About a year ago, I posted my New Year's resolutions for 2008, and they were all related to my financial life. I thought it would be interesting to take a look back, and see if I actually followed through with my resolutions and grade my results. I posted my original resolutions below, along with my updated comments about how I did in italics.
1. Rebuild my emergency fund. This got wiped out when my wife became disabled and was unable to work. I am going to build a $1,000 emergency fund to start.
Despite rebuilding and spending my emergency fund a couple of times this year due to some expensive veterinary bills for my pets, I'm actually finishing the year with about $1,000 in my emergency fund. I give my self an "A" on this one, but I still wish it was more.
2. Eliminate debt. To be honest, I have lost track of my debt due to some medical bills being turned down by insurance, and others being created when my family did not have health insurance. First, I have to get a copy of my credit report, and then start knocking out my debt. I hope to eliminate at least $10,000 in debt this year.
Well, I certainly didn't eliminate $10,000 in debt this year, but I have paid down about half of that. I finally got my wife on board with eliminating debt, and think we'll do a much better job in 2009. I'll give myself a "C" on this one.
3. Save for a new home. The new home I'm moving into is not my own. It is my father-in-law's retirement home. He won't retire for four more years, so in the meantime I can save for a down payment on my own home.
OK, I get an "F" on this one. We haven't saved anything for a new house this year, because we had to rebuild our emergency fund twice this year. Hint: ALWAYS get your pets vaccinated on time. Again, my wife has come around to my way of thinking on this, and we plan to sock away at least $500 a month for a new house during 2009. To be honest, we're not in a huge hurry to buy a new house right now because of the uncertainty in the real estate market.
4. Contribute to my IRA. Again, because my family had no health insurance I had to spend a large amount of my income on prescription medications in 2007. Things will be much different in 2008. I hope to contribute at least 10 percent of my income to my IRA. IRA rates stink right now, so I've been putting most of my money in high-yield savings accounts.
I have saved about 10 percent of my income each month, but it isn't "untouchable" money, so it's not completely for my retirement. I'll give myself a "C" on this one.
5. Continue to live below my means. This is a never-ending challenge. If you can live on less money than you earn, the rest of your financial life falls into balance.
I get an "A" for this one. Once again, my family is at the point where we do live off of less than I earn. Each payday, there is money left over from the previous payday. It helps that I have multiple streams of income and some passive income. I don't totally rely on the paycheck from my "day job".
I guess I get a high "C" or a "B-" for the year for my 2008 resolutions. Even if you fell a bit short with your resolutions, it is good to have a goal and do your best to shoot for it. Even through I didn't hit some of my goals, I did accomplish others, or at least made some progress toward them. I have the same resolutions for 2009, and hope to do a better job of hitting my goals. We'll see how I did at this time next year!
Have a safe and Happy New Year!
About a year ago, I posted my New Year's resolutions for 2008, and they were all related to my financial life. I thought it would be interesting to take a look back, and see if I actually followed through with my resolutions and grade my results. I posted my original resolutions below, along with my updated comments about how I did in italics.
Believe it or not, one of the most-read posts here at Savvy Frugality has nothing to do with saving money, investing wisely or properly budgeting a household. Nope, that distinction goes to my observations about one of the most influential infomercial pitchmen to hit the scene since Ron Popeil and Billy Mays: Vince the Shamwow Guy.
Before becoming a pitchman for rags on TV, Vince Offer (yes, that's really his name) was a writer and director whose sole film credit was something called The Underground Comedy Movie, which was sold, oddly enough, through television infomercials. Vince has also been very litigious, suing Anna Nicole Smith for backing out of The Underground Comedy Movie and the Church of Scientology. Don't sue me, Vince. I'm a fan.
Then, Vince appeared in the Shamwow infomercials, and his star was on the rise. "It's for da house, da boat, da car, da RV," intones Vince on the now-famous infomercial. "You're gonna spend $20 a month on paper towels, you're throwing money away." Twenty bucks a month on paper towels? I don't think I spend $20 a year on paper towels. I suppose if I burned them in my fireplace to heat my home I would, but I digress.
Not content to rest on his Shamwow laurels, Vince now appears in another infomercial, this time for something called the "Slap Chop". My wife has something just like the Slap Chop that she bought at Wal-mart. I'm not sure how the "Slap Chop" is different, other than the infomercial gives me an excuse to hear Vince say "you're gonna love my nuts". Seriously.
Catch Vince in all of his Slap Chop glory:
"No, we can't afford it."
If you are a parent, that sentence might seem familiar to you. It's usually said by the parent after one of their kids ask for something like an XBox or an IPhone or something else that would otherwise break the household budget. At my house, the source of contention has been my 13-year-old son's desire to have a parrot or some other kind of bird. Not only do I not want the added expense of bringing another animal into a house that already resembles Noah's Ark, but I just don't want a bird screeching in my house all hours of the day and night.
It was a similar conversation that I had with my oldest son a few years ago that didn't totally eliminate the request for high-ticket items, but made him understand more fully WHY we couldn't spend money on some of the things he wanted.
My oldest son, when he was around the age of 15 or 16, asked for money quite often (this was prior to him getting his own job at a local grocery store). He always needed money for something...concert tickets, WWE wrestling tickets, CDs, etc. He always had his hand out for more and more money. For a time, it seemed as though I was paying for all of his dates as well. The amount of money he was asking for was quickly outstripping the $20 weekly allowance I was paying him for doing chores around the house.
I had used the throwaway line "I can't afford it" with him one time too many one day when he replied with "well, WHY can't we afford any of this stuff?" It was at that point that I decided to show him.
I sat down with my son at the kitchen table and placed my checkbook in front of him. I also had a calculator. This was at a point in my life when I was trying to eliminate massive amounts of debt, and money was tight. Just a year earlier, we were worried about having a place to live. Buying an XBox was an extremely low priority.
I told my son how much my paychecks totalled each month. I even showed him my pay stubs. I told him to enter that amount on a calculator. I then read off the amounts of our bills and had him subtract those amounts from our income. He punched in numbers as I read the amounts of rent, gas, electric, cable, phone, savings, prescription drugs, doctor bills...every expense that our household incurred every single month. When we were done, I told him to look at the number that was left.
"Well, there is about $200 left over. That's plenty." he said.
I then reminded him that the $200 was actually divided by two pay periods, so that's actually $100 in miscellaneous money every two weeks. That money was usually used to pay for unexpected expenses like school supplies if he ran out, extra gasoline if the price went up, etc. Our wiggle room at that time was $50 per week. The amount of money he routinely asked for each week greatly exceeded that amount. Whe my son saw that number, I could see the lights go on in his head.
Shortly after that conversation, he took a part-time job bagging groceries at a supermarket a couple of blocks from where we lived. I got him into the habit of saving 20 percent of each of his checks for college. He could do what he wanted withe rest, including saving additional amounts of money.
The purpose of my conversation with my son wasn't to shame him into not asking for money anymore. I still gave him an allowance for doing chores around the house, but he realized that if he wanted something that cost more than the household budget allowed, he would have to save for it. Of course, you can't have a conversation like this with a 7-year-old kid, but you should start teaching kids about how to handle money starting at a point when they are asking you to buy things.
Give the kids an allowance each week, but make them work for it. If they want a video game or something that is valuable to them, teach them the value of saving for it. Children today are growing up at a time in which they expect instant gratification. I am convinced that is why so many young adults are having problems managing their money. They still expect instant gratification, and they never grew out of it.
As your child gets a bit older, buy them a reloadable pre-paid credit card. Put about $20 on it and tell them it is for emergencies or unexpected expenses only. If they spend any money from it, they must pay off the balance in full at the end of each month. This will help prepare them for managing their plastic when and if they get real credit cards at an older age.
