Rich by 30. . . . .

Last week, while perusing Wise Bread, I came across a review for a book entitled: Rich by 30. I left a comment thanking the poster, Lynn Truong, for her review. Amazingly, Ms. Truong emailed me and offered to send me her copy of the book, with the caveat that I donate the book to my local library when I was finished. I happily accepted, and the book arrived on Saturday!

Although I had a friend visiting this weekend and was therefore busy, I was able to go through the book at lightning speed. It's truly basic, and much of the information presented will be familiar for anyone with an interest in personal finance. I commented to my friend that it would be an amazing gift for a teenager just starting his or her first job. How I wish I had had the wisdom to start saving (even just a little bit!) at the age of 16, when I got my first job!

Thanks, Lynn, for the book! I enjoyed reading it, and will pass it along to the Multnomah County Library system this week, so that others in my area can benefit from it as well.

Danger's gone. . . .

My friend left this afternoon, and as expected, the shopping and spending (hers, mostly) was a sight to see. Her current 'obsession' (other than bags, shoes, and makeup) is costly fabric, with which she's making these amazing little boxes. She buys cardboard boxes at a craft store, then covers them with velvet and silk fabric, embellishing with fancy ribbon. The piece de resistance is a flower made of ribbon, that she affixes to the top of the box. The boxes, while beautiful, are created with high-end materials, and are none-too-cheap to make. Not exactly a frugal past-time. I have to say, I did accompany her to a few fabric and notions shops in the area, and am guilty of spending some of my own hard-earned cash on pretty velvet---most of which I'll probably never use. Here's an accounting of the money I spent while my houseguest was in town (three days):

Dinner: $62.75
Velvet fabric: $16.50
Other craft supplies: $4.48
Pedicure: $26.00
Breakfast: $17.40
Movie: $5.50

Since I rarely carry cash, I used my debit card to take care of our dinner the first night, and also paid for fabric, for which my friend was going to reimburse me. Instead, she covered my drinks/appetizer/dinner and lunch the next day. At which time I felt that I then owed her money, and bought her breakfast. Now, I have no idea whether I spent more or she did---we didn't keep a close accounting of this. Next time I have a visitor, I'll do several things differently:

1. Save for the visit: I spent roughly $130 over three days---money that I could have had in savings, since I've known since December that this particular friend planned to visit. Had I saved $50 a month up until now, I would have had this money set aside, rather than taking it out of my checking account.

2. Carry cash: this will help me to pay for my share, rather than coming up with elaborate schemes in which I pay for dinner, the friend pays for lunch, and no one knows how much either owes.

3. Keep a close accounting of who paid for what: when spending time with a heavy shopper/spender, be sure that close attention is paid to what you owe---it may seem nit-picky at the time, but it can save money in the long run.

4. Don't get carried away by someone else's obsession: it was fun to shop for and buy fabric---I like being crafty. However, I have neither the money nor the time to be searching out high-end fabric and then sitting around and making pretty boxes. There are only so many people in my life who would enjoy a useless item (beautiful or not) like that.

There is some good news: I still can't find my credit card. Therefore, everything I spent came out of my checking account. This forced me to think about my purchases---I have a feeling that if I had been carrying a credit card, my purchases would have been even greater than they were.

I was happy to see my friend---we had a good visit. But it also reminded me of why I'm living a more frugal life. I don't need as much stuff as I used to think I did. Those pretty boxes are great! But they'll sit in my house and gather dust for about a year or two until I can find a way to get rid of them. Better not to have them in the first place!

Finally Frugal reminder. . . .

A close friend is in town visiting this weekend, so I'll be posting next on Sunday evening or Monday afternoon, with an update of how I managed to control my spending in spite of the influence of a "shopper".

Frugal calculators. . .

I'm horrible at math, but I love running numbers using online (and my home-grown Excel) calculators.

