Monthly Archives: January 2011

How much is laziness costing you?

I’ve mentioned before that Tony and I use a credit card to purchase all of our gas. We pay the bill off every month before it accrues any interest, and we get 5% cash back on all fuel purchases. Since we’re not paying interest, the 5% cash back is basically free money, and keeping an active credit line is important for building and maintaining a good credit score. It’s win-win.

The credit card is through BP, and we only get 5% cash back on BP purchases, so 99% of the time we buy gas at BP. We only buy at another gas station if the cost per gallon is less than we pay per gallon with the 5% discount. Makes sense, right?

At the beginning of December, we started seeing signs at BP gas stations for a new rewards program. Fill up five times, and you receive a $10 gift card. Since we fill up at BP 99% of the time, it should have been a no brainer for us. Enrolling in their loyalty program would net us up to three $10 gift cards for 15 fill-ups in addition to our 5% cash back.

The only catch? You have to print a receipt and take it inside to the cashier to get credit for filling up.

I’m ashamed to admit that we didn’t start participating in the program until last week. It’s the end of January, and we’ve only gotten credit for two tanks of gas even though we did more driving in the month of December than we’ve ever done in a single month. We probably could have already received the $30 worth of gift cards considering all the gas we used last month with holiday travel throughout the state and the move.

The truth is, I saw the signs every time I filled up, and the only reason I didn’t take advantage of the promotion was laziness. It was cold, I didn’t want to drag the baby into the gas station, I was in a hurry and didn’t want to go inside. It was easier to pay at the pump and get on my way, so that’s what I did. But it cost me. We easily would have filled up 15 times in three months, but we probably won’t fill up enough in the next six weeks to receive all three of the $10 gift cards we could have gotten.

Granted, in the weeks after a newborn arrives, I think it’s easy for even the most frugal person to be lazy about saving money. But it’s unlike me to turn down any offer for free money, and that’s basically what I did by putting off participating in this promotion.

I see this type of thing all the time from less frugal people, too. Sometimes it’s easier to pay twice as much for an item at a gas station when you need it than it is to go to the grocery store where prices are much lower. Millions of people would rather pay higher prices for groceries across the board than clip coupons and hunt for deals. Many people spend hundreds of dollars a month on takeout because it’s easier than cooking every night.

Laziness is a harsh word, and I don’t think it applies in all cases. When time is limited, I think it makes sense to value your time over the money you could save sometimes. But my point is, how often do we choose the easy way when just a little bit of effort could save us a lot of money? If you’re taking the easy way out most of the time, you could be costing yourself a fortune.

It’s a question I’m asking myself a lot lately as we adjust to earning a higher income than we’re used to. I don’t want to be lazy about our finances. When you have a little extra money, it’s tempting to take the easy way out, but I’d rather work a little harder to save even a few dollars if that means building our savings and reaching our goals faster.

So it’s confession time: how often do you let laziness keep you from saving money? Think about it, and consider just how much you could save if you made a little extra effort in those situations the majority of the time. It could mean paying off your debt sooner, building your savings faster, going out to dinner once a month, or even taking a vacation once a year. When you make the extra effort to save most of the time, those dollars and cents add up quickly.

Are babies expensive?

Throughout my pregnancy, everyone who gave me advice agreed on a lot of things. I’d love the baby instantly. He’d grow too fast. He’d be worth all of the discomfort of pregnancy. (They were all right.)

There was one thing they couldn’t agree on, though. Half of them said to prepare myself because babies are SO expensive. The other half told me babies don’t cost much at all.

I was really curious to see who was right. Two months into parenthood, and I can see where the disagreement comes from. The answer: it depends.

Baby expenses begin long before the baby is born. We needed a car seat, somewhere for baby to sleep (we chose a bassinet for the first few weeks and a crib for later), clothes for the baby to wear, and diapers for the baby to, well, you know. The rest of the baby stuff is optional, but nice to have.

While it’s possible to buy secondhand, shop around for deals, or accept hand-me-downs (we did all three of those things), the truth is that the initial startup costs for baby can be steep. Thankfully, we have a huge support group of family and friends who gifted us with everything we needed.

