Category Archives: Money Management

Living life under the frugal microscope

Since the economy tanked, it’s become a little easier to live a frugal lifestyle without facing judgment. No matter how bad the recession gets, though, we still face people who just don’t get it. We’re constantly answering rude questions about how we choose to live our lives.

“Why are you throwing your money away on rent when house prices are so low?”

Because we don’t have money for a down payment and we’re not ready to lock ourselves into a mortgage anyway.

“You mean you share a car? Why?”

We don’t want to take on the expense of an additional car when we can easily survive with one. Not only would another car mean an additional car payment, it would also mean more insurance, more gas, and more emissions.

“What do you mean you don’t go out to dinner or buy yourself things? You work too hard not to enjoy life.”

We do work hard, but we’d rather save for future goals than spend all of our money today on things that matter less to us.

“Why wait for the things you want? If you want to take a vacation or buy something, just charge it now and pay it down later.”

I’ve lived through the stress of high interest credit card payments. No thanks.

It’s frustrating to face this judgment from people around us. Our closest friends and family are supportive, but we still face a handful of acquaintances that don’t understand our choices. Instead of accepting that we’ve chosen to live differently, they treat us like we’re deprived and practically living in poverty because we don’t make the same choices they do.

I must admit that it can be tempting to give in. I would love to eat out a couple times a week, refurnish our apartment now, take off this summer for Europe instead of waiting another year, take advantage of a housing market that’s pretty much bottomed out. But I know we’d never reach our goals if we gave in, and those goals are more important to me than getting what I want right now.

Fighting the temptation is easier than facing the judgment, though. Maybe someday I’ll be that person that truly lives the life I want to live without caring what others think, but for now it’s just annoying.

I feel like living the frugal lifestyle puts us under a microscope. Because our choices are different, people feel like they have the right to comment on things that are none of their business.

The worst part is, when I answer their questions, they tend to act defensive. I’m not judging their choices, and would never compare their situations to my own, but when they ask me why we live the way we do and I explain myself, there is always a feeling that I’m judging them for not saving, living on credit, or taking on a mortgage they probably can’t afford.

How do you handle the frugal microscope?

Planning ahead to keep cooling costs down

summer-fan
Photo by snapapicture

This may seem premature depending on what part of the country you live, but it’s already time for us to start thinking about summer cooling costs. The temperature here over the weekend was a beautiful 75-80 degrees. However, because we live on the third floor, a balmy 80 degrees outside usually means an uncomfortable 90 degrees in our apartment.

Last year we made it until the beginning of June before we turned on the air conditioning. Using fans and open windows, we were able to keep our apartment reasonably comfortable. On the hottest spring days last year it wasn’t pleasant, but it was bearable. We’d like to make it that long again this year.

Over the weekend we spent $25 on a new fan for our bedroom. It’s portable, so Tony will be able to bring it into the living room where he works during the day or into the kitchen when we’re cooking.

Without air conditioning or heat, our electric bills are typically $45-$50. Once we turn on the A/C it will at least double, and the cost to cool our apartment will probably peak at $150-$160 in July and August. The temperature will probably remain in the 80s through October. Ugh.

I complain about the cost to cool our apartment in the summer, but our monthly average actually isn’t so bad. Our heat bills are pretty low in the winter. In 2008, we paid a total of $1,019.67 in electric bills for our 900-square-foot apartment. That works out to about $85 a month on average. Not too bad when you look at the big picture, but it’s still painful to see our electric bill triple in the summer.

Here are some ways we reduce the cost to cool our apartment:

  • Keep the thermostat set at 80 degrees. We try to keep it set at the lowest temperature necessary to keep humidity out and stay comfortable, but not frigid.
  • Close the vents in the guest room and keep the door closed so we’re not cooling a room we rarely use.
  • Keep the blinds closed in the afternoon to keep the temperature down.
  • Use fans throughout the apartment.
  • Minimize oven use, especially before sunset.

