Frugal Flummox

Well, today was not exactly what I expected. I made an error that seriously interrupted my day and wasted a whole day's worth of income. Yet, there is a little bit of pride in myself and my ability to stand up for myself. Read on...

The error: I locked my keys in my car. Again.

Please understand, we only have one key to my car. And I was getting ready to go to work when I discovered it. Double-whammy. Sad thing is, I had been thinking just the other day that we should get some more keys made, just in case. Would have been more frugal to spend the extra few bucks to save the ordeal I just had. Where did I put that Murphy repellent...

So, I spend the next two hours calling my student to reschedule tutoring and calling around to locksmiths trying to find a deal. Finally find one, about $10 more than the cheapest guy, but seemed a lot less shady on the phone. Or not...

Mr. (lock)Smith finally finds the place, pulls up, and looks in my car window. "It will be $40 for the service and $80 for me to unlock it." (Did I forget to mention I've done this before? I know how easy it is to break into my car...).

I look at Mr. Smith, dumbfounded, and finally inform him that I don't have it, thank you, I'll call someone else. (I do have it, but there is no way on God's green earth I am paying him $120 to put a hanger in my window, thank you very much!)

Mr. Smith doesn't like that idea. He wants to know how much I expected. I told him the dispatcher said it would be about $40 for the service and $15 for the labor. (She told me $15+, but since I know there is pretty much no labor involved, I expect to only have to pay $15).

He calls, talks on the phone for a little bit, then calls me back and says he can do it for $80. I shrug and tell him I don't have it.

"How much do you have?" (I think this is the most unprofessional thing you can ask a customer!)

"$55"

"Cash? OK, but I just won't give you a receipt."

What do I care if he gives me a receipt? It's not like I'm going to pay him before I get my keys out! He pulls out what amounts to a small blood pressure cuff and a thick coat hanger, jams the cuff in the door to separate the seal enough to put the coat hanger in, and uses the bent end to pull my manual lock. The whole thing takes about 90 seconds. I retrieve the cash and pay the man.

Outside, he has the receipt (I thought there would be no receipt?) with $40 for the service and $15 for the break in and asks me to sign it and gives me the carbon copy. I ask for a card, but he won't give me one. When I get inside, I discover that the carbon had been altered underneath so that the copy I have says that I spent $80. Quite suspicious, but I can't think of any reason why that could negatively impact me. After all, I paid in cash and since he left how would he prove I didn't pay him $80?

After a quick call to my dad for some semi-legal advice (can this false carbon copy bite me in the butt?), I have mixed emotions. On the one hand, $55 is a huge amount of money for us at the moment. On the other hand, I feel somewhat proud and confident in myself, having stood up for myself and "haggling" down the price. I tend to be a "just pay the man" kind of person. Who knows, maybe this is the beginning of a more assertive me.

Now, I'm off to get some keys made for my car...

How about you? Anyone try to royally rip you off lately? Did you succumb? Did you stand up for yourself? I want to hear about it!

Living "a month ahead"

While most people are living "month-to-month," my husband (Lubby) and I live "a month ahead." Let me 'splain.

(Just thought an update would be appropriate in regards to the car: we just sent $1400 to the bank, so our liability is down to $1055. Hurrah!) That means that after everything we've taken out so far (most of our bills are at the beginning of the month), we are left with about $500 in the checking account and little expected for the rest of the month. So, why am I not panicked?

It has to do with our version of the "zero-based budget." At the beginning of the month (or the end of the previous month), I: take a look at our budget for the upcoming month, put the 'envelope money' (gifts, groceries, blow, and clothes) in its respective envelope, add whatever money Lubby's school will deduct to the budget requirement, then take everything else and put it to the car. This accomplishes three things:

1. It makes sure we are attacking our debt aggressively by putting every extra penny toward it.

2. It ensures that no matter what happens, we can pay our bills for this month.

3. It give my husband peace of mind.

So, let's take June as an example. We had $3000 in the bank. With budget and school, we needed $1700. Thus, we had $1300 extra to send to the car, plus the $100 that was part of the original budget, or $1400. We were left with $1600

1600
-468 rent+water
-354 school
-150 groceries
-120 envelopes
508 remaining for the rest of the month

Let's say I bring in $300 this month and Lubby brings in $600. We will likely start July with about $1100, but since we were a month ahead, we still have time to catch our income up to our expenses. By the end of July we should be able to send another 'extra' payment to the car-- perhaps even pay it off.

