Sushi Money

Okay, let’s be honest. How many of us have little quirks or habits that we use to save money? I was thinking about this the other day while doing a cost-benefit analysis in my head over some purchase. Then I realized I do this everyday almost unconsciously. So I began to wonder- how “normal” is it to think of saving money in various ways as a routine habit or way of life? After all, many of our friends and acquaintances enjoy spending money and living like there’s no tomorrow.

For those of us interested in personal finance and growing our wealth, does frugality just naturally go along with our goals? Or is something we pursue and challenge ourselves about? Somehow I believe we develop our own financial knowledge and strategies because it meets the values that are important to us. And how many of us wish we learned these values, or lessons, at a far earlier time in our lives?

But do you know any people who don’t even seem to care about saving money? I’m not sure I could go that far, it’s more likely that some people are just not aware of why it’s so important, or that they are spending much more of their income than they should.

So after I thought about it a while, I realized I do a lot of things to try and save money. I say “try” because I may not always be saving money, but just believe I am. And I have various habits or quirks that to try and find ways to become more efficient financially. Maybe it’s a disease… the same one that had me running around changing lightbulbs the other day after realizing I didn’t finish all the bulbs in the house last year. By my accounting, it saves us $5-$10 a month on our electricity bill.

So here’s my short list of strategies for saving money at home. These are things I do, or we focus on as a family:

1. Installed and use programmable thermostats for the house… but I still fiddle with the thermostats everyday to optimize the settings if we don’t need the heat or cooling. I even shut doors/vents to rooms that we don’t use, and are colder in winter, and circulate the fans where possible in living spaces.
2. Installed 40 compact flourescent lightbulbs instead of using the traditional incandescent bulbs throughout the house.
3. When putting gas in the car I hold the pump hose up to drain as much gas out of the line as possible… if it’s possible!?
4. Try not to drive excessively fast, but try and maintain constant speeds (a little higher than Grandpa..), and I coast as much as possible, especially going downhill and between stoplights. Also saves on brake wear.
5. Try not to shop for groceries when we’re hungry. I’ve proven that I’ll buy all kinds of useless junk if I’m hungry! We use coupons if it fits our lifestyle, but don’t clip that many. We minimize junk foods, and pre-packaged processed meals.
6. Pay bills online for free instead of using stamps and checks if possible.
7. If we go out for fast food, I’ll order from the value or dollar menu, and often order water instead of soda. But in general we eat out a lot less these days. We splurge on dining out once or twice a month at a decent restaurant.
8. We buy groceries and dry goods in bulk where possible, especially if the item is on sale.
9. Make our own coffee in the morning; having coffee out is a rare treat.
10. Prepare brown bag lunches for work/school, instead of eating out.
11. Eat and stay healthy… avoid the doctor and look for alternative health ideas for common ailments.
12. Use the library for books and videos. Find free recreation and activities for the kids.
13. Use the least expensive cell phone, land-line telephone and internet service plans as possible. But we do have broadband internet- it makes life so much more pleasant. We also keep land-line telephone service because we live in a semi-rural area and it works during electricity outages, or else we’d ditch that too.
14. Avoid bank and credit card fees in all ways possible. Find another bank if the current one charges too many fees.
15. Cut the kids hair at home. Pets are also bathed and groomed at home. Not that kids and pets are the same mind you…
16. Carefully research larger purchases (greater than $50-$100). When ready to buy, we purchase quality items that will last. Often we’ll shop online after finding a lower price, and save on taxes as well.
17. Pay off credit cards each month unless financing a temporary item at very low rates, or 0%. Don’t carry a balance.
18. Do most of our cleaning, landscaping and auto maintenance needs at home when possible.
19. Grow a garden to eat our own vegetables.
20. Don’t shop for more clothing and shoes than absolutely necessary, and purchase items on sale.

Oh… one more I just realized. Use the same old computer until I can’t stand it anymore! I’m typing on my second laptop- the first lasted almost three years. This one has just passed two years and still going strong, but I would really like to get a bigger desktop… some day.

