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10-Step (Financial) Survival Guide During The Pandemic

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Despite having a list of over 50 topics that I’d like to cover in this blog (ranging from “the 4% rule of retirement” to “love and friendship”), I feel drawn these days to talk about just one.  As I sit here, not having left my home for three weeks for much beyond a walk and a grocery store visit, it’s impossible to ignore the impact that this coronavirus has had on the day-to-day routine.  After all, when was the last time it was so difficult to buy Purell, toilet paper, or even rice (perhaps the most plentiful food in existence).  Let’s not even talk about the hour-long lines at the grocery stores that wrap around the isles. 

The impact of COVID-19 is very real and the future remains uncertain.  We should be as prepared for this to end in 12 days, as we are prepared 12 weeks, or even 12 months.

I won’t attempt to provide health or social guidance (you can find the latest from the CDC here). Rather, let’s take a moment to ensure we’re as prepared as we possibly can be for the financial impact of the virus.

Here’s TheCentsei’s 10-step financial survival guide during a pandemic:

1)  Do Not Panic – Take Control

A sudden risk of loss of income, coupled with increasing economic uncertainty for the future can be very traumatic.  These factors – intensified by the news cycle – can often give way to fear, panic, or dismay.  Society will indeed change in some ways, and that uncertainty is scary.

First and foremost, know that none of this is your fault and that you do have the strength to improve your situation.  Stress is a natural feeling, but you can mitigate it by taking actions to manage things that are in your control.  Revisiting your budget, applying for a job, calling a lender, eliminating a recurring expense, planning a meal, getting some exercise, or finishing an overdue task are all ways you can exert some control over your financial situation.  If you’re feeling a moment of stress, consider reacting by taking just 5 minutes to do something productive to counteract it.

As for everything we can’t control, we can find ways to manager our reaction.  There is an abundance of research indicating that mindfulness can a helpful way to cope.  There are several free podcasts and apps to help.  To get started, Headspace is a mindfulness and meditation app that has free content during the outbreak. The sessions are brief and the approach is relatable.

As a society, we will heal.  As individuals, we will remain in control of our destiny.

2)  Review Your Possible Government Benefits

Here in the United States, the federal government recently announced the CARES Act, a plan to give most people and businesses some much-needed relief during the onset of the virus.  The core of the bill from an individual’s perspective is a one-time $1,200 payment to help every adult making less than $75,000, with an additional $500 per child.  Also, unemployment benefits are boosted by $600 per week.  The bill also offers small businesses the opportunity for a forgivable “loan” to be used to keep employees on payroll.  Finally, all payments of principal and interest for certain federal student loans are suspended, and federally backed mortgages (most are this way) must grant loan modifications, without penalty, if the borrower has a request for financial hardship.  Many states are offering additional programs, as are other countries outside the U.S.  Take advantage of these!

The government certainly wants you to spend your stimulus check, and if you have absolute essentials that aren’t going to get paid, of course you should devote money to that first.  However, I strongly encourage you to build up your emergency fund as soon as possible, whether you receive a government payment or not.  Even if your job currently feels safe, the truth is that you never know when you’ll need it.

3)  Revise Your Budget

If you don’t have a budget, what better time to create one than when you’re stuck at home.  If you do have a budget, consider creating a version that fit your expectations during stay-at-home recommendations or quarantine.  For example, our budget is going to have changes like (a) Gasoline down 80% since we aren’t driving, (b) groceries up 50% because we are eating three meals a day at home, (c) restaurants down 75% since we aren’t eating out, (d) utilities up 33% since we are at home Mon-Fri during the day now, (e) gym expense down 100%, and (f) toilet paper usage up 200% – just kidding… or am I?!  Your budget should have similar adjustments, maybe for childcare, healthcare, or entertainment, depending on your situation.  Knowing where all your money is going can offer a huge sense of relief for those who might normally get a feeling of dread thinking about the future.

4)  Update Your Resume And References

At least 3% of Americans have already lost their jobs, and some estimates say that another 10-15% more could lose their jobs in a worse-case scenario.  Get a leg up on your next job search by updating your resume and calling your references today.  Having everything in order could save you a day or even a week if you were to lose your job and be the difference between landing the next job that much sooner.  Even if you keep your job, you might be able to leverage the updated resume for future opportunities. On a similar note, consider how you might generate some alternative sources of income as well.

5)  Maintain Your Physical Health

Sheltering at home for extended periods of time will require changes to your health habits.  Shopping with a grocery list, scheduling meals (and snacks), taking a daily walk/run, building a new exercise routing, drinking plenty of water, and washing your hands are all new routines that you will have to incorporate into your day to maintain your health.  Make sure you and your children’s vaccinations are up to date as well.

6)  Contact Your Creditors

If the virus is having a significant impact on your ability to pay your loans, you may be entitled to assistance.  Your debt probably won’t be forgiven, but you may be entitled to waived late fees, “interest only” payments for one or more months, a loan extension, or a similar offering from your lender.  Your financial institution probably won’t give this to you automatically, so take the time to give them a call.  NerdWallet recently posted an article outlining what to do with many national banks, and smaller locals banks often have similar programs.  In the U.S., federal student loans will automatically receive a six month forbearance starting March 13th and ending September 30th, meaning no payments are due and no interest will accrue (part of the CARES Act).  Log into your student loan account to make sure they didn’t make a mistake.  These programs generally do not affect your credit history, though confirm with the lender to be sure.  Finally, your landlord, utility companies, medical billers, and other “creditors” may be willing to work with you and come up with a plan.

