Have Trouble Saving Money? So Did I, Until I Tried This Game

Here are some of the things on my wish list right now:

• A sweet tart pan so I can make my very own fruit tarts. Thanks for inspiring my cravings and eventual weight gain, “Great British Bake Off”!

• This adorable neuron necklace. Yes, I’m nerdy.

• This gorgeous-but-way-too-expensive-for-what-it-is athleisure jacket.

• A bottle of this limited release wine that looks super tasty, but is a little pricy for a non-holiday occasion.

When I find something I want, even if I can’t afford it right away, I can get some satisfaction by having it on my wish list, where I can (and do) ogle it on the regular.

And if it sits there long enough without me finding the funds to buy it, I sometimes discover I didn’t really want it that badly in the first place. Talk about a money saver!

But my favorite part of keeping a wish list is actually treating myself to some of the goodies on it when I save enough cash.

There’s only one problem: Saving money is really hard.

How to Save Money Quickly by Hacking Your Psychology

Sometimes, my savings plan is derailed by unexpected minor emergencies. An unplanned trip to the doctor or a flat tire can make a pretty big dent in a 20-something’s bank account!

But I can’t deny that another factor keeping my savings game from getting stronger: impulse buys.

To be proactive about my savings, I automate them using Digit… but it’s so easy to move the money back into my account if I see something I want right now.

And I don’t want to lose track of my long-term goals, be they wish-list items or more important, bigger picture ones, like saving to buy a home.

But a recent post I saw at Lifehacker got me thinking.

The post describes Antonio, a business owner who found exercise so tedious that he couldn’t bring himself to do it, even after receiving doctor’s orders. Burning calories didn’t motivate him… but improving his willpower did.

So, Antonio stuck a sticker saying “willpower” over the word “calories” on his step counter to gamify his workouts and feel like he was earning something he really wanted.

How could I apply this to saving money?

What Can Your Money Buy You?

Well, I could easily look at my Digit balance and think of each dollar I don’t touch as a willpower point gained. But then, I thought about my wish list.

What if I thought about my savings in terms of the actual items I’m hoping to eventually purchase with them?

Right now, I have $311.39 in my Digit account. (Yes, I’ve been saving since November, so this is pretty low… but I just got back from a weekend trip where I spent a little more than I meant to at the bar.)

That money could buy me seven bottles of fancy wine, 12 neuron necklaces and three of those jackets I’m lusting after.

But it’s not even close to the cash I need to fund, say, that trip to Ireland I’ve been eyeing on Groupon.

In fact, I can do the math to discover exactly how close (or far) I am from achieving that savings goal: I only have 35% of the cash I need to get go on the trip to Ireland, and that’s before all the money I’ll need for food and other goods once I’m over there.

And if I can’t manage to scrape together almost $600 in the 10 days left on this Groupon and have to pay full price (likely), I’ll only be 19% of the way there.

So right now, I can buy three pretty athleisure jackets… but just a third of a trip to Ireland.

That really puts things into perspective. I mean, I already have enough clothes, right? That money can stay right where it is. For now.

So next time you’re tempted to blow your savings on something that steals your heart but probably won’t make you happy in the long run, think about what else that money could buy — and what it can’t quite, yet.

Your Turn: Will you use this psychological hack to help you keep your savings where it is?

Jamie Cattanach (@jamiecattanach) is a freelance writer whose work has been featured at Ms. Magazine, BUST, Roads & Kingdoms, The Write Life, Nashville Review, Word Riot and elsewhere. She lives in St. Augustine, Florida.

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Best Places To Open A Roth IRA

Skip straight to our reviews of the top Roth IRA brokers 〉

Do you know what your income tax rate will be in the future?

The answer to that question will determine whether an investment in a traditional or Roth IRA is best.

If you think your tax rate will be lower in the future then it makes sense to avoid paying tax now through a tax-deferred investment vehicle like a Traditional IRA.

You enjoy a tax deduction today, boosting your monthly cash flow, helping your money grow more efficiently over time.

The downside to a Traditional IRA, though, is that when you withdraw the money, you will pay taxes on it as though it is regular income.

Plus, when you reach a certain age, you will be required to take minimum distributions.

Depending on your situation, your withdrawals from a Traditional IRA could cause greater financial difficulties than you thought — and Uncle Sam might get a bigger cut than you'd expected.

Opening a Roth IRA: Where to Invest

One of the great things about a Roth IRA is the fact that you can open one with virtually any reputable broker. You also have a great deal of flexibility in terms of the assets you can hold in a Roth IRA.

While there are some who hold precious metals, real estate, and even certain businesses in their Roth accounts, most consumers are better off using an approach that focuses on stock and bond index funds or ETFs. These assets are low-cost, easy to understand, and don’t come with a bunch of red tape.

Most online brokers will help you open a Roth IRA, and many of them offer low-cost fund choices. Additionally, many of them waive transaction fees when you sign up for an automatic investing plan and make monthly contributions, learn more about Roth IRA rules and contribution limits.

There is no shortage of discount brokerage firms that will let you open a Roth IRA with them. For most investors the number of mutual funds or crazy ETFs you have access to really doesn’t matter. A basic, properly diversified portfolio can be constructed with any of the discount brokerage firms. This makes the main point of emphasis fees and transaction costs.

See our summary of the best Roth IRA providers 〉

Scottrade – Top All Around Roth IRA

Scottrade is an online and brick-and-mortar discount brokerage firm, which is one of the reasons why I like it so much.

My Scottrade Review

• Account Set Up Fees $0
• Trade Commission $7
• Mutual Fund Commission $17
• Annual Fee $0
• Account Minimum $500
• Promotion None

Not only do you get inexpensive trading costs, but if you ever want to sit down with a live human being, you can at one of Scottrade’s 500+ branches around the country.

The firm has kept their trade costs steady at $7 per stock and ETF trade for years. Mutual fund trades vary based on the type of fund with a maximum trade commission of $17. If you construct a Roth IRA based on ETFs, you can get the lowest possible transaction fee.

I like Scottrade so much I even created an account there.

Betterment – Best Roth IRA for Hands Off Investing

In recent years, Betterment has made a splash in the world of investing. If you are a hands-off investor who wants to grow retirement wealth over time, Betterment might be the right choice for you.

My Betterment Review

• Account Set Up Fees $0
• Trade Commission $0
• Mutual Fund Commission $0
• Annual Fee 0.15% – 0.35% account balance
• Account Minimum $100/mo
• Promotion 6 months free

Betterment is a different kind of brokerage firm aimed at those who don’t want to make decisions on specific mutual funds or ETFs. Betterment creates a portfolio for you based on your risk profile, using only stock and bond ETFs. You answer questions about your risk profile, and Betterment does the rest. You do need to sign up for automatic investing, and commit to $100 per month in order to use Betterment.

