Why You Should at Least Learn to Bake:

My quest for an amazing blueberry muffin recipe has been a thorn in my side for a year or two now. I try (emphasis on try) to bake something for my breakfasts every week. I don't really like cereal in the morning. I do like oatmeal and other hot cereals, but I prefer for my breakfast to be a grab and go affair.  Buying pre-made breakfasts (bagels and the like) is a good plan, and when the price is right, totally affordable. But every time I buy bagels or muffins or another pre made breakfast food, I stare at the big jars of flour and sugar on my counter and sigh.

This week, I finally found an amazing blueberry muffin recipe. These are coffee shop caliber muffins. The only changes I made were to reduce the amount of sugar and flour in the topping (to 1/4 cup sugar and 1/3 cup flour) and to make 12 muffins instead of 8. If you follow this recipe, be sure to cube up the butter for the topping fairly small.

If you live in California and you step into your local Albertson's this week to purchase ingredients for blueberry muffins, here's how much this recipe would run you, per muffin. Except for the Barbie muffin wrappers part. I found those on manager's special at Food 4 Less. You could also jam aluminium foil or wax paper into the muffin pan cups. Or just forgo the wrappers completely.

40 cents a muffin! And that's assuming you haven't shopped around a little for the best ingredient prices. I did, and the batch I made last night probably came in at closer to 25 cents per muffin, meaning that a muffin and a cup of Starbucks coffee made at home runs me about 28 cents total. (We've got a friend who works at Starbucks, he sells/gives us his weekly pound of coffee.)

If I had homemade coffee and a muffin everyday for a year, I'd be paying $102.20 a year to do so. By contrast, spending $3.25 on drip coffee and a muffin at a coffee shop once a week would cost about $169 a year. Homemade coffee and muffin just once a week for a year? $14.56, for me.  Which, if you're still with me, saves $154.44 a year on muffins and coffee.

And the kicker? Once again: homemade coffee and a muffin, every day, for one year, would cost me $102.20. Buying it at a shop, everyday, for a year? $1186.25. That's assuming you're buying a cup of brewed coffee, as opposed to a latte which would bring your yearly coffee and muffins total to about $1825.

And no, I didn't forget a decimal point.

Bare Bones Cash Flow Management, or Pay Your Frikkin' Bills On Time!

When I first began to gain control of my finances, I meticulously tracked every single penny earned and penny spent. I didn't find any leaks in my spending that I didn't already know about, but I did learn to manage my cash flow. Before I learned to manage my cash flow, I always had the money to pay everything eventually but I spent a small fortune in late fees and I was never really sure just how much money I had at any given point. Rent was due when I got paid, dammit - not the first of the month! I couldn't very well pull money I didn't have yet out of a hat, could I?

Turns out, I could. I am going to say something now that might shock a few people:

If your total income is greater than your total expenses per month, you have no excuse not to pay your obligations on time.

If you get paid bi-weekly, sometimes your paycheck is going to come long before rent is due. "It's cool," you might think on the 22nd, "I get paid on the 5th - so I can just blow this check on whatever and pay rent on the 5th!" Of course, when your check comes on the 5th you spend every last cent of it on rent, and then you end up having to dig up beer bottles to redeem at the recycling center just so you can put the eensiest amount of gas in your car.

Not that I've ever done that or anything.

So here's a quick and dirty list of tips for getting your cash-flow awareness into shape:

(1) Track your spending and income meticulously for at least three months. If you care at all about getting your finances in order, you should be doing this anyway.

(2) Pay your bills on time. As in "when they're due" not "just in time to avoid disconnection."

(3) If the gas bill is $42 due on the 8th, you have $82 to your name, and you get paid on the 11th - you don't have $82. You have $40. Don't take your bank balance at face value. Consider what that balance must pay for and treat the upcoming expenses as checks you've already written, debits that cannot be avoided.

(4) Try to pay as many bills as possible the day you get paid. Get them out of the way so that you can't spend the money for your cell phone bill on a $50 bar tab or whathaveyou.

If you track your expenses while paying on time for two months or more, you'll begin to get a feel for when bills are due relative to your income schedule. You'll also be able to fairly accurately guesstimate the amount of every flexible bill. If you get out of the habit of spending your survival money on stuff you don't technically need, you can blow the extra. Or, you know, save some so that when you really don't have any money, you have a little something to fall back on.

Coming Soon: A kick-ass Cash Flow Tracker in spreadsheet form for everyone to download.

Ways to Break My Starbucks Addiction

As much as I rail against buying Starbucks everyday, I have to admit that I'm often a complete sucker for them. I went to Starbucks the morning after my friend's 22nd birthday and we ordered the exact same drink, but somehow hers cost $1.15 more than mine and the two beverages together cost over $8.00. Ouch! There's also a Starbucks across from my work, and more than once I've wriggled myself into taking a longer break by picking up coffee for one or more of my bosses - sometimes this means they cover the cost of my overpriced coffee, sometimes it doesn't.

Anyway, my point is I love big cold coffee beverages in the summer. I finally switched from obnoxiously worded lattes to slightly sweetened iced coffee, and I couldn't tell the difference. The $2 less I was burning on such a silly item was nice too.