I can understand why this system might not work for everyone:
-Having that money there could be a huge temptation since it feels like 'extra'
-It could be difficult to amass a whole month's living expenses ahead of time (although, if we can do it...)

However, I find our system to be infinitely better than living "month-to-month" and having to worry whether or not I will be able to pay the rent. As long as at least one income continues, I would say we have at least two months of being behind before we really run out of money and have to tap the emergency fund. Knowing I have food, and knowing well in advance if I really must only buy beans and rice next month, is what I call peace of mind.

Dave Ramsey wouldn't approve...

I do admit that I am a pretty big fan of Dave Ramsey. I like his no-nonsense, common sense approach to personal finance and his Biblical/charitable perspective is no turn-off either. Still, I did break a cardinal rule a few months ago-- I bought a car using credit instead of cash. Here is why I believe Dave to be wrong in this particular case.

Dave would say I should have sold my car, bought a clunker, and saved for a newer car and paid in cash.

Here's the scenario-- I already drove a clunker. It looked decent, but it had who knows how many miles on it (the odometer broke 5 years ago at 144k+), everything leaked, and was getting *horrid* gas mileage. Our gas budget at the time was $600/month. Yikes! I was in school at the time and worked very little (the program I was in specifically forbade working); Hubby worked two jobs and our out-go was still 100% of our income. We had zero room to 'save up' for anything, even though I budgeted the blood out of every penny we got. Ask anyone who knows me-- if there was room to be saving, I would have been saving.

We had about enough money in the bank to pay for exactly the same car I already had or to make a pretty darn good down payment while leaving a $1,000 emergency fund. We shopped around for a while, found this car and got a payment of $103/month. The car gets decent gas mileage (24ish) and we were able to drop our gas budget in *half.*

So, we added $100 to our monthly bills, but saved $300 per month in gas. This means we could make 3x payments and be out of debt very soon. Plus, the sale of my old car brought an injection of cash roughly equivalent to 1/5 of the original balance.

I am very debt-averse and I grew up in a family that does not believe in car payments. No one is foolish enough to buy something that loses half it's value as soon as the deed is done, or so I thought. However, with some research, I was able to find a vehicle old enough to be price-stable and new enough to last a good long time, priced where I could sell it in a year for about the price I paid if I wanted to. We specifically got something family-friendly so that I could drive it for ten years if I so choose.

We are dumping this debt as soon as possible. We don't even own a credit card (although if we had longer to pay on the car I would consider a 0% for that purpose only...). Although I agree with Dave 99.9% of the time, I really believe that we made the best decision for us at the time. I will drive this thing into the ground and never have a car payment again.

Scooter economics

Ever since last summer, when gas prices were starting to get close to $4/gallon where we live, my husband and I have been thinking about purchasing a scooter. Since we seem to have a knack for living within a mile or two from at least one of our jobs, it seems like it could be a good investment that saves a lot of money in gas. Let's do some math, shall we?

Original investment: approx $1,200 (let's make it $1,500, to make it safe)
New licenses with motorcycle clearance: $70 (for two)
Insurance: I have absolutely no idea and I can't get a quote without giving every ounce of personal info I can-- we'll say $200/year, since that's about what I paid on my last car...
Registration: $100 (again, high-balling it)
Total: $2,070

So that's a hefty start-up cost. What will it save me?
My car gets about 24mpg and my husband's gets about 15mpg. We will say that the scooter gets 75mpg. It is a safe bet to assume that he will drive my car more if I have the scooter, but let's run the numbers both ways.

Our vehicle budget is $300/month. Assuming we each use equal parts for gasoline, that would put us each at $150.

My car gets24 mpg. 24mpg is approximately 1/3 of 75mpg, thus we can assume that I would save 2/3 of my part of our monthly gas allowance. 1/3 of $150 is $50, so I would save $100/month in gas by riding the scooter or $1,200/year.

Hubby's car gets 15mpg. 15mpg is 1/5 of 75mpg, thus saving 4/5 of his monthly allowance if he drove my car instead. 4/5 of $150 is $120/month saved by the scooter or $1,440/year.

Not bad, not bad at all. The scooter would pay for itself in about a year in this scenario. Especially if we deal-hunt and get a good scooter for under $1k, find good but inexpensive insurance, and we find that I've grossly overestimated other costs (which I usually do). Just dropping the initial cost of the scooter to $1k means the whole shebang is paid for the first year.

