Rational Financial Behavior
The Dollar Stretcher Blog
by Gary Foreman
gary @stretcher.com

We all like to think that we’re rational human beings. That our decisions are based on facts and logic. After all, that’s what intelligent people do. At least that’s what we think they do.

It turns out that there’s a pretty healthy controversy about that. For years, economists at the Univ. of Chicago have promoted the view that people consider all the relevant facts and then make decisions based on what serves them best. They’ve even reduced many decisions to mathematical formulas.

Other economists say that humans can’t possibly include all the relevant information in their decisions. There’s just too much data for any person to rationally evaluate.

I think that both schools may be partially right. Let me relate a recent personal shopping experience to illustrate. I was in the market for a TV. Spent part of an afternoon researching the different models and pricing available. Used both newspaper ads and online tools. Then I headed out to two local retailers to see what I could find. With a little negotiation I got what I felt was a pretty good deal with the second local store.

Was it the absolute best (i.e. most rational) choice for me? Hard to say. It is possible that there was a cheaper price or more full featured model available somewhere. But spending more time and energy searching for it didn’t seem worth the effort.

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With the beginning of each New Year, it’s a great time to work on ways to amend and strengthen your savings plan. This is especially true if you gave your credit card a workout in the shopping season leading up to Christmas.

So here are 5 savings steps that can help you streamline your finances and boost your savings goals for the coming year.

Revisit Your Budget

In order for any budget to be relevant and effective, you’ll need to revisit it on a regular basis. Your income may have changed from last year. Your bills may have risen or changed. You may have spent a little more than you meant to on other expenses.

When you revisit your budget and update the figures you have there, it can be much easier to see where your money is going. You should also begin to see whether there should be any money left over at the end of the month or not.

Work On Your Bills

Do you check your bills often enough to know when you’re spending more than you should? Compare your mobile phone bill to the one you received last month. If you see your usage is rising, work on keeping your calls shorter or shop around for a cheaper provider. You might even consider switching to a call cap if you really can’t keep those costs down.

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The Wrong Currency
The Dollar Stretcher Blog
by Gary Foreman
gary @stretcher.com

I don’t get to travel much. Or, more correctly, I’m not that fond of travel. In either case only a couple of times in my life have I been outside of the U.S. So I’m not an expert at currency exchanges. But I do know that having the correct currency is essential if you’re going to complete a transaction successfully.

For instance, years ago my wife and I visited Mexico. Some places would allow you to make purchases in dollars. But, many required pesos. In those places you couldn’t use your dollars to make a purchase.

I remembered that the other day. It occurred to me that there are times in our financial lives that we try to use the wrong currency and we can’t complete our transaction. Read the rest of this entry