We’ll save $100 by waiting until June to turn on the A/C, and hopefully utilizing these methods throughout the summer will reduce our costs somewhat even after we turn on the air conditioner. Minimizing air conditioning also minimizes our energy use and carbon footprint, which is good, too!

I wish we were tough enough to make it through the entire summer without air conditioning, but temperatures reach 100 degrees frequently where we live. We were without air conditioning for three days when we first moved in at the peak of the summer, and it was too hot to do anything but sit in front of a fan covered in sweat. And let’s just say my husband is not a pleasant person to be around when he gets too warm. I’d rather have a high electric bill a few months out of the year than a crabby husband.

How do you keep cooling costs down in the summer?

My biggest financial mistakes in college & what I learned

Now that I’m frugal, it’s hard not to look back on the choices I made in the past with regret. Luckily, I came to my senses pretty early in life. I could have done a lot more damage throughout my 20s if we hadn’t decided to change our lifestyle before we got married. But I’d be a lot better off if I’d avoided the mistakes I made in my teens and during college.

In the hopes that others may learn from my mistakes, here are the biggest financial mistakes I made before and during college:

I didn’t save for college.

I got my first part time job at 15 years old. I paid for my own car insurance and gas, but other than that I had no bills or responsibilities. I didn’t save a single penny. Where did my money go? I blew it on stuff that I didn’t need.

What I learned: Plan ahead for the things you want. We’re saving now so we can pay cash for our trip to Europe, we’re already saving for retirement, and we’ll start saving early for our children’s college educations.

I didn’t apply for scholarships.

I only applied for a couple scholarships. My grades were above average, and I was active in the school newspaper. If I had taken scholarships more seriously, I would have qualified for at least a few.

What I learned: A little extra work can save you a lot of money. Scholarship applications are the college equivalent of coupons, menu planning, and other frugal pursuits.

I took out private student loans to cover living expenses (and lived extravagantly).

My parents paid my rent, and federal loans covered my tuition. I was responsible for food, car insurance, and utilities. My job at the student newspaper took up a lot of time, but I managed to work part-time my junior and senior year. If I had worked more and lived frugally, I wouldn’t have needed to borrow high-interest loans. Now I’m stuck paying $20,000+ at 8%.

What I learned: Don’t borrow to live a lifestyle you can’t afford. It also taught me the importance of fully understanding all of my financial decisions before making them. I didn’t know what I was getting myself into, and now I’m paying the price. I wish I could take back my decision, but I’m stuck with these loans. Forever.

I ate out constantly.

At least 75% of the money I spent in college went to restaurant food. This wasn’t good for my bank account or my health.

What I learned: Eating out is expensive and unhealthy! Not only did I drain my bank account, but I gained weight. I appreciate how little we spend on food and how much healthier we are now that we menu plan and buy groceries.

I charged up credit cards and only made minimum payments.

Some of my credit card debt was due to a car that broke down every other week one summer. I didn’t have the money to pay for the repairs, but I had an “emergency” credit card.

Only $1,000 of my $5,000 in credit card debt went to car repairs, though. The rest? Couldn’t tell you. I have no idea where that money went. Probably pizza, clothes, DVDs, and bar tabs. I never missed a payment, but I only sent the minimum. It wasn’t until I graduated, after three years and who knows how much interest paid, that I got serious about paying them off.

What I learned: Plan ahead for emergencies and avoid credit cards. I lived in fear that my car was going to break down because I knew I didn’t have money to cover it. I feel so much better now with an emergency fund. It also taught me about interest rates. You can make minimum payments for your whole life and never make any headway. I’ll apply this lesson someday when we have a car payment and mortgage.

It could have been a lot worse. I had friends with twice as much student loan debt and $20,000 in credit card debt. Yikes.

What are the worst financial mistakes you’ve made and what did you learn?

How much money do you need?

This question has been floating around the blogosphere and beyond forever, but I’ve never really taken the time to answer it — not on my blog or even for myself.

