I’m excited to announce today’s launch of my new blog, Side Hustle Blogging!  It is a place to share tips, tricks and lessons learned on the subject of blogging.

Over the last year or so I’ve received a number of emails from new bloggers asking for direction on starting blogs of their own.  While I try to respond to everyone, I felt like I was repeating a lot of the advice, and rarely had a chance to follow up when I learned something new.

As a temporary solution, I began sharing the occasional “Be a Blogger” series post here at Frugal Dad, but I always wanted to separate the content by starting a new site.  I didn’t for a couple reasons. First, I thought, “Who the heck would want to read what I have to say about blogging?”  True enough; I’m still a relatively small fish in the big blogging pond.  But, I’ve learned a thing here and there, and made some mistakes along the way I might could help others avoid.

I was really pressed for time during the last half of 2008.  Many of you are aware of the family medical emergency we experienced, and juggling my family, work and blogging responsibilities was hard enough without adding a new blog to the mix.  While things haven’t completely settled down personally, I’m ready to get rolling on the new blog.  If we wait for the perfect time, we will wait forever!

It is my hope that Side Hustle Blogging develops into a place where we learn from each other. Anyone making their “side hustle” blogging should find something relevant, but the topics won’t stop at simply writing for the web.  I plan to include posts on topics such as monetization, marketing, scheduling, entrepreneuriship, taxes, etc.  You can see there will be some overlap in the themes I discuss here at Frugal Dad, but with a spin geared towards those who blog.

I look forward to seeing all of you over at Side Hustle Blogging!  Drop me a comment and say hello, or just take a few minutes to peruse the articles there.  And don’t worry, I plan to continue my daily blog schedule here at Frugal Dad.

One of the most frequently asked questions in the personal finance realm is, “How much should my emergency fund be?” The question is usually answered with a canned response such as, “Three to six months of expenses.”  Well, I have my own theory on the size of emergency funds, and it has more to do with me sleeping at night than a finance guru’s personal opinion.

Still, at some point excessive savers run the risk of saving too much for a rainy day.  After all, there are plenty of sunny days to take advantage of, and doing so may require a little cash.  Every situation is unique, but as a rule I would suggest not saving more than one full year of income in a fund designated for “emergencies.”  Most (not all) job layoff situations are resolved within one year, and most large emergencies can be covered by the equivalent of twelve months of income.

You may be like us and have savings goals that reach higher than one year’s worth of income.  That’s okay; just designate separate piles of money for each goal.  For instance, when we become debt free I plan to start saving in a “Financial Independence” fund (it’s purpose is self-explanatory) to hold proceeds from my working capital in other investments.  Ideally, I would like to have at least one year of income in this savings fund, if not more, but it will be kept in a separate fund (ING Direct allows you designate separate, or “sub-accounts”–great for separating savings goals).

Some folks lean towards the Dave Ramsey principles of a very small, beginner emergency fund while you are working to become debt free.  I understand the logic behind this idea, but only having $1,000 to our name feels a little risky to us.  I would rather accumulate a minimum of three months of expenses and then attack the debt.  After all, $1,000 doesn’t go very far these days towards household repairs, replacing dead appliances, or surviving a layoff.

So How Large Should My Emergency Fund Be?

The bottom line is there is really no right or wrong answer to the question.  Stop and think about all of your liquid assets and gauge your immediate reaction.  Are you comforted by this amount?  Are you worried it won’t be enough to cover the next bill from your mechanic?

Let that initial response guide you.  If you are not at peace knowing how much you have in savings, add more.  And because men and women often have a different number that makes them at peace, financially, couples should opt for the larger of the two amounts required to make each spouse feel secure.  Once you reach your target amount dedicated for “emergencies,” attack your debts and then move on with your financial life by funding retirement, college for your children, etc.

How much is in your emergency fund?  If you don’t want to share numbers, just tell us how many months of expenses you have saved up.

