Thursday, April 30, 2009

Save For Your Child's Education - Part 2

Saving Money Tip #129 - Save For Your Child's Education – Part 2. In the last post, I explained why I think it is important to help save money for your child’s education. In today’s post we will discuss various ways in which to save that money. There are several ways you can put money away for your child*:

--You can put money into any of your accounts or open a new account and basically just call t “college savings.” This can be a bank savings account, CD, bonds, mutual funds, stocks, or pretty much anything. While this is not necessarily a bad plan as you can use the money for anything if your child does not go to college, it does not have any tax incentive to help build college savings faster.

--You can put money away in your child’s name. Again, this can be in any type of account. One advantage to putting money in your child’s name is that children may not be taxed on some of their interest income (I believe it’s up to $600). However, a disadvantage is that if your child is applying for financial aid for school, then any money he has to his name counts against him in the financial aid formula. Another disadvantage is that when the child is old enough to withdraw the money, he can really use that money for anything, even if he doesn’t want to go to college, which may or may not be agreeable to you.

--Roth IRA – While the Roth IRA was developed to be used for retirement savings, there are some features associated with it that make it appealing to use for your child’s college education. I wrote about Roth IRAs here. While you already paid taxes on the money you put into the Roth account, it grows tax-free and you can make withdrawals from the principal at any time for any reason without penalty. Because of this feature some people like to use the Roth IRA for education purposes. I generally do not like the idea because there are other ways the government has given us incentives to save for education. And unless you have your retirement savings fully covered, you should be using the Roth IRA vehicle for your retirement savings. However, if you have been a great saver and by the time your child is ready for college, you see you have money to spare in the Roth IRA account, it’s perfectly legitimate to use some of the contributions for college. And money in your retirement accounts generally won’t count against your child if he is applying for financial aid.

--Coverdell Education Savings Account (ESA) – The government allows contributions of up to $2,000 per year into an ESA vehicle (this limit may be ending in 2010). Like IRAs, you can use this vehicle name to save money in savings accounts, CDs, bonds, mutual funds, stocks, etc. Money grows tax free in these accounts. We will discuss the ESA accounts further in my next post.

--529 Plans – This is named after section 529 of the IRS code and there are two types of 529 pans – a savings plan and prepaid college plan. Most people refer to just the savings plan as a 529, calling the other a prepaid college plan, which is what I will do here.

1. 529 Plans are offered through most states and offer no limits on how much you put in. Money grows tax free at the federal level (and if you open an account in your own state, it may grow tax free at the state level as well). We will discuss the 529 plans further in a future post.
2. Pre-Paid college tuition – Many states offer a plan where you can pay money now and they will guarantee that your child’s college education at a public state university is fully paid for (usually tuition only) when it’s time for your child to enter college. Using this plan, you don’t have to worry how well your investments are doing or how much the costs of public colleges in your state will increase because you lock in the rate when you pay. We will discuss this option in more detail in a future post as well.

In Real Life – Soon after my first child was born late in 2001, we started putting money away for her college education. In 2001 the legal limit on the Coverdell Educations Savings Account was only $500 and if we had our act together between November 2001 when my daughter was born and year-end, we would have contributed even that small amount. But with our first newborn, we didn’t have our act together, so we didn’t start contributing money to her college until 2002. By then the Coverdell ESA had increased its limits to $2,000 and that is what we started contributing each year to her college fund. At this point, our oldest is 7 years old and we have about $18,000 in her college savings accounts.

If we had more funds available to save, we would next put our money into a 529 plan, but at this point we don’t. We figure putting $2,000 away per year will probably cover only one year of college. My daughter does have an account in her name that we add money to when she gets birthday gifts or other earnings, but those savings are relatively small. Our Roth IRA is being fully funded for our retirement, so that is not going towards college. I will discuss in a future post our plans for saving the rest of the money needed to fully fund college for our children.

*What I write about here is my understanding of different plans, but I am not an expert on financial matters. How I invest is simply that. It is not necessarily advice for how you should invest. Talking to a qualified financial planner is best.

Wednesday, April 29, 2009

Save For Your Child's College Education

Saving Money Tip #128 - Save For Your Child’s College Education – Part 1. We all know that college is very expensive these days. In fact it seems that the costs are out of control and only getting worse. Knowing how hard it is for us to save for our children’s college over a period of 18 years, think how much harder it would be for a child to pay his own way. Yes, he can work summer jobs or work during school or apply for scholarships or go to community college. I wrote about some ideas to keep college costs lower here. However, I think the prudent thing for a parent to do is help his child with college costs.

I know that it is not possible for everyone to do this. However, I think more people have the ability to help out than they realize or admit to. I’ve heard nearly every reason that people feel they should not pay for their child’s education – they cannot afford to do so, the child will appreciate it more if he pays for it himself, no one did it for them, the child might not go to college, among others. However, I feel it is important to help out your child, if at all possible. Let’s challenge some of the excuses people make for not saving towards their child’s education.

“I can’t afford to save for college.” Just putting away $50 each month – the cost of a monthly cable bill - from the time the child is born until he attends college 18 years later would yield over $10,000 even if the money did not earn any interest! With a conservative interest rate of 5%, the money would be worth over $17,000! Even that small amount of $50 per month would put a nice dent into college costs.

“No one helped me pay for college.” If no one helped you, think how hard it was for you to either earn the money or for you to pay back the debts once you finished school. Also, starting out in the “real world” with debt just sets up a person for getting behind on his own savings plans.

“He’ll work harder at school if he pays for it himself.” I don’t believe that people who pay for their own education work harder in school than those who don’t. Raising a child to be grateful for what he has goes a long way to having a child who appreciates education, whether his parents paid for it or not. Furthermore, many people work hard to earn money and then turn around and waste it frivolously. Making money on your own doesn’t seem to guarantee that a person will use it wisely.

“He may not be college material.” Yes, it is true that not everyone will go to college, nor is college right for everyone. However, regardless of what your child does after high school – goes to college, learns a trade, starts a business, a solid financial backing from mom and dad would be helpful.

I realize that many people cannot fully cover the total cost of their child’s education. But contributing at least partially to their child’s college costs sets up a good cycle of saving habits that your child will learn from, not to mention the emotional reward he gets that mom and dad are behind him in his college endeavors. In the next part of this series, we’ll discuss various ways to save for college.

In Real Life (IRL) – My parents paid fully for my college education as well as that of my brother and sister. Neither of my parents attended college so they started a trend in our family that will hopefully continue into the next generation. I am saving for my children’s education, as is my brother. And I know that my sister is already paying for her kids’ college education – although they may be contributing some themselves, as well. Watching my parents scrimp and save to put us through college left an important mark on me. I knew they had sacrificed a lot so that we could get an education. And I did not squander it. Neither did either of my siblings. I think we all worked hard at school. Of course we weren’t handed money on a silver platter. We all had jobs in the summer. I worked through a bit of college, as did my sister.

And frankly because I had no debt coming out of college, I was in a better position than most people to get started on my own savings plan. I immediately started putting money away the first year I started working. And by the second year, I was already saving for retirement. Many of my friends, on the other hand, were busy paying off college loans, setting them back a few years until they could even consider starting a savings plan.

All this to say, if you can put money away for your kids’ future –whether it be college or a trade school or some other legitimate cause, I think it is worth it to do so. Of course, your life takes precedence, and most experts will suggest you save for retirement before saving for your child’s education. And I agree. But if you can do both, that is really the best. In the next post, we’ll discuss ways to save for college.

Tuesday, April 28, 2009

Learn To Cook

Saving Money Tip #127 - Learn To Cook. There are some skills that will serve you your whole life. Learning to cook is one of them. And it will not only serve you but it will save you money. Consider the alternative, which is eating out in restaurants and you are spending two to four times what it costs to make the same meal at home. Start out by learning the basics – either from reading a book, having a friend teach you or by taking a cooking class. Learn to boil pasta, cook eggs, and clean and make chicken, among other things. Once you have the basics under control you can make simple meals at home. Even eating scrambled eggs at home will save you a lot of money from eating out breakfast.

Next you can progress onto more intermediate cooking – such as making meatballs, making casseroles, and putting together meals. At this point you might become comfortable enough to start experimenting with your cooking. By using trial and error you will learn what works and what doesn’t. What you like and what you don’t. Sure you will make things that don’t turn out, but that’s all part of the learning process.

Once you have regular cooking skills and recipes mastered, you can learn even more sophisticated cooking techniques such as making sauces and marinades, different cutting techniques, and baking bread. You can customize what you learn from your tastes. Love pasta? Learn how to make it from scratch. Like eating bread – learn how to make it homemade. Or you can try to learn ethnic cooking such as Chinese, Indian, Italian, etc. The more things you can cook, the less you will want to eat out. You will not only gain a valuable skill, you will save a lot of money.

