September 2011 - Posts - The Dollar Stretcher
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The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

September 2011 - Posts

  • The Money Leash

    In our neighborhood we get a lot of dog walkers. We're near a city park and we get a lot of people taking their daily walks. Sometimes we're even on the route for charity walks. Every once in awhile we see something a little different. Last Saturday was one of those times.

    My wife and I were leaving and I noticed a woman with a small white dog (admittedly cute - it looked like our shnoodle!). Here's what struck me. She wasn't using a leash to walk the dog. Rather she was carrying it! Being the wiseguy that I am, I commented that was the first time that I had seen a dog walk a person. (ok, I admit it wasn't the funniest line you'll ever hear but my wife has learned to put up with me)

    But, as often happens, I see money lessons in a lot of strange places. It occurred to me that when it's properly used we have money on a leash. We can control where it goes. We decide what direction that we're going to walk. To put it simply, we're in charge.

    Unfortunately for some of us, money has us on a leash. It may be because of choices we've made (bigger house, newer car, excessive spending). Or it could be because of events in our lives (health issues, accidents, sudden job disruption).

    I suspect that none of us like being on money's leash. We don't like the lack of freedom or the ability to control our own destiny. Sadly for some with real debt problems, it often feels like we're wearing a choke collar.

    Wish that I could say that I knew how to throw off the collar. There's no easy way that I know of. But, one thing that I do know. However long it takes, if you haven't already begun to take control of your finances, there's no better time to start than now. The sooner you get started, the sooner you'll finish!

    I didn't mean these comments to be promotional. But, we do have a free daily newsletter called Financial Independence that will help you take control of money. If you'd like to see a typical issue click here. Or if you'd like to subscribe click here.

    Here's to the day that all of us have money on a leash!

    Keep on Stretching those Dollars!


  • Interview with CreditCardAssist.com

    I had the pleasure of being interviewed by Bill Hazelton of CreditCardAssist.com . Turns out that Bill and I were raise within miles of each other although we current live on opposite sides of the country.

    Bill asked about how The Dollar Stretcher started, how it's evolved and what we're trying to accomplish. One of my favorite questions was about how to avoid a  “deprivation mindset” when living a frugal lifestyle.

    We also got to discuss the "Financial Declaration of Independence”. And what I think about thrifty people using credit cards.

    You'll find the article here. Hope that you enjoy it!

    Keep on Stretching those Dollars!



  • Why I expect 10% Food Price Inflation

    Anyone who has been to the grocery store recently knows that food prices are going up. And, our expectation is that this will continue. Late last week we were provided evidence to support that fact.

    In an article from Reuter's on ConAgra's quarterly earnings. 

    ConAgra said in June that profit growth for the current fiscal year would be below its long-term goal of 6 to 8 percent, due mostly to higher costs for everything from meat to packaging.

     It warned at the time that first-quarter profit would be lower than a year earlier as price increases have not kept pace with accelerating inflation.

     On Tuesday, the company said it expected commodity costs to rise 9 to 10 percent in its consumer foods segment this year, up from its previous forecast of a 7 to 8 percent increase.

    On the ConAgra website's 'about us' page they describe their business this way:

    Our consumer foods are found in 97 percent of America’s households, and 25 of them are ranked first or second in their category.

     Why is that important? Because ConAgra is involved in food at all levels. If any company would be impacted by higher food prices it would be ConAgra. So it's reasonable to assume that they have some of the best people looking at any scrap of information that could help them predict future prices. So when they say they expect 9 to 10% increase on their raw materials we'd be foolish to doubt their word. And, unless we assume that they're dumb, we'd have to expect that they'll raise their prices by a similar amount to protect their profit margins. That means 9 or 10% higher prices at the grocery store for you and I.

    So what's a poor consumer to do? Fortunately you're hands are not tied. There are things that you can do besides watch your grocery bills increase each month for the next year. Let's look at some tools you have at your disposal.

    - Buy non-perishables ahead. If you don't already have a pantry, now is the time to start one. If you know that you use something regularly and it has a reasonable shelf-life, why not stock up now? Having a 3 to 6 month supply of canned goods is a good idea. Look for sales and coupons to build up your supply.

    - Plant a garden. You may not have a green thumb. I don't. But just about anyone can plant a few things that they like and manage to grow them to maturity. If you're unsure about how to start, ask a friend/co-worker who does garden for advice. Or visit the gardening section of the TDS library.

