We are slowly building an emergency fund, but the money sits in an offset account on our mortgage, so not only are we prepared in case of emergency, but we are saving interest every single day while it is there.
One nice thing about the mortgage is that the interest rate is always higher than a savings account, so whilst we might earn 4% in a 'high interest' savings account (ING or similar) we save 5.5% interest by leaving the money in the mortgage offset account. We don't see the money, but the debt goes faster.
Sure we could make more money using the fund for stocks or similar, but that introduces risk, and for an emergency fund, it should be low risk.
I find that powdered milk is cheaper than fresh if you only use it in small amounts, and infrequently, like I do. (You also don't have a plastic container to throw away or recycle, and you never run out of milk) I even have powdered buttermilk that I bought at an Amish grocery and use for baking a few things. I hate drinking the stuff.
You touched on this briefly: freeze things you won't use up. We don't drink cider or juice because of the calorie content, but once a year I buy a half gallon, divide it into portions and freeze it for using in recipes. You never have to buy a container of something just for a few tablespoons. If citrus is going bad in the fridge, zest it, juice it, and freeze those. If you don't use up the fresh herbs you buy, hang them up and dry them.
I'm a big fan of making substitutions, though my foodie friends would be horrified. I KNOW the cheese from the shaker can doesn't taste the same as freshly grated parmesan, but if you really need to save money, you'll get over it.
I shop for clothing, furniture, housewares, linens, etc. You name it. My favorite is an Am-Vet store and my money goes to a good cause. I very rarely buy anything new anymore. Most new stuff is garbage!
I found a box of never-opened, French foot seamed nylon stockings for a dollar a pair! They had to be at least 50 years old and in PERFECT shape! Score!!
I absolutely LOVE Trader Joe's. there are things there you just can't get anywhere else, at least for the price. I love how I don't have to worry about HFC, partially hydrogenated this, or artificial that. Where else can you find uncured turkey bacon for $2.99? Some of my favs are the bacon, the chicken sausages ($3.99), hummus selections ($1.99), 100 calories chocolate bars ($1.99), and the Apple Straws, i could go on and on. My Trader Joe shopping experience is always a good one and I always look forward to "sample" their item if the day and have coffee. Also you can return anything without a receipt and no questions asked! They may have a few cons, but what store doesn't? I'm definitely a proud TJ shopper!
Really? You think this wonderful list equates to be a third-world peasant? Maybe you should interview a person from a third world country and get their feedback on the list.
I don't tend to shop at thrift stores on a regular basis. Those closest to where I live don't seem to have much that interests me when I look (besides books, and I'm trying to buy less of thsoe and get them from the library instead).
Thrift store shopping rocks! I've bought second hand merchandise for years...mainly clothing and furniture but many other items as well. I buy used whenever possible.
This was a great read! My favorite is to listen to music and exercising comes right along with that. I am able to clear my mind when I exercise, which then leads to clearer thinking! I also really like writing lists. This keeps me organized and enables me to think of other ideas.
Thanks for sharing your story. Earning money via interest and investment returns can be more important than getting an incentive so it helps to do the math or try to make a projection. But if bonuses help you to save and encourage you to save when you might not otherwise, then definitely look into those avenues.
Thanks for sharing your story. Earning money via interest and investment returns can be more important than getting an incentive so it helps to do the math or try to make a projection. But if bonuses help you to save and encourage you to save when you might not otherwise, then definitely look into those avenues.
Thanks for commenting. With interest on regular savings accounts so low, it sometimes seems that there are few incentives to save so I thought I would highlight a few. You point out an inherent reason to save (not just to get the bonuses) -- to help with emergencies and large expenditures ...instead of withdrawing money from retirement accounts.
Thanks for the ideas about getting $ up-front while saving. The other big piece of the puzzle is making a profit (interest, dividends, cap gains) AFTER you save the money. This year I began doing P2P lending. I first considered it after reading MMM's blog post (http://www.mrmoneymustache.com/2012/09/24/the-lending-club-experiment/), and then did more research into it.
I agree that whether or not to build an emergency fund depends on individual circumstances. That said, after I paid of credit card debt and student loans a couple years ago, I only had my mortgage debt left. At that point, I began aggressively saving an emergency fund. And good thing, because I ended up quitting my lucrative but exceedingly stressful corporate job a few months ago. I only had the option because I had the emergency $ to fall back on.
Finally! A post about how to lower your grocery bill. This seems to be a struggle for me. I have a hard time being selective and getting only the groceries I need. When I come across something that looks good in an aisle, I instantly pick it up and place it into my shopping cart. When it comes time to check out, the total cost always seems to be higher than I would've liked! Thanks to you, I will follow the steps in this post to lower my grocery bill.
