Today’s lesson is a study in willpower. Don’t worry, it’s not hard, though some may have a harder time with it than others. Still, if you’re plagued with buyer’s remorse because you make so many impulse purchases, only to regret it later when you get that whopping credit card bill, here’s something you can try. I call it the 24-hour rule.

You see something you want. It’s not a necessity, but you crave it. It can be something relatively inexpensive or maybe something big. The point is, you want it and you want it now. Can you walk away?

If you summon up some willpower, you can. I’m not saying that you shouldn’t buy it — part of being mature about your finances is treating yourself from time to time and knowing when to do it. But what you should do is think.

Go home and think about that thing you want. Get out a piece of paper and make two columns: pros and cons. What are the pros of you buying said item? What are the cons? For example, say I want a $100 pair of running shoes.

Under my pros, I’d list:

1. Good for fitness

2. Investing in healthy lifestyle

3. Can afford to pay with cash 

Under cons:

1. A little more than I want to pay

2. Last pair of shoes still in good condition

You may have a pro list 10 items long and a cons list of 15. It all depends on what it is and what the benefits and disadvantages of you buying it are. If the pros outweigh the cons (especially if one of the pros is “can pay with cash”), chances are you can buy it without feeling guilty. If one of your cons is “have to charge on a high-interest/almost maxed out card” that’s a huge reason to not make the purchase.

After that, take a day to mull it over. I’ve used this tactic since getting financially smarter and in nine cases out of 10, after thinking over it for a day, I decide not to buy. And I realize it was the right thing to do because I don’t miss not buying.

In one instance, I did make the decision to buy. I saw a shirt for $50.00 and I loved it, but I didn’t want to pay $50.00 for it. I went home, thought about it and decided not to buy. A few weeks later, I went back to the store and the shirt had been marked down 50%. At that point, I bought it. I was able to pay with cash, too. I know that’s longer than 24 hours and in some instances, the shirt would’ve been gone, but I knew I could live without the shirt.

Most stores will hold things for you for a day, so there’s no harm in asking and waiting that long to see if you really want it. If, after a full day, you’re still dreaming about that item, go ahead and buy it…so long as one of the cons is not placing you further into debt. 

Many homeowners think about refinancing at one time or another. They want to pay off loans or they need money to make home improvements. Whatever your reason for considering refinancing, there are some things you need to know before you sign on the dotted line. 

1. Why are you refinancing? This is an important question you need to have an answer to. If it’s to pay off high-interest loans, that’s a valid concern, but if it’s simply to take an expensive vacation or buy a luxury item that’s not a necessity, you may be putting yourself further into debt with nothing to show for it. There are good reasons to refi and frivolous ones and you should only refinance when the pros outweigh the cons.

2. Are there penalties? There can be a lot of rules and information tied into your current mortgage that seems translatable only to someone versed in real estate law, but it’s in your best interest to know exactly what the fine print on those documents mean. You may have to pay stiff penalties for paying off your current loan early, penalties that are so high that refinancing isn’t cost-effective.  

3. Is your interest rate fixed or variable? This is one of the more important points and is tied into how long you plan to live in your home. Many homeowners who end up in mortgage crises signed on with adjustable rate mortgages whose introductory rates were attractively low; they may or may not have had the intention of selling within a few years. Before they’re able to make any moves, the interest rate goes up, they have trouble making payments and the home goes into foreclosure. Fixed rates are generally more favorable, depending on the next point…      

4. How long you’re going to stay in your home – If you’re in the home of your dreams and don’t plan to move anytime soon or ever, a fixed rate mortgage is your best bet. Adjustable rates only really benefit the homeowner when they plan to be out of that home before the rates have a chance to rise significantly.

5. How many points will you pay? This is an area you need to really research to see if refinancing is worth it. Points are percentage points of the value of your loan. You may think you’re getting a great deal with a zero points mortgage, but is the interest rate higher to make up for no up-front cost?   

6. Who will do your refinancing – You may have received one of those tempting offers in the mail and are thinking of trying out Bank B instead of your current mortgage lender. Don’t be so hasty because the grass isn’t always greener outside of your bank. Because you’re already familiar with your financial institution, you have a reputation with them and they know you as well. It may be simpler to stick with the business who already has all of your documentation on hand. 

