A blog about spending wisely in your twenties, with advice on everything from cooking to saving money on gas; how to teach yourself to save money instead of spending it, traveling without breaking the bank, and much more.

Saturday, March 29, 2008

Gardening Without a Yard

The lakeside house I rent with my roommates is amazing. Tons of storage space, great view, huge kitchen, lots of light in the family room. Unfortunately, the owners decided that the entire backyard should be deck & dock. There's pretty much no green, and very little shade unless we sit directly under the balcony. So today, (non live-in) Boyfriend and I ventured out to the garden center to buy some plants and proper pots. I chose the two herbs I cook with most often (cilantro and basil), a tomato plant (plus some marigolds to share the planter), a jalapeno plant, and some chamomile. My hope is that over time, I'll manage not to kill them all and my investment of $66.81 will pay off over and over again. (I'd budgeted $100 for the project).

If these plants thrive, I'm hoping to save enough for a gigantic planter, big enough for a small lemon tree. Over time I'd like to have almost a full vegetable garden. Maybe one day I'll be able to transplant everything into an actual yard. But for now I'm 23 and my plants need to be mobile so they can move where I move and the investment isn't left behind.

Now I've just got to find a way to protect it from the geese, ducks, and neighborhood cats.

Thursday, March 27, 2008

Frankenstein's Deodorant

I haven't bought deodorant in almost six months.

Last October, Target had a bunch of Suave brand deodorant on sale for $.97 each. So naturally I bought 5 or 6. This week, the last stick was finally worn down to about half an inch. So I gathered up all six containers, took them apart, and scraped the remains into one tube. I popped it in the microwave for about 30 seconds (just long enough to liquify any crumbles), then I put it in the freezer for about five minutes.

Bam. Full stick of deodorant.

I know it sounds mildly insane to pull a Dr. Frankenstein on a deodorant stick, but every dollar I don't spend is a dollar I get to put into savings where it will earn interest.

We often throw things away without considering whether they might still have some utility left. In my house, sour cream & cream cheese are considered necessities, so we buy them (store brand, on sale or with a coupon) on a regular basis and we save the containers. Six months ago we were hurting for Tupperware, but now we've got more than plenty of containers for leftovers. Paper towel tubes are used for storing plastic grocery bags (much more compact!). Brown paper bags are used to mail bookmooch books. Coffee canisters become pencil cups. We wash & re-use Zip-Loc bags. Almost gone deodorant sticks are combined to make a full stick.

Often we stress ourselves out trying to bring in more money without considering that if we found more ways to hang onto our money in the first place, we might not feel the crunch so acutely. That's not to say that bringing in more income is a negative- but finding little ways to Not Spend $1 or more here and there adds up. Bear in mind that Not Spending $1 is not the same thing as buying a $10 doohickey for $9. Spending $9 to save $1 is not equal to Not Spending $1 in the first place.

Being less wasteful affects more than just your pocketbook. When you're re-using or recycling items that you might normally have just chucked in the rubbish bin, you're keeping stuff out of landfills- going green, as it were (as I said to my roommates last night, "going green" is the new breast cancer.) You can buy 8 million products that are certified to be "gentle on the environment," but one of the best things you can actually do is create less waste.

Now, I'm not advocating that you hoard every bit of non-toxic trash until you can re-use it. But do consider: What are you throwing away that might be re-used or frankensteined back to life? Have you bought something to fill a need that might have been filled just as easily by something you would normally throw away? Can McGuyvering a solution from available materials save you a little bit of money in the long run?

Guest Post: Creative Saving Strategies

The habit of saving did not come easily to me. Only in the past six months or so have I truly begun to become disciplined about socking part of my paycheck away. I could write an article about it myself, but it would be chock full of ideas and strategies that I learned from my buddy Arjay. Arjay is one of the only people I know who was putting money away while most of the people around him spentspentspent. So for this post, I turn you over to Arjay, age 23- who has well over two month's salary in savings.

Here are a few tips on how to get started saving in your late teens or early twenties. I've been saving for a few years, and I'm glad I did because when I really needed extra cash I didn't have to stress myself out too much. Whatever your reason to save, everyone can always save- if not for something in particular, just to have something for a rainy day can really make you feel good.

Rule number one, start small. There's no need to run out and start saving a lot of money, and chances are if you suddenly save a large sum, you're just going to need it later, and that would defeat your purpose of saving in the first place. I started saving just little bits here and there with my first job right out of high school. I started saving maybe $5 or $10 dollars a paycheck. I've found that most people are comfortable starting out with saving one to two hours of work. As I started working odd jobs through college, I followed this rule, and it's worked out well for me. Small amounts over time really add up.