Betterment also offers the ability to automatically contribute the maximum each year. Betterment will figure out how much you need to contribute each month to hit the maximum, and if the IRS raises the contribution limit, Betterment will automatically adjust your monthly contribution to match. This isn’t required, though, so if you can only start with $100 a month, that’s your choice.

Betterment charges a percentage-based fee on the total amount you have invested with the firm, ranging between 0.15% to 0.35% each year. The higher your account balance, the lower your fee. It's a great choice for beginner investors, because the percentage-based fee system can work out to be cheaper for smaller accounts than the flat rate fees of the other guys. As your account grows, you might want to move your money, but for the beginner, Betterment is an amazing choice.

Trade King – Least Expensive Trades

TradeKing recently merged with Zecco, another low cost online discount brokerage firm. The combined power of the two smaller firms helps it compete with some of the bigger firms listed here, and their pricing is extremely attractive.

My Trade King Review

• Account Set Up Fees $0
• Trade Commission $4.95
• Mutual Fund Commission $9.95
• Annual Fee $0*
• Account Minimum $0
• Promotion up to $150

*$50 for accounts with less than $2500 that also have no activity in the last 12 months

TradeKing has absolutely one of lowest stock trade commissions around at just $4.95 per stock trade or ETF trade. If you are looking to trade a lot within your Roth IRA, look no further. Mutual fund commissions are extremely low as well at just $9.95 per no load mutual fund trade. Additionally, TradeKing has a collection of no-fee funds that you can choose from – although you still need to pay the expense ratio.

Lending Club – Best Non-Stock Investments

Lending Club is the top peer to peer lender in the United States. Unlike the other brokerages on this post, Lending Club allows you to invest in loans that are made to other people. So, instead of investing through the bank, you get to be the bank.

My Lending Club Review

• Account Set Up Fees $100 (start < $5,000)
• Trade Commission N/A
• Mutual Fund Commission N/A
• Annual Fee $100 (accounts < $10,000)
• Account Minimum $0
• Promotion up to $3,000

The company has been around for more than 8 years and has funded over $16 billion in loans. I am personally getting just under 9% return on my investments in Lending Club and have been VERY happy with the results.

You may be wondering, “Why the fees?”

The way Lending Club does a Roth is to partner with another company that sets up a self-directed Roth IRA. This allows you to direct your investments and not be limited to just stocks. These accounts require a little maintenance and that is a pretty standard annual fee if you only have a small balance in the account.

TD Ameritrade

Another brokerage firm that mixes online discount trades with brick-and-mortar locations is TD Ameritrade. This brokerage has more than 125 locations around the country that you can walk into whenever you have a question you want answered in person. However, the online trading platform is easy to use, and you are likely to accomplish just about anything you want without assistance.

My TD Ameritrade Review

• Account Set Up Fees $0
• Trade Commission $9.99
• Mutual Fund Commission $49.99
• Annual Fee $0
• Account Minimum $0
• Promotion up to $600 in bonuses and 60 days to trade free

Trade costs are competitive on the stock and ETF side, with a cost of $9.99. It’s also worth noting that TD Ameritrade has a collection of commission-free ETFs. If you are trying to build a long-term retirement portfolio, using these ETFs can lower your costs, even though you will still have to pay the expense ratios.

You do need to watch out for the mutual fund charge of $49.99 per trade, however. (I love everything else about TD Ameritrade except the $49.99 no-load mutual fund commission. That is simply too high.) That can be a real problem and erode the effectiveness of your portfolio.

If you are going to build an ETF portfolio, I can still recommend the company as a solid option thanks to the competitive commissions on ETF and stock trades, as well as the option for in-person help.

OptionsHouse

OptionsHouse is another great broker in the Roth IRA space. Don’t let the name deceive you: OptionsHouse does give you the ability to trade options, but it isn’t an options-only broker.

My OptionsHouse Review

• Account Set Up Fees $0
• Trade Commission $4.95
• Mutual Fund Commission $20
• Annual Fee $0
• Account Minimum $1,000
• Promotion up to $125

They have incredibly inexpensive trades at $4.95 per stock or ETF trade. Mutual funds aren’t as inexpensive, costing around $20.00 per trade.

Motif Investing

Motif Investing offers another unique way to invest your money and instantly diversify your portfolio without spending hours researching companies.

My Motif Investing Review

• Account Set Up Fees $0
• Trade Commission $4.95
• Mutual Fund Commission $17
• Annual Fee $0
• Account Minimum $300
• Promotion 1 month free trial

Instead of having to buy stock in several different companies, with Motif Investing you can buy one “Motif” which has 30 different stocks in it. All of the stocks inside of the motif revolve around the same industry.

The best part about Motif Investing is the ability to buy a motif portfolio that has 30 stocks or ETFs with one simple trade for $9.95. You won’t be able to beat those trading fees anywhere.

Firstrade

The benefits of Firstrade are obvious: low fees. But that isn't the only thing that the discount brokerage offers to investors.

My Firstrade Review

• Account Set Up Fees $0
• Trade Commission $6.95
• Mutual Fund Commission $9.95
• Annual Fee $0
• Account Minimum $0
• Promotion 1 month free trial

Thanks to Morningstar, Firstrade gives you plenty of information and research about stocks, EFTs, and mutual funds. On top of that, Firstrade offers a well-designed site that is simple to navigate, making it easy even for those who have never invested online.

If you’re looking for a brokerage that gives you flat fees of less than $7 – or $10 for mutual funds – while also providing plenty of tools, Firstrade is the place to go.

USAA – Best Roth IRA for Military and their Families

USAA provides a variety of services and accounts for military personnel and their families. If you or one of your family members has ever been a part of any military service, you should be able to open an account with USAA.

• Account Set Up Fees $0
• Trade Commission $8.95
• Mutual Fund Commission $45
• Annual Fee $0
• Account Minimum $50
• Promotion None

While USAA's trading fees might be a little higher than other options, they offer just about any insurance or financial product you will need. As a result, USAA offers the ability to have all of your accounts and policies bundled with a single company. Moreover, if you have the premium account, you will have a lot of fees waived, and your trading fees will be even lower.

As an investor or account holder, you should have no worries about the financial stability of the company. They have been in business since 1922, making them an excellent resource for any active military, retired military, or family members.

E*TRADE

E*TRADE is one of the bellwethers of the online discount brokerage industry.

The company has been around since 1992 and has constantly been pushing the industry to better technologies and other trading innovations for customers. When you think of online trading, this is the company that probably comes to mind first.