When times were really tough for my family, my kids knew we were having money problems. They could hear my wife and I argue about bills and money on several occasions. That was during my former life...when I didn't manage my money and instead let it manage me. If I could go back in time and do it over again, I would have let my children know a bit more about our financial situation, assured them we were working on fixing it (which we were, and did) and explained a bit more about why we couldn't buy certain things intead of just saying "we can't afford it." There is no need to tell your children EVERYTHING about your finances, but giving them a good overview and appreciation of what things cost is effective.
You don't want to frighten your children, but you do want them to know what things cost, and how that affects you. For example, I told my oldest son how much I averaged per hour in salary, and how many hours I had to work to purchase certain things. It was a real eye-opener for him when I explained I had to work almost a full week out of the month just to pay for rent for our apartment.
We always want to protect our children, and too often we think that means shielding them from the truth. By sharing more about your financial situation and how that affects them, they become more informed not only about where the family stands financially, but about how to manage their own finances as well.
Savvy Frugality Recommended Reading: 10 Ways to Save Money in 2009
With Christmas 2008 shaping up to be the worst holiday shopping season for retailers in years, possibly ever (since records were first kept in the 1960s), shoppers will have another prime opportunity to save some cash. "Day after Christmas" sales are springing up all over, and many in the industry this year are calling it the "new Black Friday".
As the U.S. sinks deeper into recession and unemployment continues to increase, consumer confidence is waning. In short, people are hanging on to the money they have and spending much less. Unless a retailer is offering a fantastic bargain, they risk losing sales to another retailer that is.
Haggling is also becoming much more common. With consumers able to go online and make purchase, or shop around for the best deal (even from their cell phone), most stores are offering price-matching, or are willing to negotiate a lower price. The price you see on the sticker isn't necessarily the price you have to pay. Discounts of up to 70 percent won't be uncommon at many retailers the day after Christmas.
Among the major retailers slashing prices and offering deep discounts are Sears (70 percent off electronics), Kmart (40 percent off clearance items), Crate & Barrel (70 percent discounts) and J.C. Penney (70 percent off jewelry).
There are some great bargains to be had on the online shopping sites, too. I finally caved in and purchased a new computer to replace the six-year-old HP model I have which is moving at a crawl and unable to handle some of the software I use. I ordered a refurbished model at CompUSA with a 19-inch HD monitor. It would have cost me more than $1,200 new at the store. My price? $600. If this model lasts me another six years, that's a great bargain. I may even be able to deduct the purchase price on my income taxes because I use my home computer for business purposes.
This year, the store's loss is the consumer's gain.
Savvy Frugality Recommended Reading: Haggle for Lower Prices
I hope you are having a great Christmas holiday. To help further your enjoyment of the holidays, here are a few things to keep you occupied after you have had your fill of eggnog and opened all of your gifts. They are frugal...because they are free!
1. Watch a classic Christmas movie. Everyone has seen "A Christmas Carol". Here's a little-seen classic version called "Scrooge" from 1935. It's in the public domain, so feel free to watch:
2. Track Santa and his Reindeer. NORAD, the folks who protect the U.S. from nuclear annihilation, also track Santa and his reindeer each Christmas. Check out the satellite tracking and the video!
3. Visit the North Pole. The city of North Pole, Alaska. There are some interesting things to check out on the web site of the city which actually bears the name North Pole, including a web cam which shows photos from the actual North Pole.
4. Listen to some Christmas tunes. AOL Radio has 13 Internet radio station channels chock full of holiday tunes. There is even a station with Hanukkah music!
5. Play Classic Video Games. Mom and Dad never got me the old Nintendo or Atari games when I was a kid. That's OK. I'll play them all online for FREE!
Have a Merry Christmas and a Happy New Year!
A fast and simple gift option this time of year is the gift card. I have received gift cards as Christmas gifts, and I have also given cards as gifts. It seems like a great way of giving somebody a gift while at the same time letting them buy something that they will really use and enjoy. After all, it's better than giving a fruit cake or a tie, isn't it?
The answer is: it depends.
While gift cards do carry value to the person who receives them, there are some drawbacks to using them; drawback that you may not even be aware of.
Americans spend about $50 billion on gift cards each year. This is not only a gift to the recipients, but a huge gift to retailers as well. They are guaranteed sales, whether the cards are redeemed or not. Amazingly, many gift cards are not redeemed, or they are not redeemed for their full value. If the cards are not used before they expire, the recipient loses the rest of the value of the card. In other words, that's free money for the retailer. As much as 20 percent of the value of all gift cards sold is never used.
It also pays to read the fine print of the terms of the gift card. Some cards will charge fees if they aren't used within a specified time, and some will charge a fee against the card if the consumer has the store check the remaining value of the card. If the store where the card is purchased closes for some reason, the value of the card is lost. If the card is purchased from a store chain and that chain files for bankruptcy protection, the bankruptcy judge determines if the store must honor the value of the gift card.
Another drawback to the card is that it may not cover the entire cost of most of the merchandise available at the retailer. It is estimated that recipients of gift cards tend to spend 20 percent more than the value of the card when they redeem the card at the store (if the card is redeemed at all).
Gift cards can seem like convenient, thoughtful gifts, but be aware of the potential drawbacks. If you really want to give a "spendable" gift this Christmas, consider putting cash or a check in a nice Christmas card. While cash might seem like an impersonal gift, it certainly carries less baggage than store plastic, and it can be spent anywhere.
I have written before about the Economides family. They are a family of seven that live on on $44,000 a year and have written a book called "America's Cheapest Family". They are a sort of "Tightwad Gazzette" family for the 21st Century. Their total bill for Christmas shopping this year was less than $100. Impressive! They appeared on the "Today" show to talk about their frugal lifestyle.
With the economy sinking into a deep recession, need-based organizations are seeing a dramatic increase in the demand for their services. However, at the same time they are seeing a decrease in the amount of contributions they are receiving this year. People are simply being more careful with their money, and charities are finding it more difficult to serve those who are truly in need. With that in mind, Savvy Frugality wants to do its part to help.
Savvy Frugality writes paid reviews of money-saving web sites, services and products. A paid review on this site is $25, and it stays on SavvyFrugality.com for the entire life of this blog. A paid link on SavvyFrugality.com is $5 per month, or $50 per year. This week, order a review or a paid link, and Savvy Frugality will donate half of all proceeds to the Salvation Army. This is a charity that Savvy Frugality supports because it provides such a wide range of services to the people who need them the most. The Salvation Army also does a great job of doing the most good with the money it receives. By ordering the review or the link, not only will you get some advertising for your site, service or product, but you will also be supporting a worthy cause at the same time. To order your review or link, simply email me at savvyfrugality at hotmail.com (replace the "at" with a "@"" in the email's "to" line. I'm just trying to avoid SPAM).
To make a direct contribution to the Salvation Army, go here.
To research any other charitible organization you are considering making a donation to, check out the Charity Navigator web site.
Savvy Frugality recommended reading: How to Donate to a Charity Without Getting Ripped Off.
The holidays are always a very stressful time for me. I don't really do a lot of Christmas shopping, but my wife does. I watch as she goes out to the mall and returns with many, many shopping bags. Yes, she does get very good deals when she shops, but spending a lot of money during this time of the year goes against my frugal habits during the rest of the year. I'd rather stick all of that money in the bank.
Still, I count myself lucky that we can actually afford Christmas gifts. There was a time when we couldn't. I'll never forget our first Christmas together as a married couple. We had $20 each to spend on each other. We drove to the local K-Mart and we each purchased one gift for each other. We have come a long way since then. However, this is going to be a rough Christmas for a lot of people, and we are cutting back this year ourselves. So, if you need quick holiday cash, how do you get it? The Today Show actually has some ideas.
1. Open a bank account. Banks might be in trouble these days, but they also want your business, paying bonuses to people who open new accounts.
2. Take a survey. Yes, I've tried those survey sights that pay you one or two dollars per survey. Blech. The Today Show recommends www.surveylot.com, which hooks people up with surveys that pay from $5 to $75 per hour.
