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Sometimes, obvious ways to curb our spending is seldom practiced because we feel embarrassed to try it. We read about them, laugh that it’s probably “just for fun”, and forget about them right after. Yesterday, my friend reminded me that while we might feel funny doing something unusual the first time, it is always the results that actually determine who laughs at the end of the day.
Friend: David, I freeze my credit card in order to stop myself from spending. Me: You mean you call the companies to stop them? Friend: No, I mean literally putting them in a block of ice.
This is a guest post from Neal Frankle, CFP®. Like many, he was affected by the financial crisis but unlike most who did nothing, he managed to turn it into a positive experience.
It’s easy to be scared to death these days. You may have lost 40% (or more) of your investment capital. To put the cherry on top, you might be making a lot less money now than you did 12 months ago too. Times are tough. Believe me, I get it. But like no other time before in your life, now is the time for an adult assessment of where you stand financially. The funny thing is you may find that things aren’t as bad as you think. For example, my income took a major hit when the market started to melt down last year. I am in the money management business and as the assets I manage shrank, so did my paycheck. To make matters worse, my business expenses are fixed so my net income went down much faster than the market. Believe me, I know what financial pain is. I got scared. I worried about my clients. I worried about my business. I worried about my family. I worried about worrying. I got out of this funk by taking an objective look at my situation. I:
looked at exactly how much we were spending and how much we could cut. There were things that “we couldn’t live without” only a few months ago but we learned to live without them anyway.
took many of the steps outlined in this blog over the last several months. (editor’s comment: what a smart man)
got my entire family involved in the finances and it was the first time they ever took an interest. Everyone pitched in. It was good.
It turned out that it wasn’t all that bad.
Since then, we spent more time together as a family doing things that didn’t cost money. We played cards instead of going out to movies. We sat and talked instead of going out to dinner. This was a huge positive and it’s a gift I never would have gotten had it not been for the economic downturn.
I also made changes at the office and readjusted my retirement plan. I’ll probably have to work 5 years longer than I originally anticipated, but that’s not so bad either. I love what I do and I can’t imagine doing anything different with my time. The great thing is, the 5 extra years doesn’t take into account the possibility that things could improve. Stranger & worse things have happened.
If you are worried and have financial anxiety, assess your situation objectively. What is the worst thing that could happen? Is it likely that you’ll starve and be homeless? Probably not. What is the worst-case scenario for you?
The next question is, “Can you accept your worst-case scenario? If you have to cut your expenses or get an additional job, is it really all that bad?
The last question is, can you improve the situation? In my case, I had no control over the market but I did have control over how I communicated with my clients and how much money I spent in the office and at home. What can you do to improve your situation?
A few months ago I never would have said this but now I have to admit that I’m grateful for this financial fiasco. I’m not happy about the damage it’s done to millions of people, but it really helped me focus on what matters and what doesn’t.
How about you? Have you benefited in any way from what’s happening in the financial world? I’d really like to know.
If you love free stuff, life is good since the Internet made finding out about them extremely easy. Whether it’s giveaways, coupons, or offers, a few clicks of the mouse and loads of free offers become available for the picking.
No Free Lunch with Freebies
As Milton Friedman famously reminded us though – “There’s no free lunch in this world“. So why do these offers exist?
Scams – Not to sound harsh, but some of these offers are really scams. It’s just a way for them to get your information to do something else with it.
Incentives to Get Your Business – Of course, some offers are more genuine in that they are just trying to offer something for free to get your long term business. They believe that the ROI to offer something free upfront is worth it for the larger customer base. Example include the free trial offer for Netflix or Redbox letting you rent a movie for free by signing up to their newsletter.
Market Share – Some companies will actually give away free products to gain market share in a particular niche. They figured that if everyone is already using their product, they can kill their competition. Example – Linksys in the consumer router space when they were offering $0 after rebate offers.
Branding – Some companies will offer free samples just so it establishes and strengthens its brand. The free offers from Walmart is a great example because you will grow to love that company if you get enough free samples from them.
Feedback – Many companies will send out a free product for testing purposes. While it’s not really free, what’s the harm of answering a few questions to get a free appetizer or something at your favorite restaurant?