We all dream about one day having enough money that we don’t have to worry about it anymore. But how much money would it take to get there?

Here’s what I’d need:

  • Student loans: $60,000
  • Home: $300,000? (I’ve never actually looked into how much we’d need for a home since we’re so far from buying one, but this seems like a fair estimate for a nice home in a good neighborhood.)
  • Cars: $40,000 (for two reliable economy cars)
  • Living expenses: If we invested $600,000 at a return of roughly 8% per year, it would net $48,000 a year. Without a mortgage, debt, or car payment, that would be plenty for us to live comfortably even after taxes.

So $1,000,000 would be enough money that we’d never have to work again. We’d probably make a little money writing, but the point is we wouldn’t have to work to live. Isn’t that a nice thought? I’m surprised that’s all it would take to sustain us for the rest of our lives.

How much money would you need?

Playing financial roulette

Last week our debit card was declined.

We had to pick up a few things at Target for my trip on Thursday night. The total was less than $15. When the cashier told us the card had been declined, we asked that he run it again. Declined again. Isn’t it scary when that happens?

We gave him another card, which cleared, but I was panicking by the time we got out of the store. I knew exactly how much money should have been in our account, and there was no reason for that charge to be declined. I was terrified that our account had somehow been hacked, emptied by an identity thief.

But could it have been my mistake? We recently received our tax refund, and I’d been moving money around between our checking and savings accounts. Had I moved too much? Would my mistake cost us?

When I finally checked our bank account, we saw what happened. Tony had somehow mixed up his debit card for our joint account with the one for his personal account. The cards look the same (except for a mark on the back he uses to differentiate them), but the balances are drastically different — his personal account usually holds under $200. The mix-up happened at some point before he paid for our new tires, so by the time he used his personal account debit card at Target the account was overdrawn.

When Tony realized what he had done, he panicked. “Are we going to be charged overdraft fees?” he asked. I knew we wouldn’t.

You see, this time it was an accident, but when I was in college this was a game I played often. When my account came dangerously close to empty, I sometimes spent more than I had anyway if I knew I had money coming in. I’d deposit cash before the withdrawals cleared. If the deposit and withdrawals cleared at the same time, I avoided fees. Sometimes. But sometimes I paid hefty fees. It was a dangerous game.

Because none of Tony’s charges had cleared yet, we were able to transfer money from the joint account into his personal account and avoid overdraft fees. Whew.

I’m thankful that it turned out all right, and that this time it was only a mistake. I’m grateful that I don’t play financial roulette anymore. Now when I use a debit card, I know I have the money to cover it.

Am I sticking to it because it’s costing me?

treadmills
photo by ario_j

It’s been almost three months since I joined a gym. Initially, I was concerned about the 12-month commitment. If my enthusiasm didn’t stick, I might end up stuck with a monthly fee for a gym membership that I wasn’t using.

The good news is, that hasn’t happened. When going to the gym after work became too much of a struggle, I switched to a morning schedule. I’m tired earlier in the evening now, but I love getting my workout out of the way first thing in the morning. I start the day with extra energy, and I don’t have to dread working out after a long day at the office.

This is the most consistent I’ve ever been with a workout regimen. I typically controlled my weight through portion control and healthy eating, but my fitness habits have always been lacking. This is the first time in my life that I’ve worked out every single day for longer than a couple weeks.

I can’t help but wonder if it’s directly related to the $20 being withdrawn from my bank account every month. In the past, I’ve worked out for free either outdoors, in a campus gym, or in an apartment complex gym. This is the first time I’ve paid a monthly fee to work out. Every other time I started out with a lot of enthusiasm, but eventually I started going fewer times per week until I finally stopped going at all.

This time I’ve made it a point to work the gym into my schedule every day. I know I’m paying for it whether I use it or not, and I can’t bear the thought of wasting that money every month.

Tony offered a different theory. My frugality and financial organization have made me more goal-oriented and regimented, he says, which in turn have led me to follow those same principles when it comes to fitness.

