Monthly Archives: December 2008

Making Lemonade from Lemons!

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This recession means a few things–one of which is that interest rates are way down. For those of us with a 401K, we’re a little freaked out by this, but for those with debt–we can also jump with joy.
I have a few debts that I’m still whittling away to pay down. I will be 100% out of debt (except for my mortgage) for the first time in my adult life in March of 2009, but in an attempt to pay down these debts faster, I got aggressive this week about my debts.
It started with a notice I received from the bank that the interest rate on my student loan had been reduced. Reduced? I only paid $23.50 in all of last year on interest because that rate is so low! That got me thinking–who else is making money off me that perhaps they don’t need?
Today I pulled out the statements for the three credit cards. I don’t keep balances on two of them, but I keep them open because of my long account history (almost 10 years!). The length of time you’ve had an account open and in good favor is important to your credit history and score and shows potential lenders that you’re a reliable investment.
Here’s what I accomplished in today’s debt-busting effort. Keep in mind that I have a good credit rating, and I haven’t made a late payment in at least three years, and have never missed a payment, so results may vary.
Card A–My Favorite.
We have a long history with this company and they are excellent about watching for fraudulent charges, fixing errors and providing good interest rates.
Was 7.4% now 6.9%. They suggested I try again next month as they may be able to reduce it again then!
Card B–I love my frequent flyer miles and annual $50 companion fare.
Despite the less-than excellent interest rate, and the $75 annual membership fee, the $50 annual companion fare on a major market airline that has routine flights everywhere we want to go all the time, this card has worked out for us. It’s a super-jumbo bank so it’s a pain in the caboose to get someone on the phone, but like I said, that plane ticket has come in handy every year–a wedding, funeral, adoption, last minute vacation–we’ve always gotten our money’s worth out of this thing in the frequent flyer miles and other airline promotions (and we don’t travel much).
Was 11.99% now 11.99%, however, there’s 0% for 10 months on balance transfers. Cha-ching!
Card C–My first credit card
Kind of like keeping my first house key, this card has been with me through the best and worst of times and has truly seen it all. I don’t know why, but I’ve never bothered to call and ask for a lower rate–I haven’t held a balance on it in years though. Just in case however, I gave them a call. Now, if I need to use it (or want to use it) I can with peace of mind.
Was 12.90%, now 8.9%
Total investment on my part? 30 minutes on a Wednesday morning.
Just my $.02 on debt for today.

Spending less on entertainment

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Wow… I cannot believe how cool the Library is.

They have SO much available! It’s especially great if you take a look at your local library’s network–not just what is on the shelf at your local branch.

Our library has a number of things available for checkout:
*Books
*Magazines
*Movies
*CDs of Music
*Books on tape or CD
*Puppets in the kids section (yep!)
*Subject kits

The subject kits are especially great for kids–I can decide what I want the kids to learn about, and put it on reserve…a few days later we pick up the file box full of 6-10 kids books on the subject, board games and even toys or puppet kits. They have some really helpful kits. We used this once to talk to Destiny about adoption as she was trying to understand her place in our family–we checked out the adoption kit which had role playing puppets and books. They have them on many other subjects and for many age ranges.

Check out your local library’s offerings–including free plays, puppet shows (our library offered “the mousecracker” last year–a mouse puppet show of The Nutcracker–storytimes and musical performaces. (In my experience they seem to be offered at rather odd hours, but still very high quality!)

The most powerful force in the universe

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Albert Einstein said that the most powerful force in the universe is not gravity nor time–but compounding interest!

Also, I found a similar quote that I found especially insightful.

An old adage has it that those who understand compound interest are more likely to collect it, those who don’t more likely to pay it. J. A. Paulos, A Mathematician Plays the Stock Market Basic Books, 2003, p. 86

I think intellectually we all know that the key to being debt-free and getting ahead in our savings is to have compounding interest on our side. But have you ever done the math? I mean the real math? Interest on debt is far higher than interest on savings, so here’s my challenge to you….

