Sunday, March 22, 2009

I'm not Payin!

Let's be honest. the North American and most of developed world's economy is based on consumerism. In fact it has recently been noticed that the economy is strongest when the population is in a state of hyper-consumerism. Conversely, when times are tough people don't buy as much and times get tougher. Therefore, we are encouraged to buy buy buy. Some businesses will capitalize on the notion that 'we are trained to pay'. Be aware of that and get comfortable with the phrase "I'm not payin'!"

Most people have the idea that the price is the price and would never argue. Don't be one of these. Obviously you stick to your agreements but upsells, add-ons, misleading offers... I'm not payin' for that!

Example- Out for lunch- Server asks would you like gravy on you fries? You agree that would be nice. It shows up on the bill for $1.19 plus tax. In that case I would end up paying but let the manager know it's bad business to make the offer sound like it's a freebie. The server should say "Would you like gravy for $1.19.

Here's an example where you should never pay. Our air conditioner was installed last summer. When the guys did it they screwed up something in our electrical that made out AC come on whenever we turned on our exhaust fans in the bathroom. So I called the AC people to come out and fix it. They did, promptly. Then presented me with a bill for $60. "I'm not paying.", I instinctively replied. The guy called his boss and they waived the fee. No problem.

I call this 'fishing'. Because many people just pay the bill without argument businesses may go fishing for extra revenue where it's not deserved. Beware.

Always pay your bills. Never pay for someones mistakes or dishonesty.

Next: The most controversial debate in frugality. Don't forget the Harvest!

Sunday, March 15, 2009

Make It Painful

It's tough to break free from something we're born into. from a very young age people are trained to feel that getting new stuff is fun. We get an adrenaline rush from it. Birthday parties, Xmas and other holidays with tons of presents- then the anticipation of opening them. Then the rush when we open the present. In our teens we see the cool kids are the ones with the nicest car, clothes, bling- whatever. Then we become adults and we have to be responsible with our money. It's a completely opposite world.

So how do we train ourselves? First, let's be conscious that we have been trained to do things the wrong way. Understand that every dollar you are putting out is equal to two dollars earned. When you do open your wallet, think about the toil you went through to make that money. Really feel the pain of being "roped in" to buying this item.

We need to break away from the notion that spending money is pleasurable. For the Ultrafrugal it should be painful. We may enjoy the fruits of money spent of course. But when the wallet is open and the money comes out we need to review in our minds- what we did to earn double the amount spent, what needs could be filled with that money, is it really worth it? Soon enough, spending money won't be fun.

This may take some time to ingrain in your subconscious. After all, we've had a lifetime of training.

Next: I'm Not Payin!

Sunday, March 8, 2009

A Penny Saved is a Penny Earned: WRONG!!!

We've all heard the saying. Mom and Dad swore up and down that a penny saved is as good as a penny earned. This means of course that if you save that penny/dollar, it's as if you've just earned one. I'm going to apologise in advance to those folks who believe this but that notion is WRONG!!!

A dollar saved in actuality is worth two dollars earned. So, what do I mean by that? Every time you spend a dollar, it's a dollar: 100 cents absolute. But what does it take to earn that dollar back? If you go to work in a regular job you will be taxed on that dollar at (let's say) 30%. So, right out of the gate we know it will take about $1.50 worth of work to earn back that dollar. Ah, but there's more...

Now we must incorporate the costs of going to work each day. That cuts into your eventual take home pay. Things like wardrobe: Would you need to spend hundreds/thousands on professional clothes if not for the job? No. Therefore it is a cost to include. Car/gas/insurance/repairs etc. Think about this one. Do you need a car for anything other than going to work? Some may say yes, others no. However, in every case you must factor in the fuel cost of going to work each pay period. You get the idea.

Here's a list of hidden costs of working that will show you that saving that dollar is like doing two dollars worth of work.

Wardrobe/Dry Cleaning
Union/Assn. Dues
Steel Toes
Social/Gift Fund*
Staff Lunches/Outings*

*Some of these you may be able to opt out of. But let's be frank, if you opt out of these things too often you will likely be labeled cheap. Which we are not. We are frugal. We will discuss the difference in coming weeks.

There are undoubtedly many other hidden costs of going to work each day. Crunch the numbers on what it costs you for each of them to find what you actually take home in the end.

So when you see the quarter on the street, consider in 50 cents. That five dollar meal sounds like a good deal, but it'll take $10 to make it up. That $25 dollar mail-in rebate you might get around to sending in. Send it! It's $50 of your sweat and time.

Maybe this is too complicated to fit into a catch-phrase old saying. So many continue to say "A penny saved is a penny earned." When someone tells me something like "It's only 20 bucks." The reply is "20 will cost you 40."

Feel free to use it.

Next: Make it Painful

Thursday, March 5, 2009

So you think your frugal, eh?

For a first post I figured I would discuss my history of Ultra-Frugality and why this life-long obsession has me going through this recession without a whisper of concern.

I grew up in a middle class famiy and had a father who instilled the idea of "taking care of your money". I remember having a paper route as a kid and having hundreds of dollars stashed away in my hiding spot because I wouldn't spend a nickel. Why? Because I was taught to spend money on what you need... not what you want(Oh, there's a difference). As a kid, my needs were taken care of for me so my money sat. This attitude has grown into my adult life. Now my money doesn't sit, but makes more money for me. I'll help you get there.

In the coming days and weeks, I'll demonstrate ways to save money like you've never seen. You'll see ways to spot a scam and learn how to never pay more than you should.

Coming topics to take you to the next level of frugality.....

  • Penny Saved is a Penny Earned: WRONG!!!

  • Make it Painful

  • I'm Not Payin!

  • Don't forget the Harvest