The Premise:
Put $25,000 in someone’s checking account for two weeks to see if it changes their spending habits. The money isn’t necessarily meant to be spent on anything, but it is placed there to add a layer of comfort and security that one normally doesn’t have.

The Test Subject:
Me. Who else would I give $25,000 to? I simply took $25,000 out of my emergency reserves from another account, and placed it in my checking account for two weeks. Before we go to much further, it is important that we clear up a few points:
1. This experiment wasn’t about me telling you that I have $25k to throw around. In fact, if I didn’t have $25k at my disposal, then I would possibly be the worst Personal Finance Expert on the planet. Why would you take advice from someone that hasn’t demonstrated the ability to effectively save money?
2. I am not exactly a financial angel. I have my weak moments. Most relationships have a spender and a saver. My wife is the saver, and I traditionally have been the spender.
3. The experiment is not necessarily about spending the money. The experiment is meant to measure the change in everyday spending habits based on access to a ridiculously large amount of cash inside of a checking account.
4. I don’t have any debt other than my mortgage, so I was never tempted to “just pay off my debt.”

I’m still a monkey

I am a dumb animal. I really am. Any degree of financial success that I have had is based on me tricking myself to financial security. For instance, I normally keep my checking account super-low so that I don’t blow-through money that I don’t NEED. In addition, I don’t have credit cards. I don’t trust myself to win the mental battle between the credit card companies and my small dinosaur brain. You see, credit card companies are in the business of taking my money from me. They know exactly what they are doing. They offer points and rewards and other forms of BS in order to get my hard earned money. In lieu of a battle of the minds that I would probably lose, I have decided to just not participate in their game.

So the first challenge that I encountered was my own animalness. Yeah, animalness. New word. Work with it. I had protected myself for so long from dumb decisions that I was actually nervous that my brain couldn’t handle the challenge. By the way, not enough people protect themselves from themselves. I highly recommend it. Trick yourself into financial success.

It’s on

So I deposited the $25,000 into my checking account.  No big deal really. I didn’t feel any different in regards to my spending habits, but I was a bit nervous about having that sort of scrilla in my checking account. I didn’t want some bandit to force me into cleaning out my account by using some of the most brutal slap and tickle techniques around. I decided to carry my Swatch Swiss Army Knife that I bought back in the summer of 1987. In the event that I was accosted, I figured that I would use the scissors to cut the criminal, or use the tweezers to clean up his brow line.

Although I did tell you that I’m the spender in my relationship, it’s important that you know that I don’t really spend as much money as I used to. My spending is usually limited to food, wine, gifts for Mrs. Planner, or possibly a nice tie that would look snappy on television. That being said, two questions now arise:

1. Would I spend more money on the areas that I already tend to spend money?

2. Would I add spending categories to my spending habits?

My answers? Yes and No. Yes to #1. No to #2. I didn’t ever feel compelled to start buying things that I normally wouldn’t buy, but my radio co-host, Chip Maxwell, was making headway on his mission to get me to join him in the ranks of iPad owners. I can say with great confidence that every purchase I made during the experiment was affected by the $25,000. Check that. Maybe I should say that differently. Most purchases are make are generally affected by the low balance that I normally keep in my checking account. Therefore, the $25,000 addition lulled me to financial apathy. I didn’t consider the principles of scarcity that I normally employ when making a spending decision.. This, alone, was worth the experiment. I value scarcity. I believe it to be a valuable financial tool. Removing scarcity could be damaging to my financial life. This was very scary. Many people don’t know that they are subjecting their savings to the possibility of extinction simply by keeping it in their checking account.

I’m somewhat famous for my $62/week grocery store trip. My $62 trip became $80/week during my two week experiment. I know this was because I didn’t take the time to consider the necessity of the things that I was purchasing. I had grown accustom to considering the importance of every item that I put into my cart. I believe that we should all scrutinize the items that we purchase. By having the $25k cushion, I learned that my scrutiny was tied directly to low account balance.

I did buy Mrs. Planner flowers two more times than normal over the course of the two weeks. I consider this a good thing. I believe that I purchased at least two more bottles of wine than I normally would have. My palate tells me that it was good thing too, but it wasn’t. I made two additional nominal charitable contributions. I didn’t mind that, but we have a pretty structured giving plan so it surprised me that I deviated from it.

