Pseudo-advice. . .

I am naturally drawn to those '10 best. . .' or '20 best. . .' of whatever, whether it be '10 best places to retire' or '5 best cities to find a job', or what-have-you. I'm not sure why I love them so much but they catch my eye and my mouse click at the same time.

Here, though, is the most idiotic 'best of' list I think I've ever seen: 100 Best Money Moves.

The vast majority of these "money moves" involve some form of consumerism, whether it's purchasing the 'best' video camera, obtaining the 'best' rewards credit card, or buying a $350 thermostat to 'save' money on heating and cooling. It's absolutely maddening that marketers are basically advertising to us by pretending to give us money advice!

Here's some advice, and it's free: Save more money. Pay down debt. Avoid ridiculous consumerist 'best of' lists.

Credit use decreasing. . . .

So is household worth, unfortunately! According to this CNN article, Americans owe less to banks than they ever have! Here's some text:

The government reported Thursday that household debt in the third quarter fell for the first time ever. Meanwhile, net worth dropped by the largest amount on record based on data going back to 1951.

While the fact that household worth has dropped isn't surprising, given the way homes have continued to drop in value, I am a bit curious about the decrease in credit use. I would have assumed that as people lost jobs or had their employment drop to part time, they would be more likely to pay for necessities like food and gas with credit. It appears that this is not the case, primarily because lenders are beginning to take a closer look at how much they're lending, and to whom.

As in previous articles discussing the use of credit by Americans, this one also communicates a barely disguised dismay at the fact that Americans are "spending less". This is because the economy as we know it is highly reliant on our purchase of assorted doo-dads of greater or lesser value, which are designed to wear out quickly so that we are forced to purchase replacement doo-dads.

As I've said before, this notion that Americans need to spend more to keep the economy moving is highly suspect! Why would our government and/or knowledgeable economists want Americans to use money that they don't have? It seems as if (as we're currently experiencing), building an economy on 'credit' creates a house of cards---if just a few cards at the bottom of the house are knocked out, we all come tumbling down. It's as if the people who make decisions at the very top of our economic structure want us to be a nation of serfs, ever more dependent on our 'feudal lords', the credit companies.

That is no life for me. I will continue to save money, spend it on needs (and some wants, within reason), and eventually gain financial independence from lifelong serfdom in the Land of Easy Credit.

Frugal families. . . .

I'm babysitting an almost-five-month old tonight for a friend who is using the free evening to go out on a 'date' with her husband. I love kids, so a couple of hours with a cooing, gurgling baby is my idea of a fun time.

The reason I'm writing about this? The parents of this baby are raising two young children on a miniscule budget, but I've literally never seen their four-year-old wearing the same thing twice, and my friend swears she rarely buys any clothing for her, and when she does, it's from thrift shops.

How do they do this? Aside from visiting the Goodwill on a regular basis, they accept hand-me-downs from everyone. Their daughter wears Merrell shoes (pricey, even for tiny sizes) that a pint-sized 'fashion plate' grew out of in about three months. She has an itty-bitty ballerina outfit that rivals those worn by the local dance troupe. She has these great striped tights that I wish I could find in my own size. And they paid little to nothing for all of these items. Same goes for toys. . .

One of the most refreshing side-effects of this thrift store/hand-me-down lifestyle is that their girls aren't covered in pink bows and taffetta from head to toe. Sometimes, the baby is mistaken for a boy ("what's his name"?) because she's wearing blue, green, and brown clothing that is typically seen on little boys these days. But hey, she's five months old! She doesn't know the difference!

Meanwhile, I have a friend (yes, my 'shopping buddy') who asked me what I thought about a pair of $39 jeans she was considering purchasing for her three year old (another fashion plate). $39!!!!! I rarely pay that much for my own jeans! I think the shock and disgust visible on my face was enough to communicate my opinion about overpriced jeans (or any clothing item) for a tiny person.

