Welcome to a new guest contributor, the Broke Bytch. She is a new college grad with a minimum wage job. Enjoy her irreverent tips for saving and spending. Caveat; Her ideas are her own and I bear no responsibility for their content!

Broke Bytch Background

Like most people in their early twenties, I’m strapped for cash.  Sometimes I feel like my monetary impairment keeps me from going out and living life to its fullest.  What can you do for fun these days for free?  I’ve done my research and most articles professing solutions to a lack of funding suggest things like: reading a book, taking a walk, going on a hike, stargazing, window shopping, renting a movie from the library, sunbathing; I think you get the idea.  Well if you’re like me, you can only go on so many walks and hikes or read so many–ha! I had to stop, its too absurd, I’m out of college, please, like I read.

So I  made a list of my greatest spending categories and came up with cheaper alternatives, so I wouldn’t feel so burdened by my my financial state.

My greatest spending categories list looked something like this:

1. Housing
2. Food
3. Entertainment
4. Transportation
5. Cell phone
6. Clothes

True Confession About My Housing Arrangements and Other Cheap Living Options

First, before I begin showering you you with my unbridled wisdom, I must confess I partake in one of the biggest money-saving techniques out there:  I live with my parents.  However, if you are unable to afford this luxury, there are other solutions.

A potential option, other than cramming into a hole in the wall with twenty other roommates is to look for an in-house caregiver or nanny position. Aupair-World is a cool site to check out.

Ever considered farming? If you are flexible in where you live you could work on an organic farm or WOOF. This organization profiles farms world wide, so it’s a great option for those broke souls with wanderlust.  Other benefits of farming are, you won’t need a gym membership or sleeping aids because you’ll be working so hard doing back breaking labor.

Skip the apartment altogether and travel instead. In terms of traveling on the cheap STA travel  and couch-surfing are awesome options. In fact couch surfing is promoted by NPR, the Frugal Traveler, the New York Times, the Guardian, and Time Magazine, so it must be okay.

If you can’t live with your folks “rent free” you could even rent a room in someone’s home. All those people who got slammed by the mortgage meltdown are now renting out rooms to help with the mortgage payments. And if the family is really helpful, maybe they will even do your laundry (although don’t count on it).

What to Expect From the Broke Bytch

…Wait, wait, one more thing: as you can already gather from my previous paragraphs, I’m not exactly a short-winded person, so in order to make my mind-numbing awesomeness easier to digest for all of you weak-minded individuals, I’ve broken down my entries into manageable chunks.  Therefore my subsequent entries will be grouped as follows:

1. Food: How to not eat through your wallet, no matter how high the fiber content
2. Entertainment and Transportation: Time to wake up from your drunken stupor and get home (oh wait, that’s me..)
3. Phone and Clothes: Brrrring, brrrring, Its the 90’s calling, time to get some new duds, dude (because that is apparently how the 90’s talk)

I would like to promise a particular schedule, but I’m too busy trying to make a buck to commit. Why not pick up the RSS feed and then you’ll be sure to catch every column.

See you next time,

Broke Bytch

How do you slash living costs?

I’ve been a mom for 2 decades and a daughter for quite a bit longer. I’m also a bit of a control freak when it comes to consumption. I don’t want anyone telling me what to buy and when. That said, I’m not a total malcontent. I’m lucky to have a wonderful spouse. El Carino doesn’t share my viewpoint and insists on taking me shopping for Mother’s day. (And of course I appreciate it!)  So, last week end we hit the outlet mall for a sale outfit from Banana Republic! At 40% off it was quite a bargain.

Cheap Mother’s Day Gifts Any Mom Would Love

Jr. Carina is not as financially set as her dad, and this article is informed by her wonderful gifts to me over the years.

Gifts Under $20.00

Magazine Subscription; I love decor and anything “home” related. There are many magazine subscriptions to be had for under $20.00. Some mom friendly recommendations include; House and Garden, Redbook, More, Good Housekeeping, Oprah, Real Simple, Self and many more. Although that list is rather gender stereotyped, consider your mom’s interests and hobbies and choose one that is a fit for her. Obviously, if your mom is interested in personal finance like I am there are scads of magazines. One of my low cost favorites is Fast Company.

