Book review: The Finish Rich Dictionary

A few weeks ago, a publicist with Oxford University Press kindly sent me David Bach's new book, The Finish Rich Dictionary, to review.

I've been a fan of David Bach for some time, since I read his book, The Automatic Millionaire. In fact, I could have sworn this was a book that I purchased at one time, as The Automatic Millionaire presents personal finance concepts succinctly and in layman's terms. It is also incredibly motivating without being overwhelming or 'preachy'.

In addition to the Automatic Millionaire, David Bach writes the 'Finish Rich' series, including: Start Late, Finish Rich; Smart Women Finish Rich; and Smart Couples Finish Rich. I've only read the 'Start Late, Finish Rich' version, but it's another book that resonates with me and provided some additional motivation that led me to consider increasing my retirement savings.

Bach's latest book, The Finish Rich Dictionary, can be seen as a companion piece to any of his other books as well as to any other personal finance book, magazine or blog you may be reading. The book is filled with short, relevant definitions for many of the words we stumble across (and scratch our heads over) in the journey to financial independence. I know that I have tossed aside a book on investing more than once because I was frustrated by the terminology and the assumption that I have a degree in finance (which I most assuredly do NOT). An added bonus for me is that many of the words are defined along with their linguistic origin---I love languages, and learning that the word bankruptcy, for example, comes from the Italian banca rotta ("broken bench") is fascinating.

Having this book by my side will allow me the confidence to delve into the more in-depth discussions of IRA's, mutual funds, certificates of deposits or municipal bonds. In addition to defining various finance terms (and demonstrating common usage), Bach also inserts chapters devoted to brief discussion of topics such as:

• The Latte Factor
• Saving for retirement
• Determining if you have a credit card problem
• Becoming a homeowner
• Top ten personal finance mistakes people make
• How to choose a personal finance advisor

I should note that the chapter on becoming a homeowner was apparently written in 2003 (possibly distilled from some other David Bach book), in the midst of the housing boom. As you can imagine, the advice in this section seems a bit outdated. For example, Bach mentions several times that with the historically low interest rates, people can purchase more home than they think they can afford. Added to this is the comment that banks are willing to loan homebuyers 95% or even in some cases 100% of the purchase price! Of course, this is how I've been able to purchase two homes since 2003, but with the economy in a tailspin and credit becoming tighter by the day, this chapter sounds a bit silly.

In reviewing this book, I read the personal finance chapters and the first few sections of definitions, while skimming the rest of the vocabulary chapters. I will say that I learned something within moments of opening this book: my second mortgage is set up for a 'balloon payment' in 15 years, something which wasn't fully explained to me when I signed the paperwork. I happened to notice this detail when I was taking a closer look at my bill, to see how much interest I pay versus principle. At the time I purchased my home in 2006, real estate values were still soaring and my loan officer probably assured me that I could refinance and obtain a standard 30 year loan before the balloon payment was due. In reading Bach's book, I learned the following about the definition of a balloon payment:

"A repayment of the outstanding principle sum made at the end of a loan period, interest only having been paid hitherto. Usage: Even though the terms may seem easier to meet, the borrower may not have the money required to make the large final payment."

I pay a whopping $20 a month in principle on my 15 year balloon loan. Which means I'll still have a hefty sum to pay when (or if!) I make it to the final balloon payment in 12 years or so.

All in all, I find this book to be a worthwhile investment if you are someone who wants to increase your knowledge of personal finance, particularly if you find yourself avoiding more technical investment reading because the vocabulary is unfamiliar to you. This is not a book you will read from cover to cover in one sitting, but would be a wonderful resource to have by your side as you delve into some of the more complex personal finance topics.

As I have in the past, I would like to pass this book on to one of my readers (sort of a 'pay it forward' concept). With that in mind, I will mail a free copy of The Finish Rich Dictionary to the first reader to comment to this post with the correct definition of the word 'pogey' (hint: Canadian slang). Once you've commented, I'll contact you via email for your mailing address. . . .

