Blunt Money

Most of us have a variety of long-held beliefs that we accept without question: the sun will come up in the morning, a piece of dropped toast will land butter-side down, etc. Sometimes, though, it pays to question your long-held beliefs, especially when they relate to money.

This is because many of us learned things about money as a child that we probably accepted without question. Those beliefs may or may not be accurate and applicable to the world we find ourselves in today. It can pay to examine and challenge those beliefs.

For example, if dinnertime at your house was filled with arguments about money, you might have learned that money (or the lack of money) makes people unhappy. If your parents constantly spent every penny, you might have learned that when things we good, you’d better take advantage, because they wouldn’t be good for long and there was no point in trying to save for a future that might never come. Or maybe you learned that money could be used to soothe hurt feelings, buy someone’s forgiveness, or just make you feel better via retail therapy. Maybe you actually learned good money-management skills that ARE still applicable.

The point is, you won’t know — unless you take a moment to question your long-held beliefs about money. Do they still apply to your life? How are they affecting you? Would you be better served by changing them?

What you believe affects how you act, which in turn affects the things that you experience. Make sure that you’re acting in line with beliefs that are accurate and beneficial.

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I’ve mentioned before that I get horrifically expensive haircuts. ($125 for a cut & color.) Despite the cost, a combination of inertia and being very happy with the service kept me going back to the same salon. The only things that I didn’t like about my cut & color were the price & the location. The salon was about 20 minutes from my house, which is about 15 minutes further than I prefer to drive. And of course my wallet screamed every time I went. (Which wasn’t all that often; about every 3 1/2 months.)

Then my hairdresser left, because the salon changed product lines (switching to products that were very harsh and less natural.) She moved to a different salon that was significantly further away (about 45 minutes), so I decided to find a new salon.

I’m going to be giving a local Aveda institute a try. This will be my first time going to a school for a haircut & color, but I figure it’s worth a shot. It is significantly cheaper: about 1/3 the price. Plus, it’s only a couple of miles from my house. Both of those things would be a great bonus. Here’s hoping that I like the job they do.

I’ve been struggling over the past year or so with whether or not to close a business that I have. Now it’s decision time.

The business hasn’t been making much money, mainly because I’ve had a terrible time booking clients. The clients I do book are extremely happy afterwards — ecstatic even. There just aren’t enough of them! And the advertising and trade show expenses necessary to get those few clients has been extremely high. Add in equipment costs, cell phone bills, memberships, insurance, costs of production, materials, my time, self-employment tax, sales tax, income tax, etc and things look even bleaker. The business is profitable, but barely, and that’s only because I pay myself pretty much nothing. It’s a lot of work for very little return. I could make more getting paid minimum wage.

So I would not miss the discouraging aspects of it. But I will miss doing the thing that the business is based on. I really enjoy that aspect of it, which is the reason that I gave the business another year. I wanted to see if I could cut back on advertising significantly but still maintain my number of clients. Let’s just say that that didn’t work. I only got one client that way.

So I’m sad about this, but I think the business has to go. I just need to double-check on the tax implications, and make sure I’m not missing anything important. There are other questions too, like “What will I do with all of the sales and trade show materials?”. They’re not anything that could be used by another company, since they were all made specifically for my business. At least I will free up some storage space, and some time in my life.

It’s time for this week’s Carnival of Debt Reduction. The Carnival of Debt Reduction is a weekly blog carnival that highlights posts on getting out of debt, personal debt reduction progress reports and posts about reducing debt.

With Father’s Day just past us, I thought it might be time for some debt reduction advice from Dad. Dad sez:

When I was a boy, we lived within our means.

(Photo by robertgaal.)

Picture of Wealth realizes that maybe Dad has a point and so she shifts her thinking to beat debt.

Becoming Debt Free investigates the secrets of living debt free.

Find Financial Freedom offers some tips on how to get out of debt.

Tisha agrees with Dad. She offers steps on how to stop living paycheck to paycheck.

The Happy Rock goes even further. He’s reached a tipping point, and says that debt is slavery.

But Debt Reduction Formula isn’t so sure that Dad has all the answers. He wonders, is debt a fact of life?

Do I have to turn this car around?

(Photo by dbking.)

Destroy Debt tells us how to go on vacation without adding more debt. (That should make Dad happy.)

But sometimes you just get fed up. Millionaire Money Habits explains how to stop bill collector harassment while you’re working on getting out of debt.

Debt Sucks feels like he’s reached the end of the road. Maybe a new map will help.

Money doesn’t grow on trees, you know.