3. Focus groups. These work a lot like the surveys. Check out www.findfocusgroups.com.
4. Test drive a car. Many dealerships are offering incentives just to come and take a car for a spin.
5. Moving pictures. There are companies that will pay you to turn your car into a rolling billboard. I actually tried to sign up for this once, but never got called. I guess I don't drive around enough. www.paidride.com
I have a few ideas of my own that I will throw in here, mainly because I think they are more realistic and doable:
1. eBay, baby. I have earned a lot of Christmas cash over the years by selling the stuff I didn't want anymore. Your castaways are someone else's Christmas gift.
2. Craig's List. Don't overlook Craig's List, another good place to sell your stuff.
3. Roll up your sleeve. I know it seems tacky, but there are many plasma companies that will pay you up to $200 a month for you to donate some plasma. Not only are you getting some cash, but you're helping to save a life, too. Isn't that what Christmas is all about?
4. Grab a shovel. If you live in an area that gets socked with snow, offer to shovel the walkways of the folks who don't want to, or can't, clear their own driveways and sidewalks. Clear the walkways a few homes and you could get some quick cash.
5. Freelance. Do some freelance work on the side. It could even lead to a whole new career path for you. Check out sites like oDesk.
Don't forget: the best Christmas gifts are those that come from the heart. Some of the best Christmas gifts I have ever received have been works of art created by my kids, or a blanket knitted by my grandmother. They spent their time and effort to make those gifts for me. It really is the thought that counts.
When times are tough, people get creative with the food they have available to make something not only edible, but downright delicious. I didn't grow up during the great depression. That was decades before my time. However, my grandmother did. She was an expert at taking the little bit of food she made on Social Security and stretching it into a pretty fantastic meal. One of my most enduring memories of her cooking when I was growing up was the many casseroles that she made. In Minnesota, these were known as "hotdish" (taken from the church suppers that are popular there, as in "bring a hot dish to pass around").
My favorite was my grandmother's tator-tot casserole. She also made a mean chicken-and-rice casserole, and was a master baker. We always had lots of cakes and cookies around the house.
With the U.S. facing one of the worst recessions since WWII, people are taking a renewed interest in cooking their own meals using simple ingredients, particularly using recipes from the Great Depression era. There tends to be a romanticized view of these recipes. Many people during the Great Depression went hungry, and ate things that we may not consider very tasty today. Still, each society has recipes that started out of necessity, and later became treasured family favorites. The idea was to be frugal, and make the best use of the ingredients that were available.
When I was growing up, that meant we at a lot of things that my father shot while he was hunting, or the fish that he caught from local lakes over the summer and froze. He also grew and canned or froze a lot of produce from a garden he maintained in our backyard. The reason was simple. We didn't have a lot of money back then, and that's how he put food on the table. To this day, those ingredients made some of the best meals I've ever eaten.
If you have any simple family recipes which use few ingredients available in most anybody's home, feel free to comment and post them here. I'm sure our readers would love to experiment with new recipes!
Related post: Great Depression Cooking with Clara
Savvy Frugality Recommended Reading: Finding a Job in a Bad Economy
Since economists are now saying the U.S. is officially in a recession you might be thinking of your own economic bailout. Perhaps your retirement fund or stocks have taken a beating. Perhaps you are facing layoffs at your job. Perhaps you are just plain nervous, and you are wondering how you're going to start or beef up your emergency fund.
One thing I had to learn, and learn quickly, when my wife became disabled and we became a one-income family was how to cut costs to "create" additional money in our spending plan. With that being said, I give you my plan for saving $1,000 next year. After all, we could all use a little more money, right?
1. Ditch your video memberships. Perhaps you have a video store membership, game store membership or a Netflix membership. Netflix has a cheap $4.99 a month plan, but it limits rentals to 2 DVDs a month. The $8.99 a month plan allows unlimited rentals. Better: check out videos from your local public library, or watch the free fare at a site like Hulu.com. Savings: about $108 over 12 months.
2. Say goodbye to Starbucks. I've never understood the attraction of paying $4 for a cup of coffee. It seems others are starting to feel the same way. Starbucks has been test-marketing $1 cups of regular ol' joe. Better: Pay $8 for a canister of coffee at the grocery store and brew your own. You can even find the flavored creamers and syrups at stores like Target or Sam's club. If you grab Starbucks on your way to work five days a week, that stuff really adds up. Save it for a special treat on the weekends if you must. Savings: about $685 dollars over 12 months, assuming you were hitting the 'bucks each weekday. This savings represents the cost of Starbucks once a week instead of five times a week, and the cost of purchasing coffee at the grocery store.
3. Have a meatless meal. Instead of eating dinner with meat every night of the week, try a meatless dish such as vegetarian chili, vegetable lasagna or a meatless soup with a pita and humus. Hey, I'm a carnivore, but I like these dishes occasionally, too. Assuming a package of beef costs about $8-10 bucks these days, the savings will add up. Savings: $416 over 12 months.
4. Smoke less. Notice I didn't say "quit smoking". Yes, it's terrible for your health, but you already know that. If you just can't (or don't want to) quit, at least try to cut back. Hey, it's better than continuing to smoke as much, or more, than you are now. Start by trying to smoke 2 fewer cigarettes each day. That's a pack less each month. Better: quit, it you can. Savings from smoking one less pack each month: about $50 over 12 months.
5. Use flourescent light bulbs. Yes, it's supposed to be better for the environment, but I like those compact, funny-looking compact flourescent bulbs because they use a lot less electricity. I have replaced almost every lightbulb in my house with them. Another benefit: they last a lot longer than the regular lightbulbs, offsetting the higher cost of the CFLs. I save about $10 a month on electricity. Savings: About $120 a year.
Total savings: $1,379.
Hey, look at that. We saved more than $1,000 in 2009, and it wasn't really all that painful. The point isn't for you to follow this plan EXACTLY (although you could if you wanted to). It's meant to get you thinking of the small changes you can make to your spending that add up to big savings over the course of a year. Almost all of us have area where we can cut back on spending, even if it is a small amount. Bank that $1,379 in a high-yield online savings account drawing 4 percent interest, and you'll actually make about $40 off the savings over the course of a year without doing anything other than not spending the money. Use this money as an emergency fund or to pay down debt.
You'll also notice that these aren't drastic life-altering changes. That's intentional. I hate reading personal finance advice that dictates we should all live like paupers and eat nothing but peanut butter and jelly sandwiches from the brown bag we take to work every day. First of all, most people aren't going to do that. Secondly, even if we have every intention of making huge, life-altering changes, it is hard to stick to them. That's why the dieting industry makes millions of dollars every year, and Americans are fatter than ever.
Make a few baby steps in 2009. It will add up, and you won't fell deprived.
I spent the Thanksgiving holiday at my Mom's house, hanging out with my brother and sisters, catching up on old times and meeting some of my nieces and nephews for the very first time. After most everyone had gone to bed, my sister and I spent some time watching TV (we're both insomniacs) and came across one of the strangest (and funniest) shows I had ever seen.
The whole show consisted of video clips of people stampeding to buy cheap TVs, IPods, computers and other stuff on Black Friday. People were literally trampled, and there were a few fist fights caught on tape as well. It would be hysterical if it wasn't also a bit sad.
What has reduced Americans to the level that they are willing to physically fight each other for the opportunity to purchase a television set? Is a cheap TV really worth injuring somebody else?
I believe the answer lies in the expectations and stress that we have placed on ourselves to have a "joyous" holiday season. It's not enough to be in the company of family and friends who love us, enjoy some good food, and perhaps do something good for someone else. We also have to buy them an impressive gift that we would otherwise tell ourselves we can't afford any other time of the year.
I used to fall into this trap, as recently as just a few years ago. I would get so stressed over the fact that I couldn't afford to buy my sons a Playstation 3 or a new video game or the latest version of IPod that I usually had a horribly depressing Christmas. Not only that, but I usually made everyone around me miserable as well.
