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The Simple Dollar

In this Feb. 11, 2005 file photo, trays of printed social security checks wait to be mailed from the US Treasury's Financial Management services facility in Philadelphia. Money means many different things for many different people. But for our personal finance expert it mostly means, security. (Bradley C. Bower/AP)

Money as security (or other things)

By Guest blogger / 07.20.12

Money means a lot of different things to different people. Money can represent potential stuff. It can also represent potential experiences. For some, money can represent power or social acceptance. Others might see money as a corrupting or evil influence. Still others might see money as a tool for promoting social change.

For me, though, money is security.

Whenever I think about my financial state, I don’t immediately think about the things I could be doing with it. I don’t think about all the stuff I could buy or the wonderful trips I could go on. I don’t think about using it to put myself in a powerful position or to push my way into a social circle. I don’t think of it as evil, and I don’t really see it as a tool for promoting change on a broad level (maybe if I had more money, I might).

What I do see at first glance is security for me and my family. Living a financially stable life means that my children will have the best chance at growing up with all of the opportunities in the world. It means that I won’t have to worry for quite a while about putting food on the table or paying for an extracurricular activity for one of my kids. It means I can make some career mis-steps without having our lives fall apart. It means less stress in my life.

There’s nothing wrong with seeing money as something else. If you see it as potential experiences or as a tool for achieving a leadership position or as an avenue for climbing the social ladder or as a way to push forward a social issue you care about, that’s perfectly fine.

Different perspectives on money come from the fact that we’re all different people with different values. We want different things out of life and, in most of the cases, money is the tool that will help us get tohse things.

For me, the real challenge is keeping my values in mind, even in the heat of the moment.

When life is flying by you, it is easy to get tempted by other things going on in your life. There are countless situations where the spending of money can give you social opportunity, provide you with a great experience, buy you something you desire, or countless other things.

It is in those moments where your values really matter the most. They guide you towards the right decision for what you care about most in life.

It is because of those moments that I’ve spent a lot of time thinking about my values. I want to be sure that the things I draw on in those moments to make a decision are the right ones.

Before I had spent a lot of time considering what was actually most important to me, it was much easier to get sucked into the heat of the moment and spend money in a way that didn’t support what I wanted most in life. My impulsiveness would take over, or a friend would cajole me into buying something expensive or throwing money towards a sill activity.

The more time I spend actually considering what I want from my life, the easier it becomes to resist short-term impulses. It becomes much easier to say “no” to a temptation in that moment if I’ve spent a lot of time really understanding what it is that I want most.

A big part of personal finance success is understanding what you truly value and sticking with those values. Discovering what those values are takes time and a great deal of introspection. There is no simple recipe for finding them, but spending time reflecting on what you want most from your life will help lead you in the right direction.

RELATED: Can you manage your money? Take our personal finance quiz!

Donnie Smith, CEO of Tyson Foods Inc., left, places boxes of frozen chicken parts into a refrigerated tractor trailer in this June 2012 file photo in Jackson, Miss. Frozen and prepackaged meals are convenient and easy, but they are far more expensive than their cumulative raw ingredients, and are loaded with potentially unhealthy ingredients you don’t really want. (Rogelio V. Solis/AP)

Stay fresh: Avoid frozen and prepackaged meals

By Guest blogger / 07.20.12

The freezer aisle at your local grocery store is often loaded with complete frozen meals. The aisles tend to have a wide variety of “meals in a box,” as well.

It’s easy to see why these are popular. You can just take them home, throw them in a pan or skillet, cook at a certain temperature for as long as the directions say, and put them on the table.

Of course, the equation is never quite that simple.

For starters, virtually every frozen or prepackaged meal you buy is far more expensive than the raw ingredients in it. For example, if you pick up a frozen lasagna, you could make virtually the same lasagna for quite a bit less at home, or make one for just a little less that has far higher quality ingredients.

On top of that, the frozen and prepackaged meals are loaded with ingredients you don’t really want. They usually include high levels of sodium and a wide variety of preservatives, plus their calorie count is often amazingly high.

Both of these aspects have a serious cost. The first one is a short term cost, of course. We can save about $1 per head making meals at home if we go the cheap route, but if we go for all fresh ingredients, we still save a little overall and have an amazing meal.

The long term cost is well worth considering, though. A diet high in sodium and high in caloric content has demonstratable negative effects on long-term health. Simply put, that means higher health care bills and pharmacy bills in the future. You can’t attribute this to one meal, of course, but you certainly can attribute it to a long sequence of meals. I’d attribute the cost of much of the long-term health consequences of unhealthy meals to the meals themselves, meaning that the meals are more expensive than you think they are.

The best solution is to simply start preparing as much food as you possibly can at home, from scratch.

