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Simple Savings
05/07/2010
IconWatch Your Receipts By Cheryl Gochnauer Since my ability to stay home hinges on my financial status, I guard my money when I shop. I'm not talking about watching out for muggers, though that's a wise idea, too. It simply means I watch cash register totals carefully and point out discrepancies when I see them. You would be amazed how many times the totals are wrong, whether you are at the grocery store, the gas pumps or your favorite discount center. Here are some common shopping pitfalls to watch for: Sale items ringing up at regular price. "New and improved" packaging that charges the same price for lessproduct. Clerks forgetting to subtract coupons. Items being rung up twice. "We just ran out" excuses, when you're shopping on the first day ofthe sale. Perishables being sold past their expiration date. Substitutions that don't match the quality of the advertisedproduct. Damaged product (dented cans, slit boxes, broken seals, etc.) soldat full price. It's also important for the customer to understand the requirements of any special deals being offered. For instance, I may have to buy more than one of the advertised item to get the discount. Perhaps I have to make a minimum purchase or submit a special coupon before the savings kick in. Or maybe the markdown is only valid on certain days. Another thing to keep in mind? These hard-saved dollars are too precious to be spent at stores that don't respond positively to customers' requests and concerns. Smart managers understand they attract a lot more Momma Bears with honey than vinegar. So watch those receipts, and let both price and service be your guides as you shop for your family. Comments? Email Cheryl@homebodies.org or visit the active messageboards at www.homebodies.org . Pernmission granted for use on DrLaura.com More >>

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05/07/2010
IconA Lot of Debt, Some Cash and a New Car The Dollar Stretcher by Gary Foreman gary@stretcher.com I need some advice. We are buying a new car and have a lot of credit card debt. Should we pay cash for the car and own it free and clear? Or pay down some of the debt and finance half of the car purchase? Carrie Carrie asks a good question. And, she has plenty of company. Studies show that the average family now has over $18,000 in debts (excluding their mortgage). At the same time millions of those families will be car shopping this year. What should Carrie do? Let's start by comparing the cost of the two loans. We're going to have to make some assumptions about Carrie's credit rating and the interest rates charged. To get more precise she can do the calculations using her actual rates. For illustration, we're going to assume that she has $10,000 available. If she uses the money to pay for the car she'll have $10,000 more in credit card debt. At a rate of 14%, it will cost $1,400 per year in interest payments. A car loan will be a lower cost loan. About 8% lower than the credit card rate. It will run about 6%. That means she'll pay $600 per year in interest payments. So using the money to pay off credit card debt will save her $800 per year. Why is that? The auto loan is a 'secured' loan. In other words, the car guarantees the loan. If Carrie doesn't make her car payment the lender can repossess the car. That's not true with a credit card. They can't repossess yesterday's pizza. There's another advantage to using the money to pay down credit card debt. It could improve Carrie's credit score. The amount of money that you owe makes up 30% of your credit score. The only thing more important (35%) is how good you are about paying your bills on time. And, it's not just how much Carrie owes. How close she is to the account maximum is considered, too. So, by paying down the accounts that are the closest to being maxed out, she'll not only be spending less each month on interest, but she could lower the rate that she'll pay on the auto loan. While she's thinking of her credit score, Carrie should also check for errors in her report. Studies have shown that about one in four have an error large enough to affect the rate you pay to borrow money. When she's car shopping Carrie shouldn't let every dealer access her credit file. Too many queries over a short period of time will actually reduce her credit score. In fact, if Carrie is going to make car payments, she'd be wise to line up her financing before she goes car shopping. Her bank or credit union is likely to give her a better rate than a dealer. It's hard to be sure whether Carrie really means to buy a 'new' car or simply a 'newer' car. Hopefully she'll consider the newer car. The reason is simple. A new car loses it's value much quicker than a used car does. For instance, according to KelleyBlueBook.com , a new Ford Taurus will lose approximately 50% of it's value in the first three years. Depending on options, that's roughly $10,000. But, that same Taurus will lose a little less than $4,000 from years four through six. Sure Carrie would be driving a little older car. But she'll save $2,000 per year for the sacrifice. Another option would be for Carrie to consider delaying the car purchase for a year. Let's look at how much cash that could mean to her. By applying $10,000 to reducing credit card debt she'll save $1,400 in interest during the year assuming a rate of 14%. Sure she might need to put a little of that money into repairs. But, she'll still be richer when she does go car shopping a year from now. As a general rule, if you have 'a lot' of credit card debt the best thing you can do is to pay it off first. It's usually the most expensive debt. And carrying large card balances can come back to haunt you in a variety of ways. Especially after an auto purchase has taken most of your cash reserves. Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website: www.TheDollarStretcher.com You'll find thousands of articles to help you stretch your day and your dollar. Permission granted for use on DrLaura.com. More >>

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05/07/2010
IconPayday Loans The Dollar Stretcher by Gary Foreman gary@stretcher.com www.TheDollarStretcher.com I'm in need of some money and cannot get a loan. I have several payday loans, that I cannot get paid off. I've be trying for several years and I only have enough money to re-new. If I cash out my 401k to pay these loans off I will have plenty of money each month to put back in my 401k plan. Will I still face the extra 20% penalty at tax time? I've learned my lesson and I will never get mixed up with paydays again. I think they should be outlawed. Michelle They're also known as cash advance loans, check advance loans, post dated check loans or deferred deposit check loans. The Federal Trade Commission has called them "costly cash". There are over 10,000 payday loan 'stores' operating and it's estimated that they collect over $2 billion a year in fees and interest. Typically the borrower, in this case Michelle, would write a check for the amount of the loan that she wants plus a fee. The size of the fee is based on how much money she's borrowing. The lender agrees to hold the check for one or two weeks. Typically until Michelle's next payday. At that time Michelle can come in with cash to 'redeem' the check, she can let the lender deposit the check or she can 'roll-over' the loan until her next paycheck. If Michelle chooses to roll the loan, she'll incur another fee. Payday lenders have the upper hand in collecting. If Michelle can't redeem the loan or refuses to roll it, she'll be informed that they'll deposit her bad check. If it bounces she'll face criminal charges of intentionally writing bad checks. Not to mention bounced check charges from her bank. Many payday lenders don't want Michelle to know how much she's paying. A Public Interest Research Groups survey found that only 37% of the lenders quoted an accurate Annual Percentage Rate even though the federal Truth In Lending Act requires it. Most loans are governed by 'usury' laws. Those laws limit the amount of interest that can be charged on a loan. The PIRG survey of payday lenders found interest rates that ranged from 390% to 871%. The average APR was 474%! The same study showed that in one state 77% of the loans were roll-overs. Presumably Michelle wouldn't be taking a payday loan if she could have gotten the money somewhere else. She would have paid less interest by using a credit card cash advance or borrowing from friends or family. A cash advance on a credit card would cost Michelle between 35% and 50%. She's considering taking money from her 401k plan. Any withdrawal will be subject to a 10% penalty and will be added to her taxable income for the year. So she'll probably lose 20% of the withdrawal to the federal government. But that's better than paying 400% APR. Michelle may have a better choice. Borrowing from her 401k plan would provide the money she needs now and allow her to pay it back through payroll deduction. She should speak with the human resources department to find out the details about a 401k loan. The biggest advantage is that money borrowed is not subject to tax penalties or added to her income for tax purposes unless she doesn't repay it. Other options that don't involve her 401k should also be considered. If she's eligible for overdraft protection at her bank she may want to sign up. The bank fees would be less expensive. Payday loan companies have sprung up primarily to serve clients who don't qualify for a credit card. If Michelle is among this group she should check her credit report for errors. Roughly one in four reports contain a significant error. A corrected report might qualify her for a credit card. And cash advance privileges. If Michelle has other monthly payments, she might be able to have one or more of them either reduced or delayed. A call to the creditor might be all it takes. Another alternative, if she has other debts, would be to see if credit counseling or debt consolidation would work for her. Either could reduce her regular payments and free up some money to pay off the payday loan. Finally, Michelle should cut any expenses that aren't absolutely necessary. This is a time for drastic measures. Michelle is in a tough spot. She needs to get these loans paid off before they force her into bankruptcy. Hopefully one of these tools will help her dig out of debt. Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website www.TheDollarStretcher.com and newsletters. The site contains over 5,000 articles to help stretch you day and your dollar. Permission granted for use on DrLaura.com. More >>

