April 2010 - Posts - Dollar Stretcher Guest Bloggers
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April 2010 - Posts

  • Frugal at Fifty

    by Mrs. Roy

    I read lots of articles and blogs about people in various stages of the frugal lifestyle, but I don’t see much written by folks like me, folks who have been living frugally for a while. I can tell you first hand whether or not eating store-brands has caused us any injury, whether or not our children have been psychologically damaged by having to eat chicken noodle soup every day for lunch or whether we gave up on the whole thing and are now neck deep in debt, living the American dream.

    Does it work?

    Yes, yes, yes. My husband and I go to work every day, as we have for the past thirty years. However, we have no debt except our mortgage and we will have it completely paid off in less than five years. We live in a very nice neighborhood and drive nice cars. We are both professionals and have work clothes that are appropriate. (No one knows I buy mine at consignment shops unless I tell them.)  We have money in the bank (over and above our emergency fund), in IRAs, and company deferred comp programs, all resulting from frugal living over our lifetime. In other words, we are incredibly close to that magical land of financial independence.

    We might have gotten to this point a lot sooner, but like most people, we had to repair some financial damage before we started moving forward. My husband worked for many years on a commission basis, meaning sometimes there was more than enough and sometimes not everything got paid. We used our credit cards to cover the shortages but somehow never quite got them paid off. Living on what we made (it took a while to reach living on less than we made) was a struggle, but it got easier as we went along. Don’t get discouraged. 

    I began this journey long ago after reading Your Money or Your Life. That book explains what money really is and how we should relate to it. I’ve read it several times since then. If you haven’t read it, you should. I am also a huge fan of Dave Ramsey. Dave has been there, done that and his advice is practical and doable. He’s also been living the frugal life for many, many years so he also can testify that it really works. 

    Over the years, we have had a pretty simple money management formula. We gave to our church and charity, saved some and spent the rest. The percentages have fluctuated, but we always include all three types of spending in our budget. I believe we have been blessed by sharing with others and I encourage you not to be tight-fisted with your money. 

    Do you really need an emergency fund?

    Yes. I can’t tell you how many times we’ve been saved from having to go into debt because we were faithful to save a little on a regular basis. Saving is hard. I used to get a real paper paycheck (remember those?) every Friday and I would physically walk to the bank and put some in savings, some in checking and get cash for the rest. We had a mortgage, two kids and used vehicles that were usually one pothole away from disaster so that emergency fund helped me sleep at night. What kind of emergencies qualified for dipping into the emergency fund? Our son rode his bicycle off a loading dock and broke his elbow. Our car backfired in the driveway when my husband started it one morning and caught on fire. Our daughter’s teeth all came in crooked. (We didn’t have any dental insurance but we were able to get a big discount by paying cash up front.) Our heat pump bit the dust and had to be replaced. You get the picture. Life just happens. You might as well be ready for it.

    Don’t people think you are weird?

    I thought frugal living was pretty weird when I first started it, but I soon found out that there are a lot of penny pinchers out there and most of them are the “rich folks.”  Yes, sometimes people think I’m a little goofy but they get over it and usually admire us for our ways. Thirty years ago, it was not common for people to take their lunch to work or to drive old beat up cars. And shopping at thrift stores or consignment stores just wasn’t talked about. Now all those things are commonplace. Just keep doing what you think you need to do to succeed and don’t worry about what other people think.

    Thirty years ago, I honestly believed that everybody in America lived with credit card balances. When I decided to start getting out of debt, part of my Friday paycheck routine included making a payment on my Visa at the bank that had issued it. The teller I dealt with most often tried to get me to just copy my monthly statement and mail the payments so that she wouldn’t have to process them, but I needed the discipline of handing her the money every Friday. She thought I was weird but I got out of debt. 

    I’ve held up the grocery line with my stacks of coupons. I’ve held up the fast food line with my coupons. I’ve lugged my own snacks and refilled water bottles to the ballfield instead of buying from the concession stand. I still won’t run the A/C until I just absolutely have to and we burn wood in our fireplace insert instead of turning on the central heat. And yes, people are going to think you are weird sometimes. That’s okay. I’d do it all again; I have no regrets.

