Yankee 2.0 : budgeting

I fell off the no credit wagon....

Anne Cross — Tue, 22 Sep 2009 21:37:00 GMT

...but am climbing back on. Well, I've been trying to accomplish a couple of goals in these last few months -- one was not to incur any more consumer debt, and the other was to get some stuff fixed around my house. It turns out that I over did it on the latter, leading me to fail at the former.

I had a flurry of stuff fixed at my house: new storm windows, patching holes in my soffit, sealed some flaking stone on my stoop, got a new garbage disposal, and some burnt out outlets rewired. Nothing especially glamorous, but things that have improved my quality of life. I knew how much money I had, but I kept thinking I'd get a little extra somewhere.... turns out that was not a good way to think. Not only did I not get a little "extra" I also am earning about $20,000 less this semester than I thought I would.

So I took out a cash advance on my credit card for living expenses, since I blew through savings for all that house stuff. Then I had to get my car fixed for $500, and I charged it. So I'm really not in the place financially that I expected to be right now, but I'm very grateful that I have enough money to live FRUGALLY through the end of the year. I'm going to use my unexpected free time to work on a writing project (that I hope to sell one day), and to try to drum up more business for the new year.

It's disappointing, because that other money would have really put me in a great place financially, but I'm really really grateful that I have enough to get by for a while. I learned a good lesson about not counting my chickens before they're hatched...

No more dining out!

Anne Cross — Thu, 13 Aug 2009 21:50:00 GMT

I like to make pronouncements. It's easier for me to adopt or give up something altogether, rather than piecemeal. So my latest pronouncement is this: I'm not going out to eat anymore, unless I'm away from home and can't prepare something myself.

I'm a vegetarian, so my dining out options are limited. I'm also a really good cook (well, I like my own cooking better than restaurant cooking). I like to cook, I really really enjoy it. And lastly -- why should I spend $7.00 for a salad, when I can make a better one for about $1.50?

My final meal out cost me $20.00 - for an order of french fries (not very good and kind of burnt), an ear of corn on the cob (mediocre), a blah salad, and a really good dessert, plus tip. I would rather use that sawbuck for something special, so I was glad my farewell meal was only fair.

Now the challenge will be declining firmly but politely when friends invite me to go out to eat with them (not an everyday occurance, mind you, but once a month or so I probably get a local invitation to eat out). I love to entertain and will gladly host a big dinner party, but will hope I can get away with just saying "no thanks" to invites to meals away from home....

Do other people refuse to eat out on economic grounds?

How to make $75 fast, and the realization that comes with it

Anne Cross — Sun, 19 Jul 2009 22:09:00 GMT

I came across an advertisement recently from Bank of America: open a checking account with them with a minimum depoist of $500, make at least one debit transaction within 30 days of opening the account, and they'll deposit $75.00 into the account, or mail you a check if the account is closed. This is a much better interest rate than I'm getting in my passbook savings or online savings accounts, so I'm going to sign up for it.

I'm so pleased to be in a position to be able to do this -- to have $500 that I can actually live without for a month, and to be able to compare savings rates from separate savings accounts. This is not a position in which I have found myself for quite some time. I lived hand to mouth, paycheck to paycheck (with credit card support between paychecks) for years and years. But in the past 18 months or so, I've really turned my financial life around (with help from tips on Dollar Stretcher and the Dave Ramsey method). But my budgeting and persistance have paid off. Sticking with a weekly spending budget and putting whatever was left over (be it $1.00 or $20.00) into savings has made me feel so much more secure. Gary is doing a poll on what financial independence means, and while I'm nowhere near financially independent (for me, it means paying off my mortgage and student loans and having $20,000 in the bank -- something that is in the future, but not the near future), I am starting to taste it, and I know how much more peace I will fell when it eventually happens.

And that $75 will go straight back into savings to help me reach my own goals of financial independence.

