Hard Choices, Part 7

We’ve been pretty good about keeping big expenses low for a few months. Then, all of a sudden, new BIG needs/wants spring up.

1)  Replace Car #1- $25,000+? This would replace Car #1 which needs some costly repairs. We’re not sure it’s worth it.

2) Swim Lessons – $300 to $500? We need private lessons for special needs kiddos. $39 per lesson — yikes — but I’m shopping around.

3) NEW! Smartphones – $650 (?) for two. Our phones are crapping out. I am willing to go with something in the $200 range but I think my husband would prefer something higher-end like the Samsung Galaxy S5 or S6. The lowest price I’ve seen for the S5 is $400.

UPDATE: I think I’d rather pay closer to $100 and no more than $150 for a phone. Smartphone prices are crazy!

4) NEW! Lawyer – $5,000 –  This is a wild guess. I assume a first-time  consultation is free but we would need time/expertise to create a special needs trust and wills.

5) Apple software program – I know my husband wants to get a new program. No idea of cost. I’m including this at #5 because he’s been complaining about his current program for weeks.

6) Car #2  We spent $584.85 in 2015 for repairs.  More repairs are probably needed this year.

7) Foam mattress  – $2,000 –  This has been on the “hard choices” list for a long time. Now I want a new bed frame, too.  UPDATE: $600-700  – I looked into reader suggestions and have discovered a lot of quality mattresses that cost much less than the $2,000! It looks this might move up the list.

narrow-leg-upholstered-bed-frame-natural-c8) NEW! Bed frame – $551 –  We still haven’t upgraded our 10+ year old mattress but now I want a new bed frame, too. I like a simple, modern style like one in the photo (left). For the frame only, it’s $551. Headboard is sold separately. I’m happy with our headboard but not sure how it will look with a new bed frame. Lifestyle inflation at work!

Since my last report, I’ve gotten retainer replacement ($400) and hub caps on Car #2 ($70).

What big items are on your wish list? What would you prioritize if you were me?

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This is how you do a Shopping Ban

At the risk of sounding like a frugal know-it-all, I think I figured out an excellent way to stick to a clothing/shoes/handbag shopping ban.

I’m in the third week of my clothing/shoes/handbag shopping ban and it’s both hard and easy. It’s hard because I am addicted to Pinterest. At the same time, it’s easy because i’ve set some ‘rules’ that make it more like a game. Since many people try to enact shopping bans, I thought I would share my tactic. It works best for clothing/shoes/handbag bans.

Before the ban, I donated/sold/trashed a lot of clothing that did not work for me or were beyond repair.

I did an inventory of my remaining work clothes and list it out on one sheet. I included work clothes only because that’s where I spend the most. I also don’t own a lot of clothing in other categories such as party, exercise, or casual. Note: However, I will not buy items in any clothing category until I finish the ban.

Then I made this one simple rule: I will not buy any new clothes until I wear every item listed at least 5 times.

printable-number-5-outlineWhy 5? I thought 3 times would be too easy and 5 would present enough of a challenge. I don’t have a lot of clothes but i figured it would still take me months to wear every item 5 times. After I started the ban, I read that the average women only wear their clothes seven times, so those who are more ambitious might want to wear all their clothes at least seven times.

The reason this works for me, and might work well for others, is that it does not feel like an arbitrary ban. You have it in your power to reduce the shopping ban time, depending on how quickly you wear every item you own (for your chosen number of times).

1) You’re never really done de-cluttering. After a few weeks, I realize that one dress could prevent me from ending the ban.  It was still in good condition and I had paid good money for it, making me reluctant to part with it. I made one halfhearted attempt to sell it. When it didn’t sell, I realized that I have to donate it. It’s sitting in a donation bag as of this writing.

2) There’s a “gray area” in clothing.. It should be easy to wear everything you own 5x or just get rid of it. However, I own many items that I like enough to keep but don’t get as much wear because they’re not as versatile/comfortable/stylish as my favorites.

