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Saturday, March 31, 2018

How Epicurean Principles Can Help You Transform Your Financial and Personal Life

Over the last few years, one of the most valuable areas of growing my understanding of personal finance has come from reading philosophy. As I discussed a few weeks ago:

Wikipedia provides a great basic definition: “Philosophy is the study of general and fundamental problems concerning matters such as existence, knowledge, values, reason, mind, and language.” Philosophy can be abstract, such as trying to figure out what is real and what isn’t or what it means to truly “know” something, or it can be more practical, asking questions like what the best way to live is.

I find both avenues very interesting and both are good parallels to personal finance. Understanding some of the big “whys” of the world often helps refine a lot of your internal perspectives and helps you define your internal values and principles, and the more practical elements of philosophy tend toward some degree of personal development, which I discussed earlier as an interesting area in its own right. Both avenues provide a lot of tools for thinking through challenging problems in life.

Honestly, philosophy (in a broad sense) is probably my favorite subject for reading these days. I find myself very attracted to books on philosophy and associated fields and sub-fields. I’ve jokingly suggested to my wife that this is something of a midlife crisis as I’m trying to figure out why I’m here and what the best life is.

To summarize, quite a lot of philosophy is focused on the question of how to live the best life, or what the “best life” even is, which is a question strongly tied to personal finance.

The first school of philosophical thought that really attracted me in terms of how to use it for personal success was Stoicism, the applications of which I discussed in an earlier article, How Stoicism’s Principles Can Help You Transform Your Financial Life. I found – and still find – that Stoicism is incredibly helpful in terms of stepping back from your emotional responses to things and carefully considering your actions.

However, my philosophical journey didn’t end there, and today I want to discuss Epicureanism. Epicureanism is so named because it was largely founded by a single Greek philosopher, Epicurus.

In simplest terms, the philosophy of Epicureanism centers around the idea of pleasure as the greatest good. One should seek a life of pleasure. However, what sets Epicureanism apart is its idea on what pleasure really is.

Epicurus argued that pleasure is found by living modestly, curbing one’s desires, enjoying simple pleasures in the moment without gluttony, and reflecting on and understanding the world. Doing this leads to tranquility and freedom from fear (and, to some extent, less physical pain) and that those factors together are a huge source for personal happiness. Epicurus considered this state to be the highest and best form of happiness and pleasure.

Let’s break these ideas down a little bit and see how they apply to modern life and personal finance.

Great Happiness Comes from Simple Pleasures with Minimal Cost

Epicureanism nudges people toward the idea that the greatest happiness is found in pleasures that have a minimal cost associated with them. When you pay a high cost to enjoy a particular pleasure, then that pleasure is inherently dampened by what you’re paying to enjoy that cost. This obviously has huge implications for how modern people spend their money.

Consider for a moment that a pleasurable activity or item is actually reduced in pleasure by having a significant cost associated with it. For example, let’s say you plan an amazing trip to Disney World with your family, but the bill means that you’re going to have to work a lot of hours to pay for that trip. While the trip to Disney World might be wonderful, you have to subtract from that joy the steep personal cost you’re paying for it – a lot of hours at work. On the other hand, you might enjoy a very low cost weekend camping trip somewhere that would require very little additional expense beyond what it would cost to just sit at home.

With the Disney World trip, if you don’t consider the cost of it, it might be substantially more fun than the camping trip. However, if you subtract out the immense amount of work you have to put in to be able to pay for the Disney World trip and subtract the unpleasantness of all of that time spent working on things you didn’t necessarily choose for yourself, the end result is rather little pleasure. On the other hand, that local camping trip is in itself quite enjoyable and doesn’t have nearly the downside in terms of hours of work associated with it.

For an Epicurean, the better option is the simple camping trip. It provides pleasure with much less cost. The Disney World trip may indeed provide more pleasure in itself, but it comes with a larger batch of unpleasantness – working on tasks that you didn’t choose for yourself.

(It’s important to note that work isn’t inherently unpleasant, particularly if you’re working on things that you choose for yourself; it becomes unpleasant when you can’t decide when and how much to work on your own terms and when you’re doing tasks you don’t want to do, which is a state most of us find ourselves in when working, at least some of the time.)

So, on the whole, Epicureanism points us to find pleasurable things with minimal cost, with the best things being highly pleasurable things with no cost.

It is worth noting that, while cost is often financial in nature, it can also be measured in terms of a health cost and a time cost (or opportunity cost). Epicureans prefer simple pleasures with absolutely minimal cost (obviously while seeking the best pleasures with very low cost) compared to somewhat bigger pleasures with significant cost.

So, what does that do for a person’s finances? For one, it strongly cuts into non-essential spending. An Epicurean seeks pleasure at minimal cost, so if you’re actually working toward that, your non-essential spending should drop through the floor. What does one do with that money? Well, Epicureanism offers some answers for that, too, but we’ll get to that in a bit.

As noted earlier, Epicurus offers some specific tactics for achieving a lifestyle focused heavily on achieving low cost pleasure.

Tactic #1 – Living Modestly

The main tactic that Epicurus offers for achieving a life centered around pleasure with minimal pain is to live a modest life. A modest life is one in which you cut out a lot of very minor pleasures that are associated with inflated costs, which really don’t add up to much pleasure at all, as described above.

In other words, for things that offer you relatively little direct pleasure, minimize the cost as much as you possibly can. Do you get direct pleasure from your laundry soap? Then go as cheap as possible. Repeat that for virtually everything in your life that you spend money on. If it doesn’t directly bring you pleasure, either cut the cost down to the minimum or cut it out entirely.

In my eyes, this is basic frugality strategy. If it’s not something that’s important to you, you should either avoid spending money or time or energy on it at all or you should strive to minimize the amount of time or money or energy you invest in it. Why toss perfectly good resources after things you don’t really care that much about?

The thing is, it is often hard to distinguish what really matters to you and the mere perception that something is “better” or “desirable,” which is where the second tactic comes in.

Tactic #2 – Curbing One’s Desires

The first tactic, living modestly by minimizing resources invested in things you don’t care about or care little about, is a fantastic strategy, but it comes with the assumption that you’re very clear on what things you really care about and what things are actually not that important to you. The catch, of course, is that for many people, the line between what really matters to you and what doesn’t actually matter but seems to matter isn’t very clear.

A great deal of our modern culture is centered around inserting and propping up desires in our life. Marketing is designed to prey on the core things we all want – health, good relationships, sex, joy, and so on – and tie it to products that we spend our hard-earned money on. Over time, it creates an artificial sense of want – we want a particular item not because of what the item actually delivers, but because we perceive it as bringing us health, good relationships, sex, joy, and so on.

A big part of a modern practice of Epicureanism, then, comes down to cutting through all of those mixed messages, figuring out our true desires, and curbing extra desires.

For example, I desire good friendships, and because of that, I might desire a home where I can have friends over all the time and they’re comfortable and happy. That can often twist itself into having a much bigger home than I need with lots of flashy home upgrades to make my home feel more hospitable to guests and impress them with some virtue that we believe we’re signaling. The truth, however, is that most of us will happily meet friends almost anywhere that’s reasonably clean (and sometimes not even then, honestly). If you want to have good friendships, be a good person; if you want to have friends over, just keep things reasonably clean and presentable. You can do that without a McMansion.

This touches a bit on another issue: virtue signaling. Quite often, when we buy things that we’re going to show to the outside world, part of our reason for doing that is to signal certain virtues to others. We’re successful or we’re artistic or we’re smart or we’re tech-y or whatever. The thing is, most of those signals are completely missed by others – we think they notice far more than they do about us. This is called the “spotlight effect” and it happens constantly. For another, positive impressions are usually borne by you, not by your stuff. Be clean, be friendly, be kind, and listen, and you’ll find that it’s easy to build relationships and give a good impression in social situations, and those factors don’t really cost you anything. Your words and actions will form far more of their impression of you than anything else.

The key thing here is to figure out what things you actually want, what things are just fleeting impulses dropped on your lap by marketing and media and social influences, and what things are just stand-ins for a deeper desire. That takes time and reflection. One good way to handle this is to simply adopt the 30 day rule, which simply states that when you want something that’s not 100% essential, you give it thirty days before buying it, and you reflect on it a little bit during and after those thirty days. Almost always, you’ll find that the desire either fades away or you realize that it’s actually a desire for something deeper like friendship or love or knowledge, things that aren’t handed over by buying stuff.

Tactic #3 – Enjoying Simple Pleasures Without Gluttony

I appreciate a lot of simple pleasures, as do many of us. As I write this, I’m sipping on a cup of cold brew black coffee, made in my refrigerator from ground beans, just the way I like it. Each sip is a little treat. I love things like curling up with a good book for an hour or two of uninterrupted reading, the taste of sharp cheese, the smell of a forest not too long after a rainfall, the music of The Avett Brothers… I could list hundreds and hundreds of little simple pleasures that I enjoy.

The best simple pleasures are in line with the overall idea of Epicureanism – they come with minimal cost or, ideally, no cost at all. The coffee is made about as inexpensively as can be – it’s literally coffee grounds soaked in water for most of a day, then strained. I’m always reading books from the library. I listen to a lot of music streamed at a minimal cost. A little bit of food is always inexpensive.

The catch, of course, is that if you gorge on a particular pleasure, the pleasure of it starts to fade and it begins to feel ordinary. My first taste of coffee in the morning is a real pleasure, but if I gulp it all day, it ceases to offer much additional pleasure. That first nibble or two of cheese is amazing, but if I eat several ounces of it… it’s not as good any more. I can curl up with a book all afternoon, but if I don’t do something physical, I feel like a lazy slug. The wet forest is a marvel, but if I were there for hours and hours and visited it all the time, it would feel completely plain.

The key to simple pleasures, I’ve found, is to spread them out and alternate them. Don’t go to the coffee shop every single day or even several times a week or else it will feel completely ordinary. Don’t fill every ounce of hobby time with the same hobby or it will begin to feel dull. Don’t gorge yourself on delicious food or it won’t be as delicious or special any more (plus there’s a health cost). Mix up and spread out your simple pleasures; have a wide palette of them. Have several low cost leisure activities that you love. Spend time with lots of different friends in lots of different permutations doing lots of different things. Explore lots of different places. Sample (but don’t gorge on) lots of different foods, and enjoy small portions of your favorites on an irregular basis.

Doing this has a lot of benefits. It never allows the pleasure to become ordinary and expected; it remains a pleasure. It also prevents the downsides of overconsumption, which can be immense (obesity, alcoholism, dullness, etc.).

