Growing up, us country kids would often pick up a long stick and then start doing a limbo dance. One of us would start humming a tune and we’d take turns trying to navigate our bodies under the stick. After each successful pass, we would lower the stick and see how low we could go.
We all were pretty bad at it at first, but we still did it. After some time, all of us improved with how low we could go. It was fun!
I realized that when it comes to our spending, we playing a limbo game with it. Instead of a stick we use our previous spending and with each month we tried to spend less. After we were able to do it, we would lower the spending some more. We kept repeating the process to see exactly how low we could go. Now, we rarely spend money on non-necessities. And for the necessities, well, we’re spending way less on those too!
Here are some of the things that help us to play “spending limbo”:
We have no spend days. On certain days, we avoid the store. All too often, we were visiting the store every day to pick up a few things…which turned into many things. First we tried one no spend day, then we’d add another day and then another day. Now we can go a full week without spending any money (not counting paying bills).
We sometimes take it pretty slow. How low can we set our heat? During the day, while my son is in school and my husband and I are the only ones home, we have our heat set at 64 degrees. We tried doing it like that right off the bat, but we both were freezing so we turned the heat back up to 67. After a while, it went down to 66…then 65…and now it is at 64. It may even go lower by the end of winter.
We don’t purchase things on impulse. We were $37,000 in credit card debt. We were very good at impulse purchases! For the first level, if we saw something attractive in the store, we would walk around the store a while first before purchasing it. Sometimes, we would change our minds. For the next level, we had to leave the store. Now, if I see something attractive in the store, we go home and I’ll often research it on the web and if it still looks nice we’ll go back to the store in a few days.
We plan purchases. We used to make a mental list of things we needed before we went to the grocery store. The result? We were spending way too much with each trip! We’d forget what was on the list and buy tons of things that weren’t on the list! Now, I have a computerized list of things that we regularly purchased. Before each trip, I go through my sheet and take a quick inventory of what we have so we have a clear plan of what we need to buy.
We understand that sometimes we may slip. Just like with the limbo dance, you can’t always get under the stick the very first time. We don’t always reduce our spending every time. The key with playing “spending limbo” is to keep trying and to keep challenging yourself. We view it as a game, and even though some months we may not be able to lower the spending bar, we are having fun trying.
————– Tricia is the blogger behind Blogging Away Debt. In her blog, she documents her family’s journey to pay off over $37,000 in credit card debt. Part of her debt reduction plan included a loan from Prosper.com. It originated in June of 2006 and was paid in full in October of 2007.
March madness is in full swing. How are your brackets? Mine you ask? Let’s just say I had Georgetown winning in one and Duke in another. Translation: I was out of my office pool VERY early. Hopefully you are fairing better.
Here are some of our favorite posts from around the blogosphere…
RateLadder is a Prosper lender and has been since July, 2006. He has a passion for p2p lending. He owns RateLadder — My Prosper.com Journey and other P2P Lending Adventures, P2P No Bank the P2P Blog Aggregate, and ProProsper — Professional Tools for Prosper Lenders featuring SQL access to Prosper data.
It never fails. When I pick up my mail, I notice how much of it happens to be junk or worse: credit card and debt consolidation offers, lines of credit applications and shopping catalogs that entice me to spend, spend, spend. My mail can definitely be hazardous to my wallet, with so much of what I receive just aiming to suck my money away from me and thus, my first and only response to the junk mail I do get is to have it be tossed and shredded by my glorious Fellowes Powershred Shredder.
I’ve been offered to receive half a million dollars’ worth of easy money — a lot of them via credit card applications and home equity lines of credit. That, along with the dozens of coupons and equally free catalogs — who knows what percentage of our mail *really* works to separate us from our bucks.
It’s getting so that we no longer need to leave our house to spend ourselves into oblivion and debt hell. I can just imagine how easy it would be to apply to receive all the credit made available to us, and how effortless it would be to subsequently spend it all on the goodies that jump out at us from print media, online sites and even our television sets (or plasmas, as the case may be).
