Saturday, March 12, 2011


If there's one thing that I hope I've been getting across it's the idea of thinking ahead and shopping smart. Going to the grocery store with a list is an important idea, but that list isn't cast in stone. Why? Because often there are unadvertized sales when you get there, or things that were advertised are out of stock.

To help this make more sense, let me give concrete examples from our weekly shopping. This week, we went to a different store than we normally do because they have a good price on gas, which I needed. I only get gas about once a month (again, I live so close to work and the bus stop that I can walk in under 15 minutes, which I timed one day this past week-12 minutes), and we use that trip to stock up on a few things that this store has for less than our regular store.

When we got into the store, however, we hit the sales jackpot. A brand of turkey hot dogs that I like for my lunches because they taste good, have adequate protein, and are low fat/calorie, was on sale for $1 for a package of 10, no limit. Four packages gives me lunch for at least the next month, and saved me about $2 on the normal price.

Produce-a 4 pound bag of Texas oranges for $1, and asparagus for $1.47 a pound (probably my favorite vegetable and extremely low calorie.) Two pound bags of rice were priced at $.99, which is cheaper than the 10 and 20 pound bags by about $.10 a pound (normal price), so I got 3 bags, saving about $.60. Split peas were $.71 a pound, which is a good price, so 3 pounds of those, and dry pinto beans were $.62 a pound, at least $.10 a pound less than the lowest normal price, and I got 3 pounds of those.

And then, the pasta. One brand of small 7 oz bags were priced at 4/$1, which is about $.57 a pound and included stars and small shells, so I bought 8 bags, about 3.5 pounds for $2, saving about $1.12 over normal sale prices of $.89 a pound (they also has spaghetti and vermicelli and other pastas at this price). But even better, they had another brand of 7 oz. bags on clearance at $.16, and I picked up 8 bags of pente, shells, and alphabets for $1.28, saving about $1.84. Boxes of store brand mac and cheese at $.33 a box, and we bought 2 (not an item we normally buy, but fixed with a bit of pre-cooked ham, this makes a quick and cheap supper).

Other finds:
tomato sauce at $.25 a can (bought 6)
Cream of chicken and mushroom soup at $.54 a can (bought 6)
A very good quality brand of choc. chips for $1.50 (bought 6)

In addition, we bought the frozen ground turkey (7 chubs) and corn tortillas (50 ct) that are our main reason for stopping at this store, plus other produce, baking powder, baking soda, juice, bread, soy sauce,  butter (yes, the real thing), and milk. Our total for the week was $75.76, with more than $25 of that total spent on "pantry" items (i.e. bulk purchasing in advance.) Next week, I expect to spend about $40, unless there's an unusually good sale. I'd have bought larger quantities, but our cabinets are overflowing. I could feed two people well off what we bought for 3 weeks, with minor additions. And I saved about $15 above what I normally consider an acceptable price.

There are two things on our list that surprise people. One, the real butter. We go through it slowly, so I don't mind the extra cost, and I prefer the taste. Butter may or may not contribute to heart disease, but the hydrogenated fats in margarine have their own negative health issues. The other is the milk. We spend the extra to get organic milk. 

Why? A few years ago, two friends of mine suggested my older daughter's bad acne that nothing seemed to help was due to hormones in non-organic milk (dermatologists were out of the question), and she drank at least a gallon and a half a week. I was skeptical, but figured it was worth a try. Within a month, most of the acne had cleared up, and within three months, she rarely had a problem. I switched us completely over to it, because I occasionally had problems still in my 40s and my younger daughter was approaching the age when it usually starts. Since then, I've had almost no problem, and my younger daughter went through that stage with far less than I've ever seen on a member of my family. So, yes, I spend an extra $2 or $3 a week on it, but we don't have to buy acne medications or pay for a dermatologist. I don't know if the hormones in regular milk are the problem or not, all I know is it works. At this point, if we were so pinched for money that we couldn't afford the organic, I might give milk up entirely and take lots of extra calcium.

Friday, March 11, 2011

Limits of frugality

First, keep your thoughts with the people of Japan. From what I can tell, their government has responded very well to the emergency, and as bad as it appears to be, it could have been much worse.

