8 Ways to a Healthier Financial Life By Matthew Donovan Copyright 2012 Matthew Donovan Smashwords Edition Smashwords Edition, License Notes This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or give away to other people. If you would like to share this book with another person, please purchase an additional copy for each recipient. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then please return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author. Table of contents ● Preface 1 Live with cash 2 Know your credit 3 Fraud Alerts 4 Stop recurring charges 5 Think about moving, do I really need that? 6 Do your research 7 Write things down 8 Negotiation ● Conclusion Preface A little about me, I am just like you. I work, try to save a little without forgetting to live a little. I don't have a finance degree nor am I any sort of finance counselor. This book presents some of the little things that I have learned either through personal experience, family, friends, or coworkers. Some of the items you may know but hopefully at least one will teach you something new. Living with cash What do I mean by this? Well, if you are on the opposite side of the law, it means the police will have a harder time freezing your money. If you are in business, it means you have the ability to move and take opportunities that you might otherwise miss. In our world it means that you use cash over credit cards. There was a study published in which the researchers found that when people use a credit card to purchase things they have less of an emotional connection to that piece of plastic than that hard earned paper dollar. If you start to pay with cash it causes you to slow down and think , “Do I really need the new shoes?” An additional bonus is that if the money is not in the bank, you cannot spend it, unlike plastic money. This is one reason why so many places bombard you with offers for their own branded credit cards. Also, since you cannot spend money you don't have, it saves you even more on finance charges for those times that you charged the new purse or barbeque grill that you could not pay off at the end of the month. Another reason to use more cash than credit cards is that a lot of people don't check their statements each month. Now, I have seen two things come of this; one people opt into clubs (more on this in a minute) and two that nice counter clerk at Blockbuster helps their friend out by charging their rentals to you. I had this happen to me with a credit card I wasn't using at the time. They tried a few charges over several months to see if anyone noticed. On the flip side, if you are financially responsible, there are reasons to use credit cards over cash. I purchased my last vehicle with a credit card because even though I paid a couple of hundred dollars in charges, the lack of interest made up for it in a few months. However, I am writing this book for people that may not be at this level. Run your credit report/know your credit score AnnualCreditReport.com how many of you know about this? This website was federally mandated so that we could have a look at our credit reports since so much of our lives are now controlled by these three companies. Oh. you didn't know? Yes, there are three primary credit reporting agencies: Experian, Transunion, and Equifax. Each know you, your habits, status and each generates a different score based on their knowledge of you and their own calculations. Whether you realize it or not everything from getting a credit card, car, home, insurance, and even your next job may be dependent on how good your credit report and score are. Once a year I run my report and expect to see something like 35 accounts either active or inactive. This first look tells me whether someone has gotten ahold of my identity or not. Then I go through and review which accounts are still active and if I need them or not. You might be surprised what you have forgotten about, maybe that store card that took 60 seconds to open at the check out three years ago is still there. Making sure your accounts are in good standing will increase your credit score and reduce your interests rates on purchases or even help you land a job. Next thing to do is to get your credit score. This might cost you a one time fee of around fifteen to thirty dollars depending on who you use and if you get all three or not. Another way is to check with your current bank or credit cards to see if they will give you a free copy, I know American Express used to offer me a free report once a year as a fringe benefit. Let’s go over an example of why this is so crucial. I have a good credit score of 750, my friend Sarah has a score of 650. If both of us were to walk into a car dealership and look at the same $20,000 car I will conceivably pay much less, the reason, interest rates. I typically get the best interest available, or within a quarter percent. As of this writing that’s about 2%, so lets run the numbers. $20,000 over 60 months at 2% equals $350 a month for me. Sarah on the other hand is offered $20,000 over 60 months at 10% which equals $424. OMG as they like to say. $74 dollars a month because I keep track of my credit once a year. Think of all the things that you could purchase or better yet, that’s $888 a year saved. Fraud Alerts Ever seen the advertisements on TV or in magazines for companies that help protect your identity? If you have they are not doing anything that you cannot do yourself and save yourself the recurring charges. Let’s step through this one at a time. First, call your bank and credit cards and opt out of all marketing. This will do several things including reducing your junk mail. Because you opted out of marketing they will stop sending you pre-approved checks, new credit card offers, and everything else that either entices you to spend more or just annoys you as you throw it in the trash. Plus its an easy way to be green. Next, most states will only allow you to place a 90 day fraud alert against your credit unless you have been the victim of credit fraud. Still taking five minutes every three months to protect yourself is well worth saving youself the $12.95 or whatever a month. All you have to do is go to one of the three credit agencies websites, or call them, and place a fraud alert on your credit. Once you speak with one credit agency they will pass it along to the other two agencies. At the same time you may list a phone number so that if anyone tries to use your credit you will be phoned and asked to authorize the transaction. How nice would it be to have a phone call one afternoon asking whether you are trying to purchase a $20,000 Harley motorcycle, to which you can easily say NO! The alternative is finding out three months after the fraudulent transaction whenever the account has been handed over to collections and now they are hounding you for the money. Sounds much easier right? The next step in controlling your credit is to have the credit agencies stop selling your information. What I mean by this is, companies routinely call up the credit agency and ask for people with a certain credit rating. The agency then sells them a list with your address and suddenly you are getting pre-approval letters for even more credit cards and the vicious cycle continues. A final footnote