Thursday, February 28, 2008

Lessons I've Learned from Being Broke

This article in Kiplinger made me start to reflect on my own life and the times when I was happiest. Ironically, the times when I had the least amount of "things" in my life were some of my happiest times. One of the things I can't explain to my husband is that right now, even though we don't have a lot of extra money, I feel rich. I own a home. I have two kids that I adore. We can afford to have birthday parties, go out for dinner and buy clothes that fit. For someone who grew up without being able to afford to either attend or have a birthday party (my mom wouldn't let me go because we couldn't afford a gift), throwing my son a party at the Children's Museum in Tucson made me very happy. We might have a crumby car, and my husband might have to save up for his iTouch, and maybe I make things from scratch during the week so we can have that Sunday morning breakfast at our favorite breakfast place, but the more I downsize and get rid of "stuff," the happier I feel.

Very un-American, isn't it? At least, what with all the newspapers and t.v. media encouraging us to spend our way out of a recession.

Here are the highlights from this article, which I found very interesting.

1. Know your priorities.
2. Debt is a vampire.
3. Have a cushion to fall back on.
4. Set goals and tune out peer pressure.
5. Small sacrifices add up to big rewards.
6. The size of my bank account doesn't matter.

My favorite quote from the article: "I remember my dad telling me that the only things worth going into debt for were those that appreciated in value: a home and an education. Anything else will suck you dry. Lesson learned."

Quote of the Week

This is from a comment on Get Rich Slowly by Catherine on downsizing your life:

"I don’t want to be rich, I want to be free. And freedom is worth more than stuff."

Credit card debt down another $1000

With the extra money coming in this month, we were able to put another $1000 on our credit card debt. We also put extra toward my student loans and toward the mortgage. We are slowly paying things down, and I'm looking forward to adding up net worth for February!

Here's a few things we did this month to further reduce our cost of living:

*I pulled out our old bread machine and started making my own bread. At 86 cents a loaf, I can make whole wheat, all-organic bread for 1/5 of the cost of buying it at the store.

*I started making things in bulk. I made homemade macaroni and cheese, which seemed more expensive at the time (about $8 in ingredients), but one recipe made a giant pan and it lasted for several meals. I also made pinto beans from dry beans -- 3 lbs of dry beans = $2.00. My kids absolutely love refried beans, beans and eggs, beans and quesadillas...you get the point. Since I make the beans myself, I get to control what goes in them. I put 2 strips of bacon in the entire pot, and the bacon flavor...mmmmm. And instead of one person eating 2 strips of bacon for breakfast, we ate the "taste" of the bacon in the beans for over a week. This saved money AND was better for us. (tip: I froze pints of beans, which were enough for about 2 meals. This kept them fresh, and the freezing actually makes the beans better for refrying.)

*I started making my son's lunches for school. This week I made him a lunch 3 days out of 4, and not only was he thrilled, he got fresh bread, fresh fruit and a healthy snack of root vegetable chips instead of his usual lunch at school -- pizza, pre-made bean burritos or a hotdog. I also put a note in his lunch, which made him really happy.

*I tried to get by on as little as possible. When I went to the grocery store, I stuck to fresh foods and bulk items. I found that, when I avoided the doomsday aisles of chips, crackers and juices, I could get everything I needed for under $50 a trip, or for around $100/week. This worked even at Trader Joe's.

*I bought in bulk from Amazon.com. This helped alleviate the costs of dry goods items like diapers and paper towels, and it allowed me to buy unbleached, recycled products like 7th generation. I didn't know at first if it would really reduce our total costs, but it truly has.

*I cancelled our YMCA membership. This was hard to do, but I have to go at least 10 times in a month to justify the $60 monthly cost, and it wasn't happening. I did use it last fall, when I went to Pilates 3x a week (and I loved the class!), but the nursery uses bleach and it made my daughter break out a lot afterwards, so I finally stopped going. I can still use the Y for $6-8/day, depending on which one I go to, but it was hard to give up the membership. However, $60/month was a pretty big expense -- $720/year. It is more than the insurance on our Volvo, and we're selling the car so we won't have to pay that expense, so I decided it had to be.

Those are some of the things I've done the last 6 weeks to try to save money, and it really has worked. It is surprising how the small things make a difference, and even more surprising how your attitude changes. I "treated" myself to a lunch at Barnes & Noble, and I was terribly disappointed in my $6 half-sandwich that was overcooked and drowning in cheap Italian dressing. The kids got a cookie, and for $1.95 I expected a good cookie, but it was stale and tasteless, and I thought, how their quality has gone down! But then I realized that the cafe has not changed -- I've changed. Making my food from scratch, and realizing the actual cost of a thing has changed how I look at things.

We are waiting on a possible buyer for the Volvo, so that, combined with (hopefully!) a tax return could pay off a pretty big chunk of debt. I'm feeling good about our 'debt snowball' at this point; next stop, reducing our energy bills.

Saturday, February 23, 2008

The Month Of February: Success!

This month we rented out our guesthouse by the week and made $450 ($100 more than monthly rental). We would have made another $80 but there was some confusion on the dates. That amount, combined with the $256 I made doing some light babysitting, brought my salary this month to $706, or roughly twice what I brought home when I worked part-time at a real job (after daycare).

The hardest part is not knowing what next month will bring, but hopefully more renters. We had a great experience this month and hope it will continue.