Archive for the ‘Saving’ Category

It’s OK to spend money!
March 19, 2009

The Simple Dollar was one of the first PF blogs I ever read. The articles were insightful, the advice was wonderful, and he seemed to take a middle ground on the whole frugality thing.  But lately he seems to have forgotten that there are people out there who aren’t male & living with children in rural Iowa.  That someone out there might be more interested in fashion than the kids they don’t have, or might not think that organic food is the end all and be all of existence.

Yesterday, he posted a response to a comment by Sydney, who said that the “Latte Factor” was not necessarily as important as getting the big stuff (e.g. rent/mortgage) under control. The comment continued, “Yet if you arrange your life so that major expenses are not consuming all of your income and then some, you can actually eat lunch out once awhile, buy that cup of coffee, or see a movie. Quality of life goes up dramatically. At that point, if you want to save on little things also, it becomes a choice, rather than a constant necessity just to survive.”

Instead of seeing this as sound advice (keep major expenses small and you will have enough wiggle room to allow yourself a cup of coffee or a lunch out), Trent misinterpreted the comment and claimed it said that “the ability to participate in a consumer economy is directly tied to the quality of life.”

He very condescendingly told Sydney that he used to think money was the way to happiness too, but (and I’m paraphrasing) he grew up and realized what’s really important.

Way back when I first started my blog, I wrote a post on why I hated most other blogs, and TSD was firmly in my mind as I typed.

Trent’s examples all involved things with his family, which is nice for him but not really applicable to someone who doesn’t have family or someone whose family lives far away. Furthermore, enjoying a lunch out or a cup of coffee isn’t buying into consumerism! On the weekend, I’ll walk to a small coffee shop by my apartment for a latte, which is a nice change of pace from my usual coffee, and sit there drinking it. The weather has been awesome lately, so I sit in the sun and watch the people walk by. On the way home, I might take a longer route that passes by the ocean and I just marvel, “Wow. I live here.”

Nothing but the promise of caffeine and tasty vanilla lattes could get me out of bed in the morning otherwise.

The building I work in has no windows, save for the ones in the lobby. This means that I work in a florescent-lit box for 9 hours every day. Often times I’ll work straight through lunch, but every time I take the hour to go out to eat, I walk back into work refreshed and ready for another 4 hours. Getting out of here helps me regain my sanity. Sure, I could leave the building for an hour and probably get the same boost, but nothing can lure me away from my desk like the promise of an artichoke and spinach panini.

I don’t necessarily agree with the original comment that sparked Trent’s missive since she threw out furniture and vacations as big expenses you should splurge on. I think this may have been just some bad examples.

I have a hand-me-down couch from my parents, and the upholstery has ripped on both sides of the cushions. It’s an eyesore, and not really something you can hide. I feel better just by covering those ratty slipcovers with some red sheets, and that way the stuffing doesn’t scratch or poke me. I love the rattiness of the wood (each ding and scratch is a reminder of my childhood), but the cushions are bothersome. Chad and I are saving up to reupholster it – is that wasting money?

And my honeymoon is going to cost a bundle, but it’s worth it to finally get to see all the places in Europe I’ve dreamed of seeing.

I’m not saying that you should derive happiness solely from spending money, and sure, I could walk by the beach or leave work without doing so. I’m just sick of the big-name blogs who seem to have a hostile reaction to spending money on anything that isn’t absolutely essential and basic. You can save money by cutting back on the big stuff and you can save money over cutting out smaller luxuries. When did spending money become a moral failing, indicating that you’re too simple-minded to enjoy the free things in life?

Frugal Bachelor (comment #77) had the best reply; I actually said, “Oh snap!” when I read it. The comments in general are a shitstorm, which is why I still read TSD. (OK, I also read for the same reason I watch The Hills – because it gives me something to be angry about. You don’t know what they’re going to do/say next, but you’re sure it’s going to be ridiculous.)

Am I A Savings Snob?
March 17, 2009

I’ve written before about my friend Shelly, who makes probably about twice what I do and spends probably about 3 times as much.

She was complaining recently about how much money her financial planner is making her save for a down payment on a house. Apparently he has already told her that she’ll be adding her pay raise (and then some) to her monthly savings, for a total of $1500 per month. She’s secretly cutting back her 401K contributions to compensate. Oh, and she hasn’t told him about her 401K loan because she’s worried he’ll make her pay it back more quickly.

She was clearly looking for someone to agree that saving $1500 per month is ridiculous and that $1000 was already a lot to be saving, but all I could think about was the bottom line on my budget: $1800. She seemed confused by the fact that I wasn’t impressed with what she had managed to save – $10,000 last year, she crowed.

