September 2009 - Posts - Dollar Stretcher Guest Bloggers
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Dedicated to bringing you some of the best information to help you survive tough economic times

September 2009 - Posts

  • Staying Positive in Unemployment

    contributed by David

    I was thinking about how many of us (including me) are unemployed or underemployed.  In such a state, it's very easy to focus on the negative. I started making a list of benefits to keep positive, and I thought others might also benefit from them. They also might benefit from creating their own similar lists.

    • more family time
    • more thinking time
    • time to ride a bike as far as you want or can
    • more creativity
    • less junk you don't need
    • yard sales with interesting customers
    • enough sleep to watch sunrises and sunsets in the same day
    • can develop the ability to connect to people using skills other than how much money you earn
    • counting your blessings and realizing you still have it pretty good
    • friends and family can give back to you and this makes them feel good
    • time to read
    • time to learn new skills
    • you can appreciate when someone else gets a new job or has some sort of success in any part of his or her life
    • time to cook, a need to cook, and who knows what you can make with the things on hand
    • gardening
    • fixing what you have instead of throwing it away automatically
    • libraries are free
    • think of new ideas of ways to make money and stretch things
    • expanding other identities than only what job you do
    • losing things because you can't afford payments makes you realize what is truly important and most of the time it isn't things at all
    • ability to see the humor when people start talking about how the economy is turning around or how many jobs have been created
    • after many NOs or dead-ends, caring less and less and being more and more adaptable
    • No longer a slave to the clock
    • Time to do the things that you were always too busy to do before.
    • becoming more resourceful

    Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@Stretcher.com

  • We Were Expecting a Layoff

    contributed by Nancy

    Late last summer, things started getting shaky at the company I had been working at for nearly five years. Layoffs were on the horizon, and panic was everyone’s reaction. “How can we live on unemployment?” was the ever-present topic of conversation, with most people saying, “I can’t live on that…”  It was a real wake-up call for me. I looked at what unemployment would pay, and I looked at my bills. Not surprisingly, the two numbers were not very close. While I was not living extravagantly, I had my comforts, a car loan and some credit card debt, but no real savings other than my retirement account. Not good. So I put myself on a serious financial diet. Brown bag lunches, no fancy dinners, vacations or new clothes; and no expensive Christmas presents for friends or family. By last month, when I finally got “the layoff talk,” I had paid off my car and several credit cards. I’d cut my monthly expenses by almost 30%, and put every bit of the savings into paying off debt.

    I will not say it was fun or easy, nor was I always able to stick to the plan. In fact, it was miserable at times. Knowing I was doing the right thing for my financial well-being didn’t make it any easier, or make me feel any less stressed and frustrated at the ever-present uncertainty. Morale at work was low; everyone was walking on eggshells as the rounds of layoffs began and the “fortunate survivors” were expected to do the work of those let go. Watching friends that had been out of work for months and were losing their homes and/or being forced into bankruptcy was pretty miserable too. I have always been an emotional spender, so finding ways to cope with the stress that didn’t involve “retail therapy” or “little extra treats” was a constant battle, and one that I didn’t always win. However, after a year on this “diet,” I was amazed at how much I was able to cut my overhead and pay down my debt.  Unlike many of my coworkers, I had reached the point where I could survive on unemployment until I found another job. All the struggles with my emotional spending paid off, and it finally felt worth the hard work. I knew that no matter what happened with my job, I would be okay.

    Within the last month, fortune smiled on me and I was able to find a new position before my old job ended, just days before my final paycheck.  I was able to put a chunk of my severance pay into savings, completely upgrade my wardrobe (as required for the new job), and still have money to live on without having to incur any debt. I’m not out of the woods yet. I still have some credit card debt, but I’m in much better shape than I was a year ago. I’m not going to keep living on this strict a “fiscal diet” forever, but I’m not going back to my old ways either.; In these uncertain times, debt equals stress, and there’s more than enough of that to go around without making it worse.

    This post originally appeared in Financial Independence. FI is a daily message designed to help people take control of their financial lives. To find out more, check out the Financial Independence page.

  • How to Reduce Grocery Bills

    by Joanne in Suffern, NY

    I agree with your comments on reducing the $1800 grocery bill. Our family of 6 (2 adults, 4 children) spends about $100 a week. I would add the following suggestions to yours:

    • Eliminate snack foods that are unhealthy. We stopped buying soda (we now drink water from a filtered pitcher) and chips (we snack on cereal and fruit instead).

    • Shop from the store's circular. I go over our supermarket's circular every week and plan my shopping list and the week's meals around it. If nothing good is on sale, I can fall back on items in my freezer and pantry to get us through the week (see below).

