Category Archives: Frugality

Necessity is the mother of frugality

Tony will finish graduate school in May 2010, but after that he’ll have a semester of student teaching before he’s certified to teach. Right now he receives a stipend for teaching undergraduate classes, which he won’t receive while student teaching. Unfortunately, this means we’ll have to live on my income alone for about 7 months. The student teaching program is full time, and we’re hoping he’ll be able to work nights and weekends, but I don’t want to count on that considering the trouble he’s had searching for part time jobs in the past.

We’re also preparing ourselves for after the move. I’ve done a little research, and in the area where we’re moving, it looks like we can expect Tony to start somewhere between $32,000 and $35,000 as a high school teacher (according to what I read, he’ll be paid slightly more than a normal first year teacher because of his master’s degree and experience). Of course, this number is just an estimate. If you have any information about what starting teachers in the Indianapolis metro area make, by all means please pass it along!

I will continue to generate freelance income, but I won’t be working full time since we’re planning to start a family shortly after Tony finds a teaching job. Freelancing is feast or famine, so we don’t want to factor my income into our normal budget. That means we need to start planning now for a reduced income with a baby.

On top of all this, our savings goal has increased since we’d like to buy a house sooner rather than later.

To help us reach these goals, we’ve decided to reduce our monthly spending by about 5% and increase our total monthly savings amount by 25%. Put simply, that means we’re cutting about $150 from our monthly spending and adding it to our monthly savings.

I spent some time pouring over the budget. I determined that if we continue living on a cash budget, cut our weekly spending by $25 a week and make some minor adjustments in other areas, this is totally doable. If we hadn’t spent the summer on such a tight budget, I never would have thought this was possible. I thought we were saving as much as we possibly could, but after a summer of tight expenses, instead of feeling like we need more, I only see where we can cut.

In real terms, this means we’re cutting our grocery budget from $50-$60 a week to $40-$50. Our “shopping” budget, which covers household expenses like cleaning products and other miscellaneous items, is being cut from $20 per week to $15.

As we move into fall, we’ll increase our additional savings by another $50 when our electric bill drops from $100+ during the summer to $40-$60 a month during the cool winter months.

Over the next 8 months, this will increase our total savings by about $1500. More importantly, it will better prepare us for next summer and fall when we lose 1/3 of our total income. It will also make it easier for us to transition into a single income home in spring 2011 when I’m no longer working full time.

My point is this: if you’re looking ahead to a lower income, now is the time to make cuts. It’s always easier to transition slowly than it is to jump into the cold water. Don’t wait until you lose your income. Learn to live on less now so you can bank the extra money for the future.

Photo by jayd

Sales tax increases are another reason to be frugal

Last week, the state where I live (North Carolina) increased its sales tax from 4.5% to 5.5%. With local taxes, that means our total sales tax has increased from 6.75% to 7.75%. A 1% increase may not seem like a lot, but it can add up for big purchases. On a $1000 purchase, that’s an extra $10 tacked onto your total cost.

I’m not sweating it, though. Paying less money in sales tax is just another perk of frugality. Here’s why:

I don’t buy a lot of stuff.

Since we live frugally, we just don’t make a lot of purchases that are subject to sales tax. Most of our expendable income goes to groceries, which is subject to a 2% sales tax in North Carolina. Our budget only includes about $100 a month for entertainment and household expenses like toilet paper and cleaning supplies. That means at most we’ll be paying an extra $1 a month with the increase.

Secondhand items are usually subject to 0% sales tax.

When a friend or family member gives you a piece of furniture or other item, guess how much sales tax you pay? 0%. The same is true if you shop at garage sales or Craigslist. In some states, you don’t even pay sales tax at thrift stores, particularly if they’re affiliated with a church.

If you’re worried about sales tax increases, think about ways you can live more frugally overall. After all, the less you spend, the less you pay in taxes.

Overseas transaction fees give me a headache

We’re not going to start booking until January at the earliest, but right now we’re doing a lot of research for our trip to Europe in May. That means we’re tracking airfare, putting together a loose itinerary, and researching the logistical aspects of traveling to another country.

One of the biggest headaches of traveling to another country is money. The last thing we want to do is carry all of our money in cash. A lost or stolen bag could be catastrophic. Taking cash out of an ATM is expensive, so we also don’t want to withdraw a daily cash allowance. Traveler’s checks seem like a hassle, but using a debit card or credit card will result in wasteful overseas transaction fees.

We’ve determined that the best way for us to handle money will be to carry a small amount of cash in the local currency, and then use a credit or debit card for the rest of purchases. We’ll have cash saved for the trip, so we’ll pay off the credit card immediately when we get home, but we don’t want to be stuck with ridiculous overseas transaction fees.

What are overseas transaction fees?