It was only in the past couple of years that I have changed my attitude about gift-giving during the Christmas season. Of course, I give gifts...but I give gifts from the heart that I think will have sentimental value or really mean something to the person I am giving them to. Can you remember everything you received for Christmas last year? Chances are...you can't. Personally, I can only recall one item I received for Christmas last year. It doesn't mean that I don't appreciate what I received. I appreciate the fact that my wife spends a lot of time shopping for me each year. However, it really isn't necessary for her to do so.
Christmas means something else to me. It's a chance for me to appreciate the fact that my family has so much more to be thankful for this year than we did just 5 years ago, when we couldn't really afford to have a Christmas at all. It's also a chance for me to help other families that are in that very same position. These are things that have taken over my "to do" list during the holiday season:
Donate money to the Salvation Army. They do good work, and my contribution is tax deductible.
Purchase a gift for a child that otherwise wouldn't get one. Again, the Salvation Army runs a program for this, and the Marine Corps also has its "Toys for Tots" program.
Donate food to the local Food Bank. There was a time I didn't know how I was going to afford my next meal. I've come a long way since those days. I never used a food bank myself. I don't know why it never occurred to me to use one, but I just didn't. There will be plenty of people who will need to use one this year, however.
Donate a coat to "Coats for Kids". I still have a teenage son at home who is outgrowing his clothes. The coat he wore last year will help keep another kid warm this year.
Go the the movies on Christmas Day. I don't go to the movie theater very often due to the price of the tickets. I'd rather wait until the movie hits cable. However, it is a tradition in our family to go and see a comedy together each Christmas Day. It's a fun day with the wife and kids, and I wouldn't miss it.
I usually buy gifts online, or I hit the local stores the last weekend before Christmas. I already know what my family wants, and there are always good deals to be had if you look around enough. While my family is important to me, battling crowds at the mall and shopping...isn't. I'd rather do the other things first...the things that I know will make others AND my family and I enjoy the holidays a bit more than whatever I find at the mall.
These days, we hear the words "Great Depression" thrown around a lot whenever the talking heads on TV are talking about the state of today's economy. As Savvy Frugality has stated before, the U.S. is NOT anywhere near Great Depression territory. During the Great Depression, one out of every four Americans was out of work, thousands of banks failed and the stock market plummeted some 90 percent. Things are bad...but they aren't that bad.
As Savvy Frugality has stated since September 2007, the U.S. is indeed in a recession, and a deep one, at that. Now, economists are agreeing. According to the National Bureau of Economic Research, the U.S. has been in a recession since December of 2007.
First, the bad news:
At one year, this ranks as one of the worst recessions since World War II. Only two recessions since then have lasted longer.
Unemployment is probably going to get worse before it gets better.
If the U.S. doesn't recover during the next year, we are likely headed for a depression.
Now, the good news:
Recessions last an average of ten months. The worst recessions lasted 16-24 months (1973-1975, 1981-1982). Chances are we could already be on the road to recovery.
The stock market may have already hit bottom. If the U.S. economy recovers in 2009, that means stocks will be headed back up. Good news for those who took advantage of the fire sale and snatched up quality stocks while they were cheap.
The U.S. government, or at least the people who manage the U.S. economy, KNOW things stink right now, and they have plans to do something about it. The U.S. slides into depression when the policymakers literally do nothing (like during the Great Depression). Regardless of your politics, it is unlikely President-Elect Obama will do nothing. He won the election based upon his plans to fix the economy. He'll have to do SOMETHING, or risk becoming a one-term president.
So, how does the government try to fix the economy and end a recession? In the past, government spending and tax cuts have been used to shock the economy back to life. Obama has proposed doing both. Will it work? We may have our answer within the next six months. It all depends on how quickly the U.S. government acts to employ one or both of these policies.
Savvy Frugality Recommended Reading:
The Worst is Yet to Come?
I always look forward to the day after Thanksgiving. No, it's not for the Black Friday specials. I leave that insanity to my wife, who thrives on fighting fellow shoppers for deals. I like the day after Thanksgiving because of the LEFTOVERS! I'm one of those people who feels the Thanksgiving goodies like turkey, stuffing and mashed potatoes are even better the second or third time around.
You don't have to be content with merely warming this stuff up in the microwave. You can give these ingredients a great second life by turning them into something else even more tasty. Here are a few things I do with my leftover bird (after all, who wants to waste good food?):
Turkey ala King (this is GREAT over egg noodles)
Turkey Noodle Soup (don't throw away the carcass of that bird. It make fantastic broth)
Turkey sandwiches (I like to heat up the turkey, stuffing, and mashed potatoes and put it between two slices of thick wheat bread spread with homemade cranberry sauce. Mmmm!)
Turkey Pot Pie (great way to use up those leftovers!
Do you have any good recipes for using using up that leftover turkey? We'd love to hear them!
Today we are re-visiting a classic Savvy Frugality post from a year ago, "Find the Black Friday Sales Before Black Friday". After all, there are only five days before the launch of the Christmas shopping season (except for me. I start somewhere around December 24th).
Everybody knows that Thanksgiving is this week, but there is another holiday of sorts that follows the day after Thanksgiving: Black Friday. Black Friday is the day that most retailers use to officially launch the holiday shopping season, although some retailers have already kicked off their Christmas shopping season early. There are definitely good deals to be had on Black Friday, but how do you find them?
Fortunately, there is a way of scouting out the Black Friday sales ahead of time, and this can help you pre-plan your Black Friday shopping experience and get you in and out of the stores quickly and back home in time to enjoy those turkey leftovers for lunch. Here are a few places where you can get a sneak peak at Black Friday sales, without stepping foot outside of your home or smudging your hands with ink from the newspaper sales circulars:
bfads.net - Not only can you get the scoop on in-store sales, but this web site has details about Black Friday sales available on shopping web sites as well.
blackfriday.info - This site has links to the Black Friday sales circulars of several retail chains.
black-friday.net - More links to online Black Friday ads for the nation's biggest retail chains.
blackfridayads.com - Billed as "the web site retailers don't want you to see!", this site has links to online Black Friday circulars for major retailers.
blackfriday.gottadeal.com - Links to Black Friday and Cyber Monday sales.
Cyber Monday, the Monday following Black Friday, is supposedly one of the busiest online shopping days of the year, with deals to match. I haven't necessarily found this to be the case, and I really try to avoid the Black Friday sales as well, unless there is a gift item that has been so ridiculously slashed in price that it would save me a LOT of money. Otherwise, I do most of my shopping a couple of weeks before Christmas. I have found that the closer to Christmas it is, the lower the prices get. No retailer wants to be stuck with extra inventory after Christmas. And, if you want a great deal on Christmas decorations, gift wrap and cards, wait until AFTER Christmas, and stock up for next year. Those items are usually discounted 50 to 80 percent following the holidays.
Savvy Frugality Link Love:
Savvy Frugality would like to thank the following sites for recently featuring some of its posts:
Want to be happy with your life? Spend less time in front of the TV.
That's according to a study detailed recently in the New York Times. The study found that, over time, people who watched the most TV were the most unhappy. I covered a lot of my own reasons why watching a lot of television is a bad idea some time ago in my post "There's a Reason It's Called "The Idiot Box".
At the time, I dealt with one of the main faults I find with television: it sucks up a lot of time you could be using to do something much more productive. I want to make one thing clear: I do watch TV. In fact, I have a list of favorite shows, but most of them are on "The History Channel" "Discovery Channel" or "BBC America". When I watch TV, I try to watch something educational (not counting "The Shield" or "Prison Break").
There is another downside to TV, too...especially this time of year. It can lead to people buying a lot of useless junk that they don't need. Case in point: a couple of months ago, I posted my thoughts on the ShamWow commercial, featuring annoying pitchman Vince Offer. Since then, it has been one of the most-visited posts on this blog. Do we really need to buy rags from Vince? Nope.
