Monday, October 6, 2008

For the Thrifty, Quality Matters MORE

Today I had the opportunity to go to lunch with my team at work. It was a company sponsored working lunch (which is a polite way of saying that I didn't have to pay for it). This was a particularly nice treat because I've been making a concerted effort to bring my own lunch to work each day. First, it allows me to eat healthier, second it wastes less time than finding someplace to eat and waiting for food, and third it undoubtedly saves us money. In fact, we've been pushing hard to eat out less overall. Interestingly, this means that quality is even more important when we do.

This goes against the conventional wisdom that saving money is all about taking the cheapest option and forgoing quality. In fact, this is what being frugal always implied to me: a choice to focus on price over quality. I find that as we become conscious of our spending however, quality is actually more important than price. Now that we're eating out less, eating out is more of a special treat, which means that we can afford to pay a bit more if we choose to but it had better be darned good!

So back to lunch today. We went to a rather tony restaurant where my small plate of pasta cost $15 for lunch... and it was terrible! Really bad. And you know I was relieved that I didn't have to pay for it, because if I had I would have been angry. In fact lately it seems that when we have made the choice to go out it hasn't been as good as we'd have liked. And the more we spend, the more disappointed we seem to be. One recent exception is a local Teriyaki place that's actually really cheap. You always get plenty of food and it's always delicious. Typical plates are $6-8 -- for dinner! But while I love that price, what's more important is that the quality is equally good. It really does feel like a treat.

I know that restaurants struggle with the slowing economy. Food and operating costs have surely increased for them just as for us. But what they have to remember is that a restaurant is a luxury. It's a treat that we choose to enjoy, not something that's required. You may have to adjust your menu or prices to cope, but you cannot get away with poor quality or service. When we were eating all the time a bad experience, while unpleasant, was only temporary. Tomorrow night we'd just eat someplace else. But when dinner out is a rare treat the quality matters even more.

It's the same with many things. If spending $9 on a movie ticket is a special event, you want the movie to be good. If you stop buying every new video game release, you're going to be more selective about the one you do buy. When clothing purchases are planned specifically for occasional wardrobe-building (as opposed to your weekend hobby) then those clothes had better last. That means quality.

The past decades of overconsumption have made quantity more important than quality. If you see every new release in the theater it's OK if some suck. If you buy every new game it doesn't matter if you never play half of them. If you come home with bags of clothing all the time who cares if some fall apart or go out of style after only two wearings? But that's changing now for many people. Because being thrifty means seeking out quality as well as value. And thrifty has come back into vogue.

Wednesday, October 1, 2008

Natural Cycles

It's been a difficult month. There's been a lot going on and a lot of changes. Kid starting school, visitors, returning guests, changing weather, illness, and so on. The result is that our energy levels are quite low. In recent years I've realized that the key to dealing with these times is to acknowledge them and not berate myself for all the things I'm not doing. Instead, I need to conserve my energy and put it toward those things that are most important.

This is good advice for any kind of crisis, including financial. And "financial crises" does seem to be on everyone's minds lately, doesn't it? In my two part article, Filling The Well, I talked about building up a reserve during the good times in order to have a cushion for the bad. Financial certainly, but also mental, emotional, and physical. Part two of this article has lots of practical advice and steps for starting those reserves from scratch when you're completely tapped out. However, what I didn't go into as deeply were techniques for ongoing maintenance.

Now is the time -- when I first realize that we've been too busy, stressed, rundown, and ill -- to start working on those reserves. It's easy to wait too long and run completely out of gas before thinking about mitigation. But that's a mistake. To use a financial metaphor, the earlier you realize that your checking balance is low, the more options you have to fix it. If you wait until after you start bouncing checks, things will be much more difficult. This is where the prosperity key of introspection comes in handy. Keeping an eye on yourself let's you identify problems early (just like keeping an eye on your account).

So once you realize that you're heading toward a low ebb, how do you fix it? One thing that works for me is to triage -- which is basically extreme prioritization. What's most important? What can wait and get deferred until later? What can get canceled altogether? For me that means focusing only on:
* Our family's health
* The day job and school
* The budget

And that's it. Everything else gets postponed in order to give us time to recuperate. Physically we put the focus on eating well and getting enough rest. Mentally, we take a break from worrying about the small stuff. Emotionally, we spend time together strengthening our connections. At the same time, we work on making sure that priority issues are handled. That means deadlines and homework, bills and budget will still get done if at all possible.

