Monthly Archives: December 2008

Reflecting on my first frugal year

Today is the last day of my first full year of frugality. I’ve only been blogging for about half of it, but we’ve spent all 12 months of 2008 cutting costs, saving, and pay down debt.

I’ve learned much more than I can confine to this post (you’ll have to head into my archives for some of the highlights). But here’s the big stuff I’ve learned in the past 12 months.

Budgets aren’t limiting — they’re freeing.

Before I started budgeting, I felt guilty about every extra penny I spent and stressed that I wouldn’t be able to cover the necessities. Now I know exactly what I can afford to spend, and I know what I need to leave for the necessities and savings. A little money goes a lot further when you budget.

We need much less money to live comfortably than I thought.

Before we moved here, our combined income was almost twice what it is now. But we always felt broke because we were blowing our money on restaurants and unnecessary purchases. I couldn’t imagine living on our current income then.

With a little discipline, though, we’re able to live a richer life on half the money. We still do all of the same things we used to enjoy (like movies, eating out, and books), we just enjoy them less frequently or find frugal ways to enjoy them for little or no money. Now we have money leftover for savings and debt repayment.

We actually “need” very few things.

Our ideas of needs and wants were severely out of whack before we started living frugally. Now we know that we don’t need two cars; we don’t need to own a house; we don’t need new clothes every other month. All we really need is each other, healthy food on the table, and a warm place to sleep. Once we recognized the difference between needs and wants, we were able to set priorities so we could still enjoy some of our wants without interfering with our long term goals.

Realizing how little we actually need also gives me great peace, especially in this economy. By eliminating extra wants, we could cut our monthly spending in half in the event of a financial emergency.

Stress free finances are the greatest luxury of all.

There was a time when I thought skipping weekly meals out and entertainment spending would mean getting less enjoyment out of life. Boy, was I wrong. I enjoy life so much more now that we’ve cut those things out, because I no longer feel stressed and scared about my finances.

It’s been a fantastic year, and I’m anxiously looking ahead to next year’s challenges and successes. I hope to learn even more!

Avoiding the pressure to have fun (and spend money)

photo by yoniamir

As much as I love the holidays, I breathe a sigh of relief when Christmas is over. This year I managed to escape the pressure to spend a ton of money on gifts and entertaining. Instead, I found frugal alternatives to extravagant shopping to show the people I love that I care.

Now comes the pressure of New Year’s Eve.

The older I get, the less pressure I feel. But there was a time when all of my friends were heading out to fancy, expensive parties to ring in the new year. All dressed up in new clothes, they’d drop $50 a person on tickets to these parties or head out for expensive nights on the town at fancy restaurants.

One year in college, Tony and I gave in to the pressure. We packed some party clothes and headed to the city with some friends. I have no idea what we spent after travel costs, hotel, food, and a night on the town, but I know it was a lot. The worst part was that we were pretty miserable the whole time. It was freezing, and every place in the city was charging $50-$100 just to walk in the door. We ended up going back to the hotel at 9 p.m. and watching the ball drop in our pajamas … something we easily could have done at home for free.

I know many of my readers will be celebrating the new year with young children this year, so you may not be feeling this pressure. If you are feeling pressure, though, my advice is to resist it!

Instead host a small get together or a movie night. You’ll have plenty of time to go out on the town in the coming year if that’s what you want to do — and you’ll spend a fraction of what you’d spend on New Year’s Eve.

Two years ago, Tony and I stayed home in our pajamas and enjoyed a 24-hour “Seinfeld” marathon. We made a lovely dinner, and toasted to the new year at midnight. It was the most fun I’ve ever had on New Year’s Eve, and it cost practically nothing.

What’s your favorite frugal New Year’s Eve activity?

Guest post from a new investor looking for advice

This is a guest post from one of my most frequent commenters, Bobbi. She doesn’t have her own blog, but I hope she’ll considering starting one now! There’s no better time than the new year!

I’m also going through a similar dilemma with my year-end bonus, so I can definitely relate. Please weigh in and help Bobbi make a decision about what to do with this money and how to start saving for retirement now.

First, I would like to say that I feel truly blessed to have a job in these hard times, much less to have received a “year end” bonus from my employer. Thank you Bob! Second, thank you to “Living Well on Less” for letting me guest post. This is my first. :)

A little background: I am a mid-40 something woman with a grown daughter. I don’t spend more than I earn (anymore), and I work for a small business that has been in business for 10+ years. The business is doing pretty well in spite of this crazy economy (we are very versatile in what we do). However, I do not have a 401k or retirement at all so I am trying to build my own. I have no mortgage, so I am able to save every month.

My dilemma is what should I do with my bonus ($2,000) and I am hoping your readers can give me some advice. :) I am not an investor right now, but one of my goals for 2009 is to learn more. Right now I need to do something simple. These are the choices I am considering:

ING savings account – 2.75%
FNBO savings – 3.252%
My Credit Union ‘daily interest’ account – 1.29% (daily)
24 mo CU CD – 4.69% (12/09 maturity date)
IRA – Roth or standard – ?
I have a credit card @ 0% interest until March with a balance of $1500.
Car loan around $19,000

I don’t know much about Roth IRAs and I’m not even sure I can open one with this amount. I am leaning toward taking half and paying on the credit card and putting the other half in some sort of savings. I would love to hear what your readers would do or if they can give me more information on the IRAs.