Second, while I'm a serious tightwad, there are limits beyond which are just plain stupid if you have a choice. I'm thinking about people who refuse to evacuate in the face of current or possible natural disaster. Yes, many times, the actual result isn't QUITE as bad, but the warning was issued because there was the significant probability it could be. That's because scientists know that when A happens and B happens and you have C circumstance, you have the ingredients for D to happen, and X percent chance that it will be in this range of severity. You will almost never get a scientist to tell you that there is 100% chance of an outcome. Even if you do something phenominally stupid and normally fatal, a scientist would still probably hedge that bet to a little less than 100%. Why? Because the rope could break, something might break your fall, etc.

We in the US have a marvelous system of warnings from the USGS and the NWS. So don't be the moron who ignores the warning, or worse, who goes out to WATCH. The people who ignore hurricane warnings are the ones who baffle me the most. True, some people legitimately don't have the resources to truly evacuate, but most people do. It's always the people who refused to evacuate because "it won't be that bad" or they're afraid of looting who end up frantically calling for help in the middle of the hurricane, expecting other people to put themselves at serious risk. I'm of the rather cold-hearted opinion that anyone who refuses to listen to a warning should have to wait until the rescuers aren't at significant risk themselves, but I know several people who do this sort of work. If there is any possibility of reaching the people, they'll try. And a year later, the same people who were rescued will be campaigning to cut salaries or something else for those same rescuers.

So, the limits of frugality? People matter much more than things. Staying because of "looters?" Really? You want to risk your life, your family's lives, and all the people you potentially put at risk trying to help you, for a few possessions? I won't even get into the fact that you're more likely to arm the looters than actually hold them off.

I'm old enough to remember Mt. St. Helens going up, and there were a few people who refused to evacuate. I still hear some people talk about how terrible that was. In my view, they chose to commit suicide. However, I still feel  for the family who were outside what was supposed to be the high risk area (if I recall the details correctly), a reminder that the scientists give us what they think is the worst SIGNIFICANT risk and they had more limited experience in predicting the effected area. Unfortunately, it was even worse than they predicted (something to keep firmly in mind). I also consider the USGS vulcanologists who've been killed in their attempts to investigate and understand volcanic eruptions heroic.

My point is, don't be stupid. You cost yourself and others, possibly paying in lives. If you have to risk your own life, then go do it through something pointless like bungee jumping that doesn't risk anyone else.

Thursday, March 10, 2011

Building a cushion

Returning to the topic from a couple of days ago: 

Building a cushion for emergencies isn't magic, but it does take discipline. The first requirement is that you have to get your expenses down to no more than your income. Be realistic. Don't budget $75 for your utility bill when you know it's going to be at least $150. Then you have to push your expenses down, or your income up, at least a little.

If your family income is at least moderate, this shouldn't be too difficult. Look at discretionary spending first (i.e. do you really need to pay for that cell phone package that lets you get infinite downloads when you already have ordinary internet access? How about that $4000 cruise vacation instead of spending a few days in a nice hotel for $500?) Then look at "soft" expenses such as food and utilities. And while most people seem to rule out "hard" expenses, such as mortgage/rent and car payments. I think these expenses should be evaluated too. Do you really need a 5 bedroom/3 bath house when all the kids have left home? If so, can you take in a lodger or two to put some of that extra space to use? Aim to reduce those minimum monthly expenses to 80% or less of your take home income.

If your minimum monthly expenses are $2000, your ultimate goal is $6000. Don't panic, though, you can do it in bits, and the more you have saved, the more you'll be able to save (more about that later). Assuming you have a take home income of at least $2500, you should be able to put aside $100 a month ($25 a week) without a problem. PAY your savings first, just like it was a bill, then pay your basic expenses. Then pay your basic bills. You should have about $100 a week left for emergencies and entertainment. In just over a year and a half, you'll have $2000 for the first month's expenses saved.

Now, a brief detour for those with consumer debt. Do NOT touch that $2000 except in genuine emergency (replacing the big screen tv is not an emergency, by the way). Let it accumulate interest. Begin paying off your consumer debts with that $100. There are two main approaches. One pays off the smallest debt first, the other pays off the one with the highest interest rate first. Both have advantages, but although I generally favor paying off the high interest debt first, many people find that the thrill they get from completely paying off the smallest (fastest) debt motivates them to keep going. Whichever approach, apply that extra $100 to a single debt. When it's paid off, apply the $100 plus the minimum payment you were making to the next debt. If you have multiple credit cards, get rid of all but the one or two with the best terms. And by the way, if you have a lot of consumer debt, you really should consider taking at least $100 of your spending money to apply to this.

Once you're up to at least $200 toward the consumer debt, start putting $50 a month of that money into your emergency savings again. If you had no real consumer debt, continue putting your $100 a month. In just over 3 years, you'll have 2 months of emergency funds. In 4 and a half, you'll have the three months of emergency funds.

