Tuesday, February 03, 2009

Recession Ponderings - rethinking money

As I have said before, so much of what I can now "teach" was learned the hard way. Here are some lessons learned...

What is my actual income?
Let's say you make $40,000 a year. If someone were to ask you your income, you would probably say $40,00. That's where some of us get into trouble. When we spend money, we are thinking $40,000. Wrong... your actual income is not your gross but your net income after taxes, Social Security, insurance, etc. is taken out.

Do the math, figure out what your net income is, and keep that amount in your mind when you are making your budget or spending money. You'll be surprised at how it changes your outlook.

How much does this cost me a year?
This is a question I ask Christopher once in awhile. Spending $1.00 a day on bottled water may not seem like a lot (unless you are over 50 and paying for water is still weird). However, multiply that by five to seven days times fifty-two weeks... are you sure you are that thirsty? It is far better to purchase water by the case and take it from home. Better yet is to make a one time purchase of a thermos or other container and fill it up with water from home.

I think that is why Starbucks is in trouble, people who used to purchase their coffee on the way to work each morning are no longer able to spend that kind of money on a daily basis.

I do the same math when thrift shopping. If an object is something I don't really need and I have to think about where to put it... I don't make the purchase no matter how cheap it is. I've started doing the math... $3.00 for a thrift store purchase multiplied by fifty-two weeks in a year? It's amazing how losing one-third of your income makes you rethink Goodwill and garage sales. :)

My Money or My Life
Remember the famous book where the authors have you "do the math", figuring out how many hours it will take you to pay for a purchase with your net income. It woke a lot of people up, not only to be more careful with purchases but to the fact they can live a much better lifestyle as a result of spending less.

Is the joy of driving a $50,000 car around town worth how much extra you have to work to pay for it as opposed to... say... paying $12,000 for a really good used car? Is eating out three or four times a week, going to the mall a few times a month, season tickets to the Bears games, etc. worth having the wife work outside the home if she would rather be home with the kids?

Well, as far as the Bears tickets go... don't ask my husband.

Can I Find a Cheaper Way to Get the Same Result?
This is where the rubber meets the road in decorating our homes, cooking meals, making celebrations for friends and family, etc. It is also where some of my blog friends (like Manuela) have genius ideas that I steal... I mean copy.

Here's an example, I was browsing the gift shop at the hospital yesterday (where we are trying to get help so Christopher can have his surgery) and saw the cutest "sign" which spelled out FAMILY. It was made of individual letters that were hinged together. It was also quite expensive. Next to it was a far cheaper metal sign that also spelled out FAMILY. Just as cute for far less money but still more than I can afford.

If I decide I really want something like this in my home, I'll make a trip to Michael's or Hobby Lobby for ideas. It will also go on my thrift store and garage sale radar. I have learned to ask myself this question many times over the years... what is it I like about an object, can I make the same thing at home, would something similar give me the same "feeling" or "look", etc.

I do this same thing when looking at a picture of a lovely home, an amazing garden, a beautifully set table, etc. What is it about this scene that causes me to love it and how can I recreate this at home without spending money (or at a small cost)?

It's the same with eating out... I LOVE to eat out. But do I need to eat an entire meal? Can I get the same experience by just going out for dessert and coffee? There are times when, of course, we need an entire meal but if it is experience we are after... coffee and pie may be all we need.

At the End of My Life, What Do I Want My Checkbook to Show?
I have friends whose house is... not beautiful. That's all I'll say. Even though they make very, very good money. Unlike me, having a warm and cozy and lovely dwelling place is not a priority.

However, their family has taken exotic and amazing vacations all over the world. I don't know of any other family (among my friends) that has had the travel experiences they have had. Except for their children's education, most of their "extra" income went to these vacations.

Their kids are now out of the home and they have wonderful memories. It's not the way I would have spent my money (I'm a terrible traveler, I get sick on cars and planes and trains and whatever else moves.) But it worked for them.

Frugal Luxuries
Somewhat along those lines of thinking... one has to have a few luxuries here and there. The expense of those luxuries will be different based upon your income, if you are saving for a special purchase, etc... but even if you are on a limited income like us, you must have a luxury here and there are bitterness will be your companion.

An example... $4.00 a day for my morning cup of coffee is far more than I would pay (even if we were not on Disability). However, $4.00 for a Starbucks once a month is possible. A Pumpkin Spice Latte is an experience when it is slowly slipped, with eyes closed, breathing in the aroma. It is a cheap vacation. Spending $5.00 each day at Panera is far beyond my ability right now but investing $5.00 once or twice a month to "get away from it all" with a book, a notebook, and a pen is priceless.

I pay just a little more for my Seventh Generation dish soap (I can no longer afford Mrs. Meyers but I can still purchase Seventh Generation at Target!) and purchasing a very good quality liquid hand soap for my kitchen sink is a frugal luxury, since I spend so much time doing dishes and washing my hands while cooking.

The concept of frugal luxuries could (and has) filled an entire post before...

So, there you have it, lessons learned... many times the hard way. I hope they give you something to ponder today.

14 comments:

Kristi in the Western Reserve said...

What interesting posts these are, Brenda.
I think most people know most of the things I do along the lines of thrift and greeness and simple living. But perhaps this is one I don't see mentioned. I love to decorate for the holidays. When we moved to our present home in 1980 I began planting some holly bushes and boxwood and herbs that were perennial and could be dried for wreaths - and I let multi-flora roses grow in a far corner where they wouldn't be too invasive but would supply me with clusters of tiny rose hips. I've never had to buy these things and have lots to make all manner of wreaths (easy to learn how from a library book) and decorations and gifts from my garden.

Rain said...

