Frugal is Fact Not Fantasy…

Youu’ve seen these ads. They bombard your email box regularly. But with gas moving toward $5 a gallon, food costs skyrocketing, and your 401k shrinking, chances are you may actually be reading them now. That part of you desperate for a solution wants them to be true; wants a way to easily fix the stress of financial overload.

Note the fine print.  “… are not a guarantee …”; nor are they typical.”  Sounds just like an ad for diet aids and we all know how successful most of them are.

I’m an on-line entrepreneur.  And, in my effort to be successful, I’ve accepted much free advice from the Internet gurus who tease me with 6 figure launches and income streams that would send my grandkids through college. I’ve read, listened, and employed their tactics and guess what? At this point my grandkids are going to community college if they can get a scholarship. What I’ve learned hasn’t helped the business much, but it sure has enlightened me as a consumer.

These people are selling dreams. (Unfortunately for me and the authors I promote, I sell books.) They are psychological masters at pushing the buttons we don’t like to believe we have – hope, need, frustration, desperation. The tougher things are financially, the better they will do because they offer “solutions” to our problems. At least that’s what their sales messages say. But, how many Amway, Avon, Mary Kay, and Tupperware agents have you known? How many were successful enough to quit their day jobs? The Internet has just expanded the dream pool, and the sad truth is that when people are seeking the whistle of relief from the financial pressure cooker, these guys will do well and most of you will simply be out more dollars.

Instead of spending that $50, $100, $8000 (a figure recently quoted to me for a business jump start), on a dream, you’re better served investing it elsewhere unless you KNOW you are in that 1% echelon who will deliver atypical results. Reality is a cruel mistress (or boytoy to be politically correct). Overnight success is rarely overnight. Everyone can’t BE in that top 1%. But everyone can be frugal and realize success. What we have to do is redefine success. Success it not using the credit card this month. Success is having $20 left after paying all the bills. Success is having a garage sale and using those funds to pay the car insurance. Success is finding a barter partner.  Success is consistently applying tactics to improve your financial picture, one dollar at a time. Dream big, yes. I do. Set goals and work toward them. Absolutely.  Just make sure to practice a key tenet of frugality – skepticism – and keep those dream payments where they belong – invested in your financial future, not someone else’s.

Frugal is like…

Last Thursday’s AZ Republic (6/12) ran an Associated Press article by H. Josef Hebert, titled “Gas prices are near their peak feds say,” projecting the U.S. average to stay at around $4.15 a gallon.

Cynic that I am, I waited to see what might happen. To date, the analysis seems on target. Oil prices are sitting at about $136 a barrel today, down close to $3 from their horrendous, disgusting, budget-destroying high of $139. So… that $2 a gallon we worked to find last week, well, it’s gonna have to be a long-term effort. A 401k gutting or a 2nd mortage, which rate as 2 of the 3 WORST financial fixes we Americans can choose, are only temporary salvation that will cost you BIG in the end. 

Which leads us to today’s blog. Since frugal appears to be a word more people will have to learn, this simile adoring writer thought maybe a few comparisons might make your transition to practicing frugalite a little easier.

Frugal is like….

Yoga: I looked up the defintion (ok, many definitions) and liked this one the best:

- is a physical practice of stretching the body in different ways, focusing one’s attention, and becoming one with the universe. It uses body, breath and senses to reconnect the practitioner with the universe and move emotions and thoughts into stillness.  thenewmedicine.org/resources/definitions

Frugal means stretching (a dollar) in different ways with a focused mindset that makes you one with your financial universe so your emotional roller coaster over debt and expense halts, bringing with it a sense of calm and control over the monster money (or the lack of…).   

Gymnastics: I watched the Olympic trials last night. Such talent. But more so, gymnasts demonstrate two key frugal attributes. If you take a lesson from them, you’ll be on your way to that 10 in your savings score.

