inexpensive. When my wife remarked that she wished our kids were more adventurous eaters, that she wished our kids would eat sushi, my guru bridled. “You don’t want that. That’s expensive!”Now that might sound cheap. Her point was that if you can avoid fostering expensive habits in your kids, then avoid it. When they grow up and get jobs they can acquire whatever expensive habits they like. She had picked both restaurants because they were adjacent to parks, planning to take the kids there if they got squirrelly. She had thought of everything. Would it surprise you to know this lady grew up in the Mid-West?
  7. Consider psychotherapy or some kind of debt counseling. This may strike some of you as very non-frugal. It is not for everyone. It may seem draconian (the expense!) or even counterproductive. It may fall under the heading of “treatment of last resort.” But some of us are really going to need some outside help if we are going to make substantial changes in our habits.Debt counseling may be an excellent option. Another is psychotherapy. If you are overwhelmed with negative thoughts that have evolved into larger attitudes and the way you are in the world, a good cognitive-behavioral therapist might be able to help you get some perspective.Are some feelings — regret, vulnerability, powerlessness — hard for you to get a handle on? Do you tend to be very energized and optimistic only to collapse when faced with the outcome of your decisions? This sort of pattern tends to be entrenched. Even when we know exactly what we need to do in order to get out of debt, save money, whatever the goal is — we stumble. This can be very frustrating and lead to plummeting self-esteem and self-punishment, not to mention mounting credit card debts.A good psychodynamic therapist, one that looks at some of the deeper meanings you attach to money, may be able to help you make sense of and even overcome this type of problem. The goals in this sort of therapy are ambitious, including making adjustments to our character. You can’t change your character, but you can modify it in ways that are helpful. Are you are confused about how your finances got to be such a mess? Then you might want to pursue psychotherapy.

Frugal Bugle: Gas and Food

June 9, 2007

Implementing the Budget
Saturday and it’s time to activate the budget for week two! I am already deriving considerable satisfaction from this simple implementation. As I said before, the blogging and reading of p.f. blogs really helps to support the practice of living within one’s means.

Groceries: Trader Joe’s, $93.26

Gasoline: who cares, $40.00 (11.69 gallons)
Gas factoids: Volvo 240
Miles per gallon: 20.53
Miles per dollar: 6 miles
Cost per mile: 16.67 cents

I’ve wondered about these facts for years. It is good to have them recorded. I’m going to fill up the other car early tomorrow morning, and try to see if I can document any actual difference in mileage per buck for the denser gas. I think $20 should cover the other car. The wife has much less commuting.

Total cost for Gas and Groceries: $153.26. This leaves $46.74 for random comfort lunches or even a meal out. This is not the most frugal budget imaginable, but it is a budget that we seem to be able to stick to.