Frugality is not About Deprivation-and Here’s Why

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The following is a guest post by The Frugal Goddess. The Frugal Goddess is written by Annabel Ascher, a resident of Sonoma County California. She has lived a life of economic extremes, from great fortune to sudden poverty. She relearned the secrets of frugal abundance all over again when her circumstances changed in 2007. Faced with the death of her husband and loss of livelihood, she had no choice but to change her lifestyle.

When times got tough Annabel used everything in her frugal tool kit to develop a system that will work for anyone to save money, live well with limited funds, and eventually restore prosperity. Many people are now realizing that more  stuff does not equal more happiness. Let the Frugal Goddess show you how to live frugal, green, and happy!

When I tell people what I do there are several common reactions. Or perhaps they should be called misconceptions. One of the most common is the idea that frugal people live a life of deprivation. In fact the opposite is true. It is the spendthrift that ends up living a life a deprivation, especially in old age when it is too late to do anything about it.

If you look at the very rich, the families that were self-made in this generation were all extremely frugal when they were first amassing their fortunes. And the ones who came by their fortune in a previous generation always have a frugal ancestor. What you give up when you become frugal is not prosperity but immediate gratification. Just think about it—it is almost impossible to amass wealth and amass a pile of unsecured credit at the same time.

But doesn’t that mean that you must suffer a deprived life while you are in the building phase? Not necessarily. You may have to adjust your concept of fun and luxury a bit, but there are lots of ways to make yourself feel good without spending a bundle. All the best things in life may not be free but some of them are. Next time you get the urge to pull out your wallet for some passing fancy, go fly a kite. Hug a kid, or watch the moon rise instead. And think about how spending on something small but unnecessary today will keep you from buying that house or taking that big trip later. No, frugality is not about deprivation at all. It’s about having the patience and discipline to go after what you really want. For more info on The Frugal Goddess, check out www.thefrugalgoddess.com

 

Is Greed Costing You Money?

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You may think you are a tight fisted miser because you aren’t playing the lottery or gambling away a lot of money in Vegas. You may not fall for those late night infomercials touting the latest get rich quick scheme in real estate or forex.

As a result, you may not view yourself as all that greedy. But there may be some instances of what seem like reasonable business decisions that in a quest for greater profits may actually be costing you money. Allow me to share with you two examples.

Pricing Rent at Below Market

I own a few rental houses which I plan on being able to provide a retirement income someday. When I was a new landlord, I read several books on the subject of investing in real estate and managing property. One of the best pieces of advice I read was to price the rent at the lower end of the market.

For example, if most houses are renting for $1000 per month in your area, price yours at $950. “But that means less profit to me!” Not really. There are several reasons why it will actually mean more profit.

1. Greater tenant selection: There will be many prospective tenants who see your ad and want to fill out an application. It is much easier to find a decent tenant if you have 20 from which to choose instead of just 2.
2. Quicker turn around: Assume it takes one week to find a tenant for your empty place at $950 versus one month at $1000. That 3 week difference equates to $750 in revenue. At an extra $50 per month, it takes 15 months to make that back. If the tenant moves after one year and you repeat the process, you just lost money, which leads to number 3….
3. Tenant Stability: Tenants are always looking for cheaper rent. If they can’t find it elsewhere, they have no reason to move and you will have little turnover with the costs associated with advertising a vacancy, making repairs, cleaning for the next tenant, etc. I have had several tenants in place for almost 5 years now so I can collect rent consistently month after month.

Making Money with a Blog

Here is another example from my personal experience. I run two blogs, Cash Flow Mantra and Grand Per Month and will be starting a third in April. I do all the writing for Cash Flow Mantra myself but would have no way of doing it for both. So, I have hired some writers to help with about half the content for Grand Per Month.

Even though it cost me money in January, I was able to make a profit with Grand Per Month in only the second month of its existence despite paying for some of the content. That is because of the help that I get managing my private advertising.

I had been using this service and paying a commission for Cash Flow Mantra realizing that I didn’t have the skills or the contacts to bring in any real ad revenue on my own. So rather than be greedy and balk at paying the commission, I figured that 75% of something was more than 100% of nothing. You see, greed could have cost me in the guise of making a business decision. But it didn’t and I have much more profit than I might otherwise.

