Dollar Stretcher Community

Gas Crisis???

Gary — Mon, 12 May 2008 15:10:00 GMT

Just finished an interesting week. I drove across the state for a conference. The conference was about online financial news. Many of the discussions included comments about how higher gas prices were causing big problems for consumers. (BTW, I agree that higher gas prices are causing problems for consumers. But, as you'll see in a moment, I'm a bit confused as to how consumers are reacting to the problem).

The first thing I noticed was that people were traveling a little slower on the highway. I couldn't ask them, but I suspect that they were trying to save a little gas. According to http://www.fueleconomy.gov/feg/driveHabits.shtml gas mileage decreases dramatically when you go faster than 60 mph. Until recently here in Florida the interstate moved along at about 80 mph. This trip it seemed to be closer to 75 mph. I usually try to stay with traffic, so I managed to save myself a few dollars this trip.

But, the signals were mixed. Yesterday was Mother's Day. Mama didn't want to cook and didn't want to eat what I volunteered to cook. She wanted to do takeout from one of those national chain restaurants. At this one, you call ahead and just pull into a special section of the parking lot. A server comes out to your car. They'll go back and forth until your transaction is complete. At 6:15 on Mother's Day you'd assume that they'd be busy. And, they were. What struck me as odd, was that I was the only one who shut off the engine and rolled down the windows. Granted the temperature was in the upper 80's. But, if gas is too expensive, how can I justify sitting in a parking lot for 10 minutes with the engine running? (maybe not everyone is concerned with gas prices)

Next, I refilled my tank. While I'm pumping gas the fellow on the other side of the island comments "guess it'll be $4 the next time we fill up". I have no way of knowing whether that's true or not. Even the experts at the conference couldn't tell for sure. But, I am convinced that if we want to have low energy prices we'll need to address both the supply and the demand side of the issue. That means taking steps to conserve the energy we have. But, it also means using the resources we have to produce more energy. We may choose to buy an SUV to go to the mall. We can decide not to make our homes more energy efficient. We can vote not to drill for oil or build refineries. We can say no to windmills and nuclear plants near us. We can put all of hopes on tomorrow's technologies being clean and abundant. We have that right. But, let's not kid ourselves into thinking that those decisions don't have costs. They do.

Finally, a way that you can reduce your cost of gasoline. Just by buying and using a tire gauge monthly, you'll get about 10% better gas mileage (if you're the typical driver). An investment of less than $5 and ten minutes a month could save you many dollars. Along with driving slower, it's the easiest way to reduce your fuel bill. You'll find more on the subject here.

Keep on Stretching those dollars!

Gary

A little pain and suffering is good for all of us

debbie z — Thu, 08 May 2008 03:29:00 GMT

With the price of gas heading for $4 a gallon many are screaming that this is unfair. How dare the price go up like this! Revenge is called for, and we need to organize, boycott and vent. But this is not a sudden surprise, not if you've paid ANY attention to history. So far I've not seen lines like we saw in the 70's. And no ration cards like in the 40's.

But what most people cannot seem to understand is that these high prices are actually the key to finding a solution. When gas is cheap, only the few who are frugal in everything care about conserving. Let the price get painful, suddenly everyone seems to be willing to at least listen to ideas for reducing how much they use. And inventors are trying to find the next great thing that will make the inventor rich and create a whole new world again.

In my area, it is not unusual for each person in the family to commute 30-45 miles EACH WAY to arrive at work. That is 60-90 miles per person per day. No one gave a thought to it back when gas was cheap. But now many folks are willing to at least think about making some changes, suddenly they see a burden where before they never gave that commute a thought.

Some will sell that 8-11 mpg too-large truck, van, SUV and replace it with something that they used fuel efficiency as a yardstick when chosing the replacement. I know from personal experience that I seemed to be a lonely only at weighing fuel use when I bought a new vehicle back in 2001. My small SUV got 27-29 mpg back when everyone was asking me why I even cared about how the mpg worked out, I was considered odd to even include that in my criteria. Now I'm very glad I did. That SUV still gets about 22-24 after 165k miles. That's a lot of gas I did not have to buy compared to the average SUV back then.

When gas hits $7 a gallon, I may be willing to move closer to work. I may trade my very inexpensive place to live for something more expensive that is 15 miles closer. I have a feeling I will not be alone, gas prices may make urban homes suddenly become more valued and make the prices go up. So that old neighborhood may suddenly become the next hot place to live if it means no need to fill a car up 3 times a week.

Gas at $7 per gallon, that would roughly be another doubling of the current price of gas. And many will scream that they cannot afford to have a life with gas that high. But I was buying gas at about $1.85 a gallon about 18 months ago. So if gas doubled in another 18 months there is your $7 gas. What if it doubled again after that? At some point, it will suddenly make sense to switch to something other than gas to power cars. There will be a price where the economics will kick in and some wise inventor or businessperson will see a way to sell everyone a ?? and we will leave behind the idea that is not working and move to the new thing. We did it when we left the horse and buggy behind. It can happen again.

For myself, I'm carefully watching the newest innovations in solar. I can see putting some money into making my house energy independent - it makes a LOT of sense to me. And thanks to being frugal in a thousand small ways everyday, I can afford to spend some money to get a 20 year reward that pays me back slowly. And who knows, maybe someday that same system may power my replacement for a car. If 1 in every 5 homes had such a system, it might mean no need for high pollution energy generation.

But I don't want to either miss the chance or fall for a scam. But I am watching, someday soon there will be a new innovation and there will be vast changes - again. I was recently told that it looks like in about 2 years a solar rennovation costing $5,000 might cover 80% of your home's power needs for the next 20 years. When I get proof of that, I'll consider it money well spent to install and use it. And I'll have control over my access to power for my home.

Supply and Demand

Gary — Thu, 01 May 2008 16:10:00 GMT

Wow! The news is full of stories about rising gas and food prices. For those of us who pay attention to our expenses it's not a big surprise. We've known for awhile that's been happening. In fact, what surprises us (at least me) is that so many people were unaware of what was happening.

Take gas for instance. World demand is up (primarily due to growth in China and India). Supply is basically unchanged. Economics 101 will tell you that prices will rise. On one hand we can argue about how to increase energy supplies or whether we can conserve enough to offset increased demand by other countries. But, that's not really our mission here.

What we can do here is provide ideas that you can put to work this week to reduce those gas and grocery bills. So with that in mind I invite you to pour a tall glass of your favorite cool beverage (I favor sweet tea or lemonade), sit back and enjoy this week's issue. I hope that you find it saves you some money!

Some thoughts on being prepared to garden

debbie z — Wed, 30 Apr 2008 04:02:00 GMT

Now that spring is arriving, many folks are looking at the idea of a garden. If you have never had any type of garden then start small. You have to keep up the weeding and critter control to get enough of a harvest to justify the effort. You can garden with about $20 worth of hand tools and a few pots, add to your stuff as you need it.

I tend to think in terms of what do I LIKE TO EAT? You will not suddenly develop a liking for stuff you've never tasted. So plant and tend what you like. I love homegrown tomatoes, yellow squash and onions and will happily eat them either plain or fancied up in various recipes. So those are what I plant in my little space I have the time to tend. And wait to plant until about 3 days AFTER the usual last frost date (and check the weather channels 10 day outlook!) and you will avoid all kinds of trouble dealing with frosts and chill.

