Archive for the ‘Practicality’ Category

Fighting the Urge to Spend Part 2

Last post I covered how we can be tempted into spending money while trying to become financially free.  Unfortunately, the urge to spend will still be there even after you have control of your finances (take a look at my sneaker incident).  So what are some ways one can control this urge?  Here are some tips that I have gathered that have worked for me in the past:

  • For the married folks.  Don’t ever let money be an issue between the two of you.  I believe that everyone should have a hand on the household finances even if one is more knowledgeable about it than the other.  A simple yet great tip I found was to always discuss any spending over $100.  That way, at the end of the month there shouldn’t be any surprises when you are reviewing your monthly budget.
  • Use the 24-48 hour rule.  My brother is a tech geek.  He loves anything doing with technology.  Naturally, he loves going to electronics stores and seeing the latest and greatest.  So when the newest thing comes out, he gets that must have feeling.  One of the ways he fights the urge of spending money on gadgets is using the 24-48 hour rule.  If he really gets that feeling that he needs to buy an item, he waits between 24-48 hours and the feeling usually deteriorates.  He understands that what he had was a compulsive buying feeling where the satisfaction is only from buying the item right then and there, and not necessarily because he wants it for the long run.  I find myself using this technique as well.
  • Limit the amount of time in temptation hot spots.  Temptation hot spots are places that you know make you want to spend money more than usual.  For me, any sporting good store or website dealing with sneakers are my temptation hot spots.  Just remember that we are limiting the amount of visits to these places.  I can definitely afford to buy some of the things I want so I sometimes walk into these stores to take a look.  But if I was trying to get out of debt, I would not even look at these places so I wouldn’t loose focus on the bigger picture of being financially free.
  • Have a constant reminder of your goal.  If your goal is to become debt free, why not keep in your wallet or purse a piece of paper with the amount of money you still owe written down.  When you see something you want, look at that paper and say to yourself, “do I need to add to this total?”.  Maybe you are saving for a car or a new home.  Have a picture of that in your refrigerator or with you to remind you about what you are saving for.  Get creative, and look at the bigger picture.
  • It’s okay to treat yourself.  All work and no play can make you dull.  If you save cash, have no debt, and are saving for the future, why not include a category in your budget where you can have some extra cash to buy that thing you like.

We are bombarded constantly by the media with the importance of buying stuff.  Many people become almost obsessed with the idea that the more stuff we have the better we will be.  Remember that these items are not what makes you happy.  Look at that old exercise machine you bought, or that gadget you have only used twice since you bought it.  Has it really made your life any better now?  The urge of buying is more than anything an urge for immediate satisfaction and less of a long term need.  Using the previous techniques can help you, but as always your will is what will carry you to do it.

So what are some spending blunders you had?  How do you fight the urge to spend?  I would love to read the ways you control your spending habits. 

Taking the First Step Into Savings

Last week, a friend and I began talking about saving for the future.  I told him about my current plans and how I’m saving about 20% of my income annually for retirement.  He told me he really has not saved anything.  Personal circumstances had put him in a situation where he thinks he can’t save for himself right now.  As the conversation progressed, he asked me for some advice.  What should I invest on?  Where do I do it?  How do I start?  His focus was more on the investing side of the equation.  I told him that right now, that is not as important as taking action.  The last question was what I thought was the most important one-How do I start?

If you ever wanted to loose weight, change jobs, or any type of situation that might require some deep thinking, the most important thing you can do is to take action.  Taking that first step is what will help lay the road for the future.  This concept is no different when talking about personal finance.  Don’t worry about the schematics of investing.  Worry about doing something to get you started.

The first step you should take should be taking a closer look into what you spend your money on.  I had asked my friend if he new what his income was after expenses.  He didn’t know.  I told him to just take a look at where his money is actually going.  Then, he will notice  that either A) He needs to find a way to increase his income B) Decrease his expenses C) Both.

