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Publication Information: Copyright "The Dollar Stretcher, Inc." 2001. ISSN 1527-2974
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In this issue:

Introduction

The Power of Habit
by Catherine Levison

The First Post-It Notes
by Michael Webb

Three Steps for Positive Goal Setting
by Dr. Donald E. Wetmore

From Retirement to Poverty?
by Gary Foreman

Tips, Quips, Quotes & Questions

On www.Stretcher.com This Week

Hello to all my Frugal Friends!
Let's have some fun this week. There's a good probability that you got one or more gifts that you won't be able to use this year. Some because you already have something similar, it's the wrong size or it's just a bad gift. And in some cases you can't return it. Please send a mailto:gary@stretcher.com with your best way to get some usefullness out of these unwanted gifts. We'll include the best ones in next week's issue.

On the website this week you'll find suggestions for returning online gifts www.stretcher.com/brm/01/011227a.htm as well as some other interesting articles.

Hope everyone has a happy and safe New Year!

As we all know, New Year's resolutions are notorious for being broken almost as soon as they're made. Ordinarily, no one would make an attempt to improve an area of their life only to turn around and fall right back into their old patterns.

The power of habit is the key to success when it comes to changing anything. Even though every change usually starts with a conscious decision, nothing will really by altered simply by identifying a problem. To succeed you need some follow through. Will power does play a role but habit is far more powerful and can be easily put into play even in the place of self determination.

First we need to think about the nature of habits themselves. One area to consider is driving a car. What would it be like to have to think about the turn signal, foot brake, steering wheel and two mirrors every time we made a turn? Not only are we operating our vehicles through habit, but we are arriving at the same designations over and over again without giving much thought to the process.

We also do things around the house out of habit. Recently I moved into a house that had a sink with reversed hot and cold water faucets. I thought I would grow accustomed to the reversal rather quickly -- I was wrong. I would have been able to replace one habit with another if there had only been one sink in the house, however, it was not the only one and I admit I found myself in constant confusion when I was in front of this particular sink. I had to think instead of relying on habit.

I had another chance to witness the power of habit when I moved a dining room clock and replaced it with a picture. Because the clock had hung there for nine years, I found myself going to that picture to find out what time it was for several weeks after the change. Why did it take weeks? Because it's fairly common for a new habit to take four to six weeks to become second nature.

Now, that particular fact is actually the good news.

The key to using habits to our advantage is to choose one -- and only one -- behavior to work on at a time. Identify one bad habit at a time in yourself (or your child) and then purposefully replace it with a good habit. We often make the mistake of tackling too many bad behaviors at one time. Success comes when we focus on one problem at a time. If you're working on changing habits in one of your children, it's best to approach the child, clearly state what the bad habit is and then explain how it will affect their future.

For example, if your teenage child prefers to sleep in rather than getting up at a decent time explain to him how this can affect his employment, college grades and ability to catch the bus on time. The goal is to get him to see why he would want to make a change. Make that your first and final lecture. With a view that the child has to exert himself toward the new habit, do not interfere when it isn't necessary. Help as inconspicuously as possible.

Habits ordinarily take about six weeks to take shape and become permanent. Then they are habitual and will not need additional work. After the bad habit has been replaced by a good habit you can target a new habit.

Consciously apply yourself to the new habit for a month and an half. Be consistent during that time frame and at the end of it you'll find you have a positive change that is now habitual. You won't need sheer will power and you won't find yourself wallowing in defeat because the power of habit is just that -- powerful.

Catherine Levison is a well-respected workshop presenter to parenting and educational audiences throughout the USA and Canada. She's also the author of three bestselling books on educational topics and is regularly featured in the Bright-Kids E-newsletter. To subscribe send an email to: join-bright-kids@ds.xc.org

You can browse Catherine's newest book, "A Literary Education," by going to: www.amazon.com/exec/obidos/ASIN/1891400231/simplepleasuresp/ Copyright 2001 Catherine Levison Used with permission. All rights reserved. http://members.aol.com/beeme1/

Whether you are in a long distance relationship or a short distance one, communication is vital. One way to communicate is through the mail. And an inexpensive way to do so is with postcards.

Postcards only cost 20 cents to mail in the United States. Some restaurants, bookstores or shops even carry racks with free postcards on them. A company called Max Racks (www.maxracks.com) began setting up these postcard racks as a means of advertising for their clients. Most of the postcards are clearly selling something, but hey, they're free.