on the subject, a lot of credit cards and bank accounts are offering identity theft protection as a benefit to the account holder. These are services that will help you recover your good name and may even cover some of your lost money. Stop recurring charges How often do you sit down to review your credit card statement or bank statement at the end of the month? I was dating a girl named Kim several months ago and somehow we began discussing credit cards. She spoke about how she had apparently signed up for a club during checkout while buying shoes. She was just noticing the recurring charge that had been ongoing for the past eight months and was in the process of speaking with them on some sort of resolution. I myself have been caught by this with credit card company, I took an offer at one point for some free book or something which automatically enrolled me in a magazine, I happened to notice the random $30 charge and was able to reverse it. This is a conversation that I keep having over and over, Kim this year, a co-worker last year, a friend the year before. This sense of deja vu is one of the biggest contributing factors to me writing this. Please check your statements! Think about moving, do i really need that? Over the past several years I have been moving quite a few times due to my career. This has caused me to pack, unpack, pack, and unpack numerous times. It started me thinking about all the stuff I buy because in the moment I think I really need or want it. After I get it home though it just ends up in a drawer or a cabinet. So now when I go shopping and I am about to pick up that $20 item that I just think would look great or help me out I question whether or not I want to move it five times over the next five years and that thought usually saves me $20. On a segway, it also prompted me to look into minimalism. I will admit I am not at that point nor do I want to go there, but it taught me a lot of good ideas. For example in my kitchen I hate unitaskers. Those little doohickeys that have only one purpose. It can be something as simple as using your cup towels for pot holders, but in the end that one item saves me money, counter space, and time saved during my next move. Do your research Would you rather drive a Honda or Mercedes? When I was nineteen I needed to purchase a new vehicle to get back and forth between college, university, and work. I ended up driving a Mercedes vs a Honda Civic, how would you like to do the same? I don't remember how I started down the path of looking at Mercedes but I did and I am glad for it. During my research I found that I could purchase a five year old Mercedes with roughly 40,000 miles or a three year old Civic with roughly 40,000 miles for the same price, the difference came down to the insurance. The Mercedes was $50 a month cheaper. You’ll have to ask the insurance company why but I didn't care I was driving a nice blue Mercedes with automatic climate control, Yay! Along these same lines, insurance companies, apartment complexes, banks, etc they all have something in common, they know that once you are a client you are very unlikely to leave. Let’s be realistic, once you have your bank account setup with all the auto drafts and your paycheck already direct deposited and everything else who wants to move it. The same with your insurance company, it just nicely drafts every month automatically. Well, let’s talk about this situation and we will use Insurance. When I look at insurance I talk with the representative and find out every single discount they offer. I have them list them so even if they don't think I qualify I can say no, I actually do get that one, and I have them do this every six months when I renew. Just think about going paperless, every month this usually saves anywhere between two to five dollars, you just bought yourself a latte. The other big discount is when you pay in full every six month period. Now, you might be sitting there thinking I cannot afford to shell out that much money in a lump sum. This is where the research comes in, I recently switched my car insurance carrier. The reason I did this is because, let’s say company A, wanted to up my rates for the next six month period by about $250 dollars from $350 to $600. I started calling around and found Company B at around $220. Now under the new company A policy I would have spent $100 dollars every month, but by calling around and adding a second month’s premium and buying one less case of beer I was able to pay for an entire six months with company B, $380 for the win! Write things down Plenty of people have said this and continue to say this, I will reiterate it here because so many still don't realize or understand. My best example it that I worry about going to the coffee shop, I don't necessarily worry about buying a $20000 car. The reason I say this is because I budget $350 dollars a month for a car payment, and when I go to purchase a car I make sure the rates and everything line up for this and its fixed. So, many people don't consider or worry about their morning runs to Starbucks or the bagel place because they have not written down what they spend and realized the fact that the bagel and coffee every morning that costs only $10 adds up to $300 by the end of the month ($10 X 30 Days). Another example, ten dollars in the morning for breakfast, eight dollars for the lunch special and then another ten dollars for a couple of happy hour specials before going home, lets see that twenty-eight dollars a day times twenty working days a month equals $560 a month, that’s another car payment, possibly nicer than the car you are already driving! Negotiate We still live in a barter society, did you know that? Very little has changed since medieval times or even earlier. We still barter our time for money which allows us to go out and purchase items that we need or want. The difference is, instead of two goats for a cow or twelve eggs for a gallon of milk, we trade eighty hours of our life at work for a TV. The key here is trading only sixty hours of work for that TV so that you can save the other twenty hours or trade the hours for something else. I did this recently with a big box electronics store. It was my intention to buy a TV and extended warranty, but I did not tell them at first. I merely asked for a discount on the TV, to which they responded that the price was as low as it could go. I then stated that I intended to purchase the extended warranty to which they responded they could take $100 off the TV which payed for the extended warranty. Negotiating is not just for cars and homes, its for everything. A question is free, the savings are just a bonus. Conclusion As stated in the beginning, you may have heard some of the items presented before but I keep having deja vu with family, friends, and co workers as someone learns the hard way. I hope at least one item is new to you and will help. Citations http://www.apa.org/news/press/releases/2008/09/credit-cash.aspx ### . 8 Ways to a Healthier Financial Life By Matthew Donovan Copyright 2012 Matthew Donovan Smashwords Edition Smashwords Edition, License. found that when people use a credit card to purchase things they have less of an emotional connection to that piece of plastic than that hard earned paper