It's hard to put other things on hold. To make excuses for existing commitments and avoid taking on new ones. But it's worth it. Because by focusing on building reserves the rough patch goes faster, which means I can get back to working on all those other things sooner. This is better than dragging along, overallocated and exhausted until I collapse and nothing gets done. And taking off a couple of afternoons early to grab a nap is better than getting completely ill and missing a week of work -- better for me as well as the job.

It's also critical that I not kick myself for what I'm not doing. I had this experience yesterday walking home from the bus. I was thinking about all the things I wanted to accomplish this autumn that I hadn't yet -- and here we are in October already. But then I realized that September was the craziest month we'd had in a long time. It's OK that we didn't get more done. In fact, it's smart.

Sunday, September 28, 2008

Oh Autumn -- domestic bliss

Commenting in another blog suddenly gave me a big case of guilt about this blog. I'm woefully behind on posting (and only one post short of completing my Keys to Prosperity series!). However as the seasons turned, things got awfully busy. Here's what we've been up to (and how it ties into living the prosperous life):

* The day job! I've been reading a lot lately about how your regular income is a key component of your investment portfolio. BusinessWeek has an article about asset allocation based on your industry and career risk. Over at The Simple Dollar, Trent points to that article but then expands the idea into a more broad-based (and to my mind more useful) direction: viewing your career as an investment. I remember reading a quote from Warren Buffet about how the average person should invest most heavily in their career, it being the best, safest, and most regular source of income you have.

Work's gotten busy, in part because I recently requested a new position with my company. I love it, but there's a learning curve. Still, it's a step in the right direction for my career and a whole lot of fun. So I'm putting in the time to ramp up and get started out right. It's paying off. I'm still keeping a sharp eye on my work/live balance, since this has been an issue in the past, but things are going well.

* The little one. We have a little one who's just started Kindergarten. We're all still adjusting to the different schedule and new responsibilities. She loves school and is still so excited to go each day. At the same time, she's been more demanding in the evenings and weekends and is just a bit clingy. We're giving her the extra attention she needs while setting ground rules about homework (once a week at this point), dinner, and bedtime. The time we invest here brings infinite returns of course.

* The "homestead." Fall's brought a new focus on domesticity and thrifty living. We've been looking at ways to save and not be deprived. For example, we tried Trent's recipe for homemade laundry detergent (it's working great and was fun and easy to make) and also homemade dishwasher soap. Hint, if you have a ice cream shop around, call and ask about their tubs. We got a ton of free creamery tubs -- food grade, sanitized, and a perfect 3-gallon size. Much more convenient than the larger 5-gallon ones.

We bought a bread machine and have made a commitment not to buy bread from the store anymore. Having fresh bread around without having to be around to make it is great (I love making bread by hand, but simply don't have the time). And naturally there's no comparison in terms of cost. The basic recipes are somewhat bland, but we found a recipe for bread machine bread using a sponge that's really quite good. Next, we're going to try bread with a bit of almond meal as well as pizza dough and sweet rolls. It's inexpensive experimentation and none of our errors so far has been inedible.

Homemade gelato, chicken stock, and other wonders. Cooler days make cooking a more appealing prospect. My husband the chef has been making wonders in the kitchen (the second time I ever saw him, he cooked for me and I said "I'm going to marry that man").

* Creative stuff. I have a number of crafty hobbies that I enjoy as well as some art that I struggle with. Now that we're not camping every weekend, I have more urge and incentive to create things. For example, I made the little one some simple skirts for school and tried a new technique for each one. I hemmed some pants for my husband and did some mending. I took up my knitting. All inexpensive (the way I enjoy them) and stimulating. And I got out my sketch book, which is something of a big deal. These thing are good for me and make me feel more creative and productive in all areas of my life.

So that's what I've been doing and it's all doing well.

Monday, September 15, 2008

Real Inflation

In my article on Taste Inflation, I talked about how over time our tastes for the good things in life tend to inflate. But as useful as it is to think about, a more pressing issues for many families (including us) is real the actual, literal inflation that's driving up costs. When I went searching for information on current inflation rates, I found a lot of people claiming that the government's numbers (2-3% a year) were incorrect / fudged / outright lies. Other's take a more moderate attitude and explain it as a combination of perception, time-line, and variation in shopping habits.

