Dell doesn’t just carry an extensive inventory of laptops and desktop computers. In addition, it provides a wide array of computer software and accessories, the latter of which includes batteries, cameras and laptop bags. When you’re browsing Dell’s website, you can even find a great selection of printers and home theater equipment. If you’re unlike me, and you’ve already found yourself with your ideal laptop, then you can still find a frugal accessory or two to supplement the computer.

To be honest, I don’t need a lot of the extras that I encounter on their site. Instead, I’m leaning toward purchasing the Inspiron 15R. This innovative laptop features 2nd Gen Intel Core processing, and comes replete with a switch lid, which allows you to dress your computer according to mood and style preference. The laptop can be purchased in its 14”, 15” and 17” incarnations, but the 15” seems to be the perfect size for me. It’s also quite helpful to check out Dell computer reviews from resources like consumer reports, amazon, and other shopping sites with helpful advice.

I’ll be purchasing my Inspiron 15R for just $549.99, even though its market price is listed at $837.99. For a product that consistently receives 4 out of 5 stars in its reviews, I consider that a steal. Also, there’s a promotion on the site that promises the first 500 people to buy the Inspiron 15R will get an extra $50 off by utilizing a coupon code. I’m not sure how long that deal will last, but, at the very least, it’s a signature of Dell’s generosity, and it’ll keep me returning to their store in the future.

I can’t tell you what the perfect computer is, and I certainly can’t tell you what’s ideal for you and your family. But I’m not interested in a lot of extra functions being featured on my laptop. I simply want technology that will help me get by without cutting into my budget too deeply. If you’re in the same frugal boat, I suggest checking into Dell and their Inspiron line.

“Paying off any high interest debt will save you money in the long run, but it can be pretty tempting to buy something frivolous with the money, especially if you weren’t expecting it.

I feel completely different about the money that I’ve worked really hard for, than something like a refund that I wasn’t counting on. I really want to buy an Ipad, but i’m going to do my best to resist that urge.”

I can relate to Ross’ comment, and wondered if others shared our reservations to frivolously spend money we worked to earn, but feel more temptation to spend money we receive unexpectedly. Of course, one could make the argument that a tax refund is simply a return of money you have already earned and overpaid (assuming you paid taxes at all). In that sense, it is a little different than inheriting money or lottery winnings, etc.

Back to the original idea. Many times financial planning types suggest taking 10% of an inheritance received, or some other type of windfall, and doing something fun with the money. Take a vacation to visit a place you’ve always dreamed of seeing. Buy something of your heart’s desire, even if it isn’t very practical.

I generally think that is good advice, but only if you stop at 10% of the windfall amount. The problem is, many who find themselves on the receiving end of a windfall allow it to change their lifestyle. The expensive, once-in-a-lifetime luxury vacation becomes a once-a-year expense that eventually drains savings accounts and can lead to the accumulation of debt.

It also begs the question: Is it easier to spend money you didn’t have to work for? After all, when you apply a real hourly wage concept to your earnings, it may not be worth X amount of hours worked to pay for that trip to Tahiti.

There are some who would scoff at the very idea of spending any percentage of the money frivolously. I can understand that argument, too. After all, there are plenty of things most households could do with the money to better prepare themselves financially, such as.

• Getting out of credit card debt
• Eliminating some or all of your mortgage balance
• Setting aside a one-year emergency fund
• Setting up sinking funds for known future financial events such as insurance renewals, tax payments, annual Christmas shopping, etc.
• Investing for retirement, or future college expenses for kids
• Preparing an emergency stockpile of food, water and basic household goods

In an effort to maintain some balance I would probably do a little of both. I would spend a small portion of the windfall on something I really wanted, but I would lean heavily towards investing the money into something that would continue to provide a return long into the future.

That might mean paying off any consumer debt I owed, or dropping some money into a few quality dividend stocks that would spin off income for years to come. Better yet, it might make sense to eliminate a chunk of our mortgage. That would be like getting an immediate 5% return on the money through saved interest.

