financial zen

Very often I come across articles and bloggers writing about saving money in college. It’s beating a dead horse. It’s the same “tried-and-true” advice time after time. It’s written by people on the outside, looking in. Former students. Graduated professionals.

What? Things have never changed? The same rules apply?

I’m sorry to break it to everyone, but people love to generalize the college experience. They want to trivialize the details – so let’s try and break it out for you:

Rule #1 – Scholarships aren’t a sure thing.
Yes, you can apply until your fingers are numb. But you can’t rely on this type of cash to sustain you, or fulfill your “life-long college dream” choice. I’m not saying don’t apply, I’m saying don’t listen to all the hub-bub about Loans are the devil, you’ll be in debt forever, etc…

Rule #2 – Loans are an excellent tool.
People will moan about paying off their student loans (even more so when they drop out without finishing). Education that is worth money, will cost money. But my question to you is – do you need to take your first two years of classes at the expensive place? My suggestion to you is to research community colleges – some offer “transfer” degrees to institutions – you take the general education classes at community college, save yourself a few grand, and then go drop the big bucks on your Bachelor’s Degree. You’ll save money in more than one way.

Rule #3 – Diversify your food.
Ramen seems to be called the staple of the college diet. Yes, it’s cheap. Yes, it’s not necessarily the healthiest option. My suggestion to any kid in college that lives in or around the campus – find out where the deals are. Dollar tacos? Half-off specials? These places are prime for cheap, good eats (often rivaling the price of making it yourself) – plus they come with the added bonus that you get to hang around your class-folk. People under estimate the value of networking at any stage of college.

It’s equally important to recognize that while you are in college, brand name foods may not be worth their price tag. Generic vegetables all taste the same. Some things you may not want to skimp on – peanut butter, perhaps. Maybe you like a specific kind fo salad-dressing. The point is – don’t splurge on everything except the few items you’ve grown to love (or no generic has been able to match – yet).

Rule #4 – Drink – in moderation.
This is another key networking tool – when used wisely. Boys and girls, know your limits. No one likes the excessively drunk kid. No one likes taking care of the drunk. If you choose to drink in college – pace yourself, don’t give in to peer pressure, and when you call it quits – mean it. I’ve had to help too many people out when they “couldn’t say no” to one more drink. Leaving the party “too sober” is never followed by a story involving drunken accidents, bad one-nighters, or illness.

Rule #5 – Put off new purchases.
I love following this one after the drinking issue. I’ve met a few guys who would buy a brand new outfit (occasionally on credit, occasionally on the allowance their parents give them) and then go out drinking, get too drunk, or are too uptight about “getting dirty” that they come off very stand-offish to everyone. You can get good clothes on sale (or at Good Will, or thrift stores). You really do not need the hottest fashions unless that’s your major (but if you’re a fashion designer, you should be MAKING the hot new things, not buying someone else’s). Guys – seriously, do you need designer jeans? That impresses only people who are concerned if you can buy them expensive things.

You won’t always win.
Just as a quick wrap-up, sometimes, you’re going to lose. You may get an F for the first time ever. You may have a teacher or a class that you just can’t conquer – but that’s reason to talk out, to discuss, to speak up. Break old bad habits – being shy never helps, and in a room full of people that aren’t talking, chances are they’re as shy as you. I’m still trying to crack this shell in myself.

The point is – you can spend cash. you can work part-time. You can work full-time and go to school full-time – I’m doing it for almost a year straight. I’m on the Dean’s list. think about the short-term (community college) along with the long-term (where you’re going afterwards).

Actually, perhaps that’s a better point. Just think. Think about yourself, your education, your money, your future. Think about how you’d want to tell your kids about the kind of life you *really* lead in college – the person that had a few beers, was a regular on $1 taco night, and still pulled a B average, or the locked in the dorm room, stressed straight-A student? When you graduate, it could be the people you made friends with that land you your job (or a future one). They’re not going to care tha tyou didn’t carry a 4.0. They’re going to care you took the time to get to know them.

Good luck, college kiddos, I’m in the grind with you and I know it’s not getting easier – but I know it’s definitely worth it.

