A frugal solution. . . .

I hope you all enjoyed a wonderful holiday! I certainly did, although my frugal tendencies went right out the window when faced with fabulous food, lots of opportunities (and time) for socializing, and, alas, the dreaded spending.

As has been the case since I began my frugal journey several years ago, the Christmas season seems to trigger the 'shopping gene' and I end up not only spending more than I intended to on others, but also on myself! For some reason, the act of purchasing gifts for others seems to get the juices flowing and I end up buying things for myself as well. It's as if all of my self-control, which I wield so successfully during the rest of the year, simply flies out the window for a two-week period.

Although I did score a wonderful new jacket and a pair of boots (70% off!), the upshot is that I had to send my last paycheck not to my second mortgage-holder or to my student loan balance, but instead to my credit card! Aaaarrrrrrgggghhhh! It's frustrating, to say the least.

Although I am kicking myself (even while wearing my fabulous new duds) the silver lining is that I have come up with a plan to help myself avoid this next year. My solution is this: for the first time ever, I'm going to set up a savings account just for Christmas costs, to include travel (airfare to visit the family) and gifts. I had intended to nix my savings (except for the savings that goes towards paying my water and auto insurance costs, of course) so that I could concentrate on sending every extra penny to my debt. However, in the long run, I think sending $50 a month to the Christmas savings account will benefit me by helping me avoid the frenzy of spending that I experienced this year.

Hibernation. . . .

I suppose I shouldn't title this blog post 'hibernation', as that would imply that I've been sleeping away the past six or seven months. No, I've been busy -- and that's why my hiatus has stretched as long as it has. Not that it's technically over, just yet; but I did at least want to sign back in and let anyone who's still out there (um, anyone still out there?) know that I'm alive and well! It's just that, with working almost 70 hours a week at the day job, the night job, the unpaid internship, along various attempts at socializing, life has been wacky and hectic. Two more months and I'll be calling myself a graduate school survivor -- and one without any additional school debt (let us not forget that $55K in previous student loans I'll be working on as soon as I graduate).

There has been one rather big surprise in my financial life, though. I spent at least a year padding my savings account in preparation for the year of living super-frugally. I figured out how much less money I'd be making in my last year of school, and built a savings account that almost approximated the amount of money I'd need over a nine month period. The surprise? Almost the entire savings account is still in existence!

Somehow, I managed to live on 25% less income without digging into the savings account. I had to replace my computer, and that was really my only big expense. Other than that, I pay my bills each month, on time and in full, and rarely do I think longingly of the things I could buy with the $2500 that still sits in savings -- earning a now-paltry 1.1% interest (down from the high of about 3.75% when I opened the account years ago, pre-recession). I used my credit card over the holidays for travel and gifts, and have managed to pay down the balance to a respectable $250, again without dipping into my savings accounts.

I've been puzzling over this lack of reliance on my savings account, and mentioned this to a coworker. She pointed out that I had already adjusted my spending habits when I was in 'savings mode', putting every spare penny into the bank. My spending habits have remained the same, but I'm just not saving at the same high rate I was before. That's what explains my still-healthy account balances!

In any case, I'll be moving into another financial phase in a couple of months when I graduate; as I mentioned, I'll be starting to pay down that beast of a student loan debt, I'll need to consider what (if anything) to do with my house (sell? rent? stay? move?), and looking around for jobs that pay a little better than the one I have -- which may or may not find me relocating.

Stay tuned!
p.s. hope you all have been successful in your own financial journeys during the past few months! I'm looking forward to finding the time to browse the blogs and forums again, and reconnecting with my online support group!

Home repair blues. . . .

I finally had my dryer repaired today, and found that some wires were faulty. I was actually glad to learn this, since I would have felt a little guilty if it had been the heating element (this might have been something I could have fixed myself, rather than paying someone to do it for me).

Although I'm all set up for line drying---whether indoors or out---I'm happy to have my dryer back online for rainy or cold days, and for items that really should have a tumble once in awhile (my duvet cover comes to mind. . .) for the purposes of pet hair removal, at the very least.

