What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a convenient way to store funds specifically for medical expenses. If you qualify for an HSA, you will get to enjoy a few tax advantages as well. While this might sound like an ideal setup, not everyone is eligible for a health savings account. To qualify for a health

What is a Health Savings Account (HSA)? is a post from Pocket Your Dollars.

The Shame of Debt

Money doesn’t make you happy. That’s how the saying goes, and you can’t deny that there’s some truth to it. However, while having lots of money won’t make you happy, having very little is more likely to make you stressed and depressed.  The less you have, the more likely you are to stress over the

The Shame of Debt is a post from Pocket Your Dollars.

How to Make Tough Decisions as a Couple

Marnie and Tom live in a nice suburb in the Midwest with their two young children. Marnie’s mother, Elaine, lives about an hour away.

When the kids were babies, Marnie's mother used to drive to Marnie and Tom's every day to see her grandkids and help out. But lately, Marnie's mother's health has been declining, so she can’t drive over anymore.

One day Marnie gets an idea: What if she and Tom sell their house and move closer to her mother? Then the kids would be able to see their grandmother more often. Plus, Marnie would be able to keep a closer eye on her mother in case her health gets worse. Seems like a perfect solution.

There’s only one problem—Tom doesn’t want to move. Tom likes the neighborhood they’re in. He thinks he and Marnie paid too much for their house, but other than that he’s very comfortable.

Tom says no.

Tough decisions and zero-sum situations

Faced with big decisions like this, a couple will ordinarily try to compromise. But in this case, there’s really no half-way. Economists call this kind of thing a zero-sum situation. Someone’s going to win, and someone’s going to lose.

For over thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so.

Some classic zero-sum problems for couples involve whether or not to move—often for one partner’s career—and whether or not to have another child. But there are lots of others.    

For thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so. Today, we’re going to talk about what works, and what doesn’t, when you’re faced with one of these situations.

Three ways not to make tough decisions as a couple

 First, let’s talk first about what doesn’t work. There are three main approaches that don’t work. Unfortunately, most couples try all three:

Mistake #1 – Trying to convince your partner they'll be better off

The first mistake is to try to convince your partner that they’ll be much happier if they do things your way. In Marnie’s case, this might involve demonstrating to Tom all the wonderful things about the neighborhood she'd like to move to. Wouldn't Tom be better off there? 

No one likes to be told they’ll be happier if they just do things your way.

 Here’s the problem: No one likes to be told they’ll be happier if they just do things your way. It's better to assume each person has good reasons for feeling the way they do. And that those reasons aren’t likely to change. In couples therapy, we call this "staying in your own lane."

Mistake #2 – Suggesting there's something wrong with your parnter for disagreeing

The second thing that doesn’t work is to suggest there’s something wrong with your partner. Otherwise, they'd see it your way. If only they were less anxious, less obsessive-compulsive, less oppositional, less stuck in their ways, or less damaged by unresolved childhood trauma. Then they’d surely agree with you!

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work.

A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work. It usually just leads to a lot of bad feeling.

Mistake #3 – Appealing to your partner's love

The third thing that doesn’t work is to appeal to your partner’s love and insist that if they really love you as much as they say they do, they’ll give you what you want. Almost every couple tries this.

Marnie is no exception.

“Tom,” she says, one night as they're getting ready for bed, “Don’t you see how I can’t sleep at night worrying about my mother? I can't stop thinking about how she’s missing out on so much of our kids’ lives. Can’t you see what this is doing to me? Don’t you love me?”

 “The answer’s still no,” says Tom. “And it has nothing to do with whether I love you or not.”

I'd be inclined to agree. Just because you love someone, that doesn't mean you're responsible for giving them everything they want. 

A better way to make tough decisions as a couple

The good news is there’s a much better method. There are three steps involved.

Step One:  Let’s make a deal

In business, this would be a no-brainer, right?  You’d never ask someone to give you something you want for free. Instead, you’d find out what their price is.  

In marriage, it’s the same thing. The main question is: What’s going to motivate the other person to do a deal?

Let’s see what happens when Marnie tries this approach.

One night in bed, just before they turn off the lights, Marnie turns over to face Tom.

“Tom, what can I give you to make you agree to move?” she asks.

Tom is silent.

“A promise to never complain ever again about you watching TV?”

Tom smiles. “It’s going to cost a lot more than that,” he says.

Marnie thinks some more. “How about if I agree to spend every Thanksgiving and Christmas with your family?”

Tom shakes his head. But now Marnie has the idea. She’s not asking for favors anymore. She just wants to do this deal.         

“I'll do all the cooking and cleanup three times a week,” she says. "And we spend Thanksgiving and Christmas with your family."  

Tom raises an eyebrow. Now he knows she's serious. "Let me think about it,” he says, and turns off the light.

Time for Step Two.

Step Two:  The $64,000 Question

The following night, Tom is sitting at his laptop paying bills. Suddenly it hits him. “Marnie,” he says, “I think I see a way to do this. If we’re going to move, let’s get a smaller house and start saving money again. What do you think?”    Marnie’s actually been hoping for a bigger house. It’s painful to hear that this is what Tom wants. But hey, now he’s named his price. That means he’s in the game.

To me, this looks promising. Marnie gets something she wants very much. And she pays for it, fair and square. Same thing on Tom’s side.

Marnie thinks for a minute.  

“Let’s see what we can find,” she says.

Step Three: The Price is Right

Now comes the fun part.