I'm not about to weigh in on the "is the government lying to us?" debate, but I will say this: it doesn't matter what governments or pundits say about inflation, what matters are your own monthly expenses and how they rise and fall. I mean, let's be pragmatic, the fact that electronic prices have fallen doesn't help you if you aren't buying electronics. But just about everyone pays for food and fuel, and these are where prices have risen most sharply.

Food and fuel are not only a large chunk of many families monthly budget, they are also some of your more flexible expenses. You can't exactly change your monthly rent or mortgage payment, but you can adjust your eating habits and transportation choices. We've been noticing the pinch lately and have made some changes to how we operate and what we buy.

I already wrote about using coupons for groceries and household items, but now we're doing even more:
  • Eating out? No way! We've been eating out a lot less frequently and have been eating cheap when we do. What do I mean by cheap? First, we stick to places where the cost is low. This includes our favorite hamburger joint and a national subway sandwich chain. Second, we get takeout instead of eating in. That eliminates some of the cost (and increases the health factor of the meal) because we have milk / water / juice at home instead of paying for sodas. In fact, the few times we've eaten out recently have been disappointing... perhaps it's a sign.
  • Grocery store flip. We used to shop primarily at a local healthy foods chain (similar to Whole Foods) and supplement with visits to the regular chain store. Now we've flipped that. We shop first at the chain and then anything else comes from the healthy store (they have the best prices on free-range eggs for example). By shopping at the "regular" store first, we've been saving a ton.
  • The juice quandary. I was miffed when our favorite brand of bottled OJ (100% natural, not from concentrate) shrunk the bottles, but kept the price the same. I complained and they even sent me some coupons, but this didn't solve the larger problem. 100% juice was non-negotiable, but we needed to cut the cost. So, we turned to frozen concentrated juice. For a tiny fraction of the price of bottled juice, we can get 100% juice drinks in a bunch of flavors, including orange juice. Is it quite as tasty? No. But it's still delicious, healthy, and far from koolaid. My favorite brand of juices run $1.37 for a "can" that mixes into 64 ounces of juice. And there are a ton of combinations. We've been making popsicles with the juice and also use concentrate mixed with generic soda water to make healthy sodas for special occasions.
  • Organic... not so much. The one change I do regret is that we decided we simply couldn't continue to buy all organic paper products. It was just a huge budget killer. So instead we've been getting the regular stuff... but using more cloth napkins, rags, and towels to offset the resource usage. I've also been collecting the plastic bags I get from the regular grocery and using them when we walk our dog, as opposed to the special doggie bags we were buying.
  • And speaking of the dog... We've always fed our dog a national brand of quality dog food, but after the pet food recalls two years ago (has it been that long already?) we switched to a premium "gourmet" brand. We felt strongly that if we couldn't be confident of the quality of his food, just like ours, we shouldn't have gotten a dog in the first place. So, we splurged. But prices have been edging up and it's becoming an issue. Because we've shown brand and store loyalty, we're about to get a free 50 lb bag of food (which doesn't last that long when your dog weighs over double that) but after that we've decided to switch. Fortunately, our store loyalty is paying off as the owner is going to walk us through other, less expensive options that we can feel confident about. I'm also planning to bake another big batch of dog biscuits when the weather cools off (we have no AC, so it's an issue).
  • Meat... Finally, we managed to find space for our upright freezer in the town house (we can't have it in the garage because of power issues) and have been restocking it. Our favorite old-style butcher has good prices on antibiotic and hormone-free local meats as well as freebies and bulk discounts. But they're way across town, so we've been consolidating our errands out there and stocking up when we go. That means freezing small portions of deli meats and the like.
  • ...and beer (that's two food groups right there). After some discussion and research, we've come up with a way to get brewing again in our new place. Temperature and space are issues, but we think we've figured it out. That means quality beer at a fraction of the price and in nifty blue grolsch bottles.
  • Lunch money. When our little one started school, we figured she could just eat in the cafeteria. But the choices weren't all that healthy and, while the price was good (like $2.10 a day), we knew we could do better with homemade lunches. But we did splurge on a nice container set with an ice pack insert, an insulated lunch box, reusable plastic drink boxes (much cheaper than the store bought ones), and a hot lunch/drink thermos. So she enjoys her lunch from home whether hot or cold and we don't have to worry about stuff getting "funky."
The above items about all about food and groceries. In addition, we've been tweaking the way we drive in order to save fuel. We weren't going to make a big dent here. We're already a one-car family, and our car is paid for and meets our needs well. But we made a few tweaks:
  • Magic school bus. We had originally anticipated needing to drive our little girl to kindergarten, but she surprised us by happily jumping on the school bus from day one. Yay for her!
  • Not-so-magic commuter bus. I was already busing to work daily since our move. Before, I was close enough to bike in and save even more, but that's not as feasible now (believe me, I tried it). I did arrange to buy bus passes pre-tax through work, which saves a bit. And I walk a half a mile to save about $.40 cents each way on bus fare. Frankly, I need the exercise anyway and it's actually faster to walk than it is catch the other bus and make a transfer.
  • The big errand issue. With gas as high as it is, even cross-town trips can have a real cost. We discovered that driving to the butcher's cost us almost $10 round-trip -- and it's not that far away. So we've been trying to consolidate errands and trips where we can.
So, some thrifty changes to help us keep our budget under control and deal with real inflation without going completely cheap. It's always a balancing act, but when you look past your habits and regular patterns, it's possible to find some room to wiggle.