In Real Life – I’ve always known how to do very basic cooking such as making eggs and boiling pasta. I got by with very elementary cooking techniques and ate out for food I could not make. But then when I became a stay-at-home mom, I realized I have more time on my hands (and less money) and started experimenting in the kitchen more. I learned how to bake bread and cook chicken. I tried my hand at homemade pizza and pretzels. I attempted some ethnic dishes for meals such as homemade burritos. And while I only consider myself to be an average cook in the skills department, I find that I can make many more things at home that I used to eat out. They cost less, taste just as good, and I know the ingredients that go in them. And while we enjoy eating out, I find that it’s harder and harder to pick a place to eat at. Pizza? I make that at home. Burritos? I make those, too. So eating out has become less frequent for us, saving us a lot of money.

The best part about learning to cook is you don’t mind buying more expensive ingredients in the supermarket. Steak at home is still a fraction of the price of eating it out. Our food bill has actually gone down over the years as I learn how to cook more things even though I buy better ingredients. I realize not everyone enjoys cooking or has the time to do so. But if you think you would like it, don’t be afraid to learn new things in the kitchen. There are so many resources on the Internet: allrecipes, recipezaar, and fabulous cooking blogs such as smittenkitchen. For more frugal kitchen tips, go to one of my favorite cooking blogs, tammysrecipes and you might find yourself whipping up some yummy meals, too. And don't forget all of the money you will be saving!

Monday, April 27, 2009

Stick To The Basics

Saving Money Tip #126 - Stick To The Basics. When it comes to ones finances, many people are overwhelmed. They say that finances are difficult. Or they claim that they do not know anything about investing. Or they say they are not good with math. Or they say they just don’t understand any of the financial terms. However you should not be afraid when it comes to personal finance. Just stick to the basics:

1. Keep your expenses below your income.
2. Put a certain percentage away for future purchases; and
3. Save a certain proportion for retirement.

Just do those three things and you should be fine with your own finances. You do not need to understand what preferred stock is or what a company’s price/earning ratio is. In fact, you can understand pretty much know next to nothing about investments and still become rich or at least financially comfortable. Someone who borrows money and then invests it in high-risk stocks is not necessarily going to do better than a person who puts away part of his income each year and invests them in Certificates of Deposit (CDs). In fact, he may even do worse.

So for those of you who are just starting out with personal finance and are learning the different investments and finance terms, do not be overwhelmed. Stick with the basics. Live on less than your income. Many rich individuals (those who have lots of money put away in savings, not necessarily those who drive fancy cars and live in big houses) say they got rich because they lived on less than they earned. Some of them lived on half of their income. Some maybe lived on 70% of their income. Either way, they lived on less than they earned. If they had big purchases on the horizon, they saved up for them. Maybe 15 percent of their income would be put away each year for a new car in the future, home repairs, a special vacation or a combination of all three. Lastly, they put away money each year for when they would not be bringing in an active income (i.e. retirement). Some experts recommend that you save at least 15 percent of your income for retirement. Others say put away as much as you can. A lot depends on when you will retire and how much income your retirement fund will generate. If you do not take on much risk, you should put away more. If you are more aggressive in investing, you may be able to put away less.

Really, that’s all there is to personal finance. Yes, it is nice to understand what a mutual fund is and it would be good to comprehend asset allocation. And if on your personal finance journey you become interested enough to study investment terms or at least go beyond the basics, you will probably do better than someone who just puts all of his money into a money market fund. But if your eyes glaze over listening to talk of finance, take heart. Do the above three basic things and you should still be okay.

In Real Life (IRL) – I like math and I am interested in finance. I even got my degree in it in college. But frankly, I don’t care to learn that much about various types of high-level investments. In fact, I couldn’t care less about them. My money is currently invested in CDs, mutual funds, and some government bonds. That’s it. I don’t even own any individual stocks anymore.

Over the years, I have accumulated a fair sum of money, not because I know anything more than the next person about which stock is hot or how to get rich quick. Quite the contrary. The only thing I have done is lived on less than I earned – always. I’ve never gone into debt to keep up my standard of living or to buy things. I’ve worked things I want into my budget or I save for them over the long-term. Lastly, I put away a percentage of my income for retirement. It started out as 3 percent and quickly moved up to 13 percent. Now we put about 20 percent of our income away for retirement. We don’t invest aggressively. In fact, we are probably a bit more conservative than most. Yes, I understand different retirement account advantages, such as 401(k) and IRAs. And I know where to put away college money (in an Education Savings Account or a 529 plan), but beyond that I operate our family’s finances very basically.

The point of this of this post is to let you know that you do not have to be an expert or even too interested in the financial world to accumulate money. And just because you don’t understand much or are not interested in finance doesn't mean you should just avoid it all together. In fact, the opposite is true; even if you get overwhelmed by investment terms or math or various financial accounts, just do the three things mentioned above and you will be on your way to a financially secure future.

There are many excellent personal finance and investment blogs on the Internet. I am just discovering some of them myself. To that end, I participated in a Carnival of Finance this week. Check out this blog carnival and learn more about finance, investing, and frugal living, in case this stuff doesn't overwhelm or bore you. ;-)

Saturday, April 25, 2009

Our Family's Finances - Weekly Wrap-Up

Expenses – I spent $8 at Whole Foods – still using a gift card that I received. I did my monthly shopping at Trader Joe’s and spent $53. I spent $24 at Safeway and my husband spent $17 at Costco. So we spent $94 for food this week plus the gift card. I spent $12 at a used book sale at our local library. I also spent $11 at a thrift store for more books and an American Girl nightstand. So I spent a total of $23 at thrift stores, mostly for resale and a few things to keep.

Deals – I bought great books at the book sale – 25 cents for children’s paperbacks and 50 cents for hardbacks. I am building up a lot of books for various popular series to sell on eBay. The bigger the lot, the more per book you usually get. I got such good supermarket deals at Safeway. I read about them on several different blogs. Basically, if you spent $30 on certain items, you got $10 back for a future purchase. And you could use coupons to bring the $30 price even lower, which I did. In total I spent $24 and stocked up on cereal, toilet paper, dishwashing detergent, baby wipes, laundry detergent, juice, peanut butter and a few other things.

Income – It was a slow week income wise. I received a check in the mail for $10 for some surveys that I completed and $3 in PayPal for another survey. I only sold one item on eBay for $9, but put a whole bunch more up there for next week.

Investments – I put in $1,000 into a mutual fund for my daughter’s education fund. So now I have $2,000 down for the first quarter of the year and $2,000 more to go. That part is definitely going in next week. I am a bit behind on this since this should have been done by the end of March.

Giving – I generally think of giving as donations to charities, but giving to friends and families are just as important if not more important. To that end, I gave a bit of my time this past week. Carpooling helps everyone, and in the past I have relied on people to give my daughter rides to activities while my younger children are napping. My parents were visiting this week and while they watch my other children, I was able to give back to others by driving their kids around as a “payback”. A friend also asked me if I could watch her daughter after school one day this week and next. This is the best type of giving at this stage of my life. When my children are older, I hope to do more direct giving – volunteering of time to those less fortunate. We also gave a bag of donations to Purple Heart. I know we have more around here that I can donate; I just need to take the time to gather the things up! Oh and we gave some homemade chocolate chip cookies to a girl in the neighborhood for her birthday. She’s always so sweet and plays with my children.

Friday, April 24, 2009

Change The Attitude

Saving Money Tip #125 - Change The Attitude. It seems that many of us have come to expect things in life that we had when we were younger or that others seem to have today. If we have this attitude, then we think we can buy whatever we want, take whatever trips we are used to going on, and drive any type of car we think we need. But changing this “entitlement” attitude will go a long way to putting more money in our pockets. Just because we had things in the past, does not mean we deserve to have them now or in the future. As times change or circumstances change we have to change our spending habits, too.

I have seen some people who have an attitude that they deserve certain things because they work very hard. “I deserve this new car because I kill myself every day at the office.” I know other people who think because everyone else is going on a trip to DisneyWorld means that they need to be going, too, even if they do not have the money or if the husband has recently lost his job. And I have friends who insist that they cannot lower their standard of living because it is beneath them. If they grew up in a big, modern home, then they are entitled to a big, modern home now, regardless of the circumstances.

Where did people get this attitude? And can they change it? I think so. I think most of us just need to realize that we don’t deserve anything just because we had it before, because we work hard, because we want it, or because everyone else has it. Our attitude needs to become, “this is what I can afford, so this is what I will buy.” Period. What others are doing, what we used to do, what we want, and how hard we work is inconsequential. Trust me when I say that having an attitude of buying only what you can afford will go a long way in having money saved up so you can do or have those other things you used to think you deserved.

