Wednesday, April 30, 2008

Thursday Money Tips: Grocery Savings Edition

Every Thursday, Ms. Moneypenny posts 5 savings tips. If you have tips you would like to share, post them in the comments and I'll use them in a later Money Tips edition.

Since grocery prices are rising, I thought I'd list out a few things that might help us all save at the grocery store. Since I don't shop in the typical way, these aren't the typical tips, such as 'shop only on the perimeter of the store'. But they do work, and manage to keep our budget controlled.

1. No store has the best price on everything
I've blogged this before, but it's worth repeating. I hit 5 or 6 places over the course of a month, because no one store has the best price. Over the course of a month, I shop at BJs, a big-box store, Market Basket, a local chain that offers the best prices on boxed and canned goods, our local farmstand/co-op, Whole Foods, and occasionally Shaw's or Stop and Shop. Each has particular items that we use, and prices are

2. The perimeter of the store isn't the only place for healthy food
The baking aisle contains the ingredients needed to bake wholesome, rather than packaged goods. It's often cheaper to bake from scratch, and it's certainly better for you. But be careful about where you buy - BJs, our big-box store, sells 2 1-lb packages of yeast for $3.99 I recently priced out the single-use packages at Market Basket, and they were $2.99 for a 4-pack. Even if some of the yeast goes unused, BJs is by far the better deal. I give the other package to friends or family.

3. Constantly seek out new sources of food
I do this through word of mouth. Via friends, family and message boards, I look for new options. Recently my husband and I were in New York state to visit family, and came home with our produce for the week at a significantly lower cost than we might have found it here. Look around - are there farmers near you? Friends who are willing to split large orders? Creativity will help you save.

4. Buy in bulk
No, you shouldn't go buy 400 pounds of rice. That type of hoarding only contributes to the skyrocketing food prices and could turn the fears of shortages into reality. What you should do, is consider buying larger packages of things when it's cheaper. A 20-lb package of dried beans is significantly cheaper than the same amount in cans. I keep some cans on hand for days when I have little time, but soaking beans isn't that big of a deal, and the beans taste better.

But watch your prices, because not every bulk deal is a real deal. Check around before you spend on 80 lbs of beef, or 100 lbs of flour. You may find dramatic differences in prices.

5. Plant something
Even if it's a few herbs in pots, or a tomato plant on the deck, it will save you money. Ask your gardening friends for the plants they thin, or to try a few spare seeds (trust me, we all have more than we need). It's cheap, it's simple, and there's nothing cooler than watching the little seed become a big old plant.

Next week, more grocery saving tips. And we're going to learn how to create a price book!

Tuesday, April 29, 2008

Staying Motivated for the Long Haul

Like most of the MTV generation, I'm easily distractible. In order to implement a plan of the size and scale of our downshift, I need to stay focused - and, well, let's just say that the average goldfish may have a longer attention span.

So I've had to take some steps to keep me focused...or at least focused on something else besides that sale on shoes.

I find it easy to set the goals, and to make plans. What derails me is the little distractions - I want a different lunch than the one I brought, there's a sale on shoes, oooh, that cheese looks yummy, and so on. So here's my list of 6 things I do - and you can too - to keep me on track.

1. Avoid, avoid, avoid
Stay away from the mall, only go grocery shopping (and then go with a list, and a limited amount of cash, preferably) chuck the catalogs, and invite friends over rather than meeting at a restaurant.

2. Read everything you can related to your topic
I find myself re-reading books like Affluenza, Your Money and Your Life, and similar books over and over. It's a little harder to justify more shopping when you are so conscious of the impact, both to your finances and the world at large.

3. Make plans
I find if my weekends are filled with projects, there's little room for mindless spending. Now, I'm a fan of downtime as well - to me, there's little better than curling up with some tea and a book, but I find that if I plan to spend the morning in the garden, then I don't have to worry about empty time to fill.

4. Create an 'alternate option' when the urge to go shopping, or to buy something, hits
It's kind of like a smoker who wants to quit. If you always light up right after dinner, you need to find something else to do instead. You can't just stop, you have to replace. So if you find yourself wanting to shop on your lunch hour at work, decide - actively - to do something else.

5. Retrain your brain
When you pick up that pair of shoes, it might not be unreasonable to ask yourself where they were made, if the people who made them earned a living wage, and what the environmental cost is. How long would you have to wear the shoes before they 'paid back' what they took from the environment. That's not to say you should never buy shoes, but it creates an environment of conscious spending, and it makes the little purchases that drain a budget a lot less frequent.

6. Find pleasure in things that don't cost money
Or that cost little. I knew I'd hit a milestone when I realized that most of the time, I would rather cook a new recipe than eat out. And that sitting home in front of the fire with my husband on a Friday night was one of the best ways I knew to start the weekend. Look for the joy in the little moments.

Sunday, April 27, 2008

Biting Off What You Can Chew

In response to my post on creating a downshifting timeline, Jessica, one of my regular readers, listed many of her goals that she wants to achieve before becoming a stay at home mom.  

She's got an aggressive timeline, about 3 years to be financially ready.  Her goals are excellent, but it's a lot to get done in a short period of time.  

My two pieces of advice, as someone who is also biting off, and considering chewing, quite a bit, are:

1.  To not choke yourself on goals in the short term, but keep them lofty in the long term.  For example, if your goal is a downpayment, but you also want to save enough to pay for a car in cash so that you don't have to go into debt for your next vehicle, pick which one of those goals comes first, and save for that.  Then, when you've hit the first goal, start saving for the second.  I tend to try to save for everything all at once, and it always, always dilutes the results.  

Additionally, set your sights on getting one of the smaller goals, such as having a will drawn up, or life insurance, done every other month.  That means you have 60 days, approximately, to find the time to get each of these tasks completed.  I find that sometimes the time-intensive goals get as overwhelming as the financial goals - because I'm busy.  Taking the time to find the best life insurance policy can require a couple hours on the phone or online.  So don't try to do it all, just get one done.  Then move on.

