We're buying a car today!

Miss Em said "Does it bother you to buy a car?" That is because she knows I sometimes balk at the most minor expenses if they seem "overpriced." The great Amy Dazycyn of the Tightwad books had similar issues.

She had an essay about how she balked at tuna if it was more than 69 cents but had no trouble buying a beautiful and expensive antique bed. It was a question of value, not cost.

I'm the same with tuna. I'm pretty serene about the car--a Honda Accord--because our totaled Camry was about to turn 16 and our "new car"--the Civic Hybrid--is about to be 12. We were hoping the Camry would hit 20, but a bad man with no license or license plate plowed into poor Frugal Son and left the scene. He gave us a copy of a state ID.

We are hoping the new car will last more than 10 years. Thank heavens we  saved for the car.

Frugality as stress relief once more. Thank heavens for the emergency fund. So I told Miss Em that no, I'm not stressed. I continue my search for a good price on tuna.

I think we are getting a white one (ugh) because Mr FS read that white is the safest color.

Honda Accord

Emergency Savings: An American Concept?

Almost back from a bout with the flu, or something. Dire times at Frugal Son's place of employ.

Frugal Son is working (under-employed at the moment) at a tiny bilingual school, one of the many charter schools that popped up in the post-Katrina years. Last week the employees learned that--because of a mistake made by the former financial officer (???maybe, rumor mill at work)--three of the non-teaching staff were let go. The lowly paid staff, I'm sure.

Frugal Son was shocked that one employee--who had been working for two years--had no savings. A request was circulated amongst the staff: please donate what you can. I'm no longer shocked by such requests: I've gotten many over the years, including some for helping with funeral expenses.

Frugal Son was worried for the woman, but also incredulous that she hadn't saved anything for a rainy day. I mentioned that after two years, she would surely be eligible for Unemployment.

That made him feel better. Then he said, But she's French. I'm assuming French people employed in the US are eligible for Unemployment? Right?

But then I wondered: do French people--or Europeans from the wealthier countries--have a concept of an Emergency Fund? Does the social safety net function as an Emergency Fund? Is the Emergency Fund an American concept, owing to the very lack of that safety net?

Does anyone know? Frugal Son has a tiny emergency Fund at the moment, but he's only been working since mid-August.

Emergency Fund Decimation: At Least I Have(Had?) One

So, since January 1, we had to buy a set of tires. Since we were visiting my mother in another state, we did not have time to comparison shop. $500.00. And the people messed up--took our spare (which we retrieved) and did not attach hubcap (which we lost). Will seek out another mechanic in Florida.

Then, that car--our beloved 1998 Camry--needed an additional $1200 of work.

Then, my teeth problems continue apace. The oral surgeon took pity on me and recommended another dentist. So far, my poor mouth has taken around another $1200. Some time in the future, I will need an implant ($3000).

I was picking up a prescription when I got a call from Mr FS: "The refrigerator isn't working!" We looked up the expected lifespan of a fridge and discovered ours is right at the edge of not worth fixing: it's a 2004 of no great distinction (not a SubZero).

Anyway, Mr. FS found the manual (in the secret files that I do not know how to access) and solved the problem. AHHHHHHHHHH.

Think of all the fun things I could do with the almost $3000 we have spent so far.

As always, I try to look on the bright side and thank the universe for my frugal skills, which have given us our depleted emergency fund.

Have you had any emergencies of late?

Where's My Emergency Fund? On my Credit Card!

No, don't worry. I'm not counting on credit cards to fund emergencies. But I was rather nervous about expenses for my long sojourn in France, which extended over two credit card bills. So--since my emergency fund isn't earning anything to speak of--I overpaid my credit cards, both of them.

As it happened, we spent a lot less than anticipated. So when I got my credit card bills, I found a big, fat credit. My emergency fund, however, is a bit on the meager side.

