Jean Chatzky blog :: The Difference :: Personal finance, debt, and money advice » Saving

Today’s Style: Jean’s Closet ‘Sixperiment’

Jean — Thu, 02 Sep 2010 17:18:48 +0000

Could you wear only 6 items for 30 days? This morning on Today we reviewed my Sixperiment. What can you live with? What can’t you live without? How would you accessorize? Would anyone notice? Watch the video clip below to see what I discovered.

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Today’s Money 911

Jean — Wed, 01 Sep 2010 15:41:42 +0000

This morning’s expert panel looked into your financial emergencies. How can a single parent save money for college? What is the process to remove negative activity from your credit report? For answers to these questions and more watch the video clip below.

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Ask Jean: $100K+ Earnings, $55K in Credit Card Debt, What to Do?

Jean — Wed, 25 Aug 2010 18:52:54 +0000

“Hi Jean- I watch you often on the Today show and am really in need of serious intervention-to say the least. My husband and I really don’t know what to do or where to go for help. So here goes:
We have been married for 4 years and have 1 daughter, Lucy 20 months.
We have $0 in savings and nothing for her. We both went to college and work-combined we make over $100K. But we have SO much credit card debt that we are overwhelmed and can’t save. I set up my cc for the hardship programs. I have-just in my name $35K in cc debit. My husband has about $20k in his name and he is working to pay them down. Should we go to a consumer credit place, file bankruptcy, get a loan? We just don’t know what to do and we really really want to save!
We got in this trouble from our first home-the taxes were $1500 a month and we just couldn’t afford that along with the mortgage payment so we started using credit to pay the taxes and utilities.
HELP please.” – Stacy

Hi Stacy,
I know how frustrating this is. You are making good money yet feel as if you’re getting nowhere. I’d give a credit counseling service a try — though I’m not sure how much lower this will make your payments (find one at debtadvice.org). When you go on the hardship programs with the card companies yourself, they often reduce your interest rates significantly. The counseling services bring them down to around 6% and they waive late payments and over limit fees. If you’re doing better than that yourself, I’d do two things — first go back to the card companies (your husband should do this too) and explain you’re still having a hard time making ends meet. Tell them (rather than asking them to tell you) what sort of payment you can make and in doing so give yourself room to save $100 – $200 a month. Then save the money automatically. I know it doesn’t sound like much, but every time you pay off a card, increase the amount of your savings by the amount you’re no longer paying to the card company. It will start to add up quickly. Next, go through your monthly spending line by line and see if there is anything you can cut down. Anything you can eliminate gets added to savings, as well. I’m telling you — once you start to see the savings, even small ones, add up, you’ll find strength and energy to do more. As for a loan — the answer is no, no, no. You already have too much debt. We’re paying down, not leveraging up.

Money 911: Early Retirement, IRS Debt & More on Today

Jean — Wed, 18 Aug 2010 15:34:03 +0000

Today’s panel looks at ways to reduce debt and plan for a lengthy retirement. What’s the best way to lower student loan payments? How do you handle a large debt to the IRS? What should you do if you are upside down on your mortgage? For answers to these questions and more watch the video clip below.

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Ask Jean: Saving and Budgeting

Jean — Tue, 10 Aug 2010 17:00:48 +0000

“I desperately need your help to create a budget for my husband and I. Can you direct me to a simple easy budget worksheet where I can enter what we bring home and what we pay out and this will show me what I need to save or how to save?” – Anonymous

Setting up a budget is a must – so I’m glad you’re reaching out for help! It’s a matter of figuring out where you are, and where you want to be. You need to ask yourself how much you’re bringing in each month, how much goes out each month – and when you spend that money, where it’s going.

How much you’re bringing into your household each month should include your take home pay, and any other sources of income you might have. Do you run a small business on the side? Do you have rental properties? Do you sell old books on eBay? Add it all up. If it varies, come up with the average over the past year. That will let you know exactly what you’re working with.

