My column in today’s Forum talks about being frugally generous. What tips do you have to give and save?
When all year long you penny pinch, you run the risk of becoming a Grinch.
In the season of giving thanks and holiday giving, I have to remind myself to loosen the Scrooge-like grasp on my purse strings, before three ghosts visit me in the night.
But being generous and being frugal are not mutually exclusive. It’s all about being efficient with your money, and maximizing what you can give within the constraints of your budget.
Call it frugal generosity. It can apply to Christmas gifts and charitable giving.
One of my favorite ways to give frugally is on Giving Hearts Day. During the Feb. 14 event, hosted jointly by the Impact Foundation and Dakota Medical Foundation, online donations of $10 or more to select nonprofits are matched up to $4,000.
It’s an easy way to stretch your giving dollar, making a larger impact than you otherwise might afford. A similar event featuring Minnesota organizations, Give to the Max Day, was held Nov. 14.
For food drives, I often donate cans from my pantry, which I’ve stocked when on sale or by redeeming store deals.
For example, Cash Wise grocery stores offer a free, usually nonperishable item with a $30 purchase. If you scan the free item coupon before other coupons, you can still get the item if your out-of-pocket total is less than $30. Even if it’s an item you wouldn’t use, it can still be put to good use.
That goes for more than food. I’m an advocate of re-gifting, provided it’s done with class. That is, it’s never been used, it would be loved by the recipient, and you’re gifting well outside the social circle where you received.
When I helped pack Operation Christmas Child boxes this month, I collected uneaten Halloween candy and unopened Happy Meal toys from my house. I’ve also given away gift cards I earned for free through MyPoints.com.
When approached with fundraising catalogues, I try to do double-duty, supporting the cause by buying something I can give later as a gift. I do the same when attending home parties or vendor shows.
Gift-giving is part of our household budget. We automatically add $90 every two weeks to an online money market account designated for pet expenses, travel and gifts.
To make the most of those dollars, I try to leverage pre-Christmas sales. I combined a sale price and texted coupon code to get the doll my 5-year-old daughter wanted for half its regular price.
I also hit up post-holiday sales. One year for Christmas, I gave her a Cinderella costume I’d bought at a deep discount the week after Halloween.
The key is to not get hung up on the dollar amount. Just because you found the gift for less doesn’t mean you have to spend more. It’s about the gift – and the thought – not what you spent.
Finally, I like to think about my family’s “needs” when drafting wish lists. Clothes, art supplies and bigger bike helmets are great gifts and already part of the household budget. Both my kids’ stockings will be stuffed with kid shampoo, new toothbrushes and toothpaste.
That way their teeth, like the holidays, will be merry and bright.
May all your Christmases be in the black.
Richards is a thrifty mom of two and reporter for The Forum. She can be reached at email@example.com
This spring, I wrote about how my husband and I were debating switching to smartphones. Our cell phone contract was up, giving us a window to make the leap.
My concern, of course, was the cost. Not just of the physical phones, but the monthly data plan and the temptation to purchase apps and other downloads. As I wrote, it’s way too easy to allow your tech wants to become expensive “needs.”
We talked with several friends and family members, compared price packages, and researched, researched, researched.
Finally, after months of debate (and years of being behind the tech curve), we recently leaped into unlimited minutes, texts and 2 GB of data each.
Best of all: Our new phone plan costs only $10 more per month total than we were paying for 700 shared minutes, 250 texts each and no data.
Of course, there are trade-offs. I’ll get to those.
In the end, we went with Straight Talk, a no-contract cell service sold through Wal-Mart. We had to buy our phones outright, and now pay $45 a month plus sales tax each for its Unlimited* plan (Note the asterisk, as the data isn’t actually limitless). You can enroll in auto pay, or buy the service cards in store or online.
Different Straight Talk phones operate on different networks. It was important to us to have service in rural eastern North Dakota, as that’s where we travel frequently, so we made sure the phones we purchased were designated CDMA-V, indicating they would use the Verizon network. (A Straight Talk CDMA-S phone would work on the Sprint network, as I understand it.) The codes are prominently displayed online, though I had trouble finding them in-store.
