J.D. had a thought-provoking post the other day at his blog, Get Rich Slowly.  He told the story of a friend asking him what is was like to be rich.  Well, J.D. doesn’t think of himself as rich, and the question got him to thinking about why he doesn’t feel rich.

The question of defining “rich” has even made its way into the presidential election with both candidates recently sharing their ideas on what level of income defined someone as rich.  I think they are both missing the point.  In my opinion, being rich has little to do with income, and more to do with quality of life.  I will share with you my definition of having a rich life, and I encourage you to share your definition in the comments.

I Have Enough Money to Meet My Family’s Basic Needs

When it comes down to it, the only things I really need to survive are food, shelter, utilities and transportation.  If I lived within walking or biking distance of my employer, and the places I need to shop for food, then transportation would be debatable.  I am fortunate to have these basic needs met.  Anything above and beyond this level of spending is really just luxuries.  If you don’t believe me, visit a homeless shelter in your town, or a foreign country with limit resources and an overcrowded population.  You will find a lot of people who are struggling to meet these basic needs.  In this regard, I am blessed.

I Have Enough Money to Indulge In a Few Wants

Above and beyond those basic needs, I also have a few wants, and so does my family.  We are fortunate to earn the resources to allow us to occasionally indulge in these wants.  It could be as basic as cable television or cell phone coverage, or as elaborate as surprising my daughter with Hannah Montana tickets last year (no, this was certainly not frugal, but like I say here often, sometimes you just have to stop and smell the roses!).   Because we can indulge in those occasional treats I certainly feel like I have a rich life.

I Can Afford to Give to Others

Our family has felt strongly about being in a better position to give to others.  In fact, it is one of the primary motivators behind our desire to be completely debt free.  Once we are on solid ground we will be able to give to others in a variety of ways.  One special idea we plan to incorporate into this year’s Christmas spending is to take $100 from our Christmas savings fund, visit a local diner on Christmas Eve, and leave the $100 as a tip to a hard-working waitress.  If someone if out working late on Christmas Eve you know they are working because they have to, not because they want to.  You never know whose life might be forever changed by this single, random act of kindness.  We plan to take the kids along this year and let them experience the true meaning of Christmas.  Because we are able to give to others, we have a rich life.

The Richness of Our Lives is Not Measured in Money or Things

I know, it sounds cliche, but we really try our best not to get caught up in the materialism of today.  We enjoy spending time with our kids, having frugal family fun nights, or just sitting down together and reading books.   It doesn’t have to be anything elaborate.  In fact, we have found the simpler the better!  Ten years ago or so, I didn’t feel this way.  I remember sitting in a cubicle at my first professional job staring at a picture of an SUV I wanted to buy (and eventually did).  Now, I sit in my office and look at the pictures of my kids, and just outside my window I can see the beater I drive sitting in the company parking lot.  What a difference a decade makes!

To sum things up, my definition of being rich is having enough money to meet my family’s basic needs, a few of our wants, and to be able to give some away to others.

What is your definition of being rich?

Here in my home state a recent Commission on Family Violence study reflects the number of deaths related to domestic violence is up nearly 33% over last year’s totals, and those figures are only through September.  According to a number of counselors, and those running shelters for victims of domestic violence, it seems a weakening economy leads to more incidents of violence against domestic partners.  Just a couple weeks ago a neighboring community was rocked by a murder-suicide in a quiet, affluent neighborhood, and the authorities suspect financial troubles were a motivating factor.

Economic Stress Leads To Violence

The classic case of domestic violence typically involves violence against women committed by a male partner.  Of course, this is not always the case, and there are many different forms of domestic abuse.  In a struggling economy where it is getting tougher to make ends meet, and where many breadwinners are concerned over job stability, the pressure can lead to domestic violence in the home.  The recent report is a good reminder that in tough times we should be holding each other close, not pushing each other away.

It is normal for couples to have different opinions on how to manage their finances.  For instance, one partner is usually a “spender” while the other is a “saver.” However, in lean times you have to find some common ground with your spouse, whether it be for basic survival or figuring how to maximize your earnings and stretch your dollars further than you ever have before.  The bottom line is it takes teamwork, and both partners have to be on the same page.