7)  Stay Remotely Connected To Loved Ones

With little more than an internet connection, you can stay in touch with your family and friends.  Services like Zoom, GoToMeeting, FaceTime, Skype, WhatsApp, Houseparty, and Discord all offer video calls with other people using the app, and all are available on either a laptop, tablet, or smartphone.  Virtually all are free to use, though some offer a premium version for a fee.  I’ve used all seven over the last three weeks and would recommend any.  If you want to have some fun while you’re at it, you can play a board game, enjoy some appetizers and wine, or even watch Netflix with your friends remotely.

8)  Limit Media Consumption; Disconnect From Social Media

Limit your daily media consumption and stick to reputable sources only.  No Wonkette.  No InfoWars.  No talking heads.  NPR’s “Up First” podcast is the best in this regard that I could find: factual and not emotional.  I also recommend disconnecting from social media entirely, as I did five months ago without a single regret.  You will never improve your life as a result of social media use.  As a quick side story, we had a relative recently call us in a panic because they read… on Facebook… that China created the virus to start a biological world war.  We then reminded them that the virus started in China, killing hundreds of Chinese citizens before spreading to other countries, so it made no sense that China would be trying to use it as a weapon.  It is critical to avoid this misinformation.

9)  Stay Properly Insured

Now, more than ever, it’s important to verify you are properly insured against possible losses.  Review your exact coverage limits and terms to confirm they are in line with your needs.  Avoid being overinsured or underinsured.  My rule of thumb is that you should always have insurance on important things that you could not afford to pay for or replace in cash.  Health insurance?  Absolutely.  Home insurance?  Yes!  Auto liability insurance?  Always.  Auto collision?  Only if your car is still worth more than one month’s gross pay.  Renter’s insurance?  Maybe, if you own legitimately expensive things that would be costly to replace.  Term life insurance?  Let’s talk about this one in another article, but generally yes if you have young children or a non-working spouse.  Whole life insurance?  Generally, no.  Cell phone insurance?  No.  Insurance on your $30 gadget?  Heck no!

10)  Don’t Overreact To Changes In The Market

We all know the maxim for investing: buy low, sell high.  Yet, when we see our investments in free fall, human instinct tells us to sell.  Don’t fall into this trap and try to remember a few things. 

– First: “Time in the market always beats timing the market,” so stick to your weekly or monthly retirement contributions if you can.  It remains true that the longer your investments stay in the market, the more value they will gain over time, on average.

– Second: The stock market reflects far more irrational emotions than it does actual economic productivity, such as fear (when stock prices go down) and excitement (when stock prices go up). 

– Third: You can’t lose money unless you bought at the peak a few weeks ago and sold at the bottom.  Especially if you’re retired or close to retirement, do not panic and sell off everything now, after it’s lost so much value.  Trust that your long-term strategy will work.

Invest steadily and consistently, in line with your risk tolerance.  A bad year should not alter your behavior.  You should always invest for the long-term, with an emphasis on low-cost mutual funds and EFT’s rather than individual stocks.  There has never been a 20-year period in our lifetimes where the market has lost value. 

Please consider commenting below (I will write back!) and sharing this or any article with your loved ones.  Stay healthy and stay safe!

100 Money Hacks (that take 5 minutes or less) – Part 3: Spending Less

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Before you click away from the third installment of our 5-part series (in which we examine 100 ways to improve your finances that can be done in 5 minutes or less) under the guise of “I’m broke and can’t possibly spend less than I do”… let’s start with the single greatest equation in personal finance, with a little assistance from our friend Penny.

“Hold on… WHAT!?!?”

You read that correctly. Saving $1 per day (or $30 per month), invested for 30 years at a 7% real rate of return (the market average), will earn you $36,500 in retirement.  Coincidentally, this is about the same amount of money that the average person spends per year here in the U.S.  If you have more than 30 years to go to retirement or if you live in less expensive parts of the country world, the effect is even greater. 

Sure, the effect diminishes if you are closer to retirement, but you can see why Einstein called compound interest the 8th wonder of the world.

Start saving money today.

Part 1: Budgeting

Part 2: Increasing Income

Part 3: Spending Less

Part 4: Health and Wellness

Part 5: Everything Else!

1) Get 3 quotes before every purchase. No exceptions. I cannot recommend this enough. Holiday shopping? Search Amazon, Google Shopping, Target, and Wal-Mart at a minimum. Financing a home? Get formal quotes from three banks, at least one national and one local. Travel? Kayak, Expedia, airline or hotel directly. New apartment? Internet service? Car dealership? Insurance? Doctor? Get prices from at least three providers. There are no purchases for which this wouldn’t apply, especially in a world where information is available in-store at your fingertips. If the expense is large (house), recurrent (cell phone), or both, I estimate I save 15-25% each time I do this, and in some cases, I’ve saved over 75%.

