BarbaraFriedbergPersonalFinance instructs and motivates you to become wealthy by teaching basic personal finance principles with engaging stories and understandable examples. Learn to become rich and happy from a real Portfolio Manager

“KNOWLEDGE IS POWER.” Sir Francis Bacon

Who would have thought this quote, from the 1500’s would still ring true today?

Many years ago I read a letter written to Dear Abbey. (Yes, I read Dear Abbey, please don’t laugh.) The gist of it was this, a 38 year old guy writes that he wants to be a doctor, but is worried that he’s too old to go to medical.  He complains that he will be 42 years old when he finishes med school. Dear Abbey writes back, if you go to medical school now, in 4 years you will be a doctor, if you don’t go to medical school, then in 4 years you will just be 4 years older.

That letter stuck with me when I was deciding to return to school for a second graduate degree in mid life. It stuck with me when I began writing a book. And it was a factor in spurring me on to start a blog. In fact, my life is characterized by taking risks and moving forward no matter what. In the past, I was a huge procrastinator, insecure, and afraid of failure; I am proof of the power of stepping forward in spite of fear, age, obstacles, and criticisms of others.

On that note, I want to share my 6 month anniversary celebration as a personal finance blogger with you. My success in readership has far surpassed my expectations. I began with an Alexa ranking in the 1,000,000 range and have dropped to an impressive level of less than 160,000. I owe a large amount of that success to the YAKEZIE PERSONAL FINANCE NETWORK and Len Penzo dot com  who encouraged me to join. The Yakezie mission is in alignment with my own; selflessly  promote financial literacy and personal finance.  El Carino, my biggest cheerleader, promotes my blog both to those interested as well as the uninterested and loves me no matter what. In fact his support has given me the confidence to “try anything.” My daughter is my social media consultant extraordinaire, offering many ideas, strategies, and tips to touch her generation.  Additionally, she constantly provides insight into the GEN Y mind. Finally, my outstanding MBA professor, Dr.  Oranee  T.  encouraged me to start the blog and continue with my book.

On this 6 month anniversary I want to share the links that “Google Analytics” the blog analyzer, said are your favorites. Some surprised me, others not so much. The TOP articles cover a variety of topics from investing, to mental money problems, and the financial challenges of the poor.  If you haven’t read them before, please check them out and let me know what you think.

 I am honored by your support and look forward to offering you quality PERSONAL FINANCE information to help you become wealthy.

# 1 ALL TIME FAVORITE: GET RICH WHILE YOU SLEEP WITH THE MAGIC OF COMPOUNDING

“Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”
Peter Lynch   

One of the greatest investors of our time attests to the simplicity of investing in the stock market. Read this post and find out why. Following is the “Cliff Notes” version of why you need to put part of your long term investment dollars in the stock market. 

Main Topic; Stocks  

The historical long term growth of American business is amazing. American business is frequently represented by the Standard and Poor’s 500 Stock Index (S & P 500). This index of 500 stocks is considered a barometer for the complete US Stock Market. 

Forget about the recent recession and downfall of the stock markets for a minute and take a peek at some historical returns of the S & P 500. Although historical returns do not guarantee future returns, take a look anyhow. When looking at these returns, think about the stock market as a collection of U.S. businesses, not mutual fund or brokerage account statements. Then ask yourself if you think U.S. businesses and the economy will grow over the next 20, 30, or 40 years?

Click here to read more.

# 2 RUNNER UP: HOW TO AVOID LIVING PAYCHECK TO PAYCHECK

“Have compassion for all beings, rich and poor alike; each has their suffering. Some suffer too much, others too little.” Buddha

Wealth requires a commitment and responsibility to those with less. Offer your knowledge and expertise to those without.

MAIN TOPIC: The Problem with Check Cashing Services

I just returned from a quick trip to Wal Mart to pick up some groceries. It’s Friday afternoon and my check out lane was directly across from the “Money Center.” This “Money Center” is a place where you can cash checks; for a fee, buy money orders; for a fee, and do a lot of other financial tasks; FOR A FEE. It is not a bank.

Because at a bank, if you have the right type of account, you can get your paycheck deposited FOR FREE!

The line was really long at the money center. In fact, there were people trailing out into the main part of the store. Many lower income people DO NOT HAVE A BANK ACCOUNT.

I remember back to my first full time job as an invoice clerk; I was amazed on payday when my co-worker and I went to the bank. She CASHED HER ENTIRE CHECK AND TOOK ALL OF THE MONEY! I thought it was quite odd that she didn’t put any of it into the bank.

But I digress, back to the Wal Mart Money Center. I got very despondent after seeing the enormous line-because I knew most individuals were there because they didn’t have a bank account. And they were lower income and paying a fee that higher income people didn’t pay, just to gain access to their money.

 I was struck by several things:

1. How can one save, if he/she has NO BANK ACCOUNT?
2. How can one move out of living “paycheck to paycheck” without a BANK account?
3. Where are those individuals in the Money Center line going to learn the principles of Financial Literacy?

Click here to read more.

