April 2011

Keep A Cash Stash

Even if you aren't quite up to doing the "regular savings" thing, or haven't quite built up a full emergency fund (a savings account with at least $1,000) it's smart to keep a cash stash on hand.

What constitutes a "cash stash"? For most people, between about $100 and $300. Some people like to keep several thousand dollars in "foldin' money" in their homes, in case of disaster. That may be excessive! But it's probably better to err on the side of too much cash, rather than too little.

Why bother keeping a wad of cash around? It's not JUST good for flinging up in the air while hollering "Make it rain!" when you get bored on a Sunday afternoon. (Not just!) There are several benefits to having a little backup money always on hand:

#1 Frugality Tip: Look Forward

The more time I spend working to live within (or beneath) my means, the more it comes to seem less like a matter of tips and tricks, and more about creating the right mindset. This was a dismaying realization, because let's face it, it's a lot easier to read about and implement tips and tricks than it is to change your mindset. But bear with me.

What I count as my worst financial year was, on paper, my best. I earned $52,000 in 2002, and I was young and single and childless. (Now I'm old and single and childless, which is almost the same thing, but not quite.) I was living in Atlanta, having been moved there on a contract with my job which had been bought by an Atlanta-based company the year before.

Although I earned $52k (which seems like a staggering sum to me today), I spent about $60k. That's right: I not only burned through all that money, I ended up deep in debt.

Think Like A Rich Person: Tax Breaks

There have been several so-called financial planning advice books released over the years which promise to show you the inner workings of the rich person's mind. Sadly, these books tend to be high on the fluff and metaphysical stuff, and skimpy on the "nuts and bolts."

One "nuts and bolts" difference between rich people and the rest of us is that rich people make an effort to maximize their tax breaks. A surprising number of those of us in the working class simply take the standard deductions. Or worse, go to a tax prep place where who knows what they will do.

The point being, this behavior is reactive. You're reacting to something that has always happened. That's no way to get ahead. To get ahead, you have to think ahead. It's like a game of chess - if you only react to what your opponent just did, you'll never win. You have to step back from the board and see the game as a whole, and plan ahead.

What Money Blueprint Did Your Parents Give You?

If you spend much time reading personal finance blogs and books, you will see the phrase "money blueprint" pop up repeatedly. We learn about money the same way we learn about everything else - from our parents. And a lot of our less-than-ideal money-related behaviors can be traced back to the sometimes less-than-ideal lessons that our parents (usually accidentally) imparted to us as children.

It's understandable. Parents want their children to have the best. They DON'T want their children to worry about grown-up things like money. So they shield their children from talk about money; from the very idea that there might not be enough. What parent wants to confess their financial deprivation to their children? That's the opposite of what you want to do, as a parent.

The Problem With Extreme Couponing

In A Word: Liquidity

TLC has recently turned a one-off show into an ongoing series. And in the time between the first "Extreme Couponing" aired and this latest season, the problems with this behavior have really been brought home to me.

Last January, a family member died. And it turns out that he had been something of an extreme couponer and a hoarder of new items himself. I have been helping with the ongoing effort to clean out their home so that his wife can sell the house, and it has been a real eye-opening experience.

The problem with extreme couponing comes down to one word: liquidity.

Save Money: File Your Own Taxes

Filing taxes is a great example of a basic financial skill that should be taught in school. For most people, filing your taxes turns out to be a fairly simple proposition. But it certainly doesn't seem that way from the outside!

If the only tax-related stuff you get in the mail is a W2 (or several), then congratulations! You can file the 1040EZ, which is ridiculously simple. You can even do it over the phone! Just call the number, and the phone system will walk you through the process.

Incidentally, if you are expecting a refund, it may not take as long as you think. Gone are the days when it took up to two months for a refund to arrive. Most people report that they get a refund by Direct Deposit within a few days of filing their taxes. And the turnaround time is a week - two at the most - for a paper check.

7 Money-Saving Tips

How to Save Money

I just discovered a site HERE givings tips on the “7 Habits of Highly Frugal People.” While there’s nothing wrong with any of the tips per se, the tips are so general in nature that they might not be of as much use to someone who is truthfully trying to save money. When I’m balancing my metaphorical checkbook at the end of the month, the idea of synergy—as nice as it may sound—might not help me at the end of the day or make my numbers add up any better.


What are some good practical ways to save money?

Frugal Fight: Lean vs. Extra-Lean Ground Beef

This is a question which has frequently stumped me at the grocery store. Clearly, the less lean the ground beef is, the cheaper it is per pound. But if there is one thing I have learned in life, it's that appearances at the grocery store are often deceiving.

Calculating which one you should buy will require some number crunching. This is a situation where you will be glad if you have remembered to bring a calculator to the store. (If you have forgotten, but you have a cell phone, it probably has a calculator function buried in the Tools or Applications menu.)

Rent To Own: Evil!

Storefront "rent to own" stores may promise you a flashy lifestyle on the cheap, but most sources lump them in with payday loans and other predatory lending practices. If you are trying to decide whether or not you should get some rent to own furniture, or a rent to own computer, please DON'T.

How Does Rent To Own Work?
The entire RTO (rent to own) industry leverages our worst natures. We want the things we see other people have. Things that we ourselves cannot afford to buy. It's that dangerous intersection of jealousy and pride, and if you go RTO, it will cost you a fortune.

Most RTO stores do not require cash up front. This makes them doubly tempting to people who are broke. (And if you weren't broke, you wouldn't be thinking about using RTO anyway!) You just walk into the store, and walk out with a computer, or a dining room set, or whatever.