2) Master the 30-second rule to avoid small impulse purchases. Have you ever been in the supermarket checkout and thought: “Boy, those Skittles look sooooooo good right now!” How about in the mall: “Look at those new shoes!” In your living room: “Oh man, I could really go for a new video game!” Stimulus. Response. Stimulus. Response. The best way to avoid these smaller impulse purchases is via what I and others call the “30-second rule.” Stop and think about the purchase for a full 30 seconds. In that time, ask yourself some questions: Does this purchase provide genuine fulfillment to your life no filled by something you already own? Is there a better more effective alternative? Will I be proud that I spent this money at this time next year? In 30 seconds, your impulse towards less-worthwhile purchases will often vanish.

3) Master the 24-hour rule for larger purchases. Like the 30-second rule, when you’re considering a larger purchase (define your own idea of “large:” $20, $50, $100), wait 24 hours before making the purchase. Doing so will give you time both for the impulse to fade and for you to complete researching alternatives. If 24 hours pass and the need is still there, you’ll be able to make the purchase with more confidence and less regret.

4) Remove a non-essential recurring payment or subscription. Recurring payments are the death of middle-class finances. Did you sign up for magazines years ago that are sitting in unread stacks in the bathroom? Agreed to donate monthly to a charity you’re not passionate about? Haven’t been the gym in weeks? Kept your Hulu subscription even though you only watch it once or twice per month before you’re fed up with the ads? Chances are good that there is at least one non-essential charge to your bank account or credit card that you could easily do without. Take a moment and just cancel it. Remember, you can always add it back if you change your mind.

5) Make “that” phone call. You hate the phone. I hate the phone. And most of the world hates the phone. As a result, we often put off making a phone call to a business or person that could potentially save us money. Stop putting it off and just make the call.
• Call your internet/cable provider to negotiate a lower rate (I just did this and saved $25 per month just by asking).
• Call your bank to see if they are willing to waive a late fee (did this too and was refunded the full $35).
• Call your cell phone company or a new one to improve or change your service (this too… you get my point).
• Call landlord to lower your rent or improve your apartment.
• Call your repair person to fix that inefficient heater.
• Call your credit card to get a lower rate.
• Call your town/county assessor to discuss your tax bill.
• Call the doctor to cut your bill.
• Call to your lender or a new lender to see about a refinance.
• Call the credit bureau to get an error fixed.
• Call your card issuer to report a fraudulent transaction.
Sometimes your efforts won’t work, but keep in mind that if you are giving them money for a service, you hold all the cards (no pun intended).

6) Shop for a new cell phone plan. At least yearly, take the time to shop for a new cell phone plan. Providers are notorious for slowly increasing prices, preying on your complacency while your bill skyrockets. Competitors could offer new customer deals worth exploring. Many smaller providers even use the same towers as the big providers, so you’ll get the same service for less. Paying a termination fee to get out of a contract could be worth it. I’m in the process of switching now and expect to save well over $100 per month!

7) Check your tire pressure. Do this one today. I’m ashamed to admit that I hadn’t done this for almost a year, and I had one tire that was almost 10 PSI lower than recommended. After inflating it, I increased my mileage by 10% and cut my gas bill by $100 per year. Checking and refilling combined took less than 5 minutes. Your car will be safer too. Build a routine by doing it the first day of the month.

8) Compare local gas prices. Once per week or month, check out gas prices near your home, office, or other places you frequent. Compare online using a trusted app or site like GasBuddy. A minute of your time could easily save a dollar or two at the pump. Just be careful if the station charges extra for using your card.

9) Get a new insurance quote. The average person sticks with their insurance company for 10 years. Do not be part of this statistic. Set a reminder to start shopping for insurance 30-60 days before your policy expires every year for every insurance that you carry: auto, home, health, life, etc. Like the commercials say, you can get a new quote in just minutes and potentially save $100’s. Research all options, not just the name-brand ones. I’ve switched my car insurance company 3 times, my health insurance 4 times, and my homeowner’s insurance twice… in the last 6 years alone. The savings have been in the thousands, and making the switch took just minutes each time.

10) Review your insurance coverage. You should also review your coverage to make sure you’re not paying for insurance you don’t need. Are you overinsured (too much insurance)? Underinsured? Have you reviewed all options (high vs low deductible)? Are you paying for junk coverage, like hotel stays or car rentals? Have you been keeping track of your annual medical expenditures so you can do the math on which option is better? As a rule of thumb, you should only purchase insurance for items that you absolutely cannot afford to replace in cash. Medical insurance? Yes. Liability on your car? Yes. Collision on your car? Only if you don’t yet have an emergency fund. Cell phone? Armchair? Your computer mouse? No, no, NO!

11) Go to the grocery store with a list. And… go when you’re not hungry. And… stick to the list religiously to avoid impulses. Shopping lists aren’t just to prevent forgetting something you need; they’re for avoiding things you don’t! You will buy more food and less healthful food if you shop without a list, especially if you’re hungry or make “exceptions” from the list for items marketed well by the store. Science backs me up, as does my own history. Making a list takes no time and can easily shave 10% off your bill in wasted food. This one will even save you time in the store. We keep a list of groceries in the kitchen so we can add what we need as we notice it and just bring that list to the store.

