Money Basics Part 2: Prioritizing
Now that you know where your money is going, it’s important to decide where it SHOULD be going. If you’ve been forced to reduce your spending due to a sudden loss of income, you can still focus on priorities to get you through this tough time. Having a long-term goal in sight when you’re digging for change to buy groceries can be helpful; I promise, I’ve been there. I was out of work for a few months (not long at all compared to what some people are enduring) and we were living on credit cards until I could find something new. My goal was to charge as little as possible, so we’d have a smaller burden to escape from once I was employed again. If you’ve decided to reduce your spending for your own reasons, it still helps to have your priorities in mind when temptation strikes.
If you have a spouse or significant other you share expenses with, you should start with an honest, open discussion about what your priorities are as a team. Two cart horses pulling in opposite directions aren’t going to get anywhere. If you’re completely dedicated to saving, and your SO is shopping or eating out, it’s going to create strife in the relationship. Having agreed-upon goals set up ahead of time will prevent issues (hopefully; I mean, I’m no therapist). Maybe you want to cut your household spending by 50%, and this horrifies your partner. Explaining why this is a goal for you, for example “I’d like us to take that trip to France we’ve always talked about”, can help them see your point of view. At the same time, you may have to compromise, and agree to reduce spending by only 20% for now, or maybe have an allowance of “fun money” you’re not allowed to cut.
So what are your goals? They don’t have to be lofty, long-term ones; in fact it often helps to have small, achievable goals, especially at first. “We need ‘x’ amount in savings for emergencies”, “Paying a car off early”, “Saving for a weekend trip to the beach”, “Saving the down-payment on a house” can all be valid goals. Having a long-term goal as well, like “Retire by 60”, “Pay off the house”, “Have zero credit card debt”, “Trip to New Zealand” can keep you moving in the right direction, while small goals keep up your motivation along the way.
Hubby and I have our goals set up like dominoes; as we complete one, we move on to the next. 1) Have ‘x’ amount in savings to cover emergencies. 2) Pay off his car early (we already met our goal of paying mine off early). 3) Save up to re-side the house. 4) Save up to build out our second-story porch we’ve always wanted. As we achieve a goal, we high-five and do a little dance, and get started on the next one. It makes it so much easier for me to pass by Taco Bell by saying “Nope, we’re saving for goal #1”. Of course, we indulge sometimes, but not nearly as much as we did before I started watching the budget.
Your goals will be unique to you and your situation, although there are some that are fairly universal. Seeing progress on your goals (even if that progress is simply not going further into debt), will help motivate you to reduce your spending. Keep track of where you are on your goals, and how much you’re saving. Those concrete numbers will help keep your goals firm in your mind, and reduce back-sliding. Everyone slips up now and then, though. Don’t beat yourself up, or throw in the towel if you order pizza, or buy something you didn’t plan to. Use it as a learning moment for yourself, and try to keep on your path in the future.
Why I Love Crappy Cars
Some people believe what you drive shows what kind of person you are. I totally agree. Mine shows that I’m thrifty, and creative. I drive a 10 year old Honda with almost 200,000 miles on it. The interior is clean and I do all the regular maintenance on it (not myself, I mean I have it done when I’m supposed to). What does it say if you drive a brand new car every two years? To me it says you won’t be retiring as early as you could.
There are lots of reasons to drive an old-ish car, and I’m organizing them all together right here. In the future, when I get into a discussion about this topic (AGAIN) I can defend myself by saying “Just read my blog”, instead of having to rant at them in public. I hate having to berate people loudly and publicly, but someone has to stop stupidity from spreading!
1. No car payment. That’s right, the only debt I have is my house. I don’t want any more debt. Some people argue that with an older car you end up with periodic payments anyway, in the form of repairs, but that’s why I have a savings account. When you go to buy the car, do your research first. I always check Consumer Reports to get a good quality used car, to cut down on maintenance. I would use this when buying a new car as well, because there is no guarantee that just because it’s new, it won’t have issues.