2. Don't be afraid if you miss a goal by some of your target. So maybe you didn't make it to the full $20k you wanted to save for a replacement car, in addition to the house downpayment and building up 6 months worth of expenses.  Maybe you have $15k instead.  That's okay - you still are in a place of choices: you can decide to keep your old car another year, try being a one-car family for a bit, or buy a cheaper car.  Or even decide that owing $5000 is okay.  You may not have made it 100% to your goal, but 75% is still better than nothing.

And one more piece of advice for good luck: 
Life throws out surprises.  Things sometimes happen sooner or later than we plan for them.  Just this past week we had several financial hits we never expected.  They stung, and forced us to rework some plans we'd made.  So be prepared to get derailed occasionally.  

After all, life is what happens when you're making other plans.....


How Does My Garden Grow Week 5

In a week or two, I'll begin posting pictures of my garden-in-progress.  For now though, you'll have to take my word that the vegetable seedlings and other plants are starting to overrun us.  

This weekend my husband and I drove out to my older sister and brother-in-law's farm in upstate New York, to spend some time with them and my four nephews.  We came home laden down with just-picked asparagus and rhubarb from their local growers, a dozen eggs from their chickens, and plants, plants, plants.  We now have, in addition to the pansies we've put in our front window boxes, added purple Allium, yellow Begonias, various Impatiens, a ton of other flowers for planters and window boxes around the house, some basil, and additional pepper plants (yes, we've already got many, in our defense, we didn't have this kind of pepper.  That's my story and I'm sticking to it).

Add to that the fact that two apple trees, one cold-hardy cherry tree, strawberry plants and sweet potato starts are set to arrive this week, along with a kitchen and basement starting to overflow with vegetables and herbs....and you've got me praying that we're past the last frost date so I can start getting some of this stuff in the ground.

I started my seed potatoes (fingerlings) and some garlic chives and cilantro today.  I've still got more thinning of the tomato plants to do, and some melons that need transplanting.  Oh, and I still haven't planted all the lettuce.

We're overloaded with nature's bounty already, and we don't even have any vegetables yet.  It never ceases to amaze me that a tiny little seed can do what it does.   

So next weekend we'll prep the garden space, add mulch and compost to the asparagus bed, and start some planting.    

In order to plant the seedlings, I have to 'harden off' the plants.  They can't go straight from the grow lights to the ground.  Every day, they will go outside for a bit of time, increasing slowly until they are out there full time.  But some cold-hardy items, like beans can go in the ground now.

In the summer months, my sister and her family rarely go to the grocery store.  Between the items they buy in bulk, their garden produce, chickens they raise, and eggs, there is little they need.  I started to mull over what it might take to get us to that point in a year or two - three months of the year, no BJs, Market Basket, Stop and Shop, and so on.  I like the idea, so I'm thinking about how we might make it work.

It's a nice goal to consider.  And I wouldn't miss the Sunday grocery store crowds one bit.

Thursday, April 24, 2008

Thursday Money Tips: Paying Yourself First Edition

Each Thursday, Ms. Moneypenny publishes 5 money-related tips. If you have tips, please leave them in the comments, and I will collect them for later use in my blog.

Pay yourself first. Every personal finance book or article says it. But what does it mean? Really mean? How do you do it? Here's 5 simple steps to help you on your way.

1. It means what it says - your savings comes before paying for anything else
Basically, it means taking money off the top to pay for your goals. Focus on at least two areas - putting a minimum of 10% of your pretax income into retirement accounts, and another 10% of your post-tax income away for emergencies, house downpayment, etc. Live on the rest.

2. Set some goals to give yourself a reason to save
The easiest way to make yourself save is to set some goals. Goals don't just happen, they have to be created. So sit down, or go for a drive together and talk about them. A house. A beach vacation every year. Sending your kids to college debt free. Then start putting money away for those goals. And don't touch it - except to pay for one of them.  So you can't put away all you think you should yet?  That's okay, start somewhere.   Goal setting can be fun - list all your dreams.  

3. Get the money deposited into savings automatically
This is the best way not to feel temptation to spend it on something else. With retirement accounts, automatic withdrawal to a 401k or IRA is best. With more liquid savings, set this up to automatically get deposited into an account you can't get at with a debit card or easily. Out of sight, out of mind.

4. Find the money to save by combing through your budget
And figuring out what you can cut. I'll put it this way - would you rather have a new shirt, or a home of your own? When I go through our budget, I often find it's not the big-ticket items that get us.  Those are well planned and accounted for.  It's the steady dribble of small-dollar purchases that are our budget busters.  Cutting back to 1-2 meals out a month has made a huge difference in our positive cash flow.

5. Don't give up
If you fall off the wagon and spend some of your savings, don't think "Oh, I'll never get anywhere, I should just quit."  Telling yourself that is just going to become a self-fulfilling prophecy that you don't want to have come true.  So just put yourself back on the saving wagon tomorrow and keep plugging.  You'll hit your goals...and even if it takes 4 years instead of 3 to accomplish something, that's better than never.

Wednesday, April 23, 2008

Creating a Downshifting Timeline

Jessica asked me a great question this week - how did I go about setting the timeline for downshifting?

So I thought I'd talk a little bit about how I came up with our just-under-11-year timeline.

I have to admit, I picked December 24, 2018 kind of randomly. And it might shift around a little, say if I am employed in a company that gives bonuses in Q1 of a year, or some similar driver that might make the date move a bit.

But I picked 10 years because of a few reasons.

First, it would mean our first child is about the age of the preteen years - 9ish years old, if all goes well. For me, as much as I might enjoy being home when my kids are small, I almost feel as though it's more important to be there - if not home full time at least more available than my current career allows - when kids are getting older. When peer pressure, school pressure and activities start to pull more at my children's time. This is obviously a personal choice, but I think it's the right decision for us.

Second, and no less critical than the first, it's about the first window where we will be in a financial place to consider less income. By that time, we will have paid off our second mortgage, and we plan to hit a number of other targets that I have mentioned in the past, such as having a year or more's expenses liquid, enough saved to replace one car when needed, and sufficient retirement savings that we can reduce our contributions and still retire comfortably.

Now, if we were just starting out, and had made the decision to downshift before now, we might have made some different decisions, such as living only on one salary and banking the other.

