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Budgeting

How Can I Get Out From Under A Lease Agreement?

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Lou from north Carolina asks:

Hi. I am recently living on my own with my two children, 15 & 12. I was married for 23 years and totally blown away when my husband asked for a separation. It was initiated by money problems. I made a big mistake by agreeing to file bankruptcy so my credit is shot. I don’t receive any child support and basically let him have everything. I thought we were going to work it out but we didn’t.

Your web site and cookbook have helped me tremendously. I am living very frugally now.

I have one big problem. I have a leased vehicle payment of $650 a month and two more years on the lease. I’m upside down in the lease as well. I would like to trade the van and buy something else. Something that I can pay for and keep for several years. Do I have to go back to the same dealership I leased the van from to trade it in? I have been unable to get a straight answer anywhere. I know they’re making money on me. Big money. But the $650 a month payment is killing me. Unfortunately, I don’t live near public transportation. I would appreciate any suggestions you could give me.

Hi Lou,

Unfortunately, we don’t have any experience with auto leases. Everything we have heard had sent up big red flags about avoiding getting into lease contracts, but since we don’t have any experience with them, I don’t know the best way to get out from under it if you are already committed.

In a perfect world, we’d probably try to get out of the lease as soon as possible. I looked at a little information on the Internet and it appears that most leases have a provision for early termination, but that the fee associated with that can be thousands of dollars. I would check your lease contract to see what it says about early termination.

If you want to trade the vehicle, I would avoid getting into another lease. It is possible that the dealership where you leased the car may waive the early termination fee if you trade for another vehicle with them. If they say they can do it, make sure that they’re not just taking the penalty and adding it to your new loan. If they do, you are not saving anything.

If you trade it at another dealership, they will probably do it, but I’d expect that they would pay off the lease termination fee and then add it to your new loan, meaning you’d be in the same dilemma for longer.

Read your lease to see what it says about early termination. It is possible that if you called them and explained your situation, they might let you out of it. I wouldn’t count on it, but it wouldn’t hurt to ask. If it costs you $1000 to break the lease, but you can get another vehicle that will cost you $250 per month, you’d save $400 per month and the $1000 would be paid after 2 1/2 months.

If you can get out of the lease, I’d try to buy a used car from another person and not from a dealership. Dealerships charge more (even for used cars) to cover their administrative costs.

Once you know what you’re up against, I’d do the math for all of the possible scenarios (i.e. keep the car until the lease expires, break the lease,pay the fees and buy an inexpensive used car, trade the leased car for the van you wanted, etc.) and see which one will end up costing you less.

I wish we could have given you more specific information, but as I mentioned we have no experience with car leases. It seems unnecessarily complicated (probably so you’re too confused to understand what they’re having you sign).

I hope this helps!

Michael

From: Dig Out Of Debt

photo by: zayzayem

Pay Off My Car or Put the Money in Savings?

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Mike from Manitoba, Canada asks:

“I have been trying to live more simply, and would like to become debt free so that I will be more free to make changes that reflect my new goals in my life.

Last year I bought a new car. At the time I was already thinking about maybe giving up my old car and going without. Then my best friend bought a new car and I got caught up in the old “New Car Fever”. I have enough money in Savings to pay it off. The interest on the loan from the dealer is 2.9%. Should I put my savings into investments, or pay off the loan?

I really don’t want to be a slave to my job (which I am not really happy at) for five years just so I have money coming in to pay off the car. What do you think I should do? I could sell the car, but then I’d be losing 30% of my investment and that doesn’t make sense either. I would really appreciate your advice in this matter.”

Hi Mike. There are two ways to look at this. First if you have money in savings and it’s making more than 2.9% then it’s silly to pay off the car when you could be earning more money with it in savings or investments. Most savings accounts earn a minimum of 4% so you would actually be earning money by keeping the car payment and putting the money into savings instead.

But….. If you hate your job and want to quit and paying off the car would put you in a position to do that, then I would pay it off.

You’re looking at all wrong. Right now if you have the money in savings to pay it off you aren’t working to pay for the car but you are working to build up your investments. If you hate your job that much, save up enough for 3-6 months to pay for your bills and then you can look for another job.

