Personal Finance

Five personal finance tips better than skipping your daily latte

by Jay Handy, CEO of Walnut Capital Management and SignalPoint Asset Management

You’ve probably read the plethora of financial advice columns telling you that if you
would just skip your Starbucks latte every morning, you’ll be rich before you’re 45.

But ask yourself this: Are you prepared to never venture into a coffee shop again?*

Most likely, you’ll buy another latte. “Just this once,” you’ll tell yourself. And you’ll tell yourself this over and over again until you’re buying lattes every day and feeling

defeated. At the end of the day, if you enjoy a latte in the morning, skipping it isn’t going to be realistic way to fund your retirement plan.

But is it possible to make the equivalent savings over the long term some other way?

Yes! And it doesn’t require daily willpower.

1. Negotiate your bills

People are accustomed to just accepting the price shown on their phone and utility bills, presuming the price they see is the price they must pay. But we shouldn’t assume that our bills are set in stone.
Bills are ongoing expenses so negotiating with the company can save you a significant amount of money in the long term. Some bills are more flexible than others, and I recommend trying your cell phone bill first.

To do so, check which plan you are on and see if the company can offer you on which is more appropriate to your usage. Don’t pay for something you don’t use!\

If you have been a customer for a long time, use this history as leverage. Tell the phone representative (nicely) that you want to cancel your contract and they’ll pass you through to someone who will offer you all kinds of discounts to stop you from canceling. If you manage to cut just $10 off your phone bill every month, you’ll have made $120 a year all from one phone call.

(See more tips on negotiating a phone bill here.)

2. Ask for a pay raise

The most straightforward way to accumulate more money is to make more money, so try asking for a pay raise. Many people shy away from asking for more money, but you shouldn’t.

You’ve surely had days at work when you think to yourself “I don’t get paid enough for this.” Well, you’re probably right and your boss probably knows you’re right. Appraisals and progress meetings are the best opportunity to bring up a pay raise.

3. Buy in bulk

Buying in bulk doesn’t necessarily mean buying food in enormous quantities at Costco.

Think about other recurring expenses, including travel. If you use public transport to commute to work, check to see if there is a monthly, seasonal or annual travel pass. You’ll be making savings every time you travel without having to conjure up any willpower whatsoever.

Similarly, if you like to get massages or other salon services, you can usually buy a
package of 4 or 10. While the bulk price tag might look hefty, you’ll save money in the long run if you’re a regular customer.

4. Move to a new neighborhood
If you live in a metropolitan area, the difference in rent by neighborhood can be
astonishing. A property just a mile away might be hundreds of dollars per month
cheaper for comparable floor space. Over the course of a year, you could invest
thousands of dollars that would have otherwise gone to your landlord.

If you rent it’s likely that you are used to moving anyway, so consider what is actually important to you in a property. Is it square footage? A home office? A backyard? A dishwasher and gas stove? Compare the different areas with your criteria in hand and consider a cheaper property that meets your needs. If you cut your rent bill, you’ll save money every day just by living there.

5. Review all of your financial products

Oddly, the public perception of and insurance companies is that they are not a company selling products. And yet, they offer different rates and incentives for things like credit cards and mortgages.

If you’re not using all the bells and whistles of a service, such as the rebate options on a Visa credit card, you might be paying more for something you don’t need.
Review your credit cards: Look at the interest rate you currently get and see if you can get a better deal by switching to a new card at a lower rate or an initial 0% interest rate.

If you call your credit card company and tell them about your intent to switch to a new card (and mean it), they may offer you a better rate.

Look at your life insurance coverage and consider whether you really need to be insured for as much as you are. It’s very comforting to think that you have a policy worth millions but does your family really need it? It’s financially responsible to protect your family against the worst, but be careful not to overprotect them with an expensive policy that drains you of your resources when you’re alive.

Saving doesn’t have to be a daily sacrifice. By taking action just once you could be
making big savings in the long term — and you don’t necessarily have to cut back or
change your lifestyle to do so.