Seems strange to report that results from lottery sales were higher in 2008 than in year’s past. You would think people would be buying fewer lottery tickets while struggling to fill their gas tanks over the summer, and dealing with a recession that really took hold this fall and winter. Then again, isn’t that the American way? Don’t we all dream of striking it rich? Not me.

The Colorado Lottery saw record sales in 2008 of $499.4 million. The Florida Lottery recently joined the multi-state Powerball game in an effort to suck in even more players. What’s behind the success of these lottery programs in our society’s obsession with the rich and famous (thank you Robin Leach).

The Lottery Is A Tax On People That Can’t Do Math

For purposes of this discussion I am excluding people who play the lottery as a hobby, and can afford to do so. I’m referring to the guy with a wife and three kids at home with no money for groceries who is spending $20 a week on scratch off tickets. If that same guy would simply put the $80 per month in a good growth stock mutual fund for 30 years he’d “win” $100,000! That’s a pretty good payout, wouldn’t you say?

But you could never convince him. When advised to save $80 a month, his response would probably be, “We can’t invest $80 a month! We’re living paycheck to paycheck.” Frustrating, I know. That’s because most people can’t see beyond the next paycheck when planning their financial futures. They squander every single penny they have now and just keep hoping they next paycheck will last them another two weeks.

But What If I Win?

It should come as no surprise that people who win the lottery often wind up broke. People with poor money-management habits don’t suddenly get smarter if a whole bunch of money is given to them. About the best thing you could hope for is that they have the sense to hire someone to manage it for them. Even then, they often know so little about money that they can’t adequately over-see their financial guy, who proceeds to rip them off behind the scenes.

Winning the lottery is not all roses. Imagine the people in your past that would be looking up your number if they saw you on the cover of People magazine as the country’s latest $100 million Powerball winner. No thanks. While I would love to have $100 million, I prefer to accumulate it the right way by building wealth. If by some miracle I won the lottery (and it would really take a miracle since I don’t play it), I would give away the majority of the money, minus enough to pay off my debts and those of close loved ones. As the saying goes, “more money, more problems.” And I sure don’t need 100 million new ones!

I received a letter from my credit card issuer the other day that indicated they were closing my account due to inactivity. It didn’t bother me really, because this is a credit card that I had paid off and never used. However, it was a card I’ve had since 2000 and I was concerned that the canceled card may negatively affect my credit score.

Do Canceled Credit Cards Affect FICO Scores?

The short answer is yes, closing a credit card can affect your FICO score. But the effects on your score are determined by a couple different criteria, so it is important to weigh the pros and cons before closing credit card accounts yourself. If your bank closes them, particularly for reasons such as inactivity, you may want to contact the bank and ask to have your card restored. Here’s why.

The length of time your accounts have been opened ranks third highest in the various factors used to determine your FICO score. Closing an old credit card account effectively reduces the average age of your credit history and can reduce your credit score accordingly. However, closing new accounts can have the opposite effect.

Before you go canceling all of your new credit cards, consider that credit utilization also plays a role in determining your FICO score. Let’s say you owe $2,000 on a credit card, and nothing on a second card, both with a $5,000 credit limit. Your current total credit utilization is 20% (anything less than 30% is considered ideal, in terms of scoring models). One of those accounts was opened last year, and after running up a couple hundred dollars you paid it off and it sat in your sock drawer. The other credit card, the one with a remaining balance, is five years old. The issuer of the newer, debt-free card closes your account due to inactivity, increasing the average age of your active accounts. However, your credit utilization now jumps to 40%, well above the 30% threshold between helping your score and dragging it down.

If this happens to you, act quickly by contacting the credit card issuer and asking for the account to be reopened. They may ask for authorization to check your credit report to make sure you haven’t declared bankruptcy in the last couple months, and in most cases will reopen the account under the agreement that you use the credit card at least a couple times a year.

To avoid this scenario, use credit cards a few times a year to fill up at the gas station and then pay the bill off when it arrives. You won’t be carrying a balance, but you will show signs of activity. That is usually enough to keep credit card issuers happy, and your FICO score intact.

