Countdown to Financial Fitness: Be Smart About Debt

Countdown to Financial Fitness: Be Smart About Debt: Shortly after I graduated from college, I worked in the office of an oilfield equipment manufacturing company. One of the guys from the pla...

Be Smart About Debt

Shortly after I graduated from college, I worked in the office of an oilfield equipment manufacturing company. One of the guys from the plant liked to give me unsolicited financial advice. "I never worry about how much something costs in total," he counseled. "The question to ask is, 'How much a month, for how long?' That's all the information you need to know when you're deciding whether you can afford a purchase. Think of it as just another bill."

I'd nod politely, but even though I was young and naïve, I found it hard to digest that philosophy. Why wouldn't knowing the total cost of an item matter?

If you don't care about ever getting out of debt, make only the minimum payment each month. You'll pay for your purchases many times over. Think about what you could do with all that extra money...

For most people, debt is inevitable, and many would argue that there is such a thing as "good debt": a mortgage on a family home, a student loan to finance a college education, perhaps even a car loan or credit card debt for suitable clothes so you can nail that job interview and eventually earn a living.

But too much debt is suffocating, and it can prevent you from building wealth. Interest and fees can accumulate to the point where your costs to finance a purchase exceed the value of that item.

Before you take on debt, know why you are doing it. How much are you borrowing, and how long will it take to repay? How much are you paying in interest?

Can the purchase be postponed for a while, until you can come up with the cash, or at least a larger down payment? What are the advantages of buying now, or financing instead of paying in full? Will there be a return on your investment, i.e., the extra cost to your purchase price that you will add in interest?

Look at debt as a means to an end, and let there be an end in sight. Don't regard debt as a perpetual bill.

What are your thoughts on debt? I would love to hear your comments.

Sharon Marchisello is the author of Live Cheaply, Be Happy, Grow Wealthy

Countdown to Financial Fitness: Honoring Earth Day by Saving Money

Countdown to Financial Fitness: Honoring Earth Day by shrinking your carbon footpr...: Honoring Earth Day by shrinking your carbon footprint can go hand-in-hand with saving money and shrinking your financial footprint. We liv...

Honoring Earth Day by Saving Money

Honoring Earth Day by shrinking your carbon footprint can go hand-in-hand with saving money and shrinking your financial footprint. We live in a wasteful society, and squandering precious resources costs us money every day.

The following are ten ways you can do your part to take care of our planet and save money for yourself at the same time:

1. Adjust your thermostat. Use programmable settings to automatically minimize heating and cooling when you're not home, or when you are asleep.
2. Learn to live with an indoor temperature that more closely resembles the outdoors. Easy to do during spring's mild weather, but think about practicing this habit year round. For example, in winter, set your thermostat to 68 and put on a sweater or cover up with an extra blanket. In the summer, only cool your house to 80 and wear light clothing. If your family balks, make your adjustments a degree at a time to gradually reach a compromise you can all tolerate.
3. Fix leaks and don't leave water running unnecessarily, like while you're brushing your teeth or shaving.
4. Don't leave sprinklers on a timer. It's wasteful to water your lawn during a deluge.
5. The toilet is not a trash can. A flush can use 1-5 gallons of water, depending on the age and efficiency of the toilet. Also, items that don't belong there can clog up the sewer system and risk an expensive house call from a plumber.
6. When it comes time to replace an appliance, choose a product with energy savings.
7. Turn off, and even unplug appliances when not in use. This includes lights and televisions in unoccupied rooms.
8. Eliminate unnecessary car trips. Walk or ride a bicycle when feasible. Take advantage of opportunities to carpool or combine errands. Handle some tasks from home by phone, mail, or online.
9. Don't buy more food at the grocery store than you need. Organize your refrigerator and your cabinets so you know what's in there, and use it before forgotten produce or leftovers turn into a science experiment.
10. Don't order more food at a restaurant than you need. Many restaurants do serve more food than most customers can eat, but you can fix this problem by taking the leftovers home in a box and squeeze one meal into two. Plan on it when your food arrives so you don't eat your way past "the point of no return" when there's not enough left on your plate to be worth saving. You'll be happy the next day when you're eating a "free" lunch.

