The phrase “dollars to doughnuts” first appeared in the mid-19th century as a catchy way to describe something considered a safe bet. Dollars obviously hold value, whereas doughnuts are essentially worthless (unless you’re a big fan of doughnuts, maybe). So, what does this mean to you, as a consumer, and how can it become a money trap? The answer is best illustrated by setting up an analogy.

Imagine that you’ve had your eye on an item that’s $100, and it’s suddenly being advertised as 50% off. Would you be willing to go out of your way to purchase this item at $50 (and save $50 in the process)? Probably. Pit this against another scenario where you’re considering a more expensive purchase — for instance, a household appliance. Let’s say it retails for $3,000 but it’s marked down to $2,950. Regardless of your budget, would you feel like you got a better deal on the $100 item marked down to $50 versus the $3,000 item marked down to $2950? Probably.

The reality is that both these deals represent a savings of $50, but the first is a saving of 50% while the second is a saving of something like 1%. If you’re like most people, it feels like saving 50% off is way better than saving 1%, regardless of the dollar amount.
[ continue reading… ]


If you have student loans, I’m sure you’ve dreamed of just not paying them back. You imagine what else you could be doing with that money and think how much easier life would be without the relentless payments.

I’ve totally been there. Although I’ve dreamed of not paying back my debt, I know it’s my responsibility, both morally and legally, to do so.

Aside from my thoughts on the price of higher education, signing up for student loans is still something I did myself. I signed on the dotted line and agreed to pay back my debt, which I’m working hard to do.

Recently, an op-ed was published in The New York Times about the author’s experience defaulting on his student loans. He went so far as to practically encourage others to do the same, in the name of student loan reform.
[ continue reading… ]


Dealing with a dishonest salesman or falling for a sneaky marketing ploy are experiences we can learn to identify and avoid, but there are other kinds of money traps many of us fall for – and they start in our own minds.

A common scenario that illustrates the first of these mental traps is shopping for a used car. After negotiating back and forth with the owner, you manage to agree on a price that’s several hundred dollars less than the list price and sign the title feeling like you got a great deal. Later down the road, you discover the car is worth even less than the discounted sale price. If this example doesn’t apply, perhaps you’ve fallen for this trap while purchasing a new television, an expensive piece of jewelry, or a home in a new area.

The tendency to use the first piece of information we hear or see as our “anchor” for making subsequent spending decisions is called the anchor price comparison trap (some also refer to it as the relativity trap or focalism). This happens most frequently in categories that are new to us, where we have nothing to compare to the prices we encounter.

Whatever you choose to call this behavior, it’s a verifiable bias built into our mental wiring, and it can cost us a lot. The good news is that you can outsmart your own tendency to create pricing anchors with a few simple strategies.
[ continue reading… ]


Gratitude often comes up when we talk about living a better life.

In fact, most of us know that an “attitude of gratitude” can help us reduce stress and allow us to feel better about life in general. It can also help our relationships with those around us.

But did you know that gratitude can also help our finances?

That’s right. Being thankful can help you improve your financial situation too.
[ continue reading… ]


Considering the massive student loan debt most college graduates face, there’s increasing debate about whether a traditional four-year degree is a worthwhile investment for young adults. Still, most (69.7% in 2016, to be exact) high school graduates still choose to enroll.

And college tuition and boarding aren’t the only expenses for students either, because finances come into play long before that first meeting with the financial aid department. Trying to meet or beat the universities’ standardized test thresholds and stay competitive for limited scholarship funds, many high school students (or more likely, their parents) fork out money for ACT or SAT test preparation programs as soon as their sophomore or junior year.

The tests themselves don’t cost that much – the basic SAT testing fee is $45, while the basic ACT is a little lower at $39.50. One-on-one test prep tutoring, on the other hand, can be a several-thousand-dollar investment. While group test prep programs tend to run on the lower end of that, elite programs that promise top test scores can cost up to $9,000! That’s more than the average tuition and fees for attending an in-state university for four years.
[ continue reading… ]


When it comes to your finances, your credit score can be a big deal.

A good credit score can mean big savings (or costs) if you take out a loan. Good credit can also mean lower costs when you get car insurance in some states.

If you have good credit, you’ve worked hard to manage your finances and your loans in a way that shows you are responsible. You are proving that you are a solid risk.

But what happens if you slip up? How much could that ruin your score?

According to Equifax, the damage affects different people differently. One late payment will affect a person with a lower score, but it’ll have a much bigger impact on someone with a really high score.

That’s right: if you have great credit now, a mistake could mean a bigger hit to your credit score. Someone with mediocre credit won’t see the same impact as the result of a mistake.

Do you have an excellent credit history and want to keep it that way? Here are some things to avoid if you want to keep that credit score in the good to excellent range:
[ continue reading… ]