The Simple Dollar
My biggest spending weakness is online spending. And it’s not even close.
I have essentially completely conquered my spending impulses when I’m out and about in stores. I simply don’t buy stuff on a whim when I’m in a store. I stick to my list like glue, find the stuff I need, and get out. Even if I’m waiting on someone, I don’t end up with unnecessary stuff in my cart.
What impulsive spending I do indulge in happens online, usually at Amazon, Coolstuff, or Steam, but occasionally elsewhere.
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The problem is that the tactics I use to defeat impulse spending in stores don’t work as well when it comes to buying online.
In a store, I usually have at least a minute or two to talk myself out of buying an item from the moment I pick it up until I’m face to face with a cashier (often, the time is much longer). Online, that time is often measured in seconds.
In a store, I have to hold that tangible item, which often triggers a question in my mind as to whether or not I really need it. Online, there’s no object to hold to trigger that thought. ( Continue… )
Let’s face it: we’re gradually moving to a cashless world. Many people rarely have physical cash at all, opting to do most of their transactions via the internet or credit/debit card.
I would consider myself, at times, to be in that group, as I use online banking to pay almost all of my bills and use a credit card for gas and groceries, paying off the balance in full (via online banking) each month.
This is drastically different than how things worked even ten years ago. At that time, I paid all of my bills via check and quite a few of my other transactions were done solely in cash.
There’s a bit of a problem, though. The standard advice for budgeting in personal finance books doesn’t really take into account this transition.They advise keeping track of expenses in a ledger-like format or using envelopes.
Open up virtually any personal finance book you find at the library and you’ll see that their advice for budgeting is in a world before the advent of online banking and before people began operating in a mostly cash-less fashion. ( Continue… )
Given the resources you already have on hand, how long could you go without spending any money at all? You can assume that paying taxes and paying for basic utilities like electricity is okay, but buying anything else isn’t allowed.
What would you do for transportation? Could you get to every place that you need to on foot or via bicycle? Maybe you have a mass transit pass that would enable you to use the subway or the buses for a while.
What would you do for food? Do you have plenty of food on hand that you could use in a pinch?
What about entertainment? Do you have a bunch of unread books on your shelves or unwatched movies on DVD?
We’ve done money-free weekends many times and we’ve done a money-free week a few times, but we’ve never really worked toward seeing how long we could go without spending money. My estimate would be that we could go for about three weeks in the winter and for a little over a month in the summer without spending a dime.
This is an interesting idea, of course, but what value is there in thinking about it?
( Continue… )
Over the last few years, home mortgage rates have drifted up and down between 3% and 4.5% for a thirty year fixed rate loan. That’s astonishingly low, especially considering savings accounts were giving out 6% returns in 2006. (I remember those days… 6% in a savings account. What I wouldn’t give for those days to return.)
Because of the low rates on home mortgages, many financial gurus now suggest that people hold off on paying back their mortgage. Rather than making extra payments, they suggest, you can get a better return by investing elsewhere.
On the surface, that’s a great argument. If you assume that Warren Buffett’s prediction of 7% annual returns over the long haul in the stock market is an accurate one, then it makes sense to put your money into stocks rather than to pay ahead on your mortgage, right?
Not necessarily, and here’s why.
For starters, there isn’t an investment available right now that locks you in at better than 4% guaranteed. To get a return better than that, you’re going to be investing in stocks or real estate or something else that injects risk into the equation.
How does that risk show its ugly head? In a given year, your returns might be much lower than 4%. In fact, they might be negative. ( Continue… )
At first glance, it makes a lot of sense to fly. It would take me from Des Moines through Chicago to Indianapolis in about four and a half hours. Alternately, I could drive this trip and it would take eight hours. The same is (essentially) true of the return flight, as my total flying time would add up to about ten hours whereas driving time would add up to sixteen. Flying saves me six hours of travel time.
Also, I could get a round trip ticket for this route for about $130.
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If I were to drive, the full round trip would put about 1,000 miles on my vehicle. Assuming it gets about 20 miles to the gallon (which is a good estimate), that would be 50 gallons of gas, which, at $3.50 per gallon, adds up to $175 right there. That doesn’t even include the maintenance costs and depreciation.
Flying is a no-brainer, right?