Good luck!

The ultimate frugal ride. . . .

When I first moved to Portland almost three years ago (!!!), I was awash in extra cash from the sale of my first house. One of the things I wanted to do at the time was buy a scooter, so I could be mobile without paying a ton for gas or parking. Of course, my savings ended up dwindling quickly after I purchased a home here (Home Depot definitely benefited) and I ended up forgetting all about my Vespa dreams. I still have scooter envy from time to time (usually on sunny days when rain and wind are but a fading memory), but this is a purchase that will probably need to wait until I'm completely financially secure---and maybe living in an area that gets more than 100 or so days of sun per year.

However, since some of YOU may be living in warmer and drier climes, and since I love daydreaming about this particular topic, I decided to do a little research on scooters. Here are some of the issues to consider if you're downsizing to a cute little Vespa, as I'd like to do someday.

• Think about where you'll be riding the scooter. If your commute or your drive to the grocery store requires a freeway jaunt, a scooter may not be for you. Even though many scooters these days have the juice to drive at freeway speed, think about safety---do you really want to be exposed to the elements with only a helmet and a leather jacket between you and the SUV driving 65 mph behind you?
• Speaking of grocery shopping, think about space issues. Do you make one giant trip to the grocery store each month, bringing home 20 bags of groceries at a time? A Vespa---even one with a storage box---isn't going to do it for you. Same for trips to Home Depot, Target, Ikea, or any other stores that you regularly haunt.
• Check with the DMV. Depending on how 'large' the motor is (e.g. 50cc versus 150cc) you may need to get a motorcycle license.
  
• Find out about parking. I, for some reason, assumed that scooters could park for free--simply because they don't take up much room. Unfortunately, it turns out that even scooter and motorcycle riders are charged for parking, whether it's on the street or in the university parking garage.
  
• Purchase insurance. As I cruised the internet trying to find information about scooters, one of the issues that arose more often than not was theft. Apparently, it's pretty easy--and common--to steal one of these babies. The upside is that scooter insurance will cost much less than auto insurance.
  

In the end, I think riding a scooter (in a weather-appropriate city) would be fun. I think it would also save money, given that scooters get very good gas mileage and the insurance and parking costs are less than that of an automobile. Will I be buying one in the near future? Nope. But I can still dream about it. . . .

Can you smell the fear?

Last week, I went to a union meeting at my university, to discuss the upcoming contract negotiations. Our particular contract allows departments to send us yearly 'pink slips' six months in advance of the end of the fiscal year, basically telling us that we may or may not have a job in six months. Of course, since the end of the fiscal year is June 30, the letters go out right around Christmas of the previous year. Merry Christmas!!!

Although my department has thankfully neglected to send these out (recognizing what a morale buster they are), apparently members of other departments have not been so lucky. So, at this union meeting there were probably five or six instructors from the same department who had received these rather ambiguous letters last December. Now, during a regular year, the letters are a reminder that our contracts could end in six months' time. In a year in which there is 9.5% unemployment in the state, administrators are talking about mandatory and voluntary furloughs, and we're being asked to cut our budgets anywhere from 5% to 12%, these letters take on a much more frightening tone.

Basically, the instructors who received the letters were incredibly anxious about what they meant: in other words, would they have a job, come June 30, or should they update their resumes, contact Human Resources, and set up their COBRA accounts pronto? It's a tough call. I'm not sure what I would do in their situations. Luckily, I have the second job, but my earnings are a drop in the bucket compared to my mortgage payment, let alone costs for utilities and food.

