Frugal Living

Another Way to Recycle

Posted on February 18, 2008. Filed under: Frugal Living, Westchester | Tags: , , , , |

Today is about Frugal Living

Freecycle NetworkMy family is like so many others and produces a lot of waste. This morning, I was looking at all of the bottles and cans my family used in the past week and am grateful our town has a recycle program so that waste will not end up in a landfill. I recently discovered another great way to recycle more useful items called Freecycle.

According to their webpage (www.freecycle.org), Freecycle was started in May 2003 to promote waste reduction by creating local groups of people who give — and get — free items, thus keeping those items useful and avoiding sending them into landfills. People can post items they want to give away, while others can post requests for things they need. There are over 4,000 groups with over 4 million members, and you can find your local group on the FreeCycle webpage. I signed up for my local group, called WestchesterNYFreecycle, and have seen offers for everything from children’s clothing, to sports equipment and televisions. I have also seen requests for outdoor toys, jewelry boxes, and space heaters.

This is a great way to find free items that you can use. But it is also a great way to make sure the items you no longer need can be used by others. Like lots of families with children, we have clothes, toys, furniture and lots of other stuff that is in good shape but has been outgrown or is no longer used. So if we won’t use it, it’s better to recycle it to someone else who can use it, and avoid sending it to a landfill.

I think this is a great idea and wrote an earlier post about consumerism and how our “stuff” impacts impact the environment. Well,  I am using this network to get rid of my usable “stuff” as I try to simplify my life. It’s an easy way to reduce, while having less of an impact on the environment.

Anne

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The Next Step to Frugal Living Is to Get Out of Debt

Posted on January 24, 2008. Filed under: Frugal Living | Tags: , , , |

Thursday is about Frugal Living

Photo by KevinDooley
unum.jpgWill I ever get rid of my debt? Being debt free is definitely one of my goals for frugal living. Having no debt would free a significant part of my budget for savings and investments. But how does one get out of debt?

I am working on a plan to be debt free in two years, and here are the steps I am taking.

First, get a handle on all the places you owe money. Student loans. Credit Cards. Lines of Credit. Car Loans. Friends and Family. Mortgages. Home Equity Lines. Write them all down, so you know who you owe and how much.

Then prioritize your debt based on what it buys you. Since student loans and mortgage buy something that increases in value, then I am comfortable carrying that debt and paying it off slowly because I consider it an investment. Everything else is probably consumer debt and loses value over time–cars, clothes, trips, eating out– all of these things do not increase in value and are basic consumer debt. This is what should be tackled first. Once this is paid off, then you can make a plan to pay off other debt like mortgages at an accelerated rate.

Then look at your monthly budget and decide how much you can afford to apply towards debt after you pay your other bills. Be aggressive in carving out as much of your budget as you can. While it may be tempting to put your money into savings, it makes more sense to use your money to eliminate debt where you are charged double digit interest rates, rather than putting your money into a savings account with single digit returns. Even so, I keep a small amount for savings just in case of emergencies, and to avoid having to use my credit card if something comes up.

Then figure out which sources of debt are charging you the highest interest rates. The highest interest rates will probably be on your credit cards. According to Bankrate.com the average interest rate for a standard credit card is currently 13%. Usually, you will want to target the highest interest debt you have first. However, there have been times when I tackled lower interest, but lower balance debt so I could quickly get to my goal of eliminating one of my sources of debt.

Always look for opportunities to lower the interest rates you are being charged. You can call your credit card companies, and if you have been paying your bills on time, you can often negotiate a reduction in interest rate. Also, your cards will often send you offers to transfer your balances to get a lower rate. Consider taking advantage of these–but check the fine print! Some of these balance transfers come with a fee– often 3%. So if you get an offer to transfer your balance to get 5% interest, but there is a 3% transfer fee, then you are really getting an 8% rate. Also, if you get an offer for a new card with a low interest rate, keep in mind that taking on another card and the potential for more debt may lower your credit score. So before jumping at one of these deals, consider all of the options.

Do not pay the minimum amount requested. Pay as much as you can. I found it better to pay as much as possible on higher interest debt, while paying less on lower interest debt. Then once the high interest debt was paid off, I added that same money to the payments being made on the lower interest debt. Over time, your payments get larger as they roll over from one debt to another, and you can aggressively attack those last few sources of debt.