Want to get there faster? Put 10% or even 20% of your income into savings. At 10%-$250-you'll have the first month's expenses in 8 months. At 20%-$500-you'll reach that goal in 4 months. But don't cut yourself too short unless your consumer debt is high or you're concerned you may need that money soon. Remember you'll be gaining interest as well.

Now, how does savings make it easier to save? Say you have that $2000 saved up, and you're whittling down your consumer debt, and your car breaks down, a $800 repair bill. Without savings, you'd have to put that repair on the credit card. At $25 a month, it will take about 40 months to pay it off and cost about $1000 total. That same $25 a month put back into savings replaces the money in about 32 months, and gains interest at the same time.

If your take-home income is closer to $5000 a month, as long as you don't live someplace with an unusually high cost of living (i.e. NYC, Los Angeles), you ought to be able to get your basic expenses down below $4000 a month, at least temporarily. Save at least 15% of your takehome, $750 at $5000, and in 5 months, you'll have the first month's savings.

This may sound depressingly "poor", but it's really the opposite. If you can free yourself from debt, you'll be amazed at how much extra you have in your budget. And when you have savings, you have much less stress.

For those who are already near the edge, find even $25 a month to save. And cut expenses to the bone. Cut out sodas entirely, and that could get you $40 a month or more alone. Turn off the cable. Turn off the land line for the phone and get a single pay-as-you-go cell phone that stays at home to be used only when completely necessary. Sounds too harsh? If you're REALLY so near the edge that you can't save any money, then those things are luxuries. If you've already cut genuinely cut everything you can, find ways to make even tiny amounts of additional income. Ebay things, babysit, whatever it takes to make an extra $25 a month. In a year, you'll have $300. It may not be a huge amount, but it's a start.

Wednesday, March 9, 2011


Casseroles are not nearly as complicated as people tend to think. And you don't need a recipe, just a knowledge of combining ingredients. You basically need:

About equal amounts of:
cooked meat
starch (you can replace with a second vegetable or something else if topping is starchy)
something to hold it together (cream soup, sour cream, plain yogurt)-you may need as much as twice as much of this

toppings (cheese, crushed crackers, biscuit dough, hashbrowns, mashed potatoes)

This is a great way to use up leftovers, as long as you keep in mind what tastes well together. Shepherd's pie is a layered casserole, but most of the time, you'll mix the first four things together in a greased dish, season, and cover with the topping.

Had turkey and stuffing last night? Dice up leftover turkey, dice some carrots and onions, mix together in a greashed casserole dish, pour diluted cream of chicken soup over it, season with salt, pepper, and garlic salt, and cover with stuffing. Bake for 30 to 40 minutes (longer if a large casserole) at about 350F. You can also sprinkle cheese over the top of the stuffing.

If you top with mashed potatoes, the casserole should be done when they begin to brown. If you use biscuit dough, insert a knife into the center to make sure the dough is cooked through.

You can make a pot pie in much the same way. Use a nice, deep dish, mix the meat and several vegetables, and add a thick broth. Cover with biscuit dough.

You can also make non-meat casseroles that rely on legumes for the protein, but that's trickier. Unless you use pre-cooked beans and peas or fast-cooking split peas, the topping will probably be overcooked by the time the beans are done. I prefer slow-cooked bean dishes to casseroles.

Tuesday, March 8, 2011


No, this isn't about making new cushions for your couch. This is about a "cushion" in your budget. I think everyone should know how much they need, at minimum, to get through a month (rent or mortgage, minimum payments on CC, food and gas) and have at least 3 months worth of expenses saved in some accessible form. Why? This is your "cushion," what you "land" on if you suddenly lose your job or have a major unexpected expense. Even better, have 3 months in a safe, relatively liquid form (i.e. some sort of savings account) and another 3 to 9 months in something safe you can tap into in an emergency (i.e. CDs).

I hear lots of arguments against this. One is the bizarre idea that savings takes money out of circulation. Bull. Banks do not take in your money and store it in a vault somewhere. They reloan that money at a higher interest rate to businesses and new home and car buyers. If anything, you're stimulating the economy by making this credit available. 