Thursday, September 11, 2008

Some Budget Lessons for August

I keep a monthly budget. And I'm always willing to make changes as necessary. There were a few critical lessons that I learned in August that I thought I might share:

1. If you want regular savings to be truly invisible, don't list it in the budget. Instead, just have the money auto withdrawn and reduce your income by the same amount. Out of sight, out of mind.

2. Watch those minus signs! Crediting a bill instead of debiting it is bad news (ouch!).

3. Don't start the month off in the negative. Just because last month got all screwed up and you needed to pull from the emergency fund (is bad math an emergency?) doesn't mean you should screw yourself this month too by starting out in the hole. Instead, acknowledge the problem and regroup at a more reasonable pace.

4. Remind yourself of the amount of time it took to get to this point. Years, right? If it takes the same amount of time to get back to your starting point, you are doing OK. Bonus points for getting there faster, but negative points for beating yourself up.

5. Staring at the budget and thinking "fuck we are so broke" is stupid. Even if it's true. Stop it!

Wednesday, September 10, 2008

Traits of the Prosperous Household

My Keys to Prosperity posts are all about the components necessary to experience prosperity. The start of a prosperity "how to" list really. But there's another way to view prosperity -- by looking at the characteristics of something you already know or sense to be prosperous.

It's often easy to identify some organization or entity as prosperous, but less easy to figure out WHY. Kind of a prosperity version of Justice Stewart's famous definition of pornography: "I'll know it when I see it." However if you're interested in recreating prosperity (if not pornography), it helps to get a sense of the traits that prosperous things have. Whether they are the causes of that prosperity or the result, emulating them might just be a technique for getting closer to that result yourself.

I don't have a very good idea of what a prosperous business or farm looks like, but I think I can identify traits common to a prosperous household. By household I mean a group of people who live under the same roof and who act together as a unit as well as the place where these people live.

A prosperous household is:
  • Clean. While a house doesn't have to be OCD spotless or magazine perfect, I expect that a prosperous household will be sanitary. First of all, filth and dirt breed bacteria that can make members of the household sick. Health being a key to prosperity, it makes sense that the prosperous house will be squalor free. Second, cleanliness indicates that the residents of the household care about it. When the people in a household work together to keep both themselves and the place clean, it demonstrates a commitment to the household itself.

    Possible to do items: Create a cleaning schedule. Buy more efficient cleaning supplies. Identify and practice habits that keep things clean (coasters and doormats!).

  • Organized. Again, there's a difference between "workably neat" and "Martha Stewart." The latter isn't required. But if you find yourself wasting time looking for lost items, buying duplicates of things you can't find, stumbling over clutter, and feeling overwhelmed by crap, how are you going to foster prosperity? In addition, if there's more than one person in the household, they need to coordinate organization together.

