Wednesday, December 18, 2013

Love It or Leave It - Holiday Shopping Tips

Shop, Save, Celebrate

by Frances Rahaim, Ph.D.
aka "The Money Doctor" 

Have you ever pushed a cart full of "must haves" to the cash register, and incredulously squawked to the cashier, "How much?"

Of course. We all have. But paying with plastic adds another level of danger to holiday shopping woes. It’s not the obvious high interest rates, and long payback timelines I’m referring to, but a much less talked about phenomenon that creeps up and bites us when the holidays are over.

Since you won't see the credit card bill until the new year, if you don’t keep a careful tally, you may find it difficult to pay in full. This short holiday shopping spree could take you years to pay off, or even cause late mortgage or other payments in some cases.

We all know this, but despite the fact, we don't seem to have a solution, and we do it year after year.

While I don't claim to have the only solution to the problem, I do have some helpful shopping tips that can be used year round.

1.  Give it a ride in your cart. This is a bit like choosing a color in your home. You put a sample on the wall, and live with it before committing to painting the whole room. When you see an item that you just can't leave on the shelf in case someone else buys it, put it in your cart. BUT, reserve your buying decision until you are at the back of the store where there is no pressure on you, no line of customers pushing you through the check out, and no feeling of responsibility to the cashier to purchase. Now, at your leisure, take time to add up your potential purchases and began the sorting process in step two.

2. You MUST love it or leave it.
Time constraints, or The goal of getting something for everyone, can cause your cart to magically fill with items which may not really be what you want, but allow you to check off your list.
Ask yourself, "Do I really love this?” Or if it's a gift, "Am I genuinely satisfied with this choice, and will they love it?" If your answer is anything short of a resounding yes, put it back and try again.

3. Put yourself in the receiver shoes. Would you rather have a trinket you may never use, or perhaps some quality time spent with someone you care for, or a donation made in your name. It may sound trite, but time truly is our most valuable asset. Remember, it doesn't have to have a bow to be a gift.

4. Beware of impulse buys, and rationalizations. Your impulse buy antenna should go up when you see end caps, and checkout displays.  This doesn't mean you shouldn't purchase these items, but refer back to step one.

5. Stick to the list. Somehow it seems easy for things you “Never knew you always wanted” to jump off the shelf and into your cart. Our shopping psychology justifies purchases sneakily. We tell ourselves "We deserve it, someone we love ‘needs’ it, or the easy-to-justify "It's for the home." We see these purchases as if they don’t count, but they still have to be paid for the long run.

5. Reality rules. Visualize taking cash out of your wallet to pay for each item. There's something very tangible and accountable about removing paper money vs plastic.

6. Conserve your cash. “They’ll keep it at the store for me.” This could be the conversation you have with yourself when you want an item, but don’t really need it yet. Try and leave below your means.

5. Shop small.
With gas prices at an all-time high, shopping locally makes more sense than ever. You help your community, and the people in it. And remember, your local shops are the same stores other people are traveling a distance to shop.

6. Of course no financial blog would be complete without telling you to pay your credit card bill in full if you decide to use one, but I am a realist, and know that when the holidays are done many people will have racked up credit card debt they cannot pay in full. If it happens to you, perhaps the new year is the right time to review your money management, and debt management plan. For now, I wish you happy decision-making, happy shopping, and happy, healthy holidays!

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Wednesday, November 20, 2013

Thanksgiving Tradition

Thanksgiving Tradition
by Frances Rahaim, Ph.D.
aka "The Money Doctor"

What was once a feast provided by a large group of people, has become an expenditure of astronomical portions for many families. Still, we look forward to our American holiday steeped in tradition, complete with football, holiday conversation, and everything delicious that goes with cranberry sauce.

Although I wasn’t present at the first Thanksgiving– I’m not quite that old, I'm fairly certain that it wasn't just one Pilgrim who shot the turkey, cooked the meal, and cleaned up after dinner.

The point I'm trying to make is, although nearly everyone hosting a Thanksgiving dinner would decline an offer of monetary assistance from family members due to the sense of pride and tradition that surrounds this holiday feast, sharing the burden, particularly in tough economic times may be the loving thing to do. The  expense and work involved in preparing such an extravagant meal is often too much or one or two people to manage comfortably. 

Perhaps Aunt Esther is gaining in years, but won't tell you that she is exhausted at the end of the day. Or maybe someone has suffered a job change or cutback lessening the household income.  Or, the family tradition has been handed down to the younger generation, who may be struggling financially just to make ends meet, but is too proud to mention.

Many families turn to credit cards to handle the additional financial burden, and then spend months if not years paying on that debt.