But even then, it's not clear we would have made completely different choices. I know few people who can afford a home in our high cost of living area on one salary. And just moving is not so simple - we wanted to be close to friends and family, and raise our children knowing their extended relatives and the people important to us.
Also, my husband is committed to his work. It would have been difficult to uproot that.

The decision to live where we do was not without tradeoffs. It locked us into a large mortgage, for one thing. But it also allowed us access to a great job market, to be near the people we love, and so on. It's not a tradeoff that creates deprivation for us, although we are sometimes time poor.

An important point here, is that my downshift is probably not, unless we have financial fluke that occurs to allow it to be - an early retirement. I still fully intend to work. If I can, I'll make a living by writing. If that's not possible, I'll figure out what I can do that will allow me sufficient flexibility to be around more, but still allow us to say, eat.

Part of the downshift is figuring out exactly how much money we will need to have coming in and saved. I've got some general numbers, but they are hardly precise. I'll be reforecasting each year to figure out what we need and where we are.

So what can a future SAHM learn from my plans? The first is to make a plan. Let's say you want to stay home when you have children, approximately 3 years from now. You don't own a house yet, but are starting to save a downpayment. Here's some things you can do:

1. Check housing prices and calculate your monthly payment based on how much you will put down. Forecast for the worst-case scenario, the most expensive house you might have to end up in, or the highest interest rate you might have to pay just to be careful. has some great calculators to help you out.

2. Figure you can spend no more than 30% at the absolute outside of your post-tax income on housing, including property taxes. That gives you your limit.

3. Search to find houses in your area in your price range. Calculate a payment and figure out what it's going to take.

4. Get rid of credit card debt and car payments. The fewer bills you have to pay, the more income can be put towards getting - and keeping - you home.

5. Save up an emergency fund. For a one-income family, I'd recommend no less than 6 months worth of expenses saved, rather than the 3 months typically advised.

6. Stay flexible. My sister, who is a stay at home mom, works a couple nights a week at a local restaurant. The money brought in there provides many of their 'extras' - vacations, dinners out, and so on. It gets her out of the house, and it allows her to work while still not needing child care.

7. Acknowledge that you probably aren't going to be able to keep up with the Joneses. If your neighbors or friends are remodeling their basement into a home theater, and you can't afford to do the same - even though you would really like to - just congratulate them and repeat to yourself "I am staying home, and that is more valuable to me than any consumer goods". Lather, rinse, repeat.

8. Beware of the risks. Women out of the workforce have a harder time re-entering it than they think they will. The stats bear me out here. That doesn't mean you shouldn't stay home, but it does mean that you might have trouble finding a job in your career after 5 years at home. And when you do your salary might be a lot lower than you wish for. That's okay - if you know it going in.

9. When the temptation to spend comes up between now and the time you do stay home, ask yourself "Is this what I REALLY want?". If those shoes mean your kids have to go to daycare, they might not be as tempting.

Jessica, I hope this helped answer your questions. I'm happy to answer more, or elaborate on my plans.

Monday, April 21, 2008

Keeping Food Costs In Check

Lately, the cost of everything is rising. We are seeing massive inflation in the cost of basic consumer goods.

One place where costs can be controlled is in the food budget. It takes a little bit of time, but even the tightest of budgets can benefit from a little creativity in the grocery store and the kitchen.

First, check your pantry and freezer. What do you have in there? Most of us honestly would be surprised at how much food is in there. Start there, and cook with what you have.

When you do go shopping, don't just go to one place and throw a week's worth of groceries in the cart. Track what you use and what you need for a few weeks. The easiest way to do that is through a meal plan. Note what is eaten for the week, and then think about how often you eat particular items. Do you have chicken almost every night? Time to start watching for a deal and stocking up. We buy about a month's worth of chicken breasts at a time, but when I found a really good deal on organic chicken breasts, I bought all they had, about a 2 month supply.

No one store will have the cheapest, or everything you need. But few of us have the time to go to multiple stores. So here's what I do (and why stocking up is so handy - I rarely have to go to any single store at a particular time) - I cycle through my stores over the course of a month.

I frequent BJs, a 'big box' store for cereal, shampoo and conditioner, soap, toothpaste, ravioli, olive oil and some other staples - but I only go once a month. 1-2x a month I head to Market Basket which has the lunch meat my husband likes, as well as much of the canned and boxed goods we use at rock-bottom prices. Sometimes things are literally half the price of other grocery stores in the area. Once a month we head to Whole Foods, for coffee, and a few other items. We love their meats and seafood, but we wait for a true deal.

In addition, I pop over to our local farmstand a couple of times a month. I get milk, fresh veggies, and occasionally some meat.

Take that notebook or spreadsheet you tracked your meals in, and use it to create a list of staples. As your staples go on sale, stock up. When flour goes on sale around the holidays, I might buy 25 lbs. 24 hours in the freezer and it keeps nearly indefinitely.

Plan your meals. Seriously, think about what you'll have each night of the week. Who will be home? What kind of evening will it be - busy? Quiet? Weekday? Weekend? Plan accordingly. I typically plan meals about 3-4 days out. More than that and I spend too much time erasing, less than that and I find myself in one of those "I have no idea what to make" moods.
I love the meal planning calendars at, and

In any given week, I spend less than 2 hours shopping and planning meals. Considering that all but about 5 meals a month come from home - including breakfast, lunch, dinner, and our morning coffee, and the week contains 21 meals, that's about 5.7 minutes spent shopping and planning for each meal.

Once you've tracked, planned and shopped, you need to get into the kitchen.

The absolute best money saver? Cook from scratch.

Last night I served pan chicken - which is basically chicken cooked in a pan with seasoning, a little cooking wine, lemon and whatever else looks like it might taste good, spinach sauteed with garlic and olive oil, and bread with oil and vinegar for dipping. It tasted great and took less than 20 minutes to make. Only a few times a month do I spend lengthy periods of time in the kitchen, and then only on weekends. Most of our meals our simple - chicken, fish, vegetable, side dish. When I get home in the evening I rarely have a lot of energy for prep-intensive cooking.