OK, so you didn't spend it on consumer goods, so you didn't stimulate the economy that way. What a hypocritical argument that is, making spending money with a corporation into a patriotic act! Does that argument work both ways; do corporations line up to show their patriotism and loyalty? Ask yourself how many of their jobs have left the country, and how much tax do they actually pay? How many executives collect obscene bonuses when their companies lost money or laid off ordinary employees to "cut costs"? If you spend $500 on one of their gadgets this month, do they line up to help you out next month if your car breaks down?  Then decide if patriotism comes into.

Another argument is inflation. Maybe. However, I've looked at how they calculate inflation, and it is not a measure of basic costs of living. In a lot of ways, prices are a crap shoot. You buy 50 lbs of rice this month for $.45/lb, thinking you have a great deal. Then two months from now, a bumper harvest comes in or some corporation turns out to have hoarded rice to push up the price, now dumps it on the market, and the price drops to $.30/lb.

A lot of people tell me, oh, I'll just put a major expense on my credit card. Wow. You know, credit card companies now give you clear numbers on your statement showing what you pay over the life of the loan. Pay attention to it. The loan you get through a credit card is EXPENSIVE. I have one credit card, and that's all I want. I pay off the balance every single month, and in almost 11 years, I've only carried a balance once, in special circumstances, for about 4 months.

Why have some savings? Well, you go to work tomorrow and discover your employer closed down over the weekend. Time to apply for unemployment. In Texas, if you were making about $2500 a month on salary before taxes, you'll get a whopping $306 per week in benefits, or about $1300 a month (I multiply weekly by 4.3 since there's an extra week about every three months). Your after tax take home pay was about $2200 and say your basic expenses are $1900; the difference between unemployment and your expenses is $600. If you're well paid, keep in mind that the maximum weekly benefit in Texas appears to be $415. If you're an engineer making $80,000 a year, your income is going to drop dramatically to about 1/4 of what you were making.

I don't know what the current average job search is, but let's say 3 months. At $2500 salary, person A is going to need $1800 to bridge that 3 month gap (this assumes that he gets paid wages owed by the ex-employer).  If he already had a balance of $1800 on the CC (fairly average), he's now up to $3600. His new job only pays $2100 a month for an after tax income of about $1900, and he has to buy about $250 in new clothes for the job, all going on the CC. With the interest on the new credit card balance and a slightly longer commute, his expenses are now about $1950 a month. Ooops. Now he's making $50 less a month than he spends, with a credit card balance that's close to $4000 already.

This is where that cushion comes in. Person B had one and a half month's expenses saved and with no credit card balance, his expenses would have been about $20 less a month, $1880, and that $2820 he had saved would have covered the $580 difference between his expenses and unemployment for three months ($1740 from $2820 is $1080). The $250 for new clothes would leave him with $830 in savings. His expenses on the new job would still be about $20 less a month than the new take home pay. Whew. If he cuts expenses by about $30, in a bit over 3 years, he'll have rebuilt that cushion.

To me, the second person also has a better chance of finding a job faster and a better paid job at that. Why? Less stress. Person A is going to be frantically trying to figure out how to make ends meet, spending time on that worry instead of concentrating on the job search, and is more likely to take a poorer paying job just to have ANY income. Person B may be stressed, but he knows he has that cushion, and AFTER that, the credit card which has no balance. He's more focused on his job search and spends more time on it. If he'd had 3 months of expenses saved, there would be even less pressure. With 6 - 12 months of savings, this job loss has the potential to turn into an opportunity to start his own business or go into something new.

This post is already very long, so I'll try to cover how to build a cushion later this week.

Monday, March 7, 2011

Doing the math

I am, if you haven't already noticed, a math person. And I think a lack of comfort with basic math is a source of financial trouble for a lot of people. I'm not saying that, presented with a math problem, that they can't do it. But they don't think in those terms, and they make a fuzzy (often very wrong) estimate or judgement rather than actually figuring out the true savings. For example, be a little cautious about the "per unit" pricing in grocery stores. I have occasionally seen one that was mispriced. If a one pound package of something is $1.29 (unit pricing shows as $.13 an ounce) and the one pound package of the same item next to it is $1.89 (unit pricing shows as $.11 an ounce), the first one should not cost more per ounce. At least not in this universe...

OK, double check the package weights, then pull out your handy calculator. The packages are one pound which is 16 ounces (I'm using typical US measures). You need to change the price from per pound to per ounce. So, $1.29 divided by 16 is $.0806, or eight cents an ounce. $1.89 divided by 16 is $.1181 or twelve cents an ounce. So, the first one was obviously calculated wrong. But it turns out that someone also creatively chose to round down on the second item. It may not look like much difference, but $.11 by 16 is actually $1.76, $.13 less per package, a noticeable difference.

