PraiseforThe$1,000Challenge

“Whosaysdeepdiggingintopersonalfinancehastobedrudgery?BrianO’Connor,aka“Mr.FunnyMoney,”minesinvaluablegoldnuggetsonhisownpersonalfinancialexperimentandleavesyousmarter,empowered,andlaughingalltheway.”—TeriGault,founderandCEOofTheGroceryGame.com

“O’Connorcanmakenegotiatingalowerbillwithhiscablecompanyfunny.Thisbookmademelaughandcancelmyunusedgymmembership.”—JenniferReese,authorofMaketheBread,BuytheButter

“Whoeversaidyoucan’tcutyourwaytoprosperityhasneverreadBrianJ.O’Connor.Squeezeoutallthewastefulspendinginyourhouseholdbudgetandyoumayfindyou’rericherthanyouthink.Thisbookwillhelpyourecovereveniftheeconomyaroundyoudoesnot.”—AlLewis,columnist,MarketWatchandTheWallStreetJournalSunday

“IftheFunnyMoneyfamilycanfindawaytosave$1,000inthemiddleofjobfurloughs,heftyspecialedexpensesforLi’lMoneyallthewhilehelpingGrandpawithhismedicalbills,youcan,too.Mr.FunnyMoney,BrianO’Connor,revealsinhistypicalriotousstylesimplehow-to’sforgettingitdone.JoinintheFunnyMoneyfamily’sadventureandyou’llfindyourselfpackingyouremergencysavingsaccountfasterthanyoucouldrunfromhisrecipeforroastedraccoons.The$1,000Challengeisamust-readnomatterhowdireyourfinancialpredicament.”—JulieBandy,editor-in-chiefofBankrate.com

“Fartoomuchpersonalfinancewritingtasteslikemedicine.Brian’sfinancialadvicegoesdownsmoothly,withagenerouscoatingofhumorthathelpsaseriousmoneymessageandalotofpracticaltipssliderightthrough.Alongtheway,hepuncturestheoft-peddlednotionthatparingbackiseasilydonebytrimmingbackafewluxuries(takethat,lattepolice!).Savingmoneyandtrimmingabudgetishardbutdoablework,butit’smadeeasierwithBrian’swell-thought-outtips.”—DanielP.Ray,editor-in-chiefofCreditCards.com

PORTFOLIO/PENGUIN

THE$1,000CHALLENGEBrianJ.O’ConnorisasyndicatedcolumnistforTheDetroitNews.Forhis“GrandExperiment”serieshewashonoredwitha2010BestinBusinessawardfromtheSocietyofAmericanBusinessEditorsandWritersandtheChristopherJ.WellesMemorialPrize,awardedbytheColumbiaUniversityGraduateSchoolofJournalism.HelivesoutsideDetroitwithhiswifeandson.

ToJodi,Casey,andMom

PORTFOLIO/PENGUINPublishedbythePenguinGroupPenguinGroup(USA)LLC

375HudsonStreetNewYork,NewYork10014

USA|Canada|UK|Ireland|Australia|NewZealand|India|SouthAfrica|Chinapenguin.comAPenguinRandomHouseCompanyFirstpublishedbyPortfolio/Penguin,amemberofPenguinGroup(USA)LLC,2013

Copyright©2013byBrianJ.O’ConnorPenguinsupportscopyright.Copyrightfuelscreativity,encouragesdiversevoices,promotesfreespeech,andcreatesavibrantculture.Thankyouforbuyinganauthorizededitionofthisbookandforcomplyingwithcopyrightlawsbynotreproducing,scanning,ordistributinganypartofitinanyformwithoutpermission.Youaresupportingwritersand

allowingPenguintocontinuetopublishbooksforeveryreader.

Portionsofthisbookappearedinadifferentformasaseriesofarticlesbytheauthortitled“TheGrandExperiment”inTheDetroitNews.PublishedbyarrangementwithTheDetroitNews.CopyrightTheDetroitNewsInc.

LIBRARYOFCONGRESSCATALOGING-IN-PUBLICATIONDATAO’Connor,BrianJ.,1959–The$1,000challenge:howonefamilyslasheditsbudgetwithoutmovingunderabridgeorlivingongovernmentcheese/BrianJ.O’Connor.

pagescmSummary:“Afunny,usefulguidetosaving$1,000amonth,basedonthepopularseriesinTheDetroitNews.Withmiddle-classfamiliesmorestretchedthanever,nationallysyndicatedpersonalfinancecolumnistBrianO’Connordecidedtotesthisownadviceaboutsavingmoney.Hebeganaten-weekexperimenttocuthisfamily’smonthlyexpensesby$1,000—withoutsacrificinganything

trulyimportant.Theresultisafunny,savvyguidetobudgetingintherealworld,acrosstendifferentcategoriesofspending.Itcanhelpfamilieseliminatepettysquabblingaboutmoneyandfeelbetteraboutwherethosehard-earneddollarsaregoing”—Providedby

publisher.ISBN978-1-10162753-2(eBook)1.Budgets,Personal.2.Finance,Personal.3.Frugality.4.Homeeconomics—Accounting.5.

Consumereducation.I.Title.II.Title:Onethousanddollarchallenge.HG179.O2662013332.024—dc232013023196

Thispublicationisdesignedtoprovideaccurateandauthoritativeinformationinregardtothesubjectmattercovered.Itissoldwiththeunderstandingthatthepublisherisnotengagedinrenderinglegal,accounting,orotherprofessionalservices.Ifyourequirelegaladviceorotherexpertassistance,youshouldseektheservicesofacompetentprofessional.

CONTENTS

DEDICATION

INTRODUCTION

TheGreatRecessepression

1TheMotownBreakdown2Transportation3Miscellaneous4Utilities5KidCosts6WorkExpenses

7PersonalSpending8Entertainment9LifeInsurance10Groceries11Housing

CONCLUSION

ACKNOWLEDGMENTS

NOTES

I

INTRODUCTION

TheGreatRecessepression

HowtoUseThisVeryHandyandEnlighteningBook,EvenIfYouDon’tHappentoBeaChicken-DancingPolishFarmWorker

PopQuiz:HowdidyouspendSeptember20?

A.CleaningandrestuffingyourfeatheredsuitforNationalChickenDanceDay.

B.MarkingtheFeastofZywie,thePolishgoddessoflongevity,bynotdying.

C.MarkingNationalFarmSafetyDay,alsobynotdying(onlycountsifyouworkonafarm).

D.CelebratingConstitutionWeekbyrefusingtoquarterforeignsoldiersinyourhome(unlessthey’rereally,reallycute,inwhichcase,hey,goforit).

fyoudidanyofthesethings,yousomehowmanagedtooverlooktheanniversaryofVRDay—VictoryoverRecession.Itwaspreciselyon

September20,2010,thattheeconomiceggheadsinchargeofdecidingsuchthingsdeclaredthattheworstfinancialdownturnsincetheGreatDepressionhadofficiallyendedmorethanayearearlier.Somecallitthe“GreatRecession,”sinceitwasmuchworsethanotherdownturnswe’vebeenthrough,whileotherslabelitthe“LesserDepression.”Isaysplitthedifferenceandlet’scallitthe

GreatRecessepression.Whateverwecallit,markingtheendofsucheconomicwretchednessis

normallythekindofauspiciousoccasionthatwouldmakemewanttothrowonasailorsuit,runtoTimesSquare,andkissanurse.Butnotthisyear.TheNationalBureauofEconomicReviewmayhavedeclaredtherecessionoveryearsago,butformanyAmericans,it’sstillgoingstrong.And,muchlikewatchingthebroadcastoftheOscars,itfeelslikeit’sgoingtolastfortherestofourlives.

Morethanfouryearsaftertheofficialendoftherecession,morethantwelvemillionAmericansremainedunemployedinthefirstquarterof2013,with40percentofthemoutofworkformorethansixmonths.Athirdofhomeownersowemoreontheirmortgagesthantheirhomesareworth.Realwageshavefallenforthepastseveraldecades,andpayhascontinuedtodeclinesincetheendoftherecession.Creditishardertoget,studentloandebthasballoonedtobecomeacrisis,andretireesareenteringtheirgoldenyearswithbankaccountspayingnearly0percentinterestandwithnesteggsthatgainedlittle,ifanything,between2000and2012.Seniorsowemoreontheircreditcards,babyboomershaveseentheirincomesdropbynearly10percentsincetheendof2009,andthenetworthofanyoneyoungerthanfortyiseitherflatorlowerthanitwasforpeoplethesameagein1983.

Icouldgoon(andfrequentlydo),butthebottomlineisthatevenwiththerecessionendedandtheeconomy“recovering,”anyoneofanyageisgoingtoneedtosavemore,investmore,andspendlessfortheforeseeablefuture.Thegoodnewsisthatthebest,fastestreturnonyoureffortistofindwaystocutyourspending.Apennysavedisapennyearned,accordingtoBenFranklin,butBenlivedbeforetheincometax,plusIsuspectthemathpartofhisbraingotfriedbyallthatkiteflyingduringlightningstorms.Thesedaysapennysavedisnearlyapenny-and-a-halfearnedbeforetaxes.So,ifyoucutyourspendingby$100andsendthattoyoursavingsaccount,it’slikeyourbossgaveyouaraiseof$142.Evenbetter,yoursavingsaccountcan’tfireyouandwon’tmakeyoucometolame-oofficepartieswhereTraciefromaccountspayableisgoingtomaketheDJplayABBAallnight.

So,youneedtosave,buthowdoyoudoit?Youcouldlistentothemoneyguruswhothinkwe’reallabunchofshiftlessyuppiesblowingourmoneyon$5lattesandwhoendlesslylecturethatallyouneedtodoiscutbackonlife’sluxuries.Well,thelattepolicehaveitwrong.Nobodyisgoingtobuildupanemergencyfundequaltoeightmonthsoflivingexpenses,orcreatearetirement

fundtolastthirtyyears,orpayamortgageaftertheylosetheirjobbyskippingtheoccasionaltriptoStarbucks.Yes,ifyou’rebrokeit’sfoolishnottorealizethatthecostofonedeluxecoffeecankeepyouinbeansandriceforaweek.I’mjustsayingthatpinchingeverypennyinyourpocketisamiserablewaytolive,andineffective,too,sincemostpeoplecan’tsustainit.

Insteadofworryingandscrimping,makeaplan.You’llneedtoputtogetherabudget,trackyourspending,andfigureoutwhatyou’regoingtohavetodotomakeendsmeetandprovideforyourfuture.Thattakesawhile.Inthemeantime,especiallywhenafinancialcrisishits,youneedtoconservecashnow.Thebestwayistolookatyourlargestrecurringmonthlyexpensesandsqueezeasmuchasyoucan—oratleastneed—outofthatspending.

That’swhatIdidastheFunnyMoneycolumnistforTheDetroitNewswhentherecessionthreatenedmyfamily—me,Mrs.FunnyMoney,andmyboy,FunnyMoneyJr.Ichoseourfamily’stenbiggestspendingcategoriesandaimedtocut$100fromeachone.Yourcategoriesmaybedifferentfrommine,buttheonesinthisbookareprettycommon.Evenifyoursaredifferent,youcanapplythesameapproachtoreducingyourcosts.

Howmuchyouwanttosave,andhowmuchyourealisticallycansave,willdependonyoursituation.Ifyou’reindirecircumstances,youmaynotbeabletodomuchmorethanlimitthedamage.Ifthatseemslikeyourcase,talktoacertifieddebtcounselororevenabankruptcyexpertrightaway.Buteventhen,you’regoingtoneedcash,sokeepcutting.Forthoseofuswhoaren’tfallingovertheedge,savingmoreandspendinglessisthebestcushionfromtheravagesoftheongoingtroubledeconomyandcanallowyoutomakeuplostgroundinreachingyourfinancialgoals,whetherthat’sbuyinganewpowerboatorjustknowingthat,inretirement,insteadofgenericMetamucilyou’llbeabletoaffordtherealthing.

Armedmostlywiththisbook,youcanweedouttheunnecessaryspendingthatexistsinanybudget,whetherit’stheresultofbeinglessthansystematicinyourapproachtogroceryshoppingorjustlazyinlookingoveryourbills.InsomecasesIcutmorethan$100amonthfromourbudgetwithonlyafewphonecalls.Inothersyou’llneedtodosomeextensivecomparisonshopping.Eitherway,eachdollaryousaveisnotonlymorethanthedollaryouearn,butitalsorepresentsrealsavingsyoucanenjoymonthaftermonth.