Giving – Sure it doesn’t happen often (on a relative scale), but some offers are really just someone being nice. They might be hard to find, but these offers do exist if you look for them. Example includes donation.
What’s Your Point with All This Free Stuff Talk?
Understand that when you are applying for something free, you are giving something up. Whether it’s your email address, your full contact information, or just your time, you are giving away something. Before you sign up for another free offer, consider whether you are perfectly comfortable with what you are giving up. Is it okay that my email address is giving out? Am I okay with getting junk mail in my mailbox? If the answer is yes, then by all means. If not, then maybe that free movie rental isn’t worth the weekly emails that you will get.
Some Tips About What to Look For with Free Offers
So while scams are everywhere and the only 100% foolproof way to avoid them is to not sign up for anything, how can you still take advantage of free stuff? Here are a few things to look for:
Trusted Source – Obviously, an offer coming from Walmart is pretty safe while someone from Nigeria emailing you about getting free money is much more worrisome.
Word of Mouth – If all your friends are taking advantage and can recommend it, there’s less of a chance that it’s a scam.
More Information – The more you know about the offer and the company, the better. For example, having an email address is probably not enough for you to know about the offer but if it’s free ice-cream from a store, you can probably figure out whether it’s a scam or not as you can actually go to the store to ask questions and check it out.
The Last Tip – Trust Your Gut
Your intuition is incredibly good. If it sounds too good to be true, it probably is.
Hopefully no one ever gets scammed again and more people can take advantage of free offers.
More often than not, our view of (rather than the situation itself) dictate our state of mind. Some people would still be happy even if the world came crashing down. For others, a minor setback would spark off a downward spiral of deeper sadness. New circumstances are thrown at us day in and day out. We can either make the best of it or make it worst. It is up to us.
The Danger of the Trusted News
Lately, we hear lots of stuff over the news:
We are in the worst economic environment in decades
Everyone is losing jobs. Look at that employment number at 7.2%.
All banks are failing, what should we do?
The unemployment number is climbing and it’s never good when this happens, but the unemployment number was at 5.8% in 2005 (Bureau of Labor Stats). Putting it into context, this means that less than 2 people were laid off for every 200 people we know on average.
Is it worst than it was in 2005? Absolutely. Is it really Armageddon? Hardly.
Our Expectation is Sometimes Just Too High
What about our net worth that came crashing down?
Whether it’s our stock holdings, our house value or our spending power, this chart pretty much sums it all up. I bet a few years ago when your house or stock went to crazy highs (somewhere around the red line), you were extremely happy.
The value of your asset went down rapidly the past few months. So did mine. In fact, if this chart illustrates the value of the asset, it went down 50% off its highs. It hurts to see it but other than our ego, did it change things that much? Going back to our example, isn’t it just back to the value it was a few years ago? The exact same level when we were celebrating?
The Real Danger
Some of us got into trouble because of how we handled our new found wealth. As our asset value rose, we began to increase our standard of living. Each time our stocks went up, we poured in more material to build another step. Now that the new money has stopped, so did the ability to continue building. For some, it has gotten so bad that their standard of living fell off a cliff as their money supply dried up.
For those that lived life just the same, what really changed?
What is Your View?
There are certainly many people who are in trouble now but they are just the minority. Unfortunately, most of us are spooked by the reporting on those suffering. We are afraid because of the over-exaggerated news articles; we are frighten by what could (but is unlikely) to happen and we are worried that the sky is really falling.
But is it that bad? Do you really have to be afraid and how likely is the worst going to happen?
Answer those questions truthfully and perhaps the rest of you day will be much brighter.
One of my readers sent me this great piece on productivity. While most of these about general well being and therefore non-personal finance related, understand that without a healthy mind and body, money is unimportant.
Best time to Study – When you wake up in the morning, you will probably feel tired and dizzy. However, once you wash your fast, you will be energized and refreshed. This is also the time where your mind is the clearest, so studying in early morning will help you remember everything much easier.
Best Time to Exercise – It’s great to go out for a walk in the morning because air is the freshest during that time. It can not only help clear your mind but is great for your body as well.
