MONEY Food & Drink

Here’s What Warming Oceans Are Doing to the Lobster Industry

lobster-shifting-north
Jeff Greenberg—Getty Images

The lobster population is moving.

A slow start to the lobster season sent prices creeping slightly upward this summer—but it’s lobstermen in southern New England, and not consumers, who have taken a real hit.

Warming ocean waters are causing lobster populations to shift to the north, the Associated Press reported Wednesday, and the shift is ending business for many lobstermen in Connecticut and Rhode Island. In 2013, the amount of lobster caught in the New England region south of Cape Cod was reportedly just 3.3 million pounds, nearly one-seventh of the total at the industry’s peak in 1997. Maine fishermen, meanwhile, have reported lobster catches exceeding 100 million pounds for the past four consecutive years; the lobster population in the Gulf of Maine is believed to have doubled since the mid ’90s.

Lobster lovers who aren’t on the supply side, fret not: The shift is unlikely to have much of an impact on the price of your summer lobster bake.

But for southern New Englanders who have made their living in the lobster industry, this aspect of climate change will mark a drastic change in their livelihoods. As of 2013, Connecticut was down to less than an eighth of the 160,00 lobster traps it had at the turn of the millennium; Rhode Island, meanwhile, halved its rate of issuing commercial lobster licenses since 1998.

MONEY Second Act

How This Woman Turned a Layoff Into a $3 Million Business

150209_CA_secondact_1
Sarah Wilson

After being let go from her retailing job, Heidi Rasmussen joined her husband to launch the health discount card freshbenies.

At age 15, Heidi Rasmussen began working in retailing, at the same department store where her stepfather put in 35 years. After eight years in store management and 12 years in corporate, Rasmussen had reached the rank of divisional vice president by 2012. Then, while she was out for a memorial service, she found out over the phone that she’d been let go—one of hundreds downsized that day. “Many people were just devastated,” says the now 46-year-old. “But that’s not my outlook. I’m always thinking, There’s something better.”

It took her a week to find it. Her husband, Reid, had already left his job as manager at an insurance agency to launch a business. His idea: Get insurers to offer workers discounts on expenses like prescriptions and urgent care. Struggling to get his concept off the ground, he appealed to his wife to apply her marketing brain. “I decided to transform the idea into an engaging brand,” she says. “It was a total step of faith.”

Working at full stride, Rasmussen came up with a card that bundles 10% to 60% discounts on vision and dental care with 24/7 phone consults with doctors and help with billing errors.

Employers who buy cards for their workers (typically $8.50 a pop) make up 90% of the business. Both the companies and their workers—who often get cards paired with high-deductible health plans—can save if an employee’s call to a doctor heads off an office visit. Likewise, pinpointing billing errors pays off for everyone.

Then she tested the pitch with 30 women she knew (women are behind 80% of family benefit decisions, she says). The group vetoed the name “concierge card” because “it sounded too hoity-toity.” Freshbenies’ original spokescharacter was blond, but Rasmussen made a switch to brunette after the group reacted negatively. And she learned that $12 was the most they could charge for their direct-to-consumer card.

Rasmussen expects freshbenies to bring in $3.5 million in 2014, up from $1.3 million in 2013. While the couple left higher-paying jobs, “that looks like a small tradeoff for the opportunity to work together on something that we love.”

By the Numbers

$82,000: how much savings they tapped to launch. That amounted to about 55% of her severance. About $25,000 went to a consulting firm that advised them to pitch to HR managers—a total bust. They had more success reaching out to insurance brokers who set up employer benefits.

2 years: how long they could have gone with no income. For their personal expenses, which came to $8,000 a month, they relied on the $350,000 they had saved, leaving their 401(k)s alone. “We were already very frugal and living below our means,” says Rasmussen, who lives in McKinney, Texas.

2016: when she hopes to triple revenues. In two years, Rasmussen expects freshbenies to bring in $12 million a year. The company is adding at least a dozen insurance brokers as clients every month. “Now that I’m starting to get in front of some really big brokerages,” she says, “I know they are going to want to work with us.”

MONEY Small Business

4 Phrases that Will Kill Your Startup’s Pitch To Investors

Looking to get a new biz funded? Better not say these things—or you'll sink your chances before you're even gotten off the ground, says entrepreneur Seth Talbott.

Unfortunately, there are many different areas where you can fail with a startup—and raising money from investors is no exception.

Having founded numerous companies, advised dozens more, and put together more pitch decks together than I can count, I learned the hard way which pitching mistakes are fatal and which ones are survivable.

