Chill Maadi

If you are trying to find a good deal, you need the ability to know when it is a good one and not just an advertising pitch. I’ve made price watching a hobby, so many times when I see an ad I will automatically know if it is truly a good deal or not. This is definitely a skill I’ve perfected by continual practice but it can still be difficult to recall from memory the best price when tracking multiple items. I’ve found an easy way to help trigger my memory when it comes to product prices – I keep a price worksheet and I track prices by item and store.

Originally, I started this to track grocery store items but I’ve since expanded it to include household items and other products that we regularly purchase. This master list shows me at a glance the normal price for a particular item so when it goes on sale I can quickly tell if it is a good deal or a dud. I’ve also begun adding items to my worksheet that we are considering purchasing. This forces me to comparison shop when I purchase an item and also gives me time to curb impulse spending.

My pricing worksheet is set up on a spreadsheet so it is easy to update. The important thing to note about a price comparison worksheet is that you have to keep it updated regularly. If you don’t want to keep a spreadsheet then a simple notebook works just as well. Here are some steps to consider when keeping a price comparison worksheet or notebook:

1. List item name, brand, and size. A price comparison won’t work if you are not comparing the identical item store to store. This will also help you to calculate the unit cost per item.

2. Update the list frequently. If the last time you purchased a certain product was a year ago, chances are the prices have changed. Make it a habit to frequently check prices and keep them current.

3. List price by store. You’ll need to compile information from at least 2 different stores but it really helps to have 4 or 5 to make a good comparison and see trends. I usually list the local discount stores like Target, Wal-Mart, Costco, Publix, Sam’s, etc.

I was thinking about frugal living, specifically how we manage our own finances and approach life in a frugal manner. I realized that we don’t go around saying things are “frugal” but rather we have incorporated frugal practices into our daily routines and more especially in regards to our financial decisions. They are automatic now so we don’t have to stop and think about them.

The first key to frugal living is to plan purchases in advance. This step allows us to make informed and conscious decisions in how and when we spend money. Although we have not completely mastered our impulse spending, it has greatly diminished through the use of this step.

For example, the month of June has just started. I took a few minutes to scan my calendar for the month and make notes of any occasions that are going to occur. I note that Father’s Day will be coming up so I will begin planning now for any gift giving and/or celebrations we intend to have. In July I know we will have a birthday to celebrate in our family so I’ve begun planning for that party. We’ll also be attending a couple of birthday parties for my children’s friends, so we are planning now for the gifts we will be giving them. Also, I’ve begun saving $20 per week (just setting it aside in our checking account) for gifts we plan to give at Christmas time.

If you do not have an emergency fund, you’ll want to work on getting one set up.  An emergency fund is just that – it is the equivalent of 3 to 6 months of living expenses, set aside in an easily accessible account to be used only when financial emergencies arise.  It allows you to handle unexpected bills without incurring debt and can provide a feeling of financial security.  Let’s take a look into the details of this emergency fund:

Why do you need an emergency fund?

Unexpected expenses are a part of life.  The car will need to be repaired, the water heater will break, jobs will be downsized, etc.  When these things arise, the emergency fund will provide a way for you to pay the bills without using your credit cards or incurring another form of debt.  It really is a key element in a debt-free living plan.  These things do happen in the real world so be ready for them.  It will give you a measure of security to know that you have saved up for the unexpected.

Why set aside 3 to 6 months of living expenses?

This is the current “rule of thumb” for an emergency fund.  For a family with one income earner, something more in the 6 to 8 month range of savings might be more wise.   The whole reason for having an emergency fund is to give yourself a financial cushion.  You’ll need to assess your own financial situation and determine how much of a cushion you want to have.

Where do you keep your emergency fund?

You will want to keep your emergency fund in a savings account or in another similar  manner that is very liquid and easy to get to, but not so easy you are tempted to spend it.

How do you fund it?