Eating, driving, entertainment, clothing, gifts – all those everyday routines (expenditures)  – kiss your ol’ notions about them bye, bye.  Frugality means flexibility – the only favorites you can have are those sites tagged on your computer.  Your ability to ‘go with the flow’ (currently defined as $$$ surging from your wallet at tsunami force every time you fill up) lets you find new saving opportunities by forging into the unknown in all areas of your budget. You learn to like pork ‘cuz it’s on sale; figure out how to make your favorite food; treasure those 2nd hand store finds; take pride in gifts you made vs bought; delight in puzzles, catch, board games.

Second, frugality means you employ your skills with every expenditure. Just as gymnasts move from the vault, to the uneven bars to the floor routine, focused and determined to increase their overall score, your goal is broad as well. Each dollar in your pocket instead of someone else’s counts toward whether you’ve won this month’s savings competition. 

Football: You have to be tough, dig in, and play hard all four quarters. It’s not something you do once or twice, but a daily ritual. You study game films (the marketplace), notice weaknesses (like stores desperate for your business) and on game day (any expenditure) you grind out a yard here, a couple more there, toward your savings goal. The other team (we call them Advertisers) constantly try to grab the football (your money) but you maintain control because, like football, you have a game plan. You can adapt it, based on game day conditions, but impulsiveness doesn’t exist in your world.  

A Marathon: It’s the long haul, not a sprint. You pace yourself, understanding when to go all out and when to kick back for a few miles. People don’t just buy things out of necessity. We buy for pleasure, self-worth, spite… If you try to ignore those realities, you won’t finish.

Chess: You have to plan two, three, four moves ahead. When will the car need tires? Or license tags? Or a tuneup? What about insurance (if you pay quarterly or annually)? An illness? Bobby’s one-time opportunity to attend camp? Things come up. Your plan has to account for them.

Painting: No, I don’t mean that house fiasco we learned from earlier. I mean the kind with a canvas and brushes and a vision – you know, creative. (I could have used writing here, too, but that seemed well, self-serving…) People who can turn $1 into $3 or $5 – they’re creative geniuses, to be awed, admired and learned from. If you could turn just 10% of your monthly expenditures…

Let’s say you spend $2000 a month. That’s $200. Now, if you could turn every $1 into $3… would that $600 help each month? People do it with creativity. Hard as this is to say… There are tons of frugal blogs out there with great tips. Use them.

And, last but not least…

Dieting: For those of you who’ve never had the pleasure, I hope one of the other similes worked for you. (and, of course, I hate you). For those of us who’ve been down this path, you know what happens. Motivation is strong, goal is clear, plan is in place. Ready, set, DIET!

But, you also know motivation is inversely correlated to how quick the pounds slip off. At first, you have success pretty regularly and the plan is easy to follow (ok, not easy, but you know, worth the pain). Then, it slows or you hit a plateau and… BAM! Screw dieting! It’s too much work! It doesn’t work anyway! I can’t succeed!!!

Understand that any long-term goal must be interspersed with rewards. You can’t diet forever or you’ll be such a cheated, sour-faced, angry person no one will want to be around the thin you anyhow. The same is true with frugality. You can’t always be frugal. What counts is moderation when you deviate from the plan. Don’t eat a 1/2 gallon of ice cream (oh, I’m sorry, they aren’t half gallons anymore – they’re… I don’t know – less for the same money – you know, corporate America’s new downsizing plan) eat one of those single serving things. Or go buy a single scoop at Dairy Queen.

With frugality, go out to dinner (without a coupon, even), buy a new hacksaw, splurge on color ink for the printer. Doesn’t matter. What counts is that YOU feel decadently unfrugal; rewarded for your diligence these past days, weeks, months. Then, get right back on the plan. Think about it. If your goal was lose 20 lbs. and you lost 10, isn’t that success? You’re half way there. Same is true with money. Maybe you wanted to save $100 and only found $50. That’s $600 a year. Not bad for “failing.”