2. Cheaper repairs. If you buy a practical car, like a Honda, the replacement parts are cheaper than those for a fancier car, like a Lexus (which is made by Toyota, by the way, so I hope you feel real fancy driving around in your super expensive economy car *smirk*). There are also less fancy options and computer chips in older cars. With the new ones (at least 5 years old and newer) you have to pay at least $80 when the check engine light comes on, just to run the computer diagnostic! I had to pay that because I needed a new gas cap, which was $20. What should have been a $20 repair turned into $100. Argh. (Yes, my car has computer parts, no I’m not happy about it. When the machines take over i’ll be just as screwed as the rest of you, but Hubby will be safe in his old Ford).
3. No worries! A shopping cart hit my car in the parking lot of a grocery store. It came roaring down the hill, hit a curb, flipped over and smacked the crap out of my passenger door. I was not happy about it, but since my car was already 6 years old at the time, I didn’t have to worry about it. When I got caught in a hail storm, I was not sitting there thinking “This vehicle just lost $10,000 in value in 5 minutes!” and having a panic attack. I was more worried about getting home safe. When the insurance company gave me a check, I left the dents and pocketed the cash for our next car. We got $5,000, and got to keep both of our perfectly functional, but ugly cars. Win win as far as I’m concerned. Now in the future, when something inevitably goes wrong, I have cash available to replace my clunker, with a slightly less clunky clunker.
4. Less maintenance. I don’t wash my car. It’s a waste of time, money, and water. My paint job has held up for 10 years with dirt and poop, and who knows what on it. It’ll last until I’m done with this thing. I get the oil changed, and the tires rotated, but if something major goes wrong, I’ll just scrap it, and buy a 3 or 4 year old car, and start over again.
5. Less depreciation. Depreciation is when an investment loses money over time. Cars depreciate instantaneously when you buy them brand new. If you buy a brand new car, and try to turn around and sell it the next day, it can have lost up to a third of its value. This is because most people assume it’s a lemon, and don’t want it. The older cars get, the slower the rate of depreciation is.
Would you put $20,000 into an investment if they guaranteed you’d get only half of that back in 2 or 3 years? Hell no! So why put it into a car? You never get that money back, and you could spend $10,000 on a used car, and invest $10,000, and be WAAAY better off. Finance is all about opportunity cost. What are you giving up by buying that shiny new car? The cost of the car is not just what you pay for it (plus interest, if you get a loan for it), it is also the loss of income on that money. Say you had bought a $6,000 (which is my ideal car price). You could have invested the other $14,000 (we’ll assume you had cash, not a loan to make the math easier). Even if you put it into CDs, you could earn at least 3% on that. That means the $20K car costs you an additional $420 just in the first year.
6. More eco-friendly. I know that sounds wrong but just listen (er, read). To create a new car, metal has to be mined, then smelted, then shaped, all of which is massively detrimental to the environment. All of the materials have to be transported, which burns lots of fuel. The plastics in the interior are made from petroleum, and create all kinds of noxious by-products. The computer chips inside use lots of heavy metals which are toxic to humans and animals (which is part of the reason why you can get lead poisoning from fish now). You may end up getting a bit more fuel economy, but not enough to counter-act all the pollution created to make that car. Plus, that new car smell is actually chemicals outgassing from your car, and posssibly giving you tumors. Fun stuff, right? Scientific American did a fantastic article on this subject, so I actually have a source this time, not just my own ravings!
Just save your money, and don’t worry about flashiness. If you’re worried someone will tease you or something, just buy a nondescript car, and surely no one will notice. Although, if you’re that worried about how people will perceive your car, maybe you need therapy? If someone makes a comment just say, “I chose to get a cheap car, and donated the rest to help starving babies in Africa. What are YOU doing about starvation in Africa?” It doesn’t have to be true, it just points out what a shallow jackwaggon the other person is being. You can also use your own pet cause, it doesn’t have to be Africa. Well I hope you all learned something today. You’re welcome.
Captain’s Blog: Supplemental
After I wrote my mini-frauxgalness rant (hasn’t that phrase caught on yet? Jeez), I realized there’s another faux-eco occurance that arises constantly. I call it faux-green, because I haven’t thought of anything better yet. You spammers constantly commenting could try posting something useful for a change, and let me know if you think of something more clever.
