Working online from home can be a convenient way to earn a little or a lot of money. There’s so much freedom to working on your own schedule. It’s pretty cool having the ability to turn any coffee shop or library into an instant office or to spend a day on a field trip if it suits you.

A quick search of the term ‘work at home’ brings up a myriad of opportunities from paid surveys to direct sales companies to advice on how to start your own business. So how do you know what to choose and what’s a scam? Here are some questions to ask yourself as you evaluate a work at home opportunity. Use them to determine if it’s legit and if it’s for you:

Could you turn your current job into a work at home opportunity? Before you go looking too far abroad, look around you and see if there’s a way to work from home through your current job or other people you know. Ask around. You never know what you’ll find out.

Is it a business or a job? There’s a big difference between an online job and an online business. Figure out what you’re looking at and what you’re looking for.

Do you have to pay? A job should never cost you money. If someone asks you to pay for a job or for materials to start a job, just say no. A business, on the other hand, usually costs money (although, with the internet it’s now cheaper than ever to start a business).

Can you find anyone else doing it? Search Google, facebook, twitter and other social sites to see what other people are saying about this opportunity.

Is it paid, commissions or make your own? A job pays you for work you do, usually hourly and sometimes per project. A direct sales business will typically pay you commissions for products sold and people recruited to your team. A business you start on your own will be paid in whatever ways you decide on.

What is the pay? If the pay scale is too cryptic to figure out, it’s probably a scam. You should get a straight answer to the question of what you’ll be paid. If you don’t, get outta there.

How much money can you make? This is a question you might need to figure out for yourself. If working a job, decide how many hours per day or week you can work. For a commission-based business opportunity, find out what the real average sales are and be realistic about what you can do. If it’s your own business, you’ll need to figure out how you’ll bring in money, what your profits will be and how long it could take until you’ll be profitable.

What do I know about this business? It’s great to get referrals of others who are happy working with the company and call them. You could look the company up on the Better Business Bureau and Ripoff-report websites too.

Can you really do this? Short-term or long-term? Whether you’re looking for a job or a business you need to take a hard look at yourself and figure out if it’s really for you. Is this something you want to do short-term or are you committed for the long haul? It takes dedication to build a business or work from home because you are the only person managing your time. However, you can absolutely do it!

Is it too good to be true? You know what they say about opportunities or offers that sound too good to be true. Need I say more?

Finding legitimate work at home opportunities and businesses to start takes effort. You need patience and some time to sort through the junk to find the great things that are out there. I’ve been working from home full-time for five years and it’s worth every bit of effort. I absolutely love what I do!

My best advice for you on how to find the right opportunity is to go with your gut. Never do something that feels wrong from the start. There are way too many legitimate work-at-home opportunities out there to take on something that creates with even an inkling of suspicion in your mind.

Angela Wills loves helping entrepreneurs make smart choices that result in greater profits from the internet. She is the owner of www.MarketersMojo.com the ‘hub’ of her business that provides marketing products, coaching programs, website design services and more. Angela has been featured in two print books about small business, been a guest tech expert on a local hour-long TV show, featured on numerous internet events and has worked with hundreds of clients and customers to market their businesses online.

Now that she has been running a full-time business from her home office since 2007, Angela is absolutely unemployable and darn proud of it!

1. Do a net worth statement. Assess how you feel about what you’ve accomplished financially this year. On a scale of 1 to 10 (10 being “ecstatic”) how do you feel about where you are financially today? What’s the biggest financial concern you have right now? What one thing do you want to accomplish before another year rolls past?

2. Review your budget. How did the numbers shake out this year, and what should you tweak for next?  Often, as we progress through the year and get comfortable living on a budget, we also get complacent and our costs start to rise. Look at your last two months’ spending to see if it is still in line with your planning. Is it time to do some trimming? Have prices risen in some areas of your budget indicating that you need to trim in other areas to rebalance? Are there other changes that have taken place since you did your budget that you need to incorporate officially?

3. Recalculate your debt level. If your consumer credit payments are eating up more than 15% of your budget, you’ve got too much debt. Some people find that it’s hard to even imagine being debt free. But you can be. It may take another job to earn the extra money to get out of debt, but if that’s what it takes, you can do it. Are you on target to be debt free PDQ?

4. Assess your emergency savings. It takes small steps to get to where you want to be. Having three month’s income or six months’ worth of Essential Expenses isn’t a nice to have, it’s a gotta have.