My E*Trade Review

• Account Set Up Fees $0
• Trade Commission $6.95
• Mutual Fund Commission $19.99
• Annual Fee $0
• Account Minimum $0
• Promotion up to $600 in bonuses and 60 days to trade free

Technically E*TRADE does have brick-and-mortar locations for you to go to, but there are only 30 in the entire country. E*TRADE is primarily an online discount brokerage firm, and they are one of the leaders in the industry. Their trade fees are just slightly higher than Scottrade, but there is no minimum deposit required to get started.

It is worth noting that there more than 1,000 mutual funds available through E*TRADE that come with no load, and no transaction fee. You can add these to your Roth IRA to lower your fees — although you will still be responsible for the expense ratio charged on the fund.

Charles Schwab

Charles Schwab is an interesting company that is really a full-service brokerage that is trying to play in the discount brokerage space. For stock and ETF trades, it does this well with an $8.95 commission on those trades.

• Account Set Up Fees $0
• Trade Commission $4.95
• Mutual Fund Commission $76
• Annual Fee $0
• Account Minimum $1,000
• Promotion up to $500

But if you thought TD Ameritrade’s $49.99 mutual fund commission was high…Schwab charges $76. That is unbelievable. Only open a Roth IRA with Schwab if you plan to build a portfolio of ETFs, not mutual funds.

Alternative: Skip the middle man and invest directly with a top mutual fund company

Discount brokers and full-service brokers charge fees on every trade into a stock, ETF, bond, or mutual fund. These brokers will tout no-fee mutual funds (also called no-transaction fee mutual funds) to show that they aren’t out to make a buck on every transaction you have for retirement.

But the number of no-fee funds offered is drastically different than the advertised number of mutual funds that attracted you to the broker in the first place. (Also, don’t get confused between no-transaction fee and no-load mutual funds. No-load funds mean there is no sales load cost as a percentage of assets on your investment; no transaction-fee means there is no fee to trade in and out of the mutual fund. No-load funds can have transaction fees, and vice versa.)

The easiest way to avoid unnecessary fees on your mutual funds is to simply cut out the middleman. You don’t need 10,000 different mutual funds, nor do you need to pay for every transaction you have to buy or sell into those funds. A well constructed portfolio of low cost index funds can offer you the best returns at the lowest cost.

Cutting out the brokerage middleman means going directly to the source: the mutual fund companies themselves. Not every mutual fund company will let you open a Roth IRA with them, but some of the largest will. Vanguard, T. Rowe Price, and Fidelity let individuals open Roth IRAs and deal directly with the companies to build their nest eggs.

Vanguard

Vanguard has long been an industry leader in low cost investments and the online account access is easy to navigate. The expense ratios on some of their index mutual funds are absolutely unbeatable.

Fees are clear to understand with Vanguard; we had to use the search function on the T Rowe Price website to discover the fee structure. Vanguard has an easily found link under the IRA portion of the website. Plus, we like Vanguard because the company is a non-profit dedicated to low investment fees.

• Fees for Roth IRA: $0 (with electronic statements and confirmations; otherwise $20)
• Minimum Required Investment: $1,000 for “starter” mutual funds, most other funds $3,000
• Minimum Subsequent Investment: Varies, usually between $100 and $1,000 (electronic transactions only have a $1 minimum)
• Commissions: If you invest in Vanguard mutual funds only, $0. Commissions vary for mutual funds outside of Vanguard or for ETFs.

T. Rowe Price

T. Rowe Price is another industry leader that offers mutual funds directly or through a broker. Expense ratios for index funds with T. Rowe Price are very competitive with the industry meaning you will get the maximum growth out of your invested dollars.

The company has a great Roth IRA page that explains everything you need to know about your eligibility to invest in a Roth IRA. The fee structure is mostly clear, although to find the full fee prospectus I had to do a search on their website.

• Fees for Roth IRA: $0 (with electronic statements and confirmations; otherwise $20 if your balance is less than $10,000)
• Minimum Required Investment: $1,000
• Minimum Subsequent Investment: $100
• Commissions: If you invest in T. Rowe Price mutual funds only, $0. Commissions vary for mutual funds outside of T. Rowe Price or for ETFs.

Fidelity

Fidelity is another massive mutual fund company that offers its funds directly to investors and through brokerage firms. Of the three mutual fund companies, Fidelity has the highest minimum required investment for you to get started at $2,500. On the flip side, there is no minimum additional contributions after that.

Fidelity has been battling with Vanguard and T. Rowe Price on expense ratio costs meaning you will be getting very competitive expense ratios.

• Fees for Roth IRA: $0 for IRAs
• Minimum Required Investment: $0 (although most Fidelity mutual funds have a $2,500 investment minimum)
• Minimum Subsequent Investment: $0 for Fidelity mutual funds
• Commissions: If you invest in Fidelity mutual funds only, $0. Commissions vary for mutual funds outside of Fidelity or for ETFs.

Who Qualifies for a Roth IRA?

It’s important to establish that you qualify for a Roth IRA. The basic eligibility requirements for a Roth IRA include:

• You need to have earned income. If you are a stay-at-home partner, your spouse can make contributions to your Roth IRA. It’s also possible for minors to contribute to custodial Roth IRAs if they earn money from a job.
• You need to meet income requirements, based on your tax filing status. The IRS evaluates these requirements each year, and can make changes based on inflation. Check with the current-year requirements or with a financial professional to see if you qualify.

As of 2016, you can contribute up to $5,500 to your Roth IRA each year. If you are age 50 or older, you can make an additional “catch up” contribution of $1,000 per year. The contribution limit changes, though, so it might rise in future years.

It’s also possible to convert a Traditional IRA to a Roth account, or to rollover a 401(k) into a Roth IRA. However, there are tax consequences associated with this decision. You will have to pay taxes on the amount you convert or rollover today, and that can mean a hefty tax bill. Consult with a financial professional before you make this type of conversion.

Building the Roth IRA Habit

Having trouble getting into the habit of sending money in to your Roth IRA? You're not alone. All of the above companies provide some sort of automatic investment option. You simply tell the firm how much you want to invest, on what schedule, and in what investment, and the rest happens automatically.

Automatic investing is one of the best ways to build your Roth IRA without having to think about building your Roth IRA.

How to Manage Multiple Investment Accounts

Of course, you may have investment accounts, Roth IRAs, and Traditional IRAs across several different companies. You have multiple logins to remember to check up on your investments, and having some understanding of your asset allocation is not easy.

Enter Personal Capital. The company aims to solve the problems of managing multiple accounts, tracking your asset allocation, watching the performance of your investments, and in general helping you keep all of your financial tasks in order. With a slick web interface and mobile apps that work on iOS and Android you can see everything together in one well-designed space. On top of that, Personal Capital offers a fee analysis to help you reduce what you pay.

The best part about Personal Capital? The software is 100% free.

Will tax rates really be lower later on?

With a mounting national debt, many people believe personal income tax rates will eventually be forced to increase. So, even if you think that you will have a lower income during retirement, you might still be in a higher tax bracket or have other tax considerations impacting your finances.

