I am 26 years old, happily married (to a somewhat absentee husband who is currently completing his MBA) and a mother of three beautiful children.

Many of you reading this post are parents and completely understand and sympathize with me when I say – today has been one of those days where I have constantly needed to remind myself that my children are a blessing. They are not out to get me or turn my world upside-down and ultimately, I REALLY do love them!

My nanny was a mother of 5 and would tell me that there were days when she wanted 5 more. Then there were days when she wanted to give all of hers up for adoption.

This was normal and that feeling was usually fleeting.

I have found that as a mother, my tension and attitude completely rubs off on my kids. If I wake up on the wrong side of the bed, you can guarantee that they will as well and the whole day is shot to heck.

On the other side, if I am happy and patient, my children seem eager to please and are more respectful. Thus, the big question at hand is…how do I de-stress and maintain composure throughout my stressful day/life?

Many studies and much research has gone to show the irrefutable link between money and stress. The big deal with this relationship is that it is circular and self-promoting. Meaning, when one feels stressed they are more likely to spend money. When that same someone spends needed money on needless items they increase their stress levels and are therefore more likely to spend more money in search of some relief.

You can see how this downward spiral continues to wrap and accelerate to self-destruction. Now to the topic of the post, “What (money free) chill pills can help reverse the negative cycle to create an environment of peace and happiness?”

Here are a few suggestions to consider.

1. Breathing Exercises: Okay, I know it sounds cheesy like something you would see in a movie but they WORK!  In a moment of high stress or tension (before you blow), close your eyes and breath deeply in and out several times. The benefits of deep breathing are too numerous to name but the most applicable ones for this post are that deep breathing relaxes your mind and body, relieves tension in your muscles, clears your mind and detoxifies your body.
2. Get Rid of Clutter: We are not just talking about picking up. Although existing in a tidy environment does relieve stress and tension. We are primarily talking about extinguishing all the distractions and chaos in life, such as television, radio, Facebook, surging the Internet, etc. These things have a time and place but all too often become all consuming and demanding of us instead of providing the escape we hope to enjoy.
3. Engage Your Mind: And hands and children in a satisfying activity. Sometimes, regardless of the state of my home or the insane number of items on my to do list, it makes a big difference in my day if my kids and I take some time out to whip up a batch of cookie dough and enjoy the mess while its there (this part is hard for me).
4. Get Outside: Even just a short walk with or without the kids. Sometimes the only way to break the cycle is to literally get out of it completely. Physical exercise releases endorphins, builds self-confidence, clears ones thoughts and distracts from the noise of everyday routine.
5. Find Your Happy Place: Mine is not a literal location but rather a routine/environment that I create that is a no fail cure for a bad day. Are you ready for it?.. A cup of fresh homemade mint and cinnamon tea coupled with CHRISTMAS MUSIC! Yes, it’s true it doesn’t matter if the date is Dec 12th or the 4th of July!  My foolproof happy pill is Christmas cheer!

What’s yours?

First, let me define drawing closer to someone.  By drawing closer I am specifically referring to spending quality time.  Time that will encourage communication, increase love, build understanding and result in laughter.

As parents, we sometimes feel pressured to spend a lot of money creating memories or experiences for our children. Yet, it seems that often the most memorable may at the surface appear to be the most mundane or ordinary.

In this post, I will provide a framework for creating memories and drawing closer to your children. At the end, I’ll give a few specific ideas for activities, but that is not the focus. The focus is on the method.

Step 1: Let the decision be your child’s

By handing over the reigns to the kids, it shows that this is not yet another power struggle or mom mandated activity.  It also ensures that you are spending time with your kids how they want to spend time.  Which you will probably find is not exactly how you would have liked to spend that time.  Try to discourage options like watching television, or playing Nintendo games.  These activities are fun and have a place but they do not meet the requirements of encouraging communication or building understanding.

Step 2: Be fully engaged

Children are not stupid, they know when you are distracted or just taking a back seat.  Be sure that you are enjoying the moment (even the mess) and try not to watch the clock or anticipate the end.

