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.

Festival of Frugality, #123. . .

In the Festival of Frugality, Soundmoneymatters included my post about the increasing cost of rice, including some ideas for how to make inexpensive meals using rice, as well as links to ramen recipes (don't knock it until you've tried it, folks!)

The festival also includes many other frugal-inspired posts from some of my favorite bloggers, so I hope you'll check it out!

Thanks for including me, Soundmoneymatters!

Being frugal at the grocery store. . . .

Several months ago, I began keeping track of my grocery purchases, and created a price book. This has been incredibly helpful---I’ve learned where the lowest prices are, and am much more familiar with the prices of items I buy regularly. This allows me to look at advertised ‘sales’ at other stores, and know immediately if the sale item is truly a good deal.

Because food prices have risen so quickly and consistently over the past few months, some journalists are beginning to suggest that buying in bulk might be a good way to cut down on grocery costs. I’ve been lurking around the bulk section at Winco for months, checking out the prices and often making my purchases in bulk rather than in the packaged food sections. I decided, out of curiosity, to note the prices in the bulk section and then compare to prices for store brand (where available) to see just how much can be saved by buying in bulk. Luckily, my store of choice (Winco) shows the per pound or per ounce price on the shelf sticker, making my comparisons easy. Here are the results:

White, long grain rice
Bulk: 3.8¢ an ounce
Store brand: 5.7¢ an ounce

Jasmine rice
Bulk: 4.1¢ an ounce
Pre-packaged, not store brand: 9.6¢ an ounce

Brown sugar
Bulk: 51¢ a pound
Store brand: 55¢ a pound

White granulated sugar
Bulk: 48¢ a pound
Store brand: 48.8¢ a pound

Quick oats
Bulk: 3.1¢ an ounce
Store brand: 4.2¢ an ounce

Walnuts
Bulk: 34.3¢ an ounce
Planter’s: 38.4¢ an ounce

White flour
Bulk: 32¢ a pound
Store brand: 35.2¢ a pound

Chocolate chips
Bulk: 11.7¢ an ounce
Nestle: 21.2¢ an ounce

Spaghetti
Bulk: 6.4¢ an ounce
Store brand: 5.9¢ an ounce

Parmesan cheese
Bulk: 24.8¢ an ounce
Store brand: 23.5¢ an ounce

So there you have it. The only item that was more expensive (of the items I reviewed) in the bulk section was spaghetti! And keep in mind: I only looked at the prepackaged store brands; if you regularly buy name brand items, your savings will be even greater. Something to consider: when you purchase bulk items, many times you’re helping the environment as well. I save my oatmeal container (the big Quaker oats tub) and my plastic parmesan cheese container. Then I refill them when I bring home my cheaper bulk versions.

Here’s another tip. Bulk sections are not all created equal! When I was finished at Winco, I went across the street to FM, to size up the competition. The bulk section is relatively small, so most of my items weren’t even available there. In addition, Fred Meyer only gave prices in pounds, not by ounce. Of the items that were available at Fred Meyer, the difference in price was substantial.

Walnuts
FM: $11.99 per pound
Winco: $5.48 per pound

Quick oats
FM: .89¢ a pound
Winco: .49¢ a pound

White flour
FM: .79¢ a pound
Winco: .32¢ a pound

Jasmine rice
FM: $1.29 a pound
Winco: .66¢ a pound

Hmmm, why are the prices so much higher at FM? Answer: advertising. Fred Meyer sends out weekly advertisements in the newspaper, runs TV commercials, and purchases huge billboard ads throughout Portland. When you buy your $11.99 pound of walnuts, you’re helping FM with its advertising costs. Also, FM offers more than just groceries: you can buy clothing, jewelry, housewares, electronics, and many other items there. I would wager that the much higher grocery prices are making up for losses or lower profits in other areas.

The lesson in all of this? It definitely pays to take a small notebook with you when shopping, and to pay attention to per ounce and per pound pricing. Make a detour into the bulk section of your local grocery store, and shop around. You can experience substantial savings if you’re willing to spend an extra 20 minutes or so every few months researching grocery prices.

Stockpiling food: is it really necessary?

There are a plethora (I've always wanted to use that word) of stories in the media concerning food prices and their inevitable rise. Most recently, rice was the subject of many panic-ridden articles and I myself felt compelled to go out and buy a couple of pounds. However, we in the U.S. are very lucky to have a stable, consistent source of food. People in some countries can't even find the food on store shelves, let alone complain about the prices. Is it really time to start stockpiling?

A Wall Street Journal article recently suggested that, in fact, it IS time to stockpile food. The author posits a fairly unique argument for this. He indicates that loading up the pantry now is tantamount to an investment. That food prices are increasing so rapidly that keeping our money in a savings account at a mere 3% might be less beneficial in the long run than purchasing a case or two of canned corn now, before the prices go even higher. This is because food prices are rising, on average, 4.5% for most American families.

"Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax."