Six months of living expense is quite a lot to have lying around doing not much. If one owns a house and has some equity in it, what do you think about establishing a home equity line of credit (HELOC) to cover an emergency that is greater than say just one or two months of living expenses?
I have not read ALL the comments on this yet. Too many so I am just going blindly post my thoughts. Sorry if I am repeating.......But here is something to think of. They SAY they saved $30,000 in couponing so now they can fix the house or go on vacation or something along that line. REALLY?!?! Who spends $30,000 in groceries to begin with?? It is not really money saved because without coupons, they would not have spent that much....on 77 bottles of Mustard or 100 bottle of medicine.
I buy almost all my clothing in thrift stores, and regularly buy housewares and holiday gifts there as well. One thing I already miss about Seattle is its thrift stores -- Anchorage has a much smaller population and therefore fewer options. However, I have still found some great stuff at a considerable discount.
I especially appreciate Value Village's loyalty card: It lets you shop at 50% off the day *before* a half-price sale begins. Nice.
Thanks for sharing your story. In regard to your attempt to get a life insurance policy, hopefully you can find another company to underwrite you or try again in a couple of years.
"First of all, you've got almost no chance of getting an 8% return for 35 years."
Oh, 8% long-term annual portfolio returns are definitely achievable. If you invest mostly in stock market index funds when you're young and shift into a more balanced portfolio as you approach retirement, you could get there.
First, let's examine the historical returns on stocks. From 1871 through 2012, the stock market had an arithmetic mean of 10.6% per year and a geometric mean of 8.9%. While the annual standard deviation of returns on stocks is large, the long term returns are remarkably consistent:
Over the last 50 years (since 1962), it has averaged 10.9% (arithmetic) and 9.4% (geometric).
Over the last 40 years (since 1972), it has averaged 11.6% (arithmetic) and 10.0% (geometric).
Over the last 30 years (since 1982), it has averaged 12.6% (arithmetic) and 11.2% (geometric).
Over the last 20 years (since 1992), it has averaged 9.9% (arithmetic) and 8.2% (geometric).
And while annual declines of 40% in the stock market can happen, as long as you stay fully invested over the long run, you should still do well. Notice how just 4.5 years after the crash in the fall of 2008, we're already at new all-time highs in the stock market.
"The other problem is that the huge returns from compound interest only really accrue at the very end."
Yes, the benefits of compound interest are largely "back loaded", so those returns in the years leading up to retirement are important. But unless you're 100% invested in stocks right before retirement and planning to use ALL of your retirement money the year you retire, you should do fine. A diversified portfolio of stocks, bonds, REITs and commodities could achieve returns close to 8% per year with significantly less volatility than an all-stock portfolio.
The one thing you didn't mention in your article that would've greatly supported your case is that many people don't factor INFLATION into the equation. And that's where compound interest can be a little misleading. 8% nominal returns are certainly attainable, but 8% real (inflation-adjusted) returns would be much more difficult to achieve. Although I think you could still get close.
Compound interest can certainly work for you, like it has for so many others. And the greatest thing I've learned from it is this:
The earlier you start saving and investing, the better.
#4 - Our favorite supermarket, the one without the loyalty cards, puts bright yellow tags on the meat they want gone in a hurry. $2 off a $6 steak is nothing to sneeze at.
#5 - We have one of those. We go there to get certain items like spices, which they buy in bulk and portion out in smaller containers. Their cold cuts are better and cost-competitive with the aforementioned supermarket.
#8 - If you go online (Amazon FTW), you can find things like 7-inch pie plates. Making half a pie (in the countertop convection oven) means no waste.
#10 - Many a leftover piece of steak, chicken, or whatnot has found itself part of a stir-fry at our place.
#16 - Seriously. Why pay through the nose for already-chopped veggies? They aren't even good for you.
#20 - I make my own beer. Really good beer that costs around 75 or 80 cents a bottle. It's really popular at parties. Pro tip: until you pitch the yeast, all your ingredients are considered groceries, and are exempt from sales taxes in most states.
Hi Nein! Our site features articles from several writers, each one dedicated to frugality and personal finance and offering his or her own expertise. The writers don't always agree on their approaches, but we love being able to offer readers a variety of opinions.
We are slowly building an emergency fund, but the money sits in an offset account on our mortgage, so not only are we prepared in case of emergency, but we are saving interest every single day while it is there.
