Sometimes, in the dead of night, I hear the dulcet tones of Suze Orman bellowing in my eardrums:
“Are you paying off your credit card balance in full each and every month?”
“Do you have 6 months of living expenses set aside for emergencies?”
“How’s your retirement investment portfolio?”
“You’re not thinking of cashing out your 403(b) to finance an extravagant trip to Tokyo to collect plastic unicorn syrup dispensers, ARE YOU?!?”
I tremble and gasp and scream out into the darkness, “I am, I do, it’s okay I guess, I’m not — I swear! Please don’t hit me Suze! Pleee-eee-eease…”
Torrid nightmares about IRA rollovers and international exchange rates ensue.
In my younger days, I was all about Extreme Frugality. I had an irrational fear of being even the slightest bit in debt. I couldn’t stand the idea of owing anyone a single cent, so I paid for everything upfront, in cash. No fuss, no muss. I didn’t even own a “real” credit card until two years ago. So un-American, right?
These days, I’m a lot more knowledgeable (and a lot less emotional) about personal finance. I’m hardly an expert, but I spend enough time reading blogs like this one and this one and this one to dispense a little wisdom to the financially-challenged. Like you, perhaps? Hey, no judgements here. Read on …
“Help, help! I’ve got $3,000 in credit card debt on a high-interest card, and there’s no way I can pay it off in the next four weeks. If only I just had a little more time to pull the cash together … can I get an extension on my payment due date?”
Not likely. But what you CAN do is apply for a 0% APR card with another credit provider. Once you’re approved, you can transfer your outstanding balance over to the new card — effectively buying yourself a 6-to-12 month interest-free “grace period.” Just make sure to actually pay off your debt within that period, because once it’s over your APR will jump up significantly, and you’ll be right back where you started.
“Help, help! I’ve got a checking account, a savings account, a retirement account, a CD, a car loan, a student loan, a mortgage … I can barely remember how to spell my little sister’s middle name, let alone my username and password for each and every banking site! WhatamIgonnadoooo?”
Try Mint.com. It’s a terrific portal for consolidating all your online banking clutter onto a single screen — and it updates in real-time. Snazzy!
“Help, help! I’m leaving my job and I don’t understand what’s gonna happen to my employer-sponsored retirement account. Is that money still mine?”
It’s your money, honey. However, it’s not as readily-accessible as the cash in your checking or savings account. That’s because most employer-sponsored retirement programs are tax-sheltered. So if you decide to withdraw the money before you hit legal retirement age, you gotta pay the tax man — up to 20% of the value of your retirement account, plus additional fees. Generally speaking, it’s advisable to leave that money alone unless you reeeeeeally need it. Like for a trip to Tokyo to collect plastic unicorn syrup dispensers. Or whatev.
“Help, help! I scrimp and save and budget like a mofo, but I’m still scrabbling along by the skin of my teeth. How can I stop living paycheck to paycheck?”
Some of the best financial advice I ever got came from Ramit of I Will Teach You To Be Rich. To paraphrase: “There’s a limit to how many expenditures you can cut (and still maintain a comfortable quality of life), but there’s NO limit to how much you can earn.” So, instead of focusing all your precious energy on finding clever ways to save more, shift that energy into finding clever ways to earn more. Word? Word.