Once the baby’s born, formula can be one of the biggest monthly expenses. If your baby doesn’t have special dietary concerns, off-brand formulas can provide the same nutrition for a fraction of the price. The cheapest option is breastfeeding (it’s basically free if you do it exclusively), and I’m incredibly grateful that it’s working out well for us so we can avoid the expense of formula.

Diapers are another huge monthly expense. Newborns use 8-12 diapers a day, so the costs really do add up. Buying diapers on deep discount and using coupons can cut the cost tremendously. So can cloth diapering. By hunting for deals, buying seconds (slightly imperfect but new diapers), and sticking with the economical prefolds and covers system of cloth diapering, I built a stash that will last throughout my baby’s diapering years for under $300. That works out to about $10 a month if the baby spends 2 and a half years in diapers. That number drops even lower if you use your diapers for a second or third child.

Our generous friends and family provided us with enough new clothing and hand-me-downs from Judah’s cousins to keep him clothed for the next year. He has enough outfits in each size that I can get away with doing just one load of his laundry every week. He wears the same things all the time, but that’s okay with me. When he grows out of the clothes we have for him, we can shop garage sales, thrift stores, and clearance racks to keep clothing costs down. Until he’s old enough to complain about it, he’ll be wearing the same handful of outfits every week.

These are just the expenses that you can control, though. The biggest expense for us (and one that we unfortunately can’t do anything about) is health insurance. When my husband and I were both covered by individual policies, the cost to add our son was going to be astronomical — $400 a month added to the $500 we were already paying to insure the two of us. My husband’s new job offers family insurance for about half that, which is a relief. But our health care costs are much higher as a family of three than they were as a family of two.

Later we’ll see changes in our food costs as Judah starts eating solid foods. There will also be education expenses and recreational costs as he gets older.

These expenses that you can’t control are the reason why it’s so important to save money on the expenses that you can control. Cutting costs where ever you can will make it easier to afford the expenses you can’t change.

My point is this: if you’re pregnant or want to get pregnant, how expensive (or inexpensive) your baby will be is entirely up to you. Like so many other expenses, the choices you make will affect your budget. If you buy everything brand new, pay full price for diapers and formula, and fill your baby’s closet with more clothing than he needs, the costs can be astronomical. But with a little careful planning and frugal know-how, your baby’s first year doesn’t have to affect your monthly budget that much at all.

$20 Amazon gift card for $10

You’ve probably already seen this, but I just wanted to pass it along just in case. Right now, you can get a $20 Amazon gift card for just $10 on the deal site Living Social. It’s available in all markets, and if three of you use my referral link, mine is free. :)

Don’t forget to pass it on to everyone you know! If three people use your referral link, yours could be free, too!

Goals for 2011

I’m surrounded by boxes once again, and in two days, we’ll move for the third time in eight months. It’s a stressful way to start the new year, but it’s really a great thing for our family. After eight months of frugal survival mode, we’ll finally be making enough to start building our savings instead of depleting it.

In addition to paid time off and a decent salary, we finally have employer-provided health insurance again after 8 months of COBRA and private insurance (Hallelujah!).

As I’ve written before, though, I actually find it harder to reach my goals when we’re living comfortably. A tight budget keeps me accountable and forces me to live frugally. More money means more temptation to spend frivolously. While this is more money than we’ve ever made, it’s still a very modest salary by today’s standards, and we’re going to have to stay focused if we want to stretch it to reach all of our goals.

To keep ourselves on track, I’m taking a break from packing to list our goals for this year and beyond.

1. Continue to live frugally.

Over the past eight months, we’ve had no choice but to live frugally. There wasn’t enough money available to go out to eat or buy things we didn’t need. Now that we’re earning more money, the temptation to spend will be greater, and we’ll have to stay committed to our frugal lifestyle.

2. Save at least 25% of our income.

The last year that we lived in North Carolina, we were saving about 30% of our total income. We’ll actually be earning more now than we did then, but we have loftier goals so saving will be a little more challenging.

3. Rebuild our emergency fund.

This is savings priority #1. Three moves, four months with no income at all, and four months earning less than we needed to pay our meager expenses have depleted our emergency fund to practically nothing.