3) You can stop wearing favorites for inexplicable reasons.  There are many reasons that you don’t wear certain clothes. Some make sense — Tastes change, sizes change. Some make no sense — like developing a sudden dislike for 3/4 sleeve shirts.

olivia-palermo-michael-dumler-pfw-ss14-valentino (1)4) My eye for style is more fashion-forward than I am. Do you know the saying “your eyes are bigger than your stomach”? This refers to piling more food on your plate than you can actually eat. Well, this saying applies to my fashion sense. I tend to LOVE and buy slightly quirky pieces that I see on my fashion icons and then not be able to style it right. I’ve gotten better now at judging what I will actually wear, but I still own clothes that don’t get as much wear as they should.

5) I Love Sweater Weather. I have (had) too many sweaters for a mild climate. The good news is that this ban forced me to pare down my winter clothing. The bad news is that I doubt I will wear everything 5x until late Fall or Winter 2016.

As of this writing, I foresee my shopping ban ending in late 2016 or early 2015.

How To Save When Your Spouse Is Not Interested In Finance

It’s very common for couples to have different spending / saving styles. Read this if you want good suggestions on how to get your spouse to be more frugal. (I’m assuming you’re the frugal spouse since this is finance blog.) Keep reading this post if you’re tired of attempting money talks with a partner who would rather gouge out his/her own eyes than read money blogs.

Without further ado, here are my uncommon, alternative “solutions” on how to save when your spouse is not interested in money.

  1. Your spouse keeps spending on “extras” because he/she has no idea how much money is needed for life’s necessities or future goals like retirement.  You’ve tried doing monthly/quarterly money talks over a romantic dinner. You’ve tried posting a picture of your future house on the fridge. Nothing has worked.  My solution: It’s time to get pro-active and set aside an amount via direct deposit to a retirement account (or accounts) each month. With time, the spouse gets used to a lower, net income.  Once in a while, he/she will ask “where does all our money go?” but their lack of interest in financial things will prevent a true investigation.
  2. Your spouse hates the idea of budgets. My solution: Get a joint credit card and have you and your spouse put most of your spending on this. The financially-savvy spouse can keep track of this by reviewing monthly credit card as well as bank statements for cash withdrawals.  Your spouse doesn’t have to know details but you can casually mention whether you’re in the red or black that month.
  3. Your spouse does not shop sales and wouldn’t know if a markdown is good or not anyway. My solutions:  1) Share drugstore and supermarket loyalty cards.  Every few weeks, CVS emails special offers such as “Spend $15, Save $5” or “Save 15% off your entire purchase”.  These are printable but can also be sent directly to your loyalty card. My husband shops at CVS without regard to sales but he is more than happy to see extra savings at check-out. 2) Get your spouse to try generic brands. Over time, you’ll find many items that are just as good as brand names. This is an easy way to save on groceries/household goods without using coupons.  3) Finally, be your household’s shopping ninja. Stock up on necessities during sales. Even if only half the household is saving money, that’s better than none.

However, it’s important NOT to think of money as his and hers, i.e. separate. At the end of the day, your finances affect each other.  On a day to day level, if you both spend without regard to household income/savings, it will be extremely difficult to save money for “bigger” things such as vacations, cars or home renovations.  At retirement, you will both need to have enough money to live on. You can’t eat caviar while the other one eats tuna!

To summarize, if your spouse is not interested in fiances and you want to save, practice deceit, take on the saving ninja role, and let it go because trying to change someone is impossible.

Of course the dividing line between frugal and non-frugal isn’t really clear cut. In our case, we usually agree on big expenses (which is important). Also, with time, we’ve influenced each other in good ways. I’ve learned to spend more freely. My husband has learned to hate late fees with a passion. He also asks me to find coupon codes before making most online purchases. Baby steps, baby steps…

 

 

 

 

 

Money Lessons From De-cluttering

I suffer from “sunk-cost fallacy“.  The term is used in economics and business to refer to a cost that has already been incurred and cannot be recovered*.  For example, an investor bought a stock in a company for $100 a share. Subsequently, the company starts failing. The stock drops in price…$80 down to $70 down to $30 etc.. The investor holds onto the stock because s/he doesn’t want to lose more money (see loss aversion), regardless of the fact that the company is doing poorly.

