Saturday, May 30, 2009

Our Family's Finance's - Weekly Wrap-Up

Expenses – First, I will say I have given up keeping track of my husband’s expenses. He likes to go in and out of stores on his way to work, during lunch, on his way home, etc. He stops at Home Depot, Aldi, Wal-Mart, and who knows where else? I do keep track of his Costco trips, though. I never did a big food shopping trip this week. My husband went to Costo ($13) and to an Asian grocery store ($22). I also went to the mall, which is about an every 2-3 month trip for me. I spent $15 on a haircut for my baby (I cannot cut boys’ hair). I also bought – with a gift card – a $25 muffin tin from Bloomingdale’s. No, I don’t usually shop there and I would never, ever spend that much on a tin, but I’ve been carrying around this gift card for almost 2 years and it was set to expire on June 30. I was in need of a new muffin tin so I bought it.

Now that it’s spring, the expenses are coming in fast and furious! I bought Dunkin’ Donuts as a treat for my daughter who had a friend sleep over for the night ($7). We went strawberry picking and bought 9 ½ pounds of strawberries at $2 per pound for a total of $19! We went to our Memorial Day festival in town and spent $35 for rides, games, food, etc. I went to two thrift stores and spent $15. I registered for preschool for next year ($50) and paid for “lunch bunch” for two days for my daughter ($8). I spent $65 for year-end costs related to dancing school – DVDs, recital fee, and trophies. Phew, I think that’s it.

Deals – I used a coupon for my son’s haircut so I saved a few dollars there. My husband had some gift tickets from a fair that his company sponsors so we were able to use those to get some free rides in, which is great since one ride costs $3 or more! While $2 per pound of strawberries may not be the best price ever for strawberries, there is nothing like fresh picked-from-the-plant strawberries. The ones at the market I get for $1.50 per pound sometimes don’t even come close. And I looked into different pick-your-own farms nearby, and some were charging as much as $3.99 per pound, so we got a good deal, I believe. I froze some for the winter and made jelly with some of them.

Income – I sold absolutely nothing. I have been very lazy about listing on eBay, but I do expect to do more in the coming week.

Investments – I invested $2,000 in my son’s ESA into a nice balance mutual fund! That’s half of what we need to do this quarter. To date, we’ve invested $6,000 of the $16,000 that we plan to invest this year in retirement and education savings.

Giving – I volunteered at my daughter’s school to set up for a tea that the first-grade class was having. I also made dinner for a friend of mine who sprained her ankle and watched her daughter one afternoon.

Friday, May 29, 2009

Have A Financial Plan - Part 2

Tip #147 - Have A Financial Plan – Part 2. In the first part of this series we talked about needing a financial plan. Most adults should have a plan mapping out their financial goals. The plan might start out vague when you are younger and then get more detailed as you become older and know more about your income, expenses, and goals. So what should be part of a financial plan? First, you should record your income and your estimated income in the coming years. This will give you a basis for what expenses you can take on. (Alternatively, if you start from goals you have, you will have to come up with the income you will need to maintain the expenses associated with those goals.). After you have your income down, write down your goals, starting with short-term goals – any large expenses you expect to buy or take on in the next five years. Examples could be starting grad-school in a year, buying a car in two to three years, or moving to a more upscale rental unit in 5 years. Then write down your expenses in the short-term. There is no need to be specific here, just overall costs of your fixed expenses – taxes, healthcare, student loans, housing and all that goes with it, shelter, transportation to job, clothing, etc. Then add in your discretionary costs such as vacations, gifts, entertainment, etc.

Next write down your mid-range goals. The goals will get more general the further out they are. Examples might include buying a house in 5-8 years, getting married, or starting a family within 10 years. Last, write down your long-term goals. Examples may include planning on having 2-3 children, buying a vacation home, retiring by age 60.

If you are 22 and single and writing a financial plan, it may be hard to really know when you will get married, how many children you will have, or where you will be living 15-20 years down the road. If you are 30 and married and starting a family, it will be somewhat easier to plan where you are going. Again, there is no need to get specific with mid- or long-term goals, but it’s nice to get an idea of what you want in general. Only time will tell what will really happen.

After you have your income and overall expenses written down on paper, it’s time to put some dollar signs next to your goals. If you income is $50,000 and your fixed and discretionary expenses total $40,000, then you have $10,000 to use to start saving for your goals. Figure out what amount you need to put away per year, towards your short-term goal such as paying for graduate school for the next two years and toward your car in three years. Then look at your mid-range and long-term goals. Which ones of those should you start saving for now? Since a house as part of your mid-range goals and retirement in the long-term are two very expensive goals, you should probably start putting money away for those now, too.

If you don’t have enough money for these four goals, look into your discretionary spending and see what you can cut down or cut out. This is where your budgeting comes in. And this perhaps may be where you may try to live more frugally so you can meet your goals with your current income. Alternatively, you might want to try to bring in more income to meet your goals’ expenses. The act of writing down a financial plan will help you understand what types of goals you should be saving for and give you a clear picture of how to allocate funds generally. Creating a budget will give you yearly specifics.

As time goes by, your goals will be revised and updated to reflect realities. Perhaps you will meet your spouse-to-be in the next year and get married sooner than expected. Or maybe you will get a promotion at work and your income will change and you decide to hold off on grad school. Or maybe things will work out generally according to plan. Either way, having a financial plan will help you make wiser choices with saving your money and will help you meet your goals in life.

In Real Life (IRL) – As I mentioned in part 1 of this series, I didn’t always have a financial plan. It wasn’t until I was married that my brother helped me create one. I knew, in general, that I was saving for a house and that I hoped to have children and stay home with them when they were young. I had general ideas in my head to make that a reality. My brother helped me to write my goals out based on our incomes. And being older and with a family, he gave me realistic expectations of expenses I’d have with children. I remember him specifically asking, “Are you going to buy braces for them? Hmm, I hadn’t even considered that. College? Yes. Braces? Well, I guess. And for at least $5000 per child, that is certainly a big enough expense to plan for.

About eight years after we made that first financial plan, I can honestly say many things happened that I didn’t plan for. In our first plan, I said I wanted at least two children two to three years apart and that I would take off work for five years. As it stands now, we have three children, one is adopted, and I haven’t worked full-time in seven years. So we have had expenses that we didn’t plan for, such as the adoption. My kids are spaced farther apart than I had hoped, and I’ve taken off more time from work than I had planned. Fortunately, my husband’s salary has increased faster than we estimated. And at each step of the way we have made adjustments to our financial plan. (But we still haven’t started saving for those braces!) If you are interested in making a financial plan, you can contact a fee-based financial planner in your area or you can draw one up yourself, using it as a guide for your financial life and your budget. If you are living on a budget, look for some great frugal ideas at Life As Mom.

Wednesday, May 27, 2009

Have A Financial Plan - Part 1

Saving Money Tip #146 - Have A Financial Plan – Part 1. Everyone can benefit from having a plan – whether it be a plan on how to lose weight, how to get a job, how to raise your children, or how to get from your house to a tropical vacation spot. Planning is what guides us to where we want to go. Without a plan, we may still get there. But it will probably take longer, not be as straightforward, and have more bumps along the way. That’s not to say that things always go according to plan. In fact that’s not to say that things ever go according to plan, but for the most part a plan guides us on our path more directly and more precisely.

Having a financial plan is no different than having a plan for other aspects of your life. From the time you graduate high school until you are ready to retire, you should have a financial plan made up to guide your financial life. Money doesn’t just magically appear, expenses aren’t neatly categorized and paid for, and savings don’t just happen unless you have a plan for your money – how you are going to make it, how you are going to spend it, and what you are going to save it for.

So what is a financial plan? It’s a guide outlining how much money you expect to make, what you think you will spend it on, and how much you need to save of it for times when you are not making any, along with approximate timelines. A plan estimates how you expect your financial life to be down the road – in the future, near and far. It might start out very general after high school and may not be written down, but should become more specific and formal once you start working. They will be revised and updated throughout your life as needs change, circumstances come up, and life events happen. As I said, it won’t always, or even ever, go according to plan. But it will guide you along the way and you can adapt it as circumstances change. Even the act of writing one can get you on the right track financially.

In Real Life (IRL) – I won’t say that I have always had a formal financial plan. I haven't. In college, my parents covered all of my big expenses, and I had summer and winter jobs to pay for some extras. So I did not have any type of financial plan in college, as there was no need for one. (However, for people who are putting themselves through school and undertaking debt, I think it is a good time to start one.) Once I graduated school and got a job, I worked out a general budget, figuring out how much I had to pay toward rent, utilities, food, and commuting. I sent a portion away each month towards savings, but it wasn’t toward any discrete goals. I had hazy ideas of acquiring a house in the future, but I didn’t have defined, concrete goals or anything that I would call a formal financial plan.

