Category Archives: Spending less

Day 14: Spend Less Than You Make

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Are you spending less than you make? Are you sure? Better double-check, just in case.

I’m getting ready for the Town Hall for Hope on Thursday and thinking about what are the true, simple and basic facts about personal finance. The bottom line really is that you must spend less than you make.

The origins of PennyWise Family are pretty sad. I started this blog the day after I was laid off from my “secure” job in hopes of helping other families adjust for layoffs. We had to slash our household budget immediately and needed to figure out how.
I’ve posted tips here ever since then, but thought maybe it was time for some more frugal living tips. Hands-down, the biggest hit so far has been the home-made laundry detergent. I’ve converted many friends to making their own, and we love it. To find other savings tips use my “Ligit” search bar and enter the subject of how you want to save money and it should direct you to the right posts.

I posted earlier about how we found we had cut $1500 a month from our household budget with ordinary and small cost-cutting.

Today I’m featuring a reader’s tips. These come from Abby S., in Washington State, who used to teach school in Alaska. A lot of necessities are expensive there, so she learned some spiffy ways to cut corners. Here are a few of her list:
  • Cut dryer sheets in half to make them last longer.

  • Use dehydrated eggs for cooking sweets (I use dehydrated milk for baking Abby, but I’ve never seen dehydrated eggs).

  • Make bread from scratch

  • Make milk from powdered milk and mask the flavor with chocolate powder or syrup.

  • Buy milk in bulk and freeze it.

  • Make home-made deodorant (if it works, please send us the recipe Abby… if it doesn’t, please warn us ).

  • Learn to can/preserve and freeze.

I’m also learning about making my own dishwasher detergent, but I want to experiment with my dishes before I post a recipe here. I’d hate to etch or damage someone’s dishes with a bad one, so when I’ve got it perfected I shall let everyone know.

Thanks Abby for sharing your tips!

This is day 14 of 30 in a series for April, which is “Financial Literacy Month”

Day 10: Are You Saving Enough?

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Two FREE Audiobooks RISK-FREE from Audible
I’ve been listening to the Audiobook “Total Money Makeover” by Dave Ramsey. This is available from Audible.com, and I highly recommend it. If you want to download the book, I’ve attached a coupon here for two free books.

One tip that Mr. Ramsey offers that I find especially interesting is that to know if you’re saving enough, you need to take the amount you have saved in your nest egg (savings/retirement) and multiply it by .08.

If you can live off the resulting figure, then you’re saving enough. If not, you’d better step it up (after paying off your debts of course).

I was surprised. I consider our savings rather paltry, but we actually *could* live off the results. Granted, we’d cut the cable and be living on rice and beans, but we would only have to cut our household expenses by another $300, which wouldn’t be hard.

What they say in the Total Money Makeover is true–the closer you get, the easier it becomes. We now are on the last of our “snowballs” (only one remaining debt to pay off), and it’s disappearing quickly because every extra resource can be dedicated there.

We haven’t followed one of the guidelines–we haven’t stopped saving. We’re still saving for retirement and for planned major expenses (one daughter’s adoption finalization, etc). If we’d stopped this, we could speed up the process even more.

If you’re just starting your Total Money Makeover, or considering starting the program, don’t loose heart. It goes so much faster than you’d expect. Good luck!

This is part 10 of a 30 part series on financial literacy for the month of April, Financial Literacy Month.

Day 8: Budgeting for the Technophobes

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If you’ve checked out the past three posts about aggregators that work directly with your online banking and you’re not comfortable with that, I understand. There’s a pretty spiffy Web site that works similarly called BudgetTracker. It’s a calendar based system that works from information that you provide. It also allows you to track business finances online.

Day 7: If you’re not budgeting yet…. do it!

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Ok, this catches us up to Monday, and we’re almost back on financial-literacy track.

For those of you who are brave, empowered and socially-fearless, you might like to try the “twitter of budgets” (As I’m so-dubbing it). Geezeo.com is a frightfully-social way of playing with your budget. I do think this could make budgeting fun for even the most carefree of souls.

Geezeo calls itself “Geezeo, the coolest, most fun way to look at your money without becoming one of those cheap people even you don’t want to hang out with.” (I take exception at that last part….)

I played with the site a bit today. They have a fantastic twitter-like feature called “confession booth” which you can either use with your own ID or anonymously to confess your financial indescretions and get back on track.

I’ll admit, I participated. I posted “Discovering that every time I get in the car seems like a good time for Starbucks. I’m thinking of filling my cupholders with concrete.” Ok, not too difficult. I wondered what others were saying and took a look at the feed… and I could read those all day! If you’re really brave, you can update Twitter from the “confession booth” if you’ve linked the two in your profile.

