A close friend of mine passed away recently. She was too young to be gone at 48 and quite full of life. As I was mourning my dear friend this week, I came across an article penned by Julia Baird, “Positively Downbeat: Sometimes happiness isn’t everything”. Ms. Baird based her article on the premise that even with the surge in self help-to-happiness books (4000) last year, compared to 50 in 2000, we aren’t any happier collectively. We also aren’t any richer in spite of chanting Oprah-like our mantras of being beautiful, successful, happy, etc. Why is this?

If your ticket is up in the great lottery of life today, are you really happy? Successful? Rich? Does it hurt us to be positive thinkers? Should we resort to negativity after all? What’s the solution?

Here’s what I think: In order to be anything in this world, we have to be realists. My friend was a realist, facing cancer and before this raising her family as a single parent. I’ve personally always hated what I termed years ago, the Emperor’s New Clothes mentality of thinking positive, regardless of the circumstances. For those of you who did not grow up on the fairy tale, it’s based on the story of two swindlers who convince the Emperor and all around him that he’s really wearing the finest garment. In reality, there was no clothing. They’d stolen the Emperor’s money and split. A small child saw the truth and proclaimed it loudly.

 I feel this “power of positive thinking” garbage is much like that. No matter how you say it, “I’m wealthy. I’m successful. “I’m happy.” If you’re two steps from being homeless and you can’t feed your family, those positive thinking statements aren’t going to serve up a roof or a plate of food. Sorry. I don’t buy that.

 I’ve shut down a few dinner parties when people asked me how life was. I was honest, but dedicated about my situation. “I’ve had cancer. I’ve struggled. I’m not sure how I’m making ends meet with five kids.” “But I’m working hard to face these issues.”…. This was met with dead silence, while people tried to make some sort of positive statement to lighten up these comments. It was uncomfortable for them to think that a person could be open with the harsh realities of life, while at a dinner party. Hmm.

What was I supposed to do? Lie? Pretend all was well when it truly sucked? Don’t get me wrong, I wasn’t sniveling in my plate between the main course and dessert. Nor was I looking for sympathy. Sympathetic thoughts don’t solve my problems. Deceiving others didn’t serve any purpose but make everyone else feel more comfortable. The best solution for me was honesty.

Personally, the best people, (like my friend) I’ve known were honest about their spot in life. They also had, having first been honest with themselves, often made plans on how to change these circumstances. Sometimes these plans were uncomfortable or unpleasant to hear. It hurt me to think another friend had to drop out of school, because she needed to work to feed her kids. But she did. I was proud of her choices to be fiscally sound. She’ll go back in two years and I’ll celebrate with her all the more knowing that she was honest, crying the day she determined the bills had to be taken care of first and putting her dream of education on the temporary back burner.

Another acquaintance of mine, who I’d always admired for their successes, revealed to me recently that everything they had was in hock. A process that had been snowballing as they pretended, in the style of the Emperor’s populace, that nothing was wrong at dinner parties and to themselves.

 I think the solution is  two-fold. We’ve got to face the truth about our spot in life. It may not be pretty and it might shut down a few parties. So what? Does pretending help when you sit down with your credit card bills? If you figure out how to pay your bills with positive thinking, please let me know, I’d like some positive thinking money sent my way. After you face the ugly truth, you’ve got to make some possibly uncomfortable choices. Sell the house that’s sucking you dry? Get another job? Live with your family for a while to save money? Possibly file bankruptcy? Yeah, those are unpleasant. You’ll be a lot of fun at parties telling people these things. Trust me.

 But it’s time, collectively, to stop this garbage of pretending, hitch up our big girl panties and face the truth. It’s ok, by the way, to cry about your plight. But take some action, once you’ve got those feelings out. Neither negativity, nor positive thoughts solve life, folks. It’s action.

 I agree with Ms. Baird’s quote of Eleanor Roosevelt, “Happiness is not a goal. It’s a by-product.” However, I’d add to it, there’s a lot of happiness to be found in realistically facing life, being honest, and knowing you aren’t alone. If enough people are open with their situations, like the small child in the Emperor tale, you’ll find comrades who really know you on a gut level. And you’ll celebrate saving money together, paying a bill, downscaling as a difficult, but necessary choice, etc. It won’t make for uncomfortable talk with the realists. It’ll make for brainstorming, tips, and support.