I'm not saying everyone should permanently ditch all TV, but at least try to cut down. Use one hour a night that you would normally use to watch TV to do something else. Could you use an extra seven hours a week to tackle a project at home, take up a hobby, read a book or do that one thing you wish you had the time to do? Put down the remote for that one hour each night. You'll be happier for it.
The Thanksgiving holiday is one of the busiest travel holidays of the year. Although the tough economy is expected to result in a slight decline in the number of travelers next week, the AAA forecasts that 41 million Americans will travel 50 miles or more for the Thanksgiving holiday.
With money tight, how can you splurge on both travel and turkey? Fortunately, there are some travel deals to be had.
Gas is cheap again...well, OK...cheaper. At least it's not pushing four bucks a gallon anymore. The national average is now $2.07 a gallon. According to the AAA, that's 88 cents less than a month ago, and more than a dollar less than it was a year ago.
Hotels are cheaper. Compared to last year, room rates are down about ten percent. The economy has affected their bottom line, so hotels are hoping to get your business with lower prices. Savvy Frugality tip: Don't like the advertised room rate? Look for a hotel with a half-empty parking lot, and ask the desk clerk what their "best price" is for a room. Chances are they'll cut you a deal. They don't make money on empty rooms.
Airlines are more expensive. Air travel will come at a premium this year. The AAA says on average, flights are about eight percent more expensive than they were at this time last year. Also more expensive: car rentals.
Buses are still a deal. There are benefits to going Greyhound. The bus line's eFares, Priority seating and Advance Purchase Fares can either save you some cash (up to 20 percent) or help you avoid lines at the terminal to purchase tickets. The downside: you're still riding on a bus.
Ride the Rails. Grab Amtrak's Rail Pass and travel anywhere within the Amtrak system. The 15-day pass is good for 8 travel segments (a segment is any time you get on and off a train for a particular trip. For example, if you have to change trains you are beginning another segment) for $389. The 30-day pass is good for 12 travel segments and costs $579. It's slower, but likely cheaper, than taking a flight.
It seems like the cost of everything has increased this year, thanks to the current economic woes of the U.S. The traditional Thanksgiving dinner isn't immune, either. According to the American Farm Bureau Federation's annual informal survey, the cost of the traditional Thanksgiving meal for 10 will set you back about $44.61...an increase of $2.35 or 5.6 percent from last year.
The price of all grocery items has increased this year, and at a steeper pace than previous years, thanks to the high gas prices which only recently started to decline. Still, buying the bird need not cause you to choose between a tasty meal and your child's college education. My family has always managed to get by on the cheap for Thanksgiving, and have a delicious meal in the process. So let's talk turkey and pass along a few money-saving Thanksgiving tips:
1. Go Pot Luck. There is no need to pay for the entire meal yourself. Invite friends and family (or accept an invitation to go to their house) and bring a dish to pass. This way, each person is only responsible for their dish, and that's much cheaper than buying the entire holiday meal yourself.
2. Buffet. It almost seems sacrilegious, but there are restaurants which serve turkey and all the trimmings buffet-style. If you don't have a large family, or you are going single for Thanksgiving this year, why buy all that food and prepare it yourself? If might actually be cheaper to go to a buffet-style restaurant and chow down there. This is especially a great deal if it's an all-you-can-eat place. Con: no leftovers.
3. Turkeys are generic, too. Sure, Butterball is a household name for turkey, but there are plenty of store-brand turkeys out there, too...and they are usually much cheaper per pound. We almost always buy a store-brand turkey. It still tastes great. A turkey is a turkey, right? The generic turkeys also have that pop-up timer, too. If you have a hunter in the family, you might skip the turkey and dine on some wild goose or duck if they had a good season.
4. Be adventurous. You don't necessarily have purchase a turkey for Thanksgiving. There is no law that says you must eat turkey. Some people (certainly not me) don't even LIKE turkey. A nice big roasting chicken, smoked salmon, cornish game hens or a ham will work, too.
5. Be generous. A few years ago, my wife and I volunteered to deliver Thanksgiving meals to the homebound and elderly on behalf of a Christian charity organization. We got the satisfaction of helping others, learning about things we were truly grateful for (no matter how bad you think things are for you, there is ALWAYS somebody else who needs help more than you) and we were offered a Thanksgiving meal back at the kitchen as the charity's way of saying...well, thanks.
Savvy Frugality Recommended Reading: With Money Tight, Layaway Makes a Big Comeback.
Later this month, shoppers around the country will take part in perhaps the biggest shopping day of the year: Black Friday, or the day after Thanksgiving. The day is known for its holiday shopping bargains. My wife is among those who brave the crowds (she once got into a near-fistfight over a Tickle-Me Elmo at K-Mart), but not me. I prefer to do my shopping online, in the comfort of my own home. What makes online shopping just as good as the Black Friday sales are the promotion and coupon codes which can award shoppers everything from free shipping to several percent off their purchase price. So, with that in mind, I am happy to do a review of FindSavings.com at their request.
Like a lot of coupon code sites, FindSavings.com features discount and promo codes for most of the major online stores, such as Overstock.com, Buy.com, Walmart.com and one that I use frequently around Mother's Day: 1800Flowers.com. Unlike a lot of coupon code sites, the layout of FindSavings.com is very user-friendly, with links arranged by shopping categories, store and coupon type. The coupon types available at the site include free shipping, dollars off, percent off, rebates, sales and free gifts. Depending upon what type of savings are most important for you, that is a big time-saver while you do your online shopping.
If you are looking for a specific item, there is also a search box on the site which will steer you not only to the best promo codes, but to the applicable online shopping sites so you don't have to spend a lot of time opening links and searching for the item.
I spent some time browsing some of my usual online shopping haunts, including Target.com (which features free shipping on some appliances), Borders.com (25 percent off one item), and of course 1800Flowers.com (free shipping, this will come in handy for my wife's upcoming birthday).
In the coupon section, I found a great deal at Restaurant.com: save 60 percent on a $25 restaurant gift certificate, plus receive a free $10 gift certificate. Price? Four dollars. That certainly makes eating out much more affordable, especially this time of year.
I did notice that there are some discount codes which have long since expired, but this is something I have noticed at most other coupon and promo code sites. Just make sure that the promo code you are trying to use is current and up-to-date.
Online shopping is not only a way of beating the holiday crowds at the mall, but it's a good way to save money as well. FindSavings.com helps make that a bit easier.
I came across an intriguing headline while doing some of my personal finance reading today. It was over at MSN MoneyCentral and it really caught my attention. It was "The Biggest Mistakes Poor People Make".
According to Liz Pullium Weston, there are seven money mistakes that poor people make that ensure they will stay poor, such as paying too much for rent or a mortgage, confusing needs with wants, only making minimum monthly payments, failing to budget, having no emergency savings and spending retirement savings.
Well...yeah, those things will guarantee that poor people will stay poor, but they didn't all really address my own personal situation a few years ago, when I was REALLY poor. I wasn't just poor, I was "po"...I couldn't even afford the extra "or". The worst part: it was really all my (and my wife's) fault. Worse yet: they are mistakes that so many other people make.
Spending every last dime you earn in one week...and you're paid every two weeks. Well, what do you do when you spend your check in one week, and there is another week until you get paid again? You either play the "float" by writing checks for money you don't have and hope they won't clear by the time you get paid again (but bank processing times have gotten faster, so that won't even buy you time anymore) or you use a payday loan lender, which charges hundreds of percent of annual interest. Good way to stay poor.
Buying things because they are a "good deal". "Wow, look how much money I saved" you might say. But, you couldn't even afford the amount of money you did spend, because you're broke. Good move, Wisenheimer. Now you're even more broke.
