Happy Leon Day!

Leon Day (that's "Noel" spelled backwards) is the midpoint in the year between one Christmas and the next. We're halfway there, folks, so if you want to give frugal/handmade presents it's time to start planning and preparing. If you need help getting in the mood, have a cup of hot spiced tea in a Santa mug and listen to some Christmas music:

I suggest propagating one of your favorite plants for those near and dear to you. Root a pothos or lavender cutting; divide your peace lily or mother-in-law tongue. Be on the look out for pots on clearance. You'll feel so proud of yourself come November when the stress of shopping is overwhelming those around you and you're all done with thoughtful handmade gifts ready.

I'm linking this post to Bleubeard and Elizabeth's weekly T Stands for Tuesday blogger gathering.

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ATCs (with the inspiration prompt listed before each one):

Christmas:

Random (not from a prompt):

I wish I had noticed that my scan of this one cut off the "s" in "appears". I'm not fixin' it now, though, and you'll just hafta take my word for it that it's on the actual card.

C:

Reflection:

Leaf or Petal:

Stencil:

Words to Live By:

Abstract:

Travel/Maps:

Bugs:

Most important lesson learned this week: If I'm going to use texture paste, I think I need to use a stronger substrate than index card.

Dark Financial Clouds and Blue Skies

This was written about a week ago:

We're doing the best we can but are sadly failing so far to live within our current means. We do have a pad in the checking account, but that's been gradually shrinking as outgo surpasses income. That just won't do. Plus we've been notified that The Husband's long-term care insurance premium is going to increase by about $45 a month. The one thing I can think of to do -and I hate to do it- is decrease the amount that's deducted from the paycheck for retirement savings.

I realize it's early days yet and we're only a couple of months into these new constraints, but it's frustrating when we cut back so much and it's still not enough. I wish there was a magic way to make this same amount of money go further. I'm not seeing much else we can do to cut expenses.

The dark cloud photo at the top of the post illustrates my current mood. I'd love suggestions and recommendations if anybody has them.

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This was written a few days later:

The Husband and I went over the expenses since the income cut-back and think we'll postpone cutting back on pension contributions for now and just continue to watch things. I hadn't taken into consideration that city and county property taxes and an increase in HOA fees that we paid in a lump sum had taken a toll. Things aren't as bad as I feared, and I just need to allow more time for it all to shake down. Patience and persistence, that's what I need. I was fretting, which isn't helpful. So the photo below illustrates my new current, more hopeful mood.

I'd still appreciate any suggestions and recommendations.

The moral is, Don't Panic! Slow and Steady! Persistence is its own reward! And all those other encouraging lessons you've heard a million times but completely ignore when you need them most. If you think things are going bad, reconsider, ask someone what they think, get your mind off of it for a while, have a soothing hot beverage, and come back to the problem when you're refreshed. It's never as bad as you thought it was. Well, almost never.

First World Problems

We're having to cut back -way, way back- but we're not homeless or hungry or lacking in anything really. We just have less than we're used to. Perspective is important.

Regarding cable: As we decided to drop the $20 a month cable package that gave us better access to world soccer games, we realized that we were able to keep some cable channels so we could better follow news, election coverage, and sports. Then we realized that we don't actually need cable for news and election coverage because we get BBC, Google News, and other alerts on our phones that keep us updated. We'll miss the sports on cable, but them's the breaks. We have decided to cut that cord completely, though right now we've just cut back to basic cable since they were going to charge us more for internet access alone than for this package. Isn't that nuts? Right now we're researching our internet options. This just shouldn't be so complicated.

Regarding utilities: We have a two-story townhouse with a single central unit for heating and cooling, which makes it hard to set the thermostat so that it's comfortable both upstairs and down. We're testing how warm we can keep the house so we save money but can still sleep, and we're using 72 as our night setting and 78 during the day. So far, so good. It's amazing how much difference a box fan makes.

Eating out: We're cutting back eating out to once a month, but that still means we're able to eat out once a month. Our July restaurant was the Route 64 Diner in Bolivar, TN. This month is my baptismal anniversary, and I'm still deciding where I want to go for that. It'll probably be one of the local pizza places we've been meaning to try.

The concept of frugality means we have enough so that cutting back is an option.

from The Atlantic:

Frugality is about appreciating simple pleasures and generally easing up in a society that encourages materialism and competitiveness.

...individuals’ frugality at the margins -one fewer latte here or there- matters less as the basic costs of living march ever higher. With that in mind, Ben Franklin comes off as a little naive when he wrote, “Beware of little expenses; A small leak will sink a great ship.” Small costs do add up, but they rarely amount to anything close to the big ones.

