saving money

Advice on scraping by

Dave Farquhar Saving money , , , , , , , ,

Here’s a good, timely Google search query: scraping by advice.

I looked, and I’ve never written anything that matched that query well. I know a lot of people are hurting right now. I’ve been in some tight spots and I’ve gotten out of some, so let’s talk about what I would do, on a really practical level, if I ran into another tight spot next week.

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Buy wooden trains cheap

Dave Farquhar Saving money, Toy trains , , , , , , , ,
Buy wooden trains cheap

My son likes wooden trains. I guess I shouldn’t be surprised, since I like the bigger metal (and sometimes plastic) trains that run on O gauge track. The downside to Brio and Learning Curve (Thomas) trains is that sometimes they seem to cost nearly as much as Lionel, even though they’re essentially carved blocks of wood. But I learned how to buy wooden trains cheap.

There are several ways to save money on them, it turns out.

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A shift may be coming

Dave Farquhar Saving money ,

I’ve been seeing news segments and stories about how people are choosing not to replace things, but rather, repair them, saving money in the process, but hurting the big-box stores as well.

I can see how this could be a good thing in the long run, though.Think about it. Big-box stores sell cheap goods made overseas, paying underutilized and/or unskilled workers less than $10/hour to do it.

Repair is semi-skilled or skilled work, depending on what it is you’re fixing. By definition the work has to occur on the local level. And the local level is where we’re hurting for jobs.

Not only that, it’s easy to find storefront space, assuming the repair doesn’t take place on-site. Most commercial districts have some vacancies; go into the older parts of town or into shopping malls, and you can find lots of vacancies. Last weekend I ran into an acquaintance from high school who just opened a store; he said rent is dirt cheap right now. Landlords are begging people to lease storefront space.

In the long run, it’s almost always cheaper to spend a little more money on a higher quality product (say, a pair of shoes) and then repair it when it needs it. So it’s a win-win all around.

It’s bad for the big-box stores I guess, but having worked in a big-box store myself, I know firsthand that big-box stores aren’t good for anyone but the corporations who own them and the corporations who lease to them. They don’t utilize their workers to their ability, they don’t encourage their workers to better themselves, and if they pay a living wage, they just barely do it. That’s if they bother to pay the worker at all–in my second stint at a certain big-box store, they missed two pay periods before I got fed up and told the store manager I needed my money so I could pay my bills.

I’d love to see more big-box stores close and more small, independent specialty stores and repair shops open in the business districts that the big boxes destroyed. Society as a whole will save money, and it will create jobs that are actually worth having.

Surviving a recession

Dave Farquhar Saving money , , , , , ,

I saw a link to a short story on Get Rich Slowly called What to do during a recession.

I think I can do a little better. So I’m gonna try.You might not lose your job, so don’t become a self-fulfilling prophecy. The story states that most people don’t lose their jobs when the economy goes south. That’s important to remember. I lost not one, but two jobs in 2005, not the worst year on record but certainly not the best for either of those two employers. I was pretty certain in both cases that there would be cuts and I would be one of them. I couldn’t do anything about the second case because an edict came down from a new CEO to get rid of all contractors, and I was a contractor. In the first case though, yes, I probably made myself a more likely target for downsizing. I wasn’t as bad as the guy in Office Space who got hit by a truck, but if management thinks you think you’re on your way out, they have an excuse to not feel as bad about letting you go. After all, if you saw it coming and you’re not prepared for it, it’s your fault if something bad happens, right?

So if you think you might be on the short list, don’t let anyone know you think that way, and be quiet and discrete about finding your next job.

Work your contacts. When I lost that job, I knew some people who’d asked me at one point or another if I might be interested in opportunities elsewhere. Of course I called them within 24 hours. None of that panned out for me, but at least I got some practice interviewing and some good resume advice out of the deal.

I think it’s a very good idea to ask your friends once a year or so if they know of any openings. In the event of an emergency, it gives you a much better idea of what might be out there.

Build an emergency fund, just in case. Having an emergency fund is also important. When I got hired on at my current job, my boss told me to try to have half a year’s salary in the bank. Some vote of confidence, huh? But the reality of our business model is that we can be forced to make cuts at any time, with no warning. It even happened to him once a few years ago. The upside is that the pay is pretty good and we get at least one or two opportunities to make some extra money each year, so we put up with it.