Ignoring bills. Every day, bills would come in the mail and I would toss them on a heap and ignore them. I couldn't afford to pay them, so what was the point? The point was if I had contacted the bill collectors and worked out a payment plan, the mail would have stopped coming, or at least they wouldn't have been as threatening. Plus, I was damaging my credit and racking up extra fees. Stupid.
It's "their" fault I'm poor. I was poor because my boss didn't pay me enough, because the bank charged me fees for bad checks, because the bill collectors were overcharging me, because I didn't have enough education, because my parents never taught me how to handle money. At least, that's what I used to think. The real reason was it was really all my fault. Don't have an education? Get one. Don't make enough money at your job? Get another one, or start your own business. Born into a poor family? So what. Millionaires, U.S. presidents and famous actors were also born into poor families. You can get ahead, too...but no one is going to hand it to you. You have to work for it.
Spending more than you earn. If I was to write a book about how to get ahead, it would be the shortest book in existance. It would be one page long, and contain just one sentence. That sentence would be: Live below your means. If you spend less than you earn, suddenly you have more money to use to get ahead. It really is than simple. "But, I don't earn much money to begin with" you might say. That may be true, but whatever you earn, you can still live on less. People all over the world do it everyday. In some African nations, the average annual salary is $300 a year. Not a week, not a month, but in one full year. You're much better off than that. You can live on less than you earn. If you can't, either increase your income, or find areas were you can cut back. Five years ago, I took a job which paid 20 percent less than what I had been earning. I still managed to cut my spending even further, and my family begain to live on about 75-80 percent of what I was earning. It wasn't fun, it wasn't easy, but we did it...and we're better today for it.
Savvy Frugality Recommended Reading: More Employees Getting Scrooged This Christmas.
If you're like me, you check your retirement savings, your stocks, grit your teeth and say "I'm in it for the long haul", and try to forget about it until the next time you check your stocks. After all, I have about 25 years until retirement (although I hope it's actually less), so there is time for the stock to bounce back, which it will...eventually.
But what about those college savings for Junior? Perhaps he's like my kid...13 years old and ready to attend college in five years or less. All of a sudden those stocks don't look so inviting, and every "economic meltdown" story in the news is driving the stock price lower, and eating up your gains. If you're looking at sending a child to college in five years or less, and you want to lock in your savings before losing the rest of the tuition and book money, there are a few sensible, although very conservative, moves you can make with the kid's college cash.
1. Get rid of the stocks. If you're really concerned about having some college cash left in five years or left, preserve the money you have now. Things are just to volatile on Wall Street right now to risk cash you'll need in the short term.
2. Stash your cash. Those high-yield savings accounts at online banks are suddenly looking like a better deal. Sure, they only pay 3-4 percent interest per year, but that's better than LOSING money.
3. Adjust your 529. If you have a 529 state-sponsored college savings account, shuffle your investments around to more conservative options, like bonds...or the fixed asset option which pays a set (but lower) amount of interest each year.
4. There are always U.S. Savings Bonds. These are an old-school savings option. The interest rate on Series EE and I bonds are low, and you need to hang on to them for at least five years to make it worth it, but again...you're not going to lose your cash.
5. Buy a CD. Certificates of Deposit at the local bank or credit union are another safe option. There are varying lengths of time you have to hold the CD, usually ranging from 6 months to 3 years. The higher the dollar amount of the CD and the longer you hold it, the higher the interest. Again, your cash won't go anywhere, and it's insured in case your bank tanks (provided your bank is FDIC-insured).
I had been buying shares of Wal-Mart and Devon Energy for my son's college fund. I'm not selling them (I don't have many shares), but I'm not buying more, either. For now, the kid's cash is going into an Emigrant Direct savings account at 3 percent interest per year.
I'm a big fan of the personal finance site The Dollar Stretcher. I always have been. I have read the site for years....long before I ever thought of writing my own blog. It is chock full of great information about saving money, investing and earning money, especially if you are going through some rough economic times yourself. The ideas on The Dollar Stretcher helped see me through some personal financial problems of my own, and I have tried to return the favor by helping others through my own blog here at Savvy Frugality.
With that being said, I am pretty excited to announce that Savvy Frugality will be partnering with The Dollar Stretcher! I will be writing a blog for The Dollar Stretcher site called Main Street Meltdown. I intend to focus on general money-saving tips and especially on money-saving moves anyone can make during our current shaky economy.
This doesn't mean that Savvy Frugality is going away. I will continue to post content at Savvy Frugality, and there will be additional material at Main Street Meltdown that you won't find at Savvy Frugality. Essentially, Savvy Frugality is extending its reach to new readers at The Dollar Stretcher, and we hope you will check out The Dollar Stretcher if you are not already familiar with the site. Also, be sure to check out the other great personal finance blogs available at The Dollar Stretcher site as well.
Like most people, I'm always looking for ways to bring additional income into my household. Taking steps to save money is great, but that will only get you part of the way toward living a fiscally fit life. There has to be money coming into the house, too. I take advantage of ways to earn extra money on the job, and I usually receive an annual cost-of-living pay increase, too. However, there are other ways of making extra money without moonlighting. How? Through passive income.
By its definition, passive income is income you receive automatically, regardless of what you do. It's money that constantly flows to you. This doesn't mean that you don't have to work for it. There is usually a lot of work at the outset, but after you have everything in place, the money rolls in. How much is dependent upon what your source of passive income is and how badly people want to pay you for it.
Passive income is not a "get rich" scheme. Sure, some people make a lot of money through passive income; others don't. So, how do you earn passive income. There are a few different sources which can help generate passive income for you:
1. Blogging. A lot of people have been jumping on the blogging bandwagon to try to earn passive income. The income usually comes from advertising placed on the blog site. Others get paid to blog, but that isn't really passive income. Savvy Frugality generates a bit of passive income. If I stopped writing it tomorrow, the blog would continue to generate advertising revenue without my having to do anything else to it. That's passive income.
In the past, I have written articles for sites such as Associated Content. Although I'm not a regular contributor, my articles continue to generate income, and I receive (small) payments directly to my PayPal account once per quarter.
2. Rental payments. If you rent something to somebody else, whether it's real estate or some other kind of property, you are generating passive income. Sure, there is upkeep of the property, insurance, etc., but the property works for you.
3. Royalties. If you have written a book, recorded a CD or created software that people will download from a site, that is a form of passive income. A lot of work goes into creating the product, but after it is created it will generate passive income, provided people are willing to pay for it. Some popular musicians from the 50s and 60s earn more money in royalties now than they ever did when they topped the music charts. How? They continue to receive royalties from work they did decades ago, and their product sells more copies now than when they were "in".
4. Dividends and interest. If you have a nice sum of money socked away in a CD or high-yield bank account, you are earning passive income in the form of interest. Stock investments which pay dividends also generate passive income.
5. Other creative works. I have uploaded a few designs for T-shirts and mugs on CafePress.com, and this generates some income every time someone purchases my designs. The Revver Video Sharing Network pays uploaders for their videos when they are used. Are you a shutterbug? Create some stock photos and get paid every time someone downloads them from one of several stock photo sites on the Web.
6. Business partnership. A silent partner in a business in one which helps fund the startup of the business for a percentage of the business' profits. They don't actively work or manage the business, but they are a partner, so they earn money from the business.
You are only limited by your imagination when it comes to generating passive income. The point is to create something that will continue to generate revenue for you with limited to no other involvement from you after it is created. Even if it's only a few dollars a month, if it's truly passive it won't matter, because you aren't really working for the money anymore. It is generating money on its own.
I am earning passive income each month. It is not enough to warrant my leaving my "day job", but it supplements my regular income. Some people are able to retire early as a result of the amount of money they make from their passive income. I'm not there yet, but I'm always thinking of additional ways of making my money or my talent earn additional income on "auto-pilot".
I once read an article that stated Halloween is second only to Christmas in the amount of money that people spend on a holiday. That's pretty amazing, but it makes sense when you account for the cost of candy, costumes, parties and decorations.