The SmartMoney website has a couple of calculators, which I'm using to 'test' my own Excel worksheets, which are helping me figure out when I'll be free of my credit card debt. My Excel calculator tells me that if I pay $550 a month (plus $1,000 in May, after I've received my 'rebate') I'll be consumer-debt free by mid-September of this year! In that time, I'll pay $32.22 in interest (at a 4.99% rate), according to the Excel worksheet.

Meanwhile, the SmartMoney calculator, included in an article regarding Digging Out of Debt, indicates that my credit card will be paid off in five months (by August), and that I'll pay $37 in interest during that time.

So, there is a slight difference between my own worksheet and the fancy one on the SmartMoney website, but they're close enough that I know I can trust my home-grown version. That won't stop me from playing around with the numbers online at other sites I might find, though!

The new epidemic: Affluenza. . . .

I've been waiting for literally three months for a PBS documentary called Affluenza to become available at my local library. I think when I placed my hold on it, there were 46 people ahead of me! Needless to say, I had totally forgotten about it when I read a post on WiseBread with a link to the documentary on YouTube!

The piece is about 10 years old, which isn't really a problem because the comments about American consumerism still hold true today. Note that in one of the segments, gas is shown at $1.28 a gallon!!! Wow. The most disturbing part, I think, is a segment in which a Disney marketing guru talks about 'owning' and 'branding' children----so they'll buy Disney products rather than some other company's plastic, throwaway toy. Basically, this documentary is a commentary on the U.S. 'earn and spend' mentality, how we got here, and what the consequences will be for our economy and our environment. I also own the book, which I promise to review at some point in the near-ish future.

The documentary has been divided into six parts on the YouTube site, probably because the entire video would have been too long to post. I've created links to each of the six parts:

Affluenza: Part 1 of 6
Affluenza: Part 2 of 6
Affluenza: Part 3 of 6
Affluenza: Part 4 of 6
Affluenza: Part 5 of 6
Affluenza: Part 6 of 6

Snarky note: Ted Haggard, of the New Life Church in Colorado is also briefly featured, talking about how to have a successful marriage/family life: he's the big-time pastor who was accused of homosexual relations with a gay man.

This is what I'm up against. . . . .

This Saks Fifth Avenue window, seen above, is right across from the light rail stop I often use. Luckily, I'm smart enough (and poor enough) that I've never stepped foot in the store. The salespeople would take one look at my Old Navy/Banana Republic wardrobe and my old Timbuk2 bag and immediately divine the knowledge that I can't afford a $200 dress (on sale!) Even during my days of wanton credit-card use, I went for quantity over quality (not that a $100 Juicy Couture t-shirt is made in a "better" Thai sweatshop than a $40 Gap blouse. . . .)

With this kind of advertising, though, is it any wonder Americans are over-extended and under-satisfied? You might 'want' that yummy orange handbag the mannequin is holding, but how long will that (probably $500) purchase satisfy you? How long until you're on the search for the next 'must have' bag, or belt, or pair of shoes? I have a friend who is constantly on the search for the bag/shoes/thing she has to have; once she knows her target, she spends hours online searching it out, weeks tracking it down, until finally she pounces----and these things are never cheap.

She's visiting me for the weekend, so I'm curious to see what her latest 'need' is. As for myself, I'm going to try to view the inevitable shopping excursions from the perspective of an anthropologist or sociologist, rather than getting swept up in my own need for more stuff.

Tomorrow, I'll post about Affluenza, a PBS documentary about the reasons behind and the consequences of Americans' need for STUFF. Soon, I'll also write a brief review of the book, which is one of the few I actually purchased last year.

Frugal utilities . . . .

One of my goals since last fall has been to consistently use less energy---both electricity and natural gas. I've been successful in this, although on the electricity side my bill was larger last month than it was a year ago----not because I used more energy (I used less) but because the per-Kilowatt price increased.

This just means that I need to decrease my energy usage even more, in order to make up for the increased price of electricity. How can I do this?