    - Learn to can fruits and veggies. Except in rural areas, canning has largely become a lost art. It's time to find it again.Most fruits and veggies are less expensive when they're 'in season' locally. In some cases, they're very cheap. Everyone knows that you want to stock up when something is cheap. Home canning allows you to do that.

    - Reduce the amount of meat in your diet and recipes. Meat is expensive. And, unless the price of corn and other animal feed goes down (which is highly unlikely), we can expect it to increase as much, if not more, than other food items. So now is a good time to find ways to reduce the amount of meat in recipes. Instead of one pound, try 3/4 pound. And, even if you've never considered a vegetarian lifestyle, now might be a good time to find a meatless recipe or two to add to your mix of regular meals.

    - Learn to cook cheaper cuts of meat. A good cook can make wonderful meals from less expensive cuts of meat. Spend some time in forums asking questions and learning from more experienced cooks. 

    - Use a slow cooker. Not only will it help make cheaper cuts of meat more tender, it will also make it easier to have a warm meal waiting for you when you get home from work. That's a twofer tool in my book.

    - Make the grocery store work harder for you. When roasts are cheaper than ground meat, but the roast and ask the butcher to grind it for you. Or buy the roast, cook it and slice part of it for lunch meat. Nothing says that lunch meat has to come from the deli counter.

    - Shop in unusual places - like bakery outlet stores and immigrant groceries. Outlet stores aren't just for cheaper clothing. A quick stop at a bakery outlet store can provide savings in a variety of ways. Immigrant grocery stores can be a real eye-opener. Many immigrants have limited income. So they know how to feed a family for less. Not only will you save money, you'll also discover new tastes that will seem like an adventure for your family.

    - Learn to use leftovers. By some estimations, most families waste about 20% of the food that they buy. Much of that is from leftovers that go bad in the back of your fridge. A little planning can help you use those leftovers before they go bad and turn them into convenient dinner items or inexpensive lunches. 

    Most of us are in a battle to keep our expenses in line with our income. Overcoming a 10% increase in the cost of food will not be easy. But at least you're not helpless. There are steps that you can take to minimize or even reverse the damage. 

  • The Lost Generation?

    Is the current economy causing our young people to become a 'lost generation'? Is it true that the hardships that they're facing now will affect them for the rest of their lives? Unfortunately, there's evidence that's exactly what could happen. Recently released Census data tell the story:

    This from The Associated Press:

    New 2010 census data released Thursday show the wrenching impact of a recession that officially ended in mid-2009. It highlights the missed opportunities and dim prospects for a generation of mostly 20-somethings and 30-somethings coming of age in a prolonged slump with high unemployment.

    "We have a monster jobs problem, and young people are the biggest losers," said Andrew Sum, an economist and director of the Center for Labor Market Studies at Northeastern University. He noted that for recent college grads now getting by with waitressing, bartending and odd jobs, they will have to compete with new graduates for entry-level career positions when the job market eventually does improve.

    "Their really high levels of underemployment and unemployment will haunt young people for at least another decade," Sum said. from The Associated Press

     And the financials are affecting how younger people live. Consider this from the USA Today article on the study:

    •Marrying later. The median age of first marriage has crept up to 28.7 for men and 26.7 for women, up from 27.5 and 25.9 respectively in 2006.

    At the same time, fewer people are taking a trip to the altar, period. If the marriage rate had stayed the same as in 2006, there would have been about 4 million more married people in 2010.

    •Fewer babies. There were 200,000 fewer births to women ages 20 to 34 in 2010 than just two years before even though the number of women in this prime age for having children grew by more than 1 million, according to Kenneth Johnson, demographer at the University of New Hampshire's Carsey Institute.

    "The recession is the likely cause," Johnson says. "Economic recessions often reduce fertility because women delay … in uncertain times." from USA Today

    So what's a young person to do? Hide in their parents basement and play video games until the economy gets better? Hang around Starbucks and complain about how bad things are? Surf the web and read blog entries like this one? (ok, we hope they do the last one)

    No, there are things that a 20-something can do to move forward...even in this economy.