While I do agree with the author's basic premise, that buying what we can now before prices rise even further is a good thing, I have some hesitation about filling my crawlspace with cans of tuna and beans, rather than putting my money into my emergency fund.

First, I think we can easily lower grocery bills by simply choosing a less expensive store. I used to shop at Fred Meyer, because it was convenient. Then I created a price book, and realized that the store across the street is 10-20% cheaper. I see many, many people in the parking lots of the more expensive grocery stores in town; clearly, they're choosing to pay more for their groceries. Rather than stockpiling, people who are concerned about food costs might benefit more from doing a little research on the grocery stores in their areas.

Second, buying the store brand can save even more money. Most popular items are available in a store brand, even at the more expensive grocery stores. The products are identical in most cases, with the exception of the price. I used to be a snobby shopper: only the 'best' would do, and the 'best' was defined as a name brand I recognized. Then I tried store brands, and for the most part I've been satisfied. And, more importantly, I've cut my grocery bills in half.

Third, the prices of certain items are increasing more quickly than others. For example, corn and rice (two of my favorite food items, unfortunately) seem to be getting much more expensive, much more quickly than other items. This has resulted in my not eating as much corn or rice. Instead, I've begun baking my own bread, am growing more varieties of vegetables this year, and have rediscovered the joys of Top Ramen (the price of which has held steady since roughly 1992, if my memory serves me).

And finally, consider buying in bulk. Many times you'll save more money than even buying the store brand! And, as an added benefit for those who care (as I do), there is far less packaging for the trash bin---or the recycling bin.

Tomorrow, I'll share a post about the (completely unscientific) research I just completed about the differences in price found in the bulk section of my grocery store versus the store brands. Twenty minutes with my pen and notebook got me some odd stares from other shoppers, but it also served to confirm what I had already suspected. Buying in bulk can---in most cases---save money!

Finally Frugal's Weekly Roundup. . . .

In honor of Earth Day, my weekly roundup will focus on green issues (with a little money saving advice thrown in, of course!)

Cash Money Life published a great post that includes 12 daily activities to save Mother Earth---and save yourself some cash, as well!

Debt Free Revolution writes about re-using plastic containers. I refill my water bottles again and again---I no longer buy packs of water, because they're just not environmentally friendly. Plus, bottled water is expensive---and is just tap water anyway!

Get Rich Slowly tells us how to stop junk mail---an incredible waste of trees and resources!

Sasha at Consumerism Commentary wrote a wonderful post about paying more for certain things because it's the right thing to do. She calls it ethical consumerism.

Generation X Finance comments that perhaps the consequences of rising food costs will be beneficial to us as a society.

Punny Money is 'right on the money' when he writes about the 55,000 "eco-terrorists" who purchased Hummers last year.

Paula over at Queercents discusses the cost of going green, and the personal choices we can all make to both save money and help the earth.

I hope you enjoy all of these posts as much as I did! Happy weekend, everyone!

Rice: a frugal staple no more?

Food prices have been rising for months, but until now, the cost of a food staple for millions (perhaps billions) of people (including me) has remained fairly stable. Well, this week the stories started appearing in the American news: Vietnam and Cambodia are limiting rice exports; Sam's Club is rationing the amount that can be purchased, and the cost of rice has risen 50% in the last two months, and has at least doubled since 2004.

Some of the perception of a rice shortage in the U.S. may be due to restaurants stockpiling rice, a direct result of stories in the media. I myself am fighting the urge to run out to Winco and buy the entire bulk container of rice, just to be safe.

With my frugal lifestyle changes of the past six months, I've learned to love many dishes that include rice as a major ingredient, such as:

Basic Black Beans and Rice

Enchilada Rice

Peppered Cilantro Rice

Wild Rice Cranberry Pecan Salad

So what's a frugal eater to do? Well, lately I've returned to a staple of my college days: yes, Top Ramen. Only these days, I don't use the super-salty seasoning packet. Instead, I saute some veggies in low-sodium soy sauce (and sometimes in my garlicky Veri Veri Teriyaki sauce) and mix it all up into a chow mein type extravaganza. The Top Ramen runs 9 cents a packet at my local Winco, which is much, much less per pound than the sobe noodles that are also sold in the Asian food aisle.

Here's a wonderful, simple, tasty recipe for ramen noodles that I found on the internet several months ago. There are also several other good sites with great (and not so great) recipes using the always well-priced ramen noodles. Among them are:

Budget 101: Ramen
The Official Ramen Homepage
Noodle Son

You can even pen an ode to your great love of ramen at Ramen Haiku

Happy slurping, frugal friends!

Frugal driving. . .

The average cost of gas shot upwards of $3.50 a gallon yesterday, and there is some major squawking going on in the news, in blog posts, and in other online forums! As I drove the 3 miles home from the transit center today, I realized that I'll have to go over my budgeted $30 for gas this month---which is still not a lot compared to SUV (or other gas guzzling) drivers out there who are paying upwards of $300 a month to keep their vehicles going. I'm glad I was able to switch wireless providers, as the added $20 a month will more than cover my higher gas costs. Eventually, I'm going to buy a used, lightweight bike, and ride to the transit center in good weather.