Sounds like you are doing a wonderful job to me!

Tawra

From: Dig Out Of Debt

photo by: kenwilcox

When to Buy New or Name Brand Goods

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When to Buy New or Name Brand Goods

In all my years living frugally, I have found that some things are worth buying new. Even though I often recommend shopping at garage sales and thrift stores, there are times when you don’t really save anything buying an item used or cutting back on something. I have tried to figure out how to save money using cloth napkins instead of paper ones, but I just haven’t been able to justify the effort when paper napkins are so inexpensive.

If the effort to make a less expensive item useful exceeds the value of the savings, it is not worth buying something used. I have put together a list of some of the things that I buy new and some of the things I try not to buy new.

 

Things I will buy brand new or name brand (I usually try to make sure it’s on sale):

Packing tape. The Scotch brand packing tape works much better than the cheap stuff and I end up using less.

Tortillas –I buy most staple foods at Aldi, but the Aldi tortillas just don’t taste as good and they stick together.

Anti Virus software- If you use a Windows computer, don’t take a chance on this one. Check out the reviews to determine which one is best for you. No matter what you use, you will want to download the updates regularly. You usually get a year of updates free. You can usually save on new software by buying it at Amazon.com.

Haircuts- Normally, I am a huge fan of the beauty college to save money on haircuts but the other day was a flop. I took my 6 and 2 year old. We were there an hour and a half! I saved $2 and a long drive across town (about $3 gas) but it wasn’t worth the wait and chasing after a 2 year old for an hour. Most of that time was spent cutting their hair. I will just take Elly to my stylist (only $6 anyway) and keep giving David his haircut at home.

Disposable Diapers – With our 3rd child we used disposable diapers. With the other two, we used cloth at home and disposables when we went out. I tried the cheap disposable diapers but they leak every time. I found that Luv’s are cheaper than Pampers but still work. I did get some really cheap diapers free. I used those for during the day when I changed him more often, but never a night.

Major appliances- Most new appliances are so energy efficient, that unless you know for sure it’s a year or less old, buy a new one. Do your homework. Spend the $5.95 for a one month subscription to Consumer Reports Online and study it carefully. It is worth buying a specific brand if it is significantly more likely to last.

Shoes- Mike and I have foot problems and need good shoes. We can’t find used shoes that aren’t completely worn out, so we buy new shoes (but always on sale). We buy used shoes for the kids as much as possible, but with our 8 year old it’s getting harder. Most boys shoes are just worn out because boys tear them up before they outgrow them.

AAA roadside assistance- For a reasonable annual subscription, you can have someone make minor repairs or tow your car if you have car trouble. It’s worth it not to worry about breaking down and trying to get someone to help you. We’ve used this to get flat tires fixed, to have a locksmith replace the ignition switch on our pickup and to tow vehicles to the shop while we were traveling.

Kids Blow up Swimming Pools – Most used ones have holes so it’s not worth the risk.

Electronics – Unless you know how to fix them or unless you know they are working, it’s not worth the chance. If possible, do some research before buying electronics as the price does not necessarily reflect the quality.

Anything that sells new for under $10 – Don’t buy something that’s used that "needs a little work" if you only save $5. Usually "a little work" ends up being a lot of work and it’s not worth the hour or two (or longer) to fix it.

Canning- I don’t recommend canning if your purpose is to save money. By the time you buy the fruit or vegetables and the sugar and then spend hours canning, it’s not worth it unless you get most of the ingredients for free. If you do your own canning because you like to grow your own organic produce, then you have other reasons besides the financial for doing it and you can decide whether or not it is worth it for you to do it.

 

Things I will try not to pay full price for:

Except for the things I listed above, I usually try to buy as many things as possible used or at a substantial discount. I buy most of our food staples at Aldi, a small discount warehouse grocery store.

Cars – Much of the price of a new car is based on the "wow" value of having a new car. When a person buys a new car, the value of the car immediately drops to less than the amount that the buyer owes on the loan when the buyer drives it off the car lot. If you buy a used car, you will save a lot of money. If possible, save your money before you need a car and buy it with cash.

