Clipping Wings

In the last post I mentioned my bird business.  As all of us know ducks are good flyers.  When I would purchase a new hen in order to keep her close to home her wing would be clipped so she could not fly away.  It was an easy operation with a pair of sissors.

When the wing was clipped it would throw off their balance and flying would be difficult if not impossible until the feathers grew back.  By that time they would realize that they had a safe place to live,  food to eat, and water available and would not want to fly away except for possibly a little exercises now and then.  When their babies were hatched they would then teach them to stay home also.  Soon the yard would be full of ducks as they hatched batch after batch. 

An interesting thing about this is that if one were to clip a little off both wings the bird would still be able to fly.  Their balance would be intact and though it might take a bit of getting used to they would not be grounded.  The bird raisers in the readers may enjoy this blog titled Back Yard Chickens.com

As I pondered this I realized that DEBT has very much the same effect.  Whether we get in the situation by choice or perceived necessity soon our freedom to fly is gone.  We rightly believe that we need to continue in a job we may not like to earn the money to pay the bills and may even begin living payday to payday.  Savings dwindle, bigger goals and dreams are set aside or fulfilled by even greater debt.  After a time we have lived so long in debt that we accept it as an inevitable part of of life and may bemoan the state of affairs but not acknowledge the source of the problem.

Freedom.  Such an amazing and precious word. As we look to the skys and watch the birds we are reminded each day.

My 50% Goal

The word goal immediately indicates that this is a concept I am working toward though not yet accomplished.  If one has already arrived why would one need to set a goal. 

Years ago after living extremely frugally for years it was time to seek employment. In the process I was offered not just one job but two.  The first was part time which I immediately began and a couple months later I was offered a full time position. Since the hours did not conflict I was able to keep them both. 

I found myself in a different situation than I was familiar with.  I was making far more money than I actually needed to maintain my lifestyle.  I needed half of what I made to fulfill my basic living expenses.  I admit that I went wild and spent more extravagantly than would have been prudent rather than saving.  Despite that I learned a very valuable lesson. 

Living under my means was a freedom that I had not yet experienced in my previous 20 years of adulthood.  And it was great fun.  I could go where I wanted, do what I wanted, and even though the amount I made was what many might consider a minimum wage I felt rich.  My bills were few, all I owned was paid for (with the exception of a small mortgage), and I could hang on to my paychecks for weeks before having to cash them.

The lesson I learned and took away from the experience was to always set my goal as living at 50% of my income.  This takes the focus from how much we make to how much we spend.  Ones first thought might be that this would be impossible on their current income. Just to make it more interesting I will share that at the time I set the goal I was making roughly $9.00 per hour on my full time job and $7 something on the part time job.  Not what most would consider as racking in the bucks. 

My 50% had a number of reasons first of all being the knowledge that no one is guaranteed a job.  Yes, that would come as a shock to some and a rude awakening to others who went through the economic impact in 2009 and are still waiting.  Second, I realized that if I was laid off the typical unemployment rate is half of what one might have made on the job.  Third, other factors such as health, desire to home school ones kids, or seasonal employment could come up.  Having lived in an economically challenged community for many years I fully realized that having a job was indeed a blessing but not one to be counted on.

Over the years I have had to manage, change, and adjust many times always mindful that a contract is the enemy of flexibility.  More than once just when the goal has been achieved something or someone happens that throws me off track so back to the spreadsheets I have to go.  In the old days it was pencil and paper but now mostly excel with which a quick click of some buttons I can see the annual impact of a change.  Often my major financial planning is done on the back of a receipt while riding the bus.

Financial planning is often like hitting a moving target and maybe that is exactly what is supposed to be in this drama we call LIFE.  If we approach it any other way maybe we are merely fooling ourselves.

Wardrobe Planning 5-5-5

Some might think that  when one is In The Trenches that having a decent wardrobe for work is the least important thing to worry about.  I've seen and heard them at the office.  Quite the contrary, it is probably the most important time to be aware of how one is presenting oneself to others. The book Dress for Success points out that we are not only to dress appropriately for the job we currently have but to dress suitably for the job we wish to have.  The image we portray is not only what we see in the mirror but what others see.  Whether it is for a first impression at a one time meeting or for day to day interaction our choices subtlety reflect and affect our professionalism. 

Long time readers of this blog may remember that I moved from a very casual rural environment to the city a couple of years ago with very few clothes that would fit in an office environment.  On a very limited cash basis I purchased the items needed to get me going.  Back to Work Wardrobe on a Budget showed my first purchases.  The following spring and fall I again added a few items to expand my choices.  Last fall I concentrated on adding slacks of basic colors. 

In the meantime I have had a blast going to garage sales, ebay, and thrift store 1/2 price sales and picked up more.  My favorite garage sale just down the street offered bins and bins of clothing at 50 cents each.  At that price I was able to quickly grow my wardrobe and for $20 could add 40 blouses, skirts,  and jackets. 

The result was that as I surveyed my closet I knew that I had the best wardrobe of my entire life and all total spent less than what some might spend on a couple of suits.  Horror of horrors came when I added just enough pounds to make almost everything too tight!  What to do?  Of course, I know that taking off the weight was the goal but in the meantime my slacks felt like torture devices and I often had to undo a button just to get through a day.  I'm just telling the truth here and many of you know exactly what I'm talking about though it is not often mentioned out loud.  Yes of course I wore skirts and dresses much more often but with fall here again I had to make a big decision.  Every time I looked through my array of clothes I felt like I had absolutely nothing to wear.  Every time I tried to get rid of something my mind would try to make itself believe that it would fit in just a couple of months.  My mornings now included dread and self consciousness along with hustle and bustle to get out the door.

After lamenting this for days the idea of 5-5-5 came to mind and I welcomed it with relief.  What is 5-5-5?  I grabbed an old paycheck stub from my wallet and a pen and I wrote down my best 5 suits or jackets, my best 5 slacks, best 5 skirts, 5 dresses, and 5 blouses.  Realizing I did not have 5 jackets I added it to my shopping list.  The basic black one I had was washed so many times it was time to go.  In order to be on my 5-5-5 list it had to be in good condition, fit properly, and be somewhat in style so most of my animal prints had to go.

