MONEY Budgeting

12 Things You Wish You’d Never Bought

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Among readers' biggest regrets: a $1500 plane ticket, designer shoes and 6 months rent at a coworking space.

Some big purchases leave you feeling elated: that new car, or the couch you’ve been saving up for. But what about when that splurge turns into a mistake you wish you could immediately take back? We asked DailyWorth readers to tell us about their most regrettable purchases. And oh, did they spill.

1. “I regret spending $1,500 on a plane ticket to meet my then-boyfriend in Southeast Asia on the last leg of a backpacking summer trip. I thought we were going to spend two weeks catching up, being in love, and exploring a new country together. But instead, I found out halfway through our vacation that he had been cheating on me the whole time he was away. The rest of the trip was spent feeling like a fool, hiding out from him, and being completely livid about the whole situation. We broke up on the plane ride home.”
—Lulu, 40

2. “I once purchased a gorgeous $500 white silk jumpsuit because I thought it made me look like Beyoncé. In truth, it kind of did. But I consequently learned that even looking like Beyoncé wasn’t worth the $500 plus tax I had dropped. I felt so ill spending that amount of money on something as singular as a jumpsuit (as opposed to, say, a winter coat), that I couldn’t even enjoy it. I returned it the next day much to the perplexity of the sales associates who said the jumpsuit was clearly made for me. Or Beyoncé.”
—Lydia, 28

3. “I was living in London and saw a carpet beetle, which is harmless and very common — it’s like a moth. But it sort of vaguely looks like a bed bug. So I spent six hours Googling bed bugs, and then had a complete breakdown in front of my roommates. I ended up paying £150 to an exterminator to tell me I didn’t have bed bugs. It was crazy embarrassing, and my roommates still tease me about it to this day.”
—Hannah, 42

4. “Throughout college, I spent a ridiculous amount of time researching, purchasing, and reselling designer bags. I got my first job when I was 18 and, for some reason, thought blowing every paycheck on expensive stuff was a good idea. I ended up dropping around $700 on a Louis Vuitton Speedy. I was never happy with the bag itself and I ended up selling it a few weeks later. Whenever I think about that particular purchase, I cringe.”
—Aimee, 28

5. “Private college. I was 17 and stupid and had no concept of the fact that I’d be paying for my visual arts degree forever. Lest you think I’ve wised up: I’m heading to another private university for a graduate degree. Help.”
—Julia, 26

6. “Small impulse buys, like clothes that are made of synthetic fibers and are cheaply made — all of which add up to an absurd amount of money that I don’t want to think about.”
—Hailey, 24

7. “I went to Paris for two weeks when I graduated college. I really wanted to splurge on a French fashion item, thinking it would be a special memento from my trip, and who knew the next time I’d be in Paris, and I’m an adult now so I should dress fancy (and every other reason or excuse possible). Well, I spent $400 on a pair of shoes that I never wore. Even now, in my thirties, I’d never spend that much on shoes. I can’t believe I spent that when I was younger (and poorer) — I could have used that money for a weekend trip to the French countryside, or French opera tickets, or an amazing meal, or a hotel upgrade … or, you know, just saved it. Such a waste.”
—Vera, 39

8. “A $90 book on Aristotle to impress my friends. An expensive collection of DVDs by director Pierre Perrault that I haven’t watched and accidentally scratched. They haunt me.”
—Eric, 35

9. “I impulsively purchased a $500 leather jacket in the middle of June. I haven’t been able to wear it because it’s been consistently 90 degrees. Go figure.”
—Caroline, 23

10. “Anything I ever bought because I wanted to make myself feel better about something else. You know what will never, ever lift a bad mood? Trying on jeans. I’ve learned that lesson the hard way many times. Just go home and do a kickboxing workout until the endorphins are flowing. You save money AND you get to uppercut your frustration away.”
—Katie, 32

11. “When I first moved to New York, I joined a co-working space. I paid for, like, six months and maybe went twice. I kept thinking I’d go and be so productive and make connections. But, predictably, that didn’t happen.”
—Camilla, 35

12. “I spent well over $2,000 on an Yves Saint Laurent jacket when I was 20. I was living in New York City for a summer and wanted something to commemorate the experience. That jacket is still hanging in the back of my closet, too expensive for me to wear in public and too sentimental to be sold.”
—Stephen, 29

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MONEY Budgeting

Is ‘Lifestyle Inflation’ Making You Broke?

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The tendency to spend more as you earn more can short change your long-term goals.

In theory, when your paycheck gets bigger, so should your ability to build your nest egg, pay off debt, and work toward some big-picture financial goals.

But rather than go straight to savings, that extra money can often end up getting funneled toward a few more dinners out, another new (yet unnecessary) gadget or a fancier set of wheels.

After all, don’t you deserve to reward yourself with an SUV after years of driving a compact clunker?

The tendency to spend more as you earn more is known as lifestyle inflation—and it can affect you whether you make five figures or seven.

Lifestyle inflation is exactly what Elaine Harper*, 30, a massage therapist and nutrition coach, has been worried about as her income has grown recently.

Elaine; her husband, Scott; and their two young sons moved to Portland, Ore., from Santa Barbara, Calif., last year in part to lower their cost of living.

Scott, a social worker, took a pay cut to make the move, and Elaine needed time to ramp up her business in Portland, so their take-home pay was initially about $3,000 per month.

