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This is an article by Marc Pearlman. Marc is a money management professional who has been in the finance industry over 20 years, and he is the author of The Positive Money Mindset and host of the radio show, Your Money Matters.

I watched as these two were duking it out — at the poker table, that is. Fortunately for me, I was out of the hand with my lousy cards safely in the muck pile. I watched with no attachment to the outcome, but I had a prediction of who would come out the victor in this poker showdown. This young kid, probably mid to late twenties with a black hat pulled half way down his head had been quiet most of my time at the table, was squaring off with a middle aged guy. If appearances mean anything, this middle age guy was somebody of means given the designer clothes he was sporting.

Anyway, this kid makes a modest bet and the middle aged guy is quick to match it. Not only does he match the bet, he raised him with a smirk as though daring this kid to come at him again. So, the kid comes back at him with a bigger bet, and again this guy matches him. When all was said and done, both guys had all their chips in the middle and our middle aged poker wannabe had absolutely nothing for a hand. He tried to save face and belted out, “I didn’t have anything, but I couldn’t sit there and watch you walk away with it.”

Poker chipsEgos can be expensive that way.

All too often people make financial decisions out of emotion, which can be an expensive trap for those who have their ego firmly married to their net worth. If we look around, we can see examples of this all across the spectrum of income classes.

Years ago, I worked with a doctor who shall we say did not suffer from a fragile ego. He was interested in putting money with an institutional money manager who had a large minimum investment requirement and a lousy recent track record. I had suggested a manager who demonstrated better performance numbers and who utilized a strategy with less risk. “What is the minimum investment?” the doctor inquired. The minimum was about half of the other managers requirement, I answered. The doctor quickly rebuffed the notion.

It came out in conversation that his peers had money invested with this manager who had the higher minimum. I understood that it was important for him to be part of what he believed to be a prestigious group of investors. Making money was not his motivation, satisfying his ego is what dictated his investment choice.

Another story comes to mind. I once had the opportunity to work with a professional commodities trader. I was hired to help him with his trading deficiencies. This guy had strong opinions on whatever subject was being discussed. He could not possibly fathom that his thought process could be flawed. I introduced him to the concept that being right to him was more important than making money. He scoffed at the idea. In the end, he learned his lesson in a painful way. This trader would hold onto losing positions until he was forced to sell. He vigorously defended his position that he was right only to watch his once several hundred thousand dollar trading account dwindle to less than $20,000.

Ultimately, the ego he was trying to protect was humbled.

Here is yet another example of how our egos can hurt us financially: about a decade ago I had a wonderful client who has since passed away. Great guy, but wow, what a terrible stock picker! Honestly, someone could have made a fortune by simply doing the opposite of what this guy did. He held fifteen stocks in his portfolio, ten of which I had selected for him.Out of the five he picked, every single one was a dog. When I say dog, I mean dog with fleas. They were all down 70 to 80% within a year. I am not suggesting that every selection I made was a homerun, but we were profitable on average with my ten selections.

He would call in on a regular basis to discuss the market. He never wanted to discuss his losing stock picks. Furthermore, I knew it was taboo to mention my winning stock picks. The only subject that was not off limits was the couple of picks I made that were not working out.

When he passed, he still held those losing positions. His refusal to acknowledge his mistakes cost him well over five figures in losses, not to mention the opportunity costs associated with redeploying the money elsewhere.

Big egos often mix with money with the same cohesiveness that oil and water mix. Having an inflated ego is not necessarily the issue, but when your financial decisions are borne from ego, you are in dangerous territory.

Strong and sound financial decisions require letting go of your ego. Often, we need to admit our analysis was wrong and we need to cut losses in order to preserve our hard earned capital. Sometimes the simple truth is that keeping up with the Joneses is going to bring financial ruin.

Many times, laying down your cards is the best thing you can do for your wallet.

Photo: Ross Elliott

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How to Love Cooking

This article was written by in Frugality. 44 comments.

This is a guest post by Forest from Frugal Zeitgeist. Forest writes about frugality, finance, minimalism and lifestyle. In this article, Forest shares his experiences in the kitchen. Cooking great meals is a great way to save money and stay healthy, but it’s a skill that I haven’t developed for myself. Passion can boost motivation, though, and this article might help me find that passion about preparing meals.

