Real World Finance$

Yep, we were one of the crazy few up and about bright and early this past Friday.  After getting to be a little after midnight we were up again at about 3:30 in the morning.  We got dressed again and headed to the car and got to our neighborhood JC Penny just after they opened at 4:00.

We spent 30-45 minutes there.  We took advantage of the sales to stock up on our winter wardrobes (good timing since there was snow on the ground this morning).  We dropped a couple hundred dollars, and we hadn’t really purchased much in the way of clothes the last 2-3 months, so it was within our budget.  We have a vacation planned the first week of February, so we aren’t doing much in the way of Christmas this year.

The store was busy, but wasn’t really crowded.  The store near our home doesn’t have a lot of other shopping nearby, so the real die hards were elsewhere.  We got checked out, headed out to the car and then back home to bed by 5:00.  A little silly maybe, but that was the extent of our Black Friday shopping.  One stop to buy only clothes that we really needed anyway.  No impulse shopping, no fancy electronics, not junk that’s going to collect dust in someone else’s home.

Besides, we are working on doing a homemade Christmas this year and using our talents to make gifts for each other.  My wife has been having fun with her knitting machine and learning how to felt knitted items, so those will be some great hand made gift items that cost a fraction of what they would cost in a store, and they will be worth so much more because she made them.   Hope your Friday was as financially easy as ours!

I’m sure I haven’t spent much time on this topic, but considering the recent post over at Get Rich Slowly about
How Low Can You Go? Cutting Back to Minimum I was a little inspired to spend a few moments on this.

I have to admit though, that my wife is the brains and brawn behind much of this. Here’s just a few things we have done over the past year to save some money and try to be more eco friendly.

• CFLs - Yes, those good old compact florescent light bulbs. If you haven’t looked at these lately, they aren’t your father’s CFLs. There is a much wider variety out now that have a much softer light and you can’t really tell you’ve got a florescent light in. Plus, I LOVE that I haven’t had to change a light bulb in ages.
• Cleaning Spray- My wife has found some recipies using regular old white vinegar (which is amazingly cheap) some essential oils (for scent) and some other stuff that I don’t remember to make a very effective general household cleaner.  She uses it for sinks, counter tops, floors and all kinds of other stuff.  Trust me, it’s MUCH cheaper than the $4 bottle of stuff you buy at the store.
• Laundry Soap - Another home brew concoction my wife found a recipe for.  She uses Borax and Washing Soda to make powdered laundry soap at a fraction of the store cost.  It’s also more powerful because it doesn’t have all the fillers you find in most detergents.  Having had a college instructor who was once a divisional director for a large conglomerate that made laundry detergent, having fillers makes people need to put in more which makes them feel better about the cleaning.  Evidently our psyche is such that we think more soap is better, even if a little will do the job.
• Curtains - My wife is nearly finished with this project as well.  The curtains in our bedroom for the last 2 years have been old bed sheets (attractive I know).  She had bought some fabric and made camo curtains for the boy’s room, but ours has still been lacking.  She dug out her boxes of fabric that have always been intended for quilting and has pieced together some beautiful curtains in her favorite colors.  She just needs to put on a backing to help block the light (she bought that yesterday when the fabric store had a 40% off 1 item sale) and then we’ll be all set with some wonderful custom curtains with stuff we mainly already owned.
• Garden - It’s amazing what you can grow in such a small space in your backyard with a few bucks worth of seeds.  Our only fertilizer was a bag of crushed up, lump charcoal we mixed in when tilling the soil.  We were awash with wonderful fresh tomatoes, peppers and cucumbers.  Our counter top is also getting pretty crowded with acorn squash as well.  Oh, and I should mention, we rarely had to water the garden (though we aren’t on a meter, so it doesn’t technically effect our bill if we do).  We’d like to get a rain barrel attached to the garage so we can water with that next year as well.  To boot, we did almost zero weeding and things still grew just fine.

All little things you can do that not only save you a few bucks here and there, but they can also save the environment a bit as well.

Earlier this year I began putting together some information to track our average daily use of electricity.  I wanted to know if having central air versus our window units had made any difference and also if our new compact florescent lights were doing much.  In the last couple of months, our electric budget bill was adjust down from $126 to $102 per month.  Of course, since that’s also based on the cost of electric and not the real usage, I dug further to see how we were really doing.