But Elaine’s business has been on the uptick, and in the past three months or so, their take-home pay has grown to between $4,000 and $5,000 per month.

“[Since] I recently started generating more consistent income, I’ve redone our budget—and I can definitely see the expenses creep,” Elaine says. “I’d really love to nip that in the bud.”

To help her do just that, we asked Colin Drake, a Certified Financial Planner (CFP) and head of Drake Wealth Management in Sausalito, Calif., to take a look at the family’s expenses and spending habits—and weigh in on how they can help stop lifestyle inflation in its tracks.

What Elaine Thinks of Her Lifestyle Inflation Problem



“Since moving to Portland, we’ve gotten more bang for our buck. For instance, we pay $1,455 a month to rent a nice home downtown, as opposed to the $1,650 we were paying to rent a condo with a concrete slab for a yard in Santa Barbara.

But as I’ve taken on new clients and grown my business here, that extra $1,000 or so that’s been coming in has been quickly used up.

Some of it is out of necessity.

Before my work picked up, I needed a babysitter six to 10 hours per week. It’s more like 12 to 15 hours now—and sometimes more during weeks that I crave time to myself. This has bumped our child care costs to $960 a month at times—much higher than the $330 I was averaging just three months ago.

But other expenses are definitely a result of lifestyle creep.

Food is one of the first things I spend more on whenever I feel we have some wiggle room. So we’ve been going outside the grocery list more often, eating out more when we’re tired or rushed, and I haven’t planned ahead with meals well enough.

I also haven’t been proud that our ‘extraneous shopping’ has gone up.

We’re usually good about reining in those costs. We don’t, for instance, stock up on toys for the kids or go on shopping sprees.

I’d budgeted $150 for miscellaneous shopping, but realized we were actually averaging $300—probably because we’ve been more willing these days to throw an extra magazine here, a trinket there, or a clothing item into the shopping cart.

All of that adds up, and I don’t want it to stop us from working toward some of our goals. Eventually, we want to buy our first home in Portland, and the ones in the neighborhoods we like are between $400,000 and $450,000.

Outside of the 5% 401(k) contributions Scott just started making, the only other saving we do is transfer about $150 a month into a savings account—but that always seems to get transferred back into checking to cover some unexpected cost.

On top of that, we have about $9,000 of credit card debt we’ve accrued since the move. Right now, we pay from $300 to $700 a month on our cards, but it should be more like $1,500 to get that debt paid off by year’s end, when our 0% APR offer expires.

There is one bright spot: We’re inheriting investment accounts that will be worth about $220,000, which we’re thinking of using toward a home down payment.”

What the CFP Says About Elaine’s Lifestyle Inflation

The most efficient way to tackle their spending creep won’t come from fretting over the small purchases or depriving themselves of all the fun in their lives, Drake says.

“You don’t want the kind of life where you’re at the checkout going, ‘Should I buy People magazine or not?’” he says, adding that Elaine can rest easy about her child care costs, which are necessary to growing her business—and saving her sanity.

Rather, he suggests focusing on lowering more significant cost categories that compose about 10% or more of their spending.

“People end up putting too much stress and energy into the little stuff that doesn’t make an impact,” Drake explains. Instead, he says, it makes more sense to ask yourself what your Number 1 expense is, then your Number 2 expense, etc., and focus on the bigger costs first.

Finding a less expensive place to rent, for instance, could make a big impact, considering housing makes up about 28% of their total costs. And they don’t have to consider it a permanent move, says Drake—just something to consider doing until their income climbs.

In fact, Drake suggests they hold off on buying a home until their salaries rise, because even though they have enough to cover a down payment through the inheritance, the type of house they want could lead to further inflated lifestyle costs.

Drake estimates that their mortgage payment would be around $1,900 a month for a home in the price range they want, not including the several thousand they’d likely pay in property taxes and maintenance costs.

Instead, he encourages them to use their inheritance to start an emergency fund of somewhere between $30,000 and $70,000, which could cover their expenses for six months to a year should they lose income. Any leftover money can then be used to pay down their credit card debt and to start saving for a down payment. (And, of course, it’d be wise for them to consult an accountant to help them figure out how liquidating their investments would affect their taxes.)

When it comes to their ballooning food costs, says Drake, a little preplanning could go a long way.

For example, they can pick three of their family’s favorite meals, sort them by prep time, and prioritize their grocery list so they always have those ingredients on hand. “Then they’re less tempted to eat out after a long day,” Drake says.

As for those pesky “extraneous shopping” impulse buys, Drake says Elaine should ask herself four questions before pulling out her wallet: What is the feeling I believe I will experience after I’ve made this purchase? How long is that feeling likely to last? Does it seem worth it? And is there a free way to get that same feeling?

“The bottom line is that we’re typically looking for two things [when we impulse buy]: the temporary cessation from wanting, and a feeling of happiness,” he explains. “By being aware of how effective these purchases are in actually bringing us happiness, we can then be more aware of when to skip a purchase.”

What Elaine Thinks of the CFP’s Advice

“This advice is amazing! The idea of sorting expenses from largest to smallest and then focusing on reducing the larger ones first makes sense to me.

Plus, it’s nice to hear from a financial planner that my time away from home for workand self-care is essential—even if it means needing more child care.

We don’t make time for date nights as it is, so maybe some of our convenience takeout runs can be used to help pay for a date night!