I’m not saying that everyone has this entitlement attitude, but I think enough people do that they were going into debt buying things they couldn’t afford, helping to lead to the current credit crisis. If you think you are guilty of thinking you deserve more, can you change your attitude?

In Real Life (IRL) - Growing up, I lived in a brand new 4-bedroom 2,500 square foot colonial home in suburban Philadelphia. Relative to the rest of the town I lived in, it was on the nicer, larger side. My parents were about 33 or 34 years old when they bought the house. They paid $42,000 for it at a time when my dad’s salary was probably about three-quarters of that. When my husband and I went to buy our first home, I was also 33. However, times had changed. Real estate had gone up quite a bit, and we were looking in the Washington, DC area, which is a bit pricier than Philadelphia. We ended up buying a 3-bedroom 50-year old 1,800 square foot ranch house – a far cry from the home I grew up in. And it cost more than twice as much as my husband and I were making combined.

My sister kept telling me, “I can’t believe you are buying such a small house.” But it really didn’t bother me that much. I actually liked the idea of a cozy, older home. But more importantly, I did not have an entitlement attitude, that I deserved a big 4-bedroom colonial because that is what I grew up in. This is the way things are now. Real estate is more expensive relative to our incomes. And DC is more expensive than Philadelphia. And of course, most importantly, this is what we could afford. Period.

I have a fair amount of money saved in the bank. I am pretty comfortable with our financial position even with the economic crisis around me. It’s not because I come from a fabulously wealthy family or because I have or ever had a superpower job. The truth is, I do not and did not ever have an attitude that I deserved anything. I buy only what I can afford, without overextending myself and so that a portion of our income always goes into savings as well. I do not have an attitude of entitlement. And because of this I am satisfied with where I am and with what I have. If others changed their attitudes, they could improve their financial positions and I think this would lead them to being happier, too. For other frugal tips, check out Frugal Fridays at Life As Mom.

Thursday, April 23, 2009

Take Advantage

Saving Money Tip #124 - Take Advantage. Opportunities present themselves in many different ways throughout life. It is best to take advantage of these opportunities with regards to saving money. If you live in the country, take advantage of all of the land around you and go out for picnics, go on hikes, pick edible wild berries, or go on a bike ride. All of these activities are free. If you live in the city, take advantage of all of the sights – museums, capitol buildings, statues, walks, or concerts. Most of these activities are free as well. If you are young, take advantage of your youth and walk where you need to go, ride bikes for exercise, play sports with friends, and use your imagination to have fun. If you are elderly, take advantage of your free time by reading, writing, creating, or cooking. If you work, take advantage of the opportunities presented to you through your office – holiday parties, employee picnics, or business trips. If you stay at home, take advantage of what’s around you – learn to cook or sew or enjoy activities in your town or city. If it is raining, take advantage of indoor activities. If it is sunny, take advantage of outdoor ones.

If we take advantage of the opportunities that are presented to us, then we will save money. If we seek out other ways to spend our time, we will spend more money. For example, a person who lives out in the country can spend the day on a nature hike. This is free. However, if he wants to visit a museum, he will have to drive to the city – spending money on gas. If a person in the city wants to go on a nature walk, he would have to drive out to the country – spending money on gas. Instead, he could do a city walk for free.

If a person works full-time and wants to learn how to cook, he would have to squeeze in time on weekends or after a full day at the office. If a person is a homemaker, learning to cook is a natural opportunity. On the other hand, a person who stays home who wants to travel to a new city would spend a lot of money getting there and while they are there, while a person who works may presented with the opportunity to go on a business trip and will see a new city as a benefit.

An elderly person may mourn the lost opportunities of his youth to learn how to play baseball, but could easily learn how to play the piano. A young person can take advantage of all of his energy and play sports, while putting off learning to knit for a time when she has less energy. The opportunity of a rainy day may be a good time to learn to knit or practice your writing, while a sunny day would be a great time to garden or take a walk

I am not saying you should never do those things that cost money or that are more of an effort. But I often find, that when people are looking for things to do, they look outside their homes or communities and beyond their abilities, when there are many opportunities right nearby or easier to attain. Why not start with those first?

In Real Life (IRL) My husband had two back-to-back business trips this past week. One was in Arizona. He was able to take advantage of this trip and extend it two days to visit his sister in California, four hours away. For the cost of a rental car, he got to see his sister who lives on the opposite coast from us. He took advantage of an opportunity presented to him. Had he planned a trip to visit his sister separately, it would have cost plane fare as well. His second trip happened to be in North Carolina, near where his mother lives. He not only took advantage of that time to see her, he stayed with her and saved the company money on a hotel room.

I am a stay-at-home-mom, but I used to work full-time. When I worked full time, I made simple dinners when I got home from the office, and we ate out more, taking advantage of the higher income we had to try out new restaurants and ethnic foods. Now that I stay at home, I have taken advantage of the time I have in my house by learning to cook from scratch and baking bread. I have the opportunity to do this now and know it won’t be as easy when I go back to work.

We live just outside the city of Washington, DC. For the cost of a Metro (subway) ride, we can take advantage of hundreds of museums, monuments, and government buildings, and a zoo – all that are free! We won’t live in Washington, DC forever, so we take advantage of this opportunity now. When we live elsewhere, it would cost a fair amount to visit this city. As I get older, I look back and often wish I had done things differently when I had the opportunity to do so. I wish I played more sports when I was youthful. I wish I took advantage of all of the free activities that were offered to me when I was in college. Now that I am older and supposedly wiser, I am trying to take advantage of what we have and where we are and hopefully save money while we are at it.

Wednesday, April 22, 2009

Shopping Is Not An Activity

Saving Money Tip #123 - Shopping Is Not An Activity. When did shopping become an activity in and of itself? I’m sure when it first started, people went shopping to actually buy something. They did not go shopping for the heck of going shopping. People went into town when they needed something to buy, or they went to the market when they needed to get things to eat. But at some point people’s mentality changed or perhaps they had too much time on their hands, and they decided to go shopping just for the act of shopping – looking around, soaking in the purchasing atmosphere, and perhaps buying something themselves. And that, my friends, is when the problems started. People started buying things they didn’t need because they did not set out to buy the item in the first place.

If shopping were something we did only when we needed to buy something, fewer people would be in debt nowadays, and our homes would have a lot less clutter in them. But in today’s society most people do not go shopping just when they need something. How many women decide to get together and say, “Let’s go shopping.” Or how many vacation tours have a shopping excursion as one of the activities versus visiting a museum or a natural site? Shopping has become ingrained in our culture as an activity to do in and of itself. And until that changes, our amount of debt and clutter will continue upwards.

While I am not a big fan of recessions, I think at least it is teaching some of us that we need to cut back and if that includes shopping, then I am all for it. I believe we need to rethink our attitudes toward shopping and limit it to something we do when we need something. If each of us did that, we’d have a lot more money in our pockets and more time to do other things.

In Real Life – This is not the first time I have written about shopping. And it probably won’t be the last. I think it is a fundamental problem with our society. We go shopping for the sake of shopping, and that has led to high debt among people. In general, I do not enjoy shopping. I very rarely go to the mall or the store just to look around. If I have something specific in my head that I am looking for and I want to do research on it, then I enjoy going. But I very rarely go just to go. And when I do go to the store because we’re nearby I find that I am tempted to buy things that I didn’t set out to buy in the first place. The less often I go in the stores, the less I spend. I imagine that would be true for most people.

I will admit that I do shop at thrift stores or yard sales just for the heck of it. That is something I do enjoy. In my defense, I am looking for things to resell for my eBay business. But in the meantime, I often find other cute things that my kids would like or would look good in my house. Fortunately, because the prices are so cheap, it hasn’t caused me to go into debt, but it has built up the clutter in my house. And I do see the connection of just the act of going there leading me to buy things I didn’t need in the first place. I am working on being more selective with what I buy and passing up things even if it is a good deal, unless it is something I set out to buy or if it is for resale.

Once we cut out this mentality of going shopping for the sake of shopping, I think our society will be much better. Debt will decrease, people may use their time more wisely, we will all have less stuff, and our landfills won't fill up so quickly. I am trying to work on this on my end. How about you?

Tuesday, April 21, 2009

8 Ways Not To Become Rich

Tip #122 - Eight Ways Not To Become Rich. Besides having a “real” job, there are little ways that you can make money on the side. These little ways include filling out surveys, doing Internet searches, testing products, and looking at advertisements. These little things will NOT make you rich. But they are fun ways to earn some extra side money or gift certificates for things you can use. Let’s explore some of these options.

Looking at Advertisements: There are a few sites where you can earn money looking at advertistements.