So nickel had an interesting article, comparing the definitions of frugal and cheap. Unfortunately, the examples are rather lacking.

So let’s take it up a notch – instead of HotOrNot why not “frugal or not?”

Take for instance, store brands. We know Del Monte, Chiquita, Pepsi, Coke (once Ohio State’s savior, now a harsh reality check), Jif (the choice of choosy moms) and a number of other brands. Can you taste the difference?

Honestly, there are a few choices that I have “gone frugal” on, and never will again. One of them is Peanut Butter. I bought generic once – and never again. It still amazes me that the taste can be so different. Vegetables, however, I can’t tell the difference – as with canned fruit. If it’s not fresh from the farmer (I’m working on it!) – it all tastes the same. I buy cheap.

Another recognition that “image from purchase” problem – I was once told that low-income families would be envious of the family that fed their children formula. Breast feeding is better, and recommended. Why do they go the more expensive route?

For the appeal of being seen buying and using formula. It doesn’t matter that it isn’t better, but to be seen spending that extra cash makes you look “rich.”

The point is – we’re presented with options all the time. Name brand this vs. generic that. The “appeal” of being seen wearing (or buying) that name-brand item or hottest fashion, instead of the functional, or the old or the worn. C’mon – sometimes, it’s okay to splurge. Sometimes, that endorphin boost is worth the price tag for those new shoes, that new shirt, whatever. Moderation is key!

It’s important to recognize that you don’t need to give up everything in difficult times – but recognize where your money is going, and why you’re buying it.

The real measure of your wealth is how much you’d be worth if you lost all your money. ~Author Unknown

As I wrote about the fundamentals of personal finance success – and the fundamental truth of saving more than you spend to reach wealth, it’s important to recognize what that exactly means.

You can save all your money, live in your car until your debts are paid off, live at home and mooch – basically you can spend as little as possible now so you can have a lot of money in ten to twenty years, sleeping on a couch, eating ramen, and walking everywhere.

Or you can buy a car, live in an apartment, make your own lunch, buy used, and spend less than you earn. You can still have an occasional night out, party on occasion, go to Europe – it just means being mindful with your money. But how can you do this on a limited income?

Very easily. Cut out the unnecessary expenses. No cable, no memberships, no magazines. Okay, you want cable? Get basic. Skip the DVR package and the “VOD – only $10/month!” ‘deals.’ Go to the library. Read more. Go to the park to jog. Pick up some used weights on ebay or craigslist. The point is – be frugal not cheap. You don’t need a huge house that you can’t afford – I don’t care if you think you can afford it in a few more years, that’s moronic. If you knew tomorrow you were winning the jackpot billionaire lottery – but only made $26,000 a year now, and you were thinking of getting a new car/house/xbox/whatever – treat it as if you only had the $26,000. Oddly enough, I heard someone talking to a friend at an old apartment (back when I made $11/hour as a trainer):

You do not go out and buy a Bentley because you think you deserve one. You do not buy one because you think you can afford it in a year. The car does not make the player! When you are set, you will know you can buy the Bentley outright because you can get it if you want it, not because you need it.

There be wisdom in these walls! The guy who said it made a decent living in a factory, drove a convertible, and lived in off-campus housing. Cheap housing that allowed him to buy the material possessions he wanted. Not necessarily the best move financially, but wiser than buying a bentley, a mansion, and maxing out credit cards to give the illusion of wealth. You earn your lifestyle, you don’t choose it.

No doubt everyone’s heard of the guy who tried to flip houses by lying on his credit applications saying he made more money (which they made no effort to check or clarify, either). Here’s a stripper in 24 million debt because she wanted to quit her life and find a new way – and instead of researching she signed her life away, ruining her credit while the brokerage got to inflate housing prices. Do not be duped by easy money. There is no such thing.

Let’s look at it this way – you want to retire rich? Then set aside some money now.CNNMoney has a useful retirement calculator to help figure out how much money you want to live on and when you want to retire. There are a lot of factors involved, and it’s something you should always be working towards – so don’t think your plan is set from day one – it’ll need constant nurturing, but as you watch your retirement fund grow, you’ll realize it’s worth it. Just don’t put off your life until then – I’ve met many an old couple that says they wished they spent more money when they were younger to travel and do the things they can’t do because of their age – and seldom have I met an old couple that regrets traveling or managing their money for trips.