Even if the national debt issue is somehow solved, the government doesn’t tend to lower a tax once it is set.

If you think that tax rates are going to go up by the time you retire, the best retirement account for you to open if you qualify for it is the Roth IRA.

With a Roth IRA, you make your contributions with after-tax dollars. This means you pay your taxes on the money now. While it might mean a little less today, it can make a big difference in the future. This is because your money grows tax-free. When you withdraw from your account, it doesn’t register as income, so it doesn’t change your tax bracket or tax liability.

A Roth IRA can be especially beneficial to you if you are just starting your first job. Chances are that you won’t make very much. Your tax liability might be fairly low anyway, so paying taxes on your low income isn’t likely to be a huge burden to you today. Plus, you have even more time on your side to let compound interest work its magic on your behalf.

There is no reason to put off investing for retirement. Open a Roth IRA today with one of the best brokers. It’s easy, inexpensive, and your future self with thank you.

Summary: Best Roth IRA account providers

Broker	Good For	Commissions & Fees	Account Minimum	Start Investing
	Overall	$7 per trade $17 mutual fund $0 set up $0 annual	$500
	Beginners Hands Off	$0 per trade $0 mutual fund $0 set up 0.15%-0.35% account balance annually	$100/mo
	Active Traders	$4.95 per trade $9.95 mutual fund $0 set up $0 annual	$0
	Non-Stock	N/A per trade N/A mutual fund $100 set up (< $5,000) $100 annual (< $10,000)	$0
	ETF Trading	$9.99 per trade $49.99 mutual fund $0 set up $0 annual	$0
	Active Traders	$4.95 per trade $20 mutual fund $0 set up $0 annual	$1,000
	Active Traders	$4.95 per trade $17 mutual fund $0 set up $0 annual	$300
	—	$6.95 per trade $9.95 mutual fund $0 set up $0 annual	$0
	Military	$8.95 per trade $45 mutual fund $0 set up $0 annual	$50
	—	$6.95 per trade $19.99 mutual fund $0 set up $0 annual	$0
	—	$4.95 per trade $76 mutual fund $0 set up $0 annual	$1,000
	Low Cost	$0 for Vanguard funds $0 annual	Varies
	Low Cost	$0 for T. Rowe Price funds $0 annual	$1,000
	Low Cost	$0 for Fidelity funds $0 annual	$0

Other Articles That May Interest You

• Best Online Stock Brokers for Beginners to Experienced Investors
• Best Life Insurance Companies in the United States
• Best Short Term Investments for Your Money
• Best Rewards Credit Cards

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CLOSING BELL: US stocks waver to mixed close

Stocks ended up little changed on Wall Street after an early morning rally faded away.

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President’s Distinguished Entrepreneur Speaker Series begins with founder of Philly Pretzel Factory

East Stroudsburg University of Pennsylvania is proud to announce the launch of the President’s Distinguished Entrepreneur Speaker Series. The series will bring entrepreneurs to ESU’s campus to talk about the various challenges they’ve faced in their careers as well as life experiences and educational opportunities that have guided them on their journey. The President’s Distinguished Entrepreneur Speaker Series begins at 7 p.m. Tuesday, April 4 in Beers Lecture [...]

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This Study Suggests Grads Who Move Home for Less Than 2 Years Make $6K More

You guys already know I’m a 24-year-old who had to move back in with her parents after college.

I’m not super proud of it, and I know I’m lucky.

I also know I’m not the only one. Right now, more 18 to 34 year olds live with their parents than any other living arrangements than ever before, Pew Research Center reports.

Trade-Schools.net recently tapped into this demographic by surveying 800 college graduates who moved back home.

The results are just as interesting as moving back home.

How Long are Young Folks Living at Home After College?

I’m right at the 10-month mark of my rent-payment hiatus at home. I’d told myself I’d move out by Christmas.

Well, that’s come and gone.

Then I said by my one-year mark… I’m still not feeling very proactive. I guess others felt similarly.

• 14% of respondents lived at home for less than six months.
• 24% of respondents lived at home for six months to one year.
• 24% of respondents lived at home for one to two years.
• 16% of respondents lived at home for two or more years.
• 22% of millennial respondents still live at home. (Hi, that’s me.)

Who’s more likely to move home for two or more years, you ask?

• 18% were men.
• 26% were history majors.
• 25% were arts and theatre majors and IT majors.
• 27% were telecommunications industry.
• 25% were in the transportation and warehousing industry.
• 19% were Republicans.
• 18% were Caucasians.
• 17% were Protestants.
• 25% of millennial respondents still live at home. (Hi, that’s me.)

Why Young Folks are Choosing to Move Back Home

I moved back home to save money.

After graduate school, I didn’t have much to my name. I also secured a full-time dream job with benefits in my hometown, so that was also convenient.

Here are the most common reasons people are moving back home after college:

• To save money: 48.9%
• To search for a job: 29%
• To catch up on student loans: 8%
• To avoid additional debt: 4.5%

Other motivators included to take care of health or mental health, to grow closer to family (that’s real close), to invest and build credit, to avoid living solo or to pause before a big move.

I also have to admit: I want to live on my own — but know I can’t combat the nasty roaches that live in Florida.

Apparently You Need to Go Ahead and Set a Move-Out Date

Those who live at home for a shorter period of time (under two years) seem to be doing better on the financial front.

(I went ahead and marked my calendar for May 2018. That’s my move-out date.)

Those who lived at home for less than two years reported making more money — about $6,000 more annually.

That’s quite a chunk. But also, think about the whole “correlation isn’t causation” thing your stats teacher taught you.

I have to assume moving out didn’t drive this salary increase.

However, you better believe I’m out of Mom and Dad’s before that two-year mark (mostly because I’d like to feel like a real adult by 26…).

How to Move Out of Your Parents’ House (For Real This Time)

Maybe you really will make more if you’re outta there by the two-year mark. Or maybe you just want to regain your independence (or sanity)…

Either way, I’m taking these steps to expedite the move-out process so I can start adulting.

1. Set a concrete move-out date.

I swear, guys, I’m working on getting over my fear of roaches and rent payments and working to set a move-out date.

But you don’t want to just willy-nilly point to a calendar and say “now.”

I suggest being realistic. Know what you’ll pay in rent and monthly expenses versus what you’re making.

Set a timeline and a budget.

2. Start paying rent.

This sounds odd, but stick with me.

Scope out rentals where you want to move and see how much you should plan to spend each month after moving out.

Once you’ve started saving some money by living at home, go ahead and start paying rent. I know you don’t rent a place, but just set this money aside so when you move out, you’re already set for, say, six months.

You’ll want to put this in a separate account, though, so you don’t spend it.