When I read the comments about how much rising gas prices are affecting budgets, I can definitely empathize and relate---up to a point.

But really, we in the United States have been incredibly lucky to have had extremely low-priced gas for years---when I studied abroad in Europe (twice, 15 and 20 years ago), gas was over $4.00 a gallon! That was about four times more than Americans were paying at the time. Who knows how much gas costs now in Europe---but I can tell you, there are far fewer Cadillac Escalades on European roads, and many more efficient, smaller cars.

Second, everything else being equal, an additional $75 or $100 shouldn't be killing anyone's budget---if it is, I'd have to question what they're driving, what they've been spending on other areas (like mortgage, eating out, and vacations), and whether they're driving efficiently in the first place. The problem is, food prices are going up too---that means we're getting a double whammy in terms of how far our money is being stretched.

I guess the real bummer is that higher gas prices are here to stay. We will never see $2 gas again. So given this new environment, how can you save money at the pump?

Ditch the SUV and buy an efficient, used car. Yes, I know, there are people with families, and dogs, and stuff that they need to carry around in their car. Europeans and others outside the U.S. seem to get by without driving a Ford Excursion; I think Americans can probably survive it too.

Walk, bike, or take public transportation. Yes, I know it might take a little longer to get to and from work. Slow down. Enjoy the trip. Catch up on your reading. Take the opportunity to downshift. Make walking home or riding the bus a time to connect with your partner or your kids, if you are bringing them home from school or daycare.

Keep your tires inflated. This is something I rarely pay attention to. Luckily, I have a neighbor across the street who gives me a yell when he notices that my chronically-low back tire is looking dangerous.

Get a tuneup. Yep, this costs some money. But it might save you more than that in better gas mileage. Plus, your car will last longer over the long run.

Avoid idling. Now, this just annoys me. Walking past a line of idling cars at the transit center waiting for their human 'pickup', makes me crazy! It makes me want to knock on the window, shake my finger, and give 'em a piece of my mind. I don't do it, because I don't have a death wish. Turn the car off when you're not driving it.

Combine trips. I used to be one of those people who would run to Target, go home, remember something I needed at the grocery store and go out for that, come home again, then run out to the library. All of these places are within a two mile radius of my house. Making lists before leaving the house has helped me to group my errands within one trip, meaning fewer back and forth trips.

Slow down. Your parents were right. Slow is better. Not only is it safer to drive the speed limit, you'll be increasing your car's efficiency and reducing the amount of fuel your vehicle uses.

These are just some of the many tips that are floating around the internet right now. Can you think of any that I've missed?

Carnival of Environmental Issues. . .

My post, 'End of Suburbia', was included in the Carnival of Environmental Issues, over at Wiggly Wigglers website. Thanks, Wiggly!

Frugal cellphones. . . .

I've been waiting months and months for my Verizon Wireless contract to end---I'm only two weeks away from freedom, and I couldn't help but go out and purchase my next cellphone, which will use Virgin Mobile service.

I've been checking the reviews about the phone itself (the 'Super Slice') for months as well, and I'm confident that it will be worth the money. The phone was listed at $49.99 (which is about $49.99 more than I usually pay for a cell phone). However, when I went to check out, it turned out that my particular phone was on sale---so I got it for $29.99!

The new "pay as you go" service that I just activated will cost me $20 every 90 days (for 100 minutes---luckily, I'm NOT a phone talker---I use my phone for emergencies and to make brief plans, not for chatting). Best of all, Virgin Mobile is currently offering a promotion where I can save even more money. If I load $60 into my Virgin Mobile account in the course of three consecutive days before the end of April, my phone will stay active for an entire year, without my having to load any additional minutes (unless I use all of the 300 minutes that will come with the $60, which is doubtful).

I was paying roughly $40 per month for my Verizon service---a complete waste of money. Two months ago I called and asked for a lower priced plan (which was, of course, NOT advertised on the Verizon website at all), so recently I've been paying about $23 a month for 50 'free' minutes, of which I generally used about half.

So, at $60 a year with Virgin Mobile, I'll average a whopping $5.00 a month for phone service. Even adding in the cost of my phone ($29.00 + $60.00 = $7.50 per month) I'm saving money!

Work for the rest of my life? Uh, no. . . . .

I just read an incredibly interesting (and somewhat shocking) article on MSNBC called "Gen X shrugs, says 'whatever' to retirement". Apparently, a majority of my peers (the 'Gen X' crowd, aged 27 to 42) don't believe they'll ever have the funds to retire! How did my generation become so pessimistic? I know that most of us don't believe Social Security will be worth much, if anything, by the time we reach the age of 67, but how can more than two-thirds of us believe that we'll need to work forever?