But after just a few weeks of switching to Iced Coffees, I found my Starbucks consumption right back where it was before. Sure, I've never spent TONS there to begin with, but switching to iced coffee was supposed to make the actual monetary hit hurt a little less. Instead, I just went more often because I could 'afford it' now.

Ugh!

Finally, I came up with a better solution. I've been getting up at 6:45 for class 4 days a week, so I need coffee - dammit. It's July in Southern California, so it's too darned hot for straight up brewed black coffee (which I actually prefer, most of the time). To feed my addiction I've taken to brewing coffee the night before and leaving it in the fridge to chill overnight. In the morning, I pour it into a portable cup with a little milk, ice and vanilla syrup (bought on sale at Target a while back).

There's a Starbucks on campus, and now I can walk right by it without being tempted!

A MacBook Air Is Going to Cost Me Four and Half Months of Wages

I've touched on this before, in my article about spending $37 on a latte, and in my last post; my favorite way to control major impulse purchases is calculating just how many hours I'll have to work to pay for whatever it is I want.

I make $11.75 an hour, which after taxes and deductions is effectively $10.00 an hour. The luxury good that I currently covet the most is the new Star Trek: TNG entire series DVD set, which runs about $300 - $400. Now, I have a deep abiding fangirl love of Star Trek, but I don't love it enough to spend an entire week's wages on owning the entire series, especially since a year's worth of Netflix is $116.28 - a mere day or two of work.

Newly released CDs are about $10 (usually more), and there are very few artists that I love enough to spend an hour and half on. The same goes for DVDs, or video games. A tank of gas for my car is about $40 now. That's a half a day of work, and if that's not incentive to find ways to keep my gas mileage down, I don't know what is.

Even those of us with jobs we enjoy would probably rather have our days to ourselves than a timeclock to punch. When you consider purchases in terms of how many hours you've worked, many of your most coveted items lose their luster, and finding ways to cut down on your absolutely necessary expenses suddenly has a tangible trade off.

So the next time you're in Target/Best Buy/The Apple Store, hell, even Goodwill considering an impulse purchase, think to yourself two things: (1) Do I really need this? Or do I just want it? (2) If I just want it, is it really worth X hours of work?

Ctrl-Alt-Delete! or: Undoing an Impulse Buy

My cell phone went completely haywire last night. The keypad was ignoring me, whenever the keypad would finally begin to respond - it would be interupted by an insistent prompt for me to speak a voicedial (I don't even use voice dial!). A creepy clickclickclickclick was coming from the speakers, punctuated by a prolonged beeeeeeeeeeeeep every minute or so.

I powered it on and off, removed the battery and replaced it, removed the SIM card and replaced it, left the phone alone for ten minutes, sang it a song, every quick fix I could think of. The phone remained posessed. Off to the the Cell Phone Provider Store I went.

Over the years, I've slowly upgraded my phones. The idea of downgrading is appalling to me, because I'm 23 and addicted to gadgets. I don't mine replacing my current model with another of the same, but I don't like to give up features I've become accustomed to. A weakness to be sure, but it's a weakness that only costs me every two years or so.

$121.62 later, I had one of those new-fangled music playin' phones. A Nokia whatever with red stripes and mp3 playing capability. Not all of my phone numbers were on my SIM card, so in what I thought was an exercise in futility, I put my SIM card back in my old phone, hoping the keypad would like me long enough for me to at least copy the numbers by hand. The keypad worked. It kept working. It's still working. Old Cell Phone is working just fine now.

Luckily I live in California and have thirty days to return the new phone. And to be honest, before I'd even attempted to use the seemingly broken Old Phone, it occurred to me that I'd really rather have $121.62, and that I should pop my SIM card into an Even Older Phone, and return the shiny new toy. Hopefully whatever technodemon posessed my old phone has been driven away for good- or at least until my contract's up and I qualify for a free phone. While I might try to rationalize the cool red stripey phone into a necessary purchase, it is NOT.

Dangit.

So how do I console myself, knowing that the shiny new toy is going back? Well:
$121.62 is enough to pay my cell phone bill. Twice.
$121.62 is about two and a half month's worth of car insurance.
Three tanks of gas.
About three guests at the wedding.
One month's energy bill.
Two month's groceries.

and the kicker?

Ten and a half hours of work. Before taxes.

Yeah, that thing is going back.

My Monthly Trade-Off: Extreme Frugality in One Area, Overspending in Another

Every month, after most of my bills are paid, the groceries are bought and the last thing that I must pay for before the month ends is a tank of gas, I start reviewing my income and spending. It seems that every month I manage to scrimp and save in one area while I spend more in another. In April, I spent very little on food, but a ton on leisure and entertainment. In May so far, I've spent very little on leisure, more on food than usual, and quite a bit on travel (a weekend in San Diego for Fiance's birthday.)

I already save about 10% of my wages, and by month's end I've usually got some extra income that I can also throw into savings - I'm doing very well in that regard. If I exercised some serious self-discipline, I could easily be saving another two to three hundred a month. Most of my friends consider my ability to hang on to my money something of a feat, but I still look at my ledgers at the end of the month and think "Damn! I really shouldn't have spent $X on Y!"