I admit, I have gone all out in year's past to create a Happy Halloween for my kids. One year, I purchased Styrofoam and created a front yard full of tombstones, complete with creepy red lighting. However, this year I'm taking a more frugal approach to the holiday, and with expenses being what they are in this economy, you might be considering the same thing. Here are a few measures I have taken this year to create a fun, yet frugal Halloween:
1. Cheaper candy. Sorry Trick-or-Treaters, but this year the candy is coming straight from the Dollar Tree. A few bags of $1 candy should be plenty for the kids that come knocking on my door this year. No premium candy bars this year.
2. Decorations. This year, we hung a few hand-made ghosts from the tree in our front yard. No special lighting. Besides, the leaves are starting to turn color, and the natural fall colors look great.
3. Costumes. My son bought his costume early this year, from a discount store. He's dressing as a ninja, and I think his costume cost $15. I am making my own costume. I'm dressing as Vince the Shamwow Guy. I got the polo shirt from the thrift store, I'm drawing the ShamWow logo on the shirt, and I got a spare headset from work.
4. Parties. Lots of churches in our area have "Harvest Festivals" as alternatives to Halloween. The community center in our town also has a trick-or-treating alternative for the kids, free of charge.
5. Movies. At my house, we watch scary movies each Halloween. That used to mean renting them, but this year we are watching whatever is on cable, no extra charge.
What about you? Are you cutting back on the holidays this year? What frugal things will you do this Halloween. Please share!
By now, you probably are familiar with the unofficial Savvy Frugality motto: if it's free, it's for me! With that in mind, I'm passing along some links for more free stuff! I'm still receiving free magazines I signed up for nearly a year ago: Popular Science and Business Week. I have also recently received free toothpaste. Here are some recent bargains I found:
Free Pancake Mix
Free Sample of Dunkin' Donuts Coffee
Free Taco at Taco Bell (Oct. 28, 2-6 pm only)
Free Samples on Health and Beauty items at Walmart.com
Free Betty Crocker Instant Mashed Pototoes
Free Bertolli Pasta Sauce
Free Vaseline Intensive Rescue Lotion
Free Subscription to Automobile Magazine
Remember, these free samples are truly free. If a free sample offer ever requires your credit card info, it isn't free! Many free sample offers require your email address. Yes, you will probably get spammed. Don't use your mail email address for these offers. I have opened a free email account at hotmail.com specifically for this purpose. The only thing I use the address for is free sample offers and a "catch-all" for company-sponsored spam.
I have to admit, I have cut back on my expenses more than usual lately. Not because my stocks have been getting hammered (which they are) or because I'm afraid the economy is imploding. No, I need to save money for a trip to my mom's house for Thanksgiving. One of the first places I look at when cutting back expenses is entertainment.
It's not because I don't think entertainment is important, because I do. All work and no play is no fun at all. It's just that there are plenty of options out there that are cheap or free, and entertaining at the same time. It's an easy place to cut back. Here are ten ways I have cut back on entertainment expenses and kept myself amused at the same time.
1. House Party! Why go clubbing when you can have the party at your house? Those cocktails will be much cheaper, and you don't have to tip anybody, either. Better yet, make it a BYOB affair and provide the mixers.
2. Watch Party. I'm an Ultimate Fighting Championship fan, but I'm not a fan of pay-per-view. Spike TV has regular fights that are free for the watching, and I have friends over and make a night of it. It beats paying $40 to watch the same type of fight. Alternatively: have your friends pitch in $5 each to help you cover the cost of the pay-per-view event. It's still a heck of a lot cheaper than paying for the event yourself.
3. Adventures in Eating. Why go out to a restaurant when you can experiment with new foods in your own home? My wife and I regularly try new recipes that we find online or see on the Food Network. Half the fun is cooking it ourselves.
4. Listen for free. I've recently been turned on to Jango.com, where you can listen to streaming music for free. I'm a classic rock fan, and there is a great selection at Jango.
5. Scope out Craig's List. Craig's List isn't just for trying to sell your cast-offs. It also has an events section which advertises free or cheap events going on in your own city. Alternatively, check out your local newspaper's web site and chances are it has an events calendar, too.
6. Red Box. If you are going to rent a movie, it doesn't get cheaper than Red Box. It's a dollar a night for movie rentals, and I never keep my rental longer than one night. Alternatively, check out movies for free at Hulu.com or your local public library.
7. Get a (cheap) hobby. Everyone should have a hobby, but sometimes those hobbies can get expensive. Believe it or not, my hobby is blogging. I enjoy writing. The fact that anybody reads it is a bonus, and it doesn't cost me anything. There are plenty of hobbies that can be done free or cheap.
8. Take a class. Local community colleges, learning annexes, community centers, etc. offer free or cheap courses in things such as desktop publishing, cooking, painting, etc. Alternatively, take some free courses online.
9. Volunteer. If you don't know what to do with yourself, do something for someone else. The holidays are coming up soon and volunteer organizations are always looking for extra people to help deliver meals to the homebound, deliver gifts to the needy, and help raise funds. Not only will you be helping someone else, but you'll feel better about yourself, too.
10. Board games. I know, your kids are glued to the TV playing their Wii or the latest XBox game, but I still have a lot of fun playing board games. My kids love playing Monopoly and Stratego, and we have spent hours playing these games. How long has it been since you've played a board game? They're still fun, even if they are a little "old school". I'll bet you have a couple in your closet at home. I have found some great deals on board games at thrift stores and garage sales. They have more than paid for themselves in the fun my family has had playing them...although my family won't play Trivial Pursuit with me anymore because I always win.
It hasn't escaped the notice of Savvy Frugality that our most popular posts lately have been about recession, possible depression, investing and financial survival guides. To make things a bit easier for our readers, we're presenting all of the relevant information in this easy-to-use guide which will put all of the links right at your fingertips, including some books for suggested reading. Be sure to bookmark this post, Stumble it, add this site to your RSS reader and email this link to your friends. Also, if you have a blog and link to this post, email the link to savvyfrugality at hotmail.com and I will add your blog to the recommended reading list, or just post a comment in this post with the link.
It is the definitive list of posts from Savvy Frugality about planning and making it through these troubled times. Remember, we're all in this together!
The Savvy Frugality Economic Meltdown Guide
The Savvy Frugality Economic Meltdown Guide, Part Two
The Savvy Frugality Recession Survival Guide
Bad Economic Times on the Way?
Five Moves for Your Retirement Account
Ten Quick Ways to Cut Your Monthly Bills
The Second Great Depression?
Grow Your Own Recession Victory Garden
Ten Lessons From a One Income Family
Where to Find the Cheapest Groceries
Where to Find the Cheapest Gas
Stretching Your Food Budget with Angel Food Ministries
Recommended Reading List
The Great Bust Ahead
The Second Great Depression
Crash Proof: How to Profit From the Coming Economic Collapse
Financial Reckoning Day
America's Financial Apocalypse
If you have been paying attention to the stock market lately, and it's hard not to, you've probably become a bit concerned about the state of your retirement account. The Dow Jones Industrial Average closed under 9,000 today. Ouch! The most recent estimates are that retirement accounts have recently lost some $2 trillion. That trillion...with a "t". That's a lot of money.
So, is it time to bail on the stock market and stash your cash under a mattress? The answer is: it depends. As I have mentioned before, I have been snatching up as much stock as I possibly can lately. Why? Because it's cheap, and it will be a long time before it is this cheap again. Is it a gamble? Sure, but I'm betting that companies like SiriusXM, Walmart and Johnson & Johnson aren't going to go out of business anytime soon.
How do you determine the best place to park your retirement funds while the country is seemingly spiraling toward a depression? Here is my rule of thumb:
1. How soon do you need your money? If you are in your 20's or 30's, forget about selling off your stocks (unless you own AIG). You've got a good 40 years or more before you need to start living off your 401k or stock dividends. If you sell now, you'll just lock in your losses. If you are in your 50's or 60's, things are a little more pressing. You'll still want to own some stocks, but you want good, strong companies in your portfolio. This isn't the time to risk your money on a new company. You'll want more of your money in safer investments like bonds, or park your cash in an FDIC insured savings account. Certificates of Deposit are also FDIC insured, too...and you get better rates than a regular savings account.
