Saturday, August 12, 2006

Lessons From Vacation

OK, I just got back from vacation and may have more on what I learned while there but it's late tonight so let's see...

1) Take a Cruise-- excellent value for what you get. All you can eat food, drinks, room (with four star service), transportation all included for less than you could get a comprabable hotel room for. Cruisecritic.com is a good place to gather precruise info. We went Carnival five days.
A) Don't worry about what your ports of call are or where you leave from (the closest to you is fine.) The important part is the ship you are on.
B) Five days was plenty for us. Three would not be enough.
C) Make sure you get two twin beds (they slide together to make a king). Some rooms have one twin with one above.
D) Getting a balcony room or even a window is not important. You are not in the room that often.
E) Alcohol is expensive on the boat (since we don't drink...not a problem.)

2) When budgeting for your vacation don't forget to include tips for everyone. First, it is important to tip people who do a good job. It is part of their income, not extra. Second, tips add up fast. When you go on a Carnival cruise they will automatically bill for your tips. That's a good thing.

3) Budget for "Extras"-- clothes you'll need, extra toiletries, last minute car repairs, replacing things you'll forget.

More should come later.

Thursday, August 03, 2006

Here's A Good Idea: Journal of Non Spending

Keep a journal of things you don't buy. Just jot down the date, what it was, and how much it was. Keep it simple and fun. Use a spreadsheet if you are on the computer alot.

When you go to the store or get on the internet or go out to eat and you feel like buying something...but you don't buy it...then write it down.

You'll get satisfaction when you add up at the end of the week the money you didn't spend.

Of course the most important number is not what you don't spend but what you DO spend.

Happy Not Spending!

Steppin' Up

Add it and forget it, then add some more.

That's what I call steppin' up.

It causes money trouble in the subtle kind of way that money trouble is usually caused.

Here is how it works...
1. You want a hamburger. Cost $2.59
2. You decide if you want cheese for thirty cents. After pondering it for awile...
3. ...You decide you DO want cheese. Cost of burger (now cheeseburger) is $2.89.
4. You eye the Bacon Cheesburger. Cost: $3.49. You debate the bacoon and...
5. Decide you DO want bacon.
6. Final cost of bacon cheese burger after 8% sales tax? $3.77. It's 97 cents.

That's what I call Steppin' Up.

The same hamburger at first would have cost you $2.80.
That is a 26% difference. It's almost a full dollar. (This will lead to a future post called "Buy three get one free.")

In your mind there is no way you'd go from getting a hamburger all the way to getting a bacon cheeseburger. You see the full dollar there. But by deciding on cheese first and getting that in your head it is much easier to go ahead and get the bacon. At that point adding the bacon only looks like an extra sixty cents. Not a full dollar. Steppin' Up is easy on the conscience.

Now with a hamburger dash cheeseburger dash bacon cheeseburger the harm is minimal (until multiplied out) but what about with a car?

1. Decide you want a new car.
2. Decide that you can spend X number of dollars (in reality most Americans decide what minimum payment they can afford.)
3. Find a car for let's say $17,300. BUT...
4...for $799 you can add a "Sports Package". That only adds $15 to your monthly payment.
5....and for $300 you can get a better stereo.
6 ....upgraded wheels and tires- $400.
7....Sunroof. $900.
8....Extended warranty- $600.

and now your $17,300 costs you $20,299! Plus additional interest plus taxes.

In the matter of minutes on a showroom floor or parking lot you have spent a good portion of a down payment on a house.

Speaking of houses- If you are not careful you can "step up" an additional THIRTY THOUSAND DOLLARS without even blinking.

That is the cost of "Steppin Up"

Other examples of "Steppin' Up":
...buying a washing machine with more buttons.
...buying a couch because it's "...alot nicer for not much more."
...buying large food instead of medium food.
...buying two for the discount instead of just one. (especially when the second goes to waste.)

So, next time you have ANY spending decision, no matter how small then think about it and fight the urge to "Step Up" that purchase.

Steppin' Up

Add it and forget it, then add some more.

That's what I call steppin' up.

It causes money trouble in the subtle kind of way that money trouble is usually caused.