While it may seem obvious, do not take on anymore debt. Stop using your credit card or line of credit and focus on bringing it to zero. Make a budget and stick with it. Pay cash for everything possible. Bottom line: don’t spend more than you earn.

Think of the money you apply to debt each month, and imagine what it would be like to have that money available to you each month because you no longer have debt to pay off. If you have carved out a good chunk of your budget for debt, that can be a lot.

Even with this plan, it’s hard. Something always seems to come up–the car needs repairs, the kids need something for school, something breaks in the house– and I end up using my credit cards more than I want to. My biggest motivation is imagining the day when I no longer have these bills. If I am strict with my plan, and nothing comes up, then it will take two years. Seems like a long time, but at least there is an end in sight….

Anne

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Teaching Kids How to Budget

Posted on January 17, 2008. Filed under: Family Life, Frugal Living | Tags: , , , |

Thursday is about Frugal Living

Photo by r-z

coins2.jpgThe lessons I’ve learned from frugal living will be wasted if I don’t teach these principles to my children. Right now, I am trying to teach my kids about managing money and just started an experiment. I put money into an account for them whenever I get paid, and that is the money they can use for buying clothes and entertainment. If they want to save the money they can. If they want to spend it they can. However, when they want to buy clothes or go out and do things, the money comes from that account. If there is no money, there is no going out.

I am doing this with my older daughters who are ages 14 and 15. I figure at that age, they should be able to manage their money and learn how to keep a budget. When I first told them about this, they were thrilled. I decided to give them $75 every time I get paid (that’s twice per month), and they agreed that was a lot of money for them. I came up with that amount because I usually take them shopping for clothes twice per year, and spend about $500 each time. I also added in the costs of getting their hair done, and going to the movies and came out with an average of $150 per month.

Now when they ask me if they can buy something or go somewhere, I can simply say “Yes, if you have the money for it in your account”. This has really made things easier for me to manage. I have the money that is going into their accounts set aside in my budget. When they want to make a purchase, I don’t have to worry about what it costs–now that’s for them to figure out.

One of my daughters has learned how to save her money and now has a good amount saved up. The other spends it as soon as it comes in. She’s still learning, as are many adults.

Anne

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Teenagers at the Opera?

Posted on January 14, 2008. Filed under: Frugal Living, Things to Do, Westchester | Tags: , , , |

Monday is about Things to Do

Photo by judepics
opera.jpgMy teenage daughter really surprised me this weekend when she got a call from some friends who invited her to go to the movies. They wanted to go see Macbeth.

Yes, Shakespeare’s Macbeth.

In addition, it wasn’t just any production of Macbeth, but was an opera…..and a bunch of teenagers were actually going to see it.

It turns out that the New York Metropolitan Opera is hosting a series of high-definition transmissions of several performances to movie theaters across the country. This week’s performance was Macbeth, which my daughter’s English class is currently reading. Her teacher assigned attendance to this performance as an extra credit activity for her class, and a number of the kids decided to attend.

I am not really into opera, but I think this is a great idea and an easy way to get to see high quality opera, at a very reasonable price. The series is being broadcast to over 300 theaters across the US (see full list here). In Westchester County, the series is being broadcast at two convenient locations: New Roc Cinema in New Rochelle, and City Center in White Plains. Lastly, the tickets are very reasonably priced at $15 for kids, and $22 for adults.

Usually she is not allowed to go out with her friends until she has finished her chores, but how could I say no to Macbeth and the Metropolitan Opera?

When she got home, I asked her what she thought. She shrugged and said “It was OK”. She also said it was “weird” because when she and her friends walked into the theater, it was (as she puts it) “a sea of old people, and us”. I think the organizers from the Met would be thrilled to hear that a bunch of young people attended the event.

While I am not really into opera, this series is so convenient and affordable that it’s worth trying out, and I may go later this year with my other children. Anyone interested in La Boheme?