Pull out your savings account statement and your credit card statement and use the compounding interest calculator that I’ve added to the right-hand toolbar of this page.

See if compounding interest is working for or against your family’s goals.

Doing more: Around the Holidays!

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The holidays are tricky aren’t they? We want to give our friends and our families the very best and the very most because that is what they deserve. As for being on the receiving end… perhaps you find yourself in the same places as me? Without room for stuff? Worrying that your kids will be spoiled, or feel entitled to having their every material wish met, but at the same time, not wanting to be the Grinch that spoiled Christmas with mind-numbing practicality?

A relative sent our family a World Wildlife Federation Catalog and asked my girls and their cousin to get together to choose an animal to sponsor for the year. (My oldest responded “Mom says no more pets!”) The misunderstanding was cleared up and I believe the kids are choosing to sponsor a dolphin this year. (Thanks Amy–it’s a super idea!)

I also learned about the opportunity to give a gift certificate for a “micro loan” to help establish businesses in developing nations. Check out http://www.kiva.org/ for more information. You can give your loved one a $25 gift certificate, and they choose the business person who will receive it. They’ll be sent updates of the entrepreneur’s progress. Eventually the loan is repaid and your loved one can choose to either keep the $25 repayment, or reinvest it in another business.

A few years ago my family began sponsoring a little boy in Uganda through World Vision, and while we’d intended to do it for a year, we’ve kept up with the little guy who we choose to sponsor. He sends letters about every three months and we get an annual photograph. We send little trinkets like school supplies and he now seems like an extended part of our family! It’s the best $30/month ever. I’d rather pay Mugugga’s school tuition than the phone bill any day!

Other organizations such as Ahope For Children (An organizations that provides for the care of HIV+ orphans in Africa) or the Evangelical Lutheran Church of America provide gift catalogs of items that also benefit their cause. Ahope has lovely sterling jewelery, and coffee, and ELCA offers a program where you can give your friend a goat, which is donated to a community in need of a goat (saving your friend a small fortune on hay and oats…). Can’t you just read the thank-you now?

Dear Sally, I got your goat. I named him Fred. Thanks and have a happy New Year!

Just my $.02 on doing more this Christmas and preserving the real meaning of the season.

Save a buck on: Coffee!

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In Ethiopia I was introduced to the most wonderful coffee!! Being the birthplace of coffee, everyone takes it very seriously. People of all ages enjoy the ritual of coffee. The coffee ceremony (an important hospitality ritual) can take three hours and starts out with someone roasting the beans right in front of you!

Upon coming home, the coffee I liked before my travels just didn’t measure up, and with prices as high as they were, it was crazy to be spending $6-$15 a pound for good, whole bean coffees.

A few weeks ago I stopped by the local Ethiopian market, and saw that they had whole green (unroasted) coffee beans, for $2.00 a pound! I thought, I’ve got to try this–it sounds too good to be true!

I roasted them in the Ethiopian way (except substituting my electric range and a teflon pan for the steel plate on a charcoal stove). I put the beans in the pan and poured in a small handful of traditional Ethiopian spices (cinnamon sticks, cloves and false cardamom) and toasted the beans about 15 minutes until they were dark, then ground them in my grinder and they were SUPER!

If you’re a coffee lover–give this a try, and you have the added benefit of when teased about your thriftyness, you can clarify that you prefer to roast your own in small batches for freshness and quality.

Total savings, $4.00 per pound.

Just my $.02.

Emotional or impulsive spending with debt

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I never carry cash (I’m really bad at keeping track of it!)

I carry a debit card and a credit card (in case of car-towing emergencies, etc).

A few weeks ago I stopped at Starbucks and knowing I hadn’t maintained my checkbook ledger in a while and wanting to prevent just one more stupid little receipt that needed to be recorded in the ledger, I used a credit card for my coffee.

Mistake number 1: I spent $4.00 on a cup of coffee. Seriously? Oh well, we all indulge ourselves occasionally.