It does not matter how large or how small the amount of savings you put aside is.  The important thing is to do it.  When I first started saving for retirement, I could only save about 50 dollars a month, sometimes even less.  But that didn’t discourage me.  In fact, it motivated me into saving even more.  When you start to see your savings grow, you want to keep feeding it more and more.  You start to notice that you can maybe save a little bit more this month.  As the next month rolls around, you noticed that you can save a little bit more.  Soon, saving will become a habit.

As the saying goes “the journey of a thousand miles starts with the first step”.  So open a high yield savings accountlive more frugally, read about personal finance, do whatever it takes to get the ball rolling in savings. 

 

Careful When Lending Money

Most of us have been in the position where we where have been asked if we could lend some money to a friend or relative.  Many of us have also been in the situation where we might of had to be the ones asking for the money.  Did it change the relationship between the two of you? How did you come to an agreement of paying it back?  Personally, lending money to friends and family are just something I don’t do. 

When I am talking about lending money, we are talking about $100 or more (To me that is a lot of money to loan, but I understand that to some that is not a large amount).If you where the potential lender, think back to that awkward feeling you had while trying to make the decision whether to lend the money or not.  If you did loan the money, think about how the relationship changed afterwards.  Maybe he didn’t pay you back, maybe you had to hassle him for the money.  Whatever the case may be, it is an experience we all hate to have.

My father was a small business owner back when we lived in Mexico.  His business was in all kinds of financial troubles so he started to look into other ways to make ends meet as well.  To pursue these other business interests he need it some money to make it happen so he went to his brothers and cousins for some money that they could “invest” with the promise of payment in full in the future.  As you can guess, my father never payed the money back and his relationship with them has never been the same.  Money became such a divider between them that my father has very little contact with his brothers and cousins.

Due to prior experiences with lending money and hearing so many other people have negative experiences as well with the subject, I have come to the decision to not loan money to friends and/or family.  If somebody I care for finds themselves in a situation that they need help financially and ask me for me money, depending on the circumstance, either I will help them some other other way (educating them on personal finance-If they are receptive to the info) or I will gift them the money with no expectations of getting the money back.

Lending money is a personal issue that can strain and even break relationships.  Some point in time we are all asked and will probably be asked again if we can loan somebody money.  Don’t just think of the amount they are asking for-think about the other effects that it can cause between you and the other party involved. 

Hand Washing vs Dishwashers

When we first moved to the United States, I remembered asking my mother why she wouldn’t use the dishwasher. She would tell me that while it did save some time, it was expensive to use. The water and electricity that it consume was not worth the 15 to 20 minutes it might save you in time. But dishwashers have come along way since I had that conversation with my mother over ten years ago. So are you better off using a new dishwasher than washing the dishes by hand?

I did a little research and I found this:

The Bonn study proves that the dishwasher uses only half the energy and one-sixth of the water, less soap too. Even the most sparing and careful washers could not beat the modern dishwasher. The study also rated the cleanliness achieved, again in favor of the washing machine (sorry mom). There have been studies before, but this is one of the few that stands (wo)man against machine and it sets itself apart by including a thorough analysis of the effect of half-loads and the whole demand range from your cake plate to the grimiest pots. Surf to research under household technology at U. Bonn’s site for more. :: U. Bonn Household Technology.

Even with the study done, I still don’t know what side of the fence I am in. Here are some thoughts I had after reading this:

  • The study was done by dishwasher manufacturers. How much did they invest on this study? Is it really unbiased?
  • Remember that it is talking about newer dishwashers. Specifically energy star approved models. If you have an older model dishwasher, you are probably better off washing by hand.
  • Everyone has a different method to wash dishes by hand. I know that some people keep the water running while washing while others fill the sink and many other ways. Not all methods where used to compare with the study.

So what do you guys think about dishwashers? Take a look at the study and let me know what you think.

Discovering Your Local Library

 

books

I mentioned in a previous post my love for movies.Going to the movie theatre, or renting movies at a video store can become an expensive activity. While reading other personal finance blogs, I learned about using your local library to not just check out books, but to check out movies as well. So about two months ago, I decided to give it a try.

