With all the great new toys and clothing that everyone received this holiday season, there may be a rising sense of insecurity as we accumulate more stuff – especially the expensive stuff.

Wouldn’t you be a little more cautious when pulling out that new iPhone or flashing those glimmering diamond earrings? The more valuable the stuff we own, the more afraid we are that they are going to get hurt or go missing.

Expensive Stuff Is Pampered
Let’s say I owned a Honda Civic ($16,000) and a Mercedes SL550 ($98,000). I’d park the SL550 in the garage and the Civic on the driveway. More tears would be shed over a scratch on the SL550 than a broken headlight on the Civic. Since I’d like to reduce the probability of the SL550 getting hurt, the Honda would get more miles. In the back of my mind, I know it will cost more to fix the expensive car so I choose to drive it less.

Warranties, extended protection plans, and insurance were invented to prey on us consumers because it is our natural instinct to care more about stuff that is of high value to us – it could be monetary value or sentimental value. Therefore, we are likely to spend additional money to protect expensive things.

Expensive Stuff Gets Attention
People are biased against the less expensive stuff they own. It is entirely understandable that someone would flip out over a stain on a $300 jacket instead of a stain on a $20 T-shirt.

The more expensive the stuff in my possession, the more concerned I am about its safety. Thieves, crooks, and pickpockets see expensive stuff and want to take it. I admit that I am overly cautious about my iPhone in my coat pocket as I ride on the NYC subway – and I am certain that I’m not the only one exhibiting such behavior.

When I walk off the train, I don’t check my $20 scarf, my $40 watch, or my $100 textbook – I attend to my $300 iPhone.

And Then… Forgotten
Just picture a closet full of designer handbags, shoes, and dresses that still have their tags on them. Many ladies are guilty of this, including the main character of “Confessions of a Shopaholic”. On the other hand, guys succumb to technology and gadgets. The expensive set of power tools intended for DIY projects, the surround sound system for the movie theater experience, and the latest workout equipment are the typical stuff the men leave around to collect dust.

It is an all too familiar event when someone doesn’t want to use an expensive item and ends up not using it ever. Time depreciates the value of most “stuff” to a point when we no longer hold these things close to our hearts enough to care anymore.

Consider Efficiency and Practicality
Again, this topic circles back to the instant you decide whether or not to purchase things. Do you really need it? Will you use it enough to make it worth your money? Knowing that you’ll get the most “bang” for your “buck” would eliminate your worries of feeling insecure.

Expensive stuff need not be avoided. Like everyone else, I will continue to buy the luxuries I can afford and that sense of insecurity would come knocking. While acknowledging the emotional burden that comes with expensive things, it is most important to be prepared to deal with it.

(Photo credit: subcircle)

“Pick index funds over actively managed funds” have always been the conventional advice. Actively managed mutual funds would often carry higher risks in hopes of higher returns. There is nothing wrong with adding risk to one’s portfolio but most experts continue to support diversification with funds that track certain indexes.

An article on Yahoo Finance titled “5 Reason to Sell a Mutual Fund” advises us on warning signs that an investor should ditch their mutual fund. Upon looking at these five reasons, I realized that I would never have to be on the lookout if my investment portfolio consisted of mostly (if not all) index funds.

Let review how these 5 reasons to sell a mutual fund can be disregarded with index funds:

1. “Market underperformance”
   With an index fund, it would perform closely with the market. If I am losing money, there is no portfolio manager to blame – I’ll bark at the economy. There is no need to go through the hassle of comparing to benchmarks or similar funds.
2. “Fee increases”
   Every fund will have fees. The more work that is put into managing a mutual fund, the higher the fees will be. Management of index funds requires much less work than actively managed fund. Thus, their fees are low and tend to remain low.
3. “Manager Changes”
   Typically, investors believe in the talent of a portfolio manager. They often trust the stock selection strategy and asset allocation that produces solid returns. In index funds, the investment objective is to follow the simplest of investment strategies – buy the whole index. I believe almost every portfolio manager can complete this task. If a fund company fails to find someone to fulfill this role, then I don’t this company is worthy of any investors.
4. “Changing Investment Policies”
   I picked a fund for a particular fund for a particular reason – their investment objective, which aligns with my investment goals. If a manager decides to deviate from the fund’s objective by investing somewhere else, it is no longer serving my goals. All index funds will always invest in the index – otherwise, it is no longer an index fund.
5. “Other Radical Changes”
   Major changes send out red flags because a perfectly fine mutual fund shouldn’t need any changes. The article says to be cautious if a fund “suddenly changes its name, merges with another mutual fund or if your fund company gets absorbed into a new fund management company”.

   Index funds use a generic, straightforward name. An index fund that combines with a similar index fund would still maintain its purpose and if combined with a different fund, its investment objectives have changed. Also, an index fund will do its job even under new management unless new management decides to mess with it.

Simplicity is Bliss
When investments become too difficult to understand, it is a telltale sign that you shouldn’t be touching them because you do not know how they work. Why deal with funds that are too complex? They will often encounter more complications down the road.