Beyondcuttingcosts,youshouldlookforotherwaystoputyourfinancialhouseinorder.Thetwomostimportantthingsyoucandoaretobuildandmaintainanemergencyfundandavoidaddingnewdebtwhilesystematically

payingdownyourpastborrowingatareasonableratethatletsyoulivetherestofyourlife.

I’veorganizedthisbookstartingwiththeeasiestsavingsyoucanfind,thenmovingontomoredifficultchoicesasyoueitherneedorwantto.It’sorganizedaccordingtothreeapproaches:

Freeingupcash

Ifyou’refollowingthisapproach,you’rebasicallyokaybutyourfinancialpicturecouldbebetter.You’reworking,andyourspouseisworkingornot,asyoubothhaveagreed,butyouneedmorecashtomeetyourgoals.You’remanagingtopayyourmonthlybillsbutsometimesendupputtingthingsoncreditcardsandnotpayingthemoffeachmonth.Maybeyouneedtobolsteryouremergencyfund,saveforavacationorothergoal,boostyourretirementsavings,orpaydowndebt.

Makingendsmeet

Thismeansmostofyourbillsgetpaideachmonth,butit’sastretch.You’reworking,butperhapsyourspousegotlaidofffromhisorherpart-timejob,oryouhadyourhourscutbackatwork,oryou’reunderemployed,workingpart-timewhenyouneedafull-timegig,ormakinglessthanyouneed.Youmakeminimumpaymentsonyourcreditcards,andthenjustbarely.Youremergencyfundisminusculeifyouhaveoneatall,andanyunexpectedbillscomeattheexpenseofotherthings.Youneedtocreatesomebreathingroominyourmonthlycashflowandbuildupyouremergencyfund.Thenyoucanstarttothinkaboutpayingoffdebtandsavingforretirementandothergoals.

PinchingpenniessohardthatLincolngetsaheadache

Youdon’thaveenoughtopaythebills,you’reburningthroughyoursavings(ifyoueverhadany),thecreditcardswillsoonbemaxedout,andyou’refocusedsimplyonsurviving.Youoryourspousehasbeenlaidofffromafull-timejob,andthefamilyincomehasbeencutbyhalformore.Yourfocusisonkeepingfoodonthetable,aroofoveryourhead,andthepower,gas,andwaterrunning

untilyoucangetsomenewincomeorfindanotherwayout.Youmaynotbeabletomakemuchprogressinsomecategories,butdon’tletthatstopyou.Setaspecificgoalandstrivetomakeenoughcutstohitit.Youdon’tneedtosetyourselfa$1,000challenge—Ichose$1,000becauseitmadeaniceheadline—butdomakeitsomesortofchallenge.You’llbesurprisedathowmuchthesatisfactionofhittingyourgoaloffsetstheminorinconvenienceofshoppingofftherackofday-oldbread.

Thatway,wecanallcelebratenextSeptember20inourownpersonalVictoryoverRecessepressionDay.Unless,ofcourse,you’reaPolishfarmworker.Inthatcase,staysafe,takethedayoff,andinviteacuteforeignsoldiertogochickendancing.

B

1

TheMotownBreakdown

InWhichYourAuthorDiscoversThatWhileHeCanGoHomeAgain,ItMightNotHaveBeentheShrewdestFinancialMove

eforewegoanyfurther,IwanttomakeitclearthatIneverhaveeatenraccoon.AlthoughIamnotmakinganypromises,especiallyifthevarmints

don’tstayawayfromthetomatoplants.Letmeexplain.Astheaward-winningpersonalfinancecolumnistforTheDetroitNews,it’s

hardtoadmitthatinMarch2005,shortlybeforetherecessionhit,I’dmadethekindofshrewdmoneymovethatdefinesanygoodpersonalfinancewriter:amassive,idiotic,potentiallylife-ruiningfinancialblunder.

ImovedtoDetroit.Totakeanewspaperjob.Now,beforeyoumockme,considerthatIhadtheverybestofreasons.For

threeyearsI’dbeenanunemployed,stay-at-home,freelancing,job-huntingdadwhoneededabreak—andapaycheck—afterconvertingmycordlessdrillintotheworld’smostpowerfulbaby-bottlebrush.

Besides,allthejobsasbuggy-whipmakersweretakeninMogadishu.Atthebeginning,luckseemedonmysideasIstartedwritingthecolumnfor

TheDetroitNewsthat’snowsyndicatedasFunnyMoney.Themovebacktomyhometownwouldalsoallowmysontospendtimewithhisgrandmother,whowasyearningtospoiltheboywiththesamepeanutbuttercookiesthathadbeenaconstantinmychildhood.Ihadexplainedtoher,severaltimes,thatshe,beingretired,wassupposedtomovetoFloridatobenearhergrandson,nottheotherwayaround.Butyoucan’tgetoldpeopleoutofMichiganwithdynamite.WheneverIrunintoanothermiddle-agedguywhohasjustmovedbacktomy

mitten-shapedhomestate,Isimplyask,“Grandparents,right?”andhenodsknowingly.

Mywife,anextremelyshywomanknowninprintonlyasMrs.FunnyMoney,agreedtomoveandleavebehindouridylliclifeofgiantkillerpythonsintheEverglades,alawnthetextureofaBrilloPad,andtheannualinvasionsofsealiceandwizenedsnowbirdsinrentalcars(sealiceareterribledrivers).Mrs.FunnyMoneygaveupherjoboftwentyyears,wescrapedthe“WelcometoFlorida—ThanksforNotShooting!”bumperstickersoffourcars,andweheadednorthtothelandofidlesmokestacks,blackice,andpotholeswithmyblond-haired,then-four-yearoldboy,FunnyMoneyJr.or,asIcallhim,Li’lMoney(’cuzthat’sallheleavesus).

We’dmadeatidyprofitonourhomeinsouthFlorida,sellingnearthepeakofthemortgagemania.Onthedaybeforeourclosing,awomanrangourfrontdoorbelland,withoutsettingfootintothehouse,offeredme$10,000overourbestoffer.

Thisiswhereasavvypersonalfinanceexpertshouldhaverealizedthatthemortgagemadnesshadoverheatedtothepointwhereitwouldsoonmeltintoaburned,galleddisaster.Thesmartmovewouldhavebeentotakethemoney,buryitinaMasonjar,andpitchatentattheneareststatecampgrounduntilthehousingmarkettumbledtoitsinevitablebottom.Instead,Icounseledtheprospectivebuyeronmydoorsteptokeepshoppingbutconsideradjustinghermedication.

Thefastsaleofourhouseleftuswithnodebt,plentyofsavings,andatidywadofcashtoputdownonanewhomeintheGreatLakesState.Theplanwasformychain-smoking,ex-farmer,former-Marinefather-in-law,Verne,tolivehalftheyearwithusandhalfinhisFloridacondo.

HopingtochanneltheextremelyindependentandopinionatedGrandpaVerneandourenergeticpreschoolerintoneutralcorners,wesettledonafour-bedroomtrilevelinSylvanLake,alakesidesuburbclosetomymom.DespiteMichigan’salreadyshrinkingeconomy,realestatepriceshadclimbedthere,too,sowepaidmorethanI’dplanned.Thenwepaidevenmore,sincethelunaticownerpulledthehouseoffthemarketinthemiddleofJanuary,thedaybeforeourinspection.Still,Ibearhernoillwillandevenwishherlonglife.Withincurablediarrhea.

Salvationarrivedintheformofalovelyfive-bedroombilevelrightdownthestreetfromLunaticDiarrheaLady(location,location,location!).InearlyMarch,Mrs.FunnyMoneyandLi’lMoneyarrived.Mrs.FunnyMoneyhadn’tseenthe

house,butsheinstantlycooedherone-wordapproval:“Perfect.”Ihavebeenblissfullyhappyonlyafewtimesinmylife:thenightIproposed,thedayLi’lMoneywasborn,thefirsttimeIgottheword“poop”intoanewspapercolumn.Butthemomentthatmywifeapprovedofmovingintoahomeshe’dneverlaideyesonbeatsthemall.

Togetheragain,wewerehappyinournewhome.Mymomwashappytohaveusnearby,andGrandpaVernewashappytoavoidtheMichigansnowbystayinginFloridauntilthesummer.Ihadanewjobatamajorpaper,andtheeditorsalreadywantedtohiremywife.Butshewasinnohurry.Wehadsavedenoughmoneyforhertospendayeargettingussettledandevenhadafewbucksmoresetasidetospruceupthehouse.Sure,wehadspent$60,000morethanwehadplannedonthehouse,butinayearshe’dbeworkingagain.Inthemeantime,Iwouldhangontosomeofmyfreelanceclientsforextracash.

Duringthefirstnightinournewhome,aninchofsnowfell,andIhappilyshoveleditawaythenextmorning.Soon,Iknew,thetulipswouldbepushingupinournewgarden,andaMichigansummerwouldbringlazydaysatthelake,justafewblocksaway.

Perfect,right?Atthispointyou’reprobablywondering,“Isthiswheretheraccoonscome

in?BecauseIbelieveIwaspromisedraccoons.”No,theraccoonsdidn’tshowupuntiltherecession,whichwastwoyearsaway—fortherestofthecountry.

Aftertherecessionof2001,followingthecrashoftheInternet-fueledtechbubbleandtheterroristattacksofSeptember11,mostAmericansswitchedfromspendingtheirspurioustech-bubblerichestotappingtheirequallybogushomeequity,andbythemid-2000shadturnedtheirhousesintolittlemorethandry-walledATMs.ThingswereverydifferentinMichiganbythetimeImovedthereinthespringof2005.Thetechboomofthe1990shadbeenoldDetroit’slasthurrah,whenthestatejoblessrateactuallydroppedbelowtheU.S.averageasInternetentrepreneursloadeduponEscaladesandotherfancyrides.StockinGeneralMotorssoaredto$94.62ashare,andsharesofFordMotorCompanyhit$64.77.

Thestateeconomyduringthemortgageboomwasverydifferent.EventhoughMotownsoldalotofpickupstocontractors,Michiganwasalreadywellintoadecade-longone-staterecessionthatsawthelossofmorethan800,000jobsbetween2001and2011.EvenastheU.S.joblessratedeclined,Michigan’sunemploymentrollskeptrising.WhenIclosedonmynewMichiganhomein2005,thestate’sjoblessratehadbeenworsethantheU.S.averageforforty

monthsandhadbeenmorethanonefullpointhigherthantherestofthecountryformorethantwoyears.BythetimetheGreatRecessionhitinDecember2007,theU.S.joblessratewas5percent—butMichiganwasalreadyat7.2percent.

BySeptember2007,theworst,crappiest,mostdishonesthomeloans,mostlymadetounwittingsubprimeborrowerswhonevershouldhavequalified,startedgoingbadbecause,inasaneworld,youcannotfinancea$150,000loanwitha$300monthlypayment.Thebiglendersbehindthisdreckheadedforbankruptcy,butthestockmarketsoaredundauntedonawaveofever-risinghomevalues.BetweenApril2,2007,whenNewCenturyFinancial,oneofthecountry’slargestsubprimemortgagelenders,filedforbankruptcyprotection,andOctober9,2007,theDowJonesIndustrialAveragesoaredto14,165,arecordhighthattheblue-chipindexwouldn’tseeagainformorethanfiveyears.

Carbuyers,however,gotnervous.Thedomesticautoindustrylostnearlyonemillioninsalesbetween2005and2007,evenasnationalemploymentwasstillimproving.Whentheboompeakedin2007,annuallightvehiclesalesinNorthAmericadroppedfrom17milliontheyearbeforeto16.5million.WhenyouliveinMichiganandthisisyourstate’smajorindustry,that’sabigproblem,kindoflikesharkattacksonFloridatouristsorahookershortageinVegas.Asthemortgagebubbleburst,carsalesfellbyanotherthreemillionunitsinjusttwelvemonths,toadevastating10.6millionvehiclesalesbytheendof2009.

Ofcourse,ifthecarguysneededtofeelbetter,theyjustlookedatthedeclineofthenewspapersthatwerechroniclingtheirmisfortune.Atleast,theautomakersthought,nobodycandrivetoworkonGoogle.WhereastheInternetwasclearlyturningnewspapersintothenextYugo.

Noonesawanyofitcoming,leastofallmeasIwatchedthemoverspullawayfrommynewhouse,unawarethatMichigan’sBigMittenwasslowlyandsurelyunravelingarounditsnewestresidents.Soonmypaperwassoldandcutbacksstartedastheautomakersslidtowardbankruptcy.

