"Watch the pennies and the dollars will take care of themselves." - Ben Franklin

I think everyone has heard both of these Ben Franklin quotes, and I suppose I might have taken them to heart in my life.

I don't think I'm a miser by any stretch, but I have tried to save....for a rainy day and for retirement.

I have taken to feeling a little worried about my savings....I'm not a millionaire (certainly not in this market) but I have saved a fair bit....and it worries me that I will be a bad influence on me....sort of harden me or make me less good. (in some way)

But the more I think about it the better I feel about ay money I have saved. I mean I didn't rip anyone off....I didn't extort it. I worked of my own (and my wife's) sweat and we simply lived within our means. We could easily have spent up to our wage.....but we lived a fairly simple and modest life. No dishonor in that.

I'm not sure this is much of a personal finance post....more of a navel gazing one I suppose.

Low savings rate for 2nd year......should we worry.....should we save?

I read an article in my local paper (here it is in another) that reports that in 2006, the personal savings rate was again negative. It was over twice as negative as it was in 2005......-1% vs -0.4%.

This is also only the second time there have been two years in a row of negative savings....can you believe it! Only the second.....but the worrysome thing is that the first time was back in 1932/1933....that's right, back in the great depression when there was a 25% unemployment rate.

What does all this mean? Should those of us who save worry? Should we stop savings for fear that money will ultimately become worthless, or should we instead make sure we have at least some of our investments in a place where they are at least inflation protected?

I like the latter case because I think that there will eventually be a time when the American Dollar might fall off it's high horse and we will have to have some sort of hedge against that.

Where should we hedge? You've got me....right now a dollar crash would affect everything.....so it would seem there would be very few places to hide....but as the dollar continues to soften, there will be places that become naturally strong.

Some thing the Euro will be it....who knows. Perhaps some other small currency we don't have our eyes on.

I'm going to continue to try and save....but not in my mattress, that's all!

Hmmm....this guy got me thinking.....

I was looking at the finance bloggers for a bit this afternoon and I came across this guys post and it seemed pretty interesting to me.

It seemed interesting for several reasons. First, I am a cheapskate, and I actually enjoy saving money. I like being cleaver about things and cutting corners.

I also liked his thinking because I too have been trying to cut expenses....so I have been creating spreadsheet budgets and cuting back on things like cable TV and cell phones. (and food purchases and other things)

I also took to cooking more myself in an attempt to save money. I found that buying certain things that do not spoil in larger bulk and then using them as the center of a larger dish makes things cheaper. I just have to make sure I freeze or otherwise aportion out the resuting food properly or the spoilage costs will quickly outweigh the savings.

I have purchased things like dried beans in sizable bulk, as well as rice, nuts and even squash. (Which keeps well in the basement)

I have been making soups and all kinds of squash concoctions....it is surprising what a few onions, butter, a bit of olice oil, some garlic a bit if cheese and spices will do for just those basic ingredience.

Oh, and the other thing is that I am quite lucky to love eating about anything....so I'm easy to please.

Oh, and here are some sites that I might check out further to get myself started:

• Hillbilly Housewife
• Frugal Kitchen Site
• Here is a Frugal Cookbook from NewfoundlandLow-cost cooking with Sardines! (I love sardines, and have a few cans at home!)
• Retro Randy's Journal of Joy (low Cost Cooking Page)
• Miserly Mom Recipe Page #1 and Page #2

There may be some BLOG posts coming this way from me on this sort of thing.....we will see.

My new Budget

After a little bit of noodling and a lot of looking at past expenses, I came up with what I think is a budget reduction plan that will allow me to keep my current level of 401k saving and still allow me to no spend more than I take in.

Why do I think it is important to keep my 401k savings rate where it is....especially since it is only me, and I should be able to retire on "less" than me and my wife....