After a year of working, when I was enlightened about the benefits of saving early for retirement, my financial goals started to fall into place. Suddenly, I had more competing needs for the money I was earning. And I began to write down big goals of how I wanted to spend my income. This was a general financial plan. I estimated how much I would be making in the coming years, and how much I thought I could save each year.

It wasn’t until I was married, however, when I made a formal financial plan, and that is because my brother, who is a certified financial planner, offered to help me and my husband develop one. That was about 7 or 8 years ago. And while things haven’t gone exactly according to plan; it has been a good guide for our family. Since then we have made revisions to it and constantly update our plan based on where we are and where we hope to be in the short-term and the long-run. In Part 2 of this series, I will go into more details of what to include in a financial plan and what ours looks like.

Tuesday, May 26, 2009

Take A Vacation At Home

Saving Money Tip #145 - Take A Vacation At Home. One of the buzz words in the media this past year has been “staycation.” I know some people are sick of hearing it. But I am a big proponent of taking a vacation where you live. How many people only go to their city or town’s tourist attractions when they have guests visit them? And how many have gotten ready to move out of a town or city only to be sorry that you never got to visit such-and-such place?

If you are among these people, this year might be the chance for you to do some exploring in your own town. Get a guide book for the city or town you live in. If you belong to the American Automobile Association (AAA) or the Canadian Automobile Association (CAA) you can get travel books as part of your membership. Or check a tourist book out of the library. Or Google online the name of your town along with the word “tourism” and you will find websites that list attractions in your town or city. If you live in a small area, look for places up to two hours away from you. Two hours is a reasonable drive to do each way in one day. You are sure to find plenty of attractions within two hours of your house. By not paying hotel fare, you can splurge on things that you normally wouldn’t do on a given weekend. After all, this is your vacation. And even splurges near your house would be cheaper than a complete vacation.

Spend a few days doing vacation things – eating out, going to museums, swimming at water parks, hiking on trails, going to tourist attractions, and treating yourselves to vacation-type extras such as ice cream or fun souvenirs. By not paying travel expenses such as airfare, gasoline, or train or bus fare and by avoiding having to pay hotel costs, you can do a vacation at home for a fraction of the cost of one farther away. And you get the added benefit of sleeping in your own bed at night!

In Real Life (IRL) – Every Memorial Day Weekend, people up and down the East Coast flock to the seashore for a long vacation weekend. I love the shore, but I don’t like the crowds or traffic. And the expense of a holiday weekend doesn’t do much for me either. Instead of going away each Memorial Day Weekend, we stay in town and enjoy a relaxing, stress-free weekend. We treat ourselves like we are on a pseudo-vacation, doing fun activities with our family and treating ourselves to special things. Because I am a numbers geek, I like to figure out how much we spent on our holiday weekend.

Here is how weekend stacked up. Friday afternoon we set up the moon bounce (that I bought for $25 at a thrift store five years ago) in our backyard. We invited a friend over for a sleepover and set up our pop-up camper for the girls to spend the night in our yard. In the morning I treated everyone to Dunkin Donuts ($7). On Saturday, we drove to Maryland 30 miles away (estimate of gas cost $7) to a pick-your-own farm. We spent a couple of hours there picking strawberries for a total of 9 ½ pounds (cost $19) and sliding down some big slides on burlap bags that the farm has set up. In the afternoon, the younger children napped, while my husband and our oldest daughter took a bike ride to the festival they had in our town. They enjoyed some amusement rides (with a few complimentary tickets my husband had), some musical concerts, and games ($5). On Sunday, my husband and the girls biked back to the festival in the morning for more fun, while I watched the baby. They got some face painting done and enjoyed walking around looking at the different vendors ($5). In the afternoon we went to a friend’s house for a barbeque. We brought a few pounds of strawberries that we picked as well as some brownies that we made. On Monday I enjoyed a couple hours of solitude shopping at a sale day at a local thrift store ($10). That was my vacation! Then we spent the rest of the day at the festival. We bought a package of ride tickets for $20 and a bag of kettle corn for $5. In the evening I took our two daughters out for ice cream with some free birthday coupons we had for my younger daughter. We ate at home for our meals because we had lots of leftovers. For less than $80 we had a great, fun-filled weekend filled with rides, treats, fun, sleepovers, games, exercise, relaxation, and togetherness.

Had we gone anywhere for our vacation, the gas alone probably would have cost $80, not to mention the hotels, the meals out, and the other entertainment. Instead we had a wonderful weekend full of fun for a fraction of the price and without the stress of driving or crowds. Check out your town or nearby communities and find out where you can take you next vacation.

Monday, May 25, 2009

Blogs I Like

Since it's a holiday, I thought I'd do something different today and share some great frugal and financial blogs that I enjoy reading. First, though, a special thank-you and remembrance to those soldiers who lost their lives and those who are still serving to keep America the great country that she is.

Okay, back to the blogs. About 3 years ago, I did a Google search on yardsales and came across a forum that looked interesting. From there I met some people who had blogs about what they find and what they make out of what they find. After that I did a search on frugal moms or coupons or something similar. From that I found a blog I liked, and from that bog I found another blog I liked until now I read about a dozen blogs or forums regularly. Most of them revolve around yardsales, frugal living, and personal finance, with a few others thrown in for good measure. The one thing they all have in common is that all of these blogs are all much bigger than mine, and the writers have been doing it a lot longer, so none of them need my endorsement. However, I thought I’d share the blogs I read that that give me a well-rounded perspective on finance and frugal living.

Yardsale Queen - This is the site that started it all for me. I found it and fell in love. There is a forum there with wonderful people who like to shop at yardsales and thrift stores. Many are also resellers on eBay and other sites. Chris, the “Queen” from the forum also has a blog on this site.

Money Saving Mom – This is a great for finding out deals at drugstores and some supermarkets, as well as finding free and cheap items and goodies to send away for. The author, Crystal, also writes about frugal living.

Tammy’s Recipes – This site is run by a woman who seems to cook everything from scratch, in addition to baking bread, canning, making her own laundry detergent, and making her own deodorant. Her recipes are simple and basic.

Smitten Kitchen – This recipe site is a bit more sophisticated than Tammy’s recipes. Written by Deb in NYC, there are great recipes on here simulating the taste of things you’d buy in a restaurant or a shop in the city. She also take fantastic photos.

Get Rich Slowly – This was the first personal finance blog I found. It also has a forum attached to it. The author, J.D. climbed his way out of debt and now writes about personal finance subjects.

The Simple Dollar – This is very similar to Get Rich Slowly. The author, Trent, also climbed his way out of debt and writes about personal finance topics.

Frugal Dad – The name says it all. The author on this site writes about frugal living from a dad’s point of view as well as personal finance topics.

My Money Blog – This is another personal finance blog I like.

Vacuuming in High Heels and Pearls – I met Heidi, the author of this blog on yardsalequeen. In addition to shopping at yardsales and thrift stores, she turns her finds into beautiful crafts and decorations.

Monkeybox – Shara, the author of this blog is also from yardsalequeen. Another person who turns her trash finds into treasures. From both of these blogs, you can find links to many other talented people who create beauty out of little things.

Like Merchant Ships – Meredith, the author of this site is a talented, frugal shopper who creates beauty out of little things, offers hospitality on a budget, and is a gracious hostess. There are great, frugal ideas on this site!

Scribbit – This site written by Michelle is a mom in Alaska. She writes about random topics from pop culture to life in the Last Frontier.

I know there are so many other wonderful blogs out there. These are the ones that have caught my eye and keep me reading on a regular basis. I have learned all sorts of things about cooking, living frugally, creating, investing, giving, shopping, selling and being. If you are not familiar with some of these blogs, check them out. You won’t be disappointed! Happy Memorial Day.

Sunday, May 24, 2009

Our Family's Finances - Weekly Wrap-Up

Expenses - I did two big shopping trips – one at Trader Joe’s ($53). I try to go there only once per month because it’s a bit farther from me than other grocery stores (it’s only 5 miles away, but I have 4 grocery stores within 1 mile of my house!), but I screwed up and forgot to buy some things that I normally buy, so I’ll have to go back before the month’s up. And I went to Giant ($31), stocking up on many loss leaders and using several coupons. I also went to a nearby store for last-minute things and spent $11. My husband spent $20 trying to improve the door in the basement so we don't have future floods. If it works, then it will be much better than the thousands we estimate we'd have to spend to fix the design of our basement entryway.

More year-end costs - $8 for a t-shirt for my daughter’s school. I signed my son up for a class for the summer for $53. I also went to a community-wide yard sale and spent $5 including some items that I hope to resell for more.

Deals – I used a great number of coupons at Giant, buying cereal for $1.20, barbeque sauce for 30 cents, grapes for $1 per pound, several pounds of bananas at 33 cents per pound and BOGO Breyer’s ice cream (my favorite!). I got such good deals that I think the food I bought this week will last us more than a week. I got $10 off the class for signing up early.