Per my co-worker’s suggestion, I’m going to open a checking account with Aspiration. Yes, a checking account. I know this isn’t a savings account, but Aspiration’s Summit Checking account pays up to 100 times the normal interest rate.

So while I’m saving for my future rent, I’m also watching my money grow.

Plus, there aren’t any ATM fees, which is nice, if I have an emergency.

Hey, speaking of emergencies…

3. Build an emergency fund!

When you venture out on your own, you never know what might happen.

That’s why you’ll want to have enough cushion for an emergency fund, or a rainy-day fund, as some people call it. That way, if something goes wrong, you’re covered.

Like that pretend rent, you’ll want to stash this in a separate account to keep it away from your grimy spending hands.

Experts suggest you save at least six months of living expenses.

4. Focus on paying off those student loans.

More and more Americans are defaulting on student loans, which isn’t awesome.

If case you don’t understand, defaulting on loans means you stop making payments. If you don’t pay anything in 270 days, your debt increases due to late fees plus interest, and extra collections fees could be tacked on.

Long term, you could become ineligible for more federal student aid, hurt your credit score or risk losing a tax return or paycheck.

So, yeah, paying off those loans is important — especially while you’re saving money living at home.

If you want to see if you can cut down on payments, consider refinancing. These two guys managed to save big by refinancing with Credible. (“Big” as in more than $5,000 in savings!)

You’ll feel best moving out without a chunk of debt to your name. I promise.

5. Stop holding onto stuff.

Chances are, you’ve moved back home from college with a ton of stuff — maybe triple what you left with?

My car was filled to the brim — plus I shipped a few boxes of clothes ahead of me. But I’m realizing now I don’t need 15 sweaters in Florida, or even that thing that meant so much in college that really doesn’t anymore…

And I certainly don’t want to move all of that stuff again when I get my own place. (I’m trying to find a better word than “stuff,” but, really, that’s the most accurate.)

The easiest way to get rid of the extras and make some bucks is to sell it online with an app like letgo.

This intuitive app lets you set your own prices. Plus, it’s easy. All you have to do is a take a photo of the item and upload it.

The platform operates like Craigslist in that you’re advertising to people in your area, so there’s no need to mess with shipping.

For old textbooks, consider using BookScouter. The site tells you what the book is going for and where it’s best to sell it.

Your Turn: Do you have any tips of your own for us poor graduates who’ve moved back home?

Disclosure: This post contains affiliate links. By checking out this featured content, you help us bring you more ways to save!

Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder.

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Hospitality and health bolsters Monroe employment

Growth in the hospitality and health care industries have driven unemployment rates down in Monroe County, closing the gap between this year’s and last, according to figures released by the Pennsylvania Department of Labor and Industry’s Center for Workforce Information and Analysis.Monroe’s rate was 5.7 percent, six-tenths of a percent lower than Dec. 2016, and only four tenths of a percentage point higher compared to a year ago.“After the holidays, [...]

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What the Heck is the Federal Interest Rate and How Does its Hike Affect Me?

What does the Federal Reserve have to do with the way you manage your own money?

The nation’s central bank can impact how much interest you pay on your credit card debt, mortgage or car loan. It can also affect how much interest you earn on your savings.

The Federal Reserve announced this week that it’s increased its interest rate target by one-quarter percentage point, to a range of 0.75%-1%.

It’s the third Fed rate increase since December 2015 as we creep back toward “normal” pre-recession rates of 2-5%.

A boost in employment and price stability contributed to the Federal Reserve’s decision to raise the rate.

Last month, the unemployment rate settled at 4.7% — it’s been hovering at 4.6-4.9% for the past six months.  

Just in Case You’re Curious What the Fed Rate Really Is

So what is the Fed rate? It’s the interest rate that banks use to lend money to one another, usually overnight. These amounts are held at the Federal Reserve to uphold the requirement that banks keep a certain amount of cash on hand.

Banks move money around to one another all the time at mutually agreed-upon rates within the Federal Reserve’s target range.  

The higher the interest rate, the more expensive it is to borrow money. A slightly higher interest rate slightly reduces the amount of money floating around because it’s more expensive to borrow it in the first place.

What the Fed Rate Means for You

Right now, as you’re reading this? Not much.

Sure, the stock market jumped right after the Federal Reserve’s announcement, but your debts and savings won’t show an immediate change.

The Fed’s interest rate is designed to “stimulate economic growth by encouraging borrowing and risk-taking,” Binyamin Appelbaum of the New York Times explained in December.

In tough times — think 2008 — the Fed has lowered rates to encourage an active economy with plenty of spending despite consumer anxiety. Meanwhile, in better times, the Fed increases rates.

“When rates climb, borrowing gets more expensive for businesses and consumers so they may hold back somewhat rather than spending as aggressively as they otherwise might,” Gail MarksJarvis wrote in the Chicago Tribune. “The idea is to keep the economy from overheating.”

The Fed typically makes small increases to the rate to prevent the financial turmoil that could occur from raising the rate too much at once.

“The rate hike will increase the upward pressure on interest rates that consumers pay, but the immediate effect is likely to be modest,” Appelbaum reported on yesterday’s increase. “People with credit card debt are likely to see an immediate increase of about a quarter percentage point in their interest rates.”

Appelbaum also explained that banks usually raise interest rates on loans faster than they raise rates on deposits; so if you’re saving through a certificate of deposit, for example, you probably won’t see immediate interest added to your balance.

The smart move to make for your money? Pay down debts now before you have to account for that anticipated extra one-quarter percentage point in your monthly payments. Then, start pumping your post-debt money into high-yield certificates of deposit. Or just save it anywhere — in a bank, in a tin can, anywhere. Just start saving.

A Small Increase Now is Better Than a Larger Increase Later

Janet Yellen, chairwoman of the Federal Reserve System, noted in her press conference March 15 that core inflation, which includes prices for energy and food — stuff the average person has no control over, but definitely notices when the price takes a turn in either direction — has stabilized in recent months.

Yellen said the Federal Reserve expects this core inflation to increase and overall inflation to stabilize over the next few years, signifying overall economic improvement.

Further, Yellen explained that making a small increase in interest rates now could prevent the need to raise rates more quickly in the future if the nation’s monetary policy needs considerable adjustments.

A sharp, sudden increase in the Fed rate could put us at risk of another recession; making small increases now and over the next few years allows time for economic acclimation.

We’re likely to see several more small increases to the federal interest rate over the next few years.

Your Turn: How do you think the increase in the Fed rate will affect you?

Lisa Rowan is a writer and producer at The Penny Hoarder.

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The IRS Just Removed This Tool From the FAFSA and It’s Kind of a Big Deal

It just got a little trickier to fill out the Free Application for Federal Student Aid, also known as the FAFSA.

