October 2009 Archives

Timing is everything

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If you like candy, remember that the day after Halloween (like the day after Valentine's Day), it'll be widely available for half-price. But be judicious -- empty calories, even when they're cheap, aren't the most frugal of investments.

Your Money or Your Life, Part II

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This is a penny that took a long time in dropping -- my very first post here, in January, was Your Money or Your Life, Part I. Refresh your memory if you need to.

As I said there, the heart of the book's advice is so simple to relate, I did so fairly in that very short entry. What I didn't talk about was the endgame it discussed.

By saving as much as you can, and investing it in guaranteed income funds, while minimizing your expenses, you'll approach having expenses lower than your guaranteed income interest. When the day arrives that your guaranteed income interest exceeds your expenses by enough to leave a satisfactory safety margin, you're done. You can retire.

One of the book's co-authors did so at age 31. That's the quietly radical message of the book -- that it's possible be done with the rat race at a young age with frugality and investment in boring guaranteed income interest funds as your main tools. You don't need to win the lottery or have similarly unlikely success in your career.

Bank of America going after frugalistas

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Can't believe I didn't hear about this sooner. Bank of America has announced it will be charging increased annual fees to credit card customers who pay off their balances each month. I hear that credit card companies call us smart, fiscally-savvy people who don't carry a credit card balance each month deadbeats.

Here's a chilling paragraph from Forbes
The Bank of America accounts that will be charged fees were selected based on "risk and profitability," Riess said. That means customers in good standing who never carried a balance - and never incurred interest charges or late fees - could be among those getting notices.

We happened to recently get a B of A-issued credit card recently. We signed up for it for its excellent frequent flyer mile program and $50 companion airline ticket offer, but we may have to cash out quickly! And, no doubt, this will not be limited to BofA exclusively. It's just a sign of the times.

Apparently this is all on the heels of the Credit Card Act of 2009, a House of Representatives bill that is sending all the credit card companies scrambling to write in outrageous terms in the name of future profitability. Essentially, you are charged hefty fees for not keeping a balance, and you are charged hefty fees for keeping a balance.

I had always been a proponent of responsible credit card use, when it was financially to my advantage to do so (i.e., paying off the monthly balance, not paying an annual fee.) I may have to reconsider that position.

Rain-X to the Rescue

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Here in northern California, the rainy season has begun. A great trick for drivers that I picked up from my Seattle-living days is putting Rain-X on the windshield. Cheezy 50's name aside, this stuff works.

It practically makes your windshield wipers irrelevant. Really. The organic compounds in it create a barrier on the windshield and the rain drops literally fly off. There's no more sheeting action across your windshield, and the drops bead up and roll away.

Follow the directions, apply according to the directions, and see how much longer your windshield wipers last!

_How to Cook a Wolf_

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M.F.K. Fisher, widely regarded as the first foodie writer, was simply a well-educated and wealthy American woman who liked to write about what she calls "gastronomy" or fine dining. Though she lived in Europe for some years with her first and second husbands, she was not a snob, but truly a food enthusiast, a gourmandise. She writes as eloquently of terrines as she does fried egg sandiwches; she loves food in all its forms and cuisines without regard to class.

And one of her classics, How to Cook a Wolf, is a guide to frugal cooking (hunger is personified as a wolf that must be kept at bay) during food rationing of World War II. Because she is from a far removed generation, and because she mentions the thrifty habits of her grandmother, it's a book of frugality that stretches back to a cooking past I was quite unaware of, which included hay boxes and sheets of metal to stretch precious fuel costs in maintaining a literal fire.

There is even a recipe for homespun bar soap, using repurposed grease no longer fit for food. I suppose a cook from that time period would know when that was.

And she waxes on about the benefits of baking bread, which is exactly how I feel about it, more than sixty years later, and could have been posted to a blog on bread-baking from this morning:

It does not cost much. It is pleasant: one of those almost hypnotic businesses, like a dance from some ancient ceremony. It leaves you filled with peace, and the house filled with one of the world's sweetest smells. But it takes a lot of time. If you can find that, the rest is easy. And if you cannot right find it, make it, for probably there is no chiropractic treatment, no Yoga exercise, no hour of meditation in a music-throbbing chapel, that will leave you emptier of bad thoughts than this homely ceremony of making bread.

How can you not try baking bread after that?

Walking

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Jen and I had plans to do a couple of things in San Francisco on Saturday. We took BART as we nearly always do. Neither our house nor one of our destinations was close to a BART stop; by day's end, we'd walked more than four miles (four different legs of the trip had been about a mile on foot each.)

Walking a mile takes only about 20 minutes for most people, barring physical difficulties -- if those apply, this entry won't be very relevant. But a lot of people who could walk a mile or two automatically consider it too far, and search for an alternative. A lot of times, walking can beat the alternatives.

It's generally free. It's often faster than mass transit for short distances. It's exercise. It has a low carbon footprint. And you really get to see the bit of the world you're passing through.

Of course, you'll probably sweat. You'll need comfortable shoes, and, if you're carrying anything, you'll need a comfortable way to do so, like a backpack. If it's daytime, you may need appropriate precautions against sun exposure. Fashion might be a casualty, so if your destination is a black-tie event, you might want a different conveyance.

