Category Archives: making good choices

on being frugal

A quick check-in over here, I am blogging in other places these days now that we have a kid. I was hoping it would be easy to keep to a budget with a baby (“they’re little and they don’t need much!”) but it is really, really difficult not to spend a lot on this little project…  and our house is now full of plastic and single-purpose baby specific furniture. Eeek!

 

Just found this piece over at wisebread – on being frugal. I think it is solidly written.

A Step-by-Step Guide for When Friends Ask for Help Being Frugal (Mikey Rox, Wisebread)

WE’RE DOING IT WRONG

“We’re doing it wrong.”

It’s our joke as a couple

The thing we say

When what we really mean is

“Debt has left us black-eyed and bleeding.”

 

It’s not really keeping up with the Joneses.

It isn’t about your vacations or your fancy houses – yes, plural?!

Your new cars or your HDTVs.

(Though we make our secret faces

When we read about them in your Christmas letters.)

 

When we lean together and whisper

– oh, we can be so snarky –

It comes out “We’re doing it wrong”

But what we’re really saying is

“We’re trying to do it right.

 

$90,000 to pay off, and we’re only

Two people working hard with four hands

And eight (closed) credit cards and

Just as many part-time jobs

And only 24 hours in a day.

 

So we crack our jokes, share our secret battle cry.

We’re strong enough to be debt-free for good,

And if “doing it wrong” looks an awful lot

Like wearing dollar shirts and watching Redbox,

Then I guess you can keep your Hollister.

 

When debt’s gone

 – we’re still learning to drop the “if” -

We both know it’s not the things we crave.

It’s the freedom we envy.

To do it wrong ourselves if we want.

 

Or to do it right.

 

“WE’RE DOING IT WRONG” by Joan Otto
source

no spend month 2012

It’s been a year since we declared being debt free, and in that time we have had a baby, quadrupled our rented house footage, and have been able to stop scrutinizing and questioning every penny spent. Although we currently have a fully funded emergency fund, we find ourselves running short on cash after furnishing a larger place (our previous cottage was tiny and lovely and fully furnished with built-ins) and paying for all the baby stuff we never thought we would want to have around.

Every year or so Ali and I find ourselves in a place of wanting to break bad habits and re-evaluate our life decisions by putting a freeze on spending activity. This is not difficult for Ali who is the typical dude who will question (for example) why he needs new clothes when the soles are falling off his old shoes. I’m the kind of gal who is like “oh, I’m bored? how about a trip to TARGET?!”

Sooooooo, since late August we have declared a spending freeze on everything except the necessaries (groceries, toiletries, gas, etc) with a nod to the idea that we should be using things up before buying new.

This has been extremely difficult for me! I laughed when I bought the cup of fresh squeezed lemonade from the girls at their family’s yard sale for $0.25, but I didn’t laugh when I spent $200 on furniture. I’m annoyed and freshly aware of how retailers use sales and email coupon codes that expire “tomorrow!” to try to entice impulse purchases with the justification that it “might not go on sale again.”

Action steps: I’m taking a deep breath and stepping back… unsubscribing from email lists and daily deal sites and RSS feeds from those who focus on deals, because it encourages me to want to spend money on something just because it is a good price. Our checking account balance is low enough right now that I risk fees if I use the cards again so that is warning enough to keep the purchases at bay. We’re carrying cash for groceries and stopping to let each transaction hurt a little rather than provide the dopamine rush of swiping the plastic for the magic free money tree.

I don’t really have a lot to say about this yet, but I will admit that I have lost the frugal budgeteer edge I had gained during our project – we are back to old consumption habits and impulse purchases that are impeding our timeline for putting together a down payment on a house (presumably our next big financial move). I don’t mind renting but I would like the option to buy when the time is right.

“When you start FEELING money, you handle it differently than when you’re just doing a transaction to get some stuff.”

The Oregonian article has opened up some new discussion with our friends and family who are thinking again about their own relationship to debt. I have enjoyed clarifying some of the more confusing points of our project, and debating some of the more controversial aspects of the feature with people. What it boils down to for me is that even though we were able to pay down an unusually large amount of debt in a relatively short amount of time, the principals we applied can make a difference in any person’s life, scaled to the right amount for each situation.

Using cash and getting rid of credit cards is a big part of the Financial Peace formula, and although I don’t want to get preachy about it, I agree with Dave Ramsey’s take on why cash-based transactions are an incredibly important part of the equation.