(Photo by Sancho Papa.)

Not the Jet Set reminds us that Ed McMahon isn’t coming.

Silicon Valley Blogger thinks that you should pick up a few odd jobs to help pay off debt.

Until Debt Do Us Part thinks that pets should help pull their own weight.

TooSmart looks around and takes stock of the lay of the land. Nope, no money trees in sight.

Never a lender nor a borrower be.

(Photo by SqueakyMarmot.)

Credit Friend has a common sense focus on how to get out of credit card debt.

Cash Money Life reminds us that you can’t squeeze blood from a stone. He explains what to do when you absolutely can’t pay your credit card minimums.

Get Out Of Debt thinks that monthly mortgage payments can feel like a dead weight around our necks.. So pay them off fast!

Budgets are Sexy uses a credit card balance transfer so he can get a credit card paid down faster.

Money Blue Book thinks that paying off credit cards with balance transfers might be the way to go too.

American Consumer News has a straightforward way of saying goodbye to the balance on your Visa once and for all.

For information on next week’s carnival, please visit the Carnival of Debt Reduction.

Someone asked the “what would you do if you won the lottery” question recently, and I realized that NONE of the “dreams” I have require winning the lottery or some other magical infusion of cash.

1. Pay off mortgage.
2. Fund my son’s & niece’s college.
3. Buy land elsewhere & eventually move.
4. Travel even more.
5. Spend time volunteering or doing various projects.

In fact with the exception of funding college, I intend to do all of them anyway. They’re goals, and I can see them coming to pass reasonably easily. The lottery would help spend them up a little, but that’s about it. I’m not sure what that means exactly, but it was a nice realization.

I’ve been experimenting with focusing on one goal at a time, with mixed success. (I did finish funding my IRA, but had trouble sticking to that as the priority, so I did some other stuff too. Darn.) Here is my goal update for now (things that are completely done are also crossed off).

• Open a new IRA for 2008 (probably a Roth). - DONE
• Fully fund the new IRA. - DONE
• Increase savings by $4000 in 2008. - Whee! I’ve increased savings by $1 more than I started with originally! (Which is better than the previous update, where I’d gone backwards.)
• Purchase 1-4 tax liens. - DONE, plus one more.
• Purchase at least one share of stock. - DONE
• Purchase at least $8000 worth of treasury bonds. - I’m at $500 here. I’m doubtful about the wisdom of continuing to aim for this goal at this point, but we’ll see.
• Continue paying at least $800 extra (combined) toward our mortgage/mortgage fund each month. - Revised: Our new goal is to pay $36 extra per month, and put the rest (and more) towards savings instead for the next 3 years. - Ongoing
• Continue tracking & evaluating expenditures each month. - Ongoing
• Continue saving each month for vacations & irregular expenses. - Ongoing
• Continue paying for all bills and expenses in full and on time. - Ongoing
• Reduce expenses to $1500 per month or less (excluding vacations). - Doing a little better here, but still not close enough.
• Increase income significantly. - I’ve made a slight bit of progress here, and will be hitting this hard by summer’s end.
• Continue matching contributions to my son’s college & car funds. - Ongoing
• Increase my 401(k) contribution amount. - DONE

The process of getting long term disability coverage was fairly smooth. I decided to go with Metlife, because they had a pretty good reputation and were responsive to my questions. (I figured if a company wasn’t responsive during the initial stages, I didn’t want them.) Their representative came out and met with me, and answered all my questions. He was also patient during the months(!) I procrastinated on doing this, and created a variety of different packages for me based on different scenarios & costs.

In the end, I went with what’s called “own occupation” disability insurance, which pays if you cannot work in your current occupation (even if you could still work at other types of jobs.) I chose a 90-day elimination period on my policy, even though I currently have other coverage that would kick in before then. Since it’s unlikely that a person will remain at the same job forever, I didn’t want to take chances. (And the price difference was negligible between that and a 6-month elimination period.) For a nice overview of some of the terms used in disability insurance and tips on searching for it, check out this guide.

My policy had to go through the underwriting process, which meant that in addition to the many, many questions I had to answer as part of the application process, Metlife checked out my entire medical history. One of my health care providers commented to me that they’d never been asked to provide that much detailed information to an insurance company before, so apparently the process was extremely through. This took about a month, and then I was issued my policy.

Obviously the best time to get this type of policy is when you have little chance of needing it. If you have things in your medical history that could result in a future disability, companies are likely to either exclude coverage for those things, or refuse to cover you at all. Disability insurance is also cheaper when you’re young and healthy.