I was excited to get home!  Knowing fresh in my mind what I was keeping I grabbed everything else and threw it on the bed.  I kept a few more blouses than was on my list.  I organized them by color so they looked ready to shop through in my closet each morning.  This has been my habit for 30 years and my kids laugh but they are coming around.

I couldn't believe how much better the closet looked and how much better I felt.  I even found a dress I had forgotten I had bought.  But, alas, it was too small so also went on the stack.  I'm sure to the reader it may sound like I had so many clothes and indeed I did but please check your own closets before judging too harshly and remember my wardrobe cost me less than some might spend on a few months of cell phone bills.

The logical question one might ask is did I get my money's worth? The answer is all in the math. I roughly calulate my cost per wear on each item. Let's say I purchase a dress on sale for $50 at a retail store. If I wear the dress 20 times the cost is $2.50 per wear. If I buy that same dress for $5 at the thrift store and wear it 20 times the cost goes down to 25 cents each. Many would be shocked and enlightened if they were to go through this excercise.

The next step after surveying what I had kept was to fill in a couple gaps especially in the shoe department.  I growled all the while at how shoe manufacturers must not expect women to walk on their feet but happy to see that the  Indian style moccasins are back in style.  This was replaced by a sense of accomplishment at finding a $180 Nine West gray suit for $30 on clearance.  Though not on my list it was an excellent addition.

If you are a first timer at planning a wardrobe beyond the lastest sale this wardrobe planning post may provide some tips.

Now the fun part - I invited another woman to come and pick through it all and take what she wanted.  She selected some pieces and brought back some of her own to replace them.  This afternoon another friend is invited to go through them all and take her pick.  When anyone who might have interest that we can think of has had their picks the remainder with either go to the 50 cent ladies garage sale or a thrift store. 

 

Amazon Link

Amazon Link

 

 

Pilgrimage to JC Penny

I still remember the annual school shopping event.  We lived in the suburbs of Seattle and mom would take us once a year school shopping at JC Pennys.  It was across the lake to the downtown heart of the city.  This was long before shopping became a regular entertainment event at least for the people I knew.  The next big shopping event would be for Christmas and we kids were not part of it.  I am always amazed how much things have changed!  I'm sure most teenagers cannot imagine what they would do for fun if shopping was taken off the list.

Even though where I live there are endless places one could shop for fall clothing I still do the annual event.  As you know from other posts I love the deals I find at garage sales and nothing, I mean NOTHING compares to the price.  But there is a reason why I return to JC Penneys and it is their Worthington line among the others.  There are a few reasons for this:

• Affordable prices
• Durable quality safe for the washer and dryer
• Professional look
• Most of all - Worthington pants actually fit a woman's body!

No, this is NOT me.  I wish! :)

I actually have slacks that have been worn for five years and are still in good condition.  Last year I replenished my slacks supply so have a row from black to brown to olive to tan all lined up.  This year the trek was necessary because it REALLY was time to replace my worn forever black jacket. 

The other thing I wanted to find was some straight leg black pants to go with my saddle shoes.  Guess what?  They were on sale for $15!

It gets better...there were some $2 racks.  We went wild!  Between two ladies we got 13 items at $2 each!  We didn't even look at the $10 and $12 racks that were packed.

My grand total for a jacket, pants, one skirt, and 4 blouses was less than $60!  I will continue to browse but I am really good to go for the fall and winter when added to my previous finds.  I'm still trying to figure out where I can wear my green sequin floor length dress I got for $3 at a garage sale.

Another thing that really pleased me about this years selection was in the teen section and were called  Skinny Jeans.  I love the colors!  I admit I am so tired of seeing girls wearing blue jeans all the time.  What happened to variety and dresses, skirts, and colors?  Skinny jeans come in so many colors, I think I saw at least 12 bright varieties.  With Christmas coming around the corner I know what I will be buying for the teen on my list.

 

For those who are realizing that it is time to put away the tank tops and see what sweaters still fit here are the popular colors for this fall:

 

 

I found this cute website for those who like to find fashion on a budget.  Uber Chic for Cheap.  As you head into the office or work place this fall it's fun to receive a compliment knowing that the outfit you are are wearing cost less than a cup of coffee at Starbucks.



Extra Money

I guess in reality there is no "extra money" as we should be wise about all our habits.  There are times when we do have more than our basic needs require and at that time we feel more free to splurge a little on the things that are important to us but we may set aside when higher priorities take precedence. 

Each has our own list of splurges and it is those things that show who we are as an individual.  I have had many in the past: 

• Books
• peacocks
• Garage sale treasures
• going out to eat
• one of my past indulgences was Little Golden Books written in french (talk about weird)

Others I have seen are

• clothing beyond the necessities
• men's toys - boats, 4 wheelers, top of the line tools that don't get used
• quilting fabric
• a manicure or pedicure

The list can go on forever.

Something about having "extra money" makes us feel, or reminds us that we are rich even despite the overall challenges we might be dealing with. 

Of course I'm not referring to those who routinely have an over spending problem that they are trying to curb.  The advice might be taken as telling an alcoholic that only one drink is okay.  I'm referring to those who are seeking to manage on a limited or reduced income and are scraping to make ends meet every month.

Years ago I learned it was important to budget "extra money" or spending money in, even if it was only $5 a month for an ice cream cone. Going on month after month and feeling like no headway is being made can cause one to loose hope and give up, or blow all their efforts with a major spending spree. 

Of course, I could have showed the picture of a book right here but it just didn't seem like it would give the same message :)

Brown Bag Lunch

One of the quickest ways to spend money is also one of the easiest ways to save money.  Each day I look from my window at work and see the well dressed ladies and men coming back from lunch.  I've been there before and it quickly adds up.

In our area the delis and restaurants range in price from around $5 to upwards of $15.  It's really not much, we deserve it and work hard.  What comes as a surprise is the monthly total of $100 to $300.  There are a lot of other things I could do with that money so it is one area it have made a habit of the alternative:  Brown Bagging it.

