Pete the Planner’s Holiday Savings League is a program that starts every September. The mission of the league: to teach the members how to fund holiday spending using only cash.
This year, Pete the Planner’s Holiday Savings League had more participants than ever before. Together, the league members committed to paying for nearly $300,000 in holiday spending…using only cash. That means that January has been relatively easy for these participants. No credit cared bills. No regrets. Best of all, PRIZES!!!
Here are the randomly selected winners. Thanks to our sponsors. And we’ll see you back here next September.
$25 Lowes Home Improvement Gift Card – Carrie Miles
$25 Lowes Home Improvement Gift Card – Angie Acker
$50 Panera Gift Card – Shane Copley
$50 Dick’s Sporting Goods Gift Card – Julie O’Neal
$50 Scotty’s Brewhouse Gift Card – Kari Johll
$50 Scotty’s Brewhouse Gift Card – Courtney Garrison
$50 Scotty’s Brewhouse Gift Card – Nadine Meek
$50 Scotty’s Brewhouse Gift Card – Steve Arnold
$50 Scotty’s Brewhouse Gift Card – Emily Kolarich
$50 Classic Cleaners Gift Card – Janis Gilbreath
iPod shuffle – Sharetha Marshall
iPod shuffle – Tiana Blades
iPod nano – Mary Fox
If you won, please shout about it on Twitter and Facebook!!!!!
Congrats to all the winners!!! You will be getting an email early next week with further instructions!!
I love breakfast sandwiches. They are delicious. There is a place near my house called Big Dave’s Deli and Meats that has the worlds greatest breakfast sandwich. I’m not exaggerating. It will change your view on breakfast sandwiches. Predictably, the sandwich is called Big Dave’s Breakfast Sandwich. Here’s the problem: I’m pretty sure that if I were to eat one more than once per month, my heart would stop beating. Let’s just say that Jared from Subway and Apollo Anton Ohno won’t be discussing this sandwich on TV. Therefore, I need to indulge with caution. There are consequences if I don’t masticate responsibly.
The same can be said for your financial life. Sometimes it’s okay to splurge. Sometimes it’s okay to buy yourself something somewhat ridiculous. But setting ground rules for the splurge will prevent the splurge from turning into a disaster.
Don’t splurge in order to make yourself feel better about a bad financial situation- I eat ’cause I’m sad, and I’m sad because I eat. Splurging in the midst of financial struggles is a bad idea. Because once the high wears off from the splurge, reality will be all up in your grill. A good way to splurge when you are broke, is to splurge with another resource: time. Take the day to yourself. Go to a park and walk around. Go walk around the mall (don’t splurge). Just collect your thoughts, and enjoy the silence. (It’s quite obvious at this point that I have a toddler, isn’t it?)
Plan your splurges- Yes, I know that I’m taking a bit of the fun out of it. That’s just what I do, dog. Splurge once per quarter (every three months). And better yet, plan your splurges by reducing spending in other categories heading up to the big splurge.
Don’t be a moron- Yep, that’s the type of hard-hitting advice you can only get at PeteThePlanner.com. Splurging on a car is a bad idea. Splurging on a timeshare is a bad idea. Splurge on dinner. Splurge on a sweater. Splurge on flowers for your wife and/or girlfriend (just don’t mix up the cards).
Life isn’t all about restriction. Your ability to splurge responsibly will serve you well. Yes, planning your splurge is the right thing to do. Don’t make this the worst advice that I have ever giving you. Splurge responsibly.
Jared, you got a little something on your lip. Just sayin’.
My sister was a high school senior when I was a freshmen. Prior to one hour into the first day of school, I thought this was awesome. She would drive me to school. She would help me make friends (via her friends), and she would make sure that no one messed with me. Boy, was I mistaken. The experience was nothing like I had imagined. The highlight of my first 60 minutes of high school? Her friend, Jon, helping me find my next class. “Go to the end of that hall, out the door, and take a left into the corridor.” Great advice, Jon. I went out an outside door, the door shut behind me, and I had to walk to the front doors of the school. School security almost didn’t let me back in, and I was 10 minutes tardy to my second high school class.
