I love you, Suze Orman.

I do. I love her. Because we never get to go out on Saturday nights (well, we could, but we're often too cheap to get a sitter and too tired to wrangle our deceptively innocent-looking son at a restaurant), Trent and I see her on her show every weekend. I think it's a great program. She alerts people to things that they might not otherwise know - for instance, how to deal with debt collectors or how much to put into a retirement account during a recession etc. etc. Suze Orman is a financial goddess. Go Suze!

Still, sometimes I feel a little perplexed by her advice - namely, her advice regarding emergency funds.

Suze is a big advocate of having an emergency fund that contains eight months' worth of living expenses. Now, I don't want to get into our personal financial nitty-gritty here, but between our mortgage, our student loan payments, our credit card payment, grocery bills, gas and electric bills, monthly homeowner's association dues, and random stuff like oil changes and doctor's visits, let's say that we have minimum monthly expenses of $3000. 

Essentially, then, we're supposed to have $24,000 in an emergency fund.  

...No problem. We'll get right on that. 

But tonight, Suze suggested that people try to have a years' worth of savings in their emergency funds. The rationale is that the economy is terrible, unemployment is high, there are no guarantees, and so on and so forth. 

So that would ramp up our ideal emergency savings to $36,000. And that's just for the emergency fund. That's not for all of the other funds people talk about these days: college savings fund, car fund, vacation fund, holiday gift fund...

Honestly? By the time we save up $36,000, we'll probably have recovered from this recession and entered the next one. Kidding. When there's a will, there's a way. Currently, we have steady jobs; there's no reason we can't save. But still, for us, saving that amount of money is going to take a good long time. It isn't something that's going to happen by the end of 2009. Or 2010. It's just a little overwhelming. 

I'm curious to see what people think. Does a years' worth of savings seem reasonable? Am I just way out of the loop in terms of thinking that this is a lot of money for an emergency fund? Is everyone else way, way ahead of me? If so, did you start saving when you were, like, six years old?

Zoo Day

Wouldn't this little guy make the perfect pet?... Maybe not.

We went to the zoo today, taking advantage of our brand new family zoo membership, which we purchased for $85 ($10 off the original rate, thanks to a coupon we received in the mail). That's not an inexpensive buy, but we think it's worthwhile in our case. Here's the rationale that went into our decision-making process:

1. Our son's interests: He likes animals, and he likes being outside. We knew this is something he would enjoy very much. The educational factor doesn't hurt, either.

2. Bang for the buck: The membership costs less than a total of two non-member zoo visits for a family of three. Our zoo isn't too far away from where we live, and we know we will be there more than twice throughout the spring and summer.

3. Guest options: We're allowed to bring one guest with us, gratis. This will come in handy when our families visit in April and May (my parents and Trent's mom will be here in April; Trent's dad will be here in May). This is something our families will enjoy, too.

4. Something to do with the neighbors: We are good friends with our neighbors, who have two small children. They have a zoo membership, too, so this summer we plan on doing a few group visits to the zoo. 

5. It benefits a good cause: I know not everyone approves of zoos, but from our perspective, zoos help preserve species that are losing their hold on their once wild territories. We think preservation is important. We're impressed with the upgrades our zoo has made to benefit its animals, and we know that a little of the money from our membership will go towards more positive changes.

6. It gets us more involved in a larger community: Because we work from home, it's easy for us to stay within a three-mile radius of our house and rarely venture out. We don't want to do that. This summer, we want to explore not only what our local community has to offer, but what our city has to offer, too.

We stayed for about two and a half hours this morning. Our son loved the monkeys (figures - since he's one, too), the macaws, the reptile house, and the meerkats. By the time we reached the petting zoo, he was tuckered out. We'll save that for the next time.

$282

Bad news: That was the price of the urgent care visit I made in January, when adult-onset allergies (which I'd not known I had) knocked me out for a good week. I received the official bill today. Of course, my ultra-basic insurance plan did not cover it.

Good news: We will be able to pay for it immediately with real money - not the credit card. I'm not sure if we will have enough in our checking account, but if not, we can pull some over from our savings account. I hate touching the savings account, but it's much, much better than the alternative, which is what we would have had to do a year ago when we had almost no savings whatsoever.

The bill doesn't make me happy, but this sign of progress sure does.

The long view

Today has gone on...and on...and on. Trent worked this morning while I entertained our son. We switched places in the afternoon. Late in the day, I realized I have more to do this weekend than I'd originally thought, which means that Friday night, Saturday, and Sunday will be spent at my computer. My eyes hurt already.

At times like these, I'm grateful for the long view that our goals provide. Sitting here for four or six or more hours at a time seems worthwhile when I remind myself that we're working towards our goal. The effort we put in now will hopefully pay off later - granted, a lot later, like five or six or seven years down the line, but it'll happen. Without the goal, I think I'd be less than inspired. I think I'd feel kind of depressed, actually, and then I might soothe myself by purchasing a trip to Costa Rica.