A good rule of thumb for home food preparation is this: when you’re cooking, the simpler and fresher the ingredients you start with, the healthier the end result will usually turn out to be, and the cheaper per serving the meal will turn out to be as well.

Here’s a simple example of what I’m talking about. Rather than buying a pan of frozen lasagna for $12 at the store, buy a $2 box of whole wheat lasagna noodles, $2 of mozzarella cheese, a few tomatoes, and perhaps a pound of ground beef. Make the entire meal yourself at home and it’ll be out of the oven faster than the frozen lasgana. It’ll taste a lot better, too, and it’ll be cheaper and healthier.

Start making choices like this consistently and you’ll save yourself significant money, both now and in the future.

In this May 2012 file photo, David Lee holds on to his carts while shopping at a Costco Wholesale in Portland, Ore. Buying staples in bulk can save money on trips to the grocery store, help with budgeting and are generally less expensive by the pound. (Rick Bowmer/AP)

Better in bulk: Buy staples in large quantities to save money

By Guest blogger / 07.19.12

When you get into the routine of cooking at home, you’ll eventually find yourself falling back on certain staples. Some of them are things that go into almost everything you cook, like a dash of salt or some black pepper.

Others are simply key ingredients in a lot of the recipes that you actually make. These things vary a lot from person to person, but for us they tend to include pasta, dried beans, dried rice, tomato sauce, dried oregano, flour, and flash frozen vegetables of a lot of different varieties.

There are also other things that have multiple uses in the home beyond just cooking, like baking soda and vinegar, and there are household supplies such as toilet paper.

All of the things mentioned here are things that we buy in bulk. Anything that doesn’t have a quick expiration date, can be easily stored, and is something that we use on a regular basis is a target for bulk buying.

Not only are items bought in bulk less expensive per pound, but they also shorten your grocery list and can help you squeeze out a few more meals at home before you have to return to the store. That saves on the travel cost and time of shopping, as well.

I’ll use a real example from our own pantry. We use extra long grain rice in a lot of the dishes we prepare, as my wife and I love curry and stir fry. Dried rice can easily be stored in the home, so when we get a chance we stock up on rice in abundance.

At our local grocery store, we can buy very similar rice in a two pound container for $3.99 or a ten pound container for $10.99. Obviously, the ten pound container is cheaper, as you’re getting near a dollar a pound. Sometimes, we’ll see sales that drop the price even lower, but those are irregular and hard to plan around.

For comparison’s sake, at our local warehouse club, we can buy a fifty pound bag of long grain rice for $17.67. That’s about 38 cents a pound.

Now, assuming we can get through even half of that rice over a reasonable period of time, we’ll save money buying in bulk. If we can get through that entire bag, we’re saving a lot of money.

The same phenomenon holds true for almost every item I mentioned at the start of this post. A large bag of frozen vegetables is less expensive per pound than a small one. A large sack of flour is far cheaper per pound than a small one. A case of tomato sauce is less expensive per jar than a single jar.

We even buy baking soda in bulk. You can buy a 13.5 pound bag of baking soda for $6.68 in our local warehouse club. Put some in a plastic cup in the back of your refrigerator and use it as needed and you’ll do fine. Compare that to a typical price for an eight ounce box in the store, which is usually in the ballpark of $0.89. Buying that much baking soda per box would add up to about $25.

The key to saving money this way is sticking to stuff that you’re sure you’ll use before it expires. If you don’t know that you’ll use up that much rice or if you don’t think you’ll use the baking soda before the expiration date, don’t buy it. Focus on things you use all the time so that you’re sure you’ll use it.

You’ll also want to be sure you have adequate storage space for the stuff. We store a lot of the non-food items in our garage when we’re not using them, plus we have a pretty large pantry. At our previous residence, we didn’t have much storage space at all, so we couldn’t really take advantage of bulk buying. If you can’t store it, it’s going to be wasted.

If you can handle those caveats with ease, buying key items in bulk can really cut back on your food and household budget. It’s one of those things that, once you’re in the routine of it, you can’t believe you ever got by without it.

The Kentucky Legend Ham Hotline provides tips and advice on preparing and serving the perfect ham, including delicious ways to serve the leftovers like this ham and bean pot pie. Throwing food away is like throwing away dollar bills. (PRNewsFoto/Specialty Foods Group)

Learning to love the leftovers

By Guest blogger / 07.18.12

Any time you throw food into the trash can, you’re throwing money into the trash can.

Quite often, that food you’re throwing away is the remnants of a meal from a few days ago. You stuck the remnants in the refrigerator, but every time you went to grab another meal, you overlooked the leftovers. You talked yourself out of them or you just simply didn’t bother to consider them.

