“Sadness” by Eric Perrone

While all those factors have conspired to affect motivation in several areas of my life, what has really suffered is my writing. Thanks to a number of close blogging friends, I have had no shortage of guest posts to present here at Frugal Dad (Neal from WealthPilgrim.com is sharing another great one with us this Friday!) since they learned of my mom’s passing. These breaks in the action are welcomed, but I do feel a little guilty for not cranking out material at the pace I once did.

Just yesterday I missed my first Monday post in nearly two years of blogging. I wasn’t motivated to write. I had an incredibly busy weekend of packing and moving boxes, etc, and when I finally sat down late Sunday night at the keyboard there was nothing left. No witty budget concepts. No rants about self-reliance. No new reviews to tell you about. Had I finally run out of things to say?

Fortunately, not yet. I had simply run out of steam. I was losing focus, and not just with my writing. I am not sure if it is depression or just the normal grieving process, but after losing a parent (who also happened to be my best friend, besides my wife), you sort of go through a period of just going through the motions.

I wake up, eat a quick breakfast, kiss the wife and kids and drive to work. I check my email, my to-do list, keep busy, leave in the evenings, play with the kids a while, work on the blog and go to bed. But when I go to bed feeling completely exhausted I can’t recall the specifics of the day. Did I even ask my kids how their day was at dinner? Did I remember to send that status email on the big project at work? Did I remember to pay the utility bill online? And for just a moment, just a split second, I don’t even care. I just want to go to bed to put this day in the books and do it all again tomorrow.

The problem is when you find yourself in one of these funks the days just start to slide by. Life starts happening to you, instead of you being in control. The budget gets relaxed. Old, bad spending habits come to the forefront again. You stray from healthy eating and start refueling on crap from fast food restaurants and vending machines. You distance yourself from loved ones. And the worst part? When you are going through it, you aren’t even aware it is happening.

At some point you snap out of it; like a fog lifting in the middle of the morning. Things start to become meaningful again. It is at this point that you recognize the days have been sliding by, and you start grabbing for moments before they can get by you. Yes, I’ll be at my son’s next football game, and instead of watching alone at the fence down from the bleachers, I’ll be among the other fans cheering for our kids’ team. Yes, I will again be my former productive self at work. Yes, I will balance my checkbook and take a stab at a new budget for the next month. I will re-engage life.

This was really just a long way to say thanks for sticking around during this tough time. I have some exciting ideas for the blog in the coming months, including a few spring projects I think you will enjoy (mostly related to square foot gardening, living off the grid, etc.). I’m going to rededicate myself to getting back to my frugal roots over the next few weeks, and hopefully my writing will reflect that focus.

Finally, if you are reading this and feeling blue, or more than blue, I suggest you talk to someone. It doesn’t have to be a professional, though I would certainly recommend one if you are experiencing signs of depression. Go out to lunch with a close friend and open up about what you’ve been feeling. Sometimes it helps to simply get things off your chest, and let someone else know what you are going through. Whatever you do, don’t ignore the symptoms and let too many days slide by.

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People often can be successful in the business world but clueless when it comes to managing their own finances. A business-minded strategy is a great way to manage and organize your household finances.

“Business advice can translate into wise decisions for your personal finances,” said Heath Tudor, consumer liaison for Resqdebt, a financial health management company in Allen, Texas.  “Using simple business practices, you can easily make your house more profitable and efficient.”

Tudor suggests these steps for managing your household finances:

Create a Plan - All businesses begin with some sort of a plan, both short term and long term. Plans help guide decisions and direct you where you want to be in a certain amount of time. Build a plan around your goals. Budget for everyday expenses, emergencies and long term plans.

Track Spending – Businesses often use spreadsheets to track income and expenses. This lets them know the state of the company’s finances at anytime. Tracking your finances will help you visualize your situation and make better decisions. However, you don’t need an expensive or complicated bookkeeping program to track your finances. Check out free online bookkeeping tools, such as Quicken or Mvelopes or create your own spreadsheet. Record everything that you bring in, spend and owe.

