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Saturday, December 30, 2017

15 Things I Did This Year to Save Money

As we’re about to close the books on 2017, I thought it might be interesting to look back over the year and see what things I did differently this year in order to save money.

Some of these strategies were simply all-around wins, saving money while not negatively altering my life in any way. Some of these things turned out to be time savers as well as money savers, while others set me up for saving money down the road, and still others turned out to have additional benefits.

If you want a smart way to use these tips, consider using them to fuel your frugality list.

I started meal prepping in earnest. Meal prepping simply refers to the process of making several homemade meals in advance, freezing them until you’re ready to use them. This provides a number of benefits, but the three big ones are that you’re able to synergize a lot of the meal preparation tasks (like cooking a ton of rice or a ton of pasta at once instead of in smaller batches and assembling meals in an assembly line style), you’re able to buy ingredients in bulk, and you have homemade meals on hand for convenient cooking on busy evenings.

I started experimenting with meal prepping last year, but really dug into it in earnest early this year, when I wrote a guide to successful meal prep strategies and a step by step guide to a simple meal prep of rice and beans. I’ve done meal preps for quite a few meals since then, filling our freezer with soups and lasagnas and casseroles that can easily be cooked later on when things are busier.

I also made a number of fermented foods and stored them. Last year, as a holiday gift, I received a large fermenting crock, which made it possible to make larger batches of things like sauerkraut, pickles, and kimchi. I dove into fermented foods this year, preparing all kinds of different things in the large crock and in smaller bubble-locked jars.

My best output was a small batch of radish sauerkraut, which consisted of about 90% cabbage and 10% radish, all shredded, and soaked in a brine for a few weeks in a container with a bubble lock with weights holding the vegetables down below the brine to keep them from turning bad. This stuff was so good that it didn’t even make it to the freezer. I think I ate it on everything for the next few weeks. Considering that it required only a head of cabbage, a few radishes from the garden, and some salty water, it was extremely cheap sauerkraut, too.

Late in the year, I made a sourdough bread starter in a smaller jar. I just put a cup of flour and a half cup of water into the jar, mixed it, put a loose fitting lid on it, and let it sit for 24 hours. Then, I threw away half of the mix, added a cup of flour and a half cup of water, mixed it, and put the lid back on. I repeated this for about two weeks, during which it smelled fairly bad (think dirty socks) but after the dough became more acidic and “sour,” it began to smell like a mix of bread dough and sourdough – delicious! We used this as the basis for some mind-blowing bread this year.

I started making cold brew coffee. This was another splendidly successful food experiment this year. I received a small cold brewing coffee kit for Father’s Day and started using it in earnest.

Basically, the kit consists of a fine metal sieve that sits in a pitcher of water. You put a certain amount of coarsely ground dark roast coffee into the sieve, close it up, put it in the water, put the pitcher in the fridge, and wait about sixteen hours. Boom – you have cold brew coffee.

This eliminates the need for coffee filters and the need for an expensive coffee pot. It also uses less electricity, because the water is usually cold to start with and it doesn’t add much load to the refrigerator at all compared to the energy use of heating the water in our old coffee pot.

I actually prefer drinking the coffee cold and black. It’s very mellow, so it goes down smoothly without needing to be heated and without having to add a bunch of stuff to mask the sharpest flavors.

I switched almost entirely to a discount grocer for our food. Prior to this year, there wasn’t a truly convenient discount grocer for our shopping needs. The three closest grocery stores were ones with an amazing selection but without great prices. I would sometimes shop at a discount grocer about fifteen minutes away from home, but that was an irregular occurrence. It was just very inconvenient to do so.

Late last year, a discount grocer opened fairly close to our house, close enough that it became our routine grocer over the course of a few months. During this past year, approximately 70% of our grocery spending was at that store, and according to my quick math, that saved us a few hundred dollars.

We started preparing many meals with low cost household staples. The real genesis of this switch was our acquisition of a high quality rice cooker (a Zojirushi) at a very deep discount. Once we actually opened the box and started using it, we found it to be really simple and friendly to use, so we started using it all the time.

Over time, we found that we were eating more meals with rice in them, which is a very low cost meal, plus we were often making steel cut oats for breakfast, which makes for a low cost breakfast for our family if bought in bulk.

It’s hard to really estimate exactly how much money we saved by adding more rice and oatmeal to our diet, but it was definitely a reduction in food cost. I now often buy rice and oatmeal in bulk, which means that many meals are falling below $1 per person per meal for our family.

I expanded my library use and turned it into a weekly appointment. In the past, I visited the library irregularly.

In the past year, I’ve changed that routine dramatically. I now go to the library every third Wednesday with my children in order to pick out books for us to read for personal enjoyment and enrichment; I return the previous books each visit. This is penciled in on the calendar.

In addition, almost every Thursday, I actually work at the library. I take a notebook and a pen to the library with me, gather up piles of books, and start taking notes from the ones that seem interesting with an eye toward practical things I can try or information that might fuel future Simple Dollar articles. I find that having a straightforward brainstorming session, where the output is a bunch of article ideas and several article outlines, is a great tool.