12) Seasonalize/self-insulate your home, and program your thermostat. Whether you’re of House Stark, House Targaryen, or House Centsee, winter is here! You can easily save 10-20% on your heating bill by taking steps like: locking your windows, changing your HVAC filters, scheduling furnace maintenance, covering your windows and doors with plastic sheeting, sealing doorways, insulating your attic or pipes. Each requires no specials skills and can be done quickly. Seasonalizing helps the A/C bill in the summer as well. When you program your thermostat, remember that 68°F during the day and 64°F (18-20°C) is warm enough for the winter, and 76-8°F (25°C) is ideal for the summer. Save another 15% of your bill by programming it up/down 10°F while you’re away at work or school and return to normal when you get home. Many let you control the temperature via an app as well. If you don’t have a programmable thermostat, get one. It might be free (as it was for me), and it pays for itself in a matter of months (free or not).

13) Install a smart switch and/or surge protector to reduce energy use. Phantom energy, or energy that is drawn from devices that are plugged in but not turned on, is a little overhyped by some but is a noteworthy cost (5-10%) of your energy bill. A smart switch or surge protector can be an easy way to truly turn these devices off when they’re not in use.

14) Buy LEDs (or CFLs) and toss out those incandescent light bulbs. Imagine there were a product that lasted 5-20 times longer than a regular light bulb and used 75% less energy (cost) to operate. Imagine no more; these products exist, and they’re called LED (light emitting diode) light bulbs. LED’s are maybe a $1-1.50 per bulb (or, once again, free), but it can save you a fortune in the long-term. Sources confirm that each fixture using incandescent bulbs cost $201 over a 23-year span and LED’s cost just $38 (includes upfront cost and ongoing cost of electricity). Multiply this by the average number of light bulbs per household (about 45), and reap thousands in savings.

15) Make your own coffee. Few things get more hate in the world of personal finance than coffee. But a quick look at Penny’s equation at the start of the article will tell you why. $5 per workday plus tip compared to about $0.25 at home could mean $100,000+ in retirement and/or years off your working life. No, the drive-thru is neither quicker, nor tastier, nor cheaper. Learn how to brew your own high-quality coffee, and save vast amounts of time and money.

16) Do a quick online coupon code or rebate search before your purchase. Coupon codes are a great way to save on a purchase that you would have made anyway. I’ve gotten hundreds back from eBates over the years via a convenience browser plug-in for legitimate essentials that I was already buying from the lowest-cost online retailer (after getting three quotes). Dosh is another option. However, you should never let coupons dictate your spending or cause you to make a purchase you weren’t going to make.

17) Get a quote to refinance any high interest debt.*** Yes, that’s three asterisks, because there are three ways that refinancing debt usually goes:
• The first way is that you refinance your high interest debt (ex. credit card) into a lower interest loan (ex. short term loan with a qualified bank) with a similar repayment length and low closings costs, cut up the credit cards, make tangible changes to your spending habits that got you into debt in the first place, save thousands in interest over the term of the loan, and free yourself from debt.
• The second way is that you refinance your high interest debt into a slightly lower interest loan but with a much longer repayment term (ex. 30 years) and/or high closing costs and/or balance transfer (i.e. robbing Peter to pay… Peter), don’t cut up the credit cards, maintain your poor habits, say to yourself “Whoopie! I now have thousands available on my credit limit! Time for a shopping spree! I promise I’ll be better… tomorrow!”, pay tens of thousands more in interest because you chose to add to your debt load, and perpetuate the debt indefinitely.
• The third way is that you “refinance” your high interest debt into a shady loan with an even shadier lender (ex. payday loan, buy here pay here loan, snowball loan, non-bank financial institution loan) using the shadiest (borderline criminal) credit “recovery” or “counseling” service with outrageous fees. I don’t need to tell you how the rest of this story goes other than that it ends in court and financial desolation. Seriously, if you take away just a few things from this blog, please remember to NEVER use a service like this.
• • • Guess which one of these I recommend!?!? • • •
Refinancing can be a good way to save on interest, but if you don’t change the behavior that got you into debt in the first place, refinancing will just make things worse.

18) Ask for a discount. Retailers and service providers are desperate for your business and often happy to make a deal if you ask. Supermarkets often have coupons under the counter or at customer service if you’re willing to ask. Merchants might be willing to offer a discount if you’re willing to pay in cash, especially for larger purchases. Cash-based service providers are always negotiable. Internationally, haggling is frequently the norm, and tourists miss out on significant savings. I’ve saved hundreds over the years just by asking. Don’t be shy.

19) Research low-cost ways in your neighborhood to have fun. Cities and towns often have free public events every week. Parks, libraries, walking trails, lakes, pools, fairs, markets, events, concerts, and festivals in nearly every nearby municipality. Check out how yours communicates about upcoming events and save money on a date night or a family trip.

20) Start an in-depth price comparison of local grocery stores. There are now over 50,000 items in a grocery store, but most people buy less than 50 of them on a regular basis. With so few items to compare, it’s worth doing a comparison of the items you usually buy at 3-4 grocery stores nearby. Take 5 minutes to do this each of the next 3-4 times you shop, by buying the same items you always do and comparing the results on a spreadsheet. Grocery stores deliberately make their pricing schemes complex, so be objective and follow the numbers. If one store regularly has better prices on 80% of what you buy, there’s your answer. Don’t be lured in by a sale or (God forbid) the brand of the grocery store that appeal to status-seekers. The local discount grocer sells the same products at better prices than the upscale “poshmart” (ahem, “Whole Foods”).