Thingsdidn’tgetanyeasieronthehomefront,either.Myson,Li’lMoney,couldalsobenicknamedLi’lTalkerbecauseofasevere

languagedelay.He’sbeendiagnosedasalatetalker,abright,engagingchildwithamindthat,forwhateverreason,processeslanguagelesslikeacomputerandmorelikeaCuisinart.Hisspeechdevelopmentwillcatchupeventually—butonlywithalotofhelp.

InFloridathiswasn’tanissuebecausefederalprogramscoveredthecostofprivatespeechtherapyforpreschoolers.Afterheturnedfour,andjustbeforewerelocated,hehadmovedintoanexcellentspecialeducationpreschoolprogram.

InMichigan,we’dsoondiscover,theschoolswouldn’tbenearlyasaccommodating.

OurassigneddistricthadalousyprogramforLi’lMoney,sowecobbledtogetheramixofprivatespeechtherapy,aspecialkindergarten,daycare,andconsultationswithpriceyout-of-townspecialists.Wemovedtheboytoasecondschooldistrict,butwestillneededthehelpofa$190-an-hourspecialeducationattorneytogettheservicesheneeded.Itwasallexpensive,andnoneofitwascoveredbyhealthinsurance.

Myson’sthreespeechprogramsmadeitimpossibleformywifetoreturntowork.Whatevertimeshedidn’tspenddrivingourboyaroundfoundherbackinFlorida,tendingtoGrandpaVerne,who,suddenlystrickenwithcancer,neverspentmorethanaweeklivingwithus.Wefrontedthousandsofdollarsamonthforhiscareaswewaitedforhisveteranbenefitstokickin.

Thencametherecession.Eventhoughoursonwasnowinschoolfull-time,thecrippledeconomylockedmywifeoutofajobdespiteherimpressiverésumé.Next,anominouslythinletterarrivedfromthebank,freezingourhomeequitylineasplummetinghomevalueswipedoutourequityanddownpayment.Thenewspaperinstitutedunpaidfurloughsandsalarycuts,whilemyfreelanceworkdriedupandourcreditcardbalancesbegantoswell.

IknewIwasn’taloneandthatmanyothershaditmuch,muchworse.Infact,thecrisismademypersonalfinancecolumnmoresoughtafterthanever,asreaderslookedfortipsoncuttingtheirdebtsandshoringuptheirinvestments.IwasbusierthanapriestonthedayafterMardiGras,basking,forawhile,inmystatusasapersonalfinanceexpertastheeconomycratered.

ThenIheardabouttheraccoons.RightthereonthefrontpageofTheDetroitNewsoneofmycolleagues

foundadowntownhunterwhoraisedcashbyharvestingraccoons.ShowingtheentrepreneurialgeniusnativetothebirthplaceofboththeFordPintoandtheAMCPacer,thisurbanhuntsmanofferedraccoonroastsfor$12.Hissalespitch?“Tasteslikemutton.”

ThenewsthatpeoplewereputtingraccoononthemenumademewonderhowmuchrealhelpIgavemyreaders.Afterdecadeswritingaboutpersonalfinance,Ifeltlikeafraud.Yes,Iwasgoodatoutliningretirementstrategiesandtaxmoves.Andthoughitfeltlikewewerefairlyfrugalathome,myfamily’sbalancesheetwassuddenlylessthanreassuring.IworriedwhetheritwouldbeenoughifIsuggestedtakingsteaksandchopsoffthefamilymenuandsubstitutingcheapselections,likemutton.(“Tasteslikeraccoon.”)

Sure,itwaseasytohelppeoplenibblearoundtheedgesoftheirspendingtofreeupacouplehundredbucksamonthforretirementortopaydowntheVisabill.Thatadvicewasfineforthegoodtimes.Butwhataboutwhenthefamilyfinancestookarealhit?WasIgivingmyreadersthekindofhelptheyneededtogetthroughthetoughtimes,orwouldtheybebetterofflookingupthevermin-sellingcootdowntown?IhadvisionsofaffluentBloomfieldHillsmatronsknockingatthedoorofaramshacklehousedownpasttheoldcementfactory,dubiouslysniffing,“Isthepossumfreshtoday?”

AndsoIfoundmyselfintheofficeofmyeditors,proposing“TheGrandExperiment”(akaThe$1,000Challenge),aseriesofcolumnsinwhichI’dtrytocut$100aweekoutofmyfamily’smonthlyspendingfortenweeksinanattempttosave$1,000—anevengrand.TheyassumedIalreadydidallofthismoney-savingstuffandpeeredatmeasifitweresuddenlyapparentthatthey’dhiredtheMilliVanilliofpersonalfinancewriters.

“Well,sure,”Itoldthem,“Idoallofit...oratleastsomeofit,ha-ha.But,youknow,there’salwaysroomtosavemoreand...”

IquicklybackedoutoftheofficeassoonasIheardsomeonesay“yes.”Ivowedtokeepthecolumnsshort,sinceIknewthepaperwastryingtocutbackonitsnewsprintbudget.Probably,Ithought,savingspacesowecouldstartprintingrecipesforraccoon.

Myfirststepwastosettherulestoguidemethroughtheproject.Thebedrockprinciple,theprimedirectiveoftheexperiment,wassimple:savealotofmoneysoIdon’tlooklikeafool.

Theothersruleswerealsosimple.First,myfocuswouldbeoncuttingimmediatespendingsothatanycashafamilyhadwouldlastaslongaspossible.Thesecondwastoavoidspendingmoneytosavemoney,whichcutoutthingslikeputtingafewthousandbucksintoasolarwaterheaterinhopesthatthegizmomightgenerateenoughsavingstopayforitselfsometimeduring,say,MaliaObama’ssecondterm.

Mynextrulewastozeroinonrecurringmonthlyexpenses.Sure,it’sgreattofindasalethatknocks$40offanewsetoftires,butthatonlysavesyou$40onceeveryfewyears.Changeyourlong-distanceplantosave$5amonthandyou’llbeahead$60ayeareveryyearfromnowon.Afterthreeyearsthat’s$180,whichmeansthosenexttworadialsarefree.

Finally,togetthebiggestbunchofbucksfrommybudgetingbang,Idecidedtoconcentrateonourtenlargestspendingcategories.NowIjusthadtofigureoutwhatthosewere.

I’dsetupabasicbudgetwhenwemovedbacktoMichiganandthoughtIhadarathercomprehensiveapproachusingQuickentotrackourcashflow(or,moreaccurately,ourcashebb).ButI’dleftthewholethingonautomaticpilot,usingitmostlyattaxtimetodigupdeductions.Whenitcametimetocompileouryear-to-datespending,Iwasfacingthefinancialequivalentofagardenthathadn’tbeenweededinthreeyears.Worse,Quickenhadgonehaywire.Drugstorepurchaseswereinfourcategories,ourtaxpreparerwaslistedas“Baby-sitter”(which,ifyouaskedher,wasn’tallthatfarfromthetruth),andeverypurchaseatthecornermarketwounduplistedunder“AvisRentACar.”Yes,accordingtoQuicken,someoneatourhousewasrentingacarthreetimesamonth.Butatleastwhoeveritwasgotagooddeal:theexactsamepriceasasix-pack.

MysolutionarrivedintheformofRobinThompsonofBudgetWiseConsultinginSterlingHeights.RobinisaformerGeneralMotorsengineerwithamaster’sdegreeinmathematics.Nowshe’saverypracticalpersonalfinanceexpertwhowalkspeoplethroughtheprocessofgettingahandleontheirmoney.Theproblem,Robinsaid,wasn’twiththecomputerprogram,butwithme.

“Softwareisgreatfortrackingexpenditures,butnotformakingcoursecorrectionsduringthemonth,”shetoldme.“Bythetimeyoulookitover,you’relookingintherearviewmirror.”

Robinsatdownwithmetogooverthebasicsofagood,functionalbudget.Ialreadyhadthefirststepnailed:settingaspecificfinancialgoal.Otherwise,tryingtosavemoneyforitsownsakedoesn’twork.Deciding“IwanttogotoParissometime”istoovaguetoprovidetherightmotivation,anditlacksthespecificitynecessarytomakearealplanandchartyourprogress.

“Youneedtosay,‘Iplantosave$1,800foravacationnextyearbysaving$150frommypaycheckeachmonth,’”Robinsays.“Itellmyclients,‘Remember:agoalisjustadreamwithadeadlineandadollarsign.’”

Thesecondstepforgoodbudgetingistodigoutyourbigexpensesthatshowuponlyonceortwiceayear,suchasinsurancepremiums,holidaygifts,andotherbillsthatblowupyourbudget.Includehowmuchyouspentoncarorhomerepairslastyearandotherunplannedexpenses.Robinadvisesaddingthemallup,dividingbytwelve,andhavingthatamountautomaticallysavedtoaseparateaccount.Whenoneofthosebillscomes,transferthemoneytoyourcheckingaccounttopayit.“Treatitjustlikeanescrowaccount,”Robinsays.

Stepthreeiswheremostfolksstartwhentheytrytocomeupwithabudget,whichisallthemundanemonthlyexpenses,fromgasandgroceriestothewaterandelectricbills.Onevitalexpensethattoomanypeopleoverlookissavingfor

retirementor—ifyoudon’talreadyhaveone—anemergencyfund.Havinganykindofemergencyfundwillchangeyourrelationshipwith

moneyandevenyourself,nomatterhowyousaveforitandhowlongittakes.Ifyou’restartingat$0,aimtogettwoweeksoftake-homepaysaved,oratleast$500to$1,000asabareminimum.Atthestartoftherecession,ouremergencyfundwasagodsend.Whenitdwindledasthedownturnworsened,Isleptalotworseatnight.Ifyouwanttoponderjusthowvaluableawadofcashcanbeinacrisis,askyourselfthis:HowwouldthatbigtrialhaveturnedoutforO.J.Simpsonifhe’dusedapublicdefender?

AsRobintoldme,“Youneedtopayyourselffirstandpaythatoffthetopofyourpaycheck,notthebottom,”shesays.“Youareyourmostimportantexpense.Youneedtolookatyourselfasoneofyourbills.”

Ifyouneedafinancialmantra,thereitis:“I’masimportantasthesewerbill.”

Theenvelopes,please

AnothertipfromRobinwastocontrolspendingwhereverpossiblebyusing“theenvelopesystem,”whichhasworkedgreatforme.ThisisabudgetingapproachIheardaboutfrommyparents,whouseditasnewlywedsbackinthe1940s.

Theclassicapproachistocashyourpaycheck,thendivideallyourmoneyintoyourbudgetedamountsforeachpayperiodanddistributethegreenbacksintoseparateenvelopesforeachspendingcategory,suchas$150forgroceries,$60forutilities,$125forthisweek’spartoftherent,andsoon.Whenthecashisgone,it’sgone,andyou’redonespendinginthatcategoryuntilthenextpaycheckcomes.Or,youcantakecashfromanotherenvelopebycuttingyourspendinginthatcategory.Eitherway,thesystemkeepsyourspendingincheckbecause,ifyoudon’tresorttousingcredit,youcanneverspendmorethanthecashyou’vegotonhand.

Thesedays,it’shardtopaythemortgageorcollegesavingsplanwithcash,anditcanbechallengingfortwoadultswithdebitcards,checkbooks,andjobstocoordinatecashpurchases,buttheenvelopesystemworksfineforanydiscretionaryspending,suchaslunches,entertainment,andsoon,withmoneysetasideforthingslikethecarpaymentstayinguntouchedinyourbankaccount.There’sanonlineversionforbudgetingyourexpenses,mvelopes.com,too.Theideaisthatinsteadoffocusingonwhereyourmoneywent,you’replanning

whereitgoesandseeingtheimmediateeffectofyourfinancialdecisions.Ifyouhave$150inyourenvelopeforentertainmentandtake$100foranicedinnerout,youknowthattheremaining$50hastolastuntilnextpayday.

TheonlystepIaddedtoRobin’sadvicewastocreateamonthlycash-flowcalendarthattrackswhenautomatedpaymentsaremadefromourcheckingaccount,suchascarandhousepaymentsandtheboy’sprepaidcollegetuitionplan.Yourmonthlybudgetmayadduptothepenny,butifbigchargessuchasstudentloanandmortgagepaymentsoccurinthesamepayperiod,youcouldrunshortandendupbouncingchecksorputtingyourrentonacreditcard.Plottingyourmonthlyspendinganddepositsbyday,alongwithrecurringexpenses,suchaseachweek’sgasandlunchmoney,givesacompletepictureofyourmonthlycashflow.

Withallthatdone,youaddyoursavingsgoaltoyourmonthlyexpenses,plusyourallotmentforrecurringnonmonthlycharges,andthere’syourbudget.Ofcourse,that’smoremoneythanyouactuallymake,sogobackandadjust.