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05/07/2010
IconYoung Couple Finances The Dollar Stretcher by Gary Foreman www.TheDollarStretcher.com Copyright 2003 My husband and I married young. I am 21 and he is 23. In a couple of years we want to own a home and have children. What are some things we can do now? My husband is working full-time and going to school full-time. I work full-time. We do have about $2,000 in credit card debt and are working on getting out of it. We live in an apartment and we are starting to learn about what it takes to own a home. What should we know about CDs, the stock market and mutual funds? Should we be looking at those options as a young couple? Diane Diane and her husband appear to be off to a great start. They've set some goals and begun to work towards reaching them. Plus, it would appear that they're willing to make some sacrifices along the way. Hubby's college education is a great investment. The U.S. Statistical Abstract for 2002 indicates that the average household headed by a college graduate earns 93% more than one headed by a high school graduate. Right now that amounts to a difference of over $25,700 per year. And Diane is wise to pay off her credit card debt as soon as possible. If they never charged another cent and paid just the minimum each month, they'd still be making payments well into their 50's! Being debt free will give them a better credit score which will translate into a lower mortgage rate when they buy a home. Diane and her husband should make an attempt to live on just one salary. Or as close to it as possible. Clearly that will be easier once Hubby has graduated and begins to earn more money. Living on one income will allow them to save a sizeable down payment in a relatively short period of time. It will also put them in financial position to start a family. Whether both parents work or one stays home with the baby, they'll find that living on one income now is very similar financially to what it's like after a baby arrives. Many young families make the mistake of spending everything they make. That might seem like fun now, but they'll find that it's hard making a downward adjustment in lifestyle later. Remember that a house and baby will increase family expenses. And the baby could also decrease family income. Now that Diane and her husband are working and saving, the next question is how should they invest in anticipation of buying a home? CDs are a good tool for savings when you might need the money immediately. Or if you plan to need it in a couple of years. That sounds like the situation that Diane is in. If Hubby has the opportunity to contribute to a 401k plan they should make every effort to participate. Not only will their money grow faster since the earnings aren't taxed, but his employer may match part or all of his contribution. As an added benefit, they may be able to borrow money from the account to use for a down-payment on that first home they're planning. Check now to find out how the loan provisions work. Not all plans allow for loans. They should try for some diversification within the 401k plan. A mixture of guaranteed investments (like CD's) and more aggressive choices (stock mutual funds). Stocks will earn more over a longer period, but they can have a bad year or two with a negative return. Normally that would be unacceptable if you were saving for a down payment. But if Hubby's employer is matching at a 50% rate that should cushion any drop in a mutual fund. The next step is to prepare for a mortgage. The Federal Trade Commission advises checking your credit report before making any major purchase. That will allow Diane to correct any errors. About 1 in 4 people have an error in their report that's significant enough to increase their mortgage rate. How much could that error cost? A difference of one half percent will add $500 interest on a $100,000 mortgage each year. Credit reports are kept by Credit Reporting Agencies (CRA's). They collect information from lenders. The three major credit reporting agencies are: Equifax, PO Box 740241, Atlanta GA 30374-0241; 800-685-1111 Experian, PO Box 2002, Allen TX 75013; 888-experian Trans Union, PO Box 1000, Chester PA 19022; 800-916-8800 You can expect to pay approximately $10 per report. It's money well spent. Congratulations to Diane and her husband for laying a foundation today that will allow them to build a bright financial future. Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website www.TheDollarStretcher.com and email newsletters. You'll find thousands of articles to help stretch your day and your dollar! More >>

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05/07/2010