I love the fact that my friends who are raising their girls not as accessories to be admired and dressed up like little dolls, but as future frugal thrift-store shoppers who understand that real substance is more important than how much one paid for one's shoes.

Rebate dreamin'. . . . .

I received my $600 rebate check on May 9th. That same day, I transferred the money to my ING Emergency Fund account, where it joined its friends and is hopefully now making babies. I was curious about what others decided to do with their checks. I found a post on Wise Bread asking this same question, and here are some of the responses:

"I'm realizing I could use some new clothes for work"

"I'm using it to pay taxes. Haha. "

"I'll be putting it toward CC debt."

"I'm likely to spend it on an iphone."

"We put it aside in our home down payment savings."

"Any rebate I get is getting invested right along with the rest of my income."

If you still haven't figured out what to do with your money, I can help with that! Well, actually, the Debt Diva can help! She has a list of suggestions on her website that may trigger you to use your money in a myriad of different ways, like:

Pay Down Debt Paying down credit card debt is the first priority for many people. A significant payment can save you hundreds of dollars in interest fees. You should spend a large portion of a windfall on debt, especially credit cards. You can use your extra cash in a lump sum payment or double your regular monthly payment for several months. If you don't have credit cards, lowering any outstanding debt, such as a second mortgage, will help save you money in the long run.

Emergency Funds A windfall is the perfect opportunity to start your rainy day fund. Many financial experts suggest two to three months worth of living expenses put away for emergencies like medical expenses, major home repairs or a job loss. You can start a fund, feathering your nest with a portion of your rebate and continue to put a modest amount away each month. Something as simple as an unexpected car repair can be a huge financial hit for many Americans. This fund will help protect your finances.

Retirement Funds Open an individual retirement account with some of your money or add it to an existing account. This will allow for a solid nest egg when you retire.

Invest in Yourself Strengthen your physical health by taking preventative action. Schedule any overdue medical exams - annual physical, dental cleaning, eye exams or medical procedures you have put off. You'll save in the long run if you take care of your mind and body as you age.

Savings If you are already debt-free now is a great to invest in the stock market since prices are low. Stocks produce nice returns and even as little as a hundred dollars can get you off to a good start.

Splurge The stimulus is designed to encourage you to spend the money and help the economy thrive. You could plan to spend at least 10% of the windfall on something fun for your family. By limiting the amount you spend, you will still have money left over to pay down debt or invest in your future.

And if, after reading the Debt Diva's suggestions, you STILL can't figure out how to spend that $600 to $1200 'windfall', just let me know; I'd be happy to help you---for a small fee! I am curious, though, for those of you who have received your checks, what did (or will) you do with the money?

Frugal envy. . . .

A friend of mine always wears the most current, trendy fashions. My coworker has her hair professionally cut, colored and styled, every six weeks. My neighbors across the street just brought home a shiny new car. My brother and his wife are taking off for an Italian vacation this summer. All of this results in at least a little twinge of envy: I want some new clothes; I want a new car; I want a European vacation. Unfortunately, the only way I can achieve any of these things at this moment is to use my credit cards, which I’ve vowed not to do.

In deciding to take charge of my finances and live a more frugal lifestyle six months ago, my first challenge was in getting a handle on my spending. Sure, I cut my grocery bill, canceled cable, and switched to a cheaper wireless plan---all in the name of increasing savings and decreasing debt. But the truly difficult step was taking a look at my ‘vices’ (clothes and shoes, and to a lesser degree, furniture) and figuring out how to stop craving them so desperately. Invariably, I would binge-shop, using my credit card to purchase things that I thought would make me happy, only to find later that the satisfaction was fleeting.

In decreasing this unwanted behavior, I needed first to understand it. And as I thought about WHY I needed closets full of clothes and a home that was ‘just so’, I discovered that I tended to compare myself and my things to others---and if my things didn’t quite measure up (as they never will, 100% of the time), I felt compelled to go out and find something that rivaled the ‘thing’ that was making me so envious.