On each of those visits, I dig deep into the free resources available at the library. On Wednesdays with my family, we hit the fiction pretty hard and often walk out with an armload of teen and YA and adult novels. We also often check out movies, and if there’s a road trip coming up, we usually snag an audiobook, too. On Thursdays, I plow through piles of magazines and nonfiction works, taking notes left and right, and I usually use the library’s free wi-fi extensively.

The free books, movies, audiobooks, and other resources have added up to substantial savings this year, primarily because we’ve made them into such a routine.

I cut down on my computer gaming hobby (almost eliminating it) and replaced it with self-improvement and reading. This year, I have cut my computer gaming spending by 92% compared to last year. I purchased exactly one computer game, which was on sale, compared to the dozen or so I purchased last year.

What changed? Two things. First, I made a commitment to play some of the less-played games that I already had. Second, I spent less time – significantly less, actually – playing computer games, replacing that time with other things that have less of a cost and actually get me moving around more.

I continued last year’s trend and used my clothing budget on a small number of very long lasting items. This year, the only clothing I purchased was a replacement pair of denim jeans and a few pairs of socks. However, in the case of the socks, I purchased Darn Tough Socks, with the intent of not having to replace any socks for many years.

As time moves forward, the goal is to have a minimal wardrobe, something akin to Project 333, but I’m not moving there radically. Instead, I’m just wearing out items as I go along and not replacing them until I need them within a smaller wardrobe. This was the case with the socks, as I finally purged a lot of old socks that were well worn and developing holes.

The end goal is to have a very small wardrobe with clothes that are well made and will last. This year was a great step in that direction.

I planned our least expensive (per day) summer vacation we’ve ever taken as a full family. This year, our summer vacation was a camping trip to Yellowstone, and more than ever our efforts in planning a low-cost trip paid off.

Some of the tactics used on this vacation include:

+ We relied on travel guides from the library for all of our trip planning.

+ We camped every single night of our trip (excepting a single emergency night when we were blocked from our campsite by a blizzard so we had to find emergency lodging).

+ We used a free National Parks pass that was acquired through the Every Kid in a Park program. This enabled entrance to several national parks and monuments.

+ We drove the entire trip in a single vehicle.

+ We packed much of our food for the trip, and what we didn’t pack was purchased from grocery stores away from the parks.

+ We chose almost entirely free activities, leveraging that park pass for all that it was worth.

Combined together, our family vacation cost around $85 per day. That includes fuel, feeding five people three meals a day, lodging, and all activities. It’s pretty difficult to have a fun family vacation on less than that.

I used our social network to get a few things we were looking for as freebies, and gave away a few things we didn’t need anymore to people who wanted them. During the year, rather than searching for items that we might have purchased, we simply asked for them on social media by asking if any of our friends happened to have such an item for sale or available to borrow for a while. In each case, a friend popped up and simply gave us the item. We acquired a bread maker and a few tools this way.

This started a mini-trend in our social circle of friends doing the same thing, and we ended up passing along some unused items from our garage. We passed along some toys for toddlers and some sporting goods.

Not only did this practice save us money and save our friends money, it gave us a convenient excuse to actually see a few friends. The items were all exchanged during a dinner party at someone’s home, which turned the exchange into a social perk, too.

We built stronger sharing relationships with our neighbors. We repeatedly shared child care tasks with the family across the street from us, who have two children roughly the same age as ours. We shared countless tools and other items with them. We made each other food when our families were ailing. We took each other’s children to countless practices and performances. Every single one of those things saved the other family time, energy, money, and headaches.

Not only that, we began to really expand that sharing to other families in the area. We took lots of children to lots of practices, and our children were ferried around by others. We gave away tons of produce and received quite a lot back, along with some canned goods.

What we found is that every time we took the effort to be helpful for a neighbor or a parent of one of our children or just someone in the community, we were usually paid back in spades. Not directly, of course, but in returned favors and easier relationships down the road.

We chose to keep using things. Rather than replacing several expensive items, we came up with creative ways to continue to use them.

My cell phone is now several years old, and I intend to keep using it until I literally can’t update it. I replaced the battery myself.

We didn’t replace either vehicle, even though they’re approaching 200,000 miles each on their odometers. Instead, we stuck to the maintenance schedule on each one. We’re sticking with them until our trusted mechanic tells us that there are serious problems coming down the road.

I’m using a six year old desktop computer for most of my work, and, again, I’ll continue to use it until I can no longer update it or there’s a hardware failure.

Our only television has a noticeable screen flaw. Rather than replacing it and dumping a bunch of cash on a new one, we’re simply living with it until it becomes unwatchable.

Rather than replacing something for a minor issue, we regularly chose to keep on going with what we had this year.

I cut my own hair. Rather than going to the barbershop once a month and dropping $15 or $20, I simply pulled out the clippers and followed the same pattern that the hairstylists used – very long clippers on top, short ones on the side, and an edger near the separation between the two.

