It’s no surprise that many seniors are living beyond their means. Retirement is a time where that is commonly done. With reduced or non-existent income in retirement, it stands to reason that many seniors would be spending more than they are taking in.

Traditionally, this situation was sustainable for a long time because of the significant savings that retirees had accumulated over their lifetimes. Now, with the average personal savings rate less than zero, many retirees have little to fall back on. In this situation, seniors are increasingly turning to credit cards.

According to the credit and debt counselors at BCS Alliance...

"Between the years 1994 and 2004, credit card debt accumulated by Americans aged 65 to 69 grew 217 percent. These seniors are not using their credit cards to go on wild spending sprees, but rather, are using them to pay for doctor's visits, prescription drugs and household emergencies that their depleted savings accounts won't cover. In addition, seniors are taking cash advances to pay off debts they really can't afford to pay."

After living one way for many years, it’s easy to get used to a certain lifestyle. If they are like the average American, seniors may also be accustomed to paying interest. The reductions in income that come from retirement should be cause for a reduction in lifestyle and spending; the same holds true for those who haven’t built sufficient savings. Visions of an extravagant lifestyle finally possible after a lifetime of work can quickly be smashed by the reality of rising expenses. The harsh truth is that rising medical costs may cause financial hardship even for those who are well prepared for retirement.

Those retiring today are often caught between the classic defined benefits plans of generations past and the defined contribution retirement plans of today. Without enough time under the old system, pension payments may be minimal and fewer years under the new system mean that those investments may not be worth much either.

It’s easy to think that your costs will go down once you hit retirement. Less income will mean that you will pay less in taxes, but rising expenses can quickly eclipse such savings. Poor planning may require you to work much longer than you had hoped or force you to take on debt at a time when you really can’t afford it. Starting a consistent and aggressive retirement plan earlier increases the chances that you’ll be able to live more comfortably in retirement. Frugal habits established at an early age will continue to help you in retirement as well.

The housing crisis has caused a lot of volatility in the apartment rental market as well as the mortgage market. The interesting thing is that, depending on where you are looking to rent, prices may be much higher or much lower than a year ago.

Data released by Investment Instruments Corporation shows that market prices increased by as much as 14.6% and fell by as much as 9.3% in some metro areas. The average change for the 12 metro areas surveyed was a gain of 3.3%.

The overall data was reported as follows:

Metro Area		Q107		Q208 		%Change
Atlanta			$1,007		$986		-2.1%
Austin			$936		$907		-3.0%
Boston 			$1,593		$1,645		+3.3%
Chicago			$1,328		$1,355		+2.0%
Las Vegas		$1,053		$1,056		+0.2%
Los Angeles		$1,638		$1,699		+3.8%
Miami			$1,411		$1,368		-3.0%
New York		$1,606		$1,751		+9.0%
Phoenix			$1,035		$939		-9.3%
San Francisco		$1,579 		$1,810		+14.6%
Seattle			$1,098		$1,211		+10.3%
Washington, D.C.	$1,608		$1,687		+4.9%

The rise in San Francisco is attributed to population growth causing increased competition for available apartments. High home prices there also create a larger percentage of people in the rental market. The drop in Phoenix is likely caused by an abundance of unsold single-family homes. That situation has caused housing prices to drop, making homes more affordable to would-be renters. Less demand for rentals has driven their prices down.

This latest data is another example of the importance of physical location on personal finances. When we reach the limits of what we can do to maximize income and reduce expenses, looking at larger influences such as location is the next step. Borrowing money at a high interest rate to support a reasonable lifestyle in an expensive location may not be sustainable. Comparing potential income and expenses in other places may help to highlight another city that would offer you better financial opportunities.

Barack Obama and John McCain have a long road in front of them. All the better for opportunistic money-conscious citizens.

Presidential candidates, in addition to having the responsibility of leading a powerful nation and influencing society for generations to come, provide a unique example of fiscal management.

