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Posts Tagged Money

8 things you should never do to save money

I’ve tried a lot of weird things to save money. A journalist and finance vlogger by day, I’ve gone dumpster diving, emptied fast food ketchup packets into a bottle, tried DIY beauty treatments involving food items (and more hours of clean up than I’ll ever admit on the internet), and even shared library cards with friends in different states to expand our e-book selection.

Some of those activities could be considered a little strange, a couple might be frowned upon in some circles, and only a few worked at all.

But despite my willingness to try “extreme” money-saving tips, there are some things that I would never do… primarily things that aren’t ethical, hygienic or legal. These would absolutely save you money, but at a very different cost, one that I think crosses a line between being penny-wise and being a tightwad.

1. Stealing

Stealing takes more forms than hiding an item under your shirt and walking out of a store or lifting someone’s wallet.

Filling a bag with more than your share of complimentary items at a restaurant, smuggling home office supplies or toilet paper or even getting a water cup and filling it with soda are all stealing. No crime is victim-less and these are not viable ways to save money.

2. Using services meant for the needy

There is nothing wrong with taking help when you need it. Services like food stamps, soup kitchens, food libraries and the like are meant to be used. But taking those services when you don’t need them in an effort to save a little money robs someone else of that resource.

Consider volunteering instead, charity event organizers nearly always plan to feed volunteers as a thank you for their time. I helped out at a church-run food pantry a couple of times a month where the church provided dinner for volunteers.

It was a free meal for me, provided by people who wanted to help who couldn’t spare the time. It both helped my food budget a little and I was able to help people in the community who were truly in need. It was a win-win.

3. Lying

I’ve heard countless times about people “pulling one over” on big corporations by taking unfair advantage of “Love it or your money back” guarantees. If you honestly didn’t like the product or service, absolutely take the business up on their offer, but using 90% of something and returning it just because you can is dishonest and shameful.

The same goes for people who argue legitimate charges on their accounts or claim their food is bad at the end of the meal after they’ve eaten most of it.

I don’t care how big the business or corporation is, lying like that is stealing.

4. Not washing my clothes or body

I’ve read tips more than once saying to step into the shower in your day’s clothing and wash them with you. I’ve read about people only spraying their clothing with air freshener or never washing their clothing at all. I’ll wear clothing items that don’t get dirty (office work wear and the like) multiple times but clothing that gets sweaty, smelly or dirty always goes straight into the wash.

Cleanliness is one of the markers of a polite society. No one wants to work with or spend time with people who are stinky by choice. This will eventually affect how people treat you and your future opportunities.

Wash your clothes, wash your body. Take some pride in your appearance. It costs very little, but has a huge return on your investment.

5. Getting rid of pets

A pet is a big responsibility and should be treated as such. Dogs, cats, ferrets, hamsters and moose (not judging), etc. all cost money for food, medicine, and care throughout their lives.

I’m always saddened and a little shocked to see tip lists that recommend getting rid of the family animal to offset costs. Unless you own a very expensive animal, and are jeopardizing your own ability to survive by providing for it, I would never say to kick your pets to the curb.

Instead consider shopping for the most affordable pet food and medications (generic heart worm and flea pills can be found at websites like www.petshed.com for much less money than at the vet’s office), learn to groom your own animals, and write a line into your budget to pay for monthly and annual pet costs to always have the money there to feed Fido.

6. Stopping tipping

If you can’t afford to tip, you can’t afford to go out.

As a former waitress myself, I know all too well how many people choose not to tip and the percentage is completely unacceptable. Whether or not you agree with the custom, we all know that wait staff are often paid well below minimum wage and their tips are expected to raise their salary to a reasonable level (aka more than $2 per hour which will nearly all go to taxes anyway.) When you don’t tip, the service worker isn’t getting paid for their services. It’s an unfair system, but until it’s changed, don’t punish the person serving you.

If you don’t want to tip, feel free to take your food to go, park your own car, do your own beauty services and make your own drink.

7. Mooching

“Forget your wallet” at a group lunch often enough, and you won’t get invited to them anymore.