This is why having veteran entrepreneurs in your startup team is an attractive factor for investors; experience is often life’s best teacher. But if you don’t have that knowledge at your fingertips, instead be a student of other startups’ failures. Make sure that your pitch doesn’t reflect inexperience or naiveté—not just because investors won’t touch your startup, but because your survival depends on it.

Over my time as an entrepreneur, I’ve identified these as the four most lethal phrases to use when trying to raise money:

“We have no competition.”

Why it’s a pitch killer: It shows that you either don’t understand your customers or have done a terrible job analyzing the competitive landscape—and often it means both.

With any business, you are either competing against ingrained behavior or against a rival company, and you need to know the balance of that situation better than anyone.

Just because you think that you are a “first mover” doesn’t mean that you get a free pass in studying the competitive landscape. In fact, I would argue that you have even more work to do.

As a general rule, assume that any idea you’ve heard of has been done before. If there isn’t already a market dominator, there’s probably a really good reason for that.

So don’t discredit yourself by presenting your idea to investors assuming that you’re the first one to think of it and assuming that being a “first mover” will give you a huge advantage. Proceed with caution and skepticism about the uniqueness of your solution. Study, research and dig until you find prior failures and have a deep understanding of why they didn’t work.

“No one can copy us.”

Why it’s a pitch killer: It makes you look ignorant and it also shows arrogance about your development prowess, which is a red flag to investors.

If you are a small startup, you are likely working the kind of product or technology that would take GE, Amazon, Microsoft or HP a long weekend to copy.

Additionally, in the case of software companies, patents are often not useful because startups are rarely creating new technology as much as applying existing technology in new ways. Plus, enforcing and defending patents is expensive and a massive distraction.

“We will be profitable in one year.”

Why it’s a pitch killer: Investors don’t expect you to turn a profit quickly, and, in fact, will become highly suspicious of your financial predictions if you suggest a profitability roadmap that defies industry norms.

Also, while financial projections never end up being perfectly accurate, they do speak to your ability to estimate labor costs and whether the business will scale efficiently.

So don’t make the rookie mistake of giving wildly unrealistic financial predictions.

“We are cheaper.”

Why it’s a pitch killer: A lower price point is rarely enough to unseat an entrenched leader or differentiate yourself from the competition—which is why no one with a decent amount of entrepreneurial tread on their tires starts companies from that approach.

Undercutting competitors with efficiency improvements and brilliant execution can be one of a few competitive advantages. However, the “we’re going to be cheaper” approach almost always fails because new entrepreneurs typically don’t have appropriate expectations for the actual cost of doing business, the costs of labor, or the length of the sales cycle.

And think of it from an investor’s perspective: How sexy is it to be investing in a business that is trying to be cheaper instead of premium?

So now you know the worst of what to avoid in your pitch. But the point isn’t just to eliminate these phrases—rather to also realize why they are a problem and what blind spots they reflect. My point isn’t that a few words will ruin your startup, but that a few bad decisions based out of ignorance will.

Seth Talbott has founded numerous companies, including Promedev (which provides lab services for medical providers), AtomOrbit (which helps businesses create mobile workspaces with access to legacy data) and Preferling (which helps users find restaurants based on preferences).

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. YEC recently launched StartupCollective, a free virtual mentorship program.

MONEY First-Time Dad

The One Book All New Parents Really Need to Read

Luke and The Giving Tree

Fifty years from its first publication date, The Giving Tree remains a relevant allegory for modern parenting, says first-time dad and MONEY reporter Taylor Tepper.

I try to read one book a day to my son, Luke—which works slightly better in theory than practice.

Luke’s a restless infant, who is as eager to sit still in my lap for 10 minutes as he is to fall asleep. So I spend as much time reading as I do extending the pages beyond his grasp. Often he simply bores of the exercise, and I’m left talking out loud to no one in particular.

One of my favorite stories to read on these occasions is The Giving Tree.

The tiny book—which turned 50 this year—is perhaps the most important book in my life. I’ve loved it ever since I was a boy.

I recently discovered, though, that my adoration of Shel Silverstein’s classic is not universally shared.

What the Book Is About

For those unfamiliar, The Giving Tree is the story of a relationship between a tree and a boy the tree loves. At first, the boy and the tree engage in what everyone would consider to be a healthy relationship. He plays on her limbs, eats her apples, and sleeps in her shade—all of which makes the tree happy.

Nothing stays perfect forever, though, and as “time went by,” their encounters changed. The boy started to grow up and wanted new things.

Rather than playing in her branches, he wanted money and a house and a boat to escape his life. The tree gives up her apples and branches and trunk for the boy’s sake, rendering herself nothing but a stump.

Through it all, the tree is forever happy when the boy returns for his next request and willing to give anything she has. In the end, the boy uses her stump to sit on “and the tree was happy.”