Step 3: Invite conversation

Most kids, it seems, are hesitant to just jump into conversation, but I have found with my kids that they are more than willing to talk with the slightest encouragement (this is more problematic usually for dads than moms).  So ask open ended questions.  This is important because as parents we tend to lead, even without intending to.  Our children want us to be happy and want to please us.  If we ask leading questions, they are using all their brainpower to come up with the answer that they think we want to hear.  Wouldn’t you rather know and understand how your child’s brain works and what thoughts they come up with on their own?

Step 4: Show Gratitude

Verbally and physically express your love and appreciation to your children for the time that they have spent with you.  Hugs, kisses and laughter are not over rated and can quickly turn around a bad attitude or a stressful day.

Step 5: Teach Responsibility

Be sure to include your children in the clean up process, however big or little the task.  Yes, I understand that cleanup (whatever the mess may be) would be accomplished quicker, better and more efficiently if done by you.  However, we would be missing out on the opportunity to further teach and guide our children toward becoming responsible adults.

A few activity ideas

Below are a few free or low cost activities that may be beneficial for you and your family. Please add to this list as it is only intended to spur your own ideas.

• Read books
• Ride bikes
• Bake a treat
• Create some art
• Build a play dough village
• Visit a retirement home
• Camp out in the back yard
• Rake a neighbor’s leaves
• Build a fort out of boxes
• HAVE FUN!

What have you found to be successful with your children?

As some of you may know, I am beginning my MBA at the University of Wisconsin (yay Badges!). To help fund my education, I am taking out some student loans. While filling out a form to request additional funds, I became very perplexed (and I little annoyed) by the fact that my family is not taken into account.

According to Federal guidelines, student aid money can only be for me and no one else in my family. However, the form I was filling out asked about specific monthly financial expenditures such as groceries, insurance, etc. But again, only as it relates to what I spend. The last line of the form, though, asks about child care.

Hoping to include my children on this line (they consume more resources than I do), I enquired about what was included in “child care.” Apparently, the only thing I can include is child care payments that I have to make according to a court order.

In other words, the Federal government is willing to give me enough financial aid to cover my child care payments but will not give me any assistance in providing for my children in the home.

So I can run around and have children out of wedlock, be irresponsible and an absentee father and the government will give me aid. But, if I am a responsible father who lives with and supports my children and is married to their mother, then the government says, “The best of luck to you!”

What has happened in this nation?!

When did we decide that irresponsibility is to be rewarded and responsibility is to be met with no more than a slap across the face?

Further, I don’t understand the bias against individuals with families coming back to school. Without financial aid, it’s very difficult for many to return to or go in the first place to school to obtain a better education. Without it, there are only a few options:

• Save for years: Paying for school out of savings is obviously great because you avoid debt. Though, it can take so long to save that it just never happens.
• Spouse works and kids go to day care: The challenge with day care is that my wife will pay to take three kids to day care so that she can go to work so that she can pay to take kids to day care. It just doesn’t make financial sense.
• Loans from family: This may be a possibility for those who have families with such financial means. But it can create some stress within the family.

Or you can take our approach – I’m working as a freelancer on the side to cover the extra financial needs.

I’ve vented about this problem before (read My resignation from financial responsibility). So many organizations, from the government to schools, reward those that misbehave and punish those that follow the rules.

Example: My wife and I prepared to buy a home and made sure that we could afford it. Yet, our neighbors got in over there heads and now we are in a housing crisis that has driven our home value underwater.

We’ve decided to just get a divorce so I can pay child care

Seems like the most logical thing to do. We’ll just get a divorce, live together for two years, make sure that I have really high child care payments and then get married again after I graduate.

That sounds like a good idea, right? Apparently the government thinks so.

I have found that sometimes it is difficult coming up with ideas of what to as a family for fun. The danger is that without a source of ideas, you can fall back on costly activities.

For example, taking a family of five to the movies costs around  $60-70 and if you are like me, that’s usually the first idea that comes to my mind when deciding to go out.