For starters, I am able to carpool on this trip. I have four people who will be riding with me and sharing the driving costs. Let’s say each of them contributes $40 toward gas, which is reasonable. That adds up to $160 off of the fuel cost, dropping my personal fuel cost down to $15. Of course, there’s maintenance and other expenses on top of that, but that’s a significant reduction. ( Continue… )
Jennifer writes in:
“I was wondering, though, if you would consider another post that goes a bit more into detail on how you break down your larger goals? Particularly, I would love to see an example of a project that you created daily tasks for that eventually led to a larger goal. Do break things down at the beginning and then filter tasks into your to-do list from a master list? Or do you have another such plan of action?“
This is something I’m constantly doing. I usually have several different large projects going at once and knowing how to effectively keep track of them and manage them while also making sure I move forward on them each and every day is absolutely vital.
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Here’s how I manage this.
Brainstorming and initial project planning
I’ve got a big project in mind – say, writing a novel. I’ve given it some thought and I’ve decided to commit to actually carrying that project through to the end.
The first step I take is that I have a brainstorming session. I usually do this over the course of several days in short sessions of fifteen to thirty minutes spread across those days.
In those sessions, I try to break down that big project into smaller pieces and come up with an ordered list of what would need to happen to carry this project from start to finish. ( Continue… )
Now that I have two young ones in school (and one of them in preschool … one who likes to make sure to tell everyone that he is also in school), the annual cycle of buying school supplies and preparing for the upcoming year is now a part of our lives.
Thankfully, the past few years have taught us several useful tactics for making this annual rite pass by in a much less expensive fashion. Here’s what we’ve learned.
The first place to shop for school supplies is at home.
When you get that school supply list – the one that’s full of things like “pencil holders” and “two black pens” and other things – the first thing you should do is go around your house and figure out which of those items you already have.
It’s likely that you already have quite a few of those things around your house because your children used them in previous years. Sometimes, they might end up reusing the item they were using in the spring – at other times, they might be using a hand-me-down from their sibling.
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To fill out the rest of your list, watch the flyers.
Department stores love to use school supplies as loss leaders in August. Before you go out and start buying like crazy just to get the list out of the way, start watching the flyers.
In Ankeny, Iowa, the town where we often shop, there’s a Wal-Mart, a Target, a Home Depot, and several other stores extremely close to each other. We’ll just watch the flyers for all of these stores, figure out the best time to get the supplies, then make a list for each store and get the items needed there. ( Continue… )
Over time, as our various pots and pans have worn out, we’ve slowly been replacing them with enameled cast iron, which are fairly expensive – substantially more than the pots and pans at our local department store.
My pocketknife’s blade became so beat up that it could barely cut string. I now use a Leatherman, which cost more than many other options.
After watching three different umbrellas completely fail under normal use, we purchased a Davek, which cost us about five times as much as the umbrellas we had previously purchased.
Why are we slowly making these purchases to replace worn-out items? We believe in a “buying it for life” philosophy when it comes to buying things.
In other words, when I buy something, I’d rather pay more now to not have to deal with replacing it for a very, very long time. Ideally, I’d like to not have to replace it in my lifetime – and I’m in my mid-thirties. ( Continue… )
The children move out, leaving a few empty bedrooms behind.
You can’t sublease that extra room in your apartment, so it sits there empty.
You buy a big house intending to have children, but then you decide to wait.
Things like this happen to a lot of us, and they all wind up with the same problem: you have an extra room (or three) in your home.
Having a room just sitting there empty is expensive. You’re paying for the rent or the mortgage on it. If it’s in your home, you’re paying for the insurance and the property taxes on it. You’re paying to heat and cool the room as well.
The room might be empty, but so are your pockets. ( Continue… )
It wasn’t all that long ago that I was enjoying that special summer between high school and college. I had graduated from high school, of course, but I was also the first person in my family to actually attend college. It was exciting and a bit frightening and almost overwhelming.
Looking back now on my journal entries from that time and recalling the choices I made, I recognize how completely inefficient I was in those first years in school. I made a ton of little financial mistakes that stretched my already thin finances even thinner – and eventually stretched them to the breaking point.
If I were to sit down with my eighteen year old self again and offer some pointers on how to maximize every dime on campus while also having a lot of fun, here’s what I would suggest.
Contact your roommate now
Many of you have probably already done this. If you haven’t, find your roommate on Facebook now. Drop that person a friend request.
What you’ll want to find out from that person is what shareable items to bring. Items like a television, a microwave, and a mini-fridge are items that you can share in a dorm room without any real problems. Plus, doing so will save one (or both) of you some cash if you don’t already have the items. If you do, now’s your chance to return the item. ( Continue… )