Here’s what we’ve looked like over the past 2+ years in our home (avg kWh/day):

So, we moved into our house in June of 2006.  Back then we had window air conditioners for our 2300 square feet.  They were old and noisy and we used them sparingly.  We willingly opened the windows when we had the chance.  In May of 2007, we had a central air system installed.   Since it works best to remove humidity from the air, we don’t open and shut the windows as freely, so it stays on longer.  Notice 2007 started it’s peak earlier and it lasted longer.  It was then our budget bill went from $104 to $126.

Now, early 2008, we replaced a number of our well used light bulbs with compact fluorescent, and we made the decision to raise the temperature of our central air by 1-2 degrees this summer.  Luckily as well, the temperature this summer seemed to be much more moderate.  Combine that with and earlier vacation (September rather than October) and our real electric use has been way down this year.

In case you don’t realize, we have a natural gas boiler that runs our radiators, so we don’t use much electric in the winter.  The “central air” is actually a heat pump, so it can provide some heat.  However, we use that as a back up system that is more of a signal that the pilot light is out on the boiler, you better go re-light it!  If we notice the heat pump kicking out heat in January, we know something is wrong.

There’s several more things I’d like to do to make this number look even better next year:

• Replace more bulbs in the house with CFLs
• Update some of the electrical system with properly grounded and wired outlets
• Replace the rest of the power supplies in our computers with lower wattage and higher efficiency “green” power supplies
• Rearrange some electronics and things to allow for more visible power strips so we can easily turn the television and all the associated stuff completely off when we leave the room, rather than leave clocks and wireless networks drawing power constantly

Of course, we should really do this same sort of thing with our gas usage in the winter, though it’s a bit more challenging.  We use practically no gas most of the year (water heater and range) and then use a ton of it during the winter months with our 80 year old boiler.  It was converted from coal to natural gas years ago.  I’m sure the boiler is somewhere around 50% efficient, but the replacement cost can get pretty pricey.  I looked and just buying a 95% efficient boiler was going to run $3k or so.  And I’m sure installation is at least that much if not more.  Even if that did cut our gas use in half, that would save us like $80-90 a month.  It takes a looong time to pay back five or six thousand dollars if you are paying that much a month.

Our stimulus payment hit the savings account this past Friday.  It’s amazing how much work I can squeeze into a 4 day work week when I’m taking a day of vacation on Friday.  Took a whole day off work and barely missed any time on my weekly time sheet!

The stimulus payment was almost really bad timing for us.  My brother was in town visiting and had his truck.  “If there’s anything big you want to buy while I’m here let me know and we’ll take my truck to get it.”  Great, just when I have an extra $1500 in the bank!  That new TV we’ve been dreaming about seemed so very tempting, but we managed to let it slide by.

For now, I think it will just sit in the bank until we are ready to get the new garage door and electrical work done in the garage.  When we are ready for that we would have the cash without the stimulus though, so it’s not that big a deal to us right now.  To me, it just feels good that between our E*Trade savings account and my wife’s account at the credit union we will have close to 7k in savings by the end of the month.  That’s a comfortable cushion should something happen at my contracting job. 

This was meant to a post for Earth Day, but with jury duty and trying keep up/catch up at work it got pushed off. 

We’ve been doing sort of an energy audit around our house lately, not really on purpose, but it’s getting done none the less.  It seems over the last few years we have gradually been moving faster towards being Green in our house.  You can save some pretty good money with being more green, but it’s not always a quick payback.  Here’s some of the changes we’ve either made or are contemplating sometime soon.

