Beyond Paycheck to Paycheck

at February 28, 2008 in Ranting. 3 Comments

Yesterday, right in the middle of the work day, my cell phone rang. I didn’t recognize the number, but I picked it up. It was my wireless carrier. While not verbatim, here’s approximately how our conversation went:

Wireless Carrier: <Long pause indicative of the approaching of a telemarketer> . . . Hello, Michael?

Yes. Who is this please?

Wireless Carrier: This is Spr&#t. We are calling to make sure you are getting the most value from your wireless plan. We periodically review our customers’ plans and offer them opportunities to save.

I’m in the business of saving. Okay, I’m listening.

Wireless Carrier: We are pleased to offer you the opportunity to increase your minutes to 700 minutes per month for only –

Didn’t you say you reviewed my account?

Wireless Carrier: Ummm. . .

Is it front of you now?

Wireless Carrier: Yes, Mr. Rubin. I see–

I used like 50 minutes last month and wife maybe another 100. Why would we increase our minutes to 700 and pay more? Plus, that doesn’t really sound like saving?

Wireless Carrier: You are correct Mr. Rubin. You would not benefit from a higher minutes per month plan. However, we could offer you a third phone for just –

Our oldest child is just now getting to the point where she doesn’t try to eat the regular phone. We might be interested in getting our two-year-old a cell phone, but your latest models are too small. She could definitely swallow them. So, I don’t think so.

Wireless Carrier: We also could also add to your account –

It seems like all these ways to “save money” would actually increase my monthly bill. I don’t think I’m going to be able to save the way I hoped when we started this conversation.

Wireless Carrier: No, Mr. Rubin, probably not.

Hey, you have a great day!

Wireless Carrier: You too, sir. Thank you for choosing Sp#$%t.

# # #

I hope that call didn’t use up two of my “anytime minutes.” We only have another 500 left this month on the lowest family plan they offer.

Of course, this whole conversation does beg the question: Does anyone ever really call you to save you money? You know my opinion.

"financial education"

Do pirates save?

Published by

at February 27, 2008 in Guest Posts and Saving Strategies. 0 Comments

Shea K., a Beyond Paycheck to Paycheck reader, asked to write a guest blog post. I loved her pitch: What better occasion to save a little time than a post about America Saves Week? Worked for me. I hope you enjoy her post as much as I did:

Although America Saves Week is not as exciting as Talk Like a Pirate Day (But how can anything compete with the rare 21st century opportunity to leave the house donning a bandana, eye patch, and hook, all the while shouting “Avast me hearties!”?)

Still, America Saves Week is a whole week compared to just one day; so, by implication is seven times more important than Talk Like a Pirate Day. Plus, although it lacks the pillaging, America Saves Week is a fair bit more practical and better for you. Want both? Think of Talk Like a Pirate Day as dessert. Tasty, sweet, indulgent. But too much can give you a stomach ache. Think of America Saves Week as your vegetables. Good for you and ultimately not nearly as dreadful as you initially feared.

Why?

By using America Saves Week as your excuse to get started, you’ll have a lot. In just a week! Perhaps a plan to cut back on coffees or forego expensive lunches. You’ll come up with ideas on how changing just a few things can really add up. At the end of the first week, you may find you’ve already put some savings away. More importantly, long after the glory of America Saves Week has faded, your new habits mean you will continually add to that savings.

What will it mean for you, personally?

Perhaps it will fund a new car, a new TV, better preparation for a financial emergency, or your child’s college education. It may even allow you to retire in your 50’s instead of your 60’s. Whatever you do with the savings, you are better off taking advantage (dare I say “celebrating?”) America Saves Week. So have fun, go wild! But most importantly, start today. Eat dinner at home instead of spending your way to grow someone else’s bank account.

With a little dedication and a slightly offbeat sense of humor, you’ll have enough money for some good pirate garb when it’s time for Talk Like a Pirate Day in September!

Arrrrgh!

