May 30, 2010
Is Spending Money The Most Addictive Behavior We Experience?
Biological and chemical influences over behavior.
CNN recently ran a story about teen’s increasing use of text messaging, which has reached up to 3,200 texts per month or just over 100 per day. In the article, Dr. Michael Seyffert, a neuroscientist, theorizes that the reason text messaging has skyrocketed in use is because the instant validation felt when receiving a text message creates a biological response in your brain that gives a sensation of pleasure.
That validating feeling releases dopamine, a chemical similar to adrenaline, which gives a euphoric feeling; it puts you in a good mood. According to the ISCID, food, sex, and other naturally-rewarding experiences release dopamine. Imagine if you were able to release dopamine 100 times throughout your day; couldn’t that sense of pleasure become addictive? Are there other behaviors that have the same, or an even more pronounced, mood enhancing affect? Are there financial lessons that can be gleaned from this study?
4 groups of behaviors that affect mood.
Receiving text messages is not the only way to get the good feelings dopamine creates. Is there one behavior that is more addictive than others because of it’s mood enhancing affect? If so, why is it so addictive? When considering behavioral activities that stimulate dopamine production there are arguably four levels of behaviors, each with increasing levels of enablement by society, thus making each level more enticing and easily addicting.
Illegal activity
The first group includes things like illegal drug use and stimulants which synthetically encourage dopamine production. The laws and societal attitudes toward drugs naturally discourage and punish their use. In addition to labels with the negative and scolding connotations that are assigned to illegal activities by our society, drugs are not readily available to most people; you can’t buy them at the grocery store. Influences, such as these, act to make these kinds of mood enhancing behaviors less attractive.
Legal, but negative behaviors
The next group includes negative behaviors, such as eating junk food and smoking. While both of these dopamine producing behaviors have negative health implications, they are legal and readily accessible. Few people openly encourage you to participate in either of these behaviors, but it can be easier to fall into this behavior category because little is done to stop you from enjoying them.
Recognition for positive behavior
The third group includes positive behaviors. These are obviously legal, but more importantly they are openly encouraged by society and the recognition you get from them affects dopamine production. For example, dopamine is released and creates a temporary euphoria when you receive recognition for passing a hard test, giving to charity, or being promoted at work. You may not see regular television ads encouraging you to work harder at your job, but the good feeling that peer recognition gave you can encourage further positive behavior.
The behavior that is aggressively encouraged.
Finally, spending money also achieves a mood enhancing dopamine release. Spending money is different from most other mood enhancing behaviors, however. Unlike drugs it is not illegal. Unlike the negative behavior of over indulgence on junk food, it is not generally discouraged. Spending money could be the most addictive behavior because of the various reinforcements we receive, constantly telling us that it is ok to buy. Society tells us that we are doing the nation a favor if we spend. In fact, the reinforcing fawning you may receive over your new sports car can far outweigh the cordial “good for you” received for an A on your math test. Finally, many easy ways to spend money are readily available and even in low amounts there is a dopamine reward. I spend 25 cents on a rubber ball in a grocery store vending machine and my 4 year old and I are both happy for the next 5 minutes.
4 Reasons Why Spending Money Is The Most Addictive Behavior
Read the rest of the story here!
May 8, 2010
Homes 3x more likely to flood than catch fire.
When you review your monthly budget you may be putting money aside for items such as groceries, rent, clothing, and your gym membership, but have you ever listed flood damage on your budget? According to an article in the April 2010 Western Pennsylvania AAA Motorist magazine, flooding is the most prevalent natural disaster and you are 3 times more likely to be affected by flooding then fire. We certainly hear about the floods that reach the magnitude of the horrible May 2010 disaster in Nashville, but flooding comes in all sorts of intensities.
Flood damage is not part of normal insurances and everyone is at some level of risk of financial loss. You can be the most financially conservative person but one flash flood can set you way back. The average flood damage claim is $33,000.00. Most people will not have that much money set aside even before a natural disaster hits. Also, nearly all disaster relief money is considered a loan and must be paid back to the issuing authority. Fortunately, there are steps you can take to protect yourself.
You can learn more about what to do before, during, or after a flood here.
May 1, 2010
Dolphin Pat White’s injury served as a reminder that success can be quickly taken away.
One thing we all have to be comfortable with today is that tomorrow may bring an unexpected and different set of economic challenges. The country was spending madly in 2007, but how were most people feeling at Christmas time in 2008? Challenging and changing environments are just part of nature, sometimes literally. Every day is not filled with warm sunshine, pretty flowers, and fluffy clouds. Pat White, the Miami Dolphins back up quarterback, learned this the hard way on January 3, 2010. What White’s experience taught us is that our fortunes can change in an instant.