The Internal Revenue Service recently removed the Data Retrieval Tool from the FAFSA online application process, citing privacy and security concerns.

What Is the IRS Data Retrieval Tool?

College students who want to apply for financial aid must fill out the FAFSA to get the ball rolling.

It’s a preliminary requirement to request federal grants, work-study jobs, or student loans to help pay college tuition.

The FAFSA is fairly easy (although definitely not fun) to fill out, but the amount of financial aid you’re eligible for is based on a complex formula that includes data on your family’s income, assets and benefits.  

That data is pulled from taxes returns you filed in the previous year (or your parents, if you’re still a dependent).

The Data Retrieval Tool made it super quick to include tax information in your FAFSA. It connected the application directly to the IRS database and filled in all your tax-related info with just a couple clicks.

It was so easy.

Why Did the IRS Remove the DRT?

The IRS’s joint statement with the Education Department says, “the IRS decided to temporarily suspend the Data Retrieval Tool (DRT) as a precautionary step following concerns that information from the tool could potentially be misused by identity thieves.”

Why Does It Matter That the DRT is Gone?

The DRT was more than just a convenience for FAFSA applicants.

For some people it meant the difference between getting financial aid for college and not being able to apply at all.

How many of us carry around detailed information about the previous year’s tax return in our head?

Anyone? Anyone? Bueller?

Without the DRT to look it up, applicants have to refer to a digital or paper copy of their previous returns to accurately fill out the FAFSA — which isn’t as easy as it sounds.

There are any number of reasons why applicants can’t get their hands on their old tax returns. The documents could be lost, destroyed in a fire or flood, or simply misfiled with old report cards from fourth grade.

Getting parental tax returns can be even more of a challenge, especially for people who are no longer in contact with their parents.

The DRT was an important option for getting information applicants need to properly fill out a FAFSA — and now it’s gone.

What Now?

If you’re filling out your FAFSA and don’t have a copy of the tax return you need, you’ve got a couple of options.

Visit the IRS website Get Transcript to download a free summary of your tax return. It won’t have as many details as the original return, but it should contain enough information for you to complete the FAFSA.

You can also request a free copy of your transcript to be mailed to the address on file with the IRS. Visit the Get Transcript website or call 1-800-908-9946 to place an order.

Your Turn: Does the removal of the Data Retrieval Tool affect your ability to fill out your FAFSA?

Lisa McGreevy is a staff writer at The Penny Hoarder. She usually uses this space to crack a joke but she doesn’t want to get on the IRS’s bad side.

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67% of Millennials Don’t Have Credit Cards. Here’s What They’re Missing

At this point, it feels like it’s become something of a national pastime to hate on millennials.

We have stupid haircuts. We’re pretentious about beer and coffee. We get persnickety about “management styles” at work and accept handouts and free digs from mom and dad well into our 20s (OK, sometimes 30s).

So when Bankrate’s recent survey found only 33% of millennials have a major credit card, I know some people were surprised. Avoiding revolving debt seems like an uncharacteristic display of responsibility from the generation we love to hate.

I say “I know” because one such shocked person was my father, who greeted me with the following a few days ago:

“I heard about you millennial people on the news this morning. Very impressive!”

Thanks, Dad.

Two-Thirds of Millennials Don’t Carry Credit Cards

One thing’s for sure: Going into credit card debt is no fun and not a good financial strategy.

And with a credit limit way higher than the number on your paycheck, it’s easy to fall into the vicious debt cycle.

But before you gleefully accept your elders’ congratulations, shred your cards and help bloat that figure to 34% or even 50%, hold on.

While the decision to forego credit cards entirely might seem like a smart financial strategy, it might not actually be a good idea.

Credit cards can actually be extremely useful — if you know how to use them right.

Personally, I buy everything on my credit card. I just make sure I pay my cards down in full every single month to avoid paying even a cent of interest.

It took me a while to get to this point — initially, I screwed up my credit pretty badly and had to rebuild it. But that’s why it feels even better now to take advantage of the credit companies for all they’re worth.

Here are the ways credit cards can be useful tools:

1. They Establish Your, Well, Credit

It’s pretty hard to get an auto loan or a mortgage if you have no credit history.

Although there are lots of ways to get started, credit cards are probably the easiest way to establish credit history. There’s little barrier to entry for many low-limit cards, and you don’t need a down payment or deposit unless you’re applying for a secured card.

Even if you’re in your free-wheeling 20s right now, in 10 years, strong credit could save you thousands of dollars if you purchase a home.

2. You Can Get Free Rewards

Here’s why I use credit cards exclusively: I love to travel, and I don’t love spending thousands of dollars on airfare alone.

Rewards like frequent flier miles and cash back are used to advertise credit cards — for good reason. They’re super appealing, and they make it feel less naughty to spend on your card. Spend more, get more, right?

Right, unless you overspend until you can no longer pay in full — in which case, the card company makes a lot of moolah on your irresponsibility

But if you’re not accruing interest, these truly are free rewards — just for making your purchases with plastic instead of paper.

In my case, they pay for the bulk of my travel expenses.

3. Many Come With Additional Perks

Other fun stuff I get from my credit cards:

• Free Netflix
• A statement credit for any in-flight WiFi I buy
• Free access to my FICO score
• Invitations to exclusive events

Some cardholders even get free TSA Precheck or Global Entry as a perk, and lots of us have surprisingly powerful concierge services we never take advantage of.

Having a credit card can sometimes feel as empowering and glamorous as the advertisements try to make it seem.

If You Don’t Have Strong Willpower, Forget Everything I’ve Said

Although they can be awesome for all the reasons I’ve listed above, if you don’t trust yourself not to abuse them, it probably is smarter to forego credit cards altogether.

The only way to reap the benefits without personal cost to you is to pay your cards off in full every single month.

Otherwise, it can be easy to buy something you know you can’t really afford — “just this once” — and fall into the cycle of revolving debt.

And trust me, that is one merry-go-round you do not want to ride.

Your Turn: Do you or the millennials you know (and, admit it, love) carry credit cards?

Jamie Cattanach (@jamiecattanach) is a freelance writer whose work has been featured at Ms. Magazine, BUST, Roads & Kingdoms, The Write Life, Nashville Review, Word Riot and elsewhere. She lives in St. Augustine, Florida.

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Winn-Dixie Just Killed fuelperks! (and That Could Actually Be a Good Thing)

Oh, fuelperks! I used to be such a huge fan — until I realized the fuel rewards program wasn’t quite worth it compared to my savings from shopping at Trader Joe’s.

That said, it’s no surprise to hear that Winn-Dixie will discontinue its fuelperks! rewards partnership with Shell gas stations in April.

If you’re a die-hard Winn-Dixie fan wondering what’s next, the regional grocer announced plans for a replacement program — and it sounds pretty exciting.

