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Hey everybody, it's Mariell.
Happy almost New Year.
In this moment, right on the cusp of a new year.
A lot of us have started looking at our credit card bills and our bank statements and thinking, Oh boy, I need to get my finances in order.
And there are lots of ways to go about that.
On this episode of Life Kit, I'm going to share wisdom from experts we've interviewed over the years, specifically on financial habits to leave behind in 2024.
Together, we are going to start this new year off right.
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Hey, quick question.
How are your holidays?
Did you have good time?
Maybe too good of a time.
It's normal to have a couple extra drinks around the holidays, but maybe you're thinking it's time to take a break.
Maybe you've woken up hungover or anxious or felt more irritable or sluggish lately.
Whatever your reason for wanting to take a break from alcohol, it can be difficult to navigate life without it.
It's everywhere. At work events and parties, funerals and weddings, we use it to celebrate and to mark all kinds of transitions.
That's why Live Kit has created a special newsletter series to help you get through the month without alcohol.
We'll cover everything from how to deal with uncomfortable questions like, Hey, why aren't you drinking?
To some tasty alcohol free drinks you can make at home.
You can sign up for it by going to NPR .org slash dry January.
You can also find the link in the description for this episode.
All right. The first thing we're going to talk about today is shopping.
Takeaway one, let's leave behind the habit of mindless buying, shopping without intention or limits.
Elisha Berman works in beauty and fashion marketing in New York.
She loves shopping, but a year ago, she realized she loved it a little too much.
She'd gone into this store in Brooklyn to buy a pair of gloves.
I left the store with a $600 winter coat that I just didn't need and couldn't afford, like it was a mess.
So that was kind of my like breaking point.
So in 2024, Elisha decided to do a no buy challenge.
No buy has become a movement on social media with millions of people giving it a try.
You can do it for 30 days or for a few months or for a full year.
Like Elisha set out to.
She made a list of all the things she was not going to buy that year.
No new beauty products.
I'm not allowed to buy any new perfume because I have so many.
No jewelry, no new technology, no home decor, and no bathing suits or beach stuff.
These are weird and highly specific to me.
The no buy rules are going to be different for everyone.
My area of overconsumption was beauty and fashion.
And then she also had a yes column, the stuff she was OK spending money on.
I am allowed to get dinners with friends and my husband.
I do allow fresh cut flowers.
I'm allowed to buy books.
I'm allowed to buy video games.
Basically anything that enriches my life is going to be in the yes column.
So why not try a no buy challenge this January?
See what it's like to shop from your own closet and work with what you already have.
Elisha, by the way, was able to pay down a big chunk of her debt.
As a result. And this isn't about severe austerity.
It's about pausing and deciding how to spend your money in a way that improves your life.
Also, it's about using up the stuff you already have.
I mean, you paid for it, right?
OK, take away to the next habit we're leaving behind this year is lifestyle creep.
Lifestyle creep is what happens when you start making more money and then you're spending automatically starts creeping up to Paco de Leon is the author and illustrator of finance for the people.
And she says, you know, someone might pack their lunch most days and bring it to work, but then they get a raise.
They feel like a little more coin in their pocket and they feel a little more flush with cash and they might, you know, start going out to sushi for lunch in the middle of the week.
This kind of thing can snowball, especially when people think, you know, now that I'm making more money, I need to have more expensive things.
So what they do is they immediately look around at the other people making multiple six figures and they say, oh, this is the level that we're on now.
This is the lane that we're in.
So we got to do the things that people in this lane do.
I have to get a bigger house.
I have to upgrade my home.
Yanely Espinal is a financial educator at NextGen Personal Finance and she hosts the podcast for Marketplace called Financially Inclined.
So the money that you just started making more, the excess money that you have disappears literally right away into thin air because it's going into new financial obligations that are not necessary.
They're not needs. Let's be real.
Again, the point is not to deprive yourself of everything you want, but to be aware of how you're spending and if those habits are working for you.
Paco de Leon says we should keep in mind a concept called the hedonic treadmill.
Basically what it states is that, you know, life has its ups and downs and that affects our level of happiness, but only in the short term.
Ultimately, over time, our levels of happiness are going to kind of remain around the same level, regardless of what happens.
So I think when you understand that upgrading to a nicer car might feel good, ultimately in the long run, you're probably going to end up feeling the same.
So you might be getting a cost of living pay raise at your job in January.
Maybe it's two percent.
Try automatically pushing that money into a rainy day fund or towards some debt.
That way you're not as tempted by that weekly sushi takeout or whatever it is that's making that extra cash float away.
OK, take away three.
Our next habit to leave behind this year is paying for a bunch of subscriptions that you don't use or don't even realize you have.
First thing you're going to do is check your credit card statements, your bank statements, your subscriptions tab on services like Google and Apple.
Make a list of what you are currently paying for when each one expires or renews and then figure out what you use.
If you don't use a service at all and don't expect to, that's easy.
Get rid of it. Then there's the stuff that you sometimes use or you know, you use, but maybe you don't need the premium version.
