Smart Moves

The Great Recession was supposed to make Americans less materialist. But researchers who track consumer behavior say there's no data to show that spending habits have changed.

But people in the habit of shopping as a "pick-me-up" can put at risk financial goals that are extremely important to their long-term happiness, according to Howell. Indeed, bad spending habits can jeopardize the goal at the top of the priority list for many families: saving enough for a home in a safe neighborhood with good schools for their kids.

But the good news for those prone to emotional spending is that research shows they can alter their behavior if they focus on a couple of simple steps.

"Every time you're about to make a purchase, ask yourself out loud why you're buying that item. Then you'll be much more aware of your emotional drivers, which can help you avoid mistakes," Howell says.

Another effective measure to curb impulse purchases is to carry a little pocket notebook and write down everything you spend.

"By always noting where your money goes, you can turn an emotional spending process into a cognitive process. That gives you more control of your behavior," Howell says.

Here are a few other pointers for those trying to save for a home:

-- Give up the habit of shopping for entertainment.

Gerri Detweiler, a consumer advocate and personal finance author, says that even though research shows people derive more happiness from experiences -- like visiting friends or going to a park -- they continue to pursue shopping on the belief that it's more personally rewarding.

"One way to put an end to random, unfocused shopping is to create a list of alternate activities you'd also enjoy," Detweiler says.

What alternatives might you consider? She says most people do well with social activities. For example, you might have a few friends over for a simple and inexpensive lunch plus a movie in your living room. Or you could join an outdoor club that schedules low-cost weekend outings.

-- Monitor your accounts on a regular basis.

Many people use debit cards rather than paying with cash or checks. But they fail to track their debits, which means they're only vaguely aware of their account balance at any given time. This leaves them susceptible to the embarrassment of blocked purchases or overdraft fees.

To avoid such potentially costly scenarios, Detweiler urges you to monitor your checking account activity on a regular basis.

"The best idea is to do this every day. If not every day, do it at least weekly at the minimum.

In addition, she says people who use credit cards often should track these accounts regularly, a practice she calls "Money Management 101."

-- Seek free help with budgeting.

Most financial planners aren't set up to do budget counseling for middle-income people on a tight budget. Rather, they're oriented to helping those who've already accumulated considerable financial assets.

But, as Detweiler notes, there's free help available for those struggling to limit spending, pay off debt and save for a down payment to buy a property.

"Most people don't realize they can access really good budget assistance at no charge, as well as free educational seminars on home buying," she says.

Would-be homebuyers can locate free counseling services in their area through the website of the U.S. Department of Housing and Urban Development (www.hud.gov). Once on the site, search for "HUD approved housing counseling agencies." Or call HUD's toll-free counseling locator: 800-569-4287.

-- Reduce your expenditures for "fine dining."

Overspending of any sort can reduce your chances of attaining your savings goal. But Detweiler says one of the toughest financial habits to break involves eating out.

"Restaurant tabs are enormous budget busters for lots of folks," Detweiler says.

Your savings plan won't crash just because you buy an occasional meal. But it's a different story for those who eat out several times a month at fancy restaurants that serve fine wines, exquisite entrees and delectable desserts.

-- Cast your buying plans in advance of shopping.

In the past -- before the baby boom generation -- many Americans used the "envelope system" to manage their spending. Each time they were paid, they'd tuck away dollars in specified envelopes for such necessities as food, rent, utilities and clothing. They'd also regularly allocate money for savings.

This envelope system was an effective money-saving strategy because it helped ensure that the essentials were covered and that savings accounts were fed. In addition, it increased the odds that money would be available for important big-ticket items -- such as the purchase of a replacement car -- without going into debt.

Nowadays, few people use the envelope system. But you can be equally effective in reaching your savings goals through automatic withdrawals from your paycheck to your savings account on a weekly or biweekly basis, Detweiler says.

"Given the high cost of living, advance planning is absolutely critical for families trying to buy a first home or make a move-up purchase," she says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Michael Crowley lives in a handsome Victorian with nearly 6,000 square feet of living space. He and his attorney wife bought the 107-year-old domicile for its charm, glorious interior moldings and shiny oak floors. Plus the spacious house has proven perfect for entertaining.