Shop around for one that has low miles compared to the other cars in your price range. If you look at a lot of cars, you can usually find a deal that will surprise you. If you don’t know anything about cars, find a friend who does and bring that friend with you. If you find a car you like, you can also ask your mechanic to look at it for you for a reasonable fee. It is well worth having it checked out of you’re not sure.

Clothes- I have noticed a difference when I buy Eddie Bauer, Van Heusen and other more expensive clothes. The colors are richer. They don’t fade as bad and they last longer than Wal-mart clothes. I still wouldn’t buy them new unless they were dirt cheap. I get them at the thrift store "like new" for less than $3 for dress shirts and .99 for T-shirts.

Most Furniture- I have young children and I don’t generally buy new furniture because I know that it will inevitably get scratched/stained/destroyed before its time. I buy most furniture at garage sales. I’m pretty selective so that I get good quality items that match my decor.

Couch – When you have kids, why buy a new one? Kids are especially hard on couches. Unless it has a print that really hides stains, just get a used one until they are older or out of the house. I spent $90 on the one we have now. I saved over $500 and can sell it for at least $50, probably more, when I’m done with it. If you have already purchased an expensive couch then a slipcover is worth the price with kids!

Toys and almost everything for kids and babies– Until they get to be a certain age, kids don’t know whether something is new or not. Even after they are 8 or so, you can get by with buying used items and re-packing them tastefully. For example, I bought a super sized package of Knex (a construction toy with lots of little pieces) and put it in a large plastic container. I bought the Knex for $10, but they would have cost more than $100 new. If you buy used and dress it up, you haven’t lost as much if they don’t play with it.

Camping Equipment – For items like tents, camp stoves and lanterns, most people don’t use them enough to justify the cost of buying them new. If we need something, we usually buy it at a garage sale from the people who bought it new and almost never used it. Like exercise equipment, there is a lot of it out there so you can always get a good deal.

Books- Books are so expensive when you buy them new off the shelf. Our library sells used books. You can also get them at used bookstores, thrift stores and garage sales. If you must have the latest title now (a diet book, self help book or something you saw on Oprah :-), there are ways to save quite a bit. Try Half.com, E-bay or Amazon.com. For young kids, you can definitely find it much less used!

These are some of my suggestions based on things that I buy. You may find that it is worth it for you to buy something new that I buy used. It’s different for everyone. The thing to remember is that for each item you buy, there is a cost and a benefit. Try to get the greatest benefit for the lowest cost.

-Tawra

 

From: Dig Out Of Debt

 

photo by: roblee

Paying Cash For A Car?

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Paying Cash For A Car?

Elaine From Massachusetts asks:

“Given the fact that more people are traveling further for better paying jobs — How does your concept of purchasing a car cash apply? I travel a total of 100 miles a day round trip for work. Travel time is about 1 hour 15 minutes peak times and when it snows it can take over 2 hours. YES, a new job closer to home would be ideal but close to home does not have anything but small mom/pop stores and Wal-Mart / gas station/ Auto Zone/ Home Depot/ Sears…. no big companies that pay like HP, EMC, 3Com or Verizon. The current truck I am driving has 250,000 miles. It is TRYING to make it through the winter.. Help!”

 

Mike: Hi Elaine,

We try to purchase used cars in good shape for cash. Generally, we shoot for around $5000 for a car with 50K miles or less. We have not always had the cash, and in that case, we’ve bought the $5000 car using a zero percent credit card. We don’t recommend that because you still have to pay for it eventually and using credit just delays the inevitable. If you do use credit, I’d still bite the bullet and pay it off as fast as you can even if you get a no interest loan.

Regarding your question about long traveling distances, there are only two options that we can see. Either expect to pay a lot for traveling expenses or move home and work closer together. We used to live in a remote area in rural Idaho. I drove 100 miles each way to work and it was 70 miles to the nearest town where we could go shopping. There weren’t many places to work in the town of 400 where we lived and most of those paid only minimum wage. Eventually, we had to move to a city where we were closer to jobs.