I don’t recommend joining a gym just to motivate yourself to work out. If you’re not truly committed from the beginning, all the gym membership will do is add to your expenses. But if you’re like me — strict about money and lax about fitness — and you’re truly committed to a healthier lifestyle, paying for your workouts might just strengthen your resolve.

How my husband plans to save while I’m away

The following is a guest post from my wonderful husband Tony about how he plans to save money while I’m away.

Karen has joked that I’ll be “living the bachelor life” for four days while she’s away at a conference in New York, which isn’t entirely true, but it does have me worried. The “bachelor life” to me never meant many of its stereotypical elements, but before I met Karen, I will say that the “bachelor life” certainly meant spending money frivolously. I’m worried about spending time apart from her (the first time in almost three years!) and how that might lead me to spend money where I don’t need to.

I’m determined to keep costs down, so here’s my plan, as much for you as it is for me:

Leftovers, leftovers, leftovers.

Anyone who reads here regularly knows that I’m a bit of a foodie, and my greatest financial vice is wanting to spend a bit too much at the grocery store. I like trying new foods, and in the past this has run up our bill. My plan for the days Karen is gone will be stick to our go-to meals and focus on leftovers. Pasta that could feed both me and Karen lends itself to two (at least) portions of leftovers. Without splitting it with her, I’ll have four meals for myself. That’ll help cover lunches and dinners.

No Trip to the Theater

Movies are passion of mine, and I’ll admit that at first I thought one of the ways I could pass my time while Karen is gone is to take in a matinee one day after I teach. But still, even paying only for myself, that’s an expenditure I don’t need. I’ll focus instead on the campus library, RedBox (which has some newer releases I haven’t yet seen), and our trial membership of Netflix.

Talking to Friends and Playing with Our Dog

When you’re alone, you seek out conversation. I’ll have friends and family I can call, but there is the pesky matter of being on different networks and having to use my minutes before 9 p.m. That’s why I’ve begun using Gmail’s video chat feature to talk to some of my friends back home. It’s user-friendly, completely free, and as long as you have a camera and a microphone, you’re set to go.

Also, I’m a little worried how our dog is going to react to just me at home, so I’ll be making sure he gets a lot of exercise to keep him occupied — and that’s absolutely free.

Just Another Week

I think one of the most important things to consider when you’re regular schedule is upended is to tell yourself: this is just another week. Yes, I’m going to miss Karen tremendously, but if I tell myself something is “okay just for this week,” it’s going to get me in a lot of trouble. I’ll still have classes to take and teach, so it’s not like I’m going on a vacation or anything.

Whenever something comes up that I want to do because I’ve got nothing else to do, I’m going to ask myself: would we do this on any other weeknight?

Now, I know I’m going to go a little stir crazy being alone for four days, so I do have a few activities planned. I’d like to try a southern barbecue restaurant that was recently voted the best in town, so perhaps I’ll go there for lunch one day (since the lunch menu is cheaper).

I’ve got a new attitude

This morning, like every other morning, my alarm went off at 6 a.m. Since daylight saving time began, my morning wake up call happens before the sun rises. Some mornings, it feels like I’m waking up in the middle of the night.

I’ve been getting up at 6 a.m. for the past couple weeks to work out for 30 minutes, but I don’t have to be at work until 8:30. I lay in bed for a few minutes, and I found myself considering staying there for another hour.

What finally motivated me was a compromise. The thought of getting through my whole workout was overwhelming, but that didn’t mean I should skip it entirely. I made a bargain with myself — in exchange for getting up and making it to the gym, I’d shave 10 minutes off my normal workout.

My first thought this morning was that it had to be all or nothing. Either I’d get out of bed and make it through my whole workout, or skip it and stay in bed until 7 a.m. It didn’t occur to me right away that it’s okay to compromise, and it’s okay to do only what you can do right now.