• Recycling- We’ve been doing this for a number of years now.  While we weren’t always the best at it, we’ve been much more conscious of what we throw away in the last 6-9 months.  While our savings are $0 due to the trash pick up being included in our property taxes, the feeling of throwing away only about 1 sack of trash a week for a family of 3 is pretty good.
• New Car - Yes, we bought a more fuel efficient car back in December.  With 27 MPG compared to the minivan at 17 MPG, we are saving about half the extra payment in gas alone each month (and using only 5-6 gallons of gas a week is a good feeling).  Add on the couple thousand we needed to do in maintenance on the van to the ever increasing gas prices, and we’ll probably break even this year on expenses.
• Lighting- We’ve switched out almost half our light-bulbs in the house now with Compact Florescent.  I’ve been very pleased that they don’t have the typical florescent lab look from the lighting.  We’ve been buying them on sale for about $1 a piece.  The change from 60 watts down to 14 watts will have some impact on the electric bill for sure.  The fact the bulbs are expected to last 6-7 years rather than 6-7 months should help too!
• Air Conditioning - We had central air installed in the house last year.  It was very expensive, but well worth the expense in comfort alone.  We were stuck using window units in a large home with not really enough outlets to plug them in before.  Our budget electric bill did go up about $20 a month after using the AC for a summer, but with having it as a heat pump, our natural gas budget bill went down $29 a month from turning the boiler on later and off sooner this year.
• Windows - Our house is 85 years old, and so are the beautiful wood windows.  Unfortunately, they are also single pane and not very energy efficient.  However, I’m not about to deface my beautiful home with vinyl windows while there is still breath in my body.  We did take the time to put all the storm windows back in this winter and noticed a considerable difference in the draft.  Several of the storms are missing windows and several others are just in pretty poor shape, so it might be worth the effort to look into some new storms at least.  I may even choose to put them inside to show off the windows on the outside a little better, but I’m not sure yet.
• Doors - Again, with an old house come beautiful old wooden doors.  The back door, doesn’t currently have a storm/screen door.  We’ll need one of those so we can leave it open during nice spring and fall days more often.  The front door has a storm, but it is warped and doesn’t close so it too needs to be replaced.  Problem is, 39″ doors.  Yep, standard sizes only go up to 36″, so we are looking at custom.  My solution, build my own.  It’ll be a fun project for this summer and let us keep the doors open for breezes in the fall like the house was built to use.
• Heating - Yet again, the old house blues.  While the feeling of radiator heat in the winter is beyond compare, our approximately 40% efficient, 85 year old, originally coal fired boiler just isn’t always the best.  We can get up to 80% efficient for about $1500 plus installation.  There are boilers ranging up to 95%-98%, but those are 3-4 thousand.  Payback time is much longer for this one, but if natural gas rates go up over time, the payback comes even sooner.
• Electric - We’ll be replacing some of the old knob & tube wiring in our home soon.  Part of the plan is to put electric back out in the garage at the same time.  However, we’ve also gotten a quote to run our garage and my workshop off of strictly solar and keep it off the grid (it’s a detached garage).  Seems though that the cost might not be worth it at $2500 versus about $500.  Sure, there’s now energy costs, but I won’t use enough of it to make much difference.  The next option would be to see the difference in cost of making the system grid connected so that the extra electricity we generate doesn’t just sit idle in batteries, but gets either used in the main house or sold back to the electric utility.  Again, will be quite a while for pay back, but there is a request for a 17% increase in electric rates also.
• Appliances - We do have some older appliances in our kitchen that sometimes seem on their last leg, while we don’t plan on replacing any at the moment, we’ll keep energy efficiency in mind if it comes to that in a few years.
• Water - While we are not currently on a water meter (we pay a fixed rate based on the number of “fixtures” in the house) we are still conscious of our water usage.  I actually assume we would pay less for water if we were actually on a meter because we don’t water the yard and there is only 3 of us in a house built for 5.  That said, we are planting our vegetable garden this weekend and we will need to water there.  Unfortunately, we didn’t get the chance to get some gutters put up on our garage these last few weeks as we would like to do that and send the water to a rain barrel instead of the alley.  That water would be perfect for watering the garden later and we’ve had a ton of rain the last month.  I’m sure, with our luck, we’ll hit a drought about the time we get it in place, but it will still be done.  About $50 for gutters and $100 for the rain barrel to use fresh water on the garden and avoid the water bill if we were on a meter.

So, lots of ideas some of which will happen and others won’t.  To help me keep better track of things I just contacted both our electric and natural gas utilities this morning and requested they send a report of our usage for the past 2 years we’ve lived in the house.  That way I can really see the impact we are having by changes we are making. 