Whereas this mistake was comical and most likely unavoidable, common errors of new entrepreneurs are never comical and always avoidable. Don’t be a noob. Learn from the mistakes of so many part-time entrepreneurs.
Oh, wait. We should probably identify the group of people that I’m talking about and to. I’m talking about that awesome mom with the awesome camera who knows her way around Photoshop. I’m talking about that brainy computer guy that can navigate all things tech. I’m talking about that talented designer who can breathe life into a dying project. And I’m talking about the hard working account manager who doubles as a club promoter on the weekends. Yes, everyone who earns money outside the realm of normal employment with the hope of that income turning into normal employment. That’s who I’m talking to.
Avoid the following mistakes and your chances of turning your part-time gig into your full-time gig will increase exponentially.
Bad Banking- My biggest entrepreneur pet-peeve on the planet is the commingling of personal banking and business banking. Alright, I’m puttin the smack down. If you don’t have a business account, then you don’t have a business. Go to a credit union or small bank, and get a business checking account. Yes, this requires you registering as a business in your state. Yes, this SLIGHTLY complicates things. But it’s a business, dammit! Treat it like one. Get a freaking bank account. Plus, you get the added bonus of naming your business. Don’t name it something lame like I named my first business (Advanced Planning Solutions).
Wrong mix of free work- While you are honing your skills, you will probably agree to work for free for a friend or family member. That’s fine. Just don’t do it too much. Don’t get taken advantage of. Do a couple of projects for free in order to have examples of your work, and then move on. Charge your friends. Charge your family. My uncle is my dentist. He charges me. One of my good friends is my doctor. He charges me. My best friend on the planet is my lawyer. He charges me.
No business budget- How much does it cost to run your part-time business? What’s that? You don’t know? Come on, man. You HAVE TO know what it costs to be in business. I know exactly how much it costs to run my business. This is because I have a business budget. How will you know if you need a new piece of equipment, if you don’t have a budget? You won’t. So you will either buy something you can’t afford, or you will not buy something that will help your business grow. Create a budget.
Treating your business like a hobby- Are you treating your business like a hobby because you don’t want to stop enjoying it? Big mistake. The quickest way for the fun to run away from your business is to treat it like a hobby. I LOVE my business. It is perpetually fun. Your side-business, or full time business for that matter, is most likely something you are passionate about. That means that it’s easier to have fun with it. Have fun. Just don’t treat it like a hobby. Don’t have a stupid email address. Don’t have crappy business cards. And have a website. It’s a business, not a hobby.
Calling your revenue, income- When your business earns money, that money is called revenue, not income. It’s a very small difference, but when you call the money, income, then you tend to forget about things like taxes and expenses. In addition, when you call the money, income, you tend to just deposit the whole damn check, and spend it freely. No real business would do that. The money that your business earns is called revenue. Repeat after me: revenue.
I love owning a business (several actually), and I hope that you will enjoy owning your own business some day too. If you follow these 5 tips, then you will avoid many of the pitfalls that so many part-time entrepreneurs face. Want to read a good book on part-time entrepreneurship? Check out my friend Erin Albert’s book Plan C: The Full-Time Employee and The Part-Time Entrepreneur. Not only is it a great book, but Erin embodies this philosophy. She is an amazing person.
Have a mistake that you would like to share. Leave a comment below. Thanks!!!
You must progress. But when it comes to money, progression is often mistaken for blind accumulation. Accumulation of things, money, and experiences are often the aim. While I choose not to argue today for the value of accumulating money, accumulation can’t be your financial guide. It can’t be as simple as “you are progressing if you are accumulating money, and you’re not progressing if you aren’t accumulating money.” There’s much more to it. There are stages, four stages.
Your aim is to complete the tasks and markers within one classification, and then move on to the next. This will allow you to focus on the right things. This will allow you to progress consistently. And not to get all dramatic up in here, but progressing through these four stages will change your financial life.