At the end of the day where I spend and where I save in any given month comes down to a value judgement. In May it was "Do I want beers out at the bar & a bunch of new books or do I want to spend a nice weekend with my boyfriend in San Diego?" I chose San Diego, which turned out to be a great idea. In June, I'll be paying for my share of Fiance & I's plane tickets to North Carolina. I'm a displaced Southerner who hasn't been home in four years, so obviously my $266 round trip ticket is well worth drastically curbing my spending in another area.

As the trip to Carolina, the wedding, and eventually married life come closer, I'm sure I'll need to start exercising the willpower to be mega-frugal in more than one category at a time. So here's my game plan:

(1) Leave my debit and credit cards at home. I already leave my credit card at home most of the time, but unless I need to buy gas I really don't need to bring my debit card to work with me. Sometimes the Starbucks across the parking lot calls my name a little too loudly, especially on my morning shifts.

(2) Make sure I'm setting aside time to pre-cook meals and snacks. For the most part I'm pretty good about this, but this summer I'll be in one pretty intense 4 hours four days a week class, an online class, working full time, and planning a wedding. I won't be able to just throw something together when I feel like it. Also, I'm likely to be pretty stressed out. When I'm stressed I either stop eating altogether, or I overeat. If I've got healthy food readily available, I'll be less likely to cave and make a beeline for Chick-fil-a.

(3) Write notes to myself. For example "If you spend $30, you have to cross out one wedding guest!" or "You need this for RENT!" I'm so disciplined most of the time that I generally have $5-$25 to burn if I feel like it. I can sometimes be flippant about spending a little here and there. Most of the time I fight the urge off, but sometimes I fail. Hopefully having visual reminders in my purse, checkbook, and taped to my debit/credit cards will help.

(4) Keep Fiance in the Loop. The fact that he & I are fairly minimalist frugal mostly-vegetarians bodes well for our marriage. The more in the loop I keep him, the more he can help out by saying, "Ummm, honey are you sure you need ANOTHER wedding planning book?"

(5) Stay home more often. Just walking out of the door and starting up the car is spending money. If I stay home I can cook, keep my room organized, post to BurnFive, do surveys, tons of productive stuff- most of which will save or bring in money, as opposed to spending it.

Hopefully in June I'll be able to keep all unnecessary spending to a minimum, instead of just some of it.

Financial Doublethink: A Rambling Rant

From the Irvine Housing Blog (not as boring as it sounds, I swear!):
Southern California's Cultural Pathology

I read this article about a year ago, and while I'm not in the housing market at the moment (and very few people my age are) - the basic premise that consumers are convinced that opposing ideas about money are true most definitely applies to young people.

While we're not overextending ourselves on mortgages, we are overextending ourselves in other ways. In Southern California, it's not uncommon to see a 22 year old driving a new BMW. Some of those kids are driving a gift from their parents, but most of them put that machine on credit. I don't presume to know the income of every 22 year old in a BMW, but I'd place a pretty hefty bet that quite a few of them are slaves to their car payment and wish they'd bought a Toyota. I believe that the idea of cultural pathology extends to debt denial too. There are people who are literally a thousand or more dollars in debt but are raising money for massive unnecessary purchases, as opposed to pulling themselves out of debt.

I was about $600+ into overdraft three years ago. I stopped using the bank I was with at the time and began doing everything in cash. I still had a decent amount of savings in an online bank, but with no brick & mortar bank to transfer it to, I couldn't get at it very easily (thank god). I did everything in cash, and I bought $300 purses and $180 shoes and $200 jackets. I could have easily brought my bank account back into the black, but instead I blew my hard-earned money on stuff that I'd decided I deserved, dammit. Three years later, I'm back 'on the grid' so to speak, but with a NASTY dent on my credit report. And I pretty much never carry that purse.

The financial doublethink of young people never ceases to amaze me. The fact that many of us do not grow out of it and end up tens of thousands of dollars in debt completely mindboggles me. People (including me at one point) who are totally broke will buy iPhones or Disneyland passes or new laptops or daily Starbucks. And then they complain of being "too broke!" Well, of course you're broke, you just spent all your money! But the "I'm broke!" and the "I want an iPhone!" wires never seem to cross.

Having a flashy car, a fancy iPhone, 18 Coach bags, annual passes to every theme park ever, drinking Starbucks every day and a pony will NOT make you financially stable. It'll make you look like you spent a lot of money. Looking like you spent a lot of money will NOT help you if you find yourself in a an emergency situation with no savings. Nothing is more degrading than having to go around begging your friends for money when your car breaks down. Plus they're going to wonder why you can't fix it yourself, since you've obviously got a lot of money to burn...

I'm not saying that people should never ever indulge a whim or a want. You've got to have little fun every now and then. If you're splurging on a tub of ice cream or (god forbid) a wide release new movie or even the occasional latte, you're probably not compromising your financial security too much. But if you're spending hundreds of dollars on items not necessary to your survival and ignoring your debt like it's not there, that's a purchase that could probably use some re-thinking.

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.

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.