Tactic #4 – Reflecting On and Understanding the World

For Epicurus, a big part of enjoying simple pleasures in life is doing them without fear and worry, and one of his primary avenues for eliminating fear and worry is to reflect on, learn about, and understand the world around you. He felt that a life that involved directly addressing, learning about, and reflecting on the things that concerned you made that fear and worry fade away, enabling you to enjoy simple pleasures in life without that mild taint of worry in your mind.

For me, I find that there are three big tactics I can use to reflect on, learn about, and understand the world.

First, I practice lifelong learning. Very few days go by where I don’t spend at least a good hour reading a book about something that’s on my mind, and I often find that learning about that subject eliminates a lot of the fear I have about it. Sure, sometimes leads to new questions that might concern me, but then there’s a new avenue for learning. I used to be worried and stressed quite a lot about personal finance, for example, but now none of it really worries me at all as I have learned and applied good practices. I do this with all kinds of subjects, practical and otherwise – for example, I’ve spent a lot of time learning about subjects like AI and gene editing and politics, simply because those subjects really concerned me, and learning about them alleviated a lot of my concerns.

Second, I spend time meditating every day. For me, this is a quiet moment to still my mind from the hectic pace of my life. Typically, the voice in my head is always chattering and it often ends up flying off in unrelated directions (breaking my concentration and focus on the moment) and going down negative dead ends which can contribute to a sense of fear and worry. Meditation really helps me clear all of that up, and it definitely helps with my ability to focus in the moment. I just use a really simple mindful meditation practice where I either focus on my breathing or on a single word or phrase, and when other thoughts drift in, I notice them and consciously redirect either to my breath or to the word or phrase. That’s it. I do this for about fifteen minutes per session, one or two sessions a day. (At first, my sessions were much shorter, because it was actually quite hard to do this for very long.) I’ve found that this practice has calmed many of the worries of my wandering mind and helped me to focus on the moment much better.

Finally, I write in a journal (almost) every day. I usually just write down a couple of brief highlights of the day, a few things I’m grateful for, and some reflections on the things I’m trying to focus on. I’ll usually also do a single thorough “after action review,” which means that I write about a single situation in my recent life that’s troubled me, what exactly I did during that situation, what I ideally should have done during that situation, what the difference between the ideal and the reality is, and then what that difference boils down to in terms of what I can be doing better going forward. It’s pretty straightforward and takes about fifteen minutes or so in total; I often do some of it in the evening (highlights of the day, reflections on focus points) and some in the morning (after action review; things I’m grateful for; reminders of my focus points). For me, this is an opportunity to reflect on my life and the things that are worrying me the most, and the practice brings a lot of clarity which often washes away that worry.

Learning about the world followed by reflection on what I’ve learned and on my own inner self goes a very long way toward quelling most of the idle worry, fear, and emotional pain that I used to carry around. Quite honestly, eliminating those feelings (and improving my focus and gratitude) have been tremendously helpful in terms of keeping my spending under control. These things are practices in line with Epicureanism that I was doing before I ever learned about Epicurus, because the benefits are real beyond his philosophy.

Tactic #5 – Minimizing and Eliminating Pain and Fear

A final area of interest is the Epicurean focus on minimizing and eliminating areas of fear and pain, which makes it much easier to enjoy the simple pleasures of life and minimize the amount of money, time, and energy spent dealing with pain and fear. I find that there are a lot of things a person can do to minimize and eliminate pain and fear in life.

One strategy is to live a healthy life. This eliminates a lot of pain and discomfort and also alleviates a great deal of fear. Obviously, no one can be perfectly healthy, but we can all lead a basic healthy life by eating a reasonably healthy diet and doing at least some exercise and moving around, such as going on walks.

Another strategy is to maintain an emergency fund, which protects you from worries such as what to do if your car doesn’t start or what to do if you lose your job. Cash in a savings account really takes the edge off many of life’s fears about unexpected events.

For bigger unexpected events, insurance can help. Life insurance can protect you against the untimely demise of a family member, for example. Auto insurance can protect you against the huge cost of having to unexpectedly replace a car. Insurance should prepare you for the big expenses that have some notable chance of happening that you can’t afford out of pocket, bringing the cost down to something you can afford with your budgetary breathing room and emergency fund.

Another useful tool is retirement savings. Simply putting aside money for retirement alleviates a big general worry about your golden years. You’re no longer straddled with thoughts about what you’re ever going to do when you’re 70 and aren’t able to keep up as well any more and don’t have any money, because you will have money.

Where does the money for these things come from? If you’re following Epicureanism as a whole, it comes from focusing on simpler pleasures in life. The natural benefit of focusing on simple pleasures with little cost is that you have more money to spread around.

Final Thoughts

If you found these ideas intriguing, there are a couple of books on Epicurean topics that I highly recommend.

First, you can read the writings of Epicurus himself, collected in The Art of Happiness. The writings we still have from Epicurus today that weren’t lost to the ages are a little fragmented, but this volume organizes them into a very cohesive collection that really spells out the philosophy well.

For a more modern perspective, Daniel Klein’s Travels with Epicurus does a wonderful job of putting a modern spin on Epicureanism, looking at it through the perspective of visiting people and communities living today on the Greek island of Hydra, which Klein visits after a troubling trip to the dentist and the realization that he’s facing a batch of painful and expensive (and a bit humiliating) dental work. It’s a great modern spin on the ideas of Epicurus.

In the tradition of Epicureanism, you’ll find the most pleasure from these books by checking them out from the local library.

Personally, I have found a lot to value in the ideas of Epicurus. I find that the overall philosophy – putting high value on simple pleasures with minimal cost, minimizing life’s worries – is strongly in line with how I’ve come to live my life. Thousands of years ago, Epicurus was able to take those elements and see the inherent links between them and how they form a nice framework for living, one that still rings true today.

The post How Epicurean Principles Can Help You Transform Your Financial and Personal Life appeared first on The Simple Dollar.

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Friday, March 30, 2018

Eggs on Sale? Four Ways to Take Advantage

During the week before Easter, many stores will put eggs on deep discount, selling them for as little as $0.80 per dozen. After all, many families pick up a bunch of eggs for the Easter weekend with the intent of coloring and decorating them; thus, discounted eggs are a great “loss leader” that stores advertise to get you in the door.

Whenever I see an item on such deep discount, the question I ask myself is “how can I take advantage of this?” In other words, what could I do with a large quantity of eggs to really get the most out of this sale?

Here are some of my answers to that question.

Make-Ahead Breakfast Burritos, Quesadillas, or Egg Sandwiches

There are few times during the year that are better for loading up your freezer with individually-wrapped savory breakfast items than this week because the cost of eggs is so low. If you can buy a dozen eggs for less than a dollar, then the cost of making a big batch of breakfast burritos, egg sandwiches, or quesadillas becomes really, really cheap.

It’s actually quite easy to do this. A breakfast burrito is basically just scrambled or fried eggs and any other ingredients you like (sausage, bacon, onions, peppers, hot sauce, cheese, etc.) wrapped in a tortilla. A quesadilla is more or less the same thing, except inside of a flattened folded tortilla (I usually cook these for a little bit in a sandwich press before wrapping them for freezing). A breakfast sandwich is usually a fried egg with toppings inside of a muffin or biscuit or slices of toast. They’re all more or less constructed out of the same ingredients, which you can select according to your taste preferences.

I make these items quite regularly and store them in my freezer for future use in large quantities. Here are some tips for making this work.

First of all, cool your ingredients to room temperature and pat them dry before using them. Why do this? If you don’t, you’re going to wind up with a ton of extra moisture in your burrito/sandwich/quesadilla, which will make them soggy when you reheat them. So, if you’re making breakfast sandwiches or quesadillas (if you’re using fried eggs in the quesadillas), fry a bunch of eggs and let the eggs cool before assembling sandwiches, and pat them dry before assembly. I often stick them in the fridge on a plate while I’m getting other things ready, just to cool them off.

Second, if you’re making burritos, use large tortillas or else you’ll have super-tiny burritos or a giant mess. Use large tortillas so that you can put an ample amount of filling in there and still fold them thoroughly without splitting or leakage. With quesadillas, any size works.

Finally, wrap the sandwiches/quesadillas/burritos individually in aluminum foil right after assembly, and then freeze them in a single layer on a cookie sheet. First of all, the individual wrapping ensures that minimal additional moisture is lost to the outside, which can cause the outside of the tortilla or sandwich to get dampened by steam, which can cause freezer burn or super-crunchy or super-damp tortillas or bread when you cook them. Freezing them on a single layer on a cookie sheet causes them to freeze quickly, minimizing the amount of moisture that can soak into the tortilla or bread, reducing dampness upon reheating. When they’ve frozen, transfer the sandwiches/quesadillas/burritos to gallon Ziploc freezer bags for long term storage.

This is my preferred breakfast burrito recipe, except that mine are typically vegetarian with something substituted for the bulk sausage, like mushrooms or black beans depending on my mood. For quesadillas, I usually follow something close to this recipe. For breakfast sandwiches, I make these, with some being vegetarian-friendly by simply using two eggs instead of a single egg and meat. With all of them, I use the tips above to make them turn out really well.

Pickled Eggs

Each Easter, I like to make a giant jar of pickled eggs that’ll last for weeks in the fridge. I usually use a gallon glass jar and put three or four dozen eggs in there, then eat them slowly as a snack over the subsequent weeks. The acidity of the vinegar pickles the eggs and keeps them safe and the other ingredients imbue flavor.

All I do is hard-boil four dozen eggs, allow them to cool to room temperature, then peel them and put them aside in a bowl. At this point, I boil 12 cups of white vinegar and 4 cups of water together with a cup or so of peppercorns, a tablespoon of salt, a third of a cup of sugar, a bay leaf, five tablespoons of pickling spices, and a sliced onion (big slices). I let this simmer for a few minutes, then I let it cool until it’s cool enough to handle without worrying about scalding myself.

I then toss several garlic cloves in the jar, put a layer of eggs on the bottom, put some of the onions on top of the eggs, and then keep alternating between the onions and eggs. When the jar is mostly full, I dump in the liquid from the boil to fill the jar. If I need more, I mix three cups of vinegar and one cup of water and add it on top. I close up the jar, put it in the fridge, and don’t touch it for a week, and then after that, I have wonderful pickled eggs to eat for a long while!

Make-Ahead Frittata Muffins

You can most certainly make full-sized frittatas, quiches, and breakfast casseroles. They work great for this – just fill up a pan with your favorite recipe, let it cool, make sure there’s no excess moisture on the surface by blotting it with a paper towel, and then freeze it right in that pan. It can easily be reheated with just enough oven time to heat it up any time you need a weekend breakfast.