What comes in must be more than what goes out- In business you want to bring in more than what you are spending; the same should apply at home. As you track your finances, look at your income and your spending habits. If you are coming up short every month or using your credit cards to cover purchases, you need to adjust your income-to-spending ratio.

Cut Down on Expenses - Businesses want to keep expenses low so that overhead does not cut into their profits. You can’t always change how much money you bring in but, you can change what you pay out. Examine your bills and find places where you can cut down on monthly expenses.

Conduct Reviews - Review your plan weekly, monthly and yearly. Make adjustments and track your goals.

Overall, the most important thing for your household finances is to stay organized. Know what you are spending and always remember the bottom line. These steps will help you become more profitable and the CEO of your house.

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I know it may seem strange to some that I’m even at a keyboard, but Mom’s now gone, the house is quiet with sleeping kids, and I’m turning to the activity that has always been therapeutic for me: writing.

Strange that through blogging we feel compelled to share life’s highs and lows with 10,000 complete strangers, but I don’t think of you as “complete” strangers. Over the last couple years I’ve made “virtual” friendships with many of you, and I enjoy sharing bits about my life with you all – the highs and the very, very lows.

I hope you’ll understand that I need a little time away from the blog to help settle my mom’s affairs, look after my grandfather, and grieve. I’ve lined up a couple guests posts for the week, and there may be a day or two between posts.

Thank you for all the thoughts and prayers expressed over these last 13 months.

I wrote a bit more about my mom in this post, The Path to Contentment

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The big expenses that managed to sneak up on us are what really gave us financial fits. That unusually high power bill two summers ago compliments of a prolonged heat wave. The annual car tag renewal I completely forgot about, even though it is due on my birthday every year. And each month it felt like we were always needing to replenish groceries and household items that were not on sale, or that we never had a coupon to use.

In an effort to sort of smooth out these financial highs and lows (well, mostly highs), we implemented the following relatively simple steps.

Sign up for levelized billing with your utility company. This was as easy as a phone call to our utility company and the completion of  simple form. “Levelized billing,” as it is commonly referred to, involves the utility company averaging your last 12 months of utility bills and using that average amount as your next bill due.

The beauty of this system is that your utility bill hovers around the same amount each month, even in the extreme highs and lows of summer and winter. A particularly high-usage month averaged against eleven previous months has little impact on the new amount due.

One note about levelized billing plans, utility companies require at least one year of history, and often require no late payments within that time.

Use a sinking fund for large annual expenses. We use sinking funds for those large, annual or semi-annual expenses, such as insurance premiums, taxes, etc. Rather than being hit by a $600 insurance bill at the end of the year, sock away $50 a month in a sinking fund at your favorite online savings account, and when the bill is due simply transfer the full amount to checking and pay the bill.

Watch for cyclical coupons and sales and stock up when prices are low. Coupons tend to run in cycles of 12 weeks or so, and often times grocers match sales to available coupons in an effort to attract shoppers.

For instance, a monthly P&G coupon circular is included in our newspaper around the first of every month. Flipping through the store sale ads you’ll likely find sales on P&G items to match up with those coupons.

It might also help to keep a price book. Jot down the price of items your household routinely purchases. Start tracking the cost each time you purchase, and soon you will be able to determine if that “sale price” is really a bargain. If it is, stock up, refuse to buy when prices are high, and wait until the price drops or a cyclical coupon is available again.

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Finding that peace is an uphill battle thanks to entities like the media. I’m willing to bet none of us can go through an entire day without hearing about swine flu, a terror plot, identity theft, an airplane crash, a horrific car accident, a celebrity death, or a nefarious government conspiracy.

Traditional media does a great job of perpetuating their own motto, “If it bleeds, it leads,” but they aren’t alone. New media is getting in on the act, too. One of the hottest trends on the web the last week or so involved a website that shares death risk rankings. How inspiring.

This fixation on the negative has left us all in a constant state of worry. We live in a perpetual state of fear – of dying, of going broke, of losing our freedom, of losing a loved one, and on and on. Don’t believe me? Why do you think pharmaceutical companies, especially those with leading drugs for anxiety and depression, advertise heavily during the nightly news?