7. Will you come out ahead? – The only way you’ll know this is to sit down and fiddle with the numbers. There’s a minimum amount of time you’ll need to stay in your home to break even. Use a refinancing calculator to help you calculate how much you’ll save by refinancing and how long it’ll take you to recoup your costs.     

8. Is the interest rate percentage difference worth it? If you can get a minimum two percentage points difference in your rate, refinancing may be worth it. Again, you won’t know by how much until you do those calculations.   

9. What will you do with the additional savings? If you’ve already done the calculations to figure out exactly how much you’ll save, good for you. But where are these savings going to go? If you plan to pay off loans, good. If you plan to buy that backyard pool that will add value to your home, good. If you don’t know what you’ll do with the additional savings, it’s time to sit down and evaluate…

10. Are you willing to do the homework? No one said refinancing was going to be easy. Clearly, there are quite a few informed steps you need to take before you even get to refi. Instead of taking the first offer that comes your way from a bank that’s unfamiliar to you, research them as well as your current bank and several others before making a decision. Before you sign anything, read the fine print; if there’s anything you don’t understand, don’t be afraid to ask questions! That’s what the professionals are there for – to answer them. If someone isn’t willing to explain things to you or want you to make a decision right now, run, don’t walk, out the door.     

Guess which top-selling car on the road today gets you 48 mpg in the city and 45 mpg on the highway? Hint: It’s a hybrid.

The Toyota Prius wins top honors as best-selling hybrid and most fuel-efficient. If you already drive a Prius, you have my congratulations. I long for the day I can zoom around town in a hybrid car, but until they make one large enough for my family of five to comfortably fit in, I’ll have to keep driving my gas-guzzling minivan (by the way, for anyone who’s waiting for the hybrid minivan to hit the market, there’s whispers on the horizon that one is coming, but which maker will be first?).

In these days, fuel-efficiency is a priority. Car dealers report people trading in their SUVs for smaller cars that are better on gas mileage. Who can blame them? Although summer’s peak driving season is over – and gas prices have “mysteriously” dropped now that kids and their parents aren’t traveling to vacation destinations as much – many of us still have to drive.

If you’re in the car-buying market, which cars should you look to for the best fuel-efficiency?

• Honda Civic Hybrid
• Toyota Corolla
• Nissan Versa
• Honda Accord
• Honda Fit station wagon
• Volkswagen Passat wagon

If you look at the rankings by the EPA, you can see just how much hybrids outperform gas-only cars in mileage.

But what about the wait? I often hear that people wanting new hybrids have a four-to-six month wait ahead of them, so if you’re impatient by nature, you may have a hard time with this. Still, it gives you plenty of time to say goodbye to your current car, which, even if you love it, must not be perfect if you’re even thinking of going the hybrid route.

With hybrids only becoming more popular, I wonder what the status car will be for this generation? Maybe not a Porsche, but a Prius.

If you’re already a dedicated discount store shopper, this won’t really surprise you. I love a good bargain, so I always check for sales and comparison shop and do all of those other things that previously, a lot of people saw as a waste of time, but with the economy being what it is, are now seen as essential for surviving.

It’s back-to-school shopping season and what a difference a year has made. Look at this:

• 2007 - 74% of households shopped at discount stores for back-to-school supplies
• 2008 - 90% of households shopped/plan to shop at discount stores
• 2007 - 11% of consumers who said they’d buy school products at full price
• 2008 - 1.5% of consumers who say they’ll buy products at full price

 This is a major shopping season for retailers, second only to Christmas in terms of spending. When you consider that consumer spending accounts for about 70% of economic activity, it’s easy to see how the way we spend (or don’t spend) money affects the economy.

Still, people are trying to save where they can and spending will probably be down about 2% this year for back-to-school shoppers. To help you save even more on all of the various supplies your kids will need, try these retailers for the best bargains:

1. Walmart - Their advertising may not be as slick, but what they save in ad dollars, they pass on to consumers. Now is a great time to shop because school supplies are heavily discounted. Plus, because many of the stores are open around the clock, you can shop at whatever hour is most convenient for you.

2. Target - Cute ads and better customer service add up to higher prices. Still, now’s a good time to shop because Target is trying to compete with other retailers in the back-to-school market. As with Walmart, you’ll find items like glue sticks, rulers, pencils, crayons, markers, etc. cheap.