There isn’t anything inherently wrong with spending money on family outings, but spending $50-100 a week can stop you from reaching other family financial goals.

In my last year of college, a visiting lecturer to one of my classes gave us several ideas on how to be more frugal and better investors. I loved one of his ideas for having a great time as families without breaking the bank.

First, Create a List

Spend some time with your spouse and kids creating a list of everything you like to do together as well as vacations that you’d like to take. At this point, don’t discriminate. The idea is to be exhaustive and not reject any activities.

I’ve created a short example list for my family below. Don’t be surprised if you don’t recognize everything on the list since some of it is specific to our local area.

Second, Assign a Satisfaction Level

The next step is to assign a satisfaction value to each activity. For this example, I used a scale of Low-Medium-High. I recommend keeping the scale simple, but you could add Very Low and Very High to the list if you’d like.

A side benefit to doing this as a family is that you might be surprised by what is important and fun to different members of the family. After creating our example list for this post, I had my wife run through it quickly and I was a little surprised by one or two changed she made.

Third, Assign a Cost Level

With the satisfaction levels in place, now assign an approximate cost level to each activity.

Again, I recommend using a simple scale instead of actual dollar values (though you certainly can). In my example below, I used None-Low-Medium-High-Very High. What I found really interesting was that we didn’t have any activities that fell into the High category. There was a leap from Medium to Very High. Again, you might learn somethings about you and your family’s preferences as you complete this exercise.

Last, Rank by Satisfaction and then by Cost

The last step is the easiest. First, re-order your activities by Satisfaction with the activities that provide the most satisfaction at the top. Then, rearrange all of the activities within a given satisfaction level by cost with the lowest cost being at the top. I know that might sound a little confusing, which is why I include pictures :)

I recommend doing all of this in Excel so that you can easily make changes, rearrange and save your list.

Review the Findings

If you’ve followed each of the steps, you now have a list of activities that you enjoy doing as either a family or couple sorted by how much satisfaction you get out of each activity and the cost associated.

Hopefully, you’ll see that you have plenty of low to no cost activities that you really enjoy doing. So the next time you are wondering what to do, you can just pull out your list and pick something.

Important Note: I am not saying that you shouldn’t do the High and Very High cost activities. What I am saying is this:

1. Focus mainly on doing things that you love and don’t cost much.
2. Pick a couple of the expensive activities to do each year, or maybe once a year, and save for them.

Also, keep adding to and changing the list as time passes. Make this a living document.

How do you decide what to do for fun?

Typically, I write about how to save money or avoid the temptation to indulge. I, at times, have chastened friends for their unnecessary expenditures. Today, I want to express quite the opposite.

Close-up of our Christmas tree

My wife and I just put up our Christmas tree. I believe that we broke some universal law by putting it up before Thanksgiving. But we just couldn’t wait. Christmas trees seem to carry with them all of the good and warm feelings that Christmas invokes and we were feeling rather merry (maybe it was all that egg nog).

Much to my wife’s chagrin, we own a fake tree rather than a live one. We purchased it several years ago at Target for around $50. Since then, we have been adding ornaments and embellishments. Anyone that has owned a cheap, fake tree knows that they don’t look to great just out of the box. There are random, barren spots. To make the tree look good, you kind of have to put a lot on it.

Last year, we decided to invest in our tree by buying quite a few new decorations. I estimate that we’ve probably spent all-together around $300 on our Christmas tree. That price tag may seem a bit at odds with my normal “save wherever you can” approach. However, I think it’s important, almost essential really.

First, you need something to splurge on

I have a friend who is working on getting out of debt. We occasionally talk about what he and his wife are doing to pay down the debt. One of the comments that he has made to me several times is that they need to splurge every now and then. Otherwise, they feel suffocated by the debt.

The way I see it is if you are going to splurge on something, then why not let it be on family traditions. Tree trimmings can be used year after year. We make putting up the tree and Christmas decorations a day long event involving music, food and fun.