The following Sunday, Marnie and Tom drop the kids off with her mother and start house-hunting in earnest. After a few weekends, they find a house they both like well enough. It breaks Marnie’s heart to be downsizing, but it was the only way to make things work. And it helps that once they find a place Tom likes, Marnie gets him to agree to new cabinets and closets.

Decision making builds strong relationships

 A good deal will have both of your dreams in it. That’s important, because it means you’re both fully in. You never know how a move like this is going to work out. If it goes well, you both share the satisfaction. If not, you share the blame.

A good deal will have both of your dreams in it.

One sign of a good deal is that in the end, neither of you got everything you wanted. The final result didn’t look exactly like what either of you originally had in mind.

But hey, isn’t that the case with anything creative? Eventually you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

Sometimes life brings you to a fork in the road, where no compromise is possible. When that happens, assume you’ll need to do some serious deal-making—as if your relationship depended on it. Which in fact, it will.

Eventually, you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.

As Yogi Berra famously said, “When you come to a fork in the road, take it!”

In the long run, how you settle the issue may matter more than which fork you take.

How to Retire in Brazil: Costs, Visas and More

Brazil, which has a population of some 213 million, is known for its passionate and fun-loving people, beautiful beaches and pristine rain forests that are home to an array of fauna and flora. Portuguese is the national language, and proficiency … Continue reading →

The post How to Retire in Brazil: Costs, Visas and More appeared first on SmartAsset Blog.

How to Stay Calm During a Market Fluctuation

Woman staying calm during market fluctuation

The last few weeks, I’ve been covering my eyes before I look at my investments, and only peeking through my fingers — as if I’m facing Freddy Kruger rather than a series of numbers. It doesn’t help that the financial headlines are full of frightening potential futures: a possible recession, trade wars, and potential market corrections. 

It’s enough to make me want to take all of my money out of my investments and put it somewhere safe, like my mattress.

But no matter how overwhelming a market fluctuation may be, I also know that pulling my money out of the market is the worst thing I could do when my portfolio is trending downward. That’s because the only way to guarantee that momentary losses become permanent is to sell. 

Of course, knowing that you should stay the course is a lot easier said than done. If you’re tempted to cut your losses when you hear gloom-and-doom financial predictions, it’s especially important to learn how to keep your cool. Here are some ways you can stay calm when the market is scary.

Remember that it’s okay to hide

Hiding your head in the sand gets a lot of flak, but there are times when it really is the best course of action. That’s because of a cognitive bias that prompts us to take action in response to fear. We feel as though doing anything, even if it is counterproductive, is preferable to sitting around doing nothing. But listening to the action bias is the reason why people sell when the market is at its lowest and buy when it’s at its highest. They’re afraid of doing nothing.

Since it’s nearly impossible to overcome the voice in our heads shouting at us to "Do something!" when the market is falling, the easier method of overcoming the action bias is to simply ignore your portfolio.

Of course, that doesn’t mean you should never check on your holdings. However, obsessively consuming financial news and checking your portfolio on a daily basis will lead you to making fear-based (or greed-based) decisions, rather than following your rational investing strategy. 

Instead, plan to check how your investments are doing on a regular schedule — either every month or every quarter. This will give you the information you need to keep your asset allocation balanced and make necessary changes, without falling victim to the action bias. (See also: 5 Ways to Invest Like a Pro — No Financial Adviser Required)

Take comfort in history

Although the phrase "past performance is no guarantee of future results" is all but tattooed on the foreheads of every stock market analyst and financial planner, there is good reason to look at the past performance of the market as a whole. If you study the long-term trends and overall historical returns, you’ll see that markets inevitably trend upwards.

Knowing that the market will recover does not make the short-term losses and volatility any more fun to live through, but it is easier to put any momentary losses you’re experiencing in context. Savvy investors who didn’t panic through the market corrections of 2000 and 2008 saw their portfolios recover over time. As stressful as any decline may be, trusting in a solid investment plan and the long-term historical trends of the market can help you stay the course and feel confident that you and your money will get to the other side. (See also: How to Prepare Your Money for the Coming Economic Slowdown)

Make a volatility plan

One of the reasons why we tend to overreact to volatility is because we forget that it’s a natural part of financial markets. Market downturns are normal, and we should expect to live through several of them in a long investing career. However, we often expect that markets will only go up. With that kind of expectation, even a minor dip can feel overwhelming.

A good way to counteract those expectations (and the resulting fear when they’re not met) is to create a plan for what you’ll do during a downturn.

Your volatility plan could be as simple as committing to your head-in-the-sand strategy for downturns. Knowing ahead of time that you’ll reduce your portfolio check-ins when things are looking grim can help you stick to that plan.

Your plan can also be proactive, rather than just reactive. Since you know that market downturns are normal and natural, decide ahead of time how you’ll incorporate these fluctuations into your investing strategy. You might decide to purchase more investments during a downturn, rather than see it as something to fear. (See also: 7 Easy Ways to Build an Emergency Fund From $0)

Don’t panic

Human beings are not wired to be rational investors, which is why we tend to be so bad at it. Our emotions can get the better of our rational strategies, especially when we’re feeling afraid. But selling your investments because of market volatility and scary headlines is using a permanent solution for a temporary problem.

Think through how to respond to frightening market changes before they happen. Then you know that you already have a plan to fall back on, and you’re less likely to simply react out of fear.

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Are the financial predictions changing? Learn how to keep you cool and avoid taking your money out of investments when a market fluctuation occurs. | #moneymatters #financetips #investing