Here are some tips from the Vanguard Retirement Planning Web Site page about America Saves Week:

Opt for a more modest cup of coffee instead of your regular gourmet blend.
Bring your lunch to work, even if it’s just a few days a week.
Cancel any subscriptions that you no longer use or enjoy. This includes premium cable channels.
Rent a video or see a matinee. Avoid those talkative evening theater crowds.
Book your vacation travel online, including hotels.
Pay with a debit card instead of a credit card. If it’s not in your bank account, you can’t spend it

What do you think? Got any ideas you care to share? Are you going to do anything special about this year’s America Saves Week or will you just blow it off? Any plans for September 19?

"financial education"

Graduate students work hard

Published by

at February 25, 2008 in Carnivals. 0 Comments

Sometimes they are rewarded, sometimes not. See the bottom for how Total Candor rewards graduate students.*

But first, one hard-working graduate student who goes by Broke Grad Student, just put out this personal finance carnival and included the Beyond Paycheck to Paycheck post Your Income Tax Return: Benefit From the Pain.

If you’re one who struggles with perfectionism, then I Paid for This Twice Already’s post Perfection is the Enemy of Progress is a good read. I might have titled it a little differently in that procrastination is also one of progress’s chief nemesis.

You’ve got a challenge, however. If you stop what you’re doing right now to read an article about the impact of perfectionism and procrastination, does that help or hurt your cause?

*If you’re a full-time graduate student (broke or not), Total Candor Tax Prep will do your tax return for half-off our ordinary and already affordable fees.

"financial education"

The 45-cent strawberry: Are organic foods worth it?

Published by

Source: http://www.webmd.com/food-recipes/guide/20061201/organic-food-worth-money

at February 25, 2008 in Cash Flow and Saving Strategies. 3 Comments

When I started in on my grocery shopping kick a couple of weeks ago, one of the original questions I posed was:

Prefer organic food? Which ones?

Perhaps you expected that when we got to this question I would rant and rave about how costly and irresponsible purchasing organic food has become.

You: Pretty much.

Not going to happen.

You: So you bless people going into Whole Paycheck and spending $75 on four produce items?

Not quite. Like with all financial (and life) matters, the key is balance. Assuming you can afford it, you can clearly benefit from the demonstrated health benefits of certain organic foods. However, studies have also shown that the value of other organic foods is questionable at best, especially so after factoring in the increased cost.

Of course, the stores don’t make it clear which foods fall into the “worth it” and “it isn’t going to hurt you any but it is going to make us good money” categories. So you have to be the one to properly assess both your overall food budget and the importance of buying organic for each food type you purchase.

You: But how do I find out which foods are in either category?

A few years ago, we cut out a similar article to this one I’ve linked to and excerpted from below:

Organic items worth buying as often as possible: Apples, baby food, bell peppers, celery, cherries, dairy, eggs, imported grapes, meat, nectarines, peaches, pears, poultry, potatoes, red raspberries, spinach, and strawberries.

Organic items worth buying if money is no object: Asparagus, avocados, bananas, bread, broccoli, cauliflower, cereals, sweet corn, kiwi, mangos, oils, onions, papaya, pasta, pineapples, potato chips, and sweet peas. Also included are packaged products such as canned vegetables and dried fruit.

Organic items not worth buying: Seafood and cosmetics.

We use these lists as our guiding light when determining which organic products to buy. Yet, there are still some fairly negative implications of shopping so responsibly.

You: Ugh. Such as?

Such as when my oldest daughter eats $3.00 of blueberries before I can take a bite of my 15-cent bowl of cereal in the morning and looks at me with those bug puppy dog eyes and says “Strawberries please Daddy?”

Sometimes, it isn’t easy (or cheap) being nutritionally responsible even when you’re being fiscally responsible. Of course, I suppose if we really couldn’t afford it, we’d be eating regular blueberries (like I did growing up) and everything would probably be just fine.

Sometimes I struggle with the organic vs. non-organic decision. Except with cauliflower. The reports suggest that vegetable isn’t worth spending the organic premium and, quite honestly, I don’t like cauliflower in the first place.

You’ll never live Beyond Paycheck to Paycheck if you’re spending money on stuff you don’t value. Even if they are vegetables.

To me, the organic vs. regular food decision isn’t an easy one. What about for you?