Just remember – manage your debt, spend less than you make, and focus on your long-term goals while keeping yourself satisfied and happy in the present. A delicate balance, but one that you (your loved ones) will enjoy!

(Read more stories of how other people paid off debt at Chris Pirillo’s blog)

What generation are we on now? X? Y? Z? AAA? According to MSN Money, I’m in the Generation Y category.

JLP at AllFinancialMatters has written about Young People All But Ignore Planning for Retirement. It’s quite distressing when you actually see the numbers presented.

Lucky for me – I’m one of the “numbers” that actually save – with a higher percentage contributed (and a higher balance). I feel a little good about that, because it means I’m on track with saving – now I jsut need to update my networthIQ and my NCN Network to show the dents I’ve made – that is a project for the weekend, more than likely.

It seems work went from “ain’t got nuthin’” to “omgwtfbbq” so I’ve been slammed – nine hour days n’ such. The sucky part of being salary!

How does your retirement fair – or if you’re out of the bracket – how *did* it fair when you were that age?

No doubt if you’re involved with Personal Finance, you’ll have figured ways to reduce your bills by some.

“Ways You Can Decrease Recurring Household Bills” from the Real Estate Journal brings it up but I think they’re missing a few key points.

They are working on cutting their bills down – but it seems they also went for more bang for their buck! They didn’t reduce prices, they allowed themselves to be upsold on their cable and internet. They didn’t look to decrease their bills, they looked for more for what they were paying.

It’s not that getting more for less is bad, but when your goal is to reduce spending, keeping bills at the same levels is detrimental and counterproductive. So you get ten more channels for the same price – great! Now you have more to watch instead of doing something with your life. Maybe that’s a bit too harsh, but do we really need 100+ cable channels when you know nothing is on that is going to satisfy you?

At the end of our test we racked up a net savings of $323 a year. Not bad, but we hoped for more after negotiating through the tangle of phone trees and inscrutable pricing plans. We actually let ourselves be talked into paying more for an upgraded service from one provider and struck out completely with two others. On the bright side, we’re no longer completely in the dark about our electric bill after hearing a clear explanation of it for the first time.

I think that one line (emphasis mine) is the saving grace. They got a better explanation of one of their bills – my problem is why didn’t they do this sooner? You should very clearly understand every bill you are paying – if not, why are you paying it? Why are you getting that bill? Will you pay my bills if I send them to you?

I’ve found an effective way to help my budget is to sign up for the budget plans with the utility companies – I’ve done it with gas and electric. They give you an estimated bill monthly, and after a year’s time they reevaluate it – I saved a ton going this route, although I initially overpaid, at the end of the year my next year’s bill was much cheaper – but I monitored my usage and made sure I wasn’t abusing the system. Personal Responsibility!

Have you had any experiences lowering your bills, or getting a better understanding of them?

(Note: My Personal Finances is calculated using my salary – not my wife’s income, so we’ve got a good idea what will happen after the baby’s born)

Our personal finances for the month of April – we went over by $146.11! – mainly because of our inattentiveness to our fast food fix! I’ve noticed my weight slowly declining since we noticed the unhealthy fast food trend. Our goal for this month is to keep our dining out to <$40 (I promised The Wife Sonic if we can manage our budget this month). We had a slight increase in clothing expenses - namely a couple prego clothing items (we buy mainly used - but we found a couple cheap garments we'd prefer new). We also bought sunglasses! Stylish and $10 from a mall kiosk (I love to haggle). A large chunk was dedicated to paying off bills (and knocking out some student loan).

Also increased! Medical bills! Who knew kids were so expensive? He's note even born yet and The Baby Logan is looking at a $2500 bill (possibly less).

Our gas intake is under control some - we're averaging about a tank a week (it's a long drive to the office - thank God we car pool!) My car should be back from our Friend the Mechanic this week - for a lot less then my first estimate (it was between $800-$1100). Thank God for Mechanic friends.

