The Simple Dollar
Jerry writes in:
“I was reading on another blog about replacing things that work with better versions of the same item like clothes hangers. To me, it makes more sense to just keep using something until it actually breaks, then replace it, but that’s just my sense of wanting to get every last drop out of something I put my money into. What do you think?"
Although Jerry didn’t mention the blog article he was referencing, I would guess that he was talking about “Does It Ever Make Sense To Replace Something That Is Functioning Properly?” over at One Frugal Girl.
Anyway, Jerry makes a valid point and asks a good question. At first glance, it makes good frugal sense to continue to use an item until it is no longer functional. Otherwise, as Jerry says, you’re not extracting the full value from that item. I am completely on board with using an item until it’s no longer usable.
The question, to me, really is about replacement. I do not think that the best time to replace an item is when it is no longer functional. In that situation, you ideally need something to perform that task that is functional, which means that you have a pretty small timeframe to make a purchase.
Ideally, when you’re buying a new item, you’ll take advantage of two things.
First, you’ll have a research opportunity. You can spend at least a bit of time figuring out what the best version of the item is as well as perhaps the best “bang for the buck” version of the item is. You can figure out things like that from reading Consumer Reports or other reputable publications and asking around in your social network. ( Continue… )
My experience with money – going from mountains of debt to debt freedom – over the last decade has taught me one sure financial principle that simply repeats itself over and over in my life.
Personal finance is all about self-evaluation. The more consistent your self-evaluation, the better your grasp of your financial situation will become.
In other words, if you want to succeed at money, you need to be constantly looking at your own life, your own goals, and your own choices until that kind of reflection becomes second nature.
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What if that type of reflection doesn’t come easy, though? I’ve found that when I’m struggling with money issues, the best way to start is with a question. I’ll ask myself a pointed question about my personal finance situation and make myself answer the question truthfully. ( Continue… )
This article first appeared at U.S. News and World Report Money.
The holiday shopping season is upon us and, for a lot of us, that means quite a lot of gift purchases. My holiday list is certainly long and, unfortunately, that means I’m going to be spending quite a bit of time and money fulfilling all of my gift-giving obligations.
I do quite a lot of my holiday shopping online, as do many of you, but I also find it quite useful to visit a few stores so that I can actually examine the items for myself, since online buying doesn’t allow you to actually hold an item in your hand before making the purchase.
If you have a smartphone with a data plan, this type of shopping becomes easy. You can quickly compare prices online for the item you’re holding and then buy from whichever retailer offers the best price. However, to do that, you have to already be spending a significant chunk of change on that data plan.
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What about the rest of us? I’ve found a few techniques that work really well for this kind of comparison shopping, and the best tool of all is price matching.
Here’s the trick: most major brick-and-mortar stores offer some sort of price-matching policy. If you can find a (non-Black Friday) price for an item from another retailer, they’ll match it, with some restrictions.
For example, Target matches prices from a relatively short list of retailers, including target.com, amazon.com, walmart.com, and a few others. However, Target allows you to take your receipt back within seven days if you’ve found a lower price elsewhere and they’ll refund the difference.
Best Buy, on the other hand, offers price matches from a much longer line of retailers, including newegg.com (which I’ve used within the past month, actually), amazon.com, apple.com, and many others, but you must be able to show the price within the store. ( Continue… )
Quite a few people enter adulthood without understanding the basics of personal finance.
That’s a sad statement – but it’s a true one. Personal finance is often a lesson that parents don’t feel comfortable teaching to their children and public schools rarely take a major role on this topic, either. It’s rarely included in state education curriculums.
While The Simple Dollar can and does play a role in fixing this problem, there are quite a few websites out there that do a spectacular job of handling the basics of personal finance, from the simplest baby steps of figuring out how to handle debt to explaining the details of how stocks work.
Over the years, I’ve viewed many of these resources, but I find that my recommendations to others often come down to just a small handful of sites.
If you’re looking to learn about personal finance from scratch, these are the four sites that I find myself recommending most of the time. All of them are wonderful resources. They each do a great job of spelling out the specifics of many basic personal finance issues and questions.
Best for: written explanations of personal finance ideas
Whenever I want a clear and straightforward explanation of a personal finance term, this is usually the site I turn to first. ( Continue… )
Thanksgiving. Hanukkah. Christmas. The holiday season can be painfully expensive, with gifts and meals and beverages and snacks and lodging and travel revolving around many of us.
With all of those incidental expenses floating around, there are also a lot of ways to save money. Here are twenty ways that we’ll be saving money this holiday season, broken down into three different categories.
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Travel and Lodging
Schedule holiday celebrations at an alternate time. Rather than trying to celebrate things on the actual holiday itself, talk to family and friends about celebrating the event a few days early or a few days late. Doing so can allow you to take advantage of less expensive flights.