• Unplug appliances when not in use: I've been trying to unplug the microwave and the TV/DVD when not in use, but I think I'm going to start also unplugging the coffeemaker and possibly the computer (this makes me nervous, for some reason) when I'm out of the house.
• Lower the thermostat on the water heater to 120 degrees: I've been meaning to do this for ages. What's stopping me is that my water heater is under the house, in the crawl space. Along with hundreds (I'm sure!) of cobwebs and spiders and who knows what else. I need to bite the bullet and just climb down there and DO IT.
• Take short showers instead of baths: Wow. This one is hard. Especially in the cold months, there's nothing I love more than a hot bubble bath, with a good book and a glass of wine. I'm going to try to limit my baths to a few (3) times a week. I'll search the Salvation Army for an egg timer to limit my showers, too.
• Use compact fluorescent bulbs: Happily, I already do this. I had my local utility provider come to my house last year for an 'energy audit', and unbeknownst to me, this included about ten free CFL bulbs (he would have given me more, but I felt guilty!) as well as low-flow showerhead and faucet for the kitchen sink!

I'll start these new habits on April 1st, to see if this makes any difference in my April/May energy bill, compared to last year.

What's going on in the blogosphere. . . .?

It's pretty quiet in my personal finance world, so I thought I'd create a compilation of recent posts from other personal finance and/or frugality blogs:

Lynnae at BeingFrugal posted a great article with suggestions for frugal spring break activities. For those with kids, there are some helpful tips on how not to blow the budget while entertaining the children.

Along the same lines, FrugalMomLA has posted some links to websites for the pre-Kindergarten to grade 2 kiddos.

J.D. over at Get Rich Slowly asks the question, "how to live simply, without looking cheap"? Something I've struggled with as I attempt to have a social life while living frugally.

Meanwhile, Moolonomy explains why a penny saved is actually better than a penny earned.

The Simple Dollar (which I haven't visited for quite some time) reviews a book called The Little Book that Builds Wealth. This is book five of a series of investment books by Wiley Publishing. Today, maybe I'll do a search of the site for a review of the first in the series, so as not to miss anything.

As for me, I'm all set to go out and help and friend celebrate her birthday tonight, and am planning to eat before I go----and I'll be driving, so that means my alcohol consumption will be limited. I'm hoping to keep the entire evening under $10, including the drink I plan to buy for the birthday girl.

Frugally optimistic. . . .

I'm actually feeling rather optimistic about my finances (or, rather, my future finances) lately. Which is good, because sometimes I can become so depressed and hopeless about the sheer volume of my debt that I need to go out immediately and buy a pair of shoes or some Almond Roca to soothe my anxieties.

The reason for my optimism? Well, my March zero-based budget is done (and it doesn't look half as bad as I predicted), my April budget is shaping up, and I've decreased my 403b contributions to 1% of my salary until my credit card is paid off and my emergency fund has doubled (to at least $2,000, though hopefully more). I'm hoping to put $550 a month onto my credit card starting next month, which should shave a month off of my ETR (estimated time to repayment).

I took the step of creating an estimated future budget based on NO CREDIT PAYMENTS, and while I'll still struggle, I'll be able to sock more money away into my emergency fund in 2009, while beginning to tackle my student loans (currently around $55K) or double the payment on my second mortgage.

I've put a reminder on my electronic calendar for January of 2009, at which time I'll up my 403b to 5% and open a ROTH IRA for another 5-10%. Writing this post just gets me more excited to reach some of my financial goals!

March zero-based budget. . .

I hemmed and hawed for two weeks about whether to create a zero-based budget for March, primarily because I wasn't sure whether to include the money I spent in Mexico. Finally, I decided since the money I spent for my vacation didn't come out of my salary, I would go ahead and create it----plus, February's budget went very, very well----I followed this budget as closely as I could, and it truly did help me to reign in my spending last month.

So, here it is!



I have one more check coming from my night job, which will be tiny because I spent a week in Mexico NOT working, so I'll update this when I know how much that check is (Note: this has been updated, and as promised, is 'tiny'). The 'overage' at the bottom of the spreadsheet will probably be used to entertain my friend when she visits next weekend, so probably will be added to the 'fun money' section. . .