Books; Sometimes mom wants a particular book but hesitates to buy it for herself. Downloads for Kindle and eReaders are a real bargain and you could surprise your mom with one she would enjoy. Used bookstores are great spots for bundles of bargains. I recently picked up a coffee table book chronicling the American Home for $1.00. Two recent favorite reads are The Girl with the Dragon Tatoo by Stieg Larsson and Risk Less and Prosper by Zvi Bodie and Rachelle Taqqu. Game books like Sudoku and Crosswords are great for keeping mom’s mind sharp. One of my all time favorite gifts was a Doonesbury cartoon book.

Pampering Treats; It doesn’t cost much to indulge mom. Buy a designer lipstick for under $15.00. Lotions and bubble baths are so sensuous. What about a premium nail polish? Buy a small perfume sample, on sale during this season. Consider the treats that mom covets.

Music; Who doesn’t like music? Downloads, full price, and discount CDs abound. Introduce mom to a new artist you think she might enjoy. Download it onto her phone or MP3 player. If your mom is a bit old school like I am, you can grab a CD from the bargain bin or a music resale shop. Songs from your mom’s teens and younger years can bring back those memories of carefree days.

Free

I adore home made gifts. Anything my daughter has made me over the years is still a treasure. In fact, a beautiful plaster of paris shell paper weight has a place of honor on my bedroom shelf. There’s nothing like those adorable kids paintings in a frame to spruce up a bare wall. And the framed photos with artistic editing  are sitting in my office.

Arts and Crafts; The list is only hindered by your imagination. Mom will appreciate a painting, drawing, sculpture, or collage for the day. Paste some photos of you and mom on a box (use one that’s laying around the house), cover with a few coats of mod podge, and you have a lovely keepsake box. For inspiration check out pinterest.

Beauty Services; Give mom a home manicure or pedicure. The time you spend together is priceless and creates a memory. Or treat mom to a massage.

Time; Mom’s cherish time with their kids, especially as they get older. Give mom an afternoon of mom and kid time. Do something free like visit a park, go for a walk, visit a gallery, window shop, or go antiquing. Jr. Carina and I recently visited a local museum and made clay sculptures together. It was so fun, and her two clay animals are a constant reminder of the afternoon together. Gear the time towards mom’s interests and passions. Select a special and memorable activity.

Food; Of course there is the time tested breakfast in bed. What mom wouldn’t like that? How about trying a special family lunch or dinner with a unique menu? Barbecues are perfect this time of year. For brunch there are amazing pancake and french toast recipes. My mouth is watering right now!

Spend some time thinking about what mom likes. If she’s like most moms, she puts others first and would really appreciate a nice hand written card and a “from the heart” gift.

HAPPY MOTHER’S DAY

For More Cheap Mother’s Day Gifts;

• Country Living
• Savvysugar
• Free Money Wisdom
• Financial Highway

What are your favorite low cost Mother’s Day Ideas?

image credit; google images_ingles360_blogspot

a version of this article was originally published on March 24, 2010

“I never could have done what I have done without the habits of punctuality, order, and diligence, without the determination to concentrate myself on one subject at a time.”
Charles Dickens

Who can argue with such an accomplished man as Charles Dickens? Develop habits for wealth and greater contentment will follow.

How Many of These Habits Do You Practice?

It is widely believed that small changes, practiced regularly, lead to out-sized results. Many great accomplishments began with tiny actions, implemented again and again. There’s research supporting the financial and personal benefits of quite a few of these habits.

Remember, wealth in life goes beyond money.

