Llama Money » Spending

Overspending

Llama Money — Tue, 30 Jun 2009 02:07:53 +0000

I’ve started compiling my net worth report early this month,for a change. Quite frankly, I’m disappointed in myself for making several large purchases in the same month. Normally I’m pretty good at spreading large purchases out over time, so they don’t hit quite as hard. Not this time around. I made two major purchases in June 2009, and my net worth suffered greatly as a result.

Learn to spread purchases out

You should know by now that I don’t mean buy your large items on credit, because I certainly don’t advocate that. Unless you can afford to buy the item in cash, and you have a 0% interest opportunity, you should never make large buys on credit. What I mean is, if you know that you have several large costs coming up, don’t stick them all together. Buy 1 item this month, another next month, and the last 2 months from now.

Whatever your plan, the idea is to spread things out, putting some purchases off into the future. The longer you can delay most purchases, the better off you will be. Draining your cash reserves can be unnerving in the best of times, and quite frightening in today’s troubled economic times. Slowing your purchases down is a great way to keep more cash in the bank. Build up your cash reserves a bit, before spending again.

The goal is not to deprive yourself of the things you want or need. Simply to pace yourself, and ensure that you don’t get into the habit of taking large purchases lightly. Plan then out, push them out, and take your time. Your wallet, and net worth, will thank you.

Hi there - could you help spread the word about Llama Money? This is a new site, and I could really use your help in getting my work out to new readers. If you would send someone a link, email, or even mention it to your friends, I would appreciate it. Overspending is a post from: Llama Money

Save Money with Google Docs

Llama Money — Sat, 20 Jun 2009 18:07:01 +0000

The first major purchase after a new computer is usually a suite of programs that we’ve all been using for years – Microsoft Office. You know, the suite that includes Word, Excel, and Outlook. Depending on what version you currently have, and what version you buy, this can run you anywhere from about $130 to $400. Not exactly a small chunk of change, no matter how you look at it.

Don’t be so quick to give Microsoft your money

It’s 2009 folks, and there are great alternatives to Microsoft Office. What I’ve been transitioning to is Google Docs. Google has a word processor ( like Word ), spreadsheet ( like excel ) and even a Powerpoint alternative ( though I haven’t tried that one ). For an easy Outlook replacement, you can use a combination of Gmail, Google Calendar, and Tasks.

Google Docs can handle uploads of your current Office documents – so you won’t need to create them all from scratch. It can also save in Office format – for when you need to take documents with you. The best part about Google Docs is the price. Not hundreds of dollars like Office – but exactly zero dollars. That’s it. Completely free, and it can replace Office for probably 90% of users. No more purchasing upgrades to get the latest features – Google adds features at no cost.

If you haven’t tried Google Docs, you’re really missing out. Try it for a week, and there’s no way you’ll go back to Office.

Do my own yardwork this year or outsource?

Llama Money — Tue, 28 Apr 2009 02:35:48 +0000

The grass is starting to grow, and as a proud homeowner, I have a decision to make. Do I drag out the lawnmower, trimmer, and edger, and put in some sweaty hours of hard work to tackle the job every week? Or do I go the lazy route and pay someone else to do all the work, while I get to sit back and relax. Financially speaking, it seems pretty clear – quit being lazy. It’s not quite so easy as that – let’s see why.

My cordless trimmer batteries are dead. Toast. Kaput. I need to buy a pair of new 18V batteries. I haven’t priced them, but I think they’re roughly Not Cheap.
If I sold off my lawnmower ( fancy Cordless Black and Decker ), I could probably pay for several weeks worth of yardwork.
Lazy Saturdays all summer. Well, lazier, at least.

So, if I hire out, I don’t have have to buy batteries, I can sell my lawnmower, and I get to enjoy my Saturdays. Plus, let’s face it, my yard will look nicer. I’m not exactly a pro at landscaping.

I still have to mull things over. Business income is down, and my wife’s not working. Money isn’t exactly growing on trees these days. But life sure would be easier if I didn’t have to fuss with the lawn. Thoughts? Other ideas?

Splurge on the little things – it’s good for you

Llama Money — Sat, 14 Feb 2009 15:32:50 +0000

And when I say it’s good for you, I do mean financially. Go ahead, take your wife to that movie she’s been wanting to see. Stop at Starbucks afterwards and enjoy a $6 coffee. Heck, even spring for that $5 brownie that looks so delicious. The point is, you need to splurge a little bit sometimes, so that you don’t get caught up in “save save save” mode all the time. If you deprive yourself of all life’s little pleasures, chances are good that you’ll end up doing something really stupid financially, and spending way more than you would on a few little things.

So, since it’s Valentine’s day, take some time and do something with your significant other. I’m not saying you have to go all out, but lunch and a movie would do the trick. It won’t cost a fortune, but it’ll feel good to get it out of your system, and enjoy life a little bit. Remember, finances are a bit like food. If you go hardcore into a binge diet, you’ll end up eating a whole tub of ice cream and chasing it with a pizza or two.