All gain, no pain. . . .

I spent all day Saturday at the library, writing a paper and studying for a final exam (I'm on the quarter system, so our winter term finals are this week). As per usual, I spent a fair amount of time catching up on my magazine reading.

Money Magazine had a fairly good article concerning tips for increasing your savings rate. Now, generally, most 'savings' tips regurgitate the same old ideas over and over again. This article actually had some tips I hadn't seen before.

Put it on Autopilot: Of course, there was the tried and true suggestion that we should set up an automatic savings plan, whether that means sending part of our salary to a 401K, a Roth IRA, or to a savings or money market account. The idea being, of course, if you never 'had' the money in the first place, you'll be less likely to miss it when it's gone. We've all seen this before, many, many, times. Probably because it's such a great idea, I suppose. I myself do this, and plan to increase my auto savings rate when and if I ever get a raise (my faculty union is currently in negotiations with the university----almost a year after our contract ended).

Reward Yourself: Ooooooh, I like this one!!!! I'm all about the rewards. The idea behind this is to set a specific savings goal. For example, one of my New Year's Resolutions was to increase my emergency fund by $1,000, to $2,000. I know, I know, it's not much---but I'm still in debt repayment mode. Anyway, using this strategy, I would get to 'give' myself a reward when I've met my goal----maybe a new pair of shoes, or $100 to spend on whatever I want?

Wield a Stick: Money Magazine cited a website, Stickk.com on which you can enter your goals (whether it's saving money, losing weight, or exercising more). Then you can appoint 'referees' to help keep you honest by monitoring your check-ins. You can even 'put a contract on yourself', by wagering money against your goal: for example, if your goal is to save $100 a month for the next six months, you can create a contract in which you'll have to 'pay' money (say, another $100) if you don't meet your goal. You can choose to send your money to an individual, to a charity you like, or even a charity you don't like, if that acts as a great incentive.

Invest in a Roth: Okay, this is one I've heard before too, but since this is one of my goals after I've paid off my credit debt (later this year), I was glad to see it on the list. I just decreased my 403b contributions to 1% of my salary from 10%, so I can use the extra money to pay down my debt further and faster. Since I have a pension (of sorts) through the university where I work, I'd like to keep my 403b at 5% and then do 10% to a Roth when my finances allow for it.

All in all, this article was a mix of 'vintage' (but good) ideas as well as some newer, perhaps more controversial suggestions. In the end, I benefit from hearing the same savings tips over and over again anyway----the more times I read or hear it, the better chance I will follow the authors' advice and put some of these ideas to good use in my own life.

Needs versus wants. . .

Just found this great cartoon on the GetRichSlowly site, and thought I'd share it. If you click on the link above or below, you can see a full size version of this cartoon, which was created by Dorothy Gambrell, of Cat and Girl.



















I think one of the reasons I find this so funny is that I actually DID ask for socks for Christmas this year. I wanted yummy, warm, wool (not the scratchy kind) socks, because I'm keeping my thermostat at 58 degrees to save on energy costs. Throughout the months of December and January, I was bundled up like an eskimo when I was at home. For Christmas, I received one pair of socks. The year I truly want and yes, need socks and I get one measly pair. However, I've worn them so much both feet have giant holes in the toe. Time to get the needle and thread out.

Danger's a comin'. . . . .

A good friend is coming to visit at the end of the month, someone with whom I've spent countless hours drinking coffee, chatting, and yes, shopping. This will be the first visit we've had since I started my new frugal living habits, and I'm a little nervous about how I'll handle the pressure to spend money on things I don't need.

The last time she visited (in October, I believe), I bought a pair of shoes I've literally never worn. I HAD to have them at the time, but there they sit in my closet, mocking me with their shiny newness. Granted, I think they cost less than $20, but that is in addition to the roughly $60 I also spent on another pair of shoes (which I do wear occasionally) as well as some $20 hand lotion from Kiehls ($20! For hand lotion! WHAT was I thinking? It is great stuff, though). I believe there was also the purchase of some makeup, which I rarely use.