How does this relate to de-cluttering efforts?  Like many people, I’ve held onto clothing and shoes that no longer fit, are not my style, have sentimental value (gift), wore once, etc.. simply because I attached a certain price to these items. Rationally, the money is already spent and if I don’t like the item, I should get rid of it. I could even sell it to recoup some of the cost. Instead I hold onto the clothing item because of sunk-cost fallacy.**

This weekend, I finally managed to really clear out my closet. For some items, I threw them in a donation bag and waited a few days to see if I would change my mind. Finally, I managed to donate these.

*Disclaimer: I’m not an economist. 

** Again, I’m not an economist.

I spent way too much on kids clothing.  I don’t need a shopping ban for myself. I need to rein in my spending on the kids! I now have 2 bins in the closet for “extra” clothing — i.e. clothes that fit them but are redundant. How many rugby polo shirts can a kid wear in one lifetime?

De-cluttering can save money. Now that things are grouped together and I can easily assess what I/we actually own, I feel like I will make much better spending decisions. Oh, I should give kudos to this book review post that helped me let go of more stuff.

BUT…

Re-organizing can cost money. Even though i focused on de-cluttering, I did buy some storage and shelving to better organize some closets. I can also understand the allure of the Container Store!  My Cost breakdown (so far):

  1. $30.45 for plastic storage carts
  2. $13.07 for hamper (RETURNED)
  3. $35.50 for stackable cubes (RETURNED)
  4. $25.00 for clothes to replace clothes I dumped (!)

I’m proud that I was able to re-purposed items to use as a charging station, book ends and miscellaneous storage.

All in all, I’m happy, probably way too happy, that I took the time to de-clutter and re-organize. The garage is another story for another day….

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Financial Guilt

1500 Days To Financial Freedom had a very interesting post about Financial Guilt, i.e. things that make you feel guilty about spending.  For Mrs. 1500, guilt was triggered by purchase of expensive bras.

“I’m a personal finance/frugality blogger. I tell people not to spend money on frivolous things. I give examples of people wasting money all the time and do so with more than just a touch of disdain. How can I spend $100 on bras???”

I used to feel that way a lot, and I still do sometimes. However, since I’ve been on the frugal path for years, I only allow guilt for only one type of purchase: Stuff that I bought and did not use. It can be a $6 bottle of vitamins or a $500 handbag. I don’t care. If I don’t use it, it’s a complete waste of money!

Here are some things I’ve wasted money in the past. I tend to feel guilty if I bought it and annoyed if my husband did!

1) Massage machine

2) Bike (used maybe 5 times)

3) 1-year Gym Membership (I did not go at all!)

4) various skin care creams

5) A few online clothing purchases that did not fit well (and were bought on eBay so non-returnable)

6) Toys that my kids never played with

7) Kitchen gadgets designed for one use. Luckily we don’t buy these type of things often.

9) Traffic or Parking tickets.

10) Books I read once (before I re-discovered the library)

11) Everything that is stuffed into storage totes and hasn’t been used in years.

That’s a long list for someone who proclaims to feel little guilt for purchases, isn’t it?

The Parable Of The Sofa

Once upon a time, a hard-working middle-class couple decided to replace their 10+ year old sofa. They fell in love with one from Room & Board but could not afford the price. With the R&B catalog in hand, they commissioned a furniture builder to create a duplicate of the sofa with minor customization for a lot less money.

The sofa was delivered and the couple were very happy.