Second, Christmas is one of the most memorable events as a child

I still remember all of the ornaments that we would hung each year as a child. I remember the box they were stored in. And I remember when I was finally old enough to start putting the tree together myself. Our three year old was ever so anxious to help setup our tree. Both of our kids talk all day about Christmas and snow.

The holiday season, for me at least, is about creating memories – not so much the gifts. I want my kids to know that they grew up in a home where we celebrated this joyous season.

Third, don’t be a Scrooge-ly miser

I get that Scrooge was a wealthy man and had money to spare. You may feel that you don’t have extra cash. My recommendation is plan and save for it, just like anything else. Also, consider diverting some of the gift money to a tree fund, which benefits the whole family.

Let me end withe the words of one of my favorite Christmas songs (I Cry the Day I Take the Tree Down by Michael McLean):

I thought I’d seen all the lights and sung all the songs
I thought the holiday lasted a bit too long
I never shed any tears when Christmas was through
Until I celebrated one with you

And now I cry the day that I take the tree down
I want the season to last all year round
And I’m surrounded by these memories
It’s almost like you’re here with me

For more of my musings on families, careers and financial planning, follow Rabbit Funds on Twitter. Also, let me know in the comments section what holiday traditions you splurge on.

So every month, we have dinner with some good friends that we’ve been trying to convince to jump on the bandwagon and have a baby. Well, I just found out that she is eight weeks along and we couldn’t be more excited. However, they are a two income family and are now faced with losing the second income.

Many couples find themselves in the same situation. Both spouses work for several years until junior comes along and then mom decides to stay home. Unfortunately, they’ve become accustomed to living on two incomes. So how do you adapt to a one income family and not go broke?

First of all, let me dispel the myth that you must have two incomes to be financially viable in this day and age. Maybe you’ll call me a chauvinist, or a romantic, but I firmly believe that the male gender has a responsibility to get as much education as possible and then work hard. I know too many men that are not willing to work hard and provide for their family. Now, please do not assume that I am opposed to an educated, successful woman. I am proud to say that my wife is a college graduate and business owner. We also have two lovely little girls. The oldest turned three just yesterday.

1) Plan to lose your second income years in advance

Do you realize that many of the financial woes that we are experiencing in this nation would probably not exist if companies and families would have sufficient planned before spending way too much money? For example, if new homeowners had asked themselves, “Do I have enough money in the bank to cover my mortgage for 3-6 months if I lose my job?” then maybe a lot of Americans would have taken out smaller loans.

The point is that if you know that in the next few years you may lose one of your incomes for a variety of reasons (it doesn’t have to be a new baby), then do not put yourself in a financial situation that makes it impossible to lose the second income and stay out of bankruptcy.

2) Reduce your monthly expenses through good budgeting

The second step to prepare to live on one income is to reduce your monthly expenses to the point where one income can cover all expenses. This should seem fairly obvious to you. However, reducing your monthly expenses (and that includes investments) by $1500 to $3000 may be very difficult. Though, if you’ve planned ahead as in Step #1, then you hopefully aren’t locked into any financial commitments and simply need to make a lifestyle change.

You should be using a budgeting tool like Mint.com anyways, but if you aren’t, making this type of change will almost necessitate that you become an excellent budgeter. Basically, create a new budget based one just one income several months before losing your second income and start making all of the lifestyle changes. I say months in advance because it will take you several months to figure out how to consistently stay within a new, reduced budget.

For more information bout budgeting, read Stop Lying, 5 Ways to Stop Overspending and 6 More ways to stop overspending and save money.

3) Save money in a dedicated savings account

If you are reducing your expenses as in step #2, then you will have extra income. PUT IT IN THE BANK AND DON’T TOUCH IT. Open a dedicated savings account that is just for this income. Hopefully, you will build up a nice emergency fund that you can use to ease your transition if hiccups arise. Please be realistic though about what expenses are and are not emergencies.

This account should be in addition to your normal savings since it is coming as a result of reducing your expenses. So don’t think you get to go buy something all shiny and new with it if you are already saving month.