However, what I really like to do is make frittata muffins, which are kind of all-in-one breakfast items that are individually sized and easy to freeze. I usually just follow this recipe and then, when they’re all done, I’ll wrap them individually in aluminum foil, freeze them in a single layer on a cookie sheet in the freezer, then fill up gallon-sized freezer bags or freezer containers with them.

Again, as with the sandwiches above, just make sure everything is as dry as possible before you freeze it, because the secret to freezing things successfully is to recognize that there’s more moisture there than you think and if you allow it to be too moist, you’ll end up with freezer burn and lots of sogginess when you thaw it and cook it.

Breakfast or Snack Bars

Yet another idea is to simply make a big batch of breakfast or snack bars, like these. They don’t use a ton of eggs, but they’re so different than the savory items above that they’re quite nice to have around, plus they freeze really well in a large freezer container. Just finish off the recipe, enjoy a bar or two for yourself, then cut up the rest and stack them in your preferred freezer container. You can thaw the whole container later on and you’ll have convenient breakfasts for the whole family for several days.

The nice thing with this recipe is that you can literally use any berries available to you and the recipe turns out great, so if you have a source for raspberries or blackberries or huckleberries or blueberries or lingonberries or cherries or strawberries, use them! Just use what you can easily pick, or what you can get for a low price at the store or the market.

Final Thoughts

If you follow these recipes and strategies, you can fill up your freezer with a ton of savory and sweet items that will work well for breakfasts (and for other meals – our family eats “breakfast” foods for dinner fairly often) for a long, long time.

The number one key for making food ahead, though, is to make sure it’s dry. Let the ingredients cool to room temperature before assembling the items and freezing them. You’ll be so glad you did!

Plus, there are few things cheaper than grabbing a quick breakfast out of the freezer and warming it up while you fill up your to-go cup with coffee at home before you leave. The total cost of a breakfast and a good cup of coffee in this situation is just a dollar or two, compared to the $8-$10 you might drop for the same thing at the coffee shop. Preparing a bunch of these items when eggs are on sale makes it even cheaper.

Good luck!

The post Eggs on Sale? Four Ways to Take Advantage appeared first on The Simple Dollar.

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Thursday, March 29, 2018

How Much Time Do Frugal Strategies Take? Five Time-Tested Techniques

One of the most common complaints I hear about frugal strategies is that they take so much time compared to other options. I don’t really find this to be the case, mostly because this line of thinking ignores the fact that non-frugal strategies also take time and the time difference often ends up being very small for the amount of money you save.

To illustrate this point, over the last several weeks, I’ve actually done a bunch of common tasks in a “frugal” fashion and a “non-frugal” fashion, timed how long each technique took me, and calculated the cost. This helped me get an estimate as to how much money I saved per hour of effort using the frugal techniques. In many cases, I was able to measure multiple times, so I use an average when I can in this post.

So, let’s dig in to a few of these strategies.

Canned Beans versus Dried Beans

Many of my favorite dishes contain some variety of beans in them – red beans, kidney beans, black beans, navy beans… the list goes on and on. What I like to do is plan two or three meals for a week that use the same type of bean, then buy a pound of dry beans and cook them all at once with relatively minimal spicing, then put them all in a container in the fridge to use throughout the week.

The technique for this is fairly straightforward. I dump a full pound bag of the beans in a slow cooker to soak overnight with no heat, just covering them with enough water to cover all of the beans and most of my index finger’s length in extra water. This takes about 30 seconds. In the morning, I strain off all of that liquid and then replace it with fresh liquid, at which point I turn the slow cooker on “low” and let the beans cook for some amount of time. This takes about 90 seconds, on average. Depending on what I’m doing, I’ll add a few spices and seasonings or maybe some diced onions, diced green peppers, or minced garlic. This adds another minute or so for the spices (finding them, adding an appropriate amount, putting them back in the spice rack). I won’t count the time for the added vegetables because most canned beans don’t include them anyway – it’s part of the meal prep, really. There’s also another minute or so that comes from loading the slow cooker crock and the lid and the strainer in the dishwasher and then unloading it and putting it away, and that takes about a minute all told. So, all told, cooking a pound of dried beans takes me about four minutes.

A pound of dried beans that are fully cooked is roughly equal to the contents of four cans of beans one might buy at the store. It takes me about five seconds to open a can, plus another ten seconds to get the cans out and dispose of them afterwards. So, all told, using canned beans takes about 30 seconds.

I actually measured these things two times each, and I’ll conclude that the extra time spent cooking a pound of dry beans versus opening four cans of beans is about three and a half minutes.

I typically buy dry beans in bulk and a 20 pound bag of dried black beans can be found for about $15. (If you buy them a pound at a time, you’ll be spending about $1.50 at most stores.) Most stores will sell you a can of black beans for $0.75 to $1 – we’ll go with $0.85 on average – and you need four of them to equal the total cooked volume of a pound of dried beans, so that’s $3.40.

If you’re comparing a single pound bag of dried beans to four cans of cooked beans, you’re saving $1.90 for three and a half minutes of effort. Is that worth it? It’s your call, really. If you want that calculated out to an hourly rate of money saved per hour of effort, that’s $32.57 an hour and you don’t have to pay taxes on it (it’s savings rather than income).

If you’re comparing a 20 pound bulk bag of dried beans to 80 cans of cooked beans (with 20 times the effort), you’re saving $53 for 70 minutes of effort, assuming you’re cooking the dried beans a pound at a time. Is that worth it? Well, again, if you want the hourly rate, it’s about $45.43 per hour of effort and, again, that’s savings rather than income so you don’t have to pay taxes on it.

Now, I’ll be the first to admit with this strategy – and with every other one listed here – that the time invested in doing it the “frugal” way is longer at first, and that the time drops as you become more familiar with the technique. For me, however, the fact that it saves so much for the time invested and the fact that the taste of dried beans cooked at home is so much better makes this one an automatic for me. I only have canned beans around to use in a pinch, when something caused me to not have enough freshly cooked beans.

Minute (or “Instant”) Rice versus Dried Rice

When I’m cooking rice, I do much the same thing as described above. I cook a bunch of it in a rice cooker, put it in a big container in the fridge, and use it throughout the week. That’s hard to beat – it’s actually faster than the equivalent amount of instant rice if you do it this way.

However, let’s compare the situation where you don’t have that rice cooker that you invested in initially. In that case, you’re likely stuck cooking rice in individual batches in the microwave or on the stovetop.

In those cases, the recipes are basically the same. Put a certain amount of water into a pot, maybe a bit of salt and/or butter, bring it to a boil, add a certain amount of rice, stir, then let it simmer for a while, covered. The difference here is that you have to wait for a lot longer with dry rice versus instant rice, because the instant rice is essentially already cooked and then dehydrated. With most instant rices, you usually let it simmer for about five minutes, and then remove from heat and let it sit for five more minutes. With store-bought rice, you let it simmer for about 18 minutes, and then let it sit for five minutes.

So, for a small batch of rice, the only difference between instant rice and dry rice is about thirteen minutes of simmering. Don’t get me wrong – that can make a difference sometimes – but usually you’re spending that time preparing things to go with the rice.

You can get a pound of store brand instant white rice for roughly $1.35 – it usually comes in 28 ounce boxes for about $2.50. You can get a pound of dry white rice for about $0.80 (buying it for a single pound) or as low as $0.40 (buying it in 20 pound bulk).

Assuming you’re cooking a couple of cups of dry rice at a time, you’re going to get about three batches per dry pound, which means that you’re investing about 40 total minutes of simmering time (in which you just have a pot simmering on the stovetop, so you can be doing other things) to save somewhere between $0.50 to $1. I think the dry rice (not the instant) tastes better, too, but that’s a personal factor. (The exact numbers change if you use other types of rice.)

So, here’s the scoop with rice: the fastest and cheapest method is to just cook it in a rice cooker in bulk. There’s just no way to beat that in terms of efficiency – I can cook multiple pounds at once and just leave it in the fridge. However, it requires a rice cooker to do this. If you eat rice very often at all, I suggest hitting the local Goodwill or other secondhand store and picking up a rice cooker, as it’ll be worth your time.

If you don’t have a rice cooker, use instant rice only if you are extremely constrained in terms of meal prep time. If you often find yourself trying to get dinner on the table in fifteen minutes and rarely plan ahead enough to cook the rice in the morning as you’re getting ready for the day and leave it in the fridge for the evening, then go for instant rice. Otherwise, the only disadvantage of uncooked dry rice is some additional simmering time, which you can use getting other elements of the meal ready, and it’s cheaper (and, in my opinion, tastes better).

Homemade Laundry Soap versus Store-Bought Soap/Detergent

As I’ve shared many times, I like to use homemade laundry soap. I originally described it here, but since then, my recipe has evolved. Today, I just put 2 cups of washing soda, 2 cups of borax, and 2 cups of soap flakes in a Gladware container, shake it up for a few seconds, then toss a measuring tablespoon in there. Each load I do, I use a tablespoon of this mix. When the container’s really low, I just make a new batch. This mix handles about 100 loads of laundry. The cost per load for this mix is just a hair over $0.04, though the price can get a bit lower if you just buy a super-cheap bar of soap and grate it yourself in a box grater instead of buying soap flakes.

The time investment in assembling this mix, beyond the time invested in buying the ingredients (which, since you’re using them so slowly, makes re-buying less frequent than just buying straight laundry soap or detergent), is about two minutes. I probably spend a minute measuring the contents and a minute shaking the container. This is enough for 100 loads.

Comparing this to Wal-Mart prices (as a common point of reference), one can find powdered laundry soaps for about $0.13 per load (and up), as well as liquid detergents that get as low as the $0.17 per load range.

Over the course of 100 loads, my homemade kind saves about $0.09 per load over store-bought powdered soap, so the savings is about $9 for about two minutes of effort. (We do a load or two every day, so this takes us about three months to use up.) The amount of money saved per hour (basically, making this thirty times, which would be over the course of eight years or so) is $270. If you’re comparing this powder to the liquid form, you’re saving about $0.13 per load, so the savings is about $13 for about two minutes of effort, which is an even higher hourly rate (again, spread in two minute bits across several years).

For me, the tiny amount of time needed to mix up my own soap saves so much money over the next three months that it’s well worth it.

Bulk Dish Soap versus Individual Containers

Another strategy we like to use is to buy a giant jug of dish soap and use it to regularly refill a regular-sized container of dish soap that we actually use when doing dishes. We do a number of our dishes by hand and we’ve never really found a good, reliable, simple homemade dish soap, so our savings here comes from buying store brand soap in bulk and refilling from that bulk container.

I prefer to buy the Member’s Mark dish soap at the cost of $4.98 per gallon ($0.04 per ounce), or the less harsh version at a cost of $6.98 per 100 ounces ($0.07 per ounce). These come in big jugs that aren’t very handy to use at the sink, so you have to refill a smaller bottle.

Buying this soap in a reasonably-sized bottle (40 ounces) costs $2.97 (about $0.075 per ounce).

Let’s assume it takes me about a minute to refill the smaller container. I’ll refill it three times from the big bulk container, so it’ll use about three minutes. From the smaller bulk container, I’ll fill it two and a half times, so it’ll use about two and a half minutes.

Using the big bulk container, I save $4.48 for three minutes of additional effort, which is well worth it. With the smaller bulk container, I save about $0.50 for two and a half minutes of effort, which may or may not be worth it (it adds up to $12 an hour in savings).

In short, if you get a good deal on the biggest bulk soap out there and get the cost per ounce down around $0.04 or less, then it’s worth your time to refill from a big bulk bottle. If not, you’re probably not saving much for your time investment.

Pre-Chopped Vegetables versus Chopping Them Yourself

One of my favorite tactics when preparing meals at home is to buy bags of flash-frozen vegetables and use them as a shortcut for the time spent chopping some common fresh vegetables. My local grocery store, Fareway, sells very inexpensive frozen bags of chopped onions and green peppers which work great in all kinds of things, for example, and I often use their frozen bags of broccoli, corn, and mixed vegetables for various things.

It’s not too hard to recognize that the flash frozen bags are more expensive than the equivalent amount of fresh vegetables. The bags of frozen vegetables usually clock in at around $1.40, while the equivalent amount of fresh vegetables right out of the produce section can vary, but is usually around $0.75 to $1. It’s a bit cheaper to buy the fresh vegetables, in other words.

The catch, of course, is time. Recently, I tried measuring my own chopping time to see how long it would take me to approximate the contents of a frozen bag of vegetables and what I found is that, regardless of what was in the bag, it would take me about four minutes to match it, including the time involved in getting out the knife and cutting board, honing the knife a little if needed, chopping up the vegetable in question, and putting everything away or in the dishwasher.

So, I’m saving around $0.50 to save four minutes of effort. Over the course of an hour, that adds up to about $7.50 in savings. Honestly, for me, it’s not worth it.

Thus, the vast majority of the time, I use the store brand flash frozen vegetables, and save my chopping for the vegetables that I can’t get in that form. It doesn’t save me enough money to chop things myself when I can get them in frozen form. The thing to remember is that cooking at home, even with the frozen vegetables, is light years cheaper than eating out, no matter where you eat.

Final Thoughts

These strategies, and many more like them, end up saving quite a bit of money for the time invested. If you calculate it out to an hourly rate, the savings is usually pretty impressive, especially when you consider it’s money directly in your pocket without taxation.

The catch, of course, is that these strategies do eat into the relatively limited amount of time that we have when we’re not sleeping or working. How much is that time really worth to you? For some people who are on a very tight schedule, that time can be really, really valuable.

In general, I only commit to frugal strategies when they also save time or when they’re truly big wins, above $10 per hour of time saved if I enjoy doing it and much higher than that if I don’t. If something doesn’t cost me any time, I’ll almost always do it the cheapest way, like cooking rice in a rice cooker and keeping it in the fridge. If it costs me some time, it better be saving me a lot for that time or doing it better have some other benefits to it (like way better food or an activity I enjoy or something I can do with my kids).

The thing is, there are a lot of frugal strategies that pass this basic test. For me, all of the strategies listed above pass this test almost all of the time – using dry rice over instant rice, using dry beans over canned beans, making my own laundry soap, and so on. There are many others that are big wins, too, like air sealing my home to close drafts (something that costs time, but only once, and saves money forever), using LED light bulbs (has a high initial cost, but saves time and money over the long run), buying almost everything in store brand form (no extra time, pure savings), and so on.

In my eyes, resisting even an attempt at those kinds of strategies is simply a resistance to change in general. If you find yourself resisting a strategy that seems to have more upside than downside, it’s worth your time to think about why you’re resisting it and whether those reasons really make sense. You may have meaningful reasons, but often, the reasons that people oppose change is simply that – an opposition to change for any reason.

The lesson of all of this is simple: if a frugal change has little time cost associated with it, or the time cost is well rewarded, it rarely hurts to give it a shot. The ones that you should consider more carefully are the ones with extensive time commitments that don’t offer a huge return or have some other challenges involved with them. Thankfully, common sense usually points out most of those unfruitful strategies.

Good luck.

The post How Much Time Do Frugal Strategies Take? Five Time-Tested Techniques appeared first on The Simple Dollar.

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Wednesday, March 28, 2018

Did I Do My Best Today?

I’m currently midway through the intriguing book Triggers: Creating Behavior That Lasts and Becoming the Person You Want to Be by Marshall Goldsmith, and I’ve already adopted a tactic from it that’s shown surprising dividends in my life that I wanted to share with you. I’ve actually found a lot of interesting things in Triggers that I intend to discuss at length in the future, but this one tactic is really clicking with me and I wanted to share it as soon as possible.

It’s actually really simple. Think of an area in your life where you’d really like to improve. Many of the areas of improvement are common ones that many of us have – maybe you want to spend less money or eat healthier or get more exercise or become a lifelong learner for your career, or it could be something else entirely. Choose one of them or two of them or whatever works for you, but it’s probably best to start with a small number.

Let’s say your decision is to simply spend less money, ideally as little as possible to still have a joyous life.

At the start of each day, just tell yourself this:

Today, I will do my best to spend as little as possible.

You can write it down (I recommend this, because I find a ton of value in writing things down), or you can read it a few times, or you can even think of it over and over in your head for a couple of minutes like a meditation phrase. Just focus intensely on that phrase for a while.

Then, at the end of each day, sit down and answer this question:

Did I do my best at spending as little as possible?

This isn’t about identifying a specific metric of success, but instead asks whether or not you put forth effort on that behavior you want to implement. For example, some days you might be able to emphatically say “yes” to this even when spending a fair amount of money in a given day if it was a grocery day and you kept your spending super lean at the store.

When you think about that question, you’ll probably find that it’s a bit difficult to give a strong, emphatic yes, but a strong, emphatic no is also hard. It’s usually a mild “yes” or a mild “no” or something in the middle, and that’s okay.

Rather than simply making your answer a “yes” or “no,” answer it in a different way. Score yourself on a scale of 1 to 10, where 1 is a complete failure and 10 is your ideal. Think about where you’d line up on that scale and give yourself a number.

In reality, this is a way of simply thinking about your effort during the day and focusing that thought down to a single number.

Personally, I find that this question makes me want to write a bit of reflection as part of a daily journal entry. I want to explain my thinking when it comes to that answer, because that question just draws it out of me.

Now, at first, I didn’t think this was all that great of an idea. I honestly only tried it because the book practically begged me to give it a shot, and for the first day or two, it didn’t really click at all for me. I bought a Kindle book I probably didn’t need and I got a fountain drink at a restaurant when water would have been just fine, for example.

On the third day, though, when I woke up and thought about my goal of doing my best in that area, it really clicked. The idea stuck in my mind all day and nudged my behavior constantly. I found myself semi-consciously moving away from a few different spending opportunities, convincing myself I could get it later or find it for a lot less or that I didn’t really need it, and I spent very little money that day at all.

On an ordinary day, I probably would have drained some of my monthly hobby spending and probably not spent optimally at the grocery store, but because I had that thought running through my head all day long, I didn’t. I held off.

It wasn’t because I set some sharp goal for myself, but because I simply committed to doing my best to improve my spending habits.

The next day, I bought a board game that I probably should have been more patient with. It ate up a healthy portion of my monthly hobby budget. The thing is, the voice in my head saying, “WAIT!” was shouting extra loud, but I fought to ignore it.

At the end of the day, I asked myself that question. Did I do my best at spending as little as possible? I couldn’t say yes – in fact, it was an emphatic “no,” and my explanation of it seemed really week. I didn’t need that game, especially not at that price. I might have eventually picked it up, but I certainly could have waited and bargain hunted for it. I gave myself a “3” that day, and I deserved it, and I felt bad about it.

In the days since then, I’ve spent nothing. I simply haven’t not spent a dime on anything in the last handful of days.

What have I been doing? Each morning, I simply write down “Today, I will do my best to spend as little as possible,” and I think about it as I’m doing some of my early morning routine. Each evening, I sit down with a piece of paper and answer the question “Did I do my best at spending as little as possible?” with a bit of explanation and give myself a score from 1 to 10 on it. On days when I spend nothing, I give myself a 10 – can’t get better than that. On days when I’m really really wise with my spending, I give myself a score between 8 and 9. On bad days, the score is lower.

That’s it. It takes about a minute in the morning and maybe two or three minutes in the evening, but it’s really effective at locking a particular behavior in my head.

The key, I think, is that I’m not striving to be perfect, just to put forth real, genuine effort toward the behavior I want to be my “normal.”

Naturally, I’m thinking of applying it to other areas of my life, most notably physical fitness. I want to use it to nudge myself to exercise more, using the same pattern of thinking about doing my best in the morning and then asking whether I actually did it in the evening. I’m not setting some specific standard of success in a given day because days are different – what I’m looking for is initiative and effort and action.

That’s the goal of this idea. The goal here is to encourage you to actually put effort into the thing you want to change in your life. That doesn’t mean subscribing to some harsh and absolute rules, but simply putting forth effort each and every day to move in the direction you want to go.

The repetition of it is intended to ingrain the idea in your head that you should put forth effort today to mover toward the outcomes that you want and that a good day includes a healthy dose of that effort, no matter the specific results.

The idea can be applied to pretty much anything, but it works really well for derailing bad habits (like spending too much money) or implementing good ones (like being nicer or exercising more). The key to it is simplicity and repetition, as it’s the simplicity that makes it do-able twice a day, and it’s the repetition that smashes it into your conscious thought.

If you’re struggling with getting your spending in order (or building any other positive personal habit) and you find that it’s mostly because the effort is lacking in the key moments, try this strategy. Simply start your day by writing down or meditating on the idea that you will do your best today to do whatever it is you’re wanting to do (spend less money, eat healthier food, get exercise, etc.), and then at the end of the day, ask yourself if you did your best in that area and score yourself on a scale of 1 to 10 (I really encourage you to write down that part). That’s it. Give it several days to kick in. I think you’ll be very pleasantly surprised by the effect.