I’m not just picking on pharmaceutical companies. There are a number of industries whose main purpose is to sell consumers products that make them feel more secure. From life insurance, to identity theft protection, to those make-your-own last will and testament software providers, many companies exist to help alleviate your fears.

Those companies are not necessarily bad, and most of us in and around finances generally agree their products are a necessity (at least when it comes to insurance and wills). However, this fear bleeds into other areas of our financial lives.

How many of us are terrified of applying for a new credit card, or canceling our current credit cards, because of the impact it might have on the great FICO gods? It’s sad when we allow our behaviors to be dictated to us by some secret, highly-protected, highly-complicated algorithm dreamed up to dummy down lending decisions.

This thought occurred to me the other day as I paid off yet another old credit card account, from a company that had provided horrible customer service over the years. We had already introduced the credit card to our sharpest pair of scissors, and now I was ready to call and cancel the card.

As I’m dialing the customer no-service number I remembered the same advice I’ve given here at Frugal Dad before – don’t close your oldest credit card because length of credit history is an important factor in calculating your FICO score. Same for credit utilization, which would also be affected if I canceled this card with a high credit limit.

Thankfully, at that moment my common sense kicked in and I said out loud, “Screw FICO.” Blasphemous, I know. I’m not going to carry around this old account from a company I can’t stand just because it might affect my credit score. I’ll do business with whoever I want to, and for as long as I want to. I dialed the remaining numbers and canceled the credit card.  Good riddance!

I’ve also spent too much of my life obsessing over my finances. I’ve stayed awake at night counting credit card balances instead of sheep. I’m afraid of something happening to me, leaving my wife and kids without enough to survive. Do I have enough life insurance? Do I have enough in emergency savings? Do we have enough saved for the kids college plans? Will I ever be able to retire? The list of financial worries is endless.

At some point you just have to live your life. I’m not advocating throwing caution to the wind, burying your head in the sand, or not taking basic steps to secure you and your family’s future adequately. But I am advocating that we try to sort of put things on autopilot so we can stop worrying, and obsessing over our finances.

Over the last couple years, simplifying our financial life has been a big goal for us. We’ve consolidated accounts, set up automatic transfers where possible, put retirement savings on auto pilot. Besides periodic checks on balances or fund performance I rarely look at the “big picture” stuff. I focus on winning today, and being “present” for my kids. As long as we keep winning the daily battles with money, the “big stuff” will take care of itself in time.

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The concept of a financial fire drill is based on the idea behind a real fire drill. It allows you to run through a real emergency before you have to act with smoke and flames. In the case of a financial fire drill, this means you will simulate a “what if” scenario so you’ll know what to do, and what things need to improve, before a real life financial emergency strikes.

Steps to Planning a Financial “Fire Drill”

1. Include the entire family. My family has a pretty good emergency plan. We all know where to meet in case a fire separates us in the middle of the night. We have a rendezvous point established for larger-scale emergencies, and even the kids are aware of actions to take based on various types of disasters. Similarly, the entire family should also be involved with a financial fire drill.

2. Gather a list of necessary expenses. These expenses are absolute necessities, so things like mortgage payments or rent, basic utilities like water, power, etc. (cable and Netflix memberships don’t count), and other basic expenses related to food, shelter, prescriptions, etc. Nothing else matters at this point.

3. Determine how much is in your “extended emergency fund.” A basic emergency fund is a pile of cash stored in an online savings account or local credit union. A typical goal for emergency funds is to save six months of household expenses just for emergencies. However, in a large emergency such as a job layoff or medical disability, you could likely tap other resources. Be sure to include any stocks or mutual funds not held in retirement, CDs (even if you had to pay a penalty), bonds and any other assets that could be converted to cash quickly. This total amount will represent your “extended emergency fund.”

4. Determine your maximum survivability (in months). Divide the amount of your extended emergency fund by the total expenses identified in step 2. This number represents the months you could survive without an income. For instance, let’s assume an average family of four needs about $2,000 a month to cover their mortgage, basic utility payments and food. If the same family has a $17,000 extended emergency fund, they could expect to make it about 8.5 months on savings.

