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Friday, October 23, 2020

How to Generate Extra Income During COVID-19

I recently participated as an invited panelist on an Experian #credit chat (Twitter chat) titled How to Make Extra Money During COVID-19. Below are ten key take-aways:

¨      Make Yourself Visible- Pay attention to your social media accounts, especially LinkedIn. Post valuable content regularly to get noticed by others in your field of work. “Work Out Load” by discussing your skills and work projects online (in a non-bragging way) and post links to work samples or photos of your work.

 

¨      Seek Out Job Information-Regularly network with colleagues and review online job postings via professional associations or trade groups. Many people also use online job search sites including ZipRecruiter, fiverr, Monster, flexjobs, and LinkedIn.

 

¨      Consider Jobs in High Demand- Look for work where the jobs are. Examples include online course designers, warehouse workers, package delivery handlers, “pod” class teachers, nurses, software developers, contact tracers, election poll workers, truck drivers, health services managers, and construction workers.

 

¨      Beware of Job-Hunting Scams- Avoid anything that sounds too good to be true, especially work from home scams. Another red flag is any “job” that requires an upfront fee or bank or credit card information. For more details about job scams, review the Federal Trade Commission Job Scams website.

 

¨      Start a Socially Distant Side Hustle- Make a list of income-generating activities that utilize your skills and do not require face-to-face contact. This basically means any work you can do from home. Examples include: writing, editing, graphic design, building things, monetized blogging, designing websites, product testing, online research survey-taking, video tutoring, making/selling crafts, baking, woodworking, and mask-making.

 

¨      Sell Stuff Online- Sell unneeded possessions via eBay, Craigslist, Facebook Marketplace, Etsy, Nextdoor, and more. In addition, some communities have online portals to facilitate sales among their residents. For more online selling ideas, review this NerdWallet article.

 

¨      Rent Stuff Online- Make a list of possessions that you could rent out for extra cash. Examples include real estate, transportation, clothing, and more on specialized websites. This article includes 17 ways to make money by renting out property.


¨      Score Rewards Points- Use cash-back apps such as those on this list developed by NerdWallet. Names on the NerdWallet list include Ibotta, RetailMeNot, Coupons.com, Swagbucks, and Rakuten. Also, charge food, gas, and other necessities on a cash-back rewards credit card if you have the discipline to pay your bill in full.

 

¨      Get Help If Needed- Call 211 or visit https://www.211.org/ online for curated lists of local social services to find help from.  Comprehensive lists of COVID-19 resources are available from Rutgers Cooperative Extension and the Global Financial Literacy Excellence Center.

 

¨      Triangulate Income-Generation Strategies- Use multiple methods of raising cash with a combination of cash-raising strategies discussed above. In addition, build your “human capital” by gaining new knowledge or skills that could result in a side hustle or a future promotion.

 

Thursday, October 15, 2020

Familiarity Bias, COVID-19, and Personal Finance

 Heuristics are mental shortcuts that people use in daily life. An article from the Association for Psychological Science includes a story about poor choices made by experienced skiers, some who died in avalanches. Subsequent research identified “familiarity bias” as a contributing factor in many of the avalanche incidents.

Familiarity Bias

Simply put, people experience familiarity bias when they stick with what they know. Doing so helps us make quick consumer decisions, such as selecting a favorite brand of cereal or yogurt or driving a familiar route. It saves time. People are also generally more comfortable with familiar things and dislike the ambiguity of the unknown.

There is also a downside to familiarity bias. When people think they know something well, they often “let their guard down” and make serious judgment errors. Things that are familiar seem “safe” and unthreatening, causing people to ignore danger signals, like the experienced skiers did. Acceptance by others- and not doing something differently than people we know- is also a key factor in decisions that people make.

A Personal Experience

Recently, I attended an outdoor “parking lot party” at the Florida community where I live. Masks were “recommended” but not very visible. Neither was social distancing, except between my husband and I and another couple, who were sitting at least eight feet away.

When one of their neighbors approached my husband to show him a cell phone picture, I popped my dangling mask over my nose and stepped back. It was awkward, of course, but I felt safer. It also occurred to me that people at the party were like those ill-fated skiers. They let their guard down because they were sitting with people that they knew who were not wearing masks (familiarity bias + acceptance bias).