I also hadn’t thought about the extra expenses that come with purchasing a home, such as maintenance costs. So it’s good to know we need to take those into consideration when we think about buying a home.

Another thing that jumped out at me?

The feeling associated with my shopping expenses. That really spoke to our lifestyle inflation tendencies—so I’ll be reading that over and over!”

*Names have been changed.

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LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

MONEY Millennials

5 Steps Millennials Can Take Now for a Richer Retirement

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Start now, and you'll have an even bigger nest egg when you stop working.

A couple of years ago, Emilie Hunt had to go to the emergency room with a stomach virus. The bill took a huge chunk of money out of her savings, more than $800, and kept her from saving for a couple of months.

“I’m really bad at planning for unexpected expenses,” she said. “And instead of cutting other expenses, often the first money I cut is what would go into savings.”

Hunt, an executive assistant at a private equity firm in New York City puts $150, about 2% of her salary, automatically into a retirement plan every month. Her biggest expenses are rent, student loans and food, in that order.

She makes a budget, but doesn’t necessarily stick to it.

“I don’t feel that I’m in trouble,” she said. “But I feel like I’m not growing my savings at the rate I’d like to.”

Many millennials like Hunt are saving for retirement, but not enough. They put away an average of 8% of their salary for retirement, according to investment firm T. Rowe Price’s Retirement Saving & Spending Study, which looked at 1,505 millennials with 401(k)s.

That’s a lot less than the minimum 15% that most experts recommend.

So what can millennials do to save more for retirement? Here are five tips.

Cut Costs

Before you sign a lease or buy a car, think about cheaper options. Housing and transportation are the two biggest costs for most people and significant commitments of your future income, said Stuart Ritter, senior financial planning analyst at T. Rowe Price. A small change can give you a lot of financial freedom.

“There’s a big difference between buying an expensive car, riding a bike or sharing a ride,” said Ritter.

Make a Budget

Track your spending for at least a month. That is the first step for exercising restraint. Otherwise, your spending can sneak up on you. A $3 Starbucks coffee a day adds up.

Categorize your expenses as “needs” and “wants,” and distinguish between the two, said Mark Kantrowitz, senior vice president & publisher at, a site that provides financial advice for students and families.

“Cable TV is not a need, it’s a luxury,” he said.

If you think it’s overwhelming to make a budget for all your expenses, pick a couple of categories and track them, said Ritter. Apps like Mint, a unit of Intuit, and LevelMoney help you track and analyze your spending habits.


Try increasing your savings for three months. Most people adjust to it, according to Ritter, who warns against having an “all-or-nothing mentality.”

“Some people think they can never go out with their friends if they save more for retirement,” Ritter said. “But maybe it means that you go out two times a week instead of three.”

Be careful with how much you spend after college.

“When people start making a bigger salary, their lifestyle often inflates and suddenly they are living paycheck to paycheck,” said Jason Vitug, founder and chief executive of Phroogal, a company that provides financial advice for millennials.

Phone bills, Netflix and magazine subscriptions are some of the expenses you can reduce, he said.

Save While Paying Off Loans

Student loan debt prevents some millennials from saving, according to T. Rowe Price’s study. But it’s important to prioritize both saving and paying off loans.

First, build an emergency fund of three to six months of salary. Then prioritize paying off your loans, said Kantrowitz. Start by paying off the loan with the highest interest rate.

Make it Automatic

While you are working, you should save a fifth of your salary so that you have money for the last fifth of your life, Kantrowitz advises.

Tell your employer how much you want to save and have the money automatically taken out of your paycheck. That will help you get used to having less money for spending.

Make sure you maximize your employer match, which can be upwards of 6 percent. “That’s free money,” said Kantrowitz.

MONEY Budgeting

8 Ways to Simplify Your Finances

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Consolidate. Prioritize. Automate.

Do you find yourself overwhelmed by your financial responsibilities? Do you sometimes ignore your accounts and budget because thinking about them adds stress or confusion? Understanding the steps for good financial decision-making and simplifying your role can help you take control of your finances. Check out the following tips to create an easier structure in your finances and watch how each small change adds up.

1. Pare Down Your Accounts

You probably don’t really need more than one savings or checking account or to have accounts with many different financial institutions. One method to simplify your financial life is to consolidate your bank accounts to one checking account and one savings account to cut down on the paperwork and tracking.

2. Prioritize

Picture your future and choose a few financial goals to focus on at a time, like boosting your 401(k) or growing an ample emergency fund. It’s important to be specific about the goals you want to accomplish and plan the clear steps you need to take to reach them. Writing your goals down can help you stick to them.

3. Consolidate Insurance

Just as you probably don’t need multiple bank accounts that serve the same purpose, you probably don’t need multiple insurance accounts. You can save money and stress by bundling your assets that need insurance and consolidating your policies. You can compare the various companies to see who will help you save the most in this process.

4. Keep Track of Your Comprehensive Budget

When you are ready to get control of your financial life, it’s important to make sure you are living within your means. It is important not just to create a realistic, comprehensive budget but to take the steps to stick to that budget. Once you start tracking where you money is going, you may be surprised by how much you are spending in each category and how your money can be put to better use.

5. Pool Your Plastic

If you have debt, you may want to consider transferring the balances on high-interest credit cards to a credit card with a lower rate. This will help cut down on your money management and save you some money on interest. It’s important to inquire about balance-transfer fees and factor that into your decision.