IconInvesting Small Amounts The Dollar Stretcher by Gary Foreman I am 55 years old and will begin receiving a small pension from one of my old jobs. The amount will be only $55 per month until I die. What would be the smartest thing to do with it? Pay down credit card debt, invest it, sock it away in the bank as a rainy day fund? I lost 85% of my portfolio when the stock market tanked and have very little left for retirement, so I'm afraid to get back into mutual funds. Does anything else look good these days? Erica Sioux Falls SD Erica has a good opportunity. While $55 a month isn't a huge amount of money, it can add up. For instance if Erica manages to save the money and earn just 2% it will be worth $7,300 when she's 65. Or if she manages to earn 10% it will be worth over $11,250 in ten years. So it's important to get a good return on the money and not let it disappear each month. She should consider two factors in making a decision. Her time frame and ability to take risks with the money. Erica's goal will determine her time frame. If she wants to save for retirement, she'll have a ten year horizon. However, if she wants the money ready for the next budget crunch, she'll need to think in terms of having the money readily available. If she takes a longer view she'll be able to choose a riskier investment without actually taking on more risk. Let me explain. A stock mutual fund is unpredictable in any single year. You wouldn't choose the mutual fund if you wanted to make sure that you could get all of your original investment out at any time you wanted. On the other hand, a money fund is very predictable. Your principal is always available. But suppose that Erica's horizon is ten years. The mutual fund becomes much more predictable. That's because ten years is long enough for good years to overcome any bad years. And the mutual fund will average a higher return than the money market fund over a ten year period. Erica's willingness to take risk is also a consideration. Some people can't handle a mutual fund loss. Even if past results suggested that it would only be temporary. As a rule no investment should cause you to lose sleep. If you are not comfortable with an investment you shouldn't make it. Now that we've set a framework, let's look at some of Erica's ideas. Using the money to pay off credit cards could be her best option. First, she has access to the money any time she wants. Paying down her balance will leave more credit available for new charges. The other advantage of paying off credit cards is knowing exactly how much she's earning. Erica will earn the interest rate of the loan that being paid off. So a credit card that charges you 14.5% will earn you exactly that. If she used the $55 each month to reduce debt she could eliminate a $14,900 balance over ten years. And that would eliminate over $200 of credit card minimum payments each month. Erica could invest the money in a variety of places. One problem is that it's hard to invest smaller amounts. Even if she saves up the money and invests it once a year, there's still only $660 to work with. She'd probably need to select a mutual fund. They're designed to handle small dollar investments. Erica may think of stock investments when mutual funds are mentioned. Given her stock experience she might be concerned. But not all mutual funds invest in stocks. Some invest in bonds, or a mixture of stocks and bonds. She also shouldn't confuse her recent stock experience with the performance of most mutual funds. A general purpose stock fund will not lose 85%. Certainly not before you have warning and time to get out. What 'looks good these days' usually isn't a good way to invest. Very few people are able to predict the future well enough to time markets. Most of us are better off taking a slow, steady and predictable path to wealth accumulation. As a general rule, it's usually advisable to pay off debts before investing. That's because the interest rates for borrowing money are usually higher than those paid for investing money. One exception to paying debt first is when you can invest in a 401k plan where your employer matches part or all of your contribution. That match significantly boosts the return. Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website www.TheDollarStretcher.com and ezines. You'll find hundreds of articles to help stretch your day and your dollar! Permission granted for use on DrLaura.com More >>

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05/07/2010
IconThe Annual Review The Dollar Stretcher.com by Gary Foreman When I worked in the corporate world the annual performance review was always important. Not only was it a way of telling how I was doing compared to what my employer expected, but it was also a good opportunity to identify areas where improvements could be made. Sometimes I agreed with the boss' comments. But, there were other times that I really thought that I could have done a better evaluation myself. The concept of an annual review can be helpful in your financial life, too. There are certain things that you should evaluate on a regular basis. And it's also a good idea to look at your own performance periodically. Most of us have some areas where we could do better if we're willing to make minor changes. So let's perform an annual review of our finances. In this case you'll be reviewing yourself. So if you don't like the score you get you'll know exactly where to go to complain! Have you reviewed your auto insurance within the last year? As your cars and family grows older your needs will change. And, you might find a better rate by shopping around. 