Set it up as a monthly bill to yourself.  You might want to make interim goals, such as “I want to have $500 saved in my emergency fund within the next 2 months.”  When you reach an interim goal, then set a goal for the next phase.  Find areas in your current spending where you can spend less, and then use this amount to help build your fund.  Use tax refunds, bonuses, overtime pay, or commissions to help fund your emergency fund.  One important note here: Do not use credit to build your emergency fund.  That is defeating the whole point.

So when have we used our emergency fund?

In the last few years we’ve used our fund to pay for hurricane damages to our home, car repairs to our van, and large medical expenses.  Having our emergency fund in place allowed us to weather these large cash outlays without going into debt.   We paid money back into our emergency fund after each of these events so that the emergency fund is now back to its full amount.

This is a question I have seen mentioned on several personal finance blogs – Should you focus on spending less money or making more money?  Over the years we’ve struggled with this choice as well, and we came to the conclusion that with our circumstances it made more sense for us to focus on spending less money.  We’ve made the decision to focus on spending less because it is something that we have control over right now – We could sit down at any time and make a list of ways to cut spending, which would make our “spending less” goal immediate (once put into action.)

Certainly, earning more is definitely a good goal to have as well.  If you were looking to earn more, you would need to start looking for a method to earn more which might entail getting your resume up to speed, filling out applications and going on interviews, and so the results would not be as immediate.  Certainly, earning more is desireable but if earning more equates to spending more, either because of child care expenses, increased transportation costs, or eating out more often, then the net effect may not be as large as one might have anticipated.

There are many ways to tackle the issue of spending less but for us it amounts to a very simple thought, “how can we ________ for less.”   Now this has meant that some things we would like to purchase are not feasible.  There really is not a way to purchase a brand new SUV for $5000.  However, when confronted with the purchase of something we want, we try to look at the underlying desires to come up with a more inexpensive alternative.

Using the above example of purchasing a brand new SUV, we analyze what it is we are really looking for:

1.  Reliable transportation.
2.  A larger vehicle that will accommodate our family.
3.  A clean and well kept vehicle that has a working air conditioner, heater, radio/CD player.

That is a little more concrete and defined than “we want a new SUV.”  We now have a list of details that are important to us, so we can work on finding an alternate solution which meets our budget goals and meets the specifications.

This method works in every area of spending from eating out to going on vacation.  We enjoy eating Mexican food so I’ve learned how to make a variety of Mexican dishes; Our family enjoys the beach so instead of going for a week, we go for a day.  There are many ways to find suitable substitutes at much more affordable prices.

Spending less is also a way to save money.  In fact, once you begin spending less, you’ll be amazed that you were ever spending more!  The money saved by spending less can be used in a variety of ways; your goal may be to get your emergency fund set up, save for college, or invest for retirement.  By training yourself to spend less, you will find the money to save.

If you happen to turn on CNBC, listen to a radio show about investing, or read any financial newsletter or magazine, it’s not going to be long before you see and advertisement about some company which will show you how you can invest in gold and other precious metals to make a lot of money by doing it. They have really come up with some great advertising, but when taking off the front the realities of investing in precious metals are much less desirable than one might think.

Companies which are hoping to sell you gold as an investment will tell you all kinds of statistics which shows that the US economy is going on a path of self destruction. They will show you the massive trade deficit that the United States has, the massive Budget Deficit that the United States has, and argue that over the next few decades the US economy is going to take a major down turn, and that the US Dollar will be practically worthless and that gold will hold its value. Here are the realities. In all of modern history, we’ve had a budget deficit, a trade deficit, and problems with the government. Our dollars still have value. Yes, the dollar has lost some of its purchasing power because of inflation over long periods of time; however by making good investments, you will stay several percent ahead of inflation.