100 Money Hacks (that take 5 minutes or less) – Part 2: Increasing Income

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The second installment in our 5-part series (in which we examine 100 ways to improve your finances that can be done in 5 minutes or less) has perhaps the most eye-catching title of the bunch:

Making Money!

Part 1: Budgeting

Part 2: Increasing Income

Part 3: Spending Less

Part 4: Health and Wellness

Part 5: Everything Else!

That’s right.  While there are certainly some very time-consuming ways to increase your income, like going to college or breaking the world record fingernail length, the tips here can be completed or at least started in just 5 minutes.  And no, none will require even an ounce of luck, like having Bob Barker tell you that “You’re the next contestant on The Price Is Right!”

Is Bob Barker still alive?

Do people still watch game shows?

Anyway, without any further ado!

1) Keep learning. This one should arguably be #1 on all the lists. Showing that you care about continuing your development shows your manager that you are eager to contribute to the company. To get you started, there is a wealth of quality online material and courseware at little to no cost. Sign up in minutes for free courses using edX, Coursera, Duolingo (Google phones, Apple phones), or an industry-specific program to develop professional skills. If a full class is too much, watch a TED talk instead of TV or social media. Think about what skills you need to advance your career, and start learning them today. You may not see the benefit immediately, but incremental efforts pay off over time. Developing your skill-set is perhaps the most important factor to improving your salary in the long-term. Don’t let your talents become outdated; keep learning!

2) Research all your company benefits. You’re likely aware of the big ones like health insurance (including HSA’s), dental insurance, and retirement/401k/403b accounts and matching (You absolutely must do this if you haven’t… a whopping 1 in 5 employees ignore this truly free money). However, don’t overlook that your company may have some lesser-known benefits. Mine offers free passes to local attractions, a discount on a cell phone service, free disability insurance, free life insurance, and even a free fitness tracker through the health insurance plan, but you have to opt in. Ask your manager or HR for a full list of these benefits and take a moment to enroll.

3) Sell your skills or labor. Are you a proofreader? Translator? Transcriber? Writer? Driver? Mechanic? Cleaner? Handy person? Ironer? Web designer? Resume expert? Personal trainer? Dishwasher? Babysitter? Dog walker? Graphic designer? Entertainer? Tutor? Teacher? Gamer? Dungeons and Dragons expert? Friend? There are hundreds of websites for selling these skills, and most let you sign up and start offering your services in minutes.

4) Rent out your belongings. Services like Turo, Spot, and Fat Llama let you list items for rent like your car, parking spot, clothing, lawn mower, camera, bike, scooter, and wedding dress. Each transaction only takes a few minutes, and the cash you earn is a better bargain than your unused stuff collecting dust.

5) Rent unused space in your home. Most people think of Airbnb as a way to rent out an unoccupied house only, but you can easily rent out as little as an unused bedroom. You don’t have to do it all the time, just when demand might be high for your area. For example, Lady Centsei and I live near a university, and renting out a room for parents’ weekend or graduation could be hugely profitable, and we’d only need to deal with guests for a few nights per year. If the idea of people in your house is too uncomfortable, some sites will let you rent out space on your lawn or driveway too. Signing up is quick and easy.

6) Sign up for an online side gig. I haven’t used these personally, but a family friend who is a full-time student makes an average of $10 per hour on Amazon’s MTurk and another makes about the same doing online surveys. It’s not much, but this can be a nice supplement if you have a flexible schedule and a bit of extra time. A note of caution: use a reputable service, and don’t burn yourself out.

7) Sell unused household items on eBay/Craigslist/Amazon. Textbooks, video games, and electronics have decent returns on the second-hand marketplace, and let’s be honest, I know you have some extras sitting around your house. Price your items fairly and ignore pesky time-wasting buyers. If the goods need to be delivered in person, meet in a safe, public location. Only accept cash, bank-certified checks, or PayPal/AmazonPay to avoid getting scammed.

8) Sell a collection. Coins, POGs, video games, basketball cards, Pokémon cards, key chains, shot glasses, even unopened bars of soap from hotels… all junk I’ve collected over the years. However, maybe only one or two of these bring me real joy, and the rest was just a fad that came and went. If the collection has legitimate resale value to other hoarders collectors, sell it. I sold a dozen video games this way for no more than a few hours’ work and made over $500 from games I hadn’t played in decades. If it has no resale value, take a picture of it “for the memory” and donate it (tax advantages may apply) or trash it (for the peace of mind). Selling your jewelry, art, antiques, rare books, or sports memorabilia could not only generate enough money to pay off some debt, but also prevent your wasting additional money on the collection down the road.

9) Sell or donate your old clothes. A few times per year, Lady Centsei and I have a party where we go through and donate our old clothes, or sell the ones that are still in good shape. We pick up an old box and each go through our closets at light speed. An old but great rule of thumb is that if you haven’t worn it in the last year, then you won’t wear it in the next year. Donate it!

10) Return “that” thing. Another task we’re all guilty of putting off until it’s too late. We buy something we don’t need, saying “oh, I’ll just return that.” The window goes by and now you’re out some hard-earned dollars. Set aside a specific time each week to return everything you need to. Most companies make this easy. Pick a specific time each week/month to do returns. Every dollar that you get from a return is like earning $1.25-1.50 in income before taxes.