During this first stage of your financial life, you are simply trying to survive. But how do you determine when you are done with this stage? As soon as you can check off the following tasks, then you will have made your way through this essential stage:
Credit card debt free
One month worth of household expenses saved
Term life insurance purchased for ten times your income
Household budget maintained on a regular basis
No matter what the circumstances are, if you haven’t completed the tasks listed above, then you are still struggling financially. You either spend too much money, don’t make enough, or don’t have the financial acumen to understand what to do. It doesn’t matter what stage you think you are in, if you fail to have any of the above things accomplished, then you are fighting for your financial survival. End of story. Complete the tasks, so that you may move on with your life.
Drivin’
While I do believe that if you aren’t progressing forward then you are actually regressing backward, it is possible to be in a good financial place without being in a great financial place. Which brings us to drivin’. You are driving forward to your financial goals. There’s still a bit of a risk that you might fall back into survivin’, but making your way through drivin’ into arrivin’ can permanently solidify your financial success. Check off these accomplishments, and you can reserve your seat in the arrivin’ category.
Three months worth of household expenses saved
Student loan debt free
Will or trust documentation completed
Retirement account contributions being made “up to the match”
Don’t get in a hurry to exit this stage. This stage is all about collecting yourself. You are out of financial danger, and you are forming a plan to put financial trouble behind you forever. Rome wasn’t built in a day, and neither were financial successes. Take your time, form a plan, and make your way through the stages systematically.
Arrivin’
Definitions of financial success will always vary, but when you are in the arrivin’ classification, then you are more or less a financial success. You can’t make your way into this classification by simply being smart or having a high income. You must be intentional.
Maximum retirement account contributions
Saving at least 20% of your take-home pay (in addition to retirement fund contributions)
No car payment
In my opinion, you have arrived when you have taken care of business. I don’t care about the type of car you have, the amount of money you make, or how big your TV is. I only care about you doing the most good with whatever you are working with. By this measure, a household income of $50,000 has the same chance of success as a $200,000 household. Denying this, is a problem. Someone else’s income has nothing to do with you. Don’t worry about the money you aren’t making. Do amazing things with the money that you do earn.
Thrivin’
There is something beyond financial success. When you’ve made all the right financial moves, then there will come a time when giving your money away makes the most sense. If you don’t get here, you don’t get here. You can swim around in arrivin’ your entire adult life with a great deal of wealth without ever getting to thrivin’. Thrivin’ is wealth combined with the right mindset. Disagree that you should give away money? Cool. That’s fine with me. Then you are in the arrivin’ stage permanently. I don’t believe that you can truly understand money until you can see (and then act on) the good it can do for others in need. Do these things if you want to complete the financial stages.
Charitable giving plan in place
Home paid-off
Retirement plan in place, fully funded, and ready to payout when necessary
No need for earned income. Passive income pays the bills.
Will you ever get to thrivin’? I hope so. But very few people do. You may satisfy the markers within arrivin’, but satisfying all the markers of thrivin’ is rare. I hope you get there. Hell, I hope I get there. It’s not because I want to have so much money that I can afford to give it away. My desire to get there has more to do with not depending on the power of money to only serve myself.
You may be thinking “How long will it take to make it through the different stages?” Excellent question. It takes however long it takes. It may take you 10 years to get out of survivin’. But if you don’t set the goal to get out of it, then you will NEVER GET OUT OF IT. You may be in drivin’ for 20 years. But the more you focus on completing the markers, the sooner you will make it out. Life happens, and sometimes these happenings will affect your financial life negatively. That’s okay. Just stay calm, and carry on.
This post can serve as a guide for your sound financial decisions. Need help? Just ask. I’m here to serve you throughout 2012. The more questions you ask, the better advice you are going to get. You’ve got this. Do it.
Today, we will digress slightly from the world of money. Coming off yesterday’s lesson on satire, I felt that we should exit the financial world yet again today.
