February 2009 Archives

The high price of novelty

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The hot new $60 computer game? It'll be available used on Ebay for $10 in a few years. The new movie you and a date could see for $25 this weekend? $4 DVD rental in about a year. Today's bestselling book? In a year, it'll be remaindered, available used, and won't have a waiting list at the library any more.

In each case, it's the same game, the same movie, the same book (though, obviously, the experience of going to a movie theatre isn't the same as watching a DVD at home.)

How much of a premium are you willing to pay for having, seeing, reading the latest thing? Would it really diminish your quality of life to wait a little while for them? (If you find they don't have as much appeal without the glamor of newness, well, then you've saved yourself some time, as well.)

I don't mean these as rhetorical questions. If paying the novelty surcharge is worth it to you in a given case, great. But do realize it has a cost.

Roasting your own coffee

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In these times of recessionista chic, our home coffee-roasting habit looks less like a middle class foodie-ism and more like good financial sense. It's actually both.

We both enjoy a cup of well-brewed coffee. The classic stuff, not something-ccino with three ounces of whipped "creme" on top. After smelling the delicious aroma of roasted coffee beans from a java junkie's house, and tasting the resulting superior brew, we knew that we were ready to roast our own coffee beans.

We used to pay about $13/lb of roasted coffee. Now, buying green beans (unroasted coffee is literally green), we're spending $6/lb, and drinking the best coffee of our lives. As a bonus, the green beans have a much longer shelf life than roasted coffee, which needs to be consumed within a week of roasting, while the unroasted beans last over a year.

And this way, we're able to afford our favorite, tres cher Kona coffee, much more often.

Hummus without the tahini

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Do you love hummus, the Mediterranean dip made with garbanzo beans (aka chickpeas aka ceci) that goes so well with toasted pita & crunchy veggies?

I've always loved it, and instinctively knew that it would be easy to make. It simply requires garbanzos, lemon juice, olive oil, garlic, and tahini.

What the heck is tahini? It's roasted sesame seed paste. Know how small a sesame seed is? Really small. Imagine making a paste from it. Really expensive.

So what kept me from making my own hummus at home was the OUCH! factor of the tahini.

Enter Alton Brown's hummus recipe.

He's a foodie, but one who isn't a spendthrift. The first time I made peanut butter hummus, it was devoured. Maybe because it was served to a bunch of Americans, and we love us our peanut butter. I don't know why, but people really like it. (Ok, I haven't made it for my Arab friends).

And don't worry about the salmonella/recalled peanut butter, just use the good-quality peanut butter that only says "Peanuts, Salt" on the label. But that's an entry for another day.

Digital TV antenna on the cheap

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Yesterday was the originally proposed cutover, but now it won't be until June 12 that analog TV broadcasting in the U.S. ceases (excepting low-power stations.) I hope you applied for a coupon while they were available. If you're still in the market for a DTV converter box, the Tivax STB-T8 and Sansonic FT-300A are two models that are both Energy Star compliant and were top-rated by Consumer Reports.

If you're using a DTV converter box, or your TV has a digital tuner, you'll want an antenna (if you have cable or satellite TV, of course, you don't.) The rabbit ears of yore may not serve you well in the digital world -- they're best for VHF; most digital TV is broadcast in UHF. Here's the FCC on what antenna you'll want and a thorough FAQ from antennaweb.org, where you'll also find antenna suggestions based on your location and what stations are around you.

Before you buy an expensive new antenna, though, check out this guide to making a coat hanger antenna. Enough hardware to build two cost under $5 (the coat hangers I had, and the wood came from an old CD rack.) It's working well; some people are reporting that it beat $100 antennas they tried. Cleaning and straightening the hangers is more of a pain than the video lets on, and the PDF omits one important step (that the video mentions) -- you need to insulate the hangers where they cross (a little electrical tape will do.)

Happy Valentine's Day

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The most important financial decision you will ever make in your life is the decision of who you are going to marry.

It's easy to find love advice counseling blindly following your heart, and vilifying allowing crass sensible considerations like compatibility to come into play. This is great advice if you're into emotional extremes and have no plans to have a long-term relationship in which every part of your lives, including your home and finances, are entwined.

If you do want the latter, then you'd better pay attention to a lot of things. One of them is attitudes toward money (and, this being a frugality blog, that's the one I'll be talking about.)

On any list of what couples argue about, money is invariably at or near the top. If one person thinks credit cards are for emergencies, and the other thinks they're for maxing out, it's not likely to end well.

So, Happy Valentine's Day. And please keep in mind that cynically marrying for money is not the only alternative to pretending you shouldn't think about financial compatibility.

Dispatches from Depressions Past

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The psychic effect of the depression, it seems to me, is generally a good one.... It has taught people the difference between speculative values and real values. It has hastened the death of sick industries, and proved the vigor of sound ones. It has blown up the old delusion that the amount of money in the world is unlimited, and that every American is entitled to a police captain's share of it. Best of all, it has taught millions that there is really no earthly reason why there should be two cars in every garage, and a chicken in the pot every day.

A few years back we were all leaping along after the pacemakers, and making shining fools of ourselves. Life in America had become an almost unanimous effort to keep up with the Joneses, and what the Joneses had to offer by way of example was chiefly no more than a puerile ostentation. So many luxuries became necessities that the line separating the one from the other almost vanished. People forgot altogether how to live well, and devoted themselves frantically to living gaudily.