#3 THIRD PLACE (it was a tie): REDUCE STRESS-GET RID OF DYSFNCTIONAL FMONEY BEHAVIORS-part 3

Money & Relationships-Make it Work!

“I’d marry again if I found a man (or woman) who had fifteen million dollars, would sign over half to me, and guarantee that he’d be dead within a year.” Bette Davis

 You gotta take relationships with a bit of levity or you’ll never make it through! This quote is the perfect solution for money and relationship problems. Unfortunately, it’s a bit unrealistic. Maybe a million or two is more doable.

No really, read on and find out how to handle money stress in a relationship.

MAIN TOPIC: She’s a Saver, He’s a Spender

This article is the 3rd in a series relating poor money behaviors with stress (#1-Shopping to Solve your Problems & #2 Procrastinating Dealing with Financial Matters). The topics are inspired by an article entitled Emotions, Money, & Financial Stress by Nancy Losinno, published at the US Department of Energy, Brookhaven National Laboratory website . 

You know who I’m talking about. Bluetooth came out, he got it. Iphone, Ipad, flat screen TV, etc. he bought them all. New car every few years was required by him. Meanwhile the debt piled up. She tried to save, but his spending counteracted all of her efforts. 

I’m hesitant to continue, as the story is so familiar. We all know how it turns out…… fighting, stress, anger, depression, marital discord and DEBT.

Overspending in a relationship is unhealthy whether practiced by one or both partners.

Losinno clearly stated, that in a relationship the partners have the choice of creating WEALTH or a “FINANCIAL HELL ON EARTH.” Money secrets are devastating. Unhealthy family money attitudes can be disastrous. Money problems in a relationship can be the beginning of the end.

Click here to read more.

#3 THIRD PLACE (it was a tie): WHEN NOT TO SPLURGE

“If I splurge on anything, it’s cologne. I love smelling good.” Zac Efron

This quote suggests that Zac Efron, the wealthy movie star sensation from High School Musical and many more projects, is so financially savvy that his one indulgence is cologne. If that’s his lone indulgence, then this guy is on a path of financial strength.

Personal disclosure: I have never met nor spoken to Zac Efron. (Although I wouldn’t turn down an invitation to meet him!)

MAIN TOPIC: I am ALL FOR SPLURGING

I carefully plan my our family splurges:

• El carino (my hubby) indulges in his hobby of collecting sports memorabilia.
• I go out to work at a coffee shop once or twice a week and buy a coffee.
• Special occasions find me at the COACH outlet for a nice bag.
• Travel is planned and a big priority for our family. This week-end it’s a quick family get away to Atlantic City! (No gambling for us!)

I do not covet expensive jewelry, cars, fine dining (my birthday dinner was at Applebee’s this year). In fact, when el carino wants to tease me, he goads me with the offer to buy me jewelry (because he KNOWS I don’t value spending our money on expensive jewelry). In fact, I totally don’t get the women who want a huge diamond (bought on credit). Give me the cash any day to stick in the investment account.

Please don’t think this is a condemnation of cars, jewelry, or fine dining; it’s not. It is a recommendation to spend on those activities that YOU value, not what your neighbors, TV, or society tells you to value.

Click here to read more.

ACTION STEP:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

Commit, write down, and take one step towards financial responsibility today.

Image credit: Kazeee

YAKEZIE PERSONAL FINANCE BLOGS

After every article for the next several weeks, you will be introduced to several Personal Finance web sites in the Yakezie network. Each one has their own unique voice and style. The consistency in all is their desire to help others. Consider visiting a few each day!

Zordane.com

Yes I am Cheap; Digging my Way Out of Some Serious Debt

Young and Thrifty; Saving Generation Y

Well Heeled Blog; Savvy Living through Personal Finance

Wealth Pilgrim; A Journey to Self, Wealth, & Health

Wealth Informatics; Financial Freedom through Education

Do not withdraw Funds from your Retirement Savings

EXCITING NEWS: I was selected to deliver a national training in San Francisco this November entitled: Personal Finance Solutions for Busy Mental Health Professionals. This 3 hour workshop includes material from my upcoming eBook. Stay tuned to get first crack at the NEW EBOOK. And it’s FREE to my readers.

“Develop success from failures. Discouragement and failure are two of the surest stepping stones to success.” Dale Carnegie

World renowned for his inspirational teachings, many a successful individual  has started out on a foundation of Carnegie’s lessons.

MAIN TOPIC: Read this if you are Desperate for Cash

Financial problems are a reality today. We are not out of the economic woods with unemployment hovering around 9% or worse in some areas, and many homes worth less than several years ago. Foreclosures are rampant.

 If you are on the brink of a financial disaster, and have a 401(K) or IRA from an employer, you may be tempted to withdraw those funds. In fact, last spring when I was volunteering for the IRS, preparing tax returns, I came across more than 1 individual who cashed out their retirement funds.