If all of the workplaces are far from home and the shopping is far from home, it seems like the easiest way to reduce traveling costs is to move closer to the city where you work.

Alternatively, you could develop a web business or some other home business, but beware that web businesses take just as much work as any other business and take time to set up before they make money. The “up” side is that if you’re living in a house that has been in your family for 7 generations, you can keep your house and also reduce your traveling cost.

I may have misunderstood the question, but whether or not you have a new car does not seem relevant to your driving distance. If you want a more fuel efficient car, you can buy a gently used car with cash and be way ahead on your costs rather than buying a new car. When we did the math, we figured that buying a brand new car to save money was not a good idea. If you want a new car and you are willing to pay for it, go ahead and get one. If you don’t need to save money and you really want the car, that is a choice that you are free to make.

As far as costs, though, consider this: If you buy a new car for, say $25,000, you will pay substantially more than the $25,000 cost if you get a car loan (because interest and fees add additional cost). If the new vehicle gets gas mileage twice as good as a $5000 used one, the amount you spend on the price of buying the new car will far exceed the amount of gas money saved over the life of the car, not to mention the higher insurance and license tag costs.

If we were in your situation, I’d start looking for a good deal on a used car in good shape that I could hopefully buy with cash by the time the truck goes to truck heaven. If you look at a lot of cars and if you check them out carefully, you can get a better deal than you might think. If you don’t know anything about cars, enlist a friend who does to check it out for you. When you think you’ve found “the one”, you can pay a mechanic to check it out for you to make sure it is in good condition. This usually costs around $50.

For us, we would continue to buy used cars if our income was higher and then use the extra money to pay off any debts or invest the savings in something permanent like real estate.

Just to be clear, don’t feel like you need permission to buy a new car if you want one. If you can afford a new car and are prepared to pay for all of the costs, go ahead. Our point is that financial matters are all in a balance and in order for everything to work out, all of the money you spend has to work out to less than all of the money you bring in.

If you do decide to buy a car new, don’t make that decision based on the fact that a car salesman says you can get a loan. Make sure you do the math and feel comfortable with the cost. The salesman wants to make money and it’s not his problem if you have trouble making your payments.

I hope this helps!

      -Michael

For more easy and practical ways to save money and get out of debt, check out Dig out Of Debt and learn more about how to keep more of your money.

 

photo by: amagill

Don’t Buy In! Part 3

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Don’t Buy In!, Part 3
Read part 1 here and part 2 here.

 

So What’s the point, you ask? What can I do about it?

  • Don’t buy in! Don’t listen. Reduce your exposure to a runaway stream of information. Don’t just rock along in auto pilot. Think about what you’re doing.
  • Any information going through your mind that isn’t relevant to your life merely causes mental clutter which causes stress. If you’re stressed, chances are you have this problem.
  • Turn off the news! You don’t need to know every detail of what is going on in the world. I have found that not following the news has greatly reduced the stress in my life. Yes, it is sad when a child drowns half a continent away, but unless I know the child or his family or unless it is reasonable to think the same will happen to my child, why do I need to know? It is just a cause for needless stress. It is important to be informed before you vote, but you can easily do some intentional research about the candidates shortly before an election rather than follow the daily barrage of news coverage.

    "What if something happens that I really need to know about?" You will always know people who will tell you things you absolutely need to know. On September 11th, my brother in law called to tell me to watch the news. Keep in contact with your neighbors. If something happens in your neighborhood, they will tell you. Then, if you want to know the details, go to the most reliable source of news you can find and seek out only that story.