Simply put, every time you choose to eat leftovers, you’re basically getting a free meal. It’s a meal where you’ve already accounted for the ingredients. It’s a meal that is going to disappear in a day or two if you don’t eat it.

I often look at it this way: a meal of leftovers “pushes back” the other meals you might consume. If you eat leftovers, then the meal you would have had at that time is saved for another day. You might be able to put off grocery shopping for a day or two if you do that a few times, reducing your trips to the grocery store in a month, which directly reduces your food bill for that month.

A meal made of leftovers is money directly in your pocket.

The challenge many people have with leftovers, though, is that they can often seem really unappealing compared to other options. When you’re considering what to have for lunch or for dinner, leftovers represent eating something again that you just had in the last day or two. It often represents something a bit less fresh than making a new meal, too. Thus, it’s often easy to talk yourself out of leftovers.

Here are a few tactics I use to overcome those challenges.

First, I maximize the convenience level of leftovers. When I pack away leftovers, I usually arrange a plate for myself so that I can simply grab it, throw it straight into the microwave, and have a meal on the table in just a couple of minutes. If I lower the effort and time investment of leftovers in the moment, I’m more likely to choose them in the middle of a busy workday.

You can apply this yourself by packing leftovers to take to work with you. If your leftovers are the only convenient option for lunch at work, that’s the option you’ll take.

What about flavor? There are a lot of techniques for spicing up the flavor of leftovers. Keep some common flavor enhancers on hand in your home (or at work). Salt, ground black pepper, hot sauce, oregano, basil, and tarragon are all great things to add to leftovers to add a kick of flavor for just a penny or two.

You can get creative with leftovers as well, using them as ingredients in other dishes. Leftover baby carrots can be chopped up into a salad. Leftover ground beef or beans can quickly be turned into a burrito. Leftover tomato sauce and/or tomatoes can quickly be turned into a pasta sauce.

Your goal should be to never throw away leftover foods that you would otherwise eat. If you’ve got it in your home, you’ve paid for it in some fashion. Throwing it away is no different than throwing money away.

Children learn about natural gardening, basic animal husbandry and farm to fork cuisine at farm school at Elizabeth Anna's Old World Garden in this June 2012 file photo in Forth Worth, Texas. A garden can save you money, providing food from early summer until late fall. But it can also be an expensive endeavor if rushed into without planning. (Joyce Marshall/Star-Telegram/AP)

Backyard to table: Get into the routine of gardening

By Guest blogger / 07.17.12

Last night, we had ratatouille for supper.

For those unfamiliar, ratatouille is essentially a medley of vegetables, cooked together and put in the pan in the right order so that they’re all tender at the same time.

You can pretty much put any vegetable you want into it. In ours, we had tomatoes, green beans, onions, potatoes, and various greens.

On the side, we had a handful of fresh strawberries, right on that perfect fine line between sweet and gently tart.

What do all of these things have in common? They all came from our garden.

A garden can be a tremendous money saver once you get into the routine of gardening. It can provide you with a bounty of food from early summer until frost comes in the late fall (and sometimes even a bit after that).

Of course, a garden can also be expensive. There are startup costs, seed costs, and other costs. Here are a few tactics we’ve used over the years to make a garden very inexpensive.

Share seeds Most gardens don’t need a full packet of seeds. Share them with a friend.

Save seeds If you use non-hybridized seeds, like those available from Seed Savers, you can save your seeds from one year to the next, cutting down greatly on seed costs.

Use water and soap as your first pesticide Mix a tablespoon of liquid soap into a spray bottle full of water and use them to attack pests you find in your garden.

Make your own compost Store your vegetable scraps in a bin out by the garden. Turn the contents of the bin regularly and keep it moist. Eventually, the contents will turn into a sweet-smelling brown or black mush, which is an incredible fertilizer. Spread it on your soil before your next planting.

Borrow and share tools If a friend has a small tiller or a hoe or a rake, borrow from that friend. You can often repay them with a bit of help on a project of theirs or by loaning them some of your own tools.

Our garden pays us for the time we put in each summer by providing us with a wonderful bounty of vegetables and fruits.

A money changer shows some one-hundred US dollar bills at an exchange booth in Tokyo in this 2010 file photo. According to Hamm, a reader's 401(k) option through his company is sound and competitive, but it's best to do your research and make sure the default option is right for you. (Issei Kato/AP/File)

401(k) plans: Is my company's default option the best?

By Guest blogger / 07.17.12

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
 1. 401(k) expense ratio
 2. Grocery shopping idea
 3. Home buying books
 4. Raising allowance?
 5. Consolidating several accounts
 6. Compost and time
 7. Making your own mayonnaise
 8. Car insurance options
 9. Crock pot recommendation
 10. Challenging career choice

There have been a few times in my life where I’ve been very close to a major accident. Memories of those events stick in my head and have made me really wary.