They have an aggregating feature which automatically downloads everything, excellent security credentials, and an “ask an expert” feature which I’m going to explore some more. Their blog also has some great posts including one today on four ways to save money on perscriptions. That’s a major expense in my household, so I’ll be studying up.

If you haven’t found our other budgeting solutions to your liking, give Geezeo.com a try. It looks like a lot of fun!

Just my $.02.

A belated day 5. Get a budget. Now! No, Really.

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My apologies for the delayed posts. I took a few days to enjoy the Easter Holiday with the family, and I’m back to writing feeling refreshed, renewed and most of all, saved.

Today’s topic (well, Friday’s actually) is budgeting. We all know we should budget. Most of us even have a rough mental budget. But how many people truly account for every dollar in and out. You must stop and ask each dollar “who are you, and where do you think you’re going?”

It is my theory that once someone has done this for a month–they’ll never go back to winging it again.

Implementing a household budget and reviewing our progress weekly has saved our family $1,500 per month, and we consider ourselves pretty thrifty people.

How to go about making a budget? We began by using Mint.com which we found through the Motley Fool. I’ll tell you about some more budgeting options as the week goes on.

We linked all of our accounts and classified our expenses in Mint. It’s an aggregator, so you only have to link it once, and not a lot of downloading. From that, we could see our past 90 days of spending, and we created a budget from there.

Each month since then we’ve been able to further trim our budget, whacking quite a substantial amount out and paying down our debt at a faster rate than ever before.

I’ve converted a few other folks to using Mint.com and since I tout mint so frequently here, I thought it might be beneficial to hear the praises sung from someone else.

April Stensgard of MomJobSeeker.com says “Mint.com is a very useful site. I love the daily reminders about the status of our budget. Mint.com also pointed out that our bank was charging us $10 for certain online transfers. I didn’t even know about this bank fee until Mint.com discovered it. We brought it up with our banker and have resolved the charges.”

April also offers a few ideas for improvements to Mint: she’d like to print out reports on the budget. I totally agree. I take screen shots and print those, but a printout we could post on the fridge or something would be super.

Kelly Mainard also converted to Mint. She says “Mint.com is a great asset to controlling my finances. I can see where every dollar is going and I can plan in the future. For the first time in my life, I feel as though I have real control of my finances! It’s empowering.”

If those aren’t good enough recommendations to try this yourself, I don’t know what is. Grab your bank statements, put in a movie and sit down with the computer and start working out your budget with Mint.com. An initial investment of 2-3 hours is just about perfect to get mint.com rocking and rolling for you, and beyond that, weekly maintenance of just a few minutes to classify any expenditures. You won’t regret it. I promise.

Just my $.02 for last Friday. More to come later today to catch up for the weekend.

Living great, despite the layoff

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Try it Now! Join Lending Club.We’ve now reached the point (just a few months in) where I’ve completely replaced my previous work-outside-the-home income with my mobile notary business and my freelance writing. By implementing the tips I’ve been outlining here–even post-layoff our family is coming out ahead of where we were six months ago financially, as well as in peace of mind.

Here’s a brief list of what we’ve done so far, and where it’s getting us. Remember, my layoff was December 7th, and today is April 2nd.

  • Called all lenders and negotiated lower interest rates. Followed up by shredding all credit cards. Value: Priceless!
  • Learned to cost-cut around the house: home-made laundry detergent. Saves $7/mo.
  • Budget and track all expenses with Mint.com.
  • Renegotiated and repriced insurance, dropped the gap coverage on our paid-off/high-mileage cars. Saves $4/mo.
  • Used the library more. Estimated savings $20/mo
  • Developed passive income streams (adding advertising on this web site and others, as well as Lending Club interest). Earns $1.10/mo.
  • Rolled-over my fee-intensive 401K into a more affordable IRA Savings TBD
  • Found tax advantages to starting my mobile-notary and freelance writing business.
  • “Re bundled” our cable-TV package to the same service and same company at a lower introductory price. Saves $25/mo.
  • Received our tax refund and paid off an adoption loan ($150/mo, a credit card $100/mo and a student loan $110/mo). We have just one credit card left. Saves $360/mo in debt payments.
  • Refinanced our 30-year fixed mortgage, and rolled in our home equity loan ($329/mo). We put both into a 15-year fixed mortgage and will be paying just $89 more than we were paying on our old mortgage payment. (We used Smarthippo.com to find a better rate). Saves $240 per month and 15 years off the life of our mortgage.
  • Testing out some meat-free recipes for dinner. Last night the kids loved eggplant parmesan (they thought it was pizza!). Saves $24/mo.
  • Renegotiated cell-phone plan (due to new business). Saves $100/mo.
  • The layoff reduced our household’s commuting cost. Saves $200/mo in fuel.