Do you have examples from your own life that looking back were influenced by your desire for money which may have actually cost you in the end? Any instances where you should have sold that stock but didn’t because you wanted more? Feel free to share in the comments below.

What Does Rich Look Like?

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This is a guest post from Jana at Daily Money Shot, a blog about money at the intersection of life, pop culture and everything in between.

I don’t know what a rich person is supposed to look like. When I see celebrities or people I think are rich, I don’t notice anything special about the way they’re dressed or the way their hair looks (except at awards shows when the jewelry is worth more than my entire neighborhood). I can’t tell the difference between a $400 white t-shirt and a $14 white t-shirt. Rich people don’t talk any differently and I certainly wouldn’t know if they spent their Saturday nights dining at some expensive restaurants or crashed on their couch watching old reruns of “Cheaters”. I’m fairly certain that, even though their bank accounts are way bigger than mine, they’re not all that different.

I don’t know what a poor person is supposed to look like either. In fact, I wouldn’t even know how to tell if someone was poor, for a lot of the same reasons I mentioned above. And, given the amount of celebrity shoplifters, there’s no way to tell if a rich person or a poor person, or even a middle class person, is going to steal. Apparently, though, a security guard at a jewelry store near my house does have that keen of an eye.

A few years ago, my husband and I went into the store to get my engagement ring and wedding ring cleaned. We were dressed in jeans and coats (it was winter, sometime in January) and had our infant daughter with us (who was in a stroller). We didn’t look any different than anyone else in the store, yet the guard targeted us as the thieving type (I assure you, we’re not). He then proceeded to follow us around the store for the entire time we were there. It was awkward, uncomfortable and made me feel awful. To this day, I refuse to go back to that store. I don’t ever want to feel like that again.

So why am I telling you this? I’m not really sure, quite honestly. Maybe it’s to point out that the old adage “you can’t judge a book by its cover” is completely true. While the guard at the store may have thought we looked like shoplifters, we sure weren’t. Taking it one step further, someone may look rich, but that doesn’t mean he is. And when we start comparing ourselves to people we think are one way without knowing the real story behind it, that’s when we enter, to quote the great Kenny Loggins, the danger zone.

The danger zone is where we start spending money we don’t have on things we don’t need, not just to keep up with the Joneses, but to surpass them. It’s where we look at our friends and family and, not knowing the intricacies of their finances, start getting ourselves into debt to impress and outdo them. They went to England for a week? We’re going on a 15 day cruise of the Greek Islands! They bought a 50” TV? We’re buying a 65” TV! He proposed on the beach? My finance proposed on a glacier! It goes on and on. The competitiveness is sickening. And a financial time bomb.

Why do we do it, then? Is it some need to keep up with what we think rich people do? Is it a need to seem “better” than our friends or wealthier than our friends? Perhaps we’re insecure and this is the way we can feel superior or envied. We want people to think we have money so we structure our purchases to look like we do. It’s a self-fulfilling prophecy that, at the end of the day, leaves us still feeling insecure and with an emptier wallet.

I’ve been guilty of spending for those reasons. I did it a lot in my 20s. But as I get older, I realize how foolish it actually is. I’ve learned that most people who look “rich” aren’t rich at all. They’re just like everyone else.

Because really, what does rich look like?

Cut Your Expenses By Slashing Your Cable TV Bill

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The following is a guest post.

Do you get a little angry every time you take a look at your cable bill?

Have you ever stopped and thought to yourself ” why am I paying this much just for television every month?”

If so then you are in the same boat with millions as millions of other Americans who are getting nickeled and dimmed to death by the cable industry.

Here is a secret that I think very few people realize: cable television is a luxury item and the industry as a whole keeps raising rates because as a whole Americans complain a lot but still end up paying it.

Any rational person’s path to cutting his expenses and getting out of debt should include finding a way to slash his monthly television bill.

If he has his cable, Internet and phone in a bundle package then he should look to cut that expense by a large percentage as well.

As a person who has worked for three cable and two satellite companies I am going to explain the easiest way to do it.

Negotiate A Better Deal With Retention Dept

The customer service department can do practically nothing for you. On the other hand the retention department can do wonders.

Ask specifically for them so you can be on the phone with someone who actually has the authority to help you.