To get a good balance transfer offer, you’ll need a decent credit score.

6. Go Paperless

You only need to keep important papers, so go through what you have and shred whatever you don’t need. Then streamline your future financial records by going paperless. Most companies and banks offer this feature and this can cut down on your clutter and filing. Call to set up paperless statements or bills and keep folders on your computer to help you track where your money is coming and going.

7. Automate Good Habits

If you can’t trust yourself to follow through on positive financial behaviors, consider not giving yourself the option. Set up direct deposits and contributions so you can watch your financial goals come into grasp without having to be proactive about it. If you never see the money sitting in your account, you can’t spend it.

8. Inventory Your Stuff

Take stock of everything you own, from clothes to furniture. You will find that you probably have more than you need and even things you have forgotten about. You can sell or donate what you don’t need and watch your financial clutter decrease with your life clutter.

The easier your financial management is, the more likely you are to stay on top of it and be in better fiscal health. Use the tips above and search for your own shortcuts to make this strategy a reality and watch your assets grow.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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Living Out of a Suitcase Was The Best Thing for My Family’s Finances

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Friends were shocked when we told them we were selling everything and moving from one country to the next, but we wouldn’t have it any other way.

The year was 2013, and by all outward appearances, my husband, William, and I were living the good life in St. Louis.

He was finishing up his MBA and had an internship at a well-known consumer-products company that was sure to put him on the corporate fast track—all while running his own successful tutoring and test-prep business on the side.

I was juggling getting my Ph.D. in reproductive epidemiology while also being a mom to our pride and joy, Desmond, then 2.

But during William’s last semester in the MBA program, our family took a life-altering trip to Spain as part of his study abroad offering. What was just supposed to be a three-month trip overseas turned into two years … and counting.

Since then, we’ve lived and worked in five different countries, from Hungary to Peru—and have even added to our brood along the way.

Our nomadic lifestyle may seem a bit unorthodox to some—family and friends were shocked when we told them we were selling all of our belongings to pack up and ship out—but we wouldn’t have it any other way.

The best part? It’s done wonders for our finances.

Truth be told, the career and life paths we’d always envisioned for ourselves weren’t quite panning out.

Despite the fact that most business students would have killed to have William’s internship, he was disillusioned by corporate life.

The monotony of his day-to-day routine coupled with having to work for someone else, just didn’t feel natural to him. He wanted something more.

I was feeling a similar dissatisfaction. I’d been working on my Ph.D. for almost five years, and continuing my research while caring for a little one left me struggling to maintain motivation. I was gradually falling out of love with academia.

All of this prompted William to pose a question before we embarked for Spain for his study abroad program: What if we didn’t come back to the states at semester’s end?

What if we stayed in Europe for a few more months—one last hurrah before putting down roots?

I thought he was crazy.

We had a toddler and a mountain of debt—more than $100,000 in student loans between us, a $25,000 business loan, and about $6,000 of credit card debt. We couldn’t go gallivanting around Europe like carefree college students.

But when I saw he was dead serious, it stirred something in me. I couldn’t help but feel like maybe this could be an amazing adventure for our little family.

So we got out of our lease, moved our stuff into storage, and found an apartment in Barcelona through Airbnb for $1,200 a month—not supercheap, but still less than the $1,500 we were spending to rent a home in St. Louis.

Once we settled in Spain, William had yet another crazy idea: What if we never went back and instead built out his tutoring business overseas?

We had both been employees of the company back when we lived in Salt Lake City, and when the opportunity arose, the entrepreneur in him decided to take out a business loan to buy the company from its previous owners.

When we moved to St. Louis for his MBA program, William continued to manage the business remotely, hiring two codirectors to oversee the roughly 15 tutors we employed back in Salt Lake City. He drew a salary of about $35,000—but being abroad made us realize there was an even greater opportunity to make money.

William could meet with international schools throughout Europe and pitch them our services, in which one of our tutors would spend a few weeks doing SAT/ACT prep at their schools to help students who wanted to attend college in the U.S.

I believed in the plan, but the thought of living in—not just visiting—so many different countries terrified me. But if we were going to try this, it was now or never.

So I put my Ph.D. on hold and became our family’s Chief Travel Officer.

5 Countries, $300 Rent, $0 Credit Card Debt

We stayed in Barcelona for about five months, taking in the culture, loving every minute—and mapping out our next destinations based on whether there were international schools close by, our interest in the region, and the cost of living.

Our next, three-month stop was Budapest, Hungary, which was a much cheaper place to live. By avoiding renting in a tourist area, we were able to get a great apartment for just $300 a month.

It was then that I realized how living abroad could actually be good for our finances because, if we planned well, life could be so much cheaper.

When the holidays rolled around, we headed back to St. Louis to sell all of our personal belongings and officially leave our U.S. life behind. But, first, we made a pit stop in Rome—which is when we discovered that our second baby was on the way!

Giving birth in a safe place where I felt comfortable, was important to me, which is why we chose to live next in Colombia. I was born there and still had family there, so it was comforting to know we’d have some support.

After finding a fully furnished apartment in Bogota for $900, we headed out there in February 2014—and welcomed our second son (named Roman, in a nod to Italy) in the spring.

We didn’t have international health insurance at the time, so we paid out of pocket for the birth, which only added up to $1,800, including all of my prenatal visits. Since then, we’ve gotten family coverage for just $200 a month.

