1. No, everyone is NOT doing it.

2. Because it will, eventually, catch up with you.

3. You find greater happiness from little things – especially when you’re not trying to one-up what you did yesterday.

4. Financially stretched = emotionally stressed.

5. The Jones’ are about to run out of money. Why keep up with them?

6. Hey – did you hear? There’s a recession out there. It isn’t cool to spend money you don’t have anymore.

7. Once you take control, you can spend on the things you enjoy and, since you can afford them, you’ll enjoy them even more.

8. Savings give you options. Who doesn’t like having choices?

9. It’s kind of fun to have a bank account with more digits before the decimal point than after it.

10.  If you spend less when you make more, you can spend more when you make less.

You hopefully have many choices to consider when contemplating your response to the question, “What was the best financial move you’ve made so far?”

For me, it’s easy.

You: Haven’t made too many good financial moves, buddy?

Actually, plenty. It’s just that ,as I near completion on my manuscript of book number two, I’ve contemplated this exact question.

You: Hey, that’s cheating.

Hey, it’s my blog.

You: Point taken.

I’ve concluded my best financial move to date has been my decision to keep cars for very long periods of time.

You: How long?

I drove my first car for over seven years before it died. My second car just passed 100,000 miles this last weekend and is over nine years old.  So, here I am in my late thirties and I’m still on my second car.

You: With a piece of crap car.

To some people, perhaps–which is why having cars for a very long time is my best financial strategy – not necessarily yours.  But having no car payment during 9 of the last 14 years has allowed me to spend more in other areas of my life where I value such spending while still permitting me to save substantially for my future.

What’s been your best financial move so far?  Please comment below. Your worst financial move? Take the poll to the upper right.

More than two years ago I posted Your Problem Isn’t Starbucks, emphasizing the importance of Saving Strategy # 5: Major on the major, minor on the minor.  Working with Ode Magazine, I created a video further illustrating the importance of the strategy. I think you’ll find it simultaneously liberating and motivational.  Am I right?

I’m quickly approaching the completion my second book: The Savings Solution.  While the book is almost all new content, I am revising some of my favorite and relevant blog posts and including them as sidebars.  One such sidebar follows. Although adapted from a post I wrote back in December, 2007 it is as relevant to my life today as it was then.

I welcome any and all thoughts!

Before I had children, I traveled to Ann Arbor, Michigan several times a year to attend University of Michigan football games . Unfortunately, the quantity of my Michigan visits plummeted when I became a father.[1]

Nonetheless, my wife and very young daughter did manage a visit to Michigan in 2006. And, yes, our visit was timed around a certain football game. But this story isn’t about football.

You: What’s it about?

The zoo.

You: The zoo?

The day after the football game, we caught up with some old friends at the Detroit Zoo.

You: You have friends who live at the zoo?

No, we met at the zoo.

You: So you were living at the zoo when you met?

No—no one was living at the zoo.

You: Then how did you meet at the zoo?

We didn’t meet at the zoo. We met in college.

You: But you said you met at the zoo.

We agreed to meet at the zoo, but the zoo is not where we met–originally.

You: Why didn’t you just say so?

I have no idea. My head hurts.

Anyway, we walked with our friends around the zoo with our respective young children in tow. Together, we enjoyed the weather, animals, and conversation. It was a wonderful afternoon. Suddenly, my friend commented, “Michael, you can always tell whoe the non-members of the zoo are.”

“How so?” I asked, quite curiously.

“By their stress level,” he replied. “They’re trying to see every exhibit before the zoo closes or their kids melt down. Non-members fly all the way from the zebras to the koala bears. They may slow down to see the giraffes along the way, but don’t think they the time to actually stop. Non-members are trying to get their money’s worth as quickly as possible.”

He’s right–I had been there.

You: Because you once lived at the zoo?

No!

You: Just kidding.

While joining a museum or zoo far from home will seldom make financial sense, joining local organizations can have enormous benefits–monetary and otherwise.

An example is my local children’s museum. Admission is $6.00 per person. Like most children’s museums, they also charge for kids. As such, when my wife and I took our oldest daughter, our total cost was $18. The first time we visited, we probably looked like the crazy zoo people my friend had described. Despite our toddler’s satisfaction from playing with shapes in the first room, we quickly moved her from one exhibit to another.[2]

Furthermore, at $18, it was pricey for only 45 minutes of entertainment before naptime. Consequently, we didn’t return to our children’s museum for a while after our initial visit. Several months later, my wife informed me she had purchased a family membership at the children’s museum.

