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Why young investors should "Stay the Course" and continue to invest

Xin Lu — Fri, 10 Oct 2008 06:25:13 +0000

With the recent upheaval in the financial markets, many individual investors are feeling the pain of shrinking investment accounts. In fact, retirement accounts have lost over $2 trillion dollars in value in the past 15 months. One of my friends says that it seems that every bit of money he contributes into his 401k is gone by the next statement. I understand how he feels, but I believe that young investors should try not to panic in these turbulent times and "stay the course" with their investments.

Right now, no matter what you have invested in in the past few years probably lost value, but if you have an investment plan where you regularly contribute money you would be buying in at a low point right now. It is true that the market could fall further, but your regular investments would buy at those lower points, too. This is basically dollar cost averaging and it is a strategy that has been shown to work even during The Great Depression . If you believe that the stock market would recover some day then buying in at a low point is a good thing.

Another point is that noone knows when we will hit bottom and market recoveries happen just as fast as market crashes. If young investors like me are too spooked to put in any money now or just hold too much cash for a long time then we might miss the recovery and receive returns below the market. Cash is a safe bet, but it is eroded by inflation so holding a disproportionate amount of cash is not the most profitable investment in the long term.

Also, what many people are doing now is to cash out their stock holdings in fear of further drops. I think this makes sense if the cash is needed for immediate use and if you believe the investments you bought will become worthless. However, if you are a long term investor with a balanced portfolio of stock mutual funds then there may not be much to worry about. It has been shown that individual investors in mutual funds tend to have less returns than that of the funds they invest in because they tend to pull out their investments at low points and buy in later at a higher point as an emotional response. So if there is no need for the money and you believe that in the long term stocks will recover then it may be best to leave it alone even though it is stressful to see your nest egg shrink.

In addition to staying the course and continuing to invest, this could be a great time to diversify your investments since nearly every asset class has fallen in value. If you are heavy in stocks then you could look into some real estate, commodities, or bonds. The goal is to have a well balanced portfolio that you understand, and eventually the current bear market would seem like just a bump in the road.

Permalink | 10 comments | Xin Lu's blog | Channel: Personal Finance, Investment

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What Makes You the Expert?

Linsey Knerl — Fri, 10 Oct 2008 03:10:28 +0000

By Linsey Knerl

Bloggers get flack sometimes. Even here at Wise Bread, we get the occasional, “Who died and made you the King of Frugality?” rant that leads us to continually examine the quality of posts we offer our readers. But perhaps the most enlightening part of writing for such a richly diverse audience is the genuine sharing of knowledge – one that allows for us to learn as much as we teach.

With every claim to a financial expertise, there are some important things to consider:

We are all human. Textbooks cover economics in a theoretical sense, and for the most part, these theories hold true. What the textbooks don’t take into account is the element of humanity, personal decisions, and the feeling and emotion that make up most decisions of a material kind. Love, in particular (or the desire for it) can cloud the judgment of even the most educated economist. Why am I saying this? Because I have known and respected many self-proclaimed financial “experts” who were successful in their finances, until a sticky personal situation came along (like lending money to a relative, divorce, etc.) They were no more able to handle it than most financially-illiterate people.

You can’t sell it ‘til you’ve lived it. A good friend of mine and her family were recently featured on a national talk show in order to get tips from a frugality expert. The expert studied her lifestyle, and suggested some hacks to help stretch her grocery budget a bit further. The entire scenario played out on TV, and I was able to watch my friend’s smile fade as she listened to the “expert” and her tips. Many of the tips were atrocious, and sounded great in theory, but I could tell that this woman had never actually tried most of them (or attempted to make children go along with it.)

I’ll admit that tough times do call for tough measures, but my friend was far from destitute. Instead of getting tips for using coupons, hitting sales, or making her stuff last longer, she got one-size-fits-all cheats for the very, very poor. (And the “expert” seemed far removed from the advice she was dishing out.)

Economy is relative. One thing that I have learned from writing here at Wise Bread is that my economy is not my neighbor’s. Assuming that my rural, farming family can follow the same tips as my fast-driving city friends, it doesn’t mean it will always be. We’ve seen commenters from all over the world that see U.S. values as something to be desired (or in some cases, something to be avoided.) This will affect how our “expertise” is received, and we must always be sensitive to others in this manner.

A good track record speaks volumes. Some of my favorite financial experts have years of experience behind them. They have not only maintained a successful financial picture, but often times they have come from nothing, only to rise above it. They have grown. They have met the challenges. They have been encouraging in their message. Mary Hunt, Suze Orman, the late Larry Burkett, and Dave Ramsey (among others) are popular, not because they have fantastic PR reps (although that helps), but because they have proven themselves. And their message will stick around as a result.

Nothing says it like a testimony. I see more and more “experts” popping up on talk shows, newspapers, and blogs. I am always on the lookout for something that gives credibility to their message. Many of them have really slick websites, have been featured on talk radio, and even speak at sold-out events, but have they ever really helped anyone? Those experts that can provide me with a testimony (or twenty) are the ones I will trust the most. To know their techniques are proven is a must!

Experts are everywhere. Believe it or not, most of us are an expert in something. If you’ve overcome incredible debt, raised a large family on a limited income, put yourself through college, or started a successful home business, you ARE an expert in finances. Regardless of how many talk shows you’ve done, you do have something positive to offer the world. If you heart is in it, and you have a desire to help others, I encourage you to share it!

The world can’t have enough of these kinds of experts.