Friends and family should be joyous parts of your life, not vehicles to save a buck.

Now, there’s nothing wrong with letting your relatives buy dinner when you’re visiting for the weekend, but consider returning the favor the next time they visit you. Relationships shouldn’t be about who owes who and is soured when people take advantage of people.

If you’re often invited to expensive dinners or events by more affluent friends, consider suggesting more frugal outings where everyone can have fun and not jeopardize their individual money goals. Also don’t forget that everyone loves a welcoming invitation over for a home-cooked meal. Friendship doesn’t have to be expensive.

8. Miss out on life

The easiest and most effective way to save money is to not spend it. Saving money is important to me. It’s a key strategy in my long-term money goals. But I won’t decline every invite to do something fun with friends in order to save every possible cent.

Life is meant to be lived and enjoyed. There are tons of free and frugal things to do and it’s also okay to spend a little more on occasion to have life-enriching experiences.

Your Turn!

  • What “frugal actions” are too far for you?
  • What will you do to save money?

Save

Money Habits of People Who are Debt Free

Whether your goal is to become debt free, run a marathon, or simply declutter your home and live a more minimalist lifestyle, we often turn to those who have had success and do what they do. It’s called studying best practice.

If you want to learn how to run a marathon, you would talk to other runners and follow a training plan. If you want to enjoy a more minimalist lifestyle, you would read up on minimalism and talk to other minimalists. If you want to become debt free, you adopt the money habits of people who are debt free.

Organize and Pay Attention to Your Bills

Rather than just piling up the bills and walking away from them, people who are debt free open their bills as soon as they come in. They check to make sure that the statement is accurate and organize them in a way to ensure that the bill is paid on time.

Live Within Your Means

People who are debt free do not spend beyond what they earn. It seems obvious, I know. But in these days where credit is easy to come by, and most aren’t spending intentionally, it’s easy to spend more money than what comes in every month.

People who are debt free follow the principle that if you don’t have the cash, you can’t afford it. So part of living within your means also requires you to strengthen your savings muscle and set aside money each month for larger purchases like vacations, home improvements, or a new-to-them vehicle.

Don’t Try to Keep Up With the Joneses

People who are debt free have learned to practice the art of contentment and are grateful and happy with what they have. They don’t worry that their neighbors just purchased a shiny new vehicle or just upgraded to a 75-inch flat screen television.

They also avoid the trap of emotional spending and buying items to make them feel better. They know that these unplanned purchases only have a temporary effect on one’s feelings, and if anything may lead to feelings of stress later on in the month.

Demonstrate Self-Control

In order to live within your means, it’s important to be intentional with your money and develop a spending plan. Debt-free people create a budget before the month begins which gives each dollar coming in a job, helping to eliminate money that disappears or gets wasted.

Part of living on a budget also means avoiding impulse purchases. These impulse purchases can quickly destroy a budget. Instead try avoiding the stores that you know cause you the most temptation when it comes to buying impulsively. You know that trip to Target that you made to purchase one item and ended up walking out with $100 worth. Trust me, been there, done that!

Be Proactive

It’s no surprise that being proactive is the first habit discussed in “The 7 Habits of Highly Effective People” by Stephen R. Covey. People who gain control of their finances and live debt free have learned to be proactive. This means that they have looked at ways to cut their budgets and their spending to free up extra income to pay off their debt and then start saving. They will also look for ways to earn an extra income if it’s necessary to reach their financial goals.

Your Turn!

  • What’s one money habit that you would like to improve?

Talking to Your Family About Money

Growing up, there were three topics that I was told never to discuss with other people: politics, religion, and money.  As a result, finances were never discussed in my family. I never heard the word “budget” or had a good understanding of what a budget was. Nor did we discuss money management or the importance of saving.

My husband and I don’t want to repeat that same mistake, and discuss our budget and financial situation openly with not only our children, but our parents as well. Approaching the topic of finances can be tricky, but if you know what to focus on, hopefully the awkwardness will quickly fade and this once taboo topic can be openly discussed.