Because my husband loves his iPod Touch, I encouraged him to go with an iPhone. We were able to get a refurbished iPhone 4 for $300 through the Wal-Mart website. Not the latest and greatest, but that’s not what we need.
I wanted an Android, as I’m more familiar with that platform, so chose the
cheap basic Galaxy Samsung Centura. The phone was $100 — a steal for a smartphone, it seems — and has so far been a good way for me to tiptoe into the smart world. I am a bit disappointed in the camera. (Because it doesn’t autofocus, barcode scanning apps don’t work well on it, and I was so looking forward to having a comparison shopping tool in my pocket. Also, there’s no flash.) Other than that can’t complain about the phone.
I can complain about the customer service. While my hubby was able to activate his phone with no problem, mine wasn’t properly scanned at the store which led to three hour-long stints on hold, conflicting advice from the customer reps and an all-around hair-pulling experience as I had to go back to the store and swap phones. But, as they say, you get what you pay for, and apparently you don’t get great customer service when you pay $45 a month for a data plan. (You also can’t tether devices on Straight Talk, which may be important to some.)
The activation headache aside, I’ve been pleased with our new cell service. We got to keep our numbers, the call quality has been good, and I’m now able to answer my inane trivial wonderings in the car.
I also haven’t paid for an app, and don’t plan on it.
Disclaimer: This post is not meant to be a recommendation for Straight Talk, simply an explanation of my experience for fellow frugalists out there looking to upgrade to a smartphone. I have not been compensated by any of the companies mentioned.
At a garage sale this month, several of my friends were inspecting a purse, trying to determine if it was “real.”
Well, it really is a purse, I mused to myself, not a figment of our imaginations.
No surprise, I don’t own a designer bag. Nor do I want one, because I’d rather have the money to go inside a “fake” bag. (I do have a thrift store-purchased purse imprinted with the word Prada. I pronounce it Pray-day.)
Some of my friends, however, do have Coach or Louis Vuitton bags. They talked about tell-tale signs of their authenticity while inspecting the real/not real garage sale bag.
Later, I started to wonder whether, in addition to real designer bags, these women also have fully funded retirement accounts.
Of course I don’t dare ask, or tell them about my own accounts. Because while it’s fine to talk about your $300 (or $700 or $2,000) handbag, it’s impolite or awkward to talk about the money you haven’t spent.
Why is this?
As a society, we’ve seen taboo subjects become table talk. Sex, politics and religion are all over my Facebook wall.
Money? Noooo. We don’t talk about our income, debt and savings. Even I don’t go into the specifics of what my family earns and has amassed.
But what if we started?
What if money became the new “stuff”? That instead of coveting our neighbor’s handbag, we were inspired to match her 401(k) balance? What if mutual funds were the new Marc Jacobs?
Could we create a new culture of financial freedom, where saving is admired more than spending, if we just opened up about it?
So to start, here’s a little bit of my truth: On a five-figure annual household income, my husband and I each automatically invest about $460 every month into our Roth IRAs. (*see note below)
When we retire 30 years from now, each one of these monthly contributions will be worth about $5,030, assuming an 8 percent rate of return.
I don’t share this to brag or boast. I’m just trying to turn the conversation away from Kate Spade and toward financial security. To show you it’s possible. To encourage you to plan for your future.
It’s a common fallacy that people who have expensive things have a lot of money. They might. Or they might have a lot of debt.
There is nothing wrong with buying designer bags (or high-tech toys or lux home furnishings), as long as you’re financially secure. That is, your debt is paid off, an emergency fund stashed, and you’re saving 10 percent to 15 percent of income or more for retirement.
But if you’re forgoing future savings for a Fendi, ask yourself: Which would I rather have when I’m 60?
And considering how hard a time people have telling “real” bags from “fake,” what’s it really worth?