For example, when I was thirteen, I was riding around on an ATV. I flipped the thing on top of me and burnt the side of my leg on a hot part on the underside of the ATV. I was just an inch or two from the accident being much, much worse.

When I was about fifteen, I was pushing a large garden tiller up a rather steep bank and it flipped over. The knob on the gearshift stuck under my pant leg while it was flipping over and caused me to trip and my other pant leg got stuck in the blades. I immediately managed to get it shut off, but it was very, very close to doing disastrous things to my right leg.

I’ve had nightmares about both of these incidents (and a few more) ever since they happened. I suppose it’s my own mind guiding me and reminding me of things to be careful with and things to avoid.

Q1: 401(k) expense ratio
 I just started my first “real” job last week, and will be eligible for my company’s 401k 6 months from now. The default option is American Century Livestrong 2055 target date plan (here is where I found my information), and it lists the expense ratio as .45%. I would greatly appreciate your perspective on this option, or if I should see what other options are offered.

For additional background information, the company contributes up to 3% matching, and although I’m unsure what the requirement is to get that match I plan on contributing at least 6% which should bring the total contributions to 9%, plus contributing additional money to my small but already established Roth IRA. I have no debt and have already established an emergency fund, so getting my retirement contributions established is the only real financial concern I have.
 - Marcus

That particular fund is solid, but not a top performer. The performance is comparable to other target 2055 funds (like this one at Vanguard), but it’s really hard to get a good sense of the performance over such a short time frame, as both funds have just existed for a little over a year.

The expense ratio is a little high, but it’s not incredibly high. It seems to be on par with other funds from American Century.

Since I’m not sure what other options your 401(k) gives you, I can’t say for certain that this is your best option, but it’s decent and it seems as though it will get the job done. Most 401(k) plans don’t offer the “best” investment options, mostly because they’re restricted to the offerings of certain investment houses. However, the tax benefits of a 401(k) make up for it.

Q2: Grocery shopping idea
 My best friend (who lives next door) and I came up with a great plan for solving our impulse buys at the grocery store. We both find ourselves buying silly stuff we don’t need whenever we shop. So we just started giving each other a grocery list on alternating weeks. One week she will take my list and buy everything on it for me and the next week I do the same for her. Once every month or so we resolve any financial difference between the two, which usually ends up just being $10 or $20.

I only have to go grocery shopping once every two weeks and my impulse buys are way, way down. It all works out really well.
 - Jenny

This seems like a really good idea, actually. If you have a trusted friend who can follow your grocery list and it’s convenient to swap groceries with them (like a next door neighbor), this can be a great way to keep yourself from too much impulse buying.

Another thing I like about it is it forces you to carefully think about a grocery list, which means you have to plan your meals out for the week and think about it. It will also subtly encourage you to put healthier items on the list, which can only be good for you.

If I lived really close to one of our closest friends, I’d strongly consider this type of system.

Q3: Home buying books
 My husband and I are starting to look towards buying our first home in the next 12 – 18 months. We are saving up now and plan to pay entirely in cash. Do you have any home buying books you’d recommend we read to help get us started?
 - Alice

When we were looking at homes back in 2007, we read through a lot of home-buying guides. The best one we found, surprisingly enough, was Home Buying for Dummies by Eric Tyson.

Never mind the name. The book was actually a great overview guide for the process of buying a home. It alleviated a lot of our questions with just a couple read-throughs.

The small number of questions we were left with after that book were answered with Google searching and checking with multiple sources.

Q4: Raising allowance?
 Up until now, we’ve given our children allowance based on a rate of $0.50 per year old they are, stopping at age 16. It’s worked really well, at least from our perspective.

Our twelve year old daughter – our youngest – has argued with us for the past week that the rate should go upwards. She actually went online to get inflation data and argued that there should be at least a 30% increase in allowance since we started doing this, since the price of things is at least 30% higher than when we started with her oldest sister.

How do you think we should handle this?
 - Marcus

For one, kudos to your daughter for thinking about the situation, doing some research on her own, and presenting a case for an allowance raise that’s actually based on information and not based (purely) on wanting things. That takes some initiative and some smarts.

She makes a good point in the sense that the items she would buy would be more expensive than they were ten or fifteen years ago. However, she doesn’t make a good point in the sense that she’s not really going to be buying useful items.

My response as a parent would be to negotiate a compromise to teach her some negotiating skills. I would make a counter-case against her suggestion, actually, so you can dig into the realities of what inflation actually means and how it doesn’t affect all items equally.

I feel that a child exhibiting these skills should see some positive feedback, but she could also learn about negotiation. In your shoes, I’d probably aim for a raise to $0.60 per year (not quite 30%, but an increase), but I’d make her work for it.