*If you’re not a coffee drinker, substitute your own personal indulgence here.

Five personal finance tips better than skipping your daily latte

by Jay Handy, CEO of Walnut Capital Management and SignalPoint Asset Management

You’ve probably read the plethora of financial advice columns telling you that if you would just skip your Starbucks latte every morning, you’ll be rich before you’re 45.

But ask yourself this: Are you prepared to never venture into a coffee shop again?*

Most likely, you’ll buy another latte. “Just this once,” you’ll tell yourself. And you’ll tell yourself this over and over again until you’re buying lattes every day and feeling defeated. At the end of the day, if you enjoy a latte in the morning, skipping it isn’t going to be realistic way to fund your retirement plan.

But is it possible to make the equivalent savings over the long term some other way? Yes! And it doesn’t require daily willpower.

  1. Negotiate your bills

People are accustomed to just accepting the price shown on their phone and utility bills, presuming the price they see is the price they must pay. But we shouldn’t assume that our bills are set in stone.

Bills are ongoing expenses so negotiating with the company can save you a significant amount of money in the long term. Some bills are more flexible than others, and I recommend trying your cell phone bill first.

To do so, check which plan you are on and see if the company can offer you on which is more appropriate to your usage. Don’t pay for something you don’t use!

If you have been a customer for a long time, use this history as leverage. Tell the phone representative (nicely) that you want to cancel your contract and they’ll pass you through to someone who will offer you all kinds of discounts to stop you from canceling. If you manage to cut just $10 off your phone bill every month, you’ll have made $120 a year all from one phone call.

(See more tips on negotiating a phone bill here.)

  1. Ask for a pay raise

The most straightforward way to accumulate more money is to make more money, so try asking for a pay raise. Many people shy away from asking for more money, but you shouldn’t.

You’ve surely had days at work when you think to yourself “I don’t get paid enough for this.” Well, you’re probably right and your boss probably knows you’re right. Appraisals and progress meetings are the best opportunity to bring up a pay raise.

  1. Buy in bulk

Buying in bulk doesn’t necessarily mean buying food in enormous quantities at Costco. Think about other recurring expenses, including travel. If you use public transport to commute to work, check to see if there is a monthly, seasonal or annual travel pass. You’ll be making savings every time you travel without having to conjure up any willpower whatsoever.

Similarly, if you like to get massages or other salon services, you can usually buy a package of 4 or 10. While the bulk price tag might look hefty, you’ll save money in the long run if you’re a regular customer.

  1. Move to a new neighborhood

If you live in a metropolitan area, the difference in rent by neighborhood can be astonishing. A property just a mile away might be hundreds of dollars per month cheaper for comparable floor space. Over the course of a year, you could invest thousands of dollars that would have otherwise gone to your landlord.

If you rent it’s likely that you are used to moving anyway, so consider what is actually important to you in a property. Is it square footage? A home office? A backyard? A dishwasher and gas stove? Compare the different areas with your criteria in hand and consider a cheaper property that meets your needs. If you cut your rent bill, you’ll save money every day just by living there.

  1. Review all of your financial products

Oddly, the public perception of and insurance companies is that they are not a company selling products. And yet, they offer different rates and incentives for things like credit cards and mortgages.

If you’re not using all the bells and whistles of a service, such as the rebate options on a Visa credit card, you might be paying more for something you don’t need.

Review your credit cards: Look at the interest rate you currently get and see if you can get a better deal by switching to a new card at a lower rate or an initial 0% interest rate. If you call your credit card company and tell them about your intent to switch to a new card (and mean it), they may offer you a better rate.

Look at your life insurance coverage and consider whether you really need to be insured for as much as you are. It’s very comforting to think that you have a policy worth millions but does your family really need it? It’s financially responsible to protect your family against the worst, but be careful not to overprotect them with an expensive policy that drains you of your resources when you’re alive.

Saving doesn’t have to be a daily sacrifice. By taking action just once you could be making big savings in the long term — and you don’t necessarily have to cut back or change your lifestyle to do so.