Intherarecasethatyouhaveanyleftovermoney,addittoyouremergencyfund,putitinyourretirementsavings,oruseittopaydowndebt.With“extra”cashsloshingaroundinyourbudget,you’retemptedtouseittojustifyoverspending,thenforget,splurgeagain,and,attheendofthemonth,findyourselfshortoncashorlongontheVisabill,eventhoughyoustartedoutwith“extra”money.

Now,Iknowtheword“budget”isarepulsive,ugly-soundingtermthatsuggestsonlydeprivation,misery,andsuffering,likehearingsomeonesay“diet,”“jointsessionofCongress,”or“anewmotionpicturefromAdamSandler!”Butmybudget-cuttingproject—tenweeks,athousandbucks—perfectlynailedRobin’sfirstrequirement.Itwasaspecificgoalandithadadefinitedeadline,nottomentiontheconsequencesoflookinglikeatotalchumpifImissedmygoal.

SoIbuckleddownandstartingsortingoutmyoldbankstatements.Maybe,Ithought,“budget”reallyisn’tafour-letterword.(Ofcourse,thefactthatit’ssixexplainshowIgotintotroubleinthefirstplace.)Nonetheless,Iwasonamissiontocutmyfamily’sspendingby$1,000amonth,andtherewasnowayIwasgoingswallowmypride—evenifIendedupswallowingraccoon.

A

2

Transportation

MyInitialCost-CuttingIsDriventoFailure,butatLeastMy(T)Rusty’95RoadmasterEstateWagonGetsMeThereinStyle

ftertwoupgradesandfourhoursontechsupport,Ifinallygotmyfinancialtrackingsoftwareworking.I’veusedQuickensincetheoldWindows3.1

days,whenmenweremenandthirteen-inchmonochromemonitorsruled.Iloveditthen,butnowit’sabulky,complicated,expensivememoryhog.Manypeoplelovetheonlinebudgetingandexpense-trackingsiteMint.com,whichIfindclunkyandlimited(plusit’sownedbytheQuickenfolks),butifitworksforyou,fine.ThereareseveralotheroptionsouttherethatIhaven’tyetbeenabletotest,soifyoufindagoodone,letmeknow.Untilthen,I’mgrudginglystickingwithQuicken,whichisthesameattitudeItaketowardtheDemocraticParty.

Despitethehassle,Ifinallyhadmytoptenfamilyspendingcategories.Amazingly,thelistdidn’tincludelong-distancephonechargestoQuicken’stechsupport.

Ourbigspendingmostlyfellalongthelinesthatyou’dexpect—housing,cars,food,andsoon.Togetmylist,Isimplydividedallourmonthlyexpensesintocategories,rangingfromhousingtoentertainmenttogasandsoon.ThenItotaledeachcategoryforthepasttwelvemonthsandpickedthetenthatwerecostingusthemost.Thesurpriseonthelistwaslifeinsurance,whichseemedlikeanawfullotofmoneytoinvesteachmonthinmyowndemise.

Theresultswere:

TransportationMiscellaneous

UtilitiesOffspringChildcarePersonalspendingEntertainmentInsuranceGroceriesHousing

That’sinnoparticulararrangementotherthantheorderinwhichIwounduptacklingtheminmynewspapercolumns.Housing—includingmortgageprincipalandinterest,propertytaxes,insurance,andrepairs—waseasilythebiggestcategory.Thethirty-yearloanonourhousewasat5.5percentinterest,andrateshaddropped.Iwasbettingthatrefinancingtheloanwouldeasilysavememorethan$100rightthere,butthenew,morecomplicatedmortgageapplicationrulesmeantthatitwouldtakeseveralweeks,includingarranginganindependentthird-partyappraisal.Ischeduledthehousingcategorytorunlastintheseries,figuringthatmakingitmyanchormaninthisfinancialtug-of-warwouldresultinaslamdunk,homerun,touchdown,triple-word-score,oranyothersportsmetaphorsIcouldmixandmangle.

Withhousingonthebackburner,Idecidedtotackletheautoexpensecategoryinmyfirst“GrandExperiment”column.Betweenthecostofthevehicles,gas,maintenance,andinsurance,IwassureIcoulddigout$100ofsavingspermonth.Afterall,accordingtotheBureauofLaborStatistics,transportationisthesecond-largestexpenseforAmericans,andit’seasytoseewhy:accordingtoTrueCar.com,inNovember2012theaveragepriceofanewcarwas$30,832,andthatdoesn’tincludetax,title,andotherdealercharges.Evenwith10percentdownandacarloanatalowrateof3percent,financingthatcostoverfouryearsgivesyouamonthlypaymentof$704.Plusyouneedtoeitherputupcashforthetax,title,license,andotherdealerchargesorrollthemintotheloananddriveyourpaymentevenhigher.Carryingthatkindofpaymenttranslatestomorethan$12,000ayearbeforetaxes,ornearlyone-quarteroftheU.S.medianfamilyincome.

Unfortunately,vehiclecostofferedabsolutelynosavingsinmycasebecauseIdidn’thaveabigpaymentonashinynewsetofwheels.DespitebeingbornandbredinMotown,I’veneverownedanewcar.MaybeI’mcursedbecausemyparentsbroughtmehomefromthehospitalina’47DeSoto.Mrs.FunnyMoney

islesskeenonusedvehicles,havingbeenscarredbya1976VolkswagencamperIpurchasedafterweweremarried.Tothisday,shechurlishlyarguesthat,regardlessofhowniftyanyonethinksabuilt-inpropanestovemightbe,anyvehiclethatneedstobetowedtothecampsitefailstoqualifyasa“camper.”

Sincethen,she’sinsistedthatshe,atleast,driveanewcar,whichwebuy,payoff,anddrivetodeath.BythetimeIstartedmybudget-cuttingexperiment,Mrs.FunnyMoneywasdrivingadependable’97HondaAccordweweregettingreadytoreplace.Meanwhile,I’veretainedmyknackforpickingcarsthatmakeforhandylandmarkswhengivingdirectionstoourhome.“Youcan’tmissit,”Isay.“It’sthehousewiththegreenMG/orangeCitroën/surplusEastGermanMungotrooptransport.”

I’dtoneddownmytasteforexoticanduselessvehiclesafterfatherhood,andbythetimewemovedtoDetroitIwasdrivingtheperfectfamilyhauler:a1995BuickRoadmasterEstateWagon.OutfittedwiththesameboisterousV-8asthatyear’sCorvette,myRoadmasteriseighteenfeetofhulking,vinylwood–veneeredDetroitbadasserymasqueradingunderacloakofdullsuburbansensibility.WhilesomemayderidetheRoadmasterasoversized,square,or,ascertainfemalesinmyhousescoff,looking“likeafarmcar,”letmemakeonepoint:ifWillard“Mittens”Romneyhadownedthiscar,he’dhavehadsomuchroomthatheneverwouldhavehadtostrapthatIrishsettertotheroof,andhe(Mittens)wouldbepresidenttoday.

Vehiclecost

Yourbestbetinloweringthecostofyourcarpaymentistokeepyourpaymentslowtobeginwith,bysavingforadownpayment,buyingwhatyoucanafford,payingtheloanoffquickly,andperformingregularmaintenanceandrepairssothatyourcarlasts.I’lltalkaboutagoodwaytodothatattheendofthischapter,butfornowlet’sfocusonsavings.

Onceyou’reinafinancialpinch,there’snotalotyoucandotolowerthecostofacarloan,butthefewoptionsavailablecanputasignificantamountofmoneybackinyourbudget.Someofthesealternativesaren’tallthatconvenient,buttheycangetyouthroughacrisis.

Freeingupcash

Ifyou’vegotacarpayment,lookatloweringyourcost.Iftheinterestrateonyourloanishigh,suchasyou’dgetfroma“buy-here,pay-here”lotorthoughdealerfinancingifyouhadbadcredit,visitacreditunionandaskaboutrefinancingyourloan.

AtTheDetroitNewsIusedtowriteafeaturecalled“MoneyMakeover,”andoneofmysubjectswasayoungguywho’dstartedoutwithanaffordablecarleaseaftergraduation,onlytoburnthroughhismileageallotmentbeforetheleasewasup.Ifhekeptdrivingthecar,hefacedpayingexcessmileagecharges.Instead,herolledtheremainderoftheleaseintoanewloanonapickuptruck,andbythetimeacertifiedfinancialplannerandIlookedoverhisfinances,thekidwaslosingasignificantchunkofhispaychecktoacarpaymentofabout$600amonth.Isuggestedhetryrefinancingthroughacreditunionwherehisbrotherwasamember.Iwasthrilledwhenhecalledtwoweekslaterandtoldmehe’dcutthepaymentdowntolessthan$400amonthwithanew,lower-ratecreditunioncarloan.Thesavingsamountedto$210amonth,ormorethan$2,500ayear.

Justaboutanyonecanjoinacommunitycreditunion,andothersareextremelyopen.GotabrotherintheCoastGuard?YoucanjointheNavyFederalCreditUnion.Mybrotherdoesn’tguardAmerica’sborders,buthemoldsournation’syoungminds,soIcanjoinhisteachers’creditunion.Beforeyoujoin,shoparound.MyDetroitNewscreditunionmatchesloanratesatanyothercreditunionIcouldjoin.So,whenwereplacedMrs.FunnyMoney’sHondawithamoreMotown-appropriateMercury,Ifoundanew-memberspecialof2.99percentoncarloansatacompetingcreditunion,andmycreditunionmatchedit.

Ifyouowemorethanyourcarisworth,refinancingtheloanmaynotbepossible.Youcanlooktotradethecarinforsomethingcheaper,butthiscouldleaveyouwithanunpaidbalanceontheoriginalloan.Rollingthedebtfromtheoldloanintoanewcarpaymentisrisky,thoughsomedealerswilldoit.Butitmeansyou’reoverpayingforyournew,cheaperride,you’restillgoingtoowemorethanthenewvehicleisworth,andyou’releavingyourbudgetstretched.Plus,sincethat“new”carisprobablyaveryusedone,youruntheriskofhavingthatcarbreakdown,causingyoutospendmoremoneytokeepitgoing.

It’seasiertorolloveraleaseintoanewleaseorloan,butyourunthesameriskofaddingthebalanceofwhat’sowedonyouroldleasetoanewone.Abetteroptionisgettingsomeonetotakeoveryourleasethroughoneoftheonlineservicesthatmatchespeoplewhoneedacheapcarwithleasecustomerswho

needtogetoutoftheiragreement.TwoofthebiggeronesareLeaseTrader.comandSwapalease.com.Firstcheckthatyourfinancecompanywillallowaleasetransferandthatyouwon’thaveanyliabilityforthecarorthebalanceoncetheleaseistransferred.

Yourbestbetmaybesimplytosuckitupfornowandcontinuemakingpaymentsuntilthecarisworthmorethanyouowe,atwhichpointyoucansellitandbuysomethingcheaperorrefinance.Butfirstcheckwhatyourcarisworth.Usedcarvalueshavejumpedinthepastfouryears,andyourcurrentridemaybeworthmorethanyouthink,whichmeansyoucansellitandgetsomethinglessexpensive.Ifit’saleasedcarandit’sworthmorethanyouowe,youdon’thavetoreturnittothedealer.Instead,youcansellittoanydealerorprivateparty,ortradeitinforanewride.(YoucanfindagoodoutlineofeverythinginvolvedfromEdmunds.com.)1

Makingendsmeet

Peoplestrugglingjusttogetbyshouldlookatrefinancing,orsellingandbuyingsomethingcheaperfirst.Afterthat,you’llneedtogetcreative.Maybearelativeorfriendiswillingtobuyyourcarbytakingoverthepayments.Becarefultosetupanysuchdealasarealbusinesstransactionwithawrittenagreementthatspellsouthowmuchandwhenthey’llpay,who’sresponsibleformaintenanceandrepairs,whathappensifthecarbreaksdown,andwhathappensiftheotherpartycan’tpayyou.You’llalsoneedtoarrangeinsuranceinbothofyournames.

Ifyoulease,oneofthelease-swappingsitescanhelpyousetupadealwithafriendorrelativetotakeoverthelease.Ifyou’rerunningupagainstextramileagecharges,youroptionsincludeswappingcarswithsomeonewhodriveslesssothatyou’llhavelowermileagechargeswhenyouturninthecar,oryoumighthavetoparkituntiltheleaseisupandfindothertransportation.