3 points for checking for appropriate coverage and comparing rates. 1 point for checking either. 0 points for thinking that your brother-in-law the insurance agent is taking care of it! Have you reviewed your homeowner's insurance in the last two years? While not as likely to change as your auto policy, homeowner's coverage still needs to be reviewed periodically. 3 points if you reviewed it this year. 1 point if you reviewed it the year before. 0 points for thinking that you only need to look at your homeowner's policy when you buy a new home. How much money do you owe? An easy way to measure your economic well-being is to see if you owe more or less money than you did last year. 3 points for reducing your total debt by 10% or more. 2 points for reducing it by 5 to 10%. 1 point for reducing it by 1 to 5%. 0 points if it remained the same. Minus 1 point if the amount you owe went up. How is your debt structured? Generally borrowing to buy something that will hold it's value (like a house) isn't as bad as borrowing for something that will be gone long before the payments are (like a pizza). 3 points if you don't owe any money to anyone. 2 points if you only owe money on your home. 1 point if you owe on your house and car. 0 points if you owe on a credit card or personal loan. Minus 1 point if you owe money to everyone in your office. Did you add to your retirement savings last year? Each year brings you that much closer to retirement. And, the magic of compounding means that a dollar saved for retirement in your 20's is much more valuable than a dollar saved in your 50's. So every year counts. 3 points if you saved 4% of your salary or more last year. 2 points if you saved 2 to 4% of your salary. 1 point if you saved 1% of your salary. 0 points if you didn't add anything to your retirement accounts. Minus two points if you borrowed from your retirement plan last year. Have you reviewed your investments in the last year? You don't need to be a Wall Street wizard to know that today's investment climate changes quickly. That means that you need to look at your investment position regularly to see if adjustments are required. It's tempting to focus on whether you made money since your last review. Yes, that's something that you should check. But, the more important question is are you positioned for the future? Do you need to make any changes now? 3 points if you reviewed your investments at least once each quarter. 1 point if you reviewed them at least once during the year. 0 points if your account statements are stacked on your desk waiting for you to look at them. So how did you do? If you scored 15 or more you really have things under control. You're probably only reading this because it's after-hours and you can't call your broker or insurance agent at this time! A score of 10 to 14 points indicate that you're trying, but still need a little work to be a personal finance pro. If you scored between 5 and 9 points you probably need to pay more attention to your finances. And if you scored less than 5 points make sure that your rich uncle has included you in his will. You'll need the cash! Gary Foreman is a former financial planner who currently edits The Dollar Stretcher.com website and newsletters. You'll find thousands of time and money saving articles. Permission granted for use on DrLaura.com More >>

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05/07/2010
IconSaving Time and Money This Holiday Season By Ginita Wall, CPA, CFP www.wife.org The holiday season is fast upon us. With so many demands on our time (there are just so many cookies to eat, it's hard to know where to start!), and demands for our money, it's no wonder that we're all looking for a few extra ideas to make the holiday season run more smoothly. Give these a try: Go generic Keep a stock of generic gifts on hand. Picture frames, nonperishable gift baskets, or ornaments can help you provide for unexpected guests or holiday party invitations, so you won't have to rush out and buy presents at top dollar. Keep it in the family Join with other friends or family members to purchase big gifts, or give a family gift rather than individual gifts. A special meal for the whole family or a toy that both adults and children can enjoy may be just what Santa ordered. Draw names If you belong to a big family or have lots of friends, suggest drawing names so that each person only has to buy one gift. Or, only give gifts to the children in the family. Consider the trade-offs As you shop, remember that your money is limited. If you've been saving for a vacation, consider whether you'd like to dip into those funds for a more extravagant holiday season, or whether you'd rather cut back a little during the holidays so you can have fun the rest of the year as well. Bunch your lunch To make your holiday shopping more efficient, ask your boss if you can take a longer lunch one day each week during the holiday