I'm looking forward to using my clothesline often this summer, and saving some additional money in electric bills by not using my dryer. Now the question is, how to pay for the roughly $170 bill to fix my dryer? Originally I thought I would just take it out of my emergency fund and pay down my credit card, but on second thought, I'm going to take it out of a separate savings account that is going to help fill the gap when my income decreases next year. That account is quite healthy---there's twice as much money in it as there is in the EF, and if my refinance ever goes through, I'll be able to "skip" a mortgage payment (I'm already a month ahead, even without it) and that money will go straight into that savings account as well.

So my home repair---while expensive---hasn't decimated my budget after all. I can't help thinking how that charge would have remained on my credit card for months or even years just a short time ago, because I wouldn't have had any savings to speak of. How times change!

Frugal change. . . .

Like most of us, I have a jar of change sitting in a dark cupboard, that I sometimes throw my spare nickels and dimes into----they just get in the way in my tiny little wallet! Every once in awhile if I need money for gas (just a few bucks to get me through the end of the month), I'll dive in and grab some quarters, but in general the money just sits there, unused and seemingly unloved! I've never actually cashed it in for "real money", and I'm not sure I ever planned to. . .

With this economy, though, it seems that more people are heading to their local Coinstar or bank to cash in the random change in their respective jars. The bank representative in this NBC video says that not only do they cash out to the tune of $15,000 to $20,000 per week (total) just at her branch, this kind of business has increased by 13% this year! I guess when times are tough, every little bit counts, eh?

Visit msnbc.com for Breaking News, World News, and News about the Economy

I think I may take a second look at my little jar of change! I know I don't have anywhere close to $50 in there, but it might be enough to fund a guilt-free night out with the girls sometime soon!

A frugal commute. . . .

Now that summer is almost here, it's almost time to begin my bus commute from the stop a couple of blocks from my house (rather than the car to train to bus commute that I usually do during colder or rainy weather). Each morning as I pass by the bus stop in my car, on the way to the MAX station, I consider the hour-long bus ride (including a transfer to another bus downtown) that is in my future.

Last year I did this bus commute day in and day out and while I didn't like it, gas prices were so high then (was gas really almost $4 a gallon last summer???) that taking the longer commute in a dirty, crowded bus seemed like a great deal. I was spending less than $20 on gas per month last summer, which was fabulous, considering how high gas was!

This year, I DREAD the thought of waiting at the bus stop (and exposing myself to car horns and cat calls, as it's on a major street) and then waiting again for a transfer to the university. Why is this? Maybe because gas is still less than $3 a gallon here in Portland, and I'm not going to save 'as much' money as I did last year?

Granted, I'm taking a class this summer that will preclude a late-night bus trip, so I'll only be commuting this way three times a week. I think next Tuesday will be my first day back on the bus, so I'll have to see how it goes then. I think my memories of the bus are clouded by the few hot, hot, hot days that I rode a bus without A/C and was simply miserable. For an hour.

I'm going to try to sell myself on the bus commute by reminding myself not only of the money I'll be saving but also by reminding myself that I'll get to listen to my digital books on a more frequent basis (which also helps tune out some of the rather unfortunate souls who also choose this particular bus line).

Frugal confidence. . . .

Apparently, Americans have a confidence rating in the economy of -47 (on a scale of 100 to -100)! That's pretty dismal, people! This confidence or 'comfort' rating is based on personal opinions about three separate variables:

• National economy
• Personal finances
• Buying climate (meaning, is it a good time to make purchases. . .)

Interestingly, our opinions varied based on several factors. For example:

• People with higher incomes reported more confidence (-17) than those with the lowest incomes (-72);
• Those with a college degree felt better about the economy (-35) versus high school dropouts (-63);
• Homeowners were slightly more confident (-44) than renters (-54).

Also interesting (though not surprising), less than half of us feel positively about our finances. In fact:

"Forty-five percent rate their personal finances positively, typically the best of the three measures. That’s down 7 points in the past month – the steepest such decline since May 2008 – to just 4 points from the record low in January, and 12 points below average."

Actually, the last half of last month and the beginning of this month have been quite difficult for me, financially. I still haven't published my zero-based budget from May, and had quite a difficult time getting my June budget to zero out. Meanwhile, I had my debit card declined last weekend after a day of grocery shopping (I had to transfer from money from savings to cover what I'd spent)! That is the first time this has ever, ever, EVER happened to me, in spite of all the years of spending---and I didn't like it one bit! I guess this isn't surprising, considering I rarely used my debit card in my non-frugal past and simply whipped out the credit card for every little thing.