YouData – This is one of my favorite sites. You can see that I have an advertisement for them on my sidebar. This site is great because it doesn’t involve much time - only looking at advertisements. And they don’t come into your inbox. You login and they send your way ads that are targeted to you. For each ad that you look at you get about 15 cents. And every Friday, they deposit money into your PayPal account! I love that – no waiting around months to receive your money. I receive about 50 cents to 1 dollar every Friday into my account – not bad for a couple minutes of time. (Full disclosure – if you sign up for this site, I will get referral compensation of about 15 cents. ;-) ) Note: that at sign-up they will need to send a text message to your phone to confirm that you are real. It is a one-time deal and you won't receive any other texts from them.

Surveys: There are dozens of survey sites. I like the ones that pay money or points towards gift cards. Some just earn you entry into a sweepstakes. I have not tried all of them out there, but of the ones I have tried, my favorite are below.

Global Opinions Panal / Synovate – this company has become my favorite one to do surveys for. The surveys come to my inbox on a regular basis – usually about one survey every few days. I don’t qualify for all of them, but for several. Each survey is worth points and after a certain number of points, you can cash it in for a check. I even get a few points for surveys that I don’t qualify for! In addition to the surveys, I have also tested a few products for them – regular household items – that they mailed to me, and then I answered a survey about what I tested. I have received a couple of checks from them in the mail and got to keep all that I tested.

Kidzeyes this is a great survey program for children ages 6-12! My daughter sees me doing surveys sometimes so she was excited that she would be able to do them as well. Signing up is a bit funky – I had to call and leave a message for them to confirm my sign up. But all is good with this firm. The surveys we receive are few and far between but they have paid us well for them. We have received a couple of $10 checks from them in the past few months. There is a sister program called Teenseyes for teenagers, which I have not tried.

CashCrate this survey site is time consuming, I will admit. They have a lot of things going on on their site which appear to lead to many emails going into your inbox. I don’t do any of those things. The only thing I do are the Research Surveys. You can do up to two per day and they pay 80 cents per survey. What I like about this site is that I can do up to two per day – much more frequent than what other survey sites send me. However, many of those surveys are pretty long and are not worth my time for 80 cents. Having said that, I often get sucked in and just finish them up. Once your balance reaches $20, you wait until the middle of the next month and then they send you a check. I received a $20 check after about a month when I initially did these and then I slowly started to not qualify for many surveys and my completion rate has slowed down. I am close to reaching my second $20. What is frustrating about this site is that I often answer many questions to find out that I don’t qualify and I don’t get anything for that. But I like this one because there are surveys almost always available (Full disclosure – if you sign up for this site, I will get referral compensation of about 15 cents. ;-) )

Survey Savvy
This one is a good survey site as well. I don’t receive emails from them frequently but occasionally. Each survey pays a different amount depending on its length and other factors. (Full disclosure – if you sign up for this site, I will get referral compensation of about 15 cents. ;-) )

Pinecone Research – this survey company pays $3 per survey, which is a fairly high dollar amount comparatively. The downside is that the surveys are few and far between. They send them to your inbox – on average maybe once every couple of months. Of course, if you fit the profile they need, you may get surveys more often. Pay can be sent via check or directly deposited into your PayPal account. The problem is with this company is that you need to sign up through a banner ad of theirs; you cannot do it directly from their website. So you have to find one to sign up for them. I signed up through someone’s blog, so it may be worth it to do a search to see if they have sign-ups available.

Testing Products: If you like trying out new products there are a few sites that allow you to do this by sending you things in return for your opinion or spreading the word. I mentioned that I've tried out products and given my opinion on them for Synovate. Below is another company that has you test products.

BzzAgent This company allows you to test products and share your opinions about them with others. They will send you offers to participate in a campaign – for example, a new apple juice has come out. They might send you coupons for free apple juice and discount coupons to share with friends. You try the juice and are supposed to “Bzz” family and friends about it – telling them about the new juice and why you liked it or not and then give them coupons for them to try it. After this, you write a “report” of a few sentences explaining who you “buzzed” and what you said. Over the couple years I have been with them I have tried about three or four products – some were new and others had been around for a while. I have turned down products that I didn’t want to try.

Internet Searches: There is at least one compnay out there that gives you credit for doing Internet searches with them. There may be more, but I am not aware of them.

Swagbucks: Most people have heard of Google to search for something on the Internet. But there are other search engines out there. Once such search engine is Swagbucks. And this one pays you to do searches. Search for whatever you want just like you do through Google but do it through Swagbucks instead and you accumulate points. Points can be used for gift cards or other items. I’ve been accumulating points and cashing them in for Amazon gift cards. After a few months’ of use, I three $5 Amazon gift cards and am working toward another $5 one. There are other ways to accumulate points on their site, but using their search engine is the biggest way. They use Google as part of their search engine so you should be able to find what you want using Swagbucks. (Full disclosure – if you sign up for this site, I will get referral compensation of about 15 cents. ;-) )

In Real Life – All of the items listed above are time consumers and if you figured out an hourly rate doing these things, you would not be impressed. But if you have time to kill or enjoy doing surveys, it is a fun, easy way to make a few bucks on the side without much effort. I have been participating in most of these for just 6 months with the exception of Pinecone Research and BzzAgent, which I have been part of for more than a year. And in the 6-month time period, I have probably accumulated about $100, got free products to test, and earned $15 in gift cards.

I usually do the surveys first thing in the morning when I go on the computer, taking a few minutes each day. And then as I receive them in my inbox, I fill them out as I have time. The products I have tried have been for things I would normally use or buy saving me money in the process. Plus it’s a lot of fun to try to be the tester of new products!

As I said in the title, these things won’t get you rich, they won’t even get you comfortable, but if you have extra time and enjoy these types of things, it’s a fun way to earn a little bit of pocket money.

Monday, April 20, 2009

Be Behind The Times

Saving Money Tip #121 - Be Behind The Times. One sure way to keep your expenses down is to not jump on the latest and greatest thing – the latest electronics, the latest books, the latest movies, the latest decorating scheme, etc. When things first come out, they are generally the most expensive. The marketing folks try to make us think that we cannot live without this latest item. Everyone around the proverbial water cooler is discussing it, and frankly, you can feel left out if you don’t have one. But don’t jump on that bandwagon; it will only lead you to spending more money than necessary. Instead, wait until the item has been out for a while. Competitors often jump on scene with similar items bringing the cost down and kinks are often worked out after the item has been out for a little bit. By waiting sometimes as little as a few months, you can save yourself lots of dough. Let’s discuss some examples.

Electronics are one area where there is constant updating of technology or features. Take for example DVD players. When they first came out they were a couple hundred dollars. Those who were anxious to jump on this latest technology paid a lot of money for their players and their DVDs. Meanwhile, many people happily stayed with their VCRs, holding on to their money, while still enjoying watching movies. Now that we are several years into the DVD player technology, a person can pick one up for much less money - the cost of the players is well under $100 and DVDs have come down in price to nearly half of what they were when they first came out. And of course some people looking for the next in movie technology have already moved on to the next great thing. By waiting just a few years you can enjoy what others were enjoying, but for a fraction of the cost.

Let’s talk about movies and books. When movies first come out, they are in first-run theaters with regular prices. The first day or first week of the movie, the theaters often won’t accept discount coupons. Is it really necessary to see a movie the first day or two it comes out? Wait a week and use a discount ticket. Wait a couple of months and see it at the discount movie theater. Wait a few months and rent it for a couple of dollars for several of you to see it. You still get to experience the same movie – just at a later date. Books are the same way. When they first come out, you are forced to buy the hardback edition from a retail bookstore. Wait a few months and you can get the paperback. Wait a year and you can buy it used for a fraction of the initial cost. (Of course, getting it from the library is always an option, too).

Lastly, let’s discuss decorating - things like stainless steel appliances, front-load washing machine, wood vanities, and granite countertops. As soon as we see these things on decorating shows, it is appealing to want to run out and buy them. But remember, the first company to come out with a technology like a front-load washing machine often have a monopoly until a competitor comes out with a similar model. After a year or two, you start to hear about problems that people had with the first models. The company perfects the item and more companies come out with similar models. All of these things bring the cost down and improve the product. Wait a few years for that technology and you will get a better deal and a better product. Even items that don’t have technology involved with it, like stainless steel decorating, come down in price as competitors offer a similar style.

These are just a few examples of things that go down in price after a few years. We can apply this thinking to cars (e.g. hybrid cars), cleaning and storage products (e.g. vacuum bags, Swiffer mops, Magic Eraser), sneakers (e.g. having the latest cushy features), food (e.g. in special containers, with improved ingredients). My thinking is that we survived just fine up until this point without these products. I can wait a little longer to try them out when they don’t cost as much.

In Real Life (IRL) – I usually take a lot of thought with my purchases, so it is not my personality to be the first person to try out a product. This trait has served me well financially. I guess I go by the motto, “If it ain’t broke, don’t fix it.” Our 27-inch t.v., which a mere 15 years ago seemed pretty hip is definitely outdated. But, it works for me and I see no reason to run out to buy one that is bigger, clearer or flatter. When this one breaks, I probably will do so. And by that time, not only will the costs have improved dramatically on it, the technology will have too.