I did this for almost every haircut I had in 2017 and no one noticed. I simply did it out in the yard and picked up most of the hair when I was done, depositing it straight into a garbage bag.

I saved somewhere around $150 doing this. Again, no one noticed the difference.

We cancelled most of our print magazine subscriptions. We simply started keeping an “unread” pile of magazines on our side table and if a renewal notice arrived and we saw more than one issue of that magazine on the table, we cancelled the subscription.

That simple move saw our current subscriptions drop from six to two (Consumer Reports and Smithsonian remain), although we do subscribe to a couple electronically.

We estimate that this shift saved us about $50 this year and cut down on our quantity of mail as well.

Many gift-giving occasions within our immediate family involved lots of handmade items or experience items. When our family gave gifts to each other this year, they were often of the homemade and handmade variety, with individual effort and thought going into the gifts.

Art, food, confections, and other such items were gifted amongst our family members this year, as were well-planned “days together” that involved doing things like going on a hike in a favorite state park together or going to a local free art exhibit together. We gifted each other “coupons” for shared experiences and many of them were used.

Perhaps the best gift of all was a handmade “travelogue” from our children to their mother which involved lots of pictures and thoughts as they tried to find a great birthday gift for her. The gift turned out to be individual days spent with her, largely inexpensive but carefully considered.

In other words, rather than just buying things for each other, our gifts took on a more thoughtful and homemade approach, which not only added meaning but also reduced the cost of just acquiring more “stuff.”

These tactics collectively saved us thousands of dollars over the course of the past year. Each one was a little move on its own, not something that really upset the course of our life in any meaningfully negative way, but quietly put money back into our pockets.

That’s the power of frugality. It’s not about making your life worse just to save money, but to find a genuinely better way of doing things. It’s not about going without, but about figuring out what abundance really is. That, for me, has been the real lesson of frugality this year.

The post 15 Things I Did This Year to Save Money appeared first on The Simple Dollar.

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Friday, December 29, 2017

The Frugality List

Not too long ago, I sat down and tried to figure out how much time each week I spend on things that are primarily done to save money.

Honestly, it’s kind of tricky to figure out what the exact line is. Is cooking a meal at home primarily done to save money? I decided that it wasn’t. However, is spending time on prepping a bunch of meals at once primarily done to save money? That’s tougher… I eventually decided that it was, because those meals are often used only on nights when we would otherwise eat out due to time constraints.

Anyway, what I eventually concluded is that I spend somewhere between five and ten hours a week on things that are done primarily to save money. In all honesty, that type of steady commitment of time is not too different from a small freelancing gig or a part time job.

I don’t spend that time in a conscious job-like way. I don’t block off hours for “frugality,” though I do sometimes plan my days for larger money-saving tasks (like meal prepping). Still, the hours do add up over the course of a week.

This realization led me to another one: when Sarah and I were first diving into our financial turnaround, we did treat it like a serious freelancing gig. During the first few months of our turnaround, I would estimate that we spent about 25 hours a week on money-saving tactics. This lasted for a few months, at which point the time investment dialed back to something like our current five to ten hours a week.

The first question people might ask is why.

Why would a person sacrifice that much of their spare time? To put it simply, most of these activities are ones that we do with our family or do on a lazy afternoon or early evening when the kids are playing and supper is in hand. In other words, these tasks fill in the low-hanging fruit – time we would probably spend playing a smartphone game or channel surfing or web surfing. If you contribute half an hour here or an hour there, it adds up pretty quickly to 5-10 hours per week (or more).

Why not use that time to earn more money instead? This is a bit trickier question. First of all, the returns from frugality are bigger than you expect because the savings is post-tax. If you improve your earnings, it’s a pre-tax increase, meaning you have to pay income taxes on it. You don’t owe income taxes on the savings from cutting your own spending – that savings goes straight in your pocket. Second, the impact of frugality is typically immediate; you can spend ten hours this week doing things and immediately see the savings in your checking account. When you put that time toward improving your earnings, you usually don’t see any return on that money for a long while. Even if you work at a part time job, you have to wait for the paycheck.

To tell the truth, my threshold for frugal tasks these days is that the activity needs to be saving me at least $10 per hour (or providing some other benefit) or it’s not worth my time. Remember, that’s post-tax savings, so it’s the equivalent of making $15 an hour or so, depending on one’s tax situation.

It’s also nice because I can choose when I spend time on frugality and what specific tasks I choose to take on. For example, if I don’t feel like washing freezer bags and drying them out right now, I don’t have to; they can wait. I can choose a different task for the moment. Similarly, if I want to play a game with my kids after school today instead of taking on a frugal task, I can do so. If I happen to suddenly have a spare hour, I can fill it with money-saving tasks. (Honestly, in some ways, it’s not that different than how I write.)

Here’s a nice workflow for getting into the practice of treating frugality like a freelancing gig.

Have a Frugality “List”

The first step in this process is to start creating a big list of frugal tasks that you might take on. Any task you might do to save money should go on this list, whether it’s something you might do every day or once a year or one time only, or whether it takes one minute or five minutes or an hour. If it’s an idea you have for a frugal task that would actually fit in your life, it should go on this list.