11) Ask for a raise. Public speaking, heights, the dentist, and asking for a raise all scare people more than death itself! Fear not. It is very normal to ask, and if you’ve been doing great work for a year or more, do not wait until its “time” for a raise. Today is the time to ask. Research similar roles for your experience level, make a list of your largest accomplishments, and find some time when your manager is in a good mood. Schedule a meeting and start the conversation by showing appreciation for your role and your increased responsibilities, and follow up by saying that you’d like to talk about increasing your salary to best reflect the value you bring to the company. If you have a specific figure or percentage, discuss it, but read the situation and offer a range if appropriate. Do not mention anything about your personal finances or bring up anything threatening or negative in the negotiation. Be open to other ways of increasing your compensation too, such as a bonus, added vacation time, or a more flexible schedule. If you still get a “no,” know that this may mean “not yet.” Your boss is human and may consider your accomplishments during regularly scheduled raises as well. However, it’s also possible that you may need to leave in order to find get a better salary, and that’s OK. Your skillset and work ethic will follow you anywhere.

12) Get started on a work project that will earn you a raise. Most of the progress I’ve made as a professional can be attributed to a handful of projects that propelled my career. I identified a task that needed to be done, volunteered to complete it in a time frame that I knew was realistic, went above and beyond the expectations, and was “noticed” by the right individuals upon the project’s completion. I stood out among my coworkers and reaped the rewards when it came time for raises, bonus, and promotions. Down the road, these projects helped me land jobs at other companies, as they were the best way to ensure my resume showcased my abilities. Your “project” doesn’t have to be at work, it could be a new hobby that you enjoy that helps you develop a special skillset. Data science, computer programming, people management, app/web development, artificial intelligence, and public speaking (conquer your fear!) are all high-demand skills that can be taught and mastered through projects.

13) Update your resume. As your network grows and as the economy weakens, very few people can ever have 100% job security. Take a few minutes to update your resume every 6 months (when you change your clocks) with even just a line or two of major recent accomplishments or proficiencies. If an opportunity does arise either at your current job or elsewhere, you’ll be prepared.

14) Update your LinkedIn/professional profile. Social media can be a time waster, and I see plenty of people get sucked down the rabbit hole of professional websites like LinkedIn using it as they would any other social media platform. Don’t. Rather, update your professional profile every 3 months with relevant information and remove anything outdated. You might get contacted by a prospective customer, business partner, or other opportunity worth pursuing.

15) Rebalance your retirement portfolio. Here’s a rule of thumb that I fully endorse: Your retirement portfolio should have stocks (riskier) investments equal to 100 minus your age, with the rest in low secure (low-risk) investments. In other words, a 30-year-old should have 70% stocks and 30% low-risk bonds. For a 75-year-old, 25% stocks. Once a year, take a few minutes to look at your IRA and 401k accounts, and make a few adjustments if you’re way off. Many brokerages and 401k administrators are offering something like a “Target Retirement 2050 Fund” that basically automatically does this for you. If the expense ratios are good, these can be a great focus for less experienced investors. Don’t do this every day, and definitely don’t panic and start selling when a recession hits.

16) Find a new bank. Changing banks can be a hassle, but so can excessive fees and low interest rates. There’s no one-size-fits-all approach here, so just prioritize what features are most important to you. High savings rates (yes!)? Low fees? Good online features? Quality products and services? Nearby locations? A brand (NO!)? Shop around for banks once per year, and be honest if yours is meeting your needs. If you can manage it, there’s nothing wrong with having more than one if, for example, one has an excellent savings account and one has an excellent checking account.

17) Open a high-yield savings account. If you’re earning any less than 1.70% in today’s market on your savings account, you’re missing out on free money. Do a Google search for “High Yield Savings Accounts” at both national banks and local ones, and take a few minutes to open an account. If you do, $1,000 in your savings account is almost $20 in interest per year in today’s rates. Tell me that’s not worth 5 minutes!

18) Open a brokerage/stock account. If you have 3-6 months savings in an emergency fund, and if you’ve maxed out your retirement accounts, and if you’ve paid off all high interest debt, then it might be wise to open an account with Fidelity or Vanguard to invest your excess savings in the stock market. Do not day trade stocks. Do not panic when the market fluctuates. Don’t pick fad stocks that your heard about on TV. Instead, invest in index funds that have low expense ratios and an acceptable risk profile for your age and risk tolerance. Invest for the long term and diversify your investments. “It’s about time in the market, not timing the market.”

19) Lend your money via a Peer to Peer lender. P2P lending is higher risk (and again, I do not give advice on this website), but this is a low-effort way to possibly generate higher returns. You lend money to qualified buyers at rates higher than your savings account; they borrow money at rates lower than their credit cards. You may want to consider this as a small percentage of your high-risk investments. Signing up and connecting an account can be done in minutes. Do your homework.

20) Ask for help from your friends and family. You’re not alone, and your trusted and knowledgeable social circle can be a great resource: looking over a resume, getting a lead for a new job, finding money-saving places or ideas, making resolutions, and so on (not all friends will give Centsei-approved advice). Think very carefully about asking your closest connections for a loan directly, however, as financial obligations and dependency can quickly complicate even the closest relationships.

100 Money Hacks (that take 5 minutes or less) – Part 1: Budgeting

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grayscale photography of analog pocket watch

Welcome to the first article of the Top 100 Money Hacks series, where each tip takes five minutes or less.