Permalink | 9 comments | Linsey Knerl's blog | Channel: Personal Finance, Frugal Living

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How to Financially Educate Your Children

Nora Dunn — Thu, 09 Oct 2008 01:42:49 +0000

By Nora Dunn

You have the power to create and mold your child’s financial imprint. It is through your own actions, discussions, and attitudes towards money that your children will develop habits – both good and bad – that will carry them through and last a lifetime. They won’t learn it from anybody else; finances are not taught (at least not thoroughly enough if at all) in schools, and nobody else is going to show them how to succeed in life and avoid the huge financial pitfalls that lurk around every corner.

So do your child a favor and give them a huge helping hand! Here are a few ways you can help them create a healthy relationship with money:

Don’t Bribe Them with Money

By offering money as a reward for good behavior, your kids will learn that money is an end, instead of a means to an end. Try rewarding them with tangible life-enhancing experiences which the money would buy, like taking them to the movies, or out for a family lunch. Better yet, you can reward good behavior with things that don’t require money like having a sleepover with friends.

Go With the Flow

If your child wants to count the coins in your purse, let them. Use the opportunity to help them understand what each coin is worth and their relative value. You may even help them identify what each coin can buy (if anything). If they receive birthday money, then talk about the benefits of opening a bank account. As money works its way into your child’s life (and it will), use the opportunity to talk to them about it.

Allowances: Stick to the Plan

If you give your child an allowance, be exact and consistent with the amount and timing of each payment. This will get them used to timing and managing their income stream, as they will need to do when they later have jobs and careers.

Allowances and Pocket Money: Pay Yourself First

The best way to get your kids into the habit of paying themselves first is by doing it right from the beginning. Discuss long-term and short-term savings, and encourage them to put at least 10% of their allowance either in a bank account or even a piggy bank. The piggy bank option will require additional discipline (on their part) not to delve into it for candy, and could go two ways. On one hand, irresponsibly accessing their long term savings (maybe they are saving up for a video game) may affect their ability to reach their goals; a great lesson to learn - the hard way - early on in life. Then again, using a bank account instead may take just enough of the impulse urges out of their hands to help them achieve their goals and feel the satisfaction of getting that video game after saving up for it.

Put a Positive Spin on it

Even if you don’t have a positive attitude towards your own money matters, don’t allow your children to inherit this unhealthy disposition. Don’t let them associate money with anxiety or stress. Instead, teach them practically how money can help achieve their goals and get the most out of life through avenues like creating financial independence, creating a better world with charitable contributions, and even giving it to loved ones. Again try to stay away from the idea that money is an end or is happiness in and of itself; instead show how money can be a conduit to positive things.

Talk About it, Lots!

Money is not a taboo subject, even though we may have been raised to believe it is. If you aren’t comfortable telling them how much money you personally have in the bank (either because you believe you are not a shining example or because you simply don’t want to), then that’s okay. But when your child asks why you can’t go to Disney World, this is an opportunity to discuss the household’s budget, the cost of living, vacations, and entertainment. Involve them in the family finances, and they will learn to take ownership naturally – a skill that will take them through life.

Money Milestones

Involving your kids in the family budget when they are only three years old may be a bit of a stretch. (!) Instead, consider these money milestones as a way of incorporating finance education seamlessly into their lives.

Coins

When your kids start to become curious about pretty coins and money in general, educate them as to the value of coins and what they can buy. It also makes a great lesson in math: start with pennies as building blocks, then introduce higher value coins as their numerical repertoire increases.

Bank Account

As soon as pocket money and birthday gifts start adding up, take them into the bank to open an account. There are lots of child-friendly accounts out there, so make sure you actively involve them in the process. They will derive great pride from having their own account. This is when you start to discuss the concept of earning interest on savings.

Budgeting

Now that they have a bank account and the ability to save up for things, it is time to start budgeting. If they receive an allowance, hopefully they are already paying themselves first and putting away at least 10%, as with money received as gifts.

They are also probably talking about toys they want (like video games). So help them budget for it! With pen and paper in hand, help them construct a budget by determining how much their toy costs, figuring out how much they currently have, and calculating how long it will take them to save up for it. Seeing the plan on paper may encourage them to save more than just 10% towards their goals, depending on how motivated they are. Again, this is a great exercise in applicable math.

Extra Income

Let’s say your child is now motivated by their budgeting goals, and eager to reach them sooner. You could consider paying them extra pocket money for additional chores performed (they call this “overtime” in the working world, and it is outsourcing for you!), or help them if they want to earn money entrepreneurially. Teach them good business principles if they come to you wanting to open a lemonade stand, and help them to launch their enterprise successfully, starting with a solid business plan.

Investing

As your child continues to understand and appreciate the delayed gratification of saving and budgeting, and has a good handle on the interest their bank account earns, they may be ready for something more. Talking about various investments is the next step. A small lesson in big business and stock investments could turn into a game, as they follow the share price of companies they are familiar with, like Coca-Cola, or Disney. Although having them invest their hard-earned pennies in the stock market is not recommended just yet, you could set up a mock investment account, and get them to follow the value of their money along with the stock (again, a great lesson in applicable math). Even if they forget about it for a while, a reminder a year or so down the road that they had “money” invested and what it is now worth may lead to a pleasant surprise about market growth; or conversely a rude awakening about market downturns.

Family Finance

As your child gets a good grasp on the above financial matters (they will likely be in their teenage years by now), it is time to involve them actively in the family budgeting and finances. Help them to understand what their own short term and long term goals are, such as the cost of higher education (even if you plan to pay for it), and eventually getting a car (or conversely what their alternative transportation options and costs would be), housing, and the cost of getting set up comfortably to live on their own (and hopefully, before the age of 35)!

When it comes to family vacations, involve them actively in the process, by working out with them the cost of various vacation options and funds available, and then decide together what the family would most enjoy doing. Budget together for excursions and souvenirs, and your kids will take ownership of the trip and learn to appreciate the experience so much more. Not only that, but they will be much less likely to try to guilt you into unreasonable expenditures since they already know what the budget is; they may even help other family members to stay on track!

