Frugality Is The Second Mother Of Invention

It’s been said that necessity is the mother of all invention. Then frugality must be like a second mother!  Have you ever noticed how most frugal people are also very creative? It’s no coincidence; I believe there is a strong correlation between frugality and creativity.  There’s plenty of examples out there of frugal people finding creative solutions to life’s problems – sometimes in an effort to save money, and other times simply to extend the useful life of everyday things.

Mowing by flashlight

The idea for this post came to me Saturday night while mowing our lawn late in the evening. As it got dark, I switched on the lawn tractor’s headlight feature without success. In a matter of minutes I would soon be mowing in the dark.  With no time to investigate why the lamp wasn’t working, and little time (and money) to start looking for a replacement, I did what any frugal person would do. I duct taped an old MAGLIGHT flashlight to the hood and finished mowing.

Of course, this probably won’t be a long-term solution, although after looking up the cost of a new headlamp I’m thinking I might just live with it for a while (and start mowing earlier in the day!).

Painting the top of my van with Rustoleum auto paint

A while back I noticed the top of my old van was seriously rusted. I was less concerned with aesthetics and more concerned that it would eventually leak during heavy rains. Recognizing that it is a large vehicle, I figured having a new paint job would be expensive, so I decided to do it myself.

One Saturday morning I hand-sanded the top of the van with sandpaper fine enough for auto surfaces, but coarse enough to remove most of the rust. I then gave the van a good washing to remove any sanding residue and loose paint/rust chips.

The next morning I applied a couple coats of Rustoleum auto spray paint to the roof in an almost matching color.  It’s really more two-toned now, but not many people can see the top of a van, so it certainly doesn’t bother me. With a little elbow grease, and $20 worth of supplies I had solved most of my rust problem. At 19 years old, the chances of me having to repaint the roof during the van’s useful life are slim.

Made a “book” rest

A few weeks ago I was cleaning out my work office when I found some very old programming books.  These thousand-plus page monsters were extremely outdated and were ready to hit the recycle bin long ago. But I had a different idea.

I grabbed two of the books of equal size, and found four door wedges (those triangular things that slide under a door to hold it open), and glued two to each book, about a 1/3 of the way in on both sides.  What I had left was a gently elevated footrest for each foot that I put against the backside of my desk.

No offense to the books’ authors intended of course, but the software the books were written for stop being supported five years ago. At several inches thick they make a perfect way to elevate my feet under my office desk,and saved me from having to buy an expensive footrest. Why not extend their useful life a bit?

Naturally, these homemade solutions are not always better. There are plenty of times where it makes sense to go shopping for a new product or  service that will solve your problem. However, I applaud those who stop to think about finding a frugal, creative solution using the things they already have, rather than rushing out to a store to buy something new–adding to the clutter in their home or office.

Emergency Funds For Different Kinds Of Emergencies

One of the key components of my family’s financial turnaround was the addition of an emergency fund.  An emergency fund may be best described as a pot of money used to handle life’s emergencies while helping you avoid reaching for a credit card. In the past it was these small to medium emergencies, and the subsequent credit card charges, that seemed to keep us on the hamster wheel of debt.

Another thing that helped in our recovery was the mental, and even physical, separation of small piles of money. We accomplished this by opening an online savings account at ING Direct that allowed us to open several additional “sub-accounts.”  We identified a number of unique savings goals and created an account for each one – Christmas savings, a vacation fund, orthodontic services for our kids, etc. We also recently divided our emergency fund into logical (to us) separate piles of money.

Specialized Emergency Funds

The inspiration came from a post I read over at Gather Little By Little about creating specialized emergency funds. I liked the idea of dedicating a portion of money to a specific emergency situation, and the idea folded in nicely with an earlier tweak to our financial plan to create a local emergency fund.

In this economy, it also seemed like a good idea to tag some money available to pay for things like the mortgage, COBRA insurance, etc. in the event of a job loss. Sure, the sum of these expenses could be calculated and serve as your goal emergency fund amount, but knowing I have 6 mortgage payments or 6 months of COBRA in an account helps me sleep at night!