Once you’ve transitioned to a single income, then decide how to best invest the money in this savings account. Maybe it remains an emergency fund or maybe you can invest it in a Roth IRA account or open a 529b account for the new baby.

4) Celebrate your accomplishment

Any good or true goal should have a reward at the end. So plan some way to celebrate a successful transition to income. Maybe it is a nice evening out or other small indulgence. Don’t go too extravagant but you’ve done something amazing and it’s important to recognize that.

Conclusion – The real secret to success

I probably haven’t said anything that you haven’t already considered. The reality is that what I’ve described are simply the mechanics of change. For any successful change to occur in life, you need a change motivator. You need a reason inside of you that says not only do I need to do this, but I can do this. So find your change motivator (I hope it isn’t job loss, which can be a powerful motivator). Write your motivator down and stick it on your mirror or put a picture of it somewhere that you will see everyday. Then the mechanics of change have a living force behind them driving you to make the right decisions.

Do you have experience of going from two incomes to one? If so, please share below.

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You probably already pay a lot for your utilities.  With electronics galore cluttering up your house, old appliances draining precious energy, and summer temperatures soaring (necessitating the dreaded switch to AC), you’re beginning to feel the crunch on your finances from summer utility bills.

However, there are a few simple tricks you can try to cut down on your utility bills through the hot summer months.

1. Upgrade to energy star. Trade in your old appliances for new energy-efficient models.  True, there is a hefty initial cost, but between government tax credits, rebates or cash back from utility companies, and a reduction of 25-30% in your monthly bill, they practically pay for themselves.  Along these lines, you can also consider low-flow toilets, tankless water heaters, and a more efficient AC unit and furnace.  Bonus: you’re making the planet a little greener.
2. Stop leakage. Nobody likes a leaky…well, anything.  You certainly don’t want to let out the “bought air”, so think about hiring an auditor to come out and assess areas that may be leaking.  If an audit is out of your price range, you can try it on your own by running your hands along the edges of doors, windows, baseboards, outlets, etc. to determine potential problem areas.  Then you can simply fill them in with foam weather stripping or caulk (both can be obtained pretty cheaply at your local hardware store).
3. Get smart strips. These work in much the same way as the sleep mode on your computer.  When electronics are not in use, the smart strip cuts off power to the devices plugged into it, relieving you of the burden of paying for idle current or alternately, the constant annoyance of unplugging everything in your house.  Most of these strips claim to pay for themselves within six weeks of usage.  Not too shabby.
4. Use a grill. Summer cooking can overheat your house and put your AC on high alert.  So get outside and enjoy those nice evening breezes.  In addition to keeping your temperature cool and controlled indoors, cooking outside cuts down on electricity or gas needed to run your stove.  And BBQ is delicious!
5. Plant a tree. Yeah, it’s for your tomorrow, but that doesn’t mean you shouldn’t think about it today.  Having leafy trees that soar above your rooftop will help keep your house cool throughout the summer, so even if it doesn’t get tall enough for a few years, it’s an inexpensive way to make your house more efficient in the long run and add a little natural beauty.

What else hav you tried in order to save money during the summer months? For more money saving tips, sign-up for Rabbit Funds’ RSS Feed!

Author Info: Thomas Warren is a content writer for Go College, one of the oldest and most trusted resources to guide students on how to finance and succeed in college.

A few years ago, my wife and I had the opportunity to invest in a company that we hoped would go public. We were young, just married, and broke. So we took out a personal loan from a family member (for a fairly small amount) to make the investment.

Within months, the company went belly up. Since we weren’t able to recoup a single penny from our investment, we were left to work off the debt. This experience taught us several valuable lessons. Among those lessons was that one should be extremely cautious when using leverage to make an investment or increase the expected return on an investment.

Let me give you four reasons not to use debt to invest

First, you may not  have the right experience to manage the use of debt, such as borrowing from a margin account, when investing. Without the aid of an experienced advisor, avoid using financial instruments such as margin accounts.

