My Fake Budget

About  a year ago, after reading Your Money or Your Life, I created my first budget.  I dutifully added up our income and averaged regular expenses.  Certain things like rent, utilities, gas, and insurance were easy to figure out.  I had to estimate other expenses like clothing, dining out, cleaning help, gifts, etc.  When all was said and done, our expenses tend to exceed our income on a regular basis.

In addition to irregular freelance income and unexpected expenses, another (major) problem was caused by estimated expenses that were basically numbers I grabbed out of the air.  Even after one year, I haven’t been diligent enough to figure out our average costs for many fun categories.  This is hard to do because we pay cash and we are not very aware of our budget.  In other words, if we budget $100, we may spend $100 jointly and still exceed that amount due to separate activities.

If we look on track to exceed our Dining Out budget by mid-month, I may send a half-hearted email to my husband and note to myself that we must watch our budget or cut elsewhere this month.  Only we seem to not do this or we get a bill that must be paid or another excuse…  The reason I am calling this my/our fake budget is that I simply INCREASE our dining out budgeted amount to match our actual spending instead of making any hard attempts to rein this in.

I know this isn’t good because some months we’re on track or under budget and I’m very happy. Then we exceed our budget the next month and I freak out.

Budgeting is hard!

Frugal Substitutes: The Master Chart

The idea of finding frugal substitutes for expensive wants turned from a comment, courtesy of reader and commenter Debbie M, to a full-fledged post at grumpy rumblings.

Here’s the excerpt from that comment, and I’m called out to name my list of frugal substitutes, an idea inspired by the book “Your Money or Your Life.”

Debbie M says:

“And then there’s also strategizing about what makes you happy. If you want to feel pampered, do you need to visit a tropical island? Or would you be just as happy with an in-town spa or fancy hotel, a massage, a facial, or, in my case, fresh-out-of-the-oven chocolate chip cookies and a good book?”

…And maybe oilandgarlic can share a list of Frugal Substitutes! We can always use more of those!”

And I said:

“I’ve been meaning to respond with my frugal substitutes but I could probably do a whole post. The gist of it is that I try to figure out WHY I want the big indulgence. Am I stressed? Do I want to try something new? In the past, I would assume that the best way to satisfy my want is a spa day or travel. Now I realize that I can satisfy that need for pampering in multiple and often cheaper ways. I could do a at-home facial. I could buy flowers and put a slice of lemon in my water. I can put on relaxing music. I could convince my husband to give me a massage.”

So without further ado, here’s my handy dandy chart (sort of tongue-in-cheek), and please feel free to share your own frugal substitutes:

Fees, Fees, Fees

My girl friends/family and I generally don’t talk about finances.  It’s not really about privacy; it’s just that we have so many other things to talk about! However, I wish that we did share financial insights once in a while, so I’m sharing it on this public space.

I touched on this topic before but there’s a new law going into effect that makes it easier to see fund fees in your 401k plans.   With non-401k mutual funds, you can compare fees but many people ignore the impact of fees on their returns.  Once a year or so, I use the free “Instant X-Ray” tool on Morningstar to analyze my funds and compare fees / returns with similar portfolios.

The bottom line is that the fees associated with mutual funds can decimate your savings.  Choosing no-load and index funds make a big difference in retirement.

This is my public service announcement for the week!

What Won’t You Pay For?

I love reading magazines, from money to fashion/design to family/parenting, to the point that I could easily subscribe to a dozen.  However, in the interest of saving money and reducing temptations, I limit myself to 3 or less at a time.

Despite my love of magazines, I haven’t paid for a subscription in years, not since getting my first free subscription via expiring airlines miles.   After that, I realized that there are a few ways to get my fix for free.  This works for me because no magazine is a must-have for me.  I enjoy Real Simple and Self, but as long as I get any glossy lifestyle magazine, I’m pretty happy.

In addition to airline miles, which I can never seem to redeem for travel, I have also gotten free magazines via online surveys.  I don’t waste too much time on these but I’m part of a consumer panel and I actually enjoy giving feedback so it doesn’t feel like a waste of time.  Over the years, I’ve gotten 15 – 20 free subscriptions from Lucky to Smartmoney to Martha Stewart Living.

Another way I’ve gotten free magazines is via purchases.  It’s not so common but Harry & David had a promotion — offering a free subscription with X amount purchase.   I had to email customer service but it was really easy and I think I got Sunset or Martha Stewart Living magazine. I also got a free issue of Dwell from an online furniture/decor store.

