Category Archives for Saving Money & Frugal Living

The Third Weekend – An Odd Budgeting Phenomenon

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

***Photo courtesy of www.freedigitalphotos.net

3 Ways to Help You Get Rich Quick

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

The following post is by MPFJ staff writer, Greg Johnson. Greg is a proud husband, father, and debt crusader who is in the process of becoming debt free. Along with his wife, Greg co-founded the personal finance blog Club Thrifty, where they encourage readers to “Stop Spending. Start Living.”

At some point, almost every person will dream about how they can get rich quick. Some of us dream of winning the lottery. Others look for schemes to make as much money as they can doing as little as possible. Still, others dream of turning our hobby into a money-maker so that we can quit the day job that we despise. For some people, these dreams actually come to fruition. For the rest of us, I’m here to tell you that you too can get rich quick. It is just that getting there may not follow the path that you thought it would.

So, how does the average person get rich quick? I’m glad you asked!

1) Spend Less Than You Earn

The number one rule to get rich quick is to spend less than you earn. It seems so simple doesn’t it? So, why is that concept so hard for most of us to understand? Why is it that we are constantly living beyond our means?

While I’d love to give you a succinct answer, the fact is that the reasons vary as widely as the people do. For some, it is the easy access to available credit. For others, it may be that they have a difficult time saying “no” to themselves. Regardless, if you want to get rich and you want to do it quickly, you have to start by adhering to this simple rule.

Trying to become wealthy yet spending more than you earn is like trying to sail across the ocean with a hole in the bottom of your boat. You can’t keep taking on more and more expenses without increasing your income or your financial ship will sink. (Try telling this to the U.S. federal government!) Before you can become rich, you first have to learn to control your expenses. How do you do that? It looks like it is time for #2!

2) Create a Budget

The best and most efficient way to control expenses is to create a monthly budget. Budgets are how we tell our money what we want it to do for us. It is how we tame our money into working the way that it should. Budgets allow us to keep track of where ALL of our money is going.

Let me be clear: I am talking about a written budget. Setting aside “X” dollars a month for bills and believing that you can do whatever you want with the rest of your paycheck is not a budget. You must consciously allocate your money into specific expenditure categories by physically writing it down! If you fail to write it down, you will “lose” hundreds – perhaps thousands – of dollars each month by unconsciously spending it on things that you won’t even remember you bought later.

It doesn’t matter which budgeting method you use. (My favorite is the zero-sum budget.) However, you must make conscious decisions about how to spend your money each and every month. If you do, I promise you that you will begin to “find” money that you didn’t know you were spending.

3) Pay Off Debt

The third way to get rich quick is to pay off your debt. Not only do you want to pay off your debt, but you want to do it as quickly as possible. Ideally, we wouldn’t use debt to purchase items in the first place. However, the fact is that most of us have some sort of debt. The less debt you have, the less money you will have going out…and the more you will be able to save! So, it stands to reason that the faster you pay off your debt, the quicker you will be able to become rich.

For some, paying off debt can seem like a daunting task. That is why I recommend using the “debt snowball method.” Start by paying off the smallest debt that you owe first. Make minimum payments on the others. Once you have the first debt paid off, you then take the money you were using to pay on the first debt and add it to your minimum payment on the next smallest debt. In no time, you’ll be seeing progress and eliminating larger and larger chunks of debt. The faster you eliminate your debts, the quicker you’ll be able to save!

Conclusions

You didn’t think that there was actually a way to shortcut building wealth did you? Building wealth takes time and effort. While using these methods will help you to get on the path to building wealth quickly, they are not the traditional “get rich quick” schemes you may have had in mind. However, if you follow these steps, you will see a change in your financial health in no time. Before you know it, you will feel rich too!

How about you all? Do you think it is actually possible to “get rich quick,” aside from winning the lottery or receiving a large inheritance? 

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/68751915@N05/6355220839

How Frugal Is TOO Frugal?

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

The following post is by MPFJ staff writer, Kelly Gurnett. Kelly runs the blog Cordelia Calls It Quits, where she documents her attempts to rid her life of the things that don’t matter and focus more on the things that do. You can also follow her on Twitter and Facebook.

How Can You Save Money in the Presence of Rising Day Care Costs?

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

Many people have been deeply impacted by the economic downturn. With rising inflation and high levels of unemployment, parents are facing quite a few hurdles when it comes to managing day to day finances. For parents with young children, the struggle is even worse since child care costs have been rising sharply over the last few years.

According to a study by the National Association of Child Care Resource and Referral Agencies (NACCRRA), it has been reported that the cost of child care today exceeds that of sending a child to college across many states in the US.