4. Buy a second car.

We currently share a tiny economy car. It has served us well for the past four years, but now that we have a child, it’s a little cramped. In North Carolina, I drove the car to work and Tony was able to take public transportation to work and class. Now that we’re living in a city without reliable public transportation (and we’re living about 15 minutes from Tony’s job), sharing a car will be a little more difficult. So we’d like to invest in a second car so Judah and I aren’t stuck at home all day.

5. Buy a home.

We’re definitely renting for the first year in our new city — and likely the second year as well. But now that it looks like we’ll be settling down for a few years, I want to start making plans to become homeowners. That means meeting with a mortgage broker to find out what we need to do to get our credit in order and ramping up our savings for a down payment.

6. Pay off our student loans.

Becoming debt free is still pretty low on my list of priorities. I do plan to increase our monthly payments on these debts, but I’d like to wait until we’re homeowners to really buckle down and pay them off.

7. Increase retirement savings.

As part of his benefits package, Tony’s employer will be matching his retirement savings up to a percentage. We both have Roth IRA savings accounts as well. I will continue to put money earned through freelancing and other money-making projects into my account. We’ll also decide how much of Tony’s salary to contribute to his employer-provided account tax free.

8. Open a college savings account for Judah.

We likely won’t be too aggressive about saving for Judah’s college fund at this point, but I’d like to get the account in place so his grandparents can contribute if they’d like and we can put some money away when it’s available.

I’m so excited to finally have a bit of money to work with, but it’s not going to go far considering all of our goals. We’re going to have to be extremely focused. Stay tuned to see how we do!

Photo by dmachiavello

2010 in review

This has definitely been the craziest year of my life. It wasn’t until I started compiling links for this post that I realized just how much has happened this year.

At the end of 2009, we booked tickets for our trip to Europe.

In January, we started putting together the details for the trip and planning to move. I also started training for my New Year’s resolution — running a half marathon. Pregnancy prevented me from reaching that goal, but I did become a real runner. We knew that we’d be starting a family very soon, so we took advantage of our last few months of freedom and booked a spontaneous cruise to the Bahamas.

In February, I realized that a tight budget can be a blessing. I also reflected on our accomplishments and considered how to stay relevant in my job even though I’d already turned in a resignation.

In March, we started looking for a subletter for our apartment. We went on a cruise to the Bahamas. I realized just how important a savings account can be. I also ran my first 5K.

In April, I discovered I was pregnant (but I didn’t announce it here yet). The pregnancy combined with our impending move pushed my stress level to the limit, but I reminded myself that there’s nowhere you can be that isn’t where you’re meant to be. I got a lot of flack for my confession that we’re in no hurry to be debt free. And after three years, we packed up our apartment in North Carolina and headed home to Indiana.

In May, I announced my pregnancy! I didn’t post much else that month since we were gone for two weeks in Europe.

In June, I recapped our European vacation. I also complained a lot about pregnancy. Tony accepted a new job in Fort Wayne, Indiana, and we started planning to move again. I knew money would be tight, so I came up with a game plan to tighten our budget.

In July, we found an apartment and moved to Fort Wayne. We started shopping for baby stuff. We found out that our baby is a boy! We made a list of essential baby items. And I realized just how much of our home was purchased second hand.

In August, I struggled a lot with pregnancy. I started quite a bit of controversy with my post on luxury vs. necessity. We started making plans to pay for our baby’s education.

In September, I came up with our cloth diapering game plan. I transitioned to a work-at-home career. I examined the hidden costs of small-town life. And we were gifted with a boatload of baby clothes from Tony’s yard sale master grandmother.

In October, I reminded myself of everything I have to be thankful for. We also finished Judah’s nursery!

In November, I finally posted a self portrait of my huge pregnant self. I cleared up some common misconceptions about midwifery. I looked into our options for insurance (oh, thank GOD we don’t have to worry about this anymore). And we welcomed our baby boy!

And last month, I shared my birth story. I began adjusting to life with a baby. We also found out that we’re moving again, but this time it’s for a fantastic full-time teaching job.

Whew. Three moves, two big vacations, and a baby. Let’s hope 2011 is just as great, but a lot less stressful.