5. Check your retirement plan. Make sure you’re taking advantage of a retirement plan at work and the savings matching program it may offer. No plan at work? Then you better have an individual retirement savings plan. Did you meet your savings goal this year? If you answer “no”, give your head a shake. How will you eat when it comes time to hang up your boots? How will you keep a roof over your head? If you think your kids are going to take care of you, how would you do right now if your mom and dad showed up on your doorstep?

6. Quantify your investment return. How are you putting your money to work for you? Are those investments choices you made still working for you?  Are you well diversified? Diversification helps you weather investment volatility because all your money isn’t tied up in one sector, type of investment or geographic location. If your advisor hasn’t reviewed your portfolio with you yet this year, get on the horn. This would be a good time to adjust the investments that may have fallen out of whack with your goals and tolerance for risk.

7. Review your insurance coverage: car insurance, property insurance, life and disability insurance. If you think insurance is a waste of money, how would you cope if the worst did happened? How would your family cope? As if a life disaster isn’t bad enough, would it be fair to them to be financially wiped out at the same time?

8. Do you need to review your will this year? How about your powers of attorney for both personal care and money? And have you named a guardian for your children? Have you reviewed this documentation in the last two years, or since your last major life change (marriage, divorce, moving, birth of a child)? If not, time to dig out the paperwork and have a look to see if it still meets your needs.

It’s easy to put off looking at your money. Put it off. Put it off. Put it off. But you’ll get no peace of mind from NOT knowing where you stand. Better to grab the paperwork and a cuppa, a calculator or your spreadsheet, and do the detail. While you’re at it, create the checklist you’re going to use next year to make sure you’re covering all your bases.

It may be no big to carry a $200 balance on your credit card when the option is to leave your car in the shop because you don’t have the money to pay for repairs. And if you don’t spend another penny until that $200 balance is gone, you’ve applied the right medicine to a short case of the debt-flu.

However, if you let that $200 balance spread to $350, $500, $775, you’ll soon find spending viruses and buy-now-pay-later bacteria of all kinds clamouring to gobble up your good intentions.  In no time at all you’ll have a full-blown case of debt misery, and it’ll take nothing short of an amputation to get yourself financially healthy again.

No, I’m not suggesting your cut off your fingers! But how about cutting up your cards? You don’t have to cancel your accounts… just remove the temptation to spend by eliminating the plastic until the account is back in the black. Then you can order a replacement card and go back to using your credit cards as a convenience, as opposed to being held hostage to high interest rates and all kinds of stupid fees.

What if you never seem to be able to say no when the consumer bug bites? Then don’t take your cards with you unless you’re shopping with a list for specific items. Before you head out, write the amount you plan to spend (because you have the money in the bank to pay off the balance) on a piece of paper and wrap it around your card. As you shop, deduct what you’re spending from the amount you wrote. You’ll know exactly how much you have left to spend. When you get home, don’t wait for the bill. Go online and pay off your day’s charges.

There are times when credit is useful. There are even times when you can’t see how to get from here to there without racking up some debt. That’s the cold. Let that debt fester, let it continue to grow, and you’ll find yourself dog-sick and in need of some major medical intervention to cure your debt malaise.

Here are three things you should think about as you shop for your credit card:

1. The annual fee. Lots of credit cards have annual fees. Many don’t. Typically, the more bells and whistles on a card, the higher the fee.  Are you prepared to pay an annual fee for those points you’re earning towards flights or whatever else is being offered? How many points will you have to earn (how much will you actually have to spend?) to make up for the whopping fee. If your card charges $120 annually, how much will you have to spend to recoup that $120 in actually travel dollars.

2. The interest rate. If you never carry a balance on your credit card (Yes!) then you don’t give too hoots what interest rate your card is charging. But if you’re one of those dopes that’s still using your credit cards as extra disposable income, you better be darn-tooting sure you’ve got the lowest possible interest rate going.  Know that there’s a huge range of interest rates available.

Beware of low introductory rates and how they may change. Very often an enticingly low interest rate will skyrocket into the stratosphere as soon as the introductory period ends. You could see your interest rate zoom from 1% or less to 14.9% or more. Introductory rates work best if you plan to be paid in full by the end of the term of the special offer. And for heaven’s sake, stay on the right side of the rules. Just missing a payment by one day could end your “special offer” and take you into deadly-interest territory.

3.  The provider. If you’re a debtor, do NOT have your credit card with the same financial institution that you do your banking with.  Most people don’t realize that if you have money on deposit at a bank and also have your credit card at the same bank, your deposit account can be tapped if you’re delinquent on your credit card. That’s right, the bank has the right to go into your accounts and take the money if you are falling behind on payments. That could mean you have no money for food or your mortgage/rent payment will bounce. Ouch! So do NOT have your credit card at the some FI where you have your savings and chequing accounts.