I have found a lot of great ideas in Triggers that apply to personal finance behavior and personal growth and I fully expect to return to the ideas in this book in the future, but I really wanted to share this powerful tactic with you all as soon as possible. It’s easy and it works so well.

The post Did I Do My Best Today? appeared first on The Simple Dollar.

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Beyond Capsule Closeting: How and Why to Try a Style Challenge

For many years, my disorganized and overflowing closet was the focus of my mornings. I’d stand in front of my clothes, not wanting to wear what I could see and unable to see what was hiding in piles and boxes meant to help organize the mess. I’d notice the minutes ticking by on the clock, and then throw on whatever I grabbed first.

Then, five years ago, I read about capsule closeting and Courtney Carver’s Project 333. By concept, capsule closeting is a way of simplifying and streamlining your wardrobe to a manageable number of items. It’s an opportunity to reduce wasted time and energy spent doing exactly what I had been doing each morning.

Project 333 puts specific guidelines around that concept, suggesting that participants select 33 items to wear for three months, packing anything else owned out of sight (or donating, consigning, or swapping it) until it’s time for the quarterly rotation.

I thought I’d give it a shot. It wasn’t easy. As I pulled everything out of my closet and from storage containers gathering dust under the bed, I learned first and foremost that I had an appalling amount of tops, pants, denim skirts, dresses, and coats. My overspending became visual through large, lumpy piles.

Now more than five years out and many cycles of Project 333, donation runs, and swap parties behind me, I haven’t completely escaped the lure of a new cozy flannel or trendy T-shirt. But I’m much more aware of what I’m taking on both financially and emotionally when I hand over my credit card. And I’ve learned that while I’m a stress shopper, I also regularly feel a desire to head to a local boutique or resale store when I’m simply bored.

Enter style challenges.

Get Creative

As the capsule closeting movement has grown, so too have the opportunities for style challenges. A quick Google or Instagram search offers up numerous opportunities, and that’s how I found the 10 x 10 Style Challenge by Lee Vosburgh, Canadian designer and owner of the Style Bee website.

Vosburgh says she started the free 10 x 10 Challenge in 2015 to help her “get more creative” with her clothes during a 30-day shopping fast.

Most minimalist style challenges push you to work from a microcapsule closet. Vosburgh’s is no different. She has you choose 10 items that you mix and match for 10 days. The only rule is you can’t wear the same outfit multiple days — though putting together a different outfit may be as simple as swapping out sneakers for boots. It’s an opportunity to test out new looks and ways of styling your clothes that you might not otherwise attempt. (How many of us rely on the same sweater with the same jeans and the same comfy Converse?)

“Creativity loves constraint,” says Vosburgh, “and it’s so cool to see the results of working within set limits.”

Though I took the Project 333/capsule closet route first, and challenged my style after, that’s not everyone’s path. Vosburgh says that at the time she kicked off the challenge, she’d been intrigued by the idea of a capsule closet but was reluctant to sign on for several months. “This was a way to try the concept without a lengthy commitment. I ended up loving the experience and learning so much about my style that I’ve continued doing them almost every season since.”

I’ve now participated in two rounds of the 10 x 10, one last fall and the most recent challenge earlier this year. Playing with my clothes in this way does slow down my mornings, but not in frustration. Instead, I’m sorting items in my head, putting together new configurations: Will that shirt work with those black jeans? What if I layered this T-shirt under that jacket? How about trying my favorite Converse with a dress?

When I ask Vosburgh about what she’s learned from doing these challenges, she identifies three things (and, she says, they’re similar to what the 10 x 10 community at large reports back):

  • “I gained a better sense of my personal style. Learning more about what I feel best in and what works for my body-type and lifestyle.”
  • “I had a style breakthrough and found a new silhouette or look I would have never tried but love. So often there is a gem of an outfit hiding within our closet just waiting to be discovered. This finding is always so encouraging!”
  • “I really don’t need a huge closet (or to shop a lot) to satisfy my style.”

Education in Style and Self

The first 10 x 10 I participated in, I enjoyed from start to finish. My 10 choices were spot on, and I fell back in love with a sweater I’d forgotten about. It’s since become a staple in my closet.

The second challenge I participated in was a struggle. My 10 items consisted of pieces I don’t wear regularly. I was trying to figure out why I don’t often choose them and thought this would be a good place to test that out. What it meant was I spent 10 days wearing clothes that ranged from unflattering to ugh. Was I slightly uncomfortable all week? Maybe, but I was super cheery on Day 11, and I had a pile ready for my next swap party, so it all worked out.

When asked about what someone new to a style challenge should know, Vosburgh says, “Try not to take it too seriously or focus too much on results. Fashion is meant to be fun, and personal style is meant to be individual, so go at your own pace. If you need to switch a piece half way, go for it. If you end up stopping a few days in, no prob! Just pick up again when you’re ready. If you really don’t love an outfit or two, that’s a good thing.”

When I started capsule closeting, I thought the education might end with understanding my shopping addiction and reducing my overspending, but I’ve only continued to learn more about my habits and my needs, helped along through these challenges.

“Throughout the whole process, it’s key to ask why and try to learn from the answer,” Vosburgh says. “The challenge is much more about style insights than it is about cute outfits.”

If you want to give the 10 x 10 Style Challenge a try, Vosburgh’s next session begins March 30. Find her on Instagram at @leevosburgh, or follow the community at #Spring10X10.

Related Reading: 

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Tuesday, March 27, 2018

On ‘Being Frugal Is for the Rich’

Recently, several readers sent me this interesting article from The Outline entitled Being Frugal Is for the Rich. The article criticizes a handful of recent personal finance books, particularly one entitled Meet the Frugalwoods, and seems to make the argument that frugal strategies only lead to strong financial success such as debt freedom or early retirement if you’re making a very large income or are already wealthy. Here’s one of the core arguments of the article:

So the Frugalwoods appear to be doing pretty well for themselves. And if their story carries a whiff of déjà vu, that’s probably [because] it slots neatly into a classist myth that millions of adults in this country still believe: the story of the American Millennial.

It goes like this. The 2008 recession may have cratered the wages and employment prospects for people just entering the job market, but according to the myth of the American Millennial, the real problem young people have today is themselves. Nearly a decade after the crash, the mainstream media still seems hell-bent on portraying people born between 1982 and 2004 as a bunch of decadent and “fun-employed” narcissists who [waste] their parents’ money away on matcha green tea lattes, spend too much time Instagramming their pets, and are thus responsible for the economic rut they’re stuck in.

This myth — which scrubs millions of underprivileged Millennials from the picture — is crucial to understanding why the media is swooning over the Frugalwoods right now. What’s remarkable about them is how they’ve managed to offer the public a kind of Millennial redemption story: a tale of two Millennials taking the time and responsibility to learn about money, rein in their spending impulses, and achieve financial security. But how realistic is that narrative?

Not very. Millennials have been caricatured as affluent liberal-arts majors with no career plans, but the reality is most Millennials don’t even have a college degree. And last year, the advocacy group Young Invincibles used Federal Reserve data to determine that Millennials as a whole earn about 20 percent less than Baby Boomers did during their formative years, and amass roughly half the net wealth.

The Bureau of Labor Statistics puts the median weekly income for Millennials with a high school diploma at $692, which amounts to barely $36,000 for a full-time annual salary. Meanwhile, the minority of Millennials with associate’s and bachelor’s degrees earn median weekly incomes of $819 and $1,156, which respectively add up to $42,588 and $60,112 annually. That’s before their paychecks are flattened by rent, utilities, and exorbitant health insurance premiums and deductibles. And for the millions of Millennial freelancers toiling away in the “gig economy” — which is growing larger each year — benefits like 401K plans and employer-paid insurance slide further out of reach.

Then, of course, there’s student loan debt. According to the Federal Reserve, Millennials in their twenties carried an average debt of $22,135 last summer. This is one of the most integral metrics of the Millennial experience because of its implications for how much money a young person can save. A recent study by ApartmentList claims that the rarefied minority of debt-free Millennials are putting away twice as much money as their counterparts who are still paying off balances. This makes it easier to put a down payment on a house, build a portfolio, and — if you’re lucky — retire early, Frugalwoods-style.

I have a ton of responses to all of this, so let’s break them down bit by bit, starting with my own background.

So Where Did ‘The Simple Dollar’ Come From?

I grew up without much money, as I’ve alluded to many times on here. There were times when there was very little money growing up and there were aspects of my childhood that would probably shock many of you in terms of how well they matched the pop culture vision that people have of poverty. I never really thought of us as “poor,” but looking back, there were some very lean times and some elements of my childhood that really stand out. For example, I remember going on exactly two “family vacations” during the entirety of my childhood, and both were three days or less and were in states adjacent to where I grew up.

My father was a bit of a jack of all trades and always had some kind of side business going on to make sure we had food on the table because his main employer was less than reliable and often laid off employees for extended periods before hiring them back. (He finally escaped that cycle by cleverly steering himself into a crucial job, but by then I had already left home.)

I went off to college in the late 1990s, the first person in my family to do so. I was aided by scholarships, but still incurred a fair amount of student debt during my studies. Honestly, I was like a fish out of water in college, especially at first. I knew no one there, as there was literally no one in my home county that was attending college alongside me, and I really struggled to fit in where virtually everyone else was from a substantially more affluent background than me.

It turns out that I had learned a lot from his “jack of all trades” attitude. I started in on that from almost the first day I was at college, as I jumped in to help fix a wiring problem in a public computer lab on campus which led directly to a job managing that lab (I was studying genetics at the time and the lab I was using serviced a lot of genetics students). This led to getting to know a lot of professors and a few odd jobs in various research labs until I really found a nice home in one particular lab that was combining genetics and computer science in interesting ways.

That job ended up landing me several summer internships and, eventually, a promising job after college. It offered some spectacular opportunities for growth, but it didn’t pay a whole lot and was on an annual contract basis. This was during the early 2000s job market downturn, so I was happy to get it.

I got married shortly after that, and in 2006, after lots of side hustles and a few job switches, I launched The Simple Dollar. It didn’t make much money at first – it took a few years before any real income came in. By the time I was earning any real income from the site, we had paid off all of our debts from our work income.

That entire process of paying off all of our credit cards, student loans, and auto loans was done on a household income of substantially less than $100,000 a year. I don’t know what the national average household income was in that timeframe, but we were pretty close to it.

