She’s Frugal and He Isn’t—How to Handle It

 

Another Money Fight!

Handling money wisely can be hard enough when there is only one person involved. Frugality, though very rewarding, takes work. But, as a single person your own needs and desires are the only concern. This becomes much more complicated when another person with their own viewpoints and needs comes into the mix. It is complicated even if the two of you are as alike as can be. So we can just imagine has difficult it becomes when the two of you have radically different ideas about spending and saving.

Fights about money are very high on the list of things that cause trouble in relationships and marriages. Money fights can even lead to divorce.  And even if there is no fighting, having a real spendthrift as a partner can lower your quality of life, or even leave you in a very difficult financial predicament if they should die before you. So getting this right is serious business.

If you are just starting out in a relationship with someone that you suspect has a wildly different idea about spending you have plenty of options, and no real obligations. Just keep the money separate until you are sure that any problems have been worked out-which may be forever. And don’t let your self be forced to spend more than you are comfortable with for any joint activities.

If you are living with your spendy partner already but are not married, now is the time to separate the money. They might get mad, but this is better than you getting broke. One thing that works is the three-account plan. One account for you, one for your sweetie, and one for the house. You are then able to control your money while still contributing to the household. There are differing views on figuring the household contribution. Some say it should be equal, but the Frugal Goddess prefers to have each contribute a share commensurate with their income.

To figure this out, add both incomes together. Then divide the by smaller of the two incomes by the combined total. This will be the percentage of household expenses paid by the person with the smaller income.

For example: If she makes $2500 a month, and he makes $1500 a month, the total income is $4000. So, divide $1500 by $4000. The result is .375. Now let us imagine that the total household expenses are $2000. He would pay $750 a month, and she would pay $1350. Each would retain control of the rest of their own money.

The household account should cover housing, food, home insurance, and anything else that is shared. Personal phone bills, and individual car expenses if each has their own car would not be included. Each couple has to decide for themselves what should be shared.

If you are thinking of marrying a spendy person when you are frugal, I would recommend a pre-nup that details the extent of your financial involvement before the fact, and, if you are in a community property state will serve as a protection on your future earnings. It may not be romantic, but neither is being poor when you didn’t have to be and it wasn’t your fault.

If you are already married you are in a bit of a predicament. Have you had a heart to heart with your spouse? If so, and no agreement was reached, or agreements have been broken, you may have to take stronger action. It may be good to consult a lawyer and find out if you can protect yourself and remain married. If this is your situation I wish you the best of luck. For the rest of us—romance is much more satisfying when our financial boundaries are not being violated. So take action now to make sure that being in love is not the same as being subject to the whims of another.

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Retire in Style Even if You are Broke!

 

The other day I saw a startling and scary statistic. Over 60% of Americans, when asked how much money it would take for them to feel absolutely comfortable at retirement, quote a figure of 4 million dollars. Yet the average amount of actual retirement savings is a mere sixty thousand. This is a huge disconnect. If what you actually have at retirement age is 60K, either you are going to be living on a tiny social security check, or you will not be retiring at all, but rather continuing to work.

This situation is complicated by those that were “forcibly retired” in the crash of 2008. If you are over sixty and lost your job in the crash, and you have not been able to get another job, it would not be stretching the truth to say you are “retired”. This is a frightening and unfair thing, but there it is. So what do you do?

First of all, if your unemployment has run out and you are approaching 62, go get that social security check. It may not be much but it beats the alternative.

Then, whether you retired by choice or by force, try these tips:

  1. If you are going to take up a hobby, consider one that has side benefits, such as vegetable gardening, sewing, computer repair, or carpentry. These are all useful skills that can save you money, but they can also enrich you in other ways
  2. Cook your own meals. Nothing else has such an immediate beneficial effect on your wallet, your health, and your quality of life.
  3. Cut your housing expense by getting a housemate. Studies show that living with another person will help you live longer and healthier than living alone. Even if you are married having a housemate can be helpful in other ways than just cutting your living expenses. And if your home is in danger of being lost, using it to create income could save it.
  4. Having deep friendships is more important to quality of life than money. Stay in close touch and find free or inexpensive activities to enjoy together. Things like picnics and movie night.
  5. If you have a little capital, start a small business. Just make sure it is rock solid. Buying an already successful business and changing nothing may be just the ticket. Things like coffee carts and vending machines are possible choices. The idea is not to take a risk but rather to carry on with a sure thing.
  6. If you are a good salesperson and very social, try a network marketing business. Many of them are require a very minimal starting investment. Just make sure you really love the product. These businesses are all based on word of mouth, and your integrity is important. Also, really succeeding is hard work, but if you have the right personality and the right product you can supplement your fixed income nicely.