The bottom line

I made at least 8 purchases in the two week experiment that I normally wouldn’t have made. Many people keep too much money in their checking account all the time. If I kept up my new spending pace over the course of an entire year, then I would have spent money 208 more times than usual. Money changes behavior. It just does. I did prove to myself that my assumptions about myself were true. I am a dumb animal. I need to continue to trick myself into financially favorable situations.

I would love to hear what you think about this post. How would your behavior change if you were faced with a $25k experiment?

Go to AnnualCreditReport.com – Starting out on the wrong side of debt and credit can mean decades of anguish. Get your credit report every year.

Embrace “I can’t afford it” – Your goal is not material accumulation. Your goal is not money. Your goal is financial awareness.

Give of your talents – You must appeal to your charitable calling early. Your willingness to think of others will benefit you financially. You will view your money life with scarcity. Giving to charity is not necessarily about giving money. Give your time and talent.

Start the Ween – The longer you depend on your parents, the worse things will be for both parties. Your goal post graduation is COLD TURKEY.

Measure your use of Social Media – One of the first thing your potential employer will look at is Facebook. Lock it down. You need to also build your LinkedIn page.

Grad School is not a holding area – Furthering your education is very important, but securing a graduate degree without a purpose is a major financial error that will span decades

Layaway is a tool used by retailers to keep customers buying during tough credit times. The practice started back in, you guessed it, the Great Depression. Customers make a down payment on an item, and then continue to make payments on the item prior to taking possession of it when it is paid in full. It is quite the alternative to taking possession of an item prior to actually owning it. Back in the day (1980s), layaway was a huge strategy for retailers such as Marshalls and TJ Maxx. But the strategy disappeared when retailers figured out that they could instead “sell” you a store credit card, give you the item now, and then charge you ridiculous amounts of interest. Not only that, but since the customer had possession of the item, they were much more likely to make the payment on a non-standard payment schedule (read: late). That is why layaway disappeared. Don’t get it twisted.

And this is why layaway has reappeared. Consumers aren’t qualifying for the revolving credit that stores offer, therefore stores are turning to their old friend, layaway. And as you might have guessed, layaway has returned with a newfound sense of benevolence. Hooray, big business is still allowing consumers to buy things they can’t afford (Google search: sarcasm). But I would take layaway any day, over delay of pay.

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 and media in 2009 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in November.

Starting Oct 4th at 11 am on News Talk 1430 AM, I will unravel the world of mulit-level marketing. There is one thing that I am sure of, this is sure to cause controversy. I have been banned from sales rallies, I have been emailed numerous “warnings”, and I have even made some unlikely friends.

I will be previewing my story on Abdul in the Morning (1430 WXNT Indy) on Oct 1 at 8:30 am and Smiley in the Morning at 8:50 am (99.5 WZPL Indy). Tune in.

We are going to use the money we make in this impromptu Garage Sale to pay for dinner on Saturday night. If we make $20, then we eat cheap. If we make $150, then I’ll be calling a cab….kidding.

Do it.

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 and media in 2009 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in November.

Tell your friends. Tell your family. Tell your clergy (sorry, I got carried away)

I have compiled a list of symptoms that you should consider when trying to self-diagnose.

1. Do you lie to cover up your purchases? Lying about money is a serious problem, and can really damage your relationships.

2. Are your relationships struggling? This could be a sign of your halitosis, but then again it could be a side-effect of your terrible spending habits.

3. Do you just store the stuff you buy? Spending addiction is about the purchase, not about what you purchasing. Therefore, many times addicts will buy things that they don’t  even need. Thus, storage.

If you think you have a spending problem, you should really seek help.

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 and media in 2009 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in November.

If you’re like a lot of people out there you have decreased your spending and accumulation of debt, while increasing the amount you have in savings.  A few years ago the national savings average dropped down to a negative percentage of income, meaning that the average person owed more than they had. Today out of necessity the average American has become more frugal, but it wasn’t that long ago that spending big was in vogue.

The mentality of “spend it if you got it”, led to those who didn’t to borrow it.  Now that the pendulum has swung back to thriftiness – the kind advocated by Green Candy.com – I turn today to the classic tale by Bastiat, with a modern twist, for the wisdom of saving.