What potential threats do you see on the horizon that could hurt your quality of life? What steps can you take now to ensure you are adequately prepared to handle it? What happens if you or a family member loses a job, gets injured or sick, has property stolen or damaged, or is harmed by natural disaster? What did wise Ben Franklin say? An ounce of prevention is worth a pound of cure!
-Doing well today shouldn’t preclude you from planning for a bad tomorrow.
-We’ve seen care free economic times (2007) quickly deteriorate into horrific economic trouble (2008).
-Have a back up plan in place before potentially disastrous economic problems occur. Prepare now for what the next step would be.
-The Great Recession proved that no one’s lifestyle is completely safe from the economy’s reach.
-Planning ahead for economic problems will lessen any negative impact you may experience.
Speeding Tickets, Job Loss, and My Neighbor’s House
Remember back in 1984 Sammy Hagar was singing “I Can’t Drive 55”? Well, it looks like Sammy is going to have to learn how. There have been an increasing number of reports that suggest more speeding tickets than usual are being issued. Have you seen more police watching traffic on your way to work or school? Why have speeding tickets been making the news more often? And if there really are more tickets then usual being issued, what is the reason?
-There are more stories about speeding tickets being issued
-States and localities are faced with severe revenue shortfalls in the billions
-There is a tax revenue shortage ripple effect stemming from the disaster of 2008 and 2009
-Unemployment and foreclosures in 2008-2009 mean lower property and income tax collections this year
-There is a politically safe way to raise additional revenue and address the tax collection shortfall
April 29, 2010
5 steps to a frugal and rewarding lifestyle
Now that the shock of the recession is tempering, it is interesting to read financial articles that were written right before the extremes of the recession started. The March 1, 2008, New York Times article “Frugality Can Be Acquired, but It Can’t Be Bought” discusses consumerism up to that point. Did you know one of the people that were buying more house than they could afford? Some of those same people were then borrowing even more money against the house to finance more spending. In early 2007 consumerism was at a peak. Today, however, the buzz is that frugality is “in” and millions of people are looking for financial advice in order to avoid the harsh lessons that out of control spending taught us not long ago.
The article goes on to ask this question “How do consumers learn to manage their money and deal with financial problems?”. Many people don’t even have informal training in money management, but go on to graduate from school, get a job, get handed a paycheck and loan offers, and are left to their own devices. With no direction or previous experience is it any wonder that they often end up in financial trouble?
Some make the point that there are just too many things to think about and oversee when it comes to money and people need access to better money management products and tools. What do you think? Using technology and professional accountants to manage your money is good if you are investing, but it is not necessary for every day money management. Managing a basic household budget and expenses can be a “do it yourself” project!
Want to live a frugal but satisfying lifestyle? There is plenty of advice, on managing your money, available to anyone. However, there are basic principles that build a strong financial foundation that will put you on the path toward economic security.
| 1. Live below your means. 2. Grow your income. 3. Pay less than everyone else. 4. Proactively fend off costly problems. 5. Solve problems without $$. |
1) Live below your means.
If you make $100.00 then $100.00 is your means, not $150.00. Accept the fact that $100.00 is all you have, even though lenders may tell you that you can live like you make $150.00 through their loans and credit lines.
2) Grow your income.
When your means are $100, but you want to live the $150.00 lifestyle you need to expand your means, not your credit limit. You can grow your income by marketing something of value and leveraging it into income. You can market yourself (your skill or expertise) to higher paying employers, your product, your service, or your solution to a problem.
3) Pay less than everyone else.
Regardless of what it is you want to buy, it or its’ equivalent, can be found somewhere else for less than most other people are paying. Paying less that what everyone else is paying is a big part of advancing financially. You may not get the exact same make, model, options as others, but you should always pay less for like items (cars, groceries, shoes, furniture, etc.). There are many resources to help you find a better deal while meeting your needs. Click here to learn how to pay less.
4) Be proactive in your financial behavior in order to fend off costly problems.
Letting things go is a great way to lose ground financially. Little problems become large expenses when they go unattended. Your appliances, car, shoes, hard drive, and even you wear out. Yes, preventative maintenance takes time and effort. However, the financial costs of unexpected breakdowns, replacements, and missed opportunities caused by those two far outweigh the maintenance effort you need to invest in order to extend the useful life of your possessions.