We discussed giving gifts last week. Today, I want to discuss receiving gifts. Gifts can be given for many reasons, but we rarely think about how the receiver feels about the gift. We hope they are happy, loved, surprised, or even impressed. And our gift giving is often driven be these desired results. But what if you could step back, remove all the traditional practices of gift giving, and just study the emotion? That’s what a sussy is all about.
The idea of The Sussy Project started with my friend Meggie Dials. She’s a young professional who has an awesome running blog on the side (SeeMeggieRun.com). She came to me with the idea for The Sussy Project. Give random strangers that are going through some sort of challenging life moment, a thoughtful gift valued at less than $20. The purpose is to see if random thoughtfulness could create enough of a smile to get momentum headed back in the right direction. I signed on it to help, and the rest is history.
For the last six months we have been receiving “nominations” from the friends of people that are dealing with some challenges. The friends contact us, we analyze the situation, and then try to think of the best way to spend $20 to make the recipient feel love. The project started out as fun, but has quickly become addictive. We talk about charity all the time on this here money forum. The Sussy Project isn’t charity. It’s investing in other people’s smiles. Are we trying to gift happiness? Nope. You can’t do that. That’s too big. Happiness can’t be bought. We are simply trying to provide a spark.
Monday of this past week we held Sussy Day. It was far and away the best manifestation of The Sussy Project. We filled up a Starbucks giftcard, told the barista to tell the customers that someone paid for their coffee and that they should have a nice day. We then sat off in a corner and watched. It was that simple. The results started out great, but quickly transformed into amazing. I urge you to read about the day over at The Sussy Project blog.
I’m very thankful that Meggie got me involved with The Sussy Project. It helps me understand human nature a little better, and it hopefully has sparked smiles for those in need of one.
Tampa Bay- For years, credit card companies have been finding new ways to expand their customer base. But their new idea, may take the cake. Fetal credit. St. Petersburg State Bank and Trust, based in St. Petersburg, Florida, is now testing Fetal Credit Cards. The idea is an old one, but the execution certainly is new.
Parents, upon learning of their pregnancy, can apply for a Fetal Credit Card. The credit limit is based on the parents’ income and education level. This is where things get interesting. The lower the income and eduction level, the higher the credit offered. This is what has critics up in arms.
“I can’t think of a worse idea. Well, maybe if you made a monkey live on top of a water tower, that would be a worse idea. Oh, and if the creators of Happy Days asked The Fonz to water ski over a shark while wearing a leather jacket. Other than those two things, this is the worst decision in the history of banking, if not humanity.” suggests personal finance expert Peter Dunn.
But parents have embraced this new tool as a way to teach their eventual children something about money.
“My parents didn’t teach me nothin’ about credit until I was 25. This really messed me up. Me and my wife have over $25,000 in credit card debt. We refuse to let this happen to little Hank,” extolls expecting father Hank Berea. “Gettin’ him credit early, real early, will teach him important stuff.”
And yes, you guessed it, parents may elect to have their ultrasound photos printed on the Fetal Card. Baby retailers are especially excited about the possibilities of selling goods directly to the end user. But the bank seems to be the proudest.
“The credit industry has long cared for the people it serves. It was only natural that we extend this love to fetuses. It makes all the sense in the world,” said Mark Plasinta, junior vice president of marketing for St. Petersburg State Bank and Trust. “It takes a village. It takes a village.”
Testing of the program has already begun in one market, and the results are mixed. Many cardholders have found themselves late on payments. As it stands now, the average payment is being received over 270 days late. This trend doesn’t have bank officials concerned. “We expected this coming in. We know what we are doing. Eventually these cardholders will head out and pay their balance. We’ve done the math,” notes vice president of collections Theresa Obgyn.
During my junior year of college (circa 1999), I decided that I should have a “Clooney.” Yes, a Caesar. Yes, a terrible terrible haircut…for anyone who doesn’t look like George Clooney. I thought it was pretty awesome. I kept telling myself it was awesome. Even my fiancee’ (now known as Mrs. Planner) thought it was bad. As did my friends. As did my parents. But I am strong willed. I just KNEW it was awesome. I just really wanted awesomeness to be the case. It was not. Just because you have a thoughtful desired outcome doesn’t mean that your perception is reality.