Anyway, this rather rude awakening (it's embarassing!!!) helped me to get back to the basics, in checking my accounts more frequently BEFORE going shopping! I'm feeling a little less positive about my finances than I have in the past, though, in spite of being nearly credit-debt free. This might be because I'm sensing that times will get even tighter when my income decreases very soon!

All about savers. . . .

Yet another article along the lines of the financial personality piece that I linked to on Wednesday. This one highlights research that pertains to 'Savers'. Here's a little recap:

• 'Savers' start early: 73% indicate that their parents taught them the value of saving money, compared to average savers.
• 'Savers' are less into the luxuries of life: meaning, they live well but they don't necessarily need a high-priced spa treatment or a Coach bag to feel good about themselves. This makes a ton of sense. When I began my frugal journey, I made a conscious effort to ask myself 'WHY' I was purchasing non-essential items---if I couldn't come up with a reasonable answer I didn't purchase it.
• 'Savers' know their limits: budgets are already pretty lean for savers, so cutting additional expenses is sometimes not possible---and savers are aware of how far they can go in finding additional savings.
• 'Savers' are happier with their finances: this makes sense as well. When you're not afraid to open your bills life is much less stressful. I know that having an emergency fund and additional savings accounts helps me sleep better at night!

I wish this article had contained a URL to the study itself, as I wanted to include the tables and graphs (I do love me some graphs!) and to look at the exact numbers and analysis a little further. I'll see if I can find it somewhere online. . . .

Three months to go. . . .

My boss asked me for the specifics of myproposed drop to part time status next fall---in the form of an official letter that she could take to HR to get the ball rolling. Yikes! Putting it on paper really made it seem real, and it also made a tiny wave of anxiety zip through my body. Have a I saved enough? What if I lose my second job? Can I work upwards of 65 hours a week between the internship, the day job, and my night job, without going completely crazy???

A positive outcome of the experience is that I was able to nail down my start date at the internship, which should be September 1st. Since I'm a natural 'planner', this made me feel much more comfortable. On the flip side, this is about two weeks to a month earlier than I anticipated, meaning that I have less time to pad the savings account.

I'm doing very well so far with my goal of getting to $4,000 (I'm at about $2,700 right now), and if I'm very good over the next three months, I should reach my goal, or at least very close to it. I'm still amazed that I started saving in January and have made it halfway! Just think if I'd started saving money when I was in my twenties---or even my teens! I do regret the time (and money) wasted, but then again, I'm also grateful to have 'seen the light' even at this late(r) date.

I'm committed to paying attention to what I spend each month, and decreasing expenditures where I can. Here's a list of budget tips from a recent CBS article that helped motivate me to continue on my frugal path:

• Save on personal care products: the article discusses using smaller amounts of products like shampoo, conditioner, and toothpaste, which is a great idea. I would add that local drugstores and grocery stores OFTEN have great deals on these items. If you keep your eyes open for sales and use coupons or rebates, you can often get these items for free, as my recent post shows.
• Save money on clothing: CBS urges us to splurge on an accessory, rather than a higher-priced item of clothing. Slightly ridiculous is the suggestion that we purchase two necklaces this year and nothing else, for a $600 savings. That seems unnecessary when there are so many thrift stores around, just waiting for frugal shoppers to grab those deals. I know that a trip to a thrift store often scratches my itch to shop---even if I don't find anything I want to buy.
• Save money on entertainment: a reader commented recently about the $1 DVD's that are available at Redbox, which I think is a great deal! If you're willing to be patient, you can also rent DVD's at the local library, which is something I've been doing for a couple of months. I've been very happy with the selection and I love getting random emails from the library to let me know a DVD is available for pickup (they'll even mail them to me). The bonus (aside from the price)? I get to keep the movies for up to two weeks!
• Save money on exercise: I canceled my gym membership when I was in the midst of paying off my credit cards, and in November---when my balances finally fell to zero---I renewed it (I waited for a special deal when there were no initiation fees, of course). I've been going to the gym regularly for $29.99 a month, and I feel that this is a fair price to retain my sanity. Exercise truly keeps me balanced and healthy. I also bought a DVD that I use in the mornings when I don't have time for a gym visit, which I'll use for years. Aside from that, there's the great outdoors---parks, paths, sidewalks, outdoor tracks---that are free for the taking.
• Save money on your ride: One of the reasons I moved to Portland was to get out of my car and have access to more public transportation options. I LOVE riding the Max (and, to a lesser degree, the bus) each day to work. When gas prices went through the roof last summer, I was barely affected because I can---if I choose---walk three blocks to a bus stop where I can grab a ride downtown. Granted, it's a LONG commute compared to taking the highway or even surface streets to work. But I save on gas, I save on parking, and I save the additional miles on my already high-mileage car. Even if public transit isn't an option, consider carpooling! You'll save money AND the environment. . . .
• Childcare: somewhat sadly, this isn't a line item in my budget! However, if I had kids, I'm sure the outrageous costs of childcare would be a major drain on my finances. I have friends who make use of flexible grandparents and other relatives as well as friends to provide low-cost (or free) daycare. In my opinion, this is seriously an area where a little government investment would make sense. I think a lot of single (and coupled) parents will continue to live in poverty because coordinating and paying for childcare is simply overwhelming.