Q5: Consolidating several accounts
 Right now, I have several bank accounts and credit cards. My main checking account, and my only savings account are with Ally Bank. I also have a second checking account with a local credit union, which is where I also have my car loan. For my credit cards, I have one with Capital One, one with American Express, and one with Chevron/Texaco.

I really don’t like having these many accounts, but the second checking account with the credit union I keep just in case I need to pay my car loan through that account (since the payment is classified as a transfer and it can be done the same day). As for my credit cards, I’d like to get rid of one, but I’m not sure if I should (I pay each one in full every month). My Capital One card has an annual fee and a low credit limit ($1000), but it’s my oldest account so I don’t want to get rid of that one. I like my AmEx and I use that one the most, and my Chevron card I haven’t used in months, but when I got it I was in an area where I passed by several Chevrons, and I also got it to help with my credit score.

Ideally I’d like to get rid of my Chevron card, as it provides absolutely no benefits to me and I don’t even use it anymore, but I’m not sure if I should because I don’t want it to hurt my credit score. It’s not a major network card, so I don’t think that it would hurt my credit score much, if not all, but I’m not 100% sure.
 - Drew

Since it’s not your oldest card and you have several other lines of credit, closing the Chevron card will not have a major impact on your credit score.

The only area where your score will be impacted will be a change in your credit ratio, which is the ratio of your credit card balances to your credit limits. Since you’ll be cancelling a card, your total credit limit will go down without adjusting your card balances.

Now, if you’re not regularly carrying a balance on your cards, this is completely a moot point. It only really matters if you carry a significant balance from month to month. If you carry no balance or only a small one that’s just a fraction of that card’s credit limit, go right ahead and cancel the Chevron card.

Q6: Compost and time
 It seems to me that making compost isn’t a very efficient use of one’s time. It takes a lot of time to turn your scraps into compost, with all the carrying out of scraps and turning of the compost. It’s also messy. It seems like a pretty silly thing to do with one’s time.
 - Jill

I view composting as a hobby. Whenever you look at someone’s hobby with a complete outsider perspective, it often seems like an ineffective use of time.

Look at golfers – they spend hours hitting a ball with a stick so that the ball will go in a little hole, then they do it again and again. Look at people who love to read – they spend hours just sitting in a chair staring at little markings on a page.

Almost any hobby depends a lot on what is important to the person involved with the hobby. For us, filling our small kitchen composter and emptying it into our barrel composter outside, then occasionally emptying out that barrel composter onto our garden is a good use of time. We get extra pleasure out of reusing our scraps and we like the fact that our garden is getting a boost from those very scraps.

If you don’t see value in that, you don’t see value in composting, but that kind of evaluation is true for any hobby or any way another person uses their time.

Q7: Making your own mayonnaise
 Here’s something I have found after getting frustrated over the ever-shrinking mayonnaise jars -

A little background: I have long made large batches of ranch dressing, kept it in quart jars in the refrigerator. I liked the taste as well as bottled ranch dressing, and it was about 1/4 to 1/3 the cost of the bottled when I made it myself. I used a quart of mayonnaise, a quart of buttermilk, and two seasoning packets. It was two times the recipe on the packet, but it only required one cleaning of the blender instead of two, and since it is everyone’s favorite, we use it fast enough that it doesn’t go bad.

Since the mayonnaise came in quart jars, and the buttermilk was in quart cartons, it was already pre-measured, and I just dumped one of each into the blender. About two years ago I noticed the dressing was not as thick as it used to be. Long story short, I then noticed like so many other products that the mayonnaise jars had shrunk and were only 30 ounces instead of 32, a full quart. (I have since noticed that some are now only 28 ounces). The price remained the same, though, isn’t it funny how that works. It doesn’t sound like a lot, but it is 6.25% less, and enough that the reduced amount of mayonnaise with the same amount of buttermilk made a noticeable difference in the consistency of the finished product. For a while I still used one of the 30 ounce jars of mayonnaise, plus 1/4 cup from another jar, and the dressing turned out like it always did.

I then stumbled across a recipe for making mayonnaise, and learned that it really isn’t that difficult. A single batch is as follows:

1 egg
 1 Tablespoon of vinegar
 1 1/4 cups of oil

That’s it.

Break the egg into your food processor or blender jar. Add the vinegar and beat or process for about 1/2 a minute. Then add the oil 1/4 cup at a time, letting it mix for about 45 seconds to a minute after each addition. It will take you about five minutes to finish adding the oil, but it you add too much at a time it will not make an emulsion properly.

If you want to jazz it up a bit, at the end you can add a little paprika, seasoned salt, or even a little horseradish. I also have started making it with canola oil, which is high in Omega-3 oils and healthier than most other oils.