There are HARDSHIP standards which let you cash out your retirement account before the mandatory retirement age. According to the 401K Help Center:

“The following items are considered by the IRS as acceptable reasons for a hardship withdrawal:

1. Un-reimbursed medical expenses for you, your spouse, or dependents.
2. Purchase of an employee’s principal residence.
3. Payment of college tuition and related educational costs such as room and board for the next 12 months for you, your spouse, dependents, or children who are no longer dependents.
4. Payments necessary to prevent eviction of you from your home, or foreclosure on the mortgage of your principal residence.
5. For funeral expenses.
6. Certain expenses for the repair of damage to the employee’s principal residence.”

Here is why you DO NOT WANT TO WITHDRAW FROM YOUR 401(k) OR IRA:

Hardship withdrawals are subject to income tax and, if you are not at least 59½ years of age, the 10% withdrawal penalty. You do not have to pay the withdrawal amount back.

HERE IS HOW MUCH YOU LOSE:

 Withdraw $2,000.00 and take away 10%, that leaves $1,800.00. If you are in the 28% tax bracket, subtract another $560.00. Now you are down to $1,240. And that is BEFORE state and local taxes.

In summary, withdraw $2,000.00 and walk away with less than $1,240.00. Does that sound like a good deal to you?

If you need more motivation, consider this, when you take out cash from your retirement account, not only are you paying fees and taxes, you are losing money that is VERY HARD TO REPLACE. Left in place, you are providing for your future and giving your funds a chance to grow TAX FREE. 

In fact take that $2,000. Leave it in a stock index mutual fund for 20 years. With an average 9% return (long term historical return from stocks), in 20 years your original $2,000.00 is worth $11,208.82. Compare that with the $1,240.00 value NOW.

PRACTICAL APPLICATION: TAKE EXTREME MEASURES

Before even THINKING ABOUT withdrawing funds from your retirement account, do everything you possibly can to CUT EXPENSES DRASTICALLY. Leave no alternative unexplored.

My blogging colleague Jacob, at Early Retirement Extreme is an expert at cutting down expenses to the bare minimum. You would be surprised how little one needs to live on!

Before you TAKE MONEY OUT OF YOUR RETIREMENT ACCOUNT, follow these steps:

Reduce auto costs, get rid of one car or sell expensive car and buy CHEAP one.

Sell your home, move into an apartment.

Sell your stuff on eBay and Craig’s list.

Do all cooking from SCRATCH; no prepared foods. Cut food bill way down. Substitute beans & rice for meat!

Enlist your kids and get their ideas on cost cutting. No extravagances for them.

For an indulgence, bake a cake, take a walk, have a picnic!

Call all service providers and insurers to negotiate lower rates. Cut out cable, read instead. Cut out all subscriptions.

Read the list of blogs at the end of this article for more great cost cutting resources.

Don’t forget considering ALL ALTERNATIVES to make extra money!

Do your best to withstand the current financial hardship with PERSISTENCE, RESILIENCE, CREATIVITY, & PATIENCE. If you take action, your situation will improve. Borrowing from your future is a step to avoid AT ALL COSTS!

ACTION STEPS:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

Make a list RIGHT NOW of every way possible to cut expenses.

Make a second list of every way you can earn extra income. If you are unemployed, be sure to check out TIP #2 from this article. Consider a 2^nd job or freelance/entrepreneurial activities.

Write in with your cost-cutting stories and any related questions. I am happy to help!

SAVING & COST CUTTING ARTICLES FROM WELL REGARDED PERSONAL FINANCE BLOGGERS:

Redeeming Riches

Consumerism Commentary

Single Guy Money

Consumerism Commentary

One Money Design

Wealth Pilgrim

Early Retirement Extreme

Not Made of Money

Sweating the Big Stuff

Deliver Away Debt

Little House in the Valley (get her free eBook on credit)

Budgeting the Fun Stuff

EXCITING NEWS: I was selected to deliver a national training in San Francisco this November entitled: Personal Finance Solutions for Busy Mental Health Professionals. This 3 hour workshop includes material from my upcoming eBook about Investing. Stay tuned to get first crack at the NEW EBOOK; and it’s FREE to my readers.

The following is a guest post from Crystal at Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting for the fun stuff along the way.

Free Money Finance (FMF) had this post  which went over an article from Yahoo that listed the worst paying jobs for doctors.  The absolute worst paying position still brought in $175,000*.

Well, based on past posts  at FMF and others I’ve seen online, some commenters argue that doctors still carry high debts because they “have to”  live in the nicest neighborhoods, drive the best cars, and send their kids to expensive private schools.  They also have student loans.

FMF’s post argued that even with liability insurance and student loans, a doctor should be able to build wealth quickly.  I completely agree.

Let’s say a doctor has to spend 50% of his/her salary on insurance, taxes, and expenses like that.  That would still leave the worst paid doctor with about $87,500 a year.  I’ll also say that this hypothetical doctor has $150,000 in student loans as the average college debt for doctors was listed at $140,000. 

Well, if  I made $87,500 a year, I’d live and save a little off of $40,000 and put the other $47,500 towards my student loan debt.  I’d be debt free in less than 4 years.  Then I could send that extra towards my average $200,000 mortgage in Texas (paying it off in less than 5 years) or even add more to retirement savings.