PRINT OUT THESE WEALTH BUILDING HABITS

1. Get married
2. Stay married
3. Get a college education
4. Get to work early and stay late
5. Do more than is expected at work and get promoted
6. Have a side business
7. Take risks
8. Learn from your mistakes
9. Try something new
10. Contribute regularly to  a ROTH IRA
11. Contribute to a work retirement account
12. Be patient
13. Be disciplined
14. Eat out infrequently
15. Transfer money regularly into a savings account
16. Invest regularly
17. Order water only with meals out
18. Drink alcohol infrequently
19. Avoid extravagant and ostentatious people
20. Live in a low cost region
21. Buy a modest home
22. Keep your vehicle 10 years or more
23. Take the stairs
24. Exercise regularly
25. Bring lunch to work
26. Maintain your possessions
27. Spend more on needs-less on wants
28. Drink water
29. Eat more rice, beans, potatoes, and peanut butter
30. Buy fruits and vegetables in season, canned, & frozen
31. Trade walking for driving when you can
32. Pay your credit card bill off in full every month
33. Give your kids more time and less things
34. Don’t equate net worth with self worth
35. Use the library
36. Compare prices
37. Designate part of every paycheck to saving &/or investing
38. Do not pay to have a check cashed
39. Learn a new skill
40. Get an advanced degree
41. Give to charity
42. Write down what you appreciate and value in life
43. Enroll in a work retirement plan
44. Put all investing dollars into unmanaged, low cost, index funds
45. Start saving and investing NOW, no matter how old you are
46. Take up low cost recreation and hobbies
47. Want less
48. Ask for a raise
49. Eat less meat
50. Think less about money and more about living
51. Buy I Bonds and Treasury Inflation Protected Securities (TIPS)
52. Never compare yourself with those above you
53. Spend time with nature
54. Own a pet
55. Don’t pay full price
56. Set goals
57. Review your goals regularly
58. Make time for fun and relaxation

Action Steps:

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

• List several “new” wealth habits from the list to try this week.
• Add some of your own “wealth habits.”

 Can’t Get Enough Wealth Habits? Read on;

Family Money Values writes Develop Healthy Wealth Habits

Get Rich Slowly hosts a guest post by Dough Roller in Understand the Seven Habits of Wealth

CNBC highlights The Highly Effective Habits of Millionaires

Eventual Millionaire offers insight into Millionaires Mind in the podcast

For WEALTH TIPS (click here) delivered occasionally to your inbox, sign up for my newsletter; and get a Free bonus Ebook, 20 Minute Guide to Investing. I promise, no spam.

Bankrate wants to Know; HOW ARE YOU DOING IN A DOWN ECONOMY?

Read my entry into the KissMyAssets Contest!

Read my entry into the KissM

Here’s my advice for living large in a down economy. FORGET ABOUT THE ECONOMY; LIVE A ROCKIN’ LIFE.

My family and I are living an amazing life in this down economy, learn how you can too.

The News is for Entertainment and Sensationalism

Don’t even think about the news, or the dour talking heads on your TV. You are the master of your own destiny. Life and success transcend money. Whatever your current circumstances, you have ultimate control over your greatest resources, your time and your mind.

To get you started, here are a few ideas that I’ve employed to create an awesome life experience in spite of a down economy:

1. Spend a few minutes with that gratitude journal and write down the gifts you already have in your life. Don’t sigh, I know this is quite “Oprahish”. This strategy is a sure fire mood booster. You are already living better right now than royalty of the 1800′s. The luxuries of microwave ovens, computers, cell phones, indoor plumbing, electricity, video on demand, and more make our lives spectacular.

2. If you have friends, you are already wealthy. For wonderful fun in a down economy, gather a group together for a cheap and fun filled gathering. We love potlucks with games both indoors and on the field. Try some touch football, soccer, charades, Taboo, or Wii tournaments. Low cost, high energy fun. Plus, record the event and make a memory that will last.

3. When cash is low… travel. Take a bus or train to a neighboring town and visit the free parks and museums. Pack a picnic lunch and feel like you are a million miles away. Last week end we traveled to a nearby city and wandered through the streets and city parks. It felt like we were in another world and we came home refreshed and invigorated, all for the cost of a train ticket.

4. Finally, prepare yourself a gourmet cup of tea or coffee at home. Sit by the fire or the heater, curl up with a good book and indulge in a break. Allow yourself to recharge and reinvigorate yourself by carving out some personal time.