Index funds are the migraine-free investments for any portfolio and it is always believed that the majority of our investments should consist of index funds. I totally agree. Do you?

(Photo credit: BLW Photography)

For some people, exchanging gifts is a valued tradition and is an act of love. For others, it has become a chore and a dreaded financial burden.

For some people, the value of the gift never compares to the value of this loving gesture. For others, it is about getting that iPhone or that expensive video game system.

What We Normally Do
The conventional practice has been that the gift-giver removes any stickers and tags that may reveal the price of the item(s). This could be a method of ensuring that the gift isn’t judged on monetary value but on the thought that went into it.

But, as social norms undergo perpetual changes, we are alright with leaving price tags on gifts because we are now okay with the recipient returning or exchanging their gifts if they didn’t meet their expectations.

Yet, there are still those who believe that gifts should hold a sentimental value. These people cherish what materialists do not.

Some reasons I would remove the price tags were if:

• I do not want to reveal my financial status. The price of a gift can give away how much I can afford and I may not want to expose my financial glory or demise.
• I believe that the spirit of Christmas doesn’t carry a “$” sign. Maybe I feel that my initiative to even give out gifts is already a holiday miracle…
• I already know it is on a person’s Christmas wish list. Take out the guessing work and asking them “what is on your wish list?”. They won’t refund what they wanted.

Some reasons I would keep the price tags on would be:

• I purposely want to flaunt my wealth. “Look, I’m rich. I got you all 60” HDTVs just because I can afford it”.
• I am not entirely sure the recipient wants it. I thought that person may like this present but I’d hand over the gift receipt along with it – in case they’d like to exchange or return it.
• I simply don’t care. Why stress over this matter?

After all, isn’t it the smile that we want to see as they ravage the perfectly wrapped present when they open it?

(Photo credit: Randy Stewart)

Most freshmen entering college and automatically enrolled in some sort university meal plan. And, many end up spending all of it before the semester is over due to overprice food at campus food courts.

After ditching my campus meal plan during junior year, I was only able to shop for groceries by taking the bus during weekends. Because I only visited the supermarket once a week, I had to plan out my meals beforehand so that I wouldn’t end up wasting anything I didn’t finish – and so that I didn’t starve to death if I didn’t buy enough food.

Isn’t it just annoying when hot dog buns come in packs of 8 and franks come in packs of 10? I’d have to buy 5 packs of buns and 4 packs of franks just to make sure I don’t have any extra pieces lying around.

If I hadn’t set up a grocery budget and rationed my food, I think my college debt would have been much larger.

To Those With Meal Points
I know that schools put meal points on your student ID cards. They are essentially debit cards where the money can be spent only at the establishments in or around campus.

When I was on these meal plans, I realized that I paid very little attention to the account balance. Because the money on the card was already paid for when I paid for tuition, I spent my points quite willingly – and used them up before the semester was over.

A meal plan is part of a school’s tuition and could be paid for with student loans. It contributes to the debt that we find out we have once graduation comes around.

Many other college students with the meal plans can relate to this and would probably advise to:

• Set a spending limit per meal. Estimate how many days are in a semester and calculate how much you spend per meal. A stop sign will light up in your head every time you step into the dining halls.
• Downgrade or opt out of the meal plan. Don’t play according to the school’s rules regarding meal plans. You need to see your own money flowing out so that it actually hurts every time you buy food.
• Check your points regularly. Ever have your heart skip a beat when you log onto your bank account with a balance that was dwindling to $0? If you see that you are losing something, you may do more to prevent it from happening.

To Those Who Without Meal Plans
After being on a meal plan for the first 2 years, I spent the last 2 years living on campus but without a meal plan. That’s right – I began to cook (or at least what I considered to be cooking).

The frequency that I was able to visit the supermarket was limited, which helped control overspending. If I could go every other day, I’d probably pick up a lot of junk food.

Rationing my food on a per-meal basis resulted in me knowing I had enough bread for X number of sandwiches and that I had enough chicken for X dinners during the week.

If a student totaled what they spent with a meal plan during any single week, that money would be able to feed them twice as long if it was spent at a supermarket. Taking that into account, a lot of money can saved over the course of 4 years.

• Plan your meals. College life outside of classes will be spontaneous and unpredictable but try to make up a food schedule for yourself. Note what, when, and how much you’ll be eating and try to stick to it. The key is to not waste any food – which is the same as not wasting money.
• Cook a little. Just a little. Because cooking involves some math, it creates a mindset that will be beneficial when you divide up your food so that you can make complete meals. Cooking also involves some creativity and improvisation. If you had bread left over that was intended for sandwiches, then maybe eat the rest with a can of Chef Boyardee or use it for toast at breakfast.
• Have supplemental foods ready. Peanut butter and jelly, American cheese singles, and ramen noodles are all great for a back up meal if you find that your refrigerator is empty. As always, don’t expect to live on this stuff – not the healthiest way to eat.

In the end, the whole point is to budget your food just like you would with money. Both of which would serve to help college students survive without going broke (or should I say without going into debt).

(Photo credit: Thirteen Of Clubs)