Their methods of fund-raising and spending may not be reasonable blueprints for every man’s money situation, but their campaign duties and their day-to-day experiences represent apt metaphors for provincial financial peace.

Presidential Ideals

Responsibility, unity, and integrity are just a few of the foundational principles of American presidential candidates (in theory, of course). Each carries credence in the world of personal finance, too. McCain and Obama will be must-see TV on every major news channel, but in some regards, they could be just as intriguing as leading men on CNBC, Bloomberg, and other financial networks. Despite appearances, their campaigns do have carryover into both arenas, starting with the current hot topic of choosing a running mate.

And the Vice President is...

A Presidential candidate would be nothing without his vice president, which is why the decision to pick a right-hand man or woman carries so much weight. Picking the right one might mean a windfall of support and votes come November, but choosing poorly might cost a candidate their shot at the presidency.

Such costly decisions also weigh on the minds of typical consumers. In particular, one of the most important, and therefore most VP-like, is the choice of credit cards.

In a sense, the credit card is a running mate to one’s standard savings and checking accounts. The credit card, should anything happen to the savings or checking, gains full authority on spending until the greater accounts can return. Credit cards supplement one’s money situation by offering flexibility and convenience with nary a hunting trip snafu.

Chose Wisely

However, choosing the wrong card can have serious ramifications. If consumers choose a card that does not have the right payment terms or has too many fees, then their decision could be costly. Interest builds up faster than many expect, so picking poorly in this area has a chance to shoulder Lieberman-like ramifications.

Fortunately, there are people to help with the decision-making. Presidential candidates, not unlike consumers, do not go the road alone. When they make decisions, such as picking a vice president or even picking a matching shirt and tie, there is a cacophony of aides, advisors, and staff to assist them. Successful candidates are able to lean on these resources to help the process go by much smoother, but at the same time, they are able to sift through the good ideas and the bad ones to maintain a focused, strategic goal.

Get The Facts. Not Propaganda

Consumers are no different. We do not make our credit card decisions alone. We rarely make our grocery decisions alone. There are always an infinite number of resources to help us find the perfect this and the perfect that for whatever it is we need.

We owe it to ourselves to know where these resources are. Magazines, Internet sites, newspapers, friends, and family all have an opinion on what might be the best alternative for any given choice. A decision made with copious amounts of input will have a much better chance of success than one made in with our partisan perspective alone.

Whether or not we choose to listen to the advice is up to us. Like a good presidential candidate, consumers need to be able to find out which words are sage advice and which are hot air. Finding the difference between the two is easier said than done, but it also gets easier the more practice one has at it. Listening to advice from others might seem like information overload at first, but before long, tuning out the white noise and soaking in the wisdom may become second nature.

For sure, presidential candidates do not always make the right decisions. For that matter, neither do presidential Presidents. However, when they do err, the best candidates are able to take responsibility for their actions and move on to the next challenge having learned from their mistakes and being determined not to commit them again.

We Don't Always Choose Wisely

Likewise, consumers do not always make the right decisions, either (Segways come to mind). Buying a money-pit of a home or investing in a failed dot-com company can be serious setbacks to a personal portfolio. However, they are not the end of the world.

Responding to adversity, as the corny motivational saying goes, is key to success. Just because the market on pork bellies tanked is no reason to pack it in completely. There are still a number of great opportunities to grab hold of and seek out. Consumers need to take note from their future commanders-in-chief: soldier on and be better off for it.

A campaign without mistakes is a pipe dream, and a campaign run without confidence is doomed to fail. Candidates exude several emotions during their barnstorming tours across the country: glibness, courtesy, tolerability, sympathy. The list could go on and on. But the list would be pointless were it not for a campaign run with confidence.