This would mean that I could be completely debt free within 9 years of graduating and own a really nice house to boot.  I’d also have $2 million saved for retirement within another 21 years if I could get an average return of at least 6%.

What about the nice car and expensive private schools?

Well, do you know what your doctor drives?  I have no idea.  That $40,000 a year budget could easily include a car payment of $350 a month (ours did).  If I was a doctor, I’d drive whatever I’d like that could comfortably and consistently get me from Point A to Point B.  I like the Toyota Prius, so I’d buy one of those with cash or use my awesome credit to get a low rate in the beginning when I’m strapped.  I’d still have it bought outright within my first 2-3 years out of college.

I don’t have kids, but even if I did, the public schools where I live currently are one of the highest rated districts in Texas.  My kids could go there.  If they needed more mind stimulation, I could hire them a personal tutor or even afford to send them to private school with cash by the time they were in middle school.  I might have to drive a worse car or retire on less or push back retirement a few more years, but I could remain debt free.

Some of you may argue that it is impossible to live on $40,000 a year.  It’s not – we do it and live pretty happily.  We make about $60,000 a year after taxes, insurance, and benefits.  We save about 40% of that ($24,000) - 30% for retirement and 10% for shorter-term goals.  We live on the other $36,000 a year.  We have a pretty nice house (1750 sq.ft. 3 bedroom that was built in 2004), 2 cars, and even fun extras.

This article made me regret not liking science, math, or college enough to pursue a medical degree. 

*That $175,000 is an average and doesn’t take into account the doctors that make scraps working for charities or non-profits – please don’t yell at me for them. 

How about you, could you build wealth pretty quickly by taking home “just” $87,500 a year?

YAKEZIE SHORT CARNIVAL

Enjoy this personal finanance reading; stop by their sites to read more.

 How to Create a Budget-Setting Goals at KNS Financial

 How do you know if you are rich? at Living Financially Free Ministries 

Crank Up Your Money Saving Goals With SmartyPig at Free From Broke 

Originally published on March 21, 2010

“Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it.”
Peter Lynch   

One of the greatest investors of our time attests to the simplicity of investing in the stock market. Read this post and find out why. Following is the “Cliff Notes” version of why you need to put part of your long term investment dollars in the stock market. 

Main Topic; Stocks  

The historical long term growth of American business is amazing. American business is frequently represented by the Standard and Poor’s 500 Stock Index (S & P 500). This index of 500 stocks is considered a barometer for the complete US Stock Market. 

Forget about the recent recession and downfall of the stock markets for a minute and take a peak at some historical returns of the S & P 500. Although historical returns do not guarantee future returns, take a look anyhow. When looking at these returns, think about the stock market as a collection of U.S. businesses, not mutual fund or brokerage account statements. Then ask yourself if you think U.S. businesses and the economy will grow over the next 20, 30, or 40 years?

The first time I really studied this type of data was in 1993.  Although I had been investing for a while prior to that time, my husband was still skeptical. I wanted to convince my husband of the importance of putting money into the stock market so I prepared some data for him. Fortunately, for us he was convinced by the historical information, so we boosted our investing at that time and have watched our investments grow over time while continuing to contribute regularly to our investment accounts. 

 But what does this return mean in real dollars? 

Consider this, if you are in your 20’s, 30’s, or 40’s you have many years until retirement. You can stick some money in a brokerage account at one of the discount brokers (like Fidelity, Vanguard, Schwab, or  TD Ameritrade), invest that money in an S & P Index mutual fund or ETF and forget about it. Fast forward 20, 30, or 40 years, it is highly likely that your investment will have grown substantially! Even Rumplestilskin could try this and probably wake up a rich guy after sleeping for a really long time! 

Certainly, it is better to INVEST REGULARLY and not just one time! 

Now, I don’t recommend that you run out and stick the money into the account tomorrow unless you have a bit more financial knowledge. Continue to read BarbaraFriedbergPersonalFinance and before you know it you will have the skills to grow your net worth. 

Practical Application; How do I Proceed?     

• Here is the takeaway from this post: 
• The more time you have, the greater chance you have to get wealthy. 
• Over time, the stock market has been a wonderful way to accumulate wealth. 
• Since the stock market is very volatile, only put money into the market that you can leave there for 5 years or more. 
• Invest only in stock index mutual funds or exchange traded funds (ETF’s) unless you have a lot of money and want to devote hours per week to researching individual stocks. 
• For the best low effort long term returns, AUTOMATE! Have a regular amount automatically transferred in to a brokerage account each month from your paycheck or bank account.    

Action Step: 

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans. 

Grow your emergency savings to 6 months of living expenses in a bank savings account or money market fund by transferring automatically from your paycheck or checking account to a savings account. 