I touched on the concept of faux-green in a previous post. Planet Green is constantly guilty of this type of thing. The whole show “Emeril Green” is only as green as the horse poo it’s made of. Simply using organic ingredients in cooking DOES NOT make it eco-friendly! You can’t ship special, rare, expensive, organic olive oil all the way from Italy or Nepal or somewhere and call it green (well green in color, yes, in enviromental impact, no). Shipping things from that far away leads to tons of fuel use, for what I consider to be very little gain, environment-wise.
Another problem is called “green washing”. Companies put some kind of pseudo eco-label on their product, without actually doing anything beneficial for the environment. I saw plates at the store the other day with a huge green leaf sticker on each one, that proclaimed “Made from Recycled Content!” in huge letters. In tiny letters below, it said “20% post consumer waste”, or something along those lines. 20%? Really? I’m not going to get excited about that. The worst one I saw, and I can’t remember what it was on, proudly proclaimed that it was made of recyclABLE content. That means they did nothing other than use the same old cardboard or plastic as always, and they want you to do the work of helping the environment.
These kind of things are part of why I am very hesitant to jump onto any trend. I tend to focus on my pocketbook before anything else, and it’s kept me out of trouble so far, knock on wood (which is recyclable!).
My Super Cheapness: Beauty Part Duex
Ok one more post, then I’m out the door!
My philosophy on the whole beauty process is to keep it as simple as possible, meaning I spend as little time grooming myself as I can. There are several major areas in this topic, so I’ll try to cover them as simply as possible.
1) Cleanliness: I shower every other day, not every day. This saves water, time, wear and tear on the plumbing in the house, and saves shampoo and stuff. Some people may think this is gross, but they are just uptight. I do shower if I get all sweaty, or go swimming or something, just not every night. It’s also healthier for your skin and hair, because you leave the natural, nourishing oils in your hair to help strengthen it.
2) Face: I do wash my face everyday, twice. My dermatologist told me to use regular anti-bacterial soap. This removes oil, and kills the bacteria that cause acne. I don’t buy any of that super fancy face wash stuff, just regular dial soap. I also use soap in the shower, rather than body wash. I only use fancy bath stuff if people give it to me.
3) Hair: I don’t use any hair products, although that’s mostly due to ignorance. If you use products, try to substitute those that aren’t tested on animals, or too horrific for the environment. Personally, it’s not worth it to me to get up an hour before I have to to get my hair ready. I also don’t blow dry my hair. Heat and products are generally bad for your hair. You have to remember your hair is dead. There is very little that can actually be done to repair it once it is out of your scalp. A diet high in protein can help you grow stronger hair and nails. My hair is super thick and silky, so I do everything I can to avoid damaging it.
4) Hair cuts: I cut my own bangs. The rest of my hair is growing out at the moment, although I do trim the ends myself from time to time. If you have a low maintenance hair style, like your natural color and a simple cut, you can save a ton of money. I know girls that spend $100 a month getting high lights, low lights, cuts, and whatever else those people do. That’s ridiculous! I would much rather go out and DO things than have my hair some artificial color no one believes.
5) Body hair: Okay I promise to keep it clean. Tweeze everything you can. This is the cheapest method of hair removal, because tweezers cost about $2, and last forever. Plus, this will kill the hair overtime, making less plucking necessary. Wax costs money, cremes do not work, shaving is only temporary. If plucking is too painful, go for an at home waxing kit. I like the ones that are little plastic strips with the wax already on them. They cost more than the jar of wax, (per actual wax strip), but they are very cheap per box, less than $5. The mess with the big jar of wax is not worth the savings to me, but I’m also very uncoordinated.
6) Nails: I don’t get manis or pedis, unless it’s for a special day with a friend. In fact, I have had one of each in my life. If you’re going to go, pedicures are more cost effective. The polish lasts a LOT longer, and the foot massage makes it worth it. At any of these places you can be risking nail fungus, among other health issues, so keep that in mind. I generally trim and paint my own nails.
See a pattern? Anything you can do yourself instead of paying someone to do will be significantly cheaper. I bought a razor comb at Sally Beauty Supply for about $5, and I’ve trimmed my own bangs with it for years.
Take a look at any services you’re paying for, and decide if there’s something else you’d rather be doing with that money. Are you paying for a weekly lawn service, but you’d rather have date night with the spouse? Or paying for lawn service and you’d rather have a weekly pedicure? Or vice versa? Sometimes we fall into habits of spending, and it’s easier to continue the pattern rather than taking a look at what our priorities are.
