Eat, Save, and Be Healthy

According to a recent study released by the National Endowment for Financial Education three in 10 Americans say they have lied to their partner about financial matters.  This dishonesty can range from lying about small purchases to having secret bank accounts.  However little or small, financial matters are of critical importance to a relationship.

Taking this study into account, it may not be surprising that one of the top reasons partners mention for dissolving a relationship is because of money.  Financial trust and honesty in a relationship is just as important as trust in other areas.  Just as we might encourage a new couple to be honest about other areas of their life, it is important for partners to be able to be open and honest to each other about money.  Money is such a volatile issue, that if it goes undiscussed or if issues go unresolved, it can lead to major problems in the future.

One of the ways to begin to be open and honest with your partner is to develop a money management plan.  This includes being open and honest about where you are now financially, what are your financial goals for the future, and what is it going to take to get to those goals?

Ohio State Extension has an online study at home course that couples can go through if you are interested in working through some of these issues with your partner.  If you are one of those who is guilty of not always being honest with your partner, start anew and try to open dialogue about these issues today!

In January we often think more seriously about reducing our debt as we recover from holiday buying, make plans for the New Year, and think about paying taxes.   For people who owe multiple creditors, it can be challenging to keep up with the payments.  Sometimes there is not enough cash to pay all of them the amount needed every month.  In such circumstances, it pays to establish priorities.  Professionals suggest that some payments are more vital than others and give the following guidance:

Higher priority should be given to:

Protecting family well-being

• Rent or house payment
• Utilities
• Food
• Child care
• Health insurance

Protecting property

• Car loan(s)
• Other secured loans
• Home and car insurance

Preventing or responding to legal action

When it comes to distributing scarce dollars among credit card accounts or other unsecured loans, there are some useful strategies to consider.  First, stop adding to the debt load by using cash instead of credit for day-to-day purchases.  Set an amount that your budget will allow for paying down your debt.  Allocate that money to the various accounts.  If at all possible, pay the minimum monthly amount for each account in order to prevent extra charges and escalating interest rates.

In order to reduce your long-term costs, you may choose a strategy that is sometimes called the “snowball” approach.  That method involves allocating any extra money toward paying off one of the debts, and as that one is fully paid, shifting those dollars into the next one to speed up payment of that debt as well.   The choice of which one to begin with is yours, of course.  Personal finance professionals usually suggest that you start with the account that has the highest interest rate in order to get the biggest cost savings.   Another approach is to repay loans beginning with the one with the smallest amount owed to eliminate debts (and creditors) most quickly.

There is a very useful tool to help you assess your accounts and see how you can achieve success in reducing your debt.  The tool was created by Extension professionals and is free. PowerPay is available on the web.  You will have to register by putting in your name and email address and creating a user name and password.  Go to https://powerpay.org/ The instructions are simple and are included on the web site.

Behavior happens because it is something we have done over and over, i. e. it is a habit, OR it is something that we do because we have a reason for doing it.  Changing behavior, therefore, requires different strategies for these different types of behavior.  Researchers have studied intentional and habitual behavior and have some ideas about how we might make changes.

Behavior that is “new, untried and unlearned” happens as a result of intentions:  a person means to do it for some reason.  As the behavior is repeated, particularly if it takes place in the same context (at the same place, with the same people, etc.) the brain puts it into memory and the behavior becomes guided by habit, a state in which a person doesn’t have to think as much about it – it becomes automatic.  These habitual behaviors become triggered by certain stimuli as they are repeated, and we may find ourselves doing something that we didn’t intend to do.  The repeating of the action builds a memory that links the action with the context in which it takes place.  As a result, well-developed habits may become stronger forces causing behavior than either attitudes or intentions.

Habits have been studied in a number of situations and seem to have four qualities that make them automatic:  a lack of awareness of performing the behavior, difficulty in controlling the behavior, mental efficiency – being able to perform the behavior with little conscious thought, and performing the behavior without actually intending to do it.

Making New Year’s Resolutions work for you:

• Creating a new habit. If you want to add a positive behavior to your life, find a way to make it a habit.  This will build it into your brain as an automatic function and increase the odds of your keeping it up during the new year.  Repetition in a stable context (consistent in the way you do it, place in which it occurs, etc.) is important.  Eventually you don’t have to give it much thought and the stress of the action is reduced.  As you begin this strategy, your intentions take charge  – you will need to keep thinking about what you are doing and why until you have repeated it enough times that it begins to move into your memory as a habit.  Eventually it will become automatic and you will find yourself doing it often without thinking about it.