The last time I went to a library was about a year ago while I was still in college so I didn’t feel “out of place”. It was different though, because the library I was using was the one at the University, so the environment was somewhat altered. As I walked in, I noticed how busy it was. It was a Monday morning, so I didn’t think it would be too busy. There were kids from a local kinder-garden attending a workshop and a group from a retirement home checking out some books as well. The place was surely running.

 I went to the front desk and talked to one of the librarians. I asked her if they had DVDs to check out. She politely told me that they did and showed me to the area where they had them. I was surprised at how many DVDs they had. They had over 7 bookshelves filled with them. They even had them separated by category and alphabetically as well. The librarian told me that their collection keeps on growing and they keep on having to expand it. She said that she remember when they only had enough movies to just fill a bin and they didn’t even bother with sorting them. I looked around and grabbed two movies. I went back to the front and asked the librarian if she could give me the form to fill out so I could get a library card. She gladly did and in less than 10 minutes I was ready to check out.

The next day, I came back again to check out a book. I knew the exact book that I wanted but unfortunately they didn’t have it. I asked the librarian if there was anything we could do about it. She told me that they can order the book in an in about two weeks the book will be in for me to check out. I asked her if that can be done with their movie collection but she told me that not at this time. It was worth a shot.

For the last two months, I have been visiting the library about once a week.  I have become hooked to the library! I just love not having to spend money on books and certain DVDs as well.  At first, I was hesitant about going to the library.  Don’t ask me why, but I fell like it was better to buy a book than checking it out from the library.  How dumb was I.  I am saving money and not filling my bookshelves with books that I will only read once and never pick up again.

So give your local library a try.  Just be forewarned.  Once you checkout once, you may never stop.

The Little Redbox

Me and my fiancee are big movie watchers. We don’t like going to the movie theatre due to the bad customer service, annoying movie watchers, and more importantly the cost. Going to the local Blockbuster is not that cheap either. We had started using the local library which has been great. You just can’t beat the unveliable price of free. But there is a problem. The movies in our library are not the most recent movies out. So if there is a certain new movie we want to see, we are out of luck. Not if you use a Redbox kiosk.

Redbox kiosks are popping all over the place. You probably have seen it around McDonald’s or a grocery store. They are basically vending machines for movies. You swipe a credit/debit card, enter your pin if you have one, zip code and email address(optional) and you are ready to rent a movie.

Quick info:

  • The price is $1.00 plus tax for a 1 day rental
  • You are charged an additional $1.00 for every day extra
  • The rental period ends the following evening at 9pm
  • Redbox focus mostly on new dvd releases
  • Only regular DVDs. No Blue Ray or High Def.

At Friday, I drove to the McDonald’s by my house, rented two movies for a whopping $2.00 and enjoyed a relaxing movie night at home. Sure beats spending $20 for two at the movies or $10 at blockbuster. And if $1.00 still sounds like too much money. Go to Redbox and sign up for a free rental. If you search around the web, you will find many of this free rental promo codes passing around. (I have only tried using the promo code you get directly from Redbox).

A note of caution: While researching Redbox I stumbled around this article talking about possible identity theft in Redbox kiosks. just like going to an atm, watch your surroundings. If anything looks suspicious, stop and go somewhere else. Better to be safe than sorry.

Frugality:Dating and Money

As one tries to start to embrace the frugal lifestyle, one of the questions that I get is “how can I go out in a date and not look cheap?”. At a glance, it can be hard finding places and activities that won’t hurt your pocket book. A movie and a dinner date can be somewhat expensive. On average, going to the cinema for two in the afternoon will cost you about $19. If you want popcorn and a couple of drinks that would be another $15. Later that night you go out to a restaurant. I’m not talking a five start restaurant-just a regular chain restaurant. That will be a minimum of another $25 dollars. Total=$59.