It has been estimated that the average cost for day care in the U.S is around $11,666 per year ($972 a month). The cost of day care does vary depending on several factors such as location (urban vs. rural), the reputation of the day care, the number of days a child attends day care, as well as the number of children being cared for. Day care costs are typically higher in urban cities versus rural cities. The highest costs have been recorded in places such as New York, Washington, Colorado, California and Wisconsin where day care expenses for infants and toddlers is known to be well over $10,000 per year. On the other hand, the lowest prices for day care for infants and toddlers were recorded in Kentucky ($6,500), South Carolina ($5,800) and Mississippi ($4,650).

These steep prices make it extremely difficult for a lot of families to pay for day care. While the current rates for child care are becoming unaffordable to many, it is not feasible for many families to go without it since many households need both spouses to work to make ends meet.

Below are a few tips that can help to reduce day care costs:

Pick the right kind of day care

Many parents send their children to very expensive day cares, with hopes that their child will be safer or learn more. There are a lot of day cares out there that are more affordable and can most likely provide what you’re looking for if you do your research. Ask friends, family, and colleagues at work if they know of any good daycares. You can then pick a few and check them out personally before deciding on one.

Baby sitting co-operative

This is a fast developing practice in a lot of urban households where parents in a particular neighborhood get together and look after each other’s children. Every time you look after a baby of your neighbors, you get the required number of hours credited in to your co-op account. Then you can later trade when you leave your child at the care of another parent while at work. This can be a very effective way to cut costs.

Tax credit for child care

There are tax credits that assist employed families to pay for their child care expenses. Federal tax credits can help you save up to 35 per cent in child care costs. If you qualify, you can claim $3000 for one dependent and $6000 for two dependents.

Ask family members to help

If you live close to family you could ask for their help once in a while to look after your child. Parents or grandparents especially can be a great source to ask if they would like to baby sit. I have many friends who save thousands on daycare because their parents are retired and taking care of their children during the day. One of my friend’s parents even cooks dinner every day for them to take home. Another option can be to invite family members over to your place for a month during the summer so they can help you take care of your child when you’re at work.

Coordinate with your spouse

Prioritize work in such a way that either you or your spouse can watch your child in shifts. You can coordinate your schedules so one person is always home with your child. For example, one parent can take the day shift while the other works the night shift. Another option is for your child to go to day care part time instead of full time. One parent could work Monday to Friday and the other parent could try to get a shift where they work from Wednesday to Sunday. This would mean the child would only go to day care three days a week instead of five; this can significantly cut down on day care costs, especially if you have more than one child.

Work from home

This in the long run, can turn out to be a viable option for a lot of parents. It may be hard to work while they are up, but while they are sleeping or watching TV, you can try to get work done then. There are several jobs out there that will allow you to work from home, sometimes you just have to ask. You never know, they might just say yes.

How about you all? Does your child go to day care? If so, how much does it costs? If not, what alternative do you use?

Share your experiences by commenting below!

Is it Cheaper to Live on the Top or Bottom Floor of an Apartment Building?

For the past two and a half years, I’ve lived on the upper level of my two-floor condominium apartment building.

On a non-financial basis, it’s worked out very well for us so far.

• Being on the 2nd floor, we have a little more privacy on our balcony as well as from people walking by on the sidewalk outside not being able to see inside our living room.
• In addition, I feel like it’s a little more secure since it would be harder to break in to our windows being elevated off of the ground floor.
• The only half-way negative thing I can think about for living on the second floor has been that it is a little harder to carry in large objects and lots of groceries after big shopping trips.

However, the other day, I got to wondering whether or not living on the bottom level of our two-floor building would actually be less expensive from a financial standpoint than where we live now on the top floor.  The purpose of this post will be to investigate an answer to this question. Let’s get started!

After thinking about this question for a few minutes, I hypothesized that there would be three primary factors that would influence the cost being different for living on different stories of an apartment building: market value of the dwelling (can be rolled up in terms of measurables as monthly rent or condo purchase price), air conditioning, and heating.

Rent/Condominium Purchase Prices and Moving Costs

In my personal experiences renting apartments over the past 4 years and also purchasing my current condominium, I’ve found that apartments on the ground level tend to be more desirable and higher-priced (especially in places with narrow stairways and a lack of an elevator). When I lived in a suburb of Philadelphia, the top floor apartment I had was about $50 per month less than the same unit below me. In addition, in my condo complex, units on the ground floor tend to sell much faster and are also more expensive in terms of listing price.

Of course, all of these experiences were in quiet suburbs or smaller cities, not in the middle of a 20 million person metropolis where street noise might make lower level apartments much cheaper and less desirable.