To calculate which things are most worth doing to save money in purely practical terms, do the math on that as well. Figure out how long it takes to do or make the item, work out how much it costs you to make, then how many you could make in an hour to work out your "hourly" wage. 

For example, I can make my recycled jeans tote in about 15 minutes, probably less, so I could make 4 in an hour. The fabric is free, and I pay about $.50 for the strapping for the handle and maybe $.05 for the thread. I could probably sell one of these for at least $2.50. Subtract the cost of the materials, $.55, from $2.50, and I have $1.95 profit per bag left. Multiply by 4, and my "hourly" is $7.80. A reasonable return, and there's the pleasure I get in making them myself and the satisfaction of getting a little more out of that pair of jeans.

However, go further: if I bought a bag like this for $2.50, I'd have to pay sales tax (8.25% in my area), adding $.21 for $2.71. AND don't forget you're buying in after-tax dollars. The SS would be about $.22, and income tax in the 10% bracket would be about $.33, bringing us up to $3.26 in pre-tax income to buy that bag. This is the real cost you should calculate for your hourly "wage" in making the bags. You'd have to make more than $13.04 per hour to make the commercial bag "cheaper."

Whether this is worth it to you is, of course, relative. If you make $40 an hour and can get all the hours you want, this isn't worth your time purely as a money-saver. If you make less than this per hour or can only get a limited number of work hours, it's definitely worth your time, assuming you need the bag or can use it or gift it. If you're unemployed with limited prospects right now, this could be a small microbusiness, bringing you in a few dollars extra. And if you're a Bill Gates type, can I suggest that your time might be better spent thinking of ways to help CREATE jobs in the US, which would incidentally create more customers for you (still the biggest market in the world?) If the concept is confusing, call me, and I can explain in simple terms...
I'm blessed to come from a family in which I think everyone has a natural "feel" for basic arithmetic, including ones who seem to think that they aren't that sharp (they unfortunately compare themselves to members of the family rather than the general population). And in my family, math was practical: I sometimes think we got the idea of APPLYING math to the real world in our formula. If you weren't that fortunate, keep in mind that recognizing a weakness is the first step to finding a way to compensate or overcome it. For this purpose, what you need are basic arithmetic skills and the much-neglected ingredient, COMMON SENSE. If you're multiplying $2.28 by 3, and your answer isn't more than $6 (the first number of the price multiplied by 3), then you obviously need to check your math. If the first number is $8 or larger ($2 times 4), then you may need to check your math again since $2.28 is much closer to $2 than $3. If you know you aren't great with math, check yourself with a calculator. Twice. Or three times. And always carry a calculator into the store.

Sunday, March 6, 2011

Local thinking

Local thinking is how I describe finding creative strategies for your particular circumstances. I can give you recipes all day for things that are money-saving for me, but if ground turkey is $3 a pound rather than $1.29 a pound where you live, those ideas aren't going to be as helpful for you. What you can get from the ideas are a philosophy to help you adapt to your local circumstances. Ground meat is ground meat, and hamburger and ground turkey and ground pork can frequently be interchanged. In a dish with a lot of seasonings, one ground meat is pretty much the same as another.

So, you found a really fantastic sounding recipe, but it calls for ground sirloin, portabella mushrooms, some obscure goat cheese that's $15 a pound, and fresh tarragon and rosemary. You calculate the cost per serving and decide it would be cheaper to go out for steak. Well, wait. Take a critical look at the recipe. Does it really NEED ground sirloin? Will a cheaper form of ground beef, or even ground turkey, work? Portabellas are lovely, but ordinary white mushrooms might substitute. Find out what the cheapest close match to the cheese is (we've found that cheddar, mozarella, and monterey jack can be substituted for most things). And while not AS good, often dried herbs can be substituted. With substitutes, this dish might be made for less than half the original cost and be ALMOST as good. If the gourmet quality food is more important to you, then simply look at another area of your life to cut back in.

Learn what will substitute well for other ingredients, and be willing to experiment. Just because a recipe calls for Pink Lady apples doesn't mean that's the only thing you can use. However, in general, you can only make limited changes, if any, to the proportions of ingredients in a baking recipe, and any changes in the type of flour, for instance, has to be carefully considered. Wheat flours, white or whole wheat, have qualities that make it good for baking bread that many other flours don't share. Honey and sugar can be substituted for each other sometimes, but it requires adjustments to the liquids in a recipe.