One last option would be to do nothing. Just let the money sit in a money market account safely drawing a small amount of interest. We live in an era where people are encouraged to be doing something all the time with their money – actively investing it, monitoring it, counting it, etc. However, often the best move is to simply do nothing.

We all hate to be told that we can’t do something. Whenever I’ve discussed ways to save money in your everyday life, my readers would get turned off.

When I would discuss strategies on how to cut back without giving up, my readers responded favorably.

Today, I wanted to try something different with the younger readers of Frugal Dad. I wanted to tell you to go ahead and spend the big bucks...BUT. Yes there’s a catch. Actually there’s a few catches (isn’t there always?):

You need to make big money before you spend big money.

You need to ensure that you’re at a stage in life where you’re earning a decent chunk of change if you want to buy that new Infiniti G35. Many college graduates are guilty of extreme lifestyle inflation. If your big spending results in you saving less than you would like to, it’s still somewhat justifiable. If your big spending is paid for by credit card, then you’re headed towards a financial disaster. Even worse is when low-income earners want to spend the big bucks before they’ve even reached the stage where their income justifies it.

The other day I heard yet again another story of a friend that just graduated college, started making a little bit of money, and is already living an extravagant lifestyle. Instead of saving up a buffer in his savings account, he decided to spend 15 grand for two people to go to Australia. I’m all for long term travel and working abroad, but, I’m opposed to spending the big bucks before you’ve saved any bucks or have earned any money to justify your spending.

Where are you cutting back?

If you want to allocate a lot of your income towards one spending area, it’s advisable that you cut back in other areas. I love to go out with friends. Instead of forcing myself to stay in or making my life miserable, I find ways to cut back on other areas. I try to prepare as much of my own food as possible. I try not to indulge in the newest fashion trends. I truly believe that uniforms don’t win games. So I would rather not jump on the newest trends just so that I can have more money for going out with friends.

The key point here is that if you want to spend big money on a specific area, you need to try to cut back somewhere else. If you don’t then you’ll never have any money leftover. Even worse, you might end up in massive amounts of debt. The last thing you want to happen early on in your working career is to rack up debt. The debt will just prevent you from moving on with your life (moving out, getting married, etc.).

You must plan your spending

I’m not here to judge anyone. I’ve spent more money on trips the last few years than celebrities do on plastic surgery (well not really). The reason that I get away with spending the big bucks here is because I plan ahead FAR in advance. I recommend that you find the best online banking account for your situation. This way you can plan all of your expenditures and know where your money is going.

Instead of always stressing about your money and trying to figure out where your hard earned money is being spent, plan ahead. I try to keep a few sub-accounts in my online bank account with ING Direct. This way I can roughly plan my spending for the short term and the long term.

Admit your weak areas.

We all have areas where our spending is horrible. There’s no point to lie about it. Just admit to it and try to slowly work on it over time. The quick fix almost never works (just like dieting) and you end up worse off in the end. If you acknowledge that you spend too much money on eating out, you can begin to improve your spending in this area. There’s no point to deny or to seek a quick fix. Both options will hurt your financial future. If you get realistic and serious about your money management skills, then you’ll eventually notice a big difference in your bank account and your quality of life.

There you go guys. A personal finance article giving you permission to spend the big bucks. What do you think? Where do you spend the big bucks? How do you plan your spending?

For the last several weeks I have been saving the money in my “Fun” category. Instead of having fun, I had my eyes on a different kind of prize – a new Xbox 360 video game. I’m not much of a gamer, but after receiving the game system as a gift last year I have found myself enjoying the occasional game. My son likes to play along, too.

Back to my shopping experience. I found the game I wanted while strolling through the electronics section of our local Target store (this is where my son and I often kill time while my wife does other shopping). Armed with enough cash to pay for the game ($49.99 plus tax – ouch!), I stopped to perform my usual pre-purchase routine:

• How often will I really play this game?
• Is this adding to the quality of my life, or those around me?
• Is there something more important I could spend this money on?