As long as I can keep these expenses low this summer (and next year), I should be fine. Although I'm feeling a little anxious, I've been crunching the numbers and I think I'll make it. In fact, in spite of the many hours I'll be working each week, I'm looking forward to this next challenge! I can do anything for nine months!

Emergency Fund update. . . .

The week before last, I wrote about using my credit card to pay for a rather hefty veterinarian bill (one of my cats was suffering from some sort of allergic reaction, which, now that I am purchasing Very Expensive Food seems to have cleared up). These days, anything over $100 on my credit card bill bothers me, and I figured that at 9.99% interest, taking the money out of my emergency fund (which only gets 1.5% interest at the moment) would result in a savings of 8.49%.

Although I'm loathe to use the EF for something that really should have been expected (I plan to begin both a car maintenance savings account and a pet maintenance account in the future---after I'm finished with school, most likely), I'm even more hesitant to keep a large balance on my credit card.

So, I decided that the $330+ was going to come out of my emergency fund. End of story.

What I didn't factor in, though, is that May is one of those magical months that occurs just twice a year, in which I get not two but THREE paychecks from the night job!!! Woo hoo!!! What this means is that my first May paycheck went directly to the credit card. I still have a bit left to pay on this card due to some small indiscretions (items---like my McAfee Virus Protection program---for which I'll get a full rebate later) but it's less worrisome than it was.

Yay for the night job! I'm feeling very optimistic about my finances, in spite of that student loan debt looming over my head. I'm confident that if I can manage to decimate my credit card debt, control my spending, and increase my savings, I can---and WILL---conquer my other debt too!

Soup, anyone?

In the spirit of stockpiling non-perishables for next year, I found an awesome deal at Walgreens (thanks, Hip-2-Save and Money Saving Mom!)

WAGS had an in-ad coupon for .59 cent cans of Campbell's Tomato or Chicken Noodle Soup (limit of six per transaction). Now, this is ordinarily a very good price---and I'm a big fan of tomato soup and grilled cheese sandwiches on dreary winter days. In addition to this great price, though, there's an online coupon at the Campbell's soup website that gives $1.00 off any two 'cooking soups' from Campbell's.

I was able to print out quite a few of those coupons, and purchased 12 cans of soup (6 tomato, 6 chicken noodle) for a total of $1.08!

That means that each of those cans of soup cost .09 cents!!! Amazing. . . .

I have a raincheck for six more at a local Walgreens which ran out of soup (not surprising), so I'll add some more to my stockpile next week---although I'm not sure I'll have any more online coupons to use---there is a limit, after all!

Stocking up. . . .

As I increase my usage of coupons and store deals, I've come to the realization that although I feel as if I'm spending more money at one time---because I'm stocking up on good deals---in the long run, I'll save money. Why is this? Because in the past, I used to wait until something ran out before running out to the store and purchasing a replacement---generally paying the highest price for that item. My money slipped through my fingers in dribs and drabs in this way.

Now that I'm collecting coupons and scanning the weekly ads for Walgreens, Rite-Aid and some of the local grocery stores, I'm actually planning ahead! Do I use some items regularly enough that it makes sense to buy two or three while they're on sale AND I have a coupon? Yes!