I am still using the same white refrigerator that came with the house when we bought it 8 years ago. And while we replaced our dryer when our old one broke, we stuck with a simple model. Meanwhile, some moms in my Moms’ Club have been discussing many problems they have had with their new high-efficiency front loader machines. I am glad I did not pay to be a guinea pig for that product.

While I do admit to running out and paying full-price for a brand-new movie last summer that I really wanted to see, I generally wait until it comes on DVD or I go to the theater after it has been out for some time – often using a discount coupon after the movie has been out for just a week or going to a discount theater after a couple of months. Waiting helps not only the pocketbook, but also acts as a screener by allowing me to hear reviews of the movie from others if it is even worth seeing. I almost always put a book on reserve at the library. The newest releases sometimes take a couple of months to make it to me, which is fine with me. And if it’s a book I want to add to my personal library, I wait until I find a good used copy of it to buy.

These are just some examples of things I do. By waiting to buy things I save money and usually get an improved product. To me it is worth it. I don’t have to be the first one to try something. It doesn’t make me feel more important. Personally, I’d rather be smart and save the money.

Saturday, April 18, 2009

Our Family's Finances - Weekly Wrap-Up

Expenses – Since I’ve been doing these weekly wrap-ups over the past four weeks, I realize that I really don’t spend very much money on a daily basis. Generally, I go food shopping to a few grocery stores each week and I might hit a thrift store or a couple of yard sales but that’s it. I don’t normally spring for extras during the week. My kids are signed up for many activities that are already paid for and we take advantage of free activities like the library and playgrounds. Other than that, I see why I am a good saver – I don’t spend much money. Pretty simple. Anyway, on to my expenses this week – I spent $25 at Giant, $33 at Safeway, and $10 at Costco for a grand total of $68 for food this week. My husband went out of town this week for work, so that probably accounts for why we didn’t need much – he is by far the biggest eater in this household. I’m sure my husband racked up many expenses on his boondoggle, I mean important business trip to Scottsdale and the added leg to visit his sister in California. But I am unaware of such expenses yet (and I probably won’t be privy to some of them ever).

Deals – Let me let you in on a little secret. If you ever want to get a deal on something, bring a couple of screaming kids with you to the market and let them handle the products. I usually like to shop by myself but since husband was out of town this week I had no choice. Anyway, I went to Giant and picked up some butter, which I thought was on sale for $1.99. I ran it through the self-checkout and it rang up at $4.47. It turns out it was a 3-day sale earlier this week, but the circular was unclear. Problem is, my 21-month old son opened the butter, pulled out a stick, unwrapped it and was holding the naked stick in his grubby, little hand. Oops. The guy helping at the self-checkout said, “I’ll just give that to you for the sale price.” “Thanks,” I replied. “I don’t think anyone else will want to buy this one.” Besides that screaming good deal (literally), I got several pounds of grapes for 99 cents and 12-packs of Thomas’ English muffins for $2. Other than those, I don’t remember any phenomenal deals. I didn’t study the circulars too well this week since I was flying solo.

Investments – I haven’t done a darn thing in this area. I know I still have $3000 I need to invest for the first quarter of this year. I am hoping to put in at least $2,000 of it by next week.

Income – I only sold a couple of things on eBay this week for a grand total of about $25 but my husband sold something for $40. I haven’t done much else in the area of income. I need to work on listing some more of my items. I have a couple up there now, but no bids yet.

Giving – It seems like the supermarkets have become the place for collecting for every cause lately. This week it was Knights of Columbus at Safeway. I put in my spare change, and that’s it. I also started a new bag of unwanted things to give away. As I find more stuff we don’t need, I add it to the bag.

Friday, April 17, 2009

Prioritize Your Wants

Saving Money Tip #120 - Prioritize Your Wants. If you are getting frustrated because you don’t have the money to afford the things you want to do then make a list of your priorities and their costs. Very few people have an endless supply of money to spend on everything. So unless you want to go into debt, people with a limited income (nearly everyone) must sacrifice things that they do not enjoy as much to spend money on things they enjoy more.

Let’s compare Person A, Person B, and Person C who each make $50,000 per year. For simplicity’s sake, we will say that each person has $24,000 left over after paying taxes, groceries, car expenses, and utilities. Person A lives in a fancy rental apartment with 24-front desk service and a washer/dryer in her unit. She pays $2000 per month for this unit. She loves living there. However, her high rent precludes her from doing other things such as going out and taking vacations. But she does not care. She enjoys staying at home and does not really like to travel. Person B, on the other hand, thinks her life would not be worth living without experiencing other people and cultures. She also loves socializing and eating out. She spends $500 per month for travel and entertainment. To allow her to do these things, she rents a very basic apartment for $1500 per month with no front desk and no washer/dryer in her unit. Person C, however, wants it all. He wants the fancy apartment and wants to go out on the town and take vacations. He rents the same $2000 per month apartment as Person A and takes the does the same types of vacation and entertainment as person B. So Person C goes into debt for $6000 per year.

For all three of these people, there are competing wants – a fancy apartment, entertainment, and travel. However, Person A and Person B each prioritized their wants and made adjustments based on their salaries. Person A spending more on her apartment, and person B spending more on vacations and entertainment. Both people are content with their choices. By prioritizing their wants, they can enjoy what is important to them, while staying within their income. Person C, on the other hand, did not prioritize. He may like travel more than his fancy apartment or vice versa. We don’t know. He wanted everytying and he paid for everything he wants without taking into account his income. Therefore, he is in debt. Person C should have prioritized (or, as an alternative, he could go out and earn more income).

Of course things are not as simplistic as this example, but each of us could figure out how much extra income we have to spend on fun things. Then make a list of your wants and then put that list in order with accompanying dollar amounts. Cut off the list when you are out of money. It would look something like this:

Discretionary Money = $200 per month
1.Vacation - $100 per month
2. Haircut - $25 per month
3. Eating Out - $50 per month
4. Manicure - $25 per month
5. Movies - $25 per month
6. Gym - $25 per month
7. Pedicure $25 per month
8. Cable - $50 per month
9. Cell Phone - $25 per month

Wants may change at any time. You may realize that you really do need a cell phone and can do without getting a professional manicure, so you reorder your wants. Whatever the order, prioritize your extras and cut off those that don’t fit in with your income. None of these things are worth going into debt for.

In Real Life – I cannot say that I ever truly sat down and prioritized my wants on paper. But I do know what is important to me (and for the record it looks very different than my sample list above). Vacation is probably my #1 priority after our needs have been met. I would cut off cable and eating out just to take a vacation once per year. For others, they would rather enjoy cable all year long than a one-week getaway. And that’s okay. Everyone is different. And even though I don’t write down my priorities I do know them in my head. And only the ones that are important to me are in my budget. There is no line item in my budget for manicures or pedicures or even the gym. However, if going to the gym suddenly became important to me again (and it probably should) then I know I would need to tweak something else in the budget – get rid of eating out once per week or perhaps cut down eating out to twice per month and get rid of my cell phone or some other combination of line items in my budget.

The point is – I don’t do it all. In fact I don’t do a lot of things. I don’t belong to a swim club. I don’t buy myself very many clothes. I don’t go to an expensive hair salon. I don’t have unlimited funds, so I use what I have and do the things that I really like with that – going on vacation, eating out, and activities for my children. Down the road, my priorities will probably change and I will have different line items on my budget according to my new priorities. I will always leave things out that are less important to me. What are your priorities? How do spend your fun money? For other frugal tips, check out Life As Mom.

Thursday, April 16, 2009

Reduce, Reuse, And Recycle - Part 3

Tip #119 - Reduce, Reuse, and Recycle – Part 3. Today is the last part of this series, and we are going to discuss recycling. Recycling has almost become a buzzword lately. I hear many people around me talking about recycling. Basically, it is putting back into production items that no longer have useful life. If you finish with a plastic bag and can’t use it anymore you can recycle it at the supermarket to later be turned into other plastic products. Your newspaper that has no use to you anymore can be recycled on recycling day at your home to be turned into other forms of paper one day. While recycling is great – much better than going directly in the trash – steps 1 and 2 of this triad are much better for the environment and for saving you money than recycling.

Let’s look at the example of the plastic bag that you took from the supermarket. Had you reduced your consumption and used a mesh bag from home, you would have saved 5 cents at many markets. Even if the market does not pay you to bring your own bag, you still contributed to lower overhead costs for the market by not taking a plastic bag. Lower overhead costs lead to lower grocery costs. In addition, by bringing your own bag you prevented chemicals, raw materials, and energy being burned to make a plastic bag. So reducing really is the best.