But when I do cook, I try for large batches. On Thursday night I made squash soup, with the last of the butternut squashes I had on hand. We had dinner on Thursday, I had lunch on Saturday, and then froze it for my lunch today. The weekend prior, I made a huge batch of chili, which we had for dinner, it made me a few lunches at work, and there's enough for a couple meals still in the freezer. We will defrost it some night when we are too busy to cook.

When I cook in large batches, the leftovers go to either lunches or a future meal.

It's not just soup that this method works for. You can also prepare your own quick meals by doing a little advance cooking. Let's say your kids go through 2 boxes of frozen waffles a week. What if on Sunday morning you made a big batch of waffles and froze them instead? I priced out some name brand frozen waffles, and they seem to run between $3 and $4 for a box. I can make from-scratch waffles, or even waffles from a mix for about $1.10 a batch, including the oil and eggs. Over the course of a year, that's nearly $200 that you didn't spend - and your kids probably ate healthier.

On weeknights, prep the night before. Sunday through Thursdays in the Moneypenny household, most of our prep for the next day is done before we head off to bed. Coffee mugs with sweetener on the counter. Toast in the toaster oven. Lunches packed in the fridge. Snacks out and at the ready. In the morning, all I have to do is pour my coffee and some milk, hit the toast button, and grab my lunch from the refrigerator. In all, it takes me less than 3 minutes to get all that and get out the door.

So how much time do I spend cooking and prepping? About 30 minutes on a weekday, not including cleanup. On the weekends, I might spend up to an hour cooking. Add in 15 minutes for cleanup (even my biggest messes rarely take this long, and you can clean as you go), and I've spent less than 6 hours in a week feeding us and cleaning up. Add in the shopping and planning, and it's 8 hours. But it's 8 hours that not only pays back financially, but brings me a sense of pleasure and accomplishment.

You can fight rising food costs. Shop carefully. Plan accordingly, and roll up your sleeves and cook something. You may just find you enjoy it.

Sunday, April 20, 2008

How Does My Garden Grow Week 4

This week, the daffodils bloomed here in northern Massachusetts.  This marks the official transition from late winter to spring.  To me, snowdrops and crocuses are the signs of the end of winter, but still winter.  Daffodils mean warm days and sunshine.  

My husband spent about 5 hours in the yard yesterday doing cleanup work.  Today we'll probably both be out there for a bit - I have some pansies to put in our window boxes, and we want to begin siting the vegetable garden.  This means moving some plants, so it's going to take us a few weeks.  

The landscapers are coming this week to do a full yard cleanup.  Once that's done, we'll order some mulch and mulch over the garden beds, something we didn't do last year.  

The vegetable garden is growing gangbusters.  I've been madly repotting plants and completely losing track of what type of tomato is what while I do it.  Next year I need to take the time to make up a grid on paper of what I've planted so that I don't lose track.

I still haven't started my fingerling potatoes, so I'll be doing that today.  I'm giving some, along with a few of my tomato and other seedlings to a friend, as we have probably far more than we need.  

Or goal is to get the main vegetable garden into the ground by the 3rd week of May, and then plant something additional each week through June.  That should mean we'll be harvesting until late September.  It's going to be a busy fall.  

On the Road To a Downshift: 10 years, 8 months and Counting

I've blogged before about our plan to downshift in a bit more than 10 years.  What's interesting is the plan first includes spending more time working.

That doesn't mean I plan to be at work until 9 pm every night so that I can make more money at my consulting job.  Hardly.  While I will stay when there is a need, working those kind of hours on a regular basis can literally pull all the enjoyment out of life, so I try to avoid it.

My approach is to grow my skills, and my blog.  

The blog part is easy (in theory).  I'm working towards reaching a point where I'm blogging consistently 5 days a week, treating this like a full-time job.  That's a challenge with all the other demands on my time, but it truly is one of the best things I do.  I'm working up an article library to help me achieve this goal over the next few months. 

In addition, I'm working on getting my blog more attention, and more participation.  The more questions I can answer, comments that give me ideas for articles, and the more other blogs reference mine, the better the blog will get.  

As for my career, I've recently been assessing my skills, and asking others for feedback on them. I like what I do now, but I'm looking for more challenges and opportunities.  I took the first step towards incorporating my skills into my paid career by sending a question about a particular skill I have (networking), along with some ideas I had been given on how to leverage it, to a recruiter whom I work with.  We are having dinner next week to discuss what opportunities I might take. 

In doing some forecasting, I need to keep my income steady and at the current level in order to accommodate some of our goals until 2011.  That's less than 3 years away, which is a manageable period of time.  At first, I looked at that with a pressured, stressed mindset 'Oh what if something bad happens in the next 2 years and 8 months'.  Then I realized - this is not bad.  It's my first window of 'what if'.   As in 'What if I took a different job, closer to home.  I might make less, but I might need less too'.  Or 'What if things are looking even better than I have planned?'

In 2 years and 8 months, I'd like to be supplementing my income by writing semi-professionally.  I hardly expect that my writing income will replace my current income, but as it supplements, I may have some good choices to make.  So I'm starting to look forward to 2011 as a time where I'll have some good options in front of me.

In the meantime, my husband and I will keep plugging at our goals.  I'll keep writing, I'll keep investigating how to grow my career, and I will keep looking for ways to consume less.  

I'm still a little worried about keeping my income level steady for the next few years.  But all I can do is keep working hard, find new ways to be valuable to my clients, and look for opportunities whenever they come.

Thomas Edison said "Most people miss out on opportunities because they are dressed in overalls and look like hard work."  I have no intention of missing any opportunity that comes my way if it gets me to my goals.  

Thursday, April 17, 2008

Thursday Money Tips - More on Retirement Savings

Each Thursday, Ms. Moneypenny publishes 5 money-related tips. If you have tips, please leave them in the comments, and I will collect them for later use in my blog.

One of the toughest parts of retirement savings is trying to figure out what you will need in 20, 30, or 40 years. I have a tough time with this - I can barely figure out what I want for dinner most days.

Here's 5 tips to get you started down the road of being ready for a time where your only income will be from what you've saved. I'll be writing more and more as I work to refine the approach my husband and I have taken.