“Here’s the problem: when you don’t pay cash for things, you do not feel money. You do not emotionally, spiritually, relationally register the transaction. You’ve got to learn to feel money again, because when you do not feel money, you do stupid things with money. When it doesn’t register in your spirit that the money is leaving you… ” -03/15/2012 podcast at 12:12

“Personal finance is about 80% behavior. It’s only about 20% head knowledge. Until you learn to do things that modify your behaviors and cause you to control your behaviors… until you learn to do that, you WILL struggle with money. Lots of studies have been done that show that when you pay with cash, you will spend considerably less than when you pay with plastic of any kind.” -03/15/2012 podcast at 13:48

March 15, 2012 Podcast of the Dave Ramsey Show
skip to 11:04-19:55 for a listener question abut using a debit card versus cash for purchases such as gas

We have friends who want to use credit cards to keep their credit score up, to gain points and perks, and to feel safe in the case of emergency. Every situation is different. Using cash is a lot more difficult (consider buying a house, for example) and seemingly brings more risk, but with a reasonable emergency fund in place and delayed gratification on some larger purchases until you have the cash to pay for them, it has a big payoff value. Without plastic, you can’t spend money you don’t have. OUCH!

If you’re interested in hearing more everyday advice about finances, I recommend* the Dave Ramsey Show podcast. On Fridays they take calls from real life families who have paid off their debt – and discuss specifics on salary, lifestyle choices, and advice to others who want to become debt free.

*Dave Ramsey’s on-air communication style (and politics) are not for everyone, but in the end he delivers a much needed direct challenge to the excuses many of us use to justify a lifestyle of convenience over freedom. Sometimes he comes off as a real jerk!

Free Events in Portland, Oregon

When you’re working on eliminating debt, it’s important to keep your entertainment options open. Luckily, Portland is full of incredible opportunities on a very regular basis.

Here are some resources to find free events in Portland, Oregon.

Minimalist Holiday: White Friday

Source article here. by Miss Minimalist

As you might guess, I’m not a fan of Black Friday. I don’t like crowds, shopping, excess consumerism, or stores that make their employees work late night, early morning, or—worst of all—Thanksgiving hours in service to corporate profits.

That lovely little Friday, so wonderfully placed between a holiday and weekend, deserves better. And so, in the spirit ofminsumerism and consumer disobedience, I propose we turn Black Friday on its head and embrace the opposite of everything it represents: please join me in celebrating White Friday instead.

Rather than a day of consumer frenzy, White Friday will be a day of clarity, peace, and reflection. (Think of the calm, contemplative effect of a white-walled room, versus one stacked top-to-bottom with shelves of mass-produced goods.) We’ll buy nothing, and continue our Thanksgiving gratitude for the abundance already in our lives.

Here’s some other ways to turn a Black day of consumerism into a White day of serenity:

Clear the clutter. Instead of bringing more stuff into your home, clear stuff out. Take the day to tackle a decluttering project, like your closet, basement, or attic. It feels a lot better to send a carload to charity, than stash away a carload of shopping.

Clear the dirt. Do a deep house-cleaning in preparation for the holidays. Get into those dusty corners you ignore during the year, and scrub them spotless. Such a top-to-bottom cleansing is an important purification rite in many cultures, and is good for the spirit as well as the home.

Clear your schedule. Instead of getting up at the crack of dawn to jostle crowds for bargains, sleep in, slow down, and spend the day with loved ones. Alternatively, free up your day to volunteer for a good cause.

Clear your debts. Rather than increase your credit card balance, take steps to pay it off. Review your finances, and plan how you can start the new year on more fiscally-sound footing. Propose a no-gift holiday to your friends and family, and emphasize spending time together over spending money.

Clear your mind. Instead of stressing about the upcoming holiday season, take a long bath or leisurely walk to clear your mind. Turn off the TV, skip the newspaper, don’t go online—anything to avoid being bombarded with advertisements and marketing.

Clear your soul. Reconnect with your spiritual side: meditate, attend a religious service, enjoy the gifts of nature. Spend the day not in pursuit of discounts, but in pursuit of truth, beauty, and meaning.