After some internal reflection, I decided that I didn’t really want the game. There were other things I wanted to do around the house that I could put that money towards – things that would add value to our home and provide a more lasting benefit. I walked away.

These types of “I’ll pass” transactions, as I like to call them, really add up! And we perform them all the time. Every time we skip take out and go home to cook a meal, or share a meal with a spouse instead of ordering two entrees, we are forgoing an expense we would have otherwise incurred.

Tracking the Value of “I’ll Pass” Transactions

We spend a lot of time (and money) finding ways to track our expenses, from elaborate home-made budgets to fancy personal finance software. However, we often fail to account for the money we don’t spend, something I think is more important when trying to become more financially mature. The money we don’t spend becomes money available to help get out of debt, save for retirement, and give to others. The money we do spend, well, it is just gone.

I am not very good at tracking the money I don’t spend, because often it is the result of a seemingly insignificant decision (like taking leftovers for lunch instead of grabbing fast food). Fortunately, a new service called Piggymojo (free trial info below) is now available to help you keep track of that money you don’t spend.

Piggymojo allows users to text (you can also use Twitter, or enter directly on their website) the details of their every day savings to an account that tracks the total amount saved, and allows you to save towards specific goals. I recently created a goal for a “Family Mountain Vacation” we’d like to take this fall. To fund this trip, I plan to use these everyday savings. I’ll transfer the money Piggymojo states I “saved” from my checking account into our Vacation targeted savings account each week.

Whether you sign up to use a service like Piggymojo, or you opt to try to keep up with the savings in your head, the idea is to find a way to capture these little savings each day. It becomes sort of a game. “If I put this game back, that’s $50 saved towards our vacation this fall! If we cancel the cable for the next few months, that’s another $45 a month that can go towards vacation.”

*Piggmojo has offered readers a free, 6-month trial of their service. Redeem the gift code “springpiggy” when creating your account.

When you swipe plastic, especially plastic representing money that doesn’t belong to you (credit cards), it hurts much less. This is why spending with credit cards is so dangerous. But spending cash can be dangerous, too, for an entirely different reason.

We are a couple months into saving for a Disney vacation in the upcoming year. While we are determined to cash flow the entire trip we also want it to be memorable for our kids. Neither child has been to Disney, and none of us have been on vacation for a couple years. You can probably see where this is headed.

Just because we plan to use cash, there are still plenty of opportunities to be separated from our money, and fast, especially at Disney World! It’s a trap many others have fallen into with big expenditures. The fact you are paying with cash doesn’t necessarily mean it makes sense, financially.

Cash does not equal affordability. I used credit cards for much of my twenties, racking up debt while away at school and again after returning home. I recognized that I could not afford many of the things I charged, but justified their purchase for a variety of reasons. It was school tuition, books, baby expenses, medical expenses, new clothes, and much-needed vacation, etc. Since I was charging these items and not paying off the full balances each month the financial sins were rather obvious each time the credit card bills arrived, and I was greeted with an even higher balance than the month before.

Since we stopped using credit cards a couple years ago, choosing instead to live on a cash basis, I have found that measuring affordability is a little more difficult to do. After all, just having the cash in hand doesn’t guarantee smart spending decisions. There are always opportunity costs associated with spending.

By not spending $100 on a new pair of shoes, or a new tool, or whatever strikes your fancy, you’ll have $100 to do something else such as save and invest that money. That investment will likely grow your original $100 over time, so the money you are giving up in growth represents the opportunity cost of spending that $100 on a new cordless drill today.

In our case, the cash saved for our Disney vacation could be used to pay down our remaining debt, or build our emergency fund, or to invest for retirement. We are giving up plenty of opportunity to spend that money on vacation, but it is a sacrifice we are willing to make for a memorable family vacation. Saving and paying cash does not make the trip any cheaper, but at least we won’t be dragging credit card debt back with us from Orlando.

The Object of My Desire

I had it bad.  I looked at pictures of her in magazines, videos online, and often rode by during lunch breaks just to catch a glimpse of her. Her name was Silverado, as in a Chevy Silverado.  After a teenage obsession with wanting a car I quickly decided I needed a truck.  And not just any truck; I wanted a Chevy truck.  One with four doors and a big cab with a comfy interior, but enough power to haul whatever I wanted to wherever I needed.

This truck fever stayed with me through the early years of marriage, though I resisted the temptation to buy. That was until, in a moment of weakness, I stopped at the car lot and test drove the truck model I had been watching for all those years.  This particular truck was sporty–shiny black exterior with tan leather seats and a chrome sports package.  It also had a dual exhaust which gave the engine a throaty sound on acceleration.  I was in love.

So I pulled the trigger and financed the truck, ignoring the little voice in the back of my head telling me to walk away.  I told myself I could afford the $350 a month payments, and the increased insurance premium.  After all, I worked hard.

For those first few days and weeks I thoroughly enjoyed that truck.  I looked for excuses to drive places.  But after a few months the payments started to catch up with me.  Our insurance premium renewed and I saw a noticeable increase when projected over the full six months.  The thing was pretty, but it did use up gas, and because I was doing more “pleasure driving” I burned even more of it.

We still had some debt hanging around from my journey to finish school.  My wife was staying home with both of our kids.  In what now seems like an overnight epiphany the shine wore off that truck.  I sold it two weeks from the time I decided I wanted to sell it, and felt only a slight twinge as the new owners backed out of my driveway on a Saturday morning.

The Life Cycle Of A Purchase

What happened with my truck inevitably happens to all of our purchases.  The shine begins to fade, our enjoyment of them lessens over time, and eventually they become more of a burden than they are worth.  Call it what you want–the law of diminished returns, buyer’s remorse–the only variable in the equation is time.

Occasionally things retain sentimental value long after the useful life is lived up, and we hang onto them for posterity, knowing that future generations of family may have some interest in our heirloom.  However, given enough time all of our prized possessions wind up in the landfill next to a forty year-old styrofoam cup.

Does knowing this ahead of time keep us from buying too many things now?  Of course not, else all the people who say “You can’t take it with you” wouldn’t have to remind us.  That still doesn’t mean that things cannot be enjoyed while we are here.  It simply means that objects of our desire are just that, objects.  Their only value is the one we assign to it, not what a marketer has priced it to be.  Try to focus your life energy on acquiring only things that have a lot of value to you, not someone else.  Through this lens, things like paying premiums for a name brand, or buying just to impress others will seem like a monumental waste.

Fortunately, in the last couple years we have managed to get a handle on our Christmas spending.  But it hasn’t always been that way.  Early in our marriage we bought presents for everyone under the sun (and to make matters worse, I married into a large, extended family).  I guess I was suffering from “new son-in-law” syndrome. The symptoms include overspending around the holidays in an effort to impress your new half of the family.

The years of overspending at Christmas were not a total loss, as we did learn some debt reduction tactics out of the exercise, and it did manage to cure our mega-consumer habits. So if you find yourself preparing to dig out from holiday bills, I offer the following tips I’ve collected along the way.

Take an inventory of the damage.  This first step is by far the most painful. To devise a game plan for digging out of holiday debt you must first figure out how deep you are buried. I suggest firing up a spreadsheet on the computer, or even dragging out a legal pad and pen, and listing each of your credit cards.  Update each card’s balance with current information from their website or voice response unit (you can wait on statements to roll in, but if you are already anxious I recommend getting a jump start).

Use extra savings to pay down debt.  If you went a few hundred dollars over budget, and have that money in savings, I recommend transferring some money around to pay off the debt. Only take this route if your savings balance is high enough to pay off the debt and leave some for emergencies.  The last thing you want to do is clear out all of your savings, because as soon as you make the payment you will encounter an emergency–guaranteed.