I'm not worried, since we are due for paychecks at the end of the month. If my emergency funds were earning the 5-10% I can remember from not all that along ago, I would think twice about overfunding. But the dangers of NOT paying a credit card bill are known to all: huge fees, interest payments on all your new charges, and so on.

Do you have any tricks like this for when you're on the move and might not be able to pay your bills?

Reframing and Frugality: Root Canal

Ergh. I DO need a root canal. Of course I need it before July 1, when my medical savings account gets replenished.

A long while ago, Shelley wrote a post on reframing and happiness: the gist was that you need to reframe bad, challenging events as opportunities, or something along those lines. Her specific example had to do with taxes. I totally agree: when I was a starving student, I couldn't wait to pay income tax.

Let's try reframing the root canal: I am so lucky that I have enough in my emergency fund to pay for this thing without compromising my trip to Nantes.

I glanced up from my screen and saw this book: Frame Analysis.

Aren't I lucky that I already have this book because it's kind of expensive?

Not sure if this is working. Have you reframed anything lately?

Overheard at the Food Bank Thrift Shop: Demographics High and Low

Since I had to return some items to the library (frugal habit number 1), I stopped--as is my wont--at the Food Bank Thrift Shop (frugal habit number 2). This is a rather weird thrift store, but the cause is a good one and I like to patronize when I can. The store caters to a much poorer demographic than Goodwill; many customers have vouchers for free clothing.

Tuesday is always a crowded day at the Food Bank next door. I have noticed that the cars are very fancy--many a Lexus and the like. I always thought these were the volunteers.

Au contraire, as it happens. The new guy working at the shop was regaling a customer with "things I've seen." He mentioned that people with iPhones and designer bags walk in with vouchers for $200 in food and clothing.

He said, "These people were only one paycheck from the Food Bank."

WOW. Be a good steward of your resources and amass that emergency fund (frugal habit number 3).

Ten Years to Retirement?

Ten years--give or take. My dream is to go till almost 70 and I'm hoping that I still love going to work then.

My 10 year number is a wake-up call, not so much to saving, though that's part of it, but to decluttering and NOT buying stuff.

What if we move in ten years? Having witnessed (from afar) my in-laws' sudden, emergency-instigated decision to move from a house they had lived in for more than 40 years, I just don't want to go through the agony.

With this logic, I should unload 10% of my stuff every year. That would include books. I really will not be needing my academic books at that point; some, indeed, are worth a pretty penny since they are out of print.

And, no, I should not buy any furniture, no matter how scraggly some things are getting. Same goes for kitchen items, especially heavy ones like dishes and pots and pans. Here's hoping that my children will want some of kitchenware, not to mention some of my zillion cookbooks. See above.

Luckily, I don't need to dress for success. Most conferences don't require suits anymore, except for the most snobbish. Besides, if the whirling rumors (firing! across-the-board pay cuts!) come to pass, I won't want to be looking at the pricey clothes in my closet instead of cash in my emergency fund.

I am, then, between the Scylla of moving in ten years and the Charybdis of economic uncertainty. The first calls for decluttering; the second calls for not-buying-and-banking-savings. It's a win-win situation. Talk about making lemonade from lemons!

What helps you declutter? What helps you save?

Thank You to the Universe for my Emergency Fund

So, the end of semester grades were turned in last night. Next comes the flurry of complaints and questions. Then...clean up the house, use up the stuff in the freezer, and reread War and Peace!

But then as I sat at the computer, a crown fell off my tooth!

Next morning, Mr. FS turned on his Dell computer. We hate Dell for its bad customer service anyway. Now we will put our vow to never buy anything from Dell again: Mr. FS was greeted by the dreaded blue screen. We took the computer to the Geeks at Best Buy and discovered that a diagnosis would cost $200.00. JUST SAY NO.

Back home, Mr. FS managed to turn the thing on again and backed up all the files just in case.

It turns out that putting the crown back on is no big deal. But we have to buy a new computer.

Tell me, is it good karma that the computer died after the semester was over? Or bad karma that it died at all? We had one computer that lasted for over 20 years. Now it seems that computers have become throwaway items with short life spans.


