No Debt Plan

No Debt Plan is a blog about living a debt-free life. If you're new here, you may want to subscribe to my RSS feed (e-mail subscription also available). Learn more about me, or some of my most popular posts. Thanks for visiting!

(Photo by iboy_daniel)

My wife and I got a lot of things done off of our large to-do list this evening. As a reward we took a trip down to Bruster’s Ice Cream. Now before anyone screams “hypocrite!”, I will admit I have talked about buying ice cream and eating it at home being an alternative to paying the premium of going to Bruster’s or Baskin Robbins.

But there are exceptions to rules, and tonight was one of them.

As we left the neighborhood, we started talking as we normally do.

“I’m going to write on something you said earlier today,” I mentioned. She cocked her head to the side.

“Oh really?”

“I’m going to write about our used car conversation. You know, about looking at something today so you can buy it way in advance,” I said. She had pointed out a new blue Toyota Camry in a parking lot and how she liked the color on the car. That opened up a discussion of buying a new used car in the future.

Currently, we are socking away money on a monthly basis so that in 4 years or so — fall of 2012 — we can sell her current car and pay cash for a new used one. She wanted to know how old of a vehicle we would consider.

Of course this all depends on inflation, the cost of a used car in the future, and the quality of vehicle we can afford.

“Probably a 2007 or 2008. That would be 4-5 years old and priced about right for the amount of money we are saving currently,” I told her.

“Well I guess I should get looking!”, she said jokingly. But it made me think. Maybe we really should be looking at today’s new cars for the future.

Go Look Today for Tomorrow

This may seem over the top to some of you. I’ll admit, it is taking things a little far. But if you are planning to buy in 4 years, and you are going to buy a 4 year old car in the future… that means the models you will be considering are new cars today. They are on the dealership lots waiting to be looked at. You can go in and test drive it today and see if you really like the car. You could look at all of the different options to see which ones you really want to include when you start looking four years.

But…

There are some downsides to this, of course:

• The cars you see today are new. They will drive differently new than they will used.
• There is no way to tell how cars will depreciate both physically and financially. Honda Accord’s may be great values today (I drive one), but there is no guarantee they will hold up in four years. You could test drive a car today and be disappointed in the future. On the flip side, Accord’s may not depreciate as they have in the past and we may not be able to afford one in the future.
• There is a slight risk you might get a bit too excited about the new car, or listen to a good sales pitch, and end up buying the car right there on the spot. That may seem crazy, but people make dumb money decisions all of the time.

What do you think? Would you look at cars today to buy them tomorrow?

(Photo by The Joy of the Mundane)

Earlier this week our economic stimulus check finally arrived in the mail. My wife deposited it in our account yesterday on her way home from helping out at Vacation Bible School.

Originally, we had planned to stick all $1,200 of it into our emergency fund. That plan has changed up a bit. We’ve had some additional expenses crop up with getting a dog and we now need to purchase a larger crate. Our original crate was free from my parents, but Maggie is eventually going to out grow it.

We’ve also had a few other issues crop up that we would be paying out of pocket for regardless. Based on our estimates, we’ll end up saving $845 of the total. That’s right at 70%. It’s not as much as we’d like, but it is definitely a nice boost to the emergency fund, putting us way ahead of schedule to fully fund it with three months worth of living expenses.

Have you received your stimulus check?

What did you do with it?

My wife and I decided to refinish our white clothes dresser over her spring break this past March. We figured we would do it ourselves to save money and to enjoy the experience.

It’s the same dresser she had growing up and is in great shape. However it didn’t really go with our other brown furniture (night stands, primarily).

“We’ll sand it one day, and stain it the second day.”, she said.

“Sounds good. Let’s get supplies.”

Off to Lowe’s for a handheld power sander, sandpaper of various grit levels, wood stain, new drawer hardware, and a few sponge brushes.

We removed all of the clothing, stacking them along the big window in our bedroom. “This is going to be great”, we thought to ourselves as we took the drawers and dresser out separately. We set up our little workstations and set to getting the job done on the patio.

