Tag Archives: spending

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?

Start saving now & watch your savings grow

When we first started saving money, it was overwhelming. We’d been living off savings for months with barely enough money to pay our bills, let alone save. I didn’t feel like we had any room to breathe, let alone save money.

Then we got married and I was hired full time. Suddenly our monthly income doubled, but the savings we’d been using to supplement our income had run out. We also had to add expenses we’d dangerously put off while I searched for employment: health insurance, renters insurance, and student loan repayments that we’d put in forbearance. Despite our income increase, we were still making just enough to pay our bills.

Our savings account started with the money we’d received from generous friends and family at our wedding. It was a nice little $2,000 nest egg, and it motivated us to find a way to start saving. We started moving money around, budgeting more strictly, and we were able to put $100 a month into savings.

I felt good about saving, but I still knew it wasn’t enough to reach our goals. But then the savings snowball began. We paid off my credit card debt, and we were able to increase our monthly savings. Then we both got raises, which increased the amount even more. Little by little, we managed to grow our savings to $550 a month in liquid savings and $100 a month for retirement.

If you want to start saving and you’re feeling overwhelmed, my best advice is this: save something. I know, it’s the oldest rule in the book, but it really is true. Save what you can. Even if it’s only $50 or $100 a month, the most important thing in the beginning is getting into the habit of saving.

Once you start saving, that little amount of money in the bank will motivate you to save even more. Whether you increase your income or decrease your spending, you will find ways to make your savings grow.

The most important this is don’t wait. The longer you continue spending every penny you earn, no matter how small your income may be, the harder it becomes to start saving. Instead of watching your savings account grow with your income, your expenses will grow. The more you earn, the more you spend. If you wait for a magical moment when your income increases enough that you can save painlessly, you could end up waiting forever.

Once you start saving, though, you suddenly have an incentive to spend less, save additional income instead of spending it, and increase your savings even more.

Saving is never easy in the beginning, but you have to start somewhere. Don’t be discouraged if you don’t feel like you’re saving enough. It’s better to grow your savings a little bit at a time than to grow your spending.

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.

Wow, did I get a great deal on new clothes

My shopping trip yesterday was a phenomenal success. I was looking for fashionable, versatile clothing that would be professional enough for an upcoming business trip and comfortable enough to wear in my pretty casual office. I shopped with a friend, and we went to Anthropologie, Banana Republic, and Old Navy.

Before the trip, I decided I could afford to spend $150. That felt like a lot of money to spend on clothing in one month, but I haven’t shopped in about a year.

My friend suggested Anthropologie because I was looking for fashion, and even though they offer a pretty large sale selection, the sale prices were high for me. I did end up getting a nice cardigan from the sale rack, but at $40 it was the most expensive item I bought today.

Banana Repubic and Old Navy (as well as the Gap) are offering 30% off your entire purchase this weekend. This is in addition to sale prices and clearance mark downs. I found a TON of great stuff. After Banana Republic, I was still under budget, so I took my coupon to Old Navy where I bought some plain layering tees and camis — stuff that I always need, but usually don’t want to spend the money to get.

Here’s what I bought:

  • 1 pair dress pants
  • 2 cardigan sweaters
  • 3 dressy shirts
  • 5 layering camis
  • 2 t-shirts for me
  • 4 t-shirts for Tony

My total ended up being $165.22. If I had paid full price (which I would never do, but it’s still fun to see), it would have been $478.77. That’s a savings of over 65% off the original price!

It’s unlikely I would ever pay full price since I always shop the sales. A more likely scenario is that I would have paid sale and clearance prices without the 30% discount. If that was the case, it would have been $218.03 (including my $40 cardigan, which wasn’t marked down another 30%). So the 30% discount at Banana Republic and Old Navy saved me roughly $52.81.

How did I do it? Well, obviously, the 30% off everything sale really helped. But I also shopped exclusively from the clearance and deeply discounted racks. Not a single item was full price, even without the 30% discount.