When Flexo wrote about alternative financial resolutions he mentioned the idea of cooking more often at home. Cooking at home is often described as a way to save money. It will do that if you replace your dining-out habit, but it does much more than just improve your finances. Cooking can quickly become an enjoyable hobby, and when you get into the groove you can even use it to impress your friends. The health aspects cannot be overlooked, either. Replacing processed foods and restaurant foods with home-cooked versions, where you know the ingredients, will affect you and your family’s diet in a positive way.

But you can’t just expect to fire up the stove and produce an award-winning dish. Learning to cook takes time and patience. You will fail, and you will find that at times cooking isn’t as economical as you originally thought it would be. Investing in a stock of spices and speciality ingredients can quickly blow a shopping budget!

In this post I want to share my journey into the wonderful world of cooking at home and then hopefully convince you to make it a regular activity and a beloved hobby.

How I found my passion in cooking

ToastI never learned to cook anything as a kid. My kitchen wizardry stopped at being able to “cook” a perfect slice of toast and heat an egg in hot oil. Sometimes I would experiment, but I’ll skip the tales of my candy-bar sandwich and curry hot chocolate. When I moved out of my parents’ home at the age of seventeen, I sucked at cooking.

Luckily I had a corner store within twenty seconds of my house. I became a wiz at putting plastic-wrapped steak bakes and hamburgers into the microwave, and later I even progressed to turning on the oven to warm up a frozen pizza. Breakfast cereal was a favorite dinner of mine too. Cheerios for dinner! Yum!

This went on for quite some time. When I turned eighteen and started to throw regular pints of beer into the mix, my belly decided to grow big and round. Through the age of twenty, not much changed apart from my pants size.

Weight is easy to put on and reasonably easy to fix, but the bad habits had been affecting another aspect of my life, something not immediately apparent to most around me. As my belly grew, so did my overdraft. My money situation wasn’t going too well.

In addressing the cash flow problem, I knew I had to make all sorts of cut-backs. It wasn’t exactly a secret to me that my processed food habit was costing me a lot of money and I decided to tackle it by learning how to cook at home. This was also around the same time that I became vegetarian, which seriously reduced the selection of ready-made foods I could purchase at the corner store.

One of my first trips to the supermarket after the decision involved me stocking up on spaghetti, cans of tomatoes, dried basil, salt, pepper and lots of fruit.

I remember throwing myself head first into cooking, just like the way I refused to read instructions when I got a Transformer for Christmas. I didn’t read any cookery books.

For one of my first home cooked meals, I threw a few cans of tomatoes into a large wok with a little oil. I tossed in a load of basil, a little salt and let it simmer for quite a few hours. The result was better than you may think for a first attempt, and although the work was minimal, I enjoyed throwing some stuff in a pot and coming out with an edible meal. I was intrigued enough to learn more.

I continued to develop my “tomatoes and stuff in wok” speciality and would try adding different veggies and herbs. One important thing I did do was learn the basics. This included cooking eggs in their various forms, the basics about herbs, simple stir fry, fried rice, stews and chilis. Occasionally I would follow a recipe.

The big change for me came when I quit my job and moved from England to Canada. I found food to be even more expensive in Canada, and my budget was very thin. I had left behind a high-paying job in London and was now washing dishes in a pub kitchen. Of course being around cooking all day was part of my inspiration, but working out how the hell to feed myself on minimum wage was the real kick in the butt.

I started to buy a lot of raw ingredients and had moved in with my girlfriend. A student and a kitchen boy needed some entertainment and that was where Manjula came in! We enjoyed making dinner together, even though it was stir fry most nights. Cooking with your family and friends can be a lot of fun and a motivation to push yourself forward. We both enjoyed curry so we learned how to cook it properly. I started to search for recipes online, and I discovered Manjula’s Kitchen on Youtube. Manjula cooks a lot of great Indian dishes and her lackluster commentary creates a homey, “I can do this” vibe that I found quite warming. After my first Manjula curry I was hooked.

I was being reeled into this cooking thing.

When you make that great meal, something you never thought you could make, it’s like you finally get it. Cooking can be drudgery, especially when you have to cook for many and you just don’t enjoy it. I look at it like painting. Painting a house is boring as hell, and the outcome is nice, but nothing special. Paint a picture and you enjoy the whole process and the outcome immensely. If you approach cooking like painting a picture you’ll enjoy it very much.