OMMMMMMMMMMM. We have an emergency fund for our new computer. OMMMMMMMMMM.

Another Use of the Emergency Fund: Credit Card Prepayment

Has everyone noticed that your grace period before a credit card payment is due is getting shorter and shorter. I try to pay my bills the day I get them to avoid problems. I have heard all sorts of stories to the effect that, if your payment is due on the 15th, it must be checked in by 9 a.m. If the payment arrives later in the day, too bad. These companies are not your friends.

For some reason, my vacations always begin about a day before my bills show up. Therefore, I am always nervous about getting that payment in. Many companies charge for phone payments, so I continue to write checks from my money market account, where my emergency fund resides. A few years ago, I had the idea of paying what I estimated my bill would be (plus more) before I left: prepaying.

This caused a bit of distress because money market accounts were paying some interest then--like 5%. Now that they are paying almost nothing, even that bit of distress is gone. More important, the stress is gone!

And, how pleasant to get a bill that says your amount due is 0 or that you have a credit. Rather than paying for your vacation afterwards, you can pay for it a bit in advance.

This is another area where I am thankful for my emergency fund, one of the best stress relievers entirely within your control.

Any other nifty uses for the emergency fund, folks?

The Angst of Actually Using the Emergency Fund

An emergency fund is a wondrous thing. Mr. FS and I have had a fairly hefty one for a long time. When we were in graduate school, we kept $1000.00 in a bank account--just in case. At that time, that represented 6 months rent! Then, when we finally were gainfully employed (sort of), we only had temp jobs for a while. In a panic, we put away enough to live on in graduate student poverty, JUST IN CASE we ever faced unemployment again. "We'll take a year off to write," we said. Thankfully, we never had to use it.

I am sitting here with a familiar ache in my gums that signals an eventual--and expensive--root canal. Evidently, the Baby Boomers, of which I am one, take out their stress in their mouths, by grinding teeth (NOT ME), thereby enriching their dentists and endontists. I did clench my jaw, however, through years of stress at work, to the same effect. I stopped that bad habit last year, after some expensive dental work and hoped that my root canals were at an end. Evidently not. So I suppose I will take some antibiotics to put off the inevitable for a bit, but I have learned to accept the eventual expense.

I guess that's why it's called an emergency fund: it's for emergencies. Emergencies are unpleasant, as a rule. This past year, in addition to my dental work, I experienced the even greater emergency of 3 expensive one-way plane tickets, first to see my father on life support after a blood vessel burst in his brain, then to Massachusetts where he was buried, and finally home.

It is so depressing to spend massive amounts on such awful stuff. I keep hoping that my emergency will consist of an unexpected $100.00 plane fare to Europe. So far that hasn't happened.

I try so hard to be Zen about all this. Thank heavens, I say to myself, that I didn't have to borrow the plane fare from my mother. Thanks heavens, I don't need to get a set of dentures. Thank heavens for my emergency fund.

The New Financial Advice and Mistakes I Did and Didn't Make

Like many people interested in frugality and personal finance, I have been a long-time reader of advice for the middle-class. Of late, advice is in short supply. Where are Jonathan Clements and Andrew Tobias?

Then, I saw "new financial advice" proffered on the CNN website. As far as I can tell, the advice was the opposite of the advice offered by experts in the recent gilded age (for some, not me). So it seems that we middle-class types should do the opposite of whatever is suggested.

All the advice is of the "locking the barn after the horse runs off" genre. How can you amass an emergency fund when you are laid off? Thanks for the great tip! Either you have one (thank heavens!) or you don't (what was I thinking?). I suppose if you're still working, you can get one going. That task would be made easier by the fact that frugality is now "in" and you don't need to apologize for carrying last year's "aspirational handbag."

One of my fave bloggers, Funny About Money, raised the topic: "What is the financial mistake you didn't make."

Here is my answer, related to my musings above:

All my mistakes came from following the advice of the financial press/experts. All the mistakes I didn’t make came from procrastinating or being stubborn.