3. Office Max - The prices here tend to be higher, but with the bag insert in many Sunday newspapers, you can save 15% off whatever you can fit in the bag. Plus, they’re running a penny promotion now, so you can pick up some items and get a second item for $.01.

Take your child’s school supply list with you and mark off items as you get them. There is really no point in trying to shop without that list — you’ll probably overspend or pick up the wrong items. Walmart and Target stores tend to have a school shopping area set up, so make a beeline for that special spot and stick to your list. If you can, buy a little more than what you need because that same pack of pencils that costs $.50 today will be $2.00 in two months time.        

Just a quick note to let you that we had the good fortune to be featured in a few blog articles this week. Check them out and read some of the other great posts that were selected:

• Carnival of Living Cheaply
• Finance Fiesta Hosted by Counting My Pennies
• Festival of Frugality over at Student Scrooge
• Carnival of Personal Finance at You Need a Budget

Have a great weekend!

Consider this statistic: 40% of bankruptcy filings are made by women. Most of these women are single, usually on the other end of a divorce. As you probably know, bankruptcy will mess up your credit report for years and make it nearly impossible to get a line of credit anywhere. People who file for bankruptcy usually do it because they feel they have absolutely no other options, but women, if you’re out there reading, remember these 7 things so that you don’t wind up in that staggeringly scary statistic:

You need to know how to:

1. Balance your checkbook. Think this is a given? It’s not. Many women, especially those who hold joint accounts with their spouses, allow their partners to take control of the money while they live in a worry-free environment, free from the “stress” of money matters. Think how stressful it will be if your partner leaves or dies suddenly and you don’t know how to write a check and record it in your checkbook. 

2. Live within your means. While TV commercials and magazine ads would have you believe that you’re worthless if you’re not walking down the street with a $1,000 purse swinging from your arm, the only way you should be waltzing around with a handbag that costs a grand is if you can comfortably carry that much in it and have plenty left over. Too many Americans are so busy trying to buy the latest car, the latest gadget, the latest trendy whatever, that they don’t even realize they’re sinking into debt until they’re being swallowed up. Now is a great time to rein in these materialistic tendencies if you have them.   

3. Budget. This goes along with #2, but if you haven’t yet learned to do this, you need to start today. You have to be able to figure out what you have coming in and how much goes out each month. Are there some areas you can cut back or cut out? Do you really need satellite TV? If you calculate your numbers and you have more going out than you have coming in, you have to cut back and/or make more money and draw up a financial plan.     

4. Pay bills. If you don’t know what bills come in, what they cost on average per month and who you owe money to, now is the time to learn. This includes all accounts in the household: your separate accounts, joint accounts and your partner’s accounts. If he’s not forthcoming about what he owes, that’s a red flag you shouldn’t ignore. Likewise, you need to fess up to him about what you owe.  

5. Manage your finances on your own. I’ll admit, I’m not a huge fan of joint accounts. It’s not the 1950’s and even if you’ve always been a homemaker and never worked outside of the home, you should still have some money that’s your own and that you manage yourself.    

6. Earn more. In the event that you find it difficult to pay your bills on time, you may need to earn more income. This could be in the form of a raise, a second job or a side gig.   

7. Adjust. Things aren’t always going to be the same. That’s the nature of life. If you can’t roll with the punches, it’s going to be very difficult to cope when something changes. You can either curl up in a ball and mope or you can take control of your money and your life and face it head on.

Face it; things sometimes happen. Husbands die or run off with their secretaries to Tijuana. If that should happen, you don’t want to be left behind in such a financial mess that you have no idea how you’re going to get out. Bankruptcy should be an absolute last-resort option, but remember: bankruptcy courts have gotten much more strict in recent years. All of your debt isn’t going to magically disappear because you file. Instead of going through all of that headache, however, take some steps now so that if the worst occurs, you’re prepared.   

You’ve taught your kids not to talk to strangers and not to give out personal information online. You do your best to protect them and keep them safe. You provide educational material and expose them to learning opportunities. But have you taught your kids the value of a dollar? What your kids don’t know about money can hurt them and their credit rating when they’re adults.