Envy. This was (and still is, sometimes), the root of my spending problems. I’ve had a devil of a time with it, and although I can’t say that I’ve conquered it, my attitude about stuff (mine and other people’s) has begun to shift.

You can’t always believe what you see. In other words, my friend with all of the expensive new clothes may be doing just fine financially. However, I happen to know that her husband’s income decreased substantially a few years ago, and she is now the primary breadwinner. She’s still contributing to her retirement account and saving for her kids’ college educations, but they also have a hefty home equity loan and needed an extension to pay their taxes this year. Although she still looks like someone who is earning $250,000 a year, in reality, she and her husband probably make closer to $100,000---still wonderful---but perhaps not so great that she can continue buying $150 sandals and $195 sweaters forever.

You don’t always want what someone else has. In the case of my brother and his wife, they’re both doctors and can afford a week in Italy. But my brother goes to work at 6:30 a.m. and gets home around the same time each evening---every day, including some weekends. Do I want that? No, not really. Not even for a week in Italy. My brother and sister-in-law work hard for their large salaries, but they don’t get much vacation time. I make peanuts and get over a month of paid vacation—more than that with paid holidays included. Maybe I’m not going to Italy anytime soon, but I have the freedom to take a random day off to sit in the sun on my back deck, and that can be just as good (okay, maybe not JUST as good, but that’s what I’m telling myself).

The Joneses aren’t really paying that much attention to you. Instead, they’re looking toward the Smiths, and their new Cadillac Escalade. That means that my old, 1995 sedan with the scratches and the funny noise isn’t really as humiliating as it seems to be when I’m passing my neighbors with the shiny new car. They’re not even considering me as part of the ‘competition’, and that’s a good thing---it gives me instant freedom to drive whatever I want, no matter how old and unattractive.

Be honest. Letting people know that your goals have changed may help avoid some of the “look at my expensive new . . . . “ conversations that seem to happen far too often. Perhaps it will even inspire change and frugality in your family and friends, and you can come together for common experiences, rather than a show-and-tell session in which the goal is to one up each other. Personally, I’m still working on this one—my family’s reaction to my goal of financial independence was one of ridicule and disbelief. They may someday shift into hesitant curiosity, but they’re not there yet, so I’ll need to be patient.

Be grateful for what you have, or, compare yourself to those who have (or seem to have) less. I used to work with a man who had an accident when he was in his early 20’s, leaving him in a wheelchair for life. He was (and still is!) a lovely, intelligent, humorous man, who definitely struggled with his physical challenges, but who also lived life to its fullest. When feeling sorry for myself, I would think of him and the challenges life has thrown to him, and gain a little perspective. The same goes for my possessions. Maybe I don’t drive the shiniest, prettiest car in town. But I have a car. And it’s paid for. Maybe I don’t shop at Nordstrom or Saks. But I can choose from probably 25 different outfits each morning, and that’s about 24 more than most people in the world. I don’t make a lot of money, but I have a secure job with health benefits. For these things, I am grateful.

I can’t say that I’ll ever beat envy, or that it’s even possible. I think it’s a normal human reaction, in fact. However, understanding what triggers my own feelings of envy has helped me to control the urge to pull out the credit card every time I pass Banana Republic (or Macy’s, or Ann Taylor, or . . . you get the point). My wardrobe may be a little less varied, but my bank account and sense of self are growing exponentially as a result, and that’s worth more than the momentary satisfaction of having the ‘best, newest, shiniest’ anything.

Frugal consumerism. . . .

We're constantly bombarded with advertising and enticements to purchase consumers goods. On my commute to work, I must pass at least fifteen billboards hawking everything from new cars to furniture to garden ornaments. I get off the lightrail in the middle of downtown, and walk past Borders Books, Saks Fifth Avenue, and J.Jill before I ever get to the bus stop that will take me to campus.

I'm getting better at controlling my urge to shop---when I do shop these days, I'm paying cash, rather than using my trusty credit card. I'm also learning to be a more discerning shopper, considering not just whether those new boots will look good with my new jeans, but also whether the item will truly add value to my life.