    Possible to do items: Eliminate unnecessary clutter. Find or purchase appropriate storage. Create and communicate "everything in its place" locations (coat racks and key hooks).

  • Functional. Above all, a household must work for its members. Work and play must be supported. Space should be effectively utilized. Tasks and goals should be sustained. A perfect and beautiful formal dining room that gets used once a year is the antithesis of prosperity. That you can afford the extra square footage might say something about you, but as space is one of the household budget's biggest expenses (whether that be rent, mortgage, parking, or storage costs) what it says might not be flattering. Whereas the same dining room, messier but better loved and used for hobbies, homework, game night, or regular meals, is the epitome of prosperity. The members of the household should be able to define their functional needs and implement systems and spaces that support them, while also crediting the needs of other members.

    Possible to do items: Reassign room usage. Create individual work spaces. Obtain appropriate furnishings.

  • Rhythmic. That sounds odd, but what I mean is that the prosperous household fosters a certain regularity of operation. There's always food in the house. No one is ever out of clean underwear (hey, these are goals to strive for). There's a sense that things happen in right order and at their right time. From large-scale cycles like putting up storm windows each October and stocking up at farmers markets through summer to small-scale cycles like making sure household members get their coffee and breakfasts each morning. Members of the household are in the habit of doing work to keep the household running. And the household in turn supports the regular tasks people need to do with the right tools and layout. In addition, there must be a sense of ownership of regular tasks so that the members know what they personally need to do to keep things running.

    Possible to do items: Create a yearly household maintenance chart. Purchase tools and supplies. Identify and assign regular chores.

  • Flexible. A prosperous household is going to be able to adjust to whatever life throws at it. That means that the members must be flexible as the environment and situation change over time. Everyone must have a willingness to try new things in order to maintain a standard of prosperity. In rough times, household sacrifice might be necessary and when times are good innovation can improve prosperity significantly.

    Possible to do items: Support training opportunities. Communicate household status. Brainstorm small business ideas.

  • Thrifty. The prosperous household won't tolerate excessive waste. The contents are well-cared for and properly maintained. Excess is eliminated or effectively handled. Members of the household cultivate the skills necessary to make best use of assets. As much as is practical, the household strives for a sense of sustainability and independence. The members work together to meet the household's needs and seek out the best options for doing so.

    Possible to do items: Create a meal plan to use leftover and reduce kitchen waste. Learn to fix and mend items that need maintenance. Shop around for the best option.

  • Welcoming. No household is an island (except for this one) and making the household part of the wider community is critical to prosperity. It's ironic that some of the most beautiful and beautifully kept houses are the least welcoming. A prosperous household is ready to connect with neighbors and always welcomes friends. There's a necessarily generosity associated with prosperity to keep connections strong.

    Possible to do items: Host a neighborhood barbecue. Start a reading group. Invite friends to a movie night.
So, how does your household measure up? I can already identify areas where we are doing well and ones where we need to do some work. Since my family is pretty domestic, our household is the center of our lives. We want it to be as prosperous as possible.

Tuesday, September 9, 2008

Key to Prosperity -- Introspection

I've never been very good at long-term goal setting. It seems like every time we try to articulate our goals, we end up in such a different situation that those goals no longer mean anything. Recently, I discovered another way of setting goals that seems to work better for me. But still, this is an area where I struggle.

Yet over and over I've read that it's incredibly difficult to put your financial life in order without having some goals to strive for. This is where introspection comes in. Because goal setting is often about doing. But knowing yourself well is about being. You might have goals that you know you need to meet in order to be more prosperous (like paying off debt). However prosperity is about being able to lead the kind of life you want. And that's much more dependent on what it is that you want, than what it is that you do.

So while obviously you have to set goals in order to reach them, beyond that, you have to know who you are and what you want to even set the right goals. Otherwise you run the risk of meeting your goals and then discovering they don't give you the kind of life you want.

I remember reading (but can't for the life of me remember where) that there are only two kinds of problems. One, you know what you want but haven't achieved it. Two, you don't know what you want. Clearly, you have to know what you want before you can get rolling -- and that's there introspection comes in.

Many people understand the value of being introspective, but I think that there are some common misperceptions about how to effectively introspect. We are a heavily navel-gazing society, with huge self help and self examination industries and yet we're still lost and confused.