Need help paying off credit card debt?  Consider a low-interest consolidation loan from Lending Club.

All signs now point to the United States being entrenched in a deep recession. It may be some time before things turn around, and because of that Americans will likely suffer serious side effects from the extended recession. Financial effects of recession are fairly well known. and include things such as job losses, and increases in foreclosures and bankruptcies. But not all of the side effects of recession involve finances.

Food Budgets Tightening

One of the first places families look to cut their budgets is food. After all, some could argue that food and categories such as utilities, both budget categories billed based on consumption, are a couple of only a handful of budget categories we can control from month to month. Monthly housing costs are fairly stable. Your car payment doesn’t change from month to month. Unfortunately, the effect of reducing a food budget often means poorer food choices, ultimately leading to declining health.

A diet of Ramen noodles and 2 for $1.00 generic macaroni and cheese will certainly help keep your wallet fat. Unfortunately, it doesn’t help your waistline stay trim. A quick survey of most coupon offerings reveals most manufacturers provide coupons for prepackaged or convenience food items. I know this because when shopping with coupons it is impossible to use them anywhere around the perimeter of the store (where healthier foods such as produce, meats and dairy items are typically found.

As more and more Americans look for ways to save money on groceries I imagine we will see a steady rise in obesity rates, already high relative to the rest of the world. I’m one to talk. I’ve been guilty of slashing the food budget and eating cheap things at each meal like cereals, boxed noodles and rices, etc. and have seen my own waistline expand.

After discussing things with my wife we have agreed that we should continue to spend a little more for quality foods and look for other places to sacrifice. Being the frugal person I am, I still look for deals, even on high-quality food items, and use a couple strategies to keep costs down.

Ways to Save Money on Healthy Foods

Shake produce before placing in bags. Most produce is sold by the pound, and grocery stores typically give them a good soaking fairly often to keep them moist and fresh. They water absorbed also adds a bit to their weight, and can add up if you pick up a couple pounds of fruits and veggies. Shake off any excess water before placing in the produce bags to be sure your savings don’t evaporate on the ride home.

Shop for deli meats late in the day. Often deals can be found just before the deli closes on shaved turkey and other meats nearing the “sell by” date.  Deli meats are typically of a higher quality because they are not packaged in sodium and other preservatives. Be sure to check out the meat case while you are at it. Many time we pick up a pork tenderloin or whole chicken marked “manager’s special” which is perfectly good if eaten or frozen that day or the next.

Declare a “Meatless Monday.” I was raised on meat and potatoes, so this concept seemed a little strange at first. But replacing meat with other proteins such as beans and lentils one meal a week is a great way to reduce your food budget and your intake of saturated fats. My family also eats breakfast for dinner a couple times a month, including eggs, turkey sausage and fruits.

Eliminate “empty-calorie” foods from your grocery list. When trying to save money on groceries, or lose weight, it is a good idea to remove empty-calorie foods such as chips, candies, cookies and soft drinks. They really add little to no nutritional value to your diet.  I guess this means I’ll have to give up Little Debbie snack cakes.

Take up square foot gardening. You may not yield enough to feed the entire block, but we were able to enjoy great summer salads last year complete with freshly-picked cucumbers and tomatoes. This year we are adding to our square foot garden and plan to grow even more tomato plants–hopefully they will yield enough tomatoes to can a batch or two of homemade salsa.

I’m interested to hear from readers. What strategies have you employed to help keep the costs of eating healthy down?

My daughter’s birthday is coming up first of the week and my wife has been busy baking a homemade birthday cake, complete with homemade icing and her own version of a Camp Rock cake topper.  A couple years ago my wife attended two series of Wilton cake classes hosted by a local Michael’s store where she learned the ins and outs of cake decorating.  While I remember griping about it at the time, it turns out the classes were a great investment!

This summer, when my wife injured her ankle and was in a cast, I had to visit a local Publix bakery and order a small sheet cake for my son’s birthday–$27.99! I guess my wife has spoiled me by making the kids birthday cakes for the last couple years, or maybe I had just forgotten how much those things cost!  Either way, I’m glad she is up to the task this time around.