• Stopping unwanted behavior. Researchers suggest that stimulus control (changing the environment) is important for changing behavior that is a response to temptation.  Because the context (or environment) in which the behavior takes place provides the cues that trigger the behavior, avoiding that environment (such as the people, the places, sights and sounds, etc.) is usually necessary.  This strategy will help because you are not exposed to the temptation and reminded of the behavior.  You are stopping it before it starts.

• Breaking strong habits. Because old habits have been put into your brain so firmly, they require conscious effort to stop. Just changing your intentions is not enough for most people to break a strong habit. It requires vigilant monitoring of your behavior and intervening after the automatic response has been triggered – stopping it after it starts.  This strategy will require more awareness of what you are doing:  you will have to be on high alert for a while.  Each time the habit is triggered you will have to take action to stop it.  You will have to pay attention to break the automatic response.  If you can put into action a new behavior when you realize that you are doing the old unwanted one, a new habit can eventually replace the old one.

Sources:

Quinn, J. M., Pascoe, A., Wood, W. & Neal, D. T.  (2010). Can’t control yourself?  Monitor those bad habits.  Personality and Social Psychology Bulletin 36, 499-511.

Verplanken, B. (2006).  Beyond frequency:  Habit as mental construct.  British Journal of Social Psychology 45, 639-656.

Wood, W., Tam, L. & Witt, M. G.  (2005). Changing circumstances, disrupting habits.  Journal of Personality and Social Psychology 88, 918-933.

If you are like a lot of Americans, January is the worst month for you.  This is the time that all the credit card bills come in the mail for all the presents you bought in December.  The glow of the holidays has worn off, all the presents have been opened and used and the reality of the debt slaps you in the face.

The good news is- it doesn’t have to be this way!  You can start now to make a plan to remain free from holiday debt.  Remember that this is not just about you.  You are setting an example for your children and passing on your values about money.  What does it say to them if you buy more than you can afford and then spend all January and February worrying about how you will pay for it?  These are important tips for you, but they can also be important lessons to teach your children.  Help them, and you, have a stress free beginning to the new year!

1. Make a budget. Sit down now, in November, and think about how much you can afford to spend.  Keep in mind those last minute gifts for teachers, co-workers, or holiday parties.  Include even the little things in your budget.

2. Plan ahead. Planning includes your budget, but you can also make a list of the people you need to buy for and some ideas for presents.  This will give you a good way to map out your spending and go shopping with a plan! Be thoughtful about your gifts.  Is this toy something that my child will really play with enough to justify the cost?

3. Start saving early. Hopefully you have already been working on this, but if you haven’t, START SAVING NOW!  Use your budget to determine how much you will need to save from now until the holidays to be able to pay for the gifts you want to buy.

4. Be creative! Gifts do not always have to be things you buy from the store.  If you are crafty, consider giving something that you make.  Consider giving services or time– an hour of babysitting for your neighbor, or a special outing to your children.   Sometimes these thoughtful gifts can mean even more than something you pick up at the store.  This can also be a good gift idea for children to give.  Encourage them to think about services they can give rather than material gifts.

5. Everything in moderation. When we are buying gifts, especially for those we love, it is so easy to go overboard.  This is why it is important to think ahead of time of how much you have to spend and what you would like to give each person on your list.  If you go to the store with a plan you are much less likely to go overboard.

6. Shop Online. There are many websites that can help you compare prices on any item you are purchasing.  This allows you to “shop around” without having to do all the work.  Remember to include shipping when considering an online purchase as this cost can vary a lot from site to site (some sites include free shipping).

7. Use Cash. Cash is a powerful visual.  There is something that just feels different when you spend cash versus swiping a card.  This feeling can help you not overspend.  Also, if you go to the store with $100 cash to spend, it is impossible to spend more than $100.  This is another way to keep track of how much you are spending.  By using the cash that you saved for this purpose you will also save yourself from those credit card bills!

8. STICK TO YOUR PLAN.  This is the key to being debt-free.  Why invest all the time of making a plan if you do not have the discipline to stick to it!  It can be tough, but it will all be worth it when you get to January stress-free!