Here's what the experts would say my colleagues should do:

• Pad that emergency fund! Start tracking your spending, cut the fat in the budget and start sending any extra money to savings. You'll thank yourself later, whether you lose your job or not;
• If employees in your field typically receive a severance package, start researching this. You'll want to negotiate the best possible package when or if your layoff becomes reality. Of course, in my world (the field of education) there are no such things as severance packages! I suppose the six months' notice we receive is considered severance enough.
• Start becoming indispensable to your boss. The first to go (usually) are those who contribute the least. Make sure your supervisors know which projects you're working on as well as the outcomes.
• Start talking to friends, family members, neighbors, the postman, everyone you come into contact with about the opportunities that might be out there for you. Make networking your best friend--you never know what could come of it!
• Make sure you know the steps to apply for unemployment insurance. I, for one, would have no idea how to go about this. And because it can apparently take weeks for that first payment to come in, it's imperative that the paperwork is taken care of at the first possible opportunity.
• Balance adding money to savings accounts with paying down credit card debt. If you find that you won't be able to make your credit card payments, be sure to communicate with the credit companies---in this economy, they've heard it all before, and may be able to assist with a smaller payment temporarily.
• If you do lose your job, consider part time or temporary jobs in the interim that you might not have considered before. Waitressing, home health aide, data entry, anything to keep the money flowing could be of help, especially if unemployment insurance runs out.

It was painful watching my colleagues wring their hands about something over which they have little to no control. I wanted to reassure them, but couldn't---ultimately, none of us knows what the next year will bring. Their anxiety reminded me that I need to keep working and saving, preparing myself for the worst while expecting (and hoping for) the best.

Frugal is the new cool. . . .

I began my frugal journey over a year ago, when I became sick and tired of feeling as if I was working for my credit card companies instead of for myself (read Your Money or Your Life to learn what inspired me). Now that the economy has tanked and people are losing their jobs and homes, it seems that frugality is becoming popular in a way I never imagined!

According to Paul Harris, a columnist with the London Guardian, the recession is changing the very fabric of society in the United States. Whereas we've striven for 'bigger and better' over the past 30 years (in everything from cars to cookies), we as a nation are beginning to see that the culture of overconsumption was not only bad for our environment and our waistlines, it has wreaked havoc with our collective pocketbooks.

"Frugal is the new cool, putting an end to hyper-consumption. The orgy of credit card abuse is over. A website called Debt Proof Living launched a daily email tipsheet last summer which now has 100,000 subscribers. Oprah Winfrey forsook her annual holiday list of expensive gift suggestions in favour of more modest "favourite things". Salons and spas are seeing customers desert them as women pamper themselves on the cheap at home."

While Harris ties this new culture of frugality to the ascendancy of Barack Obama, I believe thriftiness and simple living concepts would have been just as powerful under a McCain presidency. After all, our economy is in the toilet and will remain so for quite some time, regardless of who is living in the White House. The financial metamorphosis that we are undergoing is a result of the crash in the housing market, among other things, and would have been inevitable no matter the outcome of the election.

It is possible, though, that President Obama will become the new symbol of living within one's means (although the recent bailout package seems to fly in the face of this notion). I'm hopeful that this ginormous injection of capital (translation: credit) into the country's coffers will enable us as a nation to become more frugal at the government level. Perhaps the New York Times columnist Bob Herbert says it best when he tells us to "Stop being stupid". I only hope our government will take the time to read and digest Mr. Herbert's message of economic intelligence, as so many individual Americans have done (and continue to do in greater and greater numbers).

I think I might be a 'Saver'. . . .

I know it's really too soon to say for sure, but in looking at my expense-to-income chart and my ING Direct account balances, I think I might be turning into something I never thought possible: a Saver. Never in my wildest dreams did I believe that I could afford to save, let alone find the motivation and determination to actually do it.

In spite of my skepticism, my bank account tells a different story. Over the past two months, I've been able to place almost $800 in my 'internship year' savings account (which I'll use to 'bridge the gap' next year when I'll be forced to work part-time). That's in addition to the roughly $250 I place in other savings accounts each month to cover future school costs, utilities, and bi-annual car insurance payments. In the month of January, I managed to sock away $458, which represents almost 17% of my take-home pay! In February, I'm shooting for a total savings of $675---a definite challenge, but one that I look forward to. Just two years ago, I would have declared this goal 'impossible'.