End result, making my own isn’t that difficult and costs about half as much per ounce as the ever-shrinking quart jars. The main reason that I bought quart jars in the first place is the lower cost per ounce over pint jars, but since I am making it myself I now usually make a double batch, which is a little more than a pint, at a time.

When I am making my own ranch dressing now, I quaduple the mayo recipe, then remove one cup to put in a jar for the fridge for sandwiches or whatever else. Add my quart of buttermilk, two seasoning packets. I have less than four dollars in half a gallon of dressing, not much more than what two 16-ounce bottles of the pre-made costs, and have twice times as much.
 - Sylvia

This is a great recipe. I love homemade mayonnaise.

The only catch with this that I see is that homemade mayonnaise isn’t pasteurized, which means I wouldn’t keep it around more than a few days and I’d be very careful about cross contamination.

Still, when it’s fresh, few things go better on a sandwich than this kind of homemade mayonnaise.

Q8: Car insurance choices
 I drive a 2003 car almost every day. It has almost 10,000 miles. The blue book searches available online show my car as worth approximately $3,200. Is there a way to use this data to determine whether I should reduce my car insurance coverage to just liability or something? Every friend I ask about this has a different opinion and of course my insurance agent recommends keeping it insured to the max. (My current State Farm policy costs me $55/month, with an unblemished driving record and the deductibles already made as high as I think would be wise.)
 - Julie

Such matters are always based on opinion, of course.

My question would be whether or not you could financially handle a replacement car purchase right now, with no trade in. Do you have some cash on hand for a down payment? Is your credit at least strong enough to get a decent car loan?

If you’re saying “yes” to those things, then going to liability insurance is a reasonable option. It will save you money each month. However, if something happens (like sliding on a wet road and hitting a tree), you’re going to have to be ready to buy a replacement car immediately.

Insurance is basically all about risk. Over a long period, insurance is going to cost you more than what you get out of it (for the average person, at least). Insurance really only benefits you when something bad happens. When you reduce your insurance, you’re essentially saying that you’ve got enough financial backbone to take on that risk yourself.

Q9: Crock pot recommendation
 I’m considering purchasing a crock pot/slow cooker for family use. Do you have a recommended model?
 - Shari

It depends a lot on what size you need.

If you’re single or are only feeding two, I’d get a very small one. In that case, I’d get the 2.5 quart Crock Pot. If you’re cooking for two, this will make a meal and also provide some leftovers.

For a family, I’d get a big one. In this case, I’d recommend the Hamilton-Beach 6 quart programmable model. It can handle almost any family-sized meal you throw at it.

Most slow cooker models are pretty good. I haven’t come across any models that are consistently bad.

Q10: Challenging career choice
 I have been offered a new job with 30% more pay which is about 25-30 minutes away downtown and involves about 2-4 business travels per month. It’s a lateral position move but with more potential than what I have now.

At the same time, I really love my current job, my boss and associates are great and my commute is 10 minutes or less. Also, I have great flexibility to take my kids to and from school and meet my wife for lunch at home every day! I really love it. I have been at my current job 10 years.

We are doing well money wise but new job does offer 30% pay increase. I find myself trying to get excited about it and get positive but it’s hard as I love extra time with family, especially since we just had a newborn.

How would you look at this choice and what’s your advice?
 - Cliff

What will that extra 30% enable you to do in your life that you’re not able to do right now?

If you can list anything significant there, ask yourself if the things you gain are worth the things you’ll lose (flexibility with kids and work, a good work environment).

Unless there’s something really compelling going on here that you didn’t list, I don’t think the job switch is worth it.

This June 2012 file photo shows a house for sale in San Diego. When buying your first home, Hamm recommends looking for a smaller home than you might think you need initially. (Gregory Bull/AP/File)

Buying a new home? Consider downsizing.

By Guest blogger / 07.16.12

Recently, I was browsing through my journals from early 2007, the period when Sarah was pregnant with our second child and we realized that we needed a larger home. We spent a lot of our time in that period house-hunting. We had really turned our finances around over the previous year, and The Simple Dollar was beginning to become popular, so it was a very interesting time.

In my journals, I tried to keep notes on the houses we looked at. When I reflect on that time, I really only remember looking at a handful of houses, but my notes show me that we looked at a lot of houses.

So, what’s interesting about that? The first ten houses we looked at were all at least $50,000 more expensive than the house we ended up buying.

Our initial assumptions about the house we needed were very much on the high end. We were looking at houses with five bedrooms, huge amounts of open space on the lower floor, basements that were either finished into a giant parlor or could be finished in such a way, amazing open kitchens with huge islands, and so forth.

These are things that we desired in a home, but honestly, we didn’t need them, particularly in our first home.