I maintain my frugal “list” in Evernote. It’s just a single note with a ton of ideas listed in it for frugal tasks I might do, one per line with a blank line between them. Because it’s in Evernote, I can easily retrieve it almost anywhere that I happen to be.

Don’t worry about the order or about anything else. Just make this a collection of things you could do to save money.

Here are 100 ideas to get you started. Just copy and paste that whole list into Evernote, then start deleting the descriptions and the ones that aren’t relevant. You’ll likely wind up with a list of twenty or so items that really match your life.

Once you have this list in place, whenever you come upon a nice little frugal project, just add it to your list. If you’re reading an article on The Simple Dollar and think to yourself, “That’s a good little idea,” just stick it on your frugality list and it’ll eventually come up.

When You Have Downtime, Turn to the List

Whenever you find yourself with a free moment, just fire up that list and look at the top item on the list. Is it something that makes sense right now? Do you have what you need to pull this off?

If this is something you can handle right now, do the task immediately. Maybe it’s something like making a batch of homemade laundry soap, which will take about ten minutes or so. Maybe it’s something longer, like air sealing a window. Maybe it’s something shorter, like making a batch of cold brew coffee.

Whatever the task is, do that task, then either delete that task (if it’s something you can just do once or can’t do again) or move that task to the bottom of the list.

If the task isn’t something you can handle right now, do whatever you need to do to make it possible to do that task the next time it comes up, then move that task to the bottom of the list.

For example, let’s say “make homemade laundry soap” comes up and you find yourself without borax. You just add borax to your grocery list, then move “make homemade laundry soap” down to the bottom of the list.

If a really big task comes up, like a “meal prep day,” schedule it. Pick an upcoming day where you could devote a few hours to that task and literally put it on your calendar. In the current moment, take care of any prep tasks that might need to be done to pull it off, such as putting together a plan and a grocery list for the meal prep day.

Just keep repeating this, over and over, as long as you have time to devote to these tasks. Whenever you find yourself out of time, just set the list aside for the moment and come back to it during your next window of free time.

In all honesty, this isn’t all that different than how I handle my own freelancing work, except that I devote several hours a day to it. I have an ongoing list of things to work on – article drafts, brainstorming, and so on – and I work on that list in time chunks that flex around other things in my life, like getting my kids ready for school or greeting them at the end of their school day.

Final Thoughts

This simple little strategy – creating a “frugality list” and processing it during your free time – makes time devoted to frugality very, very effective. If you’re selective about the tasks that you add to the list, it can be pretty lucrative, too. Just make sure that the things that you’re adding are tasks that produce a lot of value compared to the effort – things like airing up your car tires or air-sealing your window or doing a meal prep day. Those things are big wins and can save you much more than $10 per hour of effort. That way, whenever you process the list, you know you’re getting good value for your time.

Good luck!

The post The Frugality List appeared first on The Simple Dollar.

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Thursday, December 28, 2017

Avoiding the Trap of Financially Dependent Children

Over the past few weeks, I’ve had a number of conversations with parents of adult children, both independent and dependent. Since my own children are growing older, I wanted to know about their experience helping their children get ready for independence and also making sure that when they make that leap, they don’t eventually circle back into dependence.

Before we get too far down that road, let’s talk specifically about what I mean.

A financially independent child is one that does not demand any sort of financial upkeep. You may choose to give that child irregular gifts, but doing so is very secondary to securing your own financial situation and your own financial future. It is possible for financially independent children to live with their parents in a situation where those children are contributing in full financial equality to the expenses of the household.

A financially dependent child is one that does require some sort of financial upkeep. This may be a child that lives outside of the home but requires some sort of regular contribution of money to maintain their lifestyle. This also includes children that live at home with their parents without contributing equally to the expenses of the household.

Obviously, there are degrees of financial dependence, but our goal is to raise three fully financially independent children.

What’s bad about financial dependence, though?

First, it’s a persistent financial drain on the parents. Such a drain prevents the parents from adequately saving for retirement and directly extends their working life. It also reduces the likelihood that they’ll be able to care for themselves financially in their later years.

Second, much like training wheels on a bike, it does nothing to teach children how to survive on their own. Living a truly independent life is a powerful step, one that everyone eventually has to take. Financial dependence prolongs the lesson and often makes it harder to learn.

Finally, it alters the parent-adult child relationship into one of dependence. As long as a child remains dependent on the parent, that relationship is never allowed to mature into one of equals, a state that’s beneficial for both parties.

Financial dependence seriously hurts the parents and, surprisingly, hurts the child as well.

So, how do you avoid having dependent children? Here are the five strategies that seemed to come up most often in my conversations.

Strategy #1 – Ask the Big Question Frequently

The big question is “is this choice really moving my child toward financial independence?” You should be asking this about almost everything you do with your child, starting at a young age, but particularly when they reach high school age.