We pulled it off by being extremely tight with our spending and making a number of tough choices. We found that as we were knocking down debts, it became easier to pay off the next one – the classic debt snowball – and we found a lot of nice little tactics along the way. I wanted to write about it and share it with my friends, so I started The Simple Dollar on a whim. I had tried blogging in the past and it never really took off. The Simple Dollar did, though it took a little while for it to start humming.

By the time 2008 rolled around, I had to make a decision. I was burning the candle at both ends trying to keep up with The Simple Dollar and with my career. Sarah and I sat down, looked at our financial state at that moment, looked at some of my career challenges, looked at the potential of The Simple Dollar, and decided that the right move was for me to try to do it full-time for a while.

To that point, I had never made $100,000 in a year before. It’s not as if the site made us wealthy; in fact, it mostly just ended up replacing my salary from my other job (though with a very painful salary hit at first).

Over the next few years, I did all I could building the site into something that would sustain for a while. This involved hiring a few people to help out with technical aspects and backend administration for the site while I focused mostly on writing, but I found that as time went on, I was spending so much time managing people and putting out fires and still trying to keep up with writing that I wasn’t enjoying it any more and I was literally burning out with all of the invested hours. As a result, I sold the site in late 2011 and signed a very long-term agreement to remain as the primary writer so that I could focus more on writing and on being available to take care of some ongoing family issues and medical care.

During this entire process, our household annual income bumped above $100,000 twice, and both times it was well after our consumer debt had been paid off thanks to frugality. Almost every year during all of this, our household income was fairly close to the national average. The reality is that you don’t get rich from blogging without having a pretty sizable marketing team working with you – and you never really could. There are always a few exceptions, of course, but even those are rare ones.

I started The Simple Dollar because I love to write, and I managed to build the site to the point where ad support could enable me to have a semi-healthy income, one that was sustainable due to our relatively low-spending life. That’s why I still write here – I love writing this stuff, learning and trying new things, and reading reader comments and interacting with readers.

I 100% guarantee you I would be making a bigger income if I had stuck with my previous field. I know people that stuck with it and… yeah, they’re making more than I am. I chose The Simple Dollar because I love writing this stuff, our frugal practices enable us to make ends meet, and it affords me a great deal of time flexibility which has helped greatly with having three young children (I get to be here when they get off the bus each day) and also having a few background life issues (not really relevant to the site) that required a lot of extra time and attention.

Trust me – if I were in this for the money, I wouldn’t be writing this article. I’d be in my previous career path, crunching numbers somewhere and making a much nicer paycheck. However, I’m doubtful that I would enjoy it as much, and there would be a very different set of demands on my time.

The Average American and Frugality

My belief is that the reason The Simple Dollar became popular is because, in a lot of ways, Sarah and I are the average American family. We aren’t wealthy and never have been. Neither one of us came from wealthy families; I’d describe Sarah’s as middle class and I described mine above. Neither one of us makes a mountain of money – in fact, some of our choices intentionally turned us away from making as much as we could. Sarah and I have joked that we both made career and life choices that really hurt our income potential over the years, and it’s absolutely true.

Our average annual household income since Sarah and I graduated has been a little higher than the American average, but not stupendously so. We don’t live in a high tax bracket, and we have three children to take care of. We didn’t get rich because of The Simple Dollar – in a lot of ways, it’s just a pretty normal job, with some perks and some challenges. We’re pretty typical.

Given all of that, we’re both in our thirties. We have zero debt. We fully own both of our vehicles, a 2009 Prius and a 2014 Sienna. We fully own our home. We have no student debt, no credit card debt, and no consumer debt. We are well above the pace we would need to be at to have a healthy retirement at age 65, and we’re actually anticipating retiring much earlier than that, perhaps when our youngest child leaves home, though we understand that a lot of things can change along the way. We’ve done this all with three kids in tow on what amounts to little more than the average American household income.

How did we do it? I strongly attribute frugal living to the financial success we’ve found along the way. I think that simply getting a grip on our spending and learning how to make spending decisions that get us most of the value we want in life for a much smaller portion of the price is the biggest reason we’ve found this success. We could have achieved similar success with a strong career focus, but other aspects of our life led us to chose a path where our careers aren’t going to provide us with a lot of wealth, so we found it in being frugal.

I am firmly of the belief that most of the frugal strategies we use will help families and individuals at almost every income level, though I fully understand that they begin to be less helpful when you start to approach the poverty line, and that’s a topic that I directly address from time to time in articles like this and this.

A bit of an aside: From my own life experience, part of the challenge is that, when you don’t have much money, frugality is essentially forced upon you. You often don’t have an option – you have to be super-creative with every dollar or else you don’t eat. Being in that situation for a long period of time alters one’s relationship with money; it’s often not seen as a resource to help build one’s future, but something that needs to be spent now before it disappears because it will disappear. Rather than building a foundation, you’re running from fire to fire in your life, seemingly everything slurps away what little money you have, and you sometimes find yourself spending a little in a foolish way just to feel like there’s something more to your life than crisis mode and you have some sense of control over things. Everything feels beyond your control, and that can be quite scary and it can definitely alter your attitudes toward money. Because of that, I think that people in this position, where everything is in crisis mode, often roll their eyes at the financial advice of people for whom frugality is a choice. That’s an attitude I understand in a very fundamental and personal way.

This touches upon a very important point: For most Americans, frugality is a choice. The average American income does afford a pretty wide range of options about how to live one’s life – even incomes notably below that level still offer a range of choices. You can afford to buy Tide, or the store brand laundry soap, or you can make your own – you have a choice. You can decide which is the right option for you. When money gets tight, that choice gets somewhat wrenched out of your hand – if you buy Tide, you’re probably eating something utterly dirt cheap for supper tonight, for example, or you’re possibly even going without supper. What if your kid needs an instrument for his or her band class? Everything gets super tight and the choices become few and difficult.

This is where I believe the idea of “frugality is for the rich” is based. Many Americans find themselves in a position where some of the choices they’d like to have control over are wrenched out of their hands by financial demands. They’re sitting on huge student loans and by simply making the minimum payments, they’re not left with a whole lot. Once you start covering things like basic utilities, rent, basic food, and transportation to get to a job, even with a pretty decent income, there’s not much left on the vine.

For people in that boat – and it’s the boat that a lot of people my age and younger, down to college age, find themselves in – the choice isn’t between laundry soap and supper, but the choice often comes down to choosing one or two lifestyle choices out of the 10 that they see their friends and peers enjoying, and it doesn’t feel very good.

If you compare the hand that most millennials have been dealt compared to their grandparents (and even their parents) at the same age, it’s not a very good hand, and it’s not one that’s fun to be playing in the game of life. They’re often pushed into having to make frugal decisions and life calls that their parents and grandparents never had to make.

And, as I said above, frugality is often perceived to be about actually having a choice in the matter; when it’s forced on you, it’s not empowering and it just helps you to survive, not to get ahead.

Frugality and Choice

My perspective, having lived near the poverty line and near the average American income and, at times, a little above it, is that sometimes frugality is a choice and sometimes it isn’t, but knowing how to do it well is helpful in both situations.

I don’t have a magic answer to the situation that many Americans find themselves in, where they simply don’t have the resources or the opportunities that previous generations have. That’s a broader economic and political question that’s outside the scope of The Simple Dollar.

All I can say is this: a lot of the best strategies I’ve used to help myself stay afloat and get ahead in life worked (in some form) whether I was dirt poor or doing well. The big difference was in the results – sometimes it was needed to keep us afloat; other times it was useful to help us get ahead.

The core skillset and mindset of getting the most bang for the buck for everything and knowing how to cut corners has been helpful whether or not we were struggling to survive until the next paycheck or we were trying to stretch a moderate income to cover a lot of bills or we were trying to overcome a big pile of debt on a decent income or we were leveraging ourselves toward complete financial independence and early income on a debt-free life with a solid income. The same strategies worked.

My parents bought a lot of store brand items when I was a kid, when we didn’t have much money. I buy a lot of store brand items now and I can use that difference to make sure we don’t ever go back into debt and are able to contribute nicely to retirement. The strategy is the same, but the benefit is just being used differently.

When I was in college, part of my dirt-cheap diet was to eat rice out of a rice cooker with a fried egg chopped up in it and some soy sauce on top for a super cheap regular supper. Knowing I could eat a reasonably healthy supper for a couple of dimes made it easier to keep making ends meet. Do you want to guess what we had for supper last night? Yep, rice with a fried egg (and some sautéed vegetables) chopped up in it, with some soy sauce on top. We’ll feed the whole family for a dollar while eating fairly nutritious food, and the extra money helps us with the myriad of expenses of having three kids. Again, the strategy is the same, but the benefit is being used differently.

I could go on and on with examples like this.

Now, as I mentioned earlier, this is a lot less fun when you’re forced into strategies like this due to a lack of income. Here’s the thing, though: If you stick with these strategies, they do give you some semblance of a light at the end of the tunnel. It might be far off, but it’s there. If you spend every dime you bring in every paycheck, there is no light at the end of the tunnel. If you figure out how to set aside a few bucks every paycheck by figuring out just a few more tricks, and then you do something smart with those few bucks like building an emergency fund or making an extra debt payment, there’s a little light at the end of the tunnel, even if it’s far off.

Does that solve the broader problems facing people in financial crunches today? Of course it doesn’t. I’m not going to pretend that frugal tactics are a magical wand that fixes all financial problems in individual lives or in society. It’s not.

Instead, think of frugality as a basic tool. It’s a claw hammer or a flat screwdriver. It’s something that can be used in a lot of different situations. Sure, some people will have much better tools for some jobs, but the reality is that frugality is an effective tool in a lot of situations. Like a flat-head screwdriver can open a bucket of paint or repair a bike or install a thermostat, frugality can step up whether you’re struggling to afford a basic grocery list or you’re just trying to figure out how to take the edge off of your $200,000 a year lifestyle.

In both cases, the principle is the same. You stop, look at a situation, and ask yourself if there is a way to get similar results or most of the results at a much cheaper price than what you initially thought. It always helps, even if you’re pushed up against the wall and the number of choices available to you is pretty small. You can always stop for a moment and look at the situation a little more carefully, and that’s really the heart of frugality.

So, in the sense that “frugality” means “choosing one of the less expensive options when you have twenty choices,” sure, frugality is for the rich. But in the broader sense, where “frugality” simply means “looking at a situation for more than just a second’s glance and finding the most value for the penny,” frugality always helps.