Income – I sold something on eBay for $25. I sold something on Amazon, netting me only $2. Blah! And something on Craigslist for $15 (cost $2.50). I have a lot more planned for eBay for next week.

Investments – I still haven’t invested any of the $4,000 that I need to invest in education and retirement this quarter. Again, I have until the end of June to do so.

Giving – I volunteered to be my daughter’s Girl Scout Troop leader for next year. I had wanted to do it in the past, but their meetings were during the day and it would have been hard with a very wild, toddler boy in tow. Now, their meetings are after dinner so I think I can swing it.

Friday, May 22, 2009

Figure Out Cost Per Use

Saving Money Tip #144 - Figure Out Cost Per Use. When buying things such as food, it’s pretty easy to figure out cost per unit – a pound of meat for $5, an ounce of cereal for 10 cents, etc. But how much is the cost per use – not just for food but for other things as well? Let’s say you buy a book for $10 and read it once and then give it away. The cost per use was $10 for that book. Suppose you read it and your husband reads it, too. Then the cost per use is $5. If you buy a kitchen table for $500 and it lasts you 10 years then the cost is $50 per year (I suppose you could break this down further to cost per day or per meal, but I don’t think that is necessary.) Let’s figure out the cost per use for food. Suppose you buy a ½ gallon of ice cream (or 1.5 quarts as it seems to be these days) for $3 and you get 10 bowls out of it, then each dish of ice cream was 30 cents.

Figuring out the cost per use is important because it puts costs into perspective. If you want entertainment for the evening, you can go to the movies for $10 (cost per use $10 per person) or you can rent a movie for the night for $5. If five people watch it, then cost per use is $1 per person. Or you can buy a movie for $20 and estimate how many times each of your family members or friends will watch the movie to figure out cost per use. It is a great comparison tool. Let’s say you want to spend an afternoon out on a summer day. You can go to a state park whose admission is $5 per carload (or $1 per person for a family of 5) or you can go to a museum which costs $6 per adult and $2 per child for a bit over $3 per person for a family of 5.

Suppose you are contemplating buying a high-end wooden swing set. You might shell $1200 to buy one, which is a lot of money up front. But suppose you have 3 children and your oldest one is 5 years old and the youngest is 1. You will probably be able to use that swing set for about 10 years, so the cost per use is $120 per year. If it will entertain 3 children and some of their friends all summer long year after year, then it’s actually not such a bad deal. Compare that to the cost of a swimming pool, which might only get used 3 months per year in northern climates. The cost per use is much higher. Or compare it to the the cost of a swim club membership at $5000 over the course of 10 years for a yearly fee of $500.

Cost, of course, is not going to be the only factor in your decision-making. Sometimes interests carry more weight. If your three children love to swim and wouldn’t be happy without being in the water all summer, then the swim club membership may be more worth it to you than a playset. Only you can decide what is worth it to you, but by figuring out a cost per use of the item or event, it puts the things you are comparing on a level playing field.

In Real Life (IRL) – The idea for this post came to me yesterday when I was pulling our moonbounce out of our garage. I found this particular moonbounce for $25 new in box at a local Goodwill. My husband didn’t want me to buy it because it would be one more thing laying around our garage (which it is). And I actually didn’t. I left the store, went back to work, looked the item up on the computer, saw that they sell for over $200 and went back to the store to buy it. Luckily it was still there! This was over 5 years ago.

I cannot begin to tell you the great use we have gotten out of this $25 purchase. We have probably used this moonbounce more than 25 times to date - for birthday parties at our house, barbeques with friends, playgroups, and regular everyday use. Cost per use is already at the under $1 mark. I probably never would have bought one for full price, but now owning it, I think it would be worth it even for a couple hundred dollars. I like to do birthday parties at home and a moonbounce adds an extra “Wow” factor to a party. For three kids over the course of 8-10 years, we could clearly get more than 25 birthday parties out of it. Even a $250 moonbounce would work out to only $10 a pop at that rate, while renting a moonbounce is at least $100 for a single weekend.

I do a cost-per-use with classes as well. At young ages, my kids aren’t picky about what they do for fun. While a professional puppeteer would truly delight them, an amateur one would be almost as good in their eyes. Our county recreation center has a music class geared for young children 2-3 years old. The cost is $53 for 8 classes or just under $7 per class. Our community center offers a music class a their site that is taught by a private company. For 8 classes, the cost is about $160. While I have heard great things about the music class, I cannot justify paying $20 per hour for a class for a toddler. And I don’t think my kids would get 3 times the enjoyment out of it. I don't have to tell you which class we are signed up for this summer. In almost all things I do, I try to figure out the cost per use. Many times it's just an estimate, but it gives me a good idea of the true cost of an item or event. And then I can decide whether it is worth it to me to purchase it or not. For other frugal tips, check out Life As Mom.

Thursday, May 21, 2009

Take Care Of The Big Picture

Saving Money Tip #143 - Take Care Of The Big Picture. I’ve been thinking about yesterday’s post about not getting upset with the little things that aren’t perfect in your budget. And to expand on that thought I realize that you don’t need to get upset over the little things if you have taken care of the big things. And while I do believe the little things are important to your finances – eating dinners at home instead of eating out all of the time or reading books at the library rather than buying them – in general, the big things are more important. When it comes to finances, take care of the big things and you won't care about the little things.

So what is the big picture? Taxes, a home, food, health insurance, basic utilities, a car (possibly), saving for retirement, and maybe saving for college for your children. Each person's list will be slightly different. Regardless, once those big things are taken care of, you can spend the rest of your money however you want. So if you have your housing and food payment covered and you pay your taxes, insurance, and utility bills, and you put money away each month toward retirement then the big stuff is covered. You are free to do whatever you want with the rest of the money on little things. Maybe you want to go on vacation or eat out occasionally. Maybe you have a hobby you want to partake in. The beauty of taking care of the big things is that you can do whatever you want with what is left. So there is no need to feel worried if you can afford an expensive ski trip, eat out to a fancy restaurant, or join a swim club. If you have money left to do it, then do it.

The best way to do this is to take your monthly income and pay the big expenses first – taxes, health insurance, retirement, housing payment, and utilities. If you are saving for your child’s college, then put that away as well as well as any other necessity. Whatever is left is yours for the little things - to do with it what you want, guilt-free and worry-free.

In Real Life (IRL) – When I was single and worked (actually I mean when I worked and got paid for it), I got paid twice a month. Taxes were taken out from each paycheck automatically as was health insurance and money toward my 401(k) retirement plan. On my own, I also sent a check out to a mutual fund company on the first day of the month for a future down payment on a house as well as an emergency fund. Then I took care of my big bills one by one – rent, utilities, etc. After that was done, I did as I pleased. Some weeks I went out to eat, to shows, to sporting events, or clubs. Other times I went away for the weekend.

I didn’t worry about what would probably appear to an outsider as frivolous spending. Why? Because the big stuff was done. The main bills were being paid and the savings was coming out of my paycheck automatically or regularly. The rest was mine to do as I pleased. Because the big things were taken care of, I wasn’t spending my days wondering how I would put food on the table and I wasn’t lying awake at night worried if I would be able to retire. Taking care of the big things allowed me to not worry about the little things.

Wednesday, May 20, 2009

You Cannot Time The Market - The Supermarket

Saving Money Tip #142 - You Cannot Time The Market - The Supermarket. On the trek to being more frugal and putting away more money, one can sometimes get obsessed with getting the lowest price on everything, doing things the cheapest way all of the time, and never overpaying for everything. But this is simply not a good way to go about saving money because psychologically you will lose.

You should strive to get the best deals most of the time and you should try to look for the cheapest way to do things most of the time. But buying things at the cheapest price all of the time is not necessary or even practical. There is no way to get the cheapest price on everything all of the time. Gas prices change sometimes hourly, it seems. Food prices fluctuate on a weekly basis and housing prices…well forget housing prices.

My point is on a regular basis, you should strive to pay the least amount on your food bill, but if you overpay for milk one day because you are in a higher-priced supermarket, who cares? It won’t mess up your financial plan. And if you buy gas for $2.29 per gallon only to find the next day it has dropped to $2.09 per gallon, you may feel like kicking yourself. Don’t. It’s not worth it. And all of that research you did on the new dishwasher you bought only to find out the price has dropped $30 a month later. Forget about it.

No one is perfect in this financial game. Just like no one can ever time the stock market perfectly, neither can we time the supermarket, the gas station, the electronics store or any other retail store just right. If you are getting the best price most of the time, then it is okay to overpay for Tylenol in the middle of the night for your sick child. If you are consistently beating your grocery budget, then it’s okay to buy that bag of chips you really want, even if you don’t have a coupon. And if you buy something at what was the best price at the time, don’t beat yourself up over it if you find out the price has dropped months later.