Here is how it works...
1. You want a hamburger. Cost $2.59
2. You decide if you want cheese for thirty cents. After pondering it for awile...
3. ...You decide you DO want cheese. Cost of burger (now cheeseburger) is $2.89.
4. You eye the Bacon Cheesburger. Cost: $3.49. You debate the bacoon and...
5. Decide you DO want bacon.
6. Final cost of bacon cheese burger after 8% sales tax? $3.77. It's 97 cents.

That's what I call Steppin' Up.

The same hamburger at first would have cost you $2.80.
That is a 26% difference. It's almost a full dollar. (This will lead to a future post called "Buy three get one free.")

In your mind there is no way you'd go from getting a hamburger all the way to getting a bacon cheeseburger. You see the full dollar there. But by deciding on cheese first and getting that in your head it is much easier to go ahead and get the bacon. At that point adding the bacon only looks like an extra sixty cents. Not a full dollar. Steppin' Up is easy on the conscience.

Now with a hamburger dash cheeseburger dash bacon cheeseburger the harm is minimal (until multiplied out) but what about with a car?

1. Decide you want a new car.
2. Decide that you can spend X number of dollars (in reality most Americans decide what minimum payment they can afford.)
3. Find a car for let's say $17,300. BUT...
4...for $799 you can add a "Sports Package". That only adds $15 to your monthly payment.
5....and for $300 you can get a better stereo.
6 ....upgraded wheels and tires- $400.
7....Sunroof. $900.
8....Extended warranty- $600.

and now your $17,300 costs you $20,299! Plus additional interest plus taxes.

In the matter of minutes on a showroom floor or parking lot you have spent a good portion of a down payment on a house.

Speaking of houses- If you are not careful you can "step up" an additional THIRTY THOUSAND DOLLARS without even blinking.

That is the cost of "Steppin Up"

Other examples of "Steppin' Up":
...buying a washing machine with more buttons.
...buying a couch because it's "...alot nicer for not much more."
...buying large food instead of medium food.
...buying two for the discount instead of just one. (especially when the second goes to waste.)

So, next time you have ANY spending decision, no matter how small then think about it and fight the urge to "Step Up" that purchase.

Wednesday, August 02, 2006

OK, so I have thought about cash flow...here are some ideas.

After bad mouthing the concept of cash flow awhile back I want to digress and offer some suggestions. I guess in short, what I am saying is that I recognize that Cash Flow Problems do exist and that they are real in everyone's life no matter if you make not much or yes a lot.

As a matter of fact, if "Cash Flow" is not on your mind to an extent then it means that you are blowing and going and need to ADD some direction to your spending.

So here we go...
...if it's two days until payday and you are out of money and need...

...gas- then just put in $10 (you don't have to fill up.)

...groceries- focus on buying things you can get several meals out of. Another good cash flow strategy for larger families and groceries is to make sure that you don't run out of everything at once. Stagger your bulk purchases so you don't have a cash flow crunch in any given week.

...car repairs- ask the mechanic if there is a patch or a "lesser fix" that can get you by until payday. We got a quote for a transmission repair of $1700. We asked the mechanic the options and we ened up getting the truck out of the shop for $600. Three years later we are still driving on the "temporary fix"!

...clothes- there is no such thing as a cash flow crisis for clothes. Look in your closet and hold off!
Oh yes, ditto for furniture. Any perceived "need" for new clothes or furniture when you cannot pay cash is based in pride and vanity. And never ever ever never RENT furniture...please!

...household items- honestly, this should not be a problem- I mean toothpaste is cheap...however, if you are in a very tight situation-- share your toothepaste, share your deodorant, use the other kind of shampoo, use the razor blade for a few more days. At the very least if you don't have the cash for the $12 bottle of shampoo then buy the sixty five cent one to get you by.

...haircut, manicure, etc.-- cancel your appointment. You can wait a few more days or a week.

...any bill-- if a bill is due and you don't have the money then you need to figure out which ones would be the easiest to negotiate with. See if you can pay half now and half in a few days.


OK, there you go. But really, unless you are in business for yourself, then personal cash flow issues should not exist. You learn to live within your means and get ahead of the game enough where credit cards are no longer cash flow tools. Using credit cards to manage cash flow is stage one of debt.

Remember you cannot spend your way to prosperity.