As I pushed myself through my workout, I started thinking about how often the all or nothing mentality interferes with my diet and exercise — and my finances. When a surprise expense forces me to set aside money in the budget that normally goes to something else, it feels like my goals are shot for the month. If I can’t send the usual amount to savings and debt, then I’ve failed.

When I convince myself I’ve failed, then I start to lose the motivation to do it at all.

If I didn’t make it through a 30-minute workout this morning, then I failed. When I start thinking that way, why even push myself to get out of bed at all? If I’m failing either way, I might as well get an extra hour of sleep.

Instead of all or nothing, I’m going to start just giving my all. If a surprise expense reduces the amount that I can send to debt and savings, then I’m going to happily send what I can and praise myself for coming this far. If I can only make it through 20 minutes on the treadmill, then I’m going to be proud that I still got out of bed an hour early and made it to the gym.

Goals are important, and I’m going to continue setting them for myself and striving to reach them. But I think I’ve been missing the point for some time now. Instead of setting a hard and fast rule and beating myself up if I can’t reach it, I’m going to set broader goals and work to do a little more each time.

I’ve realized that my rigid goals are limiting me. If I’m just pushing myself to save a certain amount every month or make it through 30 minutes at the gym, then I’m less likely to do more than that.

Instead of setting a goal to work out for 30 minutes every single day, my new goal is to go to the gym every morning and work out as long as I can. Instead of saving the same amount every month, I’m going to look at my budget, set a number based on my expenses for the month, and make sure I’m saving as much as possible.

Hopefully, this new positive attitude will motivate me to exceed my previous goals. Most importantly, I won’t feel like a failure every time I hit a setback.

Moving on a budget? Consider staying where you are

moving-boxes
photo by mtmiller

I think I hate moving more than anything else. It’s expensive, stressful, and exhausting. But since we’re renters, we’re always tempted to look for something better when it’s time to renew our lease.

We don’t love our apartment. It’s comfortable, but the building is old. It costs a fortune to heat and cool because our entire living room wall is a sliding glass door. We’re constantly calling maintenance to patch leaks and fix problems. We also kind of hate the neighborhood.

Last year when it was time to renew our lease, we strongly considered moving. We did a lot of research to find out how much other apartments in our area cost, and what kind of deal we could get. In the end, we decided to stay put. Why? Well, there are a number of reasons:

  • Even though we don’t love this neighborhood, it’s less than a mile from where Tony teaches and attends classes. He’s able to easily take a bus to campus, so we only need one car.
  • The building is old, but rent is cheap. Our two-bedroom apartment costs the same as smaller one-bedrooms in newer, fancier buildings. We like having the extra bedroom for guests.
  • We’d lose $300 in non-refundable security and pet deposits if we moved, and then we’d have to come up with the money for additional security and pet deposits for the new place.
  • We’re probably going to be making another big move in less than 18 months, so we decided we’re better off saving our money for that move and dealing with the problems here. After all, no apartment is perfect. If we weren’t dealing with these problems, it would be something else in our new place.
  • I hate moving. I moved seven times in four years during and after college, including an 800-mile move. I’d really like to stay put as long as possible now.

Since we knew we wanted to stay here for another year, we decided to ask our landlord what kind of deal they could give us for signing early.

Of course, we didn’t tell them we’d made up our minds. We just told them we were starting to look at other options (even though our renewal isn’t up for another two months), and asked what they could offer us. I’m so glad we did.

Not only did they offer us another year with no rent increase (it usually goes up about $15 a month), but they knocked $300 off the rent for the first month of the new lease. We were expecting our rent to go up $35-$45 this year, because last year we negotiated with them to get washer/dryer hookups installed in our apartment. Our rent should have gone up another $30 then, but they cut us a deal. If we had waited to renew, they probably would have added that $30/month to our rent plus the normal increase of $5-$15.

Honestly, if you’re renting and considering moving, take a serious look at why you want to move. If you just have normal gripes about apartment life, I encourage you to consider staying put for as long as possible. Not only will you save the money it costs to move, but you might be able to negotiate a great deal with your landlord.