Right now I have 3 magazines coming in — 1 via surveys and 2 via Recyclebank participation.  I’m still not sure how Recyclebank works (or makes money) but I get points for reporting my recycling so I figure why not participate.

Anyway, this post wasn’t supposed to only be about ways to get free magazines. I was just wondering if other people had similar experiences.  One friend finds it hard to pay for designer jeans because she used to get it for nearly free via a work connection.  Another friend hates to pay for parking. Do you have something (or things) that you just can’t bring yourself to pay for?

Living The Rich Life

I thought it was time for me to address the cost of moving to our new rental house.  We’ve had time to adjust and suck up the high costs associated with moving from movers to new appliances to starting up gas, trash, utilities and water.  We’ve benefitted from this move in countless ways that I feel it’s well worth the extra cost, to the tune of doubling our previous rent.  That’s right, doubling, while our income has stayed steady.   Fortunately, a welcome flood of freelance income has taken the sting out of the increase but I know that at some point we have to re-evaluate our budget.

I’ve been playing with numbers for months and the most obvious hit is to our savings, which should become zero if we don’t want to spend more than we earn.  However, I’m not cutting out the 401k contribution because it does reduce our tax bill and we do need to continue saving for retirement. 

To be honest, our move into a nicer neighborhood has me feeling like the family in the TV Show “The Riches” starring Minnie Driver and Eddie Izzard as crooks who assume the identity of an upper-middle-class suburban family.  The funnier thing is that this new neighborhood is not fancy by any stretch of the imagination. It just has better schools and nicer parks than our old area.  Both areas were / are safe and quiet.  Both areas probably had the same median income and were / are middle-class, although this one seems to be a tad more solidly middle-class.

I think what really makes me feel “rich” is that the house itself is bigger and newly renovated.  After many years in our old house, things get worn (naturally) and are not replaced.  I’m sure that if we stay long enough, this house would also look more worn-down; however, it still has better basic fixtures overall than our previous rental.  The old place had linoleum in the kitchen and bathroom, plus the cheapest windows you could possibly buy.  The new place wins out just by having tiles and nicer, new windows.  I guess I’m not too hard to please in the area of decor!

Truthfully, I don’t know how long we can manage on this higher rent.  We may have to downgrade in a few years, hopefully not too soon, and find a townhouse or apartment.  For now, we’re enjoying this new place. 

I also have a feeling that I will really appreciate every day here… I’ve read that  most people get used to their status/situation so happiness from things, including houses, diminishes over time.  However, I think I might be able to appreciate this place and all its advantages for a long time.  Here’s why and I hope you have the patience to read my washer/dryer story.  For many years, my husband and I did not have a washer or dryer.  We usually waited as long as possible before we hauled 4 – 6 loads of dirty clothes and linens, spending hours in a dingy, ugly laundromat on a Sunday afternoon.  Yes, we killed time with books or web browsing but we generally didn’t trek too far and the other restaurants near the laudromat were equally dingy and depressing.  At any rate, it certainly felt like we had to base our schedule that day around laundry, not the same as doing laundry at home.  And while I have said how much I hate doing laundry, I should clarify it’s more than I feel the division of laundry should be equal and not all on one party.   In spite of my dislike for this chore, I’ve always appreciated having our own washer or dryer.  What I’m trying to say is that while I might get used to this house, years of living in a tiny space and enduring a long commute will likely make me appreciate this new living environment much longer and even forever!

Why I Stopped Reading Personal Finance Blogs

About 4-5 years ago, I discovered the world of personal finance blogs, or PF blogs.  I loved how they put a personal spin on the rather impersonal world of finance.  I stopped reading traditional finance websites and spent hours reading blogs like The Simple Dollar, Boston Gal’s Open Wallet, Get Rich Slowly, I Will Teach You To Be Rich, Fabulously Broke, and Blogging Away Debt.  Many of these sites had not yet “monetized” and were more personal than they are now (some may be gone, I’m not sure..).   I read and participated in some money “carnivals” which are basically a compilation of finance-related posts. You have to submit to the host blogger and get selected for inclusion.  Reading and commenting on these blogs were a daily part of my weekday life.  Then about 2 years ago, I decided to stop reading most PF blogs.  I still read Money Saving Mom and a handful of 20-something PF bloggers but not on a daily basis.