Our office has a refrigerator, microwave, hot and chilled water from the cooler, and a seating area.  There is plenty of room for those who stay for lunch left by those who have gone out.  Over the course of time I have brought a variety of items and I tend to repeat them until I want a change.  Currently my lunches are typically as follows:

Often I don't eat all that I have brought so have created a stash in the drawer.  Admittedly I am quite squirrelish.  Other items I have taken in the past:

• Leftovers
• Frozen meals or pot pies
• Fruit or vegetables
• Cup o Noodles
• Salad
• Yogurt
• Instant Oatmeal
• Bread, peanut butter & jam
• Cottage cheese
• Instant or company provided coffee, tea, or other beverages from home
• Boiled eggs
• Pack of cookies
• Homel Compleats

Buying prepared food is NOT the cheapest way to go and even more can be saved through taking a typical brown bag meal of sandwich makings, fruit, and a snack.  I rush so quickly in the morning that if more preparation time is required the temptation arises to skip it and then I end up spending even more.  Having a months worth of soup by my bag and treats at work gives me no excuse.

What do I spend my saved money on?  Anything else that I think more important.

Don't let DEBT be the end of the story

There are a number of practical reasons for getting and staying out of debt.  Among them are:
1. No more interest paid.
2. Maximize all earned funds.
3. Preparation for living on a retirement income.
4. Etc.

The greatest reason is one that cannot adequately be put into words.  As I pondered it every choice though accurate did not seem complete.  Even the word freedom has been so overworked that we cannot appreciate the extent of it's meaning.  How can one describe something to another that they may have never experienced?  What does being out of debt really mean, especially to one who has been encumbered by it for years?

This is the closest I can come -

I was almost there.  Only $15,000 to go and the home and all debts would have been paid off at age 40.  It was a time I had worked, sacrificed for, planned, and been anxiously awaiting for years.  Once that was done it would only cost me $500 per month for my basic living expenses including property taxes and anything I earned over and above that amount could be saved, used to upgrade the home, given to others, or whatever else seemed important.  So close...

Then through circumstances that are not part of today's post I was thrown backwards with unexpected force and debt was again part of my life.  It was kind of like when you get a home spotlessly clean and the tribe comes home, or the snow off the driveway is cleared only to watch the snow come down.  Yes, but 100 times worse. 

Have you ever seen a real life ant hill?  There used to be a few of them on my grandpa's place.

When we would visit my uncle would run over them with his truck.  My brother and I would jump out and watch with fascination as the masses of ants would scurry out and immediately work on rebuilding.  It was a black mound of activity working to restore that which was overrun. ( I admit in retrospect it was somewhat cruel but in defence of my uncle they would have taken over the whole place.)

Apparently I am not the only one working on rebuilding or at least has rebuilding to do.  According to US News over 70% of Americans are in debt, 40% of those have monthly obligations greater than half their monthly income.  If that were not bad enough, 60% those over 50 years old in debt.  Wow, not a very desirable position to be in so close to retirement where the years seem to fly by even faster.

To make the reality even more clear the Associated Press have provided some clear visual portrayals with their charts:



Makes one wonder what the real cause of middle age crisis is doesn't it? 

You know, I don't like where this story is going!  I for one am not happy or contented being an AVERAGE AMERICAN.  I have smelled the ocean air and already taken off my shoes and don't want to put them back on.

Let's just purpose to run the story in reverse so we can get back to where we need to be.



It's up to us to write the end of our story.  We should not allow anyone else to do it for us.  Isn't that really what FREEDOM is all about?

What are you going to do when you go Frugal?

Many of us do not plan to go frugal.  It is something we feel is forced upon us by a change in circumstance.  We moan, groan, panic, make mistakes, learn from our mistakes, and just keep moving forward.   Then one day we realize that things are just not as tough anymore,  kind of like when a headache goes away.  We cannot say exactly when or what happened but we notice that feelings of anxiety and stress are gone.  We may even have some money in our pockets before the next payday or see a balance in our savings account.  It could end abruptly.  A new job or a raise being the most common remedy for a downturn. 

Either way the question becomes what will you do?  Will you return to your old way of doing things or stick to your new found frugal habits to avoid debt and live within your means in a fuller richer way?  Or, most likely a combination of the two.

The day will come, it may be just around the corner.

Here are some of the things I have done at different times, some admittedly wiser than others:

• Went part time.  It was no longer necessary to work full time to support my lifestyle.
• Gave more willingly and generously.
• Bought jewelry.
• Took a trip.
• Remodeled the house.
• Paid down debt at a more accelerated pace.
• Went out to eat with friends more often.
• Bought a full beef for the freezer instead of buying by the pound.
• Bought gifts for my family for the times I had not be able to.
• Loaned money to friends without worrying about being paid back.
• Went kayaking.
• Saved more.
• Started my poultry business.

Whatever you decide it will be with a freedom not previously experienced.  Others may not understand your choices and they don't need to for keeping up with the Jones' is no longer a consideration.

Home Furnishings on a Budget

Buying a home is an exciting event.  After months of planning and searching for the right home at the right price in the right neighborhood moving day arrives.  In our case all that was being moved required multiple trips in the car.  No u-haul was needed because there was no furniture.  I take that back.  There was one bed, a desk, and a t.v. with a stand.  A friend provided a pick-up for this one load.  A house seems so much more spacious without furniture.  We wandered around the open spaces deciding what we really needed and wanted.  We talked about getting a pool table for the empty living room. The air mattresses really are quite comfortable.

I did have some pieces in a storage unit so it was good to get arrangements made to close that out but it was mostly personal items and family heirloom pieces.  The lot consisted of mom's treadle machine and kitchen table, my antique buffet, 1 bed, and grandma's 100 year old oak chairs and hope chest, and two dressers.  The long trip with all my stuff in a horse trailer including the dog ended up costing possibly more than the value of replacement of the items but really, can grandma's chairs ever be replaced?

We had decided before moving that as tempting as it might be there would be NO DEBT PURCHASES.  No monthly installments, no 90 days same as cash, and no regrets.  No sweat.  That was until a major expense came up right after moving that had not been revealed on the inspection that was an immediate MUST FIX item.

Does this sound like life or what?

So with the pocket books much diminished the hunt was on for somewhere to comfortably sit.  Our weekly adventures were to hit the garage sales, consignment and thrift stores, watch the ads, craigs list, and keep our ears open for deals.