    • Combine sales items with coupons whenever possible. (editor's note: We'd like to direct your attention to two great sources for coupons, which are SmartSource and Coupons.com.)

    • Set a price for items and refuse to pay any more than that price. For example, I will not pay more than $2.50 for a big box of cereal. (editor's note: We advocate using a pricebook. You'll find more information about starting a pricebook here  and free pricebook pages here.)

    • Stock up on bargains. Buying a small freezer is a great way to have space for multiple packages of meals that were on sale or for freezing fresh meat and other fresh items that you also bought on sale. You should also keep a pantry stocked with basic canned and packaged foods.

    • Reduce the amount of meat you eat. Pastas, rice dishes, eggs, soup, and beans are healthy and cheap alternatives

    • Our supermarket puts up about-to-expire meat and bakery goods early in the morning that are 50% off. These goods are fresh and safe to eat and are covered by the store's usual money-back guarantee. Meat and most baked goods can be frozen and used later.

    • Limit yourself to one shopping trip a week. If you run out of something, do without it until next week.

    I am very proud of my grocery shopping bills and skills. Saving money while shopping takes discipline, but it is one of the easiest areas to budget.

    Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@Stretcher.com.

  • My Story: Utility Budget Billing Plans

    contributed by Tam

    This is in response/addition to the tip about the equal payment plans offered by many utility companies.

    We bought our house in early spring and our power bill was very inexpensive the first few months, but the first bill of the colder months showed an increase of over 300%!  We live in a very old farm house that is not very energy friendly. I talked with the power company and was put on "comfort billing"  and then we started taking steps to cut our power use.

    The following spring we went through some changes with the finances and the power bill didn't get paid on time. In all honesty it had been forgotten. We realized the error when we received our disconnect notice and a demand for payment of nearly $1500 (because this was the balance we were in the red at the end of winter) to keep the service on! This was the first time we'd ever been late in the year that we'd owned the home so I tried to appeal. I was told since we owed such a large balance, the best they could do was require half immediately and break the rest of the payments up over the next few months. The entire balance had to be paid before the colder months came again and I could not be placed back on the "comfort" plan until my account showed a zero balance.

    I would recommend folks call the companies they have these payment plan options set up with and ask about the consequences if any of these situations were to happen (disconnect notice, moving, etc). Better to know ahead of time what may be required, and prepared if circumstances arise, than caught unaware with a large bill that has to be paid immediately.

    Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@Stretcher.com

  • Monthly Food Cycles

    by Michelle in Rolling Meadows, IL

    I attended a class that discussed the monthly food cycles that grocery stores rotate through, and I decided, "There's no way I'm going to remember all this stuff."  So one lazy weekend, I printed all the information on address labels, and put them on the appropriate month in my calendar.  The following are the items I posted to my calendar:

    January - Football food: chili,chips and 2 liters of pop

    February - Valentine's Day: candy and chocolate (which I freeze and use in future baking recipes)

    March - Frozen foods

    April - Spring cleaning: cleansers and paper products

    May - Summer BBQ prep: condiments and meats

    June - Beat the heat: ice cream

    July - Summertime: sodas, more condiments, hamburger patties and buns

    August - Breakfast: frozen waffles, cereal and juices

    September - Back to school: lunchbox snacks, drink boxes, packaged lunch meats and canned soup (I don't have kids, but I use this info to pack my lunch for work.)

    October - Frozen foods and baking products (in preparation of the holidays)

    November - Foods to warm you: hot cocoa, coffee, tea, canned soups and foods and Thanksgiving staples

    December - Holiday parties: party platter foods, cold cuts, sour cream, dips, chips, crackers, ham, stuffing, potato mixes, butter, pie fillings, pie crusts and soups

    Now I don't have to remember when is a good time to shop for sales on particular products.  And, if I have coupons, I can hang onto them in anticipation of these monthly sales!

    Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@stretcher.com.
  • Buying a House at Cost-Per-Unit

    by This Old Housewife

    I may be slow, but I finally figured it out: how to buy a house at price per unit, just like I buy my groceries.  And I even found a place to look up the value. No, I haven't actually bought the house yet, but I have several good candidates lined up, and will begin touring and making offers.

    Normally, people look at what a real estate agent or MLS has to offer, and go by the list price or asking price, which is the same as the shelf price in a grocery store. Smart shoppers don't look at this price, do they? Smart shoppers look at price per unit, or how much this particular product costs compared to others in the same category. Prices per unit can be expressed in ounces, pounds, quarts, gallons, or even liters. Prices per unit on houses are expressed in square feet.