In trying to find some answers outside of my personal experiences as to how real estate prices and moving costs compare for different stories of the apartment building, I came across the following details:

• While I don’t remember encountering this during my moves to second-level apartments, I came across an article from Yahoo about someone saying that they had to pay the moving company a premium in order to move to an upper level unit because of the increased time and effort it would take.
• A Telegraph article from the UK reported that flat values can decrease by up to a whole 1/3 as you move from ground floor units to 4th floor units

From these findings, it seems to be that it is cheaper to live on the upper floor than the bottom floor as far as real estate prices and rent are concerned. 

Air Conditioning During the Summer Months

The next point of comparison I wanted to investigate between top and bottom floors of an apartment building is the price of cooling the place during the hot summer months. Since most air conditioners these days run on electricity, we’ll measure this price in terms of electricity usage/cost. 

Since 2008, I lived in a bottom floor apartment for 1.5 years, and then two top floor apartments for the remaining time. Although I don’t have exact numbers of my electricity bills prior to July 2010 when I moved in to a 2nd floor apartment, I remember that the electricity costs (for A/C cooling) were a lot lower for a ground floor apartment. Of course, this makes sense from a physical perspective, since density decreases as the average kinetic energy (temperature) of the air molecules increases, causing the hot air to rise to the upper floors in the summer.

In looking around the Internet to try to quantify this price difference, I was surprised to only find one report of actual numbers comparing electricity costs for A/C usage among comparable apartments on different floor levels. This report stated that the person paid an average of $84 per month when living on lower floors vs. $120 per month on the top floor. This represents an annual cost difference of $432.

Because of this evidence and other reports on general guidelines for cooling apartments, it seems that it is cheaper to keep a lower floor apartment air conditioned in the summer months than an upper floor unit. 

In addition, I did find several useful statistics about average cooling and heating costs per year that one should plan for (we’ll use these in a little bit after we cover the heating topic):

• A Zillow report stated that people generally spend about $300 per year on air conditioning, mostly running their A/C from May-September.
• A DailyGreen article stated that the average US household spends $375 per year to keep their air conditioning running.

Heating During the Winter Months

As temperatures decrease further and further during the cold winter months, heating bills can become a very large financial liability for individual households. For this analysis, we’ll consider natural gas heating.

For me personally, I have always had natural gas powered forced air heating systems. In my current place, the heating (gas) bill is included in the monthly $214 HOA fee. Of this total amount, $100 is actual HOA fees, and the other $114 pays for sewer, water, trash pickup, and gas/heating. The same HOA and utility fee is paid by all units in our condo complex year-round, irregardless of what level the unit is on. Electricity (includes air conditioning/cooling) is paid separately directly to the power company.

From what I’ve found online, the generally accepted principle is that it is cheaper to heat an upper level apartment during the winter since, theoretically, the hot air from the apartment on the lower floor will rise up in to yours. This of course assumes that the insulation on the roof of your apartment is high quality and won’t leak too much heat.

If we apply this principle to my specific circumstance, we’re actually getting a bad deal with this since our upper floor apartment is more expensive to cool during the summer and the same price to heat during the winter! But, what can ya do right?!

A December 2011 Scientific American article reported that the average US household spends $732 per year to heat their home. 

Conclusion – Is it Cheaper to Live on the Top or Bottom Floor?

From what we’ve seen in this investigation, the upper floor is cheaper in terms of rent/sales price and heating during the winter. We’ve also seen that it is cheaper to cool a lower level apartment during the summer.

So, which is cheaper?

Overall, I was nicely satisfied with the evidence for the difference in rents and real estate prices for apartments on different levels of a building. However, the heating and cooling cost differences were only based on generally-accepted guidelines, gut feelings, and personal experiences, not robust data-based studies. In addition, the evidence presented so far doesn’t answer the question of HOW MUCH you can save for heating and cooling by having a unit on a different level. But, when I sit down and think about it, I imagine that this is because these cost differences depend on so many factors (building construction, insulation, etc) that the data would either be 1) extremely hard to obtain or 2) not all that useful on a more global scale.

However, from the average US household heating and cooling cost data (includes all homes – not just apartments) presented in this post, one interesting conclusion might be provided. For example, we saw from the data that on average, it costs approximately two times as much to heat a house than it does to cool a house over the course of a year ($732 vs. $300-$375, respectively). 

To me, this somewhat tells us that on average, it might be better to avoid increased heating costs. And, if we have to pay more for air conditioning in order to get lower heating/gas bills, then this combined with lower rent/purchase prices makes the upper floor apartment the overall cheaper alternative.   

Of course, another thing I’ve learned from this investigation is that these cost differences probably aren’t as significant as finding a level of the apartment building on which you are most happy with the noise, walking up stairs, views, and other factors.

How about you all? Do you think it’s cheaper to live on the top or bottom floor of multi-unit/family apartment building? What factor would you expect to be most significant in the possible price differential? 

Share your experiences by commenting below!

Paper Towels vs. Hand Dryers – Which is Emperor of the Bathroom?