Introspection isn't about making yourself feel important. A lot of people use introspection as a vehicle for elevating their own problems / issues / successes into high drama and criticality. Your stuff isn't any more critical than anyone else's stuff... except to you. And even then, if you look within so closely that you make mountains out of your little molehills, you won't end up benefiting. Don't get so myopic that you lose the larger picture.

Introspection isn't about dwelling on your problems, feeling sorry for yourself, or (above all) beating yourself up. If you sit down to examine yourself and start cataloging every bad choice you've ever made, STOP. You're doing it wrong. If it turns into a pity party about how bad everything is now, STOP. That's the opposite of helping.

At the same time, introspection isn't about pumping up your ego with your wonderfulness. Affirmations are useful, but telling yourself how great you are doesn't help you figure out who you are. Announce your affirmations to the universe, but let your own mind/heart/soul speak for itself.

Introspection is a value neutral exercise. It's not about dictating or about judging. It's about listening, honestly and objectively, to yourself. People with faith often talk about that "still small voice." They call it the voice of God's guidance. That's useful, but you don't have to go that far to realize that if you listen to the whispers inside you, you can learn an awful lot about yourself. Whether that information comes from God or your own subconscious isn't relevant here. The point is that you listen.

What kinds of things can you learn? You can learn what you need and what you really want. You can learn about what makes you happy and content. About what uplifts you and what struggles you find worth taking on. What your priorities and real values are. Who you really are (good or bad) right now. From this knowledge you can set useful goals, both material -- I want a home of my own -- and non-material (emotional, spiritual, pick your term) -- I want to be more generous.

It is at this point, once you really know yourself, that you can then makes changes in who you are and how you life. Without knowing yourself, you can't know what goals to set. Without clear goals, you will find it much harder to create the kind of life you want. So if prosperity is what you desire, you must discover what that means to you so you can define the goals to achieve it.

Useful Quotes on introspection:

It is by our innate wisdom that we enlighten ourselves, and even the extraneous help and instruction of a pious and learned friend would be of no use so long as one is deluded by false doctrines and erroneous views. As we introspect our minds with Prajna, all erroneous views will disappear of themselves, and just as soon as we realise Essence of Mind we will immediately arrive at the Buddha stage. When we use Prajna for introspection we are illuminated within and without and are in position to know our own nature. To realise our own nature is to obtain fundamental liberation.
A Buddhist Bible, First Edition, Dwight Goddard 1932

Our most important study is our own mind, not only the intellectual mind but the spiritual mind. "Know thyself" was inscribed on the temple of Apollo at Delphi; and it must be inscribed on our own temple, "over" the door of our mind. "Know thyself." We must become acquainted with our own mind.
Keep a True Lent, by Charles Fillmore, 1953

And, behold, the LORD passed by, and a great and strong wind rent the mountains, and brake in pieces the rocks before the LORD; but the LORD was not in the wind: and after the wind an earthquake; but the LORD was not in the earthquake:

And after the earthquake a fire; but the LORD was not in the fire: and after the fire a still small voice.
King James Bible, I Kings 19:11-12

Know then thyself, presume not God to scan,
The proper study of mankind is Man.
Placed on this isthmus of a middle state,
A being darkly wise and rudely great:
With too much knowledge for the Sceptic side,
With too much weakness for the Stoic’s pride,
He hangs between; in doubt to act or rest,
In doubt to deem himself a God or Beast,
In doubt his mind or body to prefer;
Born but to die, and reasoning but to err;
Alike in ignorance, his reason such
Whether he thinks too little or too much:
Chaos of thought and passion, all confused;
Still by himself abused, or disabused;
Created half to rise and half to fall;
Great lord of all things, yet a prey to all;
Sole judge of truth, in endless error hurled;
The glory, jest, and riddle of the world!
Alexander Pope (1688–1744), British poet. An Essay on Man (Fr. Epistle II). . .


Water on the mountain:
The image of OBSTRUCTION.
Thus the superior man turns his attention to himself
And molds his character.

Difficulties and obstructions throw a man back upon himself. While the
inferior man seeks to put the blame on other persons, bewailing his fate, the
superior man seeks the error within himself, and through this introspection
the external obstacle becomes for him an occasion for inner enrichment and
I Ching Hexagram 39. Chien / Obstruction