I’m moving to a new office closer to our home, but that could change in the coming month (I’m weighing a few job options – one is a lot closer, the other is right next door to my current location). This should effectively increase my budget – it depends on the location and pay.

Lastly – I’ve got a chart with the No Credit Needed Network! I’m anxious to update my progress – all in good time, I suppose! I’ve got a lot going on (hence my less than stellar posting) but I will not neglect writing! I’ve got a stash on incomplete writings I’ll try to have ready (and relevant) so I can hopefully keep this up every morning.

MSN Money has a great article showcasing people that conquer huge debts quickly – and it makes ours look like a small pittance!

A couple paid off a $150,000 mortgage in five years, another knocked out $8,000 (of $49,000) of her credit card debt in nine months!

The stories themselves focus on a couple key components of most frugal living/personal finance topics: grads getting a house, unexpected job loss with debts out of control, or my favorite, a desired life-style change to spend more time learning and loving your family.

The key factors they really show us, are something you’ve no debt read (and will continue to read about, until everyone out there thinks of it as common-sense!) is:

Live like a college student! Just because you graduated and are ‘making the big bucks’ doesn’t mean you need to start splurging. Sure, buy yourself something nice – but save, scrimp, and pay off! It’ll be in your best interests in the long run – I know quite a few people in their thirties who tell me they wish they buckled in and paid off their debts earlier, and not delaying them and spreading them out as long as possible, to the point that after marriage and kids, it’s still an issue.

The last story, one of post-divorce, had a great list of tips (but I think they needed some help, emphasis mine):
* Opts for basic TV service — no premium channels. Why cable at all? Free TV still lives!
* Chooses a dial-up Internet connection ($9.95 a month) over high-speed service. I agree – only get High Speed if you really need it
* Buys food in bulk to last for months. Canned goods and non-perishables all the way!
* Takes his lunch to work. I skip lunch at work most days so I can eat with my wife after work – I’m a little more hungry, but it’s nice to sit with my wife.
* Makes a budget for the holidays, birthdays, etc., and sticks to it. This applies to all social events – budget, and stick to it. And do you really need a million-dollar party?
* Applies “extra” paychecks to debt (a biweekly pay schedule had provided a third check two months a year). I love the three paycheck weeks. That is debt pay-down time.
* Applies any bonuses toward his debt. Bonuses, rebates, tax refunds – all of it to your debt!
* Sets the thermostat in winter to 63 degrees. Wear warm clothes, socks, sweaters or get a space heater – preferably one with a built-in thermostat and sensor!
* Sets the air conditioner to 79. If it’s summer, be naked. The environment will thank you.
* Buys compact fluorescent light bulbs to reduce electric bills. We’re in the process of this now! Save money in the long run.
* Takes out $25 in “walking around” cash each week. When it’s gone, he doesn’t spend more. I don’t think I even hit $25 with my current budget. It’s a nice idea, though.
* Keeps the credit cards at home. I love how it’s plural. Leave them at home, frozen. With no balances. ;)
* Shops with a list and buys only what’s on the list, and avoids looking at anything else, including sale items. When my wife and I started doing this, we noticed a drop in 50% of our grocery bill.
* Keeps his car tuned up to avoid bigger expenses. This is important to prevent that “little problem” from becoming “the big problem.”
* Doesn’t keep up with the Joneses. He says he doesn’t care what they drive, where they vacation or what they wear. I love the Joneses. They give me a model to avoid, because I don’t envy their American Express bill.
* Avoids buying coffee or food “on the go” but instead eats at home whenever possible. The little expenses add up.
* Stays away from vending machines at work. Vending machines are trap doors to fatty fat and brokey broke.
* Doesn’t play the lottery. Gambling is gambling. If you want to throw money at something, throw it to me.
* Buys broken bags of mulch and fertilizer at deep discounts. This goes for many items – always check for a discount on used/dinged goods. Cosmetic defects are just that – cosmetic.
* When shopping for appliances, buys last year’s model. Buy last years, and check out for places that have close-out deals.
* Budgets vacations and looks for coupons wherever possible. This is what we’re doing – setting a goal and time frame, and slowly budgeting towards it. When we reach it – we’re taking a vacation. Not before.