If you’re doing something that your child should be doing for himself or herself, is that choice moving your child toward financial independence? Rather than investing time and effort in doing their laundry, you should put that time and effort into teaching them to do that laundry for themselves.

If you’re giving your child spending money without requiring something in exchange for it, is that choice moving your child toward financial independence? Rather than handing your child $20 to buy something or letting them just toss it in your cart, make that money exchange dependent on chores or other personal efforts.

If you’re allowing your children to make life choices without considering the financial impact at all, is that choice moving your child toward financial independence? If you’re just paying for all kinds of extracurricular activities without your child considering that they all cost substantial money, you might want to reconsider that and use it as a teachable moment.

If you’re subscribing your child to an affluent lifestyle without commensurate responsibilities, is that choice moving your child toward financial independence? Consider whether your child really deserves luxury items without putting in at least some effort to earn them, whether it’s in the form of chores at home or effort in the community.

If you find yourself bucking back against those questions, are you actually reflecting on whether or not you’re helping your child reach financial independence or just resisting self-criticism without really thinking about it?

Start using that question as a filter for all of your parenting decisions, even at an early age, but particularly as they grow older. That question will nudge you toward more independence for your child and an expectation that they earn things rather than having things given to them, both of which are key lessons. It will also nudge you toward having them learn and practice basic life skills.

Strategy #2 – Offer Non-Financial Help

One of the best descriptions I’ve ever seen of what a good parent-child relationship can evolve into is mentor-mentee. A parent of an independent adult in a healthy relationship actually ends up functioning like a mentor, providing good life advice and insight and perhaps non-financial help on occasion, but not providing direct financial aid.

As your child grows, you should be already nudging yourself toward this type of role in your child’s life. As much as it can hurt, your child actually needs you less and less as they grow up, and you should strive to recalibrate your role as they grow, sliding away from the heavily hands-on parenting style that you had when they were very young to something closer to the mentor-mentee relationship that really clicks when your child is an adult.

How do you do that? The biggest tip I have is to start choosing to offer more advice and less direct aid as they grow. When they reach an age where they can earn money for themselves, roll back the money you’re giving them. When they struggle, choose to offer meaningful advice and help them to build a game plan to solve things for themselves rather than directly intervening. Start to have them make choices between things that they want or expect rather than just handing them everything, and over time dial it back more and more.

In other words, even when they’re still in high school, you should be dialing back your financial efforts for them and dialing up your mentor efforts. Don’t solve their conundrums by spending money or giving them things. Let them start to learn how to deal with unrequited desires and how to balance a relatively small amount of resources.

Not only does this type of support help your child develop independent skills while they’re still in the home, it also prepares them for a solid non-financial relationship in adulthood. In short, use their teen years as an opportunity for them to walk the tightrope with a bit of a safety net, rather than as an extended adolescence.

Strategy #3 – Communicate Expectations Clearly, Early, and Often

You should communicate to your children as early as possible and as clearly as possible what it is that you expect from them once they’re out of school, and it should be a conversation that’s repeated regularly. What is that relationship going to be like? What help are you willing to provide as your child get his or her feet on the ground? What are the restrictions? When will that help end?

This conversation needs to be extremely clear to your child and it needs to happen starting at an early age and repeated regularly as they grow up and begin to move on. There should be no question as to what will happen once they leave secondary school, and they should not leave school with some artificially inflated expectations.

What should be communicated?

Be clear about how much of their postsecondary education you’ll pay for. Will you help them pay for books? Tuition? Room and board? Will you co-sign on student loans?

Be clear about what support you will offer once they graduate and enter the job market. Can they live with you? Under what terms? Will you offer any financial assistance if they’re not working? (Hint: the answers here should be pretty easy and straightforward.)

Be clear about how you will help. Make it clear that you will always be there for advice and assistance, and that you will help if they’re willing to help themselves, too.

Although my parents were actually very good at the other parts of this list, this is the one area where I would do things differently with my own children. My parents weren’t clear to me about how much they would help with college or with my after-college life. I grew up under the impression that if I did well enough academically to go to college, they would make sure that I could go, a belief that turned out to not quite be true. This was mostly due to a lack of clear conversation, and knowing this would have altered a number of my choices. I did manage to earn scholarships that helped, but there was a period where postsecondary education was very much in doubt for me.

Clarity is king. Have clear conversations with your children as early as possible about what you will pay for when it comes to their education and what kind of support you will offer afterwards. Stick to that policy through thick and thin.

Strategy #4 – Establish That Any Adult Assistance Requires Action to Receive Help

Most parents feel uncomfortable with mandating independence from their child because they envision nightmarish scenarios in which the child is homeless or destitute and they can’t bear the thought of allowing their child to have to suffer in that way. Compounding the problem is the fact that conversations like these can end up with the child feeling as though their parents would not help them at the lowest point in their lives, which is rarely true.

Instead, make it clear to your children that you will help them if they are willing to help themselves. They can live with you if they demonstrate active effort toward finding a job or, in the case of a first job, they’re actively saving money toward an independent life. They can live with you if they’re dealing with an exceptional life crisis but are taking steps to move past it. If they are willing to climb up to the tightrope and give it a try, you’re willing to help, too.