They will tell you that gold is a great investment which keeps its value unlike the US Dollar which loses money to inflation. This statement is one hundred percent true, but the only thing gold does is keep its value. If you put your money in good mutual funds with long track records, you can easily make 12% on your money. There are many great mutual funds with ten and twenty year track records which have performed close to 15%. Gold has return barely above the rate of inflation coming in at 3% or 4% annually. Even if dollars are less valuable over time, investing in solid investments will give you a lot more purchasing power.

Gold investors will also tell you that during a disaster in which the economy collapses that you will be able to use gold to buy goods and services. Let’s look at the example of Hurricane Katrina. Instead of trading small amounts of gold, people bartered with goods which had use, such as bottled water and firearms, rather than a precious metal which did not do any good at the time.

Take a moment and open a new tab on your web-browser. Open it up to your favorite search engine and do a simple search for “make money online.” There’s a 100% chance you will see advertisements for companies that give very vague descriptions with promises of making huge sums of money without any mention of work. Let’s face it, when trying to make money on the internet, 90% of the systems out there are crap. There are no easy ways to make large sums of money on the internet, it takes hard work, dedication, and a little bit of knowledge, just like every real job you’ve ever had. Let’s look at the different ways there are to “make money online.”

Scams – When you try to learn about making money online, you will find yourself visiting dozens of different pages with erroneous claims about how you can make thousands of dollars every week, just by following their proven system. Of course they don’t tell you what their proven system is or how it is supposed to make money. If you see one of these, just don’t bother. Their claims are bogus in almost nearly every case, don’t waste your time, no matter how attractive they look.

Get Paid To Take Surveys – You can actually make a bit of money here and there by taking surveys on the internet. There is a lot of misinformation about how much money you will make in hopes that whoever is trying to sell you on the idea will be able to refer you to the website and make some sort of commission. You will have to take a lot of qualification surveys, and if you meet the qualifications, then you can make $10 or so an hour to take a survey, but you definitely won’t get rich off it and probably won’t get more than a survey a week.

Get Paid to Read Email / Advertisements – There are sites online such as Inbox Dollars which will pay you to read emails. I’ve had an account there for several years now, and still haven’t met the $30 minimum to get paid, and I have nearly 50 referrals! The problem is that you’ll get an email every other day, and make 3 cents for each email you read. At that rate, it would take you over 5 years just to get your $30 payment! Don’t bother.

Blogging – Blogging works well for some people, but this takes tons of dedication and research. A lot of people start blogging hoping for some sort of great return from advertising, but the reality is that it takes work, a lot of work. In my first month of blogging, I probably put 40 hours of work into the website and only ended up making $30.00. I know I’m worked for peanuts, but it was fun, and I know that if I stay dedicated to it, over time it could build a following and I might do pretty well with it. Usually it takes years to make any sort of decent money blogging, it’s definitely not a get rich quick scheme.

Freelance Work – If you have special skills such as writing, programming, graphics, or other highly requested skills, there’s a good chance that you will be able to find some work online. The problem is that you need to find people who need your skills online. There are a number of places that will connect freelance workers and people who have projects that need to get done, but often times you have to pay a fee to be apart of these. It’s just part of doing the business. If you’re going to be serious about freelancing, you can make some money doing it, but if you’re just going to think about maybe doing a project some time, you’re better off not quitting your day job.

Donald Trump and Robert Kiyosaki’s Book is Not Looking Out for You! Did you know that Donald Trump wrote a personal finance book with Robert Kiyosaki? Well I found it a couple of days ago and think They Want You to Be Broke!

Why would anyone read a book about how to handle money by two people who had both filed for bankruptcy? Only people who do so poorly with money, they have to throw their hands up in the air and admit defeat that they cannot pay all of their bills file bankruptcy. Now, there are some perfectly legitimate reasons to file bankruptcy, such as a huge medical debt which could never possibly be repaid, but when people file bankruptcy because their business fails or they spent too much money, chances are you should not be soliciting financial advice from them.