A good place to start your comparison shopping is at the Financial Consuemr Agency of Canada’s website. But don’t stop there. Do your own legwork and make sure you’re getting the card that’s going to work hardest for you. Credit cards can be wonderful tools for managing your cash flow. I put all my purchases on my credit card, earn points for groceries (I’m a simple girl) and pay it off in full at the end of the month. Not only does that get me free groceries, but it reduces the number of transactions on my bank account, so it helps minimize my bank fees. Two birds, one stone.  Love it.

Here’s another tip: If you like to shop online, get yourself a separate (no fee) credit card with a low balance for your online shopping. I find the peace of mind of knowing I’m not putting my primary card into all those cyber-storage devices priceless.

The first time I asked Daisy where the money went she told me that it had been a very stressful week at work, and when she walked past her favorite dress shop on the way to the bank, she popped in to have a look and cheer herself up. She spent $134 on two tops, a great pair of pants, a light jacket and a new pair of earrings. She was quite proud since the two tops were 50% off.  And she felt great about her new stuff. Besides, she had the money in the bank and she’d just rebuild her emergency fund.

The second time Daisy dipped into her emergency fund it was because she was bored. “I just needed to get away for a couple of days” she said, her eyes pleading with me to understand that it was a make-or-break thing. “I stayed with friends, so I only had to pay for the train tickets and food. Oh, and I brought Mom home this lovely scarf I found in a thrift shop… just seven bucks.”

Then there was the wedding Daisy had to go to. “My cousin is coming to town for this. I have got to look good. She’ll be all decked out. It’s bad enough that I’ll have to listen to her insufferable blather about her maid and her gardener and her manis and pedis.” In her desperate attempt to compete with a woman she rarely saw but clearly felt in competition with (I think it was a childhood thing), she not only had a spa day, she dropped $300 on a new dress and $200 on a great pair of shoes. In her mind, it was an emergency.

Daisy spends when she’s stressed, when she’s bored, when she’s suffering a little dip in her self-esteem.  She spends when she’s happy. She spends when she’s blue. Daisy is, without a doubt, an emotional spender.

Are you one too?

If you find that you shed dollars when you’re in the rough emotionally, it’s time to become aware of what’s triggering you to spend. Hey, everyone enjoys the lift, the buzz, of a new acquisition. That’s in your brain chemistry. But if you’re letting your buzz drive you to do things that will hurt you in the long run, you’ve got to get a hold of that buzz and squash it.

Staying out of the stores is a good way to battle emotional spending. If Daisy hadn’t gone into her favorite dress shop, she’d still have the $134 she spent to alleviate her stress. Hey, breathing alleviates stress and it’s free. So does walking, singing, watching a funny video, and myriad other stress-busters that don’t involve spending money.

If you’re pummeled with ads or you have an inbox full of “sales” from online stores, you’re begging for trouble. No rabid shopper can face that much temptation and keep walking away. And when you’re stressed or blue, your resistance is lowered so you’re that much more likely to drop some money. Do yourself a favour and get yourself off those lists. Unsubscribe to catalogue mailings. And don’t even open the email offers. Just move ‘em to your junk file.

Know that even small indulgences will add up quickly so it’s not okay to buy just because it’s under ten bucks or it’s a great sale.  I’m not saying you can’t ever impulsively get an ice cream or buy a pair of earrings if you see something you really like. Just don’t make that impulsive response to bridge an emotional gully.  While we all succumb to emotional or impulse spending from time to time, when it becomes a weekly event, you’re getting into a bad habit. Acknowledge how you’re feeling and look for ways to make yourself feel better that don’t involve blowing your never-growing emergency fund.

Gail, what the dickens are you going on about?

Lots of people who are trying to get out of debt want it gone NOW. But it took a while to dig the hole and it’s going to take a while to get out of the whole. I do recommend strongly that if you’re carrying consumer debt that you focus on getting that consumer debt paid off in under three years so you don’t end up with debt fatigue. But there are lots of other kids of debt: mortgages, car loans, and student loans just to name a few.  And sometimes, if the debt is significant, it may take a little longer to get to the end.

This is where tortoising comes in. As Confucius said:

“It does not matter how slowly you go so long as you do not stop.”

While jumping on the fast track to debt-free forever may feel exhilarating as you start out, it will take persistence and tenacity to get to where you want to be. If you don’t have the courage or the backbone to do the hard stuff, if you don’t have the stay-with-it-ness to stick with the program, you’ll be back in debt in no time flat.