Some children are naturally good with money; they instinctively save and don’t fritter it away on frivolous purchases. Other children, being impulsive as kids often are, don’t save – they want the latest toys, video games, cool shoes…and they want it now. It’s no surprise they’re impatient. Adults are often the same way. Fortunately, children are too young to have charge cards or they may rack up huge bills like so many of their parents have done.

There are some secrets to raising money smart kids that you should know.

1. Show them how to save. Vaguely, I recall my parents telling me to save, but I don’t ever remember them telling me how. For a lot of people – not just kids – it’s not enough to say “save.” They (and I) need to be shown specific ways to do just that. If you give them an allowance, you need to sit down and have a conversation about what they do with their allowance money. I know some parents think that their kids should learn these lessons the hard way, but isn’t parenting about providing guidance? Explain to your child that this amount should be put away for saving and this amount can be spent. Give them a blank check register and show them how to record money going in and money going out.

2. Don’t buy them everything they want. There’s want and there’s need and there’s a big difference between the two. When kids grow up seeing their parents charge everything, they begin to think buying things is easy. Children don’t pay attention to the bills you get in the mail afterwards – all they know is that Mom bought a new purse or Dad bought a new iPhone. Learning to control your own spending impulses will teach your kids that sometimes, you can forego a new, oftentimes unnecessary purchase. They won’t like it, but this is one hard lesson that will benefit them in the long run.

3. Make them earn it. When your son asks for the latest video game, do you jump in the car and head straight for Game Stop and buy it? Or do you ask him how much it is, if he has any allowance money of his own and how much more he needs before he can buy the game himself? If children get everything they ask for, they see their parents as endless supplies of cash flow; who cares how the cash gets there? Your kid certainly doesn’t. Instead of making it easy, make them earn their own money if they don’t have enough allowance money to buy what they want (not need). I’m not one of those parents who believe kids should be paid for chores like cleaning their own rooms, but they should be allowed to earn a little extra by doing tasks that aren’t normally assigned to them (weeding the garden, washing cars, etc).

4. Send them to camp; money camp, that is. This idea has sprung up recently and while there’s debate on how much fun it is for the kids, it is a smart idea. Apparently, you send your child to a summer camp where they learn about money: investing, saving, leadership, all taught by certified financial planners. There are different camps around the country, but it’s worth looking into if you really want your kids to get solid lessons that they can carry with them. At least they won’t come home with a poison ivy rash.

Here’s a fun drinking game. Turn on any cable news program, and do a shot of your favorite liquor every time you hear the word “recession.” After half an hour, you should be nice and hammered like one of those shirtless, mullet wearing losers on Cops. No doubt about it, the majority of people in this country are feeling the strain of these rough economic times, and they’re all too happy to complain about it. But I’m not one of those people. In fact, I believe there are 3 good reasons this country needs a recession.

1. Wake Up Call- News flash- the people in Washington, D.C. could care less about whether or not you can afford to fill up your gas tank. I’m not condemning one particular party- neither of them care. Relying on the government to solve your financial problems is foolish and naïve. You think President Bush is going to write you a nice little stimulus check once a month? Get real. You think Obama is going to waltz into office and suddenly you’ll have a nice statement on your bank account? You can hope and believe in the power of change all you want, but that’s not going to happen. These bad economic times are just the wake up call the American public needed. You alone are responsible for your financial situation. The sooner you realize this, the better.

2. Stop Excessive Spending- Let me explain. We are a nation full of people who spend like drunken sailors. It starts at the top with our government, and these spending habits trickle all the way down to individuals like you and me. The vast majority of Americans break the first rule of personal finance- you can’t spend more money than you make. What a novel idea! 

This is precisely why I believe these difficult economic times can be a good thing for Americans. High gas prices and the increased cost of food have forced many people to rethink their spending habits. Whether they like it or not, they have been made to reel in the spending.

The truth is that many of us are now, out of necessity, spending the way we should have been all along. Instead of splurging on that 60 inch flat screen we don’t need, we have to get the more practical 36 inch model. And we’re better off for it.