If you have 8 postcards you can put one letter ( I L O V E Y O U ) on each card and mail them a few days apart. Of course you can write whatever phrase you want and even mix them up before you send them off.

So for less than $2 you can let your sweetheart know just how much they mean to you - one letter at a time.

Michael Webb is the best-selling author of The RoMANtic's Guide: Hundreds of Creative Tips for a Lifetime of Love. You can order at Amazon.com or for 1000s more of Michael's free tips, visit www.TheRomantic.com

As I conduct my Time Management Seminars all over, my audiences consistently tell me they want more out of life. Almost everyone I speak with has a yearning for improving several aspects of their lives. They have dreams and goals about their future as yet unrealized.

Many come to the end in life with those visions unrealized, pictures in their minds only.

Achieving goals helps us to get the "want to's" in our lives. Life ought to be more than just achieving the "have to's".

I offer three important tips to help increase the probability of achieving your dreams, getting more of what you want in your life.

1.Put your goals into writing. There is something powerful about writing out what you want, getting your dream out of your head and on to a piece of paper. It then seems more realizable. It's a stonger affirmation of what you are working towards rather than having a vague, wispy notion floating around in your head.

An even stronger tool is to prepare a goal scrapbook. Nothing fancy. Get a three-ring binder and fill it with notebook paper. Then get a picture of each your goals and paste them into your new goal scrapbook. You can go to the car dealer and get a brochure of the new car you want. Visit a travel agent and pick up brochures of your ideal destinations and add that. Clip a picture of your dream house out of the newspaper's real estate section and add this as well.

Then, each night, review your goal scrapbook and see a picture of what will surely be coming to you. It's like viewing a crystal ball and seeing your future.

2.Quantify your goals. Many do not get what they truly want in their lives because they are too vague about what they want. It is not enough to say, "I want more money" or "I want to be rich". Instead, if you write, "I want $10,000" you now have a clear target to shoot for.

3.Set a deadline. Did you ever set a New Year's resolution and never achieve it? Most people have. And most people fail to achieve their dreams because they did not include a deadline with their goal. Deadlines move us to action.

When we fail to include a deadline for our goal, when we commit to achieving it "as soon as possible", the goal winds up in our "as soon as possible" pile of things I will do another day, which is probably never. Why? Because we all too much to do and not enough time to get it all done. The items that have deadlines for completion tend to bubble up in priority and importance so that we take action and achieve them.

Having written out the goal, placed a picture in our goal scrapbook, quantified it, and set a deadline, we can now break that goal down into its little component pieces so that achievement becomes realistic and manageable.

The journey of a thousand miles begins with a single step. No goal achievement is a leap across some huge canyon. Many are intimidated and driven away from going after what they really want in their lives for fear they will have to take a giant leap across that canyon and, hey, what if I don't leap far enough? Disaster.

Let's say you have a goal to get an additional $10,000 in savings two years from today. Make up a picture of your new bank statement two years from now showing the additional $10,000 in your account. The goal is in writing. It is quantified and a deadline has been set. Now you can break that goal into its little steps for achievement.

To get $10,000 over the next two years requires getting an additional $5,000 per year. A year is made up of twelve months, so that means you need to get approximately $400 per month. A month is made up of four weeks, so that's $100 per week. And a week is made of, let's say, five business days. That's $20 per day. (I have not added in interest to these calculations just for simplicity.)

I don't know about you, but the notion of going out in the world tomorrow and getting an extra $20 is a whole lot more realistic and certainly a whole more doable than getting $10,000. Getting the entire $10,000 is the leap across the canyon. It scares me. But $20 is a single step. That's something I can handle. Now the goal seems realistic and is realizable.

But until you write out your goal, quantify it, and set a deadline so that you break it down to its small steps, it will forever appear to be too big a stretch and therefore unattainable. But every time you follow these three steps and break the goal down, you will always find that you have within your control what it takes to accomplish that next step. And once you begin, you are on your way!

Get your free copy of "The Top Five Time Management Mistakes" that outlines the five things you must avoid to be a really successful time manager. To get your free copy now, email your request for "mistakes" to: ctsem@msn.com

Would you like to receive free Timely Time Management Tips on a regular basis to increase your personal productivity and get more out of every day? Sign up now for your free "TIMELY TIME MANAGEMENT TIPS". Just go to: www.topica.com/lists/timemanagement and select "subscribe". We welcome you to our list!