Ifthegapbetweenwhatyouoweonthecarandwhatit’sworthisn’ttoobig,youcanconsiderpayingoffthedifferencesoyoucansellortradethecarforsomethingcheaper,orrefinancetoalessexpensiveloan.That’seasyenoughifyou’vegotsomecashonhandoryoucansaveup,butdon’tdrainyouremergencyfundandexposeyourselftomorefinancialrisk.We’retryingtofreeupcashhere,notblowitallbywheelinganddealingonusedcars.

Ofcourse,ifthecarispaidoffandyoucanfindawaytolivewithoutit,evenforawhile,justsellit.You’llgetaone-timeinfusionofcashandeliminateall

theoverheadthatthecarentails—gas,repairs,insurance,tolls,andevenbuyingnewpine-treeairfresheners.Afteryou’vepaiddownyourdebtorsavedupforyourgoal,youcangooutandfindacarthatfitsyourbudget.

PinchingpenniessohardthatLincolngetsaheadache

Alltheoptionswe’velookedatsofarfocusonhowtoloweryourpaymentwithoutdamagingyourcreditorleavingyourselfstuckwithanunpaidbalanceonanoldloanorleasethatwillcontinuetocostyou.Ifyou’reindirestraits,though,youneedtodowhateverittakestopreservewhatevercashandincomeyouhavewhilecoveringthebasicnecessities.

Ifnoneoftheoptionsdiscussedaboveworkforyouandyou’restuckwithapaymentorleaseyouknowyoucan’tkeepmaking,talktoyourlender.Ifyou’relucky,youmightbeabletogetatemporaryreprieveornegotiatenewfinancing,whichwilllikelycostmoreinthelongrunbutcouldloweryourpaymentsnowandallowyoutokeepdrivingthecar.Ifyoucan’tmakeadeal,yourbestbetistosurrenderthecar.Yourcreditwilltakeahitandyou’llowethebalance,plusanypenaltiesifyouendedaleaseearlyoriftheloanhasanearlypayoffpenalty.It’shard,butifyou’regoingtoenduplosingthevehicleanyway,it’sbettertogiveituponyourtermsratherthanwaitfortherepomantograbit.Plus,thelenderwillhityouwiththerepocostsontopofyourunpaidloanbalance.

Ifalender-dealerofferstorenegotiateyourloanandputyouintoacheapercar,becareful.Checkoutanyreplacementvehiclethoroughly.Youdon’twanttoendupcarryingyouroldloanplusanewloanonacarthatfallsapartinsixmonths,leavingyouwithmoredebtontwocarsandnoactualtransportation.Beforedefaultingonacarloanorlease,though,workthroughtheothersavingsstrategiesinthischapterandtherestofthebooktoseewhetheryoucanfindothercostsyoucancuttofreeupcashforyourcarpayment.

Howtobuyacar

Thebestwaytokeepacarpaymentfromcrashingyourbudgetistokeepyourinitialpaymentsaffordable.Theusualoptionsaretosavemoreorspendless,butathirdstrategyaccomplishesboth.Theideaistopurchaseacarthatyoucanpayoffinthreeyears,thenbankwhatyouusedtospendonyourcarpaymentasyoudrivethevehicleaslongasyoucan.Dothattwice,andyou’llhavelotsofcash

toputdownonacarthethirdtimearound.Forexample,a$400paymentat3percentmeansyoucanfinance$13,750for

acartoday.That’sprobablya2007model,whichyoudriveforfiveyears.It’spaidoffafterthreeandyousavefortwo,sockingaway$9,600towardareplacement.Bytheninterestratesshouldhaveincreased,solet’ssayyoufinancethesecondcarat7percent,borrowing$13,000.Addyour$9,600insavingsandthat’s$22,600tospend—andyou’reputting44percentdownincash.

Moremoneymeansabettercar,andlet’ssaythatgivesyoufouryearstodriveandsaveafterpayingitoffonceagaininthreeyears.Bythenyou’vesaved$19,200andyou’repayingwellmorethanhalfthecostofyournewcarincash—orallthecostofagoodusedcar—plusyou’vekeptyourpaymentsteadyat$400forthelasttwelveyears.

Ifyoucandriveyourcarslongerbetweenbuyingreplacementvehicles,youcanaccumulateevenmorecashandgettothepointofbuyingacarforallcashsooner.(Youcanreallystretchyourcarcashbypurchasingwell-cared-for,two-year-oldusedvehiclesinsteadofnewones.Youcanfindagoodselectionofthosemodelscomingoffleases,oftenwiththeremainderofthewarrantyorcertifiedbythedealer.)Plus,Ihaven’tfactoredinanyadditionalcashorreducedpaymentyou’llgetonyourtrade-in,sincethatwillvaryaccordingtohowwellyoutakecareofthecarandwhetheryoudrivethatpuppystraightintotheground.

Yeah,sometimesyouhavetoputupwithhandlingrepairsordrivingwithanoisymuffleruntilyoucangettotherepairshop,butthesavingsshouldmakethatsoundlikemusictoyourears.

Insurance

Unfortunatelyforthesakeoffindingsavings,boththeRoadmasterandMrs.FunnyMoney’sHondawerepaidoff.Withnocarpaymenttocut,Ilookedelsewhereforsavings.Thatleftmaintenance,insurance,andgasasmyremainingsavingstargets.Thankstoatrustworthymechanic,Icouldn’tfindanyunnecessaryrepairsoneithercar.Indirestraits,Icouldhavestartedchangingmyownoil,butthatwouldn’tneteven$20amonth.Plus,I’dprobablyprocrastinateandendupseizingtheengine.

Whenitcametoinsurance,Ialreadyhadaprettygooddeal.Theonebright

spotIcouldfindwasthatswitchingfrommonthlybillingtopayingmypremiumeverysixmonthswouldsave$54.87onasix-monthrenewal.Thatcutmycarcostbyawhopping$6.31amonth.

Theonlyotherwaytotrimmyautoinsurancewouldbetodumpthecomprehensive(fire,vandalism,theft,andothernoncollisiondamage)andcollisioncoverageonthetwocars,whichwouldsaveabout$600ayear.It’sagoodidea,exceptfortheRoadmaster’snickname,“TheDeerslayer.”

That’snotbecauseI’mafanofTheLastoftheMohicans,butbecauseinonefourteen-monthperiod,thecarsenttwodeertothenot-so-happyhuntinggroundsinthesky.Iknowthathuntersseekeveryadvantagewhenstalkingthewilywhitetail:high-techcamouflage,state-of-the-artrifleoptics,andevenahalfpintofdeerurine,which,Isuppose,huntersdabbehindeachearforthat“freshfromthelatrine”aromanoanimalcanresist.

Butwhenitcomestofatalattraction,deertinklehasnothingonmyGeneralMotorsV-8.Thankstomycollisioncoverage,though,Ihaven’tputoutapennytofixthecar,savingme$2,000indeductiblepayments.Theinsurancecompanycalledtheaccidents“actsofGod,”and,sincethefirstonehappenedintheOctoberruttingseason,I’lladmitthattheremusthavebeenanactofsomekindonthemindofthatdeer.

Findingsavingsinyourinsuranceiseasierthancuttingyourcarpayment.Justmakesurethatifyoureduceyourcoverageyoudon’ttakeonmoreriskthatcouldleaveyouinworsefinancialshape.Remember,afterall,thatthereareelevenmillioncarcrasheseachyear.

Freeingupcash

Ifyou’vegotsavings,yourfirststepistoraiseyourdeductibleonallyourinsurancepolicies.Typically,apolicystartswitha$500deductible,butraisingitto$1,000willloweryourpayment.Also,ifyou’recomfortableenoughtoaffordit,payingyourpremiumannuallyoreverysixmonthsalsowilltrimyourbill.

Yournextstepistoshoparound.Evenifyou’reasthrilledwithyourinsuranceagentasIamwithmine,companiesintroducenewdealsanddiscountsallthetime,anddifferentagentsmayhavedifferentapproachestohelpyouloweryourpremium.Thisalsohelpsyouidentifychangesthatneedtobemadeonyourpolicy,suchasateendriverwho’smovedoutofthehouseoracarthat’sagedtothepointwhereitnolongerrequirescompandcollision.

Whileyou’reshopping,aggressivelyquizthesalesrepsabouteverypossiblecombinationofcoverageanddiscountspossible.Youcangetadiscountfornothavinganaccident,fordriving(ornotdriving)acertaintypeofcar,forbeingamemberofAAA,orbeingadues-payingmemberoftheCrippledCanarySociety.Mybestdiscountonautoinsurancecomesfromcombiningmyhomeandautoinsurancewiththesameagent.Infact,youcangetdiscountsyoudon’treallywant.Myagentautomaticallyappliedanover-fiftydiscountforwizened,droolingoldfogiesafewmonthsbeforeIhitmyfifthdecade,evenasItriedtoignorethatdubiousmilestone.

Youcangetadditionalinsurancereductionsformakingmoreeffort,suchastakingadefensivedrivingcourseorinstallingacaralarm.Firstcheckhowmuchthisisgoingtosaveyou,becausethere’sacosttotakingacourseoraddingelectronics.Iftheinvestmentdoesn’tpayforitselfrightaway,itviolatesour$1,000Challengerulethatwedon’tpayoutmoneynowtoeventuallysavealittlemoneyonsomedistantbreak-evenpointyearsdowntheroad.Shoparoundforinsuranceeverycoupleofyearsjusttomakesureyouaregettingtherightcoverageatthebestpossibleprice.

Makingendsmeet

Checkyourpolicyforadd-onsandcoveragethatyoucanlivewithoutormaynotneedanymore.Coveragethatreplacesabrokenwindshieldmaybesomethingyoucancut.Instead,youcan“self-insure”byhavingsavingsandanemergencyfundonhandtofixorreplaceacrackedwindow.Andsinceyourcarhasagedsinceyoufirsttookoutthepolicy,itmightbetimetodropyourcollisionandcomprehensivecoverage.Thestandardruleofthumbisthatifyoucarisworthlessthantentimestheamountyoupayforannualcompandcollision,it’stimetocancelthecoverage,whichcanaccountforupto40percentofyourinsurancebill.Ifyoudocancelcollisionandcomp,directatleastsomeofthemoneyintoasavingsaccounttofixthecarifyouhaveaseriousaccidentor,sincethatvehicleisgettingprettyold,toeventuallyreplaceit.

Ifyou’vebeenpinchedtopayallyourbillsattimes,chancesarethatyoupaidsomeofthemlate.Ifthosepaymentsweremorethanthirtydayspastdue,yourcredithaslikelytakenahit,whichhasloweredyourcreditscore,thatmagicalnumberthat’sgrowntobealmostimportantasyourIQordresssize.Abadcreditscorecansendyourinsurancepremiumshootingsky-highfasterthan

havinganactualaccidentthatrequiresapayoutfromtheinsurancecompany.WhatdoespayingyourVisabillontimehavetodowithyourabilitytodrive

toworkwithoutrunningredlightsandplowingdownpedestrians?Onthefaceofit,nothing,butinsuranceandcreditanalystsclaimthere’saveryhighcorrelationbetweenfolkswithlousycreditandfolkswhofilelotsofclaims.Inthepastfewyears,somestateinsurancecommissionshavetriedtolimitthepracticeoftyingcreditscorestoinsurancerates.InmyhomestateofMichigan,however,theinsurancelobbyistsboughtsteakdinnersforthetax-fattenedhyenasinthestatelegislatureand,miraculously,insurancecompaniescanstillusecreditscorestosetyourrates.IfyouliveinMassachusetts,Hawaii,orCalifornia,thepracticeisbannedbecause,evidently,yourstateelectsvegetarians.

Thebadnewsisthatmakinglatepaymentsinflictsrealdamageonyourcreditscore,sinceyourpaymenthistorymakesup35percentofyourscore.Thegoodnewsisthatbecausetimelypaymentissuchabigfactorinyourcreditscore,youcanboostitveryeasilyjustbypayingontime.Makesureeverybillgetspaidbeforetheduedateforseveralmonthsandyou’llstarttoseeyourscoreimproving.Itwon’thelpyouimmediately,butputanoteinyourcalendarforsixmonthsorayearfromnowandgorepriceyourinsurancetoseeifyourcreditscorehasimprovedenoughbythentoloweryourrates.

Askyourinsuranceagenthowyourscorestacksup.Heorsheisunlikelytogiveyoutheexactnumberbutshouldbeabletoexplainwhereyoufallonthescale.YoucanbuythemostwidelyusedcreditscorefromthefolksatFICOatwww.myFICO.com.YoucangetafreeestimateofwhatyourFICOscorelookslikebyvisitingBankrate.com,theWebsiteIusedtorun.2

Noteverycompanyusesthesamescore,whichisbasedonyourcredithistory(thereareseveralformulasoutthere),butifyoulooklikeaBoyScoutononescore,it’sunlikelythatanotherwilldecideyou’relessreliablethantheaveragehobo.

