As featured in The Wall Street Journal, Money Magazine, and more!

September 2012

Learning to Say No

This article was written by in Frugality. 13 comments.

Earlier this week, I appeared on HuffPost Live, an online television channel, to talk about saying no to spending. Social situations make it difficult for people to admit among friends that they can’t afford whatever the social activity might be, such as dining out or going to a club. The discussion was couched in fashion. Working in the fashion industry, there seems to be quite a bit of social pressure to have the right clothes and accessories to fit in with colleagues. I don’t know anything about the fashion industry, but I do know how important it is to look the part when your goal is to move forward in any social or business environment.

I participated in a panel hosted by Nancy Redd that included Christina Anderson, the Fashion and Style editor for Huffington Post, Dr. Nancy Berk, a psychologist and author, Nathan Morris, a financial planner, and Veronica Dagher, a reporter for the Wall Street Journal whose article It’s Really OK to Say, ‘I Can’t Afford That’ inspired the topic for the show.

American consumers face pressure every day, whether from friends, the media, or societal expectations, to fit in. The human drive for the feeling of comfort in an environment or some kind of community drives us to make choices that move in that direction, even if those decisions can be harmful in the long run. It’s not a case of ignorance. We knowingly do things that harm our health every day, but we continue. The same is true about financial harm.

In order to feel accepted in a group, we want to act like a group. The problem is we can’t really see the true financial condition of those we emulate. If everyone on the block owns a Mercedes, it’s understandable that the one remaining household on the street feels inadequate for not being able to afford the same car. Many of the families, despite the outward display of wealth in the form of a car brand that has put a lot of marketing effort into making sure its vehicles are perceived as high-class, may be struggling financially. The car may be leased, and they might not be able to afford the payments. The families outwardly displaying their wealth might have no retirement plans, and their children might require loans to attend college. The pressure to appear the same as everyone else is strong enough that the financial priorities that aren’t outwardly facing often assume a lower priority.

This type of pressure manifests itself in early adolescence. Children at this age are often judgmental and cruel, and the pressure to be like others in a particular social group manifests in a big way. Kids who either refuse to conform to others’ expectations or can’t fit in due to their families’ financial constraints can become social outcasts. This doesn’t need to be damaging in the long run, but it can make life difficult for middle-schoolers. For some, this feeling — the need to fit in by adjusting outward appearances to be like others — never goes away.

If social groups weren’t enough, businesses whose primary goal is to make money have learned how to take advantage of the need to fit in. Marketing to children is so powerful because most parents are willing to do whatever it takes to keep their children happy. If the latest toy is perceived as being this year’s must-have at Christmas, it can be difficult to say, “No, we can’t afford it,” to a sweet child who has behaved all year. Parents have the responsibility to curb expectations and lead their children in such a way that they don’t need to care as much about outward appearances, fitting in, and resisting the highly-targeted and performance-tested marketing messages from a ever-widening array of media.

The Wall Street Journal articles offers some concrete advice for adults looking for new ways to feel comfortable saying no. Not wanting to be embarrassed is only one reason people don’t say no to spending in social situations, however. The article doesn’t address another important factor — not wanting to disappoint friends. Keeping up social relationships is an important part of having a fulfilling and happy life for most people, but it’s impossible if you turn down every request to get together for dinner because your budget doesn’t allow it.

Rather than feeling you need to say no all the time, change the conversation. Take initiative and suggest other ways of getting together and socializing that don’t require expensive restaurants or $15 drinks at the fanciest clubs. Organize a pot-luck dinner or a picnic in the park. Get together to play games. Attend a gallery opening. Find event in your community that don’t require an outlay of cash but still provides for a social experience. Rather than being the person saying no, you’re now the one with great ideas for activities, and you’re saving everyone money, and you’re not disappointing anyone.

The article suggests blaming your financial adviser when you need to say no to your friends. Punting responsibility is a quick way to get out of a sticky situation when you feel you need to give some kind of an explanation beyond “no.” Depending on how much you’re willing to share with your friends, you might want to say something along the lines of, “I’m saving money for x, so I can’t fit this into my budget this month. How about next month?” This shows that you, not your financial adviser, are responsible and in command of your money, and describes a healthy attitude towards savings. Plus, the word “no” triggers such negative responses in the brain, it’s better to avoid it and turn the conversation around in certain social situations.