Emergency Fund:I amassed a large cash emergency fund out of inertia, since I am a frugal girl married to a frugal fellow. At the time, I was told to “get the $$ working for me by investing it.”

House: I was also told to do a cash-out refi; I chose instead to pay off my house.

Here is what I'm doing now (subject to change): I am continuing to put my retirement into equity funds in same percentage as in days of yore. I have TIAA and Vanguard.

I'll probably sell my non-retirement funds that are in other families.

I will amass an even larger emergency fund. I want to have AT LEAST 5 years of base expenses in cash at retirement (10 years hence).

The above plans are possible thanks to two things. One is that I paid off my house, so my base expenses aren't that high. The other is that my children are good test-takers (of the standardized variety) and have chosen good programs at state universities that are willing to fund their tuition AND room and board. As I discussed in an earlier post, Mr. DFS and I will give them the money we saved in a 529 plan post-graduation. Luckily again (another mistake I did not make), the 529 plan is entirely in cash. So when they graduate, they can opt for a year of travel and return to a nice stash of cash for grad school or job search.

And don't forget: it's Thrifty Thursday!

What's a mistake? What's not? It depends on where you are when you need the money.

Upscale lives; humble financial lessons

More from the New York Times on Wall Street types coping with unemployment and other woes. No, I'm not referring to the media circus on Alexandra Penney, who made her money with bestsellers like How to Make Love to a Man and is now blogging on losing all to Bernard Madoff. I am referring to an article yesterday on a family much downscale from Penney, but much upscale from me.

Read it here: http://www.nytimes.com/2009/01/11/fashion/11berrys.html?pagewanted=2

The essay is about the stress on marriages during financial meltdowns. Featured is a family from tony Darien CT, where Dad, formerly of a "boutique investment firm," is now unemployed. Mom, who left a fancy job to stay home with the kids, has gone back to work, though she doesn't make as much as Dad did. They have downsized from a nanny to an au pair, but are continuing with expensive kids' sports and lessons. Their relationship has its moments of tension (Mom wants to buy kids clothes from Ralph Lauren, rather than from Walmart), but is basically strong.

Why am I writing about this? Because in this article is some very humble financial advice. In spite of working for a "boutique investment firm," Dad paid off the house and put aside a substantial sum in a college fund. Paying off the mortgage has been generally touted only in the "frugality press"; mainstream financial advice has always been that you can make more by investing your money.

Ditto for college funds. Dad said that he once had enough to send both kids to Harvard. Not bad, considering kids were 5 and 6 when he lost his job 2 years ago. Two sets of Harvard tuition would have totaled about $360,000 2 years ago. Presumably, this is a cash account (I assume this because the family is dipping into this money to maintain their current lifestyle).

So: a paid off mortgage and a substantial cash fund, for emergencies or college or whatever. You can go a long time with one person working, no mortgage, and 8 years of Ivy League tuition payments.

Dear readers: what do you think of all these articles on the woes of the formerly wealthy?

Ask Dr Frugal: How do I Save Money

How Do I Save Money?

Another question from a college student. It seems so simple, but there are questions behind the questions.

So I said: “How much do you want to save?”
Answer: “I don’t know.”

“What do you want the money for?”
Answer: “I don’t know.”

“When might you need the money?”
Answer: “I don’t know.”

After some discussion, we discovered that she wanted an emergency fund (for car breakdowns and other unexpected expenses) and that she thought $1000 would be “awesome.”

So I said, “Well, each time you skip a fast-food meal and bring a lunch instead, you save $4-$6. In a year you could reach your goal.”

Then I said, “Each time you bring a lunch, you can count it as a small victory. Keep track of the number of times you do this.”

A listening bystander said, “Small victory! I never thought of it like that.”

These are good students! They have academic and professional goals. Yet they did not know how to set financial goals. They did not know how to break a big goal into small parts. They did not know how to see rewards along the way.

Now they do.