"financial education"

Your Income Tax Return: Benefit From the Pain

Published by

at February 22, 2008 in General Financial Planning and Tax. 0 Comments

Even with our extra leap day this year, next Saturday brings — and this may surprise you — March.

For most of us, New Year’s resolutions are long gone and the countdown to spring has begun. But before April showers turn into May sneezing fits, there is at least one more important financial task to do: your income tax return.

As a Certified Public Accountant and a Certified Financial Planer professional, I find people’s treatment of their tax returns somewhat ironic. While there is a proud minority of folks who have their 401(k)s rebalanced, their credit cards paid off, and their income taxes filed already, most of us are wishing we’d done all three and would be proud of ourselves if we had accomplished just one.

But, come April 15, only one important financial task MUST be complete. And it isn’t increasing your 401(k) savings rate. It isn’t even paying off your credit card bills or finally getting private life insurance now that you have children. Nope. The one thing you’re sure to have done by mid-April is your tax return.

Because the law requires you to do so.

So, where’s the irony? A tax return is the perfect opportunity to evaluate your total financial situation. After all, this necessary evil comes annually, and your return precisely summarizes your income for the previous year. Yet, too few people take the golden opportunity to comprehensively assess where they are financially. By focusing exclusively on their income taxes, they miss the chance to analyze and improve their fiscal situation with respect to their ultimate goal: to create wealth.

For example, review your tax return and note the following:

Did you complete Schedules B or D?

If not, that’s fairly good evidence that your current saving and investing is either non-existent or limited to retirement plans. While the latter case is preferable to the former, the ideal is a balance - saving and investing for both the near future and your long-term goals.

Did you have a taxable retirement plan distribution?

If you’re retired, this is expected. If you’re not, something went awry. As a result, you paid income taxes, probably early distribution penalties, and lost a key source of your future wealth. Determine why. Study what happened and how could you avoid a repeat next year.

These are just two of the many relevant data points you and your tax preparer should note and discuss as part of the tax return preparation process. This tax season, don’t miss your opportunity to take a holistic review of your personal financial situation. After all, it will be February again before you know it. And next year . . . it’ll be a day shorter.

"financial education"

Another carnival - this one without the Chinese food

Published by

at February 20, 2008 in Carnivals. 1 Comment

A most creative personal finance carnival was hosted this week by The Financial Blogger and it included a link to my post last week When shopping, you gotta compare muffins to muffins.

An excellent posting worth a few moments of your time:

Lesson I Wished I Learned Earlier, containing many of which I’ve discussed here before, is a wonderful read and education - no matter your current age.

"financial education"

Will Mr. Moo Shoo eat your vegetables?

Published by

at February 20, 2008 in Cash Flow and Saving Strategies. 0 Comments

Am I making you hungry? Shortly after each of these recent post about food shopping, I begin to wander toward the land of salty snacks. That’s dangerous. Speaking of salty snacks,

Do you look in your refrigerator or pantry closet before you go food shopping?

You: Why is that important?

Even with a small kitchen, I’m amazed at what gets tucked away. Tomato sauce from nine months ago hides in the corner while we keep buying more. Twelve more cans of cream of mushroom soup are haphazardly discovered as we go to put away the dozen purchased moments ago.

And the refrigerator can be even worse!

You: Not the Chinese food!

Yes, the Chinese food. Remember the moo shoo from two weeks ago you were going to eat for lunch tomorrow?

You: Oops.

Then, you decided to go out for lunch then next day. After the distractions of everyday life, you forget to eat the meal at all. A while later, Mr. Moo Shoo makes his triumphant return into your life by suddenly reminding you of your need to dispose of it another way.

Shopping for produce? Make sure to check the fridge before leaving for the store. No sense in buying more lettuce now if you’ve got only two days left with the lettuce in the house before it moves on to the “Land of Great Liquidy Squishy Lettuce Consistency Beyond.”

You: Sounds like you’ve had some personal experience there.

Indeed.

Does every little bit help? You bet. Few ever are able to live Beyond Paycheck to Paycheck and knowingly and frequently waste. That refers to food as much as it does to money.

"financial education"

Cereal coupons or serial coupon user?