TortillasNext up for me was my other favorite food, bread. I had a drunken conversation with a Mexican lady who convinced me tortillas were just flour and water cooked in a flat pan. I had flour and water at home so a day or so later I mashed them together into a dough, rolled them into tortilla-shaped discs using a Snapple bottle, and fried them in a hot pan. Like my very first tomato experiment, it worked again — not perfect, but within reach of being able to be called bread!

This put me on a bread kick and I turned to the internet for a real loaf. The first recipe I ever used is one I still use today, and variations on the dough are easy to experiment with. There is something calming about kneading dough and something very satisfying about eating it hot out of the oven.

Where I am today?

I cook almost every day. Cooking is a hobby and something I do almost without thinking. I’ll happily tackle any kind of cusine and challenge myself to new recipes on a regular basis. I’m not afraid to pick up something I have never seen before and experiment with it. I still make a lot of mistakes but that is half of the fun.

Along with my confidence, my knowledge of food sourcing and nutrition has increased. I try to buy in-season foods and balance my diet with meals that contain the right amount of carbs, proteins, good fats and all of that stuff.

I absolutely adore cooking. Food is something we all need, but good food is something we all love. The smugness and satisfaction from being able to match meals at your favorite restaurants is unbelievable. Cooking isn’t an art or skill that only a few people have, it can be learned. If you keep at it, you will learn. You’ll want to share your new-found love with friends, and they’ll get the bug too.

Tips to start cooking

Starting off any new endeavor that you hope to grow into a hobby can be tough work. If things don’t work out the first time, it is easy to give up. Often, fear of failure, poor early results and lack of time push people back to TV dinners and prepared meals. Like any feat you want to achieve, you need to go in knowing that you will fail, you will make terrible food, and your journey from a person who reads recipes to a full-fledged cook will not be linear.

Making failure part of the learning process will guard your self-esteem enough to help you get through the rough patches. Set goals and make time for cooking. Instead of going to the pub, stay home and follow a recipe, bake a cake for the family, or go shopping for a cook book.

I would suggest you set goals centered around being able to cook your favorite meal or a favorite meal for your family, learning to cook a few dishes of a certain cuisine, or replacing a regular store-bought item with a homemade alternative. The goal should be something that matters to you and keeps you focused. A solid option is baking bread that is better than the store variety. It’s not easy but a skill that is a lot fun — and messy — to learn.

As your cooking progresses something will happen. Your lack of confidence will subside and you’ll fall into the groove I mentioned earlier. For me, indicators of this were being able to add ingredients without measurement and being able to open anyone’s pantry and put together a meal without a recipe book. At this stage, you won’t be a master chef, but you’ll be competent and confident enough to take on any recipe.

Experimentation is very important and is key to discovering the joy of cooking. If you think chocolate and chili pepper would be good on pork, try it. If you are bored at home, just grab some random ingredients and see what you can cook up.

Make cooking social

Keeping cooking a lonseome pursuit could stop it from progressing into a full-fledged hobby, so it’s important to share. Sharing the cooking and eating experience with friends and family is one of the best parts.

I remember baking cakes as a young kid with my grandma, and I think baking and cooking with kids is a great learning tool. I wish cooking with my parents had been a part of my whole life. Cooking with your partner also brings in a new intimacy to a relationship and shares a responsibility that is often left to one person, most often the woman.

Expanding beyond family, it’s great to host potluck meals or host a dinner party on rotation. Friends of mine set up a little club where four couples set four Saturday nights aside. Each Saturday night, the eight people would all visit one house, and the hosts would cook a three-course meal. The result was that it pushed everyone in that group to try to up their cooking game, and it was somewhat competitive. The dinner parties were successful enough that they have all improved their cooking skills.

Get started

AsparagusI hope I have you convinced to give it a try and I hope you have overcome any apprehension. You may not even enjoy cooking at first, but you’ll enjoy the challenge. Here are some tips to help you get started. Please come back to let us know how it went.

  • Cook a basic flat bread that can be used for lunches, side dishes and more.
  • Bake a real loaf of bread. This is the very first basic bread recipe I ever used, and it’s good.
  • Find an online video recipe for your favorite restaurant meal and try to make it.
  • Use the ingredients in your pantry and create a random meal. It doesn’t matter if it turns out bad, just mess around!
  • Try another favorite dish or two from another part of the world.
  • Invite a friend over for dinner and you cook. They can bring the wine.