You: So the person wearing the pants in your family is—

None of your business.[3] Since members can visit the museum at no additional charge, our $60 annual family membership means:

• We stress less during our visits. It doesn’t matter what our daughter does at the museum or if she’s totally disinterested in an exhibit where we had to plead with her to share the last time. Sometimes we arrive only an hour before the museum closes. Since we’re not trying to get our money’s worth out of every visit, each trip is a pleasure.
• We visit much more frequently. Instead of being concerned about the admission cost, membership means we go whenever we feel like it. We discovered the museum is a perfect rainy or cold day activity. Plus, it’s a great excuse to get out of the house and burn some toddler energy.
• We increase our tax deductions and lower the tax we owe, since a children’s museum membership is tax deductible. So our true cost to join was less than the $60 we paid.
• We support an important organization in our community. Members are the lifeblood of most non-profits.

For these reasons, we’re members of several similar local organizations. While memberships first appear to be expenses, they actually save us money and allow us to do more. That’s a fiscally responsible behavior. On the other hand, deciding never to do things solely because of money can make you feel cheap, if not downright unhappy.

I’m convinced my friend at the zoo had it right.

You: But you said you didn’t have a friend living at the zoo!

He doesn’t live there!

[2] Makes you wonder if a child’s attention span is really short because her brain isn’t fully developed or if other factors are at play.

[3] Or the subject of a future book. Stay tuned.

When speaking on college campuses I often give student an opportunity to make some money.

You: Seems nice of you.

To get the cash, they must stay after my seminar for a market research study.  Since I offer $25 for 30 minutes of their time,  nearly the whole audience wants to participate.

You: What do you do then?

I tell them it’s a joke.

You: You do?

Yes – I do it to make a point.

You: And what point is that?

How eager most people are to make money.

You: That’s not terribly insightful, especially given college students often have very little money.

Perhaps, but contrast this with the same audience’s (and just about every other audience’s) lack of enthusiasm for saving money.

You: What do you mean?

Well, a college audience ought to be filled with people who would love to save money. Yet most people lament the idea of working to save.  I find that both unfortunate and ironic.

You: Ironic?

Yes.  If you work hard to save money, you keep 100% of what you save. If you work hard to earn money, you keep only about two-thirds of your earnings.

You: Why?

Because of taxes.

You: Right – argh.

So, as a society, we should actually be more motivated to save money than to earn – but my expereince says most people are not. I bring this up because I moved yesterday.

You: How did it go?

Not bad, but tiring.

You: You did it all yourself?

No, the job was too hard and the items too heavy.

You: So you hired movers?

Yes.

You: That can be expensive.

Exactly – it can be, but it doesn’t have to be.  We got a couple of quotes for moving us three miles, each in the vicinity of $1,000.  As such, I started wondering – can I do this for less without breaking my back (literally and figuratively)? Answer – hire moving labor but not a moving company.  A few web searches later and I have free lance guys showing up and worked their butts off for a fraction of the cost the moving company quoted. What did I give up by not hiring the moving company?

You: A name on the truck that didn’t say “U Haul” or “Budget.”

Correct – and a driver.

On the other hand, my additional expenses were the truck (about $50 all in) and the effort of driving the truck.  Given that I drove the truck 16 miles and saved more than $500 in the process, I saved over $36 a mile.  Since I saved – not earned the money -  the $500 won’t go on my W2 and I won’t pay taxes on it.

You: Cool.

Think about it this way: Saving $500 is like earning $750. Next time you have a decision that might mean a few more phone calls and a bit more effort to save $500, recall how hard and how long it takes to earn $750. If you’re a high-priced Philadelphia lawyer earning that an hour, hire the moving company, but tell me again, why are you reading this blog?) For the rest of you, enjoy the savings.

#     #     #

Thoughts on hiring a moving company vs. getting help only on the hardest parts? I’ve done it both ways and, when the moves are heavy and/or long, a moving company can be worth it. Otherwise, I’ll keep some of the profit thank you.

I just finished reading 15 most hated fees at CNNMoney.com.  Included on their list are many you’ve heard before such as:

• baggage fees
• termination fees charged by cell phone companies if you cancel before your contract ends.