    Things I Didn’t Do

    I have never felt comfortable giving used gifts. I just save money all year for Christmas and birthdays so that I can buy nice new gifts for my friends and relatives. I’d rather preserve the relationship than save a few bucks. I know that isn’t how everyone sees it, but that’s what I do.

    I’ve never had a clothesline. My husband likes his clothes done in the dryer and so I’ve spent the $250 a year most people estimate is attributable to dryer use. 

    I didn’t cancel cable. My husband loves to watch television so we have always had cable or a satellite. We don’t rent movies often. We have been to the movie theater together about 10 times in 30 years, and we rarely eat out or spend money on other forms of entertainment so I can justify the cost.

    I don’t bake my own bread or grow my own vegetables or have chickens in the backyard. When my kids were small, I bought bread and snacks at the day-old bread store. I buy store brand canned vegetables, and eggs are a good deal even if you do buy them in the grocery store. 

    I don’t have the latest greatest phone technology. We do have cell phones but we don’t have data phones and we didn’t have cell phones at all for a long time. We tend to lag behind this technology at least five years most of the time.

    I don’t do yard sales - buying or selling. As far as holding a yard sale, I tried it a couple of times and I never made enough money or sold enough stuff to make it worth my while. I came out better mentally and monetarily by donating it to charity and taking the tax deduction. As for buying at yard sales, I just love other people’s junk, so I come home with stuff I don’t really need, which I then end up donating to charity. 

    Busting the Myths

    We fed our kids the store brand macaroni and cheese and it didn’t kill them. 

    I had a friend who ate cream of celery soup every day for two years after her divorce because of credit card debt. That was an unpleasant experience, but she’s a better woman for it. It didn’t kill her and she now travels extensively and drives a sports car, all paid with cash. It can be done.

    We don’t look like refugee camp escapees or aging hippies. We wear nice clean clothes that are current and stylish. My son loves labels so he finds a way to afford them (sales, employee discounts, consignment shops). My husband prefers a certain brand of dress slacks so we just watch for sales. I shop consignment stores, Goodwill and clearance racks. 

    You are not missing out on one of life’s great pleasures just because you don’t eat out several times a week. We cooked at home instead of eating out and consequently, we are very good cooks. I’d much rather eat my husband’s cooking than anything the restaurants can prepare. 

    Our kids didn’t have all the greatest, latest toys and they are not warped and socially inept because of it. In fact, our kids got to do pretty much whatever they wanted in school and extra-curricular activities. We went on all the field trips, participated in all the fundraisers and played lots of sports and band instruments. You just have to choose to do those things instead of something else.

    We live in a 4 bedroom house on a lake in a nice neighborhood. Frugal doesn’t mean living in a shack on the edge of town unless that’s where you want to live.

    You can have a good credit rating without living in debt. I often come across experts who say you should maintain some credit so that you will have a good credit rating. The best credit rating is being able to pay cash. I recently checked mine so I know. 

    You can go on vacation, eat out, watch cable and drive a new car, but you may not be able to do all those things at the same time. I’ve found that everybody has to choose and prioritize in life, no matter how much money you have. Being frugal just means making different choices than most folks. 

    You don’t have to be miserable to be frugal. In fact, if you are miserable, you need to make some adjustments. Having money in the bank is worthless if you aren’t happy. On the other hand, if you can only be happy if you spend money, you may want to think about why that is so.

    Do you ever get to splurge? 

    Yes. We recently bought a REALLY BIG flat screen television. This was our first television purchase in nearly 15 years and watching television and movies is something we enjoy. Yes, we have digital satellite television, but we don’t have a DVR and we don’t pay for premium channels.

    Over the years, we splurged on vacations with our family, celebration dinners and graduation gifts. I don’t regret any of it. That’s exactly why we have lived frugally, so that we can enjoy the special times of life.

    (Not Totally) Unexpected Benefits

    We were able to buy cars for both our teenagers with cash. They weren’t brand new and they weren’t top of the line, but they loved them and eventually were able to trade them in on other vehicles that they paid for themselves. 