The rest of the time -- maybe walking a mile isn't so bad.

Library book sales

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I've commented before on reading as a cheap pastime. I'd like to emphasize one of the things that can make it so cheap: library book sales.

I'm lucky to work in walking distance to both a university library bookstore and the bookstore of the friends of our local public library. Yesterday I bought Jen an omnibus of 5 M.F.K. Fisher books for 50¢. The last book I read was an annotated autobiography of Ben Franklin. 5¢. I have a stack of other good books purchased for 5-75¢. See if your town has any standing library book sales; if it doesn't, find out when your local library has its sales.

I've seen some e-book enthusiasts bashing physical book readers with accusations ranging from being out of touch to outright luddism. And for all the considerable advantages e-books offer, physical books retain the killer feature of being available on the cheap. Get back to me when you can buy desirable in-copyright used works for 5¢ for your e-reader.

Frequent Flyer Sale

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I've been waiting for a frequent flyer sale since the last time they had one, back in the recession of 2001 (remember how short and cute that one was?) I still rue the day that I didn't jump on the Continental OnePass sale to South America, for the frequent flyer equivalent of only a domestic flight.

Well, United Airlines is having a sale, but you have to book now for travel in the spring. It's only a reduction in 5,000 miles for a domestic trip or to Canada, but it's a discount nonetheless.

Peanut Sauce

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This is one of the most versatile sauces: it can be mixed with noodles and served cold, atop fried tofu, or over Chinese eggplant (our preferred method.) Make it several hours in advance of serving for best taste. As with most sauces that contain garlic, it tastes even better the next day for extra garlic zing. Oh, and it's as easy as putting the ingredients into a bowl.

This is a modified version of a recipe from the Moosewood Cookbook, of the famed Moosewood Restaurant in Ithaca, NY so thanks to Mollie Katzen!

Peanut Sauce
* ½ cup peanut butter (we like the non-hydrogenated kind; so will your arteries)
* ½ cup hot water
* 2 tablespoons soy sauce
* 3 cloves garlic, minced
* 1 tsp vinegar (any kind: cider, rice, plain old acetic acid)
* cayenne powder, to taste

  1. Place ingredients into a bowl.
  2. Whisk together and enjoy!

Number crunching, mortgage edition

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For a while, Jen and I have mused over refinancing to a 15-year mortgage. The monthly payments would certainly be noticeably more, but we'd be done so much sooner, and we've been paying the mortgage down faster than required anyway.

I'm glad to have come across this article on Get Rich Slowly.

It makes an excellent point, one I hadn't realized. If the difference in interest is small (as you can expect it to be), keeping a 30-year mortgage and paying it off on a 15-year schedule has a total price tag not much different from switching to a 15-year mortgage. The difference is small enough that I think it's a worthwhile price tag for the luxury of not being locked into the higher payments.

And, it saves us the work of pricing mortgages. Win-win!

Cheap Date

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Last night, I ordered Thai take-out before I left work, and picked it up on the way home.

Any regular readers know how often we've talked about how much more expensive it is to eat out than cook your own. And we'd generally recommend avoiding a situation in which you're eating out by default because you have no groceries or tools at home. But we'd never suggest foregoing restaurant food altogether, if you can afford it and it's worth it to you.

Take-out's a great way to have your restaurant food and eat it, too. And only it, without high-priced drinks or appetizers or dessert, without a 15% gratuity.

Again, don't do it by default, but keep it in mind as a cheaper alternative to a sit-down restaurant meal.

DIY Ice Cream

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For about $25 shipped, Jen and I bought a Donvier 1-pint ice cream maker from Ebay. You keep in your freezer a tub whose hull is filled with anti-freeze. When you want to make ice cream, you make your mix, dump it in the tub, and snap on some parts that let you turn a crank to scrape the mix from the walls as it freezes. After the first couple of minutes, a half-turn every minute or so is plenty -- it takes some 20 minutes, but isn't an arduous process.

In the end, the ice cream is pretty soft, and will need to be put back in the freezer to get hard. (The instructions call for cranking your freezer to the max for hours to get the tub as cold as possible before you start -- we don't bother. No doubt we'd have harder ice cream faster that way.)

We use good ingredients, and the result is the best ice cream we've ever had. Given the cost of the ingredients, our homemade ice cream isn't cheaper than most packaged ice cream. It's cheaper than premium ice cream, but not by a huge amount. But we have fun doing it, which is what makes it worth it.

If you like good ice cream, and this sounds like fun, give it a try.

Pre-tax savings

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This is something probably everyone has heard, but I want to stress anyway. Many employers offer participation a 401K or 403B (for tax-exempt organizations) plan. These let you sock away up to $16,500 a year (more if you're over 50) on a pre-tax basis. That's $16,500 invested instead of something like $5500 paid in tax and $11,000 net income (exact amounts can vary widely depending on your tax bracket.)

These are called tax-deferred accounts because eventually, when you withdraw from the account, the withdrawals will be taxed as income. But you're getting decades worth of compound interest in the meantime. In theory. If you can find an investment that's actually turning a profit.

At any rate, if one of these is available to you, and you can afford to do without the money in the moment, this is one of the single best ways to invest, as a substantial amount of what you're investing is money you never would have seen anyway, as it would have gone to taxes.