A lot also depends on the economic conditions people find themselves in. The U.S.’s median household income has been stagnant -even a recent uptick couldn’t bring the figure up to where it was back in 1999, after adjusting for inflation. And even moving up the earnings spectrum, families are feeling squeezed as they pour their time and money into housing and education -their best shot at providing their children with long-term financial security in an economy that can be cruel to the less-educated. In other words, pinching pennies is of limited value when there aren’t enough pennies to pinch in the first place.

Living a pared-down lifestyle necessarily means having a lifestyle to pare down.

I guess in trying to cut back because we have to unless we want to live on borrowed money we're not really living frugally in the sense some people mean it.

U.S. News and World Report illustrates this when they say,

Being frugal actually allows consumers to spend money on what they truly value while saving on the things they don't.

We're cutting back on things we want because we just don't have the money any more. There's a difference between that and getting rid of expenses so you can afford other things you'd rather have. We're cutting back to avoid debt. That article assumes you have the money but have decided to re-allocate it. That's not what's going on with us.

The Simple Dollar talks about frugality being motivated by choice or necessity:

sometimes frugality is a choice and sometimes it isn’t, but knowing how to do it well is helpful in both situations.

All I can say is this: a lot of the best strategies I’ve used to help myself stay afloat and get ahead in life worked (in some form) whether I was dirt poor or doing well. The big difference was in the results – sometimes it was needed to keep us afloat; other times it was useful to help us get ahead.

The core skillset and mindset of getting the most bang for the buck for everything and knowing how to cut corners has been helpful whether or not we were struggling to survive until the next paycheck or we were trying to stretch a moderate income to cover a lot of bills or we were trying to overcome a big pile of debt on a decent income or we were leveraging ourselves toward complete financial independence and early income on a debt-free life with a solid income. The same strategies worked.

I’m not going to pretend that frugal tactics are a magical wand that fixes all financial problems in individual lives or in society. It’s not.

Instead, think of frugality as a basic tool. It’s a claw hammer or a flat screwdriver. It’s something that can be used in a lot of different situations. Sure, some people will have much better tools for some jobs, but the reality is that frugality is an effective tool in a lot of situations. Like a flat-head screwdriver can open a bucket of paint or repair a bike or install a thermostat, frugality can step up whether you’re struggling to afford a basic grocery list or you’re just trying to figure out how to take the edge off of your $200,000 a year lifestyle.

In both cases, the principle is the same.

TreeHugger agrees with The Simple Dollar:

regardless of where you're at financially, frugal strategies always have a place.

The reason for the frugality isn't as important as the commitment to it. I'm grateful I've never been used to fine dining, designer clothes, and expensive vacations. I'm grateful that, though I'm missing some things, I'm enjoying what I have. I'm grateful we are debt free and have simple tastes. I can laugh at my first world problems, knowing how much worse off I could be. We have enough so that cutting back solves our financial issue without causing actual deprivation, and that's a blessing.

Debt

Back in the far distant times, we had debt. We've had credit card debt, car loans, a mortgage, etc. Years ago we decided that debt was dangerous, put us at the mercy of others in a way that we didn't like, and prevented us from saving. And the interest! It's hard to buy things and then pay more in interest than the item originally cost.

I discovered Dave Ramsey on the radio back in the early 1990s and found it supportive and helpful. He had an organized plan, and I bought a book and adapted his suggestions for our situation. At his website, he has instructions on getting out of debt using the "debt snowball" where you take the smallest debt and devote available resources to it until it's paid off. Then you devote those resources to paying off the next debt.

There are other Get-Out-Of-Debt programs, but sometimes it feels like those programs are actually selling something rather than providing help. Resources that give specific instructions without hyping low-interest credit cards are better. ListenMoneyMatters.com has articles on How to Destroy Your Debt. Time.com has it boiled down to 3 simple steps and offers reviews of the best books on the subject. The Art of Simple website connects living debt-free with living simply. The first two steps at The Balance are reflecting on how you got into debt and changing your spending habits.

It seems to me it doesn't much matter which system you use as long as you devote attention to it and commit to not borrowing more. I will say I'm talking reasonable levels of debt here. I can't imagine what it must be like to have the kind of medical debt some people have, for example.

Once out of debt, we were able to save up to replace our current cars. That's a glorious feeling, I'm telling you, to be able to write a check for a car. Not having those big monthly payments for cars and mortgage makes it so we can live more easily on less income. During this period of reduced income with no certainty it'll ever increase, it's such a comfort to not be burdened with debt.