What changed our minds? A few things did.

First, we sat down and talked about what we actually needed in a house at that time. Although we really wanted all kinds of neat things, we didn’t need them. We needed three or maybe four bedrooms. We didn’t need a really big kitchen. We only needed a single modestly-sized family gathering room.

Everything else, when we got right down to it, was unnecessary.

Our second clue was when we seriously calculated what our homeowner expenses would look like. Insurance was much higher. We’d be facing property taxes. Our utility bills would jump. Our actual cost of living there would also jump, as our rent in our small apartment was quite a bit lower than our expected mortgage payments. Any repairs would come out of our pocket, not that of the landlord.

It’s not just a matter of comparing your mortgage bill to your rent. Home ownership comes with quite a few additional expenses that you’ll have to deal with.

For us, the final straw was a serious talk with our lender. She was quite happy to lend us any amount we asked for, but our lender actually had a conscience. She told us that in good conscience she wouldn’t sign off on a large preapproval, but only one for a relatively small amount. Why? On paper, it was an acceptable risk for the bank, but in reality, it was a pretty big risk for them – and for us, too. Home ownership is financially hard, especially at first.

Our lender was right, and I truly wish all lenders acted with such responsibility during the housing bubble.

After that, we started searching in our own price range, and we eventually found a perfect house that really met our needs that was well within a reasonable price range for us. We’ve lived here for several years and couldn’t be happier with our decision.

When you’re shopping for a house, particularly your first one, you don’t need the house you think you do. Aim lower. You’ll find that you won’t be choked by your finances and that the house actually works really well for you. Build up some equity and maybe in a few years you can move on to the house of your dreams. It’s a far better path than the tightrope walk that comes with a house that exceeds your means to easily pay for it.

Two women wait for a bus after their grocery shopping in Los Angeles in this May 2012 file photo. Hamm argues that a grocery list is your best defense against unnecessary spending at the supermarket. (Jae C. Hong/AP/File)

Trim your grocery bill by sticking to the list

By Guest blogger / 07.14.12

Eight or nine years ago, I never ever made up a grocery list before hitting the grocery store. I’d stop in there a few times a week after work, pick up whatever I thought I could throw together for supper the next night or two, and probably pick up a few other goodies as well. I’d stop perhaps three times a week and I wouldn’t blink an eye at a $80 or $100 tab, even though it was just for Sarah and myself.

Today, I really don’t like going into a grocery store at all unless I have a grocery list in hand. In a given week, we’ll spend far less than we did back then, but now we have three children to feed as well.

What’s the difference? Part of it is having a better head on my shoulders when it comes to decisions about what foods to buy, but the humble grocery list is perhaps an even bigger part than that.

The purpose of a grocery list is really simple: it keeps you on focus in the grocery store and tells you exactly what you need. It supplements your memory while telling you specifically what you should be buying in the store.

Without it, you’ll be relying strictly on memory in the grocery store, which is problematic in several ways.

Depending on how unprepared you are, you may not even have ideas for meals in advance, which means you’re wandering the aisles hoping for inspiration. That makes you a gigantic target just waiting for marketing to take advantage.

Without a list, you’re relying on imperfect memory to recall the staples you’ll need. Do you need milk? How much? Do you even remember to think of milk? How about bread? Cheese? Bananas? You’re also relying on memory for recipes, special occasions that are coming up, and so on. Again, you’re often relying on inspiration here, wandering the aisles and hoping you notice and remember things you need.

A grocery list removes all of this. With a well-prepared grocery list, you can rely on that and nothing else. You just head for the products you need.

Even without developing a meal plan, a grocery list is a useful thing. Just leave it out on your refrigerator and jot down items as you notice you need them. If you have that in hand, then you don’t need to worry about staples, which means you spend less time staring at the shelves.

Why is staring at the shelves a bad thing? Marketing. Product packaging is designed to influence your thoughts and convince you to put that item in your cart. No matter how much self-control you have, the more time you spend staring at the shelves – particularly when you’re not simply searching for a specific item – the more likely you are to buy something unnecessary.

A grocery list is a key tool in that battle. It keeps your eyes off the shelves, and even when they are on the shelves, they’re searching specifically for an item. The amount of time your eyes idly wander the shelves is drastically reduced.

A grocery list is a frugal shopper’s best friend. Don’t leave home (for the store) without it.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere.

In this April 2012, file photo, Delly Mellor thumbs through a binder full of coupons that she carries on her grocery shopping trips at her home in Wilmington, N.C. Grocery store flyers are full of valuable deals, Hamm says, and should not be ignored. (Mike Spencer/The Star-News/AP/File)

Grocery store flyers: Your meal planning guide

By Guest blogger / 07.14.12

Within twenty miles of my home, I can find at least three Hy-Vees, two Wal-Mart Supercenters, a Super Target, a Target with a grocery section, two Fareways, a Dahl’s, and several smaller independent grocers.