I'm trying to think of strategies that I can use to avoid this happening again. I do want to go out to breakfast and dinner, get coffee somewhere, and perhaps go to a movie, so I'm going to budget for this. But I don't want to spend anything on items that I wouldn't have purchased had my friend not been visiting (because I wouldn't have dared step foot in Banana Republic, Nordstrom, or Anthropologie).

I still can't find my credit card (not that I've spent much time looking), which is a good thing. The fact that I'm truly limited to the cash in my checking account will serve to control my spending----just paying for the entertainment noted above will be a stretch this month, in fact.

I'm going to spend some time over the next two weeks researching some other strategies I can use to control my spending urges when my friend visits, and I'll share what I find on these pages.

Grocery price comparisons. . . . .

FrugalMomLA posted last week with a comparison of some common grocery (plus gas) costs, primarily from the West Coast. She did hear from a Canadian blogger, and it was very interesting to see the differences in price for a gallon of gas in Portland versus Nova Scotia! Basically, with a gallon of gas in NS costing roughly $4.56, I've nothing to complain about!

I know I would be interested in hearing from more people across the country and elsewhere about the costs in their areas. If you're interested in participating, please click on FrugalMomLA's link above and chime in!

Meanwhile, there are a myriad of news stories about how high our gas and grocery prices could eventually go, including these:

CNN: Gas prices hit all-time high

NPR: What's driving up grocery prices?

New York Post: Eat it & weep: Grocery prices soaring

CNNMoney: Holy Cow! Consumers get a milk break

While that last article does indicate that at least milk prices are going to stabilize, I think we're in for a rough ride on other items (like corn---my favorite vegetable). I'm continuing to visit my local Grocery Outlet and Winco to save as much as I possibly can until the economy improves (assuming it does. . . .)

Making sense of my travel budget. . . .

It's odd. A week in Mexico threw me completely off----I often didn't write down exactly what I was buying with my pesos, and I paid absolutely no attention to how much money I was taking from the local village ATM machine. I'm still muddling through my finances three days after my return, trying to determine how much I really spent on my vacation (too much, I'm sure).

Luckily, I hid my credit card from myself about two months ago, and now I can't find it! So I couldn't have put anything on credit even if I had wanted to! Not being able to find my credit card gave me a bit of a panic----it's like my security blanket, and I definitely felt some anxiety at not having it in my wallet, just in case. But I found that I could survive without it, in spite of only having access to the cash in my checking account (as opposed to the "cash" available through credit).

It appears that I used much more cash during my vacation week than I anticipated:

Money from ATM/debit while in Mexico: $285.92

Money taken to Mexico: $200

Airport parking: $56

Housesitter: $100

House rental: $500 (paid in advance)

I may even be missing some information here, as well. For example, I'm pretty sure I paid for my horseback ride with my debit card, and that hasn't shown up on my account yet. . . .

Enough!

Sigh. I arrived back in Portland from Mexico last night, and am now preparing to get back to work. After a week of relaxing on the beach, eating freshly-caught fish (and drinking freshly-blended margaritas), and meeting new friends and getting reacquainted with old ones, sitting in front of my computer just seems wrong somehow!

Anyway, now that my Mexican interlude is over, it's back to the daily grind, and I realized I've never written about my night job---the one that is allowing me to repay my debt more quickly.

My moonlighting job involves web research related to environmental health, and many times I come across articles that are relevant to me (and to the planet!) vis à vis consumerism and waste. Here's just one example:

Last week The Herald published an interesting opinion piece, written by John Naish, the author of Enough: Breaking Free from the World of More. This is not a book that I have personally read (nor have I even heard of it) but it sounds like something that would appeal to me as a person who is attempting to live a simpler life. Mr. Naish explains that we often purchase items when we’re unhappy or anxious, as a way to fulfill some emotional need.