There will be times when you get into very tight spots. It will seem as if everything is conspiring against your plan to become debt-free forever. But you must stick with it. Yes, you may have to adjust your plan to accommodate whatever boulder has appeared in your way, but if you keep moving like the determined tortoise you are,  you’ll eventually get around the boulder and back on track.

You must also have faith in yourself. When the tortoise went up against the hare, he didn’t start the race saying to himself, “This is ridiculous. I can’t possibly hope to beat this hare. I’m wasting my time.” Nope. He just got on the road and started plodding to the end. And if you want to be debt free, you’ve got to get on the road too.

If you make mistakes along the way, don’t fret. There’s always tomorrow. You’ll get a chance to figure out what you did wrong and make it right. Everyone makes mistakes. Everyone. Stop beating yourself up over these mistakes. Learn and keep moving.

I often talk about the need to have “gumption” when you’re facing a hard task. While others around you throw up their arms in despair or frustration, you and your gumption keep on truckin’. You know you will be debt free. You can smell it. And you’re not going to stop until you get there.

Inspirational quotes on persistence abound. From Dale Carnegies “Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all” to Franklin D. Roosevelt’s “When you come to the end of your rope, tie a knot and hang on.” You can find something that will speak to you and help keep you focused. Get on the internet and search for “persistence” and “quotes”. You’ll be astounded at what pops up.

I’ll leave you with one more that I love.  This one is from Marian Wright Edelman, the first African American admitted to the bar and an activist for children’s rights. She founded the Children’s Defense Fund in 1973. She says:

“You’re not obligated to win. You’re obligated to keep trying to do the best you can every day.”

Go. Do your best!

EFFECTIVE TAX RATE: If you paid taxes at a constant rate, instead of on the progressive scale we use, this would be it. You calculate your effective tax rate by dividing your total tax paid by your taxable income and multiplying by 100.

ESCROW: When money is held “in escrow” it means that a third party is hanging on to it until the other two parties in a transaction do everything they’re supposed to do. Your downpayment on an offer to purchase goes into escrow for example.  And when your deal does finally close, then the money goes to the seller and title to the home goes to the buyer. Badaboom.

ESTATE: All the stuff you leave behind when you die. Some things have sentimental value, like jewelry or your collection of hippos. Others have financial value, like your stock portfolio or your home. Some things can bypass your estate if you’re smart enough to use the beneficiary designation that comes with those things, like life insurance. And if you hold assets jointly (with a right of survivorship), those things will pass directly to the joint owner without flowing through your “estate”. In the U.S., your heirs have to pay inheritance tax on the stuff you leave to them. There’s no inheritance tax in Canada. But estates have to be probated, and the higher the value of the estate the higher the probate fees. Can you think of a better reason to take advantage of beneficiary designations and joint ownership designations, and bypassing your estate completely?

ETHICAL INVESTING: When you allow your social conscience to guide your investment decisions, you’re investing “ethically”. A growing trend among investors, ethical investing has brought about some significant changes in legislation by putting the power of the wallet to work for good, as opposed to focusing simply on making money. Some investors choose to eliminate particular industries from their portfolios: guns, gambling, alcohol. Others choose to put their money into companies that meet their guidelines for being environmentally friendly or for the fair treatment of workers. The basic premise is that investors can do well while doing good.

EXCHANGE TRADED FUNDS: An investment that tracks an index or a basket of assets like an index fund, but trades like a stock on an exchange is called an Exchange Traded Fund or ETF. Since ETFs trade like stocks, their prices change throughout the day as they are bought and sold. ETFs offer the diversification of an index fund with the flexibility to sell short, buy on margin and purchase as little as one share. ETFs also have expense ratios that are usually lower than those of the average mutual fund.

EXIT STRATEGY: If you buy an investment, any investment, and you know when you plan to sell that investment, you have an exit strategy. Perhaps you’re going to wait until the investment has appreciated by 20%. Perhaps it is your downside limit: if the investment loses 15%, you’ll dump it and move on.  In the world of stock investing, you might set a “stop loss” – a sell order based on the lowest price you’re prepared to hold a stock at. Most often the domain of active traders, exit strategies are in direct conflict with the “buy and hold” strategy most Spurts recommend to novice investors.

Rather than looking at a company’s business, financials and operations, some investors like to focus on the historical performance of a stock, and the patterns created when it’s price and volume are charted over the long term. Referred to in the biz as technical analysis, this is an industry unto itself. There are uptrends and downtrends, support and resistance, breakdowns, breakouts and countertrend retracements. There are daily charts, weekly charts and charts that plot a stock’s history. And if you want to take this approach to investing, you’re going to have to buy a book or six to learn about technical analysis.