Six months’ salary can be hard to save, but you should have at least two, and more is better. Sometimes I can find a new job in less than two months, but I can think of two times in my career where my new employer dragged the hiring process out by a month. That was fine the first time it happened, because I still had my previous job, but it really stank the last time, because I’d been out of work a month.

Make a bare-bones budget. I also suggest having a bare-bones budget. Make up a spreadsheet listing the non-negotiable expenses that happen every month (mortgage or rent, car payment, utility bills, car insurance). Then figure the cheapest you can feed yourself for a day. I have a coworker who might try getting by on three packs of Ramen noodles and feed himself for 30 cents a day, but for most people, $3-$4 per day for food is about as low as they can go. Multiply that number by 30 and add that as a line item. Then add a few bucks for gas (it costs money to drive to the store and to job interviews too). It’s much easier to make a budget like this before you need it than when you need it.

You don’t necessarily need to kick into the emergency bare-bones budget the day you lose work, but I did. It helped my savings last longer.

Start saving money now. Knowing where to get things cheaper will help you build your emergency fund faster, and it will help you when you can’t afford to pay full price. Find out where the nearest day-old bakery is. If there’s a thrift store near you, wander into it sometime to see if it’s any good. If there’s a farmer’s market near you, check it out and compare its produce prices to your regular grocery store–and prepare for a pleasant surprise.

Don’t bail on your stocks. This might be the most important thing. When the stock market takes a dive, a lot of people hop on the phone and take their money out. Unless you own marginal stocks, that’s exactly the wrong thing to do. You don’t need to know what to do with marginal stocks when a recession hits. If you own stock in companies that can’t survive a recession, you should sell them now and buy stock in companies that can. I had a relative who made himself rich by investing in boring companies like General Electric and Coca-Cola–companies that sell things that people buy no matter how much money they have–and holding those stocks for several decades.

That money vanished after a generation (and no, I don’t have any of it), but that’s another story.

There’s a financial cliche that poor people run to buy when stores have a sale, but when Wall Street has a sale, they rush to sell.

The thing to remember is that stock prices are purely theoretical unless you sell. So when they go down, you don’t lose anything. If the company still has decent products to sell, its price will rebound if only because vast heards of rich people will come in and buy more of the stock while the price is low. If you have some savings and you know how to stretch it, there’s absolutely no reason for those rich people to be buying that stock from you.

How I saved $380 on a cellphone plan

Dave Farquhar Saving money , , ,

I read earlier this year how some families are spending more than $1,000 a month on cellular phone bills. To me, it’s absolutely ridiculous to pay more than some people pay for their mortgage for communication. When I was growing up, a second phone line ($25 or so per month) was a luxury most families didn’t indulge in.

To me, the cel is primarily for emergencies. I have a pretty liberal definition of emergency–if I’m on my way home from work and my wife wants me to stop at the grocery store to pick up a couple of things, I think that’s reasonable. What I don’t think is reasonable is the expectation that I’ll spend all the time I spend in my car yakking on the phone. If it’s going to take more than a couple of minutes, we’ll talk on my landline when I get home.

Here’s how to have a phone for emergencies for less than $9 per month.The first thing is to get your hands on a phone. You may very well be able to avoid buying one in the store or signing a contract you don’t want to sign in order to get a free one. My mother in law gave us her old phone after she upgraded to a newer, snazzier one. That saved us around $20.

Chances are you may have to buy a prepaid phone outright. Some of them cost as little as $30, which isn’t bad, considering you could easily spend $30 trying to hunt down a new battery and charger for a used phone.

And I just let the cat out of the bag. The key is to buy a prepaid plan, rather than getting on the monthly contract treadmill.

If you buy a prepaid phone, all you have to do is activate it. If you get a secondhand phone, you need a new SIM card. In our case, they charged $10 for the new card. This is why I’m not too keen on spending money on a used phone because by the time you buy a SIM card, a new battery, and a charger you can easily spend more getting a used phone going than you’d spend on a new one. If you luck into a good, working phone for free like we did, great. If not, spend the 30 bucks.

The salesperson will undoubtedly try to upsell you to a monthly plan. In our case, she didn’t even try to upsell us to the cheapest monthly plan–she tried to sell us the $40/month plan, not the $30/month plan. Don’t let the salesperson get very far into the pitch. I told her we expected to use the phone once or twice a week and not for much more than 15 minutes a day.