What Goes Around Comes Around

Economic conditions are cyclical. Great economies are followed by downtrends, and ultimately things get better. We’ve found it a challenge to enjoy ourselves during a down economy. And I am certain that things will turn around in the future. They always do.

Barb Across the Web

• Moolanomy highlighted three of my articles in his posts; How to Communicate with the IRS, Alternatives to Investing in Low Yield CDs,  and Haggling to Get a Better Price.

How are you coping in a down economy?

How could David Siegel, billionaire owner of the largest time share company in the world, Westgate Resorts not have back up savings when trouble hit? Bloomberg BusinessWeek recently chronicled his downfall and rebound in “Versailles, the Would be Biggest House in America“.

EMERGENCY FUND

Background; What is a Time Share?

As a struggling young married couple living in Southern California, El Carino and I visited many time share presentations. Wooed in by a set of luggage, free meal and a show, or other goodie in exchange for 90 minutes, it was both a source of entertainment and a free meal.

A timeshare is a form of vacation ownership where you buy a week or two vacation in a tony resort in exchange for $25,000.00 plus an annual maintenance fee of up to $700.00 per year. This investment (I use the term investment loosely as it is quite unlikely that you will financially profit from the time share purchase and rarely can you sell your ownership interest for a profit) provides a  small apartment in a resort area. You usually buy the same two weeks with December and prime vacation times costing more than off peak weeks. Most owners’ average annual income is about $75,000.00 and they finance their timeshare purchase at up to 15% annual interest. Time share sales teams go after the relaxed vacationers for these impulse purchases.  In sum, the sales tactics are powerful and the owner profit’s outstanding.

Why Even Billionaires Need an Emergency Fund

Business was continuing as usual with expansion funded by the profitable business model. Meanwhile, after the timeshares are sold, the property developer bundles the mortgages’ together, securitizes them and sells the new investment products to investment bankers to market to the public. Things were going along great-until they weren’t. In 2008, Siegel couldn’t sell a $300 million securitization and pay off the primary lenders, his credit dried up, and he was in the midst of a huge Las Vegas building project. His funding gravy train dried up in the midst of the sub-prime lending crisis and mortgage meltdown.

What’s a billionaire to do?

He could not pay back the lenders from the initial mortgages since he was depending upon the funds from the securitization for the capital. And there were no buyers for the securitized products. The initial lenders were not happy and Siegel was on the hook for $1.2 billion, with no savings.

His creditors took swift action requesting he sell a dude ranch, mobile home park, and a Ramada Hotel near Disney World. His creditors put he and his wife on an allowance leading to a drastic lifestyle adjustment.

Lessons from a Billionaire Without Savings

Not only are there wealthy folks without savings, there are high income earners plagued with debt and a negative net worth. Without getting into the psychological reasons for this, what does this mean for those of us without a $1,000,000,000.00 net worth?

Add Siegel’s losses to those of lottery winners who blow it all combined with millionaires in bankruptcy court and the examples of financial mismanagement are not hard to come by. What can you learn from their mistakes? Hint; the lesson is not to give up because if the wealthy can’t manage their money, what hope is there for you!

No Matter What Your Income Level is; You Need to Save

Everyone needs some cash to fall back on when hard times hit. And financial setbacks happen to everyone. Not only are the poor susceptible to financial problems, but high income earners who overspend and don’t save can run into financial problems as well. There is research that substantiates the importance of having emergency funds to fall back on.

Siegel sold some assets, scaled back on spending, and continues to pay his debt. He’s on a path to become financially stable again. Yet his story highlights the importance of living within your means and saving for the eventual financial surprise.

Action Steps

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

Building an emergency fund must be done now. Don’t worry about the amount, just funnel a percent of each paycheck into a separate savings account designated for emergencies. Vow not to touch this money unless there is a financial emergency. No, I don’t mean buying a new electronic gadget or pair of shoes!

Each paycheck, transfer manually or by automatic deposit money into your Emergency Savings Account. No excuses. If you don’t see the cash, you won’t miss it.

Do it now!