Second, for the average Joe, slow and steady will win the race. We all have goals and dreams and it would be wonderful to achieve them today. However, our dreams can become nightmares if we try to run to them too quickly. Realize that if you follow tried and true investing techniques, you will arrive at your goals and have had peace of mind along the way.

Third, your mama was right – don’t spend money you don’t have. This is the foundation for any solid financial house. I read an article several months ago that referred to credit card arbitrage, which is borrowing money from a credit card with a very low promotional rate and then investing the borrowed money. The idea is that you’ll pay off the credit card before the interest charges hit and you’ll have made more money from investing the money than any fees associated with borrowing the money (e.g. cash advance charge).

The problem is that you are building a house of cards. What if you can’t liquidate the investment in time to pay off the credit card? Even though the nice marketing pitch says you pay no interest, it is actually accruing. So if you don’t pay off the credit card within the promotional period, then wham! You’ll be hit with all of the interest charges.

Fourth, we become too emotionally involved. For many people, investment decisions are based on emotions. We see the market begin to fall or rise and we sell or buy accordingly. So if we know that getting out of a bad investment now means we are left owing the debt, then we may choose to not sell hoping that the investment will come back. We may get lucky and the investment rebounds, or the investment will decrease in value even further leaving us with even more debt to repay.

So why would anyone use debt or leverage when investing?

Leverage acts as an accelerant. Just like adding gasoline to a fire, leverage can allow you to gain larger returns than you would otherwise be able to obtain.

Also, leverage increases the percentage return on an investment. Ever heard of OPM? Other People’s Money. Here’s a specific example.

• Scenario 1: I invest $100,000 and gain a return of $10,000. My percentage return is 10%.
• Scenario 2: I invest $10,000 of my own money and $90,000 of borrowed money (or OPM). If the return is still $10,000, then my percentage return is %100. This of course assumes no fees or interest associated with borrowing the $90,000, which is never the case.

Scenario 2 sounds nice because my return is %100 and I only had to tie up $10,000 of my own money. Though, at the end of the day, I’m $10,000 richer in either scenario. And I’m not financially committed to someone else in Scenario 1 if the investment begins to sour.

What are your experiences with using debt to invest? Good or bad. Also, sign-up for our RSS Feed for timely updates on other financial topics.

I decided to take Dave Ramsey’s Financial Peace University. My work was offering to pay for the course and I’m always anxious to learn something new about financial planning. As part of the class materials, I received Dave’s book Financial Peace Revisited. Having now read the book, I’d like to offer my observations.

Pros

First, if you are unfamiliar with many financial planning techniques or why you should be budgeting, saving, or getting out of debt in the first place, then this is an excellent guide. The range of topics covered are not exhaustive but an excellent start to cleaning your financial house. If you are already budgeting and investing, then consider this book a re-motivator or a little “pick me up.” I was able to find several areas where my wife and I are improving our financial situation as a result of this book.

Second, I’m a Christian and I appreciated the religious tone that Dave uses. I personally believe that we will be held accountable for our money management and Dave uses scripture frequently to illustrate his points. If you are not a Christian, don’t be scared off. He keeps the religious comments to a minimum.

Cons

First, the book was originally written in the 1990s and updated and released again in 2003. The concepts and principles that Dave teaches are certainly timeless. However, I believe that some of the techniques that he teaches are outdated. For example, all of the budgeting is completed by hand on paper. Fortunately, his book comes with convenient forms to use. However, this is 2009 and budgeting software packages are readily available and inexpensive. I can understand that many people didn’t have computers in the 1990s and that budget software wasn’t that advanced. But Quicken and Mint.com are both excellent options. Or heck, you can even use Microsoft Excel pretty effectively if you don’t mind updating your spreadsheet manually. Either way, some of the information and approaches could and should be updated.