*Note: The annual maximum contribution limit for an individual retirement account (IRA) in 2013 is $5,500, $6,500 if you’re age 50 or older.
Sherri Richards is a thrifty mom of two and reporter for The Forum. She blogs at http://topmom.areavoices.com
It was not a good week in the land of cash.
A convergence of expenses — mainly an empty gas tank and dog dish and an impulsive grocery store outing — left me holding the bag with not enough bills. So I wrote a check to cover my assets.
In the second week of giving up all my plastic, I spent $28 over my self-imposed $140 cash allowance.
While I didn’t use my plastic (technically a success that way), I discovered operating on cash doesn’t work well without some sort of structure, like an envelope system. I also slacked on writing down my outlays, so had to spend more time figuring out my weekly totals.
I filled up my car’s gas tank on Tuesday, earning a 3-cent-per-gallon discount by using cash. I only had one squirmy kid with me and there was no line in the convenience store, so it wasn’t as big of a headache as I’d feared.
On Wednesday, I needed to get more prescription food for our pooch. That cost $27.08. Also, I paid $13.50 in cash to the drop-in daycare, where Owen played while I visited the dentist (a check-up paid for by check).
I planned to spend about $45 when I went to the grocery store Thursday. I knew I was limited in cash, but shopped like I wasn’t. I was lured by excellent prices on produce, pop and Pop-tarts, and went off-list not considering the consequences. As I watched the total climb at the register, I quickly realized I was in over my head. My total was $60.86, more than I had in my wallet. I was too embarrassed and stubborn to put anything back, so I wrote a check.
A neighbor girl helped me out with the kids after school, so I needed to pay her. I’d promised Eve lunch at McDonald’s on Friday. And my favorite thrift store had a 49-cent sale Saturday, where I spent $3.14. That put my week’s total at $168.19 (not to mention my husband’s supermarket trip for Super Bowl snacks).
I suppose I could justify that I was $44 under budget in Week One, but my goal was to spend less than the $140 target each week. So this week, I’m penalizing myself for my extravagence. I’ll have only $112 to work with. I already spent $10.49 at the store this morning, a desperate run for toilet paper and coffee creamer.
Time to pinch my pennies.
It never failed. Every time I stopped to fill up my car with gas, I remembered the coupon for 4 cents off per gallon was still hanging on my refrigerator. Heck of a lot of good it did me there.
So I’ve started to keep those gas coupons, whether from the grocery store or a coupon mailer, in my car. That way they’ll be with me when I need them.
It may not seem like a big deal to save 50 cents on a tank of gas, but if you fill up weekly, that’s about $25 a year.
In my family, $25 is an extra contribution to one of the kids’ college savings accounts.
Now think if you could make five or 10 or 20 small changes that would save 50 cents a week. Suddenly you’ve got hundreds of extra dollars in the bank, provided you capitalize on them.
That is, transfer that extra money into a savings account to make sure it isn’t frittered away elsewhere.
It’s pretty painless to save 50 cents or more a week on groceries, entertainment and utilities. Find a 50-cent grocery coupon for something you were going to buy anyway, or switch to a generic brand. Trade a vending machine can of soda for a glass of water. Borrow books or movies from friends or the library. Turn the thermostat down a degree or two.
Go meatless for one or more meals per week. Considering most cuts of meat cost around $3 per pound, compared to $1 or less for protein-rich beans, this move saves quite a bit of money, not to mention it’s better for your health.
One small change my family made was to switch our city-issued garbage can from the medium to the small size, a savings of $3 per month, or $36 a year.
We never seemed to fill up the 64-gallon cart, largely because we take advantage of free curbside recycling.
Also, I think when you’re focused on saving money, you produce less waste. You don’t buy as much stuff, so there’s not as much packaging to throw away. Cooking at home results in a lot less garbage than takeout or delivery food containers.
Once you’ve made easy changes to save 50 cents or a dollar a week in several areas, think bigger.
How much could you save by making your own coffee or brown-bagging your lunch just one or two extra days each week? If it doesn’t seem like a lot, take that amount times 52, to think in terms of what you could save in the course of a year.