    We buy our groceries by the pound, the ounce, the number of loads, or even cost per serving, and we always check NADA or Kelley Blue Book before buying a car, so why aren't we buying our houses in the same way? This information is readily available to the public on Zillow. Agents will tell you that Zillow isn't accurate, but it is within a $5k +/- range of what a house is truly worth on the open market, which can be drastically different from the asking price.

    I've seen some real lulus on my local MLS (multi-listing service). There were houses overpriced by as much as $80k, and have been on the market for almost a year. Some have been sitting for over a year, and are still overpriced! Where is the agent, and why haven't they had a heart-to-heart with the homeowner about correctly pricing the house closer to local comps? Where is the homeowner who wonders why the house hasn't sold? Where is the bank sitting on an overpriced foreclosure clogging up the market, preventing them from adding new offerings to the MLS?

    I shake my head and continue to find houses listed in my area at an enormous "shelf price," yet I run them through Zillow and find them quite affordable according to comps.

    You are probably wondering why this is such a big deal to me. Some houses aren't selling as quickly as they should, and for the reason I just described, these houses are overpriced, and bank appraisers cannot justify the asking prices, so banks won't loan money to buy these houses. They will loan up to comp value, but no more. Anything more would be a risk, especially in this employment environment. The good old days of loaning 125% of value are long gone.

    Maybe if we started expressing house prices in price-per-square foot rather than just an arbitrary number based on what is owed or what is expected to come in after renovations are done, more houses would move, and it would be a darn sight easier to spot affordable ones. Then, it would be easier to stick to a "budget" by knowing how much home you could afford--LITERALLY! This would be a far better indicator than the banks, who don't take expenses into account when determining how much you can borrow for a house, or those "how much home can you afford?" calculators, which also don't take anything more into account besides income and debt.

    Now, back to Zillow for just a moment: you may be wondering just how to use Zillow as your aid in finding a home. Let's try an example (I'll pull one from my area):

    845 Norman Ave., 23518--asking price is $165k. The house is a non-descript Cape Cod style, 862 square feet, and has 2 bedrooms and 1 bath, a detached 2-car garage, all kitchen appliances except a dishwasher (a luxury here because of narrow pipes), central heat/air, gas water heater, tile and wood floors, and is fenced in back. It's been on the market for about 20 days.

    Now we go to Zillow and enter the address and  then click on the house in question (it will come up in a bubble in the center of a map). Then we look over at the right margin of the screen (How This Home Stacks Up) where it lists price per square foot in that area. Multiply the price per square foot with the number of square feet in the house, and you get the true market value of the house in question.

    845 Norman Ave.--asking price $165k, and 862 square feet. Zillow's price per square foot in this neighborhood is $130, so 130 x 862 = $112,060 or rounded down to $112 even. This is the market price, +/- 5K, for the house on Norman St. So the range for comps is $107-117K, far below what the asking price is. Someone needs to have a chat with the owner!

    Assuming I put in an offer of $112, and it gets accepted, I will have successfully saved $53k. That's a $53,000 savings that I won't have to finance, pay taxes on, or insure.  If I were to challenge the property tax, I'd probably get a discount there, too. That's no chump change. That's college money, or money that could be used toward other debt if I had any.  For me, this would be more IRA money.

    This is how I put the power of market value to work for me, knowing what something's worth, and not paying a penny over the market value. By using this method of knowing the value beforehand, I managed to save $6,000 on one used car and $8,000 on another just by looking up their values on Kelley Blue Book before negotiating.  I save untold thousands at the grocery store by shopping at price-per-unit instead of by shelf price.

    Remember the formula: Price per square foot x house square foot size = true market value

    With houses, as with groceries and cars, sticker price means nothing. People want money out of them, either for equity replacement (most of which was lost in the downturn), some distorted notion of what renovations are worth, some distorted notion of what location is worth (based on when they first moved there), or because they themselves bought at too high a price, and now can't afford to keep it.  Money and emotion seem to run hand-in-hand.

    If you want to buy a house at a realistic price, a realistic value, and want a realistic chance of getting financing on it, go the Zillow price-per-square-foot route. If you also want to find terrific price discounts, Zillow is also your friend there, too. I've found several houses that were marked down from their price-per-square-foot, but were still out of my affordability range. Oh well.  I'm concentrating on what I can readily afford, and is within my price per square foot, now that I know what it is.  I also now know that I can afford more per square foot if I sacrifice square footage.

    Everyone is smart about something! That's why we have The Dollar Stretcher Guest Blog. If you have a story that could help save time or money, please send it by email to MyStory@stretcher.com.


     

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