Next, pick a bank with a high interest rate. This is pretty obvious, but some people just get so excited about starting to save that they forget to get the most out of it. Most internet banks offer a rate that's way better than what you can get at a conventional bank. Some good ones are ING Direct and HSBC Direct, and most have referral bonuses if you get referred or refer a friend. Also, I found out that I earn more interest with ING Direct in one month than I did at Wells Fargo in a year, and most internet banks will let you open an account with a buck. That's no joke. There's another reason that I recommend internet banks, but I'll mention that later. Sign up for direct deposit and have your employer split your paycheck between your savings account and your spending (er checking for most people) account. Or if your employer doesn't offer direct deposit or can't split it, set up an automatic transfer on or just before payday. Remember always pay yourself first, and bills and rent can come after that. You are your most important bill. It's a lot better if your employer can split it for you because if you don't see it you don't spend it, and most importantly you pay yourself first.

So the other reason that I highly recommend internet banks is that most have to link to an existing checking account, so it takes at least one, in most cases two business days to get your money to where it is accessible (read as: spendable). If it takes that long to get cash, you're better off just leaving it in there for when you really need it or if something comes up. I've wanted to buy so many things with the money that's in my savings, but then I thought it takes too long to get it out so why bother, don't worry about your bank being on the internet. Most are FDIC insured, meaning your deposits are safe even if the bank goes under.

Lastly, increase your savings per paycheck. This is probably the most important rule next to saving gradually (small amounts over time really do add up). Like I said, I started really small and now I'm saving about 15-20% of my paycheck. The best way to increase your savings per paycheck is when you get a raise, just bank the raise. You didn't have that cash before, so just sticking it in the bank won't hurt you.

Now, I know what you're thinking…saving is great and all, but what if I get discouraged because I'm saving money that I can be doing other stuff with, or what if I'm really tempted to spend it. Here's how I combat both issues…First off, I think to myself that if I were to suddenly not be able to work tomorrow, I have enough savings to last a few months at least, and how many people can honestly say that. Sure I'll have to make some sacrifices, but I won't be on the street immediately. By saving and paying yourself first, is actually a way to pay for a sense of security. Think of saving as a kind of a "money insurance." I mean there's car insurance, health insurance, home owner's, and renter's insurance. Most people pay for those monthly anyway, so saving is really just like another type of insurance that you pay for, and while you may never need it…It's good to know that it's there. Also if you really end up not needing to tap into it, you can do something good for yourself later…like take a nice vacation or get a new toy that you've always wanted without going into debt. How many kinds of insurance reward you for never needing to use them? Saving is the only type of "insurance" I know of that rewards you instantly for not having to use it (whether it's the interest or sense of security).

Another way to keep you happy while saving…is to periodically reward yourself when you reach a savings goal (please note, a reward is not every month). Increments of $250, $500, or $1,000 work best. Have a fun night out with the portion of the paycheck that you would have saved, or take out some of the interest to buy a book, DVD, or something small that you've been wanting.

There'll be some more posts on how to get creative saving and what to do with your money once you're bored of "just saving." For now, my hope is to get the twenty-something crowd to start saving and thinking about saving in a new way.

I've Got All These Pans...

If you're outfitting your kitchen with proper implements, you need to outfit yourself with some book-learnin'. So get a cookbook. A basic cookbook- if you're learning to cook more than Instant Whatever, you'll need one.

I'm partial to the red-checked cookbook, but that's most likely because my mother was too. In fact your mom (or dad) might have a recommendation for good a general-use cookbook. Your best bet (as suggested by my mom) is to head over to a Big Box Bookstore (Barnes & Noble or Borders) and flip through a few until you find one that suits you. Then leave the store without spending any money. Buy the book you chose (used!) on Amazon, or try to find it on bookmooch.

I should mention now that the purpose of this series is not to teach anyone how to become a gourmet cook. The purpose is to teach those who might be spending exorbitant amounts of money on overpriced brand name and prepackaged foods how to eat well for a fraction of what they're currently spending eating gunge.

In order to accomplish that, I'll be showing you- not telling you. I will not be spending one penny on groceries during the month of April. Intrigued? Come back on the first of the month for the first installment.