My favorite item is a button-down cardigan. It was hanging on the clearance rack, marked down to $9.97 from $79. Why was it marked down almost 90%, and why on Earth was it still on the rack at that price? Well, there was a pretty big rip in the seam on the neckline. Because it was “damaged,” they took an additional 10% off the clearance price. Then I got another 30% off that. I paid $6.28 total for the sweater, which is a total savings of 92% off the original price.

When I got home, I stitched up the rip in the seam, and now the sweater is good as new. Even without the extreme discounts, it probably would have been my favorite item because it’s so versatile, comfortable, and cute. Never disregard the “damaged” items! It’s often a simple fix, and you can get some amazing deals if you’re willing to do some stitching.

The most important thing is that my wardrobe is refreshed with nice, versatile clothing that I can wear for business and daily life. But it definitely helps that I found such great deals!

If you haven’t checked it out yet, I strongly suggest you head over to Old Navy, Banana Republic, and the Gap to see if there’s anything left on the clearance racks. The 30% off sale ends today!

Clothes shopping stresses me out

This weekend I’m heading out to shop for clothes. It’s probably been about 8 months since I bought anything new, and even then it was just random clearance items I found every once in a while at the store where I worked.

This week, Kacie at Sense to Save wrote about how budgeting gave her permission to buy new clothing. Like Kacie, I hate to spend money on clothes. I take care of the ones I have and typically wear them for longer than I should. I’m just not that into fashion, and I’d rather spend that money on other things. As long as the clothes I’m wearing are in pretty good condition with no holes or stains, they’re usually fine with me.

I work in an office with a really casual dress code. Sometimes the women wear dress pants, but for the most part everyone comes to work in jeans. Obviously, we have to maintain a somewhat professional appearance, so holey t-shirts and old blue jeans aren’t acceptable, but for the most part it’s pretty casual.

I have plenty of nice casual wear that’s still in good condition, which is why I haven’t felt rushed to spend money on clothing. But next week I’m going on a business trip to a conference, and I need some suitable business casual attire. Now is a good opportunity for me to expand my wardrobe a little with nicer outfits that are casual enough for work and dressy enough for professional events.

I’ve set a budget, decided what I need, and I’m heading out today to do some shopping. Now I’m just worried about finding clothes that fit well, look nice, and don’t cost a fortune. When I’ve gone on shopping trips like this in the past, I’ve always found that the items on sale either aren’t in my size or don’t look nice. It can be pretty frustrating. Anyone have any suggestions for stores where I might find fairly fashionable business casual clothes for a good price?

What’s your tipping philosophy?

tips
photo by consumatron

My husband and I are usually pretty generous tippers.

When we go out to eat, we always tip at least 20%. We often tip above and beyond that for exceptional service. I have never stiffed a server, even when the service is bad. I’ve been in their shoes, and I know that everyone has bad days. I also know that servers often make well under minimum wage without tips. To me, tipping is just a part of the cost of eating at a restaurant (which is part of the reason I prefer to cook at home).

I usually tip at least 20% at the salon, too. If my stylist is particularly talented or attentive, I often tip more.

At hotels, we usually leave $5 to $20 for the chamber maid depending on the service and the length of our stay.

When we moved here, we hired movers to unload our truck since we didn’t have family and friends nearby to help. We tipped about 30% because it was back-breaking work in 100-degree weather, and we were so grateful that we weren’t doing it ourselves after driving for 3 days.

I guess I’ve always viewed tipping as sort of a luxury tax. If we make the decision to pay someone for services we could do ourselves, then we tip to show our appreciation. The better the service, the higher the tip.

I’ve always thought that if you can’t afford the tip, then you can’t afford the luxury.

Over the weekend in D.C., we parked our car at a garage near the hotel. The garage offered a discount for guests, but it still cost $15 a night.

When we arrived to pick up the car, we were in a hurry. I’m used to self-service garages, so I was surprised when the attendant walked off with the keys to pull the car around. It was parked on the first floor of the garage about 50 feet away from where we were standing, so I was a little confused as to why we needed valet service.

