keeping it all in perspective

my mom once told me, while i was complaining about the various little difficulties in my life, that if my problems could be solved with money, then i should consider myself very lucky. i've always been fortunate to be comfortable, financially, and i certainly don't want to minimize the challenges faced by those who struggle to meet their basic needs. but what my mom said really made me re-think how i spend money and why i try to save money.

because i am an economist by training, let me explain in economic terms: the opportunity cost of buying/doing something is what i give up in order to buy/do that thing. everything has an opportunity cost and, in most cases, it is not just a monetary cost. for example, you might think of the opportunity cost of getting take-out for dinner as just the $25 that could be spent on something else. but, in fact, the full opportunity cost would be less, because i "save" the time i would've spent cooking and cleaning and the marital strife caused by arguing with hubby about who makes dinner more and who should've made dinner today.

so, now, if something is really bothering me, and i can use money to resolve the issue, instead of assuming that i can't afford it, i think about what purchases i would have to forgo and whether i want those things more than i want this particular problem to go away. next time you have to make a decision about what to buy or what to do with your precious time, try taking a moment to reflect on what you are really giving up and what you are really gaining, and see if that gives you a little different perspective.

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Seven Ways to Cut Everyday Costs

Considering the state of the economy and the impending holiday season, I thought this might be a good time to share some of the ways my family cuts costs year round. Some of these started as ways to be a little more eco-friendly and ended up being big money savers, some were adopted strictly to save money.

1. Don't buy convenience food. This takes practice, I haven't perfected it yet. You have to plan your meals ahead and make sure some of them are quick and easy to prepare. My 4 year old helps me make a big batch of granola bars from scratch each week for snacks. We don't buy anything that is packaged in individual serving sizes.
2. Buy in bulk. We have a grocery store with a huge bulk section and the prices are amazing. Some of the things I buy in bulk: Three types of flour, Three types of sugar, All spices, Pasta, Rice, Nuts, Oats, Dried fruit, Chocolate chips, Yeast, Baking soda, Waffle/pancake mix(could make my own, but it's so cheap in bulk!), Parmesan cheese. That's just what I can think of off the top of my head. Most of our time in the grocery store is spent here.
3. Don't go to or rent movies. We do go to the $2 movie theater in our city once in a while, they usually have movies right before they go to DVD. Other than that we know our tastes pretty well and just buy the movies we want to see.
4. Be a one car family. The obvious savings here are the basic ownership costs of a second vehicle. The bonus savings are that when the kids and I get bored we can't just jump in the car and go buy our way out of boredom. We never feel stranded at home because if we want to make plans my husband can always take the bus to work, leaving us with the car.
5. Reward kids with playtime instead of treats. If our kids can be semi-agreeable when we are out running errands we let them play on the climbing toy at Target (our Target is at the mall). Bribing them with a chance to play on the train is just as effective as bribing them with a toy and is totally free. We do all of our errands in one day and it is a lot to ask of the kids so some kind of bribe is usually necessary.
6. Use cloth whenever possible. We use cloth diapers and napkins. Paper towels are only used for doggy accidents; dishrags or rags are used for all other messes. We save the cost of the products and we make fewer trips to the store so fewer impulse purchases.
7. Use less laundry detergent. I had read this tip many times but I was a little scared to do it. What if my clothes weren't clean? How would I know? In hopes of not letting detergent build up in our diapers I finally tried it. I was not looking forward to taking a big whiff of what had been a poopy diaper only an hour ago. I had used a little less than half the recommended amount and my diapers smelled fresh! I use that amount on every load of laundry now.

These are some of the changes we've made that have had the biggest impact on our monthly budget. I'd love to hear some of your cost-cutting ideas in the comments, I'm always looking for ways to save!

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sales of the week

dr. bronner's liquid castile soap at the vitamin shoppe on amazon: $8.34 for 32 oz., regularly $14.59 ($6.99 for 16 oz., $4.28 for 8 oz.), in lavender and peppermint.  tea tree, aloe vera mild baby, almond and eucalyptus scents are also discounted, as are the bar soaps.

jack and lily shoes at cupcake.com: $14.00/pair ($28.00 regularly), styles and sizes are pretty limited.

20% off your entire order at ecostylebaby.com when you use the coupon code "oct08": earth-friendly products including two of my faves - moby wraps and fuzzi bunz.

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money saving tip: banking without a bank

ING Direct offers checking and savings accounts that pay interest at a much higher rate than traditional brick-and-mortar banks, including on your checking account, even if you only have $1 in there!  the rate you get depends on how much money you have in the account (1.75% for less than $50,000, 3.3% for $50,000-99,999 and 3.5% for $100,000+).   and the interest rates are variable,  so they are updated periodically according to market conditions (4.25% about a year ago, 3.50% APY now).  the interest rates are high because there are no bank branches and no paper checks... everything is done online.  with an Electric Orange checking account you can pay virtually any bill online by entering the billing address and your account number. you can also send electronic or paper checks by entering the name and address (and bank account info for electronic checks).  there are no fees and no minimum balances.

last year, we used the account for 8 months and earned about $175.  this year, i figured out that i can earn a lot more interest by using a linked savings account and taking advantage of the free transfers.  the savings account pays 3.00% APY, which is also variable but does not depend on your balance.  so now i keep my money in an ING savings account and just transfer it over to the checking account the day before a bill is to be paid.  you can also schedule recurring transfers to make things easier.

now a couple of caveats/complaints.  you do get debit cards, but the ATM network is not that great.  so we still have our brick-and-mortar bank account for easy access to cash, and it allows us to keep paper checks on hand, just in case.  ING's bill pay system sucks - it doesn't allow you to get your statements  or even reminders online, so that makes online bill pay a lot less convenient.  you are also warned to allow 3-5 business days for payments to be processed, so this wouldn't be good for last minute types.  it also means that they get to cheat you out of a little bit of interest because there are a few days in which your money is neither in your bank account nor in the possession of your payee.  so, for very large bills, i arrange payments from the company's website, which usually requires less than one business day for processing.

oh, and rest assured - your deposits at ING Direct are FDIC insured.

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