COVID-19 Application of Familiarity Bias

As Dr. Fauci and other health experts urge caution about indoor Thanksgiving celebrations next month, they are indirectly discussing familiarity bias (i.e., not believing that your family members or friends can infect you with COVID-19 because you personally know them). With 50,000+ new cases per day, however, there are no guarantees.

Ever the diplomat, Dr. Fauci noted on Good Morning America today that each family needs to calculate the risk-benefit of holiday gatherings. He then discussed specific factors to consider including vulnerable family members with underlying conditions and out-of-town guests who could sit at airports and on planes or trains for hours.

If risks outweigh the benefits, it is probably best not to get together, however difficult or “strange” the decision to forego a traditional family Thanksgiving holiday feels. Families need to have those conversations now and make alternative plans such as small group meals and Zoom gatherings with far-away family and friends.  If you do decide to get together, set firm expectations on mask-wearing.

Personal Finance Applications of Familiarity Bias

Familiarity bias is evident in a number of personal finance decisions (or non-decisions) including:

o   Failure to compare financial institutions for the best rates on loans (APRs) and savings (APYs)

o   Failure to consider investing in non-U.S. stock or mutual fund investments (i.e., home bias)

o   Failure to periodically compare insurance company premiums or other large purchases

o   Purchasing large quantities of stock because you use a company’s products or work there 

Familiarity is one of many behavioral finance biases that affect daily decisions. Every workshop on behavioral finance that I have attended suggests that the best thing people can do to counteract negative effects of various biases is to be aware of them. Awareness can inform actions to mitigate cognitive errors that result in poor decisions.

My posts typically provide financial tips. This one could also save a life. The next time you are faced with decisions about spending, investing, or getting together with others (especially indoors for an extended period of time), stop and ask yourself if the seemingly “safe,” familiar decision is really the right one. Your health and your wealth may be at stake.

Thursday, October 8, 2020

Ten Tips for Decreasing Home Energy Costs During the Pandemic

A major expense in most household budgets is utilities (e.g., electricity, gas, water and sewer, landline and cell phone, and internet/cable.). The highest utility cost is typically heating and cooling a home. 

Fall weather in most of the U.S. means increasing costs over the next six months for home heating. COVID-19 will increase these costs because many families are spending more time working and/or learning from home.

Average households spend $2,060 for utilities but costs vary widely according to the size of a home, climate, and utility usage patterns. Regardless of what you pay for utilities, there are ways to pay less. 

Consider these 10 money-saving ideas to reduce ongoing utility costs and to prepare for the cold weather months ahead:

¨       Lower Your Thermostat- Dial down the thermostat slightly when you are at home to save on home heating bills. Even one degree lower can make a difference

 

¨       Caulk and Weatherstrip- Seal the bottom of doors and around windows to prevent cold air from entering. Home improvement stores sell supplies that will pay for themselves over the winter.


¨       Lighten Up- Replace incandescent bulbs with compact fluorescent lamps that use less energy and last years longer. Shop around and stock up on light bulbs when stores have sales.


¨       Blanket Your Water Heater- Install insulation to reflect heat back into your water heater. Also insulate water pipes. Your utility provider may be able to provide specific guidance.


¨       Turn Things Off- Stop using “phantom” energy when appliances are on standby. When computers, printers, and electronics are not being used, turn them off completely with a power strip.


¨       Plug the Leaks- Add insulation behind electrical outlets and light switch plates. While these spaces are small, they can be a source of heat loss. Again, consult a home improvement store.


¨       Look for the Label- Look for the Energy Star rating and read Energy Guide labels when replacing major appliances such as a refrigerator or dish washer. This will give you a feel for the long-term cost of using various appliances.


¨       Watch Your Wash- Wash lightly soiled laundry in warm water, adjust water levels to match load size, and wash full loads. Also, do not over-dry clothes and clean the lint filter in your dryer.


¨       Slow the Flow- Repair leaky faucets and install low flow showerheads to reduce your water bill. Two other suggestions are to consider short showers and run full dishwasher loads.