One reason why technical analysis is popular is that the charts created offer basic supply and demand information about a stock, eliminating the opinion component of most stock discussions. This form of stock picking is therefore seen as unbiased.

Charting also helps to put a stock’s behaviour in context. Is that big point move a breakout, or simply a continuation of a strong advance? Proponents hold that by keeping your eye on the charts, you can identify stocks that are about to break out big-time. And they are a great signal of when to sell. A stock’s chart will often show early warning signs well before the company actually falls apart. If there is heavy volume selling for several days, you can bet there’s something wrong. (Or was that just more investor over-reaction?)

The detractors of technical analysis will tell you that while it is purported to be unbiased, it is often up to the person doing the analysis to interpret the significance of the ‘fuzzy” information provided on those multitudes of charts. Besides, since the information used by charters is available to anyone who wants it, how can there be any real advantage to this approach?

If you’re a top-down investor, you’ll begin your analysis by first looking at the broad economic picture, narrowing your focus down to industry sectors, and then individual companies. So, if you believe that oil prices will drop, you might look to industry segments that use oil and analyze these segments to see how this economic change will affect their performance. Within the sector, you’ll then analyze other criteria — perhaps labour or competition issues — to see how they might affect individual companies. Finally you’ll look to P/E ratios and the other financial formulae.

If you’re a bottom-up investor, you’ll be less concerned about the overall state of the economy and will focus more on the fundamentals of individual companies. So you’ll start with P/Es and pull back to look at how the whole sector is doing, and what the economic picture as a whole is like.

Next week: Types of Stocks

Last week: Investing for Growth

In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

“Why not come and chat with me,” said the Grasshopper, “instead of toiling and moiling in that way?”

“I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.”

“Why bother about winter?” said the Grasshopper; “We have got plenty of food at present.” But the Ant went on its way and continued its toil.

When the winter came the Grasshopper had no food and found itself dying of hunger – while it saw the ants distributing every day corn and grain from the stores they had collected in the summer. Then the Grasshopper knew: It is best to prepare for days of need.

So, are you a grasshopper or an ant?

Grasshoppers don’t save; ants do. Ants know that the bounty of summer is followed by the deprivation of winter, and if you don’t have something stashed away for those cold, barren days, you’re going to have a sore tummy.

Grasshoppers don’t plan; ants do. Grasshoppers are of the opinion that there’s nothing much to worry about, bad things don’t happen to good people, all will be well, and you have to live for today. Ants know that crap happens to everyone, you better make sure your ass is covered just in case, and your larvae aren’t going to get to university if you don’t help them by setting up an education savings plan the minute they hatch.

Grasshoppers get drunk and pass out; ants sleep well. Ultimately, when the caca hits the fan and they have no resources, grasshoppers over-indulge is self-loathing and recriminations and hide in the bottom of a bottle, in a doobie, or some other form of distraction. Ants, who have planned like pessimists, know they’ve taken every precaution and sleep like babies.

Grasshoppers love their toys; ants love their freedom of choice. Sure a big-screen TV is nice. And getting another vehicle before the new-car smell has worn off sounds like fun. But stuff doesn’t replace options when it comes to dealing with changes in the economic weather. If the ant loses his job in a economic downturn, having a stash of corn at the ready means he won’t have to panic. In the meantime, that grasshopper will be wondering how much he can get for his year-old snowmobile.

Grasshoppers compare themselves to others; ants measure how close they are to reaching their goals. All those guys doing the no-money-down, 35-year-mortgage thing so they can get into an even bigger house than their cousin, brother, friend, business partner, next-door neighbour, whomever, are grasshoppers. Ants know that they should only buy as much house as they need, and the goal should be to pay off the mortgage, not simply pay it down so you can borrow against the equity yet again.

I’m an ant. What are you?

That being said, I do allow for the fact that people have some debt. On the “Life Pie” you can spend up to 15% of your income for debt repayment (not including your car payments and your mortgage). To calculate what percentage of your income you’re spending on debt repayment, add up your monthly debt repayment amounts (not including your car payments and your mortgage), divide that by your monthly take home pay, and multiply it by 100.

If you’re spending $670 a month paying off your credit cards, student loans, line of credit, furniture loan, or whatever else, and you make $3100 net a month, your calculation would look like this:

670 / 3100 x 100 = 21.6%

If you’re spending 15% or less of your monthly income paying off your debt then you’re probably okay from a cash flow. Not great, but not drowning. If you’re spending more than that, uh-oh!