  • Don’t watch so much television. This is important especially if you watch a lot of high stress television. Police crime dramas, abrasive TV talk shows and "He Said, She Said" reality shows will raise your stress levels. Too much of any kind of television time bleeds away hours of your life that you may later wish you still had.
  • When you feel the urge to buy something, stop and ask yourself if you’re being brainwashed or if you really need that thing you want to buy. Chances are if you have to have it RIGHT NOW, it’s an impulse buy. Put it off for a while. Weigh the value. I have found that if I delay a purchase, I almost always realize that I don’t need or really want it.
  • When someone tells you something that seems important, don’t just believe it, especially if the information causes you anxiety or has some impact on your belief system in general. If it is important, verify the information with a reliable source. I wish I had done this more in college, when I for a time believed unquestioningly the lies that some professors told me, even while they encouraged me to challenge beliefs for which I actually had solid evidence.
  • Don’t "surf" the Internet because you’re bored. When you go to the Internet, make sure you have a purpose: You want information on a particular topic or you want to play a game or buy a song that gives you encouragement. If you just surf, though, you are just finding information to clutter your brain which will compound your stress.
  • When too much information causes stress, it is expensive. Stressed people usually smoke, eat too much, develop various addictions or simply seek medical attention that they may not have otherwise needed. All these things cost money that stress free people don’t feel compelled to spend.
  • When too much information causes stress, it adversely affects your health. Spending the majority of your time under a high degree of stress leads to all kinds of medical problems that make life unpleasant and will probably lead to an early death.

 

Is it really that important to be "plugged in"?

 

Update: Reader Question – Why are there ads on this site?

Originally, this story ended here, but we received a couple messages from readers who found it strange that there would be ads in a story that speaks to the down side of advertising. We wondered before we published it if the story would generate some letters to this effect. Here is a little clarification for those of you who wondered:

Advertising itself is not "bad". Advertising does serve to inform consumers who may be interested in purchasing a particular product that the product is available. That is why I said that you need to consider the value of something before you buy it. Is this something that is really going to make your life easier, save you money, or give you some real enjoyment in life? The point is that you have to be careful that you don’t let advertising direct your every decision in life.

If people have information to share, whether it is news, information about products or simply an idea they’re trying to promote, it is perfectly OK for them to try to get that information to the public.

People need to make money in their businesses. Advertising is a good way for them to do that. It is unrealistic to think that a company will be able to provide things for "free" if there is no way for them to get paid for the time and resources required to do the work. Not many of us would devote a significant portion of each day working hard for free when there are bills to pay.

It is self destructive for you to purchase things that you don’t need with money that you don’t have. When you purchase something out of fear, envy, anxiety or anger, you’re not buying it because you need it. It won’t solve your emotional problem. It will just make things worse by increasing your debt and cluttering your life with things you don’t need.

The next time you think about buying an item, ask yourself, "Do I really need this? Will this item really improve my life?"

 

Now… If you’d really like something to help you change your life , may I suggest a great cookbook? 😉

 

A reader’s response to this story:

"Hi! Just a note, where I live (Folsom, CA) the Albertsons grocery store installed TELEVISIONS at the check out line that was streaming advertising disguised as helpful information, but selling groceries! It never ends!" Lisa M

 

Read Part 1   |   Read Part 2   |   Part 3

 

From: Dig Out Of Debt

 

Don’t Buy In! (Part 2)

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Don’t Buy In! (Part 2)
(Read part one here.)

TV ads are, as a whole louder than ever, often using fast paced tense music to make you feel like there is an urgent reason you need to watch this commercial. Even though there are laws designed to prevent television broadcasters from playing commercials louder than shows, commercial producers know how to mix the audio in such a way that the commercial sounds louder without appearing louder to the broadcast equipment. Have you ever noticed that many commercials have the sound of a telephone near the beginning, even if a phone doesn’t play any part in the "story" of the ad? That’s because production companies know that the sound of a phone ringing will cause most people to unconsciously respond with urgency to the ringing of a telephone.

Even magazines are in business to sell you advertising. Oh I’m not talking about the tabloids with "too good to be true" advertising that is so obvious to most of us. I’m talking about the magazine where you read a story about some new gizmo that the "reviewer" in the magazine seems to think is the greatest thing out there. Many of the magazine articles that appear to be written by impartial reporters singing the graces of various products are actually advertisements, commissioned by the companies that sell those products, written by advertising agencies and provided to the magazines as "stories" designed to make you think that some regular Joe out there liked the product so much he just had to recommend it to you.