¨       Insulate Your Attic- Add ceiling insulation to cut home heating bills. Check the suggested amount of insulation for your area. Be sure to insulate any pull-down attic doors or hatches and put a winter cover on whole house fans.


Thursday, October 1, 2020

12 Positive COVID-19 Related Changes That Should Continue “On the Other Side”


In an article, Some of What COVID Has Brought Should Stay, New Jersey Secretary of Agriculture Douglas H. Fisher describes adjustments that farmers have had to make to comply with COVID-19 protocols (e.g., social distancing at harvest events). The piece ends on a high note with “pandemic positives,” including more family meal time together. Secretary Fisher got me thinking about other positive practices that should remain after Americans reach the proverbial post-vaccine “other side.” 

Below are 12 recent changes that I believe should continue:

¨      Double-Digit Savings Rate- The U.S. savings rate shot up to a record 33.6% in April and was 14.1% in August. Two key reasons were fear/uncertainty about job security and COVID-19 and fewer opportunities to spend amid pandemic lock-downs. It should not take a financial crisis, however, to encourage people to save.

¨      Budgeting- Many people started or revised a budget as a result of COVID-19 because they were living closer to the “edge” than before, with less slack in their checking or savings account. Budgeting practices established during the pandemic should continue, including replenishing an emergency fund for many U.S. households.

¨      Reduced Debt- U.S. debt dropped in the second quarter of 2020. This was attributed to consumers telecommuting and/or cutting back on non-essential spending during COVID-19 lockdowns. Like savings, paying down debt as quickly as possible is something that should always be practiced on a regular basis.

¨      Family Video Chats- Videoconferencing platforms such as Zoom and Skype have skyrocketed in use after families were unable or unwilling to travel to see others face to face and risk infecting loved ones. The cost of these platforms is free or nominal and the connections that people make with others are priceless.

¨      Hand-Washing, Sanitizing, and Plexiglass- Increased attention to frequent and proper hand-washing,  sanitizing frequently-touched surfaces, and protecting retail cashiers and customers with “sneeze guard” plexiglass can only pay future dividends in reduced transmission of the common cold and the seasonal flu.

¨      Family Meal Time- “Dining in” at home has many benefits including lower cost (vs. eating out frequently) and more control over meal ingredients (e.g., salt, sugar, and high calorie sauces). In addition, as Fisher notes “the day’s events can be discussed and connections can be reinforced with those closest to us.”

¨      Gratefulness and Charity-Studies show associations between gratitude and positive emotions, resilience, and relationships. Similarly, charitable gifting and volunteerism produce positive results. People who practiced gratitude journaling and increased philanthropy during the pandemic should consider continuing to do so, perhaps using donor advised funds for donations to those in need.

¨      Creativity and Flexibility- COVID-19 challenges have fostered creativity, flexibility, independent thinking, and trade-off decision-making. Specifically, Americans have learned how to cook, sew (masks), fix computers, shop and bank online, use virtual learning platforms, and more. Key life skills should continue to be enhanced.

¨      Slower Pace of Life- Many workers have enjoyed the extra time and cost savings afforded by working at home. They are exercising more and not stressed out by commuting. In the future, workers may be able to negotiate increased telecommuting (e.g., two days a week in the office and three days working from home).

¨     Online Learning Opportunities- Many professional and trade associations, libraries, and educational organizations moved conferences and classes online. Some made as much (or more) money than face-to-face meetings and reached more people, who spent a fraction of a typical registration fee. Content providers are getting better at using virtual platforms and will, hopefully, continue future online learning experiences.

¨     Automatic and Advance Payments- To save money or due to lack of use, some people ended “autopay” arrangements for gyms, streaming services and payroll deductions (e.g., parking and childcare). Like getting refunds for advance travel deposits, undoing automatic debits is not always easy. Think twice about making future auto payments and long range advance deposits.

¨      Attention to Underlying Conditions- Since COVID-19 began, we have heard that “underlying conditions increase the risk of poor outcomes.” Underlying conditions include diabetes, heart disease, and COPD on the health side and lack of savings and high debt for finances. Some people have taken steps (e.g., losing weight) to address their personal “issues” and, hopefully, these personal improvement efforts will continue.