Why It’s So Hated

When I told friends of my affection for the book, they were incredulous: How could I find meaning in a story where one character repeatedly and unrepentantly takes and takes from the other? Was I some kind of martyr?

My friends were not alone in their hatred for the book. In doing a bit of research for this column, I found that many academics and authors, liberals and conservatives alike, find its supposed commentary on parenting distasteful, amoral and depressing.

Dr. Lisa Rowe Fraustino of Eastern Connecticut State University is among the haters. In an essay titled “The Rights and Wrongs of Anthropomorphism in Picture Books,” she writes:

“Representing the symbolic mother as a literal tree may be what makes so many readers blind to the conceptual metaphor staring us in the face: GIVING TREE IS WOMAN. Even if it’s true that patriarchal culture has traditionally cut woman down and used her up, assigning her to the role of mother with her only happiness being with her son, is that an underlying moral we want to keep imparting to young children? Is it ethical?”

A post in The American Conservative says:

“Human love simply doesn’t leave its subjects ‘spent’ in this way; there is death, to be sure, but that’s not a consequence of love in the way that the tree’s destruction follows upon the boy’s exploitation of it.”

An entry in the New York Times’s Motherlode blog writes,

“Parenting should not strip and denude, but rather jointly fulfill. The parasitic part is supposed to end with pregnancy. After that the point is to teach a child to make his own way in the world.”

In The New York Times Sunday Book Review, Anna Holmes, founder of Jezebel.com, wrote,

“Of course, maybe we’re just projecting, but to those who would say that Silverstein’s book is a moving, sentimental depiction of the unyielding love of a parent for a child, I’d say, learn better parenting skills.

Others claim that the book teaches kids to become narcissists—that the world is built for their taking, that they’ll never have to grow up.

Shel himself simplified the book to its essence, but warned readers from thinking the book has a happy ending.

“It’s just a relationship between two people; one gives and the other takes,” he’s quoted as having said.

In any case, apparently you’re a naive sentimentalist if you enjoy the thing.

Why It Should be Loved

Like most times in life, I think I’m right and those that disagree with me are wrong. Those critics that see a dark tale are misunderstanding something fundamental to the nature of parenting.

The infantilization of “emerging adults” is a hot topic these days, as more Millennials decide to return home after college due to a difficult job market, historic levels of student loans and soaring housing prices.

MONEY recently published a long feature on the stress parents face supporting their kids into their mid-20’s and on: Nearly three quarters of parents aged 40 to 59 said they’d helped support an adult son or daughter in the prior year. Half said they provided their child’s primary means of support.

No parent wants to be a stump.

But with all due respect to the critics who say this is a book about kids taking advantage, I think they are missing the point. At the same time, those who say The Giving Tree exemplifies unconditional love undersell its depth.

When Luke was first born, my wife and I were scared. We weren’t scared because we were now charged with caring for a human life (an alien experience to both of us), nor were we terrified that our lives would change forever (though they have.)

The scary thing was that we, of our own will, introduced something into the world that we loved so much. And that newborn would soon be an infant, then a boy, then a teenager and on and on.

Just as we’ve struggled to find ourselves, to carve out our own little piece of happiness in our nearly 30 years, so he would too.

When you consider the weight of that decision, when you realize that you’ve suddenly foisted the world’s beauty and ugliness onto this tiny thing, that he’ll have to reconcile it just as you did, you become scared. (And then he has a dirty diaper, and you move on.)

To me, the Tree does not represent mom or dad, so much as it symbolizes an aspect of parenthood. Parents are obviously more than stumps for their children: We have lives, hopes, dreams, disappointments completely separate and apart from the goings-on of our progeny.

But when it comes to them, when they must grow up and face the world head on as adults, we want to be there to give them apples and branches and anything else we have to make their struggle a little easier.

“The Giving Tree” is beautiful because it lets kids know they’re never alone. I think that’s why I loved it so much as a child.

And that’s why I think all new parents should read the book. It will help you put the task before you in perspective.

Taylor Tepper is a reporter at Money. His column on being a new dad, a millennial, and (pretty) broke appears weekly. More First-Time Dad:

 

MONEY First-Time Dad

Why You’re Better Off With a Hard-Working Child than a Smart One

Luke Tepper
Luke's drive is more important than his intellect. And look at him drive!

I wanted my son to be born a genius. Turns out I should have been hoping for something else.

My son took his first steps the other day.

Not yet nine months old, Luke stumbled forward two paces as Mrs. Tepper prepared his evening bath. The next day, like a revved up toy racecar, the tyke zoomed five strides after I relocated him from the Jumperoo to the floor.

This achievement is a great source of pride in the Tepper household.