All of these businesses are essentially in competition with one another, which is good for me because there’s some competition for my business.

How does that competition play out? One of the big areas where the stores compete with each other is the grocery store flyer, which is an essential tool for anyone who wants to save money on their food budget.

Just so we’re all on the same page here, a grocery store flyer is a document produced by a grocery store that lists all of their sales for the upcoming week (or two weeks or month, depending on the flyer). Most grocery stores put out some sort of flyer, as it’s a pretty effective way to get people in the door of their store.

The idea behind a grocery store flyer is simple. If a store advertises a number of items at a really low price, they can get customers in the door. They might sell that one item at cost and not make any money on it, but people will buy other items when they’re in the store, so the store will still make money on it.

That’s where you come in. Taking advantage of these sales is a great way to save money on your food bill.

Our method for taking advantage of these sales is pretty straightforward. About once a week, I’ll visit the website of a few grocery stores that I regularly visit and download their flyers. Most store websites offer their grocery flyers for free download, so just visit the site of your preferred stores and check them.

I usually start with the Fareway flyer, then the Hy-Vee one. My default grocery shopping choice is Fareway because of the prices. If I can find enough interesting deep discounts at Fareway, I stick with that flyer. If I’m not seeing anything of interest, I turn to the Hy-Vee one.

I usually try to identify at least three interesting deeply discounted items in the flyer of the store I’ve chosen that week. I prefer to find discounts on fresh items – fruits and vegetables – but that’s not always the case.

Once I’ve identified a handful of items, I plan my meals for the week around them. We simply look for recipes that involve the deeply discounted ingredients. Sarah and I strive to use those discounted items in at least two meals each, meaning the discounts cover six meals.

From there, we build our grocery list (which naturally includes the deeply discounted items) and head out to the store.

Doing this ensures that we’re going to take advantage of the big sales of the week, gives us a grocery list to use at the store to keep us focused, and helps us with our meal planning throughout the week. That’s a triple win.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. Images courtesy of Brittany Lynne Photography, the proprietor of which is my “photography intern” for this project.

In this June 12, 2012 photo, Steven Buchholz, 13 of Arlington Heights, Ill., grates fresh ginger for his teriyaki shrimp recipe. Buchholz can can give cooks three times his age a run for their money. He began cooking when he was just 9. Getting comfortable in the kitchen is a great way to save money, and create tasty meals the whole family can enjoy. (Bill Zars/Daily Herald/AP)

If at first you don't succeed in the kitchen, try, try again

By Guest blogger / 07.13.12

There was a time – circa 2000 – where I dreaded going into the kitchen. On the rare occasion when I would actually attempt to cook anything, I’d usually mutilate it. I’d turn scrambled eggs into a giant pile of burnt … stuff. I’d produce incredibly dry chicken breasts. My tuna noodle casserole … let’s just say it would be more accurate to say that I would pour it rather than serve it.

I felt deeply uncomfortable in the kitchen. It often felt like everything I touched turned into a disaster.

That feeling carried forward for several years. While I would occasionally delve into the kitchen and try new things, most of my food consuption came from prepackaged meals and from eating out.

Thankfully, at the same time I began to really notice how much it was costing me to eat prepackaged foods all the time and eat out so often, I began to realize that I was getting better in the kitchen.

The eggs weren’t burnt any more. The tuna noodle casserole was a casserole, not a soup. My chicken breasts were moist and flavorful.

Because of these factors, I transitioned pretty quickly to making much of my food at home, which saved me a lot of money.

What caused this change in coooking skills? Practice. That’s really what it came down to.

I simply went in the kitchen and started trying. Yes, many of my early meals were disasters, with some of them actually crossing the line into inedible. I had more than a few miserable lunches and dinners.

However, I got better. The meals became tastier. I began to understand how to season stuff well, what level of heat to use, and how long to leave something on the heat.

Today, I’m pretty confident in the kitchen. I feel as though I can make a meal out of whatever’s on hand. I’m not scared of anything I might reasonably take on in the kitchen.

For me, the biggest tool for getting there was a copy of Joy of Cooking. You don’t need a bunch of cooking tools. Just have a good pot or two, a good skillet or two, a couple bowls, a good chef’s knife, a cutting board, and a stirring spoon, and you’ll have what you need for an awful lot of dishes.

Don’t worry if you mess up, either. Just sit down and figure out what you did wrong, then try it again next week. Soon, you’ll find that it turns out right.

When you reach a comfort level in the kitchen, you’ll find that preparing food at home is actually quite enjoyable, often quicker than a restaurant, and usually far, far cheaper, too.

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