The first blessing was a brand new bed offered for free from a friend with a guest room that was no longer needed. 

Shortly after moving in we found our first garage sale score just down the street.  I had decided that I would rather have a seating area in my room than a dresser and found a love seat, chair, and ottoman for $150.  The price included 2 men carrying the set 5 doors down the street and depositing it in the home.  I really like the different periods of furniture and these pieces reminded me of something from the days of blond wood,  only popular for a season and reminiscent of the 1950's. Since there was no other couches in the living areas we left them there temporarily while we continued our search.

Weeks passed and the hunt went on.  The furniture consignment center looked like the most promising spot. The prices were good for the quality but still a little more than we wanted to spend.  Biglots even had a nice new set and with the discounts gave room for pondering. 

Then it happened.  We came to a garage sale where a grandma was selling her 1970's claw foot living room set in excellent conditon.  We all burst out laughing the moment we saw it because it had to be one of the ugliest sets we had seen.  It was as if the designer could not quite figure out what style they were going for so put all the styles into one eye catching combination. Yet at the same time we could all picture it right in the living room.  The set included 2 love seats, a chair, and an ottoman.  While we looked at it the owner lowered the price from $200 to $150.  We whispered to one another that if they could deliver we were on.  The question was asked and before the money exchanged hands the furniture was loaded.  A wood rocker was added to the deal for an additional $30.  We laughed all the way home.  When the men saw our older antiques they commented on the vintages though I had never thought of 1970 being an antique.  It was just the age of ugly furniture but I do admit it looks nice with the 1930's buffet and Singer that is even older than that.

 

Only one room left to go.  And, this was where we would spend the most time.  The rec room.  I said that to someone and they had no idea what I was talking about.  I responded "you know, where the t.v. goes".  They thought I meant the living room.  The conversation went back and forth as I explained that t.v. does not go in the living room because that is where company stays or one goes to read a book.  Of course if you only have one room then the t.v. would be there but not if there are two.  Then I referred to it as a family room and they still did not know what I was talking about, no it was not a den.

We were at 6 to 8 months now as our quest continued.  We joked about how long this would go on.  At this point it didn't really matter because we were comfortable, not sleeping on the floor, and still had plenty of space if someone wanted to ride a big wheel in the house.  All of our garage sale shopping was paying off with books, clothes, toys, kitchen appliances, and other fun stuff.   But, we knew our shopping days might soon be over because we were getting to the point that we needed to have a garage sale not go to a garage sale.

So here it is:  The $200 furniture.  Comfy, good condition, easy to wipe with a damp rag if needed.  One can stretch out, lay down, or use the ottomans as extra seating if needed.  The set came with the couch, chair, two ottomans, and two tables.  And, of course, same day delivery.

The best thing about these purchases in addition to the daily use they get is that in the future any of the pieces can be replaced guilt free, resold at a garage sale for a similar price, or if an out of area move  occurs they can be used and given away.  Replacement could happen at the other end except of course for the heirloom pieces entrusted to my care.

They were not purchased for the style so much as for their function. Style can come sooner or later when the money has been saved and other financial goals acheived.  If you have been keeping track the total is $530 for three rooms of furniture.  Lamps, rugs, and decorative items are being added along the way.   Whether this furniture is used for two years or twenty years it will still feel like a good deal.  The buffet?  I bought that in 1984 as part of a dining room set for $150.  I no longer have the table and chairs and if you notice one of the little knobs is different which I am fine with.  There is still a tag inside that indicates that it was built in Portland, Oregon in the 30's. 

Though you may not share the same taste in choice of styles the outlets I have mentioned carry all styles.  The consignment store especially carried many high end pieces for a fraction of their new cost. 

Happy shopping!

  

Goodbye, Middle Class

If one scans the headlines certain things of interest tend to jump out.  For some it is football scores, some diet tips, and for me it is personal finance stories. The headline above caught my eye so I wanted to know more. 

Goodbye, Middle Class

Next, I scanned the topical bold headings:

Previous pay: $110,000
Current pay: None
Where they live: Staying as guests in a friend's home

From six figures to the poverty line
Previous pay: $130,000
Current pay: $15,000
Where they live: Their foreclosed home, awaiting eviction

Previous pay: $40,000 to $50,000
Current pay: $12/hour
Where they live: Family shelter

These are the kinds of situations that I wrote the book for.  I went through this myself in a big way.  I totally sympathize with the struggle and frustration that these families are now going through.

But, do you see what I see?  Have you learned yet what I have learned?  At the risk of sounding harsh and offending some I will venture to make some comments after reading the story and watching the video at the bottom.

"We thought this could never happen to us."

And, that in a nutshell is where the source of most of our problem lies as individuals and as a nation as we go through these times.

Why not?

As I look at these salaries I can honestly say that I have never made even close to that much a year in my life.  And, to make this much money and then be broke and homeless there was much more going on then just a job loss.

It may be easy for me to see these things now because it is after the events.  There is an old saying "If I knew then what I know now things would be much different"  Of course they would.  Hindsight can give much good advise and instruction.  So speaking from that perspective let's look at some of the things we can easily spot and questions we could ask.  Our purpose is not to judge or find fault but to lay the cards on the table so when things get better we don't repeat the same mistakes.

OK.  I'm doing the tough one first just to get it out of the way. Here we go...

1.  Were their homes paid off?  We will assume the answer is no since the article states it and they are currently homeless, living with friends, or waiting for the sheriff to kick them out.

If they were making $130,000 a year what was your outstanding mortgage balance?  Was the house more than they could afford?  Just because we have a 30 year mortgage does not mean that we should take 30 years to pay off the home.  The longer we drag it out the more interest we pay.  Almost 5 times the purchase price if we go the entire length of the contract. 