1. Save the maximum you can, no matter what
Often this is more than you think you can. If you are not saving a minimum of 10% of your pretax income, you simply aren't saving enough. And that's the minimum. Try for 15%. But if that makes you stressed and worried about loss of income for today, start small. 5% maybe. Then add.

2. Don't depend on Social Security
Our federal government may or may not fix the funding issues with Social Security. Several easy solutions are out there. But the reality is, more people will be retired in a few short years than will be working....and that's a problem. I personally think that by the time I hit 65, income qualifications will be the determining factor in who gets an SS check. So save like it isn't going to be there, and then be happy if it is.

3. Think about the kind of life you want in retirement
Do you see yourself as a snowbird, with a place in Florida and a place in your home state? Relocating? Downsizing? Travelling? Providing daycare for the grandkids? Building your dream house on the ocean?
Then put a price tag on those dreams. If you want to travel to exotic places twice a year, and be able to give your kids money to help them put a downpayment on a house, even if you don't have kids yet and have no idea what trips you want to take - put a price tag on it. Then, you can either run some numbers to figure out how to save, based on estimated earnings - or you can take the easy way out - and save at least 1% of your salary on top of what you currently save for each dream.

Is that a perfect calculation? NO. But it is what I do, and it is simple. I have no idea if a trip to Hawaii will cost $6k or $26k in 30 years, so I'm saving like it's going to cost $26k.

4. If you've made it past 15% of your pretax earnings in savings, consider other options
This could mean IRAs, or it could mean saving in non-retirement vehicles, such as mutual funds. I recommend meeting with a financial advisor and planning with she or he by what you want to do. If you wish to retire at 52, you don't want to lock up all your money into accounts that can't be touched until you are 59 1/2.

5. Make it a plan to pay off whatever house you live in before retiring
Most of us don't live in the house we plan to retire in these days. Some of us do, but many do not. Still, plan to have no mortgage in retirement. Sure, you'll still have to pay utilities, upkeep and taxes, but not having a mortgage will significantly lower your expenses and increase your security. And if it was really needed - you could get a reverse mortgage.

Sunday, April 13, 2008

Spending For The Life You Have

Right after my husband and I got engaged, we got all the usual questions - about the date, the dress, the location, the honeymoon..and about our registries.  Like most couples, we registered for gifts, and we were blessed enough to receive most of the items on our registry.

Registering was a little harder than I'd imagined.  Basically, you walk into a store and have to pick out all the things you'd like to have for the next 15 or 20 or more years.  It's overwhelming, to say the least.  My older sister gave me a piece of very good advice as we were going through this process.  It's something I still keep in mind when shopping, it struck me so hard.   She said "Spend for the life you have, not the one you think you are going to have".  

She and her husband had fallen into the trap of thinking that if they had champagne flutes for 12, they would host parties using champagne flutes.  And if they had formal soup tureens, they wouldn't just serve soup from the pot on the stove, and so on.  It's pretty easy to get sucked into the marketing of 'if I have it, they will come'.  

Of course, the flutes and tureens mostly collect dust, since they typically serve dinner from the stove and eat with their four children, who aren't of champagne drinking age.  But you knew that, didn't you?

It was good advice then (we mostly managed to follow it, although a few things did make their way onto our registry that we haven't gotten a lot of use out of), and it's great advice now.   This came back up when my husband and I started looking at bedding for our new bed.  We came to marriage each with a queen mattress set, both of which were about 6 or 7 years old.  I had a bed frame, so we used that, and we put my mattress set into the guest room, and proceeded to use the one he came with.  

Now that mattress set that we've been using has a couple of people-shaped divots in it, regardless of how it's flipped, and my husband has some periodic back problems.  So instead of just swapping mattress sets, we decided it was time for something a little more supportive.  

When the discussions about what and when to do something about the bed got underway, we started seriously discussing a king sized bed.  We both wanted one, but all our bedding and our reasonably nice bed frame were queen sized.   Still, we realized if we were going to invest in a really excellent mattress set, maybe we should just bite the bullet.

So we did, and our new bed frame and tempurpedic mattress set will arrive in just a couple weeks.  We bought for the long term.   We never expect to upgrade our new bed (and in fact, I doubt we will, we're the 'buy and hold' sorts) and the mattress should last us 15-20 years.

But then there's the bedding factor.  We need new bedding, blankets, sheets, and a comforter.   We started thinking that we should definitely have a nice set, what with the nice new bed, right?  We salivated over bedding sets at Macy's and Restoration Hardware.  Perfect, matching, lovely, expensive sets.  

And then we came back to reality.  One of us pointed out that we were planning to start a family, and babies and young kids mean that our bedding may take a few hits.  The reality is, we need something that will hold up in the wash, and that we won't have a nervous breakdown over if it gets ruined.  This excludes, in large part, the lovely sets we were perusing.

So we're off to HomeGoods next weekend.  I imagine we will find something very nice, at about a third the price (we might have ended up there anyway, despite the kid factor, but this clinches it) of the other sets we were looking at.  It might not be a perfect set, but it will be washable, nice looking, and kid-resistant.  And while I might grump if a set of sheets gets ruined, I'll handle it better if they cost $24.99 than if we had spent more.  

Maybe someday we'll buy the perfect bedding set.  But for the next few years, we'll find something that's perfect for the life we have, and enjoy it quite a bit.  And if, in a few years, a sick child wants to crawl into bed with us to cuddle, I'll be able to focus my energy where it belongs - on their well being, and not on my expensive duvet.  

Now that's living your life both for the way it is, and the way it should be.  

How Does My Garden Grow Week 3

This week spring weather finally made a brief appearance in Massachusetts.  It quickly dropped back into the 40s, but a day of 70 degrees was all it took to pull Sander and I feverishly towards the yard.

We've made an agonizing decision - agonizing because I hate to spend money on things of short-term value - to hire someone to do a one-time yard cleanup for us.  Between our home projects and getting the garden space ready, spending 3 or so weekends (the time we estimate it would take) to clean up our 3/4 acre property is just a little too much.  This is one of the ways in which our working life makes our home life more expensive, but I think it will be worth it in the end. Sander has already spent about 5 hours outdoors working on cleanup, and has barely made a dent.  