Anne

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The First Step to Frugal Living Is to Know How Much You Spend

Posted on January 10, 2008. Filed under: Frugal Living | Tags: , , , , |

Thursday is about Frugal Living

Every month I go through the process of reviewing all of our bills, and decide when and how we are going to pay them. When I look at the money that is coming in, and the money we owe, it seems like we should have more than enough for all of our other needs. But at the end of the month, we always have less than we should. I am good at keeping track of our bills, and could not figure out where the money was going. I have goals for eliminating our debt and building our savings, and want to make better use of our money to meet those goals (or get to them faster!)

One thing we do to help eliminate debt is avoid taking on more debt. We use cash for everything, and avoid using our credit cards. Using debit cards for our purchases, allows us to use money from an account that is designated for all of our purchases. It also gives us an electronic record of all of the purchases we make. When I reviewed last month’s finances, I looked at all of our grocery purchases and saw that we spent $1,000 in groceries. ONE THOUSAND DOLLARS!

This is the first time I looked at how much we spend in groceries. We do all of the right things to save on food bills-rarely eating out, watching for sales, planning meals, cooking at home, avoiding processed foods-so I was surprised at how much we spent. Now granted, it was December and we did a lot of holiday cooking. Plus, we are a family of five–including two teenagers. However, that is still a lot of money to spend, and it is a lot of money that was not budgeted, but was still spent. No wonder I had less money at the end of the month than I thought I should.

While we have adopted a bunch of frugal practices into our routine, I realized that the best first step towards frugal living and good money management is to know exactly where all of your money is being spent. I have an Excel spreadsheet that I use to keep track of all of our bills, when they are due, and when I have paid them. I pay bills twice per month and use the spreadsheet to mark bills that should be paid on the first of the month in yellow, and bills to be paid on the 15th in orange so nothing is late. I also use it to keep track of the balances on all debt, and the interest rates on all of our debt to remind myself which debt I should tackle first. It may sound complicated, but it works for me.

Here is a screenshot of the spreadsheet I use (although the names and numbers have been changed to protect the not so innocent). One thing you will notice is that I am now keeping track of groceries, gasoline, and lunch money which I think are the major expenses we were not monitoring.

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There are places where you can get more polished and professional ways to track your expenses. One webpage that I like is www.wesabe.com which has money management tools plus great discussion boards. Another is www.mint.com, but they have less of a social network and information sharing.

Whether you use a homegrown system, or one of these slicker systems, there is no way to get a handle on your expenses, and make a plan for your money without knowing how you currently use your money. We are keeping track of everything for the next two months. Let’s hope January is not another month with a $1,000 grocery bill!

Anne

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Consumption Factor

Posted on January 3, 2008. Filed under: Frugal Living | Tags: , , , |

Photo by spcummings

coffee1.jpgThursday is the day I usually talk about frugal living, and I woke up this morning thinking through possible topics to discuss. For the past few weeks I have been trying to present reasons why I think frugal living has several benefits, and each week I come across something which says it better than I can. Last week, it was a video. This week, it was a very interesting and compelling op-ed piece in today’s NY Times by Jared Diamond, who is a Professor of Geography at UCLA, titled “What’s Your Consumption Factor? 

In this piece, Diamond talks about the level of consumption of Americans compared with other people in the world, and states that the “average rates at which people consume resources like oil and metals, and produce wastes like plastics and greenhouse gases, are about 32 times higher in North America, Western Europe, Japan and Australia than they are in the developing world.” He points out there are several consequences of this disparity. I don’t agree with his conclusion that terrorism–which he says stems from others’ frustration from not being able to catch up to our level of consumption–is one such consequence (I think that is a naive and uninformed analysis about the root causes of terrorism). However, he does make a good point in stating that as the people of the developing world emulate and try to catch up to our level of consumption (think China and India), the world will quickly get to the point where there is simply not enough resource (like natural materials, land, water, oil, and food) to go around, and too much waste (greenhouse gases, landfill materials) to get rid of. 

Basically, something will have to change. Others will consume more, we will have to consume less, and there will be a need for some oversight to allow for sustainable extraction of resources (imagine sustainable fishing, farming, forests, energy). I think the importance of frugal living is not just about saving money, but is about using and consuming LESS. It’s about having less of an environmental impact, making do with less, and learning how to still have a good standard of living by enjoying and using the things we have MORE. It’s a way of thinking I want to teach to my children.