Now that we’ve got you motivated, check out this article for some great savings tips. http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/28WaysToSaveForARainyDay.aspx?page=2

And remember: A Frugal Fiction book? $3.99. Reading to your child fifteen minutes a day? Priceless!!

Gas Prices Gutting Budgets!

Oil $139 a barrel? Gas $5 a gallon by July 4th? Forget everything I said last time and just send that stimulus check to your gas card. Well, maybe take out enough to buy a bike or fix the one you have. $600 is only gonna fill your tank maybe six times. You better have another mode of transportation ready.

Okay, glass is half full right? This could actually be a godsend for the chubbiness of America. I can see the headline now, “Forced to ride bikes, America becomes the most svelte nation in the world.”

Not for you? Well, I did a little research. Gas is up 81.9% since June ‘07, which means it went for about $2.12 a year ago, leaving us with the need to make up almost $2 for every gallon of gas we use. http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp)

Now, June ‘07 the minimum wage was $5.15. In July it moves to $6.55. That’s a 27% increase, an additional $1.40 an hour (well, not really cuz after taxes…) Let’s just say we see an extra $1 an hr. Still $1 a gallon light and I’m not calculating gas at $5. Better plan for finding $2 a gallon in your budget.

Let’s say you fill up once a week, we’ll use 20 gallons for this exercise. That’s $40, or $160 to $200 a month. Where is it going to come from?

1) The most obvious answer is, we have to use less gas. Whether it’s carpooling, riding the bike, walking, skipping trips, or efficiently routing trips, you may be able to save 2 gallons a week. We’ll say 10 gallons a month, or $20 we pocketed. Only $180 more to go…

2) Cell phones aren’t a necessity, but once you signed that contract, you’re stuck. If you have any extra services, delete ‘em. If your kids have those “add a line for 9.99,” do they really need it? If you’re going over on minutes, stop. Let’s face it. You’ll be home more. You can actually talk to your kids, use the regular phone, or instead of texting all those thoughts that cross your mind, send an email. If you have a regular phone and cell phone, maybe cancel the the regular one. We’ll say you found a $20 savings. ($160 left)

3) Cable. Because you’re home more, this may be hard, but drop the premium channels. Go for a walk, play catch, do a puzzle with the kids, read. Actually, I have a use for that time coming up. Savings: $15 a month. (Down to $145…)

4) Barter. “As the economy slows, a growing number of consumers are trying to find a wider market for their goods and services by offering to barter them.” http://www.azcentral.com/business/consumer/articles/2008/06/04/20080604biz-GoodsBarter-04.html

Craigslist is great for free postings. Can you offer some service in exchange for something you need? Babysit for a tuneup? Do lawncare for a computer upgrade? Cook or grocery shop for someone housebound in exchange for your own babysitting?  If you have a talent, someone else will need it, and their budget looks like yours. Find them and you both benefit. Here’s hoping you dented that gas bill by another $20. (My God, still another $125 to go…)

5) Swap stuff with others – green in more ways than one. USA Weekend (5/30 – 6/1) offered some sites to help you save the landfills. I see the potential to save some green, too. Neighborrow.com lets you trade or borrow items you don’t use often, and on Freecycle.org people ‘gift’ items they don’t want anymore. I don’t know what you can save here, but for some, probably a decent amount. I won’t give it a value, so $125 and holding.

6) School is just around the corner. Many probably counted on the stimulus checks to fill the kids’ closets. Why not get to know your neighbors and have a clothes swapping party? “Yeah, right. My kid won’t wear hand-me-downs!” you sputter. If they’re old enough to complain, they’re old enough for a little lesson in finance. Use it as a math lesson, Have them do the calculations. Start building a fiscally prudent individual now and you’ll save them years of pain later. Besides, if all the neighbor kids are doing it, it’ll go down easier. Just bring all the clothes together and let them pick. Again, I’m not going to give this a value, but offer it as another way to ‘find’ money. (Getting nervous here, where am I going to find that $125?)