2. Are you diversified? If all of your money is tied up in one stock, that's not good. Remember the poor folks who lost all of their money when Enron went belly-up? You'll want to spread your money around amongst large cap companies, small companies, and some foreign investments, as well as some stable-value funds.
3. Automate your investments. Not sure which stocks to buy? Park your retirement money in a fund geared toward your expected year of retirement. Fidelity has their so-called "Freedom Funds". If I were to purchase one for my expected year of retirement, it would be the Freedom Fund 2035, for example. As you get closer to your retirement date, your fund automatically readjusts itself to minimize risk. The farther you are from retirement, the more stocks there are in your fund. As you get closer, it readjusts to include more "safer" investments like bonds.
4. Climb the CD Ladder. As we mentioned earlier, most CDs are FDIC insured. You can purchase a series of CDs so that six months or a year from now, you can start cashing them in each month and either purchasing a new CD, or taking the cash plus interest. The CD's with the largest denominations and the longer time periods pay the most interest, usually 3 to 5 percent. Make sure the CD is FDIC insured.
5. Cash is King. Hoarding a certain amount of cash is still a good idea. You can spend it right away and it doesn't lose value like stocks do. Whether you put it in a safe or stick it in an FDIC insured savings account, you'll have a good cushion to fall back on when you really need it. Most people say have several months worth of living expenses set aside. I say you have to start somewhere. Start with $500 and work your way up to several thousand dollars. Use it for emergencies only.
Sometimes I wished I lived in a major metropolitan city like New York, Chicago or San Francisco. It's not for the pizza, sausage or seafood...and it's not because they all have great skylines. No, each of these cities have pretty good public transportation systems. If I lived in one of these cities, I would not have to own a car.
But, I live in a suburb of Oklahoma City which does not have its own public transportation system. Oklahoma City has a bus system, but it doesn't travel out to my 'burb. Hence, every time I need to run an errand which requires me to go to Oklahoma City, I have to drive.
It is said that most people who own cars travel less than 40 miles a day with them. That's not really a whole lot of driving. My car payments are $340 per month. That means it costs me about 28 cents per mile to drive my car, assuming I drive 40 miles per day, which I don't. I actually drive a lot less than that, so it really costs me more than 28 cents a mile to drive my car, and that's just taking into account the car payment, not the gas, oil, maintenance, etc.
That means that my car is the most expensive thing that I own. Each month, it costs me money just to own it, drive it and maintain it. Sure, I get transportation out of it, but when you get right down to it...it's a money pit. Even if I owned the car free and clear, it would still cost me money to use it. It's enough to make me long for the trains and buses in NYC.
In the past, before adopting a life of Savvy Frugality, when I had an emergency expense, it usually involved my car. It either broke down, needed new tires or just plain died by the side of the road. So, how do we minimize our pain of owning and operating a motor vehicle? I'm glad you asked!
1. How often should you change your oil? Opinions on this vary, but you can never change your oil too often. However, it is possible to not change it often enough. The manufacturer says to change your oil every 3,000 miles. My mechanic says every 7,000. I say a happy medium is every 5,000 miles. Do make sure that you follow the manufacturer's recommendations about what KIND of oil to use.
2. Yes, you do need to check your tire pressure. That advice about maintaining proper tire pressure isn't just a suggestion. You really should make sure your tires are properly inflated. Sure, there's the whole "you get better gas mileage" thing, but if your tires aren't properly inflated, they won't last as long. A new set of tires is more than a couple of hundred dollars. You don't want to change those more often than you need to, now do you?
3. Ditch the additives. Those bottles of additives at the automotive store promise they will clean your engine of oil sludge, remove water from your gas tank, etc. They aren't necessary, and if used improperly will actually cause more problems for your car than they will solve. I damaged the oxygen sensor on my Saturn by adding gasoline additive to the tank. The mechanic never could figure out how to fix it.
4. Streamline your car. Want better gas mileage? Get rid of all the junk in your car. That's added weight that you don't need. Also, if you have a luggage rack on your car and you don't use if for luggage, that adds more drag to your vehicle. I've read about some people who remove their side view mirrors to reduce drag on their car. That's stupid. However, the luggage or bike rack isn't an absolute necessity.
5. Heed the lights. I'm not talking about the traffic lights at the intersection, but the warning lights in your car. Have you been driving the past 2,000 miles with the "check engine" light lit up on your dashboard? That's bad news. Time to take the car to a mechanic.
I designate a percentage of my emergency fund to regular auto maintenance. I suppose you could also just open a savings account specifically for your car maintenance, and deposit $25 to $50 in it every month. When it's time to get something fixed, you have the money for it. The car repair doesn't become a dire emergency.
While the U.S. holds its breath to see if the government bailout of the banking industry works, or if the country is headed for a Second Great Depression, you don't have to sit around and wait and see if the economic mess will affect you (or rather, HOW it will affect you). A bad economy eventually trickles down and affects everybody. If you aren't directly affected by the loss of a job or by taking a hit to your stock portfolio (my stocks have been hammered...actually ALL stocks have been hammered...but I'm still buying stocks on the cheap. They will recover...eventually) then someone who buys from you or your business or provides a service to you may be affected. Either way, it's best to be prepared for any worst-case scenario.
By now, you may have taken steps to get out of debt and reduce the amount of your regular monthly spending. For a lot of people, that means starting with something they can easily control, such as their family's food and grocery budget.
Over the past five years, I have had to double the amount of money my family spends on groceries. Food costs have skyrocketed, particularly meats, dairy and produce. Still, there are ways of making your food budget stretch, and there are a few staples that should be in everybody's "emergency pantry":
Stock up on cheap dry goods: I can buy 50 pound sacks of rice and 25 pound sacks of dried beans at some of our local Asian and Hispanic grocery stores, and the price is still cheap. Rice and beans can be used for numerous dishes, and if store properly, will last for months and months.
The Dollar Store is Your Friend: I actually buy a lot of canned grocery items at the Dollar Store. The food is comparable to what I would find at the supermarket. In fact, a lot of Dollar Store items are just overstock items from supermarkets. Recently, I got salad dressing, balsamic vinegar, pasta, spaghetti sauce and roasted red peppers from the Dollar Store. I would have paid much more at the supermarket. Just make sure that you couldn't actually get the items cheaper elsewhere before purchasing them at the Dollar Store. It's possible some items could be less than a dollar somewhere else.
Make meat a side dish: For the most part, the U.S. is a "meat and potatoes" culture. Meat is expensive to produce, and lately, expensive to buy. Purchase and prepare meat sparingly. Use meat as an ingredient to soups, stews, sauces or chili. Use it as part of a casserole. Or, get your protein sources from things like beans or tofu. Meat is a huge part of the grocery budget.
Purchase powdered milk: I always have powdered milk in my pantry. I mainly use it for cooking, not for drinking. However, when I purchase powdered milk, the liquid milk I purchase at the store for cereal or drinking lasts longer, because I'm not dumping it into my cooking or baking recipes.
Make cheap items go further: This is where the soups, stews and casseroles come in handy. There is a link to the Campbell Soup casserole page at SavvyFrugality.com. One site, HillBillyHousewife.com, has an emergency menu which can be used to feed a whole family of 4-6 people for $45 per week.
Ditch the snacks: Most Americans eat too much food in the first place. I was one of them. I recently lost nearly 30 pounds, mainly by ditching snack foods and walking more. Stick to three square meals a day. You'll save money by eating less food, and your waistline will show improvement.
We'll continue our series on Emergency Saving tomorrow, when we discuss saving money on automobile expenses.