According to Babycenter.com, babies usually begin walking between 9 and 12 months. Luke was only 8 1/2 months—so he’s obviously smarter than the average bear and destined for riches and glory.

Ever since, my wife and I have indulged in a series of daydreams featuring Luke passing milestones well before other tiny mortals. Reading by age 2, dunking a basketball by 10 and garnering a Nobel Prize before he’s legally allowed to consume alcohol.

Of course we know we’re being ridiculous, but that’s part of the fun of parenting an infant—widely projecting all the things that he might accomplish that you never will. In so doing, we imagine a super-smart older version of Luke wowing the world with his intellect.

It turns out, though, we have it all wrong. Intelligence is valuable, obviously, but the more powerful skill parents should be instilling in their children doesn’t have anything to do with brainpower.

If we want him to maximize his earnings—and we do—studies show that we’re much better off emphasizing hard work and gumption.

What the Research Says

The Brookings Institute recently came out with a report that summarizes the research into the debate of character versus intelligence. Therein lay a panoply of statistics that illuminate importance of grit and drive.

For instance, high school grade point average is a better predictor of whether a student will complete college in six years than SAT/ACT scores. Grade point averages are all about grit: You have to come to class every day, turn in your homework, and perform well on tests and papers in order to earn a high grade. A standardized exam, like the SAT, mostly measures your cognitive abilities.

Another study Brookings referenced followed 1,000 children starting at ages 3 to 11 in New Zealand and found that later in life those who possessed more self control “were healthier, richer, less likely to be single parents, and less likely to be convicted of a crime as adults, controlling for childhood social class and IQ.”

Accurate, real-time salaries for thousands of careers.

I asked Jessica Lahey, a teacher who writes a biweekly parenting column for the New York Times, for her perspective.

She said the research jibes with her experience. “Kids who are raised by parents with good impulse control—the ability to plan for long-term goals and stick to those goals—are more successful than kids raised by parents who model impulsive, disorganized, chaotic thinking and actions,” she says.

And what about smarts?

“A kid who has no ability to delay gratification, has no patience with momentary confusion or frustration, or simply never develops the frontal lobe function he needs in order to organize and plan his behavior is never going to be as successful as one who can,” she says. “I don’t care how brilliant or talented he is.”

Why That Terrifies Me

For a parent, this is a little bit scary.

The idea that my son would be born with a particular IQ took the pressure off of me. However he comes out was how he was meant to come out; I couldn’t really mess him up.

But now, I need to instill a work ethic and character in him that I’m sure I don’t always live up to. My wife and I are only 28 years old and we’ve only just begun our careers; how are we supposed to have the authority to mold Luke into driven student and worker?

These are the things that keep me up at night.

But then I remember how far we’ve come since we found out Mrs. Tepper was pregnant.

We comparison shopped hospitals and doctors, and coordinated with health insurers and human resource departments. We’re following a kind of food progression chart so that he takes in as many different kinds of tastes as possible. We nurse him when he’s sick and hold him when he cries, and we do it every day no matter how little sleep we had the night before.

The act of raising a child (and we’re only in year one) absolutely filled us with fear before we had one. But like a frog in a slowly warming pot of water, we’ve adapted. We’ve found a way to weave Luke into our life.

Teaching him stick-to-itiveness, then, will just be another challenge we’ll (hopefully) slowly overcome with our infinite small decisions.

Taylor Tepper is a reporter at Money. His column on being a new dad, a millennial, and (pretty) broke appears weekly. More First-Time Dad:

Read next: Injuries. Stress. Divided Attention. Are Coaches Damaging Our Kids?

MONEY Careers

The Best Way to Come Out to Coworkers and Bosses

Apple CEO Tim Cook speaks on stage during an Apple event at the Flint Center in Cupertino, California.
Stephen Lam—Reuters

Inspired by Apple CEO Tim Cook's announcement that he's gay? These strategies can help you open up with your colleagues.

On Thursday, Apple CEO Tim Cook came out to his entire customer base.

In a column for Bloomberg Businessweek, Cook wrote: “I’m proud to be gay, and I consider being gay among the greatest gifts God has given me.”

The Apple chief’s column continued to say while he had wanted to maintain “a basic level of privacy,” he felt that this was holding him back from helping others.

“I don’t consider myself an activist, but I realize how much I’ve benefited from the sacrifice of others,” Cook wrote. “So if hearing that the CEO of Apple is gay can help someone struggling to come to terms with who he or she is, or bring comfort to anyone who feels alone, or inspire people to insist on their equality, then it’s worth the trade-off with my own privacy.”

Coming out to anyone is a big step. But for many LGBT individuals, informing professional relations of one’s sexuality is just as challenging—if not more so—as telling friends and family.