And who knows — if you’re genuine and non-judgmental with your friends, your approach to saving money might have a good effect on your friends’ attitudes. They may think more about savings when they hear you are taking a positive approach to your money.

How do you say no to spending in social situations or to your children? Continue reading to watch the half-hour HuffPost Live segment, “You Can’t Afford That.” [click to continue…]


The frugal approach to growing wealth focuses on what you spend. The Millionaire Next Door, one of the most popular wealth motivation books, shows how spending wisely is the most important factor in increasing net worth. The book contains anecdote after anecdote about millionaires who live below their means and keep their wealth by maintaining modest spending patterns even when they have the financial capacity to spend more.

This philosophy is a necessity, particularly in the early stages of growing wealth. It’s limited. Whether you’re supporting a family of four or are living on your own, you can only reduce your expenses so far. Expense reduction can be taken very far — you can live off the land if you are willing to forgo the conveniences the modern middle class has come to accept as basic living conditions. If you’re not willing to go that far, you can feed your family a steady diet of ramen noodles.

There’s always further you can take frugality, but everyone has a limit. That limit might be flexible once a family concludes that frugality is the path to long-term wealth.

A frugal-only perspective to building wealth is not going to take anyone very far. Saving money is limited — whether by a soft limit in which a family has living standards below which it would not like to have an enduring experience or the hard limit of zero. You cannot reduce your spending by an amount larger than your total expenses.

If your total expenses consist of only the basics, food and shelter, and they amount to $1,000 a month, you can only reduce your spending or increase your savings by $1,000 a month, and to do that you would need to live rent-free with a kind soul and find free sustenance. And even then, you’ve saved only $1,000 a month and there’s nothing more you can do. This is an extreme example — most people have more they can save without resorting to mooching off others who understand your desires, but mathematics is not as forgiving.

The other side of the equation is just as important, and I would argue that it’s significantly more important. In these ten tips for saving money, half are about earning more money because increasing savings depends on having a healthy income more than it depends on cutting costs. The amount you can save by cutting spending is limited by nature, nurture, or logic.

In contrast to the limited approach of cutting expenses, earning more money is virtually limitless. While there comes a point at which saving more money is not possible or even desirable, there are always opportunities to earn more.

In the short time I was a non-exempt employee in the financial industry — eligible for overtime payments — I took advantage of this as much as possible. Working long hours in this job was expected and there was more than enough to do to keep me busy, so the situation was perfect. When I moved into a different department and received a promotion to exempt status, my first concern was that my new salary would be more than my previous salary plus overtime payments. Without the opportunity to earn more for working overtime, I had less control over my income from that job.

At this time I had already reduced my expenses significantly, and had little more possible without sacrificing some of my basic requirements for quality of living. I was on the quest to build wealth, however, and that included quickly eliminating my remaining student loan debt, so I focused on earning more money. I consulted for several clients who were interested in building their web presences, as this was a skill I had been developing for a long time. I put more focus into my business outside of the workday, and that help me use a variety of skills to increase my income. A few years later, this website began gaining in popularity among readers and high-quality advertisers, and it provided a surprisingly stable source of income above and beyond my salary from a day job.

The point I’m making is that there are always opportunities to grow income if you have the time to spend building something of value. While not everyone is suited to being an entrepreneur, those who build something that other people are interested in can ease the pressure on their expense rollbacks by generating a revenue stream. This is the key to building wealth in a manner that you just can’t imitate by cutting spending.

Getting rich slowly through smart spending and good choices is an important part of the wealth-building picture, but there’s not much use to wealth if it takes a lifetime to accumulate. Putting significant effort into creating something of value — a product customers will buy, something that fills a need previously unfilled or poorly filled, a business with the potential of being sold, or a service other people or businesses require — your day of financial freedom can arrive much sooner.