    We were able to pay for college for our kids without having to burden them (or us) with student loans. We never had a special “college fund,” but by living on less than we earn, we had the money to pay for tuition. I would never have believed we would be able to do this, so I’m really proud that it worked out. Our kids also helped make this possible by living at home and going to the local college. Frugality is definitely a family event. 

    With the economy the way it is right now, it is wonderful not to be worried about what would happen if we lost our jobs. The peace of mind knowing that your life isn’t driven by financial concerns is incredible. 

    Our elderly parents have become, well, elderly, and we are able to make decisions to help them that might not have been available if we weren’t frugal. For instance, my mom is coming to live with us so we are remodeling the bedroom and bath she will use. Because we lived frugally, we were able to buy a home several years ago that will allow her to stay with us and still have some privacy. And we know we will be able to absorb the cost of an additional person in the house.

    We enjoy being able to travel to visit our children and grandchildren whenever we want. How sad it would be to be far from our loved ones and financially unable to visit them occasionally.


    Whether you just woke up this morning and realized you were hopelessly in debt or whether you’ve been cutting expenses for a while and just need to know it’s not all an exercise in futility, I hope my experience will encourage you to continue living frugally. Americans have discovered in the past couple of years that there is a big difference between wants and needs, which is something that frugal people figured out a long time ago. Once you get that straight in your head, you are on your way! 

    If I could only give you one piece of advice, it would be to have fun every day. Life is really short and the memories of good times you carry in your heart and mind are much more valuable than the money in your pocket. At the end of the day, it really is a choice between your money or your life.

    Mrs. Roy is a wife, mother, paralegal, and Sunday School teacher who has been living the frugal life since long before it became fashionable. She is most proud to be a new grandmother, the wife of a decorated war hero and an award-winning quilter. She writes about her faith, family, the environment and the frugal life at www.mrsroysway.blogspot.com.

  • Credit Card Tips for the International Traveler

    by Bill Hardekopf

    We are quickly approaching the travel season. If you are taking an international trip, the journey is never inexpensive, but choosing the right credit card can help cut costs. Most credit cards add as much as a 3% international transaction fee to the cost of your purchase.

    This international transaction fee is assessed to any purchase whether it's a $3 piece of pizza or a $5,000 piece of art. Travelers can avoid this fee by comparing credit cards and choosing the right card before you go. Capital One is currently the only major issuer that does not charge a foreign transaction fee. If you make a $500 purchase, using a Capital One card will save you up to $15.

    Pentagon Federal Credit Union recently eliminated the 2.5%  international transaction fee from the PenFed Premium Travel Rewards American Express Card.

    Each time you use your credit card outside the United States, the network (American Express, MasterCard, Visa) that processes the transaction charges your bank a percentage of the transaction (typically 1%) to convert dollars to the local currency. The bank that issues your card also charges a fee for the transaction (typically 2%). The currency conversion fee or international transaction fee will appear on your credit card statement.

    Current rates for international transaction fees:

    Capital One                 0%
    PenFed                       0%
    Discover                      2%
    American Express     2.7%
    Bank of America          3%
    Chase                         3%
    Citi                             3%

    Before you leave, contact your issuer to ask about the fees you will pay for international transactions and if there is a minimum for the fee.

    Using a credit or debit card at foreign ATMs also adds additional fees. Before departing, ask your bank what the charges are for foreign money transactions and for "foreign" ATMs  In addition to the international transaction fee, the ATM may also charge its own fee for withdrawals. If you plan to use your debit card, contact your bank to see if they have partner banks in the areas you are traveling. These partner banks may waive the withdrawal fees. Bank of America is a member of the Global ATM Alliance Bank that waives the fee if your bank is a member.

    ATM fees on international transactions vary widely. Bank of America charges a $5 withdrawal fee, plus a 1% international transaction fee. Chase assesses a $3 withdrawal fee for non-Chase withdrawals outside the United States plus a 3% conversion fee. Citi charges a 3% fee after conversion to American dollars, plus $1.50 per transaction.