Our days are crowded: Sleep (when we can manage it), shower, eat breakfast, get ready, commute, work all day, commute home again, eat, wind down, sleep.  Repeat.  With these “essentials” seeming to take 20+ hours of a 24-hour day, it’s no wonder we don’t drink enough water or get a fraction of the exercise we should, much less manage our finances.

But we do have the time.

Believe it or not, nearly every method of improving your finances takes just 5 minutes.  Most can be completed in 5 minutes, while others can at least be started in 5 minutes and give you the power to combat the inertia of a task that feels too big begin. 

You’ve got this!  In the time that it takes you to wait for your coffee, sit through a round or two of commercials, or check social media, you could be making yourself a millionaire.

In this 5-part weekly series, we will be examining 100 ways to improve your finances that can be done in 5 minutes or less.

Part 1: Budgeting

Part 2: Increasing Income

Part 3: Spending Less

Part 4: Health and Wellness

Part 5: Everything Else!

Start simple by just doing one task today.  Try another tomorrow.  And, if you make a habit of regularly checking off items on this list, your future self will thank you!

Let’s start with Part 1: Budgeting, or “how to allocate the money you have and plan for the future”

1) Make a simple budget.  You cannot manage what you do not measure.  Making and monitoring a real budget is perhaps the most vital step to your financial well-being.  I’m a big fan of the 50/20/30 rule: devote 50% of your income to essentials, 20% to saving, and 30% to discretionary/fun. This savings figure, 20%, is the amount of money you should be saving for retirement and longer-term goals.  Doing so will put you profoundly ahead of your peers on the road to financial independence.  67% of people don’t budget at all.  For example, if you’re making $60k, calculate $60,000 x 2 ÷ 10 = $12,000 per year… or $1,000 per month.  

Let’s make this even easier:

2) Update your budget regularly.  Once your simple budget is made, get in the habit of comparing it to your actual expenses and improving it over time.  You can even begin to develop a yearly budget to account for expenses that occur less than once per month.  There is no such thing as an unexpected expense, and you should plan for these less-frequent one-time expenses (a medical bill, a car repair, a tax expense, a fine, an appliance repair) in your budget over time.  Every single dollar should have a designated purpose at the beginning of the month, and no expense should be truly unexpected.  Using the above example, the individual devoted $1,000 per month to retirement savings and has $4,000 remaining per month.  Calculate the absolute essentials out, including taxes, rent, utilities, food, and healthcare.  Allocate a percentage to your emergency fund, if you don’t have one.  Devote the next portion to paying down your higher interest debt, if you have any.  Assign the next allotment to longer-term savings goals, like retirement savings, a house, a car, or investments.  Whatever percentage you have left over can be your discretionary/fun money.  Stick to your goals, and be careful not to let this slip away as your finances improve.  Don’t think you can get away with spending and “saving whatever’s left over at the end of the month;” there won’t be anything left!  Save first.

3) Prioritize your financial goals.  Too often, we think about our financial goals in an abstract way.  “Pay off my student loans.”  “Buy a house.”  “Retire early.”  Yet, few have written down these goals on paper or a spreadsheet and calculated precisely what it would take to make this happen.  Take some time every month to prioritize your financial goals, rather than hoping you’ll find money at the end of the month to devote to them.  Take concrete steps, one at a time, towards achieving these goals.

4) Sign up for a budgeting tool.  Tools like Mint (free), Clarity Money (Free), Personal Capital (Free), or YouNeedABudget “YNAB” (Free trail w/monthly fee later) often let you connect your bank accounts, retirement accounts, credit cards, and other financial accounts in a single place.  You can set goals, classify expenses, and calculate your net worth instantly.  Check and update it weekly (or daily) to better keep track of your money.  They can also give you spend alerts when you’ve gone over budget or if a bill is due soon. I use Mint and love it.

5) Calculate your net worth.  Whether you use Mint/YNAB or figure it all out by hand, calculating your net worth every month (or more) frequently is essential.  Net worth = Assets – Liabilities.  Assets are everything significant that you own: your house, your car, your retirement accounts, your investments, any “payables” owed to you by friends, family, or businesses, and anything else that has significant resale value (no, your 50” television and custom rims don’t count).  Liabilities are everything you owe: your student loans, your credit card debt, your mortgage, your car loans, and anything you owe to family, friends, or lenders.  Take a few minutes to create a chart and see how this number changes over time.  Your net worth is the single best barometer of your financial health.

6) Automate one aspect of your savings.  Again, the best way to save money is to automate it so you never have to “decide” to save or spend.  Most payroll companies let you deposit to multiple accounts, so make one of these your emergency fund, your retirement fund, or your long-term goal fund.  Most banks let you make a recurring payment like this as well.  Start by having this 20% taken out of your paycheck each week and automatically submitted to savings (ex. your IRA or your company’s 401k plan) before you pay for anything else.  I call this the “save first, essentials second” mentality.

