Monthly Archives: May 2013

Link of the week: Spruce up your home on the cheap

One of the tips I brought up in Wednesday’s post about spring cleaning was that making your home more inviting can help you resist the urge to get out. For my family, finding ways to make ours more livable is even more paramount: We feel like we’re outgrowing our space, and we plan to buy a bigger place, but we know we’ve got to make our smallish condo work for us at least three or four more years.

If you’re facing a similar need, you might need to do more than just clean and declutter. If so, these tips from SavingAdvice.com might help. We’ve done most of these at one point or another during the past couple years. It’s still not an ideal place for us, but we’re making it work.

paintbrush

Image courtesy of Simon Howden / FreeDigitalPhotos.net

7 ways spring cleaning can help you save money

I’m not one of those people who has a set time each year when I do spring cleaning. (Good thing, too, with the decidedly unspringlike weather we’ve had this year!) But we’ve been purging some outgrown baby things lately, and have tried to throw a few grownup things on the pile as well. We’re also trying to get the condo spic ‘n’ span for a housesitter who will be here for two weeks while we’re on vacation. And, as I do with most things, I started pondering the money-saving benefits of this semi-annual semi-ritual.

You might find coins in the couch cushions! OK, that has maybe never happened to me, despite how many times I’ve seen it in ’50s sitcoms, comics, etc. about thrifty housewives. But, I’ve found the occasional half-used gift card in a pile of papers, or dollar bill stuck in the pocket of a coat I haven’t used for a while, or a receipt for something I’ve been meaning to return.

You can sell things you don’t need. We didn’t have too much luck selling our old things this time around, though we did make $35 on an old Airport Wi-Fi device we don’t use anymore. Craigslist is our preferred method for anything heavy or that we think someone would want to inspect; for lighter-weight or higher-value items, we use eBay. And we’ve had much more fruitful sell-offs than this one; it’s luck of the draw.

It’s a cheap way to do some good. What we couldn’t sell, we’ve given away, either on Freecycle or to the church-sponsored thrift store that’s kind enough to put a collection van in their parking lot every Sunday. If you want to give back to humanity but are trying to watch every penny, donating unwanted items is a cheap way to do it. And, it doesn’t hurt to get a receipt for tax purposes (which I often forget)! Even if you don’t itemize on your federal return, if you live in Minnesota and your charitable giving exceeds $500 for the year, you could still deduct part of it on your state return.

You could get a bigger tax return next year. Besides the charity receipts I already mentioned, going through your paperwork might turn up other valuable deductions for your taxes, whether it’s receipts for self-employment expenses, letters from charities you’ve donated to, etc. Find it now and put it in a box or folder, and you’ll be more likely to remember to use it during next year’s tax season.

You could avoid buying what you already have. We’ve gotten much better about this, but I used to be terrible about buying something and then, the next time I did a deep clean of my home (which wasn’t very often) I’d find I already had one — or two! — of the item. If you purge and organize as you clean, you’ll know what you have and could save yourself buying more of it before you need to.

You can shop in your closet. It’s somewhat of a cliche on personal-finance sites, but it’s so true: Sometimes, we Americans with our big spaces have so many clothes that we actually forget about some of them, so you might unearth some clothes that almost feel like new, helping quell the urge to shop. Spring cleaning for us usually involves putting sweaters away and pulling out shorts and sundresses, and getting rid of things that we can’t or don’t want to wear. Ironically, having fewer clothes makes me feel like I have more, or at least more clearly usable, choices getting dressed, because I don’t have to flip past those things I refuse to wear to find the clothes I like.

You won’t mind skipping the bar. Cleaning, organizing and purging are cheap ways to make your home feel refreshed, more pleasant to be in. You might be more compelled to have a few friends over for dinner versus going to a restaurant, or have a movie night at home instead of at a theater. I know when we were in the depths of our financial hole, we started holding “happy hour” at our condo every Friday. It was cheaper to buy a few bottles of booze and cook appetizers for everyone than it was to go to a bar and just pay for ourselves! It was fun and, best of all, when I told a friend (and fellow Ordinary Saver) about it recently, she said she remembered the happy hours as good times and hadn’t thought about it being so we could pinch pennies.

Those are all actual benefits I’ve enjoyed from a good thorough cleaning, but I’m sure there are even more benefits. Can you think of any?

clutter

Bill Longshaw / FreeDigitalPhotos.net

Link of the week: Five triggers that can cause you to overspend

Anytime you’re trying to be more disciplined in your life, there’s that little part of your brain that occasionally nudges you to just let go and not worry about it. Working out, eating a balanced diet,  creating an organized financial life, keeping a cleaner house: They all require energy (mental or physical) and a certain amount of restraint.

Here, Lifehacker names 5 prevalent triggers to overspending and gives you ways to talk yourself out of it. Their list, in short:

Dating

Entertaining

Trying to get in shape

Going on vacation

Being overworked

I can relate to all of these. I’ve tamed most of them, or at least figured out how to work them into the budget without completely derailing our progress, but that doesn’t mean these situations don’t still tempt me.

What about you? What are your weaknesses when it comes to spending, and have you found any good tactics to overcome them?

shopping

photostock / FreeDigitalPhotos.net

Emergency fund: How much is enough?