What Others are Saying

Starting an Emergency Fund with the Right Amount of Money at Yes I am Cheap

How and Why to Start an Emergency Fund at Get Rich Slowly

Figuring the Size of Your Emergency Fund at Wise Bread

21 Strategies for Creating an Emergency Fund at Zen Habits

$1000 emergency fund? 6 months expenses? 1 year salary? Throw them all out the window! at Wealth Informatics

What tips do you have for building an emergency fund? Have you dipped into yours recently?

image credit; google images- gobankingrates.com

Three Ways to Benefit from the Low Interest Rate Environment

In part 1 of What do Low Interest Rates Mean?, I talked about the cyclical nature of interest rates and the economics behind the interest rate trends. Today is advice day where you get some tips about how to benefit from the current interest rate environment.

It is a certainty that economic environments change. The low interest rate environment will not last forever. At the outside, you have less than two years before interest rates will rise. After reading Part 1of this article you understand a bit about the economic and monetary policy behind the interest rate environment. Next learn how you can profit. After all, I can’t write an article without giving strategies for wealth building.

Time to buy a home?

3 Strategies to Grow Your Wealth in Spite of Low Interest Rates

1. In How to Get a Decent Return on Your Cash, I wrote about options for savers. The best savings option right now for cash you won’t need for a year or more are Government I (Inflation) Savings bonds. The I bonds pay 3.06% until April 30^th when they will reset for their six month adjustment and reflect the current rate of inflation.  The return on these investments has two parts; a fixed rate of interest which does not change and an adjustable rate of interest that moves along with the inflation rate. The beauty of I Bonds is that there is no chance of default and your investment is guaranteed to keep up with the pace of inflation. In other words, the purchasing power of your investment is protected.

Buy these risk free investments on line at Treasury Direct. You can purchase up to $10,000.00 worth of these bonds annually in increments of $25.00.I bonds are even available for purchase with your tax refund. Except for paying off debt, there is probably no better use for your tax refund.

2. For lenders, I recommend peer to peer lending. This type of loan is about lending money directly to folks who need it. The peer to peer lending investment cuts out the bank and directly matches lenders and borrowers. I am loaning money to other borrowers through a peer to peer lending site and so far am earning 10.69% Returns With Prosper. 

I started investing in October, 2011 with Prosper.com. You can read about my initial experience in this article; My Experience with Peer to Peer Lending. In contrast with government bonds, please realize that this is a risky investment. Borrowers might default on a loan in which case, you would lose your total investment in that particular loan. For that reason, I only invest $50.00 in each loan that I fund. There is also the option to invest $25.00 per loan, further reducing the default risk of the loans. Although I currently have over one hundred loans, our total invested capital in peer to peer lending is only a very small portion of our investable assets.

I only recommend this for folks that can afford to take a loss on their investments in the expectation of receiving out sized gains. The Social Lending Network is a blog devoted to peer to peer lending. If you’re interested in the topic, it is a great place to learn more. If you do decide to loan through peer to peer lending, make sure that you only invest a small portion of your investment funds in this type of opportunity.

3. Take advantage of the historically low interest rates and borrow. Don’t borrow on your credit cards as those rates are way too high (and probably always will be). But if you are considering buying a home or refinancing your current abode, now is the time to do so. Home prices have sunk across the country and mortgage rates are at all time lows. There are even FHA loans with low down payments available for those that lack enough saved up for a 20% down payment. The FHA website has a handy calculator to help figure out if you qualify for a low down payment FHA loan.

For those looking to lock in a low interest rate loan or refinance their current mortgage, according to Bankrate.com, a 30 year fixed mortgage can be had for about 4.0% and a 15 year fixed mortgage for 3.27%. In many parts of the country, your house payment would equal or be less than a comparable rental.

Although we just bought our condo seven months ago, we are refinancing with a low interest rate 15 year mortgage. Our thinking is that when retirement rolls around, it will be a bonus not to have a mortgage to worry about. So even though our new interest rate will be lower than that on our current 30 year mortgage, the payment on the 15 year loan will be  a bit more. The monthly increase is worth it to us to save over $100,000.00  in interest payments over the life of the loan and pay it off in half the time.