What I'm doing differently

Anne Cross — Tue, 19 May 2009 11:11:00 GMT

There have been so many stories in the news, on blogs -- everyhwere -- about what people are doing differently in the midst of this "economic downturn," and lots of speculation about what habits will last and what will disappear once the economy recovers.

I started living within my means over a year ago, and made many of the changes talked about in the news. I cancelled my cable, got rid of the Internet at home, went to cheap-o telephone service, cancelled my beloved artisan bottled water delivery, put all my electronics on power strips, and eventually paid off my credit cards (such a good feeling with all the news about increased fees for good customers). These are (I hope, I hope, I hope) life habits that I will always maintain.

But I'm still looking for ways to stretch my dollars. I'm going to greatly expand my vegetable garden this summer (we had frost last night, so I won't be planting until after Memorial Day, just like all the old Yankees advise) and do itas much by swapping as possible. I have set myself a $20 limit for plants this season. I'm sewing more to mend things that I might have turned into rags before (mostly pillowcases and socks).The home-made cleaning and health and beauty products are a huge savings, and I continue to research recipes for things I can make myself. I always look for free first, second hand next, and buying new as a last resort.

And I'm using coupons more. There aren't usually that many coupons I can use, but there are usually a few (some weeks go by with nothing in the Sunday paper for me), and when there's a coupon for batteries or toilet paper or some other common staple, I make sure to cut it out and file it in my little coupon file. The grocery stores around here have started putting triple coupon or $1.00 double coupon promotions on, so I make use of those and am building up a stock of those products. Plus, eggs and frozen pizzas sometimes appear in coupons. And I'm looking on manufacturers web sites for coupons for items I use. And I NEVER use a coupon for something I wouldn't have bought anyway unless it is free.

Lastly, I've started entering sweepstakes. I'm sure more and more people are joining me, so the odds are poor, but somebody's got to win, right? I always check my receipts for sweepstakes opportunities (CVS, Home Depot), and enter online. Parade magazine and Cooking Pleasures magazine also have ongoing sweepstakes, where you can log in every day and enter. It takes less than five minutes a day, and I could really put either a paring knife or $50,000 to good use.

I wonder what other frugalistas are doing differently in the "downturn"?

Insurance or savings account for my new cat?

Anne Cross — Fri, 01 May 2009 17:15:00 GMT

My beloved cat of 16 years died last fall, and I (and my dog) missed her terribly, so I decided to get a new cat from my local animal shelter. The dog's not so thrilled yet, but I know she'll come around.

The cat, Jerome, is healthy and happy. I brought him in to the vet yesterday. I asked the vet about pet health insurance, since all of my pets have had costly medical problems, and I thought insurance might be a good thing to get while Jerome is still young and healthy. The vet said it's a personal choice -- she suggests that people put a little money away into a savings plan for the pet for emergencies, but if that's hard to do, then insurance can be a good option. My dog's emergencies have run into the thousands of dollars, so I think the insurance might be a better bet for me.

I'm looking at different plans -- there are a lot of options out there -- and wondered if any of you folks in the Dollar Stretcher community had any thoughts -- especially from those of you who've gotten medical insurance for your own pets.

A year of thrift

Anne Cross — Sat, 14 Feb 2009 12:10:00 GMT

It was in February of 2008 that I decided to change my relationship with money. I was sick of living week to week, always being scrambling to pay bills, being in debt and being generally stressed over money. I bartered with a life coach for a couple of sessions, but quickly realized I didn't need someone else to tell me what to do. I knew what I needed to do! I was always listening to shows about personal finance and debt, I had gone through the Dave Ramsey thing (and paid off a bunch of debt, yet there it was again, creeping up on me) -- I knew what I needed to do, and I finally decided to just do it.

I put myself on a weekly budget of $200.00 which I took out in cash each Friday. This was to cover human food, pet food, gas for the car, and any shopping (clothes, household goods, books, etc.) and entertainment (coffee, meals out, movies) for me for one week. Anything left over would go into savings. I went back on to the snowball model to pay off my credit cards, and a few months earlier had started an IRA which had a monthly debit from my checking account (so I couldn't skip paying it).