The best example I can think of to pull this all together is a basic cup of coffee. If you are addicted coffee and need a cup every morning, the frugal approach would be to buy a bag of beans and make it at home for yourself. The nonfrugal approach would be to go to your local Dunkin’ Donuts, Starbucks, or other coffee place and buy a cup of coffee. Not only does this cost more, but each and every day you will make a contribution to your local lanfdill of your paper cup, the plastic top, the cardboard sleeve, the stirrer, paper from the sugar packs, and a couple of napkins. Now multiply that garbage by 1.3 billion Chinese people and you quickly get to why frugal living is as much about the environment as it is about saving money.

Anne

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The Story of Stuff

Posted on December 27, 2007. Filed under: Frugal Living |

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Photo by Brave New Films

Today is Thursday and this is the day I usually talk about frugal living. I have been trying to put together all of the reasons why I think frugal living is a good thing. There are the obvious benefits of saving money, but for me it’s also about consuming less, focusing on non-material pleasures and having less of an impact on the environment. All of these issues do relate to frugal living, but I have had a hard time putting them together in a coherent fashion. Then a friend sent me a link to this brief video (www.storyofstuff.com), which puts it all together in a clear and easy to digest video.

Enjoy.

Anne

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Frugal Christmas

Posted on December 20, 2007. Filed under: Frugal Living |

candles.jpg

Photo by jurvetson

THERE ARE ONLY FIVE SHOPPING DAYS LEFT UNTIL CHRISTMAS!

The commercials and hype would have you believe that you have to go run out to some packed mall and spend, spend, spend! I am trying to do otherwise. This time of year is always stressful — buying gifts, winding down at work to take a few days off, sending out cards, school events, parties, family plans, shipping packages, visiting with friends, decorating–all of this adds up to a stressful season. Now add the possibility of racking up serious credit card debt, and it just doesn’t make sense. So when I think about a “Frugal Christmas” it begins with saving money and not going overboard. But it’s also about saving sanity, working towards simplicity and trying to actually enjoy the season.

So here are the things I do to have a frugal, and fulfilling, Christmas:

  • Set a budget. And stick to the budget. I set money aside for use during Christmas and like being able to get gifts for the people I love knowing that it will not put me further in debt. This helps to avoid the anxiety I feel when money is being spent, but it isn’t clear to me where that money is going to come from (DAMN those credit cards!) I have an idea of how much I want to spend on each gift based on my budget and can focus on the giving without worrying about the spending.
  • Make something. I have knitted scarves, made gourmet food baskets, burned CDs and created family calendars with all of our photos to give away. I made butter for the first time a few weeks ago, and learned that it was really easy to do. So this year I decided to make a bunch of flavored butters to give as gifts. My package will have three butters one flavored with sea salt, another with fresh herbs, and the third with chopped radishes (sounds weird, but I am told it tastes great). My daughters spent this evening making cookies for all of their friends to give as gifts, so I am pleased to see that they have learned you can make things that are worth giving as gifts.
  • Limit the number and size of gifts. For years I have been advocating that we limit gift giving to the children in the family, but could never get anyone to agree. Then I advocated for doing a Secret Santa where each adult puts their name in a hat and we all buy one gift for the adult whose name you pulled from the hat. Again, no one agreed. So I decided to institute my own Secret Santa. Each year I get a small gift for all of the adults in my family (eg a picture frame with a family photo inside). However, I pick one person to be my “Secret Santee” and get them one big gift. I simply go in alphabetical order to determine whose turn it is to receive the big gift. This year it’s my Dad’s turn to be my (not so) Secret Santee, which is nice because it has been a tough year for him because of his health.
  • Round Robin. This is actually not one of my ideas, but a coworker told me he does it in his family with the adults and I thought it was a great idea. He has a large family and when they get together for Christmas each person brings one gift. Then they all pull numbers out of a hat. The person with the number one randomly selects one of the gifts and opens it. Then the person with the number two opens a gift. He can then decide to keep the gift or can take the gift that belongs to the person who already opened a present. So it goes on with each person opening a gift, and then deciding if they want to keep it, or want to trade it for one of the gifts that have already been opened. Then when everyone has selected a gift, it goes back to the person who was number one and they get to make the final trade for the gift they want among all of the gifts that have been opened. With a large noisy family, the fun is in the trading and laughing.
  • Buy nothing. My husband and I have agreed to not buy each other gifts for the past couple of years, and it has been great. No trying to figure out what he wants, one less gift to get, no need to make room for more sweaters. The other approach is to use Christmas as a time to buy something new for our home that we both want. Whatever the approach, the goal is to keep it simple a low stress.
  • Don’t buy seasonal items. This really applies to my wrapping paper and Christmas cards. Instead of getting something that screams CHRISTMAS, it’s better to get someting that can be used all year. So wrapping paper can be a basic red color, without Christmas prints and used all year long. Cards can have a neutral theme and be used as thank you cards during the year. No Christmas towels, dishes, aprons, pot holders or other items that would look ridiculous if used in August.
  • Take the kids out to look at Christmas lights and decorations. An advantage to living in New York is access to places like Lincoln Center and Rockefeller Center. At this time of year, there are lots of options in terms of places to see great Christmas decorations and holiday lights around the city for free or for minimal cost. Here are some listed in New York Magazine. Closer to home in Westchester, there are some families that go over the top with decorating their homes every year, and visitng them to see how they have decorated is an annual event for some. Here’s that list.