We've begun to mull over what plants will be moved to make space for the vegetable garden.  I spent time this weekend transplanting and thinning, but there's quite a bit more still to do. The nice thing about transplanting is that I can do a few at a time, in 10 minute increments.  

Actually, most of gardening works like that.  Planting, weeding and harvesting can all be done in short bursts, and it's one of the reasons that I think gardening is a great thing for even the busiest people.  

My composter arrived this week, along with a compost crock I'd ordered for the refrigerator.  I could have skipped the crock and just used tupperware, and perhaps in retrospect I should have.  I was seduced by having a special item for my composting, but in reality, it was $20 I probably didn't need to spend.  I'm chalking it up to a lesson learned (I was too seduced to return it before I started using it) to remind me to always look at what I have first, then buy only if I don't have what I need.  

Next weekend we'll begin clearing the garden space outdoors.  

Friday, April 11, 2008

Thursday (Friday) Money Tips: 401(k) Edition

Each Thursday, Ms. Moneypenny publishes 5 money-related tips. If you have tips, please leave them in the comments, and I will collect them for later use in my blog.

I'm a little late this week, but here they are. This week, I've decided to focus on retirement planning. My husband and I are in our mid-thirties, and these days, we're watching our parents start the retirement process. Sander and I have been saving for retirement for a while, but it's really hard to put our fingers on what we might truly need to save for retirement.

More on that later, I'm still in the research process of how to *really* calculate what you need from 30 years away.

In the meantime, I've come up with some personal rules of thumb around retirement savings.

So here's my recommended steps to take with regards to saving in an employer-sponsored 401(k) - whether you are just getting started, or just want to check yourself.

1. Save in your 401(k) first before any other options.
For those that have them, a 401(k), named for the section of legislation that created it, is the best savings options. There are two kinds, a Roth 401(k)k, and a traditional 401(k). Traditional 401(k)s are pretax savings that reduce your taxes now. Roths are post-tax, but are not taxed when you withdraw them. Based on the reading I've done, I'd go Roth if it is available, and if you are 45 or under when you start it. You'll lose some tax benefits now, but I'm going to guess that our relatively low tax rates aren't going to stay that way forever. If you don't have a Roth available, go traditional.

2. Save in your 401(k) even if the choices aren't great.
Why? Several reasons. It's coming out of your check, so you won't see it. Also, even if you don't have a Roth 401(k) available to you, the traditional has great benefits. And employers typically match between 3-6% of your contributions. Never walk away from free money.

If your choices aren't good, you may want to contribute up to the match, and then save in other vehicles, but even when I had a not-so-great 401(k), I saved as much as possible in there. Then when I changed jobs, I rolled it over into an IRA.

3. Make your goal the maximum contribution.
For 2008, the federal maximum contribution to a 401(k) is $15,500 if you are under 55 years of age. That's a lot of money. Even at a pretax contribution rate, if you are taxed at 28%, that's still $11,160.00 that isn't in your paycheck.

But I said make it your goal, not do it tomorrow. If you aren't saving anything now, contribute up to the employer max. And then every 3 months, up it another 1%. Keep going until it hurts. Then stop. Every time you get a raise, go up another 1%. Do this at 25, and at 40 you may be saving the max without noticing the impact. Taking 10 or 15 or 20 years to get to the max is not unreasonable. Set the goal and start moving towards it.

4. Realize you are in this for the long haul.
You aren't saving for tomorrow or next week. You are saving for something 20, 30, or even 40 years away. So the best advice I can give is to put your money into some low-fee, high rated funds (you can check your fund ratings at and then ignore it. Once a year, go back and check the fund ratings and rebalance if you need to. But leave it alone, and let it grow.

5. Don't EVER withdraw, unless you are in danger of homelessness or starving.
This money is not for fun. It's to keep you off welfare and from eating cat food in old age, not for a kitchen renovation, or dream vacation. If you save hard, you may get the trip to Tahiti too, but if you keep cashing it out, not only will you pay a 10% penalty and income tax, you'll have years of unrealized gains just wash away on that beach you are dreaming about. You want a good life when you have time to enjoy it, don't you? Don't screw yourself out of the future.

Next week, we'll talk about IRAs.

Wednesday, April 9, 2008

What Exactly Would a 'Prolonged Economic Downturn' Mean?

Yesterday Ben Bernanke and the Federal Reserve bank expressed fears about a 'prolonged economic downturn'. Bernanke is a scholar of Depression-era economic policy, and has tended to avoid his predecessor, Alan Greenspan's tendency to make strong, media-worthy statements.

For Bernanke to posit that we are about to hit an economic wall is big - really big - news. Not surprising news, most of us are feeling the pains both large and small of the constricting economy, but big news nonetheless. It means he's really really worried.

Now, just for a little historical perspective here, before the Great Depression, there were Panics. Throughout the 19th century, periodic panics collapsed banks and local economies on a frighteningly regular basis. Those pre-Depression and Depression era grandparents of ours had good reason to think their money was safer stuffed in a mattress. All too often it was safer there.

Credit was easy to come by in the 1920s, and it fueled purchases of cars, furniture, and rampant investment in risky ventures. There was a short-term spending spree in the US, after which massive deflation occured. Banks became afraid to lend. Heavy downturns in production and construction happened. Companies started laying off workers - at the height, there was 25% unemployment. People stopped spending in order to make their credit payments, which fed the downturn in production and construction.

Aside from the unemployment, and the deflation, it doesn't sound too different from today, now does it? And because of this, the Federal Reserve is being very, very careful.

There's some differences from then to now though, and they are important ones to keep in mind, before you pull all your money out of the markets and banks and bury it in the backyard.

The Fed did not intervene really during the 20s and early 30s, and when it did, it was ineffective. It was not until Franklin Delano Roosevelt took office in 1933 that a turnaround started, and economic policy changed for the better. The FDIC, or Federal Deposit Insurance Commission, which insures bank accounts up to $100,000.00 did not exist yet. In addition, the Securities and Exchange Commission was not created until after the worst of the Depression years.