In the eight months that we were in Bogota, William took countless meetings, nabbing new contracts and growing the business even more. He gradually increased his salary to about $45,000 a year, and the company helps subsidize such expenses as flights for business meetings, as well as our rent. I also brought in occasional income by doing some freelance research and public-health data analysis on the side.

While we don’t get a tax break from living abroad—we still have to file U.S. income taxes—we do get some tax write-offs for any business-travel-related expenses we have to cover.

This new life has allowed us to get our $6,000 credit card balance down to zero last year—and pay off our $25,000 business loan.

And while chipping away at our student loans will be a slower endeavor, we’ve been able to contribute to a 529 college savings account for Desmond, open a trust account for Roman, and maintain an emergency savings fund of about $2,000.

Our next goal will be to resume contributions to a Roth IRA, which we’d put on hold during graduate school.

Living frugally, of course, helps a lot. For starters, we always opt for cheap housing, even if it means choosing less-prime neighborhoods. Our rent abroad—including furnishings, WiFi and utilities—has averaged $1,000, which is about $500 less than what we were paying in St. Louis.

But, without a doubt, our biggest savings has come from no longer having to pay for gas, insurance and repairs for two cars—we quickly familiarize ourselves with public transportation in every new city. I also do a lot of cooking at home, using seasonal and local ingredients as much as I can, to save money.

In cities where the cost of living is higher, we keep stricter tabs on our expenses, so we know when we’re close to going beyond our budget. Plus, living out of suitcases means we can’t accumulate much stuff—so no extravagant shopping sprees for us!

These frugal habits have accompanied us in the five countries we’ve lived in—Spain, Hungary, Colombia, Peru and Mexico—and the dozens of places we’ve visited. We’re currently back in Bogota, but it’s off to Japan next to build an East Asian client base.

The Intangible Perks of Our International Life

One of my initial concerns with living abroad was how the kids would adjust, but they’ve taken to the nomadic life with ease.

Desmond has attended four different preschools, and in just a few short months, we’ll enroll him in an all-Japanese kindergarten. Once he gets to first or second grade, we plan to home-school because we know international schools can get very pricey.

In our opinion, these experiences have helped shape Desmond into an outgoing, fearless kid—not to mention that he now speaks Spanish fluently!

People ask how long we plan to keep up our gypsy lifestyle. The honest answer: I’m not sure. There are times when I think I’d love to own a permanent home, but then I look around and realize that we’re living most people’s once-in-a-lifetimes.

We’ve spent the past few years marveling at Machu Picchu, taking overnight train rides through Transylvania, and braving the outdoor markets of Santiago.

We may not be millionaires, but we also aren’t struggling. When we started this journey, the company had one international class. We have 11 classes starting this fall, and even more in the works for the spring semester—which has more than doubled our profits.

Over the last few years, my most fulfilling memories have been watching my children play with kids who speak different languages and hold different beliefs. I’ve also come to realize that the best memories happen when you’re willing to surrender a little control and embrace the unexpected.

At the very least, what our nomadic life has taught us is that when we finally do settle down, we won’t need a great, big house with a fancy car to be happy. I’ve learned that you don’t need to have a permanent address to feel like you have a home.

–As told to Maryanne Hayes

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MONEY Budgeting

If You Don’t Have an ‘Austerity Budget’ You Should Get One

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Your austerity budget and an emergency savings account are your sword and shield against financial adversity.

Let’s talk about austerity. No, not the austerity proposed in Greece (although I’m probably the only one not writing about Greece). Rather, I’m talking about personal austerity. I frequently recommend that families develop an austerity budget. Let’s describe what this is and how it might help you.

In a budgeting sense, “austerity” refers to sharply curtailing spending in a time of financial crisis. Your family’s austerity budget is a plan you can put into effect in the event you lose your job or encounter some other financial hardship. Creating an austerity budget involves calculating the minimum amount of money you would need monthly or weekly to live indefinitely. I like to use this definition because it is the most practical minimum budget, as we will see in a moment. Here is what it should include:

  • Rent or mortgage
  • Basic utilities
  • Food
  • Insurance
  • Car payments
  • Debt payments (credit cards or student loans)
  • Any miscellaneous ongoing expenses that can’t be eliminated

Just as important is what it should not include:

  • Savings or investment expenses
  • Vacations or travel
  • Entertainment
  • Dining out

Since your austerity budget is meant to last indefinitely, you need to be realistic about what you will spend. For instance, it does no good to lop out all restaurant expenses if you know you won’t have the willpower to break your daily Starbucks habit. Be realistic — maybe even try living on your austerity budget for a month or two. If you find that life is unbearable without, say, your daughter’s dance lessons, then go ahead and include them in your budget. You might be able to live on a bit less than this budget for a short time, but not indefinitely.

Your austerity budget and an emergency savings account are your sword and shield against financial adversity. When crisis hits, you should know what your austerity budget is and what steps you need to take to get there quickly — such as cutting off cable TV or suspending your kids’ day care. This will maximize the amount of time you can live off your emergency savings.

For some, this might be a relatively straightforward exercise. If you’re single, you might find that your austerity budget is fairly easy to get to. Others with different obligations, such as supporting a family, may find that getting down to their austerity budget requires more action. You may also find that there are issues you should address now, so if there ever is an emergency, the people depending on you won’t be surprised by their circumstances.