Any other ideas out there?

We belong to a local homeschooling co-op.  Kids are able to take special classes offered by parents as long as their parents also offer a class for other kids.  It’s been a great way for our son to get exposed to arts, crafts, sports and many other things that we wouldn’t have the time to do on our own.  Last night, I was preparing for my offering this coming weekend on Building a Birdhouse.

I have lots of scrap pieces of fence pickets from repairing and shortening our wooden privacy fence last fall.  I had found a free bird house plan online that used a single fence picket as the material.  So, I was out cutting pieces from my scraps to have “kits” put together to assemble 6 birdhouses on Saturday.  I’ve known my miter saw blade was getting a little dull and had an extra one handy.  After cutting all the sides, and cutting the end pieces to length the blade was on it’s last legs. 

I grabbed some wrenches and the new blade and started to change the blade.  There’s a little lever on the back of the saw that locks the shaft in place to keep the blade from spinning so that you can tighten and remove the nut holding it on.  The problem was, the shaft kept turning while I was holding it!  Determined to make this work, I got out some screwdrivers and started taking things apart.  I ended up with the saw motor (blade still attached) in my hands.  Then I saw the problem, the shaft is flat on two sides so that it can be locked from spinning, and that edge between the flat and round were “stripped” so to speak and allowed it to rotate through the locking mechanism.  Even wrenches on either side of the blade didn’t seem to do the trick of loosening it (and yes, I realize they are right hand threaded in case you were wondering, I’ve changed this blade on more than one occasion in the past.”

So, now the dilemma, I need to cut a number of other pieces and the hand saw just didn’t seem like a lot of fun.  I would LOVE a new miter saw, but I’m not ready to spend the $300-$400 to buy the kind I want to have for future projects.   I searched online to see what was available locally.  I talked with my brother about what he would recommend (he’s a total tool snob when it comes to quality tools, so I highly value his opinion).  I made a quick run out to both Home Depot and Lowe’s as well. 

I so love working with wood and my power tools.  I so wanted to get a new saw, but it’s just not the right time.  I stood there looking and drooling over some of the tools, but managed to walk out without getting one.  I decided that I can make do with my table saw to finish up the few dozen cuts I have left to make.  It’s not the most ideal way to make them, but it will be good enough for this.  In the mean time, I can do some more research, save and get the tool I really want rather than buying something on impulse and regretting it later.

For the last several months we’ve been working with our son to balance a “check book” for his allowance.  Instead of giving him cash (which we never have) we gave him a check book register and he has to keep track of how much he spends and the allowance he gets in there.  We try to sit down a couple times a month to keep up to date.

After 5-6 months of seeing his balance number dropping down and down I was hoping he would notice and figure out he needed to stop spending so much on games and Legos.  Well, he saw his end of month balance last week and said, “I’m not buying ANYTHING for a while until I get my money back up where it was before!” 

It was good to hear, I just hope he sticks to that.  One help is that he is travelling with grandparents for about a week and a half, so that will keep the temptation of him spending his own money down for a while.  We’ll just see what he’s like when he gets back. 

No, not me, it’s my brother.  I got word from him yesterday that everything is official now.  He will be moving to Beijing, China this summer to work for a minimum of 6 months.  The project could go as long as 1-2 years.  He just bought a house and sold his a year or so ago.  It looks like my parents will be moving back from Florida and staying in his house until he returns. 

Now, I’ve mentioned my brother before in one of my posts (Conversation with the brother).  As I said there, he is a very frugal and has always been somewhat stingy with his money.  I wish I had been a bit more like him in that way.

So, here’s a guy who is in his mid, going on late 30’s, not married a house with lots of equity and quite a bit of savings and retirement.  He’s doing very well for himself.  He’s getting shipped off to another country to work for a while.  The package is including a significant raise during  the time of the assignment (he said something along the lines of 30%), paid housing while he’s there and per diem money for food and expenses. 

Knowing him, he will be making money on the per diem alone and will have nothing to pay with his increased salary but his mortgage back home (the parents will be paying for the utilities and upkeep).  If he gets extended out for a full year or more, he will also have some significant tax savings as well.  If I also know my brother, he will come back home and probably almost able to pay off his house if he felt like it.  I don’t see him doing that, but I know he will have a TON of savings and some new retirement accounts open by then.  Guess he’ll be well on his way to retiring at 50 if he feels like it.

