Frugal Kick

The Writing on the Wall: Recession, Again

A CNN poll conducted over the weekend revealed that 59% of Americans believe another economic depression is at least likely, if not very likely. The results don't surprise me.

Historically, when the economy has struggled, my husband and I have been lucky to not feel it immediately. We're employed in sales and finance, and generally are not the first jobs to face layoffs in tough times. So, I know that when I start to fear losing my job, the economy is officially in the toilet.

The question is, when is the National Bureau of Economic Research going to declare this puppy a recession? Even rapper Young Jeezy has beat the NBER to it, releasing an album in September titled "The Recession" and offering these Buffett-esque words of wisdom, "Now that money slowed up, I'ma be the one telling you to save it like they ain't gon' make it no more."

Frugal Report Card - Month 1

It’s been a month since I started on this frugal kick and it’s time for a monthly check-in.

I’ve identified six budget-busting spending categories that I want to reduce over the coming months. Here’s a quick description of what each category includes:

1. Dining - all eating out, except business-related meals that my husband’s company reimburses.
2. Home furnishings - things like furniture, decor, etc. that are usually one-time purchases.
3. Utilities - gas, electricity, phone, cable, internet, trash, water. I’ve included this category, even though these are essential expenses, because our family is wasteful when it comes to turning things off to save electricity, running the air conditioner all day, leaving faucets running, etc.
4. Cash - this is the black hole of our spending. We withdraw cash from the ATM and then have no idea where it is spent.
5. Groceries - food and other household supplies purchased at the supermarket.
6. Household - things like toilet paper, paper towels, toothpaste, cleaning supplies, etc. that need to be replenished every few weeks.

For the month, I spent $800 less in these categories, and it was nearly painless. I’m tracking all of this in Quicken Online, and I analyze it in Excel. Here’s a simple graph that illustrates this month’s spending.

As expected, cutting back on eating out kept a lot of cash in my pocket this month. Instead of eating out for lunch and dinner nearly every day, I packed a lunch most days and cooked dinner four to five times each week. I spent $200 more on groceries, but $500 less on dining out!

I saved another $200 between home furnishings and household expenses by resisting the urge to stock up. Instead, before heading to Target or Sam’s Club, I made a mental list of the things I already had a few weeks supply of (paper towels, toilet paper, soap, soda, etc.) and created a shopping list of the things that would run out within the week. Then, I stuck to the list.

Next month’s goals are to shave $100 off utilities and an additional $100 off groceries by being vigilant about turning off lights, using the air conditioner less, taking advantage of sales at the supermarket, and beginning to use coupons.

Stay tuned!

Your Bill for the $700 Billion Bailout

Some simple math for a complicated issue:

U.S. population is 300,000,000. The cost of the bailout is $700,000,000,000. Divide. Carry the one. Ta da! Your bill is $2,333, or $9,332 for every family of four.

I’m neither an economist nor politician, and don’t pretend to understand this $700 billion bailout. But that $700 billion has to come from somewhere to fund this plan.

Now that’s NOT frugal!

Frugal Lessons Learned

One of my favorite comedians, Mitch Fatel, tells a joke about his sister having cases of ketchup stockpiled in her basement. Mr. Fatel points out how foolish that is because if times get tough, her money is tied up in ketchup. And that the wiser solution would be to stop eating foods that require ketchup.

So with that in mind, I reflect on some key frugal principles I've learned so far on my journey to frugality, the first of which is a take-off of Mr. Fatel's observation.

• Stash your cash in liquid assets (ketchup doesn't count). Lose the Costco mentality and buy what you need, when you need it. Only buy in bulk for those items that you use a lot of and can go through in two weeks, at most. The cash you're saving should go into a savings account.
• For a larger purchase, buy the best quality you can afford and then take care of what you buy and treat it as if you will never buy another one again.
• Every little bit counts. Don't set yourself up for failure by adopting an all or nothing mentality.
• Organize. The better organized your home is, the easier it is to know what you do or don't have. Plus, you're less likely to lose things that you'd then have to go out and replace. Countless times I have purchased something (everything from a bottle of cinnamon to a sheet set), only to later discover I already had that item stashed in a cupboard or buried in the back of a closet.
• Plan. Planning is a huge money saver because convenience costs. Whether that means purchasing prepared foods as a last minute dinner, or buying a last minute gift or school supplies that you could've purchased on sale or with a coupon with a bit of planning.
• Limit trips to the store or mall or, in this age, online stores. The less time you spend there, the less you're likely to spend.   

Are We Headed for Depression 2009?

Warren Buffett said in April that the recession will be "longer and deeper" than most people are expecting. With all the commotion on Wall Street last week, the forthcoming financial institution rescue plan, and little good news to speak of, it looks like he's right.

If my family and circle of friends and acquaintances are any indication, the economic troubles that started on Wall Street are careening down Main Street and crashing through front doors. My company is regularly laying off people, a close friend who is a dentist is seeing less patients, my husband is closing fewer sales and has fewer prospects, and an acquaintance who is a pastor is collecting fewer donations each week.

But are we headed for another Great Depression? At that time, unemployment levels were at 25% and being frugal was a way of life, not an option.