This is definitely the biggest financial hurtle most of us face for obvious reasons.  I was ALMOST out of the woods on this one and then got sucked back in and have to fight that battle again.  My friend Paul, mentioned in the book, recounted the ONE time he had been in debt in his entire life.  He had family property and built a home on it.  He was able to pay for the home except for $7,000.  He told me that he could not stand having this debt and having his home be at risk.  He worked as much overtime as possible until the last payment was made.  Every available dollar went on the payment and he breathed a huge sigh of relief when it was done.  I'm sure my eyes were big and my mouth open while he told the story.  $7,000 total debt in his 70+ year life?!  And, he couldn't sleep at night?  Somewhere along the way we have lost perspective and think there is such a thing as "good debt".  Oh, maybe it's because the lenders tell us so.  Of course it is good for them, they make massive interest and hold the title to our homes.  Or, it's an appreciating asset.   Sounds good, but it will appreciate just as fast or even faster when it has no mortgage lien. 

Most of us cannot look at our mortgage and snap our fingers or put it on our annual goal list and get it done.  But, can we think like Paul and do more than what we are doing now?

2.  How much reserve fund were in place?  They mention six months to 2 years of unemployment so even if they had one it might not have been sufficient but helpful for as long as it lasted.  Did they have a food storage program for six months to a year?  I would think at that income it should be totally doable.

3.  When they became unemployed did they adopt an In The Trenches battle plan?  Did they go to the fox holes and cut back all unnecessary expenses within the first 90 days or did they just try and act like everything was normal and hope for the best?

4.   Investments.  The video mentioned 401K investments.  Although these can be helpful and worthwhile when the employer contributes matching funds we do need to be careful because some of the money goes into the stock market with no guarantee of a return.  I'm sure that many of you are more knowledgeable than I on these for I have not often had them available so don't keep up on them.  Just because the banks sell them and the government promotes them does not mean they are the best things for us.  We always have to remember who the funders are behind he politicians. Were the investments something that they could cash in if needed or provide additional income during the lean times?

5.  How much other debt was there?  Were cars, furniture, and who knows what also on credit?  These are like lead weights on the legs of a swimmer.  When you are in a boat they may not be noticeable but jump or get thrown out and they will quickly drag you under.

6.  What did the balance sheet look like?  Another way of asking some of the questions above and a summary of the results.

7.  How is middle class defined?  Is it the amount of money one makes? The net result of their balance sheet?  Or, income to debt ratio?  I know many who live very well on small amounts because they know how to manage well.   

In my opinion, $130,000 is a BIG annual income.  Yes, that speaks much about my perspective but basic math says that in less than 10 years over 1 million dollars will be made.  If you had a million dollars how would you manage it?  Just because it is given in annual or monthly increments does not make it any less.  Would you spend it every month and more?  If you make half of that you could still say that in 10 years time you would bring home 1/2 a million.  Not too shabby.  We all think we want to win the lotto and many already have just don't recognize it until it's gone. 

One of the things we were required to do when I was in banking in addition to making an annual budget was to project that budget out for 5 years.  But, wait a minute you may think, this is my personal finances, not a business.  True enough.  So at the end of five years you don't care if you break even, loose money, or make a profit?  At the end of five years it's okay that you are worse off or the same?  I think not.  So with that in mind why not project your current plan out for the additional time frame.  It may surprise you or give valuable information as to how you could do better. 

Above all we need to recognize that life DOES have it's ups and downs.  When we are up what would we do differently if we acknowledged there could be a down.  As they say "Hope for the best but plan for the worst".  As all farmers know, harvest time is the time to store up for winter.  Nature itself teaches us the basic things we need to know to do well and prosper if we would just listen.

The point of my comments is not to single these families out - that has already been done with the article.  It is not to fault find after the events - that has no purpose.  My comments are intended to focus on what we can do to rebuild our future in a better way.  I once heard that when a skyscraper is built the builders must drill the supporting beams into the ground almost to the depth of the height of the building we see above ground.  This is to prevent the building from toppling over with the weight when an earthquake or other events come to pass.  Not all situations can be prevented that is for sure.  But, we can and should learn from all.  I'm still working my own plan and have a ways to go.  Hope you are too.

The good ole days

For those of us who read financial blogs we know that often the comments, discussions, and arguments of the readers are often more interesting than the blog post itself. 

The Changing Value of Hardwork posted by The Simple Dollar on October 27 was one such article.  Trent threw out an idea and the readers seemed to pounce on it and then on one another in the fray.  Below is a portion of one comment made that stirred me to jump in.  I am not trying to misrepresent the writer in any way so please go back to the link to read in it's entirety if you are interested:

"...In the not so distant past, middle class Americans could afford to have a servant (live-in or daily) and meet basic needs on ONE income. Now that is no longer true. To meet basic needs for a family takes TWO incomes, and I don’t know many middle class homes with servants. Though dishwashers, laundry machines, etc. take over some of that labor..."

My Response:
As a child raised in the 50's and 60's I can definitely state that what was considered "the basics" and supported by one income is not what people now consider the basics.  I was raised in a well off suburb and most of the families had one car, 1 b/w TV, no computers, no clothes dryers, did not drive the kids all around because we were expected to walk or ride our bikes.  We watched a movie as a treat maybe once every 1-3 months.  We reused our lunch sacks, had one phone, and long distance calls were for emergencies (like deaths) only.  The hired help was usually a teenaged girl getting paid 50 cents an hour and happy to have the opportunity to earn some money.  The boys helped with yard work.

The "need" to have two people working to support a home was created primarily by my own generation who wanted and expected it all the day they moved away from home and wanted even bigger, better, and faster - even if it meant going into debt to get it.  That is one of the major reasons we are now dealing with what is called the "American Economic Crisis". 

What stuck me full force with her comment was that in retrospect only one generation prior to mine even in the well off suburbs of America the spending habits would be considered frugal by today's standards and actions.  Go back one more generation and we had those who lived through the depression as adults and worked from before dawn to long after dark in homes that had wood heat, often no insulation, and were just getting electricity.

As a child I remember we went to Seattle only once or twice a year to shop or visit family because it was "too far away" and gas cost money.  It was all of 10 miles. 

We are probably living in the most lavish time and generation that has ever lived.  We have the most and we take the most for granted and call it a necessity.   Someone recently said "there are millions around the world who would love to come to America just to be poor".  Point well made.

If there is one vivid memory of the way in which we were raised it was that we were expected to bring home our brown paper lunch sacks daily and keep them in the condition that we would be able to use them for a week.  Waste of any kind was discouraged and the expression "Waste Not, Want Not" was oft repeated.  People didn't talk about green or frugal living but lived by the motto "A penny saved is a penny earned". 