Unfortunately, money is a big part of life, and it affects everything we do. Thinking about it in a logical way can help simplify our lives, and ensure that we get to enjoy the little time that we have on the planet.
Enjoy your weekend, my minions!
My Super Cheapness: Beauty Part 1
You may have noticed from the couple of pictures of me on here, that I don’t do much with my appearance. I think I’m a decent looking gal, and obviously Hubby thinks so too, but I don’t believe in wasting time or money on makeup, nails etc. Now, I used to spend a ton on cosmetics, and hair stuff. I’ve weaned myself off that stuff for several reasons:
1) It’s a waste of money. I never finish any single eyeshadow or blush before it breaks apart in my purse, which then coats everything important to me in a shimmering pink powder of doom. Lipstick gets dried out and gross or mushed, and nail polish gets gloppy. I don’t remember once throwing any makeup product away because I used it all up.
2) It’s a waste of time. I would rather sleep in the mornings than get up early to look extra nice for the 5 people in my office. I realize I’m also married, which means I’m not looking to meet anyone, so different circumstances may apply to certain people. I do put on a bit of makeup for going out from time to time, but usually just eyeliner and mascara, none of that pore-choking powder. It also helps that my husband has an extreme dislike for makeup.
3) It’s bad for you. I never broke out more than when I was constantly coating my face in chemicals. Add to that the fact that bacteria can thrive in makeup compacts, and you have a bad situation. The bacteria info is verified by my dear friend Dr. Stacey. She is a font of useful info!
4) It’s bad for everyone else. The way cosmetics are tested on animals is truly disgusting and unnecessary. I don’t want to be the cause of a dog having mascara stabbed into its eye to see what happens. All the plastics created for the packaging and then not recycled is not good for the environment. Plastic is made from petroleum, so the more we use, the more dependent we are on foreign sources of oil. Personally I don’t want our nation to have that vulnerability. Ok, end of politics.
So what are my solutions? Personally, I haven’t purchased any makeup or beauty products in at least 3 years, and that was for my wedding. I still have plenty laying around the house from way before then also. If you MUST have make up, Kiss My Face, Burt’s Bees and several other eco-friendly companies exist. That stuff is expensive though, so weigh your priorities. I generally stick to Burt’s Bees lip balms, or Bonne Bell, because they don’t test on animals.
PETA has a pdf out that has a huge list of companies that have pledged not to test on animals. I used this list to make a post-it of companies I like that I keep in my wallet for when I go to the store.
Good news! Bath and Body Works is on the list, so you can shop for all your female friends there guilt free. Many things are affected by how and where we shop. I shop as little as possible, but when I have to, I try to weigh my priorities accordingly. For me, my wallet and animal welfare are my two priorities, so I look for cheap brands that don’t test on animals, rather than something cheap and using recycled plastic, or etc. Okay, end of soap box speech!
Excelsior!
moneymoneymoneymoney….MONEY!
So I was super-motivated this morning. I woke up extra early and took a fifteen minute walk…to the mechanic. Yep, Red Betty is in the shop with transmission troubles, the most expensive ailment I have yet come across in any of my money-pit vehicles. Now, I love my little red wagon, but I’m not going to let emotion get in the way of a sound financial decision. While I’m awaiting more data to make my decision (like the official estimate), I’m thinking a lot about money and how not to spend it.
The best way to save money is avoid spending it. Some of the following tips have been on every money saving website in existence, but I don’t want to be left out. The others are ones that I’ve developed over time as our finances got super tight during certain situations (like our recent economic vomit-fest).
1) Eat before going to the grocery store, to avoid stocking up on tons of junk you don’t need. This has been said dozens of times, but I notice a huge difference in my shopping habits if I don’t follow this rule.
2) A variation on this that helps me is make sure you bring plenty of snacks to work. If I eat a nice snack, like cottage cheese, or peanut butter and a banana about an hour before I leave for the day, I have enough will power to cook when I get home. If I leave starving, I’m much more likely to stop for fast food.
3) I don’t use coupons. I don’t get the paper, which saves money and clutter, and I buy the store brand of everything. The store brand is consistently cheaper than the name brand even with the coupon. I only use coupons if they are for a free item, or something I could have bought anyway.