Frugality

We live within our means, but those means will shrink next month as The Husband's financial package has been cut. These things go up and down and get rearranged in his line of work, so we try not to let a lower income get us down. It will, however, mean some changes. As we go through this first year of our decreased financial resources I'll post a few of the methods we've used and the resources we've been encouraged by in the past.

The first thing I did when we found out was to give up wine. Ever since wine was made available in grocery stores here I've been enjoying a glass with supper most nights. The cost of that mounts up, and it'll be easy enough to just not buy it any more.

The second thing we did was to drastically cut back on eating out. We love eating out and do it often, and by often I mean two or three times a week. We're going to aim at eating out once a month. That'll make our choices more meaningful, surely, and we've already decided where we'll go in June.

The third thing has been to look at other areas where there's room for cutting back. For example, I've discovered that our local library no longer requires a social security number to get or renew a library card. I will use the library's books instead of buying, and I'll ask for series books I like to own as birthday and Christmas presents.

It will be a challenge not to eat into the savings we've been building up, but I'm hopeful.

I'm so glad we're not in debt. Debt's a killer!

Less Stuff, More Happiness?

Yes, according to Graham Hill in this talk at ted.com:


As The Grandmother's stuff comes in we are getting rid of a lot of our own, but it feels more cluttered than ever. There's got to be a way to get rid of a lot of stuff and end up with a lot less stuff, but it's not working out that way.

The Story of Stuff

This struck a chord with me. I do have too much stuff, and that fact gets driven home more after the Christmas season than at any other time of year. Now is the time the Christmas decorations are packed away in way too many boxes waiting to go back up into the attic. That's a task I cannot do alone -I can't even get them upstairs on my own, much less up the pull-down stairs into the attic. I've got tree decorations dating back to elementary school and brownie scout craft projects that bring back fond memories, but do I need so much of it all? I've been getting rid of some every year and not buying new, but there is still too much. And that's just for Christmas! It's not that I can't purge. I can and have: we got rid of more stuff than many people own when we moved into this place. How, then, is it possible I still have so much?

"It wasn't always like this. The average U.S. person now consumes twice as much as they did 50 years ago. Ask your grandma. In her day stewardship, resourcefulness and thrift were valued."

"Each of us in the United States makes 4.5 pounds of garbage a day. That's twice what we each made 30 years ago."

Glenn Beck calls it "anti-capitalist". The New York Times calls it "a cheerful but brutal assessment of how much Americans waste". The video doesn't argue against capitalism at all. It argues for a change in method from a system that's wasteful and hazardous to one that's more sustainable.

The Story of Stuff Project has a web site, a blog and a Facebook page.

HT: re-nest

Frugal Dad's 7-Day Turnaround

The Frugal Dad is posting a week of turnaround tips. I thought I might go along for the ride and post the results at the end of the week.

Day 1: Take an inventory of your finances.

This is basically a look at net worth, taking all the debt totals and asset totals and looking at the difference. It's encouraging to me to be debt-free except for the mortgage -Thank you, Dave Ramsey! I find the mortgage scary, though, and think of it as a debt rather than an investment, so debt totals are something I'd like to have at zero.

Day 2: Build an emergency fund, quickly.

The first of Dave Ramsey's "Baby Steps" is to have $1,000 to start an Emergency Fund. The Frugal Dad is advocating a minimum of 3 months of living expenses or $10,000 for this fund. He recommends getting the fund up to the $1,000 mark within a month by selling stuff and taking opportunities to earn extra. I'm wondering what tomorrow's step will be. Dave's next step after the $1,000 emergency fund is paying off all debt except for the mortgage, after which he places the 3-6 month emergency fund. I'm curious about how The Frugal Dad's approach will differ at this point, since both plans have 7 points.

Day 3: Cut up those credit cards.

I actually did this one a while back. We canceled my card and canceled all the gas cards. But then I was stuck keeping enough cash around to pay for gas, and I don't like carrying around $20 bills. He suggests debit cards as a substitute, but I just don't trust debit cards. I'm afraid of having my checking account emptied and having my own legitimate checks bounce. With a credit card the billing errors can be worked out while I still keep my money in the checking account. I've since gotten a new credit card which is used only for gas and paid off every month. I feel better with this plan.

Dave Ramsey doesn't have the elimination of credit cards as one of his baby steps. It's more of a prequel to the baby steps for him.

Day 4: Slash your expenses.

Frugal Dad offers several specific suggestions:

Gym memberships are usually the first to go.

We've never had gym memberships, so this day is starting out easy.

Consider canceling the cable.

We did this several years ago. So far so good.

Adjust your W-4.

