The US Treasury Brings Back the $500 Bill

Treasury Secretary Paulson announced sweeping changes to US currency today including that the US Treasury was prepared to bring back the $500 Bill, and perhaps even the $1000 as a measure to get consumers buying again.

"Let's be frank," the Secretary said, "the dollar doesn't buy what it used to, and therefore either does the $100. When we last printed the $500 and the $1000, the $100 was worth $867 in today's dollars, and that gap continues to grow. Already we have a currency gap with the rest of the world. The 500 Euro bill has been available since the Euro inception and the 100 British pound note is worth more then $200 US. "We can ill afford American's being treated a second class citizens abroad. We are also prepared to relaunch the $1000 bill at a later date if needed."

President Bush was quoted to say, "Secretary Paulson knows currency, he studied it, he understands it, heck he even has some!," the President said with a laugh. "All kidding aside, we will not let our greenbacks go the way of the yen. We will maintain the spending power and availability of cold hard cash."

When asked you would be featured on the bill, Secretary Paulson said that for the first time, two great American's will be featured on one bill. George Washington will be featured with Abraham Lincoln. The famous photo by Nathan Frost that hangs in the National Gallery entrance will be the basis for the new Bill portrait. "No other photo capures these two men in all of their glory and we believe the larger portrait to be a significant counterfeit fighting tool."

Other changes announced but not yet formalized include the potential end of the penny, wider distribution of the 50 cent piece and the classification of the dollar in a coin only.

Wow...big changes! I am glad they are bringing the $500 back as we are on a cash envelope system and it will be more convenient for us. I am not wild about the dollar coin thing though, but I guess it was inevitable.

How about you? How will this impact you?

Managing your Finances: Taming Suffitis...

I admit I have terrible Stuffitis. I stole this phrase from Dave Ramsey, but it really sums it up nicely. If I am going to ever get total control over my finances, I will need to learn to curb this base instinct.

I really have no excuse, I am in marketing, I know what and how the messages are crafted, yet, like the stupid bug who watched his whole clan march into the light, I feel powerless at times! No, I haven't gone off the deep end and charged a bunch of things, but it is really easy to self-justify some of these item as needs as opposed to wants or desires.

Here is how I am making sure to keep Stuffitis at bay:

• Chop up the Credit Cards -It is really easy to say, I might need them for emergency use only! OK, that would be one...many people hold 5+ credit cards. If you have that many emergencies at once you may want to consider upping the insurance.

• Use Cash Whenever Possible - Cash is finite; when it is gone it is gone. Cannot be overspent. Its a physics issue! Yes I am foregoing 2% cash back on left-handed tomatoes, but I don't have the best track record...maybe some day I can trust me enough to do that, not yet though.

• Bad Influences - We all have those friends that are shopping enablers, or parents that say, "Oh come on, $5 won't kill you," or, "You deserve it, you work sooo hard!"

• Track Everything - I guarantee if you haven't been doing this you will be appalled. "$550 on cat toys? We don't have a Cat!"

• Try to Appreciate what you DO Have - This is the toughest, but the most rewarding. Sure I don't have the fanciest car right now, but I also don't have the equivalent of a second house payment either!

I am sure you have your own ways, but if you want to be really in charge of you Personal Finances, I agree with Dave Ramsey...you have to tame your Stuffitis!

Zen Through Better Budgeting...

It has been three full days since Christmas morn and I feel something strange. A much lower stress level! I was asking myself, why I was truly not stressed out Christmas Night. Then it hit me, it was through better budgeting, managing our bills and cash management. I just wasn't as stressed out as usual Christmas night.

"It is all paid for!" I told myself. I have made it through the month of December actually lowering my indebtedness rather than adding to the pile. There are NO bills coming in January, as we saved and paid for everything in cash. In fact we have begun (albeit slowly) to save for next Christmas.

Here is how we did it this year:

When we decided to get real with ourselves, one of the realisations was, " What will we do about Christmas this year?" We just couldn't do what we had before and rack up huge credit card bills. One we cut them ALL up, except our debt card. And secondly we wanted off that Tilt-a-Whirl of Doom.

So the next step was to determine how much we wanted to spend in total (a top-down approach) then we said here is our list of people we usually shop for along with us and the kids. At first it worked out to about ,47 cents per person...a bit low. So we went and paired the list to who really was close to us. With having 3 kids, it was still below what we wanted to do so we made two categories of people, Us and Them (pretty original, huh). We came up with a budget per person for the Us category and a pool of funds for the Them's (my English teacher would kill me if he saw that statement...).

The next step was harder, we talked with the kids about expectation level, which we had set WAY too high up until now. We then asked them for their list and reminded them their fate was in their own hands. If they wanted a big gift...that was probably it, or they could have a series of smaller gifts.

We also dropped another bomb...we wouldn't give them money to shop for us or each other, but we expected them to at least shop for each other and established a minimum present price of $5 on each. This price floor avoided my middle Daughter (who will never be broke) from buying a pencil for each of her siblings which was her first offer! She is why the rule was established! Since we started this discussion at the end of September they had plenty of time to save.

Next...the Them's...They are all really good people, but they aren't my kids or wife so they are lower priority. We wracked our brains for what to do here, then we decided to have family pictures shot and given out as many had asked for these. To be fair ,we warned all that we were doing something like this so we could avoid the big gift vs small gift possibility. We also asked those Them's to focus on the kids if they were to buy presents at all, or to do exactly what we did, as we would love to get family pics from them as well.