It was a top priority that a mother was able to stay home and care for her children so people were willing to do without in order to accomplish this.  It is not so much that our economics have changed as it is our priorities and standards have changed.

My mother was unusual in that she was divorced and did not remarry, this was very uncommon among the kids I went to school with.  Mom received no child support and on her single salary made sure that my brother and I had good medical care, braces on our teeth (not covered by insurance), music through the school, annual family vacations, and my brother played soccor.  We always had food on the table and a warm bed to sleep in.  We were able to attend summer camps but were expected to do any "earn your own way" options that were available.  We also earned our own spending money.  We did not have everything that the families who had a father as the head of the family but one thing was always clear: we were my mom's top priority.  I don't ever remember her going out for the evening to have a good time without us.  If we were not all together she did not go.

Although mom was gone when I came home from school, making me one of the original latch key kids in our area, all the neighbor mothers were home and I shared in their home baked cookies, went to the girl scout meetings hosted in their homes, and shared in their after school activities until mom came home after a long days work.

Beyond that our lifestyle was not much different from one another and often when it was time for their fathers to come home it was my signal to go home so many of the fathers I never met.

Every family on the block had a hot meal waiting. One could hear the call to dinner as mothers stuck their heads out the door to call the kids.  For some it might have been macaroni and cheese and for others steak but nonetheless it was the way we lived.  Nowadays many people may laugh at Leave it to Beaver but it was definately a good way to grow up.  Parents worked hard and sacrificed much to provide this model of home for their children.

I share this mainly to set the record straight.  It is easy to draw conclusions and assume that the rise in the two parent working family is a necessity while overlooking that it is a choice made up quite possibly of a series of many little choices.   I just can't imagine Wally and the Beav or anyone I knew for that matter being in what is now being referred to as "generation rage". There was just not that much to be mad about.  Even in areas that were experiencing difficult times would work through them in hardworking decent ways.

Making these little choices today is just as possible if not more so than they were in the 50's and 60's.  It all depends on our priorities. 

For more about the lifestyle of the good ole days:
In The Trenches - Recycling

The Dollar Store

"How much is it?"
"It's only a buck."

When we go to The Dollar Store we hear those phases repeated over and over again.  It always makes us laugh as we catch ourselves time after time repeating it along with all the other shoppers.  Yes, the sign on the door says so but we continue to ask anyway.

About once a month we head in and have a great time roaming through the aisles finding all the strange and unusual things on the shelves.  Most do not carry the standard policy of  when the shelf is empty it gets refilled.  No, each time we go there is a different collection of items to pick and choose through as the owner has picked up the deals along the way.  With the holidays approaching the variety is even more colorful.

Even the kids can take their change and find something new and different to enjoy.  Once of the best purchases that was made was a package of colorful pipe cleaners.  Hours and hours of enjoyment and creativity was used in the making of mobiles, bird cages, and roses.  All for a buck.  The same happened with a package of colored Popsicle sticks. 

Some of the many items we have found:

• Cleaning products including window cleaner, laundry detergent, and dish soap.  Some are brand name
• Socks. 3 pair for a dollar
• Party supplies
• Hardcover and paperback books including some of the top authors
• Umbrellas
• Toothpaste
• Bungee Cords at another store $6
• T-shirts
• Hair accessories
• Calculator
• Bibles
• First aid supplies including ibuprofen and band aids
• Pet Supplies
• Picture frames
• Holiday items
• School supplies
• Liquid hand soap/sanitizer
• Gloves
• Puzzles at another store $4
• and, my favorite - pink flamingo decorative items.

They also sell all manner of food items but as is always true, know your prices.  A can of vegetables at $1 is not the best price in town.

What can you still buy for a dollar?  Check it out.  You may be surprised and have a fun time in the process.  And, if you REALLY want to save money they also have the 99 cent store where you can even get back change from your dollar.

Hear the Sleigh Bells Ringing?

I cannot believe how quickly the year is flying by!  If you want a Merry debt-free Christmas the time to starting thinking about it is now.  If the article below ignites your spirit there are other Christmas posts right below if you hit the older posts button.  See, after my break from writing it really did fly!  Good thing the elves were working because I sure had other things going on.

This article was originally posted in Christian Common Cents in August 2010.  I had a lot of fun writing it and I hope you will enjoy reading it and sharing your own ideas.  I remembered the article when last week I realized I better get my own Christmas list started. 

“What? You’ve got to be kidding. It’s only August.” (Oh, no, it's already October first!) That may be true but if you have heard the story of Santa then you know that his elves are already working. Delivery day is December 25 but all year long there has been busy activity in preparation for the day that we celebrate the birth of Christ by giving gifts to one another.

This year may be the first year ever that you are ready to consider creating a new tradition. No credit cards. No added debt. No paying for Christmas up until April. How about a new tradition of a cash only Christmas? You might have even said this to yourself every year right before you pull out the plastic.

“He’s making a list and checking it twice”. There’s our starting point. This is the most important part because it will be your guideline for what you will do for the next five months and I can tell you it might not be as easy as it sounds. It is hard to think about Christmas in August when we don’t have the store ads and commercials motivating us. “What? Oh, you mean the media is influencing us? Oh…..” Sure. They want to sell as much as they can and lay it on thick with all the best marketing, persuasive colors, lights, and sounds they can find. They have actually studied how to entice us to buy more. Just do it. Pull out the plastic.

This year is going to be different. This year we can plan early. Pay cash. And, have a wonderful holiday season that does not leave us with a strange sick feeling in the stomach when it’s over.
Back to the list making. If you can’t get enthusiastic then find a friend who will do this with you. Once the list is made figure out how much each item costs and write it on the side. Add up what you think might be the total cost. I know. It does take so much fun out of it to be so much like an accountant when thinking about Christmas. I totally get that. Spontaneous gift giving is very fun but it’s like dieting. We can’t enjoy the fact that we have passed up the donuts until we step on the scale and find that we have lost five pounds.

Here are some ideas to think about once the list is complete. You might want to revise your list after reading them.