Photo: fireflythegreat


This is a guest article by Jason Steele. Jason is an expert in travel and credit cards. He contributes several of the top personal finance sites on the Internet including the blog at Credit Card Forum. In this article, Jason shares what everyone should know before using a credit card outside the United States.

In the summer of 1987 I embarked on a teen tour by bicycle across the Canadian Rockies. My parents sent me on my way across the border with enough traveler’s checks to indulge my sweet tooth and bring back a few souvenirs. Oh how times have changed. While you can still purchase travelers checks, credit cards and debit cards are now far more popular for people traveling in foreign countries.

And although these modern methods of payment are undoubtedly more secure and convenient, they are not without their drawbacks. So before you break out your passport, take a moment to think about these important considerations:

Foreign transaction fees. These charges appear on most credit cards whenever a charge is processed outside of the United States. Sadly, this fee is poorly disclosed and provides no benefit to the cardholder. And while most banks will charge a 3% foreign transaction fee, there are an increasing number of card issuers that have dropped this unnecessary fee. For example, Capital One and Discover have none of these fees on any of their cards, while Chase has waived it on about a third of their products.

EMV smart chips. Visit a train station in a European city these days, and you are likely to find a bunch of American tourists trying to get their credit cards to work at the ticket kiosk. What they don’t know is that most unattended kiosks in Europe and some other parts of the world require an embedded smart chip. And until recently, no American card issuers included that feature.

But now, several banks such as Chase, Bank of America, and Citi are now issuing cards with this feature. Look for this chip in products that are aimed at international travelers such as the British Airways Visa Signature® Card from Chase and the Citi AAdvantage World Elite MasterCard. American Express has announced they will finally start issuing EMV equipped versions of select cards before the end of 2012.

Cash advance fees. While most credit card users are savvy enough to avoid cash withdrawals from their credit card at home, some end up reaching for their card when they need foreign currency from an ATM. Don’t be one of them. In addition to any foreign transaction fees, you will be hit with the very high APR assessed on cash advances and withdrawals. And unlike purchases, there is no grace period with a cash advance, so you will be on the hook for interest payments before you even get home.

ATM cards. Thankfully, ATM cards are incredibly useful in foreign countries. I have found that foreign banks are less likely to charge an ATM fee than banks at home, but you still may have to pay an ATM transaction fee to your bank. But at least the exchange rate offered at ATMs is usually very competitive, and many banks do not charge a foreign transaction fee for ATM use.

Security. I have never been mugged, but if I were to be, I would hand over my credit cards without hesitation. That is because I take a few simple precautions:

  • I carry multiple cards with me on my trip, but I only keep one or two of them with me at any time. The others I keep in a secure location such as a hotel safe.
  • I email myself a copy of each bank’s telephone number for receiving collect calls from overseas. In this way, my trip can go on without my lost or stolen cards. And even if I lose all of them, I know exactly who to call to report their loss and to order replacements.

Dynamic currency conversion. Some foreign merchants have a system where they can offer cardholders the option of paying their bill in their local currency. This is never a good idea, as you will always end up paying much more. This system will give you a receipt in dollars, and they may even claim there are no fees, but the exchange rate you will receive is abysmal, and the merchant will get a cut of the enormous profits. Always decline these offers and never sign a bill that is shown in dollars instead of the home currency of the merchant.

Using your credit card in foreign countries is simple and easy, but it is not without a few manageable risks. By taking the time to learn about these potential pitfalls, you can enjoy your vacation without worrying about unnecessary charges to your card.

Photo: josef.stuefer


On Sunday, I decided to take another shot at improving my time management skills. For as long as I can remember, time management has never been my strength. Always drawn to activities I find exciting, sometimes my responsibilities suffered. I’ve been through a number of programs and read a number of books designed to improve my time management skills, and at times applied some new techniques to my life, even if they were common-sense changes. The implementations were somewhat successful for a few days, but I found it easy to fall into old habits.