If you still haven’t heard enough, think about the news. When you watch, listen to or read the news, do you ever ask yourself whether or not the information that you are getting is true? Most people never question the news. If you’re in your mid 30s like I am, you have probably heard that news is impartial, that reporters are supposed to report the news without interjecting their own opinions. That’s what the editorial pages are for, right? Though this would be a great way for the news to work, it is not the reality.

Recently, there was a story on the news at one of the major stations here in Wichita called "Family Fears Africanized Bees Could Be In Kansas". The story told of a family in Southern Kansas that thought a hive of bees in their back yard might be killer bees. According to the news report, the lady that was stung had been close to the bees before and had never been stung until the date of the story. Because the lady got stung, the couple assumed that they "may" be killer bees. The news report implied that this was a reason for concern for people in Kansas with this new threat. The reporter did not put an expert on camera attesting to the likelihood that they were killer bees. There was nothing in the story to suggest that the bees were killer bees except that someone got stung. Wow, does that mean every time I’ve ever been stung by a bee that it was a dreaded "Killer" bee?

Come to think of it, why are killer bees called "killer"? When we lived in Texas, the news talked about "killer" bees coming to Texas. Now, more than a decade after the killer bees arrived there, I wonder why there aren’t thousands of people falling victim to this deadly plague. Considering how few people die from killer bee stings, I wonder why the media doesn’t do more stories about being killed by meteors falling from the sky. Still, there are many people who get stressed out seeing stories like this on the news for no good reason.

I say all this to make the point that news operations make their money from advertising and in order to keep you watching, newscasters have realized that it is easiest to keep you watching when you are constantly afraid of what will happen if you don’t see the news today. Just like with advertisers, people in the news business are trying to sell you something. Because of this fact, you only see the news that is likely to make you want to keep watching and to tune in for every newscast. This means that you get a distorted view of the real world because of "selective coverage" that tends to portray the world as a place with dangers waiting to attack you with every decision you make in life. Also, because many reporters are young with very little practical life experience and because reporters have only a few hours to develop the story, broadcast news is full of errors.

The bee story is a great example because many people hear a story on the news and begin assimilating the information as if it is factual. Even if you are a reasonable person, repeatedly hearing someone profess ridiculous things can make you question what you believe. Joseph Goebbels, author of the Nazi propaganda campaign against the Jews said that "if you tell a lie often enough, it eventually becomes accepted as the truth."

There are all kinds of other circumstances where people are trying to sell you something: The college professor who misleads his students because the real facts don’t support his political agenda, the auto mechanic who tells you the wheel is going to fall of your car if you don’t pay him $500 to flush the radiator, the electronic store representative who tries to sell your grandmother a high end stereo VCR when you have told him that she only has a 13 inch television that doesn’t put out stereo sound and on and on…

Read Part 1   |   Part 2   |   Read Part 3 – What Can I do about it?

 

photo by: jurvetson

Don’t Buy In!

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Don't Buy In! How To Avoid The Trap!

Don’t Buy In! How To Avoid The Trap!

Did you know you need a new cell phone? Did you know your car is trash? Did you know you’re not pretty enough, you’re overweight, you wear outdated clothes, you need to eat healthier and you need two large pizzas? If you didn’t know that, brace yourself because that’s just the beginning of your troubles — or so say the messages bombarding virtually every one of us every day.

Do you realize how much advertising you are subjected to each day? There are ads on television, ads on the radio, ads on the Internet, ads in the paper, in magazines, along the side of the road and on other vehicles. There are ads in virtually every business you walk into each day and there are ads all over your house. The next time you go to Wal-Mart, pause at the front door and take a careful inventory of all the advertising you are exposed to in that one location. There are hundreds, possibly thousands of print ads competing for your attention there. Wal-Mart radio plays a constant barrage of advertising trying to influence you to buy something. Many of the items available for purchase practically cry out to you to purchase them through advertising on the packaging. Even if you are the queen of frugality, you cannot help but be influenced by this daily barrage of advertising.

