money

You are currently browsing the archive for the money category.

Money Management Part 2: Pinching Pennies

January 24, 2012 in blogging, economy, frugal living, monetizing blog, money, recession by boxcarkids | 26 comments

The following are a few examples of how we manage on our meager income, plus tips from other websites and sources on ways to save money and live frugally. Everybody has some fixed expenses – fixed however doesn’t always mean completely unchangeable. For instance, interest rates are down – it might be possible to renegotiate your mortgage for a lower payment. You might have a monthly cable TV bill that is ‘fixed’ but of course it’s up to you to decide whether you need cable TV (or the specific plan/provider that you have). Then there are the expenses you should be able to curtail to some extent – such as food, entertainment, and purchase of clothing and other household or personal goods. These are the areas you have the greatest control over and the easiest first step in preparing a frugal budget.

Food

Our challenge is feeding a family of five, plus pets, on a limited budget while living in a small space. How do we do it? Well, naturally we clip coupons. But I don’t even try to ‘extreme coupon’ (haven’t seen the show but have an idea of what they do). We don’t subscribe to the newspaper (too expensive) but I generally buy the Sunday edition for the coupons and I find coupons online (Shortcuts.com and mypoints.com for example). I can either load the coupons onto my grocery club card or print them. If I use coupons from My Points, I get points in addition to savings – those points eventually translate into grocery or gas gift cards. Unfortunately a lot of coupons are for name brand products that, even with the coupon, cost more than the store brand, so I get limited use out of them. The days of grocery stores doubling the face value of a coupon are over (at least where we live, although they will double up to $1) so I generally only use a coupon if it is an item we use/need and whenever possible I try and combine sales and coupons.

We shop at the bargain and warehouse stores – Dollar Tree, 99 cents store, Big Lots, Food for Less, Smart and Final – and sometimes these are good deals, sometimes not. It helps that I have time to shop around but due to the price of gas I try and limit my visits to multiple stores and only go to those near another destination (generally one of our schools). It’s not worth the gas to drive out to the closest Walmart (12 mile roundtrip) to save a few cents on one or two items. And sometimes the bargain stores aren’t such a bargain – yes I can get a small bottle of dish soap for .99 but I have to calculate the unit price (is the $2.99 larger bottle at the grocery store a better price per ounce?) and decide whether I’m OK with trading quality for the lower price. If I use twice as much to get the dishes half as clean is it a bargain?

The warehouse store issue is buying in bulk. The cost of some foods is less at Smart and Final when I buy the ‘value pack’ and I like S&F because you don’t need to pay to join like you do with CostCo and Sam’s Club. But even though the cost per unit is sometimes quite a bit cheaper at S&F, the total cost is frequently more than I can afford. And, with limited storage space, even when I have the money to buy super large bags of rice or flour or multiple packs of canned goods, I have no where to put them. Nevertheless these stores are worth scouting out if you have a garage or large pantry. When we lived in a house we had a freezer in the garage and I regularly stocked up on bulk frozen goods. I miss that freezer!

In addition to shopping habits we’ve changed our eating habits. We don’t buy treats (cookies, soda, ice cream, etc.). We buy things on sale. We buy fewer convenience goods and I cook more from scratch, although I have found out that sometimes the packaged meal is cheaper than buying all the ingredients and making the meal. We have all given up foods we like and we seldom eat meat (which I must say I think I miss more than the kids do).

We get a box of food from a local food pantry about once a month if things are very tight – and sometimes end up with odd cans of things like cranberry sauce and mushrooms but sometimes get treats like strawberries and pork chops. One month our box was nearly entirely made up of bread and bread products – loaves, rolls, bagels – and a frozen container of bread stuffing!

Entertainment

We own a TV but do not have cable TV service. It’s too expensive and essentially a luxury for us. We used to just use the TV to watch DVDs that we rented through Netflix or from one of the video rental boxes (Redbox, Blockbuster and the like). And we picked up DVDs on sale (Blockbusters sells ‘previously watched’ dvds sometimes quite cheaply) or borrowed from friends or the library. This was great for the kids who don’t mind watching the same show/movie over and over, but not something I used much.