Our Specialized Emergency Funds

  • Local emergency fund. This fund represents to the first $1,000 of our larger emergency fund.  Instead of keeping it all in online savings accounts, we like the idea of $1,000 or so saved at a local bank.  We can write local checks for repair services, make cash withdraws, or do business inside the bank branch.
  • Mortgage fund. My goal is to have exactly six months of mortgage payments saved in a dedicated account at our online bank. After watching my mom struggle to stay afloat financially after a stroke and six months of unemployment before disability kicked in, it has strengthened my desire to have this fund in place.
  • Family health insurance fund. In the event of a job loss it could be difficult getting rehired in this economy. So having 3-6 months of COBRA insurance premiums sitting around would make me much more comfortable. In fact, if I ever venture out on my own, this fund could provide insurance for a few months (COBRA or a family health insurance plan I shopped for somewhere like eHealthInsurance.com).
  • Automotive repair/replacement fund. We combined auto repairs and replacement funds (where I will continue sending our car payment after it is paid off this month). When we have enough saved to buy a car for cash, we’ll upgrade my wife’s current car and I’ll drive hers a while longer.  In the mean time, the funds will be used to repair my old van, which has been limping along here lately.
  • Household repairs fund. The remainder of our emergency fund is in a generic account we’ve labeled “household repairs.”  This could cover things like a new hot water heater or a refrigerator repair.

I feel compelled to add this small warning – be careful not to add too many specialized emergency funds, and try not to confuse them with other targeted savings goals you may have.  For instance, my car replacement fund really could have stayed separate from my repair fund, much like a “new house down payment” savings fund would likely be separated from household repairs.

Basically, do what works best for you, but don’t too carried away creating dozens of accounts or you will create more headache accounting for the money in the long run.

Prosperity 4 Kids Product Review

Many readers are aware of my interest in improving financial education for young people. If there is any silver lining to be found on today’s tough economic condition, it is that more parents and grandparents are willing to invest in their children and grandchildren’s “financial prosperity.”  Over the years, a number of financial products aimed towards teaching kids about money have cropped up on the market.

I recently virtually met Prosperity 4 Kids creator Lori Mackey, who shares a passion for “empowering kids for a healthy financial future.”  I was immediately impressed with the quality of materials I found at her site, and she was kind enough to share a Money Mama Bank and accompanying materials with my kids.

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One of the things I like most about the product is that it separates earnings into four categories, with a realistic division for kids.  After all, not many children will save 90% of their earnings and keep $1. 00 for spending – it just isn’t realistic.  The Mama Money Bank solves this dilemma by providing four coin slots for each category:

  • Giving (10%) My kids are interested in a number of causes of their own, including cancer research (Relay for Life), Project Linus, and a number of school and church fund raising opportunities.
  • Investing (15%) Many financial products for kids stop at saving, spending and giving.  I like that this system includes an investing “bank” because it helps kids think in a more long-term view.  I explained to my daughter that the difference between saving and investing is largely determined by the amount of time until your goal. My daughter is “investing” for her college education and her own car (which she fortunately is still several years from buying).  She is “saving” for two new music CDs.
  • Saving  (25%) Again, the kids are saving for short-term needs that are a little outside of their allowance spending budget. Each week, my kids set aside 1/4 of their income for short-term savings goals.  These goals will ultimately convert to spending, but the beauty of this system is that is shows kids have to have the cash on hand before they can buy something – no debt!
  • Spending  (50%) Our kids are allowed to spend what’s left.  Without allowing kids to spend some of their money they will quickly grow to resent the plan, much like adults get frustrated when they just got paid, but have no cash to spend.

*Note, the percentages above are not necessarily the suggested percentages, but work well for our family

The other materials Lori included from the Prosperity 4 Kids system included a workbook, a story book, Money Mama & The Three Little Pigs, which included a read-along CD, and an allowance chart.  All were high-quality, kid-friendly materials.  I was particularly impressed that the allowance chart included “cling-on” type stickers which makes the chart last much longer than paper stickers.

My daughter has been reviewing the workbook, Design Your Child’s Financial Future, and has provided a short review of her own:

My favorite part of the workbook is Millionaire Habit #7: The Power of Earning.  This millionaire habit is about kids starting businesses of their own. Some of the business ideas include a lemonade stand, babysitting, and pulling weeds in the neighborhood. I have helped my Dad pull weeds in our yard for extra chore money ($0.05 a weed!). To get started a child will save some money to buy supplies for their business. This part also includes a kids mini-business plan that includes a place for business name, who or what is my competition, how will I advertise, what problem does my business solve, and where will my business be located?

You will also get to ask people a feedback questionnaire which includes questions like how much you like their business and ways to improve. My friends and I are planning to open a lemonade stand in our yard now that it is summer to sell lemonade and other snacks. We are planning to use this workbook to create a business.

- Frugal Daughter

After reading my daughter’s review it occurred to me she is taking a more thoughtful approach to her business than I have in nearly two years of freelance writing!  I think I’ve found a new contributor here at Frugal Dad!