Until we hit our own financial crisis in 2007, I’d never even heard the term “emergency fund.” Then I started combing through personal finance sites and blogs, looking for ideas, encouragement and inspiration. The term was everywhere! Every financial guru, every regular person who watches their finances carefully, every advice article, mentioned having an emergency fund as a top priority.

I remember someone in the blogger community I frequent asking where everyone kept their emergency fund and how much it was, and I responded that my credit cards were my emergency fund. Even for a while after getting on the financial straight and narrow, I avoided putting money aside for emergencies, preferring to put every extra penny toward attacking our rather massive credit-card and consumer-debt burden. (We lucked out and did not have to add to our credit cards during that risky period.)

But we wanted to have children, and we didn’t want to wait as long as it would take to be completely free of consumer debt. So when I started trying to get pregnant, we started diverting most extra money toward savings instead of credit cards. It hurt a bit to see our progress slow, but I wanted to make sure we wouldn’t lose progress if something happened during the pregnancy or early years of parenthood.

So we basically saved whatever we could; I didn’t have a specific goal in mind because I wasn’t at all sure what would be a safe amount. I think we ended up between $6,000 and $7,000 before the baby was born — and luckily nothing too expensive and unexpected happened, so we managed to hold onto most of it and continue to build our fund.

But then I wasn’t sure where to stop. I had lots of other plans for our money, so I didn’t want to just keep shoveling it into savings. I read lots of different viewpoints. Some financial gurus say to keep just $1,000 in an emergency fund, and devote all other money to debt repayment until you’re debt-free except for mortgage. That didn’t sit well with me, because even after we paid off all our credit card and personal debts, we had tens of thousands of student loans left to pay off. And we wanted to have another baby. Were we really going to risk having a mere $1,000 in emergency money with two young kids?

Other sources advised that you should save the equivalent of three months’ worth of expenses — or six, or nine, or even a full year’s. Which should I choose? And, just as important, how do you determine what constitutes a month’s worth of expenses anyway?

I settled on three months, since I still think I should be paying off debt faster vs. just socking money away. Then I sat down with my budget, which you’ve already seen an example of. I made a copy and started deleting “wants” and anything else I thought we could do without. Spending money, travel, Xmas and birthday presents, cable, charitable donations, housecleaning, Netflix, retirement contributions, diaper service, our CSA share — those were easy choices because they were optional, or could at least be suspended during a short-term loss of income. Daycare costs — naturally they’d be eliminated too if all of us lost our jobs. Federal student loans could be deferred during a time of hardship, but private loans would need to be kept up on.

A couple things were easy “keeps.” Mortgage, condo dues and homeowner’s insurance. This whole emergency budget idea seemed pretty simple so far.

But then things got more complicated. What about haircuts? None of us can cut our own hair, and we’d want to look presentable for job-hunting. I decided to cut down the frequency of haircuts but keep it in the budget. Internet? Again, we could really use it for job-hunting. But then again, there’s always the library, and free Wi-Fi in certain establishments. I cut it. Cell phones? We’re on the cheapest-possible prepaid plans, and we’d definitely need those to field interview calls. Cell phones stayed. Groceries? If we really pared down on certain items and cheaped out on others, we could cut back temporarily, so I reduced that item.

Then I started thinking about the actual logistics, in the unlikely (but possible) case we all lost our jobs at the same time. Our bus passes are paid-for, or greatly reduced, by work and school. We have to start paying our own way. So bus passes got added into our emergency budget. Then there was the biggie: health insurance! Currently we and our kids are all covered by employer-sponsored plans, and the portion we pay is taken directly from our paycheck, so even that’s not part of our regular budget.

We’d definitely want to stay insured. A layoff could be a stumbling-block, but a serious injury or illness while uninsured could be catastrophic. So I added $400 per adult and $200 per child to our emergency budget to try and get healthcare. I’d gotten our emergency budget down to about $2500 per month, but suddenly it ballooned to over $4,000 per month!

So, that’s my baseline for a month’s worth of emergency spending. I bet no two people calculate it exactly the same way, but it’s what I came up with. I have three months’ worth saved, and when I worry that I should have more months saved for than that, I comfort myself with the thought that all of us losing our jobs at once is an extremely remote scenario. Chances are one or two of us would keep our jobs, and the laid-off would receive unemployment compensation, and we could stretch our emergency funds much longer.

But I still feel this is a cloudy and mysterious part of personal finance. How do you handle it?

Stormy weather

Stormy weather

Link of the week: How to talk about shared finances without fighting

This has come up more than once since I started being more open about my passion for personal finance, and especially since I made it official with this whole League of Ordinary Savers project. No one I know — including myself — who shares finances with another adult (or adults) has done so without having a single disagreement or argument about money.

In fact, if people in a relationship have never discussed any differences of opinion about how their money should be handled, my guess is that they’re avoiding an even deeper rift than people who are able to talk about it. Or they’re afraid of hurting or offending a loved one, because let’s face it: Money matters can feel very personal, and tied up in emotions, self-image and baggage from the past.

Well, here’s another excellent article from The Simple Dollar‘s Trent Hamm about how he and his wife finally figured out how to talk in depth about money without fighting. I couldn’t agree more with his suggestions. And I’d love to hear if you have any to add!

argument

artur84 / FreeDigitalPhotos.net