The sander worked fine — but boy, this was taking a while. Her parents had painted the dresser back in the day, and apparently put several high quality layers of clear coat on it. Followed by several layers of paint. Several. Oh joy.

This is going to take longer than two days…

Needless to say, our progress was quite depressing after one afternoon. We were exhausted and no where near finished. The white paint was coming off, but you could definitely still see it in the wood grain of the few drawers we were able to tackle. We hadn’t even gotten to the actual dresser yet. Our two day dresser refinishing project was going to take much longer than two days. Some would say we underestimated the task before us.

We put the dresser into the garage and stacked the drawers beside it. Busy during the week, we were forced to work on the project on our beloved weekends. Naturally other plans would interfere from time to time, so we didn’t even work on it every weekend.

Time seemed to drag on forever.

Weekend after weekend, my hatred grew for that dresser.

It was now just another thing on the never ending to do list. The difference between it and the other items on the list being that it actually was affecting our lives — our clothes were still piled up on the floor. I missed my clothes being in drawers. The mess made our bedroom seem out of alignment with the rest of our well kept house (not my doing, my wife is amazing).

All of the paint eventually came off (see photo above), and we were able to stain it. Even the staining wasn’t easy. Humidity is very high in our area, so we had to put on one stain and let it sit for two days before adding a second coat with a different color. Wait two more days, add clear coat. Wait two more days, add final clear coat.

Finally, after two months of primarily weekend-only work, we moved it back into our bedroom. You can see the end result to the right. We think it looks great!

What did we learn?

• Know what you are getting into before you commit. We were uninformed on how long our task was truly going to take us. We paid for it in weeks of frustration.
• Doing it yourself can save you money. All told we spent around $100 to $125 on refinishing the dresser plus time. A new dresser from a furniture store might have cost us $300-500.
• Doing it yourself can be frustrating and rewarding. My wife noted that a lengthy project was much more her thing — and probably would not be fit for many guys. I was simply too impatient for a long, drawn out project. I wanted it fixed and done.

What about you? Have you ever refinished a piece of furniture, or underestimated the length of a project? Tell us about it in the comments!

I snapped the above photo a few weeks ago; the plastic bag bursting to the seams with $10.62 worth of spare change.

$10.62 may not seem like much to you. In the big scheme of things, perhaps it is meaningless. But our emergency fund now has $10.62 in it that originally was lacking. That’s ten dollars closer to our goal. Ten dollars if we find ourselves on the wrong side of an emergency.

People Are Lazy

Many people discount spare change, especially pennies. I love spare change. My wife laughs when I pick up pennies and nickels out of the road. “Do you know where that’s been?”, she always asks. Who cares? Free money!

When I worked at a movie theater in high school I knew guys who regularly threw away pennies. Into the trash. This always befuddled me. Why would you throw away money?

I can understand why people hate the penny. It’s weight is not worth its value. I’d rather have the weight of a quarter in my pocket than the equivalent weight in pennies. But it’s still money, right?

There was an instance at work that inspired this post. A co-worker had a lot of coins in the change portion of her purse. She dumped everything out on her desk with quite the jingle ringing through the air, then picked out the pennies. All told they numbered perhaps 55. She asked around to see if anyone would claim them.

My hand was the first into the air. Of course I would take them. I just earned 55 cents for doing absolutely nothing. Brilliant.

But now I had 55 cents. I, too, didn’t want to have it sit on my desk at work. What to do with it?

Hello, Mr. Coin Jar

For quite some time I have maintained a large mason jar for all of our spare change. In the past when we carried and used a lot of cash we regularly filled it up quickly. When the coins reached the top, we would dump them out, sort, and roll them before taking them to the bank. (Banks get rather irked when you walk in with $100 worth of completely loose change.)

However, since we use our credit card for every purchase possible, the level of coins has stagnated. I would bet we haven’t added more than $2 in total change in the past year to the jar.

That is until my 55 cent windfall.

Small Instance Inspires Action

As with many things in life, this small event inspired me to action. We added the 55 cents to the jar, then did our routine. Time to dump, sort, and roll. As you can see from the photo above we only had enough coins to wrap the pennies - I think we had 5 50 cent rolls.