For more information, visit the Prosperity 4 Kids website, and Lori’s blog at TeachingKidMoney.com!  There is a wealth of resources at both places on the subject of kids and money.

The Home Depot Father’s Day Giveaway

The contest is now over. Random.org’s random integer generator selected comment number 131 – congratulations to “cwaltz.” Happy Father’s Day to all frugal dads out there!

The Home Depot has offered to give one lucky Frugal Dad reader a $100 Home Depot gift card, just in time for Father’s Day.  What a great gift to present to dad, or if you’re a dad, what a great gift for yourself! Just think of the things you could buy at The Home Depot with your gift card. I doubt the lucky recipient will have a hard time thinking of ways to spend his gift card, but just in case, you may want to share the following links.

Father’s Day Gift Ideas

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The first lists Father’s Day gift ideas available at The Home Depot for less than $50.  The second link displays gift ideas between $50 and $100, and includes a couple of things I’ve had my eye on for some time.  I could use a new shop vac for cleaning out out our car (no sense pumping any more quarters into those machines!) and for cleanup around the garage.  I could also use a floor lamp for my make-shift office, and I need to stock up on some CFL bulbs and air conditioner filters for these summer months when energy bills are sure to rise.

How To Enter

To enter to win The Home Depot gift card, simply tell us in the comments below why the dad in your life (father, husband, son, etc.) should win this giveaway.  Perhaps they work extra hard supporting their family, or they don’t mind helping finish homework after a long day at the office.

Deadlines

The contest will end next Friday, June 12th at 11:59pm.  At that time, comments will be closed to this post and no new comments will be allowed.  Using random.org, I will select a random number corresponding to one lucky winner from the comments section.  The winner will be notified via email, and this post will be updated to reflect the end of the contest.

The Home Depot Gift Card

Sometimes it is hard to find that perfect gift for dad.  I know; my frugal grandfather and my stepdad seem to have everything they could possibly need, but I’m sure armed with a gift card from The Home Depot they could pick up some useful tools they probably wouldn’t normally buy for themselves.  The gift cards never expire and no service fees will ever be charged when purchasing or using a Home Depot gift card. Gift cards may be redeemed at Home Depot stores.

Visit your local Home Depot, or shop online, to find three new gift card styles to choose from, including a gift card that looks and feels like duct tape and a gift card that comes with a FREE 3/8″ drill bit.  How frugal is that?!

Good luck to all the frugal dads out there!  Get your comment entry in today, and be sure to tell your family and friends to enter.

Why An Ostrich Could Never Be Wealthy

For the better part of my early twenties I acted like a financial ostrich.  When I began to worry about our financial future, such as how we were going to live on one income, or pay off my school debt, or pay for my kids’ college education, I simply buried my head in the sand.  After all, it was easier to do that than face the mess I had created.

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Photo courtesy of lorentey

But those months spent with my head in the sand now represent time wasted for putting things back on track.  The opportunities lost for compounding growth will never be recouped, no matter how much I save in my thirties and beyond.  Sure, I can make up some ground, but that $10,000 I could have easily saved in that decade would have grown to hundreds of thousands by retirement. So what’s the lesson here?

If you are young, do not ignore your financial future

I know when you are young the thought of retirement is a distant future, but there are many things that happen between graduation and retirement that you need to plan for.  Things like buying a home, a car, having children, paying for braces, paying for your children’s education, etc, all compete for your limited supply of money.  Somewhere in all that you will need to continue to save for your own retirement, so why not get a head start before all these competing priorities enter the picture.

If you have your head buried in the sand, look up before you get run over

Remember the old Road Runner cartoons when Wile E. Coyote stuck his head down the manhole cover of a busy street, just as the sound of a truck began to rumble towards him.  You knew what was coming next – WHAM! The truck hits Wile E. Coyote and sends him flying.

This is kind of like what happens to us ostriches.  We keep our heads stuck in the sand because we don’t have to hear, and see, all the noise above the surface:  The car payment we can barely make; the mortgage payment we are late on; the kids’ college fund with barely enough to pay for textbooks, much less tuition; the credit card debt that continues to climb thanks to a 28% interest rate.  If you don’t look up soon, that “truck” will smack you right in the rear and send you flying.

It’s never too late to get started

Some of you might be reading this and thinking, yeah, great advice.  Wish I had read it thirty years ago!  It’s OK.  I know it sounds cliche, but it really is never too late to get started. If you are 50 years old, have virtually nothing saved and a pile of debt, start working down that debt!  And when it’s gone, start adding more to your retirement plan at work, open a Roth IRA, and begin to take back your financial future.  It’s never too late to look up.