But let’s say you forgot to bring your own bag to the market and you take one. You forgive yourself and say you will put it in the recycling bin next time you are there. But what about step 2 of the triad – reusing which is still better than recycling. How about reusing the bag until you used the useful life out of it? Reuse it next time you go to the market or reuse it to clean up after your pet or use it for a trash liner. Before you recycle it, it can be used again. This leads to savings from not having to buy another bag, as well as environmental savings of producing another one.

After it has been reused, then it is time to recycle it. Hopefully, it will go to a place where it will be used to produce other plastic products. While this will not usually save you money directly, it can lead to lower production costs for the plastic company because they are not using materials already in existence rather than raw materials. It is certainly better for the environment.

There are a few things with which you can make money directly when recycling. Did you know that you can recycle aluminum and take it to an aluminum dealer for cash? It would take a lot of cans, but other things have aluminum in it – aluminum siding, old gutters, and parts from cars are just some examples. Aluminum has become expensive and someone may pay you good money for it.

There are places to “recycle” cell phones, printers, computers and other electronics. To me, this is actually reusing them since most places will only take the latest models. Either way, it may be a simple way to earn a few bucks and keep the item out of the landfill. Do a Google search on selling cell phones or other electronics and you will find a bunch of mail order places that will accept them. If not, a local school will often take electronics, and while they won’t directly pay you for them, it may help keep your school taxes down.

Lastly, I have read several places recently about a new program being test marketed in certain areas that pays you for recycling everyday stuff such as our bottles, cans, and jars. This program is called RecycleBank and it works by putting your recycling in your bin like usual, except the bin has a computer chip that records how much you recycle. You get rewards points for each pound you recycle, and then you can use those points at the supermarket or other stores. This program is supposed to encourage people to recycle rather than throw away. It would encourage me!

While no one is going to get rich off recycling, it is the preferable thing to do for our environment. Keeping landfills smaller will make this world a richer place even if it doesn’t put much money directly in your pocket.

In Real Life – I already mentioned in my first post in this series that I was the co-worker making sure everyone was using their recycling bins. I worked in Washington, DC starting in 1989 and soon after a recycling program was instituted for DC businesses. I was the unofficial enforcer for my office. It didn’t earn me any money but it made me feel better to see the tons of paper that our company was generating going back into the system.

As a household, we recycle everything we can, although we don’t usually get any money for it. We recycle papers (after reusing them), glass bottles, cans, and plastics. They go out on recycling day in a bin rather than on trash day in a can. And we always sell or donate used electronic parts that we don’t need any more.

Last year, we did make some money recycling, though. Our old house was in desperate need of new gutters. My husband took the old aluminum gutters as well as some aluminum part we had stored in the garage and took them to an aluminum recycler near his office. He got $23 for his trouble. Not bad for something we didn’t need anymore anyway.

Regardless of whether or not we make money, recycling is something that doesn’t take much effort and it is worth it to all of us in the end in the form of less pollution, cleaner air, and less landfill space. And to me, that is much more important than money.

Wednesday, April 15, 2009

Reduce, Reuse, And Recycle - Part 2

Tip #118 - Reduce, Reuse, And Recycle – Part 2. Today we will talk about part 2 of this triad. After we have done all that we can to reduce the amount of stuff we consume, out next step is to reuse the stuff we already have. Reducing and reusing go hand in hand. We can reuse something already in existence rather than buy something new, thereby reducing our consumption of new materials and packaging. For example, your son may need a baseball glove for little league this year. Rather than go to a store and buy a new glove with new packaging, you can find an old glove worn by someone previously and reuse that one.

But let’s suppose you are starting with a clean slate. You have nothing and cannot find a pre-owned item that you need. Suppose, for example, that your daughter needs a pair of size 6 shoes and you can’t find a used pair that works. So you buy your child a new pair of shoes. After a year, she outgrows these shoes. Then the next step is to reuse this item. This item still has useful life left in it. So you can save them for your younger daughter to wear when she grows into size 6 shoes. Or if you don’t have another daughter, you give them or sell them to someone who does.

Apply that concept to other things around your home. You receive a gift from your boss in a nice box. Rather than throwing that box away, you can reuse that box to put a different gift in. The more things you reuse or buy used, the less effect you have on the environment. And more importantly for the focus of this blog, you save money. Using an article of clothing from your first child for your second child does not cost you anything, whereas buying a new article of clothing does. Reusing books from a friend or the library does not cost you anything either. You can be creative in your reuse beyond the typical clothes and books, and you do not have to use the item for its original purpose. A food container can become a craft project. A string from a balloon can become a ribbon for wrapping a present. An old mug can become a pencil container.

Before you go to the store to buy something, think about what you have around the house that you can reuse for the purpose that you need. And remember that reusing does not have to be just from items you, yourself own. Buying used is reusing items. Places such as Craigslist and Freecycle are excellent sources for used items. Pre-owned items almost always cost less than their new counterparts. By buying something pre-owned or reusing something you already have you are cutting down on wasting raw materials and packaging, while saving money as well.

In Real Life (IRL) –
I am constantly reusing what I have. In fact, other than a supermarket, I hardly ever set foot in a retail store. I mostly already have what I need and when a need arises for something “new” I usually look for it on Craigslist or a yard sale for a used version. So I guess you could say I am a big reuser.

In context of reusing something I have, I try hard to look at something before I throw it away to see if I can do something else with it before adding it to the landfill. One recent example I can think of is egg cartons. We buy eggs at the local grocery store or at Costco. And I hate to throw away the egg containers because surely they can be reused somewhere. Well, last summer I found out where. At a pick-your-own farm we went to I saw that they sell fresh eggs and people bring them empty egg cartons to use. So now I have a pile of egg cartons in my garage to bring to them this spring. In the meantime I was able to use one for starting our indoor garden.

Things that I cannot use anymore I give away hoping to keep the items out of a landfill since there is still useful life left in the article. By giving things away, I often get things in return too. A friend with a son 9 months older than mine often gives me clothes. I, in turn, pass on clothes to a different friend with a son 9 months younger than mine. If I don't give it away, I sell it. Giving things away or selling them helps the environment and makes or saves me money, too.

Tuesday, April 14, 2009

Reduce, Reuse, and Recycle - Part 1

Saving Money Tip #117 - Reduce, Reuse, and Recycle – Part 1. I am a big fan of the environment. Anything that has to do with keeping the Earth clean is important to me. And fortunately, keeping the Earth clean often works very well with saving money. We all know the saying, “Reduce, Reuse, Recycle.” Well, let’s focus on the first part of that saying today. Reduce means to cut down - as in cut down on our consumption of materials, cut down on our driving, cut down on our eating, and cut down on the size of our homes, among other things. The more we reduce, the better it is for the environment and the better it is for our pocketbook. Of course, all of this is within reason.

First and most important in my mind is cutting down on our consumption of materials – buying things with less packaging, buying fewer convenience items, buying fewer toys, buying less clothing, and buying fewer gadgets. Buying things without bulky packaging costs less. Buying items that are not pre-packaged conveniently cost less. And of course buying fewer toys, less clothing and fewer gadgets cost less. If all of us cut down on these types of items, we would not only save money, we would help our planet.

Secondly, reducing our driving. How many times do we just get in the car because we feel like it? We just want to take a ride somewhere. How about all of the extra driving we do because we fail to pre-plan? We drive to the bank and pass the grocery store we need to shop at but don’t stop in, instead taking a second trip to the grocery store later that day? Or the times where we drive our daughter to camp and our neighbor down the road does the same thing instead of sharing a drive? I know it’s impossible for our society to live without cars. But we are often wasteful in our use of them. By reducing the amount of driving we do, we will save money in gas and car upkeep.

Third, cutting down on our eating. Now I know not everyone has this problem, but a large segment of society overeats. Our waistlines have gone up dramatically over the years, and not for the better. Our portion size has gone up, our amount of snacking has gone up, and the overall amount we eat has gone up. If each of us cut out one snack per day or reduced the amount of food on our dinner plate we would not only save a lot of money on our food bill, but on health costs down the road as well as effects of the environment. More food equals more raw materials used, more packaging used, and more energy to purchase and consume them.

Fourth, reducing our home size. The average home size in the US has more than doubled since the 1950’s and our family size has gotten smaller. Larger homes mean more furniture, more items to fill it up, and more resources such as oil or gas to heat and cool it. Why do people need to live in such large homes? To impress the Jones family? Well the Jones family got smart years ago, and are living in a small home they can afford, while others of us are working two jobs to make the payment for the home we have less time to spend in. And when we are there, half of the rooms sit unused. When buying a home, buy one that is appropriate in size for your family. Every person does not need his own bathroom. Rooms can serve multi-functions. You will enjoy the lower house payments and the lower energy costs as well the less money it takes to furnish it, clean it, and decorate it. And the environment will be grateful, too.