We were given a Wii for Christmas some years ago and found that with an internet connection we could stream Netflix videos through the Wii. This works perfectly for us and we use the Wii more for streaming than to play games (although the kids are really enjoying playing Wii Party Games – a Christmas gift from a friend this year).

Frankly an internet connection (something we did without for some time) is something more than a luxury. It is a necessity for job hunting, and responding to requests from prospective clients. I use it to sell on Etsy (cat beds) and, at one time, eBay. I have multiple job searches set up via various websites, and use it to network (LinkedIn) and of course, write and maintain my blog. It is also the way I keep up on the news (our old trailer had a built in radio, this one doesn’t) and weather forecasts. The kids use it for homework (particularly my oldest two) and entertainment.

Our other ‘entertainments’ are on the cheap – we hang out with friends when we can; go to the YMCA, public playgrounds or the beach; read books checked out from the library (which occasionally does involve an expense as the library is out of our way and books are sometimes not returned on time); do puzzles and play games. I try to put aside a little money for things like fieldtrips (my oldest is going to a science museum in LA next month) that have entry or bus fees so that the kids can do things with their school classes.

Clothing

Unfortunately due to the size difference between my daughters and the lack of storage space we can’t do too much in the way of hand me downs. So we shop at thrift stores and bargain stores like Ross. Internet coupons for stores like Kohls, plus shopping the clearance racks are great go-to places when we need a specific piece of clothing, like the black skirt/white shirt combination my middle school daughter needed for her band uniform. Mostly we just wear things until they are worn out!

I think we are saving some money by washing clothes at home instead of going to the Laundromat. Our electric bill is somewhat more expensive in our new trailer and I’m sure some of that is the washer/dryer use, but I no longer have to drive to the Laundromat so there’s a savings in gas to offset it. I wish our washer had more than one setting – you can only wash a full tub of clothes since it fills all the way up with water regardless – but even so it is a big convenience to have it.

Internet Bargains

I use the internet to comparison shop, look for coupons and sales, and check craigslist for garage sales and freebies. I used to look at freecycle but since we don’t really need to acquire much I tend not to go there these days. If we ever have an apartment to furnish I’ll resubscribe. I also sometimes pick up a Groupon deal – such as the $20 worth of Old Navy Clothing for $10 that I got just before Christmas. Between the Groupon and the clearance racks I was able to find several pieces of clothing for nearly 80% under the list price. I picked up another Groupon right after the holiday with a little of my Christmas money – $30 for THREE oil changes at a local auto shop. That means the next 3 oil changes will only cost me $10 each, and are already paid for. Yes, I expect the auto shop will try and talk me into new air filters, and any other add-on they can come up with but if I stand firm I’ve got a real deal!

I’m a member of My Points and redeem the points that slowly add up (you can rack them up faster if you shop on line but I generally earn points through emails, surveys, and coupons rather than shopping – although I do purchase my Groupons through My Points to get points in addition to the deals) for gift cards for the grocery store (Safeway) or gas station. Since gas is one of those necessary expenses that I cannot stock up on it helps to have a gas card tucked away for the times when money is in short supply.

And of course I used the internet to ‘monetize’ my blog with Google ads and the Amazon.com affiliate shopping link. Thanks to all of you who did your Holiday shopping through that link we will receive a check for nearly $200 in March (payment trails earnings by about 2 months).

What are your frugal living tips?

Money Management – Part 1: The Big Picture

January 24, 2012 in economy, frugal living, job search, money, poverty, recession, unemployment by boxcarkids | 5 comments

When you have a small and sporadic income, budgeting isn’t easy. To be honest, even when I was employed fulltime I was never the poster child for budgeting. You know how we’re told by all the personal finance gurus that you need to have 6 months worth of living expenses saved in case of an emergency or lay-off? At best I managed 3 or 4 months. Periodically I got hooked on some new financial management software or gimmick and, as with exercise programs, followed it religiously for a few months before reverting to old habits. Money management wasn’t really part of my education – it was one of those subjects that wasn’t discussed much at home and in school the only part of the curriculum that came close was learning to balance a checkbook in home economics class.