Don’t forget to check out the first article in this series, What do Low Interest Rates Mean?

Please add your strategies to capitalize on the current low interest rates.

image credit; Madison short sale.com

Don’t forget to check out Part 2 and find out How to Profit from Low Interest Rates

In the university course I’m teaching, the  Investments text was published in 2010. The examples in the book use 12% as an expected return on stock investments and Treasury bill rates are projected at upwards of 5%. Compare those returns  with the recent 1.24% 5 year average return on the Vanguard Total Stock Market Index Fund (VTSMX) and the 3.55%  iShares Barclays 1-3 Year Treasury Bond Exchange Traded Fund (SHY) annualized 5 year yield.

Why are interest rates so low?

The students in my class complained about the unrealistic examples in the text book. They have no experience with actually receiving a few percent interest on their bank savings accounts and 5% CD rates.

What is Going on with Low Interest Rates?

In economic terms, the Federal Reserve Bank which decides monetary policy is trying to pull our economy out of a recession and jump start growth.  As part of this effort, the low interest rates are designed to promote spending by consumers and corporations. Firms fund growth through expansion and frequently take on debt to finance that growth. With low interest rates, corporate borrowing costs are rock bottom. This allows those corporations to expand at a cheaper cost than in a high interest rate environment.

Consumers make decisions whether to spend or save based on many factors. Included in that decision making are returns on saving. With low interest rates on savings, the government would like to see consumers spending in lieu of saving in order to help grow the economy. Actually, consumer spending is about 70% of Gross Domestic Product, the main metric to gauge the economic health of the country.

Savers and Retirees are Hurt by Low Interest Rates

The consequences for savers, especially retirees are difficult. Today, retirees are panicked as their CD income is nonexistent. My relatives with only cash investments have gone from high returns on their savings to retirement cash nibbled up by inflation. For the population past their earning years, hoping to supplement their social security income with interest from bank Certificates of Deposit, it is a dire financial time.

Ben Bernanke, the Chairman of the Federal Reserve Bank and one of the most powerful people in the U.S., pledged to keep interest rates low until 2014. That’s almost two more years. It is rare to have that type of clarity on the future of interest rates. In fact, I’ve never heard an official make such a public comment about upcoming monetary policy. Usually the Fed’s actions are hush hush and a complete surprise.

In the next article in this series, you’ll get some ideas about how to profit from the current interest rate environment. It is certain that it won’t last forever, yet instead of waiting for rates to rise and interest payments to grow, there are some tactics to boost your returns now.

In the Part 2, learn Three Ways to Profit in the Current Interest Rate Environment.

Related Reading for Those Who Can’t Get Enough

How Bonds are Valued and React to Interest Rate Changes at Moolanomy

Investing to Beat Inflation at Money is the Root

Low Savings Interest Rates; Good or Bad? Consumerism Commentary

Is the Fed Putting Your Retirement Savings at Risk? A guest article by Nerdwallet.com at One Money Design

How have the low interest rates affected your behavior?

Ikea customer says, “I love those light fixtures.”

The partner replies, “Come on, it’s not on the list.” (eavesdropping transcript from IKEA)

That simple exchange left me speechless. Then made me anxious. Were the items I was purchasing “on the list”? Whew, yes they were. It’s so ingrained in me to shop with a list, I sometimes don’t even think about it.

Do You Have the Discipline to be Wealthy?

 Wealth in money and life are made up of a string of smart decisions.

I learned “list making 101″ from my parents at a very young age. We made “to do” lists, grocery shopping lists, and going to the mall lists. My daughter, now in her 20′s, said when she discovered at a young age that she could write an item on the refrigerator shopping list and I would buy it, it seemed like magic. Not exactly, the entries for candy and treat food were not automatically put into the shopping cart! But I give her credit for ingenuity.

That couple in Ikea exemplified the single minded determination to stick to a goal. They obviously had a budget and specific items they planned to purchase. Would one splurge have made a huge financial difference in the long term? Probably not. But, a lifetime of self indulgence and “I deserve it” type of thinking causes a life filled with financial stresses.