Then there are a few techniques that involve the underground economy, so I am not recommending them but merely reporting what others have done to create a better quality of life in retirement. These techniques are barter and creating an all cash business. Remember those useful hobbies mentioned above? Can you trade your skills in these things for things you want and need? Can you sell your skills for cash? If so, that is how you get those small luxuries that are necessary for a rich and happy life. You could advertise with flyers on bulletin boards or by word of mouth through your circle of acquaintances, and get paid cash.  There are retirees that enjoy a much higher standard of living than they would otherwise by using their talents and skills to advantage. Some of them are even having fun.

If you are getting near to retirement and are worried about having enough, look into some or all of these ideas, and above all, enjoy this phase of your life. You worked hard and you deserve an abundant life!

How Much is Enough? Six Tips for Knowing when to Stop

If You Don't Know what you Want You'll Never Have Enough

The question “how much is enough?” is at the very heart of a frugal life richly lived. It is the backbone of frugal abundance. We live in a culture that resists the concept of enough. For the inhabitants of the “developed world”, the answer we must give is that no amount is enough. The economy we have created depends on MORE, and just enough is considered an ill.

But sensible people trying to live a good and pleasant life know that this is hog wash. Too much clutter in our material possessions or our time leads to a frenzied life where we don’t fully use or enjoy the things we have. So what is the cure? Try these six simple tips to get back to a state of happy balance:

  1. Before you bring in ANYTHING new, look at what you already have and ask yourself what the purpose is. Do you already have something that will accomplish whatever it is you are trying to do? For example, if you want to make crepes, do you really need to buy a special pan? Or would the cast iron pan you have work just as well. This also applies to time—before you add something to your schedule STOP and ask yourself why.
  2. Do you know the real cost of the things you want to acquire? Don’t forget to add in the cost of maintenance, repair, and auxiliary doo dads that you will need to make it work. When it comes to your time, remember to include travel and preparation time. These are things you need to know before committing yourself. If you don’t think it through you may bite off more than you can chew and end up with TOO MUCH.
  3. Where are you going to put the new thing? If it doesn’t fit in your house it won’t fit in your life. The same goes for new activities. When are you going to do the new activity, including prep, practice, and travel if applicable? Things without places create clutter and eventually misery.
  4. How does the new thing fit into your value system? If you don’t know, don’t buy it till you find out. You only have so much time, money, and physical space. If you let in a bunch of stuff that does not serve your value system, it just becomes a distraction. It also drives out the things that are in harmony with your values, and therefore robs your life of meaning to one extent or another. For example, if your values include bonding with your loved ones with a real sit down dinner, adding a lot of early evening activities is actually a form of clutter and will soon become TOO MUCH.
  5. Have a plan for buying things and committing your time. If you put the big pieces in first, such as travel or buying a house then the smaller decisions become easier. If you know that forgoing a new outfit will get you closer to a trip you want to take it removes some of the sting of saying no to yourself. This also works when dealing with family members. If you all agree that going camping is important it will help when you have to nix the new sneakers. Well, maybe not every time, but it will certainly help.
  6. Now apply these guidelines to what you already have. Do you need to purge anything? Cancel anything? Get rid of any time commitments, memberships, or subscriptions? Does all that you have serve you and your values? Be honest, and then start making a pile for charity. And don’t be too quick to fill up the spaces that get opened up. Open space and breathing room are essential to a happy life and a sign that you have just the right amount.

Try these six tips to create a life that is the right size for you. Not all of them will be easy, but the results will be worth it.

For more on this topic check out these links:

http://www.thefrugalgoddess.com/2010/09/23/frugality-in-a-consumption-crazed-society/

http://www.thefrugalgoddess.com/2010/08/30/false-economy/

http://www.thefrugalgoddess.com/2010/11/01/time-and-money/

Start Saving Money Today–Avoid The Five Biggest Money Wasters!

 

What's Emptying YOUR Wallet?