I truly believe that I'll have the financial security to retire at some point. Granted, when I 'retire' from full time work (hopefully by 59 1/2) I'll choose to work part time somewhere else for the benefit and for the social outlet. I've learned that in order to do this, I need to do some planning of my own.

How do I know this? Two reasons: my mom and my dad. My mom contributed money to her 403b fund and also has a government pension. She planned. She retired in her early 60's. My dad, who owns his own business, never (and I do mean NEVER) put a penny into a savings account or an investment vehicle. He is still working as an electrician at the age of 74---he can't afford to retire.

What have I learned from this?

• Don't count on social security


• In fact, live and invest as if social security didn't exist
• Contribute to a tax-deferred investment---whether a 401K, 403b, or IRA early and often
• Live below your means
• Pay off debt, whether it be credit card, auto, or mortgage loans

Do my peers in Generation X think that we shouldn't have to lift a finger to provide for ourselves in retirement? Do they believe that Social Security was intended to provide for all of our needs when we could no longer work (it wasn't)? Did our parents provide too much for us when we were young, instead of teaching us that success and security are a result of hard work and planning?

I, for one, do NOT intend to work full time forever. Apparently, this places me in the minority when compared with my Generation X peers.

End of surburbia. . . .

I watched a great documentary this weekend, called 'End of Suburbia'. It was made in 2004, and discusses the issue of peak oil (the theory that we've extracted the greatest amount of oil from the earth that we ever will, and from now on oil production will decrease). America's extreme depenence on oil and natural gas is mentioned again and again, and the consequences of slower oil production are dire.

What I found so fascinating, is that in 2004, the 'oil experts' basically predicted the situation in which we find ourselves in 2008: extended war in the Middle East, high food prices due to increase in ethanol demand, worldwide recession, and high gas prices.

The documentary was frightening, but it also made me consider what I can do now to help wean myself, at least, off oil and gas and help save money on food. Here's what I'm doing already, and what you can do too:

1. Use public transportation, if it's available. I moved to Portland, in part, because I wanted to live somewhere with a great bus, light rail, and bike lane system. I drive less than 5,000 miles a year, and possibly less than 3,000. I'm considering buying a lightweight bike so that I can ride to the transit center rather than driving and parking, to decrease my car use even further. As a side benefit, I'm saving tons of money on gas!

2. Grow your own food. Last year I planted three tomato bushes that grew to about 7 feet tall! I had tomatoes coming out my ears, and was able to give away much of what I grew. This year, I hope to plant more than tomatoes: lettuce, squash, cucumbers, and beans may be added to my little vegetable plot. Growing and buying food locally is something that the documentary mentioned several times.

3. Be conscious of energy usage in the home. Because I've been trying to save money on utilites, I've kept my thermostat at 58 degrees this winter. Yes, I was cold! But not as cold as I thought I'd be: I wore layers, including a hat, and tried to keep moving while in the house. I was also more aware of unplugging the TV/DVD, powering down the computer when I didn't need it, and unplugging the microwave. I saved money, but perhaps more importantly, I'm learning to live with less energy, something that won't be an option in the future, according to the documentary. In other words, we'll be forced to live more consciously, because the choices available and the costs of energy usage will be prohibitive.

4. Bring your own bags! To the grocery store, that is. Many stores will give you a 5 cent refund if you've brought your own bags. Plastic bags aren't biodegradable, and they're made with petroleum products to boot, so cutting back now and bringing your own bags to the grocery store will save money and help keep plastic out of our garbage bins and waterways.

5. Go vegetarian. Okay, I have to admit, I haven't gone totally vegetarian. But, to be honest, the only time I really eat meat or poultry products is when I'm eating out---either at a restaurant or at a friend's house. Eating less meat is great for the pocketbook and also for the environment: raising just one cow uses an astronomical level of energy and natural resources. Is that burger really worth it?

While most of my lifestyle changes have been driven by a need to save money, I realize that I, too, am doing my part to decrease my carbon footprint. What are you doing? More importantly, what creative tips can you give me and my readers about this issue?

Finally Frugal's Weekly Roundup. . . .

This is a bit late, but I thought I would share the best of the best posts in the blogosphere from last week.

J.D. at GetRichSlowly wrote a short post about the Secrets of the Extremely Thrifty. I hope to be one of these people someday!

Meanwhile, Flexo at Consumerism Commentary wrote a piece that confirms something I've learned just in the last six months: namely, that the wealthy earn their money, rather than inherit it. Good news for all of us hard workers!

Plonkee, at plonkee money, discusses Supercharging the Debt Snowball, using a method called the "credit card shuffle". This works best if you're just starting your debt reduction battle, but could be helpful for those of us who are beginning to see the finish line too. . . .

FrugalDad posted a great article about ING Direct accounts (I highly recommend this bank), including information about how to create and name sub-accounts. Email me if you'd like a referral to ING. . .

Money Cash Life had a guest blogger, Sher's Corner, who talked about ways she has successfully gone on a 'Shopping Diet'.