5) How to solve financial problems (without money).
The government has often been accused of throwing more money at problems in order to solve them. Unfortunately, many people do the same thing. All of us will be challenged with problems, but how much we each spend to solve them makes a big difference in our financial well being.
Financially successful people have discovered how to solve their problems without money. How do they do that? They remain flexible. They are open to new or alternative ideas. They continue learning new skills and solutions that they can apply when financial problems happen.Want more insights on managing and increasing your household income?
Visit BowmansMoneyCollege. You are invited to join me at LinkedIn
April 25, 2010
You buy insurance, but can you get free economic assurance?
Ever think about the reasons why you buy insurance? We buy insurance because we have no concrete assurance we can protect ourselves and our families from disaster. If you don’t get a needed surgery, replace the light pole you hit with your car, provide an income for your young children if you die, or repair the roof on your house that was struck by lightening you and your family will face problems that can destroy your economic security. Your inability to pay for these disasters won’t stop them from happening to you. Without insurance you may not be financially able to respond to these challenges. Then what happens?
Will you be economically scarred?
In an article published by the Economic Policy Institute the effects of dramatic financial setbacks, caused by things like a job loss, have what they call a “scarring affect”. That means when we suffer a major setback it takes an usually longer amount of time to recover back to your original standard of living. It can also mean being forced into a situation where you are delaying quality of life items such as health care and education. Protecting your ability to maintain your economic stability is crucial. If you don’t, you could fall victim to a harsh domino affect of financial problems. Is there an insurance against recession related income loss and the ensuing difficulties that threaten your standard of living?
The best insurance policy
In his book “What Would Google Do” Jeff Jarvis talks about the web providing us with access to information and education unlike any other time in history. When making the point that access to any information we want changes our ability to control our lives he says “Education and information become insurance against insurance”. Unemployment insurance is meant to provide a degree of financial help when we involuntarily lose our jobs. It never completely makes up for our previous salary and thus our quality of life is immediately threatened. However, what if we were in a position to immediately find new sources of income rather than needing to rely on the unemployment insurance? How can we make that happen?
Your level of ability in solving problems and creating solutions is what puts you in a position to proactively ward off economic set backs. Education is how you achieve those increasing levels of ability. Education is how you acquired a second or third marketable skill set that makes you employable in a shorter period of time. It is how you avoided a costly legal entanglement or identified the reason for your child’s asthma attacks. Improving your education allowed you to change your car’s oil, create your own website, start your own business, do your own taxes, identify energy drains in your house, replace a leaking toilet, and improve your credit rating. Educating yourself and adding new skills to your repertoire reduces your need for insurance and will save you money in many areas of your life.
Why do we rely on coaches, doctors, lawyers, and mechanics? One reason is that they possess a skill that we do not. They answer questions to which we do not have the answers. Throughout history there have been professional classes of people that make their living off of the information they possess. That’s information that we need to solve economically impactful problems, but never had regular and easy access to. In many cases we paid for insurance products that allowed us to afford their services. Additionally, we were at employers’ mercy to keep us employed as we had fewer alternatives for income.
In essence we were bound to services, individuals, and employers who kept a degree of control and influence over our lives because of access to information that they had and we did not. The problem many people faced was that access to the very information needed to gain back that control was economically out of reach. Education was expensive. However, that has changed.
Education is free, accessible, and abundant in 2010
The Internet has dramatically leveled the playing field. On the web you can now find information on just about anything from the complex to the trivial. The educational materials and references you find online are free, abundant, varied, and accessible regardless of your financial status. Before, you would pay someone directly or via insurance to solve a problem for you. Now, you have the ability to learn how to solve and prevent problems on your own. In regard to employment your employer (and the economy) won’t necessarily have the same influence on your personal economic well being anymore. You have the power to learn and develop new skills on your own that make you more valuable and employable in the marketplace.
All of us will face some degree of economic challenge. How prepared we are to handle it will be a determining factor in how fast and successfully we rebound from a setback. No one can know everything, but anyone can learn more things. Give yourself assurance that you can solve costly problems and prevent deterioration of your quality of lifestyle by reducing your dependency on insurance and others through constant education. Education and application of knowledge are cheapest and most powerful forms of insurance.
For more information visit BowmansMoneyCollege. You are invited to join me at LinkedIn!
April 24, 2010
Business lessons by Bret Michaels from Poison
Ever stand in the front row at a rock concert, just a few feet away from the band? It is an entirely different experience than sitting out in the lawn with 30,000 people between you and the band. I had been a fan of Bret Michaels since the mid 1980’s, but during the summer of 2007, in the front row of the Poison concert, I was in a position to personally witness trademark characteristics of his I had only read about before.