Picture two friends, one a spendthrift (Purchasing Fanatic Pete) and the other a prudent man (Coupon Clipping Chip), each of whom will have an annual income of $50,000.  Pete has won the lottery, while Chip has inherited his money.

Pete is a big spender, and like Plies, he wants you to know it.  He believes if you don’t spend ALL of your money, you will add to unemployment.  Who knew spending could be so fun and patriotic at the same time?  Purchasing Fanatic Pete loves to go to all the clubs, where he can make it rain.  Of course, he has “his people” with him, and showers them with the latest gadgets from Circuit City and Sharper Image; he gives expensive gifts to his friends to “show some love” or “spread the wealth”.

To live large, Purchasing Fanatic Pete has to dip into his capital. But so what? If saving is a sin, dissaving must be a virtue; and in any case he is simply making up for the damage being done by the saving of his tightwad friend Coupon Clipping Chip.

Everyone knows and loves Pete.  Coupon Clipping Chip though, isn’t so well known. He rents videos from Netflix and drives a Toyota.  Whereas Pete spends all of his $50,000 (and then some), Chip lives modestly and only spends half of his $50,000, and banks the rest.  Since most people only see what’s in plain view, they assume Chip is adding less than half as much to employment as Pete and the other $25,000 is as useless as if it wasn’t there.

Of Chip’s $25,000 leftovers, his short-term savings goes into the bank, allowing the bank to lend it to businesses on short term for working capital.  With his long-term savings Chip invests his money in stocks, bonds, or real estate.  When Chip’s money is invested (directly or indirectly) it is used to buy or build capital goods—houses or office buildings or factories or ships or trucks or machines.  All of these projects puts as much money into circulation, and adds to employment, as much as Pete’s spending sprees do.

“Saving,” is another form of spending. The difference here is that the money is turned over to a corporation to spend on means to increase production, which is what leads to lasting employment. But most people don’t see this activity directly, and only notice the big tips our friend Pete hands out.

A dozen years roll by and Purchasing Fanatic Pete is bankrupt.  He returns his Hummer to GM (who also did a poor job of handling its business), but is unable to return his worthless trinkets to the stores he used to patronize – they’re gone now.  Pete muddles through town, saying “I used to be somebody”; he is viewed as a failure.  He turns to begging from Chip, and GM goes begging from the government.

Meanwhile Chip has continued his spending and savings regiment, and is not only providing more jobs than ever, (because of his income through investment has grown), but his investments have helped to provide better-paying and more productive jobs. His capital wealth and income are greater because of it.

Coupon Clipping Chip has added to the nation’s productive capacity and Purchasing Fanatic Pete has not.  Therein lies the problem with our current state of affairs: we’ve had too many Petes and not enough Chips.  Now that the party is over, what we need is a return to sensible economic policies – we need to encourage productivity and savings.  We also need to teach the next generation.

In addition to the debt concerns, the article suggests that colleges and universities are misreading the situation as a whole.

Also, the rising levels of borrowing may ironically be contributing to the accelerating cost of college, say some college-finance experts. Loans can give colleges an artificial sense of a family’s ability to pay tuition. To some extent, that false sense of security gets built into the assumptions schools make when setting prices, say experts. The idea is that as prices rise, families borrow more and more, spurring prices to rise further, which in turn requires more borrowing.

Ohhhh SNAP!!! I was right. In a blog earlier this week, I suggested that IU is missing the boat with their “tuition credits” solution. Their system gives a “discount” to full time B or better students. This practice is short sited, and it will only serve to put the average student at a bigger disadvantage. 

You don’t have to agree with me, but if you don’t…take it up with the WSJ.

And I’m out.

But here is the (not so) harsh reality. Retirement and financial independence will he completely different for us than it is for our predecessors. The main culprit in this forced change is our: health. We are going to live a helluva lot longer than our parents. It is unrealistic to believe that we can work half our lives, only to not work the other half. I don’t want to be the one to break this to you (it should be someone like Oprah or Ryan Seacrest), but you are going to live to 100. You might as well photoshop wrinkles on your senior picture just to get used to it. You need to start switching your financial thinking to adjust to your newly discovered longevity.