Yes, you should strive to get the best prices on a consistent basis, but it’s impossible to be perfect about it. Instead, when you overpay for something, you should feel good about it, knowing that you can afford to overpay once in awhile because you buy so well the rest of the time.

In Real Life (IRL) –
I needed canola oil yesterday to make cupcakes for my daughter’s class. And generally I have found that Costco’s prices beat my supermarket’s hands-down on most baking products. Problem was, I have taken for granted that my husband can stop at Costco any day after work, so I don’t bother to keep my kitchen well-stocked in these things. Unfortunately, my husband didn’t work in the office yesterday, and I needed to make the cupcakes last night. So I stopped at the local supermarket and bought my canola oil. Yes, I am sure I overpaid for it. I got the best deal I could find at that store, but it wasn’t as good as I can do at Costco.

And you know what? It doesn’t make a darn difference. There are people out there who overpay all of the time. They do not research prices and compare supermarkets and warehouses to find the best prices on items they buy regularly. But I do. And over the course of a year, I probably save hundreds of dollars because of it. So, if once in a while, I overpay for an item by $1, it doesn’t come close to messing up our budget or ruining us financially. I am paying for the price of convenience sometimes. And on an infrequent basis, it doesn’t matter. If I did it on a regular basis, it would be a different story. I try not to get hung up too much when I pay too much on something because I feel like my frugal lifestyle affords me the benefit of overpaying once in awhile.

Tuesday, May 19, 2009

Pick Your Own

Saving Money Tip #141 - Pick Your Own. One of the best things about spring and summer weather is all of the delicious local fruits and vegetables that are available. In addition to the least impact on the environment from buying local fruits and veggies, the taste cannot be compared. It’s like comparing homemade macaroni and cheese to that in a box. The tastes just dance on your tongue. Having said all that, some supermarkets carry local fruits and vegetables and will often have them labeled as such. There are also often farmer’s markets in the area where you can buy them. Some people belong to a co-op, getting fresh fruits and vegetables on a regular basis.

You can do all of the above and enjoy the summer eating. But unless you have a large garden or farm yourself, nothing beats going to a farm and picking pounds and pounds of fresh fruit yourself. Depending on where you live, there may be a plethora of Pick-Your-Own farms nearby or there may be very few. But even if they are far away, it is worth it to go at least once per season to experience the joy of picking your own fruit. Besides a day of fun in the sunshine, a bit of exercise, and the final product you get to take home, it is an educational experience for both children and adults alike.

It’s especially important to teach children that strawberries grow low on the ground, apples and peaches high in the trees, and berries in bushes. Many children probably have no concept of where fruit comes from or how it gets to the grocery store. What a fun way for them to learn. And now the fun part – finding a Pick-Your-Own Farm near your home that you can spend a few hours or a full day at. Check out this list of farms for one near you. They keep it pretty up-to-date, but it always makes sense to call the farm or check out their website ahead of time: Pick Your Own .

In Real Life (IRL) – I’ve mentioned Pick Your Own Farms in the past as a valuable and inexpensive activity to do with children. But I don’t think I went into detail of our experiences. The first time I did a Pick-Your-Own was before I had children. My husband and I picked strawberries in a nearby farm. The cost was comparable or perhaps a bit less than the supermarket’s summer prices, but the taste was so much better. In addition, we had a fun day. When our children were old enough, we included them in the experience. We have picked strawberries, blackberries, apples, peaches, and blueberries.

Our day at the farm never fails to entertain our children. We’ve been to several different ones – each with different amenities. Some are elaborate with their own farm stores. Some offer hayrides and apple cider. Others are simple with nothing but some ladders and buckets to pick. But each time we come away feeling closer to nature. And my children learn a bit about the growing cycle and where fruits come from. They enjoy eating, literally, the fruits of their labor. And the pies and crisps that come from our stash aren’t too bad either. And as far as saving money? We often freeze the extras that we pick to be eaten in the winter when prices of summer fruits are sky-high. Check out a pick your own farm near you. If your experience is like ours, you won’t be disappointed. For other food ideas check out Tasty Tuesday.

Monday, May 18, 2009

Check Out The Library

Tip #140 - Check Out The Library. We all know that the library is great for checking out books. You can save hundreds if not thousands of dollars by borrowing books from the library rather than buying them from a bookstore. But the library has become so much more than a place for borrowing books.

--It is a place where you can borrow movies - Most libraries have an extensive DVD or VHS collection, potentially saving you quite a bit of money on rental fees or movie subscriptions.

--It is a place for lectures – At least twice a month there are talks at our library ranging from gardening, to travel, to actual books. The topics are varied and would attract a wide range of people.

--It is a place of book clubs – There are adult book clubs and children’s book clubs. Once a month the group gathers to discuss a book that they have all read. And then they choose another book for the following month.

--It is a place for kids’ story times – About once per week there is a story time in the library for young children. The librarian reads a few books to them and then they often do a related craft afterwards.

--It is a place for entertainment – In addition to story times; there are puppet shows, musical performances, and magicians for kids’ to do about once per month at the library. Sometimes there are even adult entertainment events.

--It is a place for meeting space – Have a Moms’ Club, garden club, investment club or something similar. You can sign up for space at the library and meet there.

--It is a place for using the computer – Libraries often have computers on the floor for use by patrons. There may be one or two or there may be dozens. Usually, there is a set amount of time you can use the computer but sometimes if no one is available you can use it for longer. It usually has Internet connection. Also, many computers offer WiFi if you have a laptop and want wireless connection.

--It is a place for summer reading programs – Most libraries have a summer reading program to encourage children outside of school. Many have a set number of books a child is to read, and when he is done he gets a coupon book for free ice cream, pizza, watermarks or many other local activities or products that businesses have been generous to donate.

--It is a place for learning – Surely all the research you want to do is available at the library – whether it’s from books, microfiche, microfilm, the Internet or other sources, you can learn a lot from the library.

You are already paying taxes to keep your libraries afloat. Why not take advantage of all that they have to offer? While there is a cost associated with libraries, it is through taxes and contributions so most events and resources are offered to the community at no cost. Instead of paying to go to a concert, why not check out the one at the library? Instead of taking your child to an expensive class, why not check out the library’s weekly story times? Instead of browsing Barnes & Noble, why not browse the library instead? There are a great number of activities to keep you and your family entertained at no additional cost to you. Check it out.

In Real Life (IRL) – I’ve always been a big fan of libraries even when it wasn’t cool. I think it’s cool now that we’re in a recession. I don’t know. Either way, I love libraries. I love to read and enjoy the quiet and the atmosphere of the library. I spent lots of time there – alone or with my children. If I added up the amount of benefits I got from that place, I would probably be amazed. We used to go once a week for story time or an entertainment event of some sort. Now that my children are older and in school (except for my youngest who won’t sit still for story time), we usually go once a week to look at books and check some out.

Last week my older child went with a friend and her mom for a lecture about backyard birds. It was held in the evening and included a nature walk on the libraries beautiful grounds. They have also done PJ’s and books evenings where they wear pajamas and listen to bedtime stories. They’ve had PJs and movie nights also. When my oldest turns 9 she is eligible to join the children’s book club – what a great group to get involved in! My children always do the summer reading programs and often enjoy the fruits of their labor all summer long – free ice cream, discounts at the water park, a free book, etc.

But the one activity that blows me away that my library system offers is a Murder Mystery Night Series. About 4 times per year, librarian staff offer a Murder Mystery Night where they come in costume and in character from a Murder Mystery Play. The attendees mingle with the actors (librarians) trying to figure out clues to solve the mystery. There are two rounds to the evening, along with time to get with your team to try to solve the mystery. Refreshments are served and decorations in the story’s theme adorn the library. The evening lasts 3 hours. Cost for the show to guests? $O! The cost is covered by Friends of the Library. The program is so much fun and is a great evening out for this Stay-At-Home Mom. I love mysteries and enjoy spending time with fellow mystery lovers as well as a friend or two.

Now I know that not every library offers this event or every event listed here, but there usually are a plethora of educational and entertaining events available at most libraries. Check out the schedule for the next month or two and see what fun things you can find. These events fit into everyone’s budget!

Sunday, May 17, 2009

Our Family's Finances - Weekly Wrap-Up

Expenses - This was such a crazy week. We had guests in town, a Bat Mitzvah, Mother’s Day, a call from the school nurse, a baby who keeps climbing out of his crib, and a flood in our basement. And the requests for money are starting to come in for year-end events. We pretty much did two big grocery trips this past week – one at Costco ($35) and one at Whole Foods ($55). We paid $12 for a field trip for our daughter’s school and $2 for a wand for a year-end show. There was a Bingo Night at the school that my husband and girls went to. I think they spent about $15 or so, but came home with a couple of cakes they won at a raffle. Soon we’ll be paying recital fees, year-end gifts for teachers, bus drivers, and the remainder of our summer activity fees. I’m gearing up for this deluge. It seems like the beginning and end of the school-year are awfully expensive!