Thank you and happy holidays to all!

I recommended that she pay off that credit card debt and start the new year with a clean slate! What do you think she should do? And can anyone give her some advice on the best way to save for retirement when you’re getting a bit of a late start?

Taking advantage of after Christmas sales today? Not so fast.

I’ve never been a fan of Black Friday. Instead, I wait until all the holiday hubbub is over to find the best deals.

It’s no secret that there are usually a ton of sales this time of year. Stores that overstocked for the holidays are trying to make room for new inventory by dropping their prices.

However, I generally avoid big ticket items in the days after Christmas. Why? I’ve found that prices fall even further in the bleak retail month of February. You may see sales on big ticket items right after Christmas, but the prices are nowhere near rock bottom. Retailers are counting on post-Christmas shoppers with gift cards to spend.

If you’re planning on dropping a big chuck of change, even if it is holiday gift money you’re spending, do yourself a favor and wait a couple months.

Smaller electronics and appliances that were overstocked for Christmas like DVD players, computers, and small kitchen appliances are likely to have big discounts this week. If you’ve been in the market for these items, now may be the best time to buy. Make sure you do your homework, though. Just because the deal looks good doesn’t mean it’s the best deal out there.

And don’t forget, now is definitely the time to shop for the holidays next year. We didn’t buy any holiday decorations this year, because we bought them last year at drastically lower prices (about 75% off). Then we threw them into storage to use this Christmas.

Look for holiday decorations, greeting cards, scented candles, artificial trees if it’s time to replace yours, and other holiday items that retailers are practically giving away. Now is also the best time to pick up calendars for next year. But hurry! The best items never stay in stock for long after the holidays are over.

Merry Christmas!

Photo by sideshow blues

I hope you’re all enjoying a safe and happy holiday. Now is the perfect time to take a step back and think about all the people and things that are truly important in your life.

Here’s what I’m thankful for this holiday season:

Seven months of marriage to my wonderful husband, who will be with me every step of the way for the rest of our lives. He’s been incredibly supportive and willing to hop on board the frugal train from the beginning. I’m so thankful for our shared goals and his willingness to make sacrifices to help us reach them.

My parents, my sisters, their husbands, and my healthy nieces and nephews. I don’t see them as much as I’d like, but I’m thankful for their well being and their presence in my life.

My new in-laws who accepted me completely as part of their family long before it was ever official and have provided us with endless support and love.

A job that I enjoy (most days) where I’m learning a million new things every day.

An unexpected career in a field I didn’t know existed before I was hired at my job, but that I’m so excited to be a part of now.

A steady paycheck that allows me to pay all of my bills on time, put food on the table, and save for the future.

Frugality and budgeting. Without it, I would still be financially lost and overwhelmed with no goals and no plan.

The people who read my blog. This blog has been such a huge part of our financial journey so far. I truly love blogging, and I’m thankful to the people who take the time to read it. Without you, I’d be talking to myself. :)

The coming year and its endless possibilities.

I hope you’re all taking the time to count your blessings this holiday season. Merry Christmas!

Guest post: Cook an elegant meal for 6 for $30

This is a guest post from Chris Ambrose. His cooking and entertaining blog, This Guy Cooks, is full of great tips for entertaining and cooking gourmet meals on a budget. If you’re struggling to come up with last minute meal ideas for Christmas or New Year’s, this great menu could be your solution.

First I would like to thank Karen for letting me guest blog on her site over the holidays. I know that this has been a tough Christmas financially for lots of people this year. With all the doom and gloom out there about the economy, just about all of my friends and family are tightening the old belt over the holidays.

As Karen wrote in one of her previous posts, the holidays are supposed to be about being with your friends and loved ones and the wonderful memories that come from those times. In my family, it’s not Christmas without my Mom’s sticky buns. Both my sister and I are in our early 30s, and to be totally honest that’s all we really care about. I have no idea what I got for Christmas when I was 8, but I can tell you that we didn’t have sticky buns that year because Mom burned them.

While things are a bit tight for everyone this holiday season, please don’t pass up on to spending time with your friends and family because you think you can’t afford it. I have come up with a elegant dinner menu for 6 people that you should be able to do for under $30. Hopefully this helps you continue to have those wonderful memories and experiences over a great meal.

Dinner Menu

Roasted Pork Loin with an Apricot Glaze

Roasted Sweet Potatoes and Onions

Spinach Salad with Mandarin Oranges and a Honey Mustard Dressing

Vanilla Ice Cream with Caramel Sauce

Sweet Potatoes

Preheat oven to 400 degrees. Peel and cut 2 large sweet potatoes into 1 inch cubes. Slice a half of a onion into roughly quarter inch slices. Toss the onion and sweet potatoes with salt and pepper, cumin, red chili powder, a dried herb of your choice (rosemary goes nicely). Place on a cookie sheet or roasting pan and put in the oven for 45 minutes to an hour until the sweet potatoes have finished cooking and are soft to the touch.