Neither of those fees bug me, however.

You: Why not?

Because they’re not hidden.

You: Meaning?

I know about them well in advance and choose whether to pay them.

You: Why would you ever choose to pay a fee?

I typically don’t.  But I have done so.

You: When? Why?

Baggage Fees

For example, I usually don’t check a bag when I travel for business.  Most of my trips are short enough that I can fit everything in a carry-on. (I have always traveled light, even before advent of baggage fees).  But I once had an 11-day business trip.  Carrying everything in one small bag wasn’t in the cards, so I checked my one bag.

You: So you paid the fee.

Yes, which was no big deal. When I shopped air fare, I knew that the airline I selected charged the fee and, even with it, would prove to be the least expensive option with a reasonable itinerary.  Next month, I am traveling with my entire family and we’ll pay baggage fees on that flight too. So what?  It’s as though the airfare was a bit more expensive, but I included the fee when I determined this was the best option.  Why do people complain about fees disclosed in advance?

Termination Fees

You:  What about cell phone termination fee charges? Those are annoying.

I don’t pay those.

You: Why not?

Because, as you said, they’re annoying.

You: How do you avoid them?

Easy, I just fulfill the contract. Then, if I’m in the mood for a change, I switch carriers.  The carrier can’t increase my rate during the contract term and I can’t quit without a paying them a fee. Seems perfectly reasonable to me.  A contract is a contract. No one forces you to sign it.

Yet there are some other charges we allegedly hate, according to the article, including:

Low/No Activity Fees

I would never pay a fee for not charging enough on my credit card.  Wow – that would annoy me.

You:  Is it fair?

Yes.  But I wouldn’t pay it – I would cancel the card.  More likely, however, is that I would never face that fee in the first place.

You: Why not?

Because I have two credit cards and I  use them both. If I had another credit card and wasn’t using it, I would cancel it, even if I didn’t face the prospect of the fee.

Frequent Flier Mile Fees

I don’t recall ever having to pay to pay to use my frequent flier miles, but I’m pretty sure I’d be annoyed by anything advertised as free that wound up not being so.  This would be especially true if the deal changed over time, which it appears is the case with US Airways.

Annuity Fees

I don’t pay these. I’m not a big fan of annuities for non-retirees anyway so no annuity fees for me.

Credit Card Rewards Reinstatement Fees

Easily avoid: pay your bill on time. You shouldn’t need a reward to do so – basic financial responsibility.  This fee is reasonable.

Closing an IRA Fees

Paying to close an IRA is an evil fee in most cases.

You: How could this not be an evil fee?

I can see it being fair if you open your account on Monday and close it on Friday. The financial services firm is taking a big hit on you there. But, short of that highly improbable scenario, this is not a reasonable fee.  You can still avoid the impact of it, however, as the article suggests, by negotiating for the company to which you are moving your assets to pay the fee to get your business.

You: But -

Not moving your money but instead cashing out your IRA to buy a car you obviously can’t afford? I have no sympathy – you are hereby deemed fee-worthy.

Mutual Fund Marketing On You Fee

The 12b-1 fees charged by many mutual funds do nothing to help existing shareholders.  Such fees are a concept that have passed their time. Yet they, too, are well disclosed. Don’t like them? Choose different funds.  See? Now I even have homework.

Want more? Here are my 10 stupid and careless ways to waste money, Ten Ways to Save Money While Ruining Your Life, and my Top 10 Most Annoying Ways to Lose A Little Money.

What fees do you deem worthy and absurd?

After a very successful trip to Annapolis, Maryland speaking at the University of Maryland’s Personal Finance Seminar for Professionals, I returned to an enormous box on my desk.

I approached in cautiously.

You: Did you fear it was a bomb?

Of course not, why?

You: It’s possible.

I think you’re watching too much TV.

You: What does that have to do with anything?

Nothing, just an independent observation.

You: So what did you do with the box?

I picked it up.

You: And?

I almost threw it to the ceiling!

You: Because you thought it was a bomb!  I was right!

No, because the box weighed a LOT less than I thought it was going to weigh. When I opened up and searched through the approximately 30″ x 18″ box, contained exactly one 6″ x 9″ book.

You: That’s it?

That and a ton of packing material.

You: Was it a good book?

Yes, it was Beyond Paycheck to Paycheck, but that’s not the point.

You: Now who would return Beyond Paycheck to Paycheck?