We gave a $136 gift for the Bat-Mitzvah that we went to, although we got off cheap for Mother’s Day, with me making a brunch at home of homemade waffles, maple syrup, fresh strawberry sauce, yogurt, homemade lemonade, and fresh fruit. All of it was part of our grocery budget. I paid $20 to a neighbor girl to help watch our kids while we were at the Bat Mitzvah. My mother in law was there, but I figured she could use the help. The flood in our basement was a result of a bad drain problem that we’ve had since we moved in here. We’re hoping we can resolve it without shelling out thousands of dollars in the near future, but we may not be able to.

Deals –I don’t think I did any bargain shopping this week – just stocked up on foods we eat and things we use on a regular basis.

Income – I sold three items on eBay this week for a total of $40. I plan to put up more after the Memorial Day Holiday.

Investments – I am finally starting to think about investing the $4,000 that I need to invest in education and retirement this quarter. I have until the end of June to do so. Hopefully, I will get moving on that soon. This blog is helping to keep me accountable!

Giving – I don’t think I gave anything this week other than the Mother’s Day Brunch for my mom, mother-in-law, and the family. I was on the receiving end of some very nice gifts of time from friends who helped watch my children while I cleaned up a very wet basement while my husband was at work. Friends are great! Have a wonderful week.

Friday, May 15, 2009

Learn To Live Among People With Different Mindsets

Tip #139 - Learn To Live Among People With Different Mindsets. People who grow up by the coasts know of no other way of life. The water is their backyard and if thrown out into the heartland would probably be surprised to meet people who have never seen the ocean. People who grow up in the city are used to having thousands of people around and if put out in the country would probably be amazed that some people live miles from another soul. People who live in the far North probably would not know how to survive in the Deep South and vice versa. And the list goes on. We sometimes get so entrenched in where we live that we do not realize that other people live completely different lives than our own. And that’s what I love about travel. It’s exciting to see how people’s lives are so different than my own.

But this post is not about travel. It’s about living among people with different mindsets. I’ve been reading frugal blogs for about a year now and I’ve become so entrenched in cooking from scratch, making do with what we have, shopping thrift stores, and getting the best deals on things that I forget that there are people out there who don’t live this way. I’ve been writing this personal finance blog for almost eight months now that I sometimes think I live in a world that is filled with like-minded folks who are trying to save for college, afford what they buy, and prepare for retirement. It seems like everyone is doing this. Aren’t they? Seriously, once you find a topic that interests you, doesn’t it seem like everyone out there has those same interests? The Internet makes it seem that way anyway.

But then I go into the real world outside my door and see that there are large segments of the population who don’t live a frugal life because they don’t want to or need to. And there are others who have no interest in personal finance because they have no interest in personal finance. Look around you at the supermarket and you see people who don’t use coupons when they purchase things. There are people out there who are not buying in bulk or going to three supermarkets to get the best deal at each one. There are others out there who have never shopped at a yardsale.

And oh, it is sometimes tempting to become one of those people to not have to think whether we are purchasing this box of cereal at the best price or to not have to worry about where our money for our next car is coming from. Or to not hold ourselves back from ordering out because it’s not in our budget. But then it’s important to realize that you are making sacrifices because you believe in being financially secure and getting the most value for your money. Seeing how others live, however, can strengthen your own convictions. So while you may live among others who have different mindsets, it’s important to go back to where you came from and stick with your financial goals.

In Real Life – I had an eye-opening experience last week. I think it came from being cooped up in my house during the cold winter and rainy spring reading too many frugal-living and personal finance blogs. I’ve become wrapped up in this frugal living thing that I forgot that others don’t live this way. I mean I know there are people who don’t use coupons for everything or aren’t trying to cook from scratch all of the time. But I somehow forgot that other people live extravagant lives. But then it came back to me when I went to an event this past weekend. I have a distant cousin who lives near me. I didn’t know him until we both found out that we live in the same city. So over the years we’ve kept in touch even though we are years apart and live different lives. We are still family living nearby, and that says a lot in this day and age of people moving far and wide across the globe. Anyway, this said cousin appears to be well-off. In fact, I’m pretty confident that he’s not hurting for money in any way, shape, or form. I don’t know if it’s Harvard-educated career that gave it away or the tennis courts that he has in the backyard of his humble mansion. Somehow I know.

Anyway, he was kind enough to invite me and my husband and my parents to his daughter’s Bat Mitzvah (a coming of age ritual for young Jewish adults) this past weekend. And during that one evening it was hard to remember that this economy is in a recession or that there are people out there who are just trying to get by. There were no expenses spared for this occasion. And I’m pretty certain my cousin did not go into debt to pay for it. He seems to have a good head on his shoulders, as well as a lot of money in his pocket. His children go to two of the most expensive private schools in this city. I’m sure their classmates include senator’s children and the like. I doubt my cousin uses coupons for food shopping or check outs blogs for frugal living ideas.

Our dinner companions for the evening were all Ivy League-educated, making this master’s degree holder feel a wee bit undereducated. And when I mentioned that my husband went to school in North Carolina, the seatmate to my left asked me bluntly, “Oh Duke or UNC?” as if there were no other schools in the state. It probably didn’t occur to him that there are. “Neither,” I answered bleakly, secretly hoping he wouldn’t ask me which school I went to, knowing that my no-name school couldn’t measure up to Ivy League. (He didn’t.) In truth, everyone was very polite and friendly, and just as it didn’t occur to my dinner companion that not everyone goes to an Ivy-League or big name school, I seemed to have forgotten that not everyone lives the frugal life that I live. I guess it’s good to get out once in awhile and see that. It may help me loosen up a bit more, which is sometimes a problem for me. But it wouldn't change the way I live. In fact, it made me appreciate my life. I wouldn't want to spend all of my time trying to be the best, worrying whether my children are being educated in the top schools or if we have the nicest house on the street. Seriously, I was just as happy to get home late in the evening and read about the newest coupon deals on my favorite frugal blogs. Yes, there is another world out there, but this frugal-living, money saving one is all mine. For other ideas on frugal living, check out Life As Mom.

Wednesday, May 13, 2009

Pay Down Your Credit Cards

Money Saving Tip #138 - Pay Down Your Credit Cards. If you do not pay off your credit cards each month you should be. And if you can’t, you should at least pay more than the minimum to get rid of your credit card debt as fast as possible. Getting caught up in credit card debt is a very dangerous road to go down. If you have credit card debt, you likely know that the rates you are borrowing money at are incredibly high – in many cases near or above 20 percent. If a credit card has a 20 percent rate then that means for every $1,000 borrowed, you are paying $1,200 back to the credit card company. In other words, you are paying $200 to them for the privilege of borrowing $1,000 for a year.

If you see a television you like that costs $1,000 and you borrow that money on your credit card for one year, then you are actually paying about $1,200 for that television. That’s not too good, considering some people will spend lots of time looking around for a deal that will save them 10 percent off that television, only to turn around and pay more than that back on their credit card if they are not paying it back full within a month.

But even worse than that is only paying the minimum that the credit card asks of you each month. It would take approximately $100 per month to pay the amount you owe within a year, but suppose the minimum on your credit card bill is only $20, and that’s all you pay? Now you have stretched that payment out over 5 years, and guess what? You are paying 20 percent interest on your balance for each of those 5 years. In essence you are paying at least twice the original cost of the television.

The bottom line is, interest rates on credit cards are extremely high. Borrowing money at high rates means you are paying a lot more for your item than if you paid for it outright at the beginning. If you can’t pay your credit cards back in a timely matter, then don’t use them to begin with. And if you already have credit card debt, then try to pay it off as quickly as possible by putting as much toward it each month that you can. The sooner you get your credit cards paid off, the quicker you can start putting savings away for things that are more important than televisions.

In Real Life (IRL) – I am not against credit cards like some people are. But I do understand why some people are anti-credit card since they may be trying to dig their way out of credit card debt. I was taught at a young age that if I cannot afford something that I shouldn’t buy it. So I never got caught up in the credit card mess that other people did. Having said that, I can see that it would be easy to get caught up in it. After all, it doesn’t feel like you are actually spending money. It’s much easier to pay later than pull out the money now.

And while I don’t deny that I may spend more in a supermarket or retail store because I use a credit card, I still think they serve a valuable purpose to use other places. There are many things I put on my credit card that I would not pay cash for – like renting a car, hotel accommodations, traveling abroad, or simply paying a doctor’s bill. Each of these gives me 30 days in which to keep the money and earn interest in my bank before I have to pay the credit card company. Not a bad deal if you pay them off each month. And while I don’t collect airline miles (since I hate to fly!), I do earn 1 percent back on all of my purchases, which is just a bonus. And I really do feel comfortable having a credit card on hand. If I ever see a must-have purchase for a good price or a get into a bind with my car I feel better knowing I have it. Yes, a debit card does a lot of what a credit card does, but it may not cover an $800 emergency repair bill if there is only $500 in my account and I don’t get paid until next week. And did you know platinum credit cards bring have some type of insurance if you use it to pay for a commercial flight and it crashes? (Me neither, but my husband claims id does.)

