Last Friday night I met my wife and kids for dinner after work for the first time in a long, long time.  We do not eat out much, and when we do it is typically fast food, or something we pick up and take home to eat.  As I was finishing up my meal, I noticed our server clearing another table and as he raked the dollar and change from the table he shook his head in exasperation.

Now, I know cheapskate tippers have been around forever, in good and bad economies.  My wife was a waitress in college and told me many horror stories about bad tippers, from those that completely forgot to leave a tip to those that remembered, but only left the bare minimum according to standard tipping guidelines.

I consider myself a generous tipper, and I have continued that trend despite the economic downturn.  If the service is particularly good, it isn’t uncommon for me to leave a 15%-20% tip.  For exceptional service, I take 10%, double it, and round up or down to the nearest dollar for an even tip.  The difference in 10% and 20% is often only a dollar or two, and I figure the person serving my meal could use it more than me.

Of course, as menu prices continue to climb, so does the amount of tips assuming you continue following the same tipping guidelines.  Using my calculations, a $40 dinner bill comes with an $8 tip, putting your night out with the family dangerously close to $50.  But considering we don’t go out that often, I have no problem paying for outstanding service.

I’m interested to hear from you.  Have your tipping guidelines changed recently? Do you work for tips, and if so, have you seen a drop in income?

I’d like to dedicate a post to expanding on an idea I mentioned in last week’s post, A Frugal Diet, Or A Frugal Lifestyle – a follow up of a follow up, if you will.  I mentioned in that post that a reader’s comment sort of splashed cold water on me, waking me from a slumber I had been enjoying most of this year.

During that time we have been relaxing the constraints on our budget.  Our debt repayment progress had slowed.  Our savings balances weren’t growing.  Money was leaking out of our checking account at a faster rate than it had in previous months.  What was the cause of this return to indifferent spending?  Complacency.

When the Going Gets Tough, So Do We

Back when we reached our financial bottom it was easy to get fired up about turning around our finances.  Mostly because finances seemed to dominate our every thought.  It kept me awake at night, and it was the first thing I worried about when I woke up.  It drove many of our decisions, and removed many options from our lives.  It was easy to get mad at the debt that hung over us, and it was easy to stick to our guns when faced with decisions to spend or save.

I’ve never been really good and doing two things at once.  Some people are natural multitaskers, and on the day-to-day stuff I do a pretty good job.  But where I fail is the big stuff.  For instance, I’ve lamented before how hard it is to lose weight and pay off debt.  Even though there seems to be a natural correlation to the two goals, I can’t seem to pull them off at the same time.  I can either get really fired up about losing weight and drop a few pounds, or I can get really fired up about paying off debt and lower our balances.  But when I do one or the other, the other goal suffers, or at best treads water until i again refocus my energy.

When Things Get Easier, So Do We

There comes a time in any financial turnaround when things begin to look up.  Maybe you’ve paid off that car loan, or a couple credit cards, and increased your disposable income thanks to reduced monthly debt payments.  Maybe you’ve also managed to pick up a side hustle, or added some overtime to your schedule, or received a promotion and increased your income.  Suddenly you find yourself not struggling quite as hard to keep your head above water.  It is as if someone is draining the pool for you, and all of a sudden you can touch your toes.  Ah…it feels good to stop flailing your arms and legs and simply relax for a bit.

Don’t get me wrong, these new feelings are a sign of progress and should be celebrated.  However, some healthy reservation is also required.  This is the same point many turnarounds have been foiled.  Think of the dieter who works out and eats right for six weeks and drops 25 pounds.  They are elated, and for good reason.  To celebrate they go out to eat something they haven’t had in a while.  And since they already blew it at dinner, that late-night ice cream won’t hurt.  And since they blew the whole night they’ll just sleep in the next morning instead of hitting the gym.  I’ll just get back on track on Monday.  You see how this can be a very slippery slope!

How To Fight Complacency While Celebrating Success

If we know that this new-found success ultimately leads to complacency, what can we do to head it off?  I would recommend allowing yourself some non-guilty pleasure not related to your ultimate goal.  For a dieter this might mean the accomplishment of a weight-loss goal is celebrated with a new dress.  For those of us working to turnaround our finances, maybe this means an increase to something that brings enjoyment, but does not cost any money.  For instance, families may agree to allow each other more time to devote to something they enjoy – exercise, hiking, learning a musical instrument, etc.