"Big deal", you might be saying to yourself, finger on the mouse button that will take you away from this page. But to me, it IS a Big Deal (with a capital B, and a capital D). What does this really mean to me? It means that I have it in me to save money. It means I can be a Saver. For someone who grew up in a household in which extra money was spent before it was ever earned, and who lived off credit for 20 years, that's a HUGE deal. It means that when I finally conquer my student loan debt and have my mortgage under control, I can save the money to: buy a "new" used car; replace my computer; take a vacation; make home improvements. I can pay cash for these things, rather than throwing the credit card down at the checkout counter with the never-to-be realized intention of paying it off by the time that 0% introductory interest rate goes the way of the dodo bird.

According to a recent article at ABC News, I'm not alone. Due to decreasing income and the threat of layoffs, Americans have increased their savings rate during the past year from 0.4% in 2005 to 1.7% in 2008. This 2008 average includes a savings rate of 3.6% in December alone. Also driving that higher number is the May 2008 stimulus check---in that month, Americans saved their after-tax income at an astonishing 4.8% (meanwhile citizens in countries like China save closer to 30% on a yearly basis)! Nothing like a recession and the threat of unemployment to send Americans scurrying to the bank at last.

Of course, my own metamorphosis from a credit-dependent spender to a live-within-my-means Saver began not with the recession, but with a little book called Your Money or Your Life. Perhaps it was mere coincidence that I read this life-changing tome just a year and a half before the economy tanked. Or maybe it was some sort of supernatural prescience, who knows. What I do know is that it jump-started my journey into 'un-debtedness', rather than 'in-debtedness". That I rode the waves of the recession last fall while sending my very last payment to my credit card is due in no small part to YMOYL as well as to Dave Ramsey's The Total Money Makeover.

I had no idea when I started living more frugally and paying down my credit balance that I would one day have an emergency fund, that I would learn to keep track of every cent that leaves my fingers, and that I would have the financial fortitude to place money in a savings account long enough for it to actually earn interest. Since I was raised with the unspoken understanding that 'money comes, and money goes (and where it goes, nobody knows)', the psychological benefit of learning that I have control over both my spending and my savings is profound.

As I write this post, it occurs to me that it may sound overly self-congratulatory. It's not meant to be read in that way (although I do feel a certain amount of pride in my ongoing efforts to change my habits). With over $56,000 in student loan debt looming, I've quite a ways to go before I'm truly financially secure. No, what I hope to communicate is that if a person like me, with an average salary---especially when compared to my ridiculously large mortgage payments---can manage to pay off credit card debt and increase savings, so can any of the other folks suffering through this current (though, I'm convinced, temporary) economic recession. It's not easy, and it's not instantaneous. It's a process, a journey, a challenge. But when you reach the point where you can ever-so-tentatively label yourself a Saver, it's worth every moment spent noting expenditures, creating and updating budgets, determining spending priorities, and reading personal finance books (and blogs!)

March Madness. . .

Happy President's Day, everyone! I just wanted to alert you that my post, 18 Ways I Keep My Grocery Bill under $75 is featured over on Free Money Finance, as part of the March Madness contest. Give it a read and vote for me if you like it!

How Americans are saving money. . . .

I came across this Business Week video entitled Frugal America, which is basically an interview with a family that used to be $800 in the hole each month (thanks to a home equity line of credit, apparently). After a few cruises, yearly trips to Disneyland, and countless restaurant meals, they found themselves over $100,000 in debt! This video details what they did to get themselves out of debt and more importantly, how they learned frugal new habits that will hopefully keep them out of debt!

It's interesting that by the end, the interviewer is comparing the increasingly frugal habits of contemporary Americans to the way their grandparents lived during the Depression. Will we revert to our old super-consumer ways when the recession finally lifts? Only time will tell!

A frugal prophecy. . . .?

For several months now, I've been toying with a version of my zero-based budget spreadsheet that I'm calling 'Hypothetical 2009'. Since I've been planning on dropping to less than full time status next September (maybe cutting back by as much as 25%), I wanted to see how my income would be affected. I also wanted to know how much I should sock away now, to cover the gap in income later.