Ah, yes…I had a point, and here it is. Why not put yourself on the road to retirement right now? This topic is immense enough to write a book, alas I’m going to condense it down to a couple of paragraphs. Our “retirement” is going to consist of doing a job that you are comfortable doing until the day you die. It’s all about redefining your passions, skills, and work ethic. You don’t want to work that 60 hour per week middle management job? Cool with me, just find something else that you want to do. The limiting factor, of course, is your income needs. Your career decisions have, and always will be dependent on your income needs. Unless you decide to eliminate that factor. 

I swear to you, dear friend, that I have a point, and it’s right around the corner. Stick with me. How much money would you need to make for you to walk away from your job and do something that you enjoy for the rest of your life? There are a number of factors that figure into your ability to answer this question:

1. Is your current job the final solution? It’s quite possible that your current job is a job that you’re passionate about. It is a job that you can continue to work some way, shape, or form into retirement. This would be great, and you are well on your way to understanding how our “retirement” will be different.

2. You should accept less. Do you want to know how you know whether you have answered the income question correctly? You should be willing and able to accept less money to do a job that you truly enjoy. Why? Because, as will be true when you retire, you will finally put your needs and wants into perspective once you have chosen your final career. In order to live the retirement lifestyle that we will be faced with, you will have to live on less money.

3. You should regularly ask yourself the “how much to quit” question, and the dollar amount should consistently decrease. Look, I already know that I’m asking a lot of you. I’m asking you to accept less money in a time when everyone is looking for more money. And now I’m asking you to settle for less money every time that you ask yourself this question. I believe that you will finally have the right mindset to act on this hypothetical, once that your income needs start to decrease. You will have accepted this concept as reality, and you are closer to being prepared to live it. 

I consistently ask myself this major question. And I can honestly tell you that my income needs have consistently decreased. If you are currently in a career that doesn’t “do it for you”, then start asking the tough questions. The hardest part isn’t even decreasing your income needs. The real challenge is finding what you truly love, once you find that you will easily be able to decrease your income needs (or wants).

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.” Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land. Green Candy™: Get in control before the debt hits the fan.

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego. Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy. Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). He blogs regularly at www.petetheplanner.com/blog. Pete appears regularly on Fox News and Fox Business as well as various CBS stations. His newest book, 60 Days to Change, is due out in September.

Have you ever been in such a financial bind that you are forced to rack your brain for desperate solutions? If you haven’t, you will. I’m not trying to ruin your day, I’m just stating the important facts. No matter how much money that you have, you will someday (if you haven’t already) be forced to scramble. Millionaires are sent scrambling everyday to cover financial obligations. College kids all over the planet are sent scrambling every single day to make sure that they have enough money in their checking accounts to cover a late night “run for the border”.

How do your backup plans flow through your head? If you need more money than you have, how would you react? Would you go into debt? Would you get a second/third job? Or, would you call your family and friends? Many people choose the family and friends route because it is the least painful to the borrower. The other options (get another job, or go into debt) are less than ideal for the person in trouble, but “borrowing” from a family member or friend creates financial shrapnel. 

Everyone has money problems. Everyone. Your parents do, their parents do, and their parents….are dead. See, so you either have money problems or you are dead. But, I digress. Your parents (should) have more money than you, but they have bigger financial problems that, many times, they have never taken the time to understand. You want numbers?

Let’s say that you are 25, and your parents are 50. Your parents have a household income of $120k per year, and your income is $45k per year. Your parents have $357k to their name, and you have $1k to yours. They are in a much better financial position than you, but they have to be because they have some major stuff coming up: retirement, healthcare, and prescription costs. I’m just being real. I see it everyday. You are welcome to tell me how your situation is different than this, but most likely it is some derivation of my example.

Let’s assume that you need to be “bailed out” of some weird financial situation. You need to pay off some debt fast. You need a down payment on a home because you are “wasting” money on rent. Etc. Over the last 10 years I have seen this scenario no less than 100 times. And invariably, the parents are in a lot less secure position than they think they are in. So while they certainly can afford to help their adult children now, it is actually a very bad long term financial decision. 