The words “paying off” are important. If you’re spending 15% or more of your income just meeting your minimum monthly payments, then you’re in trouble and headed for a fall. Making just the minimum payments on debt means you’re gonna be in debt FOREVER and you’re going to pay GOBS of interest.

If you have a $3,000 balance on a credit card charging 14.98% interest, and pay a 2% minimum every month it will take 26 years to pay off your balance and cost you a total of $7,440 in interest. Yuck!

There are some other signs that you may be in over your head. If you find, for example, that you seem to have less and less money for things like food because you’re spending more and more money trying to keep up with your debt, that’s a bad sign. And if you keep dipping into your savings, keep trying to refinance, or have to take a payday advance loan, it’s a sign that you’re over-extended.

Another big clue: you keep hitting the ceiling on your credit cards. If as soon as you pay down balance, do a balance transfer to reduce your costs, or refinance in some other way, you’re right back to the limit on your credit, you’re in deep doo-doo.

Ditto if you can’t find two red cents to put into an emergency fund. No emergency fund means that the first time Old Man Trouble rears his ugly head, you’ll be right back using your credit to fill your financial gap. That’s no way to live.

And, finally, if you can’t sleep at night, if you toss and turn or awake in a cold sweat, you’re in trouble. Why are you doing this to yourself? Taking care of the problem is so much easier.

1. Admit you have a problem. Say it out loud right now: “I have a problem with my debt.” If you aren’t prepared to admit you’re in trouble, no one can help you. If you aren’t prepared to add up the mess you’re in, you’re not ready for help yet. Quit your whining. If you want things to change, start by saying, “I have a problem with my debt.”

2 Start writing down every penny you spend. Whether you spend $1.25 for coffee or $600 on a fabulous new pair of shoes, write it down. This is how you become accountable for forfeiting your future in the name of an immediate pleasure. When you look over your list at night – yes, you have to look over the list every night – ask yourself why you’re really buying. Did you get a rush? Did you feel pleasure? How are you feeling now?

3. Switch from credit to cash. It’s way easier to charge something than it is to fork over cold, hard cash, particularly when you’re getting to the bottom of the jar.

4. Commit to paying off your debt. Allocate a fixed amount to each debt, paying off the most expensive debt first while you make smaller payments on the other debts. Once your first debt is paid off, reallocate that money to your next most expensive debt. Keep going till you’re out of the hole.

Staying out of consumer debt isn’t an impossible feat. It’s a matter of not spending more money than you make. That’s right. It means not buying something when you don’t already have the money to pay for it. Life is expensive enough. Why would you add interest to the equation?

If you’re spending money you don’t have – if you’re putting it on credit – it’s not a deal. If you’re buying something you don’t need, it’s not a deal. If it takes you three weeks, three months, or never to put what you bought to use, it’s not a deal.

A deal is buying the snowsuit your child is going to wear next winter on sale this winter at 70% off. A deal is picking up a new book you’re dying to read for half price. A deal is getting something you really need or want at a significant savings, and being able to pay for it in cash.

There are some places that are known for having “deals”, and people take the value they’re getting for granted without actually checking the prices. Dumb! And there are people who will go to extremes to get a deal, lining up for hours to browse – and ultimately buy – in stores where they wouldn’t normally shop. Whazzup with that?

People who can’t pass up a good sale even if it’s on something they don’t want, need or even particularly like aren’t smart bargain buyers, they’re compulsive shoppers. Scoring deals helps them to ease their insecurities and feel more competent and in control. And they rationalize their purchases as something good they are doing for themselves or their families.

A study by Norwich Union Insurance in Britain in late 2007 showed that 17% of Brits spent more than planned because they couldn’t resist a bargain, and almost a quarter of them could justify buying more because of a low price tag. In fact, nearly a third got such a buzz from bargain shopping that they were always on the look out for the next hit.

So are you a bargain junkie? Do you:

• hit sales and clearance racks when you’re feeling sad or mad?
• spend more than you can afford?
• see sales as opportunities you just can’t pass up?
• feel guilty about your shopping?
• walk out of stores with things you hadn’t expected to buy?
• hide your purchases?
• routinely forget what you bought and find things in your closets with the tags still on?

The next time you find yourself sidling up to the cash register with a bargain in hand, ask yourself:

• Do I need it?
• How will I pay for it?
• What will I do with it?
• What would happen if I waited?

Better yet, do what my friend Natasha does. She keeps a list of the things she needs and wants. If she finds a bargain, she looks at her list to see where it is (she’s keeps her list in priority sequence) and if it’s at or near the top, and she has the cash on hand, she buys. If not, she walks away.