On top of all that, the dust bowl of the early 1930s, the result of poor farming techniques and a prolonged drought made the food supply, as well as the ability for people in the midwest to earn a living, a complete wreck.

So what about now?

Bernanke and the Fed are deeply involved in creating liquidity in the tightening markets. They are cutting interest rates, brokering deals to keep investment houses from going under, like Bear Stearns, and taking many other actions to keep us from sinking. In addition, like it or hate it, both Congress and the President are taking action to keep the foreclosure ghost towns to a minimum.

The reality is, we could be sinking. But Bernanke, the Fed and even private banks are doing whatever they can to bail water out of our economic boat as fast as they can in order that we can make it to shore. This includes some things that may be unpalatable to those of us who pay our bills on time, such as bailing out irresponsible lenders and borrowers on an individual basis, but on a macroeconomic scale it makes sense. It is better to swim than to sink, and the crisis that faces us is not a small one. If we let people sink on a large scale to punish them for making bad decisions, we will all pay the price.

So what happens next?

No one knows. In my personal opinion, we're in for Bernanke's prolonged economic downturn. I think that we'll see layoffs, people cutting back on their spending even more than they currently are, more foreclosures, and a general lack of economic expansion for a while. It could be the rest of this year, or we might not have bottomed out yet. I'm betting on a year or two of this, but I could be wrong.

So how do I make it through this?

No one - no one - can completely reassure any of us that we won't be affected. But you can do things to protect yourself Live below your means - that means don't spend every dime you have! Save. Pay off debt. Save some more. Work harder and smarter at your job - volunteer for projects, submit ideas, and make yourself more valued. Unless things go really wrong in the workplace, the good ones often survive a layoff. You want to be one of the 'good ones'.

In short, every penny you don't spend, and don't owe, is one penny longer you can keep your own personal economic sphere afloat. Sure, you could run out and spend to inject some money into the economy, but don't. Not unless it's planned and thought out and you know you can do it. As the airline safety movies say, put your own oxygen mask on before helping others.

I know this is scary. We're one year into homeownership, and our debt for our home feels massive. We have only a single car loan that we're paying off aggressively, but between that and the mortgage I often feel pretty exposed. But the only thing we - all of us - can do is keep plugging. And try to remember that every downturn has been followed by growth.

The economy is cyclical. What goes up must come down. But it goes back up too.

Is there an upside to all this?

I think so. There's deals out there. If you've been squirrelling away a downpayment, now may be the time to score a deal while interest rates are low. There's some real investment deals out there, although I'd recommend sticking with index funds and highly rated funds rather than chasing the next big stock. Stores are putting things on sale.

So really, what does it mean?

In short, a prolonged economic downturn means that instead of our financial discomfort and uncertainty lasting a short time, it's probably going to be here a while. That stinks, to put it bluntly. But the spending party had to end sometime, and there are still jobs to be had.

Some good things may come out of this at the end. These types of crises make legislators pay attention to the average citizen, rather than corporate interests. We may see a sea change in policies. And we as individuals might decide that life is pretty good even without a flat panel tv and a new living room set. And those Joneses next door might decide the same.

And at some point, the crisis will end. Will we be wiser? Who knows? But we might be a little saner with our finances, and that would be a very good thing.

I can see clearly now, the rain is gone.....

Monday, April 7, 2008

The Enough Project

I've been doing a lot of reading lately.  I love to read, it's one of my favorite activities.  What's interesting is how my taste in books has changed over the years.  

I still enjoy novels and light reading, but more and more I find myself drawn to more serious topics, like those covered in finance books, biographies, and social commentary.  I've become more engaged in the world around me over the years, and it's impacted my reading list.

In addition to an excellent biography of Winston Churchill that I'm enjoying immensely, I recently started re-reading Your Money Or Your Life by Joe Dominguez and Vicky Robin.  I've read it before, several times.  For some reason, I feel compelled to re-read it every year or two.

It's message is profound.  Central to the idea of the book - downshifting to provide a better quality of life - is the idea of finding the point where you have enough.  

Enough what, you ask?  Enough of everything.  Enough money, enough house, enough possessions....enough.  Dominguez and Robin call it the fulfillment curve.  The point where what you have is sufficient to make you happy, and anything after that is just more stuff to own, maintain, and pay for.   As a society, we've lost sight of enough.  But I'm on a mission to find enough for my husband and I.   

I picked up Your Money or Your Life again because I was thinking about how the last few years have been marked by acquisition.  We've acquired a house, and are in the process of acquiring furnishings and renovation materials.  We've acquired a lot of other things, including intangibles like travel.  Is that an acquisition?  I think so, even though you can't put it in a moving box.

This trend will probably continue for a few more years, as we start our family, and continue to furnish and renovate our home.  But at some point, I expect - and am working towards - slowing our rate of consumption significantly.  This is done in part by making investment purchases - a bed frame that will last us 50 years, good, reliable cars that we pay off quickly,tools for our renovation projects, gardening tools that will be reused year after year, and a home that will hold and increase it's value over time.  We are also putting money into sustainable living measures, such as our garden, fruit trees, and the local food economy, all of which we hope to benefit from for many years to come.  

We spend a fair amount of money, especially since we've bought our home, but in striking comparison to most Americans, we eat out only a couple times a month, and spend little on purchases with a one-time, or limited use - what Amy Dacyczyn refers to as 'disposable purchases'.  

Once we've finished furnishing our home, and completing the major renovations that we have planned, I see a point - even with children - where we'll be putting a lot less into both investment and disposable purchases.  And this is a key part of our 10 year plan.  Our goal is to find the point where we've hit our enough target, and to stay there.  

The one fear I have is that when we hit our current enough target, a future enough target will have supplanted it.  This is the insidious trap of modern culture.  But even though I worry about that some,  I don't think we'll change our target too much.  Because we invest in things that are worth keeping, and that we love.  

My enough project is to find the enough target for us over the next few years.  It's still a few rugs and tools away, but I can visualize a day when we're there.  I don't think we'll ever not acquire things, but I think our rate of acquisition will slow to replacing, rather than adding. Which would be quite an accomplishment indeed.