    Here are some other credit card tips for international travel:

    • Cash Advances. Avoid using your credit card at an ATM to get cash. The fee is typically 3% or $10, whichever is greater. You will also immediately be charged the much higher interest rate for cash advances. The cash advance rate can be as high as 25% for some issuers.

    • Take a second card. Keep in mind that not all cards are widely accepted. If American Express is your primary card, it is not accepted everywhere, so have a MasterCard of Visa as a backup card. Discover does not have an extensive network in Europe and probably should not be your primary card.

    • Notify your bank and credit card issuer about your trip. While you are asking your bank about foreign transaction fees, tell them that you will be using your card while traveling out of the country. Otherwise, the foreign charges may raise a red flag with your issuer and a freeze could be placed on your account.

    • Take the phone numbers for contacting your bank from outside the United States.

    • You don't have to leave the United States to be charged a foreign transaction fee. Issuers recently broadened the definition of a foreign transaction. It is no longer limited to a purchase in a foreign country. Some issuers now charge a 3% foreign transaction fee on transactions made or processed outside of the United States. Making a purchase in the United States could cost an additional 3% of purchase if that online merchant is in another country. Previously, the fee was not added when foreign transactions were made in US dollars.
    Bill Hardekopf is the CEO of LowCards.com, a site that simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates. It also gives an unbiased ranking and review for each card.
  • Debt Settlement or Bankruptcy?

    courtesy of United Debt Counseling

    Having trouble with your credit card bills? Trying to decide between Debt Settlement versus Bankruptcy? Two of the most probable options available to people seeking debt relief are bankruptcy or debt negotiation. With the economy struggling to recover from a recession and unemployment numbers at an all time high, people are facing the reality that they may need debt settlement or bankruptcy in order to survive. Debt is a part of most people’s lives, but having too much debt can make living an enjoyable life difficult.

    There are two potential solutions to resolving an unmanageable debt problem. One may be filing for bankruptcy, but perhaps a better alternative would be using a debt settlement company. Before committing to either of these options, it's important to know the pros and cons of using a debt settlement company versus filing for bankruptcy to resolve your debt situation.

    The decision to file bankruptcy is one that must be thought through thoroughly. The lasting negative effects can limit financial options and the ability to obtain future credit. Bankruptcy often carries long term derogatory effects on credit scores, financial management and understanding from future lending sources. There are different types of bankruptcy, each having its own guidelines and limitations.

    Though bankruptcy may be a very good solution to a severe debt problem, filing carries negative effects that follow a debtor for a relatively long period of time. The debtor may lose property that is non-exempt (unprotected) and have to start over again in fulfilling their lifelong goals. Bankruptcy will appear on your credit report for seven to ten years depending on which type of bankruptcy is filed. Chapter 7 will normally be reported for 10 years because it does not involve any form of repayment plan to creditors and debts are completely discharged. Filing Chapter 13 may carry less of a dishonor and usually remains on your credit report for 7 years because the debtor arranges to repay a portion of the debt. 

    Debt Settlement is a proven successful approach to debt reduction. This may be appropriate for individuals with a serious amount of debt or who are considering bankruptcy. A Debt Settlement Company negotiates with creditors to settle debts for a lower amount than owed. This is accomplished by the debtor saving money for a lump-sum settlement payment. After the debt is settled, the creditor will send a letter stating the debt obligation is fulfilled. The same information is reported to credit bureaus in one of three ways:

    • The debt has been, "Settled for less than full amount"
    • The debt has been "Paid"
    • The debt has been "Settled"

    Term settlements are settlements where creditors allow us to make monthly payments on the client’s behalf. This is normally done for large debts where although there is a substantial savings, it is too much for the client to make in a lump sum. Basically, it's a payment plan that is normally 6 months or so.

    To learn more about United Debt Counseling financial contact them at 1-800-665-9981 and one of our Certified Credit Counselors will review your individual financial circumstances and will recommend one or more programs that can provide the solution and goal you are looking for. United Debt Counseling (UDC), founded in 2001, has a financial team with more than 20 years of experience in creditor relations, negotiations, settlements, arbitration, financial literacy, and counseling services.

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