When I needed to shade some windows and walls to prevent high power bills caused by using the AC I planted climbing beans on the trellis made from the frame of an old mattress. Even something ugly is nice when covered in a green plant. You can find out if a mattress company in your area will let you have the metal frame for a dollar or two. Or trash pick one. Those beans provided several meals and lowered the electric bill by about 10% by absorbing the hot sun and creating a cool shaded place beside the house wall.

When you plant, remember that the critters love nice vegies too. If you plant where you walk everyday on the way in and out of your house that will tend to help scare away critters. And some things like tomatoes you can pick as the are ripening so the birds miss out on the ripe ones. Try hanging red Christmas balls on the tomato vine before you have tomatoes, birds will try to eat them and give up. You may need to put up netting and a small fence to protect your food.

If you live in town, check out Lowes etc and ask about "broken bags" of peat, manure, topsoil etc. You can often get a 40# bag that is missing just a tiny bit for half price. If you invest in big pots or planters remember that you will be able to re-use them for many years. You can grow almost anything in a pot as long as you put in good dirt, water it, have drainage so the plant won't drown and it gets enough sun each day. A packet of seed can plant 2 years worth of garden spots.

A point or two to think about: A rain barrel can let you water your food plants even if there is a watering ban. You just open the downspout and put the barrel under it and you can link barrels together. You can also mix food plants in with your landscaping. You can put potatoes or strawberries in as ground cover, bean plants as vines on trellises, berry bushes in as foundation plants and fruit or nut trees out in the yard as part of the landscaping and for shade. A point to keep in mind is that you should consider the waste a tree will leave before you plant it near doors or windows.

An apple tree may produce 300 lbs of apples in a 2-3 week period. You cannot leave them on the ground unless you like bees, flies, wasps etc around you, and the mess can get slimy if you don't keep it picked up and can really stink and get tracked into the house. A pecan tree on the other hand causes no mess that is nasty, but it does attract squirrels and in a high wind the nuts falling can sound like you are under attack and the tree gets BIG. You can can, freeze etc or pick and barter your fruits and nuts. And some apple/pear etc are varieties that are good keepers that will hold in a cool, dark room for 3 months. But there is a deep satisfaction to walking around your home and picking your snacks and eating them sun warmed and totally ripe. You cannot buy anything that tastes that good - to ship it they have to pick before it's ripe.

From Bad to Worse

Gary — Mon, 28 Apr 2008 13:04:00 GMT

Had a really interesting conversation with a friend of mine. She had gone to a new dentist the day before and related her experiences to me. Turns out that there are a number of things that she could (should?) have done. She expected that. When she got there, she found that like most dentist's offices, this one works with more than one hygienist. My friend was surprised with how many hygienists that were working for one dentist. The patient first sees the hygienist. They'll clean your teeth and perform an examination of your choppers. Then a trip back out to the waiting room.

Next a call back into another private room and a quick visit from the dentist. The dentist will proceed to tell you any if anything needs urgent attention. Nothing unusual there. Maybe an extra trip to the waiting room, but nothing too significant. Your dentist probably works mostly the same way. But, here's where it started getting interesting.

The dentist suggested a couple of things that my friend might want to do. Then he left the room. Next the hygienist reviewed the options for each procedure with my friend. From the most expensive solution, down through the other choices until they got to the basic no-frills solution. Complete with visual aids in some cases! What was once a doctor-patient relationship has evolved (or devolved) into just another sales transaction.

As my friend was describing it to me we realized that the process was very much like going into a car dealership. First, the salesperson examines your needs. Then they present the different options (hoping that you'll want all the gee whiz features of the more expensive model). Next is a visit to the sales cubicles. Finally, they bring in a closer to seal the deal.

We couldn't help but laugh over the situation. Think about it. Most people dislike shopping for cars. All the high pressure tactics. And, many people that I know have a fear of the dentist. Something about drilling out parts of your body while you're still alive! Now my friend's dentist has managed to combine the two! What a daily double!

What I really wonder is does this dentist even know that's how his practice appears to the patient? Was it a step-by-step evolution? Where every step included just a little more sales effort and pressure? Or did he attend a conference and some expert told him how he could turn his practice from sleepy to super successful? In either case, I bet he doesn't know how his patients see his practice.

Now don't get me wrong. I'm under no illusions that he's probably making more money than...well...a less aggressive dentist. There's a reason that most car dealers are known for being relentless in attempting to close a sale. The reason is that it helps them make more money.

But, you have to wonder if it's worth the price. One poll I found showed that 56% of respondents thought that dentists displayed honest and ethical standards. Car salesmen ranked in last place at 8%! That poll was from 2001 (before some of the newer dental practice techniques became common). I can't help but wonder what a similar poll will look like in a few years.

Keep on Stretching those Dollars!

Gary

The Psychology of Money

Gary — Thu, 24 Apr 2008 17:40:00 GMT

One part of my job that I really like is talking to people about money. About two weeks ago I had the pleasure of being a guest on the Dr. Howard Gluss Show. Dr. Gluss is a clinical psychologist. I've done quite a few interviews, but this was the first one that focused on the mental aspects of finances. Had a real nice visit with Dr. Gluss. If you've ever wondered what I sound like, or if you just have about 20 minutes for some entertainment, the interview is available here. Look for segment 3 from the 4/15 show.

Keep on Stretching those dollars!

Gary

Hanging Around the Shopping Center

Gary — Thu, 17 Apr 2008 18:10:00 GMT

I don't go shopping very often. Like most guys I don't like to shop. So I do as little of it as possible. This past Saturday I spent some time in a local shopping center. While I was waiting for my son I sat back in my car and observed.

It's a fairly typical shopping center. Marshall's was the big anchor at one end. A variety of stores. I was there for the music store.

I scanned the different stores. I couldn't help but notice the tanning salon and nail salon. They were next door to each other and had similar names. Might even have the same owner. There was also a Merle Norman cosmetics store.

Near the music store was a dentist. The sign out front said "Bright Now!" I thought that was an interesting name for a dentist's office. Guess they do more dental cosmetics than dental repair.

Nearby, although not apparently connected in any way, was an orthodontist's office.

Looking around the center it appeared that about half of the businesses were in business to help us look better. Or at least feel better about the way we look.

Don't misunderstand. I like to look good and to be surrounded by good looking people. We probably all do.

But it seems strange to me that there's enough business keeping people looking good to support that many stores. I don't know what was all available to shoppers 100 years ago. But, I'd almost be willing to bet that half of retailing wasn't dedicated to appearances.

Maybe I'm being too critical. Then again, it might be a good idea to take a look at your check register and credit card statement. Separate out the items that you really needed vs those that just inhanced your appearance. You just might discover where all that missing money is going.

Keep on Stretching those dollars!