Anyway, there is a way to use credit cards wisely. They are not a ticket to free-for-all spending, but buying pre-thought out purchases, using it for travel, for sudden car expenses (until you can get your money out of the emergency fund), and earning interest for a month are valid reasons to use them. Just pay them off each month and you should be fine.

Tuesday, May 12, 2009

Saving Is More Important Than Investing

Tip #137 - Saving Is More Important Than Investing. I hear from many people that they don’t understand anything about investing. And although I have written several posts on basic investing, there are some people who are not willing to undertake more risk to earn more money. And there are other people who are just not interested in investing, and therefore resign themselves to not saving money at all. But being an investor and being a saver are really two different things.

Person A is not a very good saver. He makes $50,000 per year and only saves $1,000 per year, but he makes wise investments. He is not scared to undertake some risk when it’s appropriate and does quite well investing it. In fact, he earns a 12% return on his money. After one year he has $1,120.

Person B, on the other hand, is a good saver. She also makes $50,000 per year and saves $5,000 of it per year, but is uninformed on investing. She is scared to take risk, however, and likes only to save money in FDIC-insured accounts. Her return on investments is only 3%. At the end of the year she has $5,150.

The savings amount and investment rate for each of these people are the same year after year. At the end of 10 years, Person A has about $20,000 in savings with interest (compounded daily), and at the end of 20 years he has $88,000. On the other hand, Person B has $59,000 after 10 years, and at the end of 20 years, she has $139,000.

In fact, for Person A to have as much money as Person B after 20 years, he would need to earn a 15% interest rate per year consistently. Or to look at it another way, it would take Person A almost 27 years for his savings amount to surpass that of Person B because of his abysmal savings rate, even though he is earning a great rate of return.

While I am not in any way advocating not learning about investing or just putting all of your money in FDIC-insured CDs, I am trying to encourage those of you who are too scared to learn about investing or too overwhelmed by all of the investment choices out there to at least bump up the amount you save each year. Because putting money away is more important than what rate you earn on it. And as your savings starts to build up, you can learn more about investing. Or at least hopefully feel comfortable enough to invest a small portion of it in higher risk investments to increase your earnings. If you are new to investing, do not get talked into making investments that you are not comfortable with. Just put the money away where you are comfortable with it, putting the most away that you can.

In Real Life (IRL) – When I was new to saving, I had all of my money in CDs, government bonds, money market accounts, and bank savings accounts. It took me awhile before I became comfortable enough to invest money in mutual funds or stocks. And when I did, I eased into it slowly - gradually increasing my portion in stocks as I became more used to it. And until that point I just kept socking the money away. And truly, that is what has built my savings up today. With the stock market erasing many of the gains I made in the 1990’s, the thing that has saved me is having put so much away.

I have pointed out before in this blog that I tend to be a somewhat conservative investor as far as informed investors go. As I mentioned, I only have 25% of my daughter’s education money in equities (stock mutual funds), while 75% is in fixed income FDIC-insured CDs earning between 4% and 5%. With our retirement money – about 20 years away, I have 1/3 of our money in fixed income – CDs and Government bonds, which is more conservative than most financial advisors would recommend. (Most would probably recommend that I have no more than 20% in fixed income.) But I am an avid saver. We save about 25 percent of our income. So I can afford to get lower returns. I invest the way I do because it is the most risk I am wiling to take at this time.

We each need to take baby steps when it comes to investing – we crawl before we can walk and walk before we can run. Yes, saving a lot and getting the most interest on that savings will get us where we want to go the fastest. But crawling will get us there, too. It will just take a bit longer.

Monday, May 11, 2009

Plan An Inexpensive Party

Saving Money Tip #136 - Plan An Inexpensive Party. Keeping parties inexpensive is no different than keeping costs low for other activities, it all comes down to planning. The more you do in advance, the less things will cost. When planning a party, come up with an itinerary to follow. Most parties will follow the same sort of schedule. For example, a kids’ party will consist of:

--Small Activity waiting for everyone to arrive – this can be coloring pages or dress-up
--Craft or main activity of the day – this can be painting, beading bracelets or something similar
--Game or activity – treasure hunt, party game, trivia game, etc.
--Cake and Snack
--Wind-down – could be reading a book or something similar
--Departure – Hand out goody bags

You could easily change things to suit your needs. Some people open presents at the party. That could be done prior to departure. Others don’t do lunch but have cake and ice cream only. If it were a boys’ party, there probably wouldn’t be a craft but maybe two activities and a game.

The key is to have an order to the party with activities to fill each time slot. You should always have an extra idea or two to fill the time in case things don't take as long as planned. In general some food and games or crafts are all children need to make a party successful. Sometimes they like free play, but having things planned works best and can always be ignored if they would rather play on their own.

For adult parties, some snack foods and drinks are good to have on hand as guests arrive. Most adult parties will consist of talking and then eating a meal or appetizers. But you could easily do theme parties, too. If it is a celebration of something such as a retirement or a special birthday, it’s nice to personalize the event with a few words about the guest of honor or a game or activity in honor of the person.

Buying what you can in advance helps tremendously. Buying sodas, paper goods, shelf-stable foods and any prizes or gifts in advance will help you save money. Foods such as fruit or deli meats need to be bought at the end. You can be flexible in this regard so as to be able to take advantage of last-minute specials. All it takes is a bit of planning, a good itinerary, and you should be able to pull off a successful and inexpensive party.

In Real Life (IRL) –
I seem to hold a lot of parties – whether it is for my children’s birthdays or a special anniversary for my parents, I hold at least 3 per year. I feel like I have gotten the routine down pat. As I mentioned with the kid’s itinerary above, I usually do a craft, lunch, an activity, and cake. I often add in a few other things such as make your own sundaes – which is always a big hit, and if it’s nice out - free play in our backyard because we have a big playset. Also, we have a moon bounce that I once bought at a thrift store for $25. That is a big treat for the children. Items for goody bags are often bought throughout the year on clearance. I am flexible with food I serve. I like to have fruits or veggies to serve the children. This week strawberries were on sale, so I cut up strawberries and bananas to serve with the kids’ lunch. Had grapes been on sale, I would have served them.

For adult parties, I come up with a menu in advance – again being flexible on certain things. If I am having deli platters and roast beef is on sale, then I would buy more of that than turkey, for example. We often do an “adult” game for adult parties. One of our favorites is “How well do you know the person of honor?” For example, if it is my mom’s 70th birthday, we have a list of about 20-30 questions about my mom’s life. Where was she born? Where did she meet my dad? What is her middle name? The first person who answers a question correctly gets a Tootsie Roll or a Hershey’s Kiss or something similar. Whoever has the most Kisses (or Tootsie Rolls) at the end, wins the game and gets a prize. This always makes the party a bit more fun and adds a personal touch. We’ve also done personalized Bingo, which is a bit more work. Rather than having numbers on the Bingo Board, we have things the person of honor likes, her friends, places she’s been, etc. Again, it’s always fun and adds a nice touch to a party. Plus everyone comes away knowing the guest of honor a bit better and often leads to good conversations.

I’ve always had people tell me how much fun my parties are. And I really don’t do anything special other than spending a bit of time to come up with a course of action, buying things in advance on sale, and having a good mix of food and activities. And that’s all it takes to have an inexpensive, successful party. Anyone can do it.

Sunday, May 10, 2009

Our Family's Finances - Weekly Wrap-Up

Expenses – I went to several grocery stores stocking up for food for our family and for my daughter’s birthday party. There is a local chain near us that is pretty inexpensive in the produce department. I spent $12 there and got lots of fresh fruits and veggies. I also spent $15 at Giant, $22 at Safeway, and $22 at Whole Foods. My husband went to Costco and Wal-mart and spent $14 and $16, respectively for a total cost of $101 for food this week and seemed to cover every supermarket in the metro area. I went to Michael’s and got the rest of the crafts and things for my daughter’s party ($10). And we spent $46 on pizza for the party and for friends and family who came over afterwards. Lastly, I signed up my younger daughter for camp and activities at the local community center for the summer. I spent $225, which will keep her in gymnastics one day a week for 6 weeks, a week-long afternoon camp, and two 3-day morning camps. I went to a few yardsales and bought some great things including some American Girl items and some depression glass. I only spent $12 total!

Deals –I bought the crafts and goody bags at Michael’s using two coupons and snagged a deal at Safeway on strawberries getting 4 pounds for $4 using coupons and specials as well as some cereal for $1 or $1.50, again using coupons and specials.

Income –
I sold a few items on eBay this week for a total of $86 and a few things on Craigslist for a total of $97. And I got a $3.50 rebate in the mail. I have a few things up on eBay, but need to put up some more.