The most encouraging people I’ve known were often, dying cancer patients. Why? Because these folks didn’t have time for pretend. They shot from the hip, were interested in others, and faced their realities. I’d like to think I can learn from these people in how to live all facets of my life, from financially to relationships. It takes realism, with no time for pretending, coupled with a plan of action, to move forward, not positive mantras.

Typically, it’s not the big purchases that put your budget over the edge. It’s the small ones. We don’t notice these as much, but they add up. Suddenly, your fairly decent income is gone. I’ve blogged about my friend who is faced with bankruptcy while having a combined family income of 100K earlier.

Today and tomorrow, I’d like to share some tips from another friend, Rene, who lives on a scant 33K, and is a single mom. She’s got a great FICO score and makes ends meet for three dependant kids as a self-employed medical transcriber working out of her home. She’s widowed. When her husband died eight years ago, he had only enough life insurance to cover burial. With nothing but a social security income (at a pittance) for her kids, and no savings built up, Rene has made it successfully for a decade on a single parent income.

Here are her tips:

Start looking around at every source of spending you do monthly by keeping a small notebook in your purse, car or by the computer and log where every dime goes. Do this for a month and then group your spending by utilities, food, extras, housing, medical, insurance, etc.

Take a look at the extras you’ve dropped cash on and consider what they are. In my case, I was dropping a lot of money with my kids for after school drive up snacks. They’d come out of school ravenous. We often had errands to do, which meant we weren’t going home for a while. It seemed easy to just stop at the drive up to grab a quick item off the dollar menu.  I realized I was spending about $50 extra dollars a month on these stops. Instead, I packed the car with wholesome nutrition bars and zip lock bags of cereal. I keep fruit by the door to take with me before I pick the kids up also. On average I purchase $20 worth of snacks (granola bars, raisins, apples, rice cakes, and seasonal fruit) monthly and have cereal here on hand.  Now when we run errands, they’ve got better, healthier snacks and I’ve saved at least $30.00 a month or $360 a year.

Save on gas by mapping your route in advance. We live in an Amish community and I’ve learned a lot from watching them. Amish women pay a driver to haul them into town once a month for necessary errands. Every time you make an extra stop, you’ve lost time, gas, and usually money- since frequent stops almost always account for impulse purchases. Go with an agenda, map your route and buy what’s needed for longer periods of time.

 Use the internet for as many purchases as possible, because you’ll save on impulse buying. With no kiosks to seduce you into purchases, it’s more likely you’ll spend less. Many retailers offer free shipping on all orders or those orders over a certain amount. Staples, Drugstore.com, CVS online, K-mart, Wal-Mart, and Amazon are examples of this. I can buy most of what I need from these retailers, pay no shipping for qualifying orders and stick to a budget. Most months, produce, meat, dairy and groceries are all I buy in a physical retail store.

Limit shopping with kids. Seriously, this saves. Sometimes the urge to spend, when looking in small begging eyes, is overwhelming. If you have several children, and allow each one a few “extras” usually you’ve spent more than you planned. Another option, as my kids get older and understand budgeting, has been to allow each kid a dollar amount for an extra or to rotate who picks the breakfast cereal or other item. However you do it, stick to a budget.

Tomorrow, more tips from this successful saving’s  mom!

When sticking to a budget there are certainly going to be “unknowns”. These hidden financial landmines in your path to debt-free living may blow your budget out of proportion.  How do you deal with a car breaking down, a sick child, or a large necessary purchase?

As many of you know, I’m trying desperately to budget and pay down medical bills in the hopes of buying a home (one of these days). My future depends on today’s purchases and careful spending.

No matter what your situation is, you will have unforeseen emergencies. If you’re fortunate enough to have cash on hand to cover these areas, I salute you. However, according to financial research, there are more people in my situation with limited savings, than those with large slush funds currently.

 For people like me, who bank a small portion a week, emergency purchases can literally undo months of careful savings in one event.

This week, I have my own “emergency purchase”. My daughter has a cavity on a back molar that involves moving her braces and removing a tooth. In the end, it’s a good thing for her because it will mean the chance her wisdom teeth will have enough room to come in now. But it will result in combined fees of a general dentist and our orthodontist.