What many people don’t know is that the basic purpose of advertising is to persuade you to buy something you didn’t know you needed before you saw the ad. The message isn’t usually, “Hey, if you have a few extra dollars, you might enjoy this product.” The typical advertising message you hear really says something more like “Even though you never needed this product before, your friends and family will reject you, you will encounter daily torment, you will discover that you have no value as a human being and that you will probably die if you don’t buy this product right away!”

As competition for your attention gets more and more fierce, you get bombarded with more and more types of ads and more intense ads. It is like standing in the middle of a crowded group of people where each one is yelling at you trying to get you to pay attention to him. As time goes on, the whole group begins yelling louder and louder because each person is trying to out-shout the rest of the group.

Have you noticed an increased intensity in advertising during your life? I remember when grocery companies first used advertising on the back of register receipts. Then, one day, the store added mini-billboards to all of their shopping carts. Then they added advertising to the shopping basket carrels in the parking lot. At the time, those seemed like innovative ideas. Now, they just get lost in the “muck” of advertising. Recently, I was filling up my car with gas in Colorado and discovered that since I was last there, the gas station added video screens at the gas pump so that they could hit customers with a fresh barrage of advertising during one of those rare moments of near silence that many of us ever get. I heard today that a company is now trying to sell grocery stores on the idea of advertising actually printed on the conveyor belts where you set your groceries while you wait your turn in line. I don’t know who will be the first company to actually believe that that will be an effective way to make sales in a spot where customers are already overwhelmed with so many competing messages. At our grocery store, we are already assaulted with messages from tabloids and magazines with headlines designed to suck us in with the shock value. There are ads on the little dividers we put between our groceries and those of the next person in line. Is it really necessary to add yet another layer of mind “noise” to our lives?

I already mentioned that the purpose of advertising is to persuade you to buy something you have never needed before. Did you know that the main purpose of the media is to sell advertising so you have more urgency to buy something you have never needed before? Oh, you thought that the purpose of television was to entertain and inform you? Think again! Television shows are only produced to act as the “sugar” to get you to take the bad tasting medicine. You may wonder how I came to think this way. I have a four year communications degree, having majored in Radio, Television and Film. The principle that television and radio shows exist as a means to get people to watch ads was a major concept in the Radio, Television and Film program.

 

Read Part 2 – Advertising is Just Part Of The Problem

 

photo by: jurvetson

Frugal Living – Is It Too Time Consuming?

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Is Frugal Living Too Time Consuming?

When people ask me about getting out of debt, they often ask “Doesn’t frugal living take quite a bit more time than not living frugally?” Of course, doing work yourself does mean you spend more time doing certain things, but frugal living also means that you will spend a lot less time and money working to pay someone else to do it. Many people work more hours to pay someone else to do a job than it would take them to do it themselves. Of course, if you make a million dollars a year and have no manual dexterity, this article is not for you.

Here are some practical frugal living examples based on my own experience with a family of 4. Because your household income is probably not the same as mine, some things that make sense for me will not make sense for you. I suggest that you read my examples and consider your actual costs.

Example #1: Buying clothes- One great way to save money on clothes is to go to garage sales. This seems very time consuming to many people, but it really isn’t. In the summer, I usually spend 3-4 hours every 2 weeks (May – September) going to garage sales. That may seem like a lot, but if you compare that to how much time the average person spends shopping at the mall, it really isn’t any longer.

Example #2: Meals- Frugal living can really save you money and stress when it comes to meals. I usually average an hour and a half each day preparing and cleaning up from meals. Compare that to going out to eat: It takes the typical person 20 minutes to drive to the restaurant and 20 minutes to return home. That is 40 minutes. Then you spend 15-20 minutes ordering and waiting for your order. You are now up to one hour. If you plan an hour for eating, you are up to two hours total. Don’t forget the 2-3 hours you had to work to pay for it! This assumes an income of $30,000 per year and a $40 family meal.

If you go to fast food restaurants instead, you could cut your time down to 40-50 minutes and 1-2 hours working to pay for it.

If you stay home and cook, it will cost you 15-30 minutes preparing the meal and less than $5 paying for it. I’m not saying that you should never eat out but, that if you do it regularly, it will cost you a lot more (in time and money). Is it really worth it?