That's it for now, folks. I'll be posting a bit late on Monday so check back in the afternoon!

How to beef up the emergency fund. . . .

I've posted about the fact that my labor union may call a strike sometime during the next two months, which has resulted in my obsessing about my emergency fund. Will I need it? If so, for how long? How much will I need? At this point, I can't answer any of these questions. However, what I can control is how much I contribute, at least in the short term, to my emergency fund. I'm a natural planner---I like to be prepared. Since I can't control whether or not my union goes on strike, the only thing I can do is prepare for it, or for any other unexpected calamity that might affect my ability to pay my bills.

First, I need to establish what my goals are. Most financial experts recommend putting away funds to cover at least three months expenses. Six months is better. My monthly out-go is, on average, about $2,500. That means that at a minimum, I need to save an additional $6,500 to add to the $1,000 I already have. That's a tall order! I can probably do about $1,000 in the next couple of months by paying the minimum on my credit card. Perhaps by this time next year, I'll have saved the entire $7,500!

Next, I need to commit to not spending the funds except in a 'real' emergency. 'Real' emergencies do not include a huge sale at Macy's, dinner and drinks out with friends, or a last-minute trip to someplace sunny. So far, I've not touched my $1,000 emergency fund, so I think I'll do well here.

Finally, my money needs to be working for me, in a high-interest account. I bank with ING Direct, which I love. I'm earning 3.0% on my checking account---not a huge number, but I receive nice little chunks of change at the end of every month (equal to about the cost of a small mocha). It's nice to know that I'm earning interest---with my previous, 'bricks and mortar' bank, the savings account paid---if I'm not mistaken---.075% or some ridiculously low number.

If you can, make your savings deposits automatic. I started my ING account with an automatic $50 coming from my checking account---and then promptly forgot about it! Suddenly (well, it seemed sudden) I had over $700 dollars in my account! I highly recommend automating any savings or investing plan---when you don't have to make that monthly decision to save, it takes the ability to fudge right out of your hands. . . .

Jump-start your emergency fund. . . .

Five months ago, I committed to starting and regularly funding an emergency fund. I now have $1,000 in my ING Online Savings account, which currently earns 3.0% interest. After being with ING for a few months, I decided to open an interest-bearing checking account with them, as well as sub-savings accounts, which I'm using for future utilities, tuition, and auto insurance payments. It's working out wonderfully! I can say that I've never once regretted my decision to start, fund, and keep my ING accounts. There are other online accounts that have different features, and may even pay a bit better interest (check out HSBC or Emigrant Direct) but I like ING.

Even though my monthly interest deposits are pretty minimal (less than $10 a month total), at least it's a little something extra---basically, my money is starting to work for ME, instead of the other way around. Well, it's a beginning, anyway.

When I started my ING accounts I didn't know I could get a bonus $25 (with a $250 initial deposit) just for using another person's referral. How I wish I'd known that! Now, I have the opportunity to offer a bonus referral to you! Plus, I will receive a $10 bonus for referring you.

If you'd like to begin a savings or checking account at ING, you can use the links below. Even if you don't choose to use my referrals, I hope you'll check out the company---I've been impressed, and it's nice to know that my money is finally earning interest.

ING $25 bonus Savings account link
ING $25 bonus Savings account link
ING $25 bonus Savings account link

ING $25 bonus Checking account link
ING $25 bonus Checking account link
ING $25 bonus Checking account link

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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.

Preparing for a strike. . . .

As I mentioned in yesterday's post, my labor union may very well call for a strike in the next 60 days. I do have $1,000 in my emergency fund, so I'm feeling somewhat comfortable with the idea of not earning any money for a few days (as long as it's no longer than a few days!)

However, thinking about the possible financial ramifications of striking has led me to consider whether I should deposit my 'debt repayment' money into my emergency fund for the next two months, just to beef it up a little more. I lowered contributions into my 403b last month, so that I would have $550 free to use toward credit card debt, beginning in the month of May.

Should I put off the oh-so-sweet (so sweet I can almost taste it, folks) notion of being consumer debt-free by August? It's possible that the extra money won't be needed at all, and after the threat of strike has passed (hopefully with an adequate salary increase, to boot) I can take it out of my EF and send it merrily along to American Express.

Just for kicks, I updated my debt spreadsheet, which is shown below. As you can see, I've paid off $1530.84 in the past two months (primarily using my tax refunds, but also increasing the amounts I'm sending from my salary). Two of my cards are completely GONE! Only one more remains. . . . !

Hey! I just made $25!

I've been seeing the Revolution Money Exchange links everywhere on the web, and have simply wondered about them momentarily, then moved on. I almost never consider signing up for an account (credit, banking, etc) just because there's a 'free gift' involved.

However, I've also read some more about the company (primarily from other bloggers) and decided to give it a go. I have used PayPal in the past when I've wanted to purchase something online from EBay or other venues---until a friend emailed me to let me know that her account had been hacked. From then on, no more!