 Incidentally, after years of paying the orthodontist’s bill of 5K, I’m down to my last $700.00 owing to his practice. I was nearly celebrating the fact that I would soon be depleting another bill and was poised to begin “snowballing” that money to other creditors at the hospital. Creditors, I promised larger payments to in the near future, and doubtless will have to push those dates back, once again.

I did what generations of women have long done when faced with an emergency- I cried.

Immediately after that I enacted my own emergency action plan. Even though the kids have insurance, through their dad- it’s limited. No orthodontist visits are covered, and nearly two-thirds of the bill will be mine from the dentist. Best estimate? About another $1,000.00 by the time you include the orthodontist and the dentist. Ugh.

It came out better than I thought, though, because I’ve learned two things in this long life of fiscal drama of mine. One is the power of negotiation and the second is to face your issues squarely.

In the past, I have to admit I wasn’t so tenacious with hunting down negotiations, or so quick to jump on a pending financial situation before it turned into a nightmare. I might have drained my savings account to pay the debt off and then in another month had no resources for yet another emergency.

Instead I worked a new payment plan out immediately with the creditors at the hospital, threw a small deposit down for the new dental work, obtained a quick dental discount card to give me some reduction, and worked a new payment plan out with the orthodontist.  All my creditors are reasonably happy and I’m saved from nasty collection issues. It was a day on the phone negotiating this, but it was worth it.

Here’s what you can take with you: Especially with limited resources, it’s vital to work on negotiations with creditors. You can still stick most of the time to some semblance of your budget. Don’t drain the savings account unless it’s a last, terrible resort.

It’s been a rough year for most of us. 2008/2009 has seen the economy flat line a few times. After economic CPR, a faint fiscal pulse has been found and life is still present.

 Many of you reading this are college students, perhaps worried about what kind of work will be available upon graduation and fearing repayment of student loans. Perhaps you are a single parent, sick of constantly struggling and doing without, just to put food on the table. Or you may be one of those folks who are a statistic of the economy, hating the unemployment that robs you of your dignity, but depending on it now.

I don’t know your story. But I do have a story for us all today. One of the difficult things about struggling personally is that it tends to make us self focused. A good cure for that is, as I often write here, to make financial changes. Another cure is to look beyond ourselves. I’ve been reminded of this early today.

I’ve personally had a hard year. After being single for nearly eleven years, I married last year, amidst much fanfare and well wishes from friends. The marriage, to a man I knew almost three years, ended in two months. We never even lived together or bought a home.  I don’t even count it as a marriage, really. We lived an hour apart and were still trying to transition our lives together; when it became clear we had “irrevocable differences”. My kids were in pain, I was in pain. I’ve not dated since.

Shortly after, the economy went belly up in my part of the country. I worked like a fiend to hold down life here. I got behind again on my bills, since my income was half of what it had been only a year ago. After struggling so hard to get ahead, I felt like I had utterly flopped (again).  I downscaled, moved, had a car wreck and was hospitalized, changed careers and plunked myself into college to finish the degree I’m close to completing, and re-budgeted once again.  All of this in little over 12 months. It’s been a hell of year. I’ve been self focused, depressed and yes, bitter.

This morning at CVS, (stopping to get my advertised .99 milk) I ran into a familiar face. There’s a local woman who seems to have taken a liking to me. I’m embarrassed to say, I frequently shy away from her with a vengeance. She’s mildly disabled, but quite functioning. I’ve got a big heart usually, and enjoy passing the time with about anyone. But, this woman is the sort who corners you, and endlessly chatters. If you get engaged in a conversation, you’ll be there for seemingly hours. I’ve been too much in my own world to deal with other’s plights these last several months. I admit it. I’m not proud of it, but it’s the ugly truth.

As a new employee of the drugstore, “Shelly” was beaming with pride when she pounced on me in the far recesses of the freezer aisle. “You’re wearing green, right?” “I’m color blind, but I’m learning to guess,” she related. Somehow, I don’t know how exactly, Shelly shared her life story with me. At 44, we’re the same age, it turns out.  

When she was 8, a car wreck on Christmas Day took her mother’s life and dramatically changed Shelly’s (who was a passenger) as well. Massive brain injuries, near death, unable to walk or talk for months, Shelly became an orphan and disabled for life. Tragically, she was left with poor short term memory, color blindness, and a variety of other ailments. I can’t think what else she’s had to work through all these years, or how difficult her life has been.