Still, it is just a tool. A flat head screwdriver is useful in a lot of situations, but it doesn’t solve all of your problems. Personal finance really is a toolbox, of which frugality is a useful and well-worn option that I often grab, but it’s far from the only tool. Psychology. Social networks and friendships. Self-learning. Self-control. Discipline. Hard work. Self confidence. They’re all in the tool box, and all together, that tool box can solve a lot of problems.

Don’t ever let yourself think that your personal finance issues can’t be helped by frugality, or that frugality is for the rich. Frugality is only for the rich in the sense that a flat head screwdriver is only for opening paint cans; sure, it does have that use, but it’s far more than that. At the same time, don’t ever believe that all you need is frugality. It is a helpful tool, no more, no less. Use it to help yourself up a little, but don’t expect it to fix everything. You’ve got to use other tools as well, and different people in different situations are going to need different tools. Stick around, and we’ll talk about them.

Good luck!

Related Articles: 

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The Best Way to Help Your Child Establish Good Credit

If you’ve ever struggled with credit or debt problems in the past, you probably want to help your child avoid repeating your mistakes. On the other hand, if you’ve managed your credit soundly and understand the benefits of doing so, that’s a life-skill you’d probably like to pass on to your children.

Regardless of your motivation, parents want good things for their children, and helping your child to establish good credit certainly falls into that category. Just make sure you don’t hurt your own credit in the process.

Why You Should Never Co-Sign

Credit cards can be great tools to help your child establish a solid credit history, provided the accounts are managed properly. Once your child turns 18, they may be legally eligible to open a credit card in their own name. The catch, however, is that for people under the age of 21, there are certain restrictions.

Thanks to the Credit Card Accountability, Responsibility, and Disclosure Act of 2009, or the CARD Act, credit card issuers are no longer permitted to open accounts for people under 21 years of age unless (a) they have the ability to pay their debts or (b) they have someone over 21 who is willing to co-sign.

As a parent who wants the best for your child, you may be tempted to co-sign in order to help establish a credit card account in your kid’s name. Co-signing, however, can be a huge mistake that can put your own personal credit health at risk if you depend on your kid to use the card wisely and to make timely, consistent payments.

Any mismanagement of the account will impact both signers, not just the primary user of the account. Thankfully, there are better methods.

Related: Should You C0-Sign a Credit Card for a Family Member or Friend?

The Authorized User Method

Instead of co-signing for a new credit card account, you may consider adding your child to one or more of your existing credit cards accounts as an “authorized user.” By adding your child onto your credit card, you may be able to help them establish credit if the card issuer reports to the three credit bureaus, without putting your own credit in jeopardy.

An authorized user account is essentially a credit card with training wheels.

When you add your child onto the account, you’ll receive an extra credit card with your child’s name imprinted on it. You’ll still receive the bills and, while your child can help pay for anything they purchase, you will ultimately be responsible for the payments, including any debts your child racks up with the newly issued card.

If your child doesn’t manage the credit card as he or she should, you can call your card issuer to remove their authorization to use your account.

Additionally, an authorized user account can protect your child’s credit in the event of unforeseen problems in the future. For example, if you ever fall behind on payments or experience a default on the account due to job loss, illness, or other setbacks, your child wouldn’t be liable for the debt and could ask to be removed from the account, thus erasing any potential blemishes from their credit reports.

Educating Your Child About Credit

The most important thing you can do as a parent to help your child have a head start in the credit department is to educate them.

Your child should know about the importance of on-time payments, the benefit of never charging more than they can afford to pay off in a given month, and the necessity of monitoring their credit reports for errors.

Proper credit management habits can be learned at a young age. Poor credit management habits can also be learned at a young age, and they are hard to unlearn.

Related Articles: 

John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

The post The Best Way to Help Your Child Establish Good Credit appeared first on The Simple Dollar.

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Monday, March 26, 2018

Questions About Toys R Us, Quick Showers, Car Replacement, and More!

What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to summaries of five or fewer words. Click on the number to jump straight down to the question.
1. When to replace a car
2. Two minute showers
3. Toys R Us liquidation advice
4. Stock investing advice
5. Overcoming fear of leftovers
6. Parents exhausting their 401(k)s
7. The two voices
8. Resisting urge to spoil children
9. Roth IRA alone enough?
10. Putting emergency fund in bonds
11. Bleached flour and yeast
12. HE washers and homemade soap

One of the questions in today’s mailbag is from a reader who is worried about the recent drop in stock prices. The thing is, whenever the stock market drops in value even a little, I get several messages like this. “What should I do?”

My advice is always the same, which you can read in the answer to that question.

I’m mentioning it here because most good personal finance advice is timeless. It works whether you have a high paying job or a low paying job. It works whether the stock market is going up or it’s going down. It works whether you’re young or you’re old. The principles stay the same.

The difficulty of personal finance is figuring out how to put those principles into practice. We’re all filled with emotions and impulses which aren’t always rational, and curbing them isn’t the easiest.

Principles stay true through thick and thin. It’s our emotions and impulses that muddy the waters.

Let’s dig into some questions.

Q1: When to replace a car

My wife and I both entered our marriage (three years ago) with the vehicles that had been gifted to us when we turned 15—a 2003 Toyota Corolla and a 2004 Chevy Cavalier. We are now 26 and 27 years old. For the first year of marriage, we continued to drive those cars, and, although the Cavalier was extremely trustworthy while I drove it, the car was starting to struggle and in fairly rough shape (appearance-wise) by 2015. We then purchased a used 2015 Toyota Rav4, at the end of 2015, and have been paying it off for the last two years. I have been driving the Corolla for the past two years, but the vehicle is starting to show signs of major wear. While I don’t really mind driving it, I’m afraid that it is about to reach the point where more and more money needs to be spent on keeping it up, and it was never my car of choice, so I would rather spend that money on another vehicle. I have considered purchasing an older used vehicle (I really like older Land Rovers) and having it refreshed, but I also like newer reasonably-priced vehicles like the Honda Civic. We typically take my wife’s car on any longer trips, and I doubt we will be putting a ton of mileage on whatever vehicle I get (except to alleviate some of the mileage on my wife’s new car). We will be paying on my wife’s car until December 2020. We could pay off my wife’s car early, but we got a solid interest rate. While I would prefer not to have two car payments, the timing of our vehicles reaching the end of their first lives is dictating that we take a new route, and, while not ideal, it could make financial sense, considering the state of the Corolla. I have read your typical strategies with regard to purchasing vehicles, and I think what we have done with our first cars fit that protocol. I’m just a little hesitant on what to do at this point. After end-of-the-year raises, we have wiggle room in our budget and solid savings to hold us up, if something were to go awry. Any wisdom you could pass my way?
– Brad

Buy a late model used reliable commuter car that’s highly fuel efficient, something like a Honda Civic or a Toyota Prius. That’s my advice.

If you’re taking out a loan for this car, that means you weren’t saving all the way along for the replacements for your original cars. That’s a mistake. My advice is, once you’ve paid off these cars, keep making somewhat smaller “car payments” to a savings account somewhere. Automate it and use an online bank like Capital One 360 or Ally for this. Make it, say, $200 a month per car.

When these cars are ready to give up the ghost, you can then tap your car savings and use that to write a check for the car instead of having to pay interest on the car loan. This also enables you to still replace that car even if your financial state isn’t as good – even if you don’t have a job or have poor credit, you can still buy a car with cash if needed, but probably not on a loan.

Q2: Two minute showers

You may have already talked about this, but thought I’d send it along, in case you hadn’t. My husband and I take 2 minute showers. You get in, get your hair wet (your body will also get wet) and then turn off the shower. You work shampoo into your hair (use it to also clean your body) and then turn the shower back on to rinse off. Since we want to conserve water as well as save money, this works out great for us. Really, once you start doing this, it seems routine. Now the idea of having the water run while I’m putting shampoo in my hair seems a terrible waste of water–and it is! Thanks for all the great tips over the years.
– Jeanine

This is a really simple strategy that can be summarized as such: if you’re not actively getting something wet (like a cloth or your hair or body) or you’re not actively rinsing soap from your body or hair, keep the shower off. Don’t let it just run uselessly over you.

A typical shower head pours out about three gallons of water per minute while it’s running – low flow heads get down to about two gallons per minute. It costs about a cent and a half to heat up a gallon of water to the nice warm shower temperature you like, and the water itself costs about a cent per minute. So, if you just let your showerhead run, the cost is about five cents per minute for typical warm shower water.

So, is this a big savings? Not big, but if you simply take a shower by getting your body and hair wet, turning off the water while you scrub your hair and body, and then turning it back on, you’re probably saving at least a couple of minutes of water running. If that’s ten or fifteen cents due to a couple flicks of the wrist (and probably more since the shower water isn’t rinsing soap from your body as you wash), it’s probably worth it. I usually do something similar, mostly so I can more easily tell where I’ve washed, because constant shower water washes away the soap and it’s sometimes hard to tell where you’ve scrubbed. Without the water running, it’s easy to tell – I think it makes the shower overall faster if I turn off the water for a while in the middle.

Q3: Toys R Us liquidation advice

I have two sets of twins, 8 years old and 3 years old. Birthday and holiday gifts get expensive. We were thinking of hitting the Toys R Us liquidation sales near us and stocking up on gifts for the next 1-2 years and putting them in some tubs in the garage. Any good strategies for liquidation sales?
– Tommy

If you’re looking just for big bargains, don’t even bother with the liquidation sales at first. Typically, liquidation sales start with everything being marked up to at least MSRP, and sometimes above, and then they’ll have a blanket sale with everything being 10% off. They’ll actually sell a lot of stuff at that point, but the prices are still higher than a lot of websites and other stores.

After a while, they’ll start increasing the discount. 20% off everything. 30% off everything. And they’ll keep dropping it until the store is empty.

My advice? Wait until it’s getting fairly close to the end if you’re just looking for bargains. You won’t get much of a bargain at all during the early days of a liquidation sale, since you’ll probably just be paying 10% or 20% off of MSRP. The big bargains don’t come until later, like the last three or so days before the store permanently closes. So, just hit the store when the sales get down into the 40%-60% off range, which will probably happen when the store is only open for another several days or so, and shop then. If you wait until the very last day or two, you’ll see prices knocked down to 90% off or more, but the store will be practically empty at that point.

Q4: Stock investing advice

I have been putting my retirement savings into VTSMX (Vanguard Total Stock Market Index, which is basically just a mix of a LOT of different American stocks) and so far this year it has lost money. What should I be doing with my retirement? Losses are unacceptable.
– Charles

This was the most stark of several messages I received over the weekend about the downward trend in the stock market since late January. Since its peak on January 26, the stock market has lost about 12% of its value and is now in negative territory for the year of 2018.