Next, and probably most important – take the time to understand exactly what you’re spending money on. This is crucial to getting out of debt, but also will help you find money you can save for the future. You should look over your recent credit card statements to see what you spent your money on, and then track your spending for the next month. And when I say track your spending, I mean every time you take your wallet out – whether it’s for $2 or $50. Keep a small notebook in your purse where you can track everything from lunches to ATM fees. What you’re spending on might surprise you – and if it does, you know where you need to start making financial adjustments.

When it comes to making a budget, I think it should break down like this:

35% Housing — rent or mortgage, plus the cost of insurance, taxes, utilities and maintenance

15% Transportation — your car payment falls here (if you have one), but taxis, parking and insurance also do

15% Other Debt Repayment — credit card payments, student loan payments and any other debts you owe

10% Long term saving — putting money away as an emergency cushion, as well as the retirement account you should be contributing to (whether it’s at work or on your own)

25% Everything else — this is your life. Food, entertainment, clothes, cosmetics, travel and anything that doesn’t fit into the other categories.

Now, you can borrow from one category to another. Maybe you live in a small town, and don’t really pay for transportation all too often – but you have a large amount of student loan debt. You can use some of that money someone else might spend on the subway every morning to put towards that loan repayment. However, there’s one big rule of thumb – you can’t borrow from savings. So if after your fixed expenses, you find that your living expenses could be cut down – you know where to start to build that cushion. Clip coupons or take on a part-time job to balance it out, and put that extra money into a savings account with your bank. That way, you’ll get yourself on the right track to financial security.

Bankruptcy to Saving on Money 911

Jean — Wed, 04 Aug 2010 15:37:54 +0000

This morning, Today’s experts answered your tough financial questions. How do you keep a business bankruptcy from going personal? No employer 401K, what’s the best way to save? Should you refinance your home loan? For answers to these questions and more watch the video below.

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Stopping Overshopping — Once and For All

Jean — Mon, 02 Aug 2010 15:00:36 +0000

We all know that shopping makes us feel good. It’s a scientific fact – when we see something we want, it triggers the release of feel-good endorphins and hormones that inspire us to make a purchase – something I talk about in my book, The Difference. But I know from reading many of your e-mails that, in some cases, this kind of feel-good shopping can become a real issue. When you shop compulsively – buying things you don’t need, and racking up debt – it can take a real toll on your life.

My good friend April Lane Benson, PhD, is an expert in overshopping – and how to stop. She authored a book – To Buy or Not to Buy: Why We Overshop and How to Stop – to help compulsive shoppers curb their behavior and live a financially responsible lifestyle. Recently, April let me know about a new study she’s working on to test her treatment for compulsive buyers. The treatment has been a success for more than 100 shopaholics – and it incorporates a series of steps that help to re-shape buying behavior, and keep you from falling back into a bad habit once you’ve fixed it.

The study takes place over 12 weeks, where you’ll work with a small group (five to seven people) to treat compulsive buying behavior one night a week. It’s open to men and women, ages 18 and older, that live in the New York City area. You’ll pay a one-time fee of $150, which covers the materials and session costs, including the materials needed and the session fee.

If you’d like more information, visit April’s website. If you’re interested in participating, leave a message at 917-885-6887 and a researcher will call you back to arrange a preliminary fifteen-minute telephone screening to answer questions about the study and to make sure you meet the eligibility criteria. Actual inclusion in the study is determined after an in-person interview with a clinician that will assess eligibility more comprehensively and answer any remaining questions.

Guppie, Tadpole, Minnow, Frog: The Secret To Reaching Your Goals

Jean — Tue, 27 Jul 2010 13:42:48 +0000

The American Red Cross swimming program, at least as implemented at one Westchester County, NY daycamp, has discovered the secret of reaching your goals. Break ‘em into achievable benchmarks. My young friend Sasha, age 5, started camp as a non-swimmer, as did my own kids years ago. Back then, a half decade or so ago, kids had to cross a slew of items off their list to move from Level 1 to Level 2 and so on. It could take an entire summer to scale a single rung. No more. This year, within her level, Sasha has been challenged to hit a number of benchmarks within Level 1. She started as a guppie, moved to tadpole, then was a minnow, now she’s a frog. And, reports her mother, “she feels great!”