Financial Implications of Self Indulgence

Imagine two couples; disciplined couple one, the Smarty’s and indulgent couple two, the Spendy’s. Assume these couples were identical in income and location.

The Smarty’s Habits

• Shop with a list.
• Plan for rewards and indulgences.
• Contribute regularly to their workplace retirement accounts.

The Spendy’s Habits

• Shop frequently without a list.
• Treat themselves to indulgences whenever they feel like it.
• Don’t bother contributing to their retirement fund because they believe in LIVING FOR TODAY.

Outcome of Smart Money Habits

Look at the amazing wealth amassed from a small amount of money. The Smarty’s saved $40.00 per week from avoiding impulse shopping. They added that $40.00 per week to their investment account and let the magic of compounding return work.

SMALL SAVINGS = MORE MONEY

On the other hand, the Spendy’s were self indulgent. When they wanted something, they bought it. The Spendy’s filled their lives with impulse purchases.

The outcome? It’s unlikely that this spur of the moment spending made them any happier or more fulfilled. It’s probable that this spending filled their lives with clutter, bills, and stuff. Not to mention that later in life, they certainly lacked the necessary funds to retire.

 Self indulgent splurges are quickly forgotten. Saving and discipline lead to long term wealth and feelings of self control and strength.

Little Changes Matter

Spend a minute examining that NOT SPLURGING chart. Invest just $40.00 per week and be over four hundred thousand dollars richer at age 65. 

Do you have the discipline to say no to yourself?

SECRET SAVINGS TIP; The simple strategy of sticking to a shopping list can yield monumental results.

Caveat; I didn’t say never splurge. We all need rewards and splurges in our lives. The trick is to plan for these indulgences and make them meaningful.

Women’s Money Week

I’m participating in Women’s Money Week next week. Women have historically been laggards when it comes to finances. This week is about encouraging women to speak up about money, take control of our finances, and reshape our financial future. Women’s Money Week will run from March 5th-11th, 2012 on WomensMoneyWeek.com — coinciding with International Women’s Day.

Following are a few of the participating blogs in Women’s Money Week (I’ll include a few more each day next week):

Are you a list maker or not? How do you handle splurges and indulgences?

I consider myself quite a negotiator, yet overhearing the train conductor’s strategy, I learned there’s a method superior to my own to save money and get what you want.  I was on the train in New Jersey, off to visit my in-laws this week, when I overheard one of the train conductors speaking to his friends. He bragged about his amazing money saving strategy. Being both nosey and interested in saving money, he grabbed my attention. He didn’t seem to mind my listening in, in fact his demeanor suggested he was proud of his accomplishment and he wanted to broadcast it.

SAVE MONEY

THE SECRET TIP TO GET WHAT YOU WANT

The conductor went to rent a luxury apartment. He decided the price he was willing to pay and wrote it down on a piece of paper.

Next, he sauntered in to the leasing office and said; “Can you rent me an apartment for this amount?” and handed the paper to the leasing agent.

The leasing agent replied, “I don’t know.”

The conductor walked out.

The leasing agent called out, “Wait a minute. I can give you an apartment for this amount,” raising the ante a bit.

The conductor replied, “No thank you,” and walked out.

The leasing agent again went running after him and said, ”Wait one minute, let me get my manager.”

The manager came in and the conductor handed him the paper with his price on it and asked for the apartment. As the manager was attempting to deliberate, the conductor left.

The manager went running after the conductor and said, “Yes, you can have the apartment at that price.”

The conductor didn’t haggle, he didn’t bargain, in fact, he didn’t say much of anything. He wrote down his predetermined price, and was quite willing to walk away if he couldn’t get the apartment for the price he wanted to pay. The entire ordeal was over in less than 10 minutes, with little stress to the conductor.

THE TAKEAWAY

1. Know your price.
2. Be willing to walk away if the price is not met.
3. Don’t waste valuable time haggling.

Where I usually fall short is in the back and forth. Typically, I’m not one hundred percent sure of my own bottom line. I learned from this chance encounter to be more deliberate and evaluate in advance what is my “walk away price.”