This ties heavily into the communication strategy discussed above. Communication is vital, whether it’s making your expectations clear, articulating the advantages of independence, serving as a mentor for their difficult moments, or establishing that you will help them in times of true trial. The more you communicate – and the more you discuss the difficult questions – the clearer things will be for all involved.

The challenge is realizing that enabling is not helping. If you’re providing help that they’re just using to repeat the same mistakes and not actually work toward helping themselves, then you stop helping until they show that they’re willing to work for positive change in their lives.

As hard as it is, you need to not offer help if they’re not willing to help themselves. Otherwise, you’re just enabling a rapid self-destruction or a state where there’s no incentive to become independent. There’s nothing wrong with helping your child along a path to success as long as they’re trying to get there themselves.

Communicate this. Make it clear from an early age that you’re willing to help them if they’re willing to help themselves, and that their steps must be in a direction toward full successful independence.

Strategy #5 – Teach Independent Life Skills as Early as Possible

This final strategy points directly to me, as the parent of a preteen, another child that’s close to that age, and a slightly younger third child. If you want your child to be independent, start teaching them independent life skills as soon as you can.

Make them do dishes. Make them do the laundry. Make them clean up after themselves. Make them get the mail. Make them mow the lawn. Make them prepare meals. Make them keep an organized planner for school and activities. Make them budget their money and plan ahead for expenditures.

The point isn’t to simply work them, but to have them do things that adults typically do while they’ve got the safety net of their parents to help them handle their inevitable mistakes. That way, when they’re actually old enough to go out on their own, they’re equipped with the needed skills.

This does involve quite a bit of work – more work than just doing those tasks yourself. However, every task that they master on their own is one step in the direction of living with full independence from you. Not only will they feel much better about that particular skill, they’ll feel more confident overall about becoming fully independent.

A big part of this is to introduce these tasks properly, because they’ll often be met with resistance. Treat them as a step toward independence, not as a chore to be done. I’ve already found success with this approach with my own children. I simply reiterate the advantages of independence along with some of the responsibilities it entails, and then talk about their own growing independence and how it comes with some responsibilities. Their own nascent sense of teenage independence thrives on this kind of talk and thus far they’re relishing the tasks. This doesn’t mean that all children will thrive in this regard, but it’s working well for our children as we slowly teach them life skills.

Final Thoughts

Financially dependent children are an enormous financial drain on adults right at the time in their life when they should be focused on saving for their own future. Dependence is also an enormous emotional drain, both on the parents and on the child.

Parents owe it to themselves and to their child to find ways to encourage their child’s financial and personal independence. Parents need it in order to secure their own financial future and healthy retirement, while children need it in order to secure their own place in the world.

It’s not easy, however. The emotional bond between parent and child can make it very difficult to give a child the push out the door that is sometimes needed.

There are several approaches that work well in making this happen, the biggest of which is communication. Talk about this matter. Make it clear what’s expected, what you will do, and what you won’t do. At the same time, encourage as much independence as possible and teach your children life skills so that they’re ready to make it on their own.

This isn’t going to be easy, but if you eventually want to grow your relationship into a strong bond between adults with perhaps a bit of loving mentorship, then follow these strategies. They will help cement the kind of future you want for your children and you need for yourself.

Good luck!

The post Avoiding the Trap of Financially Dependent Children appeared first on The Simple Dollar.

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Wednesday, December 27, 2017

New Year’s Money Resolutions: Make Sure Your Homeowners Insurance Is Up to Date

The recent wildfires that devastated many U.S. communities illustrated the need for homeowners to make sure their insurance policies provide adequate coverage to repair or replace a disaster-damaged dwelling.

Too often, people buy a homeowners policy and then forget about it, never bothering to see if the payout amount has kept pace with construction costs, said Charlie Porter, an insurance agent in Menlo Park, Calif. “It’s something people generally don’t think about,” he said. “They think, ‘I have coverage, so I’m good.’ That is not true.”

In 2009, the California-based United Policyholders consumer group surveyed people who had been through wildfires that burned half a million acres and destroyed more than 1,500 homes in Southern California during 2007. About 70% of respondents said they were underinsured.

Don’t expect to be bailed out.

If your policy doesn’t provide enough coverage to fully restore your dwelling, you can’t count on assistance from the federal government. That’s because an increasing number of natural disasters has challenged the ability of the Federal Emergency Management Association to keep pace with the need.

If you’re left holding a large home repair bill, you won’t be able to convince your insurance company to bridge your coverage gap. It’s your legal responsibility to make sure your homeowners policy is adequate.

Sean Scott, a fire restoration contractor and the author of The Red Guide to Recovery, recommends having two contractors estimate what it would cost to rebuild your home before you choose a policy amount.

“I would also ask for an estimate of what building code upgrades might be required, along with an amount for debris removal and demolition,” Scott said. “Having this information will give you the ability to tell your agent how much coverage you want instead of the agent using some generic cost-per-square-foot formula that often leaves people underinsured.”