The small repeated expenses are the “budget busters” for many people.  It can be hard to know the impact of these small items on your overall expense picture without adding them up.

The eXtension Financial Security for All web site features a new calculator for estimating the annual cost of small repeated expenses.  Go to the link and enter your expenses for items such as coffee, sodas, lunches, gasoline that you purchase frequently.  The calculator will add up the items that you enter on a daily, weekly or monthly basis.  You can see the approximate annual cost.

The link to the Budget Calculator is  http://www.extension.org/pages/Budget_Calculator The link takes you to a short description of the calculator and then another link (https://share.extension.org/public/FSA/budget_calculator.swf) takes you directly to the calculator.   You can print your information or just review it online.

Barbara O’Neill, personal finance expert from Rutgers University offers a daily update on money topics via her Twitter account.

Check it out:  http://twitter.com/moneytalk1

Tips for saving money are posted on an easy-to-use web site featuring ideas by members of the web community.  The topics are Finance, Eco, Health, Tech, Shopping, Kids & Family, Car & Transit, Food, Vacation, At Home, At Work, and Miscellaneous.  Read the set of popular tips that flash on the screen or click on a topic link and view the tips by topic.  Posts come from across the globe.  Viewers may also sign up to vote for their favorite tips and add their ideas to the list.

The link is:

http://moderator.appspot.com/#16/e=3cfc

What are your tips for blog viewers that can save them money in the months ahead?  Add a comment to suggest ideas.

Are you beginning to care for your elderly parent? Care-taking is no longer limited to medical attention, making sure their house is clean or taking them to appointments. Adult children may be faced with the difficult task of managing their parents money. Not offering financial support, but assisting with paying bills, sorting out medical bills and decision making. Try these five strategies for assisting parents with money management.

Start the money conversation: This may be difficult and parents may resist  talking about how to manage their money or having their children manage their money. Be sensitive to their needs, ask if they need assistance, ask who they would like to handle their finances.  Plan ahead of time what needs to be covered during the conversation. Be firm that this is the time to make these decisions.

Request that parents prepare legal documents: Ask your parent if they have a power of attorney, health-care power of attorney, living will and a will completed and updated. Review these documents with your parents to ensure that you understand their wishes. If no documents are completed help them make an appointment to get them done. Most simple legal documents cost around $1,000 or less.

Responsibilities of a financial caretaker: Begin by reviewing monthly income sources and monthly expenses. Prepare a budget sheet. If monthly expenses exceed regular income from Social Security and pensions, where are the supplemental funds coming from?

Prepare a balance sheet that outlines the property owned, share certificates/certificates of deposit, stocks, bonds, mutual funds, and retirement accounts and their fair market value. Also, a list of debts and outstanding balances. List the financial advisors, accountants, insurance agents, stockbroker, attorney and any other financial people your parents work with.

Reduce parental debt: Seniors have the fastest growing rate of personal debt problems. Stop using credit cards to pay for monthly needs. Investigate financial, medical, food and housing assistance programs locally.

Design and implement a debt reduction plan which may include paying off the high interest rates or low balances first on credit cards. Consider additional income using a reverse mortgage, selling assests, or reducing expenses.

Review insurance coverages: Obtain your parent’s insurance policies for health, life, auto and homeowners and review to see if the coverage is adequate for their needs. Adjust as needed.

Remember that you may want to consult with a financial adviser if the task of going through your parents financials and papers is overwhelming. Only hire advisers who are insured for errors and omissions and bonded if they have direct access to your parents’ funds or accounts.

Resource: How to Care For Your Parents’ Money While Caring for Your Parents, by Sharon Burns, CPA and Raymond Forgue

Recently, most of us have had many opportunities to consider the financial condition of our economy and how that impacts us.  For some of us, this is the time to change the way we have been managing our money.

But, altering our behavior is not easy.  In fact, changing money habits can be especially difficult. How we’ve always handled money feels familiar, comfortable, and predictable – not only to ourselves but also to those around us.  Family and friends often expect us to act and respond in certain ways and may even have vested interests in having things continue as they are.  Because family members and friends may feel uncomfortable when they see us trying to make changes, they may set up barriers – either subtle or obvious — to prevent change.  We may not be clear about how to implement change – what is a better way to manage?  Change is not easy or straightforward.  We may try things that don’t work so well for us, or we may get discouraged when our attempts fall short of what we desired.  One good source of information and suggested ways to start new money management practices is the following site:  http://www.extension.org/personal_finance In addition to the suggested practices and practical advice by experts found at extension.org, the research below provides guidance on setting and accomplishing financial goals.