It’s hard to upsell you to a 500-minute plan when you say something like that.

And this is the key to saving money on all purchases. Do your homework, and go in knowing what it is you want from the start. The salesperson’s job is to get you to buy a phone that does more things than most people do with their computers. Since most of us carry a phone so we can either be reached in an emergency or reach someone else in an emergency, we don’t need a computer. Keep the goal in mind and refuse to pay extra for functionality you aren’t going to use.

After she swapped the card in the phone, we just had to buy minutes. We buy minutes in $25 increments, and we get 90 days to use them. In our case, it costs a dollar a day to use the phone (you’re only charged on the days you use it), and 10 cents per minute. The other plan charges a flat 25 cents a minute. Depending on how we end up using the phone, the 25-cent plan might be better. We’ll find out. The nice thing is that since we have no monthly contract, we can walk away just as soon as we’ve used up the minutes and switch to something else.

And after the first day of use, I can say it’s not bad. At the end of every call, I get a text message telling me how much is left on my balance. That makes budgeting the minutes very easy. I’ve never seen a monthly plan do that.

I think we can get what we need with the prepaid plan. We have a land line, which we use for normal, everyday calls. That costs $24 a month if you eliminate all of the extras. You don’t need call waiting if you have a cellular phone–people can call you on that and leave a message if your line is busy. You don’t need call notes if you have an answering machine. Those cost $10 and you only have to pay for them once. Call forwarding is useless. Caller ID is useful for screening your calls, but you can screen your calls with your answering machine too, and that doesn’t cost anything.

If you’re subscribing to those things on your land line, I suggest you take a long, hard look at those features and see if you’re getting any real benefit from them.

Some people suggest getting rid of the landline altogether, but I’m not so keen on that. For $24 a month, I can make all the local calls I want for free, with no restrictions on use. And people can call me all they want for free. Plus, having the phone line lets me get DSL for $20 a month. The long distance stinks, but we don’t make a lot of long-distance calls.

I’m almost certain I would quickly end up spending more than $24 per month to make up for not having the landline.

I’ll have a better idea in 90 days if this is going to work, but for now it looks like I’ll be able to meet my cellular needs for a Scrooge-like $8.34 a month.

So gas/solar/electric hybrids might make sense

Dave Farquhar Saving money

Last week I saw an article about aftermarket solar panels for a Toyota Prius.

I’m glad on two counts. It’ll reduce fuel usage, and while maybe it doesn’t prove my idea was a good one, it does prove that someone else had it.The system costs between $2,000 and $3,000. The manufacturer says it makes more sense with gas at $4 a gallon, in which case it will pay for itself in two years.

I’m not sure I understand the math. Basically when you have one of these you can drive about 20 miles a day for free. That’s about $2 worth of gas, at $4 a gallon. Drive those 20 miles every day for two years, and you’ve saved 730 x 2, which is $1,460.

At that price, one of these outfits has to be about more than just saving money because you won’t save any money unless maybe you live in California, where gas prices are much higher. If you just want to save money, you’re better off buying a conventional car that gets really good gas mileage to begin with, such as a Honda Civic, then start making some modifications like ripping out the seats and replacing them with high-performance racing seats (which can weigh 10 pounds or less). Or better yet, replace the driver’s seat and leave the rest of the seats out. Every hundred pounds of weight in your car decreases gas mileage by 2 percent.

No, I haven’t started messing around with the seats in my Civic yet. But don’t put it past me if gas prices keep going up.

But back to the original idea. A Prius is a $22,000 car. It gets about 55 miles to the gallon. A 2007 Honda Civic retails for about $16,000 and gets about 30 miles to the gallon, although I should note that I get closer to 35 miles per gallon out of my 2002 Civic, and if I really behave myself, I can approach 40 miles to the gallon.

Let’s run the numbers. For an extra $6,000, you get 25 more miles per gallon with a Prius.

If you drive 20,000 miles a year, you’ll burn 363 gallons of gas with the Prius, versus 667 with the Civic. At $3 a gallon, that’s $900 a year. So it would take 6-7 years for the Prius to pay for itself.