Talking With Your Spouse or Significant Other

When talking about your money with your spouse, you want to set aside time where  you can find some common goals that will require you to be on the same page financially and work together as a team. Perhaps you want a certain amount set aside for retirement, or would like to rid yourself of all of your debt. Set a common goal and then come up with a plan to start working towards that goal.

The next step is to sit down with your spouse and develop a spending plan or a budget. Both parties have to be in agreement, so be prepared to compromise. Don’t forget to include personal spending money for each of you. This will allow you to spend freely, up to a certain amount, so you don’t feel constricted by the budget.

Talking With Your Children

Teaching your children the value of money early on will set them up for success later in life. Understanding the importance of spending wisely and saving will provide the foundation that they will need as they get older and start to earn their own income.

We follow the 10% rule for saving with our children. Each week they receive $5 for chores completed. We set them up with both a checking account and saving account at our local bank, so each week, the girls will deposit their $5 dollars into their checking account and then immediately transfer 10% into their savings account. This also goes for any money that they receive for Christmas or their birthdays.

If you’re comfortable, it’s also helpful if you are honest about your money mistakes as they get older and talk about how some of those mistakes impacted your ability to save or give. You can also make them part of the budget meetings and have their input about family goals that are important to them and show them that in order to achieve those goals, other line items might need to be scaled back or sacrificed.

More than anything though, it’s important that you lead by example. What children see happening in the home has a far greater impact on their future behavior than just discussing what they should be doing with their money.

Talking With Your Parents

Although discussing money with your parents as a grown child might be the most awkward money conversation you’ll have, it’s important to have these conversations as early as you can. It’s important to be informed about their estate plan, whether they have planned for retirement, and what arrangements, if any, have they made for long-term care.

Before beginning the conversation, you want to make sure that you also talk with siblings or other family members on the best way to bring up the topic and plan for a time when the family is together. The time when you decide to approach the topic will depend on your family dynamic.

Deciding when to approach the topic is one thing, figuring out how you’re going to start is the tricky part. If you don’t know where to start, try starting with your own experiences first. You could start off by sharing that you’re thinking of purchasing long-term care insurance or looking at how much is enough to set aside for retirement and ask for advice. Their responses could then be used to get into the conversation around how prepared they are and what measures, if any, they have in place for their long-term care should they get ill and be unable to care for themselves.

The most important information you want to gather from your parents is information about their will, health care arrangements, and power of attorney. Your parents should have in place a will outlining who they have named to make any medical or financial decisions should they become unable to. Ask your parents to assemble a list of accounts, and contact information for their advisers, lawyer, and accountant if they have one. Getting organized while everyone is healthy is key. There is nothing worse than trying to scramble to gather all of the necessary documents in the face of a medical emergency or when dealing with grief.

Your Turn!

 

 

  • What conversations have you had with your family about money?

What I’ve Learned After 2 Years As A Minimalist

Two years of minimalism has brought with it more lessons that I could have imagined. I’ve not only learned a ton in regards to the collection of physical items, I’ve also started to focus on other aspects of minimalism that may be a bit unexpected. Here are the lessons I’ve learned after two years as a minimalist:

Lessons After Two Years of Minimalism1.You Don’t Miss The Stuff

While I was decluttering, I second guessed 20% of the things I got rid of. I knew they were things that I didn’t love but didn’t need; I still thought that maybe someday I would miss them. Two years in, I haven’t missed anything yet, and I actually can’t even remember most of the things that I got rid of.

2. You’ll Start to Question Your Habits

Though I hardly buy clothes anymore, of course there still comes a time when I need to replace something in my wardrobe. Before minimalism, I would have simply headed to my nearest Target or shopping mall and got what I needed from the most convenient big box store. Now, I think more about the items that I buy. I strongly believe that every dollar I spend is a vote for what I believe in, and I don’t spend many dollars, so I want to make them count. I now try to buy my clothes second hand if possible, and if that isn’t possible, I opt for sustainable and fair trade clothing.

3. You’ll Start To Spend Your Time Differently

What I've Learned After Two Years of MinimalismPre-minimalism, I spent quite a bit of time at my local Target and shopping mall. After adopting the minimalist lifestyle, I gained all of that time back. At first I started to use my time doing things like hiking and reading books from the library. Then I decided to quit my job to travel the world. Minimalism allowed me the space to truly think about what I wanted out of my life, and the resources to create that ideal life.

4. Quality over Quantity Will Filter Into Other Areas of Your Life

Though I had more free time after becoming minimalist, I also decided that it was time to take back control of my schedule. I became much more intentional with the way I spent time. I no longer attended events just because I was invited to them. I spent more time with friends who truly lifted me up and inspired me, and much less time with friends who just wanted someone to go to happy hour with. I didn’t feel guilty anymore if I decided to read a good book instead of going to an event.

5. You May Become Even Richer

Once I decided to start traveling, I created a little website to keep track of my adventures. I spent my time writing and working on my photography, which has turned into a beautiful scrapbook, and even a small income over the last year. I have started to earn money from doing things I love, which I would have never thought possible before.

I’ve learned so much as a minimalist; these five lessons brought even more value to minimalism in my life. Minimalism has changed the way I live, and I could not be happier with the results.

Your Turn!

  • Do you consider yourself a minimalist?
  • What has minimalism taught you?

 

 

 

 

My Tiny House Saved Me From Financial Disaster

why-youre-broke-tiny-house

I’ve been back and forth on writing this post for a long time, 5 months in fact.  Baked into this story is a fair bit of embarrassment. But in the end, I know that many people out there have been put in similarly compromising positions and this might be helpful.

This is the story of the worst financial disaster of my life.  The story starts with me working with an accountant for the first time in my life.  I’ve always done my own taxes, but things have gotten very complicated now with owning multiple businesses, a small army of contractors, etc.  I earn very little from this website – it’s my other ventures that bring in most of my income.

Tragedy Strikes:

I had submitted everything to my accountant way ahead of time and he had informed me that my taxes for the year would be around $3,000.  Not great, but as a self-employed person you usually get pretty slammed with taxes.  From there, I made a lot of decisions about spending, planning and budgeting for the next year.  I was feeling really good.

Then I got the bad news in a phone call….   “Ryan I’m so sorry, we made a mistake with your taxes, you don’t owe $3,000, you actually owe, $30,000 in taxes.  We made a decimal mistake.”

I was at a total loss for words.  I was sick to my stomach. I felt hopeless.

I eventually calmed down and started to think.  This was a problem, a problem that had a solution.  It was a budget that needed to tighten the belt in a way that I had never done before.  So I broke out my computer and started a spreadsheet that allowed me to fully understand what I owed and when.

Identifying two important facts:

1. I needed to come up with a lot of cash, which I now had a real world number for.

2. I also understood that timing was going to be a huge factor.

The name of the game for me was to earn more income while I timed very precisely spending to meet all my commitments.  Certain bills weren’t due for several months and my taxes weren’t due for about two months because I had done them so early.  Each time I paid a bill I had to quickly ramp my account back up in a perfect way so that I could be on point for the next bill.  This meant that there were times I’d be close to zero, but it would be part of the plan.

The ripple effect… of Death

The real chaos came from the fact that I had some other big bills coming up and having to pay $30k in taxes all of sudden was creating a ripple effect that left unchecked, would spell disaster.  A lot of my planning deals with working with cash flow. I don’t get a steady paycheck since I’m self employed.  This means I earn money and have to make it last until the next time I get paid.  Timing is so critical and a shock to the system of this magnitude was devastating, despite me having a solid emergency fund.

The main considerations to my budgeting:

  1. Understand my expenses down to the dollar.
  2. Understand my income, but operate under the worst case scenario
  3. Develop a strategy to increase income, assumed most would fail
  4. Remove costs that weren’t critical, go as lean as possible
  5. Stick to my budget no matter what

The big thing here was understand expenses and income, but operate in the worst case scenario when it came to my income projections.  For expenses, I used my real fixed costs and projected variable costs with 6 months past data.