I am always looking for ways to make this season easier and simpler. This list is the beginning and I hope to get more ideas.Anne

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Pictures with Santa

Posted on December 17, 2007. Filed under: Frugal Living, Things to Do, Westchester |

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Mall Decorations. Photo by WalkingGeek

It’s Christmas time, and I wanted to get a picture of my youngest daughter with Santa Claus (my teenagers informed me they were too old—Scrooges!). I was able to avoid the mall during this Christmas buying season, up until our Santa visit. As someone who is trying to reduce consumption and wipe out materialism in my family, the mall and teenage kids do not add up to a good time. However, despite the challenges of having teenagers with me, we were able to spend most of the day getting Santa pictures, and did a lot of window shopping. A useful tactic for me to keep the peace has been to give my daughters a budget when we go out. I find this works best because;

  • they feel in control of their money,
  • I don’t have to weigh in on every little purchase (like the mall pretzels),
  • I know exactly how much they are going to spend because we set a budget, and
  • when Mommy is not paying for everything, they become REALLY frugal and spend their money very wisely.

So the bottom line is we made it to the mall for Santa pictures, but were able to avoid a lot of the shopping frenzy and took in some of the holiday magic from the store and window displays.

Anne

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Getting Out of Debt

Posted on December 13, 2007. Filed under: Frugal Living |

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Photo by Jeff Belmonte

When I was in school, one of my roommates used to tease me about being cheap. I shopped discount, only used cash to avoid credit cards, stayed away from designer names, and was constantly looking for bargains. On the other hand, she was a strong believer in “retail therapy”, was quick to use her credit card and loved designer labels. By the time we graduated, she had a balance of over $10,000 on her credit card, while I had nothing on mine.

It’s not that I am cheap, it’s that I don’t want to be burdened with debt or things that don’t add value to my life. Although I have tried to be debt free, it hasn’t always been possible. There were student loans, but I figured that was an investment in my own future and worth the debt. There is my home, but that has increased in value so is worth owing money to own. But then there is credit card debt, which I can never look at and say what I actually got for that money. Clothes? Gadgets? Meals? Where are they now? There was a time after my first marriage ended and I was a single mother and financially strapped. I sometimes had to use my credit card for emergencies (although it seemed like there was a new emergency every month), and racked up a lot of debt. I am still not debt free, but am tackling it and moving in the right direction. Even with a lot of discipline (and no more emergencies) it will take me over two years to get out of debt.

In my view the benefit of being debt free is more than not owing money, it’s the freedom it provides to make choices with your life. Reasons why I want to be debt free:

  • Save to retire earlier
  • Save to travel and create more memories
  • Owe less so I need less money to live and can work part-time instead of full-time
  • Make even more money by investing. It costs money to owe money, because I have to pay the interest rates. While I can make money by saving money and being paid when I invest it (a basic money market account will pay you 5% per year for your money, while a credit card will cost you around 15% per year for the money you owe—I think of that as a 20% difference).

My basic goal is to give myself more freedom, and being debt free is a great way to get started.

Anne

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    Musings on how a disorganized woman with a full time job, three kids and a real need to relax is trying to make life simple.

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