What’s best for the economy is not best for you

Llama Money — Thu, 12 Feb 2009 03:27:57 +0000

Banks aren’t lending; people aren’t spending. That’s what’s wrong with the economy today ( at least, on a very, very basic level. ) So, what to do? Well unless you’re a bank, the answer would seem to be “spend, spend spend!” And indeed, if we all get together and spend like crazy, our country’s economic condition as a whole might well improve. However, what happens if you spend like mad, but everyone else keeps their spending in check? Well, then things start looking mighty bad for you, big spender.

Think about your economy, not the country’s.

How does your cash flow look? Your debt? Your net worth? These are the things that you have to look at when you’re making your spending decisions. Don’t worry about what’s going on in the world – and don’t worry about the rest of us. Your job is to worry about yourself, and your family. That’s it, no one else. If you’re not comfortable spending, then you should keep your money in the bank ( or under the mattress, whatever you prefer. ) In other words, don’t be pushed into spending because you’re trying to save the world. All that will do is make sure you end up in the poorhouse, deep in credit card debt, with no savings to fall back on.

Spending gets out of control quickly

Llama Money — Tue, 23 Sep 2008 19:02:26 +0000

No matter how frugal you are, no matter how carefully you budget your money, it doesn’t take much. Months of hard work, tracking every dollar, can be gone in a single day! One day of giving in, indulging yourself, convincing yourself that you "need" or "deserve" something new. Especially if that "something new" is expensive, and accompanied by several more "something news".

By now, you’re probably wondering what in the world my wife bought. But I say no! I can’t blame anyone but myself this time around. On Sunday I managed to spend close to $1700, all on myself. Holy guacamole. What did I buy, you ask? Take a look:

New laptop – $800. My son’s laptop finally died ( my wife’s old one ), and we tossed around the idea of buying him a new one. What we ultimately did was buy me a new one for my job, and he gets my old one. My old laptop was working fine, but just beginning to slow down. As time goes by, I multitask more heavily, and the system had trouble keeping up. It will do just fine for a 9 year old.
New Sprint mobile broadband card – $220. I had a PCMCIA card for mobile broadband. Turns out, there’s a new Express card format, and PC card’s just don’t fit. I purchased a USB card this time around, so there will be no future compatibility problems.
New phone – $650. A brand new shiny Treo 800w. My first windows-based Treo, after a long line of Palm OS Treos. My trusty 755p that I had managed to hang on to for a year and a half is slow, crashes, and is just overwhelmed by everything I ask of it. So, I replaced it with a shiny new Windows machine, that should do a better job of handling everything.

The good news

There’s a couple things coming to offset the insane cost of the items above. One, I will sell my current Treo, as it’s perfectly fine for normal use. Expected sale price: $200. My current connection card will also go up on Ebay within the week. Expected sale price: $50-$75. And finally, my laptop went on sale Sunday, so I’ll be getting a $150 price adjustment. All told, I should be getting about $400 back.

In addition to what I listed above, all my purchases will qualify as business expenses. The tax deduction should be worth "roughly" $450. So I’m looking at a net cost of roughly $850 for all the new goodies. That’s still way more than I should be spending right now – there’s a lot going on that I need to post about. I am considering taking the phone back.. as it was really the least essential item that I purchased. It depends on whether Windows Mobile fits my needs better than Palm OS. I have 30 days to decide on that one.

Moral of the story

I didn’t write this today so that I could justify my spending. I know that I went overboard… the laptop should have been a Christmas purchase. I should have held off on the phone – there’s no question about that. From a personal finance standpoint, I failed big time this weekend. My point is, the best laid plans can be shot to hell and back in a big hurry. One major slipup and all your hard work is lost. Stay strong, and make sure you leave your plastic at home, where it belongs.

Frugality vs Time

Llama Money — Tue, 22 Jul 2008 17:48:08 +0000

One of the biggest stumbling blocks that I keep coming across in my pursuit of greater frugality is a lack of time. The internet is full of money-saving tips. Grow your own garden, make your own laundry detergent, cook every meal from scratch using the chickens in your back yard, etc etc. If you have all the time in the world, there are many ways to cut your expenses.

The problem

Real life is the problem, of course. My typical day goes something like this: Wake up at 6:00, get my son ready for school, drop him off, get myself ready for work, head in, get back home around 6:30-7:00 PM. Eat dinner & clean up, done around ~7:30 PM. Head up to my home office to put in a couple hours, and in bed by 11:30-12:00. Notice the lack of time to do stuff like make dinner from the chickens, grow my own rice, and build my own car out of popsicle sticks and Elmer’s glue.

What’s the solution?

I’m not a fan of making excuses. I’m not saying that I have an excuse for being lazy about certain things. Should I eat more home-cooked meals? Yes. Should I brew my own bio-diesel fuel in my bathtub? Maybe. The point is, being busy isn’t an excuse. It’s an obstacle to overcome. It’s not that I can’t be more frugal – it’s just that I haven’t figured out how to do it realistically just yet. And that’s part of the reason this site exists – to get some feedback from my readers. If you have any great time-sensitive frugal tips, I’d love to hear them.