Most people may be more caught up in the dancing, singing, lights, and excitement in the front row of a rock concert, but as a personal finance blogger I saw a business operation as well. A rock band is a business whose objective is to make a profit and support the lifestyles of the ownership. The fans are the customers, and like a business seeking profit the more customers you attract the more successful your business will be.
I was familiar with Bret’s history and his success, but watching him in action that day made me realize the core reasons for his business success. Up until that moment I would have never guessed I could learn a valuable lesson from a rock star in developing assets we all inherently own in order to build a small business without money or outside resources. Let’s face it, running a high profile rock band comes with the same challenges a small business is faced with.
Bret has three assets that build his branding (his personna) and his business (Poison). These three assets aren’t the kind that you keep in a briefcase, lock up in a safe, or store in a warehouse. Bret has an incredible passion to perform, a strong work ethic, and a personality of inclusiveness. He makes his customers / fans feel good about seeing and knowing him.
Bret’s humble beginnings didn’t allow for the purchase of things like prime stage time, professional equipment, or reliable transportation to get to shows. However, what he and his band lacked in working capital they made up with hard work, creating a memorable product (their show), and making the fans feel included and appreciated. This grew customer demand for more of what they had to offer, which of course led to the money they needed to expand their reach.
Take a closer look at what Bret had to work with at the outset. Like many entrepreneurs, he started with few resources, but a strong work ethic, a lot of passion, and great ideas. The first thing Bret did was get to work. He worked relentlessly on meeting people, promoting the band, and getting gigs lined up. He worked on building interest in the band and getting opportunities to play in small clubs. As a paying ticket holder at the show I attended I was appreciative when Bret, a diabetic, announced that there was “no way I would miss being here with you all tonight”, even though he was fighting off a cold and losing his voice.
When he was given the opportunity to perform he did so with passion. Fans could see and hear the energy Bret put into his performances and that soon became a topic of discussion.
Finally, the thing that made Bret’s performance different was how he included the crowd. He already had a magnetic personality, but he intentionally drew people into the performance. I witnessed this myself that day in the front row. Throughout the entire show he was slapping hands, pointing at people, shouting out to individuals, thanking everyone, even yelling out specifically to the people all the way in the back.
How many times have you heard, or even said to yourself, “I don’t have enough resources to work with”, “I don’t have enough money”, or “I am tired”? Those attitudes will prevent you from succeeding in things like managing your money, getting ahead at work, or starting your own small business. Focus on the things you can do. Just like Bret you can passionately work on your business, work harder, and make your friends / family / employer / and customers feel included and appreciated. That will make you important to them and recruit them in helping you reach your goals.
For more information about starting your own small business visit BowmansMoneyCollege. Remember you are invited to join me at LinkedIn!
April 22, 2010
“Cash For Appliances” rebates start in Pennsylvania April 21, 2010
Today is the first day to file for your Cash For Appliances rebate in Pennsylvania. There is $11 million set aside for PA residents and rebate forms are available online. Note that in PA our rebates are specifically for high efficiency home heating equipment such as a water heater or furnace. There is no rebate offered by Pennsylvania for ovens, refrigerators, etc. There are other rebates available elsewhere though.
Has anyone taken advantage of the energy rebates offered by Allegheny Power and Duquesne Light? Act 129 was signed into law two years ago in PA. It requires utility companies, two of which are Allegheny Power and Duquesne Light, to progressively reduce electricity usage through 2013. In order to incentivize their customers to consume less energy, both Allegheny Power and Duquesne Light are offering an array of rebates for energy efficient appliance purchases. Additionally, Duquesne Light offers rebates for making energy efficient upgrades to your home.
There are a variety of rebates available to customers. Some have expiration dates so you should check the websites soon for the rebates you may qualify for. Both companies are offering a refrigerator recycling program, and Allegheny Power is also offering the incentive for recycling old freezers and room air conditioners. A number is also listed that you can call in order to arrange the free pickup and hauling of your old appliance. You will be paid $35.00 for the old refrigerator. All appliances must still be working in order to be eligible for the credit. Allegheny Power pays $25.00 for room size air conditioners and $35 for freezers.
Get the Duquesne Light specifics here and click on “Programs & Solutions”.