Now that you are caught up on the exciting happenings around the Frugal household, I’ll share a few of my favorite articles from the past week.

The Roundup

Millionaire Secrets of the Super Rich: The Big Problems They Keep
Finding Contentment While Others Around You Want More
Why the Recession Will Be Good for Us as a Country
When Your Financial State Improves, Do Your Frugal Standards Change
Lending Money to Family and Friends
Make a New Year’s Resolution for SMARTER Goals This Year
Paying For a Missing Item
Have You Checked Out Lending Club
20 Largest Stock Funds 2008 Performance: Nowhere to Hide.
Case Study:  Paul and Melanie Want to Buy a House.

Other Happenings

“Frugal Coast2Coast“ radio show debuts.  I enjoyed listening to Lynnae (Being Frugal) and Jen (Frugal Upstate) discuss frugal topics last week.  They even managed to work in a “FrugalDad.com” mention in their first show (thanks guys).  The show airs on Mondays at 8:30 EST/5:30 PST.

I’d like to welcome The Secure Student to the list of sponsors here at Frugal Dad.  Mike Young, Founder and CEO, and I have traded a few emails over the past couple months.  He’s even written a guest post here at Frugal Dad.  I’ve enjoyed watching the progress he’s made in building a program that gives “students and parents the wisdom they need to succeed with credit and money.”  Definitely a timely mission!

It is true there are various degrees of hoarding. Some may have a shoe fettish with a closet big enough to make Imelda Marcos jealous. Others may hoard parts and scraps and fill entire warehouses with their junk. But it is a serious sign of trouble when you have so much stuff in your home that you have to burrow tunnels through it to make your way from room to room.

That’s exactly what one U.K. man did for over ten years. Gordon Stewart, 74, was found dead in his home last Friday after apparently becoming lost in his own maze of junk and died of dehydration. Without knowing more about Mr. Gordon, other than what is told in the original story at The Sun, it is hard to know why Gordon accumulated stuff with such intensity. It is not clear what his motivations were–environmental, economic, or just plain eccentric. Either way, it was a sad end.

What Motivates People To Become Hoarders?

For some, hoarding is the symptom of some deeper psychological problem such as obsessive-compulsive disorder, or depression. Others turn to hoarding because of an anxiety that things may be needed in the future, but when the time comes they will lack the financial resources to acquire them. And then there are those who have deep sentimental attachment to things and simply can’t bear to part with them.

Aside from the extreme example of Mr. Gordon’s demise, there are plenty of other health reasons to avoid hoarding. Obviously, there are physical dangers including trips and falls, particularly dangerous to the elderly. There are more hidden dangers such as mildew, dust and rodent infestations to contend with.

A Fine Line Between Stockpiling and Hoarding

For a brief time I was enamored with coupon clipping and stockpiling. I even joined a site called GroceryGame.com where people participated in forums to show off their impressive stockpiles of 37 tubes of Crest toothpaste, 12 boxes of Cheez-Its, etc. I was impressed, and thought the idea of stockpiling household sale items, particularly things like cleaners, non-perishables and toiletries, made a lot of sense. After all, these were the days when food inflation was the scare of the season. I thought stocking up now would save us from spending more money for the same item down the line.

What I discovered was that the line between stockpiling and hoarding blurs pretty quickly. After all, how many $1.49 toilet bowl cleaners does one family really need? I dedicated an entire shelving unit in our garage to our stockpile, and soon it was taking over an adjacent shelf.

Inside the house we used two metal racks to hold our food finds, but we were never good at rotating stock and lost a few items to expiration. We concluded that the mental energy required to manage all this stuff was not worth the cost savings to acquire it. In the future if we needed a can of cream of mushroom soup we would go buy one (or two or three–still good to have a backup of some things). If we happen to have a coupon and can save a little extra, great. If not, we don’t sweat it. We control our stuff, and we don’t let it control us.