We make quarterly estimates. We do try to be accurate and send the correct amount, but some years we end up paying too much and some years we end up owing. During years when we send too much we just have it applied to the following year's tax estimates. We do not do our taxes ourselves, because we think it's too complicated and we are afraid of making a mistake. "Do right by the IRS" is a motto to live by.

Brown bag it.

We eat out only occasionally. Lunches out are paid for out of personal "allowances". We get a set amount out of each of The Husband's paychecks for personal discretionary spending.

None of these suggestions are radical. In addition to the things he lists we're also doing things like keeping the heat down, switching to fluorescents from traditional incandescent bulbs, using cold water and half the recommended amount of laundry detergent for all our laundry, using half the recommended amount of automatic dish-washing detergent, buying clothes at the Goodwill store, buying some items (toilet paper, paper towels, bar soap, shampoo and conditioner) at Sam's, eating much less meat, increasing the deductible on our car insurance, canceling all our magazine subscriptions, buying books at the local used book store rather than buying books new even for gifts for immediate family since none of us object to receiving used items as gifts...

Day 5: Start saving for retirement.

Saving 15% towards retirement is Dave Ramsey's 4th step, after the baby emergency fund, paying off all debt except for the mortgage and building up a 3-6 month emergency fund.

Frugal Dad makes lots of sense here, of course, suggesting we do the planning it takes to come up with a specific financial goal for retirement, that we take advantage of employer offerings and that we use the Roth IRA.

Day 6: Give the gift of education.

Frugal Dad had several posts over the week-end but none on the 7-Day Turnaround. It looks like the 7-Day Turnaround takes 9 days. (grin)

College funding is Dave Ramsey's 5th step. My first 2 kids got full scholarships, and we're trying to free up enough disposable income so we can cash-flow child #3 at a state school if he is not so fortunate. It's too late for us to have the kind of savings plan for college that Frugal Dad recommends, but we're committed to getting the kids through college without debt.

Day 7: Invest for an early retirement.

Since I'm over 50 and I "retired" for the first time when my first child was born, it's a bit late in time for me to plan ahead for an early retirement. In fact, I'm looking at returning with pleasure to the work force when my youngest goes to college.

Frugal Dad recommends investing outside of retirement accounts, remembering taxes and working towards having monthly expenses covered by investment income.

Dave Ramsey's plan has "Build Wealth and Give" as the 7th step, with nary a mention of retiring early, and his plan is closer to our needs. Because The Husband is a preacher with a love of the ministry, retirement is not the goal it might be for someone whose job is just a way to make money. The Husband's goal is not retirement, though we do realize how important it is to plan for the retirement that will someday be required.

Frugal Dad's plan, as Dave Ramsey's plan did before it, made me realize how obsessed I am with the mortgage. I do seem to live for the mortgage pay-off.

Now this is downsizing!

but can you really call this a home?

HT: OffbeatHomes

Give Me Warmth

You say my Christmas list needs more additions? Give me warmth for Christmas. I could be warmer, greener and save money all at the same time. What's not to like!

HT: Tree Hugger

Recycle Everything

Well, almost everything. Co-op America has information on how to recycle stuff you might not have realized was recyclable. Some of them are not practical for us. For example, this one:

6. Compact fluorescent bulbs: Take them to your local IKEA store for recycling: www.ikea.com.

would require quite a trek, as the closest Ikea store looks to be well over 300 miles away.

and when I search for a local place for composting bio-plastics as this point suggests:

7. Compostable bio-plastics: You probably won’t be able to compost these in your home compost bin or pile. Find a municipal composter to take them to at www.findacomposter.com.

I get a local site that specifically excludes compostable plastics. Hmmm...

But there are good ideas there. I especially like this one:

21. Stuff you just can’t recycle: When practical, send such items back to the manufacturer and tell them they need to manufacture products that close the waste loop responsibly.

I remember at one point hearing the suggestion that excess packaging be removed at the point of purchase and left at the store. The logic was that if everyone did that the stores would insist companies use more responsible and less bulky packaging. When I do it the store personnel always look at me funny.

HT: treehugger

Microwavable Popcorn

Microwave popcorn can apparently kill you, but I had no idea how easy it was to do-it-myself.

HT: Tree Hugger

As I think about it, wouldn't it be much easier to just make popcorn in a skillet on the stove the way Mother taught me? That way I can put a bit of oil in the skillet, but I don't have to smear oil all over the inside of a paper bag. Much less messy, I think.

I might could get rid of the microwave oven entirely at this rate.