I find that there is an added benefit to understanding your austerity budget. As you save and invest over your lifetime, you may find that you have socked away enough money that you could safely withdraw from your accounts an amount equal to your austerity budget. Using simple parameters like the 4% rule, you may find that you already have enough money to live a simple life indefinitely just based on your investments. Many people find peace of mind in knowing this. An austerity budget could be the true start of financial independence.

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MONEY Budgeting

6 Ways You’re Cheating on Your Budget

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#4: You're keeping your money too accessible.

If your budget always seems to fall short, you might tell yourself it just doesn’t work or that you’re plain better off without one. However, the problem might not be the budget, but rather the person who created the budget — you.

A spending plan isn’t going to follow itself, so if you get into a pattern of cheating on your budget and making excuses, you might never stop overspending. An honest examination of your budget and spending behaviors might reveal clues such as these as to why your budgets haven’t worked in the past.

1. Overstating Your Income

Overstating your income doesn’t work when creating a budget. Obviously, you need to include all your income when budgeting, but only if the income is regular or consistent.

Some people make the mistake of including overtime income in their budgets. But since overtime income can fluctuate from paycheck to paycheck, adding this income to your budget can make it appear like you have more money than you actually do.

If you base a budget on money you don’t have, you could end up overspending throughout the month, and you might have to use a credit card to get by.

2. Denial About How Much You Actually Spend

Not only are some people in fantasyland about how much they earn, they’re also in fantasyland about how much they spend. Guesstimating monthly expenses isn’t going to work. You need to be as realistic and accurate as possible.

“A budget should always include actual numbers, such as the actual income received that month and actual expenses,” says Michelle Schroeder-Gardner, author behind the personal finance blog Making Sense of Cents. “Too many people use numbers that they estimate or numbers they wish they were at, which is a big mistake because an estimate doesn’t help you grasp the real picture of your finances.”

To illustrate, if you normally spend $120 a month on fuel for your car, don’t under account for this expense and only budget $80 a month, unless you plan on adjusting how much you commute. Take a look at bank statements or monitor your spending for an entire month to get an accurate picture of your expenses.

3. Never Reviewing Your Budget

A budget isn’t a Crock-Pot, so you shouldn’t expect to set it and forget it. In the beginning, your budget won’t be perfect, and you’ll need to make tweaks here and there until you get it right. Also, some unexpected expenses might result in extra spending, so you have to monitor your budget regularly to make sure everything stays on track. And if you spend money unexpectedly outside the budget, be ready to adjust or reduce how much you spend in other categories to avoid overspending or having to use a credit card.

4. Keeping Your Money Too Accessible

A budget is the perfect tool if you’re always in the hole. But a budget doesn’t magically cure a spending problem. You still have to recognize your weaknesses and limitations, and work in harmony with your budget. If you have a problem controlling spending, yet you walk around with extra cash and credit cards in your wallet, there’s a pretty good chance that you’ll cheat and blow your budget. Don’t make it too easy to spend money. Only carry the cash you’ll need for the day and keep your credit cards at home.

5. Forgetting to Budget for Splurges

You need to include a little splurge money in your budget so it doesn’t feel like you’re depriving yourself. Giving yourself spending cash might seem a step in the wrong direction if you’re trying to save money. However, depriving yourself almost always guarantees that your budget will fail.

“No budget on earth will work long-term if you don’t allow for some fun stuff, even if it’s as small as a chocolate bar once a week,” says Avery Breyer, best-selling author of Smart Money Blueprint: How to Stop Living Paycheck to Paycheck.

6. Stealing Money From Other Spending Categories

This is your budget, so you have to decide a reasonable amount to spend in your various spending categories. If you want to eliminate a category in order to put additional cash in another area, this is entirely up to you, but you shouldn’t start a practice of stealing money from essential categories to satisfy a need for fun.

If it’s the 20th of the month and you’ve already blown through your entertainment budget for the month, don’t steal $100 from your housing budget in order to have a good time with friends this weekend. Spending the money you need for essential expenses can put you in the hole. And again — what’s the point of budgeting if you don’t stick to it? Be honest with yourself, and your money will thank you.

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MONEY home improvement

10 Ways to Avoid a Kitchen Remodeling Disaster

Erin Lester—Getty Images

Read this before you do any serious damage.

When it comes to making magic happen during a kitchen remodel, there are oodles of options you can cook up. Which means there is a lot that can go wrong.

Before you take the hammer to your old kitchen, read these 10 tips to avoid getting burned on a kitchen remodel.

1. Don’t overspend

Consider the market and decide whether a low-, medium-, or high-end kitchen remodel makes the most sense. Costs can run the gamut from $2,000 for a simple paint-and-hardware upgrade to $50,000 if you’re installing expensive countertops and luxury appliances.

Evaluate neighborhood comps to keep from overspending (or underspending). You may not get your investment back installing travertine in your tiny starter, and let’s face it, you’ll never see Formica in a high-end home. So check out for-sale properties in your area before shelling out for high-end upgrades.

2. Avoid an identity crisis

Don’t try to remodel a ’50s ranch-style kitchen into a contemporary cooking space. All homes, however humble, are built in a certain architectural style. Work with it, not against it. Otherwise, you’ll spend too much money and time on a complete overhaul, and you’ll likely end up with a kitchen that looks out of place.