Part of me rebels against this idea of stocking up, primarily because I have a grandmother who, when we moved her into a nursing home from her apartment, had probably a year's worth of toilet paper and shaving cream in her closets (and my grandfather had been dead for years---not sure how much shaving grandma was doing on her own. . . and I probably don't want to know. . .) I don't want to be the crazy old lady who stockpiles soap at the expense of having fun. Then again, stockpiling can be a great money-saver, as long as it is done in moderation.

Case in point: I went to my Walgreens last weekend to stock up on some items that I use (or will use, when the weather warms up) regularly. Here are some of the deals I got:

Reynolds Wrap Aluminum foil: on sale for .89 cents, minus a .55 cent coupon I had. Final price? .34 cents! I only had one coupon, so only bought one, but .89 cents is still a good deal so maybe I'll go back for more.

Three packs of diet Pepsi, for $11. This is a pretty high price, but I got $3 back in 'Register Rewards', that I can use the next time I go to Walgreens (maybe for my aluminum foil?). At $2.67 per box (and 12 cans per box), that's about .22 cents a can! A good deal, for something I love to drink in the summer while working in the garden . . . .

Colorsilk haircolor, which runs anywhere from $2.50 (on a good day) to $3.89 (waaaaay overpriced) was on sale for $1.99 a box. I happened to have a $1.00 off coupon, so I snagged three boxes (the limit) for $4.97, or $1.66 a box. Not bad!

I bought some other items on sale as well, which I won't detail in this blog post, but suffice it to say that my total savings was $25.40!

Part of my strategy of saving money for next year's drop to part-time status is to stock up on non-perishable food and household items so I won't have to spend as much money on them next year. Of course I am somewhat limited by available money and space (although it occurs to me that the space under the beds are not being used to their full potential) but I'm making more money this year than I will next year, so now is the time to stock my cupboards, especially when the products I use are on sale! By the way, the Dollar Stretcher has a good article with reader suggestions on stocking up when the prices are low. . . . check it out!

Frugal movies. . . .

I don't enjoy the luxury of just chilling at home much these days (and, truth be told, I'm not a couch potato even in the best of times . . .) Between Job #1, Job #2, and being a full-time graduate student, my schedule is tight, but my budget is even tighter, meaning that entertainment gets squeezed in here and there, as time and money permit.

A couple of years ago, I explored the possibility of 'renting' movies at the local library, only to find that the most popular movies (meaning, anything with a title I recognized) had from 10 to 75 'holds' on them, placed by other patrons. I chafed at the prospect of not having my movies when I wanted them---wait times could be months long---and continued to rent some instant gratification from Blockbuster, at almost $4 a pop!

Now that I'm two-thirds through my graduate program, I'm feeling the need for additional 'self-care' while also feeling the pinch in my budget from ramping up my savings to account for my upcoming drop to part-time status at the day job.

So once again, I went back to my beloved Multnomah County Library website and set to work finding some movies that interested me. I dutifully placed my holds, behind scores of other library patrons, and settled in for a long wait.

Imagine my surprise, then, when just weeks later I received an email from the library letting me know that my first DVD hold had come in! I trotted down to the library before getting on the Max (light rail system) for the ride home, and presented myself at the DVD counter. Shockingly, there were FIVE movies waiting for me! In placing my holds, I had tried to be strategic, placing holds up to the limit of ten DVD's, thinking that they would arrive in a staggered fashion, allowing me to watch one or two DVD's every weekend or so. Not so, not so. Although patrons are allowed a whopping TWO WEEKS to keep their DVD's, many often return them in mere days, meaning that the 'hold list' decreases much more quickly than I had assumed.

So far, I've watched six or seven FREE movies over the course of the past month or so. Using coupons, I purchase some packaged popcorn, and voila, I have a fun movie night that cost pennies. I've had friends over to watch a couple of movies with me, and if they bring beverages, we're all set for a frugal evening of entertainment.

Note: I have been downloading free audiobooks for my MP3 player for about a year, which I use when I go to the gym. I can get all sorts of books this way, without paying the $15-$30 they cost on the iTunes and other audiobook sites. . . .

Using the emergency fund. . . .