Not everything is oh-so cut and dry. I would drive one of our regular vehicles in the event of inclement weather or any time I have a lot of cargo to carry or need to use the interstate. (I am intentionally looking for something about 150cc so that it can go as fast as I need it to without going fast enough to really take it on the highway.) Not driving the scooter exclusively cuts into the actual amount of gasoline savings. Another year of skyrocketing gas prices could put saving over the top. There are plenty of what-ifs to think about.

I happen to have just about enough cash to pay for a nice, used scooter outright. Would you spring for it? On top of the economic benefits, it seems like a ton of fun! Soon my new-to-me car will be paid off (approximately 6 months into a 60 month loan... forgive the minor bragging...) and come fall if/when I'm working right down the road it could be a good thing. I hope to have some discussion on this one-- I really want your input.

Saving money by using less

I happened across a terrific blog post by Trent at TheSimpleDollar. It is called "The Happy Minimum" and can be found by clicking here. For some reason this post stirred up quite the negative response from some of his readers, but I believe there is a valuable lesson to be learned. Let me summarize:

The author uses a story about toilet-paper use to illustrate a point: we use a lot of consumable products in excess without even thinking. He spends the day paying attention to how much of things he really needs-- using only as much toothpaste as necessary, tasting food first instead of just pouring pepper on it, taking one piece of pizza at a time rather than loading his plate, etc. The whole point: he used less over the day and did not feel deprived in any way.

These things are pretty familiar to us, whether we see these things in ourselves or those around us. We all know that person who pours salt onto everything before tasting anything; that person who uses half the roll of TP every time; that person who stacks their buffet plate 10 inches high; the person who uses twelve sheets of paper towels to clean up a little spill. What if we limited our consumption to what we needed to feel satisfied rather than starting with too much?

Granted, the actual amount of money saved by one less shake of salt is negligible. However, being aware of our usage in the little things creates more awareness of the big things and the little things and the big things added together can mean big savings in the long-run. Also, it has the fringe-benefit of reducing our carbon footprint (which usually in turn further reduces our expenses!).

Some thoughts and ideas on how to reduce consumption without feeling deprived:

• Pick one or two things to focus on using 'just enough'-- Chances are by focusing on those aspects, you will see it bleed over into other aspects of your life.
• Make it fun-- Does your kid use enough toothpaste for everyone in the house? Get matching trial-sized tubes and have a 'contest' to see whose tube will last longer. Just be sure she's using enough to clean her teeth, and she'll be pasting like a frugal pro in no time. I'm seriously considering doing this with shampoo and body wash at our place.
• Ration it-- If you are paper towel people (we use dish-cloths in our house), set an achievable but challenging limit for yourself. Only let yourself use one roll per month (or whatever is appropriate for you)-- if you run out before, you're out of luck until the 1st. This is also effective with treat-foods like soda, etc.

I would love to know your ideas and goals related to this. What areas are you simply using too much without thinking? I challenge you to spend the next 30 days figuring out how much is enough and then only using that much. Leave a comment for encouragement and accountability.

Net Worth-- February 2008

It's that time again. Time to take a look out our bank account and find out what we've done this month. Things have likely gone down a bit considering the job situation, but we're no worse for wear. With both of us working this next month, I anticipate a good beating to our liability (the car).


Assets:
Checking: 1800
Savings: 2000

Liabilities:

Car: 4500


Budget Results:












Income This Month:

Substitute teaching: 216
Plasma donation: 100
Return of deposit from other apartment: 175
Random check from prev. employer: 13
MySurvey check: 60
Gifts: 200

Difference-- checking: 200




Net worth: -700



Yikes! However, never fear! We made it through the month with less trauma than originally thought, and work income for March has already exceeded that of February. (I only counted income actually received in February, not work that has been done but will pay in March).

I'm pleased to see our gas expenditures have been reasonable. That is even with a way-overpriced oil change and a trip out of state. We're still new to the area, so I want to track this for a few months, but I hope that perhaps we can adjust this budget down a little bit. Although, in a few months gas may be over $3/gallon again. If it is, I'm buying a scooter.

We went overboard on eating out this month-- nearly $100 worth of fast food. I worry about this next month because we will have more freedom with more cash. Lubby and I will have a talk to determine our goals for this month and see if we can come up with a game plan for curbing spending in that area and attacking our car payment again. Everything else has been terrific.

Looks like next month we will get free Internet as well (they screwed up our order so they overcharged us last month). One less thing to pay for.