Nevertheless I was relatively responsible in how I handled my money – tucking some away in savings, never coming close to the extravagant credit limit on my cards, and paying my bills on time. I did enjoy browsing through stores and sometimes indulged in a little ‘shopping therapy’ when blue or to mark special occasions in my life. I had a laid back attitude about money because I had a healthy and regular income.

To say that’s changed is an understatement. These days financial issues are my biggest stressor. Nothing keeps me awake late into the night, or makes me as anxious and irritable as wondering about whether I’ll be able to pay the bills. With over 20 million Americans out of work, I figured others are probably having the same concerns so I went looking for tips and advice.

The blog, Living ‘Poor’ and Loving It, caught my attention by virtue of the title alone as we are living poor and I’m not loving it! Unfortunately the blog’s author’s three rules consist of 1) Have Very Little Money; 2) Live on it; and 3) Rule 2 will change your life if you let it. These are rules for people who have some money but live as though they have more. People who run up their credit cards buying things they don’t need but think they want. People who need to pare down their expenses by not eating out, buying sporting tickets, and going on vacation. The author says “My most important money-management tool hasn’t been figuring out how to get more but rather discovering how little I really need and how much I already have.”

Been there, done that. We passed this phase of living poor during the first year after I was laid off. Thanks to unemployment benefits we were able to ease into being poor (although it didn’t seem like it at the time) and as I detailed in several early blog posts we learned to live with much less – in possessions, space and income. We gave up eating out, going to movies, subscribing to cable TV. We clipped coupons, shopped at thrift stores, and ate a lot of beans and rice. If we were careful we could afford small luxuries like buying yearbooks for the kids or eating out on a birthday night. We made do. It wasn’t easy but it was bearable.

Now we have entered (sunk to) a new level – with no guaranteed income, some fixed expenses, some variable expenses and the occasional emergency. We very much live hand to mouth. My income (mostly from writing and editing jobs and the odd sale of a cat bed) is uncertain, frequently comes in very small amounts and goes as quickly as it comes. When someone pays you $30 and you have a quarter tank of gas in your car you don’t worry about trying to save – you just head to the gas station.

When I have a slightly larger payment or a windfall I always put aside money for rent, stock up on necessities and use part of it to pay forward on whatever bills I can (after getting caught up on whichever bills I’m behind). I find that paying two months of internet service, or car insurance, for example, relieves some of my anxiety and a less anxious mom is definitely a good thing for the family! But sometimes I’m too eager to get caught up and paid forward and am then caught short-handed when, as happened last week, the car battery dies and needs to be replaced or the computer crashes and needs expert care. Then, with no credit or borrowing power, I need to borrow from the rent money, hoping that another job comes along in time for me to replace it.

I believe we are on the edge of moving from living poor, to survival living. It’s a scary place to be – I don’t like the view from here.

It’s Not all About Me – it’s About all of Us

October 28, 2011 in Class divide, economy, money, recession by boxcarkids | 5 comments

The recession ended over two years ago (June 2009 believe it or not) and the experts assure us that they are relatively confident that we are not in danger of a double dip. But the recovery remains anemic at best and is regularly characterized as ‘disappointing’ and ‘slower than expected’. Economic indicators are inconsistent with consumer confidence, housing starts, and new orders for goods rising and falling from month to month. Earlier this month Fed Chairman Ben Bernanke told a congressional committee that the two-year-old recovery is “close to faltering,” and John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, reports that “The momentum is less and less positive.” Time Magazine published an article titled, “What U.S. Economic Recovery? Five Destructive Myths” in June of this year, laying out the challenges facing the U.S., not the least of which is the sluggish job growth and the effects of being part of a global economy that is also struggling. Even when there are glimmers of hope – for example the recently reported stronger than expected economic growth in 3^rd quarter of this year – Americans continue to be pessimistic.