3. Keep the plumbing where it is

Moving water and gas lines to reconfigure sinks, ovens, stoves, or dishwashers is extremely costly, especially in older homes. So keep any pipe-connected elements where they are — and keep some extra cash in your pocket.

4. Watch out for the wrong floor plan

If you do have the budget to rearrange appliances, make sure to keep your floor plan in mind. Does it follow the natural triangular traffic pattern between the refrigerator, stove, and sink? Is the dishwasher next to the sink? It should be. Otherwise, you create a mess every time you walk across the room with a dripping dish in your hand.

5. Don’t trash existing cabinets

If your old cabinets are quality wood and still in good working order, you’re in luck. This is one of the first things to check when sizing up a pre-remodel kitchen, since cabinet frames are the most expensive component of the entire space.

It’s quite simple to give salvageable cabinets a face-lift. Three common ways to repurpose cabinets include: adding new doors and drawer fronts, relaminating fronts and sides, or repainting.

6. Never DIY spray paint

Have the cabinets cleaned and lightly sanded, then hire a professional painter to spray them. Don’t try to DIY this one; a couple of cans of spray paint from the hardware store just won’t do the trick. A professional spray job can make ugly cabinets look factory-new. You can’t get the same look by painting or rolling the cabinets yourself.

7. Don’t scrimp on new hardware

Home remodeling superstores carry a great selection of door hardware. Choose knobs and pulls that complement your architectural style, and don’t cut corners. It’s like a nice piece of jewelry — an added touch that makes the whole outfit (or room) work.

Don’t forget to remove and replace any old, painted-over hinges with shiny new ones. It may be time-consuming, but it’s very inexpensive, and it makes a huge difference.

8. Take advantage of free advice

Check out large home improvement centers for free, computer-based design services that help lay out your kitchen. Their professionals are at the leading edge of today’s decorating trends, and their services include one-on-one client assistance as well as in-home consultations, complete project management, and installation services.

9. Don’t mismatch appliances

When buying new fridges, ranges, and dishwashers, stick with the same brand. Fortunately, appliance manufacturers have begun creating good-looking, low-priced lines with matching sets — giving your kitchen a designer look for much less. With a little research and some smart shopping, you can find affordable appliances that look very high-end.

10. Don’t forget to budget for sinks and fixtures

Get the best possible faucet, one with a pullout spray attachment or a gooseneck with detachable head. It’s a necessity — and the difference between good and great is only $50 to $75. Stick to one consistent fixture finish since mixed finishes can look patchwork.

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MONEY Budgeting

5 Ways to Beat Budget Burnout

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Try setting a "splurge budget".

A budget might restrict spending, but it’s one of the best ways to stay in control of your money. You’re able to save more and live within your means, which means fewer financial stresses.

But even if you know the importance of budgeting and you’re making progress, pinching pennies, depriving yourself, and tracking every dime you spend gets old after a while. Budget burnout might cause you to fall off the wagon, but there are tricks to defeat burnout and make managing your money a lot less painful.

1. Don’t Let Your Budget Take Over

Everyone should know where their money goes, but this doesn’t mean being a slave to your budget nor letting it take over your life. I know people who eat, sleep, and breathe their budgets. Not only is it the topic of every conversation, but they also spend hours each week clipping coupons and still feel guilt over any purchase outside their budget, even if it’s only a few bucks.

I’m all for self-control and committing to a budget. However, I also know from observation that some budgeting habits are exhausting and overwhelming. Extreme budgeting can backfire and leave you frustrated and fed up. A spending plan is effective, but don’t let it overwhelm you.

2. Be Realistic With Goals

A budget reduces the likelihood of overspending and increases your disposable income. And with extra income, you can reach financial goals like building an emergency fund, paying off debt, or saving up to buy a house. Unfortunately, the risk for budget burnout increases when saving for multiple things simultaneously.

Your money only goes so far, so it might be better to tackle one savings goal at a time. If you do decide to budget for more than one goal, avoid unreasonable deadlines, which can stretch your budget too thin and cause burnout or frugal fatigue after only a few months. For example, rather than become an extreme budgeter and drive yourself crazy with a goal of paying off a $5,000 credit card balance and increasing your emergency fund by $3,000 in 12 months, be realistic and give yourself more time — perhaps accomplishing these goals over the next two or three years. You’ll get there eventually if you’re motivated and committed, but not if you’re beating yourself up about it.

3. Give Yourself a Splurge Budget

Eliminating entertainment, recreation, and shopping from your budget can help you save a lot of money in a short amount of time. But if you deprive yourself for too long, you’ll burnout and toss your budget out the window. Budgeting is about moderation, not deprivation. Make sure your budget includes a little fun or splurge money. It can be $25 a week (or less), which might be just enough to enjoy a movie or dinner with a friend.

4. Switch Up Your System

Maybe the budgeting system you’re currently using worked great in the past, but now you feel it’s too time-consuming or tedious. I’ve been there, so I know how easy it is to give up. But instead of losing interest in your budget, change it up and find a better system.

To illustrate, I did the envelope system for a couple of years. And while it worked, I eventually got tired of filling envelopes with cash every two weeks. To make matters worse, I always forgot the envelopes at home when grocery shopping and ended up using a credit or debit card, anyway. Then I switched to keeping all my cash in the bank, but quickly discovered that I didn’t have the patience to keep track of every single debit card transaction, and this method made it far too easy to overspend. Now, I deposit a reasonable amount for groceries, recreation, gas, and incidentals onto a prepaid debit card, and keep the rest in the bank. Our checking account is strictly for expenses, and since our bills are on autopilot, budgeting has become a lot simpler.