You may not see yourself as the world’s best financial example. But this is no reason to sit back on your haunches and do nothing; in fact this will only increase the chances exponentially that your kids will follow suit! Instead, be prepared to come clean with your own mistakes, and celebrate your victories, in order to help your kids learn from you and start their own financial lives on the right foot.

Permalink | 8 comments | Nora Dunn's blog | Channel: Personal Finance, Life Hacks

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Lentil Love: How to Sex Up a Simple Staple and Save

Myscha Theriault — Wed, 08 Oct 2008 18:35:13 +0000

By Myscha Theriault

Let's face it. Lentils aren't usually a food that folks write love songs about, at least in this country. But for price and nutrition, they're pretty tough to beat. Bonus? They don't need a lengthy pre-soak and slow roast like some of their larger bean counterparts. Also, in many parts of the world they are prepared in ways that are so flavorful, we as Americans might not even recognize them. After test driving the Indian lentil soup (yum) from the nearest Sweet Tomatoes restaurant here in the St. Petersburg area, my interest in exploring these little nuggets of nutritional thrift was renewed.

What's to love about lentils? Well, they're dirt cheap, pack a powerful nutritional punch, and are incredibly versatile. Worried about only having access to brown ones? They come in a variety of colors, making them suitable for customizing a meal for visual presentation. And as I mentioned above, they cook up much more quickly than their larger bean relatives, making them ideal for those nights when you are short on time to prepare dinner. So, how do you make them sexy? Here's a break down.

DIPS AND SPREADS.

Looking for an alternative to hummus with your next batch of pita crisps? This affordable recipe mixes pureed lentils with split peas and ethnic seasonings, resulting in an unexpected alternative to onion dip. With split peas being right up there with lentils on my list of rock bottom cheapies I'd like to do more with, I was happy to see them used for something besides my stand by pea soup. Bonus? If you're into vegan, this fits the bill. Here's another link to a spicy lentil pate using coconut and cayenne. A couple of other interesting finds were lentil butter (great for a sandwich spread or hummus substitute) and this recipe for lentil tepenade. Here's another link for reasonably interesting lentil spread.

SOUPS AND STEWS

My previous experiments with lentil soups were hum drum at best. The recent taste test of the Indian lentil soup at the nearest Sweet Tomatoes restaurant renewed my enthusiasm. While I'm still in the process of tracking down a copy of that particular recipe, here's a great Moroccan one from a fun little blog that Linsey turned me on to, and an interesting sounding French version from Chow.com. The most interesting sounding Indian one I've found so far is this one using lamb and served with zatar-seasoned dinner rolls. A few others I found of note?

For pure intrigue and “I've got to know what that tastes like” factor, This Jamaican lentil and coconut soup fits the bill. So does this one for eggplant lentil stew with pomegranate molasses.
Here are one or two directly comparable recipes to a pureed yellow lentil soup that was always one of my favorites to order in Kuwait. Great with lemon wedges and some DIY sumac and pita pocket croutons. Feeling like something slightly more Syrian? Here's a link to a red lentil version as well.

SIDES AND SALADS

How do you turn a pile of dried legumes into a side dish you can serve with confidence? For starters, making a pilaf is really a super simple way to add a little protein and pizazz to a very basic side dish. A few brown lentils and grated carrot with some basmati, parsley and chicken stock in the rice cooker and you've got a scoop-able one dish dinner side you don't have to tend to. But really, that's just the beginning. There are many other options out there, both for hot sides and chilled salads.

Some ideas for sides?

How about this unusual idea for lentil bread, or curried lentils with sweet potatoes? A few others that made my list are herbed lentils with bacon, cauliflower-lentil curry, Ecuadorian sauced lentils, and this recipe for spicy red lentils courtesy of the Mayo Clinic.

Are salads more your speed?

I had quite a bit of luck researching these, finding Mediterranean, Southwestern, German, and quinoa-lentil combo salads. I also found a couple of meal-worthy lentil based salads, including this one for warm lentil potato salad with roasted garlic vinaigrette.

THE MAIN EVENT

Believe me, nobody was more shocked than I to find so many ways to take these things center stage at meal time. Seriously, who knew? In fact, with all the options available, I started to notice some category patterns in the way you could serve them.

As an entrée stuffing.

Personally, I think this is one of the sexier ways I saw them used. Some specific examples? Bulgur and lentil stuffed tomatoes with a yogurt garlic sauce, as an alternative to rice in stuffed peppers, and here in a recipe for baked sweet potato and lentil stuffing.

As a burger or salmon patty alternative.

Again, I have to come clean here. I went into this thinking I'd be lucky to find one or two recipes that weren't tasteless, not to mention visually frightening. I'm happy to report, I was pleasantly surprised. I'm not saying it was an easy search, mind you. There were some seriously terrible ideas out there in internet land. That being said, a few ideas for lentil based patties managed to make their way to the top of my list.

For starters, this resource for a spinach and bean combo patty caught my eye. So did this one for spicy black bean and lentil burgers. Overall though, I think the award for the most colorful, can't wait to try it recipe goes to this recipe featuring yellow lentils, Thai chili peppers and ginger root. Here's an extra one for those on a low glycemic index diet.

Lentil loaf.

Boy, do I know what you're thinking. Lentil loaf. It's hard to even say the words without sounding like you have a ten ton weight on your shoulders. I think one of the things that helped me embrace this idea a little more was knowing from personal experience with other legumes just how effective the right sauce and seasonings can be. The list of links to recipes I felt showed any promise turned out to be quite sparse. Here's a link from Taste of Home, a source I trust for down home flavor. On the upside, the other categories have some yummy sounding options I did not expect, and as a result I have some modification ideas lined up to try. I'll keep you posted.