WGAL.com new story Allegheny Power Watt Watchers Duquesne Light Watt Choices
Dollar Amounts of Appliance Rebates
For more money saving ideas visit BowmansMoneyCollege. You are invited to join me at LinkedIn!
April 17, 2010
Your rates and insurability depend on insurance loss history reports
With the number of economic problems people faced during the Great Recession availability of credit and credit related issues became a regular topic of discussion. One positive thing that came out of the attention to credit reports was an awareness of how many aspects of our lives credit reports touch. For example, insurance rates, interest rates and loan terms, and even employment are affected by what is on our credit report. This makes checking your credit report for accuracy, on a regular basis, very important. However, what about the other consumer reports that are kept on you? For example, do you know what is being reported about you by the Loss History Exchanges?
Who provides the loss history exchange reports?
There are two loss history exchanges you should be aware of. These exchanges are the Automated Property Loss Underwriting Service (A-Plus) and the Comprehensive Loss Underwriting Exchange (CLUE). These exchanges collect information about your insurance claim history and make that information available to insurance companies who are considering what rates to quote you. Obviously, you want the information to be accurate as incorrect information could make you appear to be a higher risk. Along with other factors, such as your credit report, these reports will be part of the formula that determines 1) if you can be insured and 2) what your rate will be.
Where does the data come from for the loss history exchange reports?
These companies get their information from insurance companies that supply them with your insurance and claim history data. Nearly all insurance companies report this data. These exchanges also provide a service to insurance companies by “providing information on current and previous coverages and other policy-level data”.
Comprehensive Loss Underwriting Exchange provides information such as your personal property damage claims, auto loss and claims history. Have you ever called your insurance agent, told them about a loss, and then decided not to submit a claim? Perhaps, you decided not to submit the claim because of the amount you would pay for a deductible. That inquiry is reported to the Comprehensive Loss Underwriting Exchange. Even if you don’t file a claim, but made an inquiry into the coverage of something, that is reported and documented as well.
Like credit reports you are entitled to a free report from each of these exchanges every 12 months. If you find errors on your insurance exchange report be sure to take the same steps you would when correcting errors on your credit report. Notify the exchange in writing and provide documentation backing up your claim.
How do I get a copy of my own loss history exchange report?
You can reach Automated Property Loss Underwriting Service at the A-PLUS Consumer Inquiry Center’s 1-800-709-8842 phone number, option 2. You can reach Comprehensive Loss Underwriting Exchange at 1-866-312-8076. Learn more about credit ratings and insurance at BowmansMoneyCollege.com.
http://www.iso.com/Products/A-PLUS/A-PLUS-the-Automobile-Property-Loss-Underwriting-Service.html
http://www.iso.com/Products/A-PLUS/Consumers-Order-Your-Free-A-PLUS-Loss-History-Report.html
https://www.choicetrust.com/servlet/com.kx.cs.servlets.CsServlet?channel=welcome&subchannel=clue
Duquesne Light Watt Choices: Sounds Like Cash For Appliances – Part 2!
Has anyone taken advantage of the rebate programs Duquesne Light has been offering to their customers who buy energy efficient appliances or make energy saving upgrades to their homes? In the last billing statements mailed out by Duquesne Light there was an insert that invited customers to look at wattchoices.com for a list of appliances and upgrades that qualify for the Duquesne Light rebate.
These rebates are administered by Duquesne Light and are separate from any other programs you may be eligible to participate in. The current $50.00 rebate for customers buying energy efficient dehumidifiers was highlighted in the flyer, but there are many other appliances that can qualify. Some Duquesne Light customers may qualify for several rebates.
You will find a list of all the current rebate promotions on their website. Duquesne Light also mentions that you should check this list often as they plan on adding additional rebate promotions as time goes on. Rebates on things like installing a high efficiency showerhead, adding ceiling insulation, or switching to compact fluorescent lightbulbs are issued in the form of Visa debit cards that can be used anywhere such cards are accepted.
Refrigerator in the basement or garage? Additionally, Duquesne Light is offering a $35.00 rebate check to customers who have them come pick up an old, energy wasting refrigerator. You don’t have to buy another one in order to take advantage of this program and Duquesne Light arranges pick it up and responsibly dispose of it for you. Sounds like a pretty good deal. They pick up the cost of disposing the old refrigerator and pay you! As long as the refrigerator can still run when plugged in, Duquesne Light customers can have up to two refrigerators picked up per year. Get the specifics here and click on “Programs & Solutions”.
Looking for ways to save more money? Visit www.BowmansMoneyCollege.com. Remember you are invited to join me at LinkedIn!
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