In With the New: Winn-Dixie’s Partnership With Plenti

Winn-Dixie is partnering with Plenti, a rewards program that allows users to rack up points while they shop. The grocer is calling the new program, which debuts April 5, “Winn-Dixie Rewards with Plenti.”

Customers will earn points for every dollar they spend, plus they’ll receive bonus points by purchasing specially marked items. They will also have the opportunity to earn points by shopping online through the Plenti Online Marketplace or on the Plenti mobile app.

Users can redeem points they accumulate under the new program at big-name stores and businesses, including AT&T, Exxon Mobil, Expedia, Hulu and more.  

As reported by the Tampa Bay Times, Winn-Dixie parent company Southeastern Grocers created the new rewards program in response to problems they heard about from customers. One concern was that fuelperks! rewards expired too quickly (they expired at the end of the month). Under the new program, customers have two years to use their points.

Southeastern Grocers CEO Ian McLeod also told the Times that the drop in gas prices over the last few years has contributed to decreased use of the rewards program. That encouraged the chain to revamp its program to include a wider variety of ways to use rewards points.

Shoppers can still earn fuelperks! through March 26, but Winn-Dixie encourages them to redeem their points before the new program launches April 5.

Winn-Dixie rewards members can link their rewards card to the new Plenti program here.  

Your Turn: What do you think of Winn-Dixie’s new rewards program?

Kelly Smith is a junior writer and engagement specialist at The Penny Hoarder. Catch her on Twitter at @keywordkelly.

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OPENING BELL: US stocks edge higher in early trade

NEW YORK — Stocks are opening modestly higher on Wall Street with the biggest gains going to banks and technology companies. Oracle jumped 8 percent early Thursday after reporting better earnings and revenue than analysts expected as its cloud computing business put up solid gains. Wearable camera maker GoPro soared 11 percent after sticking by its sales forecast and saying it will cut more jobs. The Standard & Poor's 500 [...]

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31 Days to Financial Independence (31/31) – Bringing It All Together

“31 Days to Financial Independence” is an ongoing series that appeared every Thursday on The Simple Dollar for the better part of a year. This is the final entry in the series.

Before we get started with this final edition of the “31 Days to Financial Independence,” let’s make a giant list of all of the entries in one place. If you want to bookmark the series for future reference, this would be the article to save!

Getting Started
The series began by putting financial change in the context of your broader life and goals. Many people spread themselves too thin with too many desires and goals and end up missing out on many things that they really value because they’ve spent their time and resources on things of lower importance to them. It’s time to “go deep” on the things that really matter and absolutely minimize the other areas.
Day 1: The Shallows and the Deep
Day 2: Finding Direction in the Deep End and Cleaning Up the Shallows
Day 3: Finding Daily Direction and Meaning
Day 4: Figuring Out Your True Hourly Wage – and What It Means
Day 5: A Living Budget
Day 6: The Big Boost

Trimming and Cutting Your Spending
The next segment of the series focused on smart ways to cut back on spending throughout your life. The goal isn’t to cut everything, but to cut back on the parts of your life you recognized as having relatively low importance.
Day 7: Cutting and Minimizing Debt
Day 8: Trimming Your Spending – Housing
Day 9: Trimming Your Spending – Transportation
Day 10: Trimming Your Spending – Utilities
Day 11: Trimming Your Spending – Food
Day 12: Trimming Your Spending – Insurance
Day 13: Trimming Your Spending – Health Care
Day 14: Trimming Your Spending – Entertainment
Day 15: Trimming Your Spending – Apparel and Services
Day 16: Trimming Your Spending – Education and Miscellany
Day 17: Integrating Cost-Cutting Measures Into Your Life

Improving Your Income
Making more money goes hand in hand with cost-cutting on the path to financial success. Together, they can push you to unbelievable heights. This section of “31 Days to Financial Independence” will guide you toward bringing home more money in a variety of different ways.
Day 18: Improving Your Income at Your Current Job
Day 19: Getting Promoted at Your Current Job
Day 20: Finding a Better Job
Day 21: Starting a Side Business

Investing for the Future
Once you’re spending substantially less than you earn, the question then becomes: what exactly should you do with that extra money? Investing for the future is one key part of a stable and strong financial life.
Day 22: Using the Gap and Avoiding Lifestyle Inflation
Day 23: Investing for Retirement
Day 24: Investing and Saving for Education
Day 25: Investing and Saving for Other Goals

Special Topics
The series winds down with a number of standalone sections on specific topics of importance to anyone on the path to financial independence.
Day 26: Considering Insurance
Day 27: Handling a Crisis
Day 28: Handling the Long Valley
Day 29: Handling Changing Goals
Day 30: Getting Your Friends and Family on the Same Page

And here we are.

The road to financial independence is much like a jigsaw puzzle. It’s made up of a lot of little pieces, some of which are obvious in terms of what they are and how they fit, like a brightly colored edge piece, and some of which are vague and unclear at first, like an ordinary piece in the middle somewhere with a vague pattern.

However, for most people, it’s like getting a 500 piece jigsaw puzzle with 750 pieces in the box. Most personal finance advice you’ll find out there includes a lot of stuff that is relevant to your life mixed in with a lot of stuff that isn’t relevant, so part of the challenge is to discard those irrelevant pieces as you go. That’s the “personal” part of personal finance – figuring out which advice really applies to you.

How do you do that? I’m going to close out this series with the one tool that has brought everything in personal finance together for me and together for so many others. It’s a piece that many personal finance books completely overlook, but I consider it incredibly vital.

It’s regular reflection.

Exercise #31 – Reflecting on Your Journey and Bringing it All Together

The path to your financial destination is not a simple and straight one. Along the way, you’ll find yourself getting lost and circling back. You’ll find yourself wandering off down side paths and then wondering where you’ve gone. You’ll find yourself stopping for a while and wondering why you’re going. You’ll find yourself backtracking sometimes, or walking very slowly into a strong headwind.

It’s not an easy, smooth path, because life isn’t easy and smooth. Things change. People change. The great plan you came up with five years ago might not mesh with you right now. The circumstances of your life will almost assuredly change during that time. In a five year period in my own life, for example, I got married, switched jobs, had a child, bought a house, had a second child, and switched careers entirely, and my entire social circle completely rebooted along the way. My personal, professional, romantic, spiritual, and social lives were almost completely different at the end of that five year period as compared to the start.

It is completely unrealistic to think that the financial plans and goals that you had even a few years ago are still perfectly relevant today. That’s not how life works.

To compare this to the jigsaw puzzle analogy above, imagine that you’re assembling a 500 piece puzzle with 750 pieces in the box, except slowly over time the picture you’re trying to make changes, requiring you to be using different pieces. If you just keep moving toward the old picture, you’re going to find yourself unhappy at the end of the process.