Investments – I finally invested the last $2,000 from the first quarter. I put $2,000 into a mutual fund account for my second child’s Education Savings Account. After analyzing the investments I have for my children’s education, I realize that I am too conservative, with most of it in CDs earning 4-5%, so this will balance it out more to the stock side. Now I am ready to invest $4,000 for the second quarter of the year.

Giving – Umm, I don’t think I gave anything this week other than the birthday party which was a big success.

Saturday, May 9, 2009

Keep Parties Warm And Meaningful (And Cheap, Too!)

Saving Money Tip #135 - Keep Parties Warm And Meaningful (And Cheap, Too!) In today’s busy day and age with on-the go coffee, take-away meals, and portable offices, it seems like parties have become packaged like a fast-food dinner also. Pay someone a couple hundred dollars and they will do the work for you – a magician hired to entertain a group of partygoers, a restaurant package lunch party where guests go to eat and then leave, or a gymnastics event where children are herded in like cattle, do a few moves, are fed a piece of cake, and are ushered out before the next group of children arrive. What ever happened to the days where parties were actually occasions when people got together to socialize and celebrate in a simple, personalized atmosphere?

With families earning two incomes, and everyone seemingly in a rush these days, it seems that the idea of a party has changed from a nice time to get together and hang out to an event where some people try to find a way to dazzle their guests with entertainment or impersonal activities. By succumbing to this type of party, people end up spending hundreds of dollars to entertain, and the event often falls flat compared to a warm, well-thought out party thrown by the hostess.

Why not bring the parties back home? If you want to celebrate a girlfriend’s upcoming nuptials, then instead of a fancy luncheon in an impersonal hotel, hold a tea with sandwiches in your home and plan simple activities to honor the bride, such as sharing recipes with her, giving warm advice on married life, and simply sitting on a well-worn couch and talking. In ten years, the bride won’t remember what she ate at a fancy hotel luncheon, but she will remember sitting among friends and family listening to great aunt Ethel tell how she and her husband lived happily for over 50 years of marriage.

If your son is turning 5, don’t be tempted to pay the local pizza and laser tag parlor two hundred dollars to entertain your son’s whole first-grade class, instead invite a few close friends over for lunch, and make up your own activities. Plan a treasure hunt or a dinosaur dig in the backyard. Your child will remember helping mom and dad hide dinosaur bones in his backyard more than he will a laser tag day where several of his classmates held parties as well.

The advantage of holding a warm, personal, at-home party, in addition to them being meaningful to guests and hostess, is that they are usually at least half the cost of a pre-planned package party. A simple brunch in your home served on grandma’s fine dishes will cost a fraction of a fancy brunch at the city’s nicest hotel. A day of playing pin-the-tail on the donkey, having sack races, and eating ice cream in the backyard will cost pennies compared to the amount a packaged kids’ party at the local tumble and play place costs. Not only will it be cheaper, but the memories the guest of honor has from her special day will not be blended in with all of the other packaged-to-go parties that are the norm these days.

In Real Life – I am a big fan of parties at home, which I have mentioned in the past. I am constantly looking for ways to put a personal stamp on things, and it’s even better when it saves me money in the process. My just-turned 4-year old daughter was counting the days until her birthday for about 3 months, or at least asking how many more days until the big day. When it came time to plan the birthday party, I opted to invite some special friends over our home for fun games and dinner, instead of inviting her whole preschool class to a local gym or Chuck E. Cheese.

Without berating my friend for her choice of having her daughter’s party at an outside venue, I want to compare costs of a packaged party outside the home and an at-home party and also figure out whether the professional one was any more enjoyable. My friend held her daughter’s party at a gymnastics center three weeks ago. The cost was $140 for up to 10 children, which included using the gym led by an instructor for 1 hour, and using the gym’s tables in the entranceway for cake and snacks for 30 minutes. The instructor led the children through tumbles, balance beam activities, and a few other gymnastics moves for about 30 minutes, and then the children were free to jump on the trampoline or do other things until the hour was up. Afterwards, the mom put out a store-bought cake ($20) and ice cream sandwiches ($5), some snacks and juice boxes (about $10) and handed out goody bags (about $15). She set up and cleared the things herself and also served the food herself. The total cost of the 1 ½-hour party for the 8 children, including the birthday girl was $190 or $23.75 per guest plus the cost of paper goods and invitations.

We did a party a couple of weeks later for my younger daughter in our home. My daughter, along with nearly every other 3 and 4-year old girl, loves princesses. So we did a princess-themed party. She invited 7 girls plus her big sister and another guest’s big sister, for 10 children total. The party lasted 2 hours and included dinner from our favorite mom-and-pop-owned, local pizza place. During those 2 hours, the girls dressed up as princesses with dresses, wands, crowns and shoes from our dress-up collection ($0), made a craft of jeweled bracelets ($11), ate dinner including pizza, fruit, and juice ($27), played a homemade game of pin the princess in the castle ($0), made ice cream sundaes ($10), ate homemade cupcakes ($2) and played in our backyard until it was time to go home ($0). Goody bags were an additional $10. The total cost of the 2-hour party for 10 children was $60 or $6 per guest plus the cost of paper goods (I used leftover princess ones from my older daughter’s party) and invitations.

And while I may be biased, I think my daughter’s party was a lot more fun than my friend's for less than 1/3 of the price. Not to mention that it lasted longer, included dinner, and served more guests. We didn't have a minimum number of guests we had to pay for - whether they showed up or not. Plus we were able to be more flexible - one guest had to be dropped off early, while another stayed late. No one got ushered out the door, while the next birthday group showed up. The birthday girl’s baby brother was able to nap in his crib during the party. If the girls got bored, I could have found another game from our house to fill the time. But frankly, dressing up, doing crafts, and playing in the backyard was the most fun for these girls who really just like playing together without too much formal instruction. Fun and frugal plus pizza and ice cream sundaes. Can’t beat that. For more Frugal Friday tips, check out Life As Mom.

Thursday, May 7, 2009

Why It's Important To Save For Retirement

Tip #134 - Why It’s Important To Save For Retirement. Most people begin their working lives at about age 20 – plus or minus a few years. At age 20, people have an overall life expectancy of about 80 years old. So when you being working you have, on average, 60 more years to live. If you work until the day you die, you don’t have to save for retirement. But most people do not want to or won’t be able to work until they are 80 years old. In that case, you need to save for retirement. Think of it this way – from age 20 to age 80 is 60 years’ worth of living expenses. If you only want to work (or are only able to work) for 40 of those years, then you will have 20 years with no income. So 40 years’ worth of paychecks needs to cover 60 years’ worth of expenses. And that is why you need to put money away from each paycheck to fund your retirement. It is that simple.

It seems funny to save for retirement when you are fresh out of college, but the earlier you get started on this habit the better, as you have longer time to save and time for interest to compound. But let’s forget interest for a moment and take inflation out of the equation. Let’s go over a very simple example of why you need to save for retirement. Suppose you make $50,000 per year from age 20 until age 60. That is $50,000*40 (years) or $2 million total. From age 60 to age 80 you do not want to work, so your income for those 20 years is $0 total. How do you live for those 20 years? We’re not going to count on Social Security. If it comes, it will be a nice bonus and you can do something special with it. But let’s assume it doesn’t. You need to live on some of that $2 million dollars that you earned over the previous 40 years. So let’s say, from age 20 to age 60 you live on only $40,000, saving $10,000 per year for retirement. That means from age 20 to age 60 you will live on $40,000 ($1.6 million dollars total). And from age 60 to age 80 you will live on $400,000 total or $20,000 per year ($400,000/20). That might be okay. Expenses are often cheaper in retirement. Hopefully, you house will be paid off so you won’t have that big expense. But maybe you want to do better, so you live on only $35,000 during your working years and save $15,000 per year for retirement which means you will have $600,000 to live on in retirement $30,000 per year, which is probably better with income being only slightly less than when you were working.

Of course this is just a very simple with many realities taken out of it. In reality, what you save will grow exponentially over the years because of compounding interest. Of course, inflation will eat away at some of that interest, too. Your income will not be steady for 60 years either. And there are really tax benefits to saving for retirement. But this basic example shows why it is important to understand why people must put money away for retirement year after year. It is not to save so you can live on a tropical island in your golden years. You are simply covering the living expenses you will have when you will not be working. And the earlier you start saving, the less you need to put away each year.

In Real Life (IRL) – When I got my first job, I remember sitting in the human resources office the first day, and the benefits specialist telling me that I would be eligible to participate in their 401(k) after 1 year of service. “Okay,” I answered not really caring one way or another. I was just interested in having an income and some health insurance. But after a year rolled around, the benefits specialist informed me that I was now eligible to put money into the 401(k), and that they would match dollar for dollar the first 3% of my salary that I put in. Because the match of “free” money sounded good to me, I put in 3% of my salary, even though saving for retirement – a good 40 or so years away - sounded a bit extreme.