Now, if you are doing well financially, this wouldn’t be too much of a problem. But remember that if the date goes well, you will probably go out on a second, and maybe a third. Little by little, it will start adding up to a higher cost. If you are starting to pay of your debt, this could really tighten your pocket book and might cause a possible set back with your financial plans. Here are some ideas one should use when dating:

  • Budget. Look at how much you can actually spend when you go out on a date, and make sure you stick to the figure you came up with. I suggest adding a little more than what you think you are going to spend. This will give you some wiggle room for unexpected expenses.
  • Customize your date with her interests. If you know some of the things he/she likes before you go out on a date, make it tailored to her. Maybe he/she likes reading-take her to a book fair. Likes to travel-check to see if there is a cultural festival going on. Think outside the box when planning. Also, make sure to check that pricing is reasonable.
  • Have a dinner at home. We know that eating at home will always be cheaper than eating at a restaurant. Plus, you can show her your culinary skills. If this is a first date, she might not feel comfortable coming over to your home. Tell her to bring a friend over. Just make sure not to burn the food.
  • Discover your city or town. Here at Houston, we have many different festivals going on all the time. Reading your local newspaper will give you great places to go without breaking the bank to do so. My fiancee Crystal and l do this all the time. We get to go to new places, meet interesting people, eat cheep but good food, and best of all the entrance is usually free
  • Know your museums and zoo. If both of you like animals and/or museums, why not go on a date to one of these places? Usually these institutions run specials throughout the week. Learn when they are and take advantage of them.
  • Be honest. At some point, let the person know your financial plans. They don’t need to know the details. Just that at this point in your life you are trying to take control of your finances.

Dating can be awkward at times, specially in the beginning. Money can be a touchy subject to talk about. During the time that you get to know that person, the subject will probably come up. As I mentioned before, be honest with them. If you two are becoming more and more in sync, she will most likely understand your opinion. This does not mean that you should try and convince her that your way of thinking is right. Her opinion about handling money could be way different than yours. Just remember that dating is the time when you get to learn more about a person. Don’t let money get in the way.

To Commute or Not Commute

Last year, I took a position with a company where I had to drive 55 miles one way from home to work. Many people had suggested to me that I should move or look for a job closer to where I’m living. I didn’t want to do that because it would take me away from my family and fiancee, which are the most important things to me. Plus, I was excited about the job so I wasn’t even putting attention to the negatives that the position had. More importantly… the drive.

The first couple of weeks, everything was fine. The traffic and long drive was not bothering me, but I did notice that I would get home late every night, and wouldn’t have time to do anything else because I had to get some sleep, to wake up early, to get to work on time the next day. And so the cycle began.

After the first month, I noticed my energy level being less and less. I wasn’t eating healthy and I started to loose weight. I have always been thin, but I had a healthy body weight. My face looked thinner and in general, I just looked skinnier. I have always been into sports. The moment I took this job, I basically said goodbye to them. I didn’t have the energy to go and work out or to play a pickup game of basketball. I started to see my friends less and less and my overall happyness began to go down.

My relationship with my fiancee was starting to strain. Before I took this position, I was seeing her and spending some qualitiy time, 3-4 days of the week. After taking this position, I was lucky to see her more than once a week. When I did see her, I was always tired and not up to doing anything. It almost felt like the commute was sucking the energy out of me.

By the third month, I really felt unhappy. No matter what, I was working a minimum of 12 hours (9 at work and 3 commuting). I didn’t have time to exercise, see my family, or even to sit down and read a book. I felt zombie like. Finally, I couldn’t take it anymore so I decided to let my boss know that the moment a position opened up closer to home, I would be interested it in taking in it. I knew that there was a possibility that I would have to take a paycut but I was willing to do it in exchange for more social time, more energy, and less stress.

Luckily, on February a positioned opened up about 4 miles from my house and I was given the offer to take it. I think I didn’t even let my boss finish the sentence with me already saying yes. The good thing, was that I kept my salary so the loss of income was not something I had to worry about. In the end, it was the best decision I could of made. I’m saving over $200 on gas a month, spending 10-12 hours extra a week at home, I’m starting to work out again, and more importantly, my fiancee and I are spending much more time together (yest that’s a good thing).