The rest of the change had been sitting there, worthless to us. I counted it up separately and listed it in the card I put in the bag. Off to the bank — $10.62 added to our account then transferred to our emergency fund at ING Direct.

This goes hand in hand with snowflaking, an idea popularized by paid twice. You look under the couch cushions, in the street, in the closet… anywhere you can find money (or sell items for money) to get out of debt… the better. This is a perfect example. If we carried debt, we just snowflaked $10.62 toward the principle.

For those out of debt, this can be a great boost to whatever your current savings goal is. Again, $10 may not seem like much. What if you have $50 in change sitting around the house? Or $300 worth of items you don’t need or want and can sell?

Every little step counts.

Even little events can inspire great changes.

What steps have you taken lately?

What events have you ignored?

Last time we started to talk about portion control in your food habits.

I said there were three ways to link portion control in food to portion control in your finances:

• directly: eating less food means you save more money
• directly: eating too much means you will be unhealthy, gain weight, and spend more on health care in the future, and
• indirectly: if you can’t maintain portion control in food, you may not be maintaining control of your spending

We’re going to talk about third point today.

Portion control is simply having the ability to push away from the table when you are full or satisfied. In a restaurant, having the ability to recognize that what you are being served is simply too much for one person to eat, and taking half of it home with you.

This relates to your personal finances.

One of the basic keys to building long term wealth is to spend less than you earn. It’s pretty simple. If you spend X dollars and you earn X-1 dollars, you can’t be building wealth. How do you stop spending more than you earn? Learn to be content.

You don’t need that new flat screen TV. You don’t need that new BMW. You don’t need that Gucci handbag. Be content with what you have. Push away from spending table. Take a look at the things around you — perhaps your monthly subscription services (cable, NetFlix, the gym) — and ask yourself, do I really need this? Do you really use all of those shoes in your closet?

Can you see that what is being served to you is simply too much for one person to enjoy? Ask yourself, “how much time do I really use this service each month?”

Ramit Sethi of iwillteachyoutoberich.com recently had a food oriented title to a post related to this topic: The A La Carte Method: Use Psychology Against Yourself to Save Money.

What do you think? Do you have problems pushing away from the table (food or spending or…)?

My wife and I unknowingly started out May with a bit of a challenge for ourselves: to make it the entire month without using the air conditioning.

Sounds pretty easy, right? But wait, we’re in Birmingham, Alabama where the humidity gets to 1,000% (butter knife thick warning advisory) and the temperature can hit the high 80s in May. Before we moved into our house, we lived in an apartment and consistently kept the temperature at 78 degrees simply because we had an old air conditioning unit that was highly inefficient. We would come home, turn it on to get the temperature down to the high 70s, then relax. Trust me, you get used to it.

The first half of this month wasn’t bad at all. The house generally had cooled off to 75-78 by the time we came home and continually got better. Since we spent 9-10 hours either at work or on our way to/from work, it didn’t seem all that bad.

Until Memorial Day weekend. Thankfully, we were staying at a lake house that weekend. In the South, it got hot. And humid, as normal.

We came home last weekend to 80+ temperatures all day long. Add into the mix my wife is a teacher and has the summer off — and thus is in the house all day — and the need for air conditioning starts to get higher priority.

But by that time it was May 27th. Only five more days and we could say we went the whole month without a/c. We could do that, right?

Well, it’s involved a lot of walking around in our underwear and running the ceiling fans on high, but we did make it the whole month without using one minute of a/c. Yesterday it hit 85 on the thermostat in the house. I’m not sure if that is entirely accurate as the thermostat is at the front of the house, and the sun sets on that side of the house. I’m sure the office and foyer were that temperature, but further back in the house it was a good 5 degrees cooler.

Why would anyone want to do this? We have a new house. With a new air conditioning unit. All in perfectly good working order. So, why? Well, it’s the frugal thing to do. It’s saving us on the electricity bill. Heck, I think it’s kind of cool (well, not literally). It’s all part of that frugal mentality. Money we saved this month can be put to good use in an emergency fund or investments.