It's like that self control study they did with kids a few years ago. The kids in the study each received a marshmallow. They had the option of eating it right away, or waiting a few minutes - and receiving two marshmallows. As noted in the Time article, "A survey of the children's parents and teachers found that those who as four-year-olds had the fortitude to hold out for the second marshmallow generally grew up to be better adjusted, more popular, adventurous, confident and dependable teenagers. The children who gave in to temptation early on were more likely to be lonely, easily frustrated and stubborn." Hmm.

I readily admit that had I been a child in that study, I would have eaten the marshmallow right away. Self control is not one of my greatest strengths, which is probably why I feel so pained these days. I want what I want, when I want it. Waiting? Self control? Huh? Those things are difficult. They require sacrifice.

All I can say is that I'm working on it. So far, so good. But it's going to be a long weekend.

Take the drink from my hand

The "latte factor"* is a big thing with frugality fanatics these days. The idea is that many people can save a significant amount of money if they cut out small, but regular, unnecessary expenses (those daily tall double shot nonfat extra foam extra hot vanilla lattes, for example). Some argue that this can make a major difference to the budget.

I've started to realize that while I am frugal in many respects (I rarely purchase new clothes, we have only one car and no car payment, we go out to eat once a week or less, etc. etc.), I am not at all frugal when it comes to beverages. I'm a pretty literal example of someone who lives the latte factor - or in my case, drink factor. Yes, I like Starbucks. I buy drinks there much, much less often than I used to, but on average, I'd say I get one tasty coffee treat per week. I'm slightly addicted to Diet Dr. Pepper, which I'd never bought until I received two coupons for free bottles of it and discovered that it really does taste like the non-diet version. I have a special affinity for Cherry Lime-Aids from Sonic, that most Southern of all fast-food drive-ins. And - don't judge now - I do enjoy a glass of cheap merlot most nights of the week.

At various times, I've tried to drink more water and edge out these other things, but I'm not a big fan of plain H2O. The tap water here is terrible; I don't care how safe it is, it tastes like a watering hose. I've purchased filters, but I always forget to change them out, and generally it all ends up adding to the kitchen clutter. So if I do drink water, it's bottled water, and then I feel bad for contributing to an environmental problem.

Excuses, excuses.

The Simple Dollar had an interesting post recently about quality of life and whether it relates in any way to consumerism. In theory, I don't believe our quality of life should depend on the stuff we buy. But when it comes to beverages...well, after a long day of staring at my computer, a glass of wine feels awfully good. After a night punctuated by half a dozen wake-up calls from our teething son, a latte does make the next day seem just a bit brighter, a bit more do-able. And in the middle of the day, when I have so many miles to go before I can shut the lid of my laptop, an occasional soda feels like a good pick-me-up (I know - neither frugal NOR healthy! But at least I am honest.)

I'm a lot more observant about my spending habits than I used to be. Sometimes, my observations inspire me to make changes. Other times, I find myself taking no action, either because it doesn't seem necessary or I just don't want to. This drink thing might be an example of the latter. I'm proud of how far we've come with reducing debt and adding to our savings; I'm pleased to see that we're still making good progress, despite my beverage addictions. Therefore, I'm not sure I'm ready to make more cuts. It's something I'll have to consider further.

*I think this was coined by David Bach, of "Smart People Finish Rich" fame.

Fun free things for kids, Part I

I liked Sesame Street when I was little, but I like it even more now because it is the one thing - and a FREE thing! - that can keep our kid occupied for more than two minutes (aside from going to the park - but, contrary to what he wants us to believe, we can't spend 24/7 at the park). Supposedly, it will also educate him and build his self esteem. Every day at lunch, he eats his beloved macaroni and cheese and watches his beloved furry red and blue friends (Elmo and Cookie Monster).

If you go to the Sesame Street website, you can find not only the modern stuff (like Chris Brown singing with Elmo...), but also archives of the oldies and goodies that used to entertain us older folks (though to be quite honest, Monsterpiece Theatre seems a little...boring now).

Observation: Bert, Ernie, and Big Bird get very little air time these days.

Here is our son's current favorite. Feist, in his eyes, is almost as good as Elmo:

Feist counts to four

Hello, Dreamboat!

On a near-daily basis, I check used sailboat listings just to get an idea of what's out there and how much it costs. The other day, I found this little number and swooned:

A 33-Foot Cape Dory Cutter

Aside from the fact that I think "Cape Dory" is the cutest title ever (I know... Trent laughed, too, when I said that), here's why I like this boat so much:

-It's a solid cruising vessel.

-It's got a full keel. We tend to like full keeled boats - they seem sturdy and substantial.