I am happy that she’s saving, and I know that going from not saving to saving $1000 per month is a huge leap.  But it’s hard to be impressed when she takes home $1500 more per month than I do and complains about how hard it is to save money.

(On a completely unrelated note, she also told me that it’s useless to try to put down more than 3% on a house because you pay PMI no matter what (and I guess it’s not even possible to come up with the full 20%?).  I stopped talking to her then because I wanted to pull out my hair at all the things wrong with her logic.)

But maybe I’m a savings snob.  I have Chad, so I don’t have to go out to get social interaction when I crave it.  We share an apartment (although we do share a really small one, which she might not be willing to do), so that helps us save.  We don’t do anything that requires a big outlay of cash, most of the time we like hiking or just hanging out on the beach.  Perhaps I’m a snob because my personality is one that welcomes alone time and enjoys simpler activities.

And the weirdest thing is, if she was a PF blogger, I would be impressed with (and jealous of) her savings & earnings and I would cheer her on.  I’d encourage her to indulge when she felt deprived, although I might go off a bit in the comments about her 3% down payment spiel.

What do you guys think?  Am I a snob?

Is December is the final exam for 2008 savings?
December 16, 2008

Last night I took my last final.

I was already feeling burnt out from the other 2 exams I had taken, and from work, where everyone is trying to finish things before the end of the year. I admit, I didn’t study as hard as I should have, especially since this class was one of my best (I was #3 in a class of about 100 people!) & our midterm was really easy.

Naturally, he made the test a little more difficult, and cut the testing time down. If I’d had the extra half hour, I think I would have done really well. If I’d studied a little harder, I might not have needed to flip through my notes quite as much. If this was my first test (not my third), I might have aced it.

It got me thinking about this month and how I decided to take it easy. I’ve done enough, I told myself, and I’ve been tired from all of the work I’ve done. And really, saving came pretty easily this year; I never felt like I was denying myself anything that I truly wanted.

Are there parallels between this and school? Should I be putting in a final push to save for the end of the year? There is a big, shiny, round savings milestone sitting $350 away from what I’ve saved so far this year. I’ll still probably get an A in my class – everyone else was bitching after the exam – and I’ve still done an incredible amount of saving this year.

Ultimately, I think I made a good choice, even if it’s not necessarily the “right” one. Sometimes you can only push yourself so far.

Random Thoughts
November 24, 2008

Did anyone read/like the Organics posts?  I’m saving the best for sometime this week, where I look at the claims of health benefits.  Maybe for Turkey Day, so that those of you enjoying organic turkey will be too sleepy to tell me how wrong I am.

This is the first Thanksgiving that I will not spend with my extended family.  Instead, my sister, Chad and I, and some friends of ours from college will make our own dinner.  I think it will be a lot of fun, but it won’t be the same.  I wonder if I made the right choice.  A $600 plane ride home seemed out of the question back when I was trying to book a flight, but it was by no means undoable.  Did I go too far with trying to be frugal?

Well-Heeled wrote a post about her Christmas gift-giving. I’m in a similar situation. I don’t do gift exchanges with my friends or coworkers, so I only buy presents for my family members. I was lucky to have thought up good gifts for everyone this year; usually I can’t think of anything and spend extra to compensate. This year, the gifts are more expensive but they are perfect.

A question: what is everyone doing about charity?  Are you doing anything different?  With my retirement accounts completely underwater, the idea of keeping cash seems comforting.  At the same time, there are so many horror stories about food banks running out of food, people losing their homes, I’m sure a bunch of people will set fire to their houses by trying to deep-fry a turkey, and CNN had a picture of a sad puppy that had been brought to the pound because its owners couldn’t afford to feed it anymore.  There are so many people who need help, but I can’t help everyone and really, is my contribution even going to matter?  Lehmann Brothers donated hundreds of millions of dollars last year.  How can my paltry amount compare to that?

On a happier note, I’m looking forward to the end of classes!  Next week is the last week, and then I have finals.  I’m doing well in all my classes, so barring any problems on my finals (problems are likely, though; I have been slacking!) I should get through this semester OK.  It will be over, at least.  Next semester I’m only taking 2 classes, and that will be much more manageable.

Do you trick yourself into saving money?
September 29, 2008

People on the internet seem to be very fond of tricking themselves into saving money. I don’t get it.

There are some so-called tricks that I think are merely good ideas.  Saving first, then spending what’s left over?  Makes sense.  Bank raises automatically?  Perfectly reasonable.  Saving change, I totally get.  Change is jangly and heavy and creates bulges in pants pocket. Most people don’t spend a lot of change. (I spend a lot of change, thanks to the 25-cent coffee pool at work.)  Toss the coins into a jar, and every few months/years, count them & roll them.