Take for instance, home improvement. The term itself is a sales pitch. Something that is improved must be worth more money, right? I don’t know. Ask new Coke. The operative term that we are dealing with today is value. There’s personal value and there’s resale value. The confusion between the two concepts goes a long way in explaining why people make so many home improvement mistakes. To extend my earlier example a bit: my bad haircut had high personal value, yet very low resale value.
This all became relevant when Mrs. Planner and I decided to finish our basement. Don’t worry, we didn’t take out a home equity line of credit (HELOC) or use emergency reserves. We saved from scratch. As we were discussing the design plans one thing became abundantly clear, BS justifications had become a factor. “Well, we could spend the extra money and do ____. It will only go to increase the value of our home.” I had to step away from the situation, and treat it like someone had asked me my opinion about their situation. Did more expense equal more increased value? There has to be a tipping point, right? There has to be a baseline of some sort. $10k into a basement remodel may increase the home’s resale value by $10k, but a $25k remodel may only increase the home’s resale value by $14k. Unfortunately, every situation is different.
We have to have a baseline. We must. Therefore, here is a list of home improvement projects and how much of the expense of the improvement may be recouped by an increase in resale value.
Basement or other unfinished space finishing- 50-90%. Thus a $30,000 basement improvement would potentially lead to an increased resale value of $15,000-$27,000.
Just about everyone has heard that swimming pool additions add absolutely no resale value, and in some cases can decrease property value based on the high cost of maintenance. But did you know that landscaping doesn’t add much value either? It may add curb appeal, but it won’t add a great deal of resale value. Both of these things add a great deal of personal value, and if you have the financial resources to fund these purchases, then have at it.
No matter what project you choose, using debt to fund these home improvement projects is not a great idea. Check that. It’s a great idea…according to your bank. But then again tanning is a good idea, according to tanning places. You’re house is NOT A PIGGY BANK. Although you can borrow against it for things that you deem to be important, you should not. Did I mention that my assertion is now supported by…the Great Recession of 2008?!?!?! The financial meltdown that we are now (arguably) exiting was fueled by homeowners that stripped equity out of their homes. Home improvement projects funded with HELOCs was a bank marketing gimmick gone awry. It was a bad idea then. It’s a bad idea now. And it will always be a bad idea. Fund home improvement projects with money that you have saved. And by saved I mean “in addition to your emergency fund money (3 months expenses).”
But what about sweat equity? Sweat equity is real. Basically, sweat equity is the concept of doing the work yourself, and not paying labor costs to finish a home improvement project. If you have the skills, then doing some of the work yourself could really improve your chances of increasing the value of your home in proportion to your expenses. Labor expenses often double the cost of home improvement projects. If you knew what the hell you were doing, a $10k (with labor) bathroom remodel may only cost you $5k (by doing the work yourself). This would almost guarantee that you recoup your costs via increased resale value. However we now have a J-Lo problem: a big but. The big but is: if you don’t have the skills to complete a home improvement project, your attempt to do so could result in big big big trouble. Not only could you ruin something, but you could break the law, get hurt, and anger your spouse. In other words, it’d be like if you went on Spring Break and everything that could go wrong, did go wrong.
The bottom line is pretty simple
Choose your projects wisely
Be realistic about how much your home’s resale value will actually increase
Don’t go into debt to remodel
Utilize sweat equity when applicable
******BTW, there’s no way that I’m posting a picture of that haircut. Not good.
I just got this note, and I had to share it. This is just AWESOME!!!