As Budgets Grow Tighter, Victims Have Less Financial Means to Get Away

With savings dwindling and monthly expenses going up, victims of domestic violence often lack the financial resources to flee their abusers.  This is particularly true in cases of a single income households where only one partner controls the checkbook, and the other is unable to accumulate money to flee.  Fortunately, there are shelters in many areas that will take in victims of domestic violence, and their children, but even their resources are strained due to a drop in donations during economic downturns.

Seek Help, Before It Is Too Late

If you are struggling financially, and feeling the pressure build, find someone you trust to talk to–either a professional or just a good friend.  Sometimes it helps to have this “sounding board” to vent frustrations, without taking them all home to your spouse.  If you and your spouse are fighting over money, consider attending marriage and/or financial counseling so an objective third party can help you work through the various issues in your relationship.  If you are currently in an abusive relationship, please seek help immediately from a friend or family member, a shelter, or even law enforcement, if necessary.  Domestic violence is not something to be taken lightly, and as the statistics referenced above show, many times the violence escalates over time and ends in tragedy.

I heard an interesting radio advertisement today for Sam’s Club.  According to the ad beginning this Friday, October 17th, you can sign up for a 10-week membership to Sam’s Club for only $10, which should last through the end of the year.  It could be a good opportunity to save a little money on Christmas shopping, stockpile paper products, and even save a little on gasoline (Sam’s Clubs usually offer cheaper gas than other stations). 

As always, do your homework before signing up for a membership.  If you doubt you will ever shop at Sam’s Club, or won’t buy enough to realize $10 worth of savings, you would do better to pass on the offer.  And keep in mind that bulk packaging is not always cheaper.  Sometimes you do better to buy smaller packaging, but more of it–always compare unit prices.

One note:  I wasn’t able to confirm this deal at the Sam’s Club website, but I have heard some buzz about the deal from forum participants in other markets, so I’m hoping it is something that is available nationally.  Watch the comments for updates, and please share a comment if you hear about this deal in your area.

 
Photo courtesy of powerbooktrance

The following guest post is from Mike Young, Founder and CEO of The S.E.C.U.R.E. ^TM student program.  You can learn more about Mike, and the The S.E.C.U.R.E.^TM student program at his website.

The media today is focused on the $700 Billion bailout on Wall Street and the credit crunch.  However, what has become very clear in the eyes of many is that the real problem is with the foundation of our educational system.

Remember all of the neat stuff you learned in high school about credit and money?  If you are like me, you don’t, because there was no education on how credit and money actually worked.  The average kid today will see over 360,000 advertisements before the age of 18 while receiving less than 10 hours of formal education on financial literacy.

CNBC reported that the real problem with the adult population today, is they were never taught this stuff in school.  This leads us to an entire generation of consumers with a -2% savings rate.  The average American has less than $3800 in savings and an average credit card balance of $9,200!

Marketing and advertising has been working full steam ahead since the 1950’s and it’s about time that our educational system begins to make sweeping changes to help high school kids develop positive habits with credit and money before they leave home.

It’s time for our society to begin making an impact on the next generation, teaching them lessons we’ve learned the hard way.  It’s time to make a difference and consume less while saving more.  We can turn this ship around, but it’s going to take a group effort at the community level and begin getting involved now.

Frugal Dad’s Thoughts:  I couldn’t agree more with Mike’s message, and his organization’s mission.  As a society, we do a poor job at preparing our youth to take the next step to become fiscally responsible citizens.  Think about it–we spend countless hours of instruction preparing students for fitness through health classes, gym and physical education.  We spend many more hours teaching students proper grammar, in both English and foreign languages.  Rather than teaching them how to take tests, or prepare for college, perhaps we should focus our efforts on preparing students for life.  Some basic courses in personal finance including lessons such as how to balance a checkbook, how to manage credit, how taxes work, etc. would go a long way towards creating a better prepared group of high school graduates.

I don’t have quite enough in savings to get out of credit card debt, completely, but as I continue to accumulate money in my emergency fund I’ve started wondering if it makes sense to use some of that cash to pay off debt. It’s a classic financial dilemma: continue to build emergency fund, or pay off debt?

If I used all of our available savings we would be almost back to zero, and would need to use a credit card if a large emergency came up before we could rebuild the emergency fund.  That scenario reminds me of the hamster wheel of debt that got us here in the first place!