If you have found your enough point, I'd love to hear from you.  What is it?  How did you get there?  

When is enough, enough?

How Does My Garden Grow Week 2

This week, things are getting pretty crowded in the Moneypenny garden. Enough of our seedlings are large enough that potting them in larger containers has become necessary. The downside of this is that there's not enough room on the table we're currently using as a potting bench/grow table.

So out came another table, and we started moving things around. Because we are running out of space under the grow lights for these larger pots, some of the seedlings (which could now be more accurately referred to as plants - big, horking plants) have been moved upstairs to a countertop in order to get as much sunlight as possible.

I've also started to do one of my least favorite gardening tasks - thinning. For the most part, I put one seed per cell in the seed starting kit, but occasionally I add extras, either intentionally or by accident. Now it's time to get them down to one per container, which means killing off a few innocent plants. Sometimes I repot them and give them away, sometimes they just don't survive getting pulled. I hate doing it, I feel so mean. But it is necessary. 

Our seed potatoes - we decided to plant fingerlings, along with some sweet potatoes that will arrive later - arrived last week, so those will get planted this week, I just need a good flat box to plant them in.  I'm sure we have one in the basement.

The weather is finally starting to get better here in Massachusetts, so I'll hopefully start prepping the garden beds over the next two weekends.  We're still working out what the right spot is.

My garden is growing beautifully....and it's almost time to move it outdoors.

Friday, April 4, 2008

Why Budget Is Not A Dirty Word

It's interesting how people feel about budgets. They either love them or hate them. Even some of the most wallet-conscious people I've come across won't admit they are on a budget. "Oh, we just keep track of how much we spend, and put our savings in automatically" they say airily.

Um, so that's not a budget?


I think budgeting is so touchy because it feels like deprivation. "What do you mean, I can only have $100 of fun money each month? You can't put a price on fun! And don't even think about taking away my_____"

You get the picture. Most people see a budget as setting limits, and who wants more limits in their life?

But a budget can be a great tool, and it doesn't have to deprive you. It can also free you. Here's how it works:

Let's say you take home $3000.00 a month. After paying attention to what you've spent for a bit - and you should, I recommend tracking every dime for a month and seeing where it goes - you come to the conclusion that you spend $2100.00 on fixed expenses such as housing, transportation, utilities, and so on.

That leaves you $900.00 each month to buy groceries, clothes, gas up your car, and anything else you need.

But after a few months you realize that you are cutting it pretty close, what with rising gas prices, the increased cost of groceries and eating out, and a few surprises here and there.

So you take your handy-dandy list of tracked expenses and you think " to squeeze out more dough?" And you make some choices, because you want to save more, or you have too much month at the end of the money, or whatever. The key here is you choose, you decide. And if, after a while you decided that you don't like the changes, you can change it back, or make different choices. It's not locked in stone.

That, my friend, is a budget.

It's really that simple. A budget is a tool. If you decide you want to buy a house in 3 years, and the average home in your area costs $200k, and you need 10% down, you need to save $20k. That comes out to about $556 a month going to the house fund.

Too much? Okay, save less. Or lengthen the window to 4 years. At 48 months, that's $418 a month. Maybe that's better.

The more you track and learn about how you spend, the more you may want to track and learn. Or not, this is also up to you.

But the end result is this: knowing what comes in and what goes out gives you what I like to think of as 'daylight'. It allows you to know your situation. Sometimes that's hard - no one likes to see their warts. But once you know, you can choose what to do next. Even if that choice is nothing.

Much research has gone into proving that people who write down their goals consistently acheive them - at a much higher rate than those who don't. A budget is just a tool to get you to your goals, whatever they are - a second home, private school for your children, early retirement, or just a cash cushion so that you don't have to play 'bill roulette' when your car breaks down.

A budget doesn't have to limit you. It can actually make you more free- because it puts all your choices in front of you.

And then you, and only you, can choose to put a price on fun.

Thursday, April 3, 2008

Thursday Money Tips: Fear Factor Edition

Each Thursday, Ms. Moneypenny publishes 5 money-related tips. If you have tips, please leave them in the comments, and I will collect them for later use in my blog.

This week, I'm focusing the tips on how to address the concerns we all have about the state of the economy, our jobs, and our financial well-being. Here's a few things you can do to help you get through a scary time.

1. Take a step back and focus on something else
If you are in a constant panic about how the economy will affect your income, job and future, it's time to calm down, and do something else. Liz Pulliam Weston offers some tips in her article on when your money makes you crazy:

2. Start a small "Under the Mattress Fund", in cash
While I'm a fan of my money earning money, my husband and I always keep some cash on hand. In an emergency, it comes in handy. Many times you can't get the cash exactly when you need it, like when your alternator dies, and the AAA guy comes to tow you. A bit of cash - no more than $300-$500.00 - on hand can go a long way.

3. Stock your pantry
The next few shopping trips, add some pantry and freezer items to your list. Don't try to buy all at once, just add a few cans or jars or packages to your usual shopping trip. For a truly good approach, do this by checking what products you use are on sale, or that you have a coupon for. This way, you are slowly working your way up to having a supply of food and paper goods and other supplies that you can rely on when times get tough.

4. Look for places you can cut back - now
The hardest part of an uncertain economy is not knowing what will happen next. But by minimizing your outgo, you can affect that uncertainty in a positive way- the less income you need, the easier it is to replace. That said, most of us cannot affect the terms of our mortgage or rent. So look in other places. Hang clothes to dry. Turn off lights when you leave a room. Shop the sales flyers rather than throwing whatever looks good into the cart. Skip the first run movie, get rid of HBO and get Netflix instead. In short, cut now, and it will be less painful.

5. Brush up your resume and network
I'm known amongst friends and collegues as someone who is very good with resume help, and well networked. I've put executives in touch with resources to help them implement systems, helped link up former coworkers with new job opportunities, and helped friends and family put together resumes and find jobs. I don't do this because I want something in return, I do it because I want to help. But in the meantime, I am also building a network of people who would help me if and when I needed it. So if you have a successful person in your life, ask them to edit your resume. Or if they know anyone looking for person with your skills. Or if you can do anything to help them.

What comes around goes around.