Rework your debt snowball plan.  If you have racked up more debt than you can pay off in one swoop then you will have to come up with a debt snowball plan. Line the balances up smallest to largest and pay minimums on all but the smallest.  Throw every single bit of “found” money in your budget at the smallest debt until it is gone.  Yes, that includes the money your great-aunt slipped into your Christmas card.

If you racked up quite a bit of high-interest debt, such as credit card or store card debt, consider a low-interest consolidation loan to pay off the high-interest debt and then snowball the loan.  If you go this route, be sure to close out the store card accounts and cut up the credit cards or you risk going right back into debt.

Do not allow history to repeat itself.  When your debt snowball has completely melted turn your attention to saving some Christmas cash to spend next year. Set up a dedicated savings account and funnel a little money there each paycheck throughout the year. By November you will have a few hundred dollars to spend on Christmas, saving you from post-holiday debt blues.

When things are running along pretty well it becomes easier and easier to settle into a routine of saving money, making frugal choices and avoiding new debts. However, if your life is like mine, just about the time you get settled something comes out of nowhere to completely derail your plan.  Earlier this year Murphy came to visit (you know Murphy, if it can happen it will).  We went through a few demoralizing weeks with problem after problem–things breaking around the house, people getting hurt, etc.

Then we were cruising along ready for a new school year for the kids when my Mom was diagnosed with a giant cerebral aneurysm (she has been hospitalized in ICU for the past 37 days following treatment).  Daily trips back and forth to the hospital have doubled our gas budget (the hospital is about 30 minutes from our home).  Our eating-out budget has gone up as we were often forced to grab something fast in between visiting hours.  The good news is we have made the budget adjustments and avoided taking on new debts, or withdrawing from our emergency fund.  Here’s how we are making it work:

• Loosen up, but stick to core frugal principles. In a qualified crisis it seems a bit petty to be concerned with pinching pennies, so we have relaxed things a bit by lowering our debt snowball budget.  This allowed us to bump up a few categories that will undoubtedly increase while caring for my Mom.

• Keep priorities in order.  Loosening up a bit does not mean you have a license to go on a shopping spree.  Many times this is the first reaction to crisis, particularly for reformed emotional shoppers such as myself.  No, buying things may make you feel better by creating a diversion in the short term, but when the bills settle and the “newness” of your purchase wears off, you will feel even more guilty over spending the money which adds to the depression you might already be experiencing.

• Make budget adjustments as needed. My wife and I are normally reluctant to modify our monthly spending categories.  However, in an emergency a budget committee meeting may be in order.  Try to keep your overall budget amount the same by reducing non-essential categories to make room for essentials.  For instance, in our case food and gas increased almost immediately, so we reduced “Entertainment” and “Gifts” budget categories.  It won’t get us invited to many birthday parties, but you have to do what you have to do.

• Be less aggressive with debt reduction and savings plans.  Like I mentioned above, we’ve scaled back a bit on our aggressive plans to pay off debt.  As much as I’d like to finish off our remaining balances, it just doesn’t make sense to stretch too far and have to turn right around and dip into our emergency fund, or even worse, borrow money from the credit card we are working so hard to pay off.

• Get back on track as soon as possible.  In the early stages of an emergency you find yourself sort of going through the motions.  However, as things stabilize you will find yourself slowly returning to your normal routine.  When you recognize this is happening you can rebalance your budget categories and get back on track with your original goals.  Remember through all this that your family is your first priority–not Discover Card.  If it comes down to feeding your family and keeping the lights on, or paying your credit card payments, those other guys will just have to wait!

