Photo courtesy of elroySF

While working for my previous employer I had the opportunity to do a bit of traveling to meet with clients, or potential clients, to scope out business requirements for various software installations.  It wasn’t the greatest perk, as I had a wife and small child at home around that same time and rarely looked forward to being called away on business.  Still, it was infrequent enough that it make the job tolerable, and I did enjoy seeing new places and meeting new people.

One aspect I did not enjoy was dealing with the finances of corporate travel.  My employer issued employee credit cards for booking airfare, lodging and rental cars, and supplied a per diem advance of something like $30 per day for food.  According to their policy, meals enjoyed in the company of a client could be charged to the company credit card, effectively allowing us to pocket our per diem allocated to that meal.  Of course, it was popular to take advantage of these rules by inviting the client out to dinner with us every night.  One of our traveling partners once made the comment, “Is this not great?  We can eat all the steak and lobster we want, and pocket $30 doing it!”

Frugal Living is a Way of Life, Regardless of Who Is Picking Up the Check

These experiences made an impression on me.  After all, I knew someone was paying for it, and just because I wasn’t the one forking over the money I didn’t think it gave me the right to order whatever I wanted.  I normally stuck to pretty simple stuff–grilled chicken, pasta dishes, and on occasion the smallest steak on the menu.  My traveling team routinely ordered appetizers, huge meals, and dessert, and left a lot of it on the table.  Seeing that much waste made me wish others shared my frugal ideas, but it wasn’t the time to be a self-righteous frugalist.

Leading a Frugal Life By Example, at Work and at Home

I’ve discovered that finding success at being frugal in the office involves implementing many of the same techniques you use at home.  It should not matter if you are using your own money or not, because frugal living is a way of life, regardless of who is paying for it.  It is a way of looking at resources, financial or otherwise, and figuring out ways to maximize their use.   Would it be fair of me to go grocery shopping with your checkbook and load up on things I wouldn’t normally eat?

If your company put you in charge of redecorating a conference room, would you buy a much more elaborate style of furniture than the style you would buy at home?  Maybe.  I recognize that corporate America still puts a premium on looking sharp, but I think when taken to the extreme it actually hurts companies.  After all, if I am a potential client and I walk into a room decorated to the hilt I have to ask myself, “Who’s paying for all this stuff?”  Suddently, the bid from the modestly decorated “lean and mean” competitor down the street looks like a better offer.

I encourage everyone to find ways to be frugal at work.  Turn out the lights when you leave the office.   Install CFLs in table lamps (with permission).  Consider repairing or upgrading computer equipment rather than buying costly, unnecessary replacements.  While traveling don’t go overboard with food and entertainment just because you can. Remember, frugality is not something you can turn off and on as you please.  It is a way of looking at the world of finances through the lens of minimizing our own consumption, and our spending, in an effort to improve our lives and the lives of those around us.

Photo courtesy of GoldenEel

The other night on the way home I caught a bit of The Clark Howard radio show.  Howard is a consumer advocate and author with a great radio show that I don’t often catch because it is on after 6:00pm in my market, a time I’m usually spending with family after a long day at the office.  One call in particular really caught my attention that night, partly because of the situation the guy found himself in, but mostly because of the way he discovered the mess.

A Little Background

Hard to obtain all the details about the individual’s case in a five minute phone call, but here is a quick summary of the call.  According to the caller he owed about $5,000 on a credit card that was charged off a couple years ago.  Apparently, the creditor eventually got around to collecting (probably after they sold the debt for pennies on the dollar) and contacted him to work out a payment arrangement.

The caller agreed to send the collector $500 a month for 12 consecutive months to pay the debt off in full.  He faithfully sent along his payments for $500 each month, and at the end of the year he checked his statement and the outstanding balance was $5,400.  Apparently, the balance had actually gone up thanks to a 31% interest rate and various fees!  I’m not sure how accurate the guy’s numbers are, but his story serves as a great reminder for those dealing with collectors, or any creditor for that matter.

Always Check Your Statement

The caller’s story was troubling for a couple reasons.  First of all, if he could have scraped up a little cash (or already had some in savings) he could have probably settled the debt for a couple thousand dollars as settlement-in-full.  He should not have done anything without receiving the terms of the workout offer in writing from the collector.  And he definitely should have been checking his statement all along to make sure his payments were being correctly applied and his balance was reduced accordingly.

I can’t believe he actually waited a full year before checking, or requesting, an updated statement on his account.  Unfortunately, there are still a lot of people out there who trust banks and collection agencies explicitly.  The hard truth is that there are a number of unscrupulous agencies out there running around collecting old debt who use any number of tactics to separate you from your money.