Published by

at February 18, 2008 in Cash Flow and Saving Strategies. 2 Comments

First, there was my knocking over a dressing room wall to avoid trying on dozens of sport jackets. Then, we discussed the merits and drawbacks of wholesale clubs. Today, we’ll chat about this question I originally posed last week in the context of shopping for food:

Use coupons? Buy different things as a result?

According to a recent WSJ article The Coupon King, there were three billion coupons redeemed during 2006, saving customers about $2.6 billion. Despite all that money saved, about 99% of all coupons go unredeemed. Coupons are a most interesting discussion topic because, like all good thought-starters, there are plenty of implicit advantages and disadvantages.

Advantages of Coupons

Save you money on the things you buy
Give you an opportunity to try something without paying the full price

Disadvantages of Coupons

Provide an incentive for you to buy items you might not otherwise buy
Provide an incentive for you to buy more of the items you would already buy
Provide an incentive for you to buy more expensive versions of items you would already buy

I’m sure we could come up with some additional pro’s and con’s (feel free to list yours below) but that’s a decent start for the big ones.

You: So do you use coupons?

Yes, I do–but carefully. I try to use coupons that allow me to receive the maximum advantage of coupons while minimizing my potential to fall into any of the traps listed above. When we receive and review coupons (typically along with our Sunday newspaper), we always cut out coupons for the things we regularly buy. (This includes a coupon for a local Mexican restaurant that we would go to anyway.)

But we don’t bother cutting out the coupons for anything else, because those coupons don’t really wouldn’t save us money and here’s why: if you’re happy with the item that costs $2.99 for 10 and you have a 75-cent off coupon for a competing brand that ordinarily charges $3.99 for 8, you’re not going to be saving any money. Get it? You’re not really saving 75 cents.

Instead, in the short-term, with the coupon, you’re paying 25 cents more for two less. In the long-term, it’s even worse as you may now prefer the $3.99 version and can’t seem to find the coupon anywhere.

Still, I think it’s worth it to spend a minute looking at the coupons. The last time I was in a wholesale club, there was a coupon sheet at the front of the store. None of the items I planned to purchase were on the sheet, but there was a buy-one-get-one-free coupon for a new cereal, different from the one I was planning to buy. I reasoned that if I was willing to try this new cereal, I’d be saving 50% ($7 for the mammoth box). Going forward, this new cereal was cheaper too. That was worth a shot to me, so I used that coupon.

Fortunately, my decision has been verified by the fact that the new cereal is just as healthy as the old version, and my two year-old now asks for the “New one” every morning. My daughter doesn’t yet have any financial responsibilities, but I think she’s already learned a key component of any saving strategy: flexibility.

"financial education"

When shopping, compare muffins to muffins

Published by

at February 15, 2008 in Cash Flow and Saving Strategies. 0 Comments

When I told you Wednesday that buying food was my most enjoyable form of shopping, I emphasized that–despite the necessity of food–there were plenty of ways to both spend and save money based on the choices you made in addressing several key considerations.

We’ll chat about the first two today, which were:

Where do you shop for food? At a grocery store, a discount supercenter, a wholesale club, or a health foods store? All of them?

Do you make bulk purchases? What kind?

The location of where you shop can impact the amount you spend as much (or even more than) what you ultimately buy. One key, as pointed out in a press release yesterday by BJ’s Wholesale Clubs titled 8 Tips to Save Big Bucks During Hard Economic Times, is to compare apples to apples. For example, baby formula (an item I personally have discovered is remarkably less expensive at wholesale clubs) costs far more at the wholesale club than at the grocery store.

You: That doesn’t make sense.

Actually, it does. It costs far more at the wholesale club but buying it there is much less expensive.

You: What is this–a riddle?

While formula might cost 50% more at the wholesale club, you’d be getting twice as much formula. That more than compensates for the increased cash outlay.

You: So I have to do math to get a good deal? I hated algebra.