An offer of help is often declined by way of habit. Sometimes people just don’t know how to say, “Yes, thank you. I need the help.”  Rallying the troops before Thanksgiving Day and coordinating some sort of family potluck dinner might be just the answer needed to ensure that everyone enjoys Thanksgiving -- including the host.

Uncle Frank makes the best mashed potatoes, cousin Anne makes the best cranberry sauce, Joe’s turkey is amazing, and everyone saves room for Terri’s blueberry pie. When everyone brings a dish, we are all truly sharing the meal, and alleviating much of the financial weight.

Don’t want to offer money, or can't cook? You can still schlepp the groceries from the store to the kitchen, set the table, or do the dishes afterwards.  But please don't just offer help like some sort of gesture, actually DO it.  And see if you don’t form a new holiday tradition of your own, and increase the enjoyment of your holiday in the bargain.

No matter what, please remember to take everything in moderation including spending, and to give thanks for all you are grateful for on this most wonderful of holidays.

Maybe invite someone who has nowhere to go, or is without family to your home for the day, or volunteer at one of the many facilities in the area. 

Happy Thanksgiving.  Save a drumstick for me!

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Tuesday, November 12, 2013

Avoid an Identity Crisis

Protecting Your Identity – It’s More Important Than You Think

by Frances Rahaim, Ph.D.
aka "The Money Doctor"

You may not realize it but when people discuss identity theft they are not referring to an occasional credit card charge for which your bank may consider you not responsible. Identity theft is one of the most rapidly growing and pervasive areas of crime today.

With a little basic information, such as your name address and phone number, a skilled identity thief armed with little more than a computer,  can not only apply for credit in your name, but may in fact assume your identity. Obtaining this information may cost less than $1.00 at any number of public record sites.

Imagine discovering when you are declined for a car loan. Surprise! It’s because you have tens of thousands of dollars or more in debt appearing on your credit report, for which you never applied. 

What's worse is that identity thieves often prey on children, because they assume they have 18 years to use their fresh, clean credit before anyone will discover it.  Often this tragedy is discovered when applying for student loans or a first car loan. What a way to start out.

Correcting this is more difficult than you may think. Just try and prove that you did not apply for that credit.

It’s just a fact of today’s computerized lifestyle that your Social Security number, and that of your children’s is readily available. Once an identity thief has identifying information they can begin to build another person known as you. They then acquire credit in your name, and when payments are not made, as is certain to happen, your credit is damaged.  But more importantly, this person has essentially assumed your identity, and proving you are whom you are, and not responsible for the debt will be quite challenging to say the least.

Many people would think that guarding your information carefully would be the solution. Don’t provide your Social Security number without asking if it is necessary, cover your pin code when entering it, shred your documents which might contain personal information etc..  Unfortunately, even the safeguards are not enough in today's society.

There are number of things you can do to protect yourself from this crime. The first is to take it seriously. This is a very real crime, and it happens to people from all walks of life.

At absolutely no cost, you can add fraud alerts to your credit reports. These alerts cause an additional step to take place before credit is extended to you.  For instance when you apply at a cash register for a store credit card, you will not receive automatic approval. Instead, you will receive a phone call or letter in the mail asking for you to verify that it’s really you applying for this credit. Fraud alerts only last for 90 days, so you would have to keep track and add them regularly.  To be effective, you should contact all 3 credit reporting bureaus (Experian, Equifax and Transunion) to add them to your files.

Of course there are companies you can pay to assist you in monitoring your credit and protecting your identity. Two companies that come to mind are LifeLock and NIDR (National Identity Recovery). Both of these companies have had their share of good and bad press.  Some say that they are only adding fraud alerts to your reports and charging you for it, while the companies maintain that they provide a much greater service.

I have had experience with both of these companies personally, and can tell you whether you do this on your own or hire a company, that doing something toward protecting your identity is a solid step in good financial planning.

Should you choose to hire a company to help you, do your research diligently, and be sure they will cover you in all areas, not just a specific credit card or other account. Be sure they will send you alerts before the credit is approved, not just copies of your credit reports which you could obtain for free on your own.

Remember that once someone has stolen your identity, is not only about obtaining credit in your name, but they may be able to empty your bank accounts, collect government payments, or even preempt your Social Security checks before you’ve received them. 

Of all the problems we are able to solve, this is a big problem easily solved with a small amount of money. Please take this seriously, and consider identity theft protection. As much as this may sound cliché, it truly is a small price to pay for piece of mind.

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Wednesday, October 23, 2013

Vacation Tips - Get There Without Breaking the Bank

by Frances Rahaim, Ph.D.
aka "The Money Doctor"

For more information about living with debt while planning for vacations and other goals, visit 

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