One year in, I am in much better shape. I have paid off all my "little" credit card debts (Care Credit -- which provided much-needed funding for a pet operation and Sleepy's -- for a new bed), which eliminated a couple thousand dollars of debt and freed up a few hundred each month for other expenses. I started saving for the first time since I was a teenager. I usually had something left over from my $200 allowance and even if it was $1.00, I put that money into my passbook savings each week. I have depleted it a couple of times (once to fix a collapsed celing in my house, twice for my weekly allowance), but hey, it was savings, not debt! And then I've gone back to putting money into it and have continued my savings habit.I just completed a mortgage re-finance which also rolled in a large credit card (around $9500), and a home equity loan.This monthly payment will be less than what I had been paying (due to the great interest rate) and will eliminate two additional bills from my life.

I cancelled non-essential expenses. I got rid of cable tv (which was only costing me $6.00 per month, but I decided was non-essential), and a few months ago cancellled my spring water delivery (which was $40 per month, but was delicious mineral water and supported a local business). And I downsized my home telephone service to something that is local-only, per-call rate and is very inexpensive.

I buy almost everything used. Clothing, household products, books (if not simply borrowed from the library), etc. When I can't buy it used, I TRY to buy it from the source, especially for food. I buy my milk and eggs directly from a dairy, and get as much produce straight from farmers (besides what I can grow myself).

What has fundamentally happened is that I've changed my thinking. I used to operate in scarcity/fear mode, but now I feel like I'm in abundance/security mode. I have plenty of stuff (in fact, I got rid of a lot of stuff over the winter), I make big batches of food and freeze some, so I know I have plenty of food, I have enough money to make ends meet; I pay my utility bills as soon as they arrive so I don't worry about paying them; I live in a city with lots of free entertainment and I'm a block from the library; I have plenty of ways to keep busy, and as I pay down my mortgage (which is now, apart from my blasted student loans my only debt), I will eventually own my home and be even more secure.

I love doing what I can by myself -- soap and cleaning things, food, mending clothes and sheets, fixing clocks, resuing things -- it helps with the feelings of security and independence, but it's nice to be part of a community (like this one) where other people are likeminded and trying to reduce their consumption. I feel much less wasteful, too. I used to be proud of how much I recycled each week. Now I'm happy to see how little is in my recycling bin, since it means I'm consuming that much less.

While anything is possible, I am pretty confident that the changes I've made are lasting ones. My outlook on life has changed so fundamentally and completely that I don't think I will ever go back to my old ways of profligate spending. I used to feel a reward sensation when I bought something, but now I feel that same sensation when I put money into the bank. I like going to the thrift store and walking out empty-handed because I know that I don't need a single thing there.

It has been an interesting journey so far. I can't wait to see what February 2010 looks like!

Preparing to be credit-card free

Anne Cross — Wed, 10 Dec 2008 09:31:00 GMT

After thinking about selling my house, I have decided to stick it out at least another year and am in the process of refinancing. The lower interest rate will save me quite a bit each month, and I am "rolling in" a home equity loan ($14,000) and the last remaining credit card I have ($10,000). The new monthly payment will be $600 less per month than what I've been paying.

I have paid off all my credit card debt at least three times in the past, then racked up more of those bad boys. I am older and wiser (maybe not wiser, but definitely older) now and hope never to travel down that path again. I do have a business credit card (one of my various jobs is a business that I own) that I can use if an emergency happens.

Something that I have often done in the past when my debts/expenses have decreased is to lessen up on my workload. I'll stop one or consulting or teaching gigs. This time, I'm actually trying to *increase* my workload. I will still have a mortgage (now for another 30 years) and I still have my enormous student loans (currently in deferment for another year). And as long as I live in this house, I will have repairs, renovations, and expenses. So, my hope (despite the fact that we're in a depression -- oops, "recession") is to find some more odds and ends of work and sock the money away into a combination of savings (for future house projects plus as a cushion if I lose jobs or have unforeseen expenses) and extra mortgage/student loan payments.