Better question, but also besides the point.  One distributor returns books from time to time often because a book was damaged in transit.

Anyway, shipping one book in a box big enough for two toasters is a total waste of money.

You: I agree.

So this got me thinking . . . what other stupid and careless ways are there to waste money?  Here’s my list.  Please add some of your own stories of witnessing or <gasp> occasionally partaking in the “I just don’t care anymore” attitude.

1. Playing lottery
2. Printing your airline boarding passes in color
3. Not recycling ink cartridges at Staples ($3 for something that would otherwise wind up in a landfill?  Works for me.)
4. Paying for parking at a meter or a lot when there is ample free street parking nearby
5. Skipping the complimentary breakfast at a hotel
6. Ignoring routine maintenance (car, house, spouse) in the short-term so it costs you much more (engine overhaul, new furnace, jewelry) in the long-term.
7. Putting way too many stamps on an envelope (related to introductory above)
8. Buying the enormous package of some perishable item at a warehouse club because it’s SO much less per serving . . . then throwing half the thing out after you realize you have enough mayonnaise to eat said condiment at every meal for 6 months.
9. Paying sticker price for a car to avoid the inherent conflict and uncomfortable situations sure to arise
10. Saying “yes” to the $4.00 extended warranty on a $15.00 set of workout gloves (I was offered this yesterday.)

What can you add to this list of stupid and careless ways to waste money?

I just saw the article “Earn Tax-Free Income” over at Forbes.  It’s a clever topic and the piece actually delivers.  While some of the suggestions are not for those without resources (e.g., buy an apartment building), you may find that you already doing others (e.g., using a cash-back credit card).  Yet it’s a comprehensive list and I suspect every reader will find a category of untaxed income to take advantage of – at least in some capacity.

With income tax rates certain to rise eventually, generating legally untaxed income is likely to become an important part of your financial plan.  What else are you doing to prepare yourself from the eventual hike in income tax rates?

My brother sent me a link to On a tight budget? Odds are you’ll spend more. Since the article’s title suggests that trying to micro-manage expenses was a failing strategy, I was intrigued. After all, and as long-time readers know, I like the rule “Major on the major, minor on the minor” Therefore, I figured the article would support my theory.

You: Did it?

No.

You: A-ha!

Not really.  The article reports on a study down in Atlanta that supposedly proves that people who shop in a poorer area of town do a much worse job at estimating the amount of money in their grocery carts than do those who live in the affluent part of town. While both groups of people underestimated the cost of the goods they had in the cart, the poorer folks were off by three times as much.

The study then concluded that it is the complexity of the precise math that the poorer people try to do (as opposed to the simple estimating techniques used by the more affluent) that results in this problem for the poorer population.

The journalist writes:

Oh ironies. We already know that people with less money end up paying more interest on everything from credit cards to home loans. Now, it seems that penny counters  actually spend more than intended in the checkout aisle, too.

Allow me to throw out a question:

Isn’t it possible it’s the other way around?  Perhaps it’s that those who understand how to calculate the true cost of things wind up spending less and are therefore more affluent. Why rush to judgment that it is the “penny counting” attitude that makes people financially poorer?  Surely you have met plenty of people who watch every penny and yet are quite affluent. It’s not even rare.  While it’s not necessarily the path I recommend, it surely is a viable strategy.

If you’re spending more than  you can afford at the store, don’t let the media blame your math skills – bring a freaking calculator.

Thoughts?

Apparently, somewhere in the middle of the thousands of pages of health care reform is a new tax on using tanning salons.

You: Do you use tanning salons?

Me?

You: Yes.

You: We clearly haven’t met in person.  Imagine something rather white, like a blank sheet of printer paper or an albino.

You: Got it.

I’m slightly whiter.

You: Wow. Really?

Almost, it’s the beginning of April in New Hampshire. “Laying out” hasn’t happened in a while and let’s just say I’m not a big fan of the salons.  Still, this tan tax will affect a lot of people including, I am told the cast of Jersey Shore.

You: You watch that show?

No.

You: Then how do you know they’re so tan?

Well, Emily at CreditCards.com told me.  How did you know?

You: I don’t want to talk about it.

Right. Nonetheless, Emily wrote a post about the tanning tax and included several links to her favorite posts of the last week, including my little rant on financial immaturity.

Enjoy – and stay pale.