    • Don't wait for a job to find you. Find a job.  Maybe you can't find a job in your degree field. The truth is that many of you got degrees in fields that are unlikely to have many jobs no matter how good the economy is. So waiting around for a job to find you is going to be a long, long wait. Instead, look around to see what else you can do. It might mean starting at the bottom and competing with kids that don't have degrees. Or it could mean going back to school to get some additional training. But google "careers with a future" or check out the BLS career forecast (admittedly somewhat dated, but it can help get you started). You're likely to change careers at least one during your working life. It could be that this is the first change.
    • Volunteer.  You're an idealistic generation. You want to make a positive difference. You won't earn a paycheck by volunteering, but you could make a difference in the world that you live in. And, on a more selfish note, you might make a contact that could help you get your paying career started. Most employers see someone who is dependable on a volunteer job as a good risk. If you're reliable when you don't get paid, you're likely to be even more so when you are getting paid.
    • Take any job.  Sure, it's a blow to your ego if part of your job responsibility is to ask "do you want fries with that". And, no one likes to wear those hair nets or clean public restrooms. But, by working a job - any job - you'll be getting something beyond a paycheck. You'll be gaining work experience. Employers will have an abundance of job seeks for years to come. One way they'll narrow the field is to look for people with a steady record of working. Even if it's at low wage, low skill jobs. The reason? Because you don't keep a job if you don't show up for work. Or show up late. Or goof-off on the job. So a consistent job history will show potential employers that you know how to work. You're unlikely to disappoint them if hired. So that job at Wendy's might not look big on your resume. But it can make a difference later if you're competing against someone who does NOT have that experience.
    • Take the time to learn additional skills.  Use the time to learn something new. If the vacuum breaks, see if you can figure out how to fix it. Learn how to grow a garden. Not sure what to learn? Look around your parent's home. Anything need repairing? Painting? Simple ugrades?
    • Don't get depressed.  The fact that this is a tough job market or you chose a degree with limited demand doesn't make you a loser. It just means that you're going through a hard time...and, that you'll be stronger when you've gone through it. Staying active will help you build accomplishments. Remind yourself of those accomplishments often (daily?). Get excited about them. You'll need that excitement to keep going.
    • Don't get angry.  You're right. It's probably not your fault. And, it's definitely not fair. Your parents and older brothers had it easier. But getting angry at them or the world will not make things better. It won't even provide momentary relief. As long as you focus on your anger and what's causing it you'll be thinking about what's wrong. Not what it will take to change your circumstances. You probably feel like you're entitled to a good rage against the world. But, that rage will be costly.
    • Don't think your generation is alone. Your's is not the first generation to reach adulthood when times were hard. There was a generation that came of age in the 1930's. During that depression. Unemployment was in the high teens for about ten years. Employment opportunities finally became easy when WW2 started (hardly the employer that most of us would choose - especially in wartime). That generation became known as 'the greatest generation' in later years. We don't know what the future holds for your generation. Right now 'the lost generation' seems about right.  But it might not stay that way. You could be part of the greatest generation part 2. Or the overcoming generation.


  • Perspectives

    Recently I wrote about big numbers and how to relate them to our world. In a way we were talking about perspectives. I find perspectives fascinating.

    For instance, I'm told that if you interview witnesses to a car accident, they'll tell slightly different stories of the same event. Not that anyone is trying to mislead. They just saw something slightly different because of where they happened to be standing.

    Perspectives can also have an effect on how we see money matters. If you grew up very poor you might believe that you'll never achieve any financial security. Or, you could accumulate wealth, but never think that it's enough to guarantee that you won't slide back into poverty. Both are quite understandable if you grew up extremely poor.

    Perspectives also effect our financial goals and what we're willing to do to achieve them. Your goal could be to minimize expenses, while mine is to increase security. You may be driven to reach the goal. Mine may be a more leisurely journey. It's not that either one of us is right or wrong. We just have a different view of what is important. Different perspectives.

    Why am I going on about perspectives? Beyond the fact that I find them interesting? Perhaps because you hear a lot of terms thrown around today that depend a lot on your perspectives. Phrases like 'the rich' or 'the poor'. Sometimes our political leaders shoot those terms almost as if they were bullets.

    It seems to me that it's important to listen carefully to what's being said and the perspective of the person who's saying it. And, also to our own perspective to what's being said.

    Not just in political terms, but in relation to our own finances, too. That 'easy payment' might be a whole lot easier from the salesperson's perspective than it would be from your position.

    So you might want to play around with perspectives a bit. Who knows? You might even get a new perspective on things!

    Keep on Stretching those Dollars!