Whatever you decide, do not allow yourself to slip back into the same bad habits.  And if you feel those bad habits creeping back in, stop and reasses your situation.  Call a time out and lock yourself in a room to balance your checkbook, update your budget and take an inventory of your debts.  Don’t spend the entire time beating yourself up for making a mistake.  After all, money mistakes make us human, and they only become failures when they are repeated.  Remember the things that motivated you in the first place, and rededicate your life energy towards accomplishing those goals.

It has been a while since I last posted a “State of the Blog Address,” so I thought I would put together some miscellaneous thoughts for a lazy Sunday afternoon.  I plan to touch a variety of topics from blogging to my personal life to money stuff.  Stay with me.

Frugal Dad News

First, I’d like to welcome all the new subscribers here at Frugal Dad.  With your help, I’m half way to meeting my goal of 7,000 subscribers by the end of 2009 (I started the year with 5,000 subscribers).  I’m humbled by the fact that so many of you receive my emails, check my feed, and visit here to leave comments each day.  Thank you.

Schedule:  I believe it is about time I published an official blog schedule. Of course, nothing is written in stone because sometimes life throws curve balls and you have to adjust a bit.  But for the most part I will try to adhere to the following schedule:

• Monday – “Money/Frugal Living Post.”  Mondays will (usually) be the weightiest post of the week, with an in-depth look at a money or frugal living topic.

• Tuesday – “Ask the Reader.”  These have become one of the more popular topics here at Frugal Dad, I think because it provides an opportunity for us to share feedback/ideas in the comments section.  The questions could come from other readers, or from me.  I appreciate your willingness to provide feedback and adding to the community “feel” here.

• Wednesday - “Money/Frugal Living Post.” Similar to Mondays, another post on a money topic.

• Thursday – “Link Roundup.”  Mondays and Thursdays tend to be high-traffic days, and I would like to take advantage of that by linking to a few of my favorite bloggers and their articles from the past week.  I’ll add a few editorial comments to some links, and simply list others, to keep the size of the post down.

• Friday – “Guest posts, Special Features.”  Fridays will be reserved for guest posts, or a lighter post if none are scheduled. I’m human – I don’t like to work hard on Fridays, so these posts will probably take on a lighter tone than some of the deeper thoughts published earlier in the week.

• Saturday – “Weekend Projects.” In the Frugal household Saturdays are mostly reserved for household projects.  Many of those benefit our bottom line in some way (gardening, installing a programmable thermostat, etc.).  Others are done for pure enjoyment/entertainment purposes, or to add quality time with our kids.  Either way, I plan to share a little about what we’re up to over the weekend.

• Sunday – “Personal Money Stories.”  A new feature here at Frugal Dad.  I plan to give a more personal account of my daily money challenges and achievements from the past week.

Again, I’ll try to stick to this schedule for the most part, but on the occasion life gets in the way I may deviate a bit, or skip a post here and there to devote more time to a quality post the next day.

Personal News

Many of you have been following my mother’s recovery from an aneurysm and subsequent stroke suffered last September.  It’s been a long seven months, and about half way through her recovery she suffered a major setback.  Early last month Mom got very sick and we rushed her to the emergency room on a Thursday evening.  She was admitted, and it was later discovered that the aneurysm was bleeding again.  On Tuesday afternoon she underwent an 11-hour brain operation as a last-ditch effort to save her life – and she survived.

My mom raised me as a single parent, and I always knew her mental and physical toughness was second to none.  But this fight has been unlike any other we went through growing up, yet she continues to fight.  She’s been hospitalized the last six weeks or so, and recently began another round of inpatient therapy.  She is still wheelchair-bound, still not able to eat, and still mad as hell that she can’t do things for herself!

The experience has had a profound effect on all of us.  The reminder that a 53 year-old, healthy, independent woman can be struck down by something in an instant is sobering.  I feel saddest for my children, who were so close to grandma and miss here dearly.  We visit several times a week, but it isn’t the same as having her at home, having her at basketball games and school performances and birthday parties.  All we can do is continue to hope and pray that she makes a full recovery so we can all experience those joys again.

Thanks to all of you who have continued to keep our family in your thoughts and prayers these many months.  I truly believe those prayers have sustained her, and given her the strength to push through this ordeal.

Wrapup

This concludes the State of the Blog address for March 2009.  Times are hard, in many ways, but we are also blessed in so many others.  I have a job.  I have a wonderful family. And I have many virtual friends I’ve had the pleasure of meeting through this new-to-me medium, blogging.  If you are hurting, I hope things turn around soon.  No matter how down things get, take inventory of the blessings around you.  They could be as basic as a roof over your head, or food on the table.  They could be as extravagant as enjoying a week away with your family vacationing.  Either way, stop and smell the roses.  Life is short; enjoy it.