I spent my Stimulus Check

Llama Money — Wed, 04 Jun 2008 15:13:12 +0000

I know – you’re thinking “But Llama Money, what happened to all that talk about saving your stimulus check?” After all, a smart llama saves found money, and I certainly consider myself a smart llama. Well, do you remember my post about needing a new washing machine? Yep, mine was leaking anytime warm or hot water was used. Most of the time I wash in cold, but I like to use hot for my towels, and sometimes whites. At the time my expected purchase price was $700 plus taxes and delivery.

How to upsell yourself

As I was doing my research, putting off my purchase, I stumbled upon an upgraded LG washing machine. It’s one of those fancy Steam Washers. At first I scoffed and said, “I’ve been washing my clothes with water for years, and I’ve never needed steam. What a waste of money!” A bit more reading later, and I discovered a cycle called “SteamFresh”. After reading about this, I was sold. See, SteamFresh is a cycle that basically irons your clothes for you. Yes, that’s right, it irons for you. Through some sort of steam-powered magic, wrinkly clothes go in, and non-wrinkled clothes come out. I absolutely hate to iron, and resent all the time I waste on the chore. I had found my dream machine.

Luxury comes at a cost

Naturally this machine ( LG WM2487HWMA ) cost more than the $700 unit I had orginally picked out – $1099 to be exact. Add in the $200 pedestal ( huge back saver ) and taxes, and voila! I’m at Best Buy watching my $1400 bill print out. I did use my Best Buy credit card to get 18 months at 0% interest. My current plan is to pay $100 per month and finish it off in 14 months. In reality I’d be surprised if it takes more than 6 or 7 months to finish off the bill – I hate credit card debt.

I did my part to help the economy

That’s a joke, right there. I hope you got it. I had planned to purchase a washing machine, whether I got free helicopter money from the government or not. The fact that I did was simply a bonus, and means my savings account can go on unharmed. Win for me, win for best buy, and win for the US economy. What’s not to like?

Goodbye Visa, It’s been nice knowing you

Llama Money — Tue, 06 May 2008 20:32:55 +0000

I’ve always been a huge proponent of rewards credit cards – I still am, in fact. But today marks a day I didn’t see coming. Today when I get home from work, I will remove my PenFed Rewards Visa from my wallet. The only time I’ll carry it with me, is if I need gas ( 5% rewards ) or if I’m making a large planned purchase. For too long I’ve spent more than needed on eating out, groceries, and random crap.

Just the other day I withdrew enough cash to cover my food expenses for the month, and also a little extra for random crap. Not too much, mind you ( $100 ), but it should be enough. That’s right, I’m moving forward with the envelope system of budgeting. Once the envelope is empty, I’ll have to get by with what I have – no more charging.

What about the rewards?

My rewards card is amazing – 5% cash back on gas, 2% on groceries, and 1.25% on everything else. The rewards are cash, credited directly to my statement monthly. My thinking is this though – if I can reduce my grocery spending by just 5%, I still come out ahead. Spend 5% less to give up 2% less in rewards – count me in. The entire goal is to spend less, and learn to stop spending. My monthly Visa bill has been outrageous for as long as I can remember. Sure, I pay it off in full every month – but at what cost? All that extra money spent on unnecessary items could be going to pay down my car loan. Or straight into savings. Or into my Zecco account.

The tricky part

Ahh the rub. Tonight I get to ask my wife for her Visa too. That should be a blast. After all, this plan doesn’t work if only one of us is on board, right?

Inflation – Fear of the grocery store

Llama Money — Wed, 23 Apr 2008 10:19:06 +0000

After the last 5 or 6 trips to the grocery store, my wife has seemed quite flustered. She kept commenting on how expensive things were getting. Without buying things like meat or chicken, our grocery bill would still be over $120 for a single week. Add in meat and chicken and things get really ugly. If we had 6 kids it wouldn’t be a concern – but we only have one. Week after week, month after month, the value of a dollar is becoming less and less. Regular prices keep climbing, and sales aren’t quite as good as they used to be.

Nothing is immune to price increases, it seems. Month after month our grocery bill gets higher…. even as we cut back on meat and other expensive items. We’re not rich by any means, so it hurts. I am very thankful that we aren’t in a worse position financially – I can imagine what some people are going through.

It’s not going to get better anytime soon

Generally, inflation is followed by salary increases to match the cost of living. That’s the idea anyway. However, we’ve faced some pretty stiff inflation over the past few years, without the accompanying rise in wages. Most of us are making about the same amount in dollars as we were a few years ago, but those same dollars buy less stuff. That’s a pay cut, my friends, at least indirectly. Until wages catch up ( if they do ), we’ll all need to tighten our belts a bit.

For one, remember to keep investing. Even modest 7 or 8% returns will make sure your money outpaces inflation. If you like, diversify your cash a bit, so you’re not overexposed to the US dollar. If you don’t take some action soon to fight inflation, it will become overwhelming. Cut your spending, now. Invest. Buy metals. Heck, even consider buying foreign currency. Do your homework, but do it now, and make a decision.