We will also appreciate the air conditioner a lot more when we get to use it the rest of the summer. We’ll probably still leave the temperature set fairly high — 75 to 78 — because again, honest, you do get used to it. For the folks that leave it set at 68 during the summer, how large is your bill? That would be nice, but we think it is unnecessary.

What about you? Where do you keep your air conditioner set to during the summer? What is your bill like? Do you think we are crazy? Leave a comment with your temperature, your city/state, and the amount of a typical summer bill so we can decide if you are crazy or not!

(Photo by MarViniz)

Just a quick reminder — No Debt Plan will host the next edition of the Festival of Frugality next week. So go on over and get your entries in!

I saw this over at the HotCouponWorld forums this morning. You can get at least one bag of Chex mix at Walgreens for free. Here’s how to do it:

1. Go to Coupons.com, install the coupon printer software (free, easy).

2. On page one or two of Coupons.com, print off the $1 off a bag of Chex mix coupon.

3. Go to Walgreens, which is running a $0.99 sale on Chex mix this week (until 5/31, if I remember correctly).

4. Hand over coupon, pay nothing for Chex mix.

The only hiccups you might run into is the coupon is worth more than the Chex mix. Some users have reported that they have to mark down the coupon because it is worth more than the Chex mix. This may require an assistant manager or something like that.

My coupon beeped this morning when they rang up my purchase. I was also buying some razor blades ($25 for 12; definitely going to straight razor soon…), and the cashier just entered in a manual manufacturer’s coupon and wrote on the coupon. Either way, I got a $1 off of my purchase and ended up with free Chex mix.

It’s only worth $3, but it’s $3 nonetheless. Keeping the frugal mentality rolling.

I wrote on Thursday that my wife was getting pinkslipped. Well they had to tell her if she was by close of business on Friday, and she didn’t hear anything. So we are assuming we are in the clear.

It doesn’t come as much of a surprise. My wife teaches and is shared by two schools. If you let her go and don’t hire anyone else, is another teacher going to teach 3 or 4 schools? I doubt it.

So! Stressful as it was, we’re hoping this has passed. Hopefully the state will pass the education budget as soon as possible so all of the Alabama teachers that were laid off will be rehired immediately.

I hope everyone had a great Memorial Day. We’ll be back to regularly scheduled programming tomorrow.

I have been bad about not getting my articles out at my typical 7am time. Sorry about that! We’ve been rather busy the past few days. We’ve had the whole “my wife may be getting fired” issue to worry about, and we’re taking a mini-vacation this Memorial Day weekend.

This is a point I am going to consistently hit on while writing this blog. Don’t forget to live. Yes, saving money and not overspending is very important in life. But don’t become a hermit. What good is that pile of money if you have no friends or family to enjoy it with?  Enjoy life as it comes, but make smart choices.

The problem with many people is they want to live today like it is their last day, all of the time. That’s all well and good until your last day is sixty years from now, you get laid off, and you have no money set aside. It’s a very fine balance. So don’t get me wrong — keep it up. Run through the No Debt Plan, save for retirement. But don’t turn down every opportunity to enjoy life.

For example, my work partner and our wives went to the SEC Baseball Tournament last night to see Ole Miss and Kentucky play. Granted, our company paid for it as a relationship building event, but it was fun. It cost gas to get there and we could have said “eh, no thanks”, but we didn’t do that. We had a lot of fun even though we only stayed through the top of the 5th inning. (It was getting late and we had been there 2.5 hours already).

Another example — we’re taking a mini-vacation this weekend. Some married friends are all getting together at someone’s aunt’s lake house (for free). Cost? Gas and food. Both of those could be significant costs, but we had planned to go to the beach instead. The beach would run $150+ per night in lodging on top of further gas costs (more distance) and more food costs (eating out vs. cooking). So we’re getting to enjoy ourselves, relax, take the puppy with us, see our friends… and it is somewhat frugal. We’ve got the money saved up for the trip already, too.

It should be a lot of fun. But I need to run — laundry and packing call!