Dear Dollar Stretcher,
We are senior citizens who are living the good life by watching our expenses very carefully. We vacation where we find good deals, shop with coupons, read your newsletter, etc. We have discussed long term care insurance a number of times and always conclude that it would limit our lifestyle considerably to spend several thousand dollars a year on it. Recently a woman we know had a stroke. Now the only nursing home that can handle her costs $800/day. She is at the end of Medicare benefits. Her husband will be going on welfare due to her medical expenses.
We are once again discussing LTC insurance. Can you give us any input on this issue?
Vivian

Vivian's not the only person asking this question. There are more seniors now and they're living longer than ever. By the end of this decade 17 million people will be over the age of 75. And, unfortunately, with age comes more sickness and a decreased ability to take care of ourselves.

The result is that over $1 billion a year is spent on nursing home care in the U.S. And about one third of that is paid for by individuals.

As Vivian pointed out, not everyone will need professional long term care. Many retirees do fine on their own without any help. Others will rely on family to provide extra care. Only one in ten adults over age 65 will go to a nursing home. And half of them will return home. But, the other half will stay the rest of their lives.

As we grow older the likelihood of needing medical or custodial care increases. Twenty-five percent of adults over age 85 go into a nursing home and remain the rest of their lives.

For those who do stay in a nursing home for extended periods the costs can be breathtaking. Approximately 70% of the people in nursing homes have used up their savings within one year.

The cost of a stay in a nursing home averages about $110 per day. That works out to a little over $40,000 per year. With more people living into their 80's and even 90's, it's not uncommon for someone to spend ten or more years in a nursing home. So it's not surprising that a lifetime's worth of savings can be wiped out.

And nursing home care isn't the only possible expense. Many, like Vivian's friend, need extended stays in the hospital or require home health care.

To help define patients' needs the insurance and medical industries have generally agreed on three levels of care. Skilled care is performed under a doctor's orders. It's generally provided by a licensed registered or practical nurse. The nurse must be available around the clock. Thus most skilled care is provided in a hospital setting. The expectation is that the care will help the patient to recover and get well enough to resume a normal life.

Intermediate care differs from skilled care in that the nurse is only available on a periodic basis. The care may be given in a rehabilitation center or the patient's home. Often it's a matter of administering injections or changing bandages.

Custodial care is provided to meet a person's physical (not medical) needs and can be provided by non-medical personnel. Assistance with eating, bathing, dressing would fall within this category.

Many people think that the government pays for all extended medical and custodial care. That's not true. Medicare pays for almost all of the first 100 days of skilled nursing care. But it will not pay for most home care, assisted living or nursing home care. And Medicare does not pay for any custodial care.

Medicaid does pay for a large amount of extended care. But it's only available for the poor. In the past many people gave their assets to their children when faced with a long term care bill. Then they'd qualify for Medicaid. Recent laws have tightened restrictions on that practice.

Another problem with depending on government funding is that the patient is limited to using facilities that accept Medicaid payment. And these might not provide a level of care that's acceptable to the patient.

Finally, there's the invisible element of inflation to consider. Remember that when you're forecasting years into the future it doesn't take much to significantly increase costs. Just a 5% inflation rate will double the cost of an item in 14 years. So if you're 65 today just a little inflation will double prices by the time you're 79. Will you live that long? Perhaps a better question is: can you afford to gamble that you won't live that long? And, in case you're wondering, nursing home costs have been rising at a 5% annual rate.

What options does Vivian have? First, she and her husband could hope to stay healthy until shortly before death. However, medical advances make this less likely every year.

Another option is to buy insurance only for skilled and/or intermediate level care. In the case of Vivian's friend this type of insurance would be a big help. It's also possible that family can provide nursing home type care. But for many families that's just not practical.

They could also depend on relatives to care for them or pay the cost of extended care if it's needed.

A final option is to purchase long term care insurance. Over the last 15 years more people have chosen this option. While it can be expensive, for many it's the only way to protect assets that they've spent a lifetime accumulating.

As Vivian has already surmised, there's no one right answer that will apply to everyone. Each individual situation is different. Next week we'll attempt to show you how to compare long term care insurance policies and help you decide if they're a good choice for you.

Gary Foreman is a former Certified Financial Planner who writes on family finance and edits The Dollar Stretcher website.

more suggestions on how to handle going out with unfrugal friends at www.stretcher.com/stories/01/011231a.cfm

many more favorite frugal resources at www.stretcher.com/stories/01/011231b.cfm