So what things do you do to save money? I’m sure there’s a lot more… does this seem normal to you, or do you live carefree and not worry about it? I’m not sure I’ll ever be able to do that…

Great article out this week from Laura Rowley.  She says Don’t Fiddle Away Your Financial Independence and uses the analogy of the old fable about the Ant and the Grasshopper to describe the current financial challenges we face.  Even more interesting are the comments from many folks across the country.  Real people share their stories and feelings about saving and investing, the economy, bailouts, mortgage and foreclosure issues, etc. 

Maybe for some the difference is easily seen.  But I wonder how many of us have been both at times?  I know I’ve hopped around like a spendthrift Grasshopper many times in my life. The older I become, the more I appreciate the steady, disciplined approach to saving and investing.  

The Ant and the Grasshopper

     In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content.  An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

“Why not come and chat with me,” said the Grasshopper, “instead of toiling and moiling in that way?”

“I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.”

“Why bother about winter?” said the Grasshopper; “We have got plenty of food at present.”  But the Ant went on its way and continued its toil.  When the winter finally came the Grasshopper had no food, and found itself dying of hunger, while it saw the Ants distributing corn and grain every day from the stores they had collected in the summer.  Then the Grasshopper knew:

 It is best to prepare for the days of necessity.

For budget entertainment, American Idol is pretty good. What makes it better is when the competition heats up… How about that David Cook? I’ve enjoyed him each week, but his Billie Jean remake was incredible. I think he’s going all the way… Here’s a YouTube version, enjoy!

Does anybody like paying taxes?   How many of you feel a personal, moral obligation to pay the government more money so that the politicians can decide what to do with it?   Between income, business, property, personal property, sales taxes, etc… it’s hard to imagine paying more.  For goodness sake, in my state we pay personal property taxes on items we’ve owned for years and years.  We pay the same tax, albeit at a lower amount, every single year.  For the privilege of owning a small outboard motor or equipment trailer for example, we get to pay taxes on the value of those items every single year. 

But guess what?  We are going to pay a lot more taxes in the years ahead.  MarketWatch spells it out pretty clearly in 10 Reasons Your Taxes Are Going Up.   I’m not going to dive into a debate about which political party is going to raise taxes more (even though the Democrats will!), but given the economic and demographic challenges the nation faces going forward, it’s hard to see a way around it.

I’ve got a few ideas:

• What if every now illegal immigrant actually paid taxes?  Many of the estimated 12 million illegal immigrant workers thrive in the other U.S. economy- the one based on cash.  If we can find a way to implement a guest worker program or something to increase legal immigration, think of the increased revenues we could see.  Of course, some folks just call them unauthorized migrant workers…  Uh, don’t think so-  illegal is pretty accurate. But more importantly, in terms of U.S. population growth between 2005 and 2050, the Pew Hispanic Center estimates that 82% of the U.S. increase of population will come from immigration.   We’ve got to encourage the legal immigration to this country, and for every citizen paying their fair share of taxes.  Admittedly, the entitlement benefits would also increase, but right now many illegal immigrants receive welfare and education services far in excess of what is paid into the system, and that’s got to change.
• Many working adults in society are not only going to live longer, but they’re also going to work longer.  If retirement is as much a crisis as many experts predict, then a lot of folks are going to be working a lot longer in life.  Those who do work longer will pay more in taxes, and that will help fund government programs.  Of course, working longer might be better for our health anyway.  But it would be nice to have that as a choice, and not a necessity.
• Implement a national VAT program.  What’s that?  It’s the great big, gigantic tax that is placed on everything you buy, seen in Canada and many western European countries today… it’s called a Value Added Tax.  Some say it’s a regressive tax because it’s a burden carried mostly by consumers regardless of income level, and because businesses recover a portion of the VAT every year.   So the VAT is supposed to be on the excees value throughout the production, supply and retail chain.   Seems like I remember someone proposing a VAT tax to fund health care in the early 1990’s?   It may yet come.
• Start a national lottery!  Based on the success of state lotteries, PowerBall and MegaMillions, it would seem that could be a huge source of revenue.  And why not?  If the states can do it, let the Federal government sponsor a few organizations to conduct a lottery.