I’m assuming most of you have either heard or been told by someone that “THEY” say gas is going to be $4 a gallon this summer.  I’ve heard this from more than one co-worker and even my wife.  Before I get all in an uproar and worried, I first like to do my own investigation and find out exactly who “THEY” are that are making the prediction. 

I did a Google search and tried to find an article.  This proved more difficult than you would think as most of the top hits were predictions from back in 2005 after Katrina.  Of course, that prediction didn’t come true, so I’m already taking this with a grain of salt.  I did find this articleon a Reuters news-wire about a week ago.

According to the story, the US Energy Department is expecting $3.40 this summer.  However, there are other “experts” that are predicting much higher ($3.50 to $3.75).  An “expert” with AAA said that $4.00 is a possibility this summer.  I still don’t see anyone actually predicting $4.00 a gallon. 

Even if it did hit $4, with our new (more fuel efficient) car and only having one car for the family, we spend between $70 and $80 a month on gas.  A rise to $4 per gallon will only add maybe $30 a month to our expenses directly, though there may be some additional effect on groceries and other purchased goods.

I heard a couple people talking about the $4 prediction this morning in the break room.  They were all worried.  I posed my situation as using public transportation and that it really wouldn’t bother me at all.  Well, they got all in a huff about I can’t do that because I have to drive 10 miles to get to the metrolink.  Or the bus would take an hour and a half from South County and I have to drive to the bus stop (they obviously don’t know about the express buses). 

I really wanted to tell them that their line of thinking is why gas is so high.  Consumer demand helps drive prices up more than rising oil prices.  People who are unwilling to change their behavior in the face of rising prices give the oil and gas industry free money just for raising prices.  Choose to drive less, choose to move closer to work, find work closer to home, etc.  You have many options to offset your cost of gas if it really bothers you, but you choose to do none of them, so you add to the problem you are complaining about.  It’s sort of like people who don’t vote yet complain about politicians.

I’ll leave you with this excerpt from the article above.  It is about the real effect of gas prices on people and how it is making for a “terrible” life.  Myself, I don’t feel sorry for them.  It’s all about CHOICES!

For Americans like Phyllis Berry, a 31-year-old General Motors factory worker in Cleveland, gasoline costs are starting to hurt.

“I used to fill it up pretty regularly, but now I drive it until the tank is almost empty, looking for the cheapest place to buy gas,” said Berry, who drives a beat-up Chevrolet Caravan. She said that she used to take her four children to the movies four or five times a month. But with the cost of gas, tickets, popcorn and soda adding up to $70, they now go only once a month.

Can only go to the movies with 4 kids once a month! Oh the horror!

I was walking to the cafeteria at work the other day when I overheard a conversation by a couple of mid-twentysomethings. 

“Would you rather take 10, $1,000 vacations to Vegas or 1, $10,000 vacation?”

Seems to be a pretty interesting proposition doesn’t it?  If you assume that you would save the money from not going on smaller trips and stash that away for a larger trip, it becomes more interesting.

While to me, the idea of having a $10,000 Vegas vacation just seems so not worth it, but I know others would enjoy that sort of thing.  So, think of wherever you like to go on vacation and use the same logic.  For me, taking a vacation is the important thing.  I can be frugal in order to not go overboard and I still have fun getting away.  It’s not the excitement of doing all kinds of stuff in one trip that makes the memory.  I’d rather have lots of little memories and do things gradually over time.

The two who were talking were a bit the other way.  They seemed to think the big, grand vacation would be more fun.  The thought of staying the finest hotel and getting every good thing they wanted for a week was worth not having the other experiences. 

If you ask me, wasting money on a really nice hotel room doesn’t make my experience that much better that I would give up 9 other trips to get it.  Why is it that some people are so drawn to the “Luxury” item mystique?  What makes those items so much more valuable than others? 

I’ve stayed in $300+ a night hotel rooms on business.  To be honest, I didn’t get any more use or satisfaction out of it than I would have gotten if I had stayed in a $100 a night room at the hotel next door.