4) Stick to your budget. This seems obvious, but it is so easy to go over by a few bucks here and there, then it’s no longer a budget. If I have to go over, I subtract that amount from next week’s budget. This forces me to prioritize. So I buy the toilet paper, and leave the mac and cheese behind. I end up saving money, and I never miss the mac and cheese during the week. If it’s something I really needed, it will get added to next week’s list.
5) Okay enough grocery stuff. I don’t run errands. I wait until I absolutely have to go somewhere, with a list of at least three items to buy before I go. And I comparison shop mercilessly, but just within the same store. Driving all over town burns gas, wears out your car, and takes up your slack. It’s not worth it.
6) Don’t go shopping for fun! I walked through the mall the other day, and thought back to all the cheap plastic useless crap I spent money on in my teen years. I don’t have any of it, or remember any of it.
7) Use someone else’s toilet. My husband thinks I’m nuts, but I always go pee at work before I leave for the day. Any flush that isn’t at your house saves you money. That’s all I’m saying.
Watch your spending and figure out where your income drains are. Do you buy a bunch of snacks at vending machines? Do you go out for lunch or coffee, buy lots of shoes, get magazines you don’t read, pay for cable you don’t watch, or a phone you don’t use? Do you go over your cell minutes, or overdraft at the bank? Do you spend a lot on manicures or getting your hair done, or buying alcohol? Use common sense. Lights off, keep the house warm in the summer and cool in the winter, turn off the faucet, don’t drive like a maniac.
9) Brush your teeth! An ounce of prevention is worth a pound of cure, and this goes for your body, your car, and your home. Brush and floss like the dentist says, eat as healthy as you can stand and afford, get your oil changed at the right time, and keep your home in good repair. For example, we have to use soaker hoses in our area in the summer time. They go around the whole house, near the foundation. We leave the water running for at least an hour a day to keep the ground around the foundation moist, to prevent foundation problems.
10) Get free stuff! Not just anything that’s free, because you’ll end up with tons of clutter, but useful stuff. Free samples at the grocery store? You betcha! Someone bring food to the office? Save your own snacks for later, and enjoy the kindness of your coworkers. Is it big trash day? Drive around your neighborhood and pick up cool stuff. Believe me, it’s there. If you have the time, you can even get stuff that’s in good shape, but you don’t need and sell it on Craig’s List or eBay. If you don’t feel like selling stuff, donate it to Goodwill or a similar charity, and get a receipt for a deduction on your taxes. My donations last year added an extra $150 or so to our tax return this year. Jealous?
I think that covers the big stuff, plus 10 is a nice number. I might do another post on money-saving fallacies in the future (the future being after I eat my yogurt). Save on!
Slack, glorious slack
What is this slack I speak of? Slack is a philosophy of doing as little work as possible, so you can have as much fun as possible. The Church of the SubGenius is the original creator of this concept, I believe.
This is not about laziness, this is about prioritizing. Do you want to spend more time with your kids or spouse? Then don’t work 60 hours a week. If you don’t work 60 hours a week, maybe you can’t afford a Lexus or 8000 square foot house, but why do you want to own those things rather than play with your kids?
You have to look at each thing you buy, and think about it in real terms of what it cost you. The number of hours of work, as well as what economists call “Opportunity Cost”, which is the cost of the other choice you could have made. If I go out for sushi, that costs me about 2 hours of work, for less than an hour of enjoyment. With that same, lets say $30, I could have gone to the thrift store and gone hog wild (I love me a thrift store).
Like I said, Slack is about priorities. Do you want to continue to work at horrible boring jobs until you’re 67? Or would you like to retire at 55? That takes some serious thought about where your money is going, and where it could be going.
There are always little things we ignore, little nagging voices you hear in the back of your head. “The doors need weather stripping”, “The vegetables are rotting in the fridge”, “My car seems to use a lot of gas”. Often, it’s easier to turn your head, or put it off and just pay the bill rather than scrutinize how much it’s costing. I myself have done these things, and looking back now I know how much money we wasted, and what we could have done with it. It frustrates me, but I have to focus on doing right moving forward.
My Attempts at Cleverness 