CAUTION: This post if for educational purposes and is not advice to run out and buy a stock mutual fund! Before investing, it is really really important to gain some basic financial education. And before sticking any money in investments you need to have savings for emergencies and no consumer debt! Think of this post as part of your lessons in “financial literacy.” Read this blog regularly, try out the action steps, and learn the basics before you start investing. Keep reading and become financially smart!

How has the recent stock market volatility affected your investing activity?

Categories: competition, life, saving, Yakezie

“Strength does not come from winning. Your struggles develop your strengths. When you go through hardships and decide not to surrender, that is strength.”
Arnold Schwarzenegger

 Alright, so this past month of pure spending cuts may not be the worst hardship imaginable, but it was a struggle. And I must give a shout out to Schwarzenegger for knowing about winning, as this guy does not have a college degree, and has a resume that includes a stint as governor of California, actor, and world champion body builder.

 MAIN TOPIC; Lessons Learned

 For those of you just joining, I was challenged to participate in a spending reduction challenge last month by Jacq at Single Mom Rich Mom. We were joined by Christine at Money Funk and Laura at Move to Portugal. The competition was: who could beat their own monthly averages in variable spending categories. The winner would be determined by reducing spending by the greatest percentage; WINNERS for individual categories and overall.

I thought it would be fun, and I was flattered to be asked. Not once did I think I would win, and I really didn’t know how the competition would affect me since I had NEVER DONE ANYTHING LIKE THIS BEFORE.

 I’ll start with the life and personal finance lessons learned from participating in the competition. Think about whether they would apply to you.

1. CONTROL: I love control. I like to control myself and those around me. The competition reinforced that there are some things one can control and others you cannot. For example, I could not control my husband’s spending. But I could certainly almost control my own. The fact that my bi monthly hair appointment came in June was out of my control. Jacq at Single Mom Rich Mom couldn’t control when her annual car tax came due.

 The takeaway: Control what you can, accept that you cannot control everything.

2. DO NOT GRADE YOURSELF: Throughout the month I wondered how I was doing. I was even tempted to check my progress. But, I refrained from checking, practiced smart shopping habits  and cut back where I could. I figured that even though I wanted to win; win or lose, I would benefit from the competition.

 The takeaway: My job was to compete, the results would come later. Obsessing about how I was doing wouldn’t make any difference. I don’t need to grade myself.

 3. COMPETITION IS MOTIVATING: If I did not have the June challenge, I wouldn’t have tried to cut my spending for the month. Our family spent almost $500 less than we normally spend. The competition was motivating, but it was also difficult and constraining. There were things I wanted to buy which I didn’t. I cut waaay back on groceries.

 Jacob at Early Retirement Extreme asked if I was going to continue. The short answer is, I might try another competition month, but I will not continue changing my spending to match the June challenge month. Our family has a budget which allows for saving, spending on what we value, and charity. We have emergency savings and investments. And it’s working for us.

 The takeaway: Competing with a partner or two towards a goal is a wonderful way to make a difficult task more fun and up one’s motivation. This was my first time, and I would definitely try it again!

THE RESULTS

If you hung in for the entire post, thank you. Here are the final results.

OVERALL WINNER: BarbaraFriedbergPersonalFinance

with a JUNE decline of 36.56% in the variable spending categories

 I was happy to win and also surprised. I never thought I would be the overall winner. It’s sweet to win, and it’s also fun to compete! 

ACTION STEP

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

Ask a partner to join you in a competition; make achieving a goal more motivating and fun. Try it with spending, losing weight, or any other challenge.

Let me know what you think about competing towards a goal. Have you tried it before? How did it work out?

Image credit: McDuck 17

YAKEZIE SHORT CARNIVAL 

Check out these personal finance articles by talented Yakezie writers:

7 Wealth Building Strategies  at Invest it Wisely

How Would $1,000 Change Your Life?  at Financiallly Poor       

 “Enough” by John Bogle – Review & Introduction  at Engineer Your Finances

 

Categories: budget, life, saving, spending

Summary

Jacq at Single Mom Rich Mom had the audacity to challenge me to a spending challenge:

 Who can cut spending by the greatest percentage in “variable” spending categories?

Next Laura at Move to Portugal  joined in as well as Christine from Money Funk. Finally, Jacob from Early Retirement Extreme  decided to “keep the fight clean.” So, the month has passed and now it’s time to determine the WINNER!

We each had our own strategies, all very “hush hush” to nail the competition. Jacq was determined to win the grocery category by only bringing a $20 to the store. I was less systematic, although equally determined. My house was in chaos with the return from college of our daughter and I thought for sure I would be doomed. But not one to give up on a challenge, I decided to persevere and give the competition my best effort!

The variable expense categories for the challenge include:

• Auto
• Clothing
• Dining out
• Recreation/Entertainment
• Groceries/personal care/household items

The Methodology

I took the total spending in each of those categories for the past 12 months. Next, I divided by 12 for an average monthly spending. That was my baseline. Next, for the grand summation; I compared overall spending as well as individual category spending with the monthly average and calculated the difference.

AVERAGE MONTHLY VARIABLE SPENDING

7/1/2009- 6/30/2010 compared with June, 2010

Analysis

Auto-Down 76%, hooray! Got a $50 reward card from credit card company, walked more, and bunched errands.