    These tricks save us $981.10 per month, but we’ve noticed that now that all expenses are tracked, our household expenses have been reduced by about $1300 per month.

Here’s a few things that we’re not doing.

  • Working more than 45-50 hours per week.
  • Missing out on time with our kids.
  • Cutting our daughter’s preschool (we may do this to ‘snowball’ an extra $660 per month, but she’s having so much fun, we’re having her stay for now).
  • Clipping coupons.
  • Stuffing envelopes or participating in “get rich quick schemes” and “pyramid sales.”

Today’s Activities

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Today Rob and I checked out SmartHippo.com again and decided how to approach our refinancing project. We had our first mortgage, as well as a home equity loan of $15,000. Our first mortgage was at something like 5.5% and the HELOC at 8%. We were able to refinance both into 4.5% with our regular bank, paying one point into a 15 year loan and keep our payment very close to our existing fixed 30 year loan. We’re also going to enroll in the mortgage accelerator to pay it off faster. This is exciting! We’ll be making real headway with every payment towards being debt-free. We spoke to a number of banks today about the subject and all were shocked that we were OK with a higher payment, and that we wanted a 15 year fixed, instead of rolling our 30 year loan (now in year 5) into another 30–and extending our term by another 5 idiotic years. (Dave Ramsey calls this the “stupid tax,” meaning the premium one pays for making dumb financial choices).

Our house won’t be underwater, and we’ll still have plenty of equity. Also, we’ll be building equity like crazy, with more than half of our monthly payment landing in equity–not interest.

One surprise in this process was that so many of the companies we talked to wouldn’t recommend their mortgage accelerator program–because it was administered by another company and you had to pay a fee to enroll, essentialy the other company works like a payday lender and loans the mortgage the difference between the two payments. We searched out the right accelerator program with the same zeal that we searched out interest rates.

Another interesting surprise was that because of our recent debt-busting efforts (two credit cards and two vehicles and an adoption loan paid off) we were able to qualify for our refinance based ONLY on my husabnd’s income. This we’re told was because of our excellent credit scores and our low debt-to-income ratio. The mortgage consultant said adding the verification process of my self-employment income wouldn’t get us a lower rate as we already qualified for the lowest available rate. Saves us a lot of headache, and provides a lot of peace of mind.

Fun Free Podcast

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I’m not a big fan of talk radio (I find it too stressful). But I do like to listen on certian subjects, especially when the host is positive. I’ve found Dave Ramsey for free on iTunes and I’ve subscribed. It’s just one hour of his three-hour show, but it’s very educational and informative. My favorite part of the Dave Ramsey show is when people call up to scream “I’m Debt Free” when they pay off their debts (including their mortgage). It makes my day to hear people do their debt free scream. He also has some really funny expressions like “as long as you’re on this cabbbage truck, you might as well ride it” and “it’s time to paint or get off the ladder.”

Also, I’m subscribing to the Daily Audio Bible on iTunes, which is a “read the Bible in a year” kind of program. I’ve found them both great to listen to as I wash the dishes and do fold the wash in the evening.

This just in: Shocking frugality

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Wow. Here’s an article from my local news station about families getting really frugal and ::gasp:: doing their own house cleaning and lawn mowing.

Making the article even more comical, the subject is a stay-at-home mom who ditched her maid service, and stopped sending her husbands’ shirts to the cleaners. They now also do their own lawncare. The family has even started preparing their own meals. Seriously? What was she doing before? I’m a work at home mom (running a business and writing career from home) but I also do the housecleaning and cooking (with my husband’s help, of course). If I didn’t have the chores to do and my job I’m not sure what I’d do all day.

I don’t know about you, but my kids wouldn’t even want that much “quality time” with mom! Ha ha!

For those of us who are really trying to be frugal, this is a comical no-brainer.

New blog!

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In my “pennywise” search I’ve really gotten into the nitty-gritty of cooking in a thifty manner. However, I don’t feel like this is the place for it. As a result, I’ve partnered with my dear friend and frugal cooking mentor, Laura to create www.3rdworldfood.blogspot.com.

Laura is an adoptive mom like me, and has kids from several countries. To continue to teach her kids about their birth-cultures, Laura has become a master of ethnic cooking from Africa, India and Asia (yes, I know India is a part of Asia, but you’d never know if from the food, so I’m separating them for culinary purposes!).

My friend Laura has also discovered that foods from these cultures are very affordable and generally enjoyed by everyone in her very large family.

Don’t worry, Pennywise Family isn’t going anywhere. We’re just adding 3rdWorldFood as another place to go for cooking-specific info.

Thanks!