As a direct bean equivalent.

What I'm talking about here is the use of lentils in ways that you would also use any type of larger bean. Baked in a crock and served with biscuits, as a main chili ingredient, in a burrito, served over rice, whatever.

Make it a co-star.

Lentils make an excellent filler and pair well with other main ingredients to take center stage on the dinner plate. For example, how about this Moroccan meatball and lentil bake, or this spicy South African recipe? I was also excited to find this recipe for traditional Egyptian kosherie, a dish I fondly remember enjoying with a fellow international teacher after a night of bargain shopping in the old souk in Kuwait City. Don't forget the hot sauce though, if you want it to be truly authentic.

A FEW OTHER TREASURE TROVES FROM AROUND THE WEB

While much of my research resulted in large data bases comprised of every tasteless soup recipe featuring brown lentils, water and salt known to man, there were a few little golden nuggets of hope. My top three picks? A collection of slow cooker recipes for lentils, a great break down of one couple's favorite lentil recipes (including great pictures), and this resource from VegWeb.Com.

And, if meatless in general floats your boat, we have a number of resources right here on Wise Bread, featuring tofu, TVP, general meatless dishes and making your own soy products from the raw bean.

Hope this was helpful, folks. As inexpensive as lentils are, it would be a shame not to at least try to incorporate them into your family meal plan a few times a month (or week, if you're feeling adventurous). Now that I know how many appealing options are available, I'll be using these little budget beauties way more often. Got some suggestions or tips? You KNOW how I love to hear from you. Share the love, as usual, in the comment section below.

Permalink | 22 comments | Myscha Theriault's blog | Channel: Food and Drink

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Inflation is going away for a while

Philip Brewer — Wed, 08 Oct 2008 15:14:20 +0000

By Philip Brewer

For a decade, starting in the mid-1990s, the Federal Reserve kept interest rates too low and expanded the money supply too quickly. Their theory was that, as long as consumer prices were stable, they must not be creating too much money. We now know that they were wrong.

Confused by the way globalization held down consumer prices, the Fed printed us up a metric truckload of inflation. It showed up in house prices, stock prices, oil prices, grain prices--pretty much all prices except the prices of stuff made in low-wage countries and imported into the United States. Unfortunately, those prices are a major component of the CPI--and particularly of the "core" CPI (consumer prices excluding food and energy).

Starting in late 2006 and accelerating in late 2007, though, that inflation started spilling into consumer prices as well.

The US (both the government and individuals) had borrowed huge amounts of money. Between that and the rising inflation, holders of dollars were beginning to think that maybe they didn't want all their cash in dollars. That put downward pressure on the value of the dollar, which pushed up the prices of just about everything (because the US imports just about everything). Prices soared--oil, wheat, milk, corn, anything traded globally got more expensive: This was a decade of excessive money creation by the Fed finally showing up in prices.

Just as this was happening, though, the Federal Reserve seemed to lose its mind. Instead of raising interest rates to curb inflation, it started cutting rates. Pointing to the "core" rate of inflation, which barely budged, the Fed suggested that deflation was a bigger worry than inflation.

The verdict is still out on that, but there's some new evidence that the Fed is right.

First, prices of global commodities are falling. In just the past few months:

So, what's going on? There are several forces at work, and they're currently feeding back into one another.

US as a safe haven

The same people who had decided that, in view of the US trade deficit and budget deficit, they didn't want to hold so many dollars have changed their tune. If the economy is going to melt down, maybe the US isn't such a bad place to have some wealth. The US has a strong tradition of sound banks and other financial institutions. In addition, it has seemed much more willing these past few weeks to take aggressive action to protect its financial system than some other countries.

With more demand for the dollar, it has been rising against foreign currencies. A stronger dollar means lower dollar prices for global commodities.

Leverage

During the huge spike in commodities, many investors piled on, trying to make money on what was obviously a long-term upward trend. Many of them did so with borrowed money--and many thought that the dollar would be the cheapest currency to borrow, because dollar interest rates were low and the dollar was falling.

Now, with the dollar rising, many of those investors are moving to unwind those transactions--selling their commodities so they can pay off their dollar debts now, before the dollar moves even higher. That pushes commodities down and the dollar up.

Economic slowdown

Less business activity means less demand for basic commodities, leading directly to lower prices.

Producers of basic commodities will obviously see lower profits. Other businesses are facing lower profits as well, even though some of their inputs are shaping up to be cheaper, simply because of falling demand due to the general economic slowdown.

Notice that these forces emphasize one another--any sort of economic stress makes the safe-haven aspect of the US look more attractive, anything that makes the US look more attractive raises the value of the dollar, and a higher dollar pushes down the price of commodities, producing more economic stress, and so on.

What about inflation?

Just as higher commodity prices looked like inflation, lower commodity prices look like deflation.

I think there's a long-term trend toward higher commodity prices, simply because rising demand inevitably runs up against limited resources--oil, fresh water, arable land, etc. Because of that, I think declines in commodity prices are going to be temporary. Even so, prices might stay down for a considerable period, if the economy remains stressed for a considerable period.

I was one of those who, a few months ago, thought the Fed had lost its mind. Cutting interest rates just as inflation was spiking up to generational highs seemed like exactly the wrong policy. I've changed my mind. I certainly don't know if the Fed's policy is the right one, but I no longer think it's an insane one.