Of course she does.

This is why losing 10 pounds is best achieved by aiming for 2 pounds a week — then taking satisfaction in the small movements of the scale. And middle income folks who aim to save reasonable amounts save more — in total dollars — than those who set the bar too high. Set a mark you can reach, cross it off your list, and like my friend Sasha, take pride in every move you make.

Saving – Not Spending – Makes Consumers Feel Smarter

Jean — Sat, 24 Jul 2010 13:00:20 +0000

They don’t call it smart shopping for nothing but these days it’s not the money we spend that’s making us feel brainy – it’s the money we save. That’s what the researchers from Deloitte and The Harrison group learned. They surveyed 2,000-plus consumers and learned that four out of five say they find saving money using techniques like coupons and loyalty programs “fun.” So fun, in fact, that 93 percent don’t plan to return to their frivolous spending habits when the economy improves.

The research – which is called The New American Pantry Study (PDF) – pointed to five different, new consumer behaviors. Take a look. Join in. You may be more satisfied with how you’re using your money if you do.

Gratification management. Say good-bye to instant gratification, and hello to delay. Some 40 percent of consumers surveyed said waiting to get what you want isn’t as much of a sacrifice as it used to be. Consumers have tuned in to the fact that many things – from cuts of meat to clothing – will eventually go on sale, so they’re willing to wait for the moment when that happens. Makes sense in the kitchen (those cookies always taste better after you smell them baking!). Makes sense in the bedroom. (No further explanation needed.) Why wouldn’t it make sense here?

Private Label Experimentation. I’d never give up my Post Raisin Bran (believe me, it’s better than Kellogg’s), but the olive oil I cook with every day is Costco’s private label brand: Kirkland. Three-quarters of consumers are more willing to try private labels – it makes them feel smart – and once they do, three-quarters are buying those things again. “In part, it’s because we believe the same manufacturers are making both,” says Doug Harrison who conducted the survey. We do it selectively. Maybe you’d never give up your Oreos. Harrison’s wife is loyal to her Vanity Fair napkins. But on other products we’re trying – and we’re liking.

Cooking From Scratch. Twenty percent of consumers are abandoning expensive prepared foods and cooking from scratch. New websites like 5dollardinners.com have shown people how they can save a ton of money by making food themselves (and save even more by taking the leftovers in the next day for lunch). Personally, Ina Garten’s original Barefoot Contessa Cookbook has become my summer bible. Last week I made the potato salad, the cold sesame noodles and the beet salad with orange zest. Took 90 minutes. We ate for five days.

Make Loyalty Cards Your BFF. Sure, you’ve been friendly with your store loyalty cards for a while, but now they’re your BFFs. At least they are for 60 percent of consumers. What’s changed here is that men and kids are getting in on the action. They are sharing in the feeling of satisfaction you get when, upon checkout, you scan to the bottom of the receipt and see that – yes! – not only did you get two-for-one-blueberries and a free baguette, you’ve saved $18.71. And – double yes! – since the beginning of the year, you’ve saved $432.23.

Extreme Couponing. Finally, these folks aren’t just clipping the occasional $1 off, they’re layering manufacturer’s coupons over store coupons to squeeze out every last dollar. They’re signed on (as I am) to couponmom.com. They’re downloading coupons to their loyalty cards so they can swipe them at checkout and save more and their PDAs so there is no paper needed.

Feel-Good Saving Tips

Jean — Mon, 19 Jul 2010 13:39:08 +0000

New research shows that in our tighter economy, people are starting to feel better about saving than spending! How can you get that feel-good boost in your day to day life? Waiting for sales, cooking from scratch, and learning how to (conveniently) use coupons are just a few of the ways I highlighted this morning on the Today Show. Watch the clip below!

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