I recently found a website called The New American Dream, which forwards the idea of conscious living and responsible purchasing. The site has a nifty little wallet-card that can help consumers snap out of a consumption-driven frenzy, by asking themselves the following questions:

• Is this something I need?
• Do I already own something that could serve the same purpose?
• Can I borrow one, find one used, or make one instead of buying new?
• Was it made locally?
• Was it made with environmentally preferable materials?
• Was it made with fair labor practices?
• Will it serve more than one purpose?
• Is it made well enough to last a useful ength of time?
• Will it be easy and cost-effective to maintain?
• Will using it require excessive energy?
• Does it come in excessive packaging?
• Can I recycle or compost it when I’m done with it?
• If I’m still not sure, can I wait a month before deciding to buy it?

I'm starting to ask myself these questions at the grocery store (is that packaging recyclable? Is there an option in the bulk section? Are those coffee beans organic, fair trade?), at Target (do I really need another white t-shirt? Aren't my 'old' towels working just fine?), and at the many othe stores I either visit or pass in the course of a day. Asking myself questions such as these on a daily basis creates a new consumer habit for myself, and ultimately results in fewer purchases that I'll regret later.

Credit card debt: the perfect storm. . . .

While it appears that consumers added less consumer credit debt than analysts predicted in February (a measly $5.1 billion as compared to the estimated $10.3 billion), experts believe that the slowing economy and rising prices are leading more Americans to use their credit cards.
According to this CNN article, total revolving credit debt rose 2.4% to an astounding $2.54 trillion dollars in February! Meanwhile, non-revolving debt (such as auto loans) rose by 0.4% to $1.588 trillion. It's hard to believe that Americans are still out there financing cars at all!

The article points out that the total consumer debt discussed doesn't even account for mortgage and home equity loan debt! Considering many people appear to have been financing their lifestyles using home equity credit, the fact that these loans are getting more and more difficult to come by means that more Americans are turning to their credit cards to bridge the gap.

One analyst calls this the 'perfect storm' as credit card companies are now raising interest rates, especially for people who are close to their credit limits, submit late payments or no payment at all! These are the same people who may be struggling to pay their mortgages, cover the grocery bill, or keep the utilities on.

If you're on the fence about whether or not to use your credit cards, take a moment to watch Maxed Out, a documentary about the credit card industry. It may open your eyes to some of the more devious practices credit card issuers use to get your business and to keep you in the earn and spend cycle.

Maxed Out: Part 1
Maxed Out: Part 2
Maxed Out: Part 3
Maxed Out: Part 4
Maxed Out: Part 5
Maxed Out: Part 6
Maxed Out: Part 7
Maxed Out: Part 8
Maxed Out: Part 9

If you don't want to watch this on your computer, consider checking it out at your public library. It's definitely worth an hour of your time.

The tax rebate dilemma . . . .

According to an article at MSNBC, Americans may not be spending the upcoming tax rebate in the way politicians and economists would like us to. The idea behind the rebates is to strengthen our weakened economy by bringing more money to the market; Americans are expected to spend their 'windfall' on items such as TV's, clothing, vacation travel, and other goods.

However, it appears that at least some of us may be planning to use the money to pay down debt or increase savings. With the shaky state of the economy, families are wondering if it might be better to have that $1200 or $600 in the bank rather than frittering it away on a new, fancy BBQ or car stereo. In fact, much of the money might already be earmared for increased fuel costs, which according to the MSNBC article, won't do much to help the economy since most of that money goes to our overseas oil suppliers.

Despite the hints that the rebate money might not enter the economy for quite some time, some economists are counting on Americans' inability to live frugally. For example, David Wyss, a chief economist at Standard and Poor's, says this: "Americans have an amazing ability for self-deception, and I have full confidence that they’re going to end up spending the money regardless of what they say they’re going to do with it.”