-It's a good size. Some people would consider 33' to be quite small - but let's face it, you don't go cruising if you can't spend time with your family in close quarters. The smaller the boat, the cheaper the upkeep and other expenses.

-It's a decent price.

Of course, "decent price" is relative. For a Cape Dory in what looks to be very good condition, 65K seems like a good deal. Besides, you could always try to get a better price from the owner. But how we will ever have that kind of money to purchase a boat is beyond me. This is where the whole "faith and miracles" thing will hopefully come into play! ;-) - not to mention good, old-fashioned saving and frugality.

I bought a house when I was 23

Not that there's anything spectacular or mind-boggling about buying a house when you're 23...

But there is something a bit mind-boggling about being 23, having no money and a job that pays pennies, and still managing to get someone to give you a loan. Looking back, it's one of those things that, in some respects, I wish I could go back and do over. It was probably not our wisest financial decision, and it's proof that practically anyone could get a loan not all that long ago.

Here's what happened: About seven years ago, we were going to school in Arizona and living in a cramped, dirty, and loud apartment complex in what turned out to be a somewhat dangerous part of town. We disliked our grad school program, we hated the oven-grade heat, and we really, REALLY hated the fact that our apartment manager refused to either fix our "air conditioner" (in quotes because it never actually cooled anything more than the air right in front of the vent) or let us out of the lease. We were miserable. Paying the rent to live in that dive felt like hell on Earth. After 10 unbearable months, we decided to cut our losses and head back to the east coast.

It was at this time that I decided we needed - NEEDED. - to buy our own house. I could not be convinced otherwise. Didn't I deserve my own place? Didn't the government in fact want me to own my own place?

"Why rent when we can spend the same amount of money on a place of our own?" I told Trent. "Besides, we'll get tax breaks, and if something needs to be fixed, we can do it ourselves."

Somehow, we managed to get approved for a 30-year fixed rate mortgage (we demanded this because "Home Buying for Dummies" said we should), even though we were making peanuts as teaching assistants and even though we had only a very small down payment, courtesy of sympathetic relatives. If I'd been the lender, I would have refused our application. In reality, we didn't have the resources. But the bank just slapped on a gigantic PMI and a high interest rate, handed us the keys, and called it a day. We paid a mortgage of $1080 a month for our condo on a grad school salary. Our neighbors were paying a lot less, thanks to their higher incomes and lower interest rates. Most of our friends, who were renting, paid a third to half of that for their living expenses (so I'd been wrong about the cost of renting). As for fixing things ourselves, we didn't have the money.

We never missed a mortgage payment, but only because there were months when we took out advances on our credit cards. Some months, we had so little cash in the bank that almost everything - bills, groceries, other necessities - went on the credit cards. I look back and feel perplexed as to why the lender felt that it was responsible to give us that loan. I also look back and wish I had really educated myself about home buying and the associated responsibilities. I wish I'd done the math. We scraped by on the skin of our teeth. I can see now just how easy it would have been, had we NOT had some credit and had we had an adjustable rate mortgage, to spiral down into debt and foreclosure.

When we bought our current place last April, we were a lot smarter about it. We ignored what the bank told us we could afford, crunched our own numbers, and found a place that was much, much less than what the "experts" said was within our budget. We again insisted on a fixed-rate mortgage, and we requested a home warranty from the seller. There are things I wish were different. Because we didn't have a 20% down payment, we still pay PMI, and our interest rate is high compared to current levels.

You live and learn, I guess, but especially now, when so many people are losing their homes, I'm really grateful that we managed to squeak by the first time around.

The rant of a traveler stuck at home

We read several blogs about saving, debt reduction, and frugality, and the basic message of most of them seems to be, "Save more! Spend less! Don't buy stuff you don't need!"

In theory, I agree.

In reality, all I want to do is go to Expedia and purchase a two-week trip to Costa Rica.

See, everyone has his or her vice(s), and my vice is traveling. I'm not sure it would truly qualify as a vice except that international travel - which is what interests me - is extremely expensive (I don't care what people are saying about travel bargains - I don't see the concept reflected in international airfares). Trent and I both traveled a lot when we were younger, and I, especially, became addicted to it. I love it: I love meeting new people, trying new foods and activities, and immersing myself in a different culture. For some warped reason, I also like being out of my element, a fish out of water. It scares and thrills me. I thrive on these experiences.

Staying at home? It makes me feel all wilted inside. To me, a "staycation" is about as exciting as a plateful of Brussels sprouts.

This is supposed to be the year we put ourselves on a short leash, the year we save and reduce debt and work and work and work. So far, so good. Our efforts are paying off. I can SEE our debt decreasing and I can SEE an increase in our savings, but this just makes the impulsive part of my brain shout, "HEY LOOK! You have some money! Don't you think you deserve a reward? A reward like a trip to Australia...or New Zealand...or Japan...or or or" and on and on, listing possibilities that we can't even remotely afford, even if we swim to these places and sleep in roach motels.