Nevertheless, I made it work. I’ve been for the most part successful in the jobs I’ve had, and I was able to do this without sacrificing too much of my extravocational activities. Everything came together, though, when I was able to turn one of my biggest and most exciting hobbies into a business. I became a small business owner, or a start-up founder, or the word I hate, entrepreneur. Business experts often say successful entrepreneurs need to manage their time wisely. I never got to the point where I felt I was making the best use of most of my waking hours, yet I would consider the business a success.

For the last year, I’ve been moving into a different phase with the business, one in which my responsibilities are changing and I’m looking for new growth opportunities outside of the business. I also want to make an effort to spend more time on unrelated activities, like newer passions.

I’ve created a daily schedule that prescribes how I focus my time throughout the day, every day. I’ve never been a fan of structure, so I allow myself some flexibility, but having time set aside each day for certain tasks, both business-related and personal, keeps me focused. The flexibility works for me. By having a daily schedule, I can be confident about not taking time to read and respond to email in the morning when I should be focusing on reading and writing, for example.

I can also set aside time for personal activities I want to encourage myself to do, like getting into shape and increasing my photography skills. This will become more important if and when I add layers of different business responsibilities above what I’ve been doing for the past year.

In a few weeks, I’ll revisit the schedule and my progress with the new time organization to see if I’ve been able to maintain the change and whether I can see the manifestation of benefits.

With this rescheduling, I decided it was worthwhile to outsource more of the tasks I don’t like doing. I probably should have done this more over the past few years, but I held back. I have already hired a cleaning service to visit every other week to handle the deep housecleaning I’m not interested in handling. I missed the opportunity to hire an assistant — virtual or otherwise — when the business’s cash flow allowed me to do so, but I may return to that in the future. The change I made this week was to explore ordering my groceries.

For no extra money assuming I am able to continue to use coupons, I can order my groceries online and have them shipped via the Peapod service. I’ve avoided this for years. After all, the grocery store is in walking distance from where I live. Given the fact I live alone, my needs for groceries are not many. I’m looking to eat healthier, though, and my expenses might shift further away from eating out and more towards meals at home. Grocery delivery is significantly more convenient simply because I don’t need to take time away from working or more enjoyable activities to wander around a grocery store. So even if I need to pay a $7 delivery fee, I find the convenience worthwhile.

My experience ordering groceries online

Because I shop with a grocery store loyalty card, ordering my groceries online was very easy. The website, Peapod, displayed my Stop & Shop purchases automatically, and I could choose from my previous purchases and browse the virtual aisles, adding more groceries to my virtual shopping cart. Using printed coupons is the only drawback, you simply need to present the coupons when the delivery arrives for credit. Delivery was surprisingly flexible; I was able to choose a window of time the morning after I placed the order, and I was able to change or add to my order for several hours after I first finalized it.

Delivery was on time, though I wouldn’t consider the driver to be that friendly. He brought in the bags of groceries and placed them in the kitchen for me. I had already added his tip when I placed the order, so there was nothing left to do but accept the receipt or invoice and allow him to rush out the door to his next delivery.

The only drawback I’ve discovered so far is that the deli meats seem to only be available in larger portions than I need. My challenge will be to consume these before they go bad, but after this first attempt I can change my deli meat strategy for the next delivery. As far as items I prefer to hand-pick in the store, there is a concern that what I receive through delivery might not be as good or as fresh. I did notice that the sell-by date on the milk had passed, but milk is good beyond the sell-by date. I sent an email to Peapod about the issue. All other items seemed just as good as what I might have selected for myself in the store.

If you live in a city like New York, grocery shopping can be more than just inconvenient, and delivery services have been standard for a while. Living in a location like mine, it’s a little more unexpected. I’ve avoided grocery delivery because I didn’t want to feel lazy; after all, I can almost see the grocery store from my apartment. Also, I shop only for myself, so my visits to the store are infrequent. Yet, I still manage to fill five or six large bags and need extra trips from the car to carry larger items. After one delivery, though, I don’t see myself going back to traditional grocery shopping, particularly if I can keep eliminating the delivery fee.

Have you ever used a grocery delivery service? Is a service like this worthwhile for you?

Photo: SodanieChea


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