  • Really Big Numbers

    Don't know about you, but sometimes I have a hard time putting big numbers into perspective. Hundreds and thousands I can handle. But lately it seems like so many of the numbers are too big to really comprehend.

    For instance, I remember the first time that I heard about a gigabyte hard drive. At the time 80 megabytes was a typical PC drive. It was hard to conceive of something that size. Now we're dealing with terrabyte drives.

    How do I put that into perspective? You could put roughly 40,000 Word documents of about 750 words into one gigabyte. Or 20,000 copies of this newsletter. And a terrabyte drive would hold 1,000 times more!

    The same thing is true of some of the financial figures we hear about. I have a hard time grasping the thought of a million dollars. But if I think about it, I stand a chance. For instance, if I earn $25,000 per year and work 40 years, my career earnings are $1 million. Understandable.

    But when it comes to numbers like billion or trillion, well to put it in the language my New York friends would use...forget about it! (note: spelling adjusted so the rest of the country could read and understand it)

    One thing that sometimes helps is to put these big numbers on a per person basis. For instance, if my town is spending $500,000 on a park and we have 75,000 people in town, that works out to $6.67 per person. So my share of the cost of that park is about a fast food meal.

    Or take something on the state or federal level. Suppose that you hear about something that will cost the federal government $500 million. What's your share? According to the U.S. Census Bureau there are 312 million Americans. So every person in the country would contribute $1.60.

    OK, but often the programs that we hear about are in the billions or trillions of dollars. How would that work out?

    Well, one way to look at it is that your share of a $1 billion expense is $3.20. Or $1 trillion would be about $3,200 per person in the U.S.

    That's something that I can get my head around. When they say a billion it's a little less than a gallon of gas for everyone of us.

    You'll have to come up with your own picture for a trillion dollars. For some it will be a month's pay. For others it will be the value of their emergency fund. Or maybe the total that you owe on that credit card. Pick something that's meaningful to you.

    In any event, don't let big numbers overwhelm you. Especially when it's your money that they're talking about.

    Keep on Stretching those Dollars!




  • Facing Financial Fears

    They say that a writer's biggest fear is a blank sheet of paper. Or, in more modern terms, a blank computer screen. Having made my living largely by writing and editing for over 15 years, I can verify that there's some truth to that statement.

    But, like so many of our fears, I believe that they diminish in size if you face them head on. I can't point to any scientific reason. Just experience in my own life and listening to what other people have said about their lives.

    That's also true of our financial fears. A blank sheet of paper becomes less scary when I put something (anything) on the page. Same thing for our finances.

    If you read the papers, watch the news or just hang around the water cooler at work it's almost impossible not to be somewhat fearful about your financial future. Almost every day there seems to be some new headline that could cause concern.

    Fortunately we don't have to cower at the foot of some unnamed financial fear. We don't have to stay with a blank sheet of financial paper. We can identify what the threat is, evaluate how serious it is, and take appropriate steps to minimize or eliminate the threat. In part, that's what The Dollar Stretcher is all about. Helping you identify, evaluate and minimize financial threats.

    So be of good cheer! Don't look at the headlines the same way. Consider them a tool that you'll use to help identify potential threats to your financial well-being. Tools that will help you know where to stregnthen your defenses.

    Write on that blank sheet of paper. Not only will you feel better, but you'll also increase the odds of a successful financial future!

    Keep on Stretching those Dollars!


  • Virtual Thrift Club

    I love to use this space for announcements. Especially ones that I think will be a benefit to many people. Today is one of those happy events!

    We've joined forced with the Institute for American Values to form a Virtual Thrift Club. One of their goals is to "To renew the ethic of thrift and replace the culture of debt and waste." When I heard that they were encouraging thrift clubs, I contacted them about setting one up on the web. And, we've done just that.

    We're hoping that many will visit and take the opportunity to share their thoughts and suggestions about a thrifty lifestyle. We already have a couple of interesting discussions going:

    Childhood memories of money 

    Is thrift to blame for the recession?

    Is thrift returning?

    I encourage you to take a few minutes and join in. I know that Dollar Stretcher readers are a generally thrifty group. Hopefully we can join with others to encourage more and more people to join us in a debt-free and waste-free lifestyle.

    You'll find all the discussions here.

    Keep on Stretching those Dollars!


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Gary is a former financial planner and purchasing manager who edits The Dollar Stretcher website <www.stretcher.com> and newsletters. You can follow Gary on Twitter.com/gary_foreman
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