We had used the last of our cash to tip the chamber maid in the hotel. When the parking attendant waited expectantly by the door, we didn’t have any cash to give him.

As we drove away, I felt guilty. But the more I thought about it, the more I wondered why.

If we had requested valet because the car was parked far away or outside in the rain, we would have gladly offered a tip to show our gratitude for the service. If we didn’t have cash for a tip, we’d walk to the car no matter how far away or rainy it was.

But is a tip required when you don’t request the service or even want it? In this case, I would have preferred to get the car ourselves. I wasn’t really comfortable with a stranger driving it.

These are all thoughts I had after we drove away. We didn’t refuse to tip the valet out of principle — we just ran out of cash. Even though we hadn’t requested valet service and the car was only 50 feet away in the sheltered garage, we would have given him a tip out of habit if we’d had the cash. If there was a line for a tip on the receipt when we paid our parking fee, we would have added one simply because it was expected.

I usually tip to show gratitude, but this experience made me realize that sometimes that’s not the reason. Tipping is so ingrained in our culture that I often tip just because it’s expected.

What about you? Do you always tip when it’s expected, or are there instances when a tip is expected and you don’t give it?

How we’re spending our no spend weekend

Most of the spending we do — from groceries to unnecessary extras — takes place on the weekend. Because we work all week, we typically don’t have time to do any shopping. Trips to the grocery store, Target, and the occasional recreational window browse often lead to extra spending. We try to limit unnecessary spending, obviously, but even items like dog food, tooth paste, and other necessities can add up.

We’re already nearing our budget limit for spending and entertainment, but we’re headed out of town for the weekend for a frugal trip to Washington DC. Because we’d like to have some extra money for a meal and other extras, we’re attempting to have a no spend weekend. That means no recreational browsing, and no shopping even for the necessary items if it can wait. We’re buying the bare bones minimum groceries to get us through the week, and that’s it.

Setting this goal made me realize that we spend more time on the weekends spending money than I’d like to admit. No, we don’t go on wild shopping sprees. But the little bit of spending we do adds up, especially when you consider the fact that we spend $0 on the typical weekday.

To keep ourselves busy, we’ve come up with a no-spend itinerary for the weekend so we can have fun without spending any money. Here’s what we’ve come up with:

Friday: We made a homemade pizz, rented a free Redbox movie, and relaxed on the couch.

Saturday: After breakfast, we’re going to put on some warm clothes and take the dog for a hike at the state park. It’s beautiful and sunny outside today, and I think he’ll enjoy sniffing the hiking trail. The best part is I get to skip the gym for today since we’re getting exercise outside.

Sunday: Unfortunately, our Sunday plans aren’t really fun, but they are frugal. Tony’s parents are coming to visit the week after next, and since we’ll be out of town all next weekend, we’ve got to do some major cleaning and preparing. We want to get a head star on Sunday, clearing clutter out of the guest room, and deep cleaning all the nooks and crannies of our apartment. I’ll also squeeze in a trip to the gym, which isn’t exactly free since I pay $20 a month for the membership, but won’t cost anything extra.

I hope you’re all enjoying a lovely frugal weekend, too!

Living in “poverty” on $500,000 a year

I know I’m a little late with this, but I haven’t had a chance to write about it until now. As part of the stimulus bill, banking executives won’t be able to make more than $500,000 a year. The New York Times ran a sympathetic article on Feb. 6 explaining the hardship executives will face due to this pay cut.

Among the “necessities” that bankers will struggle to afford on their lowered salaries:

  • $45,000 a year for a nanny
  • $16,000 a year for two vacations
  • $240,000 a year for a summer house
  • $75,000 – $125,000 for a chauffeur
  • $65,000 for private school tuition

Not to mention the inflated yearly costs of housing and lifestyle, as well as other “necessities,” like a few designer gowns a year for charity galas. (Side note: there is, of course, no mention of a yearly allowance for charitable donations.)