Here’s how it works: If you use a debit or credit card in another country or with an international company, you pay a transaction fee of 2-3% to the bank. On top of that, you’ll pay another 1-2% transaction fee to the credit card company backing your card (Visa or Mastercard for example). These fees are in addition to any applicable sales tax on your purchase.

Check out this CreditCards.com article for current transaction fees on popular credit cards as of June. Here’s what we’d pay for cards we currently hold:

American Express: 2.7%
Bank of America: 3%
Wachovia debit card: 3%

If we spend $4000 total on hotels, food, and other expenses overseas, we’d be paying a total of $108 to use the American Express card. American Express is only accepted on a limited basis, so we might end up having to use our Visa Bank of America card or Wachovia debit card, which would cost $120 in fees. That may not sound like a lot, but we could do a lot with that money in terms of food or entertainment. If there’s a way to avoid paying it in fees, I’d like to try.

If we withdraw cash every day, we’ll pay $5 per ATM transaction plus 2.7%-3% for purchases we have to charge, like hotels. That’s $60 in ATM fees over 12 days, plus a fee to the bank that owns the ATM for each withdrawal (usually $2-$3) for a total of $96 minimum. It’s also likely that we’d pay $2 per transaction to Wachovia, bringing the total to $120.

How can we avoid fees all together?

Capital One is the only company that doesn’t currently charge overseas transaction fees. Capital One doesn’t charge a fee, and they even waive the fee imposed by Visa or Mastercard. We don’t have a Capital One card, so we’d have to apply and open a new account just for this trip.

So I’m torn. We’d pay off the balance immediately when we return home, but still. I don’t know how I feel about opening another credit card for this trip. Is it worth it to save a little over $100? When I think about spending $5000 on a vacation, $100 seems like chump change, but then I think about what we could do with that money in Europe. On a frugal vacation budget, $100 can do a lot.

My other concern is with the changes happening in credit card companies, it’s possible that Capital One will suddenly start imposing overseas transaction fees.

Like I said, we won’t be booking anything until January, which means we have a few months to wait and decide. But even if we apply for the card and book our hotel in January, that doesn’t mean Capital One won’t suddenly start imposing a fee before May. Then we’ll have a new credit card for nothing.

What do you think? Is opening a new credit card worth possibly saving $108-$120, or should we just suck it up, use one of the cards we have, and factor the fees into our budget?

Photo by andresrueda

Sign up for a FREE 6-week trial of Blockbuster by Mail

I personally use Netflix, but this deal is almost too good to pass up. Today first-time users can enroll in a six-week trial of Blockbuster by Mail ($26 value) for free!

Just go to Blockbuster.com, sign up for an account, and use the promo code groupon. Pay attention to the expiration date, though! If you forget to cancel your subscription at the end of trial period, your account will automatically renewed and charged for a month of service.

You can read the terms and conditions here. Enjoy!

Things to consider when making a big purchase

canon-xs Last weekend, I made a huge purchase. I bought a camera that cost almost a whole paycheck. Yikes.

We’ve been thinking about it and saving for months. I planned to wait until we saved enough, but I realized that I could buy it now with the money I’ve earned from this here blog (thanks for reading!) in addition to my savings. We felt ready to make the purchase. We thought it through, researched, and decided to finally take the leap.

Despite all of this, I still woke up last night in a cold sweat. We spent $750 on a camera. Holy cow. I thought about all of the things we could do with that money, especially since we’re still saving for our emergency fund and Europe and moving and eventually a house.

I calmed down when I reminded myself of all the steps we took to ensure this was a good purchase:

Ask yourself why you want it and what it will add to your life.

If you don’t need the item, then think about why you want it. I love to take photos, and they’ll be even more important when we have a baby. We have a point-and-shoot camera, but I want more control over my pictures. Photography is a hobby I’ve always wanted to pursue, but my lack of proper equipment was holding me back. This camera will allow me to pursue photography as a hobby and take high quality pictures of our memories.

On the flip side, several months ago we considered buying a TV. We have an old TV that works fine, but we considered getting an HDTV. We decided that it wouldn’t add enough to our lives to justify the cost. Our TV works, and we don’t care about the difference in picture quality that much, so a new TV wasn’t worth the money.

Do your homework.

Before making a major purchase, make sure what you’re buying will last and perform the functions you want. I thought about the type of photos I like to take, made a list of functions I needed, talked to some photographers I know, and read forums to determine which camera would be best.

I decided I needed a digital SLR camera to get the speed and control I want and a telephoto lens for the portraits and close-up shots that I like to take.

I chose the Canon Rebel XS. There are newer, pricier models, but the XS is suitable for me, so upgrading to a newer model isn’t worth the money.

Start making price comparisons.

I looked at used cameras, but resale value is so high that buying used in good condition would only save me about $50.