Interest Rates Matter, Some

The argument for using savings to pay off debt is made easier in this environment of low interest rates.  Sure, interest rates on my credit card accounts have dropped, but are still significantly higher than any rates I’m able to lock in on savings.  Just last week ING Direct lowered the interest rate on our Orange Savings Account to 2.75 APY.  That is still much higher than the rate earned on my local emergency fund, but several percentage points lower than the interest I am paying on revolving debt.  However, since I am not overly concerned with the interest earned on emergency savings–it is just for emergencies, not investing–it is hard to justify cleaning out my emergency fund to pay off my debts.

The Psychological Benefits of Having Savings

Often times people do have significantly more in savings than they owe, but are still hesitant to pull the trigger and become debt free.  That’s where the psychology of money comes into play.  When you know several thousand dollars are sitting in an emergency fund ready and waiting to tackle your family’s next big emergency, it is a comforting feeling.   Draining that fund down to zero, or close to zero, immediately brings out pessimistic thinking.  What if the roof starts to leak?  What if the car dies?  What if I get horribly sick and miss several weeks of work?  These are legitimate concerns.  After all, those are the very events we hope to avoid, but are prepared for with a solid emergency fund.  Without that cushion it feels like we are living life too close to the edge.

Bottom Line, We’ll Probably Use Some Savings to Pay Down Debt

Even though we don’t have enough in savings to completely clear our debt, we have enough to make a significant dent.  However, with an ongoing medical emergency in the family, I am reluctant to use the majority of these savings for debt repayment.  What we will do is use about $1,000 to finish off an old consolidation loan that’s been hanging around since I finished school.  The loan has a large monthly payment, and by using that $1,000 to clear it I’ll be able to put a couple hundred dollars a month towards something else rather than continuing monthly payments for the next three or four months until the loan balance finally reaches zero.  Since we have beefed up our emergency fund a bit, we can do this without dropping the emergency fund down below our comfort level.  Admittedly, the thought of knocking out yet another debt is exciting!  One step closer to debt freedom!

It’s been a few weeks since I updated everyone on my mom’s medical condition.  She remains in neurological intensive care, and is beginning to show some signs of improvement.  About two weeks ago she suffered a stroke following surgery for a related neurological condition.  She has been in ICU for four weeks now, and has been in the hospital for 40 days out of the past two months for various tests, surgeries, and recovery.  It appears her recovery could take months, but we remain hopeful she can still make a full recovery.  Thank you for continuing to keep her in your thoughts and prayers.

Now, for the Roundup:

• Will Green Food Saver Bags Make Food Last Last Longer?  If I could find a way to freeze milk without the jug being distorted (or busting), and make perishables last longer, we could probably drop back to a once or a twice a month grocery trip.

• Back to Basics:  Debt-Free Is the Path To Success.  I agree with all of Jeff’s ideas, but particularly like the point that being debt free lowers stress.  Sure, you could point to a hundred reasons why leveraging your house or your credit history to make investments makes sense, but none of those reasons outweigh the feeling of laying your head on the pillow at night and knowing you don’t owe anyone a dime.

• A Do-It-Yourself Guide to a Romantic and Highly Frugal Date Night.  Some great ideas on how to put together a frugal date.  I particularly like the format of this post as it reminds me of a DIY meal-plan.  Only, instead of picking a protein, carb and vegetable you pick a meal, entertainment option and a follow-up item for your date.

• Children Are Becoming Prime Identity Theft Targets-How to Protect Your Child’s Credit History.  It is a sad note that children are now becoming victims of crimes previously committed almost exclusively against adults.  Not only do we have to worry about our kids’ physical safety; now we have to worry about their credit history as well.

• How Ignorance Can Lead to Success.  This reminds me of the idea that some people succeed despite great risks of failure simply because they didn’t know about the risks.  Sometimes you just have to go with your gut without gathering all the facts first.

• My 401(k) Is Losing Money and I Don’t Care.  My 401(k) has been obliterated, and I don’t care either.  The way I look at it, I just own more shares of a few great funds that will surely rebound (and then some) before I retire.  I do feel for those closer to retirement age, assuming they didn’t move to more conservative investments in time.

• Can You Plan for Unexpected Expenses?  It sounds like Lazy is thinking about an emergency fund for his emergency fund.  Probably not a bad idea in this economic environment.