7) Cook. Take your lunch. Fast food is out. It’s a trip you don’t need to make, calories you don’t need, and expensive. Just taking your own coffee or soda for the trip to work and skipping the convenience store will save $20 a month (or more.)  Brown bagging it? Probably another $100 easily. We’re down to choices here – convenience or gas? Because I’m guessing, frugal that you are, you’re already limiting this cash vacumn, we’ll estimate you found another $25. Just $100 to go.

 

Sweat. Check out this site for tips on how to save on cooling,  which is 16% of the total electric most houses use. http://michaelbluejay.com/electricity/cooling.html. Your skin will glow, toxins will leave your body, and cash will stay put. Let’s say your “sweat” equity from these tips is $10. Whew, under $100 – $90 more to find… This is tough folks. (Yeah, like you didn’t already know that.)

9) Food. With everyone telling us food is ALSO going up, how do you save here? Be flexible. Eat what’s on sale. Skip anything processed – no chips, cookies, crackers, ready-made whatever. If you don’t have to cook it or can’t eat it raw, don’t throw it in your basket. (well, tp’s okay, I mean, we’re talking food) Be diligent with the coupons – not just using them, but matching them to sale items for more bang. Be creative. Rice +meat + a canned veggie or soup (or both) makes a casserole that goes further and costs less than if you serve mean & rice seperately. Bake – it’s a fun thing to do with the kids and costs less than prepackaged snacks. Make koolaid pops instead of buying ice cream. Drink water instead of soda. Things you may have counted as necessities before (like my Diet Pepsi) are going to have to become treats. You can do it! I see another $20 staying in your wallet (that’s only $5 a week.) $70.

10) Gifts. With Father’s Day next Sunday, I searched yesterday’s ads for a Frugal Find. Which got me thinking. The media has trained us to think love, appreciate, devotion, etc. require a big expenditure. Time to retrain our brains that time, not money, can equate to those things. Instead of a $4 card, make him one like you did as a child (another great bonding project with your own kids, too if you have them help.) Put together a picture album of memories you have with him and tell him what they meant to you. The same concepts apply to any gift giving occasion. Make your effort the gift. Send a free email card – send ten of them. Overwhelm them with what really matters – you, not J.C. Penney’s. Most of us can save $5 a month with this change in attitude. $65…

11) Use the thrift store. Clean out your closets and consign all those great clothes that don’t fit anymore. Sell stuff on ebay that you really don’t need. Maybe you and a neighbor can co-purchase a lawn mower. Or you buy it and charge him $5 a week for lawn service. You’re gonna have to think outside the box for ways to save and/or generate cash. A second job, often the first thing that comes to mind during financial stress, can actually reduce your cash flow – more gas, additional babysitting costs, higher taxes. If you go that route, make sure you did the math exercise and your net cash flow is positive.

12) If you use your stimulus check to pay down bills, you have that monthly expense reduction. If you sent it to the gas card, you saved yourself $200 bucks for three months, or $50 a month over the course of a year. Pay the $150 each month and use $50 from the gas card. You just about cover the $65 shortfall.

And, that leaves me speechless. I can’t think of anymore ways to find that $65. Hopefully, I’ve underestimated your savings and you’re flush. Hopefully, you have tips to share that will cover that deficit and maybe put us in the black. Let’s face it – this isn’t a short-term problem.

Remember: A Frugal Fiction book? Just $3.99 Reading to your child 15 minutes a day? Priceless!

(Hiding from financial realities in fiction? A great way to save your sanity for a few hours.)

 

Frugal & the Economic Stimulus Checks

Waiting. Waiting. Waiting. Soon, that check will arrive. $600 or $1200 or ??? depending on how many munchkins bring joy and expense your way.