The math never gets any more complicated than division. And often, the store will do the math right there on the sign with the price for you. But this apples to apples thing is important even when shopping within anyone store. Last weekend, wheat English muffins were on the BJs list my wife prepared. Before leaving for the store, I asked her if the muffins really had to be wheat if I found that wheat was much more expensive than regular. She told me that she was pretty sure they were about the same price, but if there was a big difference to just get the regular ones.

Turns out you really do have to compare apples to apples, or, in this case, muffins to muffins. She was right: $3.99 for the regular English muffins and $4.19 for the wheat ones. The packages looked the same. But only after closer inspection did I discover that the wheat package contained two inner packings of six each, while the regular package container had two inner packings of nine each.

You: Big deal, Sherlock.

It actually is. It means that the wheat muffins were actually 50% more than the regular muffins.

You: Fifty percent?

Yes. It costs about $4.00 in both cases. But with the wheat, you get 12 muffins as opposed to the 18 you receive purchasing regular. That’s a 50% difference. So, for us, regular English muffins it is.

Look, this wasn’t about saving 20 cents, it was about chopping down my cost significantly. And, sure, it may take a little more time and be a slightly bigger nusiance to evaluate a $4 purchase. I don’t recommend doing so for everything you buy, particulalry if it’s something you really love or something you buy infrequently. But for my wife and I, English muffins are a regular purchase and one that we just don’t have a particularly strong opinion regarding.

In that case, why pay more? Just a brief pause will save us a decent amount of money over a couple of years - from just the one item.

What do you have in your grocery cart that, upon closer examination, may lead you to quicker realization of living Beyond Paycheck to Paycheck?

"financial education"

Shopping: I wasn’t angry but I did knock over a wall

Published by

at February 13, 2008 in Cash Flow and Saving Strategies. 2 Comments

I hate shopping. Always have. When I was in ninth grade, I had to buy a sport jacket for the ninth grade prom. In the process, I knocked down a changing room at the local department store. True stories (both that my school had a ninth grade prom and that I knocked over the wall).

I’m not a violent person, but I can be impatient and particularly so when I feel the entire project (in this case, making myself remotely presentable to someone I “liked”) is a complete waste of time. So upon learning from my mother that jacket # 4 wasn’t going to cut it, I sighed and then leaned (a little too much it turned out, thanks to my 130-pound frame) against the wall. . . and the whole thing fell over.

Of course the good news is that jacket # 5 was definitely good enough. After all, everyone was excited to leave (or to see me go).

I’m not a much bigger fan of shopping today. The only exceptions are toy stores (I used to work for Toys “R” Us) and grocery stores (I like to eat.) Why grocery stores? Perhaps it’s because I’m somewhat wired not to spend money haphazardly. When you’re buying food at a grocery store, your spending seems like it isn’t discretionary. Since you have to eat, there’s no guilt and so you just shop away.

And you know what? Ten or fifteen years ago, that was pretty much true.

But not anymore. Now, thanks to the dramatic expansion of the retail channel known as grocery, there are more food shopping options than were once even imaginable. From the Wal-Mart Supercenter (which didn’t exist when I knocked over the department store changing room) to Whole Foods (some refer to it less affectionately as “Whole Paycheck”), there are a wide variety of options.

With so many choices in today’s retail landscape, you can’t just willy-nilly go shopping anywhere and believe that your choices won’t impact the amount of your grocery spending. Okay, perhaps you never could, but now, in 2008, it’s especially true. Plus, making such a mistake today will cost you far more money than it would have years ago. Here are some considerations for grocery shopping. The next post will feature some additional comments on the pros and cons. Of course, feel free to pipe in now.

Where do you shop for food? At a grocery store, a discount supercenter, a wholesale club, or a health foods store? All of them?
Do you make bulk purchases? What kind?
Use coupons? Buy different things as a result?
Do you look in your refrigerator or pantry closet before you go food shopping?
Prefer organic food? Which ones?
Who does the shopping? The person who does most of the cooking? Or the person who does most of the eating?
Does anyone actually cook in your household?
How much time do you spend in the bread aisle?

The answers to these questions determine not only how much money you spend on food, but also how much of your spending is truly discretionary vs. non-discretionary, a need vs. a want, or represent laziness vs. preparedness). Got any theories?

“personal finance” “financial education”