Archive for July, 2007

The Goal of Saving is Spending

For short periods of time you can deprive yourself of certain comforts in order to afford others. Just after graduation I lived in a group house in DC with five other people. But I also went out to eat quite a few nights a week and spent quite a few hours in bars down in Georgetown. Of course, I couldn’t spend money on anything other than food, because I didn’t have the space to store anything new. But there is no way that I could have lived in a messy, dysfunctional house, eaten dinner at home every night, and deprived myself of any activities with friends or family. Instead I chose to save money on the biggest expense: housing. With only $310 in rent due each month, (in 1999), I was able to save a significant amount of salary, and still have an incredible life in the city.

The point is: the goal of saving money is not to wake up one day with a pile of money. The goal is to save money in certain aspects of your life in order to be able to afford other luxuries. I am proud to say that I have never kept a balance on my credit card. Every month I have found a way to cut back on one expense in order to be able to afford another. Plus save a significant amount of my salary. If you can save $40 a week in groceries. Then you deserve to eat out every once in awhile with the $40 you’ve saved.

Two summers ago while my husband and I were vacationing I went for a walk and found a house I thought we should buy. When I mentioned the house to my husband, he said, “I’m not interested in buying a house. Let’s just finish paying off our primary mortgage.” At first, he was unwilling to sell his stocks or mutual funds. He had grown attached to the balance in his brokerage account. He had gotten used to seeing a certain number and didn’t want to see that number dwindle. He had forgotten that he was saving money that should ultimately be spent.

Of course, that doesn’t mean every time you save money you go out and spend it. I’m certainly not advocating that. Rather we save money in order to be able to enjoy our lives. There is no point in saving every dollar today and then waiting 30 years to take pleasure in that money. Along the way you have to enjoy your life, and more often than not, that enjoyment will require spending some money.

Buying our beach house is one of the best decisions we’ve ever made. Driving down to the beach, my husband and I get to spend hours alone discussing our dreams and plans for the future. We get to sit out on our deck and watch the sun set. We get to start each new day with a morning swim. Had we not bought our house we would have put the money in the bank and watched our balance grow.

This is, of course, more noble than spending all your money, or worse yet spending more money than you actually own. If you’ve read any of my other posts you know that I am a huge proponent of saving money, but I also think it’s important to enjoy the money you save along the way. The goal is to be frugal with your money… not miserly.

July 31, 2007 at 11:27 PM 3 comments

Do You Find Comfort in Your Home Equity?

My father has always been the primary provider in my family. One night a neighbor told my father she planned to pay off her mortgage early. My father fell in love with the idea. That night he came home and told my mother that he planned to pay off the house as soon as he could. With a limited income, and two children with two college educations, he managed to pay off his house 7 years early.

Three factors went into my father’s decision to pay the house off early. First, he knew that he would save money. Second, if anything happened to him, he wanted to know that my mom, brother, and I could remain in our home. Third, he knew that my mother did not have a head for numbers. (My mother is dyslexic.) In case anything happened to my father he wanted to ease my mother’s distress by letting her know that she would not lose the house and didn’t have to generate the income to continue paying the mortgage.

Because of this decision, my father has occassionally been forced to treat his house like a bank. Most of the time he makes extra deposits, but a couple of times he has been forced to make withdrawals. Since he invested his savings in the house he had little money stowed elsewhere. It’s not that he didn’t have any savings. He did have money in other accounts, but the majority of his wealth was in his home. So whenever a large expense fell upon his shoulders, like college tuition, he turned to the trusty HELOC.

I find this reasoning and logic quite interesting. The goal is to find comfort in the fact that your house cannot be taken away from you. But then you take money out of the house, via a HELOC, which again puts your home at risk.

My father recently took out a new home equity line of credit on the house. To my knowledge he has no plans to use the line, he simply opened it in case an emergency arises and he needs the money. But I can’t quite figure out why he chose a HELOC at this stage in his life. I know he has money set aside in both retirement and non-retirement accounts so he should never need to tap this line. I wonder… after all these years of having a HELOC as his safety net, does he feel at risk without one?

July 31, 2007 at 3:05 AM 1 comment

Classing Up the Joint with IKEA Furniture

Early this year my husband and I were forced to replace our living room furniture with IKEA sofas and chairs. The transformation started in April when one of our cats decided to spray his scent all over our home. That first trip to the IKEA store was quite a sad one. My husband and I decided we could not get rid of the cat, despite my numerous threats to do so, but we also couldn’t keep the furniture the cat had soiled. We didn’t want to buy expensive, quality furniture in case the cat decided to spray again, so we headed to IKEA.

This was a big deal for the two of us. My husband and I have had very few fights in our relationship, but for some reason we have always fought about furniture. It’s odd actually, but for some reason most of our trips to furniture stores have resulted in tears and angst.

Our home is now a hodgepodge of furniture. Our living room and foyer are filled with beautiful wooden tables, chairs, and hutches passed down by my husband’s grandparents. As a housewarming present to ourselves we also purchased a gorgeous china cabinet, which was filled with subsequent wedding gifts, and a new dark-wood bedroom set. Our living room on the other hand is filled with two cat scratched wing back chairs, handed down by my in-laws, an old cat-torn sofa from NC, and four IKEA chairs. We also have a number of mismatched and irregular sized tables that don’t fit the space.

I will now secretly admit that I have grown to like the IKEA furniture quite a bit. I am quite tall and the chairs all have high backs that make them quite comfortable. Throw in a couple of cheap ottomans and you have a nice cozy place to sit and blog. We purchased two Jennylund chairs from IKEA which have removable covers that can be washed should the cat decide to do his deed, which thankfully he has refrained from for now. IKEA makes a number of different slipcovers so if one becomes ripped or torn you can buy another one for $79. Tonight I came across a great website that makes classier slipcovers. If your IKEA furniture is in need of a little updating check out: Bemz. They have slipcovers for quite a few IKEA sofas and chairs. If my cat continues to behave himself I think I have a new slipcover in mind.

July 29, 2007 at 2:01 AM 7 comments

43 Things I’d Like to Accomplish

Tonight I stumbled across the 43 Things website. The site allows you to create a list of 43 things you’d like to accomplish. The creators of the site claim that people who document their goals are more likely to achieve them. You can view other’s lists and incorporate their aspirations into your own. It’s a pretty nifty idea. As you check your goals off the list you can write stories capturing your progress.

Here’s the start of my list:

  • Be well.
  • Find Courage.
  • Explore… my life, my career, my passions.
  • Spend more time with those I love.
  • Start a Journal.
  • Meditate.
  • Enjoy the weather when it’s sunny and warm outside.
  • Walk at least one mile each day.
  • Read for pleasure.
  • Rediscover happiness.
  • Sing in the shower.
  • Take a yoga class.
  • Go to sleep earlier.
  • Smile more.
  • Worry less.
  • Breathe.

July 27, 2007 at 3:00 AM 4 comments

What Employer Benefit Do You Value the Most?

What employer sponsored benefit do you value the most? If your employer asked you to choose the benefit that mattered most how would you answer? I would imagine that older, loyal employees would value their pensions, while younger employees would value 401k contributions. Middle aged employees with families probably value flexible work schedules and telecommuting. I’m sure a handful of employees would list their vacation time, while others would include educational assistance.

There are so many employer sponsored benefits to choose from. Would you choose vacation time? Flexible work options? Medical benefits? Educational benefits? Life & Disability Insurance? Adoption Expense Coverage? On-Site Day Care?

If you were faced with a cut in salary or a cut to your benefits, which would you choose? Would it depend on which benefit you most valued? If you value your 401k contributions, then clearly you care about saving for the future. If you are saving through retirement vehicles then perhaps you are also saving a good portion of your salary. In this case, you might choose to keep your salary and cut your benefits. If on the other hand you needed flexible work options that would allow you pick your children up from school each day would you be willing to take a cut in pay for the option to leave work early each day?

Personally, I would take a cut in pay, in order to keep my employer sponsored benefits. My most valued benefit is flexible work options. Faced with long commutes to work each day, I would choose the ability to work from home, over a higher salary. Benefits like flexibility enhance quality of life in a way that more money cannot.

When companies are considering cuts to benefits do they also consider cutting employee salaries? I wonder how many employees would choose salary cuts over losing their benefits?

July 26, 2007 at 3:29 AM 4 comments

Frugal Dates

My 30th birthday is right around the corner and I’ve been trying to come up with interesting ways to spend the big day. I decided not to go the frugal route on this one. My husband and I will cough up some money for a romantic sunset sail, then head out for a late dinner and maybe a sweet dessert.

Before making this decision I poked around the Internet for fun, frugal date ideas. The search for ‘frugal dates’ brought back some interesting results. The list below includes my top ten favorites:

  1. Curl up together in your backyard or a local park for some star-watching. In our case we could go to the Observatory to check out the stars.
  2. Spend the day at a park with a playground. Make a picnic lunch and play on the swings.
  3. Go to the local farmers market or state fair.
  4. Visit the zoo. Some zoos charge an entrance fee, but the zoo closest to us is free.
  5. Take a long bike ride and stop at a secluded location for a picnic.
  6. Spend a day at the beach, swimming and making sand castles.
  7. Attend a softball, lacrosse, or baseball game at a local college.
  8. Go for a hike.
  9. Take a long drive together.
  10. Take a tour of local wineries or breweries.