I really do understand what people are saying about making sacrifices now in order to ensure a comfortable future. I get it. On the flip side, I don't think the "You're only young once" argument is totally moot, either. When you're young, you're more likely to be healthy, and when you're healthy, travel is more enjoyable. When you're young, you might be more flexible about the quality of your accommodations. When you're young, perhaps you're a little less fearful (because to be honest, I, personally, have become a little more wary about my travel destinations with every passing year, especially now that I am a parent).

I can tell you that a lot of our credit card debt - the debt we're still paying off - accumulated as a result of some pretty fun vacations and adventures. Do I hate the debt? Yes. Do I regret any of my travel experiences? Absolutely not. To tell you the truth - and I know this may not be a very popular thing to say - they were worth every penny...and the interest, too.

That said, I have no desire to relapse into deep debt, so at this point, I am holding back. We have come a very long way in the last year, and I'm not going to deplete our savings or turn to my credit cards to fund a little getaway. Not right now. I need to look at this from a more long-term perspective. However, I also need to be realistic. There is absolutely. no. way. that we're not going to do some fun stuff, even as we are saving to sail. So my plan is this: once we pay off the credit card, we will save up for some sort of vacation - maybe not a jet-setting tour of Europe or Australia, but maybe we can find a good deal on something a little closer to home (in reality, Costa Rica isn't that far away, and it's supposed to be fairly inexpensive). Not only is that an incentive to keep paying down debt, but just the thought of such a possibility on the horizon may be enough to keep me out of the loony bin.

Favorite free activity

While we are waiting and saving (for who knows how long) to buy a boat so that we can live on the waves, we're spending a lot of time at our local parks. That's our favorite ***free*** activity. Sometimes we hang out and chat while we let our son run around, and sometimes we all go for a jog or a long walk.

Can free get much better than this? It'll be beautiful in the summer and fall, but it's pretty now, too:





What's your favorite frugal-friendly, free activity?

Trent: Crunching the numbers

The other day ,The Simple Dollar asked, do you want to be rich?

Well, it would be nice not to have to work at all, but the most realistic thing I could think of is that it would be nice not to have any debt. We would still need to work, but we would have more freedom to pick what we do with our money. It made me run the numbers:

Currently, our outgoing expenses (excluding 401k retirement savings) are about 83% of total incoming (after tax) money. At this point, we are sending out more than that because we are trying to pay off debt as fast as possible. So, in a way, we have the freedom to pick what we do with only about 17% of our money. If we had no debt (no credit cards, student loans or mortgage, our outgoing expenses drop to about 35% of our total current incoming money. So we would be able to choose what to do with about 65% of our earnings.

We have made some progress. At some point in early 2008, just about 100% or more of our incoming money had already been spoken for before it got to our bank. Now more of that money is ours. We are learning to be frugal and paying off debt because we want more freedom to choose what we do with our time and money.

-Trent

My favorite money-saving recipe

There is one recipe I use over and over again: a recipe for pizza dough. It's saved us money simply because it keeps us out of the pizza parlors; the result is always just as good as what we'd get in a restaurant, if not better. I make it at least once a week, sometimes more. What I like about it is that it requires only a few ingredients, and you can mix it up in a matter of minutes (unlike a lot of other pizza dough recipes, you don't have to let the dough rise, though I like to give it an opportunity to work its magic before I start pressing it onto the pizza stone).

Here's the recipe:

Pizza Dough I

Main ingredients: yeast, flour, a little sugar, a little salt, a couple tablespoons of olive oil. That's it. Mix it all together, spread it on a pizza stone or baking pan, add sauce, cheese, and toppings, and you're all set. Twenty minutes later, you've got a delicious pie that rivals anything Dominoes or Papa John's could create.

A few variations:

-You can add fresh or dried herbs, like basil or oregano, to the dough for an extra punch of flavor.

-You can use the dough for calzones. I split the dough into four parts, smoosh each one into a disk, add the filling, fold it over, seal it, and then bake it at 375 degrees F until the tops are golden brown. My fillings usually consist of chopped onion, chopped garlic, chopped mushrooms, a little spinach, some diced tomatoes, and cheese. They're very good.

-Our local grocery store has started selling store-brand organic flour at $3.50 a bag, so we've been buying that. It's definitely more expensive than regular flour, but when you work out the cost of each meal or goodie it makes, it seems worth it to us.

-You can substitute in honey instead of sugar. I like the flavor of honey in pizza crust.

Try it! Not only is it delicious and easy to make, but you know exactly what's in that pizza. Plus, if you have kids, they can help mix the dough and decide on toppings.