I then needed to come with a strategy to earn more income fast.  What this meant was I needed to get two big projects I had been casually working on out the door, I had to hustle a second income from somewhere and I had to make this happen quick.  This lead me to my first lesson:

Lesson Number One:

I’ve learned that sometimes it comes down to income, not expenditures.  This is a particularly tough pill to swallow at times because when we talk about budgeting, debt and savings its often a discussion of what we can cut out.  The truth is we can cut out all the fluff, go very lean and still not have enough; that is what happened here for me.  What this means is that we need to work on the other side of the equation: income.  I realized that was the case with me, cutting lattes would get me nowhere.  I need to earn more to make this equation work.

How I Boosted My Income:

As I mentioned, I was able to get two projects out the door, but I didn’t stop there.  I operated under the assumption that most of my efforts would fail.  With that mindset, I knew I needed to move on a lot of ways to earn income to find a success.  So from there I looked at my skills and sent some emails to connections offering my services.  I was able to land a business coaching gig and a marketing strategy coaching session.  I did a few other things, but you get the idea.

Lesson Number Two:

One thing I realized at this point was I’m pretty good at a lot of marketable skills .  This brings us to the second lesson: be valuable.  Whatever this means for you is the correct answer as long as you can do some thing and people are actually willing to pay you for it.  For me I realized I have experience in building businesses and marketing.  I can do these things and the outcome of that activity is I can earn other people money.  Hence, I’m valuable in my own way.  Think about how you are valuable, because everyone is. The trick is identifying that talent and who you’ll sell it to.

How My Tiny House Saved Me:

Through out all of this it struck me how different this time in my life would have been if I been in a traditional housing option, namely renting.  Right now the average rent in my city is around $1000 a month with utilities.  What compounds this fact is that if I had been renting, I would have not be able to pay off my student loans earlier… so in addition to rent and utilities, I’d also have to content with a $250 student loan payment.  This all would add up to me needing to come up with additional $5,000 on top of the $30,000!

Beyond money considerations living in a tiny house meant one thing that was extremely comforting: I would always have a place to live.  That comfort of knowing that let me take a deep breath and know I was going to be okay.  To top it off, my utilities are $15 a month with my tiny house and push comes to shove, I could work any job part-time and make it if I had to.

Lesson Number Three:

Tiny Houses buy you security, peace of mind and a place to lay your head.  More importantly, it let me say “I’ll be fine” and move from trying to survive to finding a solution.

Once I realized that I would always have a place to stay, I could focus on executing my plan.  The plan gave me confidence, it let me put aside the knot in my stomach and get down to the work at hand.

Lesson Number Four:

With a budget in place, I found that I could move past fear and act with confidence.  Simple things like grocery shopping became empowering experiences because I could buy the food I needed AND it was a positive reinforcement because I knew the money was there for me, that it was part of the plan.

The Results

After all the worry and hard work, it came time to start paying the bills.  I think the daunting thing about the entire process was that I knew the entire plan was going to take 4 months to execute.  This essentially meant that I was holding my proverbial breath for that entire time.  Even though I had a place to live and a budget to rely on, I found it very difficult to keep pushing.

Part of this journey was trying to keep myself above water emotionally.  I knew I was on the edge of slipping into depression, teetering there in a very precarious way.  I felt a knot in my stomach, knowing that the stress wouldn’t end for months at which I’d either make it out bare;y or crash horrifically.  I carried this with me and it weighed heavily on me.

As I moved through the critical execution phase of my plan, I had to trust the plan.  ‘In the budget I trust.’  At one point, the plan called for me to have a whopping $256 in my account for a period of 48 hours; after which a payment would hit and I’d ramp up for the next bill.  The whole thing hinged on me hitting things perfectly, paying bills and crushing income strategy to face the next big bill.

In the end, I was able to earn enough and then some.  Along the way I got hit with some unexpected bills and needed to up my game, to keep pushing and never stop.  At the end of this I have started to rebuild my rainy day fund, which I hope to expand to $30,000 with enough time.

I’m also cognizant that even though I paid those bills, it’s a double edge sword, I now have to pay taxes on the money that I earned to pay them.  A lot of this can be offset with business write offs, but not all.

Your Turn!

  • What tips have you learned from your own tough times?
  • How has budgeting saved you?
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