My point? I don’t have one. Have a good day…..kidding. My point is that the easiest decision for you is often to go to your family and friends for financial assistance, but it actually is the worst thing you can do.  Create your own solutions without creating problems for others. It will hurst worse at the time, but it will be the smartest thing that you ever do.

Today you are going to figure out if you suffer from financial numbness.

Habits are a funny thing. Whether they are good or bad they become second nature. You become numb to them, and they become part of who you are. As you know, that is why bad habits can be so dangerous. There is one financial habit that I think is incredibly dangerous, yet it often goes undetected. That habit: numb spending.

Numb spending occurs when you become completely oblivious to the inordinate amount of expenditures that you have. In other words, you live in front of a cash register.  The problem is that the more transactions that you have, the less discriminate you are in your spending. Smart people consider all of their purchases quite seriously. I’m not suggesting that you get into some sort of Lincoln/Doulgas debate with yourself over a pack of gum, but if you are looking for change, then grab the podium, Abe. How many times per week do you purchase something? Go through your bank and credit card statements and count your transactions for three previous months.

What is your average monthly transaction total? To get your weekly total just divide your monthly totals by 4.33. Controlling your transactions will be a significant part of your success. This is why cash can be a tricky way to pay. You never really know how many transactions that you have when you use cash. This doesn’t mean that you get to skip your cash usage when totaling your transactions. You are going to have to take some serious time thinking about your cash spending habits. If you don’t have any earthly clue how many transactions it takes to eat up your cash, then you already have your answer.

How do you stack up with the weekly transactions below?

20 or more transactions—You are way out of control. There is simply no reason to spend money three times per day. Seriously.

15-19 transactions— This is damn near unacceptable.  If you have this many transactions, then chances are that you often get to the end of a calendar year and wonder where all of your money went.

10-14 transactions—You seem to have a pretty good grasp on the importance of frugality and economic efficiency, but you have room for improvement.

5-9 transactions—This is pretty tough to do, but if you are serious about turning things around then I believe this is the right amount of transactions. This probably means: grocery store, gas for you, gas for your spouse, one dinner, two lunches.

1-4 transactions—You are either really broke, really boring, or awesome.

There is a misconception that if you reduce your number of financial transactions, then you will simply spend more per transaction. It won’t happen. A majority of the transactions that you will eliminate are completely unnecessary expenditures. You won’t miss them one bit.

Reducing transaction require forethought and effort. It means that you need to take lunch to work sometimes. It means that you can’t go out to eat on a whim. It means that you need to start solving problems with something other than a piece of plastic. If you have a transaction “issue”, then most likely you try to solve many daily “problems” by simply making a purchase.

Set your new transactions goal. Having between 5-9 transactions per week is ideal. Remember, if you are trying to change your life significantly in just short amount of time, then you must make some really tough decisions. 

About Green Candy™

Green Candy™ (www.GreenCandy.com) is an online financial assessment tool that helps Gen Y-ers and Millennials get on the right financial track before the “debt hits the fan.”  Introduced by radio personality, comedian and financial expert Pete the Planner (www.PeteThePlanner.com), Green Candy’s ™ various “pods” allow users to assess their financial health and competency in common areas such as Debt, Budgeting, Investing, Charity, Risk Management and Major Purchases, as well as in areas unique to Gen Y. A subsequent series of targeted worksheets, podcasts, tip sheets, and action plans guides them to the financial promise land.  Green Candy™: Get in control before the debt hits the fan.   

About Pete the Planner

Pete the Planner (www.PeteThePlanner.com) is expert financial planner Peter Dunn’s super-saving alter ego.  Peter is an award-winning comedian and rising star in the financial world. Named one of “Indy’s Best and Brightest” in finance in 2007 by KPMG, Peter was also declared one of NUVO magazine’s “30 under 30 to Watch in the Arts” for comedy.  Peter is the author of What Your Dad Never Taught You About Budgeting (2006) and is the host of the popular radio show Skills Your Dad Never Taught You on News Talk 1430 (WXNT). You can see him weekly on Fox News and Fox Business, as well as, WISH-TV in Indianapolis. He blogs regularly at www.petetheplanner.com/blog.