Despite rising public support for LGBT rights and the increase in state laws recognizing those rights, a majority (53%) of LGBT workers in the U.S. hide this part of their identify at work, according to a study released this year by the Human Rights Campaign.

According to the survey, the reasons for not being open at work range from feelings that one’s sexual orientation or gender identity is “nobody’s business,” to fear of being stereotyped, to concern that bias could have a negative effect on one’s career and professional relationships. What many don’t realize, however, is that remaining in the closet can itself have negative effects: Many LGBT workers report feeling exhausted and distracted at work from all the time and energy they spend hiding their identities, according to HRC.

“Often fears are overblown in our minds,” says Sarah Holland, an executive coach who formerly headed the Visibility Project, a national organization that helped corporations address issues of sexual orientation in the workplace. “The world is more receptive to LGBT individuals than it’s ever been before. More often then not your colleagues have already made assumptions about your sexual orientation, especially if you never say anything about your personal life.”

There’s no need to share your orientation if you don’t care to, experts say. But if you decide that it’s finally time to let your guard down—as Cook did—here’s the best way to go about it:

Assess the Risks

Before doing anything, you want to make sure that you won’t put your career or personal security in any kind of jeopardy by saying something.

Start by checking whether your state has a non-discrimination law that would protect you from being fired, harassed, or discriminated against. Currently 21 states have such laws in place regarding sexual orientation, and 17 of those for gender identity as well. (No workplace protections exist in federal law.)

While it’s a reassuring backstop if your state is among those that offer protections, it’s arguably more important to assess your company and department culture to get a sense of how your news will be received, suggests Deena Fidas, director of workplace equality for the Human Rights Campaign.

Does your employer have a written non-discrimination policy that covers sexual orientation and/or gender identity? The vast majority (91%) of Fortune 500 companies have workplace protections in place on the basis of sexual orientation and 61% on gender identity. Does your company offer domestic partner benefits? Is there a support or affinity group for LBGT individuals, or is anyone in your department openly gay? (If so, you might want to talk to people to learn about their experiences coming out and for their insights.) Is your company ranked highly on the Human Rights Campaign’s Corporate Equality Index?

On the other hand, have you heard anyone at work make derogatory comments about LGBT people?

Should you get the sense that it wouldn’t be comfortable to come out, you might want to rethink your corporate affiliation, says Holland. “Consider why you want to be at that company. Do you really want to spend your work life being closeted for fear?”

Start with Your Closest Colleagues

Once you determine that your workplace is LGBT friendly, begin by sharing more details of your personal life with a trusted coworker whom you know is LGBT-supportive, recommends Fidas.

Having an ally will make you feel more comfortable opening up to the rest of the workforce, and can help you deftly handle any conversations that get awkward or too personal.

For the other folks in your social circle, “use the Monday morning coffee talk as a chance to be more forthcoming,” suggests Holland.

Chances are, you’ve been ducking out every time the social chatter turns to relationships or dating—and 80% of straight workers say that these conversations come up weekly or even daily, according to the HRC survey. But now use them to your advantage: “When asked how you spent your weekend, don’t change the gender of your partner,” says Holland. “Say if you went to a function for gay rights.”

By speaking about your LGBT identity casually, you can help coworkers to follow your lead and treat it the same way.

Let Everybody Else Figure it Out

While coming out to family and friends often happens with a discrete announcement, “in the reality of the workplace, coming out is more of a daily process, not an announcing that one is gay,” says Fidas.

In other words, you need not go around to everyone from the IT guy to the mail clerk to formally and awkwardly inform them about your sexual orientation. There are many subtle, discreet ways you can clue in coworkers with whom you’re less likely to talk about these topics.

For example, putting photos of your partner on your desk or having your loved one pick you up at the office allows coworkers to make the discovery themselves without you hiding any aspect of your identity.

Fidas also recommends using an opportunity to correct a coworker’s mistaken assumption as a way to make your sexual orientation or gender identity clear: “If you’re staring a new job, and a coworker asks if you moved from Boston with your husband, you can say you moved with your wife, rather than saying your spouse moved with you.”

Remember most of all that “you do not need your coworkers’ approval,” says Judith Martin, author of Miss Manners Minds Your Business. “You only need them to be respectful of you, which your workplace probably already obligates them to do.”

MONEY Out of the Red

How I Paid Off $158,169 in Debt

G. McDowell Photography

Think there's no way to get out from under your obligations? This first in a series of profiles of people getting "Out of the Red" proves that it's possible.

Rachel Gause just wanted to give her three kids more than she had growing up. So, though she was receiving a secure income along with child support, she found herself living beyond her means every month—eventually racking up six figures in debt. With a whole lot of determination and almost a decade’s worth of belt-tightening, she’s climbed most of the way out. This is her story, as told to MONEY reporter Kara Brandeisky.