5. Adjust for increased expenses. Unfortunately, expenses don’t always go down in an emergency. In fact, they rarely do go down, despite your best efforts to cut expenses to the bone. Things like continued health insurance premiums under COBRA, or other medical expenses, can cause spikes in spending categories otherwise in check. Make adjustments to your prediction based on these estimates. To show how much impact these “surprise expenses” can have, in our example above the same family could only survive five months or so with a $1,000 COBRA premium added to their $2,000 in household expenses.

6. Conduct a financial fire drill regularly. Armed with all the facts and figures required, it’s time to pull the alarm and practice getting out safely. Since laying yourself off is not exactly a smart idea, it is sufficient to simply pretend you just received your last paycheck. What expenses would you immediately target to be cut? Write them down, along with customer service phone numbers and terms. Repeat this exercise once a quarter or so and update your list accordingly.

The day you are laid off you may grab your list and make phone calls to the newspaper subscription department, your gym, your lawn service guy, Netflix, and the cable company. These moves alone could save you a couple hundred dollars a month in expenses not necessary to your survival, preserving precious emergency funds. Keep this list handy, and only break it in an emergency.

None of these steps will happen on their own. You must be proactive. Force yourself to sit down and run the numbers. If you don’t know how much COBRA might cost, find out. If you don’t know how much your health insurance plan’s deductible is under a major medical event, find out. Don’t wait until your exit interview to discover these new costs. Doing so would be like waiting until smelling smoke to map out an escape route.

This article appeared in the Frugal Living Blog Carnival on 9/4/2009

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When you’ve settled on an amount you should think about secret hiding places to stash the cash. We’ve all seen those spy movies where the guy removes the tile from the back splash behind his stove and pulls out a cache of bills, passports and ammo. Well, the following ideas may not be worthy of James Bond, but they will improve the chances of your money surviving a break in.

Seven Secret Hiding Places for Your Cash

1. In the freezer wrapped in aluminum foil. Save a little styrofoam from the next pack of meat you buy and cut it down to the size of a couple large steaks. Put your cash in a Ziploc bag, stick it between two pieces of the used meat tray and wrap it in aluminum foil. Take a piece of masking tape and write “Scraps – 05/22/2005.” Robbers are not likely to look through the pack, and if they pull back the foil they’ll only see the familiar styrofoam tray and stop.

2. Sandwiched between the cardboard backing of a hard-to-reach picture frame. Most thieves pull back pictures from the wall to see if money is taped to the back, but they aren’t likely to take the time to look behind the glass, the cardboard backing and the picture itself. Use a pen knife to split the cardboard backing into two halves and sandwich the cash in between.

3. Under a piano, entertainment center or anything weighing a couple hundred pounds or more. If you have a hand truck around the house it’s pretty easy to just lift up the corner of a piano and slide an envelope under it. However, a burglar probably won’t be able to lift something this heavy, and would spend his time digging through the drawers or inside of the furniture rather than trying to lift it.

4. Inside a used can of soup. The next time you have soup, open the bottom of the can to empty the contents and the leave the top in tact. Rinse the can thoroughly, then use it to cover your stash of cash hidden inside your pantry. Stack a few cans of soup on top just to make it less convenient for someone to pick it up out of curiosity.

5. Buried in the “soil” of a fake plant. If you have a fake plant, or small tree, in your home, wrap your cash in a Ziploc bag and nest it inside the “soil” of the plant.

6. In hollowed out pages of a book on your book shelf. Using a pen knife or box cutter, carve out a few pages of your least favorite title. Hide your cash inside the book and return it to the book shelf.

7. Inside a kid’s toy hidden in their closet. Kid’s rooms are notoriously messy, and kids are not known for having large sums of money. Take apart an old plastic toy they no longer play with and hide your stash of cash in there. Return the toy to the bottom of the pile of toys in your kids closet, or toy chest, and it should be safe.