I’ve watched her do this, and it’s impressive. Natasha is accomplishing a whole bunch of things with that list: she’s keeping herself on track, looking only at things she knows she needs or wants, she’s prioritizing, and she’s only spending money she has available.

In a culture that worships shopping, it’s only natural that the “bargain” be the Holy Grail. But if you find yourself being suckered into to buying stuff just because “it’s a great deal”, you’re definitely not as smart as you think you are. If you’ve saved so much money with all your bargain shopping, show it to me.

If you can’t show it to me sitting in your retirement plan, in an educational savings plan for your kids, or in your emergency fund, you’re deluding yourself. You need to find something constructive to do with your time. Bargain-hunting isn’t doing it for you.

The first winning post is up so have a read. And for those of you who want to get your books signed or want a hug, my first two appearances for Debt-Free Forever have been set up at Costco. I’ll be in Ajax between 11 and 1 on Saturday January 9. Later the same day, between 3 and 5, I’ll be at the Costco in Etobicoke (50 Queen Elizabeth Blvd). See you there.

Back when I was shooting Season 2 of Til Debt Do Us Part – heavens, that seems so loooong ago now – one of my couples made an interesting observation to his family. Gerry of Kelly&Gerry said, “We’re not poor, we’re broke.” Good distinction.

Periodically I hear from people who want to bust my chops because the people on my show make lots of money and I shouldn’t be rewarding them for their stupidity in overspending. We’ve worked with people from all income brackets, some quite limited and believe me, there’s a big difference between being POOR and being BROKE.

People who are poor don’t have the resources available to improve their financial situations. They may face a personal challenge, such as a learning or physical disability. It may be because life has kicked ‘em hard and they haven’t found their way back to their feet: divorce can do it; widowhood can do it; unemployment can do it. So can having a mess of kids before you’re financially prepared. Poverty is not something I can do anything about. The only solution to not having enough money is to find a way to Make More Money. It’s that simple.

Being BROKE, on the other hand, is something I can help people do something about lickety-split. If you’re broke, you have resources available to you and you can  improve your financial situation, you just may not know how. It may be that you’re financially illiterate. It may be that you have no will power, no ability to defer gratification, no time management skills. Or you may simply be LAAAAZZZZY! I can teach you. I can help you see another path. I can kick your ass. I can help you make it better.

I have worked with people who have one foot in both these camps: they’re poor, but it is of their own making, and I can make ‘em make more money. But most of the people I work with are BROKE, and most of the people who watch the show who benefit from the tactics I offer are BROKE.

I often get letters from people who say things like:

Gail, I need help. I’m on a disability income and I don’t make enough money to feed my family, so how am I supposed to save?

You’re right. If you don’t make enough money to feed your family, you’re poor and my strategies won’t work. You have to undo poor – find a way to make more money – before you can put financial strategies to work.

As for the people who “make lots of money and are in debt,” they’re the reason the show exists and so many people who watch have been able to benefit. If the doctor hadn’t been overspending by three times his income, we wouldn’t have had a show. And if the chick with the dogs hadn’t been overspending on her pooches, we wouldn’t have had a show. Ditto the teacher who wouldn’t go out to work, the babe who only wore stuff three times, and the guy who gambled.

Years ago when my family emigrated from Jamaica, the woman who helped to raise me didn’t want to stay in Jamaica either. Daphne, whom I loved with all my heart, wanted her own opportunity. My dad got her a visitor’s visa to the U.S. and she stayed. Daphne learned to read and write at my mother’s elbow. With no education, no financial nest egg, no job, Daphne got busy creating a life.

Daphne worked a full time day job and a full-time night job, looking after an elderly woman who needed an attendant at night. Daphne learned to drive, bought herself a car, bought herself a house, paid for her legalization in the U.S., brought her children to live with her, put her daughter through college. My lord, the woman had fortitude!

The last time I saw Daphne was about twenty years ago. She wanted to buy me something. I was the little girl she’d helped to raise, and she was determined to give me a gift.

I still have the dress Daphne gave me. It’s ratty. Really ratty. But I wear it almost every week. It reminds me of her every time I put it on. And she is my beacon of strength.

Our circumstances do not define us. We can achieve anything we put our minds to. We have the power to make life whatever we want. Some of us want more.

Daphne wanted more. And she busted her ass to make it so. She achieved a lot, moving from poor to not so poor, to secure. She made a life.

God grant me her tenacity.

This week I’m re-posting blogs that will ask you to think about how you’re using your money. As we approach 2010, there’s no better time, psychologically, for turning over a new leaf than the beginning of a new year. But before you can hope to be successful, you have to first do some thinking, some reflecting on what’s happened over the past year, and some assessment of what’s been working and what hasn’t. So this week, here are five blogs that ask, “Are you…?”