season, and cut your lunch short the other days to make up for it. That will let you go shopping during the day, so you can spend important time with your family at night. Let your fingers do the shopping Look for shopping bargains at your favorite Internet sites or at an auction site. There are some sites that do the price comparison for you, so you'll know you are getting the best deal possible. Shop early to allow extra time for shipping. Prepare for next year right after the holiday Buy all of your decorations, gift wrap, and cards for next year at this year's post-holiday sales. Shorten your gift list Is it really necessary to buy everyone on your list a present? Consider sending a thoughtful holiday card or e-mail, or even writing a family newsletter to update everyone about the past year. Next year, pay Santa first Set up a holiday savings plan. After paying off this year's bills, put aside $50 to $100 a month for next year's holiday presents. You'll emerge from next year's holiday rush debt-free. Decorate on the cheap Instead of splurging on holiday knickknacks, use your ingenuity to decorate inexpensively. You might buy wide colored velvet ribbon at a craft store and tie bows on everything from doorknobs and banisters to candlesticks. WORTH Magazine picked Ginita Wall as one of the top financial planners in the country several years in a row. The Women's Institute for Financial Education welcomes your comments, visit our website at www.wife.org . Permission granted for use on DrLaura.com. More >>

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05/07/2010
IconThe Last-Minute Cook By Elizabeth Yarnell www.GloriousOnePotMeals.com Ask almost anyone who is in charge of putting the daily dinner on the table what the most dreaded chore is and you'll likely hear a complaint about meal planning. Figuring out what to make for dinner day in and day out is something many of us loathe. We'd like something easy to make, a recipe that won't require hours in the kitchen and it would be great if the meal was good for our family as well. And, of course, if it doesn't taste great we might as well give up before we even start. Of course, typically preparing exciting weeknight meals takes forethought, special trips to the grocery for specific ingredients and a couple hours set aside for preparation and then the clean-up of multiple pots and pans after dinner. We all want to serve our families dinners that are as good for them as they are good tasting, but, let's face it, only a few fortunate ones have the time to find interesting and achievable recipes, shop for fresh ingredients and spend hours in the kitchen every day of the week. More likely, we find ourselves racing from the morning send-off through two careers, soccer practices, piano lessons, the dry cleaners and the other tasks that make up our busy days. And that's just before dinner. Afterward there's homework, household chores, and everything else that didn't get done during the daylight hours. Really, who can blame us for choosing to eat out, bringing food home or reaching for highly-processed and expensive frozen meals? Here's a solution for our time-crunched lives: quick, healthy and easy infused one-pot meals. With a few strategic purchases stocked in your freezer and pantry, you can bring out your inner intuitive chef and eliminate the drudgery of meal-planning. Almost the opposite of crock-pot cooking, which requires that you think about dinner in the morning or it won't be ready, infused one-pot meals can cater to your last-minute mentality, allowing you to get a nutritious dinner on the table in about an hour with only a few minutes of actual hands-on preparation and less than 50 minutes of unattended baking. Infused one-pot meals offer a healthy, balanced meal of protein, energy-providing carbohydrates, and a variety of vegetables to offer the range of vitamins, minerals and nutrients that we all need. Here's an easy, last-minute recipe to throw together out of your freezer and pantry for a nutritious and delicious meal that doesn't require any forethought. So, even if you're a last-minute mom or dad, you can still serve up a meal to be proud of at a moment's notice. Santa Fe Chicken Servings: 4 Ingredients 2 15 oz. cans black beans, drained rinsed 2 green onions 4 pieces frozen boneless chicken 2 8 oz. cans green chiles or 8-12 Tbsp. prepared salsa 1 bell pepper, cut into 1" triangles 2 15 oz. cans corn kernels, drained 2 14 oz. cans tomatoes, diced, drained 2 6 oz. cans black California olives, drained and sliced Instructions Preheat oven to 450 degrees F. Spray inside of 3 1/2 or 4-quart cast iron Dutch oven and lid with canola oil. Open cans of beans, drain and rinse well. Pour in a layer across bottom of pot. Slice green onion into rings and arrange on bean layer. Rinse chicken and arrange on top of onions. If using chiles, blanket the chicken with them. If using salsa, spoon over the chicken, using as much or as little according to taste. Add bell peppers, corn, tomatoes and olives in layers. Cover and bake for 48 minutes or until the aroma wafts from the oven. Notes This is a great meal to make when you don't have any fresh vegetables in the house. Stock up on the canned or frozen ingredients and you'll be able to whip up this southwestern staple in a jiffy. Be sure to drain all cans well, refill with fresh water and drain again to remove extra preservatives and sodium. About the author: Elizabeth Yarnell is a Certified Nutritional Consultant and the author of Glorious One-Pot Meals: A new quick healthy approach to Dutch oven cooking , a guide to a guide to preparing quick, healthy and balanced one-pot meals. She is also a mother of two preschoolers. Visit Elizabeth online at www.GloriousOnePotMeals.com to subscribe to her free newsletter. The Glorious One-Pot Meal cooking method is unique and holds US patent 6,846,504. Permission granted for use on DrLaura.com. More >>