I’m not telling you that every collector you come in contact with will lie to get money from you, but I am telling you 99% of them will.  I know, I used to work in a call center environment (thankfully I didn’t have to do much collections, but I worked next to them).  It was common practice to use all sorts of pressure tactics to talk people into making payments over the phone, or give up details of their checking account for auto-drafts of their accounts.  The next call from that customer usually came to us in customer service–”Why did you guys wipe out my entire checking account, I only agreed to $25 a month?”

Of course, I had to tote the company line at the time, but secretly I wanted to tell these people, “They took out all of your money because they lied when they said they wouldn’t.”  Plain and simple.  So please, always get these work-out agreements in writing, and always keep up with your account statements to hold the collector accountable for following through on their end of the deal.

 
Photo courtesy of Oracio Alvarado

Over the last couple months two long-held truths of the financial world have been turned on their heads.  One, money market mutual funds can’t lose money, and two, the value of real estate always goes up.  Unfortunately, many have discovered neither of these “truths” have ever been 100% true, just assumed.  And you know what assuming does.

Has the American Dream Been Oversold?

For years the “American Dream” has been to own your own home.  The notion itself is a little absurd.  After all, you never really own your home outright.  Don’t believe me?  Try not paying your mortgage for a couple months.  But you own your home free and clear you say?  Well, try skipping out on property taxes this year.  No, we never really own our homes completely free of any obligation.  However, to a lot of people “owning” a home represents the pinnacle American financial experience.

Realtors and Brokers and Politicians, Oh My!

So who has been perpetuating this idea that owning your own home would somehow complete you, financially?  Realtors have certainly played their part.  Let me make clear first, I am a fan of realtors.  I think there are some truly great real estate agents out there who have their buyer’s (or seller’s) interest at heart.  But I think there is an even larger number out there who signed up clients for mortgages they knew they couldn’t afford, and did so by conspiring with banks and mortgage brokers to work “creative financing” for their clients.  In other words, since the buyers couldn’t qualify using standard mortgage practices they had to “get creative,” which led to a variety of bad loan options such as adjustable rates and  interest-only loans.

So realtors and banks played their part, but the government isn’t off the hook.  For the last two decades administrations have pointed to increases in home ownership as evidence of a strong economy, and a happy citizenry.  The Clinton administration called for increased loan options for lower-income families, particularly those who did not have funds available for down payments.  Bush furthered the problem by calling for an “ownership society” early in his first term.  It seems both administrations were caught up in the idea that home ownership was a proper measure for our fiscal health.

We’ve now discovered many homeowners would have been better off continuing to be renters.  Despite what others tell you (particularly those associated with the real estate industry), renting is not the equivalent of “throwing money away.”  Renting a house is a viable option for providing safe shelter for you and your family.  There should be no shame associated with it, and in fact, in many cases it is much smarter to continue renting than opting to buy real estate.  After all, a house is just sticks and bricks, but a home is where you make it.  And it doesn’t matter who holds the mortgage on that “home,” you or a landlord.

Often times mortgage brokers run numbers and say things like, “Well, for the same amount you are throwing away in rent each month, you could be making a mortgage payment!“  Unfortunately, the real world tells us that rent and mortgages are not equal, in terms of the financial risk associated with each.  If you buy a house with no emergency fund and the hot water heater bursts sending gallons of water over your flooring, guess who gets to pay for the cleanup and repairs?  If that same scenario happens in a rental home, your landlord is on the hook for necessary repairs.

Owning a home is still a worthwhile goal as real estate prices do typically increase over the long term.  However, it’s best not to jump into home ownership solely for the investment potential.  Leveraging too much of your life by over-buying a house can wreak havoc on your family’s finances for years to come.  Renting has its downsides as well, but they are typically more inconveniences (fluctuating payment amount year to year, having to move if owner wants to sell or reoccupy, etc.) as opposed to the uglier potential negatives associated with mortgages.  Can you say “foreclosure?”  So, if you are in position to buy a home, make a frugal purchase and enjoy your new humble abode.  If you are not in position (no down payment, no emergency fund, etc.) then simply rent a space and keep plugging away at building savings–no shame in that game.

Photo courtesy of Beige Alert

Do you remember your last shoe purchase?  I do.  It was a pair of New Balance trail shoes I found on sale marked down from $44.99 to $29.99.  I was blessed with a wide, flat foot (thanks, Dad) in a size 13, so finding comfortable shoes on the cheap can be a challenge.  In fact, footwear is one of the few areas I have to sacrifice a little frugality in the name of health.  However, once I find a comfortable pair of shoes, I tend to wear them out, and then some.  I mentioned the idea for this post to my wife and got the, “Sometimes you really take this frugal living stuff too far” look.  I assured her I wasn’t the only one meticulously calculating the cost and service life of their shoe collection.  She still wasn’t convinced, but I thought it would be an interesting exercise.  So with my apologies to Imelda Marcos, here’s a run down of my “extensive” shoe collection.