Several years ago I clicked on a link about wasting money. On the list were several items that seemed very subjective, such as owning of houseplants, or reading magazines. I started searching for more such lists, and found that they all had subjective items on them. No one suggested that having children should be on the list, but some did list pets. The one thing all of these subjective items had in common was that each of them had some intrinsic value. And to the person who values an item it is not a money waster. The other thing about these list was that none of them caught ALL of the real money-wasters. You know, the things that nobody could possibly value. The financial losses that have no bright side. So, here is my list of the true money wasters.

  • Fees or fines for things that are avoidable. This includes parking tickets, tow-away charges, moving violations, and anything else where you run afoul of the law and have to pay when you get caught. What can you do about it? Park somewhere legal, leave earlier, stay sober or find another way home, and obey all traffic laws. It may be inconvenient sometimes, but not as much as paying a big fine or worse.
  • Unused memberships. The biggest offender is the gym membership, but there are others. Are you paying for an online subscription or premium service? You might be paying and not be aware of it, as in the case of 3rd party billing for “premium downloads” that can attach to your cell phone bill without you even being aware of it. To avoid this money drain, take a look at all the things you pay for automatically. Look closely at all your bills to make sure you don’t miss anything. If you aren’t using it, get rid of it. And next time you are tempted to join or subscribe to anything that costs money, think twice. Ask yourself if you have a bad track record. When and how will this new activity fit into your life? Can’t figure it out? Don’t do it!
  • Bank overdraft charges. I am not referring here to charges just to keep an account, though you probably can find a free one if you look. I am talking about what they charge when you write a check you shouldn’t. This may also apply to using your debit or credit card when the money isn’t there as well, though many states now have laws which force the bank to simply decline the card if there are insufficient funds, instead of paying the item and charging you an over-draft fee. To avoid paying any overdraft fees, set up overdraft protection with the bank or simply never go over what you actually have available. It might be a good idea to leave a small cushion just to make sure.
  •  Late fees. If you have any control at all over your cash flow you can avoid late fees. The problem may be that you procrastinate. Procrastination is fine in some situations, but not when it’s costing you. On the other hand, you may be late because you income has dropped. If it is in your monthly budget you should be able to pay for it. If you can’t then you must get rid of it. It may not seem fair. It probably isn’t. But this is the system we live with. If you have experienced a downturn in your financial situation you may start with a pile of bills and get rid of the services one by one. First the premium satellite for your TV, then the memberships to things, all the way down to the car if need be. If you know the difference between a need and a want you’ll know what to do.
  • Disorganization. This causes waste in many ways. It may be buying duplicates of things because you can’t find the first one. It may be massive food waste because you can’t tell what is in your refrigerator and cupboards. It could be paying higher prices because you don’t plan ahead. The only solution is to do an honest evaluation. If you know you are wasting money and overspending because you are disorganized, sit down and think about it. Are there areas where you are doing fine and others where you are suffering from disorganization? Or are you pretty much a mess across the board? Either way, start by trying to get a good friend to help you work on it. It may take a professional organizer in the end if your issue is severe. Just start today if this is you.

There are other behaviors that contribute to wasting money, but these five are the most common offenders. The good news is that all of them are fixable. Just think what you could do with the money you save.

Don’t Get Scammed –Block “Third Party Billing” on your Cell Phone!

The other day I was getting ready to pay my cell phone bill online, and noticed that it seemed high. I took a closer look and noticed a $19.95 “usage fee”. Now, because I am a frugal person I purposely set up my service so that there would be no overages of any kind. So, I braved the potential one hour wait time to talk to a real person and learned that this charge was for a third party billing service for “premium texting”. Sometime ago I had begun receiving texts for some blingy contests. I had taken them as text spam, bad enough in and of itself. But this was much worse. They were charging me for these spam messages and I never signed up for anything like that! Why would I?

Well, they reversed the charges, and blocked any further third party billing requests. And I learned a valuable lesson. First—check every item on your phone bill every month. Don’t be afraid to raise a bit of a fuss over any suspicious items. If you completely understand what you are signing up for, you will spot phony charges right away.

Second—call your cell service right away and get them to block all third party billing. If you are getting a new phone or changing providers don’t forget to renew your blocking request. If they don’t understand the request ask to speak to someone who does understand and can help you.

Third—be careful how you use your texting service. These scam artists harvest numbers from many different sources, some of them very legitimate looking. If you are EVER asked to provide your mobile number online, find out first what the asker intends to do with your number.

Protect yourself. Don’t let rats steal from you a little at a time. If you follow these simple steps you will be sure you are not paying for things you didn’t ask for and don’t want.