Let’s factor solar panels into the equation. The maker of the panels says they improve a Prius’ fuel economy by 29 percent. That bumps it up to roughly 70 miles per gallon. So, driving 20,000 miles a year, you’d burn about 285 gallons, saving about $250 a year at $3/gallon. At $4/gallon, your savings are more like $375 a year.

Hmm. Now I’m starting to see why these aren’t standard equipment.

I think hybrid cars and solar panels are great things for people who can afford them. I do have to say I was shocked and relieved to see the new Saturn commercials that include the words “Rethink status,” trying to sell hybrids as a status symbol. GM is one of the companies most guilty of marketing oversize pickup trucks as status symbols. So this is a nice change.

Solar panels are very conspicuous, so I can see those becoming a status symbol potentially. And that wouldn’t be a bad thing. If every U.S. driver did something to save 80 gallons of fuel per year, the world would be a better place.

Considering the amount of violence that surrounds oil anymore, maybe it would even be a kinder and gentler place.

The second-cheapest way to get household necessities

Dave Farquhar Saving money , , , , , ,

The topic at lunch at work turned to saving money around the house earlier this week, largely because one of my coworkers suddenly found himself with full responsibility for his two pre-teen nieces. The coworkers who are parents started talking about the best places to get good used clothes, the best places to get food cheap, and other stuff. Not being a parent, I just listened. I’m not at that stage in life.

I’m in a different stage of life, still a relatively new homeowner. Yesterday I paid a grand total of $5 for an ironing board and a stepladder, two things I’ve been surviving without. I’m about ready to quit going to the hardware store and to Kmart.The secret is estate sales.

Estate sales are usually crowded affairs, as people swoop in from all corners of the globe to cram themselves into tiny houses in search of things that are rare, things that are cheap, or best yet, rare and cheap.

I see two types at estate sales. The first is the well-to-do, who are there in hopes of securing antiques and collectibles for pennies on the dollar. The other is recent immigrants, who are generally there in search of inexpensive household necessities. They already know the secret.

The best time to go to estate sales is either really early or really late. If you get there early–it seems like people show up an hour early sometimes–you’ll get the best selection but you’ll pay top dollar. In some cases I’ve seen things priced at literally 10 times what they’re worth. In less extreme cases, I’ve seen tools priced the same as a new one at Sears.

Then again, yesterday I bought a pair of small pruning shears for 50 cents and a sharpening file for a quarter.

If you get there on the last day, reality has kicked in, the sucker prices have generally gone away, and dickering becomes the rule of the day. Prices drop by a factor of two or three, and the later it gets, the more willing they are to listen to prices.

If you’re shopping for household necessities, this is a good thing. The antique furniture dealers have no interest in ironing boards and laundry baskets and trash cans. Recent immigrants do, but chances are they already have those things. Stuff like this is often priced low to begin with, and it gets cheaper as time marches on because the chances of someone buying it are pretty low.

You can get household appliances cheap too. I saw a 20-inch Zenith TV marked at $50 yesterday. I know it works because they had it turned on. I’ll bet someone will get it for $20 today. I saw a washer and a dryer priced around $200 each yesterday. The washer was less than two years old. The dryer was a bit older but it was a Maytag. Those prices were decent, and could go way down if they sat long enough. If you’re willing to live without a warranty, you can save yourself a bundle. Two years ago I paid $900 for a washer and a fridge. A friend gave me a dryer. It looks like it could be 25 years old but it works and I was happy to save $250.

But yesterday I wasn’t looking for appliances. I wasn’t necessarily looking for household necessities either, but I’ve been needing a stepladder and a full-size ironing board. So when I spotted one marked at $4.50 and $6, respectively, I wasn’t going to pass them up. It was around noon, and it was a Friday-Saturday sale. They’d be closing up shop in an hour or two. Anything under $20 was automatically half price. I dragged the ironing board and the stepladder up to the checkout. “Five dollars is fine,” she said.

And it was fine with me too. I still remember the day when I went out to either Wal-Mart or Kmart (I try not to shop at Wal-Mart anymore but I did then), days before I moved out of my mom’s house for good, to buy household necessities. After spending more than $200 on things like trash cans and laundry baskets, there was still a lot of stuff I lacked.

If I’d known then what I know now, I probably could have gone to three sales, spent a grand total of 50 bucks, and ended up lacking a lot less.