The Ten-Year Boots

Not long after my wife and I married I found a comfortable pair of Timberland hiking boots.  They were expensive, compared to my current standards, at around $70, but they do last forever.  I don’t hike, but the boots are comfortable and warm in the winter, and provide a thick sole and a high ankle in case I do explore a trail here and there.  They don’t see much action in the summer, but I do occasionally wear them in the fall and winter seasons.  In ten years they’ve become a little scuffed at the top of the toe, and I’ve replaced the laces a time or two, but overall they are in great shape.  In fact, with the weather turning chilly these last couple weeks I’ve brought them to the front of the closet for their seasonal use.

Work Shoes:  One Brown, One Black

Funny how your job environment can actually make you more frugal.  Years ago when I worked in landscaping part time, and in a home improvement warehouse full time, I wore out shoes a lot more frequently.  I’m fortunate (I suppose) to have a desk job, so footwear is not a major concern for me.  And since I’m not out to make a fashion statement I typically can get by with two pairs of work shoes–one brown and one black, with two belts (or a reversible) to match.  For my feet, you can’t be a comfortable pair of Hush Puppies, but they are getting harder and harder to find, locally.  I picked up a great pair of black ECCO brand dress shoes a couple years ago on Ebay, and because I wear black shoes less frequently than I do brown, they’ve held up great and are by far my most comfortable work shoe.

The Trail Shoe

Part cross-trainer, part running shoe, part walking shoe, the trail shoe is just about the best style of tennis shoe around for my needs.  The toe box and the heel of this style of shoe tends to be a little wider, which works well for me since I tend to roll on the outside of my feet when I walk.  Trail shoes do a better job of keeping me stable.  When I inevitably wear out the inside of the shoe before the outside I remove the insole and pick up a replacement for around $15, further extending the life of the shoes.  When that replacement insole wears out the outside is usually pretty ragged as well, so I pick up a new pair and “retire” the old pair to be my designated yard-mowing shoes.

I figure I walk about a mile a day in each type of shoe (averaging out steps taken around work, exercising, etc.).  Some days I don’t wear any shoes, particularly in the summer, so I factored that in as well.  Assuming I wear all three styles of shoes 300 days out of the year, and average a mile or so in each type of shoe, I get about 900 miles out of these four pairs of shoes each year.  I replace the trail shoes and work shoes annually at a total cost of around $150 (including replacement laces, insoles, etc.).  Hmm…I wonder if $0.17 a mile is a pretty good miles-per-tread figure?

While I don’t expect you to calculate your own miles-per-tread estimate, I am interested to hear about your frugal shoe collection.  Feel free to share in the comments below.

Photo courtesy of le

Our family recliner has been on its last leg (literally) for some time now.  After years of use, a couple moves, and kids substituting it for an indoor jungle gym, it finally bit the dust.  The base of the chair splintered off two Sunday afternoons ago just as I was kicking back to recline and watch a little football, sending me to the floor in a heap, and sending my wife and kids over the edge with laughter.  You know you are a member of the frugal class when the first three things you think to yourself are, “Does my back hurt?  Does my shoulder hurt?  How much is in our emergency fund?”  Sad, I know, but at least I had the priorities in correct order.

Searching for a New (Old) Recliner

A brief (and I mean brief–open furniture ad, grasp chest in response to the price of recliners, and toss ad in trash can) survey of the Sunday sale ads didn’t provide many leads.  Unfortunately, we missed the window of yard sale opportunities by one day, but decided we could make do with our old sofa (which is also in need of replacement) for a few days.  I hit Craigslist and eBay (looking for local auctions), but those searches yielded nothing. Nothing on the bulletin boards at work or at the gym.

I checked back with Craigslist near the end of the week and a search for “chair” in my area revealed a yard sale on Saturday morning with a used La-Z-Boy recliner as one of the items for sale.  We woke up early and headed over to the address listed and liked what we saw from the street.  The light brown recliner matched our other furniture well (not that this was a big concern), and it appeared to be in good shape.  Upon closer inspection and test ride (or sit) proved that the chair was sturdy and lacked any stains or weird odors.  The homeowners were asking $40, and we paid them without haggling (I hate haggling at yard sales).  Sure, we might could have talked them down a few dollars, but the chair retailed for a few hundred bucks, so I considered it a win-win for both parties.

Patience Over Impulse

With the back off from the base the recliner easily fit in the back of our SUV.  We carried it in, reattached the back and everyone gave it a try.  We’ve had it a couple weeks now and I can say it is a very comfortable chair.  My wife thinks I say that just because it costs us $40, and there might be some truth to that, but it really is a solid recliner.  I was proud of us for holding off on a new chair from the furniture store for two reasons.  One, we saved a ton of money, and two, we took an old chair off someone’s hands and kept it out of the landfill where it would take years to disintegrate.  I put our old chair out by the curb with a sign marked, “Needs Work–Free” and an industrious passerby picked it up and hauled it off.  I guess there is always someone out there more frugal than you!