One of my cats has some kind of itchy-scratchy thing going on, that has resulted in some major discomfort for her. After trying some home remedies (including changing her food, in case that was the cause of it) I finally broke down and took her to the vet. $300 dollars later, I walked out with my cat, some EXTREMELY expensive cat food (care to feast on peas and venison, anyone?), and drugs galore.

Now, this is not the kind of thing I would consider to be an emergency. I did put the charges on my credit card, and want that debt GONE as soon as possible, but I was hesitant to use my emergency fund cash to pay it off (I have almost $1700 in my EF right now).

Then I started thinking, and yes, actually doing the math. I get 1.5% on my ING Direct savings account right now (I can't believe I started at 3.75% before the economic bust. . . I'm salivating at the interest I could be earning---and will earn again at some point in the not-so-distant future). I pay 9.99% on my credit card. Sooooo, an intelligent woman would figure that I'd be 'earning' 8.49% by paying off the credit card (9.99 minus the 1.5% I won't be earning on that money).

Is my math correct on this (more importantly, is my LOGIC correct)? It seems to make sense. Why would I willingly pay 9.99% interest when I'd only LOSE 1.5% interest if I took the money out of my emergency fund?

Of course, the trick is to replace that $300 over the course of the next few months so my EF is nice and healthy again.

March expense to income chart. . . .

Now that I'm a few months into 2009, I wanted to share my progress in a graphic way (I do love the charts, folks!) As you can see, my expenses in March climbed significantly, mostly due to a birthday celebration to which I contributed quite a hefty sum (it was worth it, by the way---this is a good friend, whose birthday I missed last year due to work).

And, the chart itself:



One thing that jumps out at me right away is that although I spent more money in March than I intended, I spent LESS than I had in January, while my income was higher in March as well. So, although my perception had been one of failure to control my spending, the reality is that I did just fine.

March zero based budget. . .

Whew! I finally put together the remains of my March zero-based budget, and it ain't pretty. I was dreading looking at the numbers in black and white, because I knew I hadn't done well in the 'Fun' and in the 'Miscellaneous' categories.

As you can see, I overdid my 'Fun' budget by $21.48 and spent a whopping $91.26 more than I had allocated in my miscellaneous category. I covered for this by taking away the savings ($60) I usually send to my account that covers my monthly trash pickup and water bill.

Although I did overrun my budget slightly, I was happy to see that I spent only 76% of my total income---the rest went to savings! Also, my spreadsheet shows that I ended up with $70.92, but in reality there was only $5.25 left in my checking account at the end of last month (I sent this to my savings account). Somewhere along the line, I 'lost' about $65, so I'll try to be better about accounting for every penny this month.

All in all, March was an expensive month (I overspent on a friend's birthday celebration) but I'm relieved to see that the damage is not as bad as I anticipated. Now, on to April!!

The Frugal Family Guide. . . .

Hey all, this is a late-day post to turn you on to a wonderful article I just discovered, in the online version of Newsweek. It's called The Frugal Family Guide, and although it's not really a 'guide' per se, it's a rather funny essay by a writer named Steve Tuttle.

Mr. Tuttle writes about his parents (who are in their late 60's, early 70's) and their lifelong commitment to frugality. For the senior Tuttles, frugality isn't just a reaction to the latest grim economic news. No, living thriftily (is that a word?) is just a state of mind, something that comes naturally, and has allowed them to send two kids to college, pay off their house (that they built themselves), and amass a rather large savings account.

THIS is what I aspire to. To live frugally not because I have to, but because it's the right thing to do. Mr. Tuttle's parents remind me of my grandparents (now in their 90's) whom I used to think of as 'miserly' but who re-used anything they could rather than replacing with a shiny new 'thing' (my grandmother still had her 50 year old working toaster when we moved her into an independent living facility). My grandmother can afford to live in a nice apartment with good nursing care and in close proximity to her children because she and my grandpa lived like the Tuttles.

Anyhow, this post was supposed to be a few lines intended only to introduce you to this article, but I'm so blown away by the simplicity and common-sense approach of it that I seem to have lost control a bit. . . . Enjoy!

Can you smell the fear?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A frugal bonus. . . .

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

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

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

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

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

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

7 frugal food tips. . . .

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

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

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

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