Vast amounts of "money" have simply disappeared: the illusory wealth of the housing bubble, the mortgage-backed securities based on it, and the paper assets based on those. The destruction of that "money" is hugely deflationary. The Fed is trying to create enough money to offset that destruction. The problem is that they have no way to know how much money to create. They're walking a tightrope, with a deflationary depression on one side and hyperinflation on the other.

The Fed is clearly inclined to err on the side of inflation, simply because they know how to cure inflation. Only incredible luck would produce a soft landing at this point. The Fed is aiming to produce a modest amount of inflation--confident that, if it manages that, it can bring the inflation back down once the economy is out of danger. In the short term, though, I think the risk of inflation has fallen quite a bit, simply because so many people want to hold dollars.

Since the Fed is trying to create some inflation, I don't expect this situation to persist for long--I wouldn't get rid of your inflation hedges--but don't enter into transactions expecting inflation to bail you out, and don't be surprised if we see some of the price hikes of the past few months suddenly reversed.

It's a scary situation, and it's not very comforting to realize that the central bankers are just as scared as we are.

Permalink | 14 comments | Philip Brewer's blog | Channel: Personal Finance

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Life Without Television

Andrea Dickson — Wed, 08 Oct 2008 00:26:44 +0000

By Andrea Dickson

I haven't owned a television in over 7 years. I haven't lived in a house with a set in over 5 years. I spend my days largely television-free, and I actually like it.

This isn't to say that I don't watch some television shows over the internet. I have to get my Heroes fix somehow (and Stephen Colbert; I'm sorry, I have a huge crush on the man). But as someone with an addictive personality, I've found that keeping myself away from the boob tube has kept me happier and healthier. While saving money on a cable bill is a good impetus for some people to cut the cable, I already pay $30 a month for internet, and cable wouldn't cost me that much more ($5).

For me, it's not about the money, at least, not directly. It is about the following:

1. Time not spent watching really stupid crap. I'm the kind of person who can veg in front of the television for hours. I'll come home from work, plop down in front of the TV, and before I know it, it's midnight, and I'm rapidly losing IQ points watching local news - nothing is worse than local television personalities. And that's just with basic television! I shudder to think what would become of me if I had something like HBO. I'd become one with the couch, literally, within a few days.

2. I live by my own schedule. Not having a glowing television beckoning to me allows me the freedom to, say, go on longer walks in the afternoon with my dogs. What's the rush to get back inside, after all? Sure, I've got a nice house, but there are no shows that I need to watch. I frequently run into neighbors and acquaintances, also walking their dogs, who would love to chat, but have to get back to the house before Ghost Whisperer or whatever comes on. Sure, you could argue that I could still live by my own schedule if I had a TiVo or other DVR, but the truth is, I'd still be a slave to the shows I recorded.

3. The joys of radio. I've always liked radio better than television, and I'm happy to live in an area where we have a good public radio station. My hometown public radio was mostly classical music, and as nice as that is, I enjoy talk radio - news, interviews, stories. In the same way that books allow your imagination to run wild (in a way that movies or television don't), radio gives you the words and the freedom to create scenes in your mind. I like that, and I appreciate being able to enjoy a medium that doesn't require more than one of my senses at a time. With the radio on, I can listen to the news and cook dinner at the same time without taking my eyes from the stove. I've listened to the presidential and vice presidential debates on the radio this year, and find it to be a more than adequate way to take it all in (mind you, I did miss all of the Palin-winks and the frighteningly bright-white Biden teeth, but still).

4. The joys of reading. I really do enjoy falling asleep in front of the television, but since I don't have one, I like to read in bed until I'm sleepy. Usually, I don't get more than a half hour of reading in before I start to doze off, but I can get through one book a month that way.

5. The joys of the internet. I really do love the internet - it's where I get the majority of my news, entertainment, and extracurricular writing. I can watch movies online through Netflix or Hulu, or on my DVD player in my laptop. I've never been one to tout the big screen experience - to me, seeing a movie on a small screen is just as rewarding as seeing it at the theater. However, watching a movie on my laptop while lounging in bed is not nearly as comfy as watching one on a television from my couch. The result is that while I do catch some TV shows, I watch many fewer than I actually would if I had a TV set up in my living room.

6. No remote controls. I used to get frustrated with my mother's refusal to accept new technology, but I have to admit that the multitude of remote controls in your average living room is baffling to me. Every time I watch a movie at my sister's house, setting up the television, DVD player, and sound system ends up feeling as complicated as performing a live concert. Remote controls are passed around the room like batons as we try to get the picture, balance, and volume JUST right. And one of the remotes is ALWAYS missing. In my house, I don't have a single remote control. Hey, it's hard enough to find my shoes and keys in the morning.

The downside:

I never know what people are talking about when they make inside jokes featuring plotlines from The Office or South Park. I don't watch these shows online because they don't interest me, but if I had a TV, I probably would watch them. So then I would know what people were talking about. But then again, I'd probably never leave the house.

I eventually have to explain why I never have a grasp of pop culture, and I hate sounding like one of those self-righteous jerks who never watches TV. I don't avoid TV to be more high-falutin' than other people - it's just better for me, overall, if I don't.

I can't invite people over to watch TV; this is a big season for debate parties, and I can't host one, because no one wants to sit around the radio with me and imagine how angry John McCain looks. Also, watching television or a movie is a nice way to end a date, but I have to skip that and go straight to the making-out part. Awk-ward.

I almost never see commercials. And commercials are a lot smarter than they used to be. The internet-TV commercials are exceptionally tame.

A picture paints a thousand words. Sometimes, descriptions of events simply can't tell the story the way footage of a suicide bombing or a miraculous rescue after a natural disaster can.

Do Wise Bread readers watch TV? Do you think it's worthwhile for you and your family?