Anyway, I've set up a Revolution account, and hope to see my $25-just-for-signing-up deposit in my account soon. If you think this is something you'd be interested in, feel free to click the link below to use me as a referral---you'll get a free $25, and I'll get $10. It took all of three minutes to sign up; however, keep in mind this promotion only goes through May 15.

Frugal strike. . . .

It's entirely possible that within the next two months, my labor union will choose to go on strike. We don't know when, and we don't know for how long; all we know is that contract negotiations between the university and the faculty union have been cool at best and downright nasty at worst.

Six months ago, our upper management received salary increases in the 10-25% range. We are being offered 7% over two years, and that isn't even retroactive to last summer, when our contract expired. 7% would probably about cover the anticipated increase in cost of living over the next two years---there are no additional funds for merit increases or any other recognition of outstanding work.

A year ago, this news would have struck fear into my heart---I was living paycheck to paycheck, covering the gap between my expenses and my income with credit cards.

Today, I have a small emergency fund ($1,000), enough to cover a short period if I were to go on strike. I'm feeling somewhat uncertain about the future, but I'm confident that I can survive this. My emergency fund and my new frugal lifestyle has given me the freedom to support my union and my colleagues, if it should come to that.

What new behaviors can I thank for this newfound confidence?

Working a second job in the evenings. Last May, I was lucky enough to be offered an online job that I could do from home. I only make $13 dollars an hour, but it's about 25% more than the other moonlighting jobs I considered last year, and the extra earnings are allowing me to pay my credit card off twice as fast.

Canceling cable. I work two jobs, and I go to school part time. Who has time for anything other than local TV?

Downgrading my cellphone plan. I am NOT a 'phone talker'. I don't spend hours on the telephone---I prefer speaking to people face to face, or via email. My cellphone is primarily used to make plans with people (i.e. "when/where are we meeting"?) when I'm away from the house. I switched to an unadvertised 'low minute' rate, and saved $10 a month. Soon, I'll do away with Verizon altogether, and transfer to a pay-as-you-go plan.

Using tuition benefits to go back to school. My first master's degree cost over $30,000. This one will leave me in debt to the tune of $0. That's an amazing thing.

Saving money on utilities. I kept my thermostat at 58 degrees this winter. I was diligent about turning off lights and unplugging appliances when not in use. I'm saving about 30% on each of my gas and electric bills, when compared to last year.

Paying myself first. This really works! The first thing I do when I get my paycheck is transfer funds to each of my savings accounts. Not having the money in my checking account means that I truly don't spend it.

Zero-based budgets. Dave Ramsey's book, Total Money Makeover, was an eye-opener. I recommend it to anyone struggling with debt and under-earning. I created my first zero-based budget in February, and although I'm continually tweaking throughout the month, this type of budget has changed my life. I'm now planning ahead for things (like my quarterly water bill) that used to send me into a tizzy each month, wondering where the money was going to come from.

Note: here are links to my February, March, and April zero-based budget posts.

These are some of the most important factors in my continuing education toward a frugal lifestyle. There are more, and I'm sure I'll be learning some new tricks over the next year. I hope I don't have to go on strike; but my finances are secure enough that I think I can do it if I need to.

Festival of Frugality. . . .

Thanks to Rather Be Shopping for including my post, "Frugal healthcare. . ." in the 121st Festival of Frugality. . .the Tax Day edition, to be published tomorrow!

Carnival of debt reduction. . . .

CreditAddict is hosting the Carnival of Debt Reduction for April 14, 2008.

Checking out the carnival is a great way to find many wonderful articles on the topic of debt reduction, all in one place!

By the way, my article, 'Winning" the war on debt . . . ' , was selected for the carnival. Thanks, CreditAddict!

Frugal healthcare. . . .

I am an admitted eavesdropper, especially when I'm on my 20 minute commute on the local lightrail. The topics people choose to discuss between themselves and over cellphones in public never ceases to amaze me.

Last week, I was privy to a conversation that a young woman was having about a family member who had suffered a seizure, leaving her unable to speak, and without the use of her right leg. The family member does not have health insurance. Local hospitals were willing to stabilize her, but not treat her in the way that she needed---because they knew they would not be paid. The young woman was counseling another family member about how to get healthcare in Canada. She suggested driving the sick relative to Vancouver, BC (we're about a five hour drive from Canada), visit a hospital there, and claim to have been staying there on vacation when the seizure occurred. Because Canada has universal health insurance, the sick relative would be treated at no (or very little) cost.

Aside from feeling horrible about this woman's precarious situation, I also felt incredibly lucky to have an employer who covers all of my health insurance costs. I pay $1 for prescriptions. I pay nothing to see a doctor. Nothing to see a dentist. Sure, it's an HMO, but I'm covered.