Well yesterday, during a meeting that I unfortunately missed, our department heads started using the dreaded 'furlough' word. Meaning, we may need to cut our budget to such an extent that employees may be asked to 'voluntarily' cut their hours.

My first reaction was: "Yikes"!

My second reaction was: "Hey, I'm actually prepared for this"!

And, since I was facing the prospect of having to talk my boss into cutting my hours anyway next year, this might just turn out to be a blessing in disguise.

The tool that has been most helpful to me in visualizing what my financial life will look like next year is a website called Paycheck City. On this site, you'll find a salary calculator that will allow you to play around with your income, your tax withholdings, your deductions (for example, tax deferred retirement savings) and other variables that will affect your net income.

I can play around with my withholdings to my heart's content, plus I can plug the final income number into my zero based budget and really see where I still need to cut my expenses. Seeing my future finances in black and white also makes me much more committed to saving money now so I'll be a bit more comfortable later. I recommend this for anyone facing layoff, furlough, or other change in circumstances.

Frugal taxes. . . .

The tax season is almost upon us! Last week I briefly mentioned a realization that I recently had concerning my tax refund this year. Because my salary is relatively low compared to the money I spend on my mortgages (most of which is interest payment), I generally receive a nice, hefty tax refund. Last year's refund allowed me to pay down a good chunk of credit card debt, and add some money to my emergency fund.

This year, however, I created a little estimate of my 2008 tax refund, and determined that--because of the earnings from my second job--I'll be lucky to get even $200 back! Egads! I was counting on a healthy refund to pad my 'internship year' fund, with which I'll make up the loss in earnings I'm anticipating next year. (Note: it's amazing to me that I'm even planning ahead for this. A year and a half ago, it would never have entered my mind that I would actually be able to save enough money to allow myself to work part-time temporarily).

I've been reading articles about the latest U.S. 'stimulus package' to learn whether I can expect a 'rebate' check this year, which may help. Actually, there appear to be quite a few changes in the works that could help many American taxpayers this year:

• First-time homebuyer's credit: my prospective realtor mentioned this to me late last summer, when I was researching the feasibility of selling my house (I decided not to try just yet). The catch is that the $7,500 'credit' is actually an interest-free loan to be paid back over 15 years. There are rumors, however, that the 'loan' may be transitioned into a true 'credit', though, so if you purchased a home after April 8, 2008, you will want to keep your ears pricked.
• Foreclosure tax break: I sincerely hope none of you are in the midst of a financial crisis that resulted in the foreclosure of your home. However, if this did happen, there appears to be a (slight) silver lining to that black cloud: Whereas in the past, forgiven mortgage debt was actually TAXED, this year any forgiven debt under $2 million will be tax free.
• The standard deduction is increasing: to $10,900 for married couples filing jointly, to $5450 for singles and married filing separately, and $8,000 for head of household.
• The personal exemption is also going up: of course, it's increasing by a mere $100, but in this kind of economy, every little bit helps!
• Don't forget the benefit of free filing: if your adjusted gross income is less than $56,000, you're eligible for Free File. I use H & R Block, and have found the website to be user-friendly and accurate. There are many companies that can help, though, so go to http://www.irs.gov for more information.

Most of these changes and new benefits don't apply to me, unfortunately. And it sounds as if any new stimulus package will result in lower payroll taxes, rather than a lump sum payment, which may make it more difficult to save. If, in fact, our payroll taxes are lowered, I plan to pay close attention to how much this increases my take-home pay, and will have that amount automatically sent to my savings account---if I never 'see' it, I won't spend it!

The inevitable disclaimer: I'm not a tax professional, just a mere mortal trying to figure this stuff out myself. For questions or more information, check out the IRS website. I've actually found this site to have a wealth of information, especially the various electronic publications housed on the site---there's even a toll-free number you can call for additional assistance!

A frugal bonus. . . .

