Tag Archives: frugality

Your Money or Your Life, Step 4: The Three Questions

[This is part 4 of a 9 part series on the book Your Money or Your Life. See my original post about the book.]

In the last step, we started a Monthly Tabulation, where you figure out how much you spend in various categories.

Now we’re going to add three more columns to the tabulation. Each column represents the answer to one of the following three questions you’ll ask yourself about money/time spent in that category:

  1. Did I receive fulfillment, satisfaction and value in proportion to life energy spent?
  2. Is this expenditure of life energy in alignment with my values and life purpose?
  3. How might this expenditure change if I didn’t have to work for a living?

For shorthand you can use a +/- system. The + sign means spending more in this category would increase fulfillment, would demonstrate greater personal alignment, or would increase after Financial Independence, respectively. Conversely, use the – sign if you didn’t receive fulfillment proportional to the hours of life energy you spent in that category, or if that expenditure was not in alignment with your values and purpose, or if you could see expenses in that category decreasing after Financial Independence, respectively. Leave the box blank if that category is just fine where it is.

For example, every month when I see how much we’re spending on car-related expenses (fuel, parking, insurance, maintenance), I put a – sign in “alignment with my values” since I value exercise and public transit over driving, and another – sign in “change if I didn’t have to work” since if I didn’t have to work I’d have more free time to get places slower. It took a while, but these costs have started to go down, like magic. I’m choosing to walk and/or ride the bus more often when we go on family outings. We’re saving money and also enjoying the ride.

Finally, this is the core of the 9 steps (and not only because we’re half way through). Taking a look at whether or not you’re spending what you want on the items/services you want to spend it on is the single best way to change your spending. Budgets don’t work, they’re like diets. Being honest with yourself about your values and the sense of fulfillment that your dollar buys is the only way to make changes.

This step takes about an hour a month. It also helps you figure out what is enough for you, which we’ll talk more about in a later step.

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A Full Freezer

[If you already know me, you’ve probably heard this story already so you can skip this post]

We bought a 7.2ft³ chest freezer for $75 delivered. To see how much it costs to power the freezer, I borrowed a kill-a-watt from the library to check out how much energy it consumes. At current electricity prices, it’s going to cost $25 a year to keep it running. Probably less, since I measured it when it was mostly empty and full fridges/freezers run more efficiently.

To fill the freezer, some friends and I bought an entire cow. I read that buying meat by the cow instead of by the pound can save a family of 4 almost $500 a year, if they eat beef frequently. We only eat occasionally, but even if we save $100 this year, that pays for the freezer and the cost of running it. It came to $4/lb for all the various cuts of meat. (Where I live, a good cut of grass-fed beef can be $10/lb.) We split the meat 5 ways, and each of us got anywhere from 80 – 145 lbs.

The meat is amazing! If you live in the Pacific Northwest, I highly recommend getting some meat from 3 Sisters Farms.

It never hurts to ask

I love asking for things because it never hurts to ask. As long as you’re polite, reasonable, and ethical, there’s no reason not to ask for what you want.

Lowering prices: I recently called my auto insurance company (Pemco) and asked them to lower my premium. They said no but it didn’t hurt. On the other hand, I asked my credit card company to remove my yearly fee and they said yes. The 5 minute call saved me $70.

Improving your credit score: Since having higher credit limits helps your credit score, it never hurts to call your credit card companies every year and ask them to raise your credit limits.¹ Say “I’ve been a loyal customer for X years and always paid off my balance in full. I’m planning on making some purchases in the near future. Can I have my credit limit raised to…?” Also ask if they’ll bypass the credit check, since that temporarily hurts your score.

Other requests: I emailed my Congressman to see if he’d fly a flag over the Capitol in honor of my Grandpa (a World War II veteran) and Venessa’s Grandma. It took a while to get a reply, but his staffer obliged and also offered to send me the flag for a reasonable price. Whenever I buy something on craigslist I ask if the seller is willing to deliver it to me, or at least meet me somewhere convenient. Failing that, I ask for a small reduction on the price.

On being asked: When it comes to the kids, I try to start answers with “No” as infrequently as possible. But when they make an especially outrageous demand, I’ll say, “No, but it didn’t hurt to ask.” I wonder if my folks said the same thing to me?²

I have a feeling that most children are reprimanded when they ask unreasonable questions, so by the time they’re adults they’re literally afraid to ask. It’s a shame, because that same part of the brain is also what drives curiosity. We should praise our children for asking all sorts of questions, everything from “Why is this the way it is?” to “Can I have …?”  It’s the latter type of question, when combined with a good work ethic, that leads to new inventions and discoveries:

Q: Can I have an iPod?

A: Yes. How do you plan to save up for it?

or

Q: Can I have an iPod that also plays 3D movies?

A: Yes but you’ll have to invent it first!