This comes up a lot with streaming services.
Eric Deggans is a TV critic and media analyst for NPR.
One of the things that I suggest people do is come up with a strategy before they actually say I want the streaming service or I don't want that one.
Because once you figure out what you like as a consumer and what you think is most important, it will help you make those decisions.
Eric suggests that you make a TV diary.
Take a week, take two weeks, even a month and just monitor what you watch and what you like.
Don't change your habits at all.
And then at the end of that month or that week, I guarantee you, you will be surprised by where you spend your time and what you're actually watching.
And that can help you make a decision.
So, you know, say you discover, wow, you're spending a lot of time on YouTube.
Then you thought, well, then maybe you want to get the ad free versions of YouTube and you're okay with a subscription to Netflix where you have ads or you're okay with gennisoning Netflix.
Netflix, by the way, is one of NPR sponsors.
You may also be able to get access to certain streaming services through your cable TV, broadband or wireless provider.
Like T -Mobile has a level of 5G service where you can have access to Netflix and MLB TV, you know, they say it's on them, you know, so you're not paying extra for that for that access.
So if you're already using that wireless provider or if you're trying to decide, you know, whether you're going to go with a wireless provider, that might be something that would shade your decision because you know you'll have access to these channels that you also care about.
One other tip. Remember, if you sign up for a free trial and you want to cancel it, set a reminder so you actually follow through.
You don't want to end up in a situation where you're paying monthly for something you don't use.
When it comes to other subscriptions and services, look into lowering your bills.
Kristin Wong is a journalist who covers personal finance.
People don't realize you can haggle your bills if you have cable and your cable bill is too high.
If you have Internet, your Internet bill is too high and you haven't called in the past six months to negotiate a better rate.
It's worth just, you know, taking an hour out of your Saturday and listing all of your bill providers and going through each one and giving them a call and saying, hey, can I get a lower rate on this?
It's worth asking. It doesn't take much of your time.
And then the good news about that is you continue to save money every month.
All right. It's time for takeaway four.
Our next habit to leave behind, ignoring your credit card debt.
Look, debt is a huge problem for a lot of Americans and often it happens because of an unexpected emergency expense, an illness, a broken down car.
Our systems are broken and I am not going to shame anybody here.
But I am going to tell you about how you can use your credit cards to your advantage while paying the least interest possible.
First of all, if you have credit card debt and you're not sure how you're going to pay it off, allow me to introduce you to a maneuver called the balance transfer.
That's when you roll over your debt to another credit card with a 0 percent interest rate for some period of time.
It could be a year, a year and a half, so that you're just paying the amount you already owe and not any additional interest.
John Kiernan is the senior personal finance editor at WalletHub.
If you do it right, you can take the amount of your kind of current balance that you can't pay, reduce the interest rate to zero, so you're only paying the principal and you can pay that off much quicker and much less of an expense.
These cards will usually charge a one time balance transfer fee of three to five percent of the total amount you're transferring.
But this is still a good deal if you pay off the debt within the zero percent interest period.
One thing to note about these cards, though, is you will have to make the minimum payments throughout that period.
Another tip, if you want to avoid interest charges, you need to pay what's called the statement balance by your due date every month.
You'll see that online and also on the paper or PDF statements you get from your credit card issuer.
The statement balance is a readout of what you spent in a one month period at the time your billing cycle closed.
If you don't pay your full statement balance every month at the due date, you're going to start accruing daily interest charges, which will get very, very expensive if you don't pay them off quickly enough.
So the way to game the credit card system is to buy stuff, get the rewards or points your card offers and then pay your bill, which is your statement balance off in full every month.
That's the ideal situation.
You're not going to have to pay interest if you can pay it in full every month and you're going to earn lots of rewards.
A couple other tips here, set up automatic payments so you don't accidentally miss one.
But if you do miss a payment, call the credit card company and ask them to cut you some slack.
They'll often waive fees and interest if it's your first time.
They're not going to do it every month.
But if you've been a good customer, they're more willing to cut you a break than a lot of people realize.
There's a lot of competition among credit cards and banking.
So they know they have, you have other options.
Jon says you can also ask the credit card company to change your payment due date to a time of the month that's more convenient, like right after you get paid.
All right. Take away five.
Our last habit to leave behind this year, forgetting to negotiate.
Negotiation isn't just for job offers.
You can use it throughout your life.
Joan Moon is the founder of Moon Negotiation, a negotiation and career coaching firm.
She's also the head of negotiation coaching at the Harvard Kennedy School.
And she says one strategy you can use is the win -win.
A win -win is when you talk about how you and I are both going to benefit from the solution.
You may have heard this idea in passing, but think about how you can actually put it into use.
Moon gave me an example.
She was on a help call with customer service recently because she was having problems with her phone.
I called customer service and you said, you know, you told me to do this thing and that if I did that, the situation would be fixed.
The new customer service rep I was talking to said, well, you know, we don't have any record of us telling you that we told you to do that.
And I was incredibly upset.
And so I said, okay, you know the research on this.
Like let's utilize this win -win framing strategy.