Cheap or Frugal? What’s the Difference Anyhow?

 

So many times when I tell people about my writing I get a strange response. “oh—I don’t like that word-frugality” they say. “I don’t want to be cheap” Or sometimes “I don’t want to live in a poverty consciousness.” It is easy to see where these ideas come from. The shift in our value systems as a culture has given the honorable qualities of frugality and thrift a bad name. At this point for many these words are bundled up with other words such as miserly, stingy, and cheap.

But this was not always the case. The founders of the United States had a very different view—hence all the wonderful sayings about frugal living from the best minds of that era. For example “A penny saved is a penny earned.” and “Beware of little expenses. A small leak will sink a great ship.” both from Benjamin Franklin. They did have a word for cheapness back then—they would have said miserly, but they knew the difference between miserly and frugal or economical. The question posed in this post would never have arisen back then.

Today is a different story. In an atmosphere where things and experiences (that can be purchased) have taken the place of actual connections with people to large extent and going into debt is the normal way to get our needs met and our wants satisfied it is hard to imagine the value of delayed gratification. It is to the advantage of the market to make us believe that frugal is the same thing as cheap.

It is true that some behaviors are “cheap”. For instance—going out to dinner and ordering the pasta instead of steak is frugal. Not tipping the waitress is cheap. A frugal person would not go to a place where they can’t really afford to be there. The same with going out with friends and “forgetting” your wallet. A frugal person would just suggest a less expensive form of entertainment to begin with. Or they would save up for a big night out and thoroughly enjoy it, knowing that spending their time and money that way was the best use it could have, and without guilt. That is the true meaning of frugal abundance. It is to know what you want, and then going about making proper provisions to get it.

A cheap person only has one way of interacting with money—hoarding it. A frugal person is adaptable and responsive to the environment. They are willing to spend when appropriate while getting the best value for their money. This may mean that they are slower to reach for the wallet. This is not the knee jerk reaction of the miser, but rather the behavior of a self-aware person living with-in their means. In the end, it is the big spender that experiences lack, and his frugal sister who lives in prosperity.

Your Routines Could Be Making You Broke

 

Coffee and the Paper

Habits—everyone has them. Even the most freedom loving among us have some kind of daily and weekly routine. There are good reasons for this. One of them is biological. Our bodies are designed to run in a rhythmic fashion.  Our sleep patterns, for example, cause us to cycle on a daily basis. The second reason is psychological. Our minds are designed to categorize information. Huge amounts of undifferentiated data are just too much to process. Habits and routines are one of the ways we dial the information overload that comes barreling into our consciousness every day. In and of themselves habits are neither good nor bad.

If you are trying to manage your money and cut your expenses you must create the right habits to give you a push, and defeat the habits that cost you. The first step is to identify your current routine. Let’s start in the morning: You roll out of bed, and then what? For many people the answer is to get a stimulant such as coffee into their system as fast as possible, often coffee in the western world. How do you get your coffee? How much does it cost? In addition, many of us eat breakfast, and according to nutritional experts all of us should. So, how do you handle that, and how much does it cost?

To do a good audit, pay attention to your routines for a few weeks. Each time you identify one, ask yourself if there is an expense associated with it. Remember to multiply the cost by how often you partake in the habit. For instance, the cost of to-go coffee should be multiplied by 365 if you do it every day. Do this exercise on the daily, weekly, monthly, and even yearly levels.

Once you know what you are doing now, it may be time to tweak those habits. You may be shocked at how much money is leaking out of your sieve without you even being aware of it consciously. Changing habits, especially those that are deeply engrained, may take quite an effort. But it can be done. If your money wasting (and often unhealthy) habit is one known to be tough to break you may want to get some help from a support group. If it is something like smoking you may need medical help. But, with the right plan in place virtually any habit can be defeated.

You may also have some good habits, walking each morning for example. Don’t forget to include these. Knowing you are doing some things right will improve your morale. You may also want to make a list of habits to integrate into your life, such as making a healthy breakfast at home each day, packing a healthy lunch, or socializing outdoors instead of expensive indoor venues. Developing a little habit such as making your bed a certain way each day can anchor your day at no cost to you except a few moments of your time. These are the habits that enrich us and bring order to our lives.

Everyone has 24 hours each day, and we all fill them with habits. With a little work your habits can make you richer, healthier, and more fulfilled.

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