Creditscoresareacomplexandsometimesmurkyworld.Unlikeyourcredithistory,youcan’tgetafreecopyofyourcreditscores,andyoucan’tdisputehowthey’reconstructed.Beyondpayingallyourbillsontimethereareothermovesyoucanmaketoimproveyourscore,fromkeepingoldunusedcreditcardaccountsactivetohowmuchcredityouuse.Thetopiccouldfillabookandithas.Foracompleteguidetodemystifyingandraisingyourscore,seetheexcellentYourCreditScore,YourMoney&What’satStakebyLizWeston.3

PinchingpenniessohardthatLincolngetsaheadache

Cutyourcoveragetotheboneandeliminateanyextrasonpolicies.Carryonlytheminimumcoverageyouneedtostaylegalandprotectedfromaworsefinancialcalamityifyougetinjuredinanaccident.If,forexample,youhavegoodmedical,life,anddisabilityinsurance,makesureyoudon’tduplicatethatwithmorethantheminimumrequiredmedicalcoverageforyourautopolicy.

Onetacticthatmayseemdrasticismoving.Dependingonwhereyoulive,insurancecompaniesmaystickyouwithhighratesorevenrefusetowriteyouapolicyiftheythinktheaccidentrateorautotheftistoohighinyourarea.WhenIfirstmovedtoFloridainthe1980s,Icalledthecompanythathadbeeninsuringmycarforthreeyears,onlytohavetheagenttellmethathewasn’tallowedtoissuecoveragetosinglemalesunderthirtyinmyzipcode.It’sprobablynotworthmovingjusttogetlowerinsurance,butifyouarerelocatingorcomingupontheendofalease,checkouthowyourrateswillbeinfluencedbymovingtoanotherneighborhood.

Gas

Fuelisthemostvolatiletransportationexpense,sincethepriceofgasfluctuateswitheverytwitchoftheeconomyorflare-upinMiddleEasternpolitics,which,becauseit’shotandthere’ssandeverywhere,happensfrequently.Gas,alongwithgroceries,isalsooneoftheitemsmoststronglyfeltinyourbudget,sinceyoufillupmuchmoreoftenthanyoubuyanewwaterheater.

Freeingupcash

First,makesureyou’regettingthebestpriceyoucanatthepump.UseanonlineservicesuchasGasBuddy.comtofindthelowestpricesnearyourhomeorworkplaceandstickwiththestationsthatconsistentlychargetheleast.Thiswayyousaveeverytimeyoufillupwithoutcontinuallyhavingtohuntaroundforabetterdeal.

Ifyouhavemorethanonecar,usetheonethatgetsthebestmileagewheneveryoucan,especiallyforlongtrips.TherearefewtimesitmakesmoresensetotakemybelovedRoadmasterwagononalongtripinsteadofmywife’sHonda,so,unlesswe’rehaulingtheboatorthewholefamilyandourluggage

somewhere,wechoosethethriftyfive-speedmanualHonda.Youdon’tneedtocalluptheFuelEconomy.govWebsitetocalculatethemileagedifferenceforaquicktriptothestore,butforanylongtrip—especiallyonethatyoumakeregularly,suchasmysixty-miledailyroundtripdrivetodowntownDetroit—drivethecarthatgivesyouthebestMPG.

Itshouldgowithoutsayingthatkeepingyourcarwellmaintainedmakesadifference,andthisincludespayingcloseattentiontoyourtirepressure.Trytocheckitonceaweekandconsultthemaintenancescheduleintheowner’smanual.Finally,takeoutthejunkinthetrunk.Asandbagbacktheremaymakesensetogiveyoumoretractioninwintertime,butinsummeryou’rejustwastinggas.Thesamegoesforthosetenbagsofnewspapersyou’vebeenmeaningtotaketotherecyclingcenterforthelastmonth.

Makingendsmeet

Whenpossible,eliminatetrips.Trycarpoolingorseeifthereareanymasstransitoptionsthatmakesenseforyourscheduleanddon’tcostmorethanthegasyou’dsavebyleavingthecarathome.Checkoutmonthlycommuterpassesforbusesandtrains,localride-sharingservices,commercialexpressbuses,andvanservices,orseeifyourworkplaceofferscarpoolingopportunities.

Ifyouareabletotakeadvantageofmasstransit,checktoseeifyouremployeroffersacommuterbenefit.UnderIRSrules,youcanpayforcertainmasstransitandevenparkingorbicyclecommutingexpenseswithpretaxdollars,whichlowersyourtaxbillandincreasesyourtake-homepay.Thebenefitworkslikeaflexiblehealthcarespendingaccount.YoucangetmoreinformationattheIRSWebsite4orfromyourbenefitscoordinatororhumanresourcesdepartmentatwork.

PinchingpenniessohardthatLincolngetsaheadache

Youshouldconsiderparkingthecarandfindingotherwaystogetaround.Foratwo-carfamily,thiscouldbeamajorinconvenience,butonethatsavesmoney.Forasinglepersonoraone-carfamily,itcouldbenearlyimpossible.Butagain,transportationisthesecond-biggestexpenseinmostfamilybudgets.Ifyoucanlearntolivewithoutacar,notonlywillyousaveongas,insurance,andmaintenance,butyoucaneliminateacarpaymentorevengeneratesomecash

fromsellinganunneededcar.Bycombiningcarpools,ridesfromfriends,occasionallyborrowingacar,orusingacar-sharingservicethatoffersshort-termrentals,suchasZipcar,IGO,RelayRides,orthroughmembersoftheCarSharingAssociation,itmightbeeasierthanyouthinktolivewithoutyourcar.Andifyou’vegotacarthatsitsunusedforpartoftheweek,youcanofferyourcarforshort-termrentalsthroughsuchservices,too.

Oneplaceyoumaynotbeabletosaveifyouparkyourcarandkeepitisoninsurance.Yourinsurancecompanymaychargeaheftycancellationfee,uptoafullyear’spremiuminsomecases.Also,yourstatedepartmentofmotorvehicleswilllikelydemandthatyousurrenderyourlicenseplatesonceyourinsurancecompanyreportsthatyou’vecanceledyourpolicyandnootherinsurershowsyoutakinganewone.Ifyoucangaragethecarforseveralmonthsandtheinsurancecancellationfeeisn’ttoosteep,completelytakingyourcarofftheroadwillcutalotofspendingoutofyourbudget.Formostofus,however,itmaynotberealistic.ChrisBalishhaslotsofadviceinhisbookHowtoLiveWellWithoutOwningaCar,butit’snotgoingtowinhimanyfriendshereinMotown.5

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Totalmonthlysavings...$41.61

Lefttocut...$958.39

Ifinallyfoundsomesavingsinourmonthlygascosts.WhileIpreferredtodrivemyprizedRoadiedailyandMrs.FunnyMoneywasloathtopartwithherHonda,theseven-mile-per-gallondifferencehitusatthepump.TheroundtriptomyofficeintheBuickcostmorethan$9adayingas,whilethemorefuel-efficientHondaburned$6.48ingas.IfIcommutedintheAccordonthethreedaysMrs.FunnyMoneywasathome,weusedaboutthirteengallonslessingaseachmonth,producingsavingsof$35.30,basedonEPAfiguresanda$2.70averagecostofregulargas.

ThatwasinOctober2009.Todaythatsavingswouldbeevenbetter,sincegaspriceshavesteadilyincreasedastheeconomyhaspickedup.Bytheendof2012,theaveragepriceintheUnitedStatesforagallonofunleadedregularwas

$3.80,sowe’dsavealmost$50amonth.Ontheotherhand,Mrs.FunnyMoneyhassinceupgradedfromherHondatoaMercuryMariner,whichgetsjusttwomilespergallonmorethantheRoadmaster.Thatworksouttoameagersavingsof$15.83permonth,anddemonstrateswhymanagingyourmoneyisanongoingchore.

Autoinsurancedidn’toffermuchsavingseither,sinceIalreadyhadagooddeal.TheonebrightspotIcouldfindwasthatswitchingfrommonthlybillingtopayingmypremiumeverysixmonthswouldsave$54.87onasix-monthrenewal.Thatcut$6.31amonth,fortotalautosavingsof$41.61,leavingthefirstinstallmentofmybudget-cuttingcolumnsstuckina$58.39pothole.

S

3

Miscellaneous

IDiscoverThatAllKindsofUselessSpendingIndicatesMyFinancialCommonSenseAlsoIsLockedinMyStorageUnit

o,inthefirstinstallmentofmy“GrandExperiment”series,printedrightthereintheMondayissueofTheDetroitNewsforalltosee,Imissedmy

$100savingsgoalby$58.39rightoutofthegate.This,Ithought,mustbewhatitfeltliketobetheguybehindNewCoke.

AllIcoulddowastakecomfortintheinspiringwordsofthegreatAmericaninventorThomasAlvaEdison,whofloppedtimeaftertimetryingtoinventthelightbulb.SaidEdison:“Ihavenotfailed.I’vejustfoundtenthousandwaysthatwon’twork.”

Admittedly,I’donlytriedfourwaystosave,butIhadninemoreweekstotaketheother9,996shotsatit.

Lookingforaquicksuccessformysecondcolumn,myeyefellonthe“miscellaneous”categoryofmybudget,themetaphoricaljunkdraweroffamilyfinances.MyrealkitchenjunkdrawerisfilledwithuselessstuffIhaven’tgottenaroundtothrowingout—brokenrubberbands,dried-uptubesofKrazyGlue,andasparetrunkkeyformylong-gone’76PlymouthVolare.

Thesamegoesformyfinancialjunkdrawer.ItincludedanunusedsubscriptiontoWeightWatchersOnline,aforgottene-mailaccount,anoldlifeinsurancepolicy,asubscriptiontoanonlinebaby-sitterdirectory,legalinsurance,andastorageunitthathadn’tbeenopenedsinceaboutthetimeGeraldoventuredintoAlCapone’svault.

Whattheyallhadincommonwasthattheywereautomaticallychargedtomybankaccountorcreditcard.Thismadethemeasytooverlookeachmonth

and,Iimagined,hardtoeliminate.I’dhavetoplowthroughabunchofpapers,findcontactnumbers,andthencalltocanceltheservicesontopofdecidingwhetherthefamilyreallyneededanyofthisstuff.Buttherewasthepotentialtosavealotofdough:therewasatotalof$181.42inthiscategory,sosurelyIcouldcancelenoughstufftohitmygoalofcutting$100forthesecondweekofmyseriesandmakeupsomeofthenearly$60shortfallfromthefirstweek.

Yourown“miscellaneous”categoryofrecurringmonthlybillsisgoingtoincludelotsofchargesdifferentfrommine.Anythingthatyoudon’tbudget(assumingyouhaveone)orpayaspartofalargersetofexpensesusuallylandsunderthemiscellaneouslabel.Youcanchoosetorecategorizethingstotheirproperplaces,asIdidwiththeoldlifeinsurancepolicy,orasIcouldhavedonebymovingthebaby-sittersubscriptionservicetothechildcareportionofthebudget.Ifyoutrackyourspendingandcategorizethetransactions,justkeepitconsistentsoyoucaneasilyfigureouthowmuchthatsubscriptiontoCatFancyiscostingyou,eventhoughFluffypassedontotheGreatLitterBoxintheSkytwoyearsago.

Nomatterhowyoutrackanexpense,yourjobrightnowistodecidewhetheryoucancutit,andifyoucan’t,whetheryoucanfinditforless.Don’tgetalltangledupobsessingaboutwhetheryourautoinsuranceispartofyourinsurancecategoryoryourautocategory.Bytheendofthiswholeprocess,you’llhavetheprettygoodbasicsofabudget,havingnaileddownyourtoptenbiggestmonthlyexpenditures,andyoushouldcontinuetorefineitfromthere.

Rightnow,we’reheretocutspendingandfreeupcash,notcreateanelegantlycolor-coded,beautifullyformattedspreadsheetthattrackseverypennyyouspendwiththeruthlessnessofaKardashiansearchingforanewhusband.

Automatedcharges

IfIhadbeengettingabillinthemaileverymonthforane-mailaccountIhadn’tusedinmorethantwoyears,thenhadtositdown,writeoutacheck,digoutthoseniftyreturn-addresslabelsthatIjustknowarearoundsomewhere,thenlookforastamp,thengobuystamps,thenrememberwheremywifekeepsthestampsandrealizeI’vewasted$12buyingstamps,Iwouldnothavebeenpayingthebillforthatolde-mailaccountforverylong.Sohowdidthataccount,whichIwasgoingtomaintainforjustafewmonthsafterwemoved,liveon,leechingmymoneyfortwoyears?