There are thousands of little ways you can conserve Earth's resources and consequently leave more money in your pocket. I'm sure you can think of many more.

How are you taking care of the planet? I would love to hear your comments.

Sharon Marchisello is the author of Live Cheaply, Be Happy, Grow Wealthy.

Countdown to Financial Fitness: Tax Planning for 2016

Countdown to Financial Fitness: Tax Planning for 2016: Federal income taxes are due, and unless you are eligible to make a last-minute 2015 contribution to a deductible IRA (Individual Retiremen...

Tax Planning for 2016

Federal income taxes are due, and unless you are eligible to make a last-minute 2015 contribution to a deductible IRA (Individual Retirement Arrangement) or HSA (Health Savings Account), there's nothing you can do now to change what happened last year. But there is still plenty of time to make things better for your 2016 return.

If you haven't already started, why not now, while the subject of taxes is fresh on everyone's mind? Here are three suggestions:

First of all, if you got a big refund or owe a shocking tax bill, and you are expecting similar income and deductions this year, consider adjusting your 2016 withholding or estimated tax payments. To determine how much of an adjustment you'll need, divide the overage or shortage by the number of remaining installments and increase or decrease by that amount. If you are an employee, file a new W4 with your payroll department. The form includes a worksheet to help you figure out what to change.

Do you incur expenses for a business, or for volunteer work? If so, make sure you hang onto those receipts and keep them together for easy tallying at tax time next year. And don't forget to log your mileage. If you use your vehicle for both business and charitable purposes, keep separate logs, because the allowable deduction per mile is different.

If you're not already contributing as much as you can afford to retirement accounts—up to any company match, at a minimum—you still have plenty of time left in the year to catch up. Same goes for HSAs, if applicable. Even if you have a workplace retirement account such as a 401k, you can still contribute to an IRA. Whether it can be a Roth or a regular IRA, deductible or nondeductible, will depend on your income and other factors.

You might not be able to avoid paying taxes, but with a little planning and good record-keeping, you can avoid hardship next April 15, as well as the reverse—giving the government too much interest-free cash all year.

What tax planning strategies are you using? I would love to hear your comments.

Sharon Marchisello is the author of Live Cheaply, Be Happy, Grow Wealthy

Countdown to Financial Fitness: Why Save?

Countdown to Financial Fitness: Why Save?: Most people would like to have more money at their disposal, but everyone has different needs, different reasons for saving and buildin...

Why Save?

Most people would like to have more money at their disposal, but everyone has different needs, different reasons for saving and building wealth. To motivate yourself to save, you must understand why you are doing it. After all, why deprive yourself now if you might die tomorrow?

Some people are content with a simple life. They can drive used cars, wear hand-me-downs, cook at home, recycle, and enjoy activities and hobbies that cost little to nothing. Maintaining such a small financial footprint enables them to work fewer hours and explore jobs that might be more interesting than lucrative.

Some people love luxury. They must wear the most fashionable clothes, drive the newest car, live in the biggest house. When they go on vacation, everything has to be first class. They stay on the cutting edge of technology and are the first to buy the fanciest toys. Consequently, they have to work harder and smarter to support such an expensive lifestyle.

Most of us fall somewhere in the middle—willing to sacrifice in some areas in order to splurge in others. If you take time to think about what you value most in life, making sacrifices where necessary will become easier, because you won't have to compromise on the desires you find truly important.

While some people only save when they have a specific goal in mind, such as a major purchase or life experience—a wedding, a college education, a home—others are driven to accumulate as much money as they can. Although watching your wealth grow can be very satisfying, make sure you know the reason. If your love of money eclipses your personal relationships and interferes with your ability to savor the joys life has to offer, maybe it is time to step back and breathe. Strive for a little balance.

Money can't buy happiness. But it can be a wonderful tool to help you reach your goals.

What are your reasons for saving money and building wealth? I would love to hear your comments. 

Sharon Marchisello is the author of Live Cheaply, Be Happy, Grow Wealthy