Example #3: Buying a car- If you buy a new car with $500 a month payments for 5 years, you pay $30,000. Let’s say you earn $30,000 per year at your job. If you assume 25% income tax, you must earn $40,000 to pay for your $30,000 car. This means that you have to work 1 year and 4 months for no other reason but to pay for that car. Is it really worth working over one year just to pay for a new car? If you decided to buy a $7500 car instead, you could afford to take a vacation from work for a year. Haven’t you been saying you need more free time? (If you didn’t get that, get out your calculator and do the math. This is important.)

Always consider the hidden costs, too. Would you feel more inclined to buy a security system for that $30,000 car? How much will that cost? Are the parts more expensive for the $30,000 car when it breaks down? Trust me, your new car will still break down almost as much as a used car. Ask my brother…

Be very careful when you start saying things like “Doesn’t frugal living take too much time?” or “I can’t seem to find time to be with my husband or children” or “I don’t know where to start saving.” Often, those are excuses that you have created to ease your guilt. If you think about it and do the math, living simply will give you more free time. If you’d rather not, you can always keep spending money and wishing you had more family time. It’s your choice! But take heart- if you have read this far then you get and A+ for taking the first step and trying!

      -Tawra

For more easy and practical frugal living tips to help you save money and get out of debt, check out Dig out Of Debt and learn more about how to keep more of your money.

 

photo by: Robbert van der Steeg

Where Do We Begin To Catch Up On Debt?

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Leslie from Rhode Island asks:

Where do we begin to catch up on debt when we are behind three months on every day living such as mortgage, car payments, and utilities and IRS payments?

 

Jill: It is hard to give specific answers to your question without knowing more details about all of your finances. Here are some general suggestions about a couple of things that you mentioned. Some of these ideas may seem drastic, but if you are three months behind on everything including the IRS then you need to take a very honest and serious look at your spending habits.

In order to catch up on past due bills, you not only have to live within your income, you have to live below your income. It may be painful, but you have to figure out how to live below your income at least long enough to pay the past due bills and then to keep current on all of your bills.

If you can’t keep up with your mortgage, then no matter how much you love your home you may have to sell it for something less expensive. The same goes for your cars. You could try to get by with one car. That may not be as impossible as it sounds. My son and his wife both work and often only have one car. She found she could switch to evening hours at her job for a while until they could get another car. One spouse may have to take the other to work for a while. This may not be convenient, but declaring bankruptcy isn’t really handy either. Besides, if you declared bankruptcy and still spent more than your income, you’d end up with the same problem all over again. You could also sell you cars and get less expensive/used cars with smaller payments.

Cut back on utilities as much as possible. There have been times where I couldn’t run my air conditioner or I just used it when it became unbearable. Notice that I said unbearable, not uncomfortable. There’s a difference. Stop watering your yard. If your lawn dies, it dies. What would you rather have? Bills that are paid, no financial stress and a dead yard or lots of debt and stress and a nice green yard? I know it seems like there is no way out but it really is doable. Remember, you can’t spend more then you earn. Start thinking about each item you buy. Is that item really a need or just a want? Most Americans have a difficult time telling the difference between needs and wants. Do you really NEED it or do you just WANT it?

Cell phones are still a biggy. I was talking to a woman who was frantically trying to keep the creditors at bay. She said I just don’t have another place to cut back. I said what about your cell phone. Boy the look of horror on her face. We all insist we need a cell phone and they are nice especially in an emergency but that isn’t the reason most of us have them. We have Smart Phones because they are a fun toy for us to play with and to use to interact on social media. You can get an inexpensive little phone that doesn’t have all the bells and whistles to use for an emergency.Here’s a new concept for some to try – visit with your neighbor or friend eyeball to eyeball instead of texting all the time. Much cheaper then paying for an expensive phone. I know, I can’t believe I even suggested such a thing but hey if your are really serious about saving you will do it.

If you often wonder where all of your money goes or if you need a more frugal mindset, check out Dig out Of Debt and learn more about how to keep more of your money.