Easy.Thecharge,alongwithalltheothers,wentonacreditcard.WhichwasagreatconveniencewhenIneededthee-mailaccount.Thebillgotpaidautomatically,sotherewasnodangeroftheaccountbeingclosedorofhavinglatechargesadded,plusIhadaconvenientrecordformytaxes,andIgavethewholethinglessthoughtthanIdevotetotheWorldIndoorSoccerLeague.Thatkindofconvenienceworksagainstyou,however,whenyounolongerneedwhat’sbehindthateasymonthlycharge.

Usuallythesekindsofchargesspringfrommomentarygoodintentionsthatendupplacinganotherbrickintheroadtodebthell.Peoplewanttoloseweight,sotheysignupfortheongoinggymmembershipat$29.95amonth.OrthehealthycookingWebsitewitha$9.95monthlycharge.Afterafewmonths,yourself-improvementinitiativelosessteam,butcancelingthosechargesseemslikeanadmissionoffailurethatwouldgetpiledontopoftheguiltyoualreadyfeeleverythirtydayswhenyouseethatchargeonyourcreditcardstatementandrealizeyouhaven’thitthegymorwhippedupthoseegg-whiteomeletsforbreakfast.Instead,you’rebacktosittinginfrontoftheTVplowingthroughcarry-outpizza,gettingnearlyasbloatedasyourcreditcardbalance.Theonlythinggettingthinnerisyoursavings,asyoucoughupacouplehundredbucksayearinsomekindofpsycho-financialanorexicbingeandpurge.

Ofcourse,that’sassumingthatyouevenstopandlookthroughyourmonthlycardstatements.Therearemorethan600millioncreditcardsincirculationtoday,whichworksouttomorethanthreeforeachU.S.household.NearlyonethirdofU.S.cardholdersadmittedtopayingonlytheminimumbalanceatleastonceinthepastyear,accordingtotheFederalReserveBankofBoston,andmorethanhalfwerecarryingabalance.I’mbettingthatplentyofusfeelbadenoughaboutourbalancesthatwefurtivelyopentheenvelope,lookattheminimumpaymentdue,andsendoutthecheckoronlinepaymentasquicklyaspossibletoavoiddealingwiththedetailsofourdebt.

Butthat’showasubscriptionhereandamembershiptherepileuptoweighdownyourfinances.And,asIsheepishlyfound,it’snotallthattoughtorootthemout.Ihadn’ttouchedmyolde-mailaccountortheWeightWatcherssubscriptioninyears(wishIcouldsaythesameaboutnachos),buttheywereinstantlycanceledwithjustafewclicksonaWebsiteandasinglephonecall.WhatwasreallystupidisthatIalreadygotWeightWatchershelpatwork,completewithdietandfoodguidesandrecipes,whichwaswhyIneverusedtheonlineservice.Mycompany’shealthplanpaidfornearlyallthecostofweeklyWeightWatchersmeetingsconvenientlylocatedrightinouroffice,including

weigh-ins,or,asIcalledthem,“TuesdayswithShame.”TheinitialthrillofseeingthatIhadjustsavedcloseto$400ayearwas

wipedoutbytherealizationthatIhadbeenanutterfooltoletthoseexpensesrununcheckedforsolong.Butthere’snosenseincryingoverspilledmilk,especiallywhenit’sfull-fatGradeAandyou’veknownallalongthatyoushouldbedrinkingskim.

Thelegalinsurancewasakeeperat$19.92amonth,especiallysinceMrs.FunnyMoneyandIneededtoupdateourwills.Plus,thecoveragemorethanpaidforitselfwhenwehiredattorneystohandlethepurchaseofGrandpaVerne’scondoandthenewplaceinMichigan.

Onewaytoconsiderwhethertokeeporcancelthiskindofrecurringmembershiporservicefeeistogetawayfromthelow,“E-Zmonthlypayment,”whichoftendoesn’tfeellikealotofmoney,andlookatyourannualcost.Balancethatagainsthowoftenyouusetheplanorservice,plusanyexpenseyoumightincurineithercancelingorrestartingthemembershipifyouneeditlater.

Inthiscase,$19.92permonthaddsupto$239ayear.Gettingasimplewillpreparedwouldcostatleast$250foroneperson,andlikelymoreinthecaseofmeandMrs.FunnyMoney,sinceourwillswillbecomplicatedbytheneedtoprovideforLi’lMoneyandtheguardiansluckyenoughtogethim(thoughtheymayfeeldifferentlyifouruntimelydemiseoccursduringhisteenageyears).So,evenifIcarrytheinsuranceforanothertwoyears,itshouldmorethanpayforitself,evenifwedon’texperienceanyunforeseenlegalhassles.Finally,theplanisaholdoverfromthebenefitspackageatMrs.FunnyMoney’soldjobandisn’tofferedatmyworkplace,meaningwe’dhavetosignupforanew,morecostlyoneifweweretocancelitnowandrestartitinthefuture.

Thesameissuesdon’tapplytothebaby-sittingdirectory,sincewehavearosterofdependable,caringsittersforourboyand,ifwecancel,wecansimplyresubscribeanytimedowntheroad.So,Mrs.FunnyMoneyagreedtoaddacoupleofbackupbaby-sitterstoourrosterandthencancelthesubscription.Asforthee-mailaccount,I’dkeptitopenafterthemovesothatIcouldstayintouchwithfreelanceclientsandprofessionalcontacts.But,morethantwoyearslater,everyonehadmynewe-mailaddressandInevercheckedtheaccount,whichwasstuffedwithspamandnotesfromsexyRussianswhohadinheritedfortunesfromaNigerianprince.Itwascanceledwithacoupleofphonecallsandafewadditionalpangsofguiltaboutwastedcash.

Freeingupcash

Nomatterhowmuchmoneyyoumakeorhowcomfortableyourcashflowmaybe,there’snoexcusetoletforgottenrecurringpaymentspileup.Likebankfeesandlatecharges,it’sunderstandablehowthishappens,butyou’resimplywastingmoney.Ifyoudon’tgooveryourcardstatementsindetaileverymonth,startbyreadingthroughonestatementthismonth,andcancelanyunnecessarycharges.Ifyouonlyhaveonecreditcard,it’llbeeasy.Ifyou’reallowingsomeservicestoautomaticallydebitchargestoyourcheckingaccount,dothesame.

(Ipersonallydon’tliketoallowanyonetodebitmycheckingaccountautomatically,sinceit’smuchmoredifficulttodisputeorreversemistakenorinaccuratechargesthanitiswithacreditcard.Ifyoudon’tqualifyforacreditcardordon’twantthetemptationofhavingonearound,setupsuchpaymentsasarecurringautomatedpaymentyoumakethroughyouronlinecheckingaccount,whereit’seasiertomonitoractivityandcancelcharges.)

Whenitcomestodecidingwhethertokeeporcancelgymmembershipsandsimilarsubscriptions,youcantrytobalanceconvenience,guilt,andgoodintentionsagainstafewextrabuckspermonth,butthat’snotthebestapproach.Instead,trythis:calculatetheannualcostofyourmembershipto,say,thediscountbuyersclubatShoeLaceDepot.(Theirmotto:“We’llhelpyoutieoneon!”)At$12.95amonth,that’s$155.40ayearplus,Godforgiveyou,anyinterestchargesthattreacherouslyinflatethetabifyouaren’tpayingoffthenewchargeseachmonth.

Nowthinkaboutyourbiggestfinancialgoal:attheendoftheyear,youcanbemorethan150bucksclosertothatgoal,oryoucanfritterawaythedoughthinkingyou’llsavealittlemoneyondesignershoelacesandshoelaceaccessories.Ifyourgoalispayingdowndebt,you’llalsosavetheinterestchargedonthe$155.40youcanpayoffinthenexttwelvemonths,and,ifyourgoalissavingorinvesting,you’dgettheinterestorinvestmentgainsthatmoneywouldgenerate.

Whichwouldyouratherhave?AstheysayatShoeLaceDepot,thatdecision’satoughone—knot!

Makingendsmeet

Ifyourbudgetisreallystretched,makingdecisionsiseasy:moneybeatsconvenience.Anysubscriptionorservicethatyoucangetforfreewithonline

research,atriptothelibrary,orworkingwithfriendsandneighborsneedstogo.TakemyWeightWatchersonlinebill:youcanfindWeightWatchersbooksandthemonthlymagazineatthelibrary,orseeifyourcompanyhealthplanoffersadiscounttoattendthemeetings(IpromiseIwon’tpeekwhenyouweighin).Asforthebaby-sitterdirectory,youcanfindsittersbyaggressivelypollingyourfriends,theparentsofyourkid’sclassmates,andCraigslist.Yes,it’sahassletodothebackgroundchecksonyourownandtrackdowneachsitter’sreferences,butyourtimeisfree(especiallyifyourbudgetistightbecauseyou’reunemployedorhavelosthoursatwork).Iknowmanyparentswouldbeloathtogiveoutthenameandnumberoftheirfavoritebaby-sitters,butthenexttimeyou’recooking,makeupanextratrayoflasagnaandI’llgiveupthedigitsforAudrey.Justusegroundturkey,notbeef—weigh-inistomorrow.

Whenitcomestocancelingrecurringchargesthatcouldcostmoremoneytoreinstatelater,suchaswithmylegalinsurance,considerjusthowunknowablethefuturecanbe.Alotofthingscanhappenbetweennowand“someday”whenI’llgetaroundtoupdatingmywill,butifyoureallyneedtocutspendingnow,it’sbettertohavecashinthehandtodayandsolveanyfutureneedslater.

Infact,themoreIconsiderthatlegalinsurance,thecloseritcomestoviolatingmybig$1,000Challengeruleagainstspendingmoneynowtoachievesomevaguefuturesavings.Thebestsolutionwouldbetogetorganized,getthewilldonenow,andcanceltheinsurance.ThenIgetthebestofbothworlds:thenecessarylegalguidanceandsavingnearly$240ayear.Sogettingoffmybuttisabetterstrategythanspendingandwaiting.Especiallyinthiscase,whereinsteadofawillI’vehadawon’t.

That’snottosaythatmoreambitiousplansaren’tworthkeeping.Assoonasmyboy,Li’lMoney,wasborn,hismotherandIsignedhimupforFlorida’sprepaidcollegetuitionplanforabout$75amonth.Thattranslatesintoafullypaidfour-yearcollegeeducationatadiscountoftensofthousandsofdollars.That’sonehouseholdexpensewewon’tcancelforanythingshortofazombieinvasion.

Ifyoucan’tmakethatkindofstrong,bottom-lineargumentforsmallconveniencesandmentalindulgences,likeanabandoneddietplanorhealthclubmembership,thenitneedstogo.Ifyoufeelhassleddrivingtothecommunitycentertoworkoutinsteadofgoingtoyourfancygym,justthinkaboutthemoneyyou’resaving.

Iunderstandthatmanypeoplewillbalkatsacrificingtheirphysicalfitnessroutineforfiscalfitness.Whileit’snothardtomaintainahealthyweight,it’s

justsomucheasiertopackonextrapounds.That’sparticularlytrueduringtheholidays,suchasArborDay,CanadianThanksgiving,andInternationalDayofPeace.(Especiallyif,likeme,youobserveInternationalDayofPeaceattheInternationalHouseofPancakes.)

Inmycase,Iskipthepriceybig-namegymforalocalworkoutstudiorunbyachipperyoungwomanwhoseideaoffunisafive-milesprint.Kerry’sgrouptrainingclassesarelessexpensivethanasessionwithapersonaltraineroramonthlygymmembership,andshegivesmeadiscountforbuyingtenclassesatatime.Theprepaidclassesdon’texpire,soifImissasession,I’mnotoutanymoney.

Butthatdoesn’tmeanIdon’tpayinotherways.Kerryrecentlyhadmesitonahugerubberballandcommenceaseriesofsit-ups.Thiswastoworkmyabs.Ormaybemybicuspids.Ihuffed,puffed,andooffed,tryingtoworkaroundmyswollengut.

“Iknowjusthowyoufeel,”Kerrysympathized,beforeaddingjusttheencouragementamiddle-agedmanissurelypayingapersonaltrainertoprovide.“IhadthesameproblemwhenIwaspregnantwithmydaughter.”