Best Time to Eat Fruits – One hour before a meal is best. This is because as fruits are mostly eaten cold, eating it first before your hot meal won’t cause your body to increase excessive white blood cell production. This is good to protect your immune system.
Best Time for Training – The best time for training is in late afternoon / early evening. The reason is because this time is when your body is performing at the best. In other times of the day, your blood pressure and heart beats are usually higher, so training during those times are harmful to your body.
Best Time to Shower – Right before bedtime is usually the best time to shower, as it relaxes your joints and muscles to give you a better night’s sleep.
Best Time to Sleep – For afternoon nap, it’s best to do it after 1pm because that’s the time when your body is the most sluggish. At night, going to bed at 10 to 11pm is best. This is due to the fact that a human’s deep sleep usually happens around 2-3am, and the fact that it takes a body approximately 1 and a half hours to get into deep sleep.
Best Time to Brush Your Teeth – 3 minutes after every meal. This is because acid will start to be broken down from the food, which start damaging your teeth.
Best Time for Skin Care – Skin care is best done at night because that’s when your skin is in recovery mode. (It is also the time when no one else other than your spouse are looking at you.)
Best Time to Drink Tea – Definitely not within one hour after a meal, as drinking tea may block the absorption of non-heme iron. Therefore, it is wise to wait one hour after your meal to allow the nutrition to be fully absorbed.
Finally, Best Time to be Financially Responsible – All the time. Period.
HSBC made a big push into the online savings account industry a few years ago and have already establish HSBC Direct (its U.S. online banking subsidiary) as a premier online bank offering high yield savings accounts. While, they have a relatively small footprint in the North America, HSBC is actually one of the biggest banks world wide with over 100 million customers and over $1.2 trillion in customer deposits.
Why I Opened a HSBC Direct Online Account
There are many reasons why I opened an HSBC Direct account, some of which are:
The brand name of HSBC certainly help.
The bank always offered one of the highest advertised yields available.
Many of my family members living overseas have an HSBC account and they highly recommend it.
The added convenience of being able to easily transfer funds between inter-countries accounts under the bank.
My friend actually moved to the United States and had no credit here, but he was still able to get a HSBC credit card due to his relationship with the bank in Hong Kong. So this gave me the warm and fuzzy feeling with the brand.
While all of the above reasons were small, they collectively pushed me over the edge to sign up for an account.
Logging Into HSBC Direct
A neat security feature that HSBC Direct provide is its security-key screen when you log in. In addition to your username and password, the system will ask you to use your mouse and click on the keyboard on screen to provide a security key. This is great because it deters hackers from gaining access to your account by installing a keylogger (a software that tracks your key strokes) to steal your password.
Bank to Bank Transfer vs Intra-Bank Transfers for HSBC Direct
For some reason, HSBC decided to separate two different user interface for bank to bank transfers and transfers within different accounts under the same bank. While I’m sure the internals are much different, I don’t see what the difference is as a user. While this is not a problem at all for me (as I only have one HSBC account), this is nonetheless something I hope they update in the future.
HSBC Transfer Features
As you can see from the screen shot, you can setup recurring payments with HSBC like other online banks. I would rather see the flexibility to schedule a recurring transfer in any number of days (instead of picking from a preset list), but it is again a minor point because they pretty much cover all the common ones.
Another minor benefit for this online bank is that transfers are processed within the same business day if you put it in before 8pm Eastern Time (I’ve seen other offerings at 6pm or 7pm).
Thoughts on HSBC Direct as My Online Bank
With the simple interface, added security and unparalleled brand name, HSBC definitely has my attention as a top pick for my emergency fund. I also like this bank because it will periodically offer a very high yield for a promotional period (last time, it was 6% APY for 6 months). As those offers are only for new money, I would usually have an account setup and ready so I can transfer money into the it as soon as I see the advertisements. For those that don’t like to actively manage their emergency funds, having your money in this bank is also not a bad choice because it always offers one of the highest yields available.
If you would like to get started with its high yield, you can sign up right away.
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HSBC made a big push into the 