• Keep Your Holiday Supplies Simple With An Inventory and a Plan.  The idea of keeping an inventory of holiday supplies is brilliant.  We spend a lot of time around the holidays trying to remember where we put that box of outdoor lights, and an even greater amount of time trying to decide if we even own a box of outdoor lights!

• Barack Obama vs John McCain-Who Cares?  I share Ben’s apathy towards this year’s election.  I think both political parties have done a particularly bad job of nominating candidates, and I wish the ballot had a “Do-Over” option.  I hope four years from now a true fiscal conservative emerges with a campaign based on actually upholding our Constitution–something most politicians have largely ignored.

• 17 Sneaky Savings Strategies.  I’ve never thought of several of these “sneaky” ideas, but I plan to implement them in the frugal household.  The “own your own laundry mat” is my personal favorite!

• 7 Mistakes Not to Make In a Crisis. Could not agree with these more.  A knee-jerk reaction now could have long-term effects on your bottom line for years to come.

• Divorce-A Wealth Killer.  Lots of reasons to avoid divorce if at all possible, and wealth-killing is near the top of the list.  Both sides of a divorce seem to be hit particularly hard, but it is often the children who are most affected.

• Improving Middle Class Finances Through Education.  Financial literacy is a big deal to me because I believe many of our society’s money problems could have been avoided if young people were properly trained to take on the world of personal finance.  If schools won’t do it then us parents will have to take up the slack.

• Fulfillment, Accomplishment, and  a Game of Risk.  This is a great reminder that sometimes there is nothing wrong with just “being.”  Put down your to-do list, your Blackberry, your laptop, your meal plan and your calendar and just “be.”  Enjoy the nature that surrounds us.   Enjoy some quality time with family.  I’m turning off this computer now and plan to spend the rest of my weekend taking this advice.  Hope you have a great weekend, too!

Here lately our markets have been in a tailspin with little reason to “pull up” and get us out of this dive.  It seems like there has been one negative bit of financial news after the other for weeks.  Many economists and politicians are fearing a recession, or worse.  In times of market turmoil I hear many pundits tossing around the phrase, “Cash is King!”  When stocks are losing money, 401(k) funds are being obliterated, and even the rock-solid money market mutual fund accounts were on shaky ground for a while, cash looked like a pretty good investment.  After all, a 4% interest is better than a negative 20% loss.

If You Are Not In the Market, Consider Cash

I’ve never been much of a stock market guy.  Most of my early career I barely made enough money to pay for school and a few miscellaneous expenses.  I did contribute to a 401(k) early, but only because my employer automatically enrolled us and made a matching contribution.  Over the years, I have learned more about the various types of mutual funds and am comfortable making investment elections for both my 401k and Roth IRA.  However, as I begin to dabble with savings outside of retirement plans, I can’t help but wonder if cash really is king.  Maybe an ultra-conservative mix of high-yield savings accounts, CD ladders, and treasuries really is the way to go.

It is easy to look like an expert by recommending cash in a bear market, but what about when times are good?  In years past where stock mutual funds were averaging 25% growth it seemed ludicrous to keep cash on the sidelines earning 4%.  However, when stocks are down 25% the idea of earning a guaranteed 4% is attractive.  We know historically that the market will go up over the long term, but it is these short-term sell offs that make stock market investing so painful.

If You Are Already In the Market, Stay the Course

I do not believe in pulling all long-term investments out of the market. Jim Cramer recently took some heat for suggesting that investors take money out of stocks if they will need access to the money in the next five years.  On the surface, his comments sounds pretty gloomy for the immediate future of the market, however what he suggested is what virtually all financial planners suggest.  It is generally a bad idea to invest money in the stock market if you plan to use it within the next five years.  This recent downturn is a good reason why that is sound advice.  Five years simply does not allow enough time to recover from these types of hits.

So how does one ultimately decide whether or not to invest in the market, or in cash?  The answer lies in determining your tolerance for risk.  If you are a risk-taker, and have time on your side to ride out some of these short-term storms, then you are probably safe to invest in the market.  However, if you are not a big risk-taker, or are already nearing retirement, cash may be the most attractive option.  Of course, you may miss some growth when the market rebounds, but at least your capital will be relatively safe in the short-term.