What can you do, then? The first step is to recognize that a good personal finance plan is constantly being revised. You’re changing, your situation is changing, and the boundaries and specifics of your life are changing, so it’s natural that your personal finance plans and goals should change as well because good personal finance is a reflection of your life. What you’ve built in this series should never be set in stone.

Instead, you should begin a habit of regularly reflecting on your financial situation – your spending choices, your savings goals, and your priorities.

This shouldn’t be a “once per year money retreat” kind of thing. Instead, you’re far better off if the reflection is frequent but less intense. You should take advantage of the little windows in your life to really reflect on individual aspects of what you’re doing, as well as the big picture.

When you’re driving your kids to a soccer game, spend some time thinking through some of your recent spending choices. Were those choices really a good idea in the big scheme of things? What could you have done differently?

When you’re waiting at the doctor’s office, consider whether or not you’re putting yourself in a position to make more money at work. What could you be doing to put yourself in line for a raise? Or a promotion? Do you even want a promotion? Might there be opportunities elsewhere?

Personally, I find a great deal of value in putting aside ten or fifteen minutes each day just to think about my life as a whole and where it’s headed. I usually do this in the form of journaling – literally writing out the details of a concern I have in my life and then digging into that concern to find a good solution. Whether you actually write out those concerns or not is up to you (I find it powerful, but not everyone does), but the time put aside for really considering the details of one’s life is powerful for almost everyone.

During that time, consider different aspects of your financial, professional, personal, and spiritual life. Ask yourself really hard questions and think about the answers. If you’re unhappy with something, think about why you’re unhappy and what you could be doing better.

Many, many people go through their lives operating on instinct in terms of their day-to-day choices, and while instinct works pretty well for short-term impact, it’s pretty awful for building the life you want over the long term. Reflection is simply time where you consider the long term and perhaps retrain your instincts a little bit to incorporate more of the long term into your immediate decision-making instincts.

A concrete example might illustrate what I mean. In the last few months, I’ve spent a lot of time thinking about the coffee that Sarah and I enjoy in the mornings. Sarah is a heavier coffee drinker than I am – I just like a cup or two, while she’ll drink most of a pot in the morning. I’m also a more recent convert to drinking coffee than she is. While Sarah leaves for work in the morning, I stay at home and there’s often more coffee in the pot than I want to drink, and Sarah really doesn’t like stale hot coffee from the day before.

So, given that change, I’ve been thinking about how we can both get cups of coffee that we enjoy while keeping the cost low, and the solution I came up with was to try cold brew coffee. I essentially make it like iced tea in the fridge, putting some grounds in a large reusable tea bag in a large pitcher of water and letting it rest in the fridge for a full day. It makes a very mellow flavored but very potent coffee, one that Sarah and I both enjoy once we water it down a little bit (yes, it’s really potent). All she has to do is heat up some in her coffee mug in the morning and in her travel cup before she leaves, and then I can drink exactly what I want without wasting a drop. It’s also easier to clean up. It saves us money and takes less time each morning.

Sure, it seems like a simple thing, but it would not have occurred without some thinking about the problem and a better way of solving it to eliminate waste and unnecessary expense.

That’s a simple example about saving a dollar or so each day. For a bigger example, I’ll turn to our automobiles. For a long time, Sarah and I have been socking away money very steadily into our early retirement savings. I regularly ask myself if that’s the best choice without just assuming that it is, and recently I decided to tone it down a little bit.

Why? I’ve noticed that our cars are getting older. One of them was purchased eight years ago; the other was purchased seven years ago and was already several years old. They’re both approaching 200,000 miles and while they’re still in good shape, it’s fairly obvious that at some point in the next several years, they’re going to start wearing out and breaking down.

So, during one of those reflection periods, I realized that we’re probably cycling out both cars in the next three to four years, and because of that, it’s probably a good idea to make sure we have plenty saved up to replace them with reliable late model used cars. One will be a fuel-efficient and very reliable car for Sarah to commute with; the other will be big enough to transport our family on road trips with reliability and safety.

Thus, we made the financial choice to cut back on our retirement savings and instead channel a lot of that money into saving for replacement cars in about three years. We’re rapidly filling a savings account now and will continue to do so until we hit our car buying target number, at which point we’ll flip the switch back to early retirement savings.

I use reflection to constantly make little alterations to my spending habits, my personal choices, our savings strategies, and so on. All of those little alterations occur because I’ve noticed that something has changed in my life and I want to make sure my choices today reflect how things really are, not how things used to be several years ago.

Several years ago, I didn’t drink coffee and Sarah made just enough for her to take to work. Several years ago, our cars were fairly low mileage and recently purchased so replacing them wasn’t on the horizon. Several years ago, we were planning to move into the country in a few years, which isn’t true now because our goals changed. Several years ago, I made my own laundry soap in a giant bucket; now, I make it in a small container. Several years ago, we pieced through child care costs at a local daycare center; today, we piece through soccer league costs and band instruments.

Big things change. Little things change. It is only through constant reflection that you can continue to make the right choices based on the person you are right now and will be moving forward, rather than the person you were a few years ago. It is only through regular reflection that your choices reflect your situation right now and moving forward, rather than the situation you were in a few years ago.

Here’s my final exercise for you: make reflection on your life a daily part of your life. Every single day, spend some time actively and seriously thinking about what you’re doing in some aspect of your life. It can be a big picture thing, like whether you’re saving for a car or a house down payment. It can be a detail thing, like whether your laundry procedure makes cost-effective sense or whether there’s a way to have a delicious cup of coffee each morning at a lower cost or whether you made a good spending decision the other day when you were out with your friends.

Just focus in on one aspect of your life and ask yourself whether you’re making the right moves in that area right now, for the life you have right now and the one you’ll have going forward. Don’t just assume you’re doing things right; you’re probably doing things right based on your life a few years ago, but that doesn’t mean you’re doing things right based on the life you have right now.

You might decide that you’re doing it right, all things considered. You might decide that you could be doing things differently, but you’re not entirely sure what you might do that would be different (that’s often the time to do some research and then some further reflection). What you’re doing is updating that jigsaw puzzle of life so that the picture matches where you’re at now and where you want to be headed.

As I noted above, I often write in a journal when I do this, but I also do these kinds of reflections when I’m driving somewhere or when I’m waiting at a doctor’s office, or when I’m sitting in the car waiting for my oldest child to finish his soccer practice and I don’t have anything to write on.

Every once in a while, it might be a good idea to walk through this entire series again, starting from the beginning, just to make sure that you’re doing everything in a way that reflects where you currently are. You might find that different tips and strategies jump out at you compared to what seemed important a year or two ago.

The goal, as always, is to work toward a better life – financially, professionally, personally, and otherwise.

Good luck.

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