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05/07/2010
IconSpendaholic The Dollar Stretcher by Gary Foreman I am 22 years old and I live in NYC. I am in some serious debt, which I have turned over to a debt consolidation company. I make a decent amount of money, however, I can't seem to keep it for more than a few hours. I end up spending my entire paycheck within the first day I have it....seriously. I am trying to find a support group in NYC, but am having no luck. I know I have a problem and I can't continue to live like this. Donna My Dad used to call it 'letting money burn a hole in your pocket'. Call it what you will, but it's a serious problem for some people. If you regularly spend all the money you have, you'll always be broke. There are two main strategies that Donna can use. First, she can severely limit the amount of cash and credit that she has available for spending. Second, she can change the way that she relates to money. Let's begin with the tools that will limit how much money Donna has at any time. If her employer offers it, she should use direct deposit. If that's not available, she'll need to deposit her entire check as soon as she receives it. Donna should use payroll deductions to force savings. Otherwise, she's probably going to have trouble accumulating any. Deductions are also a good way to save for retirement. She might want to consider making regular monthly contributions to an IRA or mutual fund account. It's foolish for Donna to carry much cash. She'll just be tempted to spend it. Before she leaves the house in the morning Donna should list the items that she expects to buy that day. Include everything. Even snacks and the daily paper. The idea is to only carry the cash she'll need and get in the habit of only making purchases that are on the list. Donna has already seen what credit cards can do. They're meant to be convenient to use. And, that's the problem. It's easy to keep charging until she reaches her credit limit. Leave them at home unless they're needed for a planned purchase. Once Donna limits the amount of cash and credit that's available, it's time to change the way that she relates to money. She already recognizes that it's easier to reach your goal if other people are involved. Contacting a local social services agency could turn up a support group for spendaholics. Another source of support is an 'accountability partner'. It could be a friend, relative or mentor. Someone who can be trusted. Donna would regularly report to the partner on how well she was doing. Sometimes just knowing that we'll have to confess our failures is enough to keep us from stumbling. That partner can also be helpful when Donna does suffer a setback. And they will come. A compassionate partner can help dust us off and get us back on track. If you can't find someone to hold you accountable, create a system to hold yourself accountable. It could be as simple as keeping track of the days that you stuck with the morning spending list. Donna should also consider using a budget. It would put her on notice when she had already spent the money that she had allocated for entertainment, clothing or any other category. Avoid the places that are most likely to trigger spending. Just as the alcoholic can't hang around bars, the spendaholic shouldn't go window shopping. It's like dancing with the devil. You're bound to get singed. Use rewards and punishments to encourage good spending behavior. We all respond to appropriate rewards. Donna might find that she's never had the money for good seats at a Broadway show because the money is always gone. The idea is to pick something that had not been attainable under the old system and then reward yourself after an important goal has been met. It will get easier the longer you persist. It's hard to break old habits. Especially if they contain some behavior that could be addictive. Remember that tomorrow will be easier than today. But you have to get through today first. Donna has already taken the first two steps. She's recognized the problem and started to look for help in solving it. Hopefully she'll be successful in using some of the tools to take control of the situation and begin to build a new pattern of relating to money. Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website TheDollarStretcher.com and newsletters. You'll find hundreds of articles to help you stretch your day and your dollar! Permission granted for use on DrLaura.com. More >>