Permalink | 58 comments | Andrea Dickson's blog | Channel: Frugal Living, Lifestyle, Technology

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The 10 Things I Won’t Give Up Just To Save Money

Julie Rains — Tue, 07 Oct 2008 13:00:38 +0000

By Julie Rains

Times are tough and they may be getting tougher as inflation and unemployment rates rise. There are 10 things that I could cut out of my expenses to save money right now but these measures will likely cause my earning power to shrink and my cost of living to rise in the long term. I’ll share my plans for spending, my ideas for cutting back, and so, you won’t think I’m frivolous, my list of things I never bought in the first place.

10 things I won’t give up:

1) Internet access. The Internet has freed me from the limits of my local economy, which has been burdened with layoffs from R.J. Reynolds Tobacco Co., Hanesbrands, and Wachovia. It has allowed me to eliminate yellow-page and other forms of advertising in favor of a website and network of contacts that range from bankers, teachers, and sales reps within a 10-mile radius to engineers in Honduras, designers in New York and California, and property managers in Washington, DC. And, my Internet access enabled graduate-level distance studies in journalism, and a freelance blogging job with Wise Bread and Parenting Squad.

2) Good food. I know I could save money at the grocery store if I just bought regular peanut butter or high fructose corn syrup orange drink rather than natural peanut butter or real orange juice, but I want to consume the good stuff and avoid what I am pretty sure won’t be healthy for me. My goal is to stall the onset of disease so I can save healthcare dollars and be healthy enough to work productively for many more years.

3) Fitness expenses, which now consist of a gym membership and athletic gear, such as running shoes, Barracuda goggles, moisture wicking apparel, and concentrated carbohydrate gels.

For a while, I opted for cheaper alternatives that didn’t require planning or a membership fee, such as running and walking in my neighborhood. I also used a stationary bike and home gym. These were good options for a while but I didn’t really maintain a good fitness level as it became difficult to measure my progress. When I realized that I could start facing some serious health problems, I decided that the expense of the gym (in my case, a family membership at a nearby YMCA) was worth it. Having access to resistance training equipment, indoor and outdoor tracks, indoor pool, group classes, and more helps keep my workouts interesting. After a decade hiatus, I am now back to community road races and bike rides.

4) Health insurance. I have a high-deductible policy primarily to avoid having to sell investments in order to pay for a catastrophic health event. The policy itself isn’t particularly useful in covering day-to-day healthcare expenses though I do receive pre-negotiated discounts on medical services.

5) Cancer Screenings. The cost for these range from free for an annual skin cancer check offered on a limited basis by a local dermatologist to $50 or so for a yearly mammogram and $1,500 for a colonoscopy every 5 years. Treatment should be much less expensive in the early phases than in the latter.

6) Dental Care. My childhood dentist didn’t use novacaine when drilling so avoiding the dentist has often seemed like a rational way of saving money, time, and stress. But repairing dental problems can be pricey compared to the expense of regular cleanings, check-ups, and ultrasonic toothbrushes. And since underlying health problems can be signaled by problems in my mouth, it makes sense to get looked at (even for a moment) by a dentist. For inexpensive care, use services offered by area universities or community colleges with dental programs.

7) Dinner with the book club. Once a month, I gather with a few friends (all moms with teenage sons) to discuss our latest selection while dining at Panera Bread, where a sandwich, salad, and/or soup are somewhat extravagantly priced compared to home-prep expenses. Though we’ve considered other sites including our own homes, we haven’t yet strayed from this choice: no one has to ready her house and the folks at Panera allow us to sit and talk for hours. We meet for dinner on un-crowded Saturday nights and stay until closing. The social connections, divergent perspectives shared in a supportive environment, enlightenment regarding literature and teenage culture is invaluable, and cheaper than talk therapy (though please visit a licensed psychologist or psychiatrist if you need help).

8) Kids’ activities, now consisting of junior varsity football, scouts, and church youth group. Despite one child’s athletic injury (a $600 wrist fracture, making me realize why orthopedists are prominent sponsors of the football team), these activities are some of the least expensive available. Summer camps run a few hundred dollars and most outings typically require the cost of food and just a few dollars more. So, I am not planning on cutting these relatively minimal expenses for what I hope will yield dividends in the future, namely strong men and someone to pitch my tent when we go camping on vacation.

9) Chocolate and wine. There are some indulgences I refuse to give up. As my eighty-something dad says (paraphrasing Clement Freud’s wisdom), if you give up what you enjoy, you don’t live longer, it just feels longer.

10) Annual vacations. Getting away from my routines and having novel experiences is essential to my well-being, physically and mentally. And, according to research, vacations may help prevent cardiovascular disease.

10 things I never bought in the first place:

1) Lottery tickets. The lottery came to my home state of North Carolina a few years ago but I haven’t yet bought a ticket. It’s not that I will never, ever buy a ticket but I haven’t yet and now doesn’t seem like a good time to start. (For a lottery alternative, see Philip's post on generating a windfall).

2) A larger car than I need on a day-to-day basis. Yes, I would love to be able to haul gear around on the bed of a pick-up truck or take a vanload of kids to the swimming pool. In some cases, not having the larger car has cost me more (because I have had to buy supplies on the road or take 2 cars so that kids can be seated safely) but in general, I have saved on the initial cost of the car, insurance, property taxes, and gas.

3) Private school tuition. My kids are doing well in their district-assigned public schools and if they weren't, I would consider alternatives such as charter schools more suitable to their needs, tutoring by a professional or me, and/or the guidance of an educational psychologist. I just can't see justifying $10,000+ per year per child for private school.