I feel a bit insulted by this comment! Mr. Wyss is saying that no matter how smart we think we are, our instinctual drive to consume will trump our intelligence. For my part, the rebate check will be going directly to debt payment. This will (if all goes to plan) more than double my monthly payment to the credit card company, and will result in my credit card debt disappearing a full month sooner than expected! Now THAT is smart, and no amount of advertising or consumption lust will convince me to spend that money on items I don't need, which were probably produced overseas, anyway.

If you haven't decided how to spend that rebate check, here are some ideas to consider:

How about buying yourself some freedom? Freedom from debt, that is. Do you carry a credit card balance? Have you been ignoring it, paying the minimums month after month? Why not pay it down (or off)? Consider the satisfaction you'll feel as you watch your balance shrink, along with your minimum monthly payment.

Split the rebate. Are you a family of four? Are you receiving $1200? How about dividing that by the number of family members and allocating the money this way: $300 to debt repayment; $300 to retirement savings or emergency fund; $300 to the upcoming camping trip; and $300 toward that new TV or other purchase.

If you purchase, buy American! If you decide the use the rebate check to buy something fun (or necessary), make sure you're purchasing something that was made in America! I know, I know, this is almost impossible these days, especially in the case of electronics or appliances. However, the only way the rebate will serve its true purpose (to improve the American economy) is to buy items made by Americans. An alternative to buying a thing would be to travel domestically---this also benefits Americans.

So, I'd like to know: what are YOU going to do with your rebate check?

Life or Debt. . . .

This weekend, I picked up a book by Stacy Johnson (of TV’s Money Talks fame. . .), called Life or Debt. Although the book was published in 2002, it somehow seems dated (perhaps because Stacy mentions VCR’s and Walkmans). Despite the impression that the book was written in the early 90’s, Johnson does outline a fairly common-sense plan to get out of debt. In fact, there were a few times when I wondered if he had taken some of his idea straight out of my all time favorite, Your Money or Your Life.

Here are the steps to debt freedom, according to Stacy Johnson:

Step One: Compute your average hour after-tax, after-work-related-expenses wage. Just as YMOYL suggests, we need to find out how much we really make on an hourly basis, after taking commuting costs, food expenses, and clothing costs into account. Johnson includes his own instructions for doing this:
· Write down your annual salary
· Multiply this number by .7 (to account for taxes)
· Add up all the expenses (gas, food, clothing) associated with your job every year; subtract this total from the number in line two.
· Divide this new number by 2,000, the average number of hours a person gets paid to work every year. This is your true hourly wage.

Step Two: Inventory your possessions---everything, from the contents of the garage, to the attic, to the pots and pans in the kitchen. Write it all down.

Step Three: Go through the inventory, and make a mark by those things you purchased but didn’t really need or didn’t use. Do you really need two cars, three cell phones, two lawnmowers? Tally the total cost of the things you bought but didn’t really need. Multiply this number by 6.7, which will tell you the opportunity cost of these items. The opportunity cost represents the amount that you would have gained had you invested that money for 20 years at 10%. So, a $250 lawnmower you rarely used because you borrow your neighbor’s riding mower instead would have been worth after 20 years.

Step Four: Find items on your inventory list that truly meant something to you. Johnson’s example is an old backpack that took him through many countries. This exercise is meant to help you refocus on what is really important in your life.

Note: steps one, two, three and four are almost identical to information presented in YMOYL.

Step Five: Determine your 'Debt Destroyer'. Multiply your annual income by .10, then divide by 12. This is the amount that you will use each month to pay down your debt (in addition to your minimum payments).

Step Six: Finding that 10%. To figure out how you’re going to find that 10% for debt repayment, Johnson suggests writing down every penny that leaves your hands. Once you know how you’re spending your money, you’ll have an easier time finding ways to save (this is the ‘Latte Factor’ in action).

Step Seven: Begin eliminating debt, by:
· Not creating any more debt
· Ranking debts in order of fastest possible payoff (divide total amount owed by minimum payment; the lowest number is the first debt to repay)
· Build a ‘Debt Destroyer’---this is your extra 10% payment from step five.
· Pay off your debts, using the Debt Destroyer.
· When all debts are paid off, invest the Debt Destroyer plus the total of all of your old monthly payments.