Research sheds some light on how we might be most successful in changing financial behavior.

The first step in changing our money management is to set a goal – what do we want to achieve and by when?  Research studies have pointed to three main keys to increasing success in accomplishing your goals.  The first point is that goals should be  clear, narrowly focused, accomplished without much difficulty, and completed relatively soon (naming a specific date). Tip #1:  Set goals that are specific in terms of what you want, how much it might require of time, money and any other resources, and when you want to have it.

The second key to being successful in reaching your goals is to know why you have chosen the goal.  In the terminology of some psychologists today, “you need to own your goal.”  In other words, a goal should come from you for your purposes and NOT be handed down by someone else. It must fit with who you are and what you need and want, being realistic about your time and money resources, of course.

The goal may also have to be planned with others in your family or household. Everyone involved needs to be considered and everyone needs to feel ownership in, and commitment to, the goal in order for it to be accomplished.  Tip #2:  Set a goal that is one you want to achieve and know why you want to achieve it.

Having your goal defined and being sure you know why you have set it are two important contributors to goal success. The third key factor is having a specific plan to reach your goal. The action plan will need to have dates attached to it, so that you know when you will start, when you will reach certain milestones along the way, and when you will fully accomplish your goal.  Sometimes there are dates imposed by circumstances outside yourself, such as holidays, vacation dates, birthdays, graduation dates, weddings, etc.

The other important part of action planning is to recognize that you will have some distractions and temptations to use your time or money for things other than achieving your goal. These opportunities to spend now rather than save for the future come to everyone and most of us find it hard to avoid these temptations.  These enticements may prevent you from reaching your goal on time. It is easy to become discouraged when these things happen. However, if you plan for ways to avoid or recover from these disruptions, you can quickly get back on track. Tip #3:  Establish a target date and create a detailed plan of action to follow that will act as a guide to achieving your goal, including ways to overcome obstacles or temptations that could interfere with completing your goal.

References

Koestner, R., Lekes, N., Powers, T. A., & Chicoine, E. (2002).  Attaining Personal Goals:  Self Concordance Plus Implementation Intentions Equals Success.  Journal of Personality and Social Psychology, 83 (1), pp. 231-244.

Prochaska, J., Norcross, J., DiClemente, C. (1994) Changing for Good, New York: Avon Books.

Seiling, S. (1999) “Behavior Change and Money Management” in McKinney, C., Seiling, S., Little, F. and Varley, I.,  Pathways to Money 2000+, Section 1, pp. 18-23.

We all know that the economic times are tough: stocks are down, unemployment is up.  While the economy certainly affects our wallet, it can also affect our family.  Did you know that money worries are the # 1 cause of couple disputes?  In a recent study Authors, Papp, Cumings and Goeke-Morey, in the February 2009 edition of Family Relations found that often couples did not rank money as #1 when asked to rank what they thought were the biggest causes of conflict.  However, when they were observed working through different conflicts, money was often more emotional, tended to last longer, and were more likely to remain unresolved than conflicts not related to finances.

As couples navigate these tricky issues, and perhaps find an even greater need to deal with them in these tough times, it is important to be aware of the emotion and tension that is often involved.  Here are a few tips for these tough discussions:

• Don’t place blame, rather focus on how to resolve and work through the problem
• Be patient with your partner…and with yourself
• Take a break if you need to cool off- go for a walk or separate for a little while to calm down.  But come back to resolve the issue.  Don’t let the issue stay unresolved.
• Don’t bring up past issues—this is not productive and only serves to hurt the current discussion.
• Often, in the case of money, a budget or action plan is always good to have- to refer to when discussing money issues.  Try to make this budget or plan together, with both sides inputting.
• Involve the whole family in financial planning.  This can help children and teens begin to learn to manage money
• Try to think of things to do with your kids that do not involve money such as:
  • Family Mealtimes together
  • Picnic in the Park
  • Having a game night
  • Doing volunteer work together

Resolving money issues is never easy. But if you are able to work through these hard issues with patience and compassion, your relationship may end up stronger in the end!