…why not ask “how can I afford that”?

While browsing the The Carnival of 20-Somethings Finance, I saw a post called Tori Spelling - Unsung Financial Hero? that caught my attention.

If you like reality shows (me, not so much, but I actually caught part of this episode on one of my ‘unable to sleep’ nights), you may be familiar with Tori and Dean - Home Sweet Hollywood.  On a recent episode, Tori and Dean were looking at new houses to buy, and they were looking at one that was twice their budget.

While that in itself isn’t very remarkable, what was remarkable was Tori’s response to her husband’s objections that they couldn’t afford the house.

Instead of saying “we can’t afford it”, Tori’s attitude was “how can we afford this house?”.  She was willing to start a business - or even two - to be able to afford this house, even while 9 months pregnant!

In my financial planning business I work with a lot of people who are in debt.  I’d like to take Tori’s “how can we afford this house?” attitude and challenge those of you who are in debt, to consider…

Instead of asking, “how can I get out of this debt hole I’ve dug for myself?”, ask yourself, “how can I make more money?”.

By focusing on how to make more money, you’ll have a more positive attitude towards your money, and you’ll probably pay your debts off much faster than if you took a negative approach and spent your time worrying all the time.

What do you think?

That’s what clients are asking (or at least thinking) about the current stock market.

Well, I hate to break the news, but this IS normal!  The stock market goes up AND down.  It’s a cycle, made up of periods of expansion and periods of retraction, of good times and not-so-good times.

The market goes up, and periodically it needs to retract.  Right now we are in a retraction.  However, those who adopt a reasonable investment policy, diversify and rebalance their portfolio as needed - these folks have positive long-term investment experiences.

Those people who “forget” that the market is a cycle and panic when the market goes down will have negative experiences because they make decisions based on fear that cost them money in the long run.

So while this may be “normal”, there are some things you can do to improve your finances while we are waiting for the next expansion period in the stock market cycle:

• Make sure you are properly diversified.  You should have an overall allocation that matches your risk tolerance, your goals, and your time frame.
• Don’t try to time the market.  People who try to time the market often miss the best days (or weeks or years), causing them to lose out of hundreds, thousands or even tens of thousands of dollars in growth in their portfolio.
• When reviewing your portfolio, remember to view the big picture.  Some investments/accounts are more aggressive than others and will increase/decrease faster than others.  You need to view the portfolio as a whole to get a true understanding of how your portfolio is performing.
• Review your portfolio expenses.  Do you have funds with commissions or high annual operating expenses?   The less you pay in fees, the more money you have to work for you.
• If you are retired and are already withdrawing from your nest egg, now’s a good time to review your spending.  Are there any areas you can cut back on?  Do you have any hobbies or interests that can be turned into money making ventures?
• If you’re in the accumulation phase, now’s a great time to increase your retirement contributions.  Remember your goal is to buy low and sell high… well now is a great time to buy low!

If you’d like to learn more about the economy and the stock market cycle, here are some good articles for you to read:

Understanding Cycles by Investopedia - while I don’t agree that you should be timing the market cycles, this article does a great job explaining the economic and market cycles.

Presidential Elections and Stock Market Cycles - an interesting article about how the presidential elections and stock market cycles relate to each other.

How to Profit from Maket Volatility by Christine Benz of Morningstar.com - this is one of my favorite websites, click on the Personal Finance tab for tons of articles on a variety of personal finance issues.

One of my Twitter buddies recently asked what a blog carnival was and if it was a good idea to participate in one.

What a great question! According to BlogCarnival.com, a blog carnival is a blog community where articles on a particular topic are linked to on a blog host’s page. A blog carnival is similar to a magazine in that you have a topic, editors, contributors and readers. Blog carnivals are typically published on a regular schedule (can be weekly, monthly, etc.) and generally include editor comments along with links to all of the articles contributed.

Blog carnivals are a great way to find what people are blogging about on different subjects. So if you have a particular topic you are interested in, you can follow a carnival that features that topic to learn what other bloggers are writing.

Also, if you are a blogger yourself, contributing articles to blog carnivals is a great way to get new readers to your blog.

I have participated in blog carnivals - both as a contributor and a reader - for a couple of years now, and really enjoy them.

In fact… here are two carnivals that I am participating in this week:

The Carnival of Personal Finance, hosted by Might Bargain Hunter, and
The Carnival of Debt Reduction, hosted by HelpMyCashGrow.com

In recognition of recent gasoline price increases, the IRS has raised the standard mileage rate for the final six months of 2008.

The rate will increase to 58.5 cents a mile for all business miles driven from July 1, 2008, through December 31, 2008. The rate for the first half of 2008 is 50.5 cents.

The IRS normally updates the mileage rates once a year, but given the significant increases in gas prices this year, the IRS has made a special rate increase in the middle of the year.

Taxpayers may use the standard mileage rates to calculate the deductible costs of using their personal automobile for business, charitable, medical or moving purposes.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Whichever method you choose, it is important to keep track of your mileage to substantiate your deduction. Because the rates were increased in the middle of the year, it’s also important to keep track of the dates you use your vehicle for business to make sure the proper rate is used.

One of my favorite websites is Allrecipes.com. I go there anytime I’m looking for a new recipe or just need inspiration for something to cook for dinner.

On my most recent visit, I noticed a section called ‘Cooking on a Budget’. Since inflation and rising food prices are at the top of many people’s minds these days, this was a great find!

In ‘Cooking on a Budget’ you’ll find articles on smarter meal planning, budget friendly recipes (the lemon garlic tilapia looks awesome!), tips on how to buy in bulk and how to freeze food, and videos on how to prepare “cheaper than takeout” meals for your family.

I’ve gotten many great recipes from this site over the years. I can’t wait to try some of the budget friendly recipes. I hope you enjoy this site as much as I do!