I could get the camera and an 18-55mm lens on Amazon for $500 without the telephoto lens. Adding a Canon brand telephoto lens added another $250, bringing the total cost to $750.

I found an amazing deal on eBay for the camera, three lenses (including a Tamron 28-80mm and a Canon 75-300mm) and a ton of equipment like memory cards, carrying case, digital card reader, tripods and other things that I don’t really need but may use as I learn more about photography. The total cost is $750.

I considered buying the camera with the 18-55mm lens for $500 and getting the telephoto lens later, so I broke it down by value. I needed a high capacity memory card ($25-$30) and camera case to protect the camera ($30). Ignoring all the other extras, that brings the cost of the lenses alone to under $200. There’s no way I’ll find two digital lenses, especially not a Canon telephoto, for under $200. Considering the huge list of extras in addition to the lenses, it was best to spend the extra $250 now. If I don’t use all of the extra equipment, I can always resell it to get some of my money back.

Don’t choose a bargain over quality.

For major purchases, it’s almost always worth it to spend a little more for the best possible quality. I hope to have this camera for years to come, which means the additional cost will be worth it in the long run.

I can’t wait to share my photos with you!

What are your “go-to meals” for hectic weeks?

On weeks like this one after we’ve been traveling or the weekend is too busy to run our usual errands, the last thing we want to do is plan meals and grocery shop on Sunday night or Monday morning. Unfortunately, these are the weeks when planning is most important. The refrigerator and pantry are shockingly empty and we’re too tired at night to be creative with dinner.

The mix of exhaustion, laziness, and disorganization is dangerous for your budget and your health. It’s nights like these when I’m most likely to say, “Forget cooking, let’s order a pizza.” But after a week of overspending and overeating on vacation, fast food is the last thing we need.

For weeks like this, I have a list of meals that are quick, relatively healthy, and simple to prepare. We usually try to be creative and come up with at least one new recipe a week. Not this week. We pulled our menu plan directly from our go-to meal list.

Here are some of the meals I add to my menu when I’m crunched for time:

Chicken quesadillas
Tacos
Bean and cheese burritos
Pasta with marinara sauce
Homemade pizza
Canned soup and sandwiches
Grilled cheese
BLT sandwiches or salad
Breakfast for dinner

These may not be the healthiest options in our recipe book, but they’re healthier than fast food and simple enough that we can cook them up with no hassle.

Kacie at Sense to Save has written about experimenting with batch cooking to make hectic weeks even easier on her. Foods like casseroles or soups can be frozen and heated up later.

How do you get through your craziest weeks without ordering in?

Winding down from a wonderful vacation

We’re home after a marathon 10-day trip to Indiana to see family and friends. Ten days, three cities, 2,000 miles, babies, puppies, family … we’re absolutely exhausted.

dogs

Above: Howie and Abby, my sister-in-law’s beagle puppy, take a brief break from their constant wrestling.

As we drove home, I found myself dreading the budget breakdown that always follows a vacation. We had big plans to be as frugal as possible, and we worked really hard at it, but inevitably there is always a little money spent on vacation. We treated friends to dinner to thank them for hosting us. We bought food and drinks on the road. We made a couple of very small impulse purchases at a record store in Indianapolis (about $10 for record albums to play on the used record player my sister’s husband generously gave to us).

blogger eli

Above: My adorable nephew getting an early start blogging.

We budgeted $400 for this trip including gas, food, and entertainment. We’re actually not far off that mark. Gas cost about $200 and we spent about $150 meeting friends for dinner, going out for drinks, and enjoying ourselves. The nice thing about staying with family and friends is that money usually reserved for a hotel can go to more fun.

We’re back now which means back to reality. Back to budgeting, cooking at home, staying in on the weekends, watching what we eat, and waking up early to exercise. No fun, right? But as hard as it is to get back into our routine, I find myself craving that stability. We’ve been living out of our suitcases for 10 days, bouncing from house to house all over Indiana as we visit family and friends, uprooting the dog every 72 hours. We’re all ready for some normalcy.

I’ve written before about how hard it is for me to get back into the swing of things after a vacation. That spendy mentality tends to stick around, especially as we start to come down from the excitement of vacation. We start to feel down and try to console ourselves by bringing back that vacation mentality — overspending and overeating.

But the sooner we get back into our routine, the easier it will be to overcome those feelings. I came back to work yesterday and Tony’s last year of graduate school begins tomorrow. I took yesterday off from the gym, but this morning I was up bright and early. I’ll likely catch up on laundry and tidying tonight.

While the winding down from a vacation can be a downer, I’m reminding myself of how nice it is to be back in the quiet of my own home, spending time alone with my husband, and living the quiet life that we love so much.