Gary

Mr. Unwilling to Commit

Gary — Thu, 10 Apr 2008 15:30:00 GMT

I admit that TV commercials fascinate me. What's really fun is peaking underneath the assumptions that they make. Take the latest one from Verizon. A young twenty-something man runs into a girl of about the same age. The conversation makes it clear that they knew each other in high school. The girl makes some comment about the guy being "Mr. Unwilling to Commit". She asks about the whole group of Verizon people that are following the guy. He explains that they came with his plan. And the biggest benefit is that he only pays for the minutes he uses. She comments "so you haven't changed a bit" as she walks away. The message is clear. He's still a loser because he doesn't make commitments.

But I congratulate "Mr. Unwilling to Commit". He's smart not to commit to buying something he doesn't need. I only hope that he's as wise when he buys a car. How many people sign up for 5 years of payments only to regret it half way through the payments?

Our friend might actually be a much better choice for the young lady. He's a better catch than someone who falls in love quickly, gets married quickly and puts her through a divorce a few years later. My guess is the young lady will learn that lesson herself someday.

Keep on Stretching those Dollars!

Gary

Wasted Work - Are you guilty?

debbie z — Wed, 09 Apr 2008 03:51:00 GMT

When I was growing up, the elders around me often forgot I was there and talked freely about "adult matters". No need to worry, back then adults did not discuss things that were R or X rated even with each other, but they were often brutally honest and blunt about what they saw as the reasons why certain folks were "never going to amount to much". As I've gotten older, I can see that they often had more than one excellent point and I want to share with everyone some of those points that are now "policitically incorrect" but still true....

You would often hear the saying "a bad wife (homemaker) can throw it out the window with a spoon faster than he can haul it in the front door with full wheelbarrows". What they meant was that the tiny little automatic habits you have can either keep you going or sink your ship. A little waste in almost everything you do adds up to huge costs as the bad habits keep being repeated without thought over and over. A wasteful household consumes more of everything, and that everything costs money! And making that money costs you time which is your LIFE. Why squander it on stuff, every human is worth more than that.

One example no one likes to have pointed out is that your time at home is NOT worth what you are paid at the office! If it was, no one could afford to sleep 8 hours - they would be trying to get by with no more than 4 and paying horrid prices healthwise later. When you are at home you need to switch your focus from quantity done poorly to some done well and try to plan out as much wasted work as possible.

If by mowing your own yard you can save $250 every month at 2 mows a month then study what is stopping you. Is there too much yard? Is there a problem with the equipment hindering instead of helping? Should you look at replacing high care items with stuff that can safely be ignored in terms of constant care? Why are you stuck with the hassle and is it REALLY worth it - could you dump some of it?

Many folks have found that replacing lawn in hard to mow or tend areas with ground covers is a win/win deal after the 2nd or 3rd year. Yes, it may cost you $100+ to convert an area you took 45 minutes to mow to a never mow or mow 1 or 2 times a year set up but you get back 45 minutes of your LIFE every time you don't have to do that chore. And the life/time savings keep repeating forever or until you move away. Your time is better spent with those you love (2 legged or 4 legged) than in keeping up high maintainance stuff that will never love you back and just stresses you out.

Taking care of your "stuff" is another win/win idea. Example - Look at your furniture in the kitchen. Lets say you have a table, 5 chairs and a baker's rack that are not permanently attached in place. Every day you have to move it all so you can sweep and clean. And the fabric seats get really nasty and are hard to clean. What if you put wheels under the table and chairs? How much repeated work every day would that save you? - 10 minutes every day X 365 days X 10 years starts to be some meaningful time. How about changing to a no care fabric that wipes clean?

Would you keep the area cleaner if it was easier? Could another person give you meaningful help if it were suddenly possible for a 7 year old to sweep and do it right since they don't have to pick up and move the chairs? If you keep dirt more picked up in the kitchen, the rooms that are next on the path through the house will stay cleaner too, since there will be less to get tracked everywhere. And it's the DIRT that damages the flooring, damages furniture and rugs, stains the painted areas, causes 90% of the work and just looks bad and makes you feel like it is hopeless and you can't win. Damage eventually will cost money to repair - why not avoid as much of that type of expense as possible?

Look at your clothes - how often have you looked down AFTER you spilled something that cannot be washed out and were mad at yourself for ruining a good item of clothing? Maybe even - GASP! a brand new item. Make it a habit to change out of clothes suitable for church/work etc as soon as you come home. Put on those clothes you SAID you were "saving for cleaning/yardwork". You are a lot more likely to actually DO some of that dirty work and chores if you can dive right in without worrying about messing up your clothes. And your clothes will last longer. And one $30 item per person per month not needing to be replaced means money left in your pocket. And do treat stains, sew back loose buttons, catch up drooping hems etc. A stitch in time saves a lot more than nine.

Model this behavior for your kids and you'll spend less on their clothes and stuff too. When I was a child, my grandparents set the example in this type of stuff and the whole family followed along 99% of the time. And by simply explaining that when I forgot and ruined something that this meant that due to the need to pay to replace it there was no money for X made the lesson stick.

Work-at-Home

Gary — Thu, 03 Apr 2008 14:17:00 GMT

Incoming email:

I wondered if in your vast knowledge you would know of any honest, real work there is for stay at home moms? Not selling Avon or Herbalife, but actually taking advantage of my admin skills that I still possess. I worked for a Fortune 500 company before becoming a stay at home Mom, now I need to supplement our income and all I keep finding is scams left and right. Any ideas?
Thanks much.
Michelle

Boy, has Michelle got a lot of company. This has got to be one of the five most frequently asked questions. The good news is that yes, I have some ideas. But, the bad news is that they're not an easy 'one size fits all' type of solution.

Michelle has already framed the answer. She clearly doesn't want to do anything that is primarily sales (i.e. Avon or Herbalife) and that's understandable. Those are honest companies, but some people just aren't meant for sales. Just a different personality type. And Michelle is smart enough to avoid the scams (every time someone tells me they've been approached to stuff evelopes I cringe...).

The key is where Michelle says that she wants to 'take advantage of my admin skills that I still possess'. That's the key for anyone in Michelle's position. Evaluate the skills you have. Preferably something that requires skill, training and/or experience to master. Look for something that other people want. In Michelle's case it might be some specific part of her job (scheduling, proof reading, phone skills, etc) or the entire 'admin asst' package.

Once she has identified her skills, she can spend some time thinking of WHO can best use those skills. Specifically with Michelle working in a home environment. That might take some creative thinking. But some traditional 'office jobs' are becoming home jobs. Try to think like the employer. In one way it's a benefit for them when someone works at home. They don't have to provide office space. That's a big savings for them. So look for work that they can have done outside the office. If you find a way to help them make more money they WILL be interested.

The next step is to find companies that can use that skill. Don't limit yourself to large or small companies. Even though Michelle is used to working at a big company, she should consider how some of her skills might translate to a mom & pop business. Many of them are used to trying something new. Remember, that the worst that can happen is that you get turned down. No reason to avoid approaching them with the idea.

Michelle will also need to be creative in finding the right opportunity. It probably won't be advertised in the paper or on any of the job posting sites. In fact, there's a good chance that the people who hire her won't even know that they're looking for someone. At least, not until Michelle tells them about her idea how she can help them make more money! Yes, it will require some selling and Michelle doesn't like sales. But, it's different selling a product and selling yourself. Michelle has a product that she really believes in...herself!

Where can she find these companies? Try everything. From the phone book, to contacts in the community, to walking in on a potential employer. Talk up your idea for work to everyone who will listen. Even if you think that there's no way that they can help you. They might not be able to help. But, they might know someone who can.

It's also possible that Michelle will need more than one employer. She might need to work for two or three employers to get the hours/income that she wants.

Will it be easy to find honest, paying work? Probably not. But it is possible. More and more people are working remotely. Michelle's skill and willingness to search out a job can produce the results she wants. And, I for one, am betting that she'll succeed!

Keep on stretching those dollars!

Gary

Gas Boycott

Gary — Thu, 27 Mar 2008 15:28:00 GMT

This just in:

Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a gallon of gas is CHEAP at $1.50 - $1.75, we need to take aggressive action to teach them that BUYERS control the marketplace..not sellers.

With the price of gasoline going up more each day, we consumers need to take action. The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing their gas! And, we can do that WITHOUT hurting ourselves. How? Since we all rely on our cars, we can't just stop buying gas. But we CAN have an impact on gas prices if we all act together to force a price war.

Here's the idea: For the rest of this year, DON'T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL. If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit.

I received this email just recently. The sender had included me on a list of people that they thought should see this message. Presumably to encourage me to join the fight. Maybe they even hoped that I'd put it in the newsletter. I'm not going to do that. And, I'll tell you why. There are a number of good reasons.

First, variations on this idea are sent around via email every time gas prices spike upward. If the idea was workable, it would have done it's magic years ago.

Second, it will do nothing to change the economics of gasoline. Ultimately, what we pay for gasoline is most affected by the amount of gasoline available and the total amount of gasoline produced.

We can stop buying from Exxon. But if we buy from Hess, Texaco or anyone else we haven't changed the total demand for gasoline or the total amount produced.

Now if the email suggested that everyone drive 10% less or that they encourage the oil companies to build additional refineries that would change the supply and/or demand for gasoline. (if I recall correctly no new refineries have been built in the last 20 years - every one is basically running at full capacity now) I know that means some inconvenience (driving less) or doing something that we might not want to do (allow oil refineries to be built).

Third, Exxon won't be hurt, Mom and Pop Smith who own the local gas station will be. There is very little retail mark-up on gasoline.

"Most gas stations today double as convenience stores, and although they generate more than two-thirds of sales from gas, two-thirds of profit comes from in-store sales of cigarettes, drinks and food, according to the convenience store association." ">Wall St. Journal

Yes, some stations are owned by the big oil companies. And, if you quit buying gas from them you might force them to lower their price. But the mom and pop stations that compete with them won't be ABLE to drop their price. Right now with oil prices going up they have a very small mark-up on gasoline. They can't afford to lose money on gasoline to bring you to their convenience store.

In fact, if they did drop their price the result will be to drive them out of business. That means LESS competition. And according to my old college economics textbook, less competition means higher prices. Not a winning strategy for the consumer.

So to the extent the strategy causes a 'gas war' it only does so temporarily and then makes the problem worse.

Fourth, none of this has any effect on the real problem. Demand has increased. Supply hasn't kept pace and could be interrupted by political events.

"With real gross domestic product growing at a rate of 8-10% a year, China's need for energy is projected to increase by 150 percent by 2020. to sustain its growth China requires increasing amounts of oil. Its oil consumption grows by 7.5% per year, seven times faster than the U.S." Institute for the Analysis of Global Security

"Worldwide oil consumption increased by a cumulative 11.4 percent from 2001 to 2006 (2.3 percent per annum). The United States is the world’s largest petroleum consumer, at 20.6 million barrels per day (mbd). But while U.S. oil consumption has increased by 1 percent annually over the past five years, consumption in other nations, particularly China and India, has grown much faster due to their rapid output growth. Over the past 25 years, China’s annual GDP growth—about 9.5 percent—has averaged more than three times that of the United States, while India’s has averaged almost 6 percent, nearly double that of the United States. Federal Reserve Bank of St. Louis

In other words, China and Indea are consuming more and more oil. And, they will continue to do so.

OK, so what can the poor consumer do to fight higher gasoline prices? First, recognize that we can make a difference.

We can start by using less gasoline. Check your tire's air pressure once a month. Replace your air filter on schedule. Drive slower. Don't buy a bigger vehicle than you really need. Carpool if you can. Group trips to reduce the amount of miles you drive.

We can recognize that gasoline is only one part of a bigger problem. Even with conservation, worldwide demand for energy is going to continue to increase. Unless we expect millions of people worldwide to continue to live in abject poverty, we're going to have to make affordable energy available to them.

So we need to get busy exploring ALL possible ways of producing clean, cost-efficient energy. I won't get into specifics. No need to set off a political firestorm on a blog devoted to personal finances. But I admit to getting fed up with some of the politicians and political activists. It seems that there's no type of energy that acceptable to some of them. Not oil, not natural gas, not coal, not nuclear, not solar, not windpower, not...well, you get the idea.

If we continue to block all types of energy production we can expect higher prices for energy. It's really that simple. Maybe they're right. Maybe none of those methods are acceptable. Maybe some amazing new technology will save us. But, if it doesn't let's not pretend to be shocked when prices increase. Let's be honest enough to admit that we made choices that caused them to go up.

Keep on Stretching those dollars!

Gary

Become an Inflation Fighter

Gary — Tue, 25 Mar 2008 17:05:00 GMT

For the first time in years, inflation is back in the news. If you've studied economics, that's no surprise to you. In an attempt to make it easy for people to borrow money, the Federal Reserve has been lowering interest rates for years. When they do that, they reduce the value of the U.S. Dollar compared to other currencies. That has the effect of raising the price that you and I pay. Especially for foreign goods. (yes, you can argue that helps the American worker, but it does raise prices)

Add to that increased demand for certain commodities (for instance, corn to make ethanol, oil and building materials in the far east) without an increase in the supply of those commodities and prices will go up. That's basic supply and demand.

But you don't need to get into economics with the typical consumer. We already know that prices are going up. I bought gas and groceries in the last week. Enough said. What we need is a solution.

Here at the Dollar Stretcher we can't lower prices for you. That's beyond our abilities. But we can show you how to substitute a cheaper product, use less of a product or find it for the best price possible. All those things will reduce the effect of inflation on your family.

And, we're going to make every effort to do just that. We'll be calling them "Inflation Fighters" and you'll find them in our email newsletters, our Community Forum and on our website. Just look for the words "Inflation Fighter" and you'll find articles to help you deal with the inflation that we're all facing.We're also starting a weekly email newsletter with articles specifically designed to help you become a Inflation Fighter. To subscribe send an email to subscribe-InflationFighters@hub.TheDollarStretcher.com.

Here's to a less expensive tomorrow!
Gary

Mixed Messages

Gary — Mon, 17 Mar 2008 17:08:00 GMT

Saw something fairly interesting yesterday. I was sitting waiting for a stoplight to change when a cab pulled into the lane next to me. I knew it was a cab because it had a sign painted on the door. The car was a little smaller and older than what you normally think of as a cab.

Then the cab pulled forward a bit. Stenciled on its back window was "We Buy Junk Cars" and a phone number. I couldn't help but laugh. Talk about mixed messages! I didn't get a hance to see whether the phone number was the same as the one on the door. It could be that the ad was for a different company. But, even so, if I were running a cab company, the last thing I'd want customers to be thinking about is junk cars. Especially if my cars were a little older.

Seemed kind of dumb, but then again, maybe I do something similar myself. I live a frugal lifestyle except when I choose a fast food lunch instead of the sandwich fixings I have waiting for me at work. I suspect that if I think about it for awhile, I'll come up with other mixed messages in my financial life.

So maybe spending a little time looking for the mixed messages in our lives would be a good thing. Sure hope I don't find too many!

Keep on Stretching those dollars!

Gary

Trust Me

Gary — Mon, 10 Mar 2008 17:26:00 GMT

This weekend while being snowed in, I watched an interesting infomercial and immediately thought of The Dollar Stretcher. It was for a car loan place called "Open Check". The website is opencheck.com. Apparently according to the infomercial and website, in just 15 minutes you can get an open check to take to a car dealer and get a new car. The more I watched of the infomercial, the more red flags were going up. I went to the website and couldn't find the real story about this. Maybe you could check into this and explain the real story about this type of car loan. I'm guessing it's a legitimate car loan, but at some ridiculously high interest rate for 10 years or maybe longer.
Carla

Carla,
So you were snowed in and want to know whether the real snow job is outside or inside your home. Good question.

If warning flags are going up, it's usually time to run away (and take your checkbook with you). You might miss some opportunities that way, but you'll avoid painful mistakes. You and I both know that "Open Check" is not loaning money because they think you're a nice person and they want to be your friend. They're loaning money to make even more money. And, that means that they need to get some money from you.

Now it could be that they've found a way to make the loan process more efficient and that will save you money and make them a big profit. But, it could just be a web gimmick to keep borrowers from finding cheaper loans.

I'd be very cautious. You're right. They're sending up caution flags. Their web application is very simple. But, it does ask for your social security number, birth date, address and mother's maiden name. If they were identity theives (and let's be clear I'm NOT saying that they are) that would be enough information to cause you some serious problems. Giving out that type of personal info should be done very, very cautiously. And only when you know that the company receiving the information is trustworthy. Let's assume that Open Check is an honest, above board company. The trouble is that we don't know that for sure. And, I don't see how a website can give you that confidence.

A couple of other thoughts on the subject. If you have a good credit rating and are looking for a reasonable loan amount, there are plenty of places to shop for the best auto loan. Your bank or credit union. A dealer will have options. There's no reason to go to an unknown website that asks dangerous questions.

On the other hand, suppose that you've gone to those places and they don't want to loan you the money you need for the car you want. Then what? You could try something like Open Check and hope for the best. But, it could be that the legitimate lenders have a message for you (if you're willing to listen). They may be saying that you can't afford the car that you're trying to buy. You can force the issue by finding a loan that you think you can repay. Of course, you'll be making car payments that will affect how much money you have for everything else in your life. (think of the people driving fairly new SUV's who are struggling to put gas in them now)

If you have credit problems, you might need to invest some money into repairs for your current ride. Wait a few years until you've rebuilt your credit score. That's really not so bad an option either. It's almost always cheaper to put money into your existing car than to trade it for something newer/better. Instead of making payments, you'll have money earning interest.

So until you're very sure about "Open Check" I'd steer clear of them. There's just too many ways that this offer could go wrong for you.

Keep on stretching those dollars!

Gary

The Car You Know

Gary — Mon, 03 Mar 2008 14:25:00 GMT

Recently this post appeared in The Dollar Stretcher Community:

Thanks to you who have suggestions and encouraging words about this pregnancy. I am pleased to have a baby come to my family, as I am one who will love, nurture, and care for it. All the members of our family want the baby . I am prone to excessive worry but do feel this will work out.

We do not qualify for WIC or other types of financial assistance. I am going to put faith into the garage sale/ebay/craig's list/freecycle/put the word out route for baby stuff. In addition to selling and paring down (which we need to do to make room for the baby anyway), I'm considering trying to do something with selling a car and buying something else in its place to cover medical costs and keep us in the black. But I wonder...is that a penny-wise, pound foolish choice? We are not mechanical and don't have the ability to fix a clunker to keep it going.

Since we "paid off" our cars through our home mortgage refi, we own them free and clear. They are both dependable, trustworthy cars. One is a nicer family-size car and the other is a small fuel-efficient economy car. They are both 2003 models. On the one hand, we would like to keep the two cars because one is fuel efficient and can get me to and from my doctor's appointments (70 miles round trip each visit) while we will need another one when the baby comes for any family travel. Is it possible to get a dependable family car for about $7500? We could sell the smaller one, with the intent to repurchase in a year or two, but this doesn't seem like a good idea, since we have maintained it and know its history.

Would you do this? If so, what type of used car would you purchase at the 5-7500K price point? Just another thought..

I'll keep my comments largely to the auto question (after all, I am a 'car guy'). I doubt that trading a known good used car for an unknown used car is going to be a good financial decision.

Let's see what happens if she does sell her car. I looked at kbb.com (Kelley Blue Book). She didn't say what they had, so we'll use a 2003 Honda Accord as being a common model. I chose the base model with 55,000 miles in good condition. Private party price was $9,480.

She'll need to replace it. So I priced a 1998 Honda Accord (same base model in good condition). This time with 110,000 miles (about 11k per year). Kelley valued it a $4,050.

At first glance the swap would net about $5,400. Not bad. But look at the risks she's taking. She's going from a known, well-cared for car that's not giving her any trouble to an unknown vehicle.

Take for instance the timing belt. Honda suggests replacement at 105,000 miles or 7 years. Would her '98 purchase have had the job done? It's not a small question. It's an expensive job. My local Honda dealer quoted $700 for the job. If she doesn't know for sure, she'll probably need to have it done. Because if she gambles and is wrong, when the belt does go it will do major (read thousands of dollars) damage to the engine.

There will be other similar questions. Think transmissions, electrical, brakes, prior accidents. Today's cars are pretty complicated. That means that they're expensive to repair. Repairs that require $500 to $1,000 are common. Our soon-to-be mom could spend much of the $5,000 in repairs without being too surprised.

One other thought about the car. A 2003 model should last her for a number of years. Conceivably they won't need to look to replace either vehicle for 3 or more years. That's a very good thing. A 1998 model is running on borrowed time. They could find themselves facing the choice between an expensive repair bill or buying a car at any time. Adding a car payment at this time would be a serious financial mis-step.

What are the alternatives? Our mom-to-be has already solved most of the problem by deciding to find used baby equipment. A little scrounging and some paint-up/fix-up can save lots of money. Finding willing helpers won't be hard. Everyone wants to help an expectant mom! If she's missing one or two major items as she approaches her due date, let the word out prior to a baby shower. Guests would be glad to pitch in for a bigger gift.

The other major expense are the medical bills. Unfortunately you can't buy them used! But you can talk with your medical provider about payment plans. They understand that many young parents don't have the resources to just write a check for the whole amount. As long as your talk with them before incurring the charges many will work with you.

Also, another poster suggested checking again with government programs. It can't hurt to ask. Check, too, with local churches. Many are glad to help expectant mothers as part of their ministry.

Having a baby is a major event in any family. And, usually when you have one big thing going on it's wise not to make any quick financial decisions. Our mom-to-be is smart to seek guidance before trading one of their cars. And The Dollar Stretcher advice would be to keep the good cars they have and rather look for savings on baby items and a payment plan for the medical bills.

Keep on Stretching those Dollars!

Gary

What? Me Worry?

Gary — Tue, 26 Feb 2008 15:20:00 GMT

Back when I was growing up Mad magazine was a favorite of kids. (maybe it still is). They had many regular features, but the best known was a character named Alfred E. Neuman. He wandered through life ignoring danger. And he introduced a whole generation of kids to the phrase "What, Me worry?"

Fast forward to 2008. I recently received the following email:

I am trying to help my nephew, who wants to buy his first house at the age of 51. He wants a $300,000 house, mortgaged for 20 years. But he and his wife declared bankruptcy (credit card debt) a few years ago, and though he is at the end of paying off his debit, he finds it hard to get a good mortgage deal. His best bet, I think, is to pay at least 20% down. But he has only $29,000 (an interest-free loan from me). Shouldn't he borrow from his 401K the rest of the 20% needed (they do have $31,000 in their 401K accounts)? Suppose he saves one-half a percent? Would that be worth it? (I do not know the details of the 401Ks, but let us assume some "typical" case.)
Thank you,
Edward

Edward was responding to an article I had written about how to evaluate 401k loans. Let me first compliment him on his generosity and willingness to help his nephew. But, if we step back and look at the situation we might find Mr. Neuman's handiwork.

Let's begin with the facts that Edward includes in his email. His nephew is 51 and got in enough credit card debt to declare bankruptcy. We don't know whether it was a job loss or medical issue that caused the credit card debt. But, it could be possible that Nephew is a little too quick to pull out the plastic when he sees something he wants. Edward needs to make sure that's not the case. If that is what caused the problem Nephew will probably not be able to keep the house even with his uncle's help. Sooner or later the credit card bills will begin to conflict with the mortgage. And some of the bills just won't get paid.

Ed is right. Finding a good deal on a mortgage will be hard. That's because lenders know that people who have had debt problems before are more likely than average to have them again. And, yes, a larger down payment will tend to keep the interest rate down But, look at where that down payment comes from. $29,000 comes from an interest free loan from Uncle Ed. (for the record, most mortgage loan agreements require you to disclose if you've borrowed or been given any part of the down payment. It could be illegal to fail to disclose the interest free loan)

The other portion would come from borrowing money from Newphew and his wife's 401k plans. Ed is concerned with the amount of interest that his nephew could save through the lower rate available in his 401k plan. Normally, I'd encourage that type of thinking. But, there are a couple of risks in using a 401k loan that could be much bigger than saving some interest.

Most 401k loans require a fairly short payback period. Nothing like the 20 or 30 years for most mortgages. So if you combine the mortgage payment and 401k loan payment, the earliest years of the mortgage will have the highest payments. That could be a problem.

Also, many 401k loans require that you pay them back completely if you leave your job. Even if it's not your choice to leave your job (read lay off or fired). That would put Nephew in a real bind. No income and a need to pay back up to $31,000 right now. Unless he has some other assets available (unlikely), he'll probably try to take a second mortgage against the house to repay the 401k loan. Finding a 2nd mortgage on his home could prove difficult. If not impossible. The only other options? Go to Uncle Ed for a second loan or let the 401k loan default. I have no way of knowing how a second Uncle Ed loan would work out. But, failure to repay the 401k loan means paying a penalty and income taxes on the unpaid balance of the loan. All of it. And, it also means that a bunch of Nephew's retirement money is gone forever.

So maybe buying this house isn't such a good idea. There might be a better option. Rent for a few years. Soon they'll be through repaying debt. Once that happens they can take the money that had been going to debt and begin saving up a down payment for the home. In a few years their credit score will improve. That will lower the interest rate on their mortgage (which will save them even more money). And, they'll also have some time to consider what they really need in a home. $300,000 buys a lot of house in most parts of the country. Something a little more modest might be in order.

Is it possible for Nephew to borrow money from his uncle, his 401k, buy this house and live happily ever after? Of course! But, with sub-prime mortgages defaulting all over the place you'd have to be Alfred E. Neuman to say "What, me worry?"

Keep on stretching those dollars!

Gary

The joys of a pantry -when you have a system

Debbie Z. — Tue, 26 Feb 2008 04:22:00 GMT

I still embrace the simple pantry system my Grandmother taught me 30 years ago. I can not even begin to calculate how much money, time and hassle it has saved me. The concept is simple: Look at what you USE and build up a stockpile of all of those items that you can. Learn when it is a good deal at the normal price, a great deal at a reduced sale price or a KILLER deal when they decide to get rid of the item. Killer deals come along very seldom, but they are the most satisfying to scoop up. I love it when the company changes the label or size etc and the grocer decides that they need it to go away immediately and mark it down below their cost - even better if you also have coupons.

I keep a 6 month to 5 year supply of such items. When you only need to go to your storage area instead of the store you save money three times plus tons of your time. First, you bought the item on sale, not at full price. It never seems to be on sale when you have run out and need it now. Second, you saved the cost of going to get it such as gas, busfare, wear and tear on car, etc. But third, you never saw the impulse items because you did not set foot in the store. That can be a huge savings! Companies spend millions learning how to shut down your intelligent side and get you to pick up and buy items you did not know you wanted until you saw them. It is a game you can only win if you limit their chances at you.

You can stash supplies from lightbulbs to canned goods to bagged rice to TP to toothpaste and pasta. And the items can be stored anywhere that they are protected from the damaging effects of heat, cold, water etc. Which means anywhere in the living space at your home. Just avoid storing scented non-foods like laundry products, health & beauty etc in the same area as food items. Just about any item found on a store shelf can be stored at your house, but only use the space for high use items. If one box of laundry soap lasts you 3 months, having a 10 year supply is wasteful since it may break down or you may find you no longer like that item the best because you found something that works better long before it gets used up.

What I do is set up shelves like the grocer has and figure out how much I use this item. I use a lot of tuna, canned tuna keeps for 2+ years. Since I use at least a can a week 52 cans is about a year's supply. I don't plan to buy that much, I usually have about 25 cans on hand but if I found it at a great price I know about how much would add a year's supply to my stock. I have found it for 25 cents per can when the store decided to stop carrying one brand, needless to say at that point I gleefully stocked up! And don't forget to share your frugal bounty with those who have little or nothing, one of the soul satisfying things about my pantry is hearing about a need and being able to meet it and help someone out.

Real Simple

Gary — Tue, 19 Feb 2008 13:47:00 GMT

I think that those of us who are into frugal living are blessed with a lot of fine resources. Among them is a magazine and website called "Real Simple." Their main focus is on simple living (with a modern interpretation). They had contacted me about an article they were working on awhile back. Just published it the other day. You can find it here

The concept of simple living seems a little strange. Especially when we discuss it in a blog wired to the net. I'm sure that it doesn't mean the same thing that it did years ago. Back then living simply meant a return to a less mechanized, more rural life. Supporters tended to be self-reliant. The live off of the land types.

But like so many things you don't have to go all the way to benefit from the concept. You don't have to leave civilization behind to simplify your life. Depending on your lifestyle it could be something as simple as getting rid of some of the clutter in your home. I suspect that if we did more of that there would be fewer people looking for bigger homes (did you know that the average home is about 50% bigger than it was 30 years ago?).

It might be time for you to simplify your finances. I don't know the statistics, but I bet a lot of people have more than one IRA. That's ok if there's a specific investment reason for each one. But if they're both doing the same thing it would be simpler to only have to monitor one of them.

I remember watching westerns on TV. Occasionally you'd see one that included a wagon train heading west. Often, if they ran into trouble, they'd leave behind the things that they felt that they could live without. Sometimes those things had traveled with them for many, many difficult miles. It must have been hard to do that.

It could be that our lives are a little like that wagon train. Look around your world and see if there aren't some things that are not adding anything to your life. If you find something like that it's time to give serious consideration to leaving it behind. Even if it's been part of your life for years.

In case you'd like to find out more about the simple living lifestyle you might like to check out an email newsletter called Simple Times A good friend of ours, Debi Taylor-Hough, has been sharing great ideas with her readers for years. Might be a good way to get a start on a simple, more fulfilling life.

Keep on stretching those dollars (and other resources!)

Gary

The Refrigerator Test

Gary — Tue, 12 Feb 2008 14:13:00 GMT

I was invited to a friend's surprise birthday party this weekend. Had a great time. Good friends and good food. Can't ask for much more than that! But I noticed something during the afternoon/evening. This friend often hosts an 'open house'. They'll throw on a big batch of food, people will bring more and everyone has a great time. It's the kind of place where you just know it's ok to head for the refrigerator if you need something. No need to ask first.

It occurred to me that demonstrated a lot of financial freedom. To paraphrase past wisdom - "you can measure how rich a person is by how little he needs" - i.e. the richest person isn't the person who HAS everything - it's the person who NEEDS nothing.

Refrigerators are an interesting thing. If you come over to my house you can be pretty sure that I'll ask if you'd like something to drink. But I'll be the one to get it for you. Refrigerators are kind of a private thing. You don't need to know that I've got some cheese curds tucked away in a corner that I'm reluctant to share with anyone. And, that's the problem. At that point I don't really own the cheese curds, they own me. (ouch!)

Guess I still have some growing to do. But that's ok. At least I know what direction I'm headed and have some idea on how to get there!

Keep on stretchin' those dollars!

Gary

On the Road Again (with apologies to Willie Nelson)

Gary — Thu, 07 Feb 2008 13:11:00 GMT

Just finished an overnight road trip with a friend of mine. Saw something that I'm still not sure what to make of it. Somewhere along I-75 just south of the Florida/Georgia border is a truck stop with an amazing store attached to it. I doubt that it's unique. I just don't get on the interstate for long drives that often. Unfortunately I don't even remember the name or what exit (I was just waking up from a 2am snooze when my partner pulled in).

The truck stops I remember were glorified convenience stores. But this was like a small shopping center rolled into one store. Along with the regular items, they had everything from 'Betty Boop' pieces to a case with a variety of hunting and ornamental knives. Oh, and the case with blown glass items. And then there were all the native American Indian rugs. Not to mention the junk metal artwork. Truly a unique store.

I'm used to looking at things through the eyes of a consumer. But, even 6 hours (and a lot of black coffee) later, I still don't know what the store represents. I really would have liked to see it in the middle of the day when the roads were jammed with tourists. Now that I think about it, it probably looks a lot like any shopping center or mall in the country. Some folks buying necessities (food, clothing). Some buying things that they forgot to buy earlier (a present for Aunt Mary, a pair of sunglasses). Others are buying because something caught their eye (stained glass cowboy anyone?). And, still others aren't buying at all, just looking out of curiosity.

One thing is certain. We sure do have a variety of stuff available to us. No matter where we might be. Truly amazing. And, while that's good in a lot of different ways, it's also dangerous. Let's face it. When we're buying something at a truck stop we're buying it because we need it right now. Convenience is more important than selection, quality or price. (just for the record, the shop we found appeared to be stocked with quality items at a reasonable price, but I bet that's not true in every similar store) We all know that buying in a hurry is a good way to set ourselves up for regret later.

Keep on stretching those dollars!

Gary

Hello Everyone

Debbie Z. — Wed, 06 Feb 2008 05:22:00 GMT

My name is Debbie Z and I have joined the Dollar Stretcher community today with a new blog - Kitchen Table Finances. I hope to share with others the incredible gift I was given by the older members of my family who taught me how to be frugal and watch my spending when the "norm" was to be a spender and not think about how to make stuff and money last longer. I strayed from their ways for a while in college and afterward, but I came back to my senses when I got out on my own and had to pay my own way!

In our family, at the kitchen table was where lessons of every type were taught and sometimes driven home by a comment of "You were told that would happen if you.., so now what are you going to do to fix this mess?". Hopefully some of those little tips and tricks of a different way of seeing the world can help others as much as they helped me. My Grands (grandparents) all lived until I was a young adult or until I was nearly 40 so I received lots of life lessons in the little things that very quietly let you pile up the savings in all the monies you are not forced to spend.

So to share a few things as examples:

My Grands were horrified at the thought of making a special trip for anything. We kept a fully stocked food and supply pantry. And you put EVERYTHING on a shopping list so you would not forget to buy it while you were in town. Your neighbors and friends did likewise, so if you needed something the odds were high you could borrow one and buy them a replacement when you shopped again. You can still do this today.

An unusual way to save is to never buy any vehicle that is the color of the road or the shadows if you can avoid it. If you already own one like this, make it a constant habit to always drive with your headlights on so others will see you. You can replace a lot of extra headlights for what one wreck caused by someone who did not see you and hit your car would cost you. Never use the so called parking lights - they cannot be seen well enough to let someone avoid hitting you.

Never just destroy anything out of idleness, I have watched so many people sit and tear up something that they later had to repair or replace. Isn't it easier to just not tear it up to start with? Even paperclips, sheets of paper, and pencils are useless once mangled and cost money and effort to replace. And someone with "monkey fingers" who picks at loose wallpaper, flaking paint, loose buttons, a seam coming unravelled etc means that the item often now requires time consuming repair and you may have it out of service for days or weeks until it is repaired. And most people today may not know how to repair something that has gone from a tiny problem to the whole item being messed up so they have to buy another.

Am I a Victim?

Gary — Tue, 05 Feb 2008 19:01:00 GMT

Just the other day I was reading an article about politics. Part of the article talked about how some people more easily accept victim status. I don't know how true it is in the political world. But, I do know that it's true in the financial world. Some people look at themselves as financial victims. They feel that they have no control over their financial future. That it's all under someone else's control. And, that there's nothing they can do to change it. Fortunately, most Dollar Stretchers know that they don't have to play the victim. They can take control of their circumstances and put themselves in a position where they'll control their financial destiny.

It hurts to see people victimized. Take, for instance, our friends who have a variable mortgage that just jumped. They can't afford the payment and the current market makes it very hard to sell the house. Right now they're victims. Certainly it's not their fault that the housing market is down for the first time in recent memory. They assumed that they could refinance when they got to this point. At least that's what they were told when they bought the house.

It could have been different if they had been regular Dollar Stretcher readers. They would have read the warnings from Greg McBride of Bankrate www.bankrate.com/dls about interest only and variable mortgages. They would have known exactly the dangers they faced. They would have read numerous articles on how to calculate how much house you can afford. It could have been different.

Please understand that this is not a backhanded way of saying "I told you so". It is a way of saying that in many cases you don't have to be a victim unless you choose to be. You have the right to know what could happen with a mortgage. Or a car payment. Or a credit card payment. You have the information available to you to help you make an informed decision (we publish much of it right here). You have the ability to understand the information. You have the ability to make decisions that will keep you from being a victim later. And, that's the key. You can take steps now to prevent you from being a victim later.

Are there some situations that are outside of your control? Sure! Some things happen to us that there's no way to predict or protect ourselves from. In those cases we are indeed victims. But, we encourage you to take control of as many financial situations as you can. Some will require a little effort on your part. Others will require you to put off a purchase or buy something less expensive that what you originally planned.

So refuse to be a victim. Don't let anyone take control of your financial life. Even if you can't control everything that could happen in the future, Choose to take control of the events that you can. You'll find that it pays big dividends in the future!

Keep on stretching those dollars!

Gary

A Little Security

Gary — Wed, 30 Jan 2008 19:28:00 GMT

A number of years ago I read a story about children who were found in an orphanage at the end of World War II. They had suffered from a lack of material things during the war. They were undernourished and dressed in rags. Once the town was liberated material things were still in short supply, but those in charge made a special effort to see that the children had enough to eat and proper clothing. Yet, weeks went by and the children didn't seem to be doing any better. They weren't gaining weight. They still suffered from nightmares. The adults weren't sure what they could or should do. Finally someone got the bright idea to give each child a biscuit before bedtime. If they ate the biscuit, they were given a second one to hold during the night. The effect was almost immediate. The children began to sleep better. They started gaining weight. More and more smiles were seen.

When asked about it the adults surmised that the even though the children were well fed now, subconsciously they weren't sure that they'd have anything to eat tomorrow. After all, there world was fine before the war came. The simple fact that they went to sleep with a biscuit in their hand or beside them on their pillow told them that they'd have something to eat tomorrow. Just that little bit of security made all the difference to them and changed the way they saw the world.

I think that adults are like that, too. If we don't know how we'll make our next car payment there's a heightened level of stress. Add a ballooning credit card balance and we'll begin to lose sleep (just like the kids). But give us a small savings account and we sleep like babies. It's a lesson that we all could benefit from learning.

In this week's Dollar Stretcher you'll find a story that shows how one generation can pass a biscuit to the next generation. You'll find it at <http://www.stretcher.com/stories/08/08feb04f.cfm>. Now that's a real gift. Passing on a sense of security to your children. It doesn't get much better than that.

Keep on stretching those dollars!

Gary

Step Away From the Computer

Gary — Mon, 28 Jan 2008 20:12:00 GMT

How many of you have heard the term 'shopping therapy'? That's when you go shopping to make yourself feel better. Maybe you're fighting the blahs. Maybe a bad day at work. Maybe you just broke up with a significant other. A little time shopping will make you feel better.

The subject came up when I was doing a radio interview with Gail & Keith at 600KCOL in Colorado http://www.600kcol.com/cc-common/podcast/single_podcast.html?podcast=keith_and_gail.xml We were discussing ways to replace 'shopping therapy'. Gail challenged me to give listeners the benefits of shopping therapy without running up their credit cards. How could someone spend hours at the mall without spending money? The answer is obvious. Don't bring any money (or credit cards). I suggested going to the mall with $5 in their purse or wallet. You could 'window shop' without risk. Visit the food court for a soda. Window shop some more. Keith agreed that Gail couldn't get in too much trouble doing that.

Then I mentioned that some people can get in just as much trouble surfing shopping sites on the net and brought up "The Barbershop" post http://community.stretcher.com/blogs/stretcher/archive/2008/01/10/the-barbershop.aspx My solution was to turn off the computer. That's when Gail broke into her best police officer voice - "step away from the computer". I couldn't help but break up. She had it exactly right. Sometimes the absolute best thing that we can do is to step away from the computer. Don't flirt with temptation. Walk away from it. And, it's always best if you can do it with a smile on your face!

(btw, I usally enjoy doing interviews. This one with Gail & Keith was especially enjoyable. You might want to check them out.)

Keep on stretching those dollars!

Gary

Preparing for Recession

Gary — Wed, 23 Jan 2008 15:40:00 GMT

Lately it seems everyone is talking about a possible recession (or even a depression). When the Federal Reserve drops rates by 3/4% between meetings it's probably time for all of us to take notice. No one knows for sure whether we'll end up with a recession or not. But, as we all do know, it's always better to be prepared for financial challenges. Just in case.

The first thing is to know what your current position is. Are you spending more than you're making? Do you even know? Where does your money go each month? The only way to really find out is to track your spending for a month and compare it to your income. Don't forget to include items that happen just a few times a year (property taxes, auto insurance, etc). If you are working you should be making more than you're spending each month. That extra money can be used for paying down debt or building an emergency fund.

Next, pay down debt. It's easier to survive a job loss if you don't have a lot of bills each month. Now is the time to reduce credit card balances. Even it it means taking a second job or cutting off cable television. You'll be tempted not to do anything. Just remember that if you do lose your job it will be too late.

Look for big savings items. With lower rates now might be the time to refinance your home or car. Compare insurance rates. Make sure that you really can afford the house or car you're paying for. Typically if your house is over 40% of income or your car is over 20% you need to do radical surgery. That means moving to a cheaper home or car.

Take a serious look at your food/grocery/eating out expenses. Most people spend 15 to 20% of their money on food. But, it's real easy to spend more. And, it can happen a little at a time. That luscious $4 dessert won't bankrupt you by itself. But, it will take you one step further from your goal.

Look at your employment situation. If you're honest with yourself, it's not that difficult to recognize job troubles ahead. Is your employer in trouble? Is the whole industry suffering? Could your job be done by someone else for much lower pay? Either within the U.S. or without? Does technology threaten your job? If you can answer 'yes' to any of those questions, you'd be wise to consider what your life would be like without your present job.

Ask yourself if you'd be likely to find the same type of work at a different employer. It could be that your field is changing. That happened to me. If you're facing a similar situation begin learning a new trade now. Don't wait until you lose your job. Waiting will only make the transition longer.

No, I can't say whether you'll be affected by a recession or if there will even be a recession this year. But I can tell you that you'll be better able to handle one if you begin preparing now.