3. Learn to Save- In general, Americans are terrible at saving money. The average family in the United States saves less than 1% of their annual earnings. Over in the UK, they save about 10% of their income. If nothing else, I hope this downtime will teach Americans how to save money. Before you go out and charge something you can’t afford, put aside about 10% of your paycheck. In fact, just pretend you make 10% less than what that number on your paycheck says. If you do this for long enough, periods like this won’t have any effect on you. Your stress will be reduced, and you will be in the prefect position to retire with a nice nest egg.

I imagine the only people in the U.S. who don’t know that the cost of living has shot through the roof recently are little children under the age of one. Everyone else knows just how much everything – gas, food, utilities – has increased. It all ties in together because you can’t have rising gas prices without it affecting the food prices (i.e., more expensive transportation), you can’t have higher food costs without it affecting the housing market: people need to eat more than they need to pay their mortgage. It’s like a domino effect that ends somewhere that’s kind of scary for a lot of Americans.

Unless you’re very independently wealthy or you’ve learned to survive on very little, you’re feeling the crunch. Until the economy improves and the cost of a gallon of gas no longer determines if you have a good day or a bad one, here are 10 ways you can survive the rising cost of living, or what’s become a difficult time for a lot of us:

Save Money on Gas

1. Carpool or bike. If you regularly read the comic strip Blondie, you know that Dagwood Bumstead was way ahead of the current green age because he carpools to work every day. Sure, he’s usually running late, but I think we can cut the guy some slack because he’s helping the environment. It seems that people don’t want to carpool as much anymore, though I’m not sure why.

Biking is another alternative, which I’m even more fond of because it requires no gas, releases no emissions and it’s good for your body. I know everyone can’t do this because they live too far from their job (and during the hot summer, it may not work for hygiene reasons unless your job has a shower you can use – otherwise, your coworkers may start steering clear of you, eco-friendly star or not).

2. Run errands one day of the week. This may require more organization on your part, but if you can plan to run errands that are in the same general area one day a week instead of making multiple trips, this will save on gas. 

3. Fill up first thing in the morning. Now the basis for this is a lot more scientific that I can get into, but it has to do with the air temperature, the temperature of the gas and the amount of space available in your gas tank versus how much gas actually goes in there. In short, fill up when it’s coolest to get all of the gas you’re paying for. 

4. Work flex hours if you can. If you have the option to work at home one or two days per week, this is worth looking into. You’ll save on gas, as well as the aggravation of driving in rush hour traffic.  

Save Money on Food

5. Make a grocery list and stick to it. When I don’t make a list, I often wander the grocery store aisles and just start grabbing stuff. Then I’m irritated when I get home and see that I already have these impulse items hidden in the back of the pantry. Look in your cabinets before you leave home, make a list and, most importantly, stick to it. I like to mark items off as I get them (this is very satisfying for listy types like myself).

6. Compare prices between stores. It’s worth it to sign up for those free discount cards that many grocery stores offer nowadays; you’ll get their weekly fliers in the mail advertising specials. When you get the fliers, look over your grocery list and see if anything you need is on sale that week. If different stores have savings, you may have to shop at more than one store (so long as it doesn’t involve driving across town, it make sense), but some stores accept competitors’ coupons.     

Save Money on Electric Bills

7. Use compact fluorescent bulbs. I know the initial cost is higher, but in the long run, these light bulbs last 10 times longer than standard bulbs and can save you around $60 in electricity bills per bulb. 

8. Set your thermostat higher during the summer. The most comfortable temperature in your home is going to vary, but you should set it about one to two degrees higher than what makes you content. If you can manage to increase the thermostat temperature by one degree a week, you can expect to save between five and 20 percent off your electric bill depending on where you live.

Save Money on Personal Services

9. Extend the time between services. If you get your hair colored every six weeks at $60 a pop, try going every eight weeks. Over the course of a year, this will save you about $130, which you can put into an interest bearing savings account to get the most from your newfound saving ability. 

10. Learn to do some things yourself. I’m a big DIY person, but even if you’re not, there are some tasks you can tackle yourself. Manicure, pedicure, eyebrow waxing, moustache trimming…these are simple services that many people can do themselves.

There’s no telling when this economic crisis is going to end. I know that some of these ways may seem small, but remember this: just as money adds up when it’s coming in, it adds up the same way when going out. You may think saving $5.00 today is no big deal, but when you save $5.00 here, another $10.00 there and an extra $15.00 someplace else, it does add up…to savings which you can keep.