What city in northern Ohio starts with a T, rhymes with burrito, and is the hometown of the new owner of my iPod? Well, it doesn’t matter what town it is. What matters is why someone there has my iPod. Allow me to paint the picture.

I bring this up because you are going to hear, read, and see a tremendous amount about our economy in the next couple of months. The NY Times this weekend all but put us smack dab in th middle of a recession. It is scary. I felt uneasy after having read the article. Your first reaction is one of evaluation. Should you do anything different? Should you move your investments? I know I talked about recession last week, but believe me. This is just the tip of the iceberg.

Here is my super simple recession survival guide.

1. A flashlight. (I don’t know why. It just seems like it should be on a survival list)
2. Make sure you have a three tiered savings and investment plan. Short term savings in a savings account or money market. Mid-term savings in balanced mutual funds (nothing risky). And finally your retirement savings in a properly allocated portfolio. You need all three. This is also the time that some people find out that their is a downside to aggressive investing. Yes, 38% returns have been nice, but there is a downside.
3. Don’t panic and sell. If retirement is close, or if you need your money for a house or something, then consider moving some to cash. People who are 6 or more years from retirement, just relax. The market will find its way back up.
4. This is a good time to work on controlled spending.
5. Don’t listed to the media. They are just trying to scare you. They just want you to watch their show. We have been through this before, and we will go through this again.
6. Freeze-dried ice cream.
7. Be weary of a do it yourself stock portfolio. This is not a time for amateur stock picking.

This post isn’t meant to scare you. It is simply meant to relax you. Don’t do anything drastic, and seek professional advice if you are unsure what to do. Remember there is no reason for 95% of you to freak out. The other 5% should have freaked out a long time ago because they were doing the wrong things anyway.

I think that my number is $100 with Mrs. Planner. It’s not that I feel that A) I need permission $100 is a lot of money or C) I can’t make money decisions on my own But I frankly can’t think of something I would need that costs more than $100 that I can’t take the time to discuss. I feel that the discussion helps hold me accountable to our financial goals.

Some of you may find that this could be the root of some deeper issues. I will not be held liable for possible progress.

Discuss.

****Gift purchases for the significant other don’t count.

I had a friend in college who use to make us stop at the ATM every time we would make a late night run to Taco Bell. He wanted to know what sort of menu delicacies he could afford. If he had $6 in his account, then he would usually get a Mexican Pizza and a Chalupa. If he only had $3, then he would get two Chicken Soft Tacos and a Meximelt. Although I appreciated his attention detail, I thought this was a rather ridiculous way to spend money. Little did I know that online banking would allow millions of other people to “run for the border” the same way.

Online banking is a technological innovation that the banking industry has brought to us. Our job is to harness it’s convenience, and better our financial lives. Unfortunately, we have leaned on online banking, and now it could be our downfall. Many people today simply log on to their bank accounts daily to check their balances. They then spend whatever is left in their account. This is not the way online banking is meant to be used. It is impossible to get ahead when using this technique because you always spend what is left. People log on and then decide if they can afford a good lunch or a cheap lunch. It is liking opening your fridge and eating whatever is inside.

Do you do this? Do you do anything like this? If so, STOP. And if all else fails, make a trip to the Pete the Planner World Headquarters. I will yell at you with a smile on my face, and then we will go grab some lunch. You’re buying, so make sure to check you balance.

Some things are certain. Some things aren’t certain. Certain: death, taxes, my hair loss. Not certain: my Nobel Prize Application, Dick Clark’s age, and bonuses. Bonuses? Yes, its that time of year again when many Americans turn their watchful eyes to their potential bonus payouts come year end. I have seen bonuses both greatly enhance and destroy peoples’ lives.

Employers are smart (my employees may not think so), they know that you will generally give more effort when they tie your compensation directly to your results. Smart employers pay bonuses quarterly. Employers are let off the hook if you don’t reach your goals, but oddly enough we don’t let ourselves off the hook. Most people count on their bonuses despite the fact that they aren’t guaranteed.

I have a client whose bonus doubles his base pay. He is forced to only depend on the base pay. If he were to depend on the whole thing he could be in real trouble. It would be catastrophic. He does it the right way. Most people do it the wrong way.

Check yourself. Make sure that you are not putting too much faith in an uncertain bonus.