 

*If you’re not a coffee drink, substitute your own personal indulgence here.

The man who bought a $30,000 couch

The man who bought a $30,000 couch

by Jay Handy, CEO of Walnut Capital Management and SignalPoint Asset Management

Lust:

1. : personal inclination: wish

2 : an intense longing: craving

We live in a consumer society, and lust is a powerful motivator.

There is something very virtuous about saying no to something you want NOW and putting off your desire to have it.

The Stanford marshmallow experiment provided interesting insight into the merits of delayed gratification. The marshmallow experiment was a series of studies on delayed gratification in the late 1960s and early 1970s led by psychologist Walter Mischel. Mischel and his team placed a number of children alone in a room at a table with a marshmallow in front of them. They were instructed if they did not eat the marshmallow, but could wait until the tester returned, they could get two marshmallows.

The agonizing period of time was about fifteen minutes. About one third of the children could delay the satisfaction with hilarious tactics to witness: talking to themselves, sitting on their hands, singing, etc.

The remaining two thirds simply could not withstand the temptation and plunged into the sweet and chewy lone marshmallow.

The fascinating piece of this study came years later when scientists followed up years later to see what had happened to these children. In follow-up studies, the researchers found that children who were able to wait longer for the preferred rewards tended to have better life outcomes, as measured by SAT scores, educational attainment, body mass index (BMI), and other life measures.

I often mention this study when talking to younger people and their money. The things you can do now to set aside funds can have so much greater influence on your options and net worth than if you were to upgrade to a fancier car, better apartment, or newer IPhone.

One example I remember from a friend of mine, when I was working at an investment bank in the early 90’s. Like many companies, our firm would give options or shares for being dutiful employees.

My friend and his wife wanted so badly to buy a $1,000 couch to match their apartment’s drapery and painted walls. With very little available cash, he sold off some of their available company shares he had accumulated. It was only about 18 months later that the stock of our company rose by a factor of 30.

Long after they moved from that small apartment, he refused to sell or trash this now faded and threadbare loveseat. He would, in a humble manner, lead guests down to the basement’s TV room and ask them if they would care to sit on a $30,000 couch.

This is not say one should live like a monk. But, if you sense you may be that child who would dive into the single marshmallow to have immediate satisfaction, keep this in mind when you find yourself rationalizing your next purchase.

And consider investing that same amount instead.

When your relationship starts to get serious, have the money talk

by Jay Handy, CEO of Walnut Capital Management and SignalPoint Asset Management

It’s complex enough for one person to figure out how to manage their money (and where!). When you decide to commit yourself to a long-term relationship or marriage, the complexity doubles and things get interesting.

It’s been fascinating to watch over the 30 years as I’ve counseled couples on their life goals, financial stresses, hopes, dreams, layoffs, educational accounts, vacation, and first and last homes.

No matter how long a couple has been together, their original “familial DNA” will bubble up. Everyone is brought up with a different relationship to money, and those patterns stick.

Some people’s history is best described as: “Well, we never had any money, but gosh, it was always talked about. How much everything cost, what we would do if we could, and so on.”

And others might say: “We always had enough for anything we wanted, but we never spoke of money.”

From my vantage point, it is almost a therapy session to then get two well-meaning people together on the same financial page to manage a life together, including possibly raising children. Each comes to the table with a deeply seeded feeling on finances, a topic that is one of the top three causes for divorce. (For many reasons, such as when one person’s spending grows out of control and causes anxiety and tension in the relationship.)

I say therapy, because like all relationship issues, it comes down to communication and honesty. There can be some real resentment, grown over time and deeply buried, which only emerges, and sometimes in an ugly way, when challenged.

It is a lot easier to move through the inevitable rough spots in life if both people have a better sense of where the other is coming from. I tell people that having the money conversation is the first investment to make in one another in order to really start out as a united front. It will pay great dividends in the future.

CNBC put together a helpful list of topics to talk through that can help you get started, which you can read here.