5. Give Up Budgeting Control

In some relationships, one person manages all aspects of the money, including the budget. If this works for you and your partner — great! But if you’re the person responsible for keeping the family on budget and you’re feeling overburdened, share the responsibility or completely pass the torch to your partner — but make sure he or she will be as responsible with the checkbook as you were.

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TIME Money

Why ‘Don’t Worry About Money, Just Travel’ Is the Worst Advice of All Time

Chelsea Fagan is a writer and founder of The Financial Diet, a (non-boring) blog about personal finance.

It demonstrates only a profound misunderstanding about what 'worrying' actually means

I have an internet acquaintance that I’ve been following on social media for a little over two years now, an all-around nice, smart girl who blogs and does odd jobs and has recently decided to go back get a Master’s. In Europe. For a degree that, by all reasonable accounts, is probably not going to lead to a great job. And she knows this, I think, because she talks about it as “an opportunity to learn and expand her mind,” more than any sort of preparation for a future career. Which is fine, but the truth of the matter is that she is able to enjoy such freedom — to be a wanderer of sorts who enjoys travel, study for the sake of study, and long conversations over good dinners — because she comes from a good bit of wealth and, if not subsidized entirely, never has to worry about her safety net. She won that particular bit of genetic lottery, and it’s useless to begrudge her the freedom that fate bestowed on her.

But it is useful — important, even — to begrudge her the attitude that comes with it, one that is all too prevalent amongst young people who do not have to worry about the foundations of their future financial security: This idea that you must travel, as some sort of moral imperative, without worrying about something as trivial as “money.” The girl in question posts superficially inspiring quotes on her lush photos, about dropping everything and running away, or quitting that job you hate to start a new life somewhere new, or soaking up the beauty of the world while you are young and untethered enough to do so. It’s aspirational porn, which serves the dual purpose of tantalizing the viewer with a life they cannot have, while making them feel like some sort of failure for not being able to have it.

It’s a way for the upper classes to pat themselves on the back for being able to do something that, quite literally, anyone with money can buy. Traveling for the sake of travel is not an achievement, nor is it guaranteed to make anyone a more cultured, nuanced person. (Some of the most dreadful, entitled tourists are the same people who can afford to visit three new countries each year.) But someone who has had the extreme privilege (yes, privilege) of getting out there and traveling extensively while young is not any better, wiser, or more worthy than the person who has stayed home to work multiple jobs to get the hope of one day landing a job that the traveler will assume is a given. It is entirely a game of money and access, and acting as though “worrying about money” on the part of the person with less is some sort of trivial hangup only adds profound insult to injury.

I was able to travel, and even though I paid for my life abroad with my own work, it was still a result of a healthy amount of privilege. I was from a middle-class family who I did not need to support or help financially, I knew that I could always slink back to their couch if things didn’t work out, and I had managed to accrue a bit of savings while living at home for the few months before I left. There are millions of people who have none of these things, and even if they wanted to pay for travel on their own, would simply not be able to because of the responsibility or poverty they lived with. For even my modest ability to see the world, I am eternally grateful.

And what’s more, I understand (perhaps even better after having traveled a good amount) that nothing about your ability or inability to travel means anything about you as a person. Some people are simply saddled with more responsibilities and commitments, and less disposable income, whether from birth or not. And someone needing to stay at a job they may not love because they have a family to take care of, or college to pay for, or basic financial independence to achieve, does not mean that they don’t have the same desire to learn and grow as someone who travels. They simply do not have the same options, and are learning and growing in their own way, in the context of the life they have. They are learning what it means to work hard, to delay gratification, and to better yourself in slow, small ways. This may not be a backpacking trip around Eastern Europe, but it would be hard to argue that it builds any less character.

Encouraging that person to “not worry about money,” or to “drop everything and follow their dreams,” demonstrates only a profound misunderstanding about what “worrying” actually means. What the condescending traveler means by “not worrying” is “not making it a priority, or giving it too much weight in your life,” because on some level they imagine you are choosing an extra dollar over an all-important Experience. But the “worrying” that is actually going on is the knowledge that you have no choice but to make money your priority, because if you don’t earn it — or decide to spend thousands of it on a trip to Southeast Asia to find yourself — you could easily be out on the streets. Implying that this is in any way a one-or-the-other choice for millions of Americans is as naive as it is degrading.

Everyone needs to forge their own path to financial independence and freedom. And perhaps you are lucky enough that your path involves a lot of wandering around, taking your time, and trying a bunch of new things — because you know that security will be waiting for you at the end of the rainbow. That’s fine, and there is no need to feel guilt or shame over your privilege, if only because it’s unproductive and helps no one. But to encourage people to follow your very rare path, because you feel it is the only way to spiritual enlightenment or meaning, makes you an asshole. It makes you the person who posts vapid “inspirational” quotes that only apply to a tiny percent of the population who already has all the basics covered. And God forbid anyone who needs the money actually does follow that terrible advice, they won’t be like you, traipsing around South America and trying degrees for fun. They will, after their travels are over, be much worse off than when they started. And no souvenir keychain is going to make that reality sting any less.

This piece originally appeared on The Financial Diet.

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