A flashback in my head to the last year, of all the tears I’ve cried over my personal plight washed over me as we talked.

No, awareness of other’s lives won’t pay my bills.  

But one thing I did take from talking with Shelly was the joy of taking small steps, no matter how long or how hard they are. It’s taken her 34 years to identify the color green. She’s celebrating this step. I joined with her in celebration, hugging her in the frozen food aisle, while fighting back the tears. I didn’t see her wallowing in fits of depression bitter, because it’s taken her 3/4^th of her life to learn three colors. Shelly is rejoicing in small steps.

We should too.

No matter what kind of forward steps they are. Pay off a bill? Hurray! Make a single payment on time? Be glad. You’re making tiny steps. You, like me, should be celebrating them. I haven’t participated in this celebration enough of my own achievements.  I’ve only been comparing myself to others my age, in my affluent town. And as a single parent, with few resources, I fall short on comparison to other’s 401K’s and home ownership and plush vacations. So what if it takes you a little longer than your best friend or neighbor? Celebrate the small steps forward.

The other thing I took away from my dear Shelly, (who I formerly hid from) is to remember the other man’s plight, no matter how dire our personal issues are. We all have heard and know the adage about someone having it worse. But I challenge you to look for those moments when you can celebrate with others or encourage another soul. For your act of service, lending a few moments, I promise you’ll reap more than you give. That’s earning potential you won’t get from the economy, your job or the stock market.

I know I won’t be hiding from Shelly anymore. I’ll be looking for her to see what she’s accomplished and what I can learn from her. I’m done being self focused and I’m not going to expend negative energy in comparisons anymore. If it takes me 34 years to pay off my debt, I’d guess Shelly will celebrate with me, if no one else will.

Celebrate your small steps and look beyond yourself.

At age 22, my son’s become a man. Over lunch he discussed finances like the adult he’s matured into. The question came up regarding loans and payments. He purchased furniture for his apartment on credit a year ago.  Now, his finances have changed a bit. We spent time going over a budget and reviewing how to address that loan, while making the best use of his money.  As I review other finance sites, and talked to folks about their feelings on interest bearing loans, I realized his questions are quite common. The tendency, when you get a little cash is to pay off loans immediately. I advise against this practice, largely, because I’ve done so, and felt the pain of missing cash in the bank later.

Here are options I gave him:

1. With student grants and some money he’s saved he can deplete all his savings and pay the loan off. I did not recommend this, of course. Unforeseen financial events could catapult him into a money mess with no savings. As a general rule, you should have at least three months of earnings in the bank. Since he’s in college full time and living off campus, saving that much money is a hard call. But now it’s even more imperative to hang onto what cash he has.
2. He can opt for paying ahead on the loan a few payments, then do an auto draft in the same month to stay ahead of the interest and keep his credit in good shape. If he pays only two payments in advance, he’s saved a bundle in interest and shortened the life of the loan.  And he’s hung onto the bulk of his cash at the same time. This is a very good choice.
3. As he has a full time job, and excellent credit, another option is to charge the loan on a credit card that offers 6 months “no interest” on balance transfers and new purchases. He can save the interest he’s currently paying for six months and if disciplined, pay the entire loan off in the initial period, interest free. Also, if he chooses wisely, and opts for cash back or rewards card, he’ll do himself a favor by receiving discounts and reward points long term.  The important tool with credit cards is the use of discipline. You can’t go on wild shopping sprees or overspend. My son is on a tight budget. Other than his onetime purchase of furniture, he’s been fiscally sound and made great choices. Three other loans he’s had he’s paid off in full already, on time. I feel his best option is to attempt this route. Like anyone applying for a credit card, he’ll need to investigate the terms following the 6 month interest free period to be sure it’s still a deal. I suggested three cards, Citi Platinum Select and Discover More or Discover Student. (With Discover Student’s card he can reap from 5-20% cash back on purchases, even at his local student book store, which is a Barnes and Noble).

 If you can’t obtain a credit card, however, paying ahead and securing future payments with an auto deduct, is your best choice. Add an extra $5.00 to the payment to stay way in front of the interest, (on top of your payments ahead) and you’ll pay it off quicker. The one warning- Make certain you keep enough in your bank account to cover these debits. You don’t want a thirty dollar payment costing you $30 more in overdraft fees.

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