So, what should you do about it? Assuming that this is a long term investment and you don’t plan on tapping it at all in the next ten or more years, you shouldn’t be doing anything. Stocks are volatile investments, which means that sometimes they lose money. In 2008, the stock market lost 40% of its value. Most people who are quaking right now were not invested in stocks in 2008 – instead, they rode this incredible rebound from 2009 to 2017 and seem to now believe the the stock market goes up, up, and up. That’s not true – it goes down sometimes. That’s the reality of it.

Stocks are like anything else – they operate on supply and demand. As long as more people are wanting to buy stocks than there are people wanting to sell those stocks, the price will go up until they can agree. As long as more people are wanting to sell than to buy, the price will go down. Right now, more people are wanting to sell than to buy, for a number of reasons. There are more people out there at this moment who want to sell their stocks than there are people who want to buy them, so the price will go down until they can agree on a price.

It won’t go to zero because most shares are shares of good companies that pay out dividends – people want shares that pay out dividends, they just might not be willing to pay the current market price for them.

Over a long period of time, stocks almost always go up, but that’s a long period – ten years or more. If you’re looking at a period of just a few months, yes, there will definitely be periods where it goes down.

Q5: Overcoming fear of leftovers

When I was a kid my parents always threw out leftover food because they believed it would go bad and we would all get sick and die from it. I now know that this is not exactly true but I am still really uncertain whether or not something that’s left over is okay to eat. How do you do it?
– Dan

For the most part, I trust my eyes and my nose, and my fingers to a smaller extent.

If something looks normal and smells normal, I basically have no problem eating it. It’s okay if it looks a little dry, too.

Things I watch out for is sliminess that wasn’t there before and changes in color. If something looks wet or slimy, I toss it. If something has changed color, I toss it. If I touch something and the texture has significantly changed, like it suddenly has a wet or slimy layer on the outside, I toss it. If I notice something has curdled or grown mold and I didn’t intend for that kind of thing to happen, I toss it. (There are times when I do intentionally curdle milk for a recipe, for example, but when it happens without my intent, I don’t trust it.)

That’s really all I do. I find that just putting leftovers in the refrigerator in a closed container, or in the freezer in a closed container, is all I really need to do most of the time.

Q6: Parents exhausting their 401(k)s

My parents are both in their early 70s and in really good health. They travel a lot and visit us regularly and they go on hikes and all kinds of adventures, and that’s great. But I am worried that they’re burning through their retirement savings really fast.

We had a talk when they visited in March about long term plans. My dad has made me executor on all of their estate and is really open with everything with me and we talk about things often. I was doing some math on their 401(k)s and their balances are dropping really fast because of all of the money they’re taking out for trips and things like that. They recently bought a 2017 minivan (so that there’s room for family on road trips if needed) and just paid for it out of their 401(k).

It’s not a limitless bank and I am getting worried they are going to run it empty long before they pass away. I tried to talk to my dad about it and he just waited until mom was out of the room and said, “Honey, there’s probably going to be a morning before too long where me or mom won’t wake up, or one of us will get cancer or something. Every day we have left together is an adventure. We’re not going to sit around and wait to die.”

I understand that, but I am also worried that they are going to rely on me to take care of them when the money runs out. When I bring up that idea they just say that they’ll cross that bridge when they get there. I am worried that (a) they’ll rely on us to care for them or (b) just commit suicide when the money runs out because that is something they used to joke about and now don’t mention. What can I do?
– Jane

There isn’t much you can do. This is your parents’ money and they can decide to do with it what they wish. Your role is to decide what you’d be willing to do when their money runs out.

So, what are you willing to do? Could they live with you in several years? Would that work for you or for them? Can you give them any financial support if they reach that point?

They’re clearly aware of the financial problem, but perceive other things as being more important. You can’t make them feel differently. However, you do have a long runway to decide what you’ll do about it.

Q7: The two voices

How do I handle the constant war between spending less and having cheap experiences? Whenever I spend money on something that’s actually good, a voice in my head yells about how much money I’m spending and how I’m bankrupting myself. If I go the cheap route, the voice in my head yells about how I’m letting myself down and living like a weird hermit and have a terrible life. What can I do to make them both shut up?! Ha!
– Nicole

My solution is to cut back very, very hard on the 95% of things that really don’t matter to me, and then spend thoughtfully on really high quality things on the 5% of things that do matter to me. The trick is really figuring out what doesn’t matter and what does matter.

What do you really, really care about? What’s your main hobby? What one or two things really make you happy? What items do you use every day? Those are things where it’s much more okay to spend a little more and get high quality items.

At the same time, what things do you not care about as much, or only care about because a friend or loved one really cares? What hobbies do you not spend much time on, or just care about because a friend does, or that you used to care about but really don’t any more? What items do you rarely use? Those are things that are okay to cut back on and go the cheap route.

As for normal, routine items, my default is to go cheap until that cheap item gives me a very clear reason as to why it isn’t doing the job. The only typical item that I don’t buy in store brand form is trash bags because I’ve had some awful experiences with cheap ones and the small extra cost for decent ones saves me a lot of headaches. Almost everything else around our house is store brand in terms of household items and staples.

Q8: Resisting urge to spoil children

How do you resist the urge to spoil your kids?
– Monica

For me, I try to look at the long term instead of the short term when deciding whether to buy them things. What are they really going to remember in ten years? What lessons will they take away from this?

What I’ve come to realize is that they generally won’t remember the thing you bought for them in that moment, but what they will remember is that they didn’t have to curb a desire inside of them. It just got fulfilled for them, like magic. They didn’t have to wait for things they desired, and they didn’t have to accept that desires sometimes go unfulfilled. That doesn’t really lead to healthy spending habits as an adult.

The thing to remember is that you’re a parent, and one of the valuable lessons for a parent is to help teach your children how to control their impulses and how to handle potentially negative or destructive emotions. Knowing how to handle wants and desires is a big part of that, as is knowing how to express love and care without buying things.

Sure, it’s tempting to give your child everything he or she desires, especially if you didn’t have that happen when you were a child. However, the thing to remember is that giving that item is often mostly just fulfillment for you, because you enjoy giving that item and you enjoy the response. It doesn’t end up really helping the child at all; in fact, it often just sets up some unrealistic expectations in the child.

Q9: Roth IRA alone enough?

I am 23 years old and single. I am a contract employee in my field, which means no retirement benefits or 401(k). Is saving in a Roth IRA enough for retirement? What else can I be doing or should I be doing?
– Craig

The annual Roth IRA contribution cap is $5,500. So, let’s assume you max out your Roth IRA each year from 23 to 65 and earn an average annual return of 7% per year.

If you do that, you’d have $1,410,468 saved up when you’re 65 years old. However, that’s in 2061 dollars.

In 2018 dollars, assuming 3% average annual inflation, that’s
$395,697. If you take the safe withdrawal rate of 3% per year, that’s $11,870 per year, tax free.

If you choose to work to age 70 instead, the “real” annual amount jumps to $16,970, tax free.

Now, remember, that will be supplemented by Social Security, and that number holds true only if Roth IRA contribution caps never change and you never contribute more.

As long as you don’t plan to live extravagantly, it’s definitely doable. You’ll probably have other assets at that time, like a home, which will also help.

Q10: Putting emergency fund in bonds

My husband and I recently contributed to the PIMCO Income Class C, PONCX. I would like to ultimately contribute half of our emergency fund by contributing 5k every 6 months for 18months. This would equal 3 months of expenses. We would also keep 3 months of expenses in a regular savings account. The fund has traditionially yieled 7-8% a year and has never lost money. The operating expense is 1%. If we choose to take money out before 1 year it would cost us 1%. Is this bonds fund a reasonably safe for a portion of our money? We have additional liquid savings we use for daily life and home improvements. We contribute 15% to retirement and are in our 30s. We have one child and no debt other than a car lease and a mortgage. Thank you for any feedback you can provide.
– Erica

In general, I don’t like to invest money unless I can explicitly state what the purpose of that investment is. What is your reason for doing this?

It seems as though this is part of your emergency fund, but you’re investing it in something with a withdrawal fee if you need it any time soon and at least some level of investment risk. The purpose of an emergency fund is to have cash with extremely low risk and incredibly available, which is why a FDIC-insured savings account is a good place for it.

You seem to want more return from this money, which is fine, but if you’re doing that, it’s no longer an emergency fund. It’s an investment, with investment risk associated with it. What are you investing for? What are you hoping to achieve through that investment?

An emergency fund with three months of living expenses in it is perfectly healthy for a married couple without kids or with one kid, so taking the money you’re thinking of putting into this investment and investing it is fine. However, I wouldn’t think of it as an “emergency fund” any more, because you’re doing things with it that aren’t in line with the goal of an emergency fund. Instead, I’d think of what your goal with that money is. Is it for a house? Is it for early retirement? Then, invest it appropriately to match that goal.

Q11: Bleached flour and yeast

Another killer of yeast in breads is flour that has been bleached or bromated. Good bye yeast. The yeast may have been fine, but the whitening agents in the flour killed it. Sometimes flour package MARKED unbleached actually isn’t because of a miss bagging at the factory. Always something!!
– Margie

You are correct that bleached and bromated flours tend to have less naturally occurring yeast in them. If you’re trying to achieve natural rising of your bread (i.e., a sourdough), you should not use bleached or bromated flours.

However, in my experience, bleached flour tends to result in bread that rises too much, becoming overly soft and sometimes having big holes in the loaf. I use unbleached bread flour strictly to avoid that problem.

This, of course, is assuming you’re using a store-bought source of dry yeast, like Red Star, and you’re properly proofing it in warm water beforehand.

Q12: HE washers and homemade soap

Is the recipe compatible with HE labeled washing machines? I have use of a machine that is an HE and I don’t know what makes detergent compatible with them. I appreciate your response.
– Sarah

The homemade laundry soap recipe I use supposedly works just fine in HE washers, but I have no personal experience with HE washers, so I don’t know this for certain.

My recipe is really simple. I just mix two cups of washing soda, two cups of borax, and two cups of soap flakes together in a Gladware container. All of those things are powder, so I just put the powders in there and shake it around for a while. Then, I toss in a tablespoon as a measuring tool and use one tablespoon per load.

The cost per load for this is between 2 and 4 cents, depending on the source of the washing soda, borax, and soap flakes. Compare that to Tide, which is about a quarter per load, and that’s assuming you measure it accurately. If you do a load a day over the course of a year, that adds up to about $75 in savings.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

The post Questions About Toys R Us, Quick Showers, Car Replacement, and More! appeared first on The Simple Dollar.

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