A ton of useful tips for a grad, a divorcee, or anyone looking for a lifestyle change. They mention taking a second job, which I recommend (and have done before) but remember not to stress yourself out! You need to budget your time so your loved ones don’t suffer!

Tricia (@ Blogging Away Debt) has a great article talking about MSN’s “Money trouble? It’s your own fault!”

She’s right, it reads like tough love – but one thing I think most people need to understand is that is what they (and their debt need) – a good ole’ kick to the head.

Placing blame won’t do anything except delay the inevitable. As I once read:
A young man will blame the world for his troubles, a smart man blames himself, a wise man blames no one.

People get too hung up on placing blame – on others, on themselves that they miss the whole issue – their is debt to resolve!

I once blamed the credit card lenders for preying on my ignorance – I realized it was my fault, and knocked my debt down and focused. Now, the majority of my debt is from a wedding, a honeymoon, and an emergency. It’s under control – and my wife and I are knocking away our debt like crazy. I’m looking forward to post our state of “monetary affairs” at the end of the month so we can better come to grip with our finances – we’re all ready aware we’ve got a fast-food problem!

Three days ago we canceled cable television. We mostly live on downloads of television shows and netflix.
What made me laugh was when they asked why I was canceling…

Them:”Sir, why are you canceling?”
Me:”It’s too expensive and the VOD never works.”
Them:”Well, if I sign you up for a new promotion it’ll lower your cost by $7, to $82, and it’ll add HBO for free for three months.”

No dice.

So we’re cable-free (uh, television, I mean). I kept the internet (for work and personal use, for my wife and I).

Monthly Savings: ~$45
Yearly Savings: ~$540

Boo yeah.

I read a lot about the Latte factor – that all those Lattes you buy can add up to big bucks!

Take this post from Free Money finance – he shows four examples about your daily habit, and how it adds up… over 40 years.

I agree, little factors add up. But *anything* adds up over $40 years. Let’s talk car payments – lose that car! Walk to work (or bike)! Insurance and maintenance add up, too. Don’t have kids. Live on Ramen and multi-vitamins. There are so many ways to save money if you look.

Of course, this comes in your interpretation of… The Latte Factor! If you really want to save money, those are really legitimate ways – lose the car and take the bus or move closer to work (I know a guy that bikes to work year round, another person that carpools). You don’t need to eat out everyday for lunch (do you really need to Never Eat Alone?).

The idea is – do you really need that cup of joe in the morning? Or, if you really need that coffee – do you really need it to be Starbucks brand? Do you need the $5 flavors when a $1 cup of coffee with free cream and splenda will do?

The idea is to cut out those small expenditures that we take for granted – and to cut out the ones that will cost us in the long run (smokers, I’m looking at you, same thing with Mickey D’s addicts). I don’t drink coffee in the morning (usually). If I do, it’s a $1 a cup at the little deli place downstairs – Starbucks is across the street, so if I really wanted it, I’d get it there – but I don’t. I’ve maybe been in Starbucks one dozen times, if that many. I dig the atmosphere, the whole “watch me type my novel” crap that goes on – but I don’t dig the prices.

Dong (@ AskDong.com) also points out that when you’re considering cutting lattes – you should really look at your budget and see if it’s that huge of an expense – his example shows that Dining/Going out was a huge expense over his lattes. This is an excellent example of realizing what the Latte factor is about – realizing where you are burning money – not necessarily in lattes and coffee, but in the things we do every month that we take for granted.

I’m not saying we need to go the ultimate route – No Impact Man is all about reducing his environmental foot print – and in essence, is being incredibly frugal. Borderline hippie-commune frugal. I love it. I’d love to follow in his steps, but I’m not quite at that point yet. Subway is too easy a choice when I’m studying for four hours after an eight hour day of work, and my pregnant wife is half awake. Maybe someday, but today!

Anyone else do the latte factor? Have you seen that it’s not your lattes but something else eating your money?