I just wanted to share with you my financial step in the right direction. I think it was in August or September that I read one of your articles about budgeting. My husband and I had a very good and frank discussion about our money and where we wanted to be financially. We sat on the couch one night and broke down all the numbers. The wonderfully amazing part is that there were no tears, no yelling, just honest statements about how we have behaved as the financial decision makers in our household. We both came into our marriage with credit card debt and were both paying crazy interest on all the cards. Whereas the debt wasn’t very large ($2500 for me and about $3,000 for him), it was consuming our budget. At that point I decided that I needed to make a change in my habits. I was tired of giving away my money to a company that obviously didn’t need it. Starting September 14, I took every single penny of “my money” (money that is deposited into my personal account each paycheck after our joint account is funded) and paid it toward my credit card bills. This meant that I no longer ate out for breakfast or lunch, no shopping excursions, no extras. Period. It was definitely the hardest thing I have done in a long time. I am ecstatically happy to tell you that I made my very last payment yesterday and as of now, I no longer have any credit card debt! The very best part of it, is that I had not told my husband what I was doing and that is my gift to him for Christmas. I wanted to tell you thank you for sharing your wisdom and helping people like me make moves in the right direction.
My goal is to now help my husband pay his debts off. Our reward to each other is paying cash for our next vacation in November.
Thanks again Pete and Merry Christmas!
Tonya
Merry Christmas to you, Tonya!!!!
Do you have a success story to share? Email me at success@petetheplanner.com
A brief respite from advice. Want to peek behind the curtain? The Indianapolis Star did a nice little piece about your favorite Ginger American. I said the words “teat” and “hell” in the article. My mom is going to be pissed.
Here’s the article. As always, thanks for you support and readership.
On Monday I had a chance to have lunch with a friend. While I was waiting for him to arrive, I noticed a group of ladies lunching at the table next to me. I, too, am dismayed by my use of ‘lunch’ as a verb. Just as I looked over towards the table, the 3rd member of their lunch party had arrived. She was carrying two small gift bags. She handed them to the ladies, and the ladies tore into them like 8 year olds on Christmas morning. They were candles. First off, as a guy, if you ever buy me a candle, I will promptly throw it at you and call you a derogatory name. But this isn’t about gender. This is about the comment that followed the exchange of gifts.
“Margaret, you’re always so generous!” said one of the ladies.
Bullshit.
Margaret may be thoughtful, but that doesn’t make her generous. Upper-middle class ladies giving each other gifts during a $50 lunch doesn’t make them generous. Generous is when you are giving something to someone that needs something. Giving modest, or even extravagant, gifts to your friends is often misconstrued as generous. I know that it seems like I’m splitting hairs here, but I’m not.
When gifts exchanged amongst family members and friends are misconstrued for generosity, something REALLY bad happens. People who really need others’ generosity, miss out. And it’s especially bad if the giver deems their give to be generous. I believe that most people innately want to help others. This “want” is satisfied when you feel that you have helped others. When you do something generous, or what you perceive to be generous, then this desire is satisfied. An extravagant gift to your friend for her baby shower isn’t generous. It’s thoughtful. The diamond earrings that you give to your wife, girlfriend, and/or mistress isn’t generous. It’s thoughtful. Yet, if we perceive these gifts to be generous, then everyone loses.
This is a HUGE problem around the holidays. Several American families are about to exercise their generosity…in the wrong way. The exchange of gifts amongst the fortunate steals the satisfying act that comes with truly being generous. This makes me very sad.
Yes, I realize that people are allowed to give gifts to each other. Yes, I realize that there is nothing wrong with that. But when you have sifted through the thousands of household budgets that I have, and when you have seen that “gifts” account for a major amount of spending, while “charity” does not, you would feel as jaded as I do. We MUST listen to our instincts. Our instincts are telling us that generosity is very important. But something different is telling us to share that generosity amongst your friends, who happen to be in the exact same socio-economic situation as you.
Gift away. Give. Give. Give. Just realize that you aren’t helping ANYONE by giving your loved one a gift. Harsh? Absolutely. But, I’m in the same boat as you. If I give my daughter a motorized child’s size Barbie Cadillac Escalade (which there is no way in hell I would ever do), then I’m not being generous.
When you truly are generous, you will feel the difference. You will want to repeat the process over and over and over.