4) Extra pairs of shoes for the kids. For most of their lives, my kids have had just one pair of shoes: a pair of sneakers for school, play, and nearly every social occasion. Old pairs were saved for use as river shoes on canoeing trips. There are exceptions that require a change in strategy. When a formal event is on the horizon, I wait until close to the big day to make sure that whatever pair of shoes I secure will still fit. Now that they're older, I have gotten them flip-flops or fake Crocs to wear to the pool; fortunately, these type of shoes are not as size sensitive as sneakers or dress shoes, and so have lasted multiple seasons. For hiking boots, I snagged a great deal on functionally great shoes in an unusual color from Lands' End overstocks or bought sneakers with super-duper treads.

5) Mortgage payments on a too-expensive-for-me house. Though I have, at times, regretted not spending more on a larger house that might have increased in value more rapidly than the one I am in now (my home's tax value is less than the median price in my town), I am pleased with the affordable mortgage payment.

6) Cleaning supplies. I’ll admit it – I am not a good housekeeper. Cleaning supplies for anything other than laundry, dishes, and certain parts of the bathroom, are rarely on my weekly shopping list. Soap and water seem to do well; and now that someone I trust has proven its efficacy, I am going to spend my cleaning money on baking soda.

7) Entertainment. I’ve always chafed at the cost of movies and some live shows, considering that there are usually free or cheap alternatives, funded by corporate sponsors, local groups, or my public library.

8) Expensive trips. Though I insist on annual vacations, they haven't typically been luxurious ones. And now that I've started bike riding, multi-day events with tent or gym accommodations appeals to my sense of adventure and frugality.

9) New wardrobe every season. I wouldn’t mind updating my closet more often but I don’t have a great fashion sense and rarely have face-to-face meetings with clients so my fashion clothing needs are minimal. I try to buy classic clothing that lasts nearly forever.

10) More enriching activities for the kids. If you're a parent, you'll know that there are loads of activities for kids. Fortunately for me, my kids don't beg to be signed up for lessons though I wouldn't mind partaking in martial arts, cooking school, and horseback riding. Putting a limit on these saves at least $50 each month plus gas money.

10 things I am considering cutting out or changing:

1) Using a clothes line to dry my clothes (It took 3 days for 3 t-shirts to dry but I am hopeful that the right combination of clothes and lower humidity in the fall will bring faster drying.)

2) Cancelling the newspaper (Reading the paper has been my morning ritual for years but now that the paper is trimming its print offerings, I am considering eliminating this daily habit altogether.)

3) Growing a garden (Right now, I have chard and blueberries but would like to learn how to have a real vegetable garden.)

4) Turning back the heat and air conditioning, depending on the season

5) Baking, not making, homemade gifts

6) Camping rather than staying in vacation rentals or hotels on vacation

7) Consuming cheaper sources of protein (such as applesauce protein bars found in my clean eating post)

8) Shopping more at consignment stores, discount stores, and Goodwill

9) Learning how to landscape my yard (My yard needs some work so, even if I hire a professional, I'd like to get a better handle on what I should and shouldn't do; community college classes are great for this type of information.)

10) Organizing my space (I am one of those people who need to get organized in order to avoid buying tools or other rarely used items I already own.)

So, now you see my priorities, which likely differ from yours, and my feelings about false economy, that is saving money on the front end only to have to spend more later. Feel welcome to consider my list as you ponder yours.

Permalink | 44 comments | Julie Rains's blog | Channel: Frugal Living

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Penny Pinching Ways to Pimp Your Garage

Myscha Theriault — Mon, 06 Oct 2008 17:13:46 +0000

By Myscha Theriault

When you open your garage door, does it look more like the room of doom than a place to park your car? Do piles of culch abound, preventing you from laying your hands on that oh-so-needed tool? Holiday decorations taking up the corner where you can only dream of a humble work bench? Are teenagers in training constantly thwarting your efforts toward a more streamlined man cave? Guys, this one's for you. Here are eleven frugal garage pimping tips for the organizationally challenged.

Ceiling racks.

These are a huge help and perfect for those items you only access seasonally, such as holiday decorations. They come in a variety of styles and save your wall space for those items you need access to on a more frequent basis.

Peg board.

Available for cheap at your local home hardware box store, this stuff is easily attached to wall studs, and can be loaded with hooks to keep your hard to store items in plain sight. Wanna set the teenager in your life up for success? Trace hammers and other tools in black marker exactly where they hang on the peg board. The outline will be there to serve as a reminder to return the tool to its precisely allocated spot.

Wall organizers.

Wire baskets, wall hanging units for smaller screws and nails, and vertical bike racks all come to mind here. Basically, you just want all the precision storage you can get for those tougher to streamline storage categories.

Rolling industrial shelves.

My love affair with industrial shelving has been well documented. I think this stuff is particularly well suited to the garage however, because of the abuse that anything in that room is generally required to take. This is the kind of storage infrastructure that can take a licking and keep on ticking. Bonus? The wired version allows the bulk of the dust and debris to float directly down to the floor, making it easy to vacuum up. If you have some heavier items like air compressors or generators you want shelved, I've seen industrial strength shelves up to that level of task affordably priced at Harbor Freight.

Keep everything off the floor.

If you are following the tips above, this should be easy. Keeping everything off the floor via wired storage items and wall units makes routine push broom sweeping and power vacuuming a breeze.

Bins.

See through ones are great. But for pure durability, I'm in love with the galvanized steel ones you can pick up at Lowe's. They are rectangular, can be stored easily and look like those old fashioned ones that used to slide in and out of the smaller cage style lockers in gym class growing up. Of course, you could go round and shop at a farm goods store. Either way, galvanized storage containers are affordable and stand the test of time. Bonus? They make great ice buckets at a back yard barbecue. Some ways to use them? Storing jump ropes, baseball gloves, soccer balls and sports equipment in general. Gardening paraphernalia would also be a good candidate for bin storage.