Just when I thought I had heard it all, I found out I haven’t.  The other day I heard a radio commercial for a local business that allows you rent custom rims for cars.  Rent rims for cars?  Why in the world would anyone want to rent rims for a car?  Bad enough many of these spinning tire toys cost up to $2,000, but now people are renting them?  Yep, I guess I’ve heard it all.

Photo courtesy of South Beach Cars

Rent To Own

I have never particularly liked the rent-to-own business model, because to me it is like financing a purchase over twelve months and paying significantly more than the item is worth.  Why not just save up the cash for twelve months and buy the thing outright?  Because people suffer from instant gratification disease.  The disease afflicts millions of us and is largely responsible for this economic meltdown.

Nobody wants to build wealth the old-fashion way, they want a get-rich-quick scheme.  Nobody wants to wait to move into that dream house two or three house purchases a way, they want their starter home to have five bedrooms, a pool and a three car garage with a huge wired shop out back.  Nobody wants to wait until they are making $150,000 a year to buy that brand new BMW, so they finance more than they earn in a year in an attempt to show everyone on the road that they are better off than they really are.

Now car enthusiasts can take the same approach by renting financing custom rims and tires, GPS devices and CD players.  What’s next, renting televisions?  Oh, that’s right, you can do that, too.  But when you do agree to one of these rental agreements, no one tells you that in the end you pay much more for the item than straight retail.

For instance, during Super Bowl Sunday madness a local rent-to-own store was offering one of those big, widescreen televisions for only $99 a month (for twelve months).  Problem was, it was an $800 television.  I wasn’t the top math student in school, but to me that sounds like an overpriced deal by about $400.  Still, I wonder how many people stopped to make the annual cost conversion.

The bottom line is this; as a collective consumer society we are going to have to break away from the monthly payment mentality that has had a grip on us since the invention of credit cards and car deals.  It is no longer sufficient to say, “I can afford the payment.” No, the larger question is, can you afford the car?  And if they answer is no, then you need to keep saving or look for something cheaper.  The same goes for rims, televisions, computers, and anything else than can be financed.  Which in today’s world, includes just about everything.

Photo courtesy of Thinking Tree

Last week I mentioned our project to cut the cost of watching television for one year.  That project recently came to an end, and after some internal discussion as a family we decided to sign back up for the expanded cable service (not digital, not high-definition, no movies – just the regular cable lineup).  The decision was an easy one for our family, but a controversial one amongst readers.

Long-time reader, Robert, called me out:

Jason, I have been following your posts for a few months now and as an outsider looking in, it kind of seems like you may be on a financial diet vice a financial lifestyle change.”

My gut reaction was to be a little defensive, but then I realized in a way, Robert was right.

A Diet or A Lifestyle Change

When people start and fail a new “diet” plan they are often told to make a lifestyle change, rather than embark on a fad diet.  It’s good advice, because diets come and go, but lifestyle changes stick.  In some ways I have been on a spending diet, because early on in our financial turnaround it was required to free up some cash to use towards debt reduction, and to build our savings.

Now that we have a little breathing room, we are relaxing that spending “diet” some to allow back in a few “quality of life” expenses that we missed. For instance, cable was something we missed for the entertainment value it brought.  The monthly cable bill is cheaper than a night out at the movies for a family four.

This phase is commonly referred to as “maintenance” in the dieting world.  It’s the phase where you reintroduce carbs or fats or whatever it is that you restricted during your weight-loss phase, and it is by far the most dangerous time.  If you let too much back in you start putting weight back on, and if you allow too many new expenses to rack up you’ll suddenly find yourself right back in debt and living paycheck to paycheck.

A Frugal Lifestyle Not Without Luxuries

One of the things I’ve tried to stress here at Frugal Dad is the idea that you can live frugal and still enjoy life.  You don’t have to live a spartan existence, or be completely miserable, to lead a frugal lifestyle.  In fact, most frugal people I know are quite happy.  Having nice things and being frugal don’t have to be mutually exclusive.  In fact, I have a few nice things I am proud of, but I make sacrifices in other areas to balance things out. I try to avoid waste, but I don’t mind spending money to get a good value.