Also, tally small inflows of cash, such as the extra dollars you get recycling cans or selling things you don’t use. Collect your spare change and add it to the savings stash.
Every time you pass up on a tempting purchase for savings sake, whether it’s a candy bar or a new pair of leather boots, put that money aside, too.
Finding the smallest ways to trim your expenses is a good way to start saving, even if it’s just 50 cents at a time.
Sherri Richards is a thrifty mom of two. She blogs at www.topmom.areavoices.com.
If you don’t tell your dollars where to go, they’ll disappear. My husband and I found this to be true long before I read it in a Dave Ramsey book. It’s the reason that when you plan to save whatever’s left at the end of the month, there’s never anything left.
For years now, we’ve “paid ourselves first,” and amazingly, there always seems to be enough to go around. Today’s online banking features make it easier than ever. Every month, automatic transfers send money into our individual retirement accounts, money market and future car fund, before we even miss it.
But where should you tell those dollars to go first? Sometimes all of the things you need to save for seems like a never-ending list: retirement, college for the kids, an emergency fund, that trip to Italy or the down payment for a house.
It’s a matter of prioritizing your savings goals.
Last October, I wrote an article for The Forum about Ramsey’s Financial Peace University course, which was being offered at churches in the community. It was the first time I’d heard about his Seven Baby Steps, which lay out his top priorities for your finances.
I realized we were following them closely, but not exactly. We’d saved up an emergency fund (steps 1 and 3), were contributing 15 percent to our retirement (step 4), putting some in Eve’s college savings account (step 5) and making additional principal payments on our home (step 6).
But out of line with the steps was Craig’s lingering student loan payment. Ramsey would want us to get rid of that in step 2, before putting money toward retirement, college savings or paying off the house. My accountant husband, thinking in terms of interest rates and tax deductions, didn’t agree.
The student loan has since been paid off, and we’re still chipping away at our savings goals, even with a new baby and me working fewer hours.
So how should you save your dollars? Different financial writers offer different advice, but all have common themes.
First and foremost, they say you should have an emergency fund that could cover several months’ expenses. Some say three months; some say 12. Keep this money safe. We stash ours in a money market account at the same bank as our checking account.
It’s often advised to pay off your high-interest debt by “snowballing” your payments – putting the same amount toward the debt each month even as your balances decrease.
Then, put that money toward your retirement – ideally 10 or 15 percent of your income or more – before your kids’ college savings. Worst-case scenario, they can take out student loans. There are no loans for retirement.
Challenge yourself to max out a Roth IRA, contributing $5,000, next year. If that sounds impossible, consider this: Trimming $96 a week in wasteful spending – perhaps on eating out or fancy coffee or your own personal vice – and putting it into an IRA could earn you $49,678.65 in interest over 30 years, assuming an 8 percent return on your investment. Not retiring for 40 years? That $5,000 will grow to $121,366.93.
Paying yourself first can really pay off.
Before my husband, Craig, and I got a puppy six years ago, we had the conversation: How much would we be willing to spend to save the dog’s life?
We’d watched as Craig’s mom and her husband shelled out quite a bit on chemotherapy for their dog Lady. (They then started calling her Laptop, because that’s how the money was going to be spent.) Lady/Laptop, an older, large-breed dog, died about a year later.
I thought $1,000 was a fair figure. Craig was less generous, throwing out $500. We both agreed there was a financial limit. (And whether it’s right or wrong, we both agreed the limit was higher for our new cockapoo, Willow, than for our older, adopted cat.)
Fast-forward to last year, when a routine vet visit showed an unexpected problem in our puppy: Bladder stones. The solution? Surgery, at a price tag of about $1,400.
This tested our limit commitment. I couldn’t in good conscience put down a dog because she had crystals in her bladder. She was (and still is) a young dog for her breed, otherwise in good health. It wasn’t a life-threatening condition, but one that would cause Willow pain, and would inconvenience us with her urinary incontinence.