So what’s the best way to avoid getting into a junk mail induced debt mess? I’ve already mentioned that my automatic response is to junk the junk. But if you’d like to be even more merciless about the unwanted, unsolicited mail, then you can do the following things:
Stop Piling On The Debt! Declare War On Junk Mail
#1 Find out how your information gets around.
To have a fighting chance at solving the junk mail problem, you’d want to find the source of the problem. Your information is being bought and sold and resold and it could be tricky to determine where it all originates. A good way to trace your mailing info is by making slight alterations to it each time you pass it along to a new company or entity. For example, by changing your middle initial or name, you may notice how that data gets around.
#2 Tell companies to quit peddling your information.
After identifying who’s behind your unwanted mail, you can write them directly to complain and to request them to drop your name and address from their lists. Inform your credit card companies, credit bureaus and all other business organizations you’ve corresponded with (if possible) that you do not want to release your name, address and phone number for junk mail, promotional or marketing programs.
#3 Use services to help you delist your name from existing mailing lists.
Check out Junkbusters, a free web site which provides great instructions on handling all sorts of junk mail, telemarketing calls, spam and other annoying promotional campaigns. You can also review the material on the New American Dream web site, which has a section called “Declare Your Independence From Junk Mail”.
#4 Refuse to accept the mail at your door.
You can actually write “return to sender” on an untouched envelope, if it’s mail with the label “return postage guaranteed” or “address correction requested”. For mail that includes a reply envelope, use their envelope to return a message insisting that you be removed from their list. Other tactics: mark your junk mail with “refused” and send it back to where it came from. Note that this should not cost you anything because first class postage covers returns.
~ooOoo~
What’s great about cutting down on junk mail is that by doing so, you’re also saving the environment. With less junk mail making the rounds, there’ll be less trash, less need for landfills and dump sites, and ultimately, we’ll all benefit from lower garbage collection bills and taxes. So save yourself from debt while saving the environment at the same time!
Any lender who has a loan that came from a listing created before Nov 9, 2007 will receive a refund of his or her servicing fees charged in situations where the full monthly payment was not received within thirty (30) days after the due date of the payment.
Lenders will also receive a refund of servicing fees on such loans when servicing fees were charged on partial payments received within 30 days of the due date, but where the full payment was not received within thirty (30) days after the due date of the payment.
As of Nov 9, 2008, the Lender Registration Agreement has been updated to allow the charging of servicing fees on all payments, regardless of the amount and timing of the payment received. Lenders on loans that result from listings created on or after Nov 9, 2007 will have servicing fees deducted on all borrower full or partial payments, whenever received.
As of last night all of the refunds have been processed. The refunds that were specifically released last night were…
Forfeited Group Leader rewards on late payments paid to lenders
Group Leader rewards withheld with no mention in Group Leader or Lender agreements
These refunds combined with our Lender servicing fee refunds earlier in the quarter resolve this matter. Prosper takes our obligation to our members very seriously and we appreciate these issues being brought to our attention.
Specifically, We want to thank and acknowledge Traveler505 for bringing these errors to our attention. This is an example of how the Prosper community helps us improve the site and our operations on an ongoing basis.
Sometimes being too savvy about investing can paralyze your decision making. Back in December I had a feeling that the market was going in a bad direction, and I sold a fairly significant portion of the index funds in my IRA (about 25% of my overall holding). Yay! Right? I missed the horrible downturn, and while the remainder of my investment portfolio has taken a beating like Clint Eastwood in A Fistful of Dollars, I left this portion in a money market fund, chugging along at 3%.
The problem now is that I’m hesitant to start investing again. I shouldn’t be - even if we aren’t at the bottom, the chances are very good that if I go right back into the same types of investments I’ll be just fine. I’ve slightly altered my mix (going lighter on corporate bond index funds and beefing up my domestic positions) with recent contributions, but that cash is just sitting there mocking me. The monthly interest rolls in and I wonder whether I can time the bottom of the market.