Good luck with your new money-saving, healthy hobby.

Please don’t hesitate to ask any questions, or ask for any resources, ideas or anything that comes to mind. If you love cooking, what inspired you to start?

Photos: John McClumpha, jeffreyw, woodleywonderworks

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This is a guest article by Aloysa, a creator of My Broken Coin. In this article, Aloysa offers five conversation starters for couples considering moving in together.

Based on my own personal experience I can tell you that expectations of your significant other change as soon as you move in together. All of a sudden, you expect him to make the bed, walk your dog, wash the dishes, and put the toilet seat down. He wants you to cook him breakfast and dinner, pack his lunch, buy a six-pack on the way home from work, and listen to his rants about his favorite football team.

But what about your financial expectations of each other? How often do you discuss them?

I strongly believe that when people decide to move in together, they should know as much as possible about each other finances: bank account balances, when the car will be paid off, how much money you both earn, what monthly bills you have to pay including alimony and/or child support.

If you don’t know that much, you really don’t know anything about each other and should stop reading here.

Conversation #5: What are you waiting for? Pay it already!

CoupleWhat is your bill paying style? This is something that can be very important in your life together. Let’s say you pay bills in advance, but your significant other waits till the last minute. Potentially it can create a problem for both of you. One gets nervous that a bill is not paid yet, while the other is stress-free till the “payment due” date.

Resolution: sit down together, go over your bills and figure out what needs to be paid. Make a spreadsheet or a schedule with the due dates for payments, decide when the bills are expected to be paid, and, most importantly, don’t forget to stick to that schedule!

Conversation #4: Who is paying for that dinner?

The complaint that I often hear from my cohabitating friends is related to a very trivial but tricky question: who should pay for nights out, especially if expenses are split 50/50?

Most of the time my romantic girlfriends expect that dates will be covered 100% by their partners. Some of my pragmatic guy friends assume that if they are splitting everything else 50/50, date nights should also be split the same way. Unfulfilled expectations could cause tension in the relationship, and feelings can get hurt.

Resolution: Nothing can kill romance in the relationship faster than resentment caused by money issues. You have to decide together what is expected of each other when you go out. If you expect a romantic dinner that he covers, tell him about it. If you want her to pick up her portion of a tab, talk about it.

Conversation #3: You owe how much?!

Your relationship should be open and honest. There should not be any hidden surprises such as your credit card debt, taxes you owe to the IRS, or student loan balances.

One of my friends was shocked when she found out by pure accident that her boyfriend, with whom she was living for about a year, owed $70,000 in credit card debt. When she confronted him about it, his response was, “It is my debt. Don’t worry about it.” His debt became hers when they started looking for a house together and could not qualify for a house they wanted because of his credit card debt.

Resolution: Pull a free credit report for each other, and be open about your debts. I know that not everyone would agree with this idea, but if one day you decide to get married, have kids, and buy a house, you will be glad you did it.

Editor’s note: There’s a related discussion that’s worth mentioning, as well. Before you begin cohabitation, it may be a good idea to discuss whether you and your significant other should be considering combining financial accounts now, later, or never. Depending on the state where you live, there may be statutes that define how individual property may become common property regardless of whether you combine your accounts, but it’s a discussion that should also come sooner or later.

Conversation #2: I need some cash! Please?

Both of you are individuals with different interests, life views, expectations, different bank accounts and different bills. Bills change over time. Your bank account can get overdraft fees. Or you simply spent more than you expected.

One of my friends came back from work to find out that the water was turned off in the house because her live-in boyfriend did not have the money to pay the water bill. He did not dare to ask her for help, and they ended up with no water for a few days.

Resolution: It can be difficult at first but it gets easier every time you do it. Ask for help if you need it. The worst that can happen is you will have to explain why you are short on cash. The best thing that can happen, you will have an uninterrupted supply of water!

Conversation #1: What are we looking for?

I have a few friends who have lived with their boyfriends and girlfriends for three, four, five years and they now feel the drive to make their relationship legal has flown the coop. Before you decide to share your lives and your bills, it is always a good idea to discuss how both of you see the future.