It’s important to remember that any cash saved at home could be lost in a fire or natural disaster. The ultimate hiding place is a fireproof safe bolted to the floor, and even that isn’t fool-proof. The ideal spot for storing large amounts of cash is an online savings account, far away from your house and any potential danger. But for the small amounts you stash at home, take the time to put it out of sight.

Also, remember to tell a spouse or close friend about the money in case you are not able to get to it (you die, or become injured or ill and cannot communicate). Keep enough cash on hand to cover you a few days in a major emergency, but not so much that you’d be completely wiped out if it all disappeared.

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We were convinced our compromise of financial personalities was for the greater good of marital harmony.  However, over the years our natural tendencies were overridden by circumstances – circumstances we created for ourselves, but had to work through nonetheless.

Just a couple years into our marriage my wife quit working as we decided she would stay home with our children. It was a decision we made together, and reflected both of our desire for her to be home until the kids were school age. Neither of us downshifted our spending appropriately for living on one income, and soon we found ourselves in debt. Our growing debt had an interesting effect on our relationship. My wife became a saver, and I sobered up (financially) after a couple years of spending more freely than I was comfortable with.

These days we are both enjoying a more frugal lifestyle. Just the other day my wife went grocery shopping and picked up $273 worth of groceries and cleaning supplies for $186. For hardcore couponers out there that might not sound like a huge savings. But for us it is huge! We both resisted using coupons for years, dabbling with services like The Grocery Game and other coupon websites only half-heartedly.

The reason we weren’t gung ho was because we weren’t both enthusiastic about couponing. I would clip, she would forget. She’d clip and give to me for my after-work run by the store, and I’d forget to use them at the checkout. But when we both got on the same page we started realizing some serious savings.

This same synergy developed through shopping with coupons has carried over into other areas of our financial life. We both decided we were tired of being in debt and have been paying it off like crazy the last several months. We are now equally passionate about building our savings, our kids’ college savings plan and our own retirement.

How much do you and your significant other differ on finances? Has this changed since you first met?

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Today I’m a 31 year-old husband and father of two. Fourteen years removed from those experiences on the football practice field, I still find reasons to tell myself to “man up.” I see lots of examples of dads not acting like men when it comes to providing for their children, financially and emotionally.

For those who need an example of what it means to “man up” and take care of your family, I’ll share the following trailer from one of my favorite movies, Cinderella Man. Jim Braddock knew a thing or two about taking care of his family – playing through pain, swallowing his pride, sacrificing everything for this family, and fighting for what he believed in. We don’t have enough modern day Jim Braddocks walking around, but fortunately, we have great films like this to remind us what they used to look like.

Cinderella Man Trailer

I have a lot of respect for men who provide financial support for their children even when things don’t work out between them and their spouse. I have zero respect for fathers who don’t. To me, there is no higher calling than being a parent, and that means that after you have children you put their needs above your own. You sacrifice the spoils of single life and “man up” to take care of your family.

Unfortunately, I see plenty of examples of males (they aren’t men), who put their needs ahead of those of their family. They might be there for their family physically, but emotionally they are bankrupt. These are the types of guys so busy boosting their egos in the corporate world that they forget to boost their kid’s confidence by showering them with attention at home.

I’m not talking about the guy who works 60 hours a week because he has to, or the guy deployed around the world to serve his country, I’m talking about the guy that works long hours because he wants to. You know the type – he finds reasons to work late and volunteer for travel to avoid the “noise” at home. To him I say, it’s time to “man up.”

Finally, there is the guy who still lives the single life, partying with friends and buying all kinds of big-boy toys for himself while the basic needs of his family are not met.  I’ve seen guys like this drooling over cars, or boats, or computers, or paintball supplies while there kids are standing in the background with holes in their shoes and clothes that don’t fit. I just can’t understand that thinking, because I would give everything for my wife and kids. That is the essence of being a real man. That is what it means to be a “frugal dad.”

On this, the longest day of the year, there is no excuse not to reconnect with your kids. Go enjoy a few quiet moments with them outside, teaching them to appreciate the nature that surrounds us. Take the kids for a walk around the block, or at the park.  Give them a call if you are separated. Whatever your circumstances, “man up” and be a great dad!

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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.

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