Traveling with pets without losing your mind

This week on our vacation to Indiana to visit family and friends, we brought our dog Howie along for the ride. Our families were both happy to accommodate him, and he’d rather be with us than back home in a kennel. But bringing a dog along on vacation comes with a long list of hassles.

Howie window

We took some steps to keep Howie happy and out of our hosts’ hair while saving our own sanity. Try these tips if you’re bringing your favorite family pet along for vacation:

Exercise, exercise, exercise.

If you think your dog has had enough exercise, put him on the leash and take him out again. If you have a young dog, it’s not possible to exercise him enough on vacation.

Howie is incredibly well behaved in the car — he usually just goes right to sleep as soon as we start driving. But we still stop every two hours on the road to let him stretch his legs on long car trips. We also took him for a run every morning when we were staying with family. Nothing is more stressful than an under-exercised dog in a strange environment. Without enough exercise, dogs are restless and whiny at best and downright destructive at worst. Make sure they’re spending the vacation as tired as possible.

Bring as much of home as you can.

When Howie was younger and sleeping in a crate, we brought it along on trips. Now we bring his dog bed, his favorite toys, and plenty of food. If you’re traveling with a cat, consider bringing a scratching post, cat toys and bed to keep them occupied and comfortable. Bringing a piece of home along with you will make them feel more secure in a strange environment, and the more secure they feel, the less likely they are to act out.

Don’t pawn your pet off on family.

I don’t know if you’ve noticed, but Howie is pretty much the most adorable dog ever. Consequently, all of our family members were offering to walk him and feed him and pet him. It’s easy to walk away and assume they’ll take care of taking him outside or disciplining him if he’s getting too rowdy. Be careful not to do that.

If you’re visiting family with your pet, don’t expect them to do the dirty work. Just because they’re enjoying the novelty of your furry friend doesn’t mean they want to scoop the litter box or follow your dog around with a poop bag. Don’t get too distracted to take care of your pet’s basic needs.

If your family or friends want to take advantage of the fun parts of spending time with a pet, let them. But when it comes to the dirty work, make sure you’re doing it yourself. If you expect someone else to take out the dog, you might end up with a mess on the floor, and your family won’t be so willing to welcome your pet next time.

Since I’m not a cat owner, I’d like to hear from those of you who’ve traveled with cats. How do you make it easier on your pet when you’re traveling?

Another frugal road trip

After our harrowing experience in Washington D.C. last week, we’re both a little nervous to get back on the road. But we’re heading up north to see our families for the next week!

Tony starts school again week after next, so this is our last chance to make a trip to see family until Christmas. We’ve already decided to stay home for the holidays this year since we’ll be saving money and vacation time for Europe, so we want to spend some time with family now.

Here’s how we’re planning ahead to make it healthy, frugal, and stress-free:

Frugal

We made these plans (and saved the money) months ago. We budgeted and set aside $150 for gas, and it shouldn’t cost much more than that. We’re bringing the dog, staying with family, packing food for the road, and making the trip in one day instead of stopping overnight and spending money on a hotel room. Snacks and meals for the trip are covered by this week’s grocery budget. This should truly be a frugal vacation.

Healthy

I’m putting some extra time in at the gym this week to make up for extra calories I’ll most likely ingest at home. We’ve made a vow to avoid fast food at all costs on the road. It’s a particularly bad idea when we’re traveling with the dog, because we have to eat in the car. Fast food makes it stink for weeks. Yuck. It also makes us feel horrible to eat fattening food, and then sit still in a long car ride.

Our grocery store deli makes delicious footlong subs out of premium deli meat and bread for only $4. We’ll pick one up on our way out of town on Friday, put it in a cooler, and eat it for lunch. For the drive back to North Carolina next week, we’ll probably stop at Subway for a $5 footlong.

We’ll be taking Howie out running every morning before it gets too hot to let him burn off some energy and burn some calories ourselves. Hopefully that will keep me from getting too out of shape before I return to the gym next Monday.

With cookouts and restaurant meals with family, I can’t guarantee I’ll make the best choices, but I’m determined not to let one vacation throw off all of my success so far.

Simple

Last month we took money out of our car savings to replace our tires and change the oil, so our car is all set for another road trip. We just renewed our AAA membership for the year in May, so we have access to roadside assistance and towing on the off chance that something goes wrong.

As always when we travel with Howie, we’ll be stopping every 2-3 hours to let him stretch his legs and pee. We’ll also bring a gallon jug of water and his water dish so he can stay hydrated. He’ll most likely sleep through the trip, but since it’s a 12-hour drive, we usually offer him water every time we stop to make sure he doesn’t get dehydrated.

We’ve put a lot of planning into this trip, so hopefully it will be more fun and less fiasco than last weekend!

Did you go on a frugal vacation this summer? Where did you go, and how did you save money?

Living Well on Less

Simply Frugal. Simply Healthy. Simply Happy.