One nice thing about the mortgage is that the interest rate is always higher than a savings account, so whilst we might earn 4% in a 'high interest' savings account (ING or similar) we save 5.5% interest by leaving the money in the mortgage offset account. We don't see the money, but the debt goes faster.
Sure we could make more money using the fund for stocks or similar, but that introduces risk, and for an emergency fund, it should be low risk.
I find that powdered milk is cheaper than fresh if you only use it in small amounts, and infrequently, like I do. (You also don't have a plastic container to throw away or recycle, and you never run out of milk) I even have powdered buttermilk that I bought at an Amish grocery and use for baking a few things. I hate drinking the stuff.
You touched on this briefly: freeze things you won't use up. We don't drink cider or juice because of the calorie content, but once a year I buy a half gallon, divide it into portions and freeze it for using in recipes. You never have to buy a container of something just for a few tablespoons. If citrus is going bad in the fridge, zest it, juice it, and freeze those. If you don't use up the fresh herbs you buy, hang them up and dry them.
I'm a big fan of making substitutions, though my foodie friends would be horrified. I KNOW the cheese from the shaker can doesn't taste the same as freshly grated parmesan, but if you really need to save money, you'll get over it.
I shop for clothing, furniture, housewares, linens, etc. You name it. My favorite is an Am-Vet store and my money goes to a good cause. I very rarely buy anything new anymore. Most new stuff is garbage!
I found a box of never-opened, French foot seamed nylon stockings for a dollar a pair! They had to be at least 50 years old and in PERFECT shape! Score!!
I absolutely LOVE Trader Joe's. there are things there you just can't get anywhere else, at least for the price. I love how I don't have to worry about HFC, partially hydrogenated this, or artificial that. Where else can you find uncured turkey bacon for $2.99? Some of my favs are the bacon, the chicken sausages ($3.99), hummus selections ($1.99), 100 calories chocolate bars ($1.99), and the Apple Straws, i could go on and on. My Trader Joe shopping experience is always a good one and I always look forward to "sample" their item if the day and have coffee. Also you can return anything without a receipt and no questions asked! They may have a few cons, but what store doesn't? I'm definitely a proud TJ shopper!
Really? You think this wonderful list equates to be a third-world peasant? Maybe you should interview a person from a third world country and get their feedback on the list.
I don't tend to shop at thrift stores on a regular basis. Those closest to where I live don't seem to have much that interests me when I look (besides books, and I'm trying to buy less of thsoe and get them from the library instead).
Thrift store shopping rocks! I've bought second hand merchandise for years...mainly clothing and furniture but many other items as well. I buy used whenever possible.
This was a great read! My favorite is to listen to music and exercising comes right along with that. I am able to clear my mind when I exercise, which then leads to clearer thinking! I also really like writing lists. This keeps me organized and enables me to think of other ideas.
Thanks for sharing your story. Earning money via interest and investment returns can be more important than getting an incentive so it helps to do the math or try to make a projection. But if bonuses help you to save and encourage you to save when you might not otherwise, then definitely look into those avenues.
Thanks for sharing your story. Earning money via interest and investment returns can be more important than getting an incentive so it helps to do the math or try to make a projection. But if bonuses help you to save and encourage you to save when you might not otherwise, then definitely look into those avenues.
Thanks for commenting. With interest on regular savings accounts so low, it sometimes seems that there are few incentives to save so I thought I would highlight a few. You point out an inherent reason to save (not just to get the bonuses) -- to help with emergencies and large expenditures ...instead of withdrawing money from retirement accounts.
Thrifting is a wonderful way to live well at less cost! I have gotten so many fun things. It is a treasure hunt that never ends!!!
Thanks for the ideas about getting $ up-front while saving. The other big piece of the puzzle is making a profit (interest, dividends, cap gains) AFTER you save the money. This year I began doing P2P lending. I first considered it after reading MMM's blog post (http://www.mrmoneymustache.com/2012/09/24/the-lending-club-experiment/), and then did more research into it.
I agree that whether or not to build an emergency fund depends on individual circumstances. That said, after I paid of credit card debt and student loans a couple years ago, I only had my mortgage debt left. At that point, I began aggressively saving an emergency fund. And good thing, because I ended up quitting my lucrative but exceedingly stressful corporate job a few months ago. I only had the option because I had the emergency $ to fall back on.
Coupon site http://www.dealoyster.com for current coupon codes gets my vote!
Finally! A post about how to lower your grocery bill. This seems to be a struggle for me. I have a hard time being selective and getting only the groceries I need. When I come across something that looks good in an aisle, I instantly pick it up and place it into my shopping cart. When it comes time to check out, the total cost always seems to be higher than I would've liked! Thanks to you, I will follow the steps in this post to lower my grocery bill.