“For most people, they’re unable to really make a distinction between a recession and just 2 percent growth, which means the economy is growing so weakly it can’t hire enough people to make a dent in unemployment,” said Bernard Baumohl, the chief economist for the Economic Outlook Group.

Indeed, it is this one discouraging statistic that concerns us the most. Unemployment remains very high, and seems to be stuck at around 9 percent. The Bureau of Labor Statistics reported that over 14 million people were unemployed at the end of September, a figure that does not include the 9.3 million who are involuntarily working part-time or the 2.5 million people who do not have a job but who have given up looking for work. That’s a lot of people who aren’t paying taxes, aren’t saving for college or retirement, aren’t spending money on new appliances or cars or going on vacation. Naturally in the recession, and now in the aftermath of the recession (let’s stop calling it a recovery folks), the poor have been disproportionately hit, making their hardscrabble lives even harder. And their ranks have been increased by the number of middle class households that have slid into poverty in the past four or five years. Over 46 million Americans were living in poverty in 2010. Somehow I doubt that number has decreased in the past year. In an interview on PBS, Isabell Sawhill of the Brookings Institute says “it is definitely unemployment that’s driving this increase in poverty rates” and Douglas Besharov of the University of Maryland agrees that “this downturn is sending many millions of people who enjoyed a middle-class or at least a very comfortable lifestyle into poverty…unless we take some pretty drastic action to turn this around, it will be with us for quite a number of years.”

In the very thorough and thought provoking opinion piece in Politico, titled, “The end of the middle class?” the author Robert Borosage says,

“The jobs we’ve been shedding by the millions are solid, middle-class positions — the kind that could support a family and send children to college. The hard reality is that the relatively few jobs being created are service-related —disproportionately low-wage and low-skill. The broad middle class — the triumph and strength of America’s democracy — is sinking. Unless we change course dramatically, we will become even more a nation of haves and have-nots.”

So, is this the new normal? A burgeoning lower class, a decimated middle class and an upper class made of up the top 1 percent of earners whose after tax income has grown over the past 30 years by an amazing 275 percent? This statistic comes from the recent CBO study, titled “Trends in the Distribution of Household Income Between 1979 and 2007” which also reported that during the same period middle class income grew on average only 40 percent. Currently, as I’ve said before in other blog posts, and as the blog My Budget 360 reports, the top 1 percent control some 42 percent of wealth in America and the top 10 percent control nearly 93 percent of the wealth. Conversely the bottom 90 percent own 73 percent of the debt in the country.

That is an enormous inequality and while some might attempt to explain it away by touting the financial acumen of self-made men, under closer inspection that argument can be seen as obfuscation at best and deceit at the worst. In an opinion piece in the Washington Post titled, “The study that shows why Occupy Wall Street struck a nerve,” the clearly liberal writer Eugene Robinson says,

“Indeed, the CBO report says that even the poorest households saw at least a little income growth. Why is it any of their business that the high-earners in the top 1 percent saw astronomical income growth? Isn’t this just sour grapes?

No, for two reasons. First, the system is rigged. Wealthy individuals and corporations have disproportionate influence over public policy because of the often decisive role that money plays in elections. If the rich and powerful act in their self-interest, as conservative ideologues believe we all should do, then the rich and powerful’s share of income will continue to soar.”

Continuing this trend is not in the best interest of the country. It is the road to ruin. It’s oligarchy, the very thing the founders of this country were running from. It’s time to pull our heads out of the sand and take a good hard look at where we are, how we got here, and where we are headed before it’s too late.

Recommended readings:

The end of the middle class? http://www.politico.com/news/stories/0911/63849.html

http://www.mybudget360.com/top-1-percent-control-42-percent-of-financial-wealth-in-the-us-how-average-americans-are-lured-into-debt-servitude-by-promises-of-mega-wealth/

The study that shows why Occupy Wall Street struck a nerve. http://www.washingtonpost.com/opinions/the-study-that-shows-why-occupy-wall-street-struck-a-nerve/2011/10/27/gIQA3bsMNM_story.html