All-in-all, I am pleased with this month's report even though we're in the red. We've done well with what little we've had and stand a more-than-promising chance of making twice what we made this past month. I expect a huge chunk out of the 'liability' column next month and a positive net worth.

For January's states, click here.

How to save on your energy bill

Got a couple of bills today, electric among them. It was actually very exciting!

Budget for energy for February: $150
Spent in February: $90 (aprox)

That's a difference of about $60! Here's what we did that seems to have contributed:

• Turn off the heater. It's been pretty warm-- even close to eighty some days. However, our apartment stays cold, so it has been a sacrifice. No heat and a high of 39 is cold, but blankets, some fire wood, and more blankets keep the chill at bay. We do use it if it is going to be cold for a good while, like when we had an ice storm a few weeks ago.
• Limit lightbulb use. We try not to use the lights during daylight hours.
• Unplug stuff. We're actually not very good at this, but we try to turn off our surge protectors and unplug many of our appliances/computers/etc. when they are not in use. "Ghosting" electricity can really drain your wallet... apparently... (Note: Do not unplug your refrigerator! I do not want to be responsible for that!)

I know it's not a list of 35 things-- that may be coming at a later date. The point is that you don't have to do a million drastic things to see a difference in your bill. Our first bill was about $70, and it was only for about 10 days! From people I've talked to around here, average monthly bills are about $150.

I hope we can keep this up through the summer months as well. Of course, you'll know when we know.

Revised budget for February and March

Things change. We didn't get jobs as fast as we could have hoped in this economy. So, our budget for the next few months is going to take a hit. Here's what February looked/looks like:

425 Rent (had 1/2 off, but finished out our pet deposit)
150 Electric
200 Groceries
300 Gas (cars)
20 Water
35 Internet
1130 Total


March looks like this:

430 Rent (we got $20 off for participating in a community event)
150 Electric
150 Groceries
300 Gas
20 Water
35 Internet
1085 Total

Thankfully we've been able to stop paying our car until we get our feet under us. We had been paying about double to quadruple the payment, so we don't technically have to make another payment until April. Now, if we don't make another payment until April I will be very sad. We've lost a lot of ground already in intrest.

All the reading about frugal living and couponing has me inspired to cut my grocery bill in half. Since we were able to comfortably get what we need this month for about $200-- including a lot of convenience foods like frozen waffles, granola bars, etc.-- I am confident that with coupons and watching for deals I should be able to take us down even one more notch.

Net Worth-- Day 1

In order to truly prove that you can live on next to nothing and still come out ahead, I'm going to post our square-one stats.

First off, my husband and I are both, for all intents and purposes, unemployed. I have a business that has the potential for substantial earnings, but we've recently moved to a new city and I have not restarted that venture yet. I am a certified teacher, so substitute teaching is a definite possibility in the interim. My husband is looking for part time work while he pursues his master's degrees (yes, he's working on two).

Liabilities:
4.5k-- car loan

Assets:
2k-- checking
2k-- savings
4k-- total

Monthly expenses:
Rent $450
Utilities $150
Gas (car) $300
Car pymt $103
Internet $ 30
Groceries $300
Total $1,333


As you can see, our current net worth is in the negative to the tune of about $500. However, our monthly expenses are negligable. We watch movies, out-of-the-air TV, and play video games for entertainment.

Goals for 2009(ish):

• Pay off the car
• Compile an emergency fund of 3-6 mo. expenses (about 8k)
• Fully fund Roth IRAs for the two of us
• Should either of us obtain full-time employment w/ retirement, contribute up to the full employer match

Our plan:
Our financial plan is to divert any income in excess of our expenses toward paying off our car liability. This, of course, is after tithing 10% of our gross income. The goal is to have the car paid off by June, thus freeing up money to set up an emergency fund of 3-6 mo. of expenses. By the end of the year we should have completed both of these goals with some (or maybe a lot) of wiggle room for retirement and possibly saving for the downpayment on a house.

Why I'm telling you this:
Never despise meager beginnings. I'm posting all of this so that I'm accountable and so that the readers can see what progress can be made on a very limited income. If you are searching for hope for your finances, if you don't believe it can be done, or if you want to see what we do to pull this off... subscribe. I'll keep you posted on what jobs we do, how much we're making, where that money goes, and all else related to our progess toward a $1,000,000 net worth.

On that note, tomorrow I'll do my first subbing job and make about $80 gross. That will be our total income for the month of January. It has been a month of many unknowns, changes, and challenges. Stay tuned: our future is bright!