There are lots of other things we can reduce in our daily lives to keep costs down and help the environment, but those are the big ones. Think about what you can reduce in your life to save some money and help out the Earth as well.

In Real Life (IRL) – I was always that annoying co-worker who went around the cubicles to make sure everyone put their paper was in the recycling bin, and then I pulled paper out of the recycling bin to write on the other side. I collected paper clips scattered about the copy machine to make up a box in the supply closet to reduce the use of new ones. I’ve been bringing my own bags to grocery stores for well over 15 years to reduce my use of disposable bags. My husband and I bought a 1750 square-foot house for a family of two to grow into. And we turned it into a 1900 square foot house by adding a wall and enclosing a porch when we became a family of five. By buying a relatively small house we have been able to reduce the use of energy to run it and reduce the amount of things we need to decorate it.

I try hard not to buy new toys and things – especially those with unnecessary packaging. I try to carpool when I can and combine trips when I can. I even walk or ride my bike to reduce my car use whenever I can. I do not buy many convenience items, and have been cooking from scratch more lately, which reduces food packaging tremendously. I am working on eating less. Ahem. Moving on.

I mostly do all of these things because I care about the size of our landfills and the air that my children and future grandchildren will breathe. I get the added benefit of saving money when I do these things. In what ways can you reduce your consumption of materials to help save you money and help keep our planet clean?

Monday, April 13, 2009

Make The Hard Decision

Tip #116 - Make The Hard Decision. When life throws choices at you, as it does almost everyday, you need to make decisions – chocolate or vanilla, big or small, luxurious or basic? Chocolate and vanilla is an easy one – go with the one you like better. Big versus small? That one’s a bit tougher. It’s so tempting to go with the big one – the bigger house, the bigger diamond, and the bigger television. But the consequences of the bigger one make it so much harder. Bigger generally costs more money and maybe that money would be better spent elsewhere or saved. Luxurious or basic? Hmm…that one is an even harder choice. Again, it is so easy to be sucked into the amenities of luxury – the plush bed at a fancy hotel, the leather seats of a high-end sports car, the marble tile in an upscale home. But again, the luxurious choice comes at a cost.

When do you hold off on the extra expense of the bigger item or the fancier space? When you are making the hard decision – the decision to put away money today for uncertainties tomorrow, the decision to delay your gratification until you can really afford it, the decision to start small and work your way up to big. The less expensive choice is often the responsible one.

It is so tempting to get what you want now – the big home with the granite countertops, the five-star hotel with valet service, and the sports car with heated seats instead of the 50-year old home with the peeling wallpaper, the 3-star hotel with no view, and the basic model of a used car. I know that it’s not always easy to choose The Best Western hotel when you would like to stay at the Ritz. It’s not easy to pick laminate counters when you see granite all around you. It’s not easy to pick the Hyundai when you are dazzled by a Lexus.

But by making the harder decision now, you will have more freedom to do what you want at a later time. By not spending money on items that you cannot really afford, you are saving for a future of uncertainty or for the freedom to do what you want when you are older. Make the tough decision now and you won’t regret it later - there will come a time when you will be able to buy that Lexus without guilt or to retire while you are young enough to enjoy it. This doesn’t mean that you cannot enjoy things today or that you cannot ever go “all out” for special occasions. As long as you have money put away and aren’t spending every last dollar you own for “things” or experiences, then it is fine to do so. But you know when you are buying something that you cannot really afford. Stopping yourself from buying it is a tough decision to make. But you can do it.

In Real Life – I am where I am today because I often made the tough decisions. First of all, when I say “where I am today” I mean that I am not in debt; I feel comfortable with my finances in today’s down-spiraling economy, and I am not scrambling about wondering how I will pay for the water heater if it breaks. It does not mean that I have my own empire, in case anyone had any misconceptions.

Now that I have that cleared that up, I will share with you my experience. I had been taught growing up that I need to keep some money in the bank. It was supposed to be put there for a rainy day. So when the mortgage company told us that we qualified for a $300,000-plus mortgage, I didn’t listen. I didn’t want to be enslaved to a large mortgage payment. So instead of deciding to buy the 4-bedroom colonial like the one I grew up in, we bought a 3-bedroom ranch house. That was a hard decision. When several friends in my neighborhood did $40,000 kitchen remodels, I redid our outdated kitchen into a 1950’s diner complete with black and white vinyl tile floor for a total cost of $1,000. That was a hard decision. When others around me shopped at retail stores for their children, I went to yard sales and thrift stores. That was a hard decision. (I realize these aren’t “hard decisions” compared to decisions made by starving people, enslaved people, sick people and others. I am using this term in context of personal finance.)

But today when so many around me are struggling because they made poor spending decisions in the past, I am fairly comfortable with where we are now. If my husband loses his job, we won’t be struggling to make the house payments for quite a while. I am not paying big dollars to heat a large home that sits empty all day because I am at work so I can pay for. My hard decisions in the past have paid off to make my life easier today. That doesn’t mean I didn’t ever do extravagant things or buy good-quality items. I chose a “spa” hotel for my honeymoon, but I don’t choose it for my yearly vacation. I chose a nice wood swing set for our backyard because it will last long and get good use. In general, though, I have always made the less-expensive decision that allowed me some freedom - with my time or by having extra money. And because of that, it has actually made my hard decisions much easier to make.

Saturday, April 11, 2009

Our Family's Finances - Weekly Wrap-Up

Expenses – I do not budget to the dollar. I just know that in general we spend about $400 per month in groceries – some weeks more and some less. I spent about $60 at Safeway plus another $10 at Giant and $10 at Whole Foods (on my gift card). My husband spent about $30 at Costco for food. So we spent a little over our approximate $100 budget for groceries. We didn’t eat out this week and being that it’s Passover, we won’t be until next week. I didn’t do any other shopping this week. The kids were on spring break, but all of our activities involved playdates with other children, riding bikes, and going to playgrounds so no extra costs were involved at all. My husband bought a sports jacket for half-price for $50 that he needs for a work trip.

Deals – Our grocery stores are fighting each other for our business these days. When I first moved to the DC area, there was Giant and a couple of Safeways, with a few Magruder’s scattered about, but that was it. Giant was by far the biggest and the most expensive market. Now there is also Trader Joe’s, Whole Foods, Harris Teeter plus the warehouse chains. And they are getting competitive. Many are running loss leaders, triple coupons, $5 off $50 on a weekly basis. Anyway, this week I bought 8 pounds of strawberries at $1.50 per pound. And I bought 3 ½ pounds of 90% lean ground beef at $1.99 per pound. Great deals! Some of the meat and the strawberries are already frozen for future use.

Income – I participated in a focus group on Monday night, which paid $100! They called me out of the blue. It lasted two hours and they fed us dinner. It was a lot of fun. I am now on their list, so I hope to get called again. I got a quarterly dividend check from my mutual fund – also about $100 and listed a few things on eBay – not much since it’s the holidays and spring vacation. I also sold a child’s bike seat on Craigslist for $10 that we aren’t using any more. I’ve taken pictures and hope to get more things up on eBay in the coming week.

Investments – I finally took the $1,000 from last week and put it into my oldest child’s Education Savings Account (ESA). I decided on putting it into a mutual fund that we already own with Vanguard. They have low fees and it is a relatively low-risk stock fund. I’ve been pretty conservative with my kids’ college funds – most are invested in CDs at 4-5%. But I know I should take advantage of the 10+ years I have until my oldest goes to college and put more into stock mutual funds, so I am trying to rebalance a bit. And I’m hopefully taking advantage of some cheap stock prices. I need to invest the other $3,000 for the first quarter of the year. (Our new budget is that we need to invest $4,000 each quarter to fulfill our Roth IRAs and ESAs for our children. We’re a bit behind on this since this plan just went into effect on April 1st when my husband’s company got taken over officially and his salary changed.)

Giving – My giving is usually in the form of a lump sum dollar amount to a few different charities throughout the year – often when they call me to remind me. I also do many donations of clothing and household items throughout the year that we don’t use or I don’t sell. So my giving week to week isn’t very much and is very random. Anyway, on that note, for this week, I donated my change from my groceries to a fund at Safeway and $1 for Kids with cancer at Giant.

Friday, April 10, 2009

Keep Your Eggs And The Basket

Saving Money Tip #115 - Keep Your Eggs And The Basket - During this time of year with Passover underway and Easter on the horizon, it is time to celebrate those holidays that should not be costing us much money. Yet each year, the stores are filled with huge baskets, dozens of different kinds of candy, and hundreds of colorful eggs for Easter along with the unleavened food and accessories for Passover. And while I can certainly understand the Easter candy and the unleavened food from year to year, as food is certainly disposable, I do not understand who is buying up these dozens and dozens of Easter eggs. Where do they go from one year to the next?