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05/07/2010
IconTo Boycott or Not to Boycott, that is the question The Dollar Stretcher by Gary Foreman gary@stretcher.com In light of the recent arrests of illegal workers hired with the full knowledge of Wal-Mart, some have called for us to boycott their stores. Will you share your thoughts on this? I understand that small time boycotts (a handful of people in each community) will never register with the powers of the world's largest retailer. I would like to do my part but where do I draw the line? I'm cost-conscious and my best grocery value is with consistent Wal-Mart shopping. However, if it's at the expense of someone's job am I being fair to pinch a few pennies? Additionally, Wal-Mart is the only store in my area that sells general merchandise. If I want a spool of thread or a pair of pajamas, I have to drive 15 miles one-way if I don't shop at Wal-Mart. There's a huge trickle-down effect. If our local Wal-Mart has declining sales, our county loses revenue and people lose jobs because our shopping will have to be done in the nearby city. Ellie in Virginia Ellie sure asks a big question. Let's begin by finding out a little about boycotts. According to BoycottCity.org the practice began in Ireland and targeted a ruthless landlord named Boycott. All of his tenants were so upset that they refused to have anything to do with Boycott and his family. The practice came to the U.S. in support of labor movements. And in the 1960's it gained popularity as a political tool. Over recent years you've seen more boycotts. That's because they appear to be working. However, you won't find many statistics because companies are reluctant to comment on boycotts and certainly don't want to admit that they work. The purpose of a boycott is to get an organization to change because of an organized refusal to continue to do business with the company. For example, Ellie feels that Wal-Mart shouldn't hire illegal aliens. Boycotters argue that an organized refusal to shop at Wal-Mart will cause them to stop the practice. Please note that I haven't studied what Wal-Mart's hiring policies are so I don't have a position on this particular boycott. But I do believe that in a free market system it's fair to vote with your money by financially supporting businesses that you admire. Or to withhold your business from companies you disapprove of. Now on to the question of whether Ellie should join this particular boycott. To decide, Ellie needs to consider how important the goal is to her, whether the boycott could help achieve that goal, whether her personal sacrifice is worthwhile compared to the goal and would an alternative strategy be better. Ellie's goal appears to be to protect the jobs of American workers, primarily in her hometown. Can a boycott help achieve that goal? Even though Wal-Mart may be the largest company in the world, yes, a boycott could be successful. But, as she points out, it would take a large number of boycotters to affect Wal-Mart's bottom line. So good leadership of the boycott is required. One position for Ellie to consider is only shopping at her local Wal-Mart if that store meets her standards. Each store's sales and profit figures are measured separately. So it might be easier to affect a change in her local store. And, if her real concern is local jobs, then a national boycott might not be necessary. Plus, it is possible that boycotting the local Wal-Mart could cause them to lay-off her neighbors. For every job saved, the boycotters could cost two or three. Now for the toughest question. Is the goal worthy of the sacrifice? If she abandons Wal-Mart that means driving further to buy household items. No big deal if she visits the city regularly. But it's a different situation if her car is troublesome and she rarely leaves home. Or the difference in costs. For Ellie paying a little extra may be no big deal. But for a family just barely to pay the rent, those pennies might mean missing a meal. Plus the poorer family probably spends less in Wal-Mart when they do shop. So the wealthier family will have a greater impact on Wal-Mart even if their sacrifice is less. Finally, Ellie should consider the alternatives. A visit to the local store manager could reveal that the store isn't hiring illegal aliens. Or she might want to ask if the local paper would do an investigative piece on Wal-Mart's hiring practices. Another option would be to continue to shop at Wal-Mart, but to set aside the money saved for a contribution to the local food bank. In most cases it's wise to exhaust other options before resorting to a boycott. Boycott issues aren't often easy. You can't mathematically calculate the 'right' answer. So the bottom line is usually a decision about what is important to you. And that's a question that only Ellie can answer. Gary Foreman is a former financial planner and purchasing manager who currently edits The Dollar Stretcher website thedollarstretcher.com and newsletters. You'll find thousands of time and money saving articles. Permission granted for use on DrLaura.com More >>

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