Mistake number 2: I realized this after the fact, but I used a credit card, which meant I BORROWED four dollars for a cup of coffee that I didn’t need, and was a luxury indulgence. It hit me as I was driving to work “Gee Jess, that was dumb.”

I remembered several years before (flash back to my first apartment, and gigantic bills and tiny income) someone had told me to take a freezer baggie and stick my credit card in it, fill the baggie with water and stick it in the freezer.

(I actually did this at the time and it worked great!) You can’t microwave or boil the baggie without damaging the card so much that it renders it unusable. You must sit the baggie in the sink and just let it thaw naturally, which is fine if you need to have your car towed, or pay for emergency medical care, but will definitely prevent you from buying those cute new shoes you don’t need… or a $4.00 cup of joe.

Just my $.02 on debt for today.

Pennywise People: Using less, and doing more

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Hello–I’m Jessica. Thanks for taking the time to visit me here at my Penny-wise family story.

Please indulge this first post as an explanation of how this blog came to be.

I’m a professional person and a college graduate. I put myself through college on student loans, thiftyness and dumb luck. Let me illustrate: I was fortunate enough to benefit from a program that allowed me to attend two years of community college during high school saving me tuition funds. Mom and Dad helped with the books, and I took a part time job. After junior college, I moved away from home to a state college that offered a great education at a great price, which was still far more than I could afford.

I took a work study job working at the college gym (though anyone who knows me knows that I am far from being an athlete!) I had another work-study job working on the college’s two sailboats doing woodworking (thanks dad for the woodworking education!) I volunteered like crazy and by then the faculty knew me so well, that one professir asked me to house-sit her home for a semester while she taught abroad. That led to another referral and I ended up spending a year, rent free caring for other people’s homes–at a time when I really needed to save a few bucks in rent!
I whittled my food budget by using a co-op and doing some gardening to $50 a month and took advantage of the free bus pass offered by the college, and I finally graduated, though sometimes I wondered how I would do it (wow, was I ever broke!).

After graduation I moved to an apartment in the city to start looking for my dream-job—right in the middle of a recession. I found a job, but my apartment was 2/3 of my monthly income, and just 325 square feet. I remember that every time I turned on the toaster and the hair-dryer at the same time, the whole place would go dark because it was all on one electrical circuit.
Yes–I could reach the toaster in the kitchen from styling my hair in the bathroom!
I moved in to that apartment with a rocking chair, ten boxes of books and a fouton that I borrowed from my boyfriend (now, my wonderful husband). And again, I took advantage of that bus pass!

One day, as I was trying to figure out how to make the rent and the phone bill and if I could buy a monthly bus pass or if I should stick to daily bus cupons, I realized how much waste I really had. I owned ten boxes of books… which I was paying approximately $2 per square foot per month for. (You could seriously measure my net worth in old textbooks). The next several weeks on the way to work each day, I boarded the bus with a wheeled bag full of my beloved books which I sold at Half Price Books. It earned me enough to buy my next month’s bus pass, and I decided that recessions come and go, but if I were going to provide myself with any security, I must find a way to live below my means (even if my means were pathetic at the time!)

As the years have gone by I’ve sometimes been better and sometimes been worse at staying not just within, but below my means, but one thing I have found is that it takes extraordinary effort to do so!

My family and I have discovered that we can *do* so much more, when we have so much less, and we find it more satisfying than trying to keep up with Joneses. We enjoy supporting charitable causes and volunteering our time, and we believe that it’s our responsibility to help others, and like John F. Kennedy said, that a rising tide should lift all boats.

I had the opportunity to visit Ethiopia this past fall, and was stunned by the resourcefullness of the people there. Practicality to a point that I had just never thought of. Like my great-grandmother’s thriftyness–only so much more. I was also inspired by how little greed I saw there. People were just helping people, there were no “Jonses” to keep up with, and furthermore, it seemed that those who had the least, gave the most.

I’ve been inspired by this latest recession, and the great need of others around me, to see how I can do more with less–and help others along the way.

If you’re intrested in using less, and doing more–I invite you to follow along, or participate–chime in and provide your suggestions for using less and doing more.