Also, there are two chapters that in conjunction raise an issue that I have with the book. The chapters titled “Only Buy Big, Big Bargains” and “Career Choice” are good chapters touching on important points. However, they both suggest that you need to find a career where you can make lots of money and then go buy lots of nice, potentially expensive stuff with cash. I don’t think there is anything wrong with nice stuff, especially if you are paying cash and not going into debt for it. But Dave suggests that that path is the right and only one. I disagree and here is why. My wife and I are considering several graduate school options. One route would land me in a lower paying job that provides much higher satisfaction while the other option we are considering offers much more money but may be less satisfying. According to Dave, picking the satisfying career (so the first option) will generate more money. In my case, that’s just not true. Further, just because I can afford a $100k car, doesn’t mean I should buy one despite how good of a deal I get on it. I think Dave still has a focus on a lot of material things. Fortunately, he teaches you how to pay cash for those things.

Last, Dave gives a basic overview of the mechanics and fees of mutual funds. I was surprised that he didn’t cover passively managed index funds or how to construct a simple, diversified portfolio (which he could write a whole book on). Also, I personally believe that the average investor never needs to purchase a fund that has a load (fee to purchase it). Dave suggests that there are certain load bearing funds worth owning but never describes the criteria for knowing when a load bearing fund is worth owning. Again, I believe that unless you have a reasonable understanding of the market, mutual funds, and how to construct a strong portfolio, then stick with no load funds. In fact, stick to index funds from companies like Vanguard or Fidelity.

Summary

All and all, the book is a good, an easy read, and offers practical suggestions. Even though it appears that I had more negative than positive to say, my negative points are minor issues. On a scale of 1 to 5, I’d give it a solid 3.5. If you’d like to see additional reviews and comments or to purchase the book, check it out on Amazon.com.

I decided to write this post in the form of a letter to Dave Ramsey:

Hey Dave,

My company decided to offer your Financial Peace University course to any employees interested. Always hoping to learn more and better my financial situation, I signed up. In your latest lesson, you spoke about dumping debt and specifically advised people to sell stuff.

Well Dave, I’ve started to sell my stuff. For example, my wife and I aren’t big TV watchers. In fact, the only TV show we regularly watch is Fox’s Dollhouse and we almost always watch it on Hulu.com. So we sold the TV…the TV Dave. I’m not sure what all the ramifications are yet of that decision, but I’m hoping that my family will be better off with less digital garbage coming in. One thing you didn’t talk about though was getting a good deal for all the stuff I’m out selling. In my haste and desire to cleanse my home and earn some extra cash, I completely undersold the TV. A nice, young college student and his roommates are now enjoying my TV at a hefty discount. I loved getting the subsequent five phone calls that day asking about the TV. Each person willing to pay more than what I sold it for. So you might want to tell your viewers/readers that they should get excited about selling stuff, but don’t get stupid about it. Do you know anyone that wants a nice, solid wood TV stand from IKEA?

While we are on the subject Dave, I’m not sure where the selling stops. For example, I preempted my wife this week by telling her that “the golf clubs stay!” So what if I’ve only used them once in the last two years. Doesn’t that just make me an average golfer? Actually, I would golf more if my wife weren’t so bad at it that she refuses to go. The one time I used them last year was when she went to her brother’s wedding out East. I went golfing twice that week – it was a good week. So my point is, you told me to sell, sell, sell. But do you offer any guidelines? I would sell anything that I owe money on to pay it off, but that’s only my car and my house – and the house stays.

So Dave, that leaves my car. I’ve only had my car for six months, and I love my car. I drive a 2008 Hyundai Santa Fe. I haven’t driven an SUV for years and I’m not sure that I’m ready to make the mini-van commitment. My kids don’t play soccer yet, so what does driving a mini-van say about me? Of course, I sure wouldn’t mind a reduced car payment. It’s not that I can’t afford it, but I sure could do other things with that money. So I did a little research online and I’m pretty sure I can get more than what I owe on my car. But the problem now is finding a cheaper car that is big enough for my family and double stroller. I found a 2005 Town & Country for sale but it has 98k miles on it. Come on Dave, 98000 miles! And that’s the best deal I’ve found so far in a price range that makes selling my car and getting another one worth it. So do you have any advice to go along with your simplified statement of “sell the car”?