In fact, studies have shown that the ‘feel good’ chemical dopamine is activated when we’re on the ‘hunt’ for a new item. Interestingly, this chemical reward is highest when we’ve located our item and are considering a purchase. Once we’ve sealed the deal and the purchase is complete, the dopamine effect flattens, and we are hit with ‘buyer’s remorse’.

Naish suggests two ways we can help ourselves control the urge to splurge:

Attitude Adjustment: we need to stop thinking that some thing is going to make us happy, even though we are already surrounded by enough stuff in our homes and offices to provide satisfaction for years to come. The key here is expressing gratitude for the things we already own, instead of striving to own more. In fact, Mr. Naish cites a study that provides evidence that those of us who are more appreciative and grateful exhibit more happiness and less need to assuage our emotions with retail therapy.

Decide to Have Enough: related to the attitude (and behavior) adjustment noted above, is the idea of simply deciding that what I have is already enough. Obtaining more and more stuff can make us less happy, because we spend time, energy, and money on searching for, purchasing, cleaning, maintaining, and insuring the stuff that we bring into our lives. This gets in the way of spending quality time with our families and other loved ones---the ‘thing’ that really brings happiness (and doesn’t add one iota to global warming, I might add).

J.D. over at Get Rich Slowly also recently wrote about the concept of ‘enough’, and how being satisfied with what we have can be the key to personal wealth. Check it out!

“You can never get enough of what you don't need to make you happy.” ~Eric Hoffer

The Spanish word for frugal is. . . "frugal".

In preparation for my trip to Mexico (where I am right now), I checked out my favorite sites to see what kind of travel advice they could give to a certain frugal individual (me).

First, I visited WiseBread , and found these gems:

Frugal Travel: Tips for Packing Light

Keeping the Budget in Budget Travel

Eating Cheap While Abroad

Then, on to Get Rich Slowly

Ten Money Savings Vacation and Travel Tips

At Saving Advice :

How I Take Frequent Vacations on a Limited Budget

Plonkee Money had this advice:

Going Somewhere Nice? Packing Light Rules

Almost all of these sites mention packing light, which is something I did NOT do. Actually, having a completely full suitcase means that my Mexican purchases will need to be teeny tiny (and cheap) or they won't be coming home with me at all.

Back in the swing of things on Sunday, guys, and maybe I can even upload some pictures.

Carnival of Personal Finance

I'm still in Mexico, but I wanted to let you know that The Baglady is hosting this week's Carnival of Personal Finance, so give it a click! She has compiled a great collection of articles and blog posts on issues ranging from budgeting to career to debt, from writers all over the blogosphere. . . .

I will try to log in again between margaritas and fish tacos. Tomorrow morning (early---7 a.m.!) we go deep sea fishing, and if we're lucky we'll be feasting on fresh catch tomorrow night. . . .

Hola from Mexico!

Our house has internet access, so here I am sitting on the veranda, watching the surf (and the surfers), drinking my morning coffee. It occurs to me that someone could live here full time if only he or she had a job in which telecommuting was possible. Not me, obviously. What a life, though!

So far, I've spent more than I thought I would, primarily because I'm not familiar with the exchange rate yet, and I'm also horrible at math---I'm not really sure how many dollars my pesos represent---must get on this.

For example, a small container of milk (for coffee) and 8 fresh eggs came to 20 pesos, which I think is about $2.00---if so, quite a deal. However, dinner (delicious mahi-mahi filet with shrimp and cheese, and the requisite margarita) was 300 pesos. A beer at a local bar was 50 pesos. Granted, I'm also just kind of throwing pesos in my friends' direction, hoping it covers my share--another thing I shouldn't be doing.

Hoping to get better at the peso to dollar exchange, and hoping that I'll take the time to figure out exactly how much I owe at any given time, rather than throwing money at someone.

Have a lovely week, everyone! I'll post again in a couple of days. . . . .