It seems to me that the depression will be well worth its cost if it brings Americans back to their senses. Once they rediscover the massive fact that hard thrift and not gambler's luck is the only true basis of national wealth, they will discover simultaneously that a perfectly civilized and contented life is possible without the old fuss and display.

-- H.L. Mencken, 1933

When I was a little girl, I loved Sprite soda. I loved the green bottle it came in, I loved its lemon-lime flavor, I loved the carbonation.

I couldn't believe how little it cost --- it was something I could afford even on my little allowance. I remember asking my dad how stores could afford to put even my beloved Sprite on sale, when it was so low-priced in the first place.

He pointed out to me that the cost of a bottle of Sprite is mostly the cost of the bottle itself. I didn't know that packaging was the major part of the price tag for food & drink items. My eyes were opened.

That's why the bulk food section of the grocery store is a great place for value. It's not always necessarily the lowest price (compared to weekly specials), but a majority of the time it is true, and it's extremely easy to verify.

For example, Quaker Oats is promotionally-priced this week at $2.50 for 42 oz, or 95 cents a pound. The everyday low price of oatmeal in the bulk food aisle is 75 cents a pound. We eat a lot of oatmeal in my house, so that 20 cents savings adds up, and that's a savings of twenty cents per pound based on the This-week-I'm-on-sale price, because usually it costs more.

From the eco-conscious perspective, I don't purchase the flimsy cardboard Quaker Oats container (back in the day, it was sturdy enough to repurpose) only to throw it away each month once the oats are gone. I keep my oats in a refillable & handsome mason jar.

At my local grocery stores, they literally have the same products in the bulk bins as the ones sitting on the shelves: flour, pancake mix, sugar.

Between the cornmeal, lentils, rice, dried cranberries, and almonds, I have a lot of mason jars in my cabinets.

I never wait for a tax return check

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I choose my witholdings on my W4 so that I mail a check to Uncle Sam each April.

Why? Because I get to decide about the disposition of my money (i.e., in an interest-bearing account) versus having the government sit on it each year, interest-free, and then finally getting around to returning it to me the following year.

I'm especially glad this year that that is how I plan it, because the state of California may not be issuing tax refund checks in 2009, but I-owe-you checks instead. Who knows when the IOUs will be able to be cashed.

Ouch! The bad news just gets worse, and all the financial mayhem is related to each other.

Hannibal Lecter's frugality advice

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In "The Silence of the Lambs", Hannibal Lecter and Clarice have this exchange:

Hannibal Lecter: And how do we begin to covet, Clarice? Do we seek out things to covet? Make an effort to answer now.
Clarice Starling: No. We just...
Hannibal Lecter: No. We begin by coveting what we see every day. Don't you feel eyes moving over your body, Clarice? And don't your eyes seek out the things you want?

Every year, billions are spent on advertising. To what end? To ensure that we see products every day, so that we can begin to covet them. The subtext of most advertising is that happiness can be bought (or, conversely, that no one will love you if you don't use the right products.) Even if we forget a particular brand name, we're exposed to that underlying message over and over.

People even put the lie to Lecter's assertion that we don't seek out things to covet, haunting online bargain sites (one rather honestly used to use the tagline "How to go broke saving money") or going to the mall for recreation.

If you want to spend less, covet less. If you want to covet less, limit your exposure to things to covet.

Paying Attention

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Jen and I watched Tuesday's Oprah, a rerun from October, about saving money. It featured "the thriftiest family in America" helping another family now getting by on one (reduced) income instead of the double income they'd been accustomed to.

The one family may have seemed liked spendthrifts relative to the other, but they actually had been living within their means: they were saving, and they paid off their credit cards every month. In other words, they were doing far, far better than many people.

And, still, it was easy for the thrifty family to demonstrate how they could save $2000 a month. Most of the steps they took were fairly obvious -- cutting back on the $190/month cable/phone/internet bill, cooking and brown-bagging leftovers for lunch instead of eating out, borrowing DVDs from the library instead of buying them on the day of release.

Part of the Your Money or Your Life plan is just to track all your expenses. The book notes that most people report ending up spending 10% less just because the accounting makes them pay attention, before they specifically tried to cut back.

Ultimately, paying attention is the first, last, and only article of financial advice I have to impart.

A penny saved is more than a penny earned

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Imagine two situations. In one, you get a new job that pays an extra thousand dollars a year. In the other, you manage to spend about $20 a week less, saving a thousand dollars a year more than you had been.

In the first case, the thousand dollars is taxed (possibly at a higher rate than your existing salary.) If it's taxed at 30%, that's only another $700 in your pocket.

Money you spend, on the other hand, is post-tax. Any of it you can switch to savings is like giving yourself a raise bigger than the amount you save. And this is before taking interest into account.

There are a lot of ramifications to this simple fact. Are you considering a job that pays another couple thousand a year, but with a longer, more expensive commute? If the additional two grand is taxed at 30%, that's another $1400 in your pocket. If you end up spending an extra $30 a week getting to work, your raise has just cost you money.

If you can cut your spending, you've just given yourself a raise. And it might be bigger than you're imagining.

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