Rachel Gause
Jacksonville, N.C.
Occupation: Master Sergeant, United States Marine Corps
Initial debt: $179,625
Amount left: $21,456
When she started paying it down: 2006
When she hopes to be debt-free: November 2015

How I got into trouble

“I was just trying to keep up with everybody else. I’m a single parent to three kids, ages 10, 14, and 16. I was always spending extra on Christmas and on birthdays. Also, growing up, I didn’t have new clothes and new shoes at the start of every school year. But I wanted to make sure my kids always did.

Looking back, I wish I would have known not to rely on credit cards. I wish I would have known that it’s okay to keep your car for four or more years, as long as you maintain it.

I started going into debt when my first daughter was born, 16 years ago. I remember I had to get a furniture loan. By 2006, I had $55,848 in credit card debt and $76,711 in car loans. Then there were the personal loans. I had a consolidation loan that I used to pay off my credit cards. Altogether, it came out to $179,625.”

My “uh-oh” moment

“I wasn’t aware of how much debt I was in. The turning point for me was when I hit the 10-year point in the Marines, and I saw other people around me retiring. I wanted to sit down and see where I was at. And that’s when I realized I didn’t want to retire in debt. I didn’t want to be that person.

At the time, I had a Toyota Sequoia, and I couldn’t make payments on it. I knew I was in way over my head.

Even though I had three kids, we didn’t need that big truck. It was going to put my family at a financial challenge. So I spoke to a lady at my church, and I said, ‘I have this truck, and I’m going to trade it in for something smaller.’ And she said, ‘I always wanted a Toyota Sequoia.’ I sold it to her and got into a Corolla instead.

I realized buying that truck was a bad choice, and I knew I needed to develop better habits from there. That was my first step forward.

How I’m getting out from under

Now I put roughly $2,100 a month toward my debt.

For the rest of my income, I use the envelope system. Before I get paid, I do my budget. Then I have 13 envelopes—one for groceries, one for clothes and shoes, one for charity, one for dining out, one for gas, and so on. I go to the bank, take the money out, and divide it between the envelopes.

I don’t spend anything that doesn’t come out of those envelopes. Debit cards are nice, but swiping is less emotional. Cash makes me more aware of what I’m spending my money on. If I run out of money for something that month, I don’t buy it. But I’ve never run out of money for something important—now I’m more aware of how much I’m spending.

That’s because I also got a small composition book from Dollar General to track my spending. Every time I spend money, I write it in that book. Then I compare that to what I’m supposed to be spending, according to my budget.

I also do a quarterly audit on myself to make sure I’m not spending too much more on my cable or cell phone bills.

But it’s not all deprivation. We have a chart that we color in every time we reach a milestone, and we treat ourselves to something nice. For example, recently I went on a trip with my high school classmates to Atlanta—funded totally in cash.

My kids have been understanding about our debt-free journey. They know that mommy has made some bad financial decisions in the past. Now I teach them about needs and wants.

The other day, I was coming home from work, and I said, “Do you need anything from the store?” My son said, “We don’t need anything, but we’d like some candy.”

If they want a video game, they know they need to save their money to get that video game—and that means there’s something else they won’t be able to get. They understand if you have a big house, that means you have to pay big electricity and water bills. I’m teaching them to live within their means and not just get, get, get to try to impress people.

What I’ve learned that could help someone else

My advice would be to sit down, see where you’re at—first, you have to know how much debt you’re in—and then create a spending plan. (Some people are scared of the word “budget.”) You have to tell your money where to go, or it’s going to tell you where to go.

The numbers may scare you in the beginning. It takes two or three months before you can get the budget right.

And you have to be consistent. If you don’t put 100% into it, it’s not going to work. You can’t be half, ‘I’m trying to get out of debt,’ and half, ‘I still want to spend money.’ You have to sacrifice.

My hopes for the future

Once I become debt-free, I plan to build up my emergency fund and then start actively investing and saving for retirement.

Then I hope to get my kids off to a better start.

My daughter will go to college soon. We’ve talked about student loans.

The main reason I joined the military was to obtain my college degree for free. I earned my degree in business administration from the University of North Carolina-Wilmington last year. But while I was there, I saw so many kids taking courses for a second and third time because they were failing and they weren’t going to class.

So I told my daughter, you’ll pay for that first year, and we’ll see how you manage. Then I’ll assist you with your second, third and fourth years. But first, I need to make sure you’re dedicated.