This Friday, let’s forget about keeping corporations in the black. Rather than go down the dark road of debt, delusion, and environmental destruction that goes hand-in-hand with consumerism, let’s do the opposite. Let’s make it a day to live lightly, act serenely, and make the world a little brighter for ourselves and others.

-Miss Minimalist

Source article here.

What I’ve Been Reading: Simplicity, Money, Holiday Prep, and more…

I have been collecting links to share with you, and the list has grown so huge I am going to break it down by section. These posts basically represent the types of reading I do in addition to photography and design related books and sites.

SIMPLICITY

HOLIDAY SPENDING

MONEY in GENERAL

BANKING

MISCELLANEOUS

Enjoy! Hope you find something here useful.

Megan Clark on successful self-employment

This guest post is written by Megan Clark, a successful entrepreneur in Vancouver, Washington. Megan and I clicked when we realized that we were both working on similarly aggressive financial goals for the year, and that we both have many opinions in the discussion of what is means to have the consistency of a 8-to-5 job  versus living in the autonomy of running your own freelance business. Megan is the Owner and Designer of Clark & Company, Founder of The Exceptional Creative and Co-Founder and Partner of hi, friend.

Photo: Jordan Philips

___________________________________

Being self-employed was something I always knew I would do; I assumed I would ease into it while working a full-time job elsewhere. Maybe over the course of five or ten years I would ramp up my own studio and finally take the leap, with a large stash of cash in the bank and tons of relevant design experience under my belt. As it turns out, the entire going-out-on-my-own process was majorly abbreviated and happened much sooner than anticipated. From the time there was any hint of something amiss at the ad agency I was working for as Junior Art Director to my last day and termination letter was a mere three weeks. I had only been out of school for two and a half years at that time.

Once I got over my immediate shock, the logistics of being laid off were the most overwhelming component by far. Where would I set up my office? How could I afford a new computer? What about a printer? Fax machine? Business cards? Health insurance? My investment accounts? Should I be collecting unemployment?

Drumming up business wasn’t easy either, but I considered it easier than answering all of the previously stated questions. While working at the ad agency, I worked nights and weekends with other clients; many small start-up companies who couldn’t afford a full-blown studio to do their work came to me. When I suddenly had a full-time schedule to fill I let them know I was available and word spread quickly. Many of them sent me more work and several passed my information along to others who needed my help.

Interestingly enough, it wasn’t until about six months later that I made the leap to commit 100% of my efforts to myself rather than sort of working for myself and sort of trying to find a “real job”, too. At that turning point I chose myself and I knew that the path ahead would be tumultuous, but equally rewarding.

Lesson Learned: Choose yourself.

About six months after that pivotal moment, a copy of The Total Money Makeover by Dave Ramsey landed in my hands. I devoured it like a hungry, hungry hippo (or rhino, perhaps?). My husband and I have been working our way toward financial freedom since. We listed our debts smallest to largest and have paid off five of the six initially shown our our chart.


Our chart isn’t nearly as tidy as Spencer, but it does the trick. This thing’s already more than two years old. We might just frame it once we’re done. The smiley face stickers mean we’ve completed that particular debt. Five down, one to go!

Recently, I had the realization that for many the supposed security of a full-time gig working for someone else is actually a limitation in disguise. Yes, the check may auto-deposit into your account twice a month, but literally one-third of your time is consumed by your commitment. The other third is spent sleeping and that doesn’t leave much room for making money elsewhere.

Lesson Learned: Security = Limitation

By no means have I over-earned what I was making on salary at the agency every month, but over the course of a year I absolutely do. Generally speaking, when you work for yourself, the harder and longer you work the more you make. Not all hours are billable, obviously, but the rate at which one can bill when one is self-employed and an expert in one’s field is typically high enough that it compensates for the time spent on administrative duties, business planning, sales, and so forth. Free agent paychecks may be more sporadic and varying in amount than a regular payroll check, but they pay the bills just as well… and sometimes better.

Over the last three years I have started three different companies. (I’m planning to slow down in 2012, I think…) Each of these companies uses a different method for making money, but all fall into a overall model I’d like to develop. That model is illustrated by a quadrant. The “Revenue Quadrant” comes from The Free Agent Formula, a kit that’s a must-have for any free agent. Here’s what it looks like:



The Revenue Quadrant can be found in Chapter 3 of The Free Agent Formula, available here. Copyright Reach Group LLC.


Lesson Learned: Diversify your income streams.