'Tis the season. . . for tax preparation! I'm one of those people who waits impatiently at the mailbox (and the email inbox) for my W2's and other assorted tax documents, so I can get my grubby little hands on my refund. I don't waste any time filling out my forms online, and often create a 'fake' 1040 in late January so I know roughly how much to expect in my refund check.

Although (according to my tentative calculations) I won't walk away with much of a refund this year (due to the income from my second job), in the process of creating an 'estimated' 1040 form, I have discovered a new passive source of income that I've never had before!

It's called INTEREST! As in, interest on my savings accounts! I'm stunned to report that my measly savings (the majority of which is held in my emergency fund) brought in almost $70 dollars last year!

This is what the wealthy (or even just financially secure) people mean when they say that their money works for them, not the other way around. Although $70 is not that much money, I think it represents a huge step for me. I've never before been able to keep enough money in a savings account to actually earn interest. In fact, just getting the money from my checking account to a savings account has been a challenge; it's generally been spent before I've even gotten my paycheck.

This past November I finally paid off my credit cards, leaving just my student loan debt to deal with---that has been my entire focus. Even when I created my emergency fund (as Dave Ramsey suggests in Total Money Makeover), it just never occurred to me that some day that account---as well as the other sub accounts I created---would benefit me in such a tangible way.

Though I have miles to go to reach total financial independence and security, I have to say: the journey so far has been incredibly fulfilling. I love my new frugal lifestyle!

Finally Frugal's Weekly Roundup. . .

This week has flown by! I wasn't able to cruise the blogosphere much, unfortunately, but I did pick out some great posts that caught my eye in spite of being crunched for time. . .

J.D. at Get Rich Slowly wrote an interesting post about what a person could do once he or she gets to what he calls the 'Third Stage of Personal Finance'. In other words, once we've paid off debt and learned the mechanics of saving and investing, what then? I highly recommend this one, especially for those of you who are clearly 'there' (you know who you are!)

Here's my final plug for The Thrifty Chicks' February Thrift-ya-away, in which you can win one of six frugal thriftstore finds by simply leaving a comment! Who could resist?

Working for Financial Freedom is a site I wish I'd discovered last year. This is the story of one family trying to pay off $58,000 in debt. As of now, they're very, very close! I'm going to spend some time reading the archives on this one. . .

Finally, on I've Paid for This Twice Already, a lovely post about bringing balance into our lives. This sort of goes full circle back to Get Rich Slowly, which is essentially discussing the same concept. We can (and should) pay off debt, set up savings plans, and focus on investments. But we also need to live in the moment rather than constantly planning for the future. . . .

Have a great weekend, everyone!

Are my frugal ways hurting the economy?

A recent Forbes article indicates that a whopping third of U.S. women are planning on making NO clothing purchases in 2009! That is an incredibly high number, in my opinion, and speaks volumes about the current state of our economy. Apparently, in a 'normal' year, only 4% of women say they won't purchase any clothing. In fact, consumption in general seems to be waning, as the graph below from the Wall Street Journal indicates.

Partly as a result of the sudden increase in women who will wear what's in their closets, many retailers are either in dire straits--and will probably close their doors completely--or are in serious financial jeopardy. I was shocked to see some of the well-known brands that may be shutting some or all of their stores in the coming year:

• Eddie Bauer
• Ann Taylor (a personal favorite)
• Sears/Kmart
• Lane Bryant
• Pacific Sun
• Timberland

Learning this immediately made me think of my own frugal goals for 2009, which include following The Compact and attempting to purchase used clothing and other items whenever possible. Technically, I must count myself in that 33% of American women who will avoid the mall this year. Are my frugal habits going to hurt our economy? According to this Wall Street Journal article, we 'frugallers' are "aggravating" the economy!

Well, I decided to do a little unscientific web research on the topic of frugality, saving money, and helping (or hurting) the economy. Here's what I found:

Jim Ludwick of the Business Monthly has this to say:

"I won't take you back to school for economics class other than to remind you that when you save you can help banks, companies and even the government save money, too, by putting your dollars to work at less cost. That means more profits for businesses and their owners (read: shareholders), and it lowers the cost that the government must pay to borrow (read: lower interest rates)."