Its crucial that you become a aware of the competing cable companies in your area.

Take a look at the deals you see them advertising online. Write them down on a piece of paper for further reference.

Should no other cable company exist in your area then you will need to look at the offers that the satellite companies are offering.

Either DISH or Direct TV will be fine. Take their medium package and use their online tool to add in any extra equipment you have (IE. extra HD boxes or DVRS).

The total price of the competing company’s promotional rate will usually be at least $4o cheaper than what you are paying now.

In most cases it will be a lot more.

When you are speaking with the customer retention specialist you need to make sure you sound very polite but firm at the same time.

Explain to them that “you like the service and want to stay with what you currently have but feel like the deal you are being offered by XYZ company is too good to pass up.”

Tell them that you and your family are trying to cut back on expenses and can no longer afford the package that you have at its standard rate.

Nine times out of ten you will get a significant discount on your total bill.

I gave one of my friends who was complaining about his cable bill last week these exact instructions.

He had Cox Communications and was paying approximately $110 a month just for cable television, one digital home recorder (DVR) and one additional high definition box.

I told him to call Cox and tell them that he could get the exact same cable package with the same equipment from Direct TV for $50.99.

He did what I told him and the retention department offered him his same cable package with free Showtime for three months for $65 for six months.

Not bad.

I was listening to the conversation and told him to ask for a longer promotional period. My friend did not think they would go for it but I urged him along.

Sure enough the retention rep did it.

She didn’t give any resistance whatsoever and with one push of a button gave him a year long promotion that will have him $45 a month. That translates into $540 a year!

While I was proud of my friend I was also disappointed in myself.

That was good but I felt that I should have pushed him more.

I should have got him to push them further to add one more premium movie channel with the deal and up his Internet speed.

Why not? These cable companies spend a lot of money getting you. You might not realize this but hundreds of dollars in advertising were spent so that you know they exist.

Additionally, they probably subsidized a large portion of your installation costs.

If they loose you as a customer then at some point in the future they will have to spend hundreds of dollars to get you back.

Giving you another promotion actually saves them money in the long run.

You have more “aces” to play the more competing companies there are in your local area.

Depending on what deals are currently being offered you might be able to get your cable company to discount your bill well beyond what you ever thought was possible.

I say shoot for the stars. You have nothing to loose and only a lot of money in savings to gain. Whenever you think you are asking for too much go ahead and ask for more. After all, they ask you for more money every single year.

Have Credit Cards Let Us Down?

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Author bio: This is a guest post from Steve who writes about personal finance from his unique perspective at Money Infant. Once you are done here head over there and say hi. Tell him Tight Fisted Miser sent you!

It’s a silly question really. Credit cards aren’t like people, they can’t let us down. They are simply pieces of plastic used to access a line of credit granted to us froma bank or other lending instituition. Credit cards aren’t good or evil, they are simply another tool in a large arsenal of financial tools. If anything it is us who have let ourselves down through our poor understanding and use of credit cards.

What is a Credit Card Really?
A credit card is a card issued by a financial institution that gives the holder the ability to charge goods and services (borrow money) usually at the point of sale. Credit cards are meant to be used for short term financing and as such typically charge high interest rates. Borrowing limits are set by the financial institution issuing the card and are determined based on a set of criteria including FICO scores, current outstanding credit, outstanding credit line used and other factors.

Why We Feel Let Down
Many of us are carrying large amounts of credit card debt and feel as if we can’t escape from the credit card treadmill that we find ourselves on. I know exactly how this feels because I was once on the same treadmill. You feel loss of control, overwhelming frustration and as if the credit card company let you down. The problem is we didn’t understand the proper use of credit cards – short term financing. The credit card didn’t let you down, you let yourself down by using this tool incorrectly.

Proper Credit Card Use
To enjoy the benefits of credit card use (ease of payment, cash back and points programs, increased credit score and financing options, lowered interest rates) we need to learn how to use them properly. It really isn’t difficult if you can simply keep in mind that credit cards are meant for purchases that will be financed for 30 days or less. Typically it is after 1 month that interest begins to accrue, so if you pay your card off before this you avoid the hefty interest charges and using your card isn’t really any different from cash.

No matter how betrayed by your credit cards you may feel the truth is they are there to help you if you can understand them and use them the way they are meant to be used