Then if you need to apply for new credit you simply have to call the necessary credit bureau, pay $10, and “thaw” the credit freeze for a day or two.

It’s painless, and it could save you from major pain in suffering if someone were to apply for credit in your name. Do you really check your credit reports every few months? I bet most people don’t even order their free credit reports once a year. Therefore someone could easily apply for credit in your name a full year before you ever know about it. Good luck getting all of those charges removed. It will take you hours and hours to clear all of that up.

If you’re prone to signing up for new credit offers and know that you shouldn’t this will slow down the process as well. You can’t just walk into a Costco and sign up for a new American Express card. By having to wait a second, think, and call the credit bureau you my just have enough courage to skip signing up for yet another credit card or car loan.

Give it a try!

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I think it’s an interesting idea though. This means that when I’m old and famous (and perhaps wealthy) I’ll be able to write a check to help pay for my kids or grandkids college without having to worry about gift tax coming into affect. At the rate college costs are rising, the current $12,000 per year per person limit won’t even cover textbooks by the time I have kids in school!

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I think for my family, we are status-quo from a housing perspective. Our home is just about at the mid-point for what we could have afforded and what we need, and is comparable to many of our friends homes in the area. It’s probably about 10% below the mean when compared to most of my coworkers.

My wife and I probably spend a bit more than most of food ($100-$125 or so per week). I’m still not sure why this is the case, as I judiciously use a price list, shop multiple stores, and purchase store brands for commodity-type items. Nonetheless I think we’re probably near the average.

In all of the other categories, I think we spend much less than others that are near our income level. Clothing, cars, entertainment, travel & vacations, gift giving. We enjoy all of these things but we definately don’t go overboard. Perhaps this is why we can spend a little more on housing and food.

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The premise of “The Pathway” is that many of us do a crappy job of dealing with our feelings. We fail to identify our true feelings and provide for our own needs. This failure on our part eventually leads us to engage in external solutions. It could be overeating, it could be over-shopping, drugs, alcohol, or any number of things.

The book walks you through the steps of completing a “cycle”, which is a set of brief questions to help you recognize how you feel, what you need, and what support you need if any. There is also a limits cycle that asks if you have reasonable expectations.

Here’s the thing that struck me: I always knew I was an emotional over-eater, but I never connected the dots that I need to resolve my emotional issues to improve in this area. I’ve sought out behavioral solutions that require more thinking that feeling, and although I’ve made progress I’m still not “cured”.

If I didn’t know anything about nutrition, then I could think my way out of this problem by gaining new knowledge. But I can’t think my way out of emotional issues. They require a different tactic. That’s where The Pathway comes in.

Do you have any problems in your life that you’re trying to think your way out of? Could it be an emotional issue rather than a rational or behavioral issue?

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Why? It’s hard to fake a dividend. Of course you also need to watch the payout ratio as well, but earnings per share is more easily manipulated than dividends. Either a company paid a dividend or they didn’t. Earnings can be manipulated by legitimate means based on one-time charges, exchange rate fluctuations, and thousands of other things. Dividends are distributes based on the approval of the board, and a long history of steady or growing dividends (in my opinion) indicates stability.

Keep in mind that high yields do NOT directly represent financial stability, as we’ve seen in the financial services sector recently. As always you need to make your own investment decisions, but as for me the dividend history for a firm is a good starting point.

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Next start in on the income side. What is the person going to study in school? What is the average starting salary for that major? Are there any jobs posted on monster that require that level of education? If so what is the high and the low end of the offered salaries? And what about savings?

Just think of the impact you could have on someone by doing this exercise. It’s filled with teachable moments, from budgeting to apartment hunting to job searching.

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I don’t think you can fit everyone into a single mold though. If there’s someone at one end of the spectrum that recycles dryer lint and can live frugally on $3000/year, then there must be someone on the other end of the spectrum that is addicted to buying things.

Do you know anyone that’s addicted to buying things? I once dated a girl briefly (from a speed dating event no less) that was addicted to weight loss products and equipment sold on late night infomercials. She told me her mom did the same thing, which is probably where she got it. She was the perfect target for new ab machines, chin up bars than hang on your doorway molding, and fitness videos that “guarantee” losing two dress sizes in five days.

I’m not attempting to judge people who buy such things. To be honest the chin-up bar thing kind of appeals to me. My question is whether or not people recognize that this type of behavior is an external solution to their internal needs. We’re talking about feelings here folks. If you don’t learn to deal with your feelings and adequately provide for your needs, eventually your wires get crossed and you begin to lean on external solutions to internal problems.

I’m not a shopoholic, but I am an emotional eater. And what I’m beginning to learn is that small behavior changes may not be enough to solve my (or your) problems.

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Although I’m sure many will disagree, I don’t consider my home an investment. It may go up in value due to inflation, all other homes somehow get destroyed, or people just want to pay me more for it. However, it’s not an investment in my mind. It simply appreciated, but it didn’t produce any cash flow.

Likewise with gold and oil, I’m not against someone “investing” in those items. You may even make a ton of money doing it. You’ll just be speculating the the price is going to go up, and if you’re right you’ll glad you did. In and of itself gold, oil, and art have no intrinsic value beyond what others are willing to pay. They don’t produce earnings, so you’re left only with (potential) appreciation.

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Here are the steps I would recommend without knowing a person’s detailed financial and personal situation:

• determine your asset allocation (this is a lengthy topic that has been discussed on numerous blogs including this one in the past).

• determine how much you want to save in after-tax accounts. Saving some money for retirement in aftertax accounts will give you flexibility in the future, and could also be considered your “extra” emergency fund. I recommend setting a targeted % of your total portfolio, but you can also pick a fixed dollar amount. A 5-15% target is probably where my mind is focused at the moment, but yo must make your own investment decisions that are right for your personal situation. Investing for retirement will be more efficient in 401k’s and IRA’s, but flexibility has value as well.
• Save first in your 401k up to the match amount. If there is no match proceed to the next step
• Save in your Roth if you are able to (i.e. you’re under the income limit)
• Save in a traditional (self-directed) IRA at a reputable mutual fund company (Vanguard, Fidelity) if you couldn’t invest in a Roth. You’ll have more investment choices here, and you’ll likely have better investment choices as well.
• Save in your 401k until it is maxed out.
• Save in after-tax accounts (like the third step above).

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I would rather be a renter in this economy at the moment though. As hopeful as some are that things are about to turn around, I’m not convince that the housing or overall economic situation is going to improve greatly in the next couple of year. If we had waited a few years to purchase our home we would be in a more stable financial position, but our quality of life would have been lower.

I am grateful to God for our home, and when we purchased we were (apparently) wise enough to get a home we could grow into but not so large that we were foolishing heating and cooling a square mile of unused space. All in all it was a good purchase, and with kids on the way and my wife staying home with them I’m glad they have a place of their (our) own.

Personally speaking though I’d rather be a renter at the moment.

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