With Great Power, Comes Great Responsibility

Candidates need to believe in their goals and ideals, and they need to have faith in the people who vote for them. Similarly, consumers need to have faith in their own ability to create financial victory. (Warning: here is where it gets all-American cheesy.) We, the people, have potential and opportunity unlike virtually anywhere else in the world. We have banks that reward prudent savings. We have free markets that pay for wise evaluation. We live in a country that desires to see its people have successful, meaningful lives, and we need to show the confidence in our own ability to do so.

Speech writing, politicking, and kissing babies are other hallmarks of a presidential race. In the same way, check writing, penny pinching, and kissing frivolous spending goodbye are tenets of solid financial planning. Much motivation can be found in the campaigns of McCain and Obama, and for the next few months, we will have an opportunity to be reminded of them plenty.

Managing and paying your bills is a relatively straightforward procedure, but some bills are more difficult than others. The freedom that comes from a bill without a due date also makes it more likely to be forgotten and unpaid.

Most bills have clear due dates after which fees and penalties will be assessed. You’ll usually have at least a week after getting a bill to pay it online or put a check in the mail. A few times a year, you’ll probably also have bills that have no clear due date. These typically come from doctor’s offices, landscapers, or contractors who do work on your home.

These types of bills can be frustrating when you follow a detailed payment schedule and budget accordingly. In general, paying a bill as late as possible is the best course of action. The longer you can keep your money in your accounts, accumulating interest for you, the better. Paying too soon is basically the same as if you were to lend money to the vendor interest free. On the flipside, you want to ensure that the bill is paid on time to avoid any fees. Technically, if no due date is given, you shouldn’t be assessed any fees, but experience shows that many companies see the situation differently.

One way to handle bills without due dates is to simply not pay them until you get a second notice that does give a due date. You might also consider that such bills are due upon arrival. What I usually do is create an artificial due date for these types of bills, typically a few weeks out from when I receive them. That way, I get to keep my money a little longer, the bill gets entered into my financial tracking software so that it won’t be forgotten, and I don’t have to worry about getting second notices, which can start to be worded in a threatening manner.

Vendors would be well served to put a due date on all of their invoices. Not doing so creates an ambiguous situation that can be uncomfortable for all parties involved. From a consumer side, creating an artificial due date for these types of expenses can alleviate much of the stress and potential headaches associated with a bill being labeled late.

In my post about wealth coming from cash flow as opposed to income, I mentioned an article showing that Britney Spears was living beyond her means. A new report shows that she has been tracking her finances and has dramatically curtailed spending.

Following Britney’s lead is something I would hardly ever suggest. But since I previously wrote about her bad habits, I thought it only fair to cover the latest update about her recent improvements. First, the article says that she tracks her spending religiously. That is something that we should all try to do. Tracking is the first step, reducing comes next. Sources cited in the article claim that Britney has reduced her spending by an incredible 80%.

The article concludes by giving 5 categories used by Britney that we may be able to use as well:

Slash transportation costs

With high gas prices, consolidating trips, choosing not to travel, and looking for more efficient transportation can save a bundle.

Cut your housing costs

Living in the least expensive house that meets your needs versus the most expensive house you can afford is the way to go. Taking in rental income can also offset higher costs.

Slash discretionary spending

Discretionary spending is, by definition, unnecessary. Borrowing money to pay for such purchases makes them even more costly. When money is tight, this is the first area to cut.

Get Free babysitting

Childcare can be enormously expensive. To save money, try having a family member watch your children, or trade off days with other parents.

Turn your trash into treasure

Selling your stuff on eBay or Amazon is a great way to make some secondary income.

The more out of control your spending is, the easier it is to make cuts. Getting rid of the "low hanging fruit" as a first step takes a lot less effort than cutting the last dollar. Once you’re really budget-conscious, it becomes more and more difficult to cut even more, simply because you’re already quite efficient. Since your spending habits were probably nowhere near as bad as Britney’s, you probably can’t hope to reduce your expenses by the same 80% she claims to have done. But looking at the ways she tracks her spending and the cuts she made may inspire you to do some trimming of your own.