Scott Malcomson writes on the Huffington Post:

"The theory is that, in the near term, the American economy needs stimulus, and a critical part of that stimulus should come from consumers. Otherwise the current Mexican standoff - companies cutting back and shedding workers, banks not lending, consumers not spending - will continue.

It makes sense, up to a point. But it isn't as though Americans aren't spending at all. A savings rate of 10 percent will still keep us a bit behind the French and Germans (who don't have our worries about health care and retirement savings), and far behind the Chinese, whose levels are somewhere around 20 or 30 percent (and who have much worse worries than we do about health care and retirement). Besides, the money is not being put under mattresses. It is going into bank accounts and other highly conservative investments. It is available to be lent."

Meanwhile Steve Hamm, over at Business Week writes about the 'new frugality' this way:

"Menzie D. Chinn, who teaches economics at the University of Wisconsin, figures consumers won't be in a position to spend freely for five years.

Which brings us to what John Maynard Keynes called the paradox of thrift. What's good for the individual, argued the famous economist, can ignite or deepen a recession. But that won't deter the newly thrifty. "I can't help the economy," says Kim Schultz, a resident of hard-hit Avoca, Mich., who with her husband, Jon, owes $40,000 in credit-card debt. "I've got to help myself." On the other hand, this newfound austerity could—emphasis on could—rewire Americans as savers rather than spenders. And that would help put the economy on a sounder footing over the long haul."

It seems that Keynesian economists would likely blame the slowing economy on frugal Americans like me---if I don't spend, then our consumer-driven economy will topple and fall. But isn't it better for Americans to SAVE, rather than overspend? Isn't one of the reasons we're in this predicament because lenders gave out too much easy credit to people (like myself) without the ability to pay it back?

Although I "get" the argument that I must spend to help my country's economy, I don't BUY it. A healthy economy, in my humble opinion, is not one that is driven by short term spending by people who are living above their means. Instead, a healthy economy is one that is based on long-term investment in the things we can afford, whether at the individual level with a reliable car (paid for with cash) or at the government level with investment in sustainable industries and infrastructure.

I choose a healthy economy. I choose frugality.

Thursday's give-away. . .

Don't forget, it's not too late to click over to The Thrifty Chicks website and leave a comment to win a super-cool thrift store find! Today's item is a bracelet that retailed for $98 (the tag is still attached) and that Ms. Shopping Golightly found for a mere $3.99 at the Goodwill!

Learning about these things makes me question why I ever buy new at all!

January zero-based budget. . . .

Here's my zero-based budget numbers from January. In some areas, I did better than expected and in others, well, not so much. For example, there were definitely some expenditures that came as a bit of a surprise (the extra $43 for school, for example) and I under-estimated the amount of money I would spend on postage. These 'overages' came out of my budgeted 'internship year savings', unfortunately!

This month I'll try to keep my grocery costs low so that I can increase the amount of money I'm sending to savings. Also, this month I've separated my 'fun' budget from a more vague 'miscellaneous' budget, since things like toothpaste and shampoo were falling into the fun category previously. This made it seem as if I were spending over $200 a month on 'fun' when that just isn't the case (unfortunately!)

Festival of Frugality. . . .

My post, 20 ways to save money now, is listed over at the 163rd Festival of Frugality, hosted this week by My Journey to Millions. Literally, almost a hundred links to posts ranging from budgeting, to giveaways, to frugal Valentine's Day ideas. Be sure to check it out!

A Thrifty Chicks thrift-ya-away. . .!

The Thrifty Chicks, a blog I visit regularly (especially now that I'm committed to buying used this year), is offering an entire week of opportunities to win surprisingly hip thrift-store items, simply by leaving a comment on the website.

Hmmmm? What's that I hear you saying? "Yuck. Why would I want some old moldy thing that nobody else wants anyway, and that probably sat around in a dusty bin for ages"? Well, judging by Monday's giveaway (or should I say 'thrift-ya-away'), Ms. Shopping Golightly and her thriftstore partners find some pretty amazing stuff.