Clothing-No one in the family bought any!! The $66 was for my hair, which I categorize in the clothing column. So now you know, I kind of splurge on my hair! You may wonder why I put it in the clothes column- but, it doesn’t really matter. What matters, is that I’m consistent, and every 8 weeks the hair salon cost goes in the SAME category.

As a side note, although I spend quite a bit at the hair salon, my husband, on the other hand, does not! In fact, he prefers that I cut his hair! Thus, we are saving 20 bucks a month on his hair care!

Dining out-Oops, up a bit over 2 ½%; included daughter home from college & FATHERS Day buffet!  But it was really worth it. The buffet was delicious, and I love to eat out!

Recreation & Entertainment-AMAAAAZING! In spite of my husband’s hobby, we are down 70%. As you may remember, we get the maximum enjoyment from our TV & cable.

And, incredible scenery, beautiful walking paths, and summer time gave us the opportunity to enjoy the FREE outdoors!

I TOOK A PAGE OUT OF Jacob’s Early Retirement Extreme strategy and put a 7 piece drum set and electric piano on Craig’s list to really slam the recreation/entertainment category….. Unfortunately, the only responses I got were from spammers. NO SALE!

Grocery etc.-Only fell  7.38 %, about 38 bucks. I confess, I am a fanatic about fresh fruits and vegetables and really healthy eating. Produce this year is very expensive. I think that’s what killed us here! But, all in all even with the food inflation over the year, we did spend $38 less than average. Hey, that’s more than enough for a nice dinner out!

Overall, we spent $866 in variable categories versus an average of $1,365 for an overall savings of $499, a decline of 37%. I AM THRILLED!! 

Summary and Conclusion

The competition pushed me to find low cost ways of living. I visited lower cost grocery stores, looked for inexpensive entertainment, still splurged on my hair-but didn’t buy any clothes in June and overall had a good month.

Did I feel deprived? Maybe a little…. but I made sure not to cut back too much, because then I would just go out and binge shop when the challenge was over, and that would totally defeat the purpose.

Was it fun? YES, it was great fun. I loved the camaraderie of the competition and the savings. Now our June spending was a bit slimmer than usual, which gives us a bit of a cushion. After all, with the recent drop in the stock market, our net worth took a bit of a hit in June. But after cutting spending back last month, the market decline is a bit less painful.

Try competing for your own goals with a partner or two and see if you find it as motivating as we did!

Image credit: Andriz 

Write in about your tricks to live large on a slim budget.

Categories: links, investing, money management, saving, make money

Welcome to a collection of amazing articles. Each one of these posts was chosen for its innovative ideas and thought provoking topics. After digesting this wonderful menu of diverse reading desserts, you will be smarter and wealthier.

Following are links to these delicious articles and a taste of their content. Go on and indulge.

The Oblivious Investor throws in a twist with 3 Good Stocks to Buy Right Now.

“Quick reminder: The fact that a company is growing (or is going to grow) does not by itself mean that its stock is a good investment. For a stock to be a good investment, there must be reason to think that its future growth is not already reflected in its price. Said differently, for a stock to earn above-average returns, the company must do better than the market expects it to.”

The Car Negotiation Coach at Findthebestcarprice reveals How to get Paid to Drive. INGENIOUS!

“Did you know you can make money just by driving your car? You can, if you are willing to allow a company to put an advertisement on it. These advertisements, called wraps, look like they are painted right on the vehicle, but they are just really nice decals. The programs are called ‘free car’ or ‘get paid to drive’ and they pay you for advertising for their product on the side of your car.”

In Best Way to get out of Credit Card Debt Fast, Wealthpilgrim offers a new take on an old subject!

“I don’t know about you, but sometimes when I face a daunting task I waste energy and time. Sometimes I spend too much time thinking about where to start. Other times I use the shot gun approach rather than focus my efforts. When I do that, my results are diluted.”

Littlehouseinthevalley reveals  how to make a quick call and increase your spendable income in Smashing the Bills to Smithereens! I love this.

“Constantly looking for ways to reduce our monthly bills, a few quick phone calls revealed a total savings of $63 a month without reducing our services! Here’s how I, er, my husband did it with my help. I keep an excel file that lists the averages of how much all of our bills cost on each month. I have everything listed in categories, for instance under the category of CAR I included auto insurance, car payment, and gasoline. Out of a total of about 25 items (a lot, I know!) I pay on a regular monthly schedule, I went through my list and highlighted the items I thought we could save on without downgrading any of our services. Those items took only a phone call and included the phone bill, DSL service, and auto insurance for a total savings of $63 a month, or $756 for the entire year.”

Something to think about…..from Investitwisely in How Rich are you?

“In the beginning of time, every man was equally poor, or equally rich, depending on how you look at it. Then we discovered agriculture, and the surplus of food enabled specialization of labour, which gave birth to cities and to civilization. Since then, we’ve been more or less divided into three economic groups: The poor, the reasonably well off, and the ultra-rich.”