Why? Was I such a financial guru that I had no need for the words, wisdom or support of pf-bloggers? Yes and no.  I was getting more than enough information from traditional money websites and magazines.  I had set up my saving accounts and investments (index, no-load, watch those fees) and could consider myself an intermediate investor.  However, I could certainly still learn new things.  For example, to this day, I still have little knowledge of ETFs, bonds or college savings accounts.

OR Did I make so much money that I no longer needed to look for ways to save and earn more?  Definitely not!  As I mentioned, I still read Money Saving Mom and occasionally other money-saving blogs.  However, the frequency and participation is nearly zero.

OR Did I lose interest in the topic, period?  That’s not quite true either.  While I don’t like reading about pf blogs daily, I am still very interested in reading/learning about money, more so than most people I know.

So why did I stop reading?  Here’s the longish answer.  I once read about a study that reported wealthier people are often more selfish and less empathetic than those with lesser means.  While I am certainly not wealthy, I realized that reading all those finance blogs made me think of money ALL THE TIME.  With money on my mind, I worried more about finances.  Was I saving enough? Did I get the absolute best deal on those batteries and toilet paper? Even worse, I felt somewhat superior to those who were/are less concerned with money.  Since I thought about finance daily, I could not understand why many of my friends, co-workers and family members made ”wrong” choices in regards to spending and saving.   Looking back, not all their choices were wrong, per se.  They were simply making choices based more on emotions than financial security.  In short, I lost my compassion and empathy.

It wasn’t actually easy to stop reading.  First, I reduced my list of favorites to a handful of blogs.  I also stopped trying to discover new pf-blogs.  However, I still read finance carnivals during the work week, and this habit kept me in the same money-focused mindset.  I realized that I had to go cold turkey.   I deleted all pf-blogs from my favorites list and did not read any for weeks.  It was relatively easy to stop reading but the hardest part was not finding out about sales and drugstore deals.   Luckily the arrival of kids cut my free time and I am now happy if I get a good-enough deal on household staples and groceries.

As they say, eventually your new routine becomes your new habit.  While I still occasionally visit a few finance blogs, I no longer read any of my old favorites on a regular basis.  A few weeks ago, I stopped by “The Simple Dollar” and “Get Rich Slowly”.  I skimmed a few posts and quickly moved on.  I don’t have a new focus, or rather my new interests are all over the map.  I like reading blogs by intelligent women on career/work and family.  I read some design/lifestyle and cooking blogs.  I get my money “fix” from finance websites or magazines.  If I do come across a pf-blog, I may look up a specific topic but I no longer browse numerous personal finance stories.

Nowadays, I’m mostly satisfied with my financial knowledge and choices.  I’m happier when I don’t think about money so often, even if I probably still think about it more than the average person!

Do you read personal finance blogs? If so, how often?

3 Hacks In 1: Save Money, Time and the Planet?

 As someone who is often caught in the dilemma of saving money vs. saving time, I appreciated this post by Laura Vanderkam about her top 10 Frugal Hacks.   These tips are meant to save you money, but not at the expense of taking away your time.  

Her post got me wondering if I could come up with my own “3-in-1″ tips for those who are more financially strapped and/or want to be “green.”   In other words, can you save money, save time and save the planet?

Here are my Top 10, some adapted from Laura’s list, some new, and some which I may have written about before:

1) Streamline your errands: Plan out your day so that you can finish at least two errands in one trip.  If you’re going to the gym, stop at the market on the way home.  Getting a hair cut? Is there a drycleaner near by?  Do you need to get gas? Think it out a bit and I guarantee that you will save time and gas.  I also recommend keeping a shopping list with you at all times (by paper or on your phone) so that you can just pull it out once you’re at the store.  Bonus tip: Many retailers let you take out cash when you pay with a debit card, saving you a trip to the bank.

2) Learn to cook a few dishes well, and focus on recipes that are very adaptable with ingredients.  To me, this would include Italian rice salad, Chinese stir fry, frittatas, fajitas/tacos/burritos, and omelettes.  As an example, if you make frittata, all you need are eggs, olive oil, salt, pepper and some cheese, ideally parmigiano.  The list of possible ingredients include bell pepper, onions, spinach, leeks, sausage, ham, mushrooms, and so forth.  The same principle applies to stir fry, which you can whip up quickly with a variety of vegetables and one protein.  The green angle? Versatile recipes are also great for reducing food waste. 