The best thing to do is to fire up a travel website and try lots of alternative dates for your flight. Is it cheaper to fly on the Thursday before the holiday and fly back on the following Sunday? Look at different scenarios, particularly if you’re traveling as a family and particularly if you have lots of people flying for holiday events. ( Continue… )
It’s not really that complicated.
1. Spend less than you earn.
2. If you’re facing a pile of debts, make minimum payments on all of the debts but the one with the highest interest rate, then make the biggest payment you can each month on that high one.
3. Never expect that your “future self” or anyone else will bail you out of your dumb mistakes today and remember that only you can make better choices for yourself. ( Continue… )
Charlotte writes in with a reader mailbag question to which my answer ran a little long:
“I understand the goal of financial independence. You want to reach a point where you live off of the interest of your investments. I don’t understand how it’s realistic for the average working person to get there before retirement and that’s if you view Social Security to be that kind of return on investment. I mean, I can see it if you win the lottery or something like that, but not as a path that any regular person can follow.“
This is a path that anyone can follow. Ten years ago, I would have found the idea of this kind of financial independence completely ludicrous before the age of seventy. Right now? I think it’s totally realistic and I hope to arrive there within ten years or so.
There are a few keys to making this work that I think will illustrate the process for you.
First and foremost, you need to focus on maximizing the gap between your spending and your income. The “gap” is an idea I often talk about, but it’s a vital one. The larger that gap, the faster financial independence will come.
Obviously, there are two ways to increase that gap: spend less and earn more. If you spend less, then you have a larger chunk of your income left behind for saving and investing. If you earn more, than you have more total money to deal with.
Ideally, you’re tapping into both sides of this, and the stronger you push both sides – earning more and spending less – the larger your gap will be and the faster you’ll reach financial independence. ( Continue… )
In most marriages, one spouse is the primary handler of the personal finance mechanisms. In my family, it’s me. With my parents, it’s my mother.
That person usually is the one who makes the trips to the bank, makes sure the bills are paid, reads through the bills when they come in, and lots of other little tasks like that.
In our marriage, at least, we talk about virtually every decision we make, but I usually take care of the implementation of those decisions. The same thing is true, more or less, for my parents.
In terms of functionally achieving things, this works really well. However, in terms of actually making decisions, this setup makes it very easy for one person to just simply take control of many personal finance decisions. ( Continue… )
This article first appeared on U.S. News and World Report Money.
When most people think of a slow cooker, they think of a device of convenience. It saves time, after all. You can put your ingredients into the pot in the morning, come home from work, and find a meal already prepared for you, saving you time during those crucial rushed early evening hours. You can assemble the ingredients for a soup or a stew, cook it throughout the day, and have it completely ready to go when guests arrive.
Slow cookers are undoubtedly convenient, but where they secretly shine is in the money they can save you. Our slow cooker easily saves us hundreds of dollars each year simply because of the sensible ways we use it.
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For starters, when we use our slow cooker on weeknights, it almost always replaces takeout or a meal eaten at a restaurant.
For our family of five, it’s pretty easy to assemble a slow cooker meal for all of us for less than $2 per meal. At a restaurant, even children’s meals are far above that $2 per meal rate. Meals for adults are substantially more expensive.
If you assume that we’re eating takeout or delivery or at a restaurant for an average of $6 per head, that means a crockpot meal is saving us $20 each time we use it. If you figure we do this once a week, that’s $1,040 per year right there. Even if you adjust the estimates drastically, you’re still seeing hundreds in savings over the life of the slow cooker. ( Continue… )
You can barely visit a chain store these days without being offered a credit card associated with that store. From Wal-Mart and Best Buy to Target and JC Penney (and countless others), offering credit has become a big part of the business for many retailers.
The usual advice for store-specific credit cards is to avoid them. They usually offer atrocious interest rates and, as with any new credit card, they provide yet another avenue for identity theft.
The challenge is that those criticisms are most important to people who aren’t following good personal finance tactics to being with.
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(What if your credit is a mess? What if you have several cards and are carrying balances on them? If that’s your situation, then you should fall back to a cash-only system. Put your credit cards away and do not use them until you have a zero balance, then re-evaluate the cards at that time. Until then, live out of your checking account, make minimum payments on all but one of the cards, and make the biggest payment you can on the other card. Don’t worry about credit cards at all until you’re out of the hole.)
For example, if you’re paying off your credit cards in full each month, the interest rate on the card doesn’t really matter too much.
Along those same lines, if you are very selective about your credit cards to begin with, you shouldn’t have more than one or two cards for personal use, period. I actually think two is the magic number, so that you still have access to one if the other is lost or stolen. ( Continue… )