The Roberts Average Weekly Spending Budget

• Gas:  $25.00
• Starbucks:  $20.00
• Eating Out:  $165.00
• Grocery Store:  $140.00
• Entertainment:  $100.00
• Lawn/Home Care:  $95.00
• Night Out With Friends:  $40.00
• Shopping:  $75.00
• Total Miscellaneous Expenses:  $660.00 per week

That’s Not a Typo – $660 a Week

The budget probably doesn’t look all that different from other families out there (I even saw a couple familiar frivolous activities I used to engage in, and a couple I still occasionally do).  Like most young families, the Roberts like to eat out several times a week.  I know from experience this gets expensive when you have four mouths to feed.  And from the video it didn’t look like they were dining at a budget eatery for their evening meals.  Even Chick-Fil-A adds up quickly if you visit a couple times a week!  Mrs. Roberts was seen in the video getting a pedicure and manicure, and paying $25 to get her SUV washed and detailed.  All signs pointed to the fact these guys were mega consumers.

What Lifestyle Changes Were Implemented?

During their weekly spending diet the Roberts participated in a pot luck dinner, rather than going out to eat.  They washed their own car, mowed their own grass, and made lunches at home.  All great moves to cut back on spending.  They also visited a farmer’s market to help cut down on their grocery bill.  Here’s a look at their after budget:

• Potluck Dinner:  $30.00
• Lunch Out:  $6.00
• Farmer’s Market:  $12.00
• Gas for Lawn Mower:  $3.95
• Drug Store:  $24.64
• Grocery Store:  $95.00
• Total Miscellaneous Expenses During the Spending Challenge:  $109.38

Lessons Learned

It’s difficult to determine from an eight minute video whether or not the family’s lives were really changed.  I got the impression from the segment that both the husband and wife enjoyed spending money, and spent freely before the Today Show challenge.  It would be interesting to follow up with them in six months to see how many of these changes “stuck.”  One thing I did see in the video was the family engaging in more quality, family time.  They spent a Friday evening at the park feeding the ducks, and a weekend day playing on a Slip-n-Slide in their backyard.  It appeared they really were living the good life.  I don’t think it occurred to the Roberts prior to this exercise that it was possible to have fun without spending money.  Hopefully they now appreciate that less is more, and that they can put the excess money they were spending frivolously to better use.

I’ve included a link to the video segment:  Living With Half as Much

When Budgeting, Think in Shorter Terms

One of the ways I’ve found success in budgeting is to think in shorter terms. Instead of trying to plan for an entire month’s worth of income and expenses, I’ll just plan out the next two weeks (which works well since I’m paid biweekly). Personally, we find it easier to anticipate upcoming expenses over the next couple weeks than for the entire month. But even a two-week plan has pitfalls. Things always tend to sneak up on us that we forgot to account for when setting the budget. Kids’ yearbooks, medical expenses, or a trip to the vet can blow your budget out of the water. For this reason I’ve started thinking about my income and expenses on a daily basis.

The Daily Cash Flow Battle

I don’t literally mean I lay out a budget every single day in a formal manner. I mean that I break down my incidental, or miscellaneous, expenses budget for the entire month down into a daily amount. For instance, if I set aside $360 in June for incidental spending (eating out, clothes, gifts, entertainment, etc.) then my daily incidentals budget is $12. That means I can spend an average of $12 a day on these miscellaneous budget categories and not break my budget. I keep this figure tucked away in my memory bank and while out and about during the day keep sort of a running total in my head. There was the $3.00 breakfast sandwich on the way into work; $1.00 for the drink out of the machine; $5.00 for a coworker’s kid to go to band camp. I’ve already spent $9.00 of my $12.00 budget for daily incidentals. That means if I want to stop by Target and pickup that new CD that came out it will have to wait until another day.

One Bite at a Time

This plan reminds me a bit of that saying, “The best way to eat an elephant is one bite at a time.” By breaking down an entire month’s worth of budgeted expenditures into a daily limit we are forcing ourselves to keep an inventory of our expenses as we go about our lives. Not much room in this plan for a $40.00 pair of jeans you happened to see in the window on the walk to work. If you continue to win the daily battles when it comes to daily cashflow, ultimately you will win the war against debt and overspending.

photo by IntangibleArts