As usual, Shawn at Watson Inc. keeps me thinking with this thought provoking Millionaires Make Return to Boom Levels.

“Additionally, don’t forget who the average millionaire is. Remember that the typical millionaire is not a Wall Street titan, a corporate fat cat or a celebrity but rather a hard-working entrepreneur (32%) or professional (19%). Moreover, even though both the 14th Annual World Wealth Report and the 2010 Global Wealth report rightfully exclude primary residences in determining HNWIs, keep in mind that approximately 97% of millionaires are also home owners.”

I’m a sucker for anything “efficiency related.” Hope you enjoy this one from Myfinancialobjectives entitled Bringing Your Efficiency Home.

“What I mean by the title, is how much more could you accomplish at home if you brought the same efficiency home with you that you use at work (assuming you are more efficient at work than at home)?  I recently posted about Time Management and how an efficient time management mentality allows me to save a lot of time both at work and at home.” 

Frugalconfessions writes about the positives of keeping an eye on your spending in Financial Limits and Boundaries Breed Creativity not Deprivation. She’s definitely a “glass half full”  person.

“then I would miss out on all of the great opportunities out there. For one, I never would have learned the Drugstore Game, which led me to write six columns called “Frugal Confessions” and start this blog! Having unlimited money would have caused me to spend more of it (necessity is the mother of invention, not abundance) as I never would have discovered great tools like Craigslist, followed many of the blogs that I do with people dedicated to saving me money, learned how to invest my precious resources, save for retirement, etc. Having limits in my life has only served me, not caused me deprivation. With limits, opportunities abound—have you taken advantage of yours?”

 Get the latest word on MOTIVATION research in Management Rewired by Charles S. Jacobs, discussed at Eliminatethemuda.

“More and more the science is showing that everything we thought we knew and understood about motivation may be wrong. Contrary to our perception, providing extrinsic motivators such as bonuses, gifts and rewards or even punishments for undesirable behavior may often be detrimental to our long-term objectives. There are more effective and efficient methods to motivate and manage, the author shares, but many of these methods are counter intuitive and challenging to implement.”

Let me know if you enjoyed the tasty tidbits of financial wisdom!

 image credit Chotda

Categories: competition, life, saving, spending

“Americans love to fight. All real Americans love the sting of battle.” George S. Patton

I’m proof that Patton is right, because I LOVE A GOOD CHALLENGE.  But hey, wait a minute, he forgot about Canadians-my arch nemesis and competitor: Jacq at RichMomSingleMom is from Canada. OK, Patton MUST have been referring to North Americans.

MAIN TOPIC: What’s Going on with the Catfight?

OK, here’s the deal. I agreed to a spending reduction challenge with Jacq @ Rich Mom Single Mom, Christine @ Money Funk, and Laura @ Move to Portugal, back in the beginning of June. Jacob @ Early Retirement Extreme,  the king of spending reduction is our commentator/ moderator.

 At the time I thought it was a great idea. Now I’m wondering, WHAT WAS I THINKING?

Here is a summary of the challenge:

1. Competition categories:  Auto, clothes, eating out, entertainment/recreation, groceries, & household/personal care.
2. Methods: Get a personal baseline by averaging out spending in those categories.
3. Track spending in those categories for the month of June
4. Compare personal spending to baseline

Goal: Reduce spending in each category. Report to other competitors the percentage decrease.

Winner: Greatest percentage decrease vs. own benchmark.  Overall winner and category winners

Last week I wrote complained about my plight. My husband was not as committed to the challenge as I was. After hours minutes of thought about the wonderful advice from many of the spectators to this dramatic event, I accepted Sam @ Financial Samurai’s suggestion to motivate El Carino (my husband) for the competition with a PRIZE!! OK, that’s going pretty well. Now he is mindful of his spending and referencing the challenge too!

Next, my daughter returned from college last week. Although I considered recommending a family fast for the entire week to cut down on groceries and eating out, I knew I could not do that to myself!!! Fortunately, so far she isn’t eating too much!!! Of course both of them are wondering why there isn’t much food in the house!!!

 So what to do……. I really want to WIN!

PRACTICAL APPLICATION:  Here are the Secrets to Coping with Spending Cuts

At one time or another we all need to cut back our spending a bit. Sometimes it is for a time limited period; job loss, unexpected expenses, or some other unforeseen occurrence. Other times, the spending cutbacks need to be more permanent. Regardless of whether you need to cut back a little or a lot, for a short time, or a longer one, HERE ARE SOME WAYS TO COPE.

What not to do:

1. No cold turkey. Just like in dieting, if you cut back too much, you become too deprived and set yourself up for a spending BINGE.
2. Don’t bully your family-they will rebel (Take it from someone who has tried and failed). Enlist their participation and make it beneficial for them as well.
3. Do not spend your leisure time SHOPPING. That’s just stupid, like a dieter visiting a bakery. Reduce the temptation to spend.