Pork Roast

Mix together a dry rub for your pork loin (about 3 lbs. roast) consisting of salt, pepper, dried oregano, and cumin (remember with cumin a little goes a long way!).

Heat a tablespoon of olive oil over medium high heat in a skillet (love to use my 12″ case iron pan for this). Place the spice rubbed pork loin in the skillet and brown on all sides.

Once it’s browned on all sides, place it in the oven for about an hour or until you have an internal temp of 150 degrees.

For the glaze, take about a half a cup of apricot jam (peach also works well), and heat it in the microwave or on the stovetop. After the pork has been in for 30 minutes, brush the pork with the jam. Repeat this again after you take the pork out of the oven. Once the pork is finished let it rest for 10 minutes before carving it.

Salad

For this salad I normally just get a bag of pre-washed baby spinach and a can of mandarin oranges in light syrup. For the dressing just whisk together Dijon mustard, olive oil, red wine vinegar, and honey.

Dessert

This is just a simple dessert. Pour a caramel sauce over a good quality vanilla ice cream. Feel free buy the sauce at the store or go ahead and make your own. It’s pretty easy.

Wine

I think that a Syrah would stand up nicely to the pork and fruit flavors of this dish. One of my favorite value Syrah blends is the 2006 Penfolds Kanooga Hill Shiraz/Cab blend. You can normally pick it up for about $7.99.

Check out Chris’s blog for more recipes & entertaining tips!

Hitting the road for the holidays

I’m headed home to Indiana tonight to see my family for the first time in 6 months. Yay!

This is my first real bloggy break since I started “Living Well on Less” five months ago. I’m feeling a little anxious about taking so much time off, but you won’t forget about me, will you? :)

I planned on having a post scheduled for every day that I’m gone. Ha. That didn’t happen. Holiday stress and travel plans kept me from planning ahead that far. I did manage to get something scheduled every other day, though, so I hope you’ll stop by over the next couple weeks.

While I won’t have time to post, I will have Internet access, so I’ll be popping on once a day or so to moderate comments, etc.

I hope everyone has a happy and healthy holiday. See you next year!

Tempted by the end-of-year bonus

I wasn’t expecting to receive a bonus from my employer this year. We’re in a recession, after all. So imagine my surprise when I received a bonus of about a week and a half’s pay. That’s quite a lot of money considering how little we spend.

I find that extra money is a lot easier to control when it’s expected. For instance, we know we’ll receive a tax refund this year. We’ve been anticipating it all year, and we already know where it’s going (savings).

However, when someone hands you a check out of nowhere, it can be tempting to blow it. After all, I was doing fine 5 minutes ago before I received the money. It’s not like I’ll miss it if I just spend it, right?

I have a feeling that no matter how committed I am to frugality, I’ll always have these moments of temptation. In that moment of weakness after I looked at the amount on the check, I started thinking about new furniture, a new TV, and a thousand little, inexpensive things I could use this money to buy. It would be a lot of fun to just blow this money. But then it would be gone, I wouldn’t be any closer to reaching my goals, and I’d regret it.

I quickly reminded myself that we’re in debt, and we’re nowhere near reaching our financial goals. Blowing money on things we don’t need is a good way to keep ourselves from reaching those goals.

So what is the practical side of me considering using the money on? Here are some thoughts I’ve had:

Summer fund

Two months of the year, Tony doesn’t receive a paycheck for teaching. He’ll find a part time job, but chances are it won’t pay as much as his monthly stipend. Last year we adjusted our budget and tightened things up to accommodate for our lower income. I’m considering throwing my bonus into a savings account to help us a little during those summer months of lower income.

Emergency fund

Our emergency fund is about 1/3 of the amount we want. This money could help us beef it up a little.

Debt

This is the least appealing option. After all, my bonus is dwarfed by our $60,000 in student loan debt. However, every little bit does help.

Retirement?

This is a tough one. Tony and I are 24 and 25, and neither of us has a retirement account. We’ve wanted to open a Roth IRA for some time, but it has taken a back seat to debt and savings. I’m considering using this bonus to jumpstart our retirement saving. While I don’t think it’s enough to open an account (I think I need at least $3,000 for that, but I’m not sure), it could at least get us started until we have enough saved to transfer it to a Roth IRA.

While I really want to get started on retirement saving, I’m hesitant since we are considering moving in a year and a half. We really need all of our savings to be liquid so we can use some of it for the move if that’s what we decide to do. So I’m leaning toward putting off retirement savings for another two years until we’re settled down somewhere.

I could use some advice. What would you do?

Start your after Christmas shopping today

Many of you are probably eagerly anticipating the great after Christmas deals this year. You may not have to wait until December 26 to get started, though.

Today is the deadline for most online retailers to ship items by Christmas. Even though the holiday is a few days away, online after Christmas sales will start tomorrow.

Most people are already done Christmas shopping (especially online), and they won’t start shopping for post-holiday deals until this weekend. Get a head start online in the next few days before all the best stuff is sold out!

Remember, though, only shop the deals if there’s something you genuinely need. You’re not saving anything if you’re only buying it because it’s on sale!