What I’m saying Dave is that we are trying. We are filling Craigslist with more stuff for people to buy (which doesn’t that encourage this problem for other people?). However, I would appreciate it if you could answer three questions: (1) Am I being a good guy and helping someone out if I undersell my stuff, or should I get every penny for it that I can since I’m using it to pay off my debt? (2) Do you have any guidelines on what I should and should not sell? At what point have I sold my life? Notice I didn’t say “lifestyle.” (3) You said in your video not to get a clunker, but you were adamant about selling the car. So where’s the happy medium? I can find a cheap commuter car no problem, but a quality, cheap family vehicle is harder to find.

Dave, I like you. And I like your course, even if I don’t agree with everything. I also think we could all do with a little less stuff in our lives and homes and on our credit accounts. I’ll let you know how it all turns out once the selling spree ends.

Regards,

Adam “I’m keeping the clubs” Williams

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If you’ve taken Dave’s courses or have read his books, what are your experiences with selling stuff? Any good answers for my questions? Let us know in the comments.

When Grandpa Michael started his business several decades ago, he borrowed money from Uncle George. Business went well, but the relationship soured. In fact, the relationship ended after years of fighting over money and just how much Uncle George should earn. I learned from observing this experience that family and business don’t always mix. As a result, I’ve often asked myself, “Self, should family ever be involved in my finances?” My general reaction is to say no. However, there is a bigger picture to consider. In certain situations, my answer changes to, “Well, yes.”

In the last few years, the Internet has seen the rise of social lending. For those of you unfamiliar with social lending, it’s when you receive a loan from someone other than a bank. So every time you ask your roommate to lend you $20 so you can go to that concert, you just participated in social lending. Sites such as LendingClub.com and PertuityDirect.com have formalized the process and allow nearly anyone to participate. Another big hitter in this market is VirginMoney.com. Sir Richard started his empire through a loan from his aunt. He now wants to help other individuals secure a loan from family or friends in order to start a business, pay off some debt, go to school, or even pay for their home.

So why use social lending, especially if the money comes from family, instead of obtaining a traditional loan from a brick and mortar bank?

1. Maybe you don’t credit qualify. We have all made mistakes and that might reflect on your credit report. Social lending provides an opportunity that might not otherwise exist.
2. You may find a better rate. Certain social lending sites, such as LendingClub, set the interest rate on each loan based on the credit history of each loan applicant. However, VirginMoney allows you to negotiate the rate yourself if you know the person(s) funding the loan. So if a bank offers you 10% on a personal loan, Grandpa Michael might agree to 8% (he knows you’re good for it).
3. Family wealth, or money passed on through the generations in your family, is difficult to maintain when you pay so much of it to financial institutions. Most of us want to leave assets or money to our children (whether that be funds to be used specifically for college tuition or a first home purchase or just good old hard cash). Either way, we cannot pass on what we have given to banks. By borrowing from family, you keep it in the family and encourage the growth of family wealth.

But what about mixing family and finances? Sure, it sounds like a good idea to keep money in the family, but what if you risk repeating what happened with Uncle George? This part is tricky. How you answer that question for yourself depends a lot on your relationship with family members. Though, I do have a few simple suggestions. First, keep the term of the loan short (2-4 years) if you believe problems may arise. Grandpa Michael and Uncle George were business partners for 30 years. Second, if you use a social lending site, then your payments are set, scheduled, and can be automated. Meaning, Dad doesn’t have to wonder when the payment is coming. And last, do not borrow money without a legitimate reason. This may seem obvious but consider the current economic condition and how we arrived here. There is a difference between needing a new car because you have outgrown the old one and needing a 2010 Escalade. If you overextend yourself with family, they may or may not be more forgiving than a bank.

In short, borrowing from family via a formalized process helps you receive the financing you need and has the added benefit of growing family wealth. Though as with any loan, ask yourself this question first, “Do you really need the money and can you afford the payments without a high risk of overextending yourself?”

So have you or would you borrow a substantial sum of money from family? Leave your comments below.

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(This post was featured in the Carnival of Personal Finance – History of College Footbal Edition)