Don’t buy too much coverage, either.

While people tend to underinsure, it’s possible for people to buy too much homeowner coverage. Some consumers mistakenly assume that they should be covered for an amount equal to their home’s value on the real estate market. What they don’t realize is that the land the home rests on won’t need to be replaced after a fire. Your goal should be to have enough money to repair or your dwelling, not purchase another home.

To make sure your homeowners policy remains adequate over time, it’s a good idea to monitor construction costs periodically. Although building costs are more stable than home prices, they can fluctuate, based on the price of labor and materials. It’s a good idea to consult a local builder or restoration expert.

Find out what your possessions are worth.

It’s useful to know how much it would cost to repair or rebuild your home, but don’t forget about what’s inside it. In order to get a handle on what your stuff is worth, create a home inventory that includes items of value in every room. Write down approximately what each item cost. (A photo of each room – and its contents – is a good way to document these belongings for insurance claims. Keep digital copies somewhere you can access them away from home, such as a cloud storage service.)

A home inventory will come in handy if you ever need to file a fire insurance claim, said the Rocky Mountain Insurance Information Association. If you have valuables, such as artwork or jewelry, ask your agent about your need for an insurance rider to protect items whose value may exceed the limits offered by a standard homeowners policy.

Understand how policies work – and whom they’re protecting.

Standard homeowners insurance policies generally cover the replacement cost of your home and the actual cash value of your personal property. To determine actual cash value, adjusters factor in depreciation: A computer you bought for $1,200 five years ago may only be worth $600 now.

If you buy a full replacement policy, it will provide enough money to replace damaged possessions with ones of similar quality, without factoring in depreciation.

The Insurance Information Institute (III) says the price of replacement cost coverage for homeowners is about 10% higher than actual cash value, but it’s generally is worth the investment.

Finally, remember that if you have a mortgage on your home, your lender will usually require you to buy a homeowners policy — but you can’t rely on lending institutions to make sure your policy covers the full cost of repairing your home. Lenders generally require borrowers to carry only enough insurance to cover the amount of the outstanding loan.

Time for an annual insurance check-up.

The III recommends that at least once a year you make sure you have enough insurance to cover your dwelling and the possessions within it. It’s also important to keep your policy up to date after you’ve made renovations to your home, said J.R. Duren, a personal finance expert at HighYa.com.

“If you’ve updated your kitchen and that update increased the value of your home, then get a new homeowners insurance quote that reflects that increase in value,” Duren said.

In the end, you can’t rely on anyone else to tell you how much homeowners insurance you should buy. The amount you need is a moving target that can change from year to year. It’s up to you to determine what your comfort level is and to keep your policy updated.

Related Articles: 

The post New Year’s Money Resolutions: Make Sure Your Homeowners Insurance Is Up to Date appeared first on The Simple Dollar.

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Tuesday, December 26, 2017

More Than Just Wrapping Paper: How Post-Holiday Clearances Can Slash Your Budget All Year Long

Today is that special time of the holiday season: the beginning of deep discounts on all the stuff that’s red, green, or gift-oriented. Everything must go! (If only to make room for Valentine’s Day items.)

Every year a lot of holiday stuff goes unsold, and the stores don’t want to hold on to it. Turn the retailers’ loss into your gain by stocking up not just on cards and wrapping paper, but also on other things you’ll use for the next 365 days.

Think it’s all dented dolls and tired tinsel? Some of it might be. But if you pick your spots, you can stretch your giving and household budgets further than you ever dreamed.

The following tactics can help. Although the stores will be crowded, the savings can be worth it.

Buy some clothes.

Clearance prices will be available on both holiday-oriented and everyday winter fashions. (I know a woman who paid less than $4 for a dress in order to get its belt, since a new belt would have cost much more.)

If you have kids, buy clothes at least one size up, for next year. The longer you wait, the steeper the price drop – and the younger the child, the less the motif matters. Your five-year-old might think it’s awesome to wear a Jack Skellington sweatshirt in early March.

Buy next year’s holiday gifts.

Some people do the whole next year’s worth* of shopping on Dec. 26. That’s dedicated frugality.

And if that’s you, congratulations. Personally, I suggest looking for a few presents, as opposed to stressing out about it: I can’t go home yet – I still have people to buy for! Do what you can, rather than setting yourself up to fail.

But if you’re in the zone, then stay there and buy as much as is practical – of 2018 gifts and/or one or more of the categories below.

*During conversations about holiday preparations, you may encounter someone who did all her buying at the after-Christmas clearance the previous year. It took only a couple of hours and she paid an average of 47 cents per gift. Or so she says, somewhat loudly and smugly. Don’t be that person. She’s really annoying.

Get birthday gifts.

If you’ve got kids, assume they’ll be invited to parties in the year to come. Have games, stuffed animals, books, art kits, and such on hand, and you won’t have to make extra trips. Bonus: You paid rock-bottom prices.

Got nieces, nephews, or godchildren (official or honorary)? Buy toys for their natal day celebrations, too. If they were born in January, hit the calendar kiosk for a useful and potentially beautiful gift.