When the market is this bad, my risk averse nature really kicks in. I am more anxious to avoid a loss than I am to take a chance on a gain. This thought pattern haunts a lot of people, and it does not serve me well. I have been somewhat successful at avoiding huge market downturns, but I’m usually late catching them on the upswing again.
So how do you avoid getting paralyzed by concerns about the weak economy and the struggling market? Here are a few ideas:
1. Don’t look year-to-date returns on mutual funds or stocks or any sort of investment. I understand why mutual funds try to rope investors in with their 5-year, 3-year, 3-month, year-to-date and so on returns - anybody likes looking at “15% returns” when they are investing. But it takes about two seconds for anyone to understand why this approach doesn’t work: for example, the Patriots won 16 games in the regular season, and their first two playoff games. Does it mean they were automatically guaranteed a 19th win? No. Past performance does not ever guarantee future results.
2. Diversify. With a good mix of index funds, you should be automatically diversified. Right? Wrong. If you have 100% of your investments in Vanguard mutual funds, you’re banking a lot on Vanguard, aren’t you? I am. It makes me nervous, and I plan to do something about it as I go back into the market - I’m going to try to find something besides the personal-finance-blogworld-beloved Vanguard to invest in. And as far as that goes, there’s a lot to be said for diversifying outside the stock market, too - real estate investing, P2P lending, investing in small businesses and even investing in yourself by continuing your education. Instead of investing only in the stock market, branch out. Now is as good a time as any to start a portfolio that isn’t restricted to equities. Diversifying your investments helps spread the risk and loosens that paralysis.
3. Be realistic about macroeconomic issues. I liquidated 25% of my holdings in December, and in retrospect, that seems about right. In terms of catastrophic market meltdowns, I think we are about at 1 star out of 4. I think the worst is behind us, because the root causes of a recession have already infected the economy like a virus. But much like a virus with a 14 day incubation period, once the symptoms start showing you are actually closer to the end of the sickness than the beginning. And people, let’s face it - although the market is down and homes are being foreclosed, the vast majority of Americans still have jobs, still buy stuff and still pay taxes. People will still need to borrow money, maybe more than ever. P2P lending should grow faster than ever while the banks are credit-shy after suffering quarter after quarter of writedowns. But the important thing to remember is that the engine of capitalism is not stopping, it’s just sputtering for a second. The next president needs to take it in for some routine maintenance and some tune-ups after the last eight years, but I think we’re a long way from needing to trade it in.
4. Don’t stay invested heavily in the US. I’ve seen this mentioned elsewhere, but keeping more than 50%-60% of your savings invested in the US is not wise. The US doesn’t represent 50% of the world’s capitalization, so it should represent that much of your portfolio if you want to be diversified. In the same way that smart people got in at the beginning of the dot-com and real-estate booms, there are a lot of markets around the world that are growing far faster than the US market. Failing to invest heavily in overseas markets is dangerous for anyone planning to retire 10+ years in the future.
5. Stick to a formula but don’t be inflexible. I have stuck to a 30/30/30/10 formula for a long time (US, international, bond and “other”). I’m changing it, but I’m going to stick to my new formula for a while. Now I’m going to switch to 40/30/20/10, because I want to cash in on the US market when it’s at a low point, and I am not comfortable about the prospects for the bond market. I feel the need to get more aggressive although I’m doing it within the confines of an index fund strategy. Bonds were not providing the normal “hedging” protection they’ve provided in the past, since the Fed keeps cutting rates every time they draw a breath these days.
So don’t let the gloom and doom stop you from investing. Shake it off and get back in there, champ.
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Steve S. is the author of Brip Blap, a blog about personal finance, health, career management, productivity and self-improvement. He lives and works as a contract governance and audit consultant in the New York City area, and has lived in Germany and Russia. He is an active lender at Prosper.
Growing up, us country kids would often pick up a long stick and then start doing a limbo dance. One of us would start humming a tune and we’d take turns trying to navigate our bodies under the stick. After each successful pass, we would lower the stick and see how low we could go.