Putting a dollar a day into a piggy bank?  Putting a quarter into a jar every time you do laundry?  I don’t get it.  These are things that are always recommended by blogs & even by people who get paid to write about money for a living. Why not transfer $30 to savings every month?  Right when you get your paycheck, before you have a chance to think about it.  When you visit the ATM, take an extra moment and transfer $10 from checking to savings.

Tricking yourself into saving money creates the problem that you never get into the habit of saving.  You never make a conscious decision to look at your money and say, “I’m going to save some of this.”  You don’t look at where you spend your money, you merely pull a few wadded-up ones from your wallet and stick them under your mattress.  You’re not trying to cut back on spending.  And really, how many singles (or fives) does one encounter in a day?  What’s to stop you from grabbing biscotti with your $3 coffee, since you’ll have $15 left to spend either way?

Without addressing your spending and just tricking yourself into saving, you give yourself an opportunity to trick yourself right back.

Maybe I’m being a snob here.  I don’t have problems finding ways to save.  I earn enough that I can cover my bills and still have enough left over to save.  I’m lucky to have the kind of personality where saving comes naturally.

So I pose the question to you dear readers: do you trick yourself into saving?  How? Why?  Do you not trick yourself, but see the value in it?  I’m on the fence about even posting this, but I’m curious about what others think…

Jumping on the bandwagon
September 17, 2008

Nearly every blog I read had posts yesterday & today about the giant drop in the stock market.

I’m there too.  My 401K is down almost $1000 since the end of last month; my Roth is down $1500 from the beginning of the year.  I usually try to ignore the news, because as the balances drop & the talking heads screech I want to move all my money into my mattress. (If I started doing that a year ago, I’d be ahead right now.)  No matter how reasonable I try to be, I’m freaking out.

It doesn’t help that Chad insists I tell him what to do with his money, and he now is yelling at me about the market’s performance.  Because I totally have control over this.

I considered reducing my contributions to my 401K.  I know you’re not supposed to do it.  I’ve been trying to find a reason to do it (I could save it for the wedding!), and the only thing that is keeping me from changing it right now is that I wouldn’t get that much extra cash by scaling things back.  A 5% decrease in contributions will be less than $100/paycheck.  Wow, I’m sure that extra $700 will cover a lot toward the wedding!

When things get tough, I turn to Excel.  Spreadsheets soothe me.  I made a pie chart to track my spending, similar to StackingPennies’ “Where is My Money Going?” post from a few months ago.

I really want to get the savings up to 50%.  The charity spending should go up, as should gift spending.  I’m going to change my federal tax allowances so that I have less withheld from my paychecks.  I checked the IRS calculator, which said I should set it at 6, but I still like to get a refund, so I’ll probably just bump it up to 2 or 3 allowances for now.  Otherwise, I guess I’m pretty pleased.

So what are you guys doing?  Silently freaking out but taking no action?  Taking everything out of the stock market and putting it into your mattress?  Plugging up your ears and singing “LALALA” to block out everything?

LALALA!

The benefits of an emergency fund
August 11, 2008

I make no secret of the fact that I dislike my job.  The work is uninteresting, unchallenging, and the position itself comes with little respect.

I went back to graduate school in order to ensure that my brain wouldn’t waste away while I looked for another job.  I’m a little less than halfway done.

I was told back in March that there would be a positioning opening up in a different area, and that the job was mine if I wanted it.  They couldn’t officially move me until June, but I was so excited to work there that I was willing to wait.  Then our company lost a major contract and there were layoffs.  I’ve been assured that they still want to hire me, but the longer it takes, the more I worry that there won’t be a job waiting for me.  I’m not sure how much longer I would be willing to work at my current job.

I still have options.  My company allows a leave of absence for education; I would pay tuition and book fees up front and they would reimburse me after I come back and work for a year.  I could probably handle another year at my current position if it meant tuition reimbursement.  It’s possible that by the time I finished, the new job would be ready to go as well.  Since it’s at the same company, I would still be reimbursed.

Of course, if my request for a leave of absence was denied (my managers can be spiteful), I would have to foot the cost myself.

5 classes x $4350 each = $21,750 + (books, rent, utilties, food = ~$5000) = $26,000

I just checked my account balances, and I can afford it.  I could drop everything and go to school full-time without owing anyone.  I could do it RIGHT NOW.

That is an awesome feeling.

The lamest frugal weekend ever
August 4, 2008

I’m always reading lists about how to have frugal weekends.  The problem with those weekend plans is that they always sound sort of boring.  This reminds me of what Chad and I did this weekend!

We watched Season 1 of Heroes.  All weekend.  That’s all we did.