(Well, beautiful if they like horses or puppies. Those with odd senses of humor or nerdy tastes might be happier with Emily The Strange or “Star Trek” calendars.)

Stock an evergreen gift closet.

As noted above, parents who have toys on hand are ready for the inevitable birthday party invites. But grownups have birthdays, too, so look for items like hat-and-scarf sets, picture frames, books, and accessories.

Treat yourself.

High-end skin care kits and gift sets are deeply discounted after the holidays, according to Helene Massicotte of FreeToPursue.com.

“It’s a low-risk way to try new products and save significant money per ounce,” she says. “And just a few kits can last you for months.”

Foodie baskets and spa packages are all over the stores until Dec. 25 – after which retailers can’t get rid of them fast enough. At half-price or less, treat yourself to something tasty or luxurious. Or you could…

Treat someone else.

Food and spa packages make nice gifts for others, too. Your first-time-mom sister might love to plan a long, hot soak with frou-frou scents and fancy lotions to follow. If you live nearby, offer to sit with the baby while she locks herself into the bathroom for her first alone-time since parturition.

Remember, too that Valentine’s Day is right around the corner. That basket of barbecue items or set of sybaritic potions might be perfect for Feb. 14.

Bonus: These things are experiences, not stuff, and will eventually get used up vs. becoming clutter.

Stock your household.

Sheets, blankets and throws. Candles. Bakeware. Dishes. Table linens. Towels for kitchen and bath.

Paper plates and cups can become part of your emergency kit. Or use them at your next party or barbecue. Teresa Mears of Living on the Cheap says great January deals on red and green products work fine for informal parties the rest of the year, as long as you don’t use them together.

Storage containers, sometimes marketed as “ornament storage bins,” are deeply discounted after Christmas. Doesn’t matter if they’re red or green, or printed with wreaths – they’ll be stuck in the attic or the crawlspace where nobody sees them.

Stock your pantry.

Holiday-printed paper towels, napkins, and storage bags and containers will be available at half-price or less.

Ditto certain baking supplies and food items, so check supermarket clearance bins for things like fancy coffee and tea, chopped dates and pecans, holiday cereal (yep, that’s a thing), eggnog-flavored pudding mix (not making this up), canned pumpkin, cranberry sauce, and black-eyed peas.

Even everyday products like coffee may be deeply discounted if it’s in holiday-themed packaging. And guess what, “Christmas blend” coffee tastes just fine in January.

(Pro tip: Add another layer of savings by using manufacturer coupons from sites like Coupon Mom and Coupon Sherpa.)

Don’t forget the drugstore.

Head for the “seasonal merchandise” aisles, advises Stephanie Nelson of Coupon Mom. You’ll see discounts of at least 50% the first few days, quickly followed by price cuts of 75% to as much as 90%.

Toys, gadgets, clothing items, and even small appliances will be remaindered. One year Nelson picked up a $40 blender for 75% off – and then sent in a $10 mail-in rebate attached to the box. “So my blender was actually free,” she says.

(Don’t need a free blender, or a free whatever? You could give it as a gift, sell it on Craigslist or donate it to charity.)

Linsey Knerl, who blogs at 1099 Mom, has five sons who use Old Spice body wash, deodorant, and other products. Last year she saved 75% on more than a dozen Old Spice gift sets. “I’m happy to go back again this year to stock up,” says Knerl, whose family owns a small farm in Nebraska.

Stockpile holiday supplies.

Wrapping paper, gift bags, and ribbon. Ornaments, strings of lights, wreaths, and trees. Holiday cards. If you have a place to store even a few such items, pick them up at a discount and next year’s celebration will be noticeably cheaper.

Stockpile holiday craft supplies.

Do you make your own décor or gifts? Buy the raw materials now, when everything’s being remaindered. Those snowman candy molds will cost lots more next November.

Look for open boxes.

Starting today, people will clog the stores to return gifts that didn’t work out. This, too, can work in your favor.

According to Erin Huffstetler, frugal expert for The Balance, some “open-box” electronics and other returned items can no longer be sold at full retail.

“One man’s Christmas return could become your next big bargain,” she says.

More tips from the pros:

  • Do a major inventory of what you have, and write down what you need. Pay attention to that list.
  • Well, most of the time: If a deal is just too good to pass up, get it. That $10-but-actually-free blender is a good example.
  • Get there early, because the good stuff might go quickly. But if you can, revisit the stores in early January. Those 90%-off sales should start kicking in by then.
  • If you’re apt to overbuy, bring only as much cash as you can afford to spend, and leave the plastic at home.
  • Know what things usually cost. If something was marked way up in anticipation of the holiday, then half-off still isn’t that great a deal.
  • As always, if you don’t need or can’t use it, then it’s not a good deal.

Related Articles:

Veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.”

The post More Than Just Wrapping Paper: How Post-Holiday Clearances Can Slash Your Budget All Year Long appeared first on The Simple Dollar.

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Monday, December 25, 2017



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