July 25, 2007 at 3:25 AM 2 comments

List of Online Survey Sites to Make Extra $

I have never signed up for online survey sites but I know quite a few folks who make extra money this way. I recently came across the following list of sites and thought I’d provide links for anyone who’s interested.

Disclaimer: I can’t provide any comments or legitimacy for these since I have not signed up for them myself. I am not advocating their use. I’m simply providing links. Please read all disclaimers prior to utilizing any of them.

July 24, 2007 at 2:55 AM 1 comment

All Out of Ideas

I have absolutely no idea what I want for my birthday. I’d like better health, but I don’t think anyone can wrap that up in a box for me, so I’m completely stumped for ideas. I recently read that money can buy happiness. Studies have shown that people feel happier when they spend money on activities rather than things, so I’m trying to incorporate activities into my list. I used this same approach last Christmas. Rather than receiving jewelry and clothes, of which I already have plenty, I received hockey tickets and gift cards for places like Dream Dinners. As a result my hubby and I had quite a few special moments together. But now that I asked for all of those things at Christmas I have no idea what to include for my birthday….

It’s becoming harder and harder to come up with a list. Any ideas?

July 21, 2007 at 3:16 AM 3 comments

Embarrassed by my Own Frugality

I am a big believer in coupons. Since I started clipping I haven’t paid more than 50 cents for name brand shampoo, conditioner, soap or dish washing detergent. I estimate saving between $20 – $40 each week by reading the sales circulars and combining sale items with manufacturer’s coupons.

There is only one problem with clipping coupons… they often fail to work. The cashier scans the coupon, the scanner beeps, the cashier looks at the coupon, the cashier rescans the coupon, the scanner beeps, the cashier asks me to show her the item, I ruffle through the bags to find the item, she looks at the item, she looks at the coupon, she looks back at the item, she rescans the coupon, the scanner beeps, she lights up the ‘help needed’ sign on the register, and all of the people in line behind try to refrain from groaning.

Now every single time this happens I want to slink away from the register. I hate knowing that the unlucky individuals in line behind me will be stuck for one more second than they have to be. I know in my heart that my time is more valuable than money. So I won’t wait in line for 10 minutes to save 10 cents. But sometimes it’s worth standing in line to save the money. For example, on Sunday I had two coupons for free items, cat food and candy. The coupons saved me roughly $7. Of course, neither of the coupons worked, despite the fact that I purchased the brand, size, and quantity listed on the coupon, so I waited for the store manager to help me.

But the whole time I waited I felt guilty. I apologized to the woman behind me at least three times. She said not to worry, that she had the same coupons for the same items, but I felt awful nonetheless. What do I feel? Is it guilt? Embarrassment? I’m not sure. Would I be less embarrassed if I didn’t make a six-figure salary? Would I feel differently if my family needed the money to pay the bills? I don’t know, but every time I wonder… Why do I feel bad?

July 20, 2007 at 3:22 AM 3 comments

Encouraging Savings: The Calendar Trick

It’s funny how similar weight loss advice and debt reduction tips can be. Yesterday I read a blurb in an old issue of Health magazine advising individuals to track their workouts by marking them on a calendar. According to the article, you mark an X on each day you workout. If you look up at the calendar and don’t see any X’s for the week, you need to head to the gym.

This same approach works for saving money. You can place an X on the calendar for each day that you don’t spend money. If you don’t see any X’s on the calendar, you need to leave your credit cards and ATM card at home.

The idea is to provide yourself with a visual representation of your habits, with the hope that the visualization will reinforce good behaviors and ultimately allow you to form better habits.

In addition to using a calendar to mark spend-free days, you can also write down how much money you save each week through coupons, rebates, etc. I came across this idea in an old issue of Woman’s Day magazine. A coupon-clipping couple kept track of their savings by writing the amount saved each week on their calendar. At the end of the year they totaled their savings and celebrated their windfall with dinner out or an evening away.

When I first started clipping coupons and saving money I found I needed reminders to save. After all, unless you were raised in a frugal family you probably don’t particularly like clipping coupons and holding pot-lucks instead of going out to dinner. It never hurts to keep reminders around to encourage you.

July 18, 2007 at 12:38 PM 2 comments

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