What about people who don't work for employers who offer health insurance? How can they find insurance that is affordable and that will protect them from unexpected illnesses like this woman's seizure? I was so moved by the conversation that I heard last week, that I did a little reading, and here are some suggestions:

First, check your state government website. Many states, including mine, have information for consumers about obtaining all kinds of insurance, including health insurance. In fact, my state ever offers government insurance, for those who have been denied coverage by private insurance companies.

Then, compare quotes. There are many health insurance companies that will take information over the phone and will provide a quote within minutes. Call several companies to see what your options are, and how inexpensively you might obtain the same level of insurance coverage. There are even online sites where you can receive several quotes over the internet, without ever picking up the phone.

If you have auto or home insurance, see if these companies offer health insurance. Sometimes, insurance companies will give you a discount if you have multiple lines of insurance. However, be careful: you might save money if you were to go with a different company altogether, so continue to compare costs and coverage with other companies.

Consider how much you are willing to pay for prescriptions, copays, and deductibles. If you're able to agree to a higher deductible, your monthly premium will oftentimes decrease. The same goes for the percentage you're willing to pay for prescriptions and copays to see a doctor---the more you're willing to pay upfront for these services, the less your premiums will be.

Quit smoking! If you're a smoker, then quit as soon as you possibly can. Smoking is a risk factor that is taken into account by health insurance companies, so smokers will pay higher premiums than non-smokers. And calculate how much money you'll save---no cigarettes to buy, plus lower premiums. It's a win-win situation.

Lose weight! Again, if you're overweight (as defined by the insurance company), you may be seen as a higher risk---and you'll pay higher premiums. Now might be the best time to stick to that new exercise and diet regime; it may literally save you hundreds of dollars a year.

Consider your profession. Do you work with chemicals? In high rise construction? Professional tightrope walker? These professions might be considered high risk, and might contribute to higher premiums as well.

Clearly, the best way to obtain affordable health insurance is to work for an employer who offers it, and then do your best to stay healthy. However, if you're still looking for that perfect job with the perfect benefits (if you find it, let me know), private health insurance is a must-have in our country, with the exhorbitant cost of hospital and emergency care.

Weekly Roundup. . . .

There were many, many great articles and blogposts out there this week. Here are just a few of the ones I learned from:

Get Rich Slowly: Advice for Late Bloomers

Another from Get Rich Slowly: What do you splurge on?

Frugal Dad: How to teach compounding interest to kids

Moolonomy: Money management tips for seniors

I've Paid for this Twice Already: Sometimes it IS the amount of money you make

FrugalDad: Are Parents to Blame for Financial Problems?

One Frugal Girl: Can I give up TV?

Have a great weekend, everyone!

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?

The Middle Class Millionaire. . . .

I’ve been reading many of the posts at the Early Retirement forum, which led me to do a little reading about people who appear to be on a path to millionaire status through their own hard work, commitment to saving, and smart investment strategies.

In The Middle-Class Millionaire, Russ Alan Prince and Lewis Schiff take a page from The Millionaire Next Door, and suggest that ‘middle-class millionaires’ are different enough from all of us regular Joes (or Marys) that they can be studied as a unique group. And, of course, the reason we’d want to study them at all is so that we can emulate them and become millionaires ourselves.

The authors define ‘middle-class millionaires’ as having a net worth that falls between $1 million and $10 million---including the equity held in their homes. Importantly, Prince and Schiff point out that their millionaires became wealthy not through inheritance but through hard work. In other words, these millionaires are self made. These millionaires were then compared to a sample of middle-class families with incomes between $50,000 to $80,000 and with net worth of less than $1 million (whom I'll call the 'non-millionaires').

What they found was interesting. For example:

• Middle-class millionaires are always ‘on’. While both millionaires and non-millionaires alike believe the statement “Anyone can become a millionaire if he or she works hard enough”, millionaires work, on average, 70 hours per week, as compared to 41 hours per week for non-millionaires.
• Millionaires are five times more likely to say that they are always available for business by email or phone (76% versus 16%)
• They are three times more likely to say that they regularly work weekends (67% versus 21%)
• They take fewer vacations than non-millionaires (12 days versus 19.5 days)
• Middle-class millionaires believe in networking. They believe that knowing many, many people is crucial to success.
• Millionaires are three times more likely to say they belong to a formal or informal networking group (43% versus 16%)
• They value networking as a way to connect with people you can turn to for information (83% versus 29%)
• Middle-class millionaires never give up. Nine out of ten respondents in both the millionaire and the non-millionaire groups reported having had a serious setback with a very bad outcome. However, millionaires had 3.1 such incidents, while the non-millionaires had 1.6.
• Millionaires were twice as likely to credit learning from these bad experiences as being very important to their eventual financial success (73% versus 36%)
• Millionaires were five times more likely than those in the middle-class non-millionaire sample to try again in the same field, after a setback (77% versus 14%)
• Only 2% of millionaires reported that their most common course of action was to give up and focus on other projects In the middle-class non-millionaire sample, 51.5% reported giving up.
• Millionaires go where the money is. Middle-class millionaires can more often be found in ownership of a business, or in businesses with incentivized or pay-for-performance compensation.
• Millionaires are three times more likely to say that choosing a career on the basis of its prospective financial rewards is important to financial success (73% versus 28%).
• Non-millionaires were more likely to believe in the idea of “do what you love and the money will follow” (54% versus 2%)

In all, there do appear to be some important differences between the middle-class millionaire and the non-millionaire. If you want to be a millionaire, as many in the Early Retirement forums do (and, truth be told, as I do), you may want to check this one out at the library.