I am, however, wondering if I should keep the one credit card I do have, once it's paid off. My credit scores are 738, 766, and 740 (discovered during re-fi process), and while I really really don't ever want to apply for a loan again (will pay cash for my next car), I think credit scores are used in other areas, and I would like to have the best score possible. I think having the one card open with a zero balance would be beneficial to my credit rating, but it *might* also present a temptation for reckless spending.... Any thoughts from you frugalistas out there?

Another debt down

Anne Cross — Mon, 29 Sep 2008 18:39:00 GMT

Well, I've gotten paid from a new client and used part of the money to pay off a store credit card (at 0% interest) that I had opened to pay for a new mattress and box spring 18 months ago. I love my bed -- it's a tempurpedic and it really is restorative to sleep on (my dog and cat think so, too!).

I now have four debts, but they're all doozies. A big fat credit card (just under $9,000), a home equity loan, a mortgage and monster student loans (which I'm ignoring as long as possible -- I can keep it in deferment for a few more years).

So now that my "small" debts are gone, it will be a while before I can say that I have paid something off. This is slightly discouraging, because I really enjoy the payoff feeling. I have to learn how to be joyful at seeing my other balances get slowly chipped down.

So using a slightly modified Dave Ramsey targeted debt payoff plan, I'm rolling some of my bed payment into the remaining credit card (5.9%) and some of it into an online savings account (3.5% interest). Because my pay is sporadic (self-employed), I really don't want to put all my disposable income into debt payoff, because then I might wind up using my credit card if I'm in a tight spot.

Hearing all the scary economic news, I feel a little bit better knowing that I am sleeping on a bed that is mine, free and clear.

Weekly Allowance

Anne Cross — Sat, 13 Sep 2008 11:32:00 GMT

As part of debt-reduction/fiscal awareness, everyone tells you to write down everything that you spend for a month or so. I've done that a few times in the past, and used it to arrive at a system that works really well for me. After analyzing my spending patterns, I decided that I can live very comfortably on a budget of $200 per week.

That money is enough to cover groceries, pet food, gas for my car, clothes, coffee, lunches out, movies, books, haircuts, etc. Everything that is not a scheduled monthly or annual expense comes from this fund. I also put whatever is left over when the next Friday arrives into a savings account. When the money is gone, it's gone. I take it out on Friday, and sometimes I've spent it all by Sunday, so then I have a lean week, but I don't take out any more from the bank. Sometimes, I only spend $20 in a week, and I put the remaining $180 in the bank.

This system works for me for several reasons. First off, I'm mostly self-employed (and the college where I teach only pays us three times per semester, so that's just like being on a self-employed schedule), which means I get huge piles of money at times, and then nothing at all at times. Since money burns a hole in my pocket, having this agreement with myself is like getting a regular paycheck, and it's easier to manage. It used to be that if I saw something pretty that I wanted and I had the money in the bank, I would just get it and deal with being broke later. Now, if I see something I want, I think "well, I've got $200 to live on this week, is it in my budget?"

Secondly, I really don't like the whole writing things down process of spending -- I did it, and I arrived at this figure through that, but this way, I know what I have to spend, and I don't feel guilty if I want a $70 deep tissue massage or if I want to pop down to NYC for the day -- I make those choices knowing it might mean I'll eat beans all week. It gives me a parameter to work with.

Next, all the experts say that we're tighter with cash than with debit. Knowing I have $200 in my wallet makes me feel secure and independent, and I am often quite happy not to spend it. I also like not leaving a transaction trail behind me with debit purchases.

Lastly, it has gotten me to save. $200 per week seems (to me, anyway) like a pretty generous amount of money. Even with the cost of gas so high, I can meet my basic needs on less than $200, so I almost always tuck away at least $20 to put into savings.

Over the summer, I had no income and wasn't able to live on this budget -- I only had $10 to live on some weeks. But I'm solvent again, and am back on my plan. It's nice to be in control of my finances again! I'm amazed at how much free-er I feel now.