During that year, I spoke to my father and an older man at work, and both of them advised me to put in as much as I could into the work retirement plan. Not only would I get a tax benefit, but I remember specifically the my older co-worker saying, “You won’t even miss the money since it comes out before you get your paycheck.” So the following year, I put in the full 13% that the company allowed. And my co-worker was right! I was saving for retirement painlessly because I didn’t even see the money that I was putting away. From that point on, I got accustomed to living on less than I earned.

I eventually started putting even more money away for retirement in an IRA account and then when my children were born and I worked part-time or not at all, I stopped contributing to my 401(k) altogether. Thank goodness I put money away for retirement in those early years, when I really didn’t have high expenses – I shared an apartment with friends and I had no family depending on me. I am grateful for the good advice some wiser, experienced investors gave me. I’ve written a few other posts on saving for retirement, including one that linked to a retirement calculator to figure out how much you need to save each year. But the purpose of this post is to show the very basic reason why it’s important to put money away each year for retirement. Unless you die the day you stop working, you will need money to live when you don't make an income.

Wednesday, May 6, 2009

Some Things Are Worth It At Any Price

Tip #133 - Some Things Are Worth It At Any Price. When trying to save money, many people, myself included, are guilty of holding back on purchases that are not necessities or do not benefit us monetarily. I hear people say that children are too expensive so they aren’t going to have any, and I know people who never take a vacation because it’s not worth spending the money on something that is short-lived. And while I am not suggesting that someone who is thousands of dollars in debt go on a Caribbean vacation, a small getaway even to a friend’s house or at a local state park is good for the soul. You may come back well-rested, rejuvenated, and ready to tackle problems that seemed to heavy to bear before you took a break. If you want kids, then you will figure out a way to raise them inexpensively. Yes, there will be costs and sacrifices on your part to have them, but as most people who have children will tell you, it’s the best decision they made. (I’m not saying people who do not want kids should have them; that’s a whole other can of worms.)

My point is, some things are worth it at any price. Living close to family may cost more than living somewhere else but the benefits you and your family receive cannot be replicated. So when you are evaluating your budgets, don’t just look at the bottom line, think about what will make you happiest overall, and even if it is not the most cost-efficient move, it will benefit you in ways greater than monetarily.

In Real Life (IRL) - In my financial wrap-up this week, I mentioned a $95 pet bill that we had. It will be the last pet bill we pay for awhile. You see that $95 bill was to euthanize our family dog, Bonnie and to cremate her. Bonnie was 16 ½ years old and for a large dog, had lived a full life. But for her last few days on earth, she wasn’t eating and was pretty much sleeping all day. I won’t lie and say this pet meant more to me than anything. She didn’t. She was actually a package deal who came with my husband when I met him. Some days I liked her very much and other days I merely tolerated her.

Bonnie was a collie/golden mix who looked primarily like a collie. So she had very long dog hair that shed everywhere, and I am not a big fan of shedding dog hair. And while she had a gentle disposition with people, she hated (with a capital “H”) other animals. In fact, she attacked a dog once who came over to say hi to her. My husband got her at the pound and they believed she may have been abused as a puppy, so we had to be extra careful not to have her around other animals. Since my husband is at work all day, some of her care fell on me. I added water to her bowl, cleaned up her dog poop in the yard, and checked on her every now and then. When we went on vacation, we paid hundreds of dollars to have someone watch her for us. And when she had teeth problems, incontinence problems, and arthritis problems, we paid for her vet bills and medications. Week after week we paid money to keep her fed. In fact, we have a line item in our budget just for dog.

Dogs are expensive, no doubt about it. And if our lives were just about money and how much we can accumulate, there is no denying that having a dog would not be worth it. But some things are worth it at any price. Who can put a price on the responsibility a child learns from having a dog or the unconditional love a dog gives his owner? Or the companionship a dog brings to a person living alone? You can't. Having that kind of companion is priceless. We will miss our dog greatly in our lives. But she lived a good full life and I hope that we brought as much happiness to her as she brought to our family. Rest in Peace, Bonnie.

Tuesday, May 5, 2009

Save For Your Child's Education - Part 5

Saving Money Tip #132 - Save For Your Child’s Education – Part 5. Today we will wrap up our discussion on saving for your child's education. We will talk about the Prepaid Tuition Plans offered by some states. Prepaid college plans are actually another type of 529 Plan. However, many people when referring to a 529 Plan are usually referring to the 529 Savings Plan that we discussed yesterday. Basically, a Prepaid College Tuition plan is when a state (or a higher education institution) offers you a chance to pay today for your child’s college tuition in the future. For example, if you have a 5-year old child who will go into college in 13 years, you can lock in her tuition rate. The state computes a formula based on estimated tuition increases for the next 13 years as well as expected investment results from today’s money and comes up with a figure for what you would need to pay.

The advantage of this type of plan is that regardless of what tuition rates do - whether they skyrocket or not over the next 13 years, you are locked in. You don’t have to worry about how fast the rates rise if you lock in today. You also don’t have to worry about how to invest – what rates of return you will get because the rates of return are calculated into the formula used for what you pay today.

However, there are disadvantages, too. It’s possible that you would have better investment returns on your money than what they are figuring into their formula, which is a usually fairly conservative rate of return. Also, it’s possible that tuition rates will not rise as much as they estimate. In other words, if you prepay $40,000 for tuition today for your child’s college in 13 years, it’s possible that you would have done better investing that same $40,000 on your own if you get a good rate of return and/or if college tuition rates increase slower than estimated.

Prepaid College Tuition Plans, like 529 Savings Plans are offered by the state, although a much smaller number of states offer Prepaid plans. Because it’s offered by the state, they usually only allow tuition to a public in-state university. If your child does not go to a school within the state or goes to a private university, the Prepaid College Tuition usually does not cover that. Instead the money will get put toward the other school based on a set interest rate return (again, a fairly conservative return, and not necessarily better than what you would have done investing this same money on your own). Also, like the 529 Savings Plans, some state’s plans are better than others. Most state’s plans only cover tuition costs, so you still have to save for room and board. Furthermore, states may only offer this type of plan during certain enrollment periods, so this plan is not necessarily readily available when you want it.

If you are the type of person who is not interested in looking into various investments for saving for college and want the guarantee that when it’s time for college, that it’s paid for, and if you are virtually certain that your child will go to a public university in your state, then the Prepaid College Tuition plan might be right for you. If you think you can beat the investment returns of the state or if you think college tuition rates will increase slower than estimated or if you think your child might look to a private college or an out-of-state college, then the Prepaid College Tuition Plan is probably not right for you.

The two websites that I mentioned in yesterday’s post that detail 529 plans also give details on the various states’ Prepaid College Tuition Plans: Saving for College (sponsored by Bankrate) and College Savings.

In Real Life (IRL) – Living in Virginia, I have heard most about Virginia’s Prepaid College Tuition Plan. And I believe it was considered one of the better plans in the country, at least at one time. Apparently, the amount you have to pay has gone up quite a bit over the last few years, as tuition rates have skyrocketed. So, people who did the prepaid tuition years ago probably did quite well participating in it. Today with the economy being what it is, I wonder if tuition rate increases will slow down. The Virginia plan is attractive in another way, because there are so many good public schools within the state, while other states might not have as many options. However, even knowing that and hoping my child will go to one of the state schools, I have a hard time locking into a plan that has so many limitations.

In this 4-part series, about saving for college, we have discussed various ways available to save for college, discussing in detail the main options of the Coverdell Education Savings Plans, the 529 Savings Plans, and Prepaid College Tuition Plans. As mentioned in the first part of this series, there are other ways you can save, too. I also said that I would discuss more thoroughly what we are doing in real life. We have been putting away $2000 per year for each of our children in an ESA. We estimate that it will cover one year of college. I am hoping, however, to go back to work in about a year or so, and with my income, we should be able to put away a bit more, but still not the full amount.

Our detailed plan to pay for college is to use the money we are currently using toward our mortgage. When we bought our home almost 9 years ago, rates were fairly favorable, but a couple of years later they were even better. At that point we were able to refinance into a good rate (4.75%) for a 15-year mortgage, and we were able to cover the expense on just my husband’s income. We are currently 6 ½ years into our 15-year mortgage, so we have 8 ½ years left. Our daughter won’t be starting college until 3 years after that. Our plan is to use that money toward college. That is what seems to work for us. It might change, but that is the plan for now. And when saving for college, whether you are planning to pay for it from savings in an ESA, a 529, a Prepaid College Plan, a Roth IRA, or from a Trust your grandparents have set up is not as important as actually having a plan to pay for college. Don’t let it sneak up on you one day and you realize that you have not done anything to help your child cover this great expense. It will be a big help down the road to start your child off on the right foot.