While writing this post, I found an article in The Washington Post talking about the consequences long commutes can cause to your body and mind. I highly suggest taking a look at it specially if you are thinking about doing a commute longer than an hour.

So what are your thoughts on commuting to work? I’m specially interested in hearing your experiences with it and how you dealt with it or are currently dealing with it .

Spring Cleaning Can Make You Money

Last weekend, my fiancee was doing some spring cleaning around her apartment.  As she dug through her closet, she was amazed at all the useless stuff she had been storing for years.  Some things where not even open or worn.  They still had the sale ticket on them!

About two years ago my fiancee was a BIG SPENDER.  She just love the sense of buying and couldn’t get enough of it.  As we began to save to start a new life together, she began to realize the foolishness of her spending.  She noticed that with or without the things she bought, she was still the same person.  Now that she has money in the bank and even extra to invest, she tells me she feels almost free.  Before, she felt like a slave to her credit payments (she at one time owed around $2000 which she paid in full about a month ago) and nothing to show for it in terms of savings.  After seeing both sides, she tells me that she will never go back.

As she began to separate the items that she wanted to keep and the ones she didn’t, she came up with a great idea.  “Why not make a little money out of this”.  As I mentioned earlier, much of the unused clothes she had in the closet still had their tags.  She also kept the receipts for them.  Depending of the store she had bought them from, she could return them and get her money back.  The ones she couldn’t return and get cash back, she would  either get store credit (if there is something she truly wants and needs), or they can be sold in an upcoming yard sale and still make a little bit of money.  So far this is what she has found:

  • Clothing.  Lots and lots of clothing.  Thankfully the store she bought them from has a lenient return policy so as long as the clothes were in good shape, and we had a receipt, we can get our original tender back.  Some of her purchases were done with a credit card, which she has already cancelled, so she received store credit.  The other purchases were done with cash so that is what she received back.  Total in cash:$100.27   Store Credit:$120.45
  • Old Furniture.  Two old bookshelves that were just collecting dust.  She talked to some of her coworkers and sold them to them.  Cash: $20
  • Dvds and cds.  Two full boxes of them.  We found dvds that we only watched once and music cds that we never listened two.  We made a list with the names of the movies and cds and sent them to all our friends and family.  They chose which ones they liked and bought them from us for a $1 each.  Cash:$33

Her grand total came up to be…drum roll $153.27 in cash and $120.45 in store credit.

I’m in the process of Cleaning my things as well so we can put our stuff together for a yard sale.  Any cash we can make will be a win for us.  Not only are we making money for our wedding, we are also getting rid of stuff that was just taking up space in our homes.  The things that end up not selling will go to charity.  I will let you guys know what treasures I uncover in a later post.  What our some of the things you have found while spring cleaning?

How much Cash do You Carry?


It seems that once a week, one of the employees at my job needs somebody to help them break a $5 bill or even a $20 bill into a $1 so they can purchase something from the bending machine. They know that I never carry cash so they stopped asking me if I could give them change.

I rarely carry cash. I just find it much easier to just carry my debit card with me. I don’t see the need for it when almost all the businesses I deal with accept a debit card. The only time that my fiancee and I use cash, is when we go eat in a taco stand that only takes cash.

So what are some reasons one should carry cash? I suppose tipping can be one of them. But restaurants and bars include tipping when you sign your bill so cash becomes unnecessary. Trent in The Simple Dollar asked the same question. He mentions that carrying $20 dollars for any cash related emergency. I think that is usually the maximum amount one should carry as well.

There is an episode of the TV show Seinfield where George’s wallet is too fat and he can barely close it. Finally, the wallet got so fat that it exploded. My wallet use to look just like his. I remember that if I said down for long periods of time, I had to stand up because my “bottom” would begin to hurt from the wallet being so full of cash and junk that I never use. For the record, that is not my wallet in the picture.

So how much cash do you guys carry? What are some of the reasons behind it? I would love to read your responses about this topic.