I decided to call around to a few different veterinary clinics to get quotes. (You do this when getting your car fixed, why not your animal?) Thankfully, another clinic in town could do the surgery for around $800, keeping our self-imposed limit in tact.
Now, fast-forward a little further to today. We’ve spent hundreds upon hundreds more on that mutt, for special foods, antibiotics, ultrasounds, urinalyses, etc. The stones just keep coming back. We’re planning another operation, frustrated to see our budget blown by the family beast but not willing to give her up, or give up on her.
It’s puppy love, I guess. What can you do?
Money Savin’ Mama has some ideas that may help you save money on your pets, even if our dollars keep getting thrown to the dog.
1) Before you get an animal, consider the true cost. It’s not just the adoption fee or the amount you pay the breeder. Factor in yearly food, grooming and vet bills. Some breeds are more prone to specific health problems. Could you afford a special needs pet? Check out the slideshow that accompanies this Kiplinger article on the cost of pets.
2) Set aside doggie dollars every month. Figure out how much you expect to spent on the pet per year, divide by 12, and deposit that much every month into a savings account. We’ve been earmarking money for the pets, which has kept us from going into debt on their account.
3) Research pet insurance. You might decide it’s a worthwhile expense for your family. MSN Money financial writer Liz Weston tackled the issue in this column.
4) Call around. Like I found, some veterinary clinics are more affordable than others. When facing this latest surgery, I asked our vet if it was possible to have veterinary students perform the surgery for a discount. She said that is a possibility in larger cities, like Minneapolis or Denver. Fargo-Moorhead has a low-cost spay/neuter organization, PAAWS.
5) Know your options. We’ll be declining the optional blood work and laser procedure with Willow’s upcoming surgery. Ask if an expense is necessary. If it’s optional, weigh the cost versus the benefit.
Yesterday, my 2-year-old daughter grabbed the checkbook cover that holds her savings account ledger and deposit/withdrawal slips from the kitchen table. I’d been updating it with her latest interest payment (16 cents, woo hoo!) and a deposit of some Christmas cash.
“What’s this?” Eve asked.
“It’s your checkbook,” I told her. She liked that answer.
I took the opportunity to instill an early money lesson. “It’s an account where you save money,” I explained. ”So then one day, if you want to buy something really special, you’ll have money to do that. Or maybe you want to keep saving it. Or maybe you want to give it to someone who really needs it.”
“I’m going to give money to you,” she said, pointing to me, “and to you,” pointing to her Papa, who was helping with a flooring project in our kitchen.
Atta kid. I’m going to remind her of that in about 14 years.
My husband and I have tried to be intentional with money lessons with Eve. She has a piggy bank, where I enthusiastically encourage her to drop the spare coins she finds from time to time. I’ve let her drop the envelope into the collection plate at church. We’ve looked at the different kinds of coins (she recognizes pennies and quarters) and I’ve tried to teach her about their monetary values.
But I don’t think that part has sunk in, largely because we haven’t ventured into one crucial side of money management – spending.
Eve knows money is for saving. I don’t think she knows it’s for spending. And I’m hesitant to go there. Saving is the difficult part. Spending is easy. Why should I encourage it? But if I don’t teach her to spend responsibly, who will? Not TV, certainly. Not our “stuff”-obsessed culture.
Obviously she’s with me when I buy groceries and toiletries and clothing, but I use plastic a lot. Like, all the time, just for convenience. I remember reading a column from a financial adviser about how some kids aren’t learning about money for this reason. When you pay cash, a kid observes you handing over money for things. When you pay with a credit or debit card, that card goes back in your wallet. You haven’t given up anything, in their eyes. They don’t grasp the exchange of currency.
Maybe it’s time to break open the bank and bring some of those quarters and pennies to the dollar store, let her pick out a toy, and hand over the coins. To show her the value of money.
That sort of lesson may be more important than knowing a quarter is worth 25 cents.
What lessons are you teaching your child about money? How have you tried to instill financial smarts with your kids?