Case in point: this lovely pillow (very likely new), which Ms. Golightly found for a mere $2.99 at her local Goodwill:


Now, I ask you: wouldn't you leave a comment on The Thrifty Chicks website to have a chance at that beautiful pillow? I surely would (and probably will)! Here are the rules, per Ms. Golightly herself:

"To win this pillow, leave a comment to this posting pledging that you will visit one thrift store within the next seven days. Each comment equals a pledge to shop at one store. So, two comments equals visiting two stores. I trust you to be honest for this does after all benefit charity.

My daughter, Little Pie, will draw a number from a basket, if it matches your post number, you win!Don't forget to leave your email address. The deadline for pledges to thrift is Monday, February 9th. If you are living outside the United States, Ms. Golightly will humbly need to negotiate a shipping fee. She is, after all, quite thrifty and is sponsoring this thrift-ya-away on her on savings.

New items will be posted each day through Friday, the February 6th!"

Now, go forth and comment!

7 frugal food tips. . . .

As I attempt to bring my grocery costs back to my early 2008 levels (when I regularly spent between $75 and $85 a month on food), I'm having to relearn some of the frugal habits I used during some of my more successful months.

Here's a list of seven frugal food tips that I'm trying to incorporate back into my grocery store visits:

1. Take a calculator to the store when shopping. I have a tiny one that was free with some offer or other, that I keep in my car. This helps me know whether the cost of the items in my cart will fall below my 'allowance' for that trip. A calculator also helps me determine whether that 16 ounce jar of spaghetti sauce is cheaper per ounce than the 24 ounce jar, when the grocery store doesn't give me that information on the shelf label. . .
2. Make a list before you go to the store, and stick to it. I confess that my budget blunders often occur when I'm cruising the aisles and happen to see some ingredient that I think I need at that moment, but for which I have no 'plan of action' as far as a recipe or meal. Creating a list ensures that I'm less likely to purchase an expensive jar of maraschino cherries that will sit on my shelf gathering dust.
3. Buy generic or store brands. This has been probably one of the greatest savings areas for me. I used to shun generic brands like the plague. Then I realized that there are many items that will be added to other ingredients (like cream of celery soup, for example) in a recipe---no one will ever notice that I paid half as much for the generic version, and most of the time, the taste is very similar.
4. Check your receipt! Especially when using coupons or taking advantage of a 'buy one get one' deal, be sure to take a close look at your receipt before leaving the store! I can't count how many times I've gotten home with a niggling sense that something's just not right, only to check the receipt and see that I didn't get the deal I thought I was getting.
5. Speaking of coupons, use them! In my case, I will only use coupons for items that I normally purchase anyway. I haunt the local library on Sunday morning, and clip the few coupons that I'll use, leaving the others for the rest of the library crowd. I use coupons most often on personal hygiene products like soap and shampoo.
6. When shopping, be sure to check the shelves at the bottom level---oftentimes, that's where the cheapest products are kept. It makes sense that the more expensive items will be at eye level, where most people are going to focus. Take a small child with you to read off the deals on the bottom shelves if you can't or won't kneel.
7. If you're shopping at a grocery outlet, as I sometimes do, be sure to check the expiration date on the foods you purchase. I've gotten home a few times, put all of my groceries away, and then discovered a few weeks later that I've purchased stale cookies or crackers. Be on the lookout for items that will expire before you'll have a chance to use them!

These tips, and a myriad of others, help me to keep a handle on my grocery budget. With 2009 and even greater financial challenges facing me, it will be worth my while to hone my frugal habits at the supermarket!

Carnival of Financial Planning. . .

My blog post, 'To Invest or Not to Invest' was picked up in this week's installment of the Carnival of Financial Planning, held over at The Skilled Investor blog. Give it a look-see; there are tons of great articles concerning everything from budgeting to economics to managing debt and retirement planning.