Six months of living expense is quite a lot to have lying around doing not much. If one owns a house and has some equity in it, what do you think about establishing a home equity line of credit (HELOC) to cover an emergency that is greater than say just one or two months of living expenses?
I have not read ALL the comments on this yet. Too many so I am just going blindly post my thoughts. Sorry if I am repeating.......But here is something to think of. They SAY they saved $30,000 in couponing so now they can fix the house or go on vacation or something along that line. REALLY?!?! Who spends $30,000 in groceries to begin with?? It is not really money saved because without coupons, they would not have spent that much....on 77 bottles of Mustard or 100 bottle of medicine.
I buy almost all my clothing in thrift stores, and regularly buy housewares and holiday gifts there as well. One thing I already miss about Seattle is its thrift stores -- Anchorage has a much smaller population and therefore fewer options. However, I have still found some great stuff at a considerable discount.
I especially appreciate Value Village's loyalty card: It lets you shop at 50% off the day *before* a half-price sale begins. Nice.
Thanks for sharing your story. In regard to your attempt to get a life insurance policy, hopefully you can find another company to underwrite you or try again in a couple of years.
"First of all, you've got almost no chance of getting an 8% return for 35 years."
Oh, 8% long-term annual portfolio returns are definitely achievable. If you invest mostly in stock market index funds when you're young and shift into a more balanced portfolio as you approach retirement, you could get there.
First, let's examine the historical returns on stocks. From 1871 through 2012, the stock market had an arithmetic mean of 10.6% per year and a geometric mean of 8.9%. While the annual standard deviation of returns on stocks is large, the long term returns are remarkably consistent:
Over the last 50 years (since 1962), it has averaged 10.9% (arithmetic) and 9.4% (geometric).
Over the last 40 years (since 1972), it has averaged 11.6% (arithmetic) and 10.0% (geometric).
Over the last 30 years (since 1982), it has averaged 12.6% (arithmetic) and 11.2% (geometric).
Over the last 20 years (since 1992), it has averaged 9.9% (arithmetic) and 8.2% (geometric).
And while annual declines of 40% in the stock market can happen, as long as you stay fully invested over the long run, you should still do well. Notice how just 4.5 years after the crash in the fall of 2008, we're already at new all-time highs in the stock market.
"The other problem is that the huge returns from compound interest only really accrue at the very end."
Yes, the benefits of compound interest are largely "back loaded", so those returns in the years leading up to retirement are important. But unless you're 100% invested in stocks right before retirement and planning to use ALL of your retirement money the year you retire, you should do fine. A diversified portfolio of stocks, bonds, REITs and commodities could achieve returns close to 8% per year with significantly less volatility than an all-stock portfolio.
The one thing you didn't mention in your article that would've greatly supported your case is that many people don't factor INFLATION into the equation. And that's where compound interest can be a little misleading. 8% nominal returns are certainly attainable, but 8% real (inflation-adjusted) returns would be much more difficult to achieve. Although I think you could still get close.
Compound interest can certainly work for you, like it has for so many others. And the greatest thing I've learned from it is this:
The earlier you start saving and investing, the better.
And there's no false allure in that.
I shop at thrift stores to help their cause, and I like to upcycle old items, and of course find great treasures!
A few really good ideas here.
#4 - Our favorite supermarket, the one without the loyalty cards, puts bright yellow tags on the meat they want gone in a hurry. $2 off a $6 steak is nothing to sneeze at.
#5 - We have one of those. We go there to get certain items like spices, which they buy in bulk and portion out in smaller containers. Their cold cuts are better and cost-competitive with the aforementioned supermarket.
#8 - If you go online (Amazon FTW), you can find things like 7-inch pie plates. Making half a pie (in the countertop convection oven) means no waste.
#10 - Many a leftover piece of steak, chicken, or whatnot has found itself part of a stir-fry at our place.
#16 - Seriously. Why pay through the nose for already-chopped veggies? They aren't even good for you.
#20 - I make my own beer. Really good beer that costs around 75 or 80 cents a bottle. It's really popular at parties. Pro tip: until you pitch the yeast, all your ingredients are considered groceries, and are exempt from sales taxes in most states.
I should start making bread again, though.
#22 - Self-explanatory.
Hi Nein! Our site features articles from several writers, each one dedicated to frugality and personal finance and offering his or her own expertise. The writers don't always agree on their approaches, but we love being able to offer readers a variety of opinions.
Wait a minute, on one page you tell us to eat like third-worlders but here you tell us to blow 300 bucks on a coffee grinder?