Thursday, September 24, 2020

Financial Education During COVID-19: 16 Resources to Get Money Smart


Financial literacy is a lifelong pursuit. Research studies have shown that many people get smarter about personal finance through financial experiences (e.g., investing) and life events (e.g., home-buying). In addition to formal financial education programs in schools and at workplaces, people also learn about personal finance through self-directed learning.

Each weekend, I encourage my Twitter followers to learn one new thing about personal finance every day. Even during a pandemic, with limitations on travel and group meetings, there are many free or low-cost resources available for informal financial education. Listed below are 16 types of financial education resources to help you learn more about personal finance:

¨       Blogs- There are hundreds, maybe thousands, of personal finance blogs. Each year, the top financial blogs in various categories get recognized with Plutus awards. Search “personal finance blogs” online to find curated lists for “best personal finance blogs.” Subscribe for free to blogs that are of interest.

¨       Books- There are thousands of personal finance books. I know because I recently wrote one (Flipping a Switch) and regularly check its Amazon rankings. Search “personal finance books” and to find curated lists for “best personal finance books.” Free copies to borrow may be available at your local library.

¨       E-Learning Courses- Again, search online for curated lists of online personal finance courses such as Hands on Banking® (Wells Fargo), Investing for Your Future (Cooperative Extension), Personal Finance 101 (Udemy), Smart about Money (NEFE), and courses on the Coursera platform and from Khan Academy.

¨       Financial Advisors- Contact current or potential advisors with questions within their area of expertise. Some advisors provide free community programs at libraries (without a sales pitch!) or free initial consultations.

¨       Government Resources- Federal and state government agencies have high-quality financial education materials. A good place to start looking is www.MyMoney.gov, the website of the Financial Literacy and Education Commission. Resources are organized around five key topics called the “MyMoney Five.”

¨       Internet Key Word Searches- Sometimes, the best way to find the information that you need is to simply search key words and see what you find. Websites that are not useful may ultimately lead to those that are.

¨       Investment Clubs- These are formal groups of people who learn about investments together and pool their money to purchase a portfolio of stock. Many clubs have been meeting virtually during the pandemic.

¨       Magazines- Personal finance magazines include Barron’s, Business Week, The Economist, Kiplinger’s Personal Finance, Forbes, and Money (available in digital format). Free copies to borrow may be available at your local library. Investment companies also produce magazines and the AARP magazine includes personal finance content.

¨       Newspapers- The Wall Street Journal is America’s leading personal finance newspaper. Large city newspapers also include significant personal finance content. Links to key stories are typically posted on social media.

¨       Online Quizzes and Calculators- Hundreds, if not thousands, of financial quizzes (see sample) and calculators are available to test financial knowledge and  “personalize” financial information (e.g., calculate potential savings).

¨       Podcasts- There are more than 550,000 podcasts available to download. Search “personal finance podcasts” online to find curated lists for “best personal finance podcasts.” Subscribe for free to podcasts that are of interest.

¨       Software and Apps- Search “personal finance software” (or apps) to find curated lists with recommended options. Since there are so many tools to choose from, curated lists are usually organized by category (e.g., budgeting and taxes).

¨       Talk Radio- Personal finance topics are covered on National Public Radio (NPR) and on individual radio station shows that feature both nationally known speakers (e.g., Clark Howard and Ric Edelman) and local financial experts.

¨       Television Shows- Search “personal finance television shows” to find curated lists with recommended options. Examples include Squawk Box  and The Profit (CNBC), Your Money (CNN), and Money Matters (RLTV).

¨       Twitter Chats- Engage in a synchronous “conversation” with others about a financial topic using a common hash tag (e.g., Experian’s #creditchat on Wednesday afternoons from 3 to 4 pm ET).

¨       Webinars- Find free personal finance webinars via the websites and/or social media posts of webinar sponsors. Many public libraries, such as the New York Public Library (NYPL), have been offering free webinars and archiving them.

How to Generate Extra Income During COVID-19

I recently participated as an invited panelist on an Experian #credit chat (Twitter chat) titled How to Make Extra Money During COVID-19 . ...