After I retire from the military, I want to become a certified financial counselor so I can help people break the vicious cycle of being in debt and dying in debt. My passion is to put together financial classes for non-profit organizations like women’s shelters, churches, and organizations for military service members. There aren’t that many in this area, and I see a real need. I see so many people struggling to survive, living paycheck to paycheck.

I’ve already started counseling some people who ask for help.

Every now and then, I get a message on Facebook from someone I helped that says, ‘I just paid off another credit card’ or ‘I paid off my car.’ That’s my motivation now. I don’t want to stop – the need is out there.

Are you climbing out of debt? Share your story of getting Out of the Red.

Check out Money 101 for more resources:

MONEY retirement planning

3 Ways to Feather Your (Empty) Nest

Birds in nest throwing money in the air
Sebastien Thibault

Just because the kids are gone doesn't mean it's time to splurge. Here are some ways to treat yourself well without compromising your comfort in retirement.

The phrase “empty nest” may sound sad and lonely. But—shh!—don’t let the kids know that when they clear out, Mom and Dad have fun. Often too much fun. A study by the Center for Retirement Research at Boston College found that empty-nesters spend 51% more than they did when their children were home. “We have clients who go out to lunch and dinner every day,” notes Cincinnati financial planner John Evans.

Certainly after surviving Little League, teenage attitude, and the colossal cost of college, you ­deserve to splurge. But you also don’t want to compromise your finances as you begin the final sprint to retirement. Here are three ways to keep feathering your nest while still enjoying your freedom.

First, Keep Your Spending in Check

  • Rerun your numbers. While you can likely afford to let loose a bit, make sure your retirement plan is in order before you go wild. “You should save a bare minimum of 10% a year, really more like 15%—and if you’re behind you may need to save 20% to 30%,” says Boca Raton, Fla., financial planner Mari Adam. Use T. Rowe Price’s retirement income calculator to see what you need to put away to get your desired income.
  • Make a payoff plan. Erasing your debts before retirement will require sacrifice now—but will take pressure off your nest egg and allow you to have more fun later. Figure out how to do it with the debt calculator at CreditKarma.com.
  • Plug the kid leak. One in four affluent parents ages 50 to 70 surveyed recently by Ameriprise said that supporting adult children has put them off track for retirement. Lesson: Get your priorities (retirement and debt elimination) straight first, and build gifts into your annual budget proactively vs. giving willy-nilly.

Second, Free Up Even More Cash to Stash

  • Downsize. Convert Junior’s room into a better tomorrow: Moving from a $250,000 house to a $150,000 one could boost your investment income by $3,000 a year while reducing maintenance and taxes by $3,250, the Center for Retirement Research found.
  • Cut your coverage. If your kids are working, you may not need life insurance to protect them. You may be able to take them off health and auto policies too.
  • Moonlight. Besides increasing your income and helping you establish a second act, “self-employment makes a huge difference in what you can do on your taxes,” says Tony Novak, a Philadelphia-area CPA. That’s especially valuable in these peak earning years when you’ve lost the kid write-offs.

Finally, Supercharge Tax-Efficient Savings

  • Catch up on your 401(k) and IRA. Once you hit 50, you can sock away $5,500 more in your 401(k) this year, for a total of $23,000, and an extra $1,000 in your IRA, for a total of $6,500. In 2015, you’ll be able to put an extra $6,000 in your 401(k), for a total of $24,000; IRA caps remain unchanged. If you start moonlighting, as suggested above, you can shelter more money in a SEP-IRA—the lesser of 25% of earnings or $52,000.
  • Shovel cash into that HSA. Got a high-deductible health plan? Families can contribute $6,550 ($7,550 if you’re 55-plus) to a health savings account. Contributions are pretax, money grows tax-free, and you don’t pay taxes on withdrawals for medical expenses. If you can pay your deductible from other savings, let your HSA grow for retirement, Novak says.

Sources: Employee Benefit Research Institute, PulteGroup, MONEY calculations­

MONEY family money

This Company Will Give You $500 If You Have a Baby Today. Wait, What?

141017_FF_BabyMoney
Mike Kemp—Getty Images

It's no joke. As part of its rebranding campaign, investment firm Voya will give money to the newest of new parents.

Lucky for you if you’re in labor right now.

A company called Voya Financial has announced that it will give every baby born today—Monday, Oct. 20, 2014—500 bucks.

The promotion, timed to coincide with National Save for Retirement Week, is part of a marketing campaign to alert the public that the business that once was the U.S. division of ING is now a separate public company with a new name.

Get out the castor oil and order in Indian if you’ve already hit 40 weeks, because the offer is only available to those who exit the womb before midnight tonight—though soon-to-be-sleep-deprived new parents have until December 19 to register a child.