PinchingpenniessohardthatLincolngetsaheadache

Unlessit’sanessentialservicethatyouabsolutelyneednow,andyoucan’treplaceitorlivewithoutit,cutit.Checkthelibrary,seeifyoucanpoolapurchasewithfriends(say,forexample,splittingthecostofthesitterservicesubscriptionwithotherfamiliesthatjusthadbabies),orfindawaytolivewithoutit.Anotherexample:insteadofholdingontomyolde-mailaccountforyears,Icouldhavekeptitforonemonth,sentoutaweeklye-mailblasttoeveryoneintheaddressbookgivingthemmynewe-mailaddress,andthencanceledit.Otherthansheerlaziness,Ican’trecallwhyIdidn’tdothatinthefirstplace.

Thesadtruthisthatifyou’rereallyupagainstthewallwhenitcomestomoney,you’regoingtohavetolearntodowithoutalotofluxuriesandeverydayconveniences.Onceyou’vefinishedgoingthroughthebigcategoriesofyourspendingasyouworkthroughthisbook,keepgoingthrougheverydollarofrecurringexpenses.Inmycase,alittlehereandalittlethereaddedupto$1,000ofsavingspermonth.Iwas,quitefrankly,embarrassedathowsloppyandwastefulI’dbeen,although,asanyphysicsmajorwilltellyou,ittakeseffortto

overcomeinertia,whetherphysicalorfinancial.Forawholehostofreasons,it’seasiertoavoiddiggingthroughyourfinances,butitpaysoff,especiallywhenyou’reintrouble.

Whentimesarereallytough,considertheadviceofMaryHunt,founderofDebtProofLiving.com:“Ifitisn’tnecessaryforthepreservationoflifeortokeepMommyandDaddyoutofjail,don’tspendit.”

Storageunit

It’softensaidthatyoucan’tputapriceonmemories,butIdoiteverymonth:$76.

That’sthetabforastorageunitpackedwithchildhoodbooks,stuffedanimals,andatleastoneoldbaseballglove.Itwasthebiggestchargeeverymonthinourmiscellaneousspendingcategory.AtleastIwasn’talone:accordingtotheSelfStorageAssociation,in201110.8millionhouseholdsspent$22.45billion(yes,witha“B”)tostoreourstuff.

It’snotaboutthestuff,butwhatthatstuffrepresents,whetherit’sGrandma’schinaorthetrophyfor“MostImprovedCamper1969.”Wedon’twantGrandma’schina—wewantGrandma.Ihaveamuchnicerfishingrodthantheoldfiberglassoneinstoragethatmylatefathergaveme.AndevenifIdidusetheoldone,itwouldneverreelinwhatIreallywant—mydad.

Hangingontothosememoriescomesatacost:morethan$900ayearforme.That’sthepriceofaniceweekendgetawaywithMrs.FunnyMoney,summerdaycampforLi’lMoney,orasolidcontributiontoourretirementaccount.Instead,I’vegotold,uselessstuffandbillstostoreit.

WhatIneededtodowastakealessonfrommyfriendJudyKelner,whodecidedtopullherlategrandma’sgoodchinaoutoftheatticandputittoeverydayuse.Whenoneofhergrandkidsdropsaplate,Judyliftshereyesandbrieflyprays,“Thankyou,Grandma.”Thenshegetsoutthedustpanandpitchesthebrokenpieces.

So,itwastimetocancelonemorerecurringmonthlychargeandtakemyboytocleanoutthatstorageunittogether.There’sanoldbaseballglovethat’sbeenwaitingforhimalongtime.

Freeingupcash

Ifyou’vegotalotofstuff,youcantakethetimetosortouttheunit,selloffanythingthatcanfetchadecentprice,clearoutspaceathome,anddonateortrashtherest.Ifyou’reapackratlikeme,askyourselfthisquestionbeforeyoukeepanything:ThisthinghasbeenlockedinstorageforXyearsandI’vemanagedtolivewithoutit.DoIreallyneedaspareVeg-O-Matic?Evenifit’sthebabyblanketGreat-grandmaknittedforyou,you’rebetterofftakinganicepictureforyourscrapbook,thensendingittoyourcousin’spregnantdaughterandmakingsureitcontinuestocirculateamongyourfamilyratherthanallowittogatherdust.Andit’scheaper.

Makingendsmeet

Timeismoney,andthemoretimeyoukeepthatjunkinstorage,thelessmoneyyouaregoingtohave.Getoveryourinertiabygatheringfamilyorfriendsandsettingasideanafternoontoemptythatlocker.Setituplikeamovingparty.Youcandistributethingsyoudon’twantamongyourhelpers,haultherestbacktoyourplace,andthenbuyacoupleofpizzasandbottlesofcheapredwineforacelebrationofyournewfoundfiscalresponsibility.Goingthroughyourpersonalbelongingsmayunearthafewunflatteringdetailsaboutyourlife,somakesuretheseareyourrealfriends,thekindoffriendswhowill,forexample,pledgetoforgetthatyouwerepayinggoodmoneytostashtheentirecollectedworksofCaptain&Tennille.

PinchingpenniessohardthatLincolngetsaheadache

HaulitalloutASAP.ThentrytosqueezeeverydimeoutofyourdetritusbysellingyourstuffonCraigslist,theconsignmentstore,oreBay(orthroughaneBayconsignmentshop).Anythingyoucan’tsellyoudonate,makingsuretosnapsomepicturesandwritedowndetaileddescriptionssothatyoucantakeataxwrite-offlater.YoucanestimatethevalueofyourdonationsatSalvationArmyUSA.org.1Eventhoughyoumaynothavemuchincometobetaxed,morewrite-offswillloweryourtaxableincomeandcanhelpyouqualifyforrefundabletaxcreditsthatwillprompttheTreasurytosendyouacheckattaxtime.

Becauseyou’refinanciallystressedanditseemslikeabighassletodealwithallthisstuff—alongwithanyemotionsattachedtobelongingsleftbehindbya

divorcedspouseordeceasedlovedone—youmaybetemptedtostoppayingthestoragebillandjustforfeityourgoods.Hey,maybeyourjunkwillendupstarringonanepisodeofStorageWars,right?

Whileit’struethatthelawsinallstatesallowstoragecompaniestoauctionyourstuffifyou’veabandonedit,thestoragecompanycancomeafteryouforanyunpaidrentalbalance—alongwithlatefeesandpenalties.You’vegotenoughproblems,sodon’taddtothembyhavingyourcreditdingedandacollectionagencyhoundingyou.Bettertogatheryourfriends(oneofwhom,ideally,hasapickup),schlepthestuff,andgetitoverwith.Ifyoucan’tswingthepizzas,turnitintoapotluck.Goodfriendswillnotonlyunderstand,butthey’llwanttohelp.Although,whenyouallgetbacktoyourapartment,theyaregoingtoinsistthatyourefrainfromplaying“MuskratLove.”Let’sfaceit:friendshipgoesonlysofar.

Lifeinsurance,partI

Althoughthestorageunitclearlyneededtogo,whethertocancelorkeepmyoldlifeinsurancepolicywasn’tsoobvious,soIturnedtoafewexperts.Thisisgoingtobejustabriefforayintothewonderfulworldofinsuranceandriskmanagement,withamoreextensivediscussionoflifeinsurance,disabilityinsurance,andmorecominginchapter9,sotrynottodieorgetyourselfdismemberedbeforethen.

Cuttinglifeinsurancecoverageisariskyplay,saidPeterBahner,acertifiedlifeunderwriterwhoalsoheadstheGreatLakes–areapracticeforPrudentialFinancial.Bahnertoldmethathe’sseenclientscancelapolicyforayearortwo,thenrunintoahealthissuethatmakesitverycostly—orimpossible—togetcoveragelater.Evenreducingcoverageonapolicy,whichcanlowerthepremiums,mayrequireanewmedicalreviewthatcouldturnupissuesthatwouldraiseyourpremiuminsteadofloweringit.

“Youneverwanttocancelapolicyuntilyouhavereplacementcoverageinplace,”Bahnerwarned.“Idon’tthinkthatriskisworththesavings.”

Ontheotherhand,the$100,000policyisasmallpartofmylifeinsuranceandwouldproduceonly$5,000or$6,000ofincomeayearformygrievingfamily.Inthisinstance,Bahnersaid,itmightnothurttocancelit.Butontheotherotherhand(likeeconomists,personalfinanceexpertsusuallyneedatleastthreehandstomakeanydecision),$28amonthfor$100,000incoverageisa

prettygoodbuyaccordingtoFranTwiddy,acertifiedfinancialplannerwhorunsIndependentFinancialAdvisorsofRedford.“That’sacheappolicy,”shetoldme.“Iwouldhatetogivethatup.”

Twiddyaddedthataswegetolder,insurabilitycanbeanissue.IfIreallywanttosave,shesaid,Ishouldtakeapagefrommyautoinsuranceplaybookandgofrommonthlytoannualpayments,whichcouldcutfrom4percentto8percentofmyannualcost.

Calculatingallourinsuranceneedsshowedthatthe$100,000policywasnecessarytoreachthetotalannualincomeI’dneedtoleavebehindfortheWidowFunnyMoney.(Arrivingatthatnumberisanentirelydifferentequationwe’lldiscussinchapter9,whenItackleouroverallinsurancebill.)Sothatmonthlyexpensewasakeeper.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89Totalmonthlysavings...$174.50

Lefttocut...$825.50

So,theinsurancestayed.Thegrandtotal:$132.89ofspendingeliminatedbycancelinganolde-mailaccount,WeightWatchersonline,asubscriptiontoanonlinebaby-sittingdirectory,andthestorageunit.Thathitthe$100goalforWeek2andpushedthetotalsavingsto$174.50amonth,knockingdownthefirstweek’ssavingsshortfalltoamere$25.50.

Thismeantitwastimetocelebrate.Idecidedtosplurgeandopenagoodbottleofwine.OratleastIwouldhave.I’dswearthatcorkscrewwassomewhereinthejunkdrawer.

N

4

Utilities

YourAuthorPlugsintoSavings,RingsupLowerBills,andCacklesManiacallyWhileVisitingRevengeuponHisCable

Company

owthatIhadhitmy$100weeklysavingsgoalforthefirsttime,IwastantalizinglyclosetobreakingeveninWeek3.Mygoalwastonotonly

comeupwithanotherhundredbucks,butalsotofindafewmoretocutsoIcouldmakeuptherestoftheWeek1shortfall.

Fortunately,theprospectsforsavingslookedgoodbecausethecategoryforWeek3wasutilities,includingwater,cableTV,phone,andmore.Ifitcameoutofawallatmyhouse,itwasfairgameforacut.Andthankstonewtechnology,onlinescams,andmyownpreviouslyestablishedsloth,itlookedlikeI’dmorethanachievemygoal.

Itookparticulargleeatwieldingthebudgetaxinthiscasebecause,likeeverygoodAmerican,it’smytwenty-first-centuryrighttoabsolutelyhatemycablecompany.Betweenthe$100-plusbilleverymonthandtheservicewithascowl,Ifounddespisingthecableguysnearlyaseasyashatingprofessionalsoccerandlightbeer.

Theothernight,forexample,Mrs.FunnyMoneywasworking.Iwastiredandjustwantedalittlemindlessentertainmentbeforebed,soIscrolledthroughourtwo-hundred-channellineupofcableofferings.Jeez,Isaid“mindless,”not“mind-numbing”!ThefirstdozenshowswererealityfaresodimwittedthatIcouldfeeltheidiocyseepingintomyDNA,tothepointwhereIwasputtingmygreat-grandchildrenattheriskofbeingbornstupid.Thenexttwentychannelswerepay-per-viewevents,suchastheNewGuineaLittleLeagueJuniorPutt-

Puttsemifinals($24.95).Thatwasfollowedbyabunchofshoppingchannels,atwhichpointIgaveupandreadabookbecauseitturnsoutthatTipsforthePerfect-FittingBrawasnothinglikewhatI’dimagined.

ThisshoddymenuofentertainmenthadmemoresteamedthanabowlofclamswhenIconsideredourcablebill.Myfirstcallwastoanalternatecableproviderthatoperatesinourcounty.Unfortunately,theydidn’tserveourneighborhood.AfewmorecallstocompareservicegotmeapackagefrommyphoneandInternetprovider,AT&T.Thankstothewidespreaduseoffiber-opticcableIfoundacombinedpackagethatkeptallofmycurrentlineupwhilealsodumpingamoviechannelIneverwatched,butwhichtheoldcablecompanyrequiredmetotaketogetthemoviechannelIdowatch.Thatcutacombinedbillof$225.84forcable,phone,andInternetaccessto$145,forasavingsof$80.84.