¹ Do not do this if you abuse credit cards. This is for people who pay in full each month and generally have their financial house in order.
² I definitely remember my parents doing this: if they bought something at the store and then saw it went on sale soon after, they’d bring the item back, along with their receipt and ask for the difference in cash. It must have worked or they wouldn’t have done it all the time.

Now the internet knows how much I spend on socks

I got this cute drawing on a receipt for socks I ordered online, and I decided to share it on reddit, the social news website. Not sure what I was thinking.

The first comment, from MikeOnFire, was actually a good question that got me thinking:

$44 for three pairs of socks? Wow, either I’m missing out or I’m pretty good with my money

To which I responded

Whether or not you’re missing out depends on how much you currently spend on your socks, how often you need to replace them, how much you like shopping for socks, the value you place on fashion/style, etc. Spending more or less for a particular item doesn’t necessarily make you good or bad with your money. It’s all about how much value you personally get out of the amount you spend.

In other words, nobody can impose their money values on another person. Beyond spending less than you make, being “good with money” can mean different things to different people. I don’t spend much on clothing over the course of the year and I’m not a fan of clothes shopping. So when I buy an article of clothing, I choose something that will hopefully provide good value, and last a while.

The most important things when it comes to money are having a healthy attitude, and sticking to your goals/values.  Actually those might be the most important things in life in general. Funny how that works.

Your Money Or Your Life, Step 1

[This is part 1 of a 9ish part series on the book Your Money or Your Life. See my original post about the book.]

Step one in Your Money or Your Life is to figure out how much money you’ve ever made, including income and gifts. This gives you a picture of how powerful you are in bringing money into your life, which eliminates vagueness and self-delusion.

Here are some tips to help you figure out your life’s earnings:

If you’ve ever worked a job before, you have a file with Social Security and you probably get statements from them.  If you don’t have your most recent Statement of Earnings form, you can request the information online.  The SSA website changed recently but it looks like you can do that here, or call them 1-800-772-1213.

That should give you employment earnings. Here are other forms of income to consider (listed roughly chronologically). Some involve the WAG valuation method, which stands for Wild-Ass Guess. However you figure this out, be thorough and non-judgmental of yourself.

  • Under the table jobs or tips, that won’t show up on your Social Security statement. A popular one is…
  • Babysitting. Estimate your average pay per gig, number of gigs per month, and number of months you were a babysitter.
  • Allowance. Try to remember how much you received per week for the different phases of your life. (Or call your mother, I’m sure she’d love to hear from you).
  • College stipend. Were you lucky enough to get one of these?
  • Bar Mitzvah, or other life milestones where gifts are given?
  • Birthday Gifts. How much have you gotten every year, on average?
  • High school and college graduation gifts?
  • Other monetary gifts from family members. My folks liked to buy savings bonds in my name, every so often.
  • Wedding gifts, if you’re married.
  • Gifts you got at the birth of a child. (this is starting to sound like The Game of Life)
  • Lottery or gambling winnings

One side effect of completing this exercise is that I realized how generous the people in my life have been to me, and how lucky I’ve been to have had a financial safety net until I was old enough to make it on my own.

Once I added it all up, I found that I’d almost be a millionaire if I’d somehow been able to keep all the income I’ve ever received. Of course that’s not possible, but it’s still amazing to see how much money has come into my life. Next we’ll see what I have to show for it…

An amazing new service that will change your life!

I just found out about this amazing new service. It’s like Netflix but it also has books and music. It also compels you to get exercise and to meet your neighbors. And best of all, it’s totally free!

Ok, I lied about it being new and about just discovering it. The service is called the Seattle Public Library and it’s one of the most amazing parts of living in this city. Even if our neighborhood branch looks a little silly:

Like a colonialist with a robotic arm

Making the switch from being a media buyer/renter, to a patron of the library isn’t going to save you huge bucks (when we canceled our netflix subscription, it was like $7 a month). The biggest change is accepting the idea that one need not own something to get full enjoyment out of it. Borrowing it for a few weeks is good enough.

In other words, you no longer need to stockpile media in your home. Our CD collection fits in a few CD booklets. Our movie collection fits in a drawer, with room to spare:

And it’s mostly Lord of the Rings

Our bookshelf is tucked in the corner of the bedroom, and mostly contains books that fall under the category of “stuff I’d like the kids to read when they’re a little older,” starting with The Hobbit, and working up to Cryptonomicon.

The exercise part comes from the fact that the library has no parking so I usually walk or ride my bike there. And getting to know your neighbors is just an effortless side-effect of being in a public place every so often.

You’re already paying for your local public library through taxes, so you might as well enjoy the benefits!

A quote

I have three precious things which I hold fast and prize. The first is gentleness; the second is frugality; the third is humility, which keeps me from putting myself before others. Be gentle and you can be bold; be frugal and you can be liberal; avoid putting yourself before others and you can become a leader among men.

–Lao-Tzu, the founder of Taoism.

A short post tonight. I have a library book due soon, so I’m going to read.