Voya estimates that it may have to kick in as much as $5 million, since there are about 10,000 babies born every day in the U.S.

While the company has promised that families will not have to sit through a marketing pitch to get the money, and that the baby’s information would be kept private, this special delivery still comes with a catch.

The money is automatically invested into Voya’s Global Target Payment Fund, which according to Morningstar has above-average costs and below-average performance.

Regarding the fees, Voya’s Chief Marketing Officer Ann Glover says that the funds Morningstar uses as comparison are not apples to apples. In any case, Glover says families are free to sell out of the fund if they so choose. “Of course, we would hope people would hold on to the investment,” she adds.

But hey, money is money, so if you’re due, you may as well take what you’re due.

And for those mamas and papas whose progenies aren’t quite ready to make their debuts? While you won’t get money from Voya, you may have other opportunities to get big bucks for your little one.

Start by checking in with your employer to see whether the company helps with college savings. A growing number do. Unum, for example, offers its workers with newborns $500 towards a college savings account.(Our Money 101 can help you find the best 529 college savings plan.)

Also, in several communities around the country, charitable or government programs seed savings accounts for kids. For example, residents of northern St. Louis County in Missouri can get $500 through the 24:1 Promise Accounts. Babies born in Connecticut get $100, plus $150 in matching funds by age four, thanks to the CHET Baby Scholars program.

“This is gaining significant momentum nationwide,” says Colleen Quint, who heads one of the nation’s most generous free savings program, the Harold Alfond College Challenge. Started by the founder of Dexter Shoes, the charity gives every resident newborn in Maine a $500 college savings account.

In fact, Mainers can get the most free money for their children according to a survey of such programs by the Corporate for Enterprise Development, which has gathered details on at least 29 free childrens’ savings programs.

Besides the $500 college savings account, a state agency will match 50¢ for every $1 parents contribute each year up to $100 a year and $1,000 over a child’s lifetime. So Mainers can, in theory at least, get up to $1,500 in free college savings money on top of any additional freebies they can get from companies.

That should be more than enough to buy a chemistry textbook in 2032.

MONEY retirement planning

8 Things You Must Do Before You Retire

sébastien thibault

Getting ready to retire? The moves you make in the months before you call it quits can smooth the way to a secure future.

After working diligently for more than 30 years—so you could set yourself up financially for your golden years—the glow of retirement is finally on the horizon. Alas, it’s not time to relax just yet.

Each day more than 10,000 baby boomers enter retirement. Yet only around one-quarter of workers 55 and older say they’re doing a good job preparing for the next phase, according to the Employee Benefit Research Institute. The last 12 months before you call it a career is especially critical to putting your retirement on a prosperous path. It’s time to get your portfolio, health care, and other finances in order so you can enjoy your new life.

THE TURNING-POINT CHECKLIST

12 Months Out:

Dial back on stocks now. You still need the growth that equities provide, but even a 15% market slide in the year before you retire can erase four years’ worth of income. Cap stock exposure to around 50% in your sixties, advises Rande Spiegelman, vice president of financial planning at Schwab Center for Financial Research.

Raise cash. Your paychecks are about to stop. So as you downshift from stocks, move that money into a savings or money market account to fund at least one year of expenses, says Judith Ward, T. Rowe Price senior financial planner.

Set a realistic retirement budget. Use the worksheet on Fidelity’s free retirement-income planner to list all of your fixed and discretionary expenses. Then use T. Rowe Price’s free retirement-income calculator to see how safe that level of spending is likely to be, based on the size of your nest egg and age.

6 Months Out:

Play out Social Security scenarios. You can claim Social Security at 62, but if you can hold off until 70 your checks will be 76% bigger. Tool around FinancialEngines.com’s free Social Security Income Planner to find the best strategy for you.

Figure out how you’ll pay for health care. Check if your company offers retirees medical, long-term care, and other insurance coverage. If you won’t get health insurance and aren’t yet 65 (when you qualify for Medicare), then compare plans offered via the Affordable Care Act at eHealthInsurance.com. Or use COBRA, where you can stay on your employer plan up to 18 months after leaving.

3 MONTHS OUT:

Begin the rollover process. In a small 401(k) plan, average fund expenses can run north of 0.6% of assets. You can cut those fees at least in half by shifting into index funds at a low-cost IRA provider. See if your plan provides free access to investment advisers to help you decide.

Sign up for Medicare. Nearing 65? You can enroll for Medicare up to three months before turning that age. Also, figure in supplemental plans to cover expenses that Medicare does not, such as dental care and prescription drugs.

Get a running start. Put your post-career itinerary into action. Research volunteer groups that you want to join, reach out to contacts if you plan to keep a hand in work, start a new exercise routine, or begin planning that big trip.

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