However, after a few weeks, they decided that they also needed a slipcover. The slipcover for that sofa model was also expensive and not in quite the right color. They decided to save money by purchasing (on sale) a pre-made sofa cover from Slipcover.com.

surefitUnfortunately one slipcover was not enough to cover both of the sofa pillows. The wife decided to buy another slipcover of the same fabric.

For a few months, the couple were happy. Then one day, the wife said to the husband, “I hate that we have to adjust the slipcover all the time.”

He replied, “I know! I’ve been meaning to tell you that I hate that the slipcover is not quite even at the bottom edges.”

After some research, they paid $400 to have the two slipcovers made into a custom cover for their couch.

After the custom slipcover was made, the couple were quite happy…for a few months. Then they realized that their kids were messing up the beautiful couch and they bought a pet cover to throw over the custom-fitted slipcover. Yes, a cover over a cover.

In the end, they ended up spending more than the cost of the expensive Room & Board sofa and slipcover.

The moral of this story?

1) Perfectionism is the enemy of frugality.  The couple was so intent upon having the perfect sofa that they spent more on slipcovers and customization than on the sofa itself.

2) Sometimes your frugal ways end up costing you more money. The total cost for two Surefit pre-made slipcovers and tailoring costed more than the pricey store slipcover!

3) Good furniture and kids don’t go together well.

kids-ruined3

5 More Things The Middle-Class Do For Money

As I stated in an earlier post “5 Things The Middle-Class Do For Money“, the advice below is not intended for those at either ends of the financial spectrum — very rich or poor. This advice is intended for those who are “solidly middle-class” who sort of have their financial lives in order but need to maximize their savings to maintain a “middle-class” lifestyle.

We earned enough credit card rewards to pay for one airline ticket to Mexico.

We earned enough credit card rewards to pay for one airline ticket to Mexico.

1) Points Game – Many people use their credit card to get airline miles. While airlines have tight restrictions and black-out dates, it can still be worthwhile if you or someone in your household is a frequent traveler. I’m not an expert at this because 1) we don’t travel enough and 2) when we travel, we are not loyal to any particular airline.  For us, the priorities are cost, number of stops, flight time, and NOT having a connecting flight in Newark, otherwise known as “hell on earth”.

2) Credit Card rewards – If you pay off your credit card in full, you’ll be a fool not to use a rewards card, which is simply a credit card that rewards your spending with points. These points can add up quickly and be redeemed for gift cards, travel, cash back and more. Since I started paying attention to these rewards, I estimate that we earn about $200 – $400 per year.  One year, the reward was enough to pay for a plane ticket to sunny Mexico.

Use Ebates to earn cash when you shop online.

Use Ebates to earn cash when you shop online.

3) Ebates –  I’ve earned over $254.65 back since signing up years ago. It’s not a life-changing amount but it’s great to get extra money just for buying online. Once you sign up, you earn cash back on online purchases at participating stores. Percentage of cash back varies by store.  I think this is a no-brainer way to earn ‘extra’ money and I admit to sending referral links to friends and friendly acquaintances.

Tip: More than once, I’ve had to follow up with Ebates about giving me credit for the purchase. This can happen because it takes time for the store to report the purchase. I believe there is a delay to make sure people don’t just buy and return, yet get the credit.  Just something to watch out for!

4) Referrals – Speaking of referrals, every time I sign up for a new service, I check to see if there is a referral credit. I love forwarding referrals to friends. Most of the time, you and your friend both get a reward (if your friend signs up and spends X-amount within a certain timeframe).

5) Mail-In Rebates – While some people hate rebates, I don’t think it’s really much of a bother to do this.  All you have to do (usually) is complete a simple form and send in the receipt and UPC code. I do this soon after purchase so I don’t miss the deadline. I’m hoping more companies follow the lead of Johnson & Johnson’s rebate process. All you had to do was take a photo of the receipt and text/email it to a special inbox or number.

As for dollar amount, I prefer to go after rebate $15 or higher. I generally do not purchase things I wouldn’t normally buy, unless it’s something I wanted to try already.