But fast-forward a few years, and the couple -- whose son is soon heading to college -- is planning to trade their three-level property for a single-level one. Why? Because climbing the home's three flights of stairs is becoming increasing taxing.

"I'm only 47 years old. But ... I have bad knees and a bad back. There have been times I had to practically crawl upstairs to get to the master bedroom. If I'm really hurting, I sleep in a recliner on the first floor," Crowley says.

As the broker-owner of a real estate firm that caters to homebuyers, he sees both the pros and cons of vertical and horizontal houses. Because of the rising cost of land, he says you typically get more house for the money when you buy vertical because the home's footprint is smaller. But he recommends a single-level house for most buyers over 50 who may someday have trouble tackling stairs.

He commends his mother, now 78, who had the foresight in 1974 to buy a 1,500-square-foot single-level property where she could live indefinitely in comfort. Indeed, she still lives there and has no plans to move.

"Like me, mom has a bad back and bad knees. But with a rancher, she never has to use stairs and can walk out onto her garden without any problem. She doesn't need to downsize to an apartment, which she'd hate to do," Crowley says.

Though Crowley sees the pluses of one-level living, particularly for older people, he also sees positives for the buyers of a multi-story home, including the privacy of sleeping upstairs.

Mark Nash, a real estate expert and author of "1001 Tips for Buying and Selling a Home," says buyers with mixed feelings about housing styles should visit at least two vertical properties, along with two horizontal ones.

Here are a few pointers for buyers deciding between vertical and horizontal:

-- Look forward to your future housing needs.

No matter your age, it's tough to foresee your housing requirements going forward, though Nash says that doing so to the best of your ability is important. He recommends you look ahead at least three to five years, especially if you are in your retirement years, during which injuries and illnesses can happen suddenly.

He says that couples with young children should think about how their kids' needs will evolve. Those for whom affordability is a major concern may wish to opt for a two-story house with extra bedroom space for their growing offspring.

-- Consider the possibility of future appreciation for one-level homes.

With the oldest baby boomers already in their late 60s, demand is rapidly increasing for single-floor living among pre-retirees and retirees. As a result, Nash says ownership of a one-level house should prove a good investment over time, so long as it's located in a desirable neighborhood.

"Particularly in communities where ranch houses are scarce, this could be a good bet. As time goes on, there will be more senior homebuyers who need one-story living as their knees give out," Nash says.

Nevertheless, he contends that some boomers still prefer to own a spacious two-story house with enough upstairs bedrooms to accommodate family members who stay overnight.

"In their retirement, some folks are practically 'professional grandparents.' They'd hate living in a small, one-level house or condo if it had limited space for their kids and grandkids," Nash says.

-- Factor in the advantages of a second-floor "hideaway."

An increasing number of people now telecommute or run a small business out of their home. And many such home-based workers relish a quiet space where they can retreat when they need to concentrate.

Crowley says that in most cases, a two-story house is better suited to home-based work than a single-level property. That's because upstairs rooms are usually better separated from the noise and congestion that often surrounds a first-floor entryway.

Likewise, many homeowners enjoy the tranquility of an upstairs bedroom.

-- Avoid any property that would need a first-floor addition.

Are you drawn to ownership of a traditional, two-story place, but want certainty that the property you buy will still serve your needs as you grow older? If so, should you consider buying a vertical house with the intention of building on a first-floor master suite?

"Absolutely not," Nash says. "Getting an addition put on is a pricey proposition that can take six months or longer and cost far more than anticipated."

Unfortunately, one-level houses aren't to be found in every community. However, if you're convinced that such a property is your best option, Nash encourages you to consider comparable nearby neighborhoods where one-level properties are more readily available.

"But never forget that location should be the top priority on your selection list," Nash says.

-- Don't seek to replicate your parents' lifestyle.

Were you raised in a family that's always lived in two-story traditional houses? Then you may be emotionally programmed to seek this type of housing, even though a one-level place would be better suited to your lifestyle.