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

During a recent trip to Raleigh, North Carolina, I went to use the bathroom of the restaurant at which my family and I were having lunch. In this restaurant’s bathroom, they had both a hand dryer AND a paper towel dispenser! I was like, “Wow, I guess they couldn’t make up their minds about which method people might like more!”

As a result of this experience, it got me wondering how paper towels and hand dryers stack up against each other when it comes to both the following aspects:

• Which is more popular among consumers?
• Which is cheaper and has a lower amount of environmental impact?
• Which is more effective at drying and being sanitary? 

In today’s post, we’ll explore these questions and try to find some answers! Let’s get started!

Are Hand Dryers or Paper Towels More Popular?

In order to get started answering this question, I first wanted to know which one of our two ‘bathroom drying competitors’ is more popular, among bathroom providers stocking them and also as far as favorites among customers.

The answer to this was very unanimous in that every source I could find stated that paper towels were much more popular among customers and also among janitorial services that service and provide bathrooms.

• A 2008 study of European consumers cited by Wikipedia stated that 63% of respondents preferred paper towels over hand dryers (only 28% of respondents preferred hand dryers). 
• This trend of consumers preferring paper towels over hand dryers was also confirmed by studies reported by Livestrong.com and Kimberly-Clark stating the 55% and 87% of consumers surveyed, respectively, preferred paper towels over the “other” electrical option. 
• Janitorial service companies prefer to stock their bathrooms with paper towels since this provides them with more billable man-hours to clean and restock the restrooms they service. 

Which is Cheaper and More Environmentally-Friendly?

Contrary to the results of the previous question on popularity, hand dryers clearly reign supreme in the categories of cost-effectiveness and environmental responsibility. 

• A 2011 Guardian report stated that paper towels generate a total of 70% more carbon emissions over their lifetime compared to the newest cold-air dryer technologies (Dyson Blade, etc). 
• A Rodale report stated that even though the initial capital costs for a hand dryer is higher ($300-$400 versus $20-$30 for a paper towel dispenser), the increased operating costs for paper towels over electric hand dryers makes the latter more cost effective in the long-run. 
• For example, paper towels cost $23 per 1,000 uses to refill. On the other hand, electric hand dryers only cost $1.47 per 1000 uses for the electricity. 
• In addition, it was reported that hand dryers often last 10 years before replacement is needed and require virtually no maintenance to keep running. 

Which is More Effective at Drying?

Which is Better for Personal Hygiene?

Because of these conflicting results, it’s hard to tell whether one method is superior to the other for cleanliness. 

So, Are Paper Towels or Hand Dryers Better Overall?

From this investigation, we saw that paper towels are both more popular and more effective for drying consumers’ hands. However, hand dryers are cheaper, better for the Earth, and possess about the same level of hygiene.

As such, I think that if I were a business owner, I would insist on installing a high-powered (new technology) hand dryer and NOT having paper towels since paper towels simply drive up my costs.

Even if my customers didn’t prefer the hand dryer to paper towels, I doubt that alone would be enough to prevent them from doing business with me.

How about you all? Do you like paper towels or a hand dryer better for drying your hands?

If you had a business, which would you install for your customers to use?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/marktee/6009596457/sizes/l/in/photostream/

Are You Guilty of Irrational Money Decisions?

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

Our Biggest Irrational Money Decision

Spending Big Bucks at a Restaurant and Balking at Grocery Store Prices

Chasing the Lowest Gas Price

How to Combat Your Irrational Money Decisions

***Photo courtesy of http://www.flickr.com/photos/dave_mcmt/278891555/

Should You Need a License to Get a Loan?

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

***Photo courtesy of http://www.freedigitalphotos.net/images/Finance_g198-Person_Siging_On_Loan_Application_p40358.html

Going Back To School is Different the Second Time Around

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

The decision to go back to school

Going back to school affects your finances

How about you all? What is your dream and what are you willing to sacrifice to achieve it?

Share your experiences by commenting below!

***Photo courtesy of http://www.flickr.com/photos/lollyknit/336511240/sizes/o/in/photostream/

4 Places Women Should Avoid When Getting Out of Debt

————————————————————————————————————————
Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
————————————————————————————————————————

4. Day Spas: 

3. Upscale Restaurants:

• Parmesan crisp

• Prosciutto-wrapped ___________ (fill in the blank)

• Warm fig and balsamic reduction

• Quattro formaggio

• Chowder (especially preceded by ‘clam’)

2. Discount Retailers (Marshall’s, TJ Maxx, Ross, Nordstrom Rack): 

1. To Visit Your Friend Who Has a Compulsive Shopping Problem: 

***Photo courtesy of http://www.flickr.com/photos/spcbrass/4557822128/sizes/l/in/photostream/