On the other hand, my time is quite valuable, and going through this exercise, if unsuccessful the first time, could cost quite a bit of time. So that factor must be included in the strategy as well. Either way, I am definitely going to give this one a try, what about you?

MY ATTEMPT AT NO HAGGLE NEGOTIATING

One of my indulgences is art. I love art and collect original art. There is a shop in NYC where El Carino and I have bought several pieces in the past. On this trip, I decided to try out the train conductor’s strategy.

We found a piece we loved, wrote down the price (about 15% less than the listed price) and asked for free shipping as well. The dealer accepted our price. That was quite fortunate for us, as I don’t know if I could have walked away. This artist is my favorite and the pricing is quite fair. We are thrilled with the art and the success of the train conductors negotiating tactic. Give it a try!

ACTION STEPS

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

• Next time you are looking to purchase a negotiable item, do your research in advance and come up with your bottom line figure.
• Write it down and hand it to the sales person.
• Be ready and willing to walk away, so it’s probably best to try this technique only when you are committed to walking if you don’t get your price.
• Let me know how this method works out for you.

More Money Saving Tips

55 Painless Money Saving Tips; Dough Roller

How to Stop Spending and Start Saving; Not Made of Money

100 Tips for Saving Money; The Simple Dollar

10 Unconventional Money Saving Tips; Get Rich Slowly

8 Painless Money Saving Tips; US News

30 Easy Ways to Save Money (No You are Not Doing All of Them); Dumb Little Man

Barb Across the Blogoshpere

Self Directed Carnival of Investing at Arbor Investment Planner

Festival of Frugality at Penniless Parenting

Carnival of Personal Finance at Well Heeled Blog

NYC CONDO

“Owning a home is a keystone of wealth.. both financial affluence and emotional security”. –Suze Orman (from stjamescantor.com)

For as long as I can remember, real estate was a part of my life. On Sunday’s we would pile in the car to look at real estate my parent’s company owned or preview property for sale. One of my first jobs out of college was in real estate sales. I started investing in real estate in my 20′s and to this day, work for a real estate holding company.

This past summer, El Carino and I relocated and purchased a “short sale” condo. Our home is 2 stories, 1,800 square feet, with 4 (tiny) bedrooms. Comparable homes to ours in New York City sell for $2,000,000.00 to $3,000,000.00. Our purchase price was nowhere near that amount.

My interest in real estate transcends real property and extends to home decorating. In order to meet my decorating “fix” HGTV is my television destination. One of my favorite shows is “House Hunters.” The program tails buyers across the country as they look for their ideal property. I cannot get away from the reality that….

An identical property can sell from $200,000.00 to $2,000,000.00, depending upon its location!

We moved from a very low cost of living area to a more expensive one (not NYC). Consequently, the house we sold cost less and had more square feet than the new home we bought. And, as I boldly stated, a comparable home to ours would easily cost in the millions in New York City.

COST OF LIVING COMPARISONS

Real Estate Strategy

I’ve discussed this topic before; building wealth can be accelerated by living in a low cost of living area. Life is all about choices. Do you want the excitement of living in LA, Chicago, NYC, or San Fransisco? If so, be willing to pay 100% to 400% more for a home than in St. Louis, Missouri. When El Carino was job hunting, I was a regular visitor at a cost of living calculator. Every time he had an interview, I plugged in the numbers to determine what salary was appropriate for the job and location. In fact, in the early parts of our lives, we deliberately chose to live in lower cost of living areas to maximize our lifestyle and savings.  Those decisions paid off quite well. We fed our love of the arts and theatre with occasional visits to major cities and returned willingly to our less expensive abode. Paula at Afford Anything takes the concept globally, and talks about the lowest cost of living spots internationally.

I encourage anyone who is younger, mobile, and interested in building up a nice nest egg to consider their geographic location and cost of living when considering their future. Tens of thousands of dollars can be saved each year by opting to live in a less expensive area. Live in middle America and you too can have a million dollar home (by New York City standards) for a fraction of the cost.

Would you sacrifice the excitement of the “big city” for thousands of dollars in long term wealth?

cost of living data credit; cnnmoney

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