1. Christmas cards. Almost everybody loves getting Christmas cards especially if they are from someone they have not heard from all year. To economize in this area consider reducing the price of the box of cards, not the number of people on your list. Discount and dollar stores often carry boxed cards year round at very cheap prices. Think about buying stamps now and setting them aside or stashing the money in your Christmas account if you want to wait for the seasonal stamps.

2. Christmas account. Set up a Christmas account at the bank and put a regular amount of money each paycheck that is building to the full amount of the list. With five months to go before Christmas and a list of $1,000 then you would need to put $200 per month in the account. What? Can’t afford that? Then it’s time to go back through the list. Here are more ideas to help cut it back.

3. Baking cookies and treats. We used to spend a few days in the kitchen baking, baking, and baking. Little cranberry and pumpkin loaves, cookies, and fudge. We would then deliver them to friends and neighbors with our personal Christmas greetings. Is there anyone on your list who would be just as happy with holiday treats as they would be with the gift you were planning to buy? In these tough economic times everyone knows about cutting back and understands. Sometimes it can even be a relief to them because they don’t feel like they need to reciprocate more than a hug if that is all they can afford.

4. Layaway. Before credit cards (yes, there was actually a time before credit cards) layaway was very popular with the department stores. Ask at each of the stores you frequent if they have layaway. If not suggest that Christmas is coming and they might want to get it in place. If yes, then watch for the best sale you can find on big-ticket items. Shop around so that you know the difference between the regular price and a sale. When you find the best deal put it on lay-away. You will need to make a regular payment so ask and make arrangements with the store to do so. This can be reduced from the money you are putting in the bank. Don’t miss a payment. The merchandise could go back on the rack and you could lose some or all of what was paid in. Another good reason to have your Christmas account. If you really are running short you have a back-up payment source.

5. Make your own gifts. Do you have a talent or craft that you enjoy? By starting early you can make many of your gifts. One of my favorite Christmas’ was when I was about five. My mom and dad bought me a doll. My grandpa made a wooden doll bed and painted it white. My grandma made some blankets, sheets, and a little pink pillow, and my great aunt made some doll clothes. It was a family effort and it was wonderful. Most was made from scrap lumber, fabric, and yarn. The cost was minimal but the gift was priceless.

6. More please. I am a firm believer that children under 12 would prefer to have a number of smaller gifts than one big gift. It’s more exciting. If income is limited by setting an amount per person you can select what will fit into this limit. Board games, books, articles of clothing can all add to their feeling of an abundant Christmas. Remember that kids do count so if Sally got five gifts then Mike wants five gifts also. If there is a more expensive item on the list is it something that could be a “family gift” instead of being designated for one person?

7. Practical Christmas gifts. It’s great to have picked the perfect gift for everyone on our list. How often does that really happen based on the returns? One of the ways I like to shop is to pick a practical gift and buy the same thing for almost everybody. Towels are my favorite item because everyone can use them and every couple years it’s nice to have some new. It’s very simple to go and buy seven sets of towels in colors to match their bathroom. For children there are Dora, Barbie, sports, and other things kids love. The price is about $12 to $20 per person to do this. Other gifts I have bought in this manner are sheets, digital cameras, and kitchen towel sets. You can structure your gift to the amount you have to spend per person that year.

8. What are your own favorite Christmas memories? What was most special? Can you incorporate any of these ideas in your planning?

9. Still short on having enough money planned? There is still time to do a Labor Day Garage sale to bring in part or the entire amount needed for your Christmas list.

10. Bonus tip. When shopping for others with a plan you will be less likely to impulsively buy things that are not needed just for recreation. You can still have the enjoyment of a day of shopping but are doing it with a purpose in mind.

Every year we remind ourselves that it is the thought that counts for Christmas and that thought flies out the window when we start shopping. Santa’s helpers have the right idea and we can learn from their experience by planning ahead. When the holidays arrive we can be ready and be able to relax and enjoy them. Oops, in December it’s to make all those cookies. So, we can be busy and enjoy them. When January comes we can walk to the mailbox with confidence knowing we have achieved our personal victory over the credit monster for another year.

Early Retirement Extreme - Book Review

Where do you want to be in five years?  If making dramatic improvements to your finances is one of your New Year's Resolutions start here.  I had anxiously awaited my copy of Early Retirement Extreme written by Jacob Lund Fisker and was not disappointed!  Jacob is also the author of a successful blog by the same name and has developed a growing number of readers worldwide where forums and cell groups have begun and are taking hold.  It is the wave movement taking hold across the land and for good reason.  Amazon readers give Early Retirement Extreme a five star rating and sales are doing great for this first time author.  Where else can a person read and find support for frugal, green, and healthy living and set a course for retiring in five years all at the same time?  Jacob shows how these principles can be applied with tremendous success even on a minimum wage job.

If you have read any of Jacob's writing you know that just when you are fully concentrating to understand what he is saying he cracks an unexpected joke that gets you laughing. Rather than attempt to recount the book chapter by chapter which you can do on your own I have decided to highlight some of my favorite parts:

The Consumer Dungeon - If you have not taken the time to consider the downside of the consumer driven economy in which we live Jacob has written a graphic, disturbing account that reads like the beginning of a dramatic movie.  Men especially will appreciate the details that seem to come out of a end of the world future movie that is happening all around us.  In fact, the entire book could be made into a movie recounting one man's journey to freedom and his willingness to show others the way.

The Four Economic Quadrants -  Lifestyles are categorized as the salary, working man, business man, and renaissance man.  Having had the opportunity to live in each one and move throughout during different periods of time I know that the descriptions of each and the pros and cons are straight forward and accurate.  By recognition and acknowledgement a person is much more able to maneuver the direction they want to go without succumbing to the unconscious influences that would keep them from their goals.

Goals, Strategies, and Tactics - Why do our goals fail or take so long?  Often it is because we do not take into account the opposing or conflicting factors either in our own lives or surrounding circumstances. Jacobs goal building charts show how to integrate our lives and daily habits in a way that will provide congruency and ultimate success.  More importantly is by taking a few minutes charting things out it not only finds a solution but the BEST solution when reviewing multiple options.