I would characterize Life or Debt as a combination of ideas from Your Money or Your Life and Dave Ramsey’s Total Money Makeover, without the radicalism or the religious undertones. It’s a good book for someone who hasn’t read much else about debt reduction, and who is highly motivated. Personally, YMOYL and TMM both inspired and motivated me more than this book did, and I would recommend those over Life or Debt.

Do you know someone who might benefit from this post? Email it to them, by clicking on the link below.

Winning the war on debt. . . .

I am now less than $3,000 away from paying off my credit cards (again!) and becoming consumer-debt free. There have only been a couple of times in the last twenty years when I’ve been anywhere close, and I can almost taste the freedom. Then it’s on to the student loans and mortgages, but that’s another post for another day. . . .

After years of pulling out the credit cards to pay for clothing, gas, entertainment, car repairs, and travel, I’ve lived primarily on cash for the past five months. Although I’ve been ‘here’ before---meaning, I’ve vowed previously to deal with my debt---this time feels different. I truly believe that this time I’ll be successful. Why is that?

There are several factors, which, when combined, are helping me to finally face and conquer my debt ---and this time I know I will come out on top. Here’s why:

Discovering the blogosphere: debt has always been my ‘dirty little secret’, something to be hidden and tended to anxiously, while pretending to the world that my income was greater than my outgo. Last year, I discovered blogs---and learned that there are hundreds, probably thousands of people just like me, all of them struggling to banish debt from their lives. In writing my own blog, I feel like I have joined a community that supports and understands me and my ‘secret’. Not only have I been offered heartfelt encouragement from complete strangers, I have learned a great deal about the nitty gritty of saving money, increasing income, and getting out of debt.

Hiding my credit card: Of the many blogs that I peruse, and the many books that I’ve read on the subject of personal finance, debt reduction, and frugal living, one idea appears in about half of them. That is the notion that credit cards---in the hands of people like me---are a dangerous tool, which should be ripped from the wallet and destroyed. Having nursed my credit like a babe at the bottle, I could never wrap my brain around this. I decided on a half-measure: I would remove my credit card from my wallet and leave it at home, far from my reaching fingers. Well, I must be getting old, because I literally can’t remember where I put it! This has kept me from making quite a few purchases which---at that moment in time---I thought I HAD to have, whether it was a new pair of boots, a raincoat (of which I have plenty), an expensive haircut, or any number of unnecessary items. Perhaps I’ll never find my credit card; now that I have an (albeit tiny) emergency fund, I’m not as worried as I would have been five months ago.

Rethinking my attitude about ‘stuff’: I have been blessed to find a second job at which I can work from home, a couple of hours each evening. I do computer research in the field of environmental health---I read all sorts of articles about pollution, global warming, and toxins in our food and consumer goods. Depressing? Yes. However, learning about the role humans have played and continue to play in the degradation of the earth has made me much more aware of everything that I bring into my life. I pay attention to the packaging of my food and other items; I shun the offer of the ubiquitous plastic bag at the checkout counter, to walk my tiny purchase 100 yards to my car; I consider each purchase not only in terms of whether I want it, but whether I need it, and more importantly, what will happen to it when I’m finished with it? Will it go to a landfill? Is it biodegradable? Will it end up swirling in the Texas-sized vortex of plastic in the North Pacific Ocean? This has helped me to whittle down my purchases substantially, and conversely increased the amount of money I have available to make increased debt payments and increase savings.

In spite of my debt and the long hours at work and school, I feel incredibly lucky to have finally realized that I can get off the ‘earn and spend’ rollercoaster. That I have the power to change the way I live my life and how I spend my money. In September I’ll have paid off my credit card completely----after that I’ll begin the next phase of my journey toward debt freedom---and I’m looking forward to the challenge!

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".

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.

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!

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.

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

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. . . .