7) Create an IRA or other investment account.  An IRA or Individual Retirement Account is one of the greatest vehicles for savings and can have outstanding tax benefits.  Half of Americans and nearly 90% of people across the globe don’t have a single dollar invested.  All it takes is 5 minutes and $100 or less to start saving for retirement.  I recommend Vanguard and Fidelity.  The key is to find a company that has options with no minimums and zero/ultra-low expense ratios.  If you don’t have an account, don’t be intimidated and don’t worry about the specifics just yet.  You can do it.  Just sign up for an account, link a bank account, make an initial contribution to a zero/low cost index fund (VTI or FZIPX), and set up an auto-contribution if you can.  Don’t rely on your pension; don’t rely on social security; rely on yourself.

8) Contribute to your IRA.  In just a few minutes per month, you can easily set up a one-time or recurring contribution to your IRA.  You can set this up either directly through your broker or even with your payroll to automate your savings (see #6!).  In 2019, you can contribute up to $6,000, so if this is your goal, make a monthly contribution of $500 or about $120 per week.

9) Set essential bills to auto-pay.  Assuming you always leave a reasonable balance in your checking account, which I would recommend, it makes sense to set your truly essential bills to auto-pay each month so you don’t get hit with late fees.  For example, setting utilities, rent/mortgage, insurance, and minimum credit card payment to auto-pay could save you money on fees long term. Make sure you don’t use auto-pay as an excuse to spend more.

10) Plan out the timing of purchases during the year.  Being patient and planning ahead can save you 20% or more or many major purchases.  The best time book travel?  January, February, and August.  Fitness equipment?  January and February.  Holiday decorations?  After the holidays.  Gym memberships?  June and July.  Cars?  August and September when the dealers need the prior year’s models off the lot.  Halloween candy?  After Halloween.   Wedding dresses (wait… plural?…)?  December when they need to make room for new year’s designs.  Best days to book travel?  Tuesdays, Wednesday, and Saturdays.  Budget these expenses into a your yearly budget and enjoy the savings (or should that be “SAVING???”).

11) Review your monthly bank statements.  Taking a few minutes to go through your bank statements is an excellent financial habit to develop.  Even if you only identify one or two fraudulent transactions or unnecessary recurring expenses and correct them, your time was well worth it.  Reconcile this with your budget to see how you did each month.

12) Review your monthly credit card statement.  Similar to the above, look for fraud, bogus fees, or unnecessary transactions on your card statements and fix any findings.  Don’t neglect this.

13) Adjust your tax withholding.  I’m not a tax adviser, but you should review your tax withholding if any of the following apply: you get married, you have a child, you had a substantial refund last year, you had a substantial tax liability last year, or your income is changing significantly from expectations.  You may need to claim more “allowances” if you’re withholding too much for taxes or claim fewer allowances if you’re not withholding enough for taxes.  If you’re self-employed, a business owner, or a 1099 contractor, you may need to ensure that you’re sending the right quarterly estimated installments to the IRS.  If you’re not from the U.S., check your local and federal responsibilities to make sure you’re not over or under paying.

14) Make a meal plan for the week.  Budgeting = Planning.  With a simple meal plan, you’ll waste less food, eat healthier, save time, stay orderly, and avoid using a restaurant as your kitchen.  This small task pays for itself time-wise and budget-wise many times over.

15) Make an inventory sheet for your refrigerator or freezer.  Americans waste about 40% of their food, and most other developed countries aren’t much better.  Waste often starts with simply not knowing what is in your kitchen, and taking 5 minutes per week to track you inventory has been proven to reduce waste significantly.  You spend at least this amount of time throwing out moldy leftovers and going back to the grocery store anyway.  Start with this or purchase an inexpensive reusable like this.

16) Prepare snacks for the car or office.  Save yourself a trip to the drive through or vending machine by preparing or purchasing healthier snacks, in bulk, for times when you need a quick snack.  Doing so can cut your empty calories by 50% and your costs by 75% over the alternatives.

17) Take the first step towards estate planning.  Budgeting is a life-long endeavor.  For a larger estate, you will want to contact an estate attorney from the beginning.  For the smaller simpler estates, you can create a simple will yourself or at least begin to summarize your assets and wishes until you do have the time to work with an attorney.  In a document like a will, be sure to include the basics like stating your full legal name and address and age, testifying that you are of sound mind and not under duress, naming an executor, identifying you heirs with no ambiguity, including witnesses, and getting the document notarized.  The more work you put in yourself, the more you’ll save in legal fees (and the more trouble you might prevent between your heirs).

18) Write down and evaluate today’s expenses.  When you’re first getting started with your budget, make a nightly habit of writing down everything you spent money on that day, including automated payments, and consider one simple thing:  Did each purchase bring you joy?  This exercise shouldn’t make you feel guilty, but you should reflect upon what spending is actually necessary and begin to take steps towards forming better habits.  Be willing to change your behavior when you realize what’s really important to you.  As this process becomes familiar, you can start doing this monthly for the larger purchases only.

19) Write down how you spent your time for the day.  Budgeting is as much about allocating your time as it is your money.  Writing down your time spent each day is a great habit that I’ve been trying to develop more thoroughly myself.  Take a few minutes to write down, in 15-minute increments, exactly what you did that day.  Use a digital template if it’s easier.  Be as honest and specific as possible.  You’ll likely find that you waste a bit more time that you realize, and you can slowly work to better manage your time throughout the day.

20) Set a reminder.  Set a reminder on your phone or calendar to do anything on these “100 Tips” posts, whether it’s something to do multiple times per day (walking, drinking water) or once per year (annualcreditreport.com, shopping your internet/cell plan).