Thank you! You've given me some wonderful things to ponder.

Tammie @ Are You For Real? said...

Frugal luxuries? What a beautiful concept! I think the lifestyle of our current society has forgotten to enjoy simple luxuries. I want to appreciate more of what I have ... and see the luxury of the blessings God has given me.

Charity Grace said...

What wonderful ideas! Frugal living is one of my favorite subject. I'm afraid I get a charge out of being thrifty. Posts like this one are very inspiring.

Vee said...

And excellent lessons they are, too. I agree that any money spent for something that one does not need is ridiculous. It's silly to spend a dollar on an extra set of shoes if one isn't going to wear the shoes. John bought just such a pair at Goodwill, he even tried them on, but they are never worn. They sit in the back of the closet gathering dust. A ridiculous waste of money. And will he give them away? Probably right back to Goodwill where they can make another $5 on them. :D

I love what you said about purchasing a special coffee from Starbucks once in a while...a mini vacation. I'm going to have to remember that because I would rather go to Starbucks once a month than go to Burger King twice a month.

Cherrie said...

Thank you again! I love reading your blog!
Cherrie

scrappy quilter said...

I'm so enjoying these posts. They are so simpler to our live, living on a fixed income which is way below the poverty line (so they tell us). I love thrift stores however I've learnt just because it's at a good price, doesn't mean I buy it.

I also agree with frugal luxuries. We do need to have a few of those every now and then. For me, I'd rather spend a few of those $$ on something for my home to beautify it rather than on Starbucks. That is one of the reasons I so loved Tracey McBride's book Frugal Luxuries. It thought me so much about living frugally, yet living with little luxuries.

Kathy said...

Dear Brenda,

I have just stopped by and caught up with your recent recession ponderings - so interesting and challenging. Thank you for taking the time to write about your experiences and encouraging others.

I was also thrilled to see your reference to the verse in Timothy as it is one I have found so powerful over recent weeks.

All the best to your family and especially to Christopher and his health.

Kathy

Marianna said...

What wonderful thoughts Brenda. I love the idea of frugal luxuries. Candles are my personal little luxury! I wait until I get a good coupon from Yankee Candle and then use them sparingly to make them last longer.

BTW, I am so glad that Target is carrying the Seventh Generation products at such a good price.

Marianna

Anonymous said...

Were you refering to the book Your Money or Your Life by Joe Dominguez and Vicki Robin? I read it years ago and it changed how I thought of work verses money. and a lot of other things. Are we working to live or mearly living to work? The book has been revised just recently and they had it in paperback at Costco the other day. The premis of the book is the same but they updated the figures and added some thoughts in the new version. Yes when I am even thrifting and thinking of purchases I think of how many minutes/hours my husband will have to work to equal the amount of the object. A sobering thought. Sometimes it brings that 'I need it' at times right into the 'I want it' list for sure!! So on the shelf sometimes it stays!! ;) Repurposing is one I do even with things I have at first sat aside to give away. At times the material in the clothes I was going to give away is the right color etc for that throw pillow I wanted to do..or the lamp shade etc. Or an outfit for the Grandchildren. Many things can be redone but only keep what you will really use. You made me think of a piece of wood I have. It is the only piece left from a piece of furniture my Great Great Grandfather made. I am not in the habit of just keeping wood but this is one has good memories and is wood hard to get now. Now I know what I am going to do with it. I am going to stencil Family and add my Great Grandparents pictures to it and hang it up!! ;) Thankyou for the idea! ;) Jody

~~Deby said...

Yes, you are right. We are a generation that really does not know nor want frugality...."I want it, I want it NOW" is the lament--sometimes not in word but in action.
This is a great REAL post Brenda, where the rubber meets the road...
Contentment, is learned and it better to do it by choice that HAVING too....I think I am working in this area of my life.
love these posts,
Deby

irinaguthrie said...

Hi Brenda, I just wanted to comment about that family you know who took luxurious vacations. When my husband and I didn't have any children, we lived in Russia for 3 years and traveled A LOT from there. It was a lot cheaper and we didn't have a home we owned. Actually after a year and a half of living in a rented apartment, that was becoming quite costly, we decided to move to a dorm for foreign professors that institute that we were both teaching in at the time provided. It was practically free for us, saved us a lot of time in commute. But it wasn't as nice as our own place and there were other people to share the common spaces (like kitchen, bathroom) with. But we made do, because we wanted to save even more to see the world. It was important to us at the time (well, still is, but we can't afford it anymore), and it created wonderful memories for us.

Things to make house beautiful are nice, and I like to get them now, but I guess at that time my priorities were different and I didn't want to get too much stuff, since I knew we'd be moving back to the US at some point.

Peggy. said...

Great post. I think people today want everything right now. They don't know what its like to wait to get something. They want the big house fully furnished right now. I wish my house was bigger but even if I had a bigger house I would still use some of the old things I love from years ago when we were starting out. My youngest sister is a pro at decorating from Walmart and Deals stores because thats what she can afford and all they have where she lives. Her house looks like a show house and it's all from resale and/or discount stores.
Peggy

the pleasures of homemaking said...

Well thank you Brenda! I really love finding ways to get a certain look without spending too much money. Your Money or Your Life is such a wonderful book and as someone else mentioned it's been updated recently (which it needed). They also have a message board.

It's nice to read that you think frugal luxuries are an occassional necessity. That's something that bother's me all the time. Should I spend $3 for that pretty plate or cup of coffee or should I do something better with my money like save it or donate it. I really admire people that somehow don't buy a thing and are content!

I've found Mrs. Meyers at TJ Maxx now and then - must be the scents that don't sell as well?

Manuela