It was frugal, because we already had the DVD set (I bought it for Chad for his birthday last year.  His birthday is in October, so that gives you an idea of how long overdue us watching it was!).  We even managed to drag our atrophied bodies off the couch and to the kitchen to make food.  Although we discussed getting take-out, even greeting the delivery guy would have required pants.  So we made our own burritos, and spent no money.

It was frugal, but so very, very lame.

Friends with money
June 19, 2008

I have a friend from work who is about 10 years older than me. She’s is brilliant and a great engineer. As such, she makes a lot of money. She also spends a lot of money.

In March I pushed myself to do a “no spending” month, which basically meant I didn’t buy anything personal (clothes, etc.). I made it, actually, although I guess I cheated because Chad took me out to dinner a couple of times. When I told Shelly that I was doing this (she always has grand weekend plans, but even without a no-spend month going on, I can’t afford to do all that), she actually mocked me.

I am an introvert, so if I spend a lot of time socializing, I need time to recharge by myself. There are a few people who don’t trigger this reaction, namely my sisters and Chad, but in general I need at least two hours to myself for every hour I spend socializing. This has never been a problem before.

Shelly is extremely extroverted, so she needs to be around others like I need to be alone. She is very talkative (she can go on for hours with nothing more than a few nods and laughter from me), which is very nice when I want to be social but sort of irritating if I see her too often.

And this girl spends money like no one I’ve ever seen! Every night she has plans: happy hour, movies, concerts, dinners out, etc. While I envy her energy, I wondered for a long time how she managed to do all that. One night while we were drunk, she confessed that her financial planner was having her set aside $1000 per month for savings, but that she was going to stop because she really needed the money. This was the same night she confessed that she’s making over $100K. The reason she needed the money? She kept running out before the end of the month!

I try to get her to hang out with Chad and me. We have had Wiitar Hero nights, or “let’s dress up and get drunk on wine” parties, or barbeques. During football season we’ll gorge on chips and junk food and scream at the TV. We don’t spend a lot of money, but no one has ever complained about it. We make it fun. She seems to enjoy having a captive audience, since Chad and I are not big talkers (unless you get Chad started on sports trivia), but since he and I are both introverted, we can handle her for maybe one night per weekend.

Another thing she will do that makes me uncomfortable is if I decline an invitation citing not being able to afford it, she’ll immediately offer to pay. Does anyone else know someone who does this? It’s not what I’m after. I don’t say “I can’t afford that” meaning “pay for me!” Usually it’s a “I don’t think that’s something I want to spend my money on” or “I could buy a skirt at Anthropologie – full price! – for that much money!” or “I’m feeling kind of tired and I don’t want to go anywhere with you right now and money is a convenient excuse.”

Does anyone out there know those kinds of people- ones who are disdainful of frugality and sort of hinder your plans? What do you do about those people?

Tricks with money
June 9, 2008

I play tricks with my money sometimes.

I have a separate account that I deposit my “fun money” into.  I still track the amounts I spend, but there is an extra cell in my budget where I subtract that amount from the equation, i.e.

Starting Balance $1,069.40
Paycheck #1 $1,500.00
Paycheck #2 $1,500.00
Other Income $1,500.00
Joint $1,050.00
Car Payment $0.00
Insurance/Fees $0.00
Gasoline $0.00
Cell Phone $41.30
Student Loans $0.00
Miscellaneous $3,400.00
Clothing
Food/Entertainment
Books/Music
Gifts $100.00
Travel $500.00
Charitable Donations
School
Other
ING $2,500.00
Roth
$300.00
Ending Balance $1,084.08

The bottom cell tracks what I put into and what I spend from that other account.  I used to feel guilty when I would spend money on clothes or eating out, since each time I spent money it would show up as a drop in the amount of money I could put into savings.

I also have been playing a game with my paychecks.  May was a 3-paycheck month for me, but I hate waiting until 2 weeks into the next month for the next paycheck.  Instead, I track the third paycheck against the next month (in this case, May’s 3rd pacheck becomes June’s first).  I suppose this one is more of a silly thing I do to make sure I keep the right amount of money in my account.  I’m also doing this because I’m going to have to buy a plane ticket this month, if I don’t decide against going home for Thanksgiving.

I have a hidden buffer in my account as well.  I have $1100 that is going to be used on a new laptop (as soon as Montevina is released & used in the Apple computer I’ve been drooling over), and I’m not tracking that.  The money is partially from gifts and partially from my stimulus check.  I tried to buy a computer last year, but seeing the drain from my accounts would have been too painful.  This year, I’m removing that money from my view so when I spend it (I really need a new computer!), I don’t get guilt about ruining my savings.

Does anyone else do this with their money?