Now the test...we've saved the money, taken out cash so we couldn't go over, then prepped our list. In order to keep track of what was who's money we separated the money in a bigger envelope with 3x5 cards with the gift receivers name. This kept us fair between the kids, and if we did want to go over, we have to take it out right then, from someone else's present money. This avoided many prior years issues of going over on one, then making up to the other, now #3 wasn't balanced...a never-ending spend spiral!

So how'd we do? Exactly on budget (well, actually a received a gift-card from work so I went over on her, but I used the gift card to do it!). We managed our money, we kept to cash so it was easy to track, and everybody had a great Christmas. Oh yeah, and it looks like we reduced our debt this month by $2,940!

All I can say is this worked for us, we are planning to do the same every year and enjoy our Zen...

Managing Money: Get Everyone Involved pt2...

For the second part of Managing Money: Get Everyone Involved, we are going to talk about establishing a work area, cash management and follow-up. Once again this is just how we are doing it, you may find tweaks that work better for you; go for it! We tweaked the Ramsey system for us take any of this you want and turn it into something that fits your personality. It is the only way to make long-term change.

Work Area - I firmly believe that having someplace, a desk, a box, even a bedroom drawer where everything is kept is an important thing. The second, is to make sure that your significant other knows that space as well. This should have files on all bills to store afterward and your checkbook as well as credit cards, if you aren't prepared to chop them up yet. You want your family to understand where all this information is in case of anything happening to you. Banker Girl has a really good article about why here.

Cash Management - For us, this has been key. We use cash for groceries, dining out, entertainment, gas for the car, the kids allowance and ours. This is where we have made most of our improvement in making budget. My wife didn't want to be in charge of an area, but since we are in this together, she took over all cash funds, except the car and allowances. She is 100% in charge of those funds. She has done so well, and I am not just saying that cause she will probably read this :), we have cut nearly 33% off of our grocery bill through better planning, coupons and using only cash.

This has really also squished the Budget Police mentality around here. As I said before it is OUR Families money, our family should have a say! The kids have their votes on how to spend the money as well. They make their pitches on dinner and when we go. So when they used to push to eat out all of the time, now they are often the first to say, "I want pizza this weekend, we better wait!" 180 degree turnaround!

Follow Up - We have a review every weekend after I get paid to review how we did for the previous two weeks. We then go to the bank and get the cash in the denomination we need. I bring one of the kids each time so they see how much money this really is and where their allowance cash comes from. Initially we got some strange looks asking for $x37 in $50's, $20's, $10's, $5's and $1's but now they know us and it goes pretty quick. I may have even convinced some of them to try it as well.

We will also have a quarterly review to check and see if our levels are right: Did we over budget for Gas? (not likely), Under for Groceries? etc.. The most important part is that we discuss it as a family. In learning these lessons now they will hopefully find that personal finance, budgeting and avoiding bad debt gives them a leg-up later in life.

And that is the best thing we can do for them...and ourselves...

Just Seven More Shopping Days...

I saw that sign outside of the mall on the way home tonight. I guess for people that have never heard of Christmas, that may be helpful. If you are Jack Bauer from 24 and cannot see the little clock on the lower part of the screen it is also helpful. For most though it is a way to goad one more purchase out of you, or maybe even more.

By the way Black Friday (the day after US Thanksgiving) isn't called that due to the crush of people in a Black Plague sort of way. It is named as such as the day when retailer profits for the year turn to the Black (or positive).

Imagine that...a whole year of losses, then just 40-ish days to cover everything!

It isn't that the margins get better, it is that people who normally wouldn't think of shopping for Uncle Stu any other time, including his birthday, frantically search for the perfect gift for the person that they barely know or perhaps even don't like. It is actually rude not to! I have seen a lot of blogs talking about buying for in-laws that expect gifts even when the person is really trying to get their finances in order.

Not to say I haven't done the same thing!

Not this year though. By setting an exact amount to spend and using cash, it really came down to priorities for me and my wife...the kids. If that offends some people...Bah Humbug :)

However...I would be remiss if I didn't at least act gracious to anyone reading this. I am truly grateful that you take your time to read these entries, and I probably read yours! Thank you!

With that said I still need to get Uncle Stu a pipe cleaner organizer. Quickly, since there are only seven shopping days left...

Surviving Christmas by Charles Dickens...

Basically two weeks until Christmas and the tension is palpable.

Living up to an impossible standard (Christmas Past) Kids with unreal expectations (Christmas Present), trying to stick with a budget (Saving Christmas Future). The ghost of Jacob Marley (Bob's Son) visiting and telling me not to be cheap while the chains made by CitiBank rattle on the floor.

Well this year we are trying something else. We saved $1200 in order to pay for Christmas. $200 for each person in the house, $200 more for presents for others. Given that this is the annual GNP of Ghana on one hand it really is a ton of money, but less than we have spent before (not budgeted, but spent :) ). I don't know about you, but pull the tinsel out of my eyes and I generally don't drop a grand+ on anything. But, every year get me all liquored up on egg-nog and off we go. Buying plastic crap in the shape of; Barbie and her Bio-Engineered Pets, Various remote controlled creatures and don't forget the latest (and outdated in January) electronic gizmo's of doom.

So this year we went cash only, ala Dave Ramsey and we have pretty much stuck to it, although we went over by $83 on the gifts for others as family portraits (along with the requisite new clothes) went a bit over.

And you know what...

There is still plenty for everyone.

Sure we had to plan a bit better. My wife fought the good Black Friday fight and got some Massive deals (Thanks Hustler Blog $$$ - Great tips). We tried to manage expectations for everyone, but in January there will be no panic...no, "Oh my Gosh, we spent $X!!!" No one died (except Marley...but that was awhile ago) and we go into the new year chipping awayat the debt instead of adding to the pile.

And it feels pretty darn good...