Simplicity and Social Justice

Frugal for Life pointed me to the Simple Living Network News, a free online newsletter. There's an article in the current newsletter #59 called Simplicity & Social Justice: Thoughts On The Competitive Society which begins

Simplicity has often been attacked as a yuppie movement with no relevance to the poor. Certainly I would never give a talk to poor people about how to simplify their lives! The poor are trying to survive, and that's not what living simply is about. Simplicity is about making conscious choices for the well being of people and the planet, and poor people don't have the luxury of choices. (Ironically, of course, the planet is less harmed by poor people than by richer people who use up so many more resources.)

However, the concept of Simplicity is vital to helping poor people because Simplicity's underlying goal is to "put money in its place." People are impoverished because of the greediness of the rich.

It seems to be basically a promotional article for the book Slow is Beautiful, but it does look like the main thrust of this author is voluntary simplicity in the service of benefiting the poor rather than for the benefit of the environment, which is what I see most often these days.

I'm going to subscribe to the newsletter for a while to see how the purpose manifests itself in their articles.

Live Smaller

Here's a presentation on living in a smaller house, one that meets your basic needs. You can see the slides here and listen to an audio presentation here.

The trick might be finding such a house. New construction seems to focus on building the most square footage that will fit on the lot. I'd like to see more, maybe not 140 square foot homes like this presenter promotes, but well-planned multi-bedroom homes under 1400 square feet. What I see are 2- and 3-story houses that are over 4000 square feet. Yikes! What must those heating and cooling bills be like! In-fill developments seem to be concerned with bigger and bigger houses on smaller and smaller lots. Now I realize that settled communities are worried about decreases in property values that they think will result from higher density development, but I think we have to overcome those prejudices to provide simpler/smaller spaces in service of environmental responsibility. This does not have to mean that smaller houses on smaller lots will be cheaply made and ugly and so be bad for established neighborhoods. Some of the pictures I see of small homes are lovely homes. Some of them cost more per square foot and have higher quality features than the larger houses and McMansions.

There was a report at Time last year on small homes. NPR's report from last year is here. The New York Times had an article earlier this year on the subject. MSN has a report here.

My question would be, "Where will I keep my seasonal decorations?"

Photo from Flickr

Happy Anniversary, Dave Ramsey!

I'm a long-time fan of Dave, and he's celebrating his 15th anniversary of radio presence this week. Dave Ramsey has a message that is making a difference.

Here are his Baby Steps:

$1,000 to start an Emergency Fund

Pay off all debt using the Debt Snowball

Three to six months of expenses in savings

Invest 15% of household income into Roth IRAs and pre-tax retirement

College funding for children

Pay off home early

Build wealth and give!

He has written books, including The Total Money Makeover. We have a very old copy of The Financial Peace Planner.

Here's a sample of Dave at work:


3/10/2008: Moolanomy explains the process and offers links to other articles.

In Debt We Trust

HT: documentaries.ws

"It's our ignorance that gives them their power." (a quote from the video) The way we have allowed the credit-granting institutions to get so out of hand is shocking. Interest rates on credit cards are usurious, and the credit card terms are unbelievable. No other loan can arbitrarily raise the interest rate on money you've already borrowed.

This video covers debt from credit cards but also 1) shows interest rates for title loan businesses and how they target the poor and our military personel, 2) discusses the national debt and what it means for us, 3) describes our citizens as modern-day serfs and 4) much more. The amount of money that pours into Congress from the financial institutions and real estate developers appears to have effectively bought legislation favorable to those two industries at the expense of the rest of us.

I become a stronger fan of Dave Ramsey's Baby Steps every day.

William Shatner and Dave Ramsey

I'm a Dave Ramsey fan from way back and so my first thought when I saw William Shatner's financial advice in Money Magazine was, "Wow! That sounds just like Dave!"

Shatner says,

Intergalactic superstar
William Shatner, 75

Memorable money mistake: "When I was a young actor at Canada's Stratford Festival, one of the older actors told me that Canadian uranium is the future and you must buy into it. So I bought it on Thursday with the entire $500 I had saved.

"The following day, the Canadian prime minister said the country would no longer buy uranium. I was wiped out. It actually hurt my performance onstage. Since then I've led a very conservative financial life."

What money means to me: "For the longest time I could never get ahead more than a few hundred dollars, no matter how well I did or what job I got, and no matter how hard I tried to pare expenses down. With three kids, it was always very, very tight, and it was always a scramble for what was my next job.

"So I learned never to go into debt because I don't want those monthly payments to preoccupy my thoughts. I never spend more than what I can afford, and I don't owe anything."

What I tell my kids: "Don't buy anything on time, and that includes cars and houses."

HT for the Money Magazine article: Consumerism Commentary


I've never heard Dave Ramsey sing. I wonder if he's as good as Shatner: