Category Archives: Frugality

Where we’re going & how far we’ve come

Last week after I  mapped out financial goals for the next 3 years, I felt overwhelmed. Whenever I set a new goal, especially one as lofty as saving $20,000 for a house within three years, I go through a period where it feels impossible.

I have to remind myself of how far we’ve come. I remind myself where we were just three years ago — living paycheck-to-paycheck with an empty savings account.

I remember how I felt when I started this blog a year and a half ago. Simple goals like building an emergency fund, starting a retirement account, and saving for our move in three years on our meager income felt so far away. It might as well have been a million dollars.

I think back to last January when Tony and I started talking about our crazy plan to go to Europe. I wanted to make it happen, but I doubted whether we could save that much money in addition to our emergency fund and moving fund.

But step by step, dollar by dollar, we met our goals. We learned to spend less and save more without compromising our comfort. We learned that determination and good planning can make even the most difficult goals a reality.

When we finally completed our emergency fund and saved enough for Europe, I felt like I’d just finished my last final exam. I was relieved and proud. We’d come so far. That’s partly why I waited so long to set new goals. I wanted to revel a little — to feel like we’d finally made it — before starting over again.

It’s time to move on, though. There’s no finish line for frugality. There are always new challenges to overcome and new goals to accomplish. That’s part of the fun of it.

This is only the beginning, and we have a long way to go. With such a long road ahead of us, it helps to look back on how far we’ve come, and remind ourselves that each step is taking us closer to the next goal. Each time we hit a new landmark, we’ll be a little more stable, a little more settled, and a little more confident in our ability to get to the next one.

Photo by cdm

Financing a car vs. paying cash for an older vehicle

Let’s say you have $5,000 available to purchase a car, and you need it right now. You can technically afford to add a monthly payment to your finances, but of course that will take away from the amount you’re able to save each month.

You need to decide whether you want to use that $5,000 as a down payment for a financed car or use it to pay cash for an older car with a lot of miles on it.

Let’s look at some of the pros and cons of each:

Paying cash for an older car

Pros

  • No monthly car payment
  • More money to put toward savings
  • Lower insurance rates
  • Lower taxes

Cons

  • Higher maintenance fees
  • Unreliable
  • It’s a gamble. You may drive it for years with no problems, or the engine could die and leave you without a vehicle a few months later.
  • Depending on the age and type of vehicle, gas consumption is likely to be higher than a newer car.

Financing a used car

Pros

  • Certified cars come with warranties that promise reliability.
  • Less likely to have problems soon

Cons

  • Still a gamble. You don’t know how the previous owner cared for the car, so you could end up with a car payment and high repair costs.
  • Higher financing interest rates than brand new vehicles

Financing a new car

Pros

  • Guaranteed reliability through warranties.
  • If you’re the only owner, you can care for it diligently and drive it for 10+ years.
  • Possible tax incentives on cars with better gas mileage.
  • Lowest possible interest rates for financing.

Cons

  • High monthly payment.
  • High taxes.
  • High insurance rates.

I don’t really have an answer. To me, it’s a toss-up, and used cars are a gamble. You might save a lot of money, but you’ll end up funneling it back into the car for repairs. We haven’t decided what we’ll do for our next car, but we’re leaning toward financing a certified used car.

Here’s why:  I drove a lot of old beaters in high school and college. My dad is a relatively good mechanic, so this wasn’t a problem in high school. When I broke down, he’d pick me up, and get my car running again. But in college, I ended up stranded a lot with no choice but to tow my car to a garage and charge the repairs on a credit card. Ouch.

When we moved to North Carolina, Tony and I made the decision that we’d rather share one new, reliable car than have two unreliable beaters. So that’s what we did. And I don’t regret it. We bought a reasonable economy car, but it was brand new. Yes, there’s a payment every month, but I’d rather pay a car payment every month than wonder when I’ll be stranded again by a breakdown.

Many personal finance bloggers will say, “Yes, you’re likely to pay for repairs on a used car, but it still won’t add up to the amount you’ll lose in depreciation and interest on a financed car.” That’s true. But honestly? It’s not about the money for me. There was absolutely nothing I hated more than breaking down at a stoplight or being stranded in the cold after working late. I’d rather pay 100 car payments than deal with that again.

What about you?

Photo by smcgee

How a tight budget can be a blessing

Three years ago, we moved to North Carolina with a small nest egg but no real plans. Tony had a job waiting for him (an extremely low-paying teaching assistantship), but I spent three months looking for a full-time job in my field before I starting working part-time. We were frugal out of necessity. it’s scary to watch money leaving your account every month with no income. We didn’t know how to budget, though, and three months with no income depleted our savings pretty quickly.

Once I started working part-time, things were still extremely tight. During those 10 months, I learned most of what I know about finance out of necessity. Our limited income required that we prioritize our spending and avoid buying anything that wasn’t completely necessary. Frugality was easier then, because the temptation to spend wasn’t there. We were just trying to survive without getting behind on our bills.

Not only did we survive, but we paid off most of our credit card debt during that time. By the time I finally found a full-time job, though, our savings account was pretty much empty. We spent the next year and a half building it back up and saving for other goals.

Ever since our income increased, though, staying committed to frugality has become harder. Now that the need to plan and save isn’t quite so urgent, it’s tougher to make the right choices. Three years ago, if we overspent, we might not be able to pay our rent. These days, the consequences of overspending aren’t as concrete. It may mean that it takes us a little more time to buy a house or pay off our student loans, but we’re in no immediate danger.

Because of this mindset, I’m actually looking forward to hunkering down and going back into survivor mode after the move. I’m hoping that the months we spend searching for jobs will help us recommit to frugality, and once we’re finally in our own place building our savings again, we’ll have a renewed motivation to meet our goals quickly.

If you’re currently living in survivor mode, I have a little advice: Take advantage of this time without temptation and learn to be happy with what you have. Commit to this lifestyle now while temptation is low. As your income increases, don’t let your spending increase with it.

In my experience, tougher times can be a blessing. It’s a time to reflect on what’s really important in life, learn to be happy with less money, and develop habits that will help you save even more as your financial situation improves. As tight as I know things will be for us after the move, I’m looking forward to taking advantage of this opportunity to focus on our priorities.

How I saved $5 by reading a label

This week I came down with a cold. The same week I’m getting my wisdom teeth out, of course. I’ve already contacted my oral surgeon, and he says the mild congestion I’m suffering won’t affect my surgery tomorrow. Whew. I didn’t want to put it off another week.

But that’s not the point of the this post. I want to quickly tell you about my trip to CVS last night.

When I’m sick, the most effective medication for me is a blend of ibuprofen and decongestant. I don’t know why, but ibuprofen seems to work better for me than acetaminophen.

I stopped at CVS on my way home from work to pick some up. I’m used to paying high prices for even generic versions of this cold medicine. The cost was $10 for 24 pills.

I started checking alternatives to see if I could find something similar for less money. I looked at a box of generic Sudafed, which cost only $5 for 24 pills. When I compared the ingredients, I realized that the only difference between the generic Sudafed and the generic Advil Cold and Sinus was that the Advil included a dose of ibuprofen. The generic Sudafed had the same exact decongestant in the same amount (30mg of pseudoephedrine).

All this time I’ve been paying double for the generic Advil Cold and Sinus when I could have just picked up generic Sudafed and supplemented it with a dose of ibuprofen, which I always have on hand at home. This morning I took a dose of the decongestant along with a dose of ibuprofen, and it’s just as effective.

The lesson? Next time you’re browsing medications, be sure to compare ingredients and think about what you have on hand at home. Otherwise you could end up paying twice as much to buy something that’s already in your medicine cabinet.

Photo by zingersb

I’m about four years late on this one

It’s Thursday. Which means tomorrow is Friday. So how about something fun?

Today I’m sharing some free music. First listen to the adorable Drinking with You, a fun little song about the beginning of a relationship. And then download the hauntingly beautiful but depressing When You Go , an all acapella song about the end of a relationship.

Both songs are by Jonathan Coulton. This guy has been Internet famous forever now, but I never heard about him until October when my sister played some of his stuff for me. I love his music, but I also love his story. Instead of seeking a traditional recording contract, he built a simple website, and started posting a free mp3 of one of his songs every week. He quickly built a huge following, and now he’s a real-live musician without a day job. And the best part is he did it on his own terms.

It’s just another reminder of the power of sheer will and determination when it comes to getting what you want. No record deal? No problem. Make it happen.

I wish I’d have heard about this guy five years ago when the rest of the Internet did.

Photo by abletoven

Tips for applying for your passport

We’re setting sail for our cruise to the Bahamas in 44 days, which means we’ll need our passports much sooner than we originally anticipated for our trip to Europe in May. I already planned to take care of that this month, but booking our cruise really pushed me to do it sooner rather than later.

Week before last, we put together all of our documents and headed to the passport application office on Tony’s campus (you can search for the office nearest you here). I was really nervous about all the hoops we’d have to jump through, but I was pleasantly surprised to discover that it wasn’t that difficult. The whole process took about an hour and a half, and I was able to do it on my lunch hour. We filled out the application in the office and had our photos taken there, too. You could cut your time in the office significantly by filling out the paperwork ahead of time and bringing in your photos.

If you’re dreading your passport application process for an upcoming trip, keep these things in mind.

It takes 6-8 weeks to process your application.

If you’re planning to apply for a passport, I’m sure you already know this, but it’s really important to keep in mind. I didn’t think about the timeframe until after I booked our cruise, but luckily we were still able to get our applications in 8 weeks before our cruise. We’re cutting it close, but I’m optimistic that it will be okay. If you can’t wait 6-8 weeks, you can apply for expedited processing with a 2-week turnaround, but you’ll have to pay an additional $60 and cover the cost of 2-day delivery.

Bring your certified birth certificate.

You’ll need a certified state ID or driver’s license and your birth certificate. Some hospitals issue a “certificate of birth,” but you’ll need a certified copy from your county, city, or state to apply for a passport. Look for a notary stamp and a signature from a county or city official to be sure. Also, you’ll have to send the original copy with your application. They’ll send it back to you when they’re finished processing your application, but be prepared to be without your birth certificate for a couple months.

You’ll need a 2″ x 2″ headshot.

You can have passport photos taken at many drugstores and photo processing locations. Passport photo regulations require that the photo be recent and in color with a plain white or light-colored background. If you’re in a hurry, choose a passport application agency that will take the photos for you. We paid $8 each to have our photos taken at the office, which is comparable to prices I saw at drugstores.

To save time, fill out the paperwork ahead of time.

You can fill out the passport application ahead of time and bring your completed application to the office. I wish we’d done this, because I made a mistake on mine in ink and ended up filling it out twice.

Bring a check or money order.

The total cost for each passport was $100, but it doesn’t all go to the same place: $75 goes to the U.S. Department of State and $25 goes to the application agency for processing fees. The $75 passport fee is payable to the U.S. Department of State and sent along with your application, so it must be paid in check or money order. You must have a separate check or money order for each application. The passport agency allowed us to pay the processing and photo fees in one lump sum on a credit or debit card. If you use an online bank that doesn’t offer paper checks (like ING), you can get a money order at the Post Office for a fee of $1.10.

Track your application.

About a week after you apply, you’ll be able to track the status of your passport online.

Overall, the process wasn’t as difficult as I expected. Cross your fingers that we’ll get our passports with plenty of time to spare!

Photo by clappstar

In which we admit defeat in the classic struggle between man and expensive razor

About a year and a half ago, Tony and I were fed up with spending ridiculous amounts of money on his razors. He has quite a beard, and when he’s shaving every day he can go through razors pretty quickly.

We were pumped when we found what seemed to be a fantastic frugal alternative: the safety razor. He even wrote a post about it. It’s an ancient-looking steel razor that holds regular straight razor blades. These razor blades cost about 50 cents each — a much lower price than the razors he was buying at the time for $4 a pop. They’re also environmentally friendly. The steel razor blades are completely recyclable, and create much less waste than fancy plastic-encased replacement razors with moisture strips.

Shortly after he began using them, Tony’s sensitive skin became irritated. At first, he assumed it was just part of the transition. He was sure he’d get used to it.

We started buying him manly lotions in an attempt to heal his irritated skin. He was determined to make the frugal razors work. But everything we tried failed, and he was uncomfortable with the patches of red skin on his face and self conscious about them.

I told him he didn’t have to worry about the money. If he wanted to go back to his old razors, it was absolutely fine with me. But he’s stubborn, and he felt unnecessarily guilty about spending $15 a month on replacement razor blades.

When the weather turned colder, his face dried out even more. He finally agreed to buy some of his old razors, use them, and see if it helped. It did. Though he’s grown a beard for the colder months, he cleaned up his face with the replacement razor once and his irritated skin already looks improved.

Frugality is one big experiment. Whether you’re buying generics or trying to use less dishwasher detergent, the point is to live comfortably while spending the least money possible. But there comes a point when you have to accept that the experiment has failed. There comes a point when frugality makes you so uncomfortable that you have to admit defeat and drop a few extra dollars to be comfortable.

The good news is, there are a million other ways we can save money. We won’t even notice that $15 a month if we cut corners in other places. We tried to find a frugal way, but the alternative just wasn’t worth the money it saved. If $15 a month means that Tony is a little more comfortable in his own skin, then it’s money well spent.

Photo by photonoob

The cure for a case of wanderlust

Tony and I have spent a good deal of our young lives being responsible. We save our money instead of spending it. We take short weekend trips instead of traveling to exotic far-away lands. We spend our weekends at home watching movies instead of drinking at bars with other 25-year-olds.

I’m not complaining. This is the life that I want, the life that makes me happy. There’s only one thing about it one thing I would change: I want to travel more.

Neither of us was very responsible with money in college, but we didn’t travel, either. We didn’t go on extravagant spring break trips or study abroad. It remains my only real regret about the way I handled my education.

Now that we’re so close to finally settling down, it’s made me think a lot about this one aspect of young life that I feel I missed. I know that we’re still young. We still have plenty of time. But I also know how much will change.

Because we know what’s coming, we’re trying to pack a lot of young living into a very short time. It’s why we decided to go to Europe. It’s why we spent much of the summer taking short little trips to the beach and the mountains.

All of this is to tell you that Tony and I did something a little crazy last week. We booked a 3-day cruise to the Bahamas. We’re setting sail in just 52 days — roughly two months before the week that we’ll move and board a plane for Europe.

We paid in cash, and we can absolutely afford it even with the trip to Europe and the move coming up. And yes, we got a very good deal.

We can afford it because we spent the last three years hoarding money, saving as much as we could for what will come once we arrive in Indiana. We’ve worked hard to put ourselves ahead of the curve when it comes to our finances. It won’t hurt our long-term goals to make a few spontaneous decisions in the short time we have left as a married couple without children.

I’m not saying that we’re going to spend the next few months blowing our hard-earned savings. I’m well aware of our limits and our goals. But we’ve got a little extra money, probably for the last time in a long time, and I intend to have a little fun with it. The important thing is that we keep our goals in mind, and we enjoy ourselves without getting too far off track.

We plan to pack a lot of living into the next few months. :)

Photo by rednut

Countdown to Europe and moving — Four months to go

The end of the holiday season was particularly bittersweet for me. We’re moving and taking a trans-Atlantic vacation in 120 days, and it’s finally time for me to start doing all the things I’ve been putting off until “after the holidays.” It’s so exciting, but overwhelming, too.

I’ve been breaking everything down month-by-month to make sure I get it all done. Here’s what’s on my plate for January.

Moving

Last month I set a date for our move and booked the movers and the truck. We’re renting a U-Haul and hiring a moving company to load up the truck. I don’t know if I’ve written about this before, but honestly, even though loading the truck ourselves would be more frugal, hiring people to do it is the best $150 I will ever spend. We’re on the third floor, and it’s just us. Knowing that two professionals will be here to lug our heavy possessions down three flights of wind-y stairs takes a huge load off my mind.

Just before the holidays I also informed my boss and co-workers that I’ll be leaving in May. My plan was to make an announcement in March, but the other employee in my department is pregnant and due in June. I felt like it was only fair to let everyone know well in advance so they could plan for both of us to leave around the same time.

We’re also continuing to declutter, but that’s not going as well as I’d hoped. :( I’m hoping the New Year will motivate me to really start getting rid of stuff so we can lighten our load.

Europe

For Christmas, Tony’s parents got me a couple of frugal vacation planning books for Paris and London. This month I plan to read through them and make a to-do list based on the tips I find valuable.

Since our flight and hotels are already booked, there isn’t much left to do beyond deciding what to see in the cities and getting our passports. This month we’ll be taking care of the passports to make sure we have plenty of time.

Everything is coming together nicely. Here’s hoping it’s smooth sailing from here to May.

Photo by tahir