Like the tax refund, here comes another cash windfall, an even better one since you didn’t expect it. But, and don’t be fooled by Uncle Sam, it comes with that psychological trigger many can’t name but most fall prey to. It’s a theory called “reciprocity.”

Reciprocity is the glue of Internet Marketing. Give me your email address and I’ll give you something free. So, we do, because, well, we’re frugal which means free is tough to ignore, and then the emails arrive: monthly, daily, weekly, always giving us more free stuff, until, finally, guilt overwhelms us and we BUY. After all, I mean, look at all the value we didn’t pay for…

So, where’s reciprocity in these checks? Start with the name. Economic Stimulus. The government is tapping into your patriotism, subtly making YOU responsible for the economy’s health. It’s up to YOU to stimulate the economy because we gave you something “free.” (Yeah, like that won’t just be tacked onto the national debt…)

If you’re like me, truthfully, you love the good ol’ USA, but the economy that most interests you is your own! God helps those and all that. So, before that check arrives, steel yourself, and budget that money for the long haul. (after all, you’ll be paying it back at least that long.)

To help, here are my tips for using that economic stimulus check to stimulate YOUR economy. 

1) Pay off any of those no interest for 12, 18, 24 months accounts you might have. I just checked one of mine and guess what? If I miss the due date, they want almost $500. It’s definitely getting my stimulus check!

2) Grocery’s – Fry’s in Phoenix (Krogers in other places) is offering 10% off if you buy gift cards in $300, $600, or $1200 increments. If this deal is offered in your area, think about it. Chances are, you don’t normally have $300 or $600 to invest in future purchases. But, now you do. You’ll be buying groceries no matter what happens so why not save 10% immediately?

3) Christmas Club – When I was a kid (you know, like awhile ago) my parents had a Christmas Club account. They put aside $5 or $10 a week to pay for Christmas. Banks no longer offer that kind of account, but put the money away now and you won’t be making credit card payments next year.

Notice I didn’t say pay off a credit card? Why? Most of us pay it off only to charge it up again. If you SWEAR to pay it off and not charge it up again, pay if off. Otherwise, it’ll fritter away and you won’t know where you spent it.

4) Send a chuck of change to your gas card, you know, like carry a credit balance on the account. Why? You have to buy that liquid gold, which only seems inclined to increase in price. If you prepay, you have gas at your disposal and you won’t spend the $ anywhere else.

Note: I said GAS card, not credit card. See #3 above.

5) Take care of medical stuff: annual visits, teeth cleanings, etc. – you know, the items you want to do regularly but the budget never seems to have enough flex in to allow.

6) Do maintenance. Buy those energy efficient light bulbs. Have the refrigeration unit cleaned. Do auto tuneups. Did you know spark plugs have coils that you’re supposed to replace every 30,000 miles? Me neither. But, a small investment in your vehicle will help extend that credit balance you have on the gas card. Any project that will make your life more energy efficient will also make your stimulus check keep on paying long after it’s gone.

7) Make an extra house payment, rent payment, car payment, pay car insurance for six months or a year. (Which doesn’t mean you skip the payment next month and take a trip to Cancun.) The key is to ‘pay it forward’ so you have some breathing room if you need it.

 

And, finally, splurge!

WHAT? All these rational ideas and now I say “Splurge.” Yes, do something (preferably small) that will allow you to fulfill your patriotic urges and help ol’ Uncle Sam out. Actually, it’s not for him – it’s for you. Living frugal can be overwhelming day in and day out. It can be exhausting and frustrating and down right depressing at times to always be watching pennies when everyone else seems to be flush in dollars. Take the kids to the waterpark or bbq T-bones instead of chuck steak. Whatever you do, reward yourself for your sound wisdom and restraint when that check arrives.

 Have more ideas? Let us know, and remember,

A Frugal Fiction children’s book: $3.99. Reading to your child fifteen minutes a day? Priceless!!