What to do in Order to REDUCE SPENDING:

1. Reward yourself and your family with non monetary rewards; time, free activities, & experiences. Who knows, it may even improve your familial relationships.
2. Enjoy the challenge of the game. I happen to be competitive, so being in a COMPETITION makes cutting back on spending FUN! After all, I might WIN. You can adapt this to your own family, or set some goals and compete with yourself.
3. Ask yourself this question, “IS MORE BETTER?” Robin and Dominguez, authors’ of Your Money or Your Life stated, “If you live for having it all, what you have is never enough.”
4. Figure out for yourself when “enough is enough.”
5. Balance, moderation, and small changes lead to big results. Take your spending reduction “one day at a time” (Alcoholics Anonymous). You can do anything for one day.
6. Start today, don’t procrastinate.

What cost cutting strategies work for you? How do you keep motivated to spend smart?

ACTION STEPS:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.  

1. Write down everything you spend for 1 week.
2. At the end of the week, spend a few minutes looking at those expenses.
3. Ask yourself these questions;  Would I buy it again? Did I get enough pleasure from my spending?
4. Summarize, where can you cut spending without excess pain?

Photo credit: Ourania2005

 

YAKEZIE SHORT CARNIVAL

The Cost of Your Car @ Sustainable Life Blog

Health Care for Kids when you can’t Afford it @ Eliminate  the Muda

How to Overcome the Pitfalls of Zero Based Budgeting @ Wealth Pilgrim 

Learn more personal finance from these excellent bloggers.    

Categories: life, saving, spending

 Background-I’m in a spending reduction challenge with 3 other personal finance bloggers,

 Jacq @ RichMomSingleMom, Christine @ MoneyFunk, Laura @ MovetoPortugal &, and one outside moderator, Jacob @ EarlyRetirementExreme … and it’s not going too well!

Update, I’m doing amaaazing…..my husband, not so much.

 I get home from teaching last night, and my husband not only ate dinner out…. but indulged in his hobby, memorabilia collecting….$7.00 on a box of baseball cards & $2.60 for a pack of boston baked beans (not the healthy type, the candy).

His response, “You mean I’m on the challenge too?” I responded with, “I can’t cut you out of the budget (much as I might like too), can I?”

 Another incident…..He went to the grocery with me this week. Note to self, go to the store alone. He does not look at prices!

This is the same guy who on a trip to England did not know his surname. And to put it all in context, he is world renowned in his field (whatever that is)…Go figure?

To all of you on the sidelines, please cheer me on, I need your support!!!! Let me know what to do, I can’t control my husband!

This is all after I went 6 days and spent only $1.50 on a cup of coffee…. that’s it!

What should I do? Write in please!!!!!!

Categories: life, values, spending, saving

“I shall tell you a great secret, my friend. Do not wait for the last judgment, it takes place every day.” Albert Camus

OK, my secret is not as magnificent as that of Albert Camus. But in my quest for authenticity I will share something I normally would keep to myself.

MAIN TOPIC: The BarbaraFriedberg Way to Cut Spending

I am incredibly lucky in that most of my work is done away from a traditional office. That means, if I have a computer and internet, I can get my job(s) done. To up my productivity, once or twice a week I head out to Panera, the public library, or a beautiful hotel lobby. As long as there’s free internet, I can work!

Getting out of my home office is a productivity matter. If the environment doesn’t change once in a while, I get way too sidetracked and distracted and my productivity goes down.

Does that happen to you?

Here are the pros and cons of each location:

Before moving on to the practical application, my decision making regarding spending is based on a VALUE for COST premise. If the cost is worth the pleasure or value I receive from the spending – GREAT. If the COST OUTWEIGHS THE VALUE – not so good.

 Read more about this philosophy in The Secret to Saving without Sacrifice.

PRACTICAL APPLICATION: Here’s the Secret

When I go out during the day, I always pack my lunch. For a break, I take my sandwich, some carrots and go out to my car (or the lobby of the library) and eat. (I still can’t believe I divulged this.)

Why do I do this? Because …….. the $10 it costs for lunch out does not give me $10 worth of pleasure. Conversely, the $2 worth of coffee- yes, worth the money for me.

Here’s how it plays out:

Annual Savings from bringing lunch 1 time/week:

Save $8.00/week X 50 weeks = $400.00/Year

And now for secret number 2; my husband and I spend the extra $400.00 on something that we really value, such as:

2 Nights vacation in a hotel

2 tickets + dinner for a Broadway show

Several trips to a minor league baseball game

Now I realize there are those out there who probably think I’m overly frugal cheap. Or would rather eat lunch out than go to a hotel, show, or ball game; and I get that.

The reason I shared my secret is to open the door to discussion.

What are the ways you save and where do you splurge?

ACTION STEP:

Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.

Evaluate your spending for a week and cut out the lower value/higher cost activities.

YAKEZIE SHORT CARNIVAL: Coupons are they Worth the Hassle? @ Beating Broke, Do Something Instead of Nothing @ Financially Poor, 6 Sneaky Ways Grocery Stores and Retailers Get You to Spend More Money @ Frugal Confessions