Later in the week, I’ll present some of the differences that made me a bit squeamish about the middle-class millionaire route to financial success. . . .

If you liked this review, share it! Click on the link below to email it to a friend, and help me increase my readership!

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!

Frugal reading. . . .

Lynn Truong at Wise Bread very generously sent me her copy of Rich by 30, and asked that I donate it to my local library when I'd finished.

Yesterday, I rather hesitantly walked up to the counter at my branch of the public library and asked if I could donate a book. For some reason, I was a bit nervous that they would turn me down, or ask me to fill out reams of paperwork, or consider it a waste of their time.

Instead, the woman at the counter gave me a giant grin, and thanked me profusely. I felt wonderful walking out the door, and it made me think about all the reasons I love the library:

• I practically grew up in a library, first of all. I come from a family of voracious readers (with two librarians, a poet and English professor, and an English literature major, it's not suprising). My parents couldn't afford to buy so many books, so we hung out at the library on the weekends, picking out five or six books to last through the week.
• On a more practical note, the library has saved me countless hundreds of dollars over the years. Last year alone, I probably saved $200, primarily because my 2007 New Year's Resolution was to stop buying so many books and instead check them out of the library. I also borrowed several books for school, which I used throughout the term, instead of buying them at inflated prices at the university bookstore.
• The library staff is generally very helpful and friendly. They answer my questions and help me find the books I'm looking for. I've also noticed that they treat every person with the same respect, whether the person appears homeless, is a student, is elderly (or grumpy), or, like me, is simply clueless much of the time.
• I feel like I belong to a true community when I spend time at the library. I tend to see the same people over and over again at my local branch, reading the newspaper on the weekends, spending time with their kids in the children's section, checking email on the public computers.

It's a shame that so many public library systems struggle financially----but there appear to be many opportunities to volunteer (and, apparently, donate). My grandmother was involved with the 'Friends of the Library' group in my hometown, my mom volunteered (and was then hired) by the library after she retired, and I can see myself continuing this tradition when I reach retirement age (whenever that is).

Frugal economy. . . . .

CNN has an ongoing series that profiles American families and how they're reacting to our slowing economy (i.e., the recession). It's called 'America's Money: In their own words' Today's profile caught my eye, because it's written by a man who is working a second job, to "pay the bills", just as I am.

I really wish these profiles were a little longer and more in-depth, because I'd love to know several things about this person: for example, just how much (or little) does a Vice President make? Is he truly living a "lower middle class" existence? Does the wife work? Do they have overwhelming student loans or other debt? A giant house? Is he driving a gas guzzler, since his gas bill is $170 a week (mine is $30 a month)?

I'm trying hard not to automatically judge this person and make assumptions about how his family is living. I look at my own situation (also working two jobs) and realize that everything is relative, after all. I have access to great public transportation (hence the lower gas bill) and make use of it. I have a wonderful public library where I can stock up on books, read magazines, and study in a warm and inviting atmosphere. I live in a tiny house, although with an admittedly too-large mortgage compared to my income. My car is old, but efficient and reliable. I have access to great health benefits, retirement plans, and tuition remission through my employment. Yes, I'm working two jobs, but I feel like I'm squarely middle-class.

It's interesting to read about how others are handling their own financial struggles, if only to help me realize that I'm not doing all that badly. . .

Vice president of information technology, 32, Denver, Colo.

We purchased a home last year and I'm proud to see my children live in a decent neighborhood close to a good public school and have a backyard to play in.

However, since moving, unexpected expenses and rising costs have created a situation of struggle. I do have a fixed-rate mortgage, but everything else is getting so expensive. Last week I spent $170 on gas alone. I've taken on a second job, and I know as long as our economy hangs in there and doesn't collapse, we'll be okay.

My biggest frustration is I work very hard to maintain a lower middle-class income and lifestyle. We don't go on vacations, or rent movies. We just hang out and do free or cheap stuff. But I still work a second job and I miss out on school events and struggle to feel okay explaining this to my son.

April zero-based budget. . . . .

I've found that a zero-based budget is working fairly well for me, although it does require some tweaking throughout the month as unexpected expenses arise. I also need to think about my 'fun money' allocation, as it seems that I use this money for items that I wouldn't normally consider fun (like the notebooks I'm going to buy today for my classes). As usual, I'll be updating this throughout the month.



Here are the links to my February and March zero based budgets, for comparison.