sponsored links:

Tales from the Wallet: How to React to a Stock Market Drop

How to React to a Stock Market DropDo you know what to do with your investments when the stock market takes a dive — how to react to a stock market drop? Were you worried about what would happen with the markets today? Late last night, as Donald Trump was getting close to winning the presidential election, the headlines began to announce dire predictions: “Trump’s win turns stock market into shock market,” from CBS News. “Be very scared for your 401(k) right now,” from Mother Jones. “Stock Futures Plunge as Donald Trump Posts Surprising Win,” from the Wall Street Journal.

Not everything about such a situation is bad, as Shannon McLay, founder and president of The Financial Gym, told us this morning before the markets opened:

I think that today will be a gift to investors as the stock market will likely drop on the uncertainty of a Trump presidency, but what that means for investors is that they have the opportunity to buy stocks, ETF’s, mutual funds, etc., on sale. Who doesn’t love a sale? If you have cash in your investment accounts, you should consider investing in the uncertainty, especially if you are investing for the long run.

Now that it’s late morning, we know that things aren’t as bad as expected. Under the headline, “Markets meltdown fails to materialise,” the BBC reported,”The S&P 500, Dow Jones, and Nasdaq stock indexes were little changed after the first hour of trading.” The Chicago Tribune reported that the “conciliatory comments” in Trump’s victory speech “helped global stock markets recover a large chunk of their earlier losses Wednesday.”

If there had been a big drop in the stock market, what would you have done? Do you know what the best things to do are? These are some of the experts’ tips:

[Read more…]

sponsored links:

What Should Your Monthly Housing Costs Be?

housing costsHow much of your salary should you be spending on housing costs? What do you actually spend? We decided to devote a post to this topic after seeing an interesting discussion about readers’ rent/mortgage payments as compared to their incomes.

Before getting to specifics about housing: The general 50/20/30 rule for budgeting is still commonly accepted advice. The guideline was made popular by Senator Elizabeth Warren (who happens to be a bankruptcy law expert) in her book All Your Worth: The Ultimate Lifetime Money Plan. As described in this LearnVest article, you should:

[Read more…]

Tales from the Wallet: What to Do When You’re Facing “Frugal Fatigue”

frugal fatigueHow do you prevent “frugal fatigue,” also sometimes called “savings burnout”? It’s that feeling that you’ve been scrimping and saving and you have no money and the debts are still there and you’re not getting anywhere and dammit you just want to not think about it and buy what you want for a little while? I know readers have talked about this, and when I was writing the post about my budget spreadsheet, I realized that I have another spreadsheet I use also that, for me, prevents this kind of frugal fatigue: my “snapshot spreadsheet.”  This is how I personally prevent frugal fatigue, but I’m curious to hear from you guys — ladies, how do you prevent savings burnout? Do you rely on Mint or YNAB to give you an accurate picture of your net worth? How do you track net worth changes? Do you have similar ways of recognizing and patting yourself on the back for major monetary accomplishments, like debt payment or saving? (These particularly are helpful in guarding against savings burnout!) 

Pictured: Vera Bradley Georgia Wallet, $98 at Zappos in six colors. Love the fun inside lining! 

[Read more…]

Tales from the Wallet: Leave Room in Your Budget to Take Advantage of Sale Prices

leave room in your budget for salesI just saw a great study on this, so I thought we’d discuss — do you leave room in your budget to take advantage of sale prices?  Do you do it in a disciplined way (“I have $300 to spend for fun purchases, no more!”) or is it just part of your budgetary cushion? Which sales do you splurge on? 

This seems like a great follow up on our recent post about how to make a budget: Of course it’s great to be aggressive with your savings, student loan payments, and investments — but be wary of trying to live on too tight of a budget if you don’t have to. Probably the biggest long-lasting effect the recession had on my money habits is that I leave enough room in my budget for unexpected sales on household items. When I’m in the grocery store or the pharmacy, I look for items with good sale prices and then purchase them even if we don’t need the item immediately (provided we have the storage space). The headline of the HuffPo article I saw about a relevant study says it all: “Poor People Have To Spend More On Toilet Paper Than The Rich: Study.” The study found that low-income households don’t have the cash to buy in bulk, so they end up paying higher per-item prices; the article also mentions that poorer people often end up paying more for “discount” toilet paper than richer people do on “premium” toilet paper. (A lot of readers agreed with me when we talked about everyday splurges: sale prices or no, life is too short for cheap toilet paper!)

[Read more…]

Tales from the Wallet: How to Make a Budget

how to make a budgetFor today’s money feature, let’s discuss living within your means — how to make a budget and stick to a budget. What does “budget” mean to you? What tips and tricks have you used to set a budget, pay down debt, save money and protect against lifestyle inflation — and what alarm bells have you used to tell you that it’s time to reassess? 

The No-Budget Budget

I’ve mentioned before that I don’t think every person needs to make a budget — there were years in BigLaw where I would automatically move my second paycheck to savings/investments, living entirely off my first paycheck (and auto-contributing to my 401k). That was enough of a “budget” to me, with no further thought. I knew then and know now I was lucky in those years, and I’m still so grateful for them — that simple decision has laid a great groundwork for me and for my family.

Pictured: MICHAEL Michael Kors ‘Jet Set’ Travel Wallet, on sale for 40% off in purple; at full price in several other colors.

[Read more…]