The Renaissance Man- Wouldn't you just like to be YOURSELF?  Sometimes does it get difficult to even know who this is when we conform, fractionalize our lives, keep up with the Jones, and spend all our money to comply with a certain lifestyle, profession, or tax structure?  It is no wonder that people have what is termed "A Midlife Crisis", or turn to t.v., weekend partying, or shopping to numb the mind.  We are so busy that it is easy to lose our own sense of identity.  In becoming a Renaissance person we are able to rediscover the curiosity and mastery we had as a child when we took apart the radio or dreamed of becoming a cowboy.  The difference is that now as adults we can combine our dreams with skills, talents, plans, and knowledge that we did not earlier possess.  Though it sounds idealistic the process is extremely practical and through the changes we gain the time and money to pursue who we are after the fashion of Jonathan Livingston Seagull.

The Practical Side of Life - Detailed chapters to help you consider housing, clothing, food, and transportation choices are provided.  Another gem in this is section is the answer to the question that every person from Washington State wants to know, "Do you get more rain on you when you walk or run?"

Investing - I admit that algebra was my all time worst subject.  When I first saw the equations my eyes glazed and my mind when blank.  But as I continued to read I was excited to see that investment strategies were provided not as a specific "how to" but as a set of principles that could be applied whether you choose to invest in stocks, gold, timber, or real estate.

There is no doubt that Jacob Lund Fisker is an extremely intelligent, educated, and analytical person and for these reasons his writing may be somewhat intimidating at times because it compels us to look at and think about much we have taken for granted.  What is rare about Jacob is that he is able to take this information and break it down to it's simplest form and find methods that are ultimately practical and so full of common sense that they can be applied with success by anyone regardless of profession, education, social status, advantage, or lack of them.

The ERE Strategy is intended to be a comprehensive adjustment that will enable a person to retire in five years.  For those who are not ready to jump in for the entire lifestyle change  a modified version can be adopted that will shave years off the time needed to pay off mortgages, debt, build retirement funds, or provide the flexibility for the ups and downs in life.

As we start the new year following what has been one of the most difficult economic times in American history Early Retirement Extreme provides a method for the fast track to recovery and prosperity.  The book will pay for itself thousands of times over and can undoubtedly be the best investment for the new year.  I'm excited as I watch the principles gain popularity and momentum and recommend this book as one of the best New Years Resolutions a person can have and look forward to seeing the title on the best seller's list.

10 Great Christmas Gifts That Won't Cost You a Dime!

Yahoo! Finance - Financially Fit

With Christmas getting so near the wallet may be getting thinner. Instead of pulling out the plastic here are some ideas to get the gears going to think of your own meaningful gifts that cost no money. My favorite on the list was the cooking, yes, it admit my favorite lasagna recipe is not free but still could save from buying a gift. I don't know about you but it sounds pretty fun to have a friend deliver a home cooked meal. And, what a surprise.

It's not too late to start many projects.  Creativity and your own talents and skills are your biggest asset.

Getting ready for winter

The rural community where I lived for many years has many homes whose average age is 60 or more years old.  Many of these homes were built with below ground basements that served as the foundation of the home.  They are unfinished and usually quite dark with just the small windows at the base of the home and one overhead exposed light bulb. They are not considered as living space but rather a place to house a wood burning stove, canned goods, camping equipment, or freezers.  They are often susceptible to flooding in the winter.  Needless to say there is not a lot of quality time spent in these basements.  An occasional trip up and down the stairs to retrieve an item is the extent of their occupancy so often the basement may have no visitors for long periods of time.

A friend recently shared with me the story of another friend who made the journey down the stairs only to find that it had been completely taken over as a storage area for the squirrels.  Imagine her surprise when she came down the stairs and in my friends words "every pine cone in the county" had been deposited in this ladies basement.

Healthy Finances

If we were to contemplate healthy finances what might that look like? 
Food on the table
Bills paid on time
Reserve in the bank

Conversely what would sick finances look like?  At the end of the post I hope you will consider your own finances and decide:  Are they healthy?, Have a cold?, in ICU?, or, on life support?  Knowing the answer will help you view your situation more objectively and possibly make some adjustments in your way of dealing with the choices and attitudes available. 

what-you-should-expect-from-social-security: Personal Finance News from Yahoo! Finance

what-you-should-expect-from-social-security: Personal Finance News from Yahoo! Finance

There is nothing new about this news but it will take a while for the information to travel around the block. These predictions based on mathematical calculations have been around at least for the last 20 years but are getting more attention as the time draws closer.

I don't know about you but I don't want to work until I'm 70 or 68. That being the case, retirement needs to be of important consideration and planning. Sounds like the perfect opportunity to remind everyone again about the book just released by Jacob Fisker called Early Retirement Extreme. Hot off the presses and available through Amazon.com or his web site. Jacob will tell you what adjustments can be made now to prepare to retire early.  He should know because by implementing his plan he has already become semi-retired at age 34.  Read his story here on his site and get an idea of the flavor of his unique but very practical approach to finances.  To get a brief overview of what a transition toward early retirement may mean to you take a look at his 21 day makeover listed in the left sidebar.

While others are worried about the inevitable, by taking some positive and specific steps retirement may not be as far away as you think.

Another article you may find helpful from The Simple Dollar.

Living on One Income: How to Make it Work

Living on One Income: How to Make it Work billeater.com

Living on One Income can be by design or circumstance. Jessica Bosari from billeater.com has encouraged us to look at the big ticket items to find ways to stretch your budget. Attached is the link to hear her suggestions.

Billeater.com has a neatly organized site to help you save money in all spending categories and shows where you can get coupons and freebies.

Living on one income can be tough but there are often opportunities.

Secrets of Extreme Savers

Link to story:  Yahoo! Finance - Financially Fit

Sometimes looking at how others live can be quite surprising. We hear so much about unemployment, debt, and difficulty that we begin to think that is all there is.

Sometimes the sunshine comes through the clouds and we become aware that there are different choices that can be made.

For millions of people the financial crisis has been a time where they need to start over. Though it can be difficult it can be the cloud with the silver lining!

In this article the featured families have been able to save between 20% to 60% of their income. The story tells how they were able to do it and how it affected their lives.

Exciting!