BTW, tomorrow I’ll announce the winners of 3 copies of Debt-Free Forever. And y’all should pop over to www.debtfreeforever.ca to see the new site to support the book.

We’re in a pickle. We aren’t saving enough and we’re carrying record levels of debt. Not just mortgage debt, though many of us have more than we can manage in terms of mortgage payments. Noooo. We’re carrying record levels of debt on our lines of credit, our credit cards, and the plain-ol’-boring loans. Why? Simple. We’ve forgotten how to live within our means. We’re ricocheting out of control, spending money we’ve yet to earn. We’re buying STUFF we think we NEED, when all we’re doing, really, is scratching our consumer itch. I mean to say, do you really NEED a TV? Do you really NEED another pair of pants? Do you really NEED that better-than-ever cell phone, camera or power saw?

The fact that we can’t seem to get to the end of the month before we get to the end of the money should be our first clue. Here’s what I mean:

GA writes: We have a $50,000 line of credit as well as $45,000 in credit card and personal loans. We have a child starting college in Sept, another following in 2 years and a 2 year old. I have tried to trim our budget but can find no leeway. Grocery seems to be the biggest budget buster. We have cut eating out to once or twice a month but still have to reach for our credit cards by the end of the month. Any ideas where I should look to trim the fat and how do I cut back on the grocery bill? It seems the costs are up every time I go to the store.

Here’s a frustrated soul who can’t figure out how to cope with rising food costs because there is no wiggle room in your monthly spending. With $95,000 in debt, a minimum repayment amount of just 3% would mean a monthly payment of $2,850 a month. OMG! I’m sorry, GA, but FOOD is not your biggest budget buster; debt repayment is.

And that’s exactly the problem so many people are facing. They can’t figure out how to repay the money they have borrowed and have a life at the same time. Not surprising, really. You’ve already spent $95,000 you haven’t yet earned (and that would be after tax dollars, I’d like to point out).

So what other clues might there be that you’re living beyond your means?

Are you saving less than 10% of your net income? Yes. Then you’re living beyond your means. You see, if someone in your family were to have a medical emergency or a blip in their employment, if your roof were to leak or your car give up the ghost, if you should have to cope with a major move, the care of an aging relative, or educational expenses, you’d be up a creek without a paddle. Right GA?  Ideally, you should save as much as you can, with 10% of your gross income being a guide.

Are the balances on your credit cards or lines of credit rising? Yes. Then you’re living beyond your means. Paying only the minimum on your credit cards or lines of credit while you continue to increase the balance you owe is a sure sign you’re a dope. When, exactly, are you going to have the money to finally get rid of the debt? Is some magical wand-waving fairy god mother going to pop into your world and woosh away your debt? Or do you figure that a windfall is in your future? Hey, WAKE UP! If you have a $5,000 credit card balance at 18.9% and make a minimum payment of just 2.5% per month, you’ll end up forking over almost $8,000 in interest over the 25 years it takes you to pay off the balance.

GA owes $95,000. Let’s say she’s averaging an interest rate of just 11%. And let’s say she makes a payment of $2850 a month (ouch!) It’ll cost her almost $19,000 in interest and take 40 months to pay off the debt. Over-extended? I guess so.

Are you missing payments on bills? This is a sure way to ruin your credit rating and increase your interest costs. And it’s a sure sign you’re living beyond your means. If you don’t have a handle on what your monthly bills are, and what it’ll take in income to keep current, then it’s time to get with the program. Get out all the bills that have to be paid every month and make a list. Rank the bills in order of priority. You HAVE to pay your electricity bill, but you don’t HAVE to have premium cable (or any cable for that matter.) Okay, now deduct your HAVE TO PAY amounts from your monthly income in order of importance. When you run out of money, cancel everything else.

Are you taking cash advances on your credit cards? Yes. Then you’re living beyond your means. Cash advances, putting your groceries on credit, applying for new cards so you can transfer balances so you can fool yourself into thinking you’re paying your debt are all signs that you’re in BIG TROUBLE.

I know it’s easy to get credit. I know it’s nice to have what you want when you want it. And I know everyone else is doing it. But just because they’re all walking off the edge of the precipice doesn’t mean you should follow them. And if you’ve been walking in lock-step with a bunch of fools who can’t control their spending to the point that they put themselves and their families at risk, then it’s time to change your pace.

You don’t have to be a follower. You don’t have to continue to do what all the other dopes are doing. You can stop the insanity, take control of your future, and commit to living within your means. I know you can. Do you know you can?