3) Shop Sales and What’s In Season:  In general, if you buy fruits and vegetables that are in-season, it’s both fresher and cheaper (and better for the environment).  Not coincidentally, what’s in season is often what’s on sale at supermarkets.  This doesn’t only apply to seasonal items.  As Laura mentioned, if pork is on sale, buy the pork.

4) Use your local library:  Borrowing books or DVDs is obviously  a money-saving choice, too.   However, it’s not simple or green if you have to drive far to get to a library.  I’m including this because I assume that most people don’t have to drive far out of their way to get to their local branch.   The Los Angeles public library system (www.lapl.org) even allows you to reserve books from any of its branches.  You log into your library account, put books on hold, and get an email when the books arrive at your local branch. You can pick these up at your convenience (within a two-week timeframe).

5) For Travel, Think Local and Flexible: While I love traveling far from home, there’s no doubt that international flights exact a heavy environmental toll.  If you stay closer to home, you won’t have to shell out big bucks on airline tickets.  Hotels will still cost money but sites like www.priceline.com can save you a lot if you’re not set on exact dates or a certain hotel.  Another helpful booking website is www.backbid.com.  I tend to scour several sites for the best deal but that takes up precious time.  What I love about backbid.com is that it allows you to post up your hotel reservations and then get competing bids from nearby hotels.  If you like the new offer, you can book it and cancel your existing reservation.   

6) Use Amazon.com:  If you’re into coupon clipping and drugstore deals, Amazon.com might not offer the lowest prices on household goods.  However, if you want to save both time and money, many items like diapers and wipes are reasonably cheaper via Amazon’s Subscribe & Save option.  With Amazon Mom or a $79/year Prime membership, diaper and wipe prices even beat Costco and drugstore deals.  I’ve also found great deals on selected cosmetics, coffee and a host of other items, so it’s definitely worth comparing prices on Amazon before buying elsewhere.  I think the environmental cost of shipping is offset by fewer trips to a physical store.

7) If you must clip coupons, use www.couponmom.com:  Coupon sites like www.couponmom.com does the hard part for you by making it easier to match up sales with coupons at drugstores and supermarkets.  However, remember that driving around to get the lowest price or stocking up on things you don’t need is not good for the environment.

8) Check in on your smartphone:  I’m a bit of a techno-phobe but I had a chance to try out a fancy smartphone recently.  Most people know about free apps for scanning product bar codes and coupon apps, but the most useful app for me was Yelp.  With Yelp’s free app, I got 15% off just for checking in at a restaurant.  Checking in can be a pain if you are wrangling kids, but I often use Yelp anyway so this wasn’t a time-consuming step. This app can also save you time.  If you’re running errands and suddenly realize you need cash, you can look up nearby banks instead of driving around.  Smartphones are not necessarily a green choice, especially if you upgrade constantly, but there are tons of other apps that can help you save both time and money.  Do you have any favorite apps that save you time/money and the planet?

9) Buy and Sell Used, the Smart Way: I like the idea of buying used because I’m keeping something out of the landfill. The only downside is that it’s often simpler to dump things in the trash.  However, even if you’re short on time, you can call the Salvation Army and schedule a free pick-up.  What if you’re short on time but could use the extra cash?  I recommend listing items on ebay or Craigslist at bargain basement prices.  If you list items at very low prices, you can usually find an eager buyer quickly.  This is a nice compromise between donating and selling to make a profit.  Extra tip: Have a buyer meet you at work if your home is not centrally located.

10) Buy Organic, the Smart and Cost-Efficient Way: Buying organic is expensive but good for you and better for the environment.  If you can’t afford to, focus on avoiding the dirty dozen, i.e. fruits and veggies that retain pesticides.  In general, if the peel is thin and you’re likely to eat it, go organic (ex: apples, strawberries, potatoes, sweet bell peppers).  For thicker-skinned fruits and vegetables, you can stick with non-organic (ex: avocados, bananas).

Bonus Tip: Streamline your local deals:  I am a fan of Groupon-like deal sites, but there are so many similar sites nowadays that it’s time-consuming to keep track of deals.  I also don’t have time to read multiple emails from Groupon, Tippr, Living Social, and other deal sites.  That’s why I use www.dealery.com , a site that aggregates daily deals for your selected city or cities.  So much easier!  Note: This tip doesn’t really save the planet but I just wanted to share…

Do you have any tips to add?