Wednesday, March 26, 2008

Louis CK on Being Broke

Not everyone has been quite this broke (I have!), but everyone hits their own personal low when it comes money. Only in the past six months or so have I managed to lift myself out of the bottomless pit of being so broke they charged me for being broke. I opened a money market account with a high interest rate in February, and get this - they really do give you money for having money. I've deposited $150 since I opened the account and they've given me $.29. Granted, a quarter and a few pennies isn't much. But all I had to do to get it was save a some money. My regular savings account is lucky to earn one red cent in interest in a month!

Maybe one day I'll earn enough interest to even out those overdraft fees I paid when I was younger.

Tuesday, March 25, 2008

Finding a Reason to Save

The biggest obstacle many young adults face financially is apathy. The second might be ignorance. Managing our finances seems big & scary, and when it comes to saving & living within our means we just don’t wanna. Checking our balance online once a week is often the most we ever do when it comes to financial planning. We make our big purchases on payday, before we can whittle our income down with stupid stuff like paying our bills or filling our gas tanks. We’re certainly not immediately concerned about ever having the money for a wedding, a house, kids, retirement or anything else. In fact, we’re often operating on this vague assumption that by the time those Major Life Events come ‘round, we’ll be working glamorous jobs and making $80,000+ a year and those expenses won’t even dent our bank accounts.

We’re just not inspired to do anything with our money other than spend it. We want (multiple) beers after work every night, iPods, dinners out, new clothes, DVDs, the latest cell phones, video games…in fact, we’re pretty much still teenagers except for the beers part. Most of my friends weren’t paying any attention to their finances until all of the sudden they found themselves crossing over into their mid (or late!) twenties. Out of nowhere, we begin to wonder if we are doomed to live with roommates our whole lives, if we’ll ever have careers instead of jobs, if we’ll have nice weddings or just go visit a justice of the peace and have it over with, or if we’ll be able to retire comfortably- the list goes on and it’s different for everyone. Whatever your reasons, they’ll hit like a ton of bricks when the time comes.

But what do you do before the What-Ifs kick in and you start caring about your long-term financial situation? How do you get inspired to take control of your finances instead of just plucking along, paycheck to paycheck, heaving a big sigh of relief when you don’t get evicted and your cell phone’s still on? I believe the answer lies in finding short-term goals to work toward. Our attention spans are short, at 18-20 ish we don’t really NEED to start planning for weddingsbabieshousesretirement just yet (though we should)- but we might just get inspired to get our butts in gear for the more nearsighted goals.

So if you’re not quite old enough to care about the Real Grown Up Stuff You Have to Pay For, sit down and make a list of goals. They should be goals you could reach in a year (maybe less!). Here’s what a few of mine might have looked like when I was 19:

• My own room! (If you live at home, this might translate into getting an apartment with friends. If you’ve already got an apartment with friends, this might translate into getting your own place, or a place with fewer roommates.)
• A trip to ______ (Fill in the blank. I think I wanted to go to Africa when I was 19. Still do. Traveling abroad or cross country is perhaps one of the best goals for younger adults. We’ve got more freedom to roam and it’s lower cost goal with a short payoff. Perfect!)
• Paying off my car loan. (Some of you might have this one too. If you went to college, this might be a student loan instead. It might be both. Maybe you just want you’re a car in the first place!)
• A laptop! (I’ve got one now, I bought an iBook G4 from a friend for $500 when I was 22. But this item might be any other gadget- a GPS, an iPhone. Of course, this assumes you’ve got the willpower to not put such an item on credit.)

Write down your goals. Whether you’re 18 and you just want an iPhone or 28 and looking to buy a house. Write them down. Be detailed. Where is your apartment? When you get to Italy, what will you see? What will you do with your laptop when you get it? Where is the dining room in your house? Put your list somewhere you’ll see it every day (taped to your computer monitor is best). Definitely look at it when you check your account balances online. Are you treating your money in a way that brings you closer to your goals? Or are you just as far away from them as ever? When the disparity between your behavior and your greatest wants can no longer be denied, it is very difficult to not begin taking at least baby steps towards financial responsibility.

If you’re reading this blog you probably already care about your financial situation on some level, but all the blogs and tips in the world won’t help you unless the decision to take control of your finances is inspired by a personal goal you care deeply (dare I say viscerally) about reaching.

Monday, March 24, 2008

Coupon Codes!

In this day & age, nearly all of us shop online at least some of the time. One of the most annoying things about online shopping is leaving the promo code box blank. Well, never again! CurrentCodes.com is an up-to-date, free database of current coupon & promotional codes. Next time you buy anything online, check this site before you check out!