I’d like to say the reporter was being facetious. Unfortunately, that doesn’t seem to be the case:

“As hard as it is to believe, bankers who are living on the Upper East Side making $2 or $3 million a year have set up a life for themselves in which they are also at zero at the end of the year with credit cards and mortgage bills that are inescapable,” said Holly Peterson, the author of an Upper East Side novel of manners, ‘The Manny,’ and the daughter of Peter G. Peterson, a founder of the equity firm the Blackstone Group. “Five hundred thousand dollars means taking their kids out of private school and selling their home in a fire sale.”

Sure, the solution may seem simple: move to Brooklyn or Hoboken, put the children in public schools and buy a MetroCard. But more than a few of the New York-based financial executives who would have their pay limited are men (and they are almost invariably men) whose identities are entwined with living a certain way in a certain neighborhood west of Third Avenue: a life of private schools, summer houses and charity galas that only a seven-figure income can stretch to cover.

So, you see, even the absurdly wealthy are living paycheck-to-paycheck, and we’re supposed to be feel sorry for them because they’ve gotten so used to the luxurious life that they’ll no longer be able to afford on a half million dollar salary. Give me a break.

Many of the people facing lay-offs are worried about whether they’ll be able to feed their children and keep their modest homes. They were already living on $50,000 a year or less, but now their yearly income is half that. You’re telling me I’m supposed to view these bankers as victims because they might have to give up their bi-annual vacations?

To me, this is a prime example of people with too much money and no ability to look outside their own sheltered bubbles. Give. me. a. break.

Just for fun, I’ll also share this post from the Consumerist — their suggestions for how CEOs can cut costs and survive at $500,000 a year.

Organizing my finances electronically

Everyone has a different method for paying bills and keeping track of spending. For a long time, I struggled to find the right method for me. I used to track spending with my online banking system, but that didn’t allow me to create a budget. I was constantly looking at my balance and mentally subtracting bills that I knew were coming up. It was stressful and dangerous.

Then I started paying my bills on payday. This helped me avoid the constant fear that I wouldn’t have enough to pay my bills when they were due, but it often left me with a dangerously low balance at the end of the pay cycle.

Now that I’ve been budgeting consistently for about 6 months, I’ve developed a method for bill paying and financial organization that works really well for me. So I thought I’d share it with all of you.

My checking account is for bills and living expenses only. I keep enough to pay my monthly bills with a little cushion for human error, but the rest of my money goes into savings where it can earn interest and stay safe from impulse purchases. When there’s extra money in my checking account, it gives me a false sense of wealth. When I have just enough to cover my bills, I’m not tempted to spend.

Every month on the 1st of the month, I create a zero-based budget using Mint.com. Every penny of income for the month is assigned to a purpose. By this time, I’ve usually already received the bills that fluctuate from month to month — like the electric bill and gas bill. I set all of our fixed expenses first, then I balance our discretionary spending amounts for food, entertainment, and savings based on what’s left over.

I’m able to determine how much I can afford to put into savings, and go ahead and put it away before we pay any other bills. I’ve tried to wait until the end of the month to contribute leftover money to savings. The problem is, there’s almost always nothing left by the end of the month. If it’s in my account, I’ll spend it. It’s easier for me to determine how much I can save, and save it right away to eliminate temptation.

Because I don’t keep a huge surplus in our checking account, I stagger bill payments with pay periods. Tony receives his teaching stipend at the end of every month, but pretty much all of it goes to rent and savings on the 1st of the month.

I’m paid bi-weekly, so I base our bill pay schedule on my paydays. The bills that are due in the first half of the month are paid on the 1st. Bills due in the second half of the month are paid on my second payday. I use Mint to keep track of what’s been paid.

Every other day or so, I check our spending in Mint. I try to make sure we’re on track to avoid overspending. We have very few discretionary spending categories, which makes it easier. I really only monitor food, miscellaneous expenses, and entertainment.

Pairing zero-based budgeting with electonic spending tracking and a consistent bill pay schedule allows me to stay on top of spending. It also lowers my stress. Because my budget is zero-based, I know I’ll always have enough to cover my bills and expenses. That works for me.