What Robert was right about was that my dedication to minding expenses was beginning to weaken.  It was a wakeup call I needed, and I appreciate his willingness to tell me.  Oddly enough, when things are going well, financially, we tend to let down our guard.  When things are going bad we make penching pennies our top priority.  I like to think I’m usually somewhere in the middle, but I occasionally need reminders like this to make me lean more towards the side of penny-penching.

Last weekend my daughter and I had a talk about credit cards after she saw me use my debit card at the store.  Here’s a sample of our exchange:

Her: “Dad, I thought you weren’t supposed to buy stuff with credit cards.”
Me: “That’s true, but that was a debit card I swiped in the store.  Debit cards take money right out of my checking account instead of borrowing money from the bank.”
Her: “Borrowing money? You mean credit cards are like a loan?”
Me: “Well, yes.  They are a loan – one that you have to pay back in a short time or you get charged interest.”

You can see what she was thinking.  Most people think of loans as something you apply for inside the bank, across the table from a neatly dressed banker. You fill out mountains of paperwork and sign your name a dozen places and then you shake hands with the banker across the desk.

Borrowing money on a credit card is much easier, and therein lies the danger. Once approved, you are free to spend right up to your credit limit (and often times beyond) without any additional scrutiny. No one asks if you can afford that item, or asks how you plan to repay the item. No one asks for collateral in case that item cannot be paid for long term. No, we simply swipe the card and go.

Maybe I could have avoided going into debt in the first place if I thought more like my daughter.  She’s right – credit cards are a loan. And in most cases, they would represent loans on very bad terms. Imagine sitting down at a bank to finance new bedroom furniture and agree to paying 24.99% interest!

So to those struggling with credit cards I offer up this bit of advice.  Shift your thinking about credit cards. Imagine every single time you use the card and sign the receipt it is the equivalent of signing a note for that amount. But banks don’t want you to see credit cards this way, which is why they go out of their way to improve the design and “convenience” of credit cards.  You didn’t honestly think they let you pick your own card design, or have it available in key-chain sizes to help you?

Banks recognize that the less their credit products look like a loan the better. So they wrap them in plastic, and cut them down to fit in your wallet (or on a keychain, see picture above), and maybe even pay the NFL to let them put the logo of your favorite team on the background.  Pretty snazzy, huh?  Well don’t be fooled.  Those things are miniature loans riding along in your back pocket, and they have the potential to wreak havoc on your financial life if not used properly.

Photo courtesy of GoldenEel

Yes, you read that correctly. Could you live on $800 a year, excluding utility bills, clothing, gifts, car, and house? Your reaction is probably like mine – what’s left?  Well, a lot, actually.  Consider how much money leaks through your budget on things like food, pet food, entertainment, and other miscellaneous categories.

I stumbled across a blog post at Jane4Girls $800 Annual Budget that proves it is possible to live on an $800 annual household budget (by “household” I mean things like food, cleaning supplies, health and beauty supplies, etc.). Here’s an excerpt from her site which explains the mechanics behind how she pulls it off:

I have basically put $800 cash into an online savings account. This is for 4 people, one adult, 1 teen, two tweens and two dogs.  This averages out to 54¢ per person per day. Any time I have to pay out of pocket for something I will use a credit card that I earn rewards on, either cash back, gift cards back or college savings. Then I will transfer that purchase amount from my online account to my checking account to cover the cost of those items when the bill comes in.”

It is hard to believe a mom and three kids (and two dogs) can really live on $66.67 a month, but when you really dig in to Erin’s system you find that a lot of what she uses has been stockpiled and/or acquired by combining store sales with coupons.  That is a great strategy, and one we tried last year after signing up for the Grocery Game.  The service published a list which matched up store sales with available coupons from the Sunday paper (and a few online sources).

During weeks we stuck to the game we saw some significant savings, usually around 35% off regular, retail grocery store pricing.  However, we also found ourselves buying a bunch of stuff we didn’t really need, just because it was a “rock-bottom price.” As the stockpile of unused stuff began to grow we realized that stockpiling wasn’t working for us because we bought more of the things we didn’t need and that offset the savings of buying the things we did need.

It is an interesting exercise nonetheless, to imagine just how low you could go on annual household spending. Without knowing much more about Erin I assume she is doing this because she has to, and we are fortunate that we don’t have to mind our pennies quite as closely. I would rather spend a little more on things like food to eat healthier meals, more fresh produce, etc. rather than always hunting a coupon bargain.

Still, there are some opportunities for us to cut costs, and use more coupons on the foods we do buy, particularly basic staples.  I get bored too easily to track spending at such a granular level for an entire year, but I might just try something similar for the month April. Stay tuned.