The $37 Latte

Until I was about 20, I ignored overdraft notices. My mother would call and point out the pile of matching envelopes arriving at her house (the address I still used for banking purposes for a while after I moved out), and I would shrug them off or rationalize them. The older I get, the more I realize that this phenomenon is not unique to me. Granted, not everyone racks up tons of overdraft charges, but I believe there’s a fairly significant number of the 18-25ish set who not only rack them up, but also live in complete denial of the havoc overdrafting is wreaking on their finances.

I don’t know of any hard numbers on just how many of us get into this awful habit, and I can only guess as to the reasons. Perhaps we’re embarrassed, perhaps we’re in denial. We want to seem financially solvent, even if we’re not – often we don’t care about the numbers on our bank statements as long as our debit and credit cards clear when we’re buying overpriced goods & services that we don’t actually need.

In a perfect world, the bank would just reject our attempts to purchase items that we haven’t actually got enough money for, but banks are businesses and charging fees to the financially illiterate or irresponsible is their bread & butter. We start to play beat-the-bank, thinking we’ll deposit more before the transaction clears, and we begin to believe that it’s ok to overdraft. After all, the bank let you charge whatever it was you thought you needed in the first place, right?

Let’s say you’re like I was, and you are completely in denial about the notices flooding your mailbox. Let’s say that one of them was the result of having not quite enough for the $5 latte you wanted. You have $3, and you go ahead and charge the $5 on your debit card. The bank catches this, of course, and hits you with a $35 fee. You just paid $37 for an already overpriced $5 latte.( $5-$3 you already had = $2 +$35 fee = $37). You could have made a normal cup of coffee at home for pennies on the dollar. Even more amazing, somewhere between buying that latte and getting the notice, we manage to convince ourselves that they’re unconnected.

How much are those “little” $35 charges hurting you? Let’s say you make $15 an hour. (Lucky!) and you’re getting 6 overdrafts a month. 6 x $35 = $210. Six overdrafts a month means $210 you don’t have. And $210 ÷ $15 per hour = 14 hours. $210 worth of overdraft fees is the equivalent of 14 hours of work for you, that’s almost two days of hard work- completely down the drain. Unless you are very, very lucky you probably don’t even like your job that much. And yet you have just wasted 14 hours of time there. That's fourteen! hours! you worked just to have the money float away into BankFeeLand. That $210 could easily pay almost all of your utilities if you’re living with roommates. It’s almost FIVE TANKS of gas in a compact car, if gas can be found for $3.70 a gallon anywhere near you.

So how do you kick the habit? Well for one, start actually OPENING the notices. Tack them up somewhere where you’ll see them everyday, so that they are staring you in the face. Each time you get another, add together the running total on the most recent notice. Every so often, look at that total and think about what you could be buying if you’d SAVED that $35 instead of giving it to the bank. After a while (it may take longer for some), you’ll begin to find yourself unable to deny or rationalize the money that you’re just giving away- money that you’re most likely working your butt off for. Once you’ve learned to be honest with yourself about overdrafting, start following these tips:

Know your available balance. Don’t just have a vague idea of what you think you might have in the bank. Know what you have available to you, after deposit holds, automatic bill payments, and anything else that you might not immediately think of when you’re excited about payday. You might deposit $600, but sometimes only $100-$200 is available for spending same-day. In the era of online banking, there’s no excuse to not know your available balance.
Don't play Beat-the-Bank. Most banks will still hit you with a fee even if you deposit money before a transaction with overdraft potential clears.
Set up overdraft protection. Get a savings account and link it to your checking account. Put $100 in it and set up overdraft protection. Never, under ANY circumstances withdraw that $100. You might feel that $100 is a lot of money to leave in a low interest account, and you might want to use it for an impulse buy. Don’t think of that $100 as YOUR $100. Think of it as $100 you paid to your bank to never charge you an overdraft fee again.
• If all else fails- if your will power, self control, and knowledge of your account balances aren't enough to make you stop overdrafting, call your bank request that your debit card be JUST a debit card. Most debit cards can be run as credit cards- and this will allow merchants to approve many transactions that would otherwise be rejected for Not Sufficient Funds, forcing you into overdraft. If your card can only be run as a debit card, most banks will only approve transactions for which you have sufficient funds.
• And above all - Curb Your Spending. Obviously this aspect of avoiding overdrafts is bigger than this entry, but it applies – big time. If you can manage to stop, or at the very least cut massively back on, impulse buying and overspending, you’ll be gambling your bottom line less often, which means risking overdraft less often. If you find yourself with $3 in your account, get the smaller $2.85 latte if you aren’t strong enough to get out of the line and walk out of the coffee shop. But please, please don’t let yourself spend $37 on a latte ever again.