Seriously. I know new families are created each year and still other families move into this country, but I suspect that 90% of the population hasn't changed from year to year (does anyone know the actual percentage?). What does everyone do with their colorful eggs from one Easter to the next? Where do they go? I know that sounds like a silly question. But I truly wonder this. Same with Christmas decorations. Why don't people hang on to their decorations from year to year? How can it be that stores can be successful selling those colored eggs and holly-laden tablecloths year after year? What do people do with them? Well, I obviously do not know what they are doing. But I know what they should be doing. Keeping them. This is not only good for the environment, but it is good for your pocketbook, too.

Unless you have added a new child to your family, there is no reason why baskets cannot be reused from year to year. And there is no reason to be buying new eggs every year. This applies to decorations from all holidays. Once they are bought, that is it. There should not be any reason to be buying new decor year after year. It is a waste of money and a waste of resources. Keep your eggs and the basket, too.

In Real Life (IRL) - I won't lie and say I stay up nights thinking about this stuff. But I have always wondered how stores have stayed in business selling holiday merchandise. Every year around Christmas, I would think, who is buying those holiday dishes this year? Didn't everyone already buy them last year or the previous year? And of course the Easter eggs. I don't even celebrate Easter and I have a stash of eggs. Doesn't everybody else have a stash of eggs that they can refill?

For Passover, which we do celebrate, I have a Seder plate, a Matzoh plate, a wine cup, and a bag of plagues. That's it. Every year we use these same things again and again. I cannot imagine buying any new Passover products unless it is food or other disposable products (which I try hard not to buy).

For all holidays, in order to save money, use what decorations you already have. I know people like change and fresh ideas but seriously, these things are only used for a few weeks per year, how much fresher can they be? Save your money and reuse holiday decorations again and again. Whatever you do, though, don't reuse the matzoh. :-) Anyone want a stash of colorful eggs? Anyone? For other frugal tips, check out Life As Mom.

Wednesday, April 8, 2009

Sometimes Staying At Home Pays

Saving Money Tip #114 - Sometimes Staying At Home Pays. If you are a Stay-At-Home Mom (SAHM), you may not realize that you are actually making an income even if you aren’t technically making one. Most of us have seen those emails passed around the Internet that show a SAHM’s salary to be over $100,000. While I do think that’s a bit exaggerated, SAHMs do save money in so many ways that we really do “make” money.

Figure out your real worth as a Stay-At-Home Mom. Start at $0. Then add in money you save per week or month by doing activities yourself that you couldn’t do if you worked. But be realistic about it. What expenses did you really have when you had a job that you don’t have now? If when you had a job, your family ate out 3 times per week at $20 per meal and now that you stay home you eat out only once per week for $20, then you have just “earned” $40 per week (minus the cost of cooking the meals instead). Let’s say when you worked you spent $25 per week in gas, and while at home you spend $5 per week on gas, you just earned $20 per week (plus the value of less wear and tear on your car). If you bought work clothes to the tune of $50 per month and now you spend $20 per month on clothes, you have just earned $30 per month. If you had a housekeeper clean your house for $150 per month when you worked and now you clean it yourself, you have just earned $150 per month. And let’s say you now mow the lawn instead of hiring a lawn maintenance person for $800 per year like you did when you worked. That’s $800you just earned (minus gas costs to run the lawnmower). Add in the money you save by not putting your children in daycare or after school care and add in the taxes that you don’t have to pay on your “income” and you may really be better off staying at home or at least not as bad off as you had thought.

Now of course it does not make financial sense for every mom to stay at home. It will make less sense for those with greater incomes or for those who are counting on their benefits. But even so, it is an interesting exercise to see how much a person actually “earns” when she is not working.

In Real Life (IRL) – I have been a mom for 7 years and I have worked part-time (10-15 hours per week) for 4 of those years. At various points I have had to pay for childcare for 1 or 2 children that I normally wouldn’t have paid if I did not work. This past year with gas prices going sky-high and increased preschool costs, I figured out that I was only going to bring home $400 per month if I went back to work. And frankly for all of the extra work of dropping children off at various places for a few hours and driving 35 minutes to a job across the river, it just didn’t seem worth it. And when I calculated what I could make at home selling things on Ebay, it seemed even less worth it.

But besides the big expenses of childcare and gasoline, I hadn’t even calculated the other “costs” that go along with working. I would need to update my wardrobe a bit. I would not be coming home from work and mowing the lawn once per week all summer, instead I’d be paying a neighbor boy $35 per week to do so. I would not be cooking from scratch 6 days per week. I would not be comparing supermarket flyers for the best deals. Unfortunately, I would still be cleaning the house myself. (That’s one luxury I have never had).

There are so many little ways I save my family money by staying home because I have time to do things I wouldn’t be able to do if I had a job – even a part-time one. I spent two hours yesterday finding my husband the best deal on a rental car. I saved $35 for that effort. I went to two grocery stores yesterday to shop loss leaders. Trust me, I would not be doing that after a day at the office. That’s not to say that staying home is always the wisest financial choice. It’s not. But for now, combined with my desire to be home with my children, it is the best decision for us. I know by being out of the workforce, I am losing out on salary increases and contributions to retirement accounts. But having saved early on, it doesn’t hurt me too much. I plan to go back to work one day when it does make financial sense for us when my kids are a bit older and won't need childcare. But I probably still won’t have a housekeeper. Darn it!

How much do you “earn” by staying at home?

Tuesday, April 7, 2009

Go To The Theatre For Cheap

Saving Money Tip #113 - Go To The Theatre For Cheap. If you like Broadway shows, but don’t like the average $100 price per ticket, then there are many alternatives to see plays and musicals for very little cost. Besides professional theatres, there is, of course, community theatre, which will often have tickets well less than half the cost of professional theatre. Tickets at community theatre may be as low as $20 each. And the caliber at community theatre should not be questioned. Participants are often trained actors and actresses who just may not have made it into the big time or who only do theatre on the side.

If the cost of community is even too steep for you, check out your local colleges and high schools. You may be surprised at what a great job these student actors do. For approximately $5-$15 per ticket, you can get a nice night out on the town and see an enjoyable show for about the cost of a movie. With artistic students pitching in for the scenery and the musical students participating for the the score, you will see and hear talent displayed by young members of your community, while supporting them as well.

If you want to pay even less or have children that you would like to take to the theatre, then check out the middle schools and elementary schools in your area. They, too, put on plays and musicals often for under $5 per ticket and sometimes for free. The price certainly cannot be beat. You will probably be impressed at the level of professionalism that even 5th and 6th graders can have. And for the young child, it is a great introduction to live theatre at a low cost.

Suppose you go to your local schools’ shows and your community theatre, but you still want to go to a professional theatre such as Broadway? Did you know that you can buy tickets for sometimes as much as half off? In Times Square there is a TKTS booth that sells discounted Broadway tickets for the day of the show. Many hotels sell “twofers” tickets - two for the price of one, also for the day of the show. Costco sells limited tickets for Broadway shows and other professional shows outside of New York at a discount. Your local Entertainment Book offers tickets at a discount for many local professional theatres. And for some larger cities there is a site called Goldstar that sells premium theatre tickets at a deep discount. There may be similar sites for your locality that sell discounted tickets. Before you buy, do a search on the Internet for discounted tickets along with the name of the show or the theatre and you may be surprised to find cheaper tickets for sale.

In Real Life (IRL) – I love musicals. They’re fun, entertaining, and just in general a nice evening out. Having said that I can count on one finger the number of shows I have seen on Broadway – Annie - when I was 9 years old (as an aside, Sarah Jessica Parker played one of the orphans in the show I saw). Broadway theatre is generally not in my budget, and I don’t live near enough to go often anyway. Besides that show, I have seen a few professional shows in Philadelphia where I used to live. I remember getting half-price tickets to a show on Easter (we are Jewish so we weren’t celebrating anyway). I have seen professional shows in DC where I live now. One great site I have bought discounted tickets from in DC is from the Cultural Alliance Organization. I have also seen shows at the university level that students put on. And I have taken in many live productions at several different community theatres.

Recently, I just started taking my daughters to see some shows put on at our local schools. I live in a very populated area so I can get probably 20 different high schools within a half hour of my home. I took my oldest daughter to the Wizard of Oz at a local high school a few years ago. For the price of $10 or $12, my daughter was mesmerized and was thrilled beyond belief to get the actors’ autographs. Try that on Broadway! Since then I have taken them to see Annie and Charlie and the Chocolate Factory at the local elementary schools. These plays were put on by 5th and 6th graders and were extremely well done. It seems, in general, that schools put on their big shows in the spring. I am picking out one or two to take my children to in the next couple of months. Here is a list of local school shows in my county as well as in a neighboring county. A great selection and a great price!

So if you like live theatre, do not be put off by the high price of tickets. You are sure to find discounted or cheaper alternatives where you live.