In that case, Nash urges you to step away from your comfort zone to at least visit a few ranch-style houses.

"Eventually, someone in the family has to break with tradition. Choosing the optimal place to live isn't about getting a clone of your parents' place. It's about being happy with what's right for you," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Patricia Nowak was thrust into widowhood suddenly at the age of 47, when her husband was struck and killed crossing a street. She was overwhelmed by grief and the realization that she'd become both the sole parent and provider for her young children. But her problems multiplied when, just 18 days after the accident, her refrigerator caught fire, burning the family's house to the ground.

Tackling one issue at a time, Nowak, a public relations executive, eventually restored calm and order to her life. Because of the hardships of the experience, she later dedicated herself to helping other widows of all ages rebuild their lives. Drawing on her experience, she authored a book: "The ABC's of Widowhood."

Unlike many widows, Nowak didn't confront the thorny question of whether to sell the family home. But she says it's common for those who've lost a spouse to confront complicated real estate matters, including whether to put their property on the market.

Nowak says that anyone who loses a spouse is well advised to wait for a time before making a major move.

"If you can afford to wait, don't make any big decisions for the first six months, because you're in a fog for at least that long," Nowak says.

Nowak says the first order of business should be to organize your finances.

Though many young women now take a vital interest in money matters, she says those who become widowed at a later age often need financial counsel to make solid choices. But she advises against turning to relatives for such help, because they typically lack objectivity.

Rather, she recommends seeking advice from neutral third parties whose names you obtain through business or professional associates.

Arlen Olberding, a financial planner with the Garrett Planning Network (www.garrettplanningnetwork.com) says widows who own a big family house should think carefully before deciding to sell and move to a small condo.

"Trading down to a condo can have financial benefits, including a reduction in energy costs and upkeep demands. Yet, after taking your monthly condo fees into account, you may save less than expected. And your lifestyle could be compromised," Olberding says.

Instead of buying a condo, he says widows might be better off downsizing to a small, one-level house.

Here are a few pointers for widows (and widowers) trying to formulate their housing plans:

-- Make sure your finances are in order before making any move.

Mark Nash, a real estate expert and author of "1001 Tips for Buying and Selling a Home," says keeping a large family home indefinitely often means serious trade-offs for those who survive a spouse.

"I recommend you consult a certified financial planner or accountant before making any major real estate decisions. They can help you crunch numbers and forecast the implications of any options you're considering," Nash says.

Prior to meeting with an adviser, Nash suggests you spend some time with your checkbook and credit card statements to see how much your house cost you during the previous 12 months. Be sure to include mortgage and utility costs, along with taxes, insurance and maintenance expenses.

-- View housing as an integral part of a holistic planning process.

Nash says many people, widows included, see their real estate choices in isolation from their larger plans and dreams. But where you live can affect your lifestyle in important ways.

Suppose, for instance, that as a newly widowed person you'd love to go back to college to audit classes or work toward an advanced degree. In that case, you might wish to move from your current home to one closer to a university. Alternatively, those who love the arts might choose to leave a suburban location for a one closer to galleries, theaters and concert halls.

To whom should you turn to help chart your lifestyle planning for the next stage of your life? Nash says that sometimes a real estate agent who's willing to listen to your story, (and won't push you to sell,) is a good bet.

"You could also discuss your plans with a therapist, counselor or life coach," he says.

-- Take into account your emotional attachment to a family home.

Some widows are less interested in recasting their lives than in strengthening their ties with family. Some are strongly attached to the home where they raised their children and want to keep a place with extra bedrooms for extended family visits.

Nash, a long-time real estate broker, says he's worked with many older women who live to regret the sale of the spacious family home.

"Their home is their pride and joy. Once it's gone, they feel like a fish out of water," he says.

-- Think through plans to move near your grown children.

As the years pass, many widows are drawn to the idea of moving to a place close to the home of one or more of their children. But, as Nowak says, you don't necessarily need to move permanently to see more of your extended family.

"Why not rent an apartment near your kids for a few months of each year? That could allow you to remain the rest of the year in a part of the country where your friends live and your favorite activities are based," she says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)