Do you know what his or her timeline is for marriage? Do you even want and plan to get married? If you don’t discuss it early on, she might start thinking that he is with her because it is convenient and cheap. He might think that she is using him as a stepping stone until someone better comes along.

Resolution: Just because you are moving in together, don’t assume that you both have the same intentions and share the same goals. Relationships tend to stall and drift. Natural progression stops, and you are left guessing what the future life holds for the both of you.

Talk long and hard before you make your final decision to move-in, ask questions and please, never assume anything.

What discussions do you expect to have or have had prior to moving into the same living space as your significant other?

Photo: gareth1953

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Thanks to some changes to the federal Home Affordable Refinance Program (HARP), more homeowners can qualify for government-endorsed refinancing. Previously, the program only offered refinancing options for households where the mortgage value was up to 97% through 125% of the home’s market value. This did help families who have become underwater, having more left to pay on their loans than their houses are worth. Given the continued depressed real estate market in much of the country, this hasn’t been enough. HARP 2, the expanded program, will allow a family who owes more than 125% of its home’s value to qualify for refinancing.

This program is different than the Home Affordable Modification Program (HAMP), which encourages lenders to change loans to restructure monthly payments. Each program has different requirements for qualification.

Many people are in financial trouble due to the combined effects of unemployment, increasing expenses, and accepting a mortgage that carried too much risk for a family. Some are ready to walk away from the house and the mortgage, accepting the consequences such as destroyed credit. Others want to take every option available to stay in the house and pay the mortgage in some form. Programs like HARP can now reach more people who want to keep their homes.

In order to qualify, the mortgage must be owned by Fannie Mae or Freddie Mac, the mortgage must have originated on or before May 31, 2009, you must be current with your mortgage payments, you must have had no more than one late payment in the last year, and your loan most be at least 80% of the value of the house.

In the past two years, fewer than 450,000 homeowners have taken advantage of HARP each year. With this adjustment to allow households deeper underwater to qualify, the number of families taking advantage of the program could increase to one million in each of the next two years.

HARP and HAMP are sponsored by the Department of the Treasury and the Department of Housing and Urban Development. The programs come from generally good policies designed to help homeowners when mortgage lenders have been more apt to take advantage of consumers. Just this weekend, I spoke with a firmer loan officer who left the business due to the shady ethics in the industry; her large corporation was issuing mortgages with the full knowledge that the borrowers would eventually default. There’s more to the story — the bank was selling the mortgages, so they had no inclination to worry about what would happen to the borrower in the future, and the government was subsidizing and encouraging risky mortgages, and every lender was taking advantage of this “free” money.

Nevertheless, HARP and HAMP can help correct these problems from a systemic perspective as well as a homeowner’s perspective.

Would you take advantage of the new and improved Home Affordable Modification Program?

New York Times

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Could You Survive at the Poverty Line?

by Your Finances Simplified
Thrift store

This guest article is written by YFS, owner and author of Your Finances Simplified. YFS was born and raised in west Philadelphia and is now a financial adviser, IT contractor, landlord, and treasurer of a non-profit. If you and your family of four received an annual income of $22,350, could you survive? You would be ... Continue reading this article…

78 comments Read the full article →

How to Spend Money on Fun

by Flexo
Fun Snowboarding

The point of accumulating and saving money is not to die with the most money in the bank. Yes, it can be helpful to your heirs to leave a fortune for the next generation, but not at the expense of living a fulfilled life yourself. There are many opinions about what it means to live ... Continue reading this article…

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Boost Your Human Capital: Stay Healthy

by Flexo
Jogging Girls

It’s easy to focus on the personal policies that help improve your net worth immediately. Saving money, investing thoughtfully, and earning income affect your bottom line immediately. This view can be shortsighted occasionally. Focusing effort on your personal human capital can have a greater affect on your net worth over the course of the rest ... Continue reading this article…

7 comments Read the full article →

The Financial Planner Who Lost His House

by Flexo
Great Expectations - Carl Richards - Behavior Gap

Carl Richards is one of today’s best writers focusing on personal finance. Originally keeping a great blog at behaviorgap.com, The Behavior Gap has moved to the New York Times, and early next year, Carl will release his first book. Look for The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money on January ... Continue reading this article…

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