Honestly, I am not a fan of increased taxation.  I would rather see our resources focused on helping businesses grow stronger, and bringing more business to the U.S.  But there’s another reason taxes are going up- and that’s simply because the wealth in society is growing larger.  

A recent study showed that global wealth of rich clients grew by 12% over the past five years.  Those same assets held by investors with over $1 million dollars is forecast to grow by 50%  and hit $75 trillion by 2012.  That’s an incredible sum of money… and somebody is going to find a way to increase taxes on it.  The gap between the poor and the very wealthy is growing wider.   Many of us are still climbing the slopes, but we too will pay our fair share in the years ahead.

I don’t like paying taxes, but I accept the necessity in order to fund certain programs and benefits.  I do not favor larger government programs that require further tax increases to maintain funding.  It seems like it’s going to be a huge wrestiling match in the years ahead, especially if people think we’re going to fund a national health care program.    Is that possible?  Do you want to pay for it? What else can we do?

Some excellent personal finance and investing articles out there this week.  CNN/Money’s Walter Updegrave replies to an anxious investor while discussing Investing for the Long Haul.  Can’t say it any better than that right now, and so much of investing depends upon your time horizon.

If you’re really anxious, the government has just the thing on April 7th when you can invest in all kinds of Treasury securities in amounts as little as $100.  You can do that through a broker of course, but it may cost less by going right to the source at treasurydirect.gov.

Still working on taxes?  The IRS released its list of the Top 2008 œDirty Dozen Tax Scams this month.  Peace of mind with taxes really helps, and it’s always nice to know what to look out for.

Even though the markets have looked pretty good over the last week, don’t expect the volatility to ease anytime soon.  MSN’s Jim Jubak takes a thorough look at the challenges impacting global market stability and some Safer Ports in the Market’s Storms.  

Of course if you want to become anxious again, he presents a hard dose of reality in Retirement Crisis: From Bad to Worse.

But there’s nothing like a little Zen Economics to help you relax, and make you wonder if you really know anything at all. 

Working with a financial professional can be very helpful.  Whether that’s a Financial Planner or simply a local broker, do some homework and make sure you’re comfortable with the relationship.  A good planner can make all the difference however, especially with a longer time horizon. 

Awoke to a cold spring morning today with blue skies and sunshine. It would be nice if it were all blue skies for the economy and markets, but there’s still a lot of uncertainty out there. Does it seem like we’re reading more and more about recession paranoia in the media these days? Maybe recession-speak is now fashionable, but perhaps also because of the election cycle. As some economists observe, one way to create a recession is to just keep talking about it. Hmmm, interesting observation about sex there…

Many American consumers are feeling pinched these days. The Fed has aggressively cut rates in the face of many economic challenges, yet some investors are worried about the Fed causing more inflation. The inflation argument may be valid down the road, but it doesn’t sit well when we’re trying to tackle the other economic problems first. Seems like you slay the dragon in front of you before worrying about the one coming next.

All I know is I can bring more certainty to our own life through doing more things that improve financial stability, and doing less things that reduce it. Stuff like increased savings, reduced spending and debt, and becoming more knowledgeable about financial matters. Honestly I can control very little except the conduct of my own life, and even that is arguable at times.

Yet because most of us care about the nature of our life situation in the future, we do something about it. We modify behavior in the present in order to cause change for the future. Or at least we try to do that. Sometimes we fool ourselves for quite a few years, going through the motions, but not really being serious about it.

And then it hits. Some event, realization or dynamic in our lives that induces enough reflection to become aware of our mortality. For many of us it’s hitting the age of 40. Maybe like that keystone analogy and the poll results that shows how people take retirement planning the most seriously around the ages of 40-49.

It’s the realization that says,

“Half my life might be over, and I have very little to show for it!”

If you haven’t yet been hit with that realization, it will come. It’s kind of like presbyopia. “Presby what?!” Well, let’s just say “old people’s eyes.” Somewhere between 40-45 years old, most people are going to have a tough time reading things up close. And you’ll need reading glasses. Just a fact of life. And it’s a humbling experience that I’ve just gone through the past few years. I think reading glasses should come with a financial “how-to” book that helps people understand retirement planning. Because that’s about the same timeframe that most people start really planning for retirement.

I think it helps to remember what’s important, even in the face of a recession and that,

“If it takes change to make our lives better, then we better change!”

There are tons of resources out there of course. Learning from the experience of others can be a valuable source of new knowledge. In the blogosphere an excellent source of insight is the Carnival of Personal Finance hosted this week by Million Dollar Journey.

With an eclectic mix of personal financial advice and interesting stories, there’s something there for everyone. PennyMine talks about Teaching Kids the Importance of a Dollar. Dividends4Life finds Dividend Gold in a Down Market. The Honest Dollar shows us 11 Ways to Trigger an IRS Audit. And The Financial Engineer writes with the economy tanking it’s no time to increase foreign aid by $845 billion dollars. Not really time to increase taxes either…

There we have it. A place to find a beginning, and make a start or new commitment in our own lives. This week I’m committed to finishing our taxes. Now where did I put those reading glasses…

“Keystone: … a central building block; a central cohesive source of support and stability.”

We can use the keystone analogy to think of retirement and the need for a structured financial plan in the years ahead. With a growing retirement keystone in place, we have the ability to achieve our financial goals and shape the direction of our lives.

Social Security is that keystone for many people, but a recent Wall Street Journal/Harris Personal Finance Poll indicates that Fewer Americans Plan to Rely on Social Security in Retirement. That’s good news because it implies that more people think Social Security will simply not be enough and are doing something about it.

Fewer doesn’t mean a majority however:

• 60% of all income and education levels are still planning on Social Security as the primary source of income in retirement.

Lots of folks haven’t even started yet:

• Of all age groups, an average of 24% have not started retirement planning. The number stating they have not started retirement planning is highest for 18-34 year olds at 47%, dropping to 5% for 55 year olds.

A common theme:

• Based on age and marital status, more people indicated they started planning for retirement between ages 40-49.

It’s an excellent article that reveals some interesting generalizations. Pensions, IRA’s, savings, investments and yes, Social Security- all can serve as that retirement keystone. But how many of us really take retirement planning seriously in our early years?

Over the past few months we have really changed our driving habits due to rising gas prices.  I didn’t think it would affect us so much, but psychologically I find myself doing the frugal dance and calculating how much it would cost to make a trip here or there.  A short roundtrip to the gym or Wally World can cost $3 to $5 for us depending on the vehicle used.

So admittedly gas prices definitely have influenced our choices and habits at home.  We drive the fuel efficient car much more often to work, and don’t take as many trips.  When we need something at the store, we save it for a list or call each other and someone picks it up on the way home.  All normal stuff to be sure, but we are a lot more conscious of our gas expenditures now.  Honestly it kind of crept up on us, because I didn’t really think about our habits until I read that nationally over 50% to 60% of people have said they’ve changed their driving habits too. 

Lets take an unscientific poll and see what you think (this poll only works on the SushiMoney.com homepage, not in the feed).  Here’s the question:

Have You Changed Your Driving Habits Because of Gas Prices?

• No, not at all.
• Yes, a little.
• Yes, a LOT!
• I've stopped driving...

View Results

Of course high gas prices are nothing new over the past few years.  Here’s a chart showing the past 12+ years of gas prices.  Remember the good old days when we didn’t even think about it?  I wonder what kids in high school do these days… it would cost too much to do a lot of driving!

With the current national average well above $3.00 per gallon, it seems consumers really may be affected at home.   Yet over the past couple of days the price of oil has come down a bit based on weaker demand and economic concerns, so maybe reduced driving habits are making a difference in demand?  And maybe the rampant speculation by energy investors will taper off for a while.  Keeping prices lower over time would be nice, but the oil pundits are forecasting higher prices for the next decade and beyond. 

What can we do?  Some folks create a personal hedge and buy into an energy mutual fund or oil company stock (that quarterly dividend feels pretty good when you’re at the pump), but realistically we’ve got to modify our behavior.  I’m not ready to give up the ‘ole car yet, so aside from driving less, thinking about how we drive can help as much as anything.  Here’s an older, but excellent review of What Really Saves Gas at Edmunds.com.  What makes a difference for me?

• Turning the car off if sitting somewhere for more than 2-3 minutes.  Idleing the engine can really lower fuel economy.  It’s a winter habit for many of us, but spring is here!
• Don’t “mash on the gas” when driving (unless I’m really late for something!).  Gentle acceleration and coasting to stop lights at times can improve mileage and saves on brake wear.
• Keep the tires properly inflated. Low tire pressure puts more rubber on the road, and takes more “energy” aka fuel to make the vehicle go. 
• Maintain the car properly, and change the air filter on schedule.  The harder the engine must work, the more gas it uses.
• Slow down!  I don’t drive 70+ mph on the highway nearly as often anymore.  Somewhere between 55 and 65 mph appears to yield the best fuel economy.   Even some of the long-haul truckers are slowing down to improve mileage.
• Get a different vehicle!  Anybody for a Smart car or a bicycle?  Maybe in a different color…

We’re all going to have to get used to driving, and “consuming” more efficiently in the years ahead.  I’d love to hear how gas prices have affected your habits and family… what else are you doing to drive less or improve your gas mileage?  

And have you checked out GasBuddy.com before?  It’s a nice site to check out prices in your local area.  Often they’re pretty close to each other and it may not make much difference.  But sometimes you can find a station .3 to .4 cents cheaper, and I’m all for that!

     It looks like the wider markets fell today, clear across the board.  Let’s not talk about volatility… it’s just going to be a fact of life for a while.  And not only for stocks but also gold and commodities as well.  It’s about time for the commodities to take a hit, with so much rampant speculation in recent months.  Are the easy money days for prescious metals and commodities over?  Maybe.  There’s still lots of gold bulls out there however.  Difficult to fathom buying gold near $1000 an ounce.

     Somebody tell me, besides owning the value of the metal- what do you do with that gold?  Obviously you don’t have to hold gold bullion.  But many people do and think they’ll trade it or something if paper currency goes bonkers. Certainly lots more folks invest in precious metals mutual funds and gold stocks as well.  Over the past 5-6 years they’ve done very well. Be that as it may, for now I’ll stick with stocks and mutual funds for the majority of my long term portfolio.   But debating the merits of gold versus equities is not something I’ll wade into.  There’s a few questions I just don’t want to ask right now (or hear the answers to…).

Two lawyers were in court in a small southern town and learned a lesson about relationships and long memories. 

The prosecuting attorney called his first witness, a grandmotherly, elderly woman to the stand. He approached her and asked, “Mrs. Smith, do you know me?” She responded, “Why, yes, I do know you, Mr. Williams. I’ve known you since you were a boy, and frankly, you’ve been a big disappointment to me.  I have known you to lie, to cheat on your wife, and to manipulate people and talk about them behind their backs. It seems you think you’re a big shot when you haven’t the smarts to realize you’re just a two-bit pencil pusher. Yes, I know you.”

The lawyer was stunned by her reply. Not knowing what else to do, he fumbled with his papers and then pointed across the room and asked, “Ah, well, Mrs. Smith, do you know the defense attorney?”

She again replied, “Why yes, I do.  I’ve known Mr. Jones since he was a youngster too.  And do you know what?  He’s lazy, mean-spirited, and has a drinking problem. He doesn’t know the first thing about people, and his law practice is one of the worst in the entire state. Oh, and he cheated on his wife with several different women. One of whom was your wife. Yes, I know him.”

The defense attorney’s mouth just dropped open and he didn’t know what else to say.

The judge then called both counselors to approach the bench and, in a very quiet voice, said,
“If either of you idiots asks her if she knows me, you’ll never practice law again!”

The market is soaring today and seems to like the recent aggressive action by the Federal Reserve, and that they may drop the Fed Funds rate by a full point or more today.  I sensed a change by several commentators that instead of the Fed being behind the credit crisis the past few months, they are actually now way in front leading the charge to solve the financial problems.   Which is good.  Maybe it’s not all doom and gloom.  Although there’s still a lot of disagreement about the Fed’s course of action to solve these problems over the long term.

But Fed Chairman Ben Bernanke is well-versed in Depression era financial lessons, and did a great deal of academic research on the same.  So he has studied the causes and influences of the financial problems of the 1930’s and is working to prevent the same thing from happening now.

Apparently the banking and lending industries have just about shut down over the past weeks as everyone is afraid of  doing business with another company that may go bankrupt.  Some of those fears have eased today after Lehman Brothers (LEH) and Goldman Sachs (GS) both reported earnings that were not quite as bad as many have thought, with higher estimates going forward. 

That’s all the market really wants right now… clarity for the road ahead.  And with today’s Fed rate cut, as well as earnings announcements over the next few weeks, we may have a lot more of it.   Still going to be pretty volatile, but I honestly think we’re starting to put the worst of this behind us.

“What?!” I can hear a lot of folks saying…  because it just doesn’t seem that way right now.  There’s lots of fear and near-panic in some sectors, and with housing still down and oil and commodities through the roof a lot of folks are worried.

But this isn’t the Great Depression.   Unemployment right now is pretty strong, although that doesn’t mean anything if you’ve lost your job recently.  I wish those of you the best if you’re looking for work.  Many folks are rightly concerned about where their money is and if it’s safe.  For money you can’t afford to lose- it should be in FDIC insured bank and money market accounts.

What if you’re worried about your portfolio?  Make no bones about it, I’m a long term investor with a 10+ year horizon investing for retirement.   The LA Times has a good Q&A article that tells Investors to Take Deep Breath Amid the Storm.I just think it’s not that bad, and it’s not going to get much worse. It’s like the negative press and commentary has reached a crescendo, and just when everybody finally “buys in” to the storyline about how bad it is, the market’s going to turn. 

Somewhere there’s going to be a guy on a street corner with a sign… ‘THE WORLD’S GOING TO END!” and he’ll be standing there by himself looking around wondering where everybody went.   Back to work my friend, trying to make their lives better.

Some pros even see the markets headed higher by the end of 2008.   That’s the camp I’m sitting in.  I remember the recession of ‘90-’91 timeframe.  Many politicians and folks running for election cried that it was the worst economy in 50 years.  And then it picked right up again the following year, leading to a huge run of growth through the 1990’s.  Is it different this time? I doubt it.

We’re in an election year right?  One side is going to gnash their teeth and cry about every aspect of the economy. Lately they have good reason to unfortunately.  I sure wish some of these folks would talk about what’s good in the nation and the economy once in a while, instead of everything wrong with it.  You don’t lead by shrill complaint… you lead through inspiration.  Probably why Sen. Obama attracts a lot of folks?   But one of these days the markets will turn around with conviction (today?) when the news is not quite as bad as before.   Smart money is even buying strategically right now.

“But what about the dollar?” I hear others say.  Well, let’s just say there’s a few companies here at home that really benefit from a low dollar.  But it’s too low right now, and is part of the problem with higher oil prices.  Overall however, the dollar’s going to rebound over time- just watch and see.  I wouldn’t bet against Uncle Sam any time soon.  All the press about this or that country shunning dollars. Hogwash.  Wait until the least crisis in their own country or region- guess where the money will flock to?   Right back here…  and we’ll step up to the plate and do what we’ve always done.  We’ll help them get through it too.