And so I redirected the conversation saying, listen, I want to remain a longtime satisfied customer at this company.
I've been with you for 10 years and I would like to keep it for another 10 years.
So what she was doing was speaking to their interests and to hers.
They both wanted to benefit from this relationship.
And with this, we were able to focus on solutions instead of focusing on the past and whether or not they told me that, you know, cause that was not going to be a productive conversation.
You can also use negotiation strategies with your friends and family.
Let's say you have roommates and you're getting annoyed because they're not cleaning up as much as you'd like.
She suggests a strategy called the menu of options.
So what I would recommend is come up with three different options.
Let's say maybe we come up with a different cleaning schedule that is a little bit more accommodating of our lifestyles, or maybe we change the breakdown of responsibilities within the home, or maybe we look up prices of housekeeping services.
When you present three different options, it's less of a standoff and it signals to the other person a collaborative tone.
Like let's solve this problem together.
One thing a lot of people don't realize they can negotiate.
Medical bills. I always tell people the numbers are fake.
They don't matter. Like it can always be lowered.
Jared Walker is the founder of Dollar Four, a national nonprofit that helps people eliminate their medical bills.
He says while these bills may seem urgent, especially when they say do upon receipt in all caps, you actually have a lot of time before they're sent to collections or they affect your credit.
There is no like sense of urgency.
You have to pay this now.
You have time. You can take a deep breath, get a plan and go through it.
So if you get a medical bill, the first thing Jared suggests is seeing if you qualify for financial assistance, also called charity care, based on your income.
We have an entire episode on this topic, so check that out to learn more.
If you don't qualify for that income -based assistance, Jared says you should ask the hospital or doctor's office for an itemized bill listing all the procedures and medications they're charging you for alongside their codes.
And you can look up what those are and see if that actually happened.
Because a lot of times you'll get a bill and it'll say, oh, you've got this scan and it never actually happened.
If that's the case, call the billing office and let them know.
And even if your bill is technically correct, like they say they gave you two ibuprofen, and that's true, but they charged you a ridiculous amount for those pills, Jared says you can call them on that.
Tell them when a charge is unreasonable.
And he says you can also call the hospital or doctor's office and ask, what's the settlement amount?
Like, what will you take right now if I can close out this account?
Typically, we can get 30 to 50 percent off just by asking that.
If I pay you right now, what can I get lowered off this bill?
Do you recommend that rather than being like, I have five hundred dollars.
Will you close it? Oh, no, never show your hand.
I would, I would just say, hey, what's the settlement amount?
And then see what they'll offer.
But then I can offer you the lowest amount.
Right. It's a whole game.
And even then, like all if it's not a number that I like, I'll just say, OK, talk to you later and then hang up, call the next day and see if the next person like I have called three days in a row, talk to a different person, got three different numbers.
And look, all of this is exhausting, especially if you're still healing from whatever sent you to a doctor.
Consider letting a friend or family member help and just know that this probably won't be solved instantly.
I tell people like, yeah, you have to be like persistent and you have to grit and you have to get after it.
But also it's like you just kind of buckle up, like it's kind of a battle and it's brutal.
And that's why, again, like if you're not in that space, like get an advocate, get somebody that can do it on your behalf.
And there's no shame in that.
One last tip here after you've negotiated.
If you can't pay your bill all at once, ask the medical billing office to put you on an interest free payment plan.
We're not talking about opening a credit card with the hospital or billing office, just negotiate a payment plan directly with them.
All right, time for a recap.
The first habit we're leaving behind this year is mindless buying.
Take a look at what you already have and consider taking a break on purchasing more.
The second habit we're leaving behind in 2025 is falling into the trap of lifestyle creep.
Just because you might be making more money or just because you've come into a sum of money doesn't mean you have to start spending more.
The third habit we're leaving behind is holding on to unnecessary subscriptions.
Go through your expenses and see if you're paying for services you don't use.
The fourth habit we're leaving behind is letting your credit card debt get out of hand.
Debt can be intimidating, but it's important to understand the terms of your credit cards and try to avoid racking up interest charges when you can.
And the final habit we're leaving behind this year is forgetting to negotiate.
You can use negotiation to your advantage in all aspects of your life to try to get the best deal possible.
For more LifeKit, check out our other episodes.
There's one about how to create a financial self -care routine and another on credit card basics.
You can find those at NPR .org slash LifeKit.
And if you love LifeKit and want even more, subscribe to our newsletter at NPR .org slash LifeKit newsletter.
Also, we love hearing from you, so if you have episode ideas or feedback you want to share, email us at LifeKit at NPR .org.
This episode of LifeKit was produced by Bria Suggs.
Our visuals editor is Bec Harlan and our digital editor is Malika Grebe.
Megan Kane is our supervising editor and Beth Donovan is our executive producer.
Our production team also includes Andy Tagle, Claire Marie Schneider, Margaret Serino and Sylvie Douglas.
Engineering support comes from Carly Strange and David Greenberg.
I'm Mary El Segara.
Thanks for listening.
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