Zones.

One of the easiest ways to keep things from getting chaotic again is to keep all categories of items in their assigned zone. For example, all sports equipment, from volleyball nets to croquet, to soccer balls should be stored in the same general area. Ditto for lawn and garden items as well as workshop items and general tools. Trying to incorporate more household support into your child's routine? Having a system where they can look in a general area when you assign an item for retrieval keeps their frustration level low and their success rate high. Side perk? No more volleyball nets on your soldering table or hammers stored in with the football pads.

Hang a neon ping-pong ball.

What? No, seriously. Hang a ping-pong ball. I saw this tip years ago in one of those doctor's office magazines, and we used it in our garage in Italy. If you are tired of having the car be parked too close to the tool shelves by a young person with a learner's permit (or spouse who doesn't see it as the priority you do), pull the car in exactly where you want it parked. Then, hang a bright colored plastic ping-pall ball from a string attached to the ceiling. The trick is to hang the ball so it touches your windshield in a particular spot, like the center spot behind the rear view mirror or behind the inspection sticker. Then set the family rule that whoever puts the car in for the night has to park it with the hanging ball lined up to the agreed upon spot. No windshield scratches, and your accidental paint dings from opening the vehicle door into the side of the lawn mower are a thing of the past.

Padded work stations.

If you have one or two work stations in your garage where you need to stand to work for extended periods of time, consider giving your joints a break with padded floor tiles. You don't need to do the entire room, just a rectangular space large enough to step around on a bit. Your back will thank you.

Power shopping for the man's man.

Stocking a garage or workshop for home use can easily cost a small fortune. But by using simple power shopping strategies and demonstrating a little patience, you can have what you need for much less. Cruise moving and estate sales, as well as flea markets and store models for things like shop vacs, generators, snow blowers, air compressors and more. It might take a bit longer, but so does saving up for the full price version.

Customized drawer liners.

I know we're focusing on the frugal alternatives for garage pimping, but if you do have a set or two of rolling tool cabinets (and they can be affordable from time to time), consider custom cutting holes in a foam liner to keep expensive precision items in place and protected. This also serves the same purpose as outlining items on the peg board. Teenagers in training or friends over to help you with a tougher home improvement project will know where to return items when clean up time arrives. Another great idea is the rubberized rolls of kitchen shelf lining material. It's affordable, and also ideal for those shallow drawers of items you don't want rolling to the back of a metal drawer and being too tough to reach.

That's it, gentleman. My best efforts at a home resource article with your needs in mind. I know you've had to read more than your fair share of penny pinching chick lit in the past. It wasn't for lack of appreciation for your frugal efforts on the home front, believe me. It's just taken me longer to dig up some ideas you might find useful, as mechanically based frugality isn't exactly my strong suit. In fact, aside from my utility cart piece, I believe this is my only attempt. I'll keep digging. In the meantime, I hope these ideas will get you rolling on the road to reclaiming that holiest of man caves, the garage. Good luck guys, and keep me posted on your success.

Permalink | 7 comments | Myscha Theriault's blog | Channel: DIY

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When Good Cakes Go Bad: A Cheat Sheet for the Uninspired

Linsey Knerl — Mon, 06 Oct 2008 14:54:13 +0000

By Linsey Knerl

I’m no cake professional. I can barely manage a Betty Crocker boxed mix with the fluffy frosting from a can. I appreciate all the hard work that goes into a professional piece (be it for weddings, birthdays, or that retirement party.) Check out my tips for faking cake proficiency, and see what happens when it all goes terribly wrong.

The Good

Cakes are usually delicious, regardless of how dysfunctional they may appear. While close family may be forgiving of a lop-sided creation badly adorned with those premade candy letters and the 50-cent candles from the Dollar store, there are better, classier ways. Here’s how I manage:

Your Basic Cake – White cake is actually pretty boring, and reminds me of my Easy Bake Oven days. A nice lemon, pineapple, or red velvet cake somehow oozes a little more sophistication. It’s OK to use a box mix for these more challenging cakes, and if done correctly, you may get a few “oohs” and “awes” with little effort.

Your Mix-Ins – Nuts, fruits, sprinkles, chips, and other yummy, tiny little things can give your basic cake extra spark and delightful flavor. Play around with flavor combinations that compliment each other, and give an instant gourmet taste to your cheap knock-off.

Your Presentation – The most creatively-prepared cake mix will fail to bring fascination if baked in your standby rectangle cake pan. While I’m not advocating we all go out and purchase $50 Elmo cake shapes, a bit of style and the wonders of silicon can keep your desserts pretty and in one piece. I love Wilton’s entire line of Bundt pans and those cute little tulip and daisy individual cake molds.

Your Frosting – Huge gobs of premade frosting can be a turn off. Consider making your own frosting or lightly dusting a cake with powdered sugar. If you insist on decorating with no skill whatsoever, go easy, take your time, and remember that less is more.

Assuming that you can bake, decorate, and transport your cake safely to your destination, you have a shot at impressing with little money and effort. (Or consider a dump cake for true simplicity and honest flavor.)

The Bad

There are always those who don’t heed the warnings of the cake professionals and undertake something way beyond their skill level. Sadly, many of these errors occur in the bakeries of large grocery stores or big box retailers, where consumers are left overcharged and unimpressed. My favorite cake goofs of all time are displayed in all their glory at the Cake Wrecks blog. (Thanks to Autumn Oak Hollow for the tip!) A doggie cake that looks like a pile of crap (literally)? You seriously have to see it to believe it.

Permalink | 7 comments | Linsey Knerl's blog | Channel: Life Hacks, General Tips

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