A secondary tool my husband and I have worked with through our Total Money Makeover is called Whiteboard Accounting. This concept was introduced to me by Frank Chimero, a renowned illustrator and design thinker in Portland, Oregon.

The Whiteboard Accounting process is as follows (from Frank’s blog):
—–
•    Buy a whiteboard. Any size you want. I’d say maybe something about 11×14”
•    Split it into 12 sections. These are months.
•    Figure out how much dough you need to make each month to meet costs. Don’t forget to set aside a bit of cash for retirement, savings, an emergency fund, money for buying the occasional cup of coffee out. If you’re super lazy and don’t feel like exerting effort, take your rent and multiply it by 5.
•    Have that number for each month? OK. Let’s say it’s $1,000. (Just for the sake of example.) In the box you’ve drawn for each month, you’d write $100 ten times. (One hundred bucks multiplied by ten is a thousand bucks. Get it? We’re visualizing our income!)
•    As you land jobs and as checks come in, you erase $100s from the board. I get an illustration gig. It pays $400. I erase 4 $100 off the board. Repeat ad nauseam.

The thing is, once you erase all the $100 in the month of January, you’re done. Stupid job comes into your inbox, but January is cleared out? Say no! Land a job on January 20th that you really want to take, but you’ve already cleared out the month? Start erasing 100s in February!
—–

Frank described this on his blog (which you can read more of here), but I took it and made it my own. The original idea is to be implemented so you know when you can afford to say “NO” to work. In our case, Whiteboard Accounting is used so we can visualize our income goals and cross off our progress each month. If we over-earn our goals, first we say, “Hallelujah!” and draw a smiley face, then we take whatever is above and beyond and throw it toward the debt we’re on in our debt snowball.


Smiley faces are good. They mean that we over-earned our monthly income goal. Hallelujah!

My job has enabled us to get out of debt at an accelerated rate, but I love it for more reasons than that. I always say I’m ruined because I’ll never be able to work for anyone else… unless it’s an utterly perfect job. As it stands, I have the freedom, flexibility and control to make my job exactly what I’d like it to be. Decision-making is a breeze, relatively speaking. There are no meetings, committees or ballots necessary. Whatever I do, it’s something that I said “yes” to, not what I was volunteered for my someone above me.

It’s not all rainbows and butterflies, but it’s pretty darn good. The days I feel like a lone ranger, need to make a tough decision to delegate work, face budgeting challenges or realize I may never again enjoy a paid vacation or holiday, I remember why I chose myself all those years ago. That thought never fails to put a smile on my face and a spring in my step. I am doing what I love and it’s allowing my husband and I to achieve financial freedom.

Lesson Learned: If you love what you do, it will love you back.

____________________________________

Guest post written by Megan Clark.

Megan is the Owner and Designer of Clark & Company, Founder of The Exceptional Creative and Co-Founder and Partner of hi, friend. You can follow Megan on twitter: @clarkandcompany. Megan and her husband Bryce live in Vancouver, Washington.

Meg and Bryce Clark

Photo: Melissa Tomeoni


August Spencer Update: FINAL PAYMENT!

We are posting this a little bit later than normal…  our final Spencer payment. We were able to pay down the remainder of our Sallie Mae-held student loans on August 23. It took us a total of eight months and 23 days to complete our goal, which is actually quite a bit faster than we originally expected. We’re thankful for having gotten our income up and our expenses way down this year.


WE’RE DEBT FREE!

12/1/2010 starting balance: $69,176.76
8/23/2011 total payoff: $69,999.41

We went out to a fancy dinner last night to celebrate!

We finally received reimbursement from moving expenses (we had to drastically reduce our payment in July after covering the cost of a U-Pack pod and cross-country move). We also realized Rachel had a big chunk of cash sitting in her business accounts that would better serve us in finishing our debt. These two piles of cash allowed us to pay off the final part of Spencer at an accelerated rate.

Originally, when I posted the grid I mentioned that we would deal with the horn later. I figured I would adjust the remaining ten squares to eat up any interest added along the way. At Maggie’s super suggestion, I decided to leave the horn squares at approximately $500 each. (The body squares each valued at $100). So Spencer still represents our original amount, and the pile of dung represents the interest we paid.

Just wait until you see the size of the interest we would have paid if we didn’t go ahead with this goal. Another post, another day.