Financial author, Robert Kiyosaki and Donald Trump, CEO of the Trump Organization & now the President of the USA, have written a book about how you should handle your money. The book, entitled “Why We Want You To Be Rich” is Kiyosaki and Trump’s attempt to get together to write a book about their “financial secrets.” In the book, they offer specific advice on how to invest money and become very wealthy. It sounds great to begin with, but there’s a problem.

Both Kiyosaki and Trump have filed bankruptcy. Why anyone would accept financial advice from them defies all logic and reason. Taking their financial advice from them would be like taking dieting advice from the 400 pound guy who lives down the street. It’s just not smart! If you’re looking for financial advice on how to become very wealthy, do what millionaires do! There’s a very well written book by Thomas Stanley called The Millionaire Next Door, which will tell you what millionaires do and how their behavior makes them wealthy. The book tells us that millionaires save large percentages of their money, invest it wisely, and spend very little.

Trump and Kiyosaki have another message. They tell us that they have a new way of thinking, which involves defying traditional investment logic. They tell us not to invest in mutual funds and work hard “because that does not make you rich.” They say that investing in mutual funds is playing it safe, and it won’t make you rich.

They tell us that “safe is the enemy of rich.” There is some truth to this, the greater the risk, often the greater potential gain, but they get it wrong because they ignore risk all together-that’s why they filed bankruptcy! When you let too much risk into your life you are asking for trouble. You could put all of your money on black in Vegas, but not many financial counselors will tell you to do that, because there’s too much risk!

You don’t get successful just because you take risk. You get successful because of your passion for the work, the quality of your work, your focus to be successful and your attention to detail. Kiyosaki seems to believe that the only thing you need to be rich is the desire to be rich, and this simply is not true!

This book really does not offer anything new. It’s simply a rehash of Kiyosaki’s previous books and Trump’s view on personal finance, which no one should take seriously. There are plenty of much better books from people who actually have money and have held onto it for a long period of time that will enable to you become very wealthy, but it requires hard work, dedication, and much more. The Millionaire Next Door by Thomas Stanley and The Total Money Makeover by Dave Ramsey would be a good place to start for those who really want to do what it takes to be rich.

Most people consider having luxuries delivered them to be a luxury and something that just doesn’t make sense for the common man. Many believe that the added cost of having someone else grab the items for you and deliver them is a waste of money and you’re just better off to do it yourself. For those of us who live in rural areas without grocery delivery services, this is a completely hypothetical discussion, but if you have a grocery delivery service available to you, it might make financial sense. Consider these points before dismissing grocery delivery services as an unnecessary luxury.

It takes less time. You don’t have to take the effort of driving to a grocery store, desperately looking up and down the aisles for the one or two items you just can’t seem to line and waiting forever in the checkout line. Your time has a value, and if you can save an hour or two a week by having someone else get your groceries for you, it could be worth it.

It’s better for your car. You don’t have to pay for any gasoline to get to the grocery store or have additional wear and tear on your vehicle when you have your groceries delivered to you. Instead a van will take all the deliveries for the day out and drop them off for you and anyone else who ordered groceries that day.

Impulsive purchases are avoided. When you’re picking out your groceries online, you won’t get tempted to purchase some sweets that you really don’t need. You are far removed from the items that you are purchasing, so the impulsive purchases that normally occur at the grocery store just won’t happen. You’ll spend less on groceries and end up saving money in the long run.

Better Organization . When you shop for groceries online, you can easily plan out the ingredients you will need to cook for a week and order only those ingredients. It takes all the guess work out of grocery shopping. You’ll have exactly what you need and know exactly what you will be paying for it.

You will eat healthier. When all of the junk food at the grocery store isn’t right in front of your face, it is a lot easier to resist buying it. Since your further removed from your purchases, you can purchase food based on your intellect and what you know is healthy rather than the emotional cravings that hunger causes. You’ll end up getting a lot healthier food, probably without even realizing it.