Well, I figure I want to make sure I stay out of my kids pockets when I get older. I don't want to be a drag on them financially. Cheryl and I didn't come this far so that I could screw it up now! :-)

Also, if I happen to pass on before I spend it all down, then it goes to the girls, which would be fine with me too. (trust me, it's never going to be the Bill Gates fortune....they have never had silver spoons anywhere near their mouth, and any money they get from me will never make that happen either)

Up until now I have not given out any specifics on my budget situation. I guess I'm still thinking about how far to exactly go, but I guess I will wade in a little with some expense numbers. (at least those I am going to change)

I'll start by note that our house income has recently dropped by a bit over 25%. That is a fairly sharp decrease, but we are lucky enough to not be in massive debt. This means that quite a bit of our expenses are discretionary.

It turns out I am currently about $227 per month ($2723 per year) in the hole at my current spending rate. So I wanted to come up with savings that would balance that and give me a slight savings every month.

I decided on the following:

1) Cut out Vonage and move my home number to my Cell Phone: With my kids off at college, I am the only one home and so I can use my cell phone and perhaps get Skype Out for home outbound calling. (only $15 per year vs $20 per month) That is a savings of $18.75 per month.

2) Cut out all cable except for Internet access: Again, being the only one in the house, and NEVER watching TV, I am fine with this. This will lower the bill from about $89 per month to about $40 per month for a savings of $42 per month, or $504 per year.

3) Drive for better mileage: Ok, so this seems like a stretch, but I literally drive to work at 80MPH or above...and I get about30MPG in a Civic. When I was breaking in the car, I was driving it like it was fine crystal and getting about 42MPG, so I think I can gain something by driving in between those two. I did my estimates on a 9% fuel economy increase, which I think is possible. I happen to drive about 70 miles per day, so it adds up...and to the tune of about $14.61 a month for about $175 savings per year!

4) Decrease my food costs: We spent about $100 a week, and I figure that being me along, I can cut that to $60. Not only am I eating for one alone, but I also intend to cook more simple things with more inexpensive items. Stir fries, rice, etc....able to be eaten over days and taken in for lunch. This will save about $172 per month, or a bit over $2060 per year savings.

5) Take a car off the road: I currently have 4 vehicles on the road right now. I have a 2005 Civic, a 1990 Honda Odyssey, a 1998 Jeep Cherokee and a 2005 Kymco Scooter. I am going to take the van off the road. Taking this car off the road will save $4.17 per month or $50 per year. NOTE: As an aside, I am going to sell the Van and my 1999 VW Beetle that sits off to the side waiting a driver. Those sales are not really a cash flow move, but will get rid of a couple of idle vehicles and perhaps add a couple of bucks to the checking account.

6) Taking the Van off the road will also save me insurance money. This means a savings of about $29 per month ($348 per year). I also suspect that with one less driver, the total rate may also go down a bit too...but I have not estimated this at all.

My final savings total per month is $271, which means I end up with my saving about $3256 a year.

NOTE: It was noted that I made a serious mistake typing this in so late and tired.....having made a ton of typo mistakes. (I did my budget spreadsheet in terms of a monthly budget, and really botched things going to years here)

Anyways...in looking back over my spreadsheet, I find that I have forgotten two fairly major expenses.....one being church donations and the second some money I transfer to my daughters every month. This results in a spreadsheet change of about $300 per month, so I am not again about $163 per month in the red.....so I need to sharpen my pencil a bit more!

Yes, I know I didn't give you all the numbers.....and I know that my savings doesn't really come up to the level of my wife's salary, but that is the best I can do without doing a total zero based budget. I will be doing that over time as I get my own payment history documented.

So back to the calculator for me....but not right now!

I hope to keep you updated on my experiences in 'Saving'.

Oh, BTW...being the Engineer that I am, I have been thinking about how I was going to track and follow all my spending activity, and I have been considering Quicken, Microsoft Money, etc.... I think I might play with quicken, but I think the most straight forward system is a manual one that my mother in-law described to me. It has the benefit of not only being simple, but it also will leave a much better "paper trail" for anyone coming along when I pass on...so they can better pick up the pieces.

My wife did a very good job of this with a fairly manual system she used....and the only things I have screwed up on (mostly double paying) are the two or three items she took care of online of with auto payment from checking!

My next post will probably be about an "issue" I have just had with Mastercard. (and I'll be looking for suggestions on another card....NOT Mastercard and NOT Citibank...but more on that later)

Wholesale Clubs are not my bag! (this post explains why)

I signed up for a BJ's Wholesale Club 60 day pass, and I have been to the store three times so far. The first trip was just to look around, and the last two to shop.

I initially went in to find a chair and a lamp for my wife, and I quickly found out that shopping at a wholesale club is a lot like shopping at Building 19. (a store that sells insurance recovered merchandise and has the motto GOOD STUFF CHEAP) The problem I have with both of those stores is that you just can't reply om any pasrticular thing being in stock. (except for perhaps food)

My wife and I went in to BJs on another occasion when we were looking for an electric blanket for my daughter. They had them, but only in King and Queen. (the selection was nil too)

Then, tonight I went in looking for a battery for my daughters 1998 Jeep Cherokee. There is not much special about that battery, except that BJ's simply didn't have anything like it in stock.

I skipped over to Walmart, and they had three batteries that for the Jeep and I had a choice.
(and the prices were better on batteries in general)

My point is simply that it seems that BJ's (and probably all the clubs) are not general merchandise shops....they carry a lot of very popular things, but they are lacking of many of the less mainstream items. (and sizes)

Besides, I am more of a bargain shopper. BJ's does not seem to have sales...and I thrive at searching out sales. I think lazy shoppers might benefit from "club" shopping.....but I find it even a bit boring.

Such is life......

My first real purchase at a Warehouse "Club"

This isn't meant as an ad for BJs, but just a description of how this 47 year old did something absolutely new today.

Ok...so my "first" was not all that unusual....or outstanding, but I actually experienced something I had never done before, and I had to BLOG about it. (what was this exciting moment pray tell???)

My wife and I actually did some shopping at a warehouse club today....BJs to be exact.

I have never owned a membership, and never been with my mother who used to have one from time to time. I always had mental pictures of warehouse purchases as having to be tractor-trailer load sized. (large yes.....too large, not at BJs)

So we went in just to look around, and pick-up some bananas.....which we did, but while we were looking around we saw so many other cool and affordable things. First there was the large container of Olive Oil that I just have to have.....then the industrial sized box of Oregano. (I can't have enough of that for sure) Then there was a great deal on pistachios, which I had a craving for!

These items did have a great bit of savings on them....and I look forward to trying the place out again in the next 40 or so days.

In fact, holiday time is probably an opportune time to take advantage of some of the "try-us" shopping days that these clubs offer. BJs offers a 60 day free trial, and I believe Sams Club gives out "Try us FREE for a day" cards.

Shopping these clubs isn't for everybody, but there does look to be savings to be had if they carry what you want and you shop there regularly.

Black Friday Ad Sites

Wow...talk about specialized web sites.....here are three sites I found that post Black Friday sale ads for both online and store day after Thanksgiving bargains.

As I understand it, the "Grand daddy of them all" is BFADS.NET. They break the savings up by storefront and then by product.

The next site is blackfridayads.com, and like the first store, they provide links right to the online site where you can add the item right to your shopping cart.


Then www.theblackfriday.com seems to focus on scanning the sales fliers of the stores they list. At least this is what I found with Staples.

After Thanksgiving, we need to be happy and SPEND!

Here we are on the day before Thanksgiving and two days before the start of the shopping season and wouldn't you know it....we get news reported that consumer sentiment has dropped in November.

The article note: "The University of Michigan's final reading of its November index of consumer sentiment fell to 92.1 from October's final reading of 93.6. Economists polled by Reuters had expected a final November reading of 93.1."

So there is concern that the holiday shopping spending may be down and that anemic holiday spending might slow the economy even more. Hey, perhaps people are actually looking out for themselves rather than going even further into debt. (what a concept....and perhaps a sign that people are learning!)

The second bit of news might be a part of the problem causing the slip in sentiment....jobless claims have risen again.

Another article said: "The number of U.S. workers applying for jobless benefits rose by an unexpectedly steep 12,000 last week to 321,000, government data showed on Wednesday...."

Hmm....the troubling comment in there is "unexpectidly".....

Working in the computer industry, and seeing the massive desire and reality of outsourcing, I see reason for people to worry. At least the people in high tech.

But I am guessing that we will be told to "not worry about the man (problems) behind the curtain"....and something to the affect that it is our patriotic duty to spend and keep the engine of the economy running. (in the old days we were told to work harder....now all we need to do is spend harder....it all sounds so easy, except now that means more debt!)

Well, spending makes sense to me when it is connected with investment. That is, when the money you put out there is being used to enhance a process, build up an asset (like a property), invest in a company, get an education...things like that. That is money well spent. (it is actually growing the money)

Spending to buy the latest consumable isn't even a close second....but I can see doing this as a form of relaxation....or when giving a present to a loved one.

But going into debt to spend on consumables that do nothing to grow your net worth....that's shear folly. But this is what we are asked to do....

Do yourself a favor.....save money. I'm not speaking in "government double-talk". I don't mean lower the rate of increase of your debt spending...I mean start increasing your net worth by saving!

We can have fun by baking cookies, talking about old times and enjoying our friends and family. Those are the most important things in life anyways...right?

I hope everyone has a very Happy Thanksgiving Day tomorrow!

Teaching kids about money and saving....

When I was a kid, I remember my parents teaching me about money and the value of saving. But I also remember that they did more than just "tell me" what to do...they would walk the talk as well.

My parents were not wealthy....and they started life from very humble beginnings. My mother had a high school education, and my father finished college in his mid-thirties.

Both of them had to work to make ends meet, but they were always happy and never in debt. They kept telling me that the key to it all was being frugal and having a mind to save!

So when my wife Cheryl and I had kids, we talked a lot about what we wanted to teach them...and how we would also try to practice what we preach. (I hope we are at least a little successful)

We wanted to give our daughters an appreciation for how saving could be done, so we decided to start by giving them an incentive to save. It all started with their receiving an allowance for doing their chores. We tried to connect the chores with the allowance, though I don't think we ever held it back if chores were not all completed. (they sort of worked on salary I guess...but they did their chores)

But how to teach saving....well, I thought that I would introduce them to the idea of making interest in money saved. But kids have a short attention span....they were not going to see the value of earning 10% per year....so I raised the ante and offered them 10% a month! (and I rounded up to the closest dollar)

We would get together at the end of each month, look in their saving box and I would pay them the interest right on the spot. It started out giving them a buck or two, but when they saw it growing, they naturally started holding the money. They quickly saw that they could actually make more in interest payments than in allowance....and if they were patient enough, they would be buying candy with interest alone with no need to touch the new allowance or principle!

Soon after that, they noticed that their saving would allow them to have enough to buy some pretty cool things they wanted. Kristen actually bought Elijah (her dog) for $600 at one point!

What did I do when their savings level hit $500 and I was giving out $50 a month....I kept it up because I saw it was working and they were really thinking about whether they wanted to "blow" money on something or save it. (besides, if I quit, they certainly would have had an incentive to just spend it)

I think they both ended up with about $1000 in savings each, and this was what they used to open up their bank account that they have to this day.

I guess the lesson I myself learned is two fold.....first, if you want to teach your kids something, you have to be proactive and do it. You can't expect them to somehow "pick it up" along the way. (It's the parents responsibility)

Second, once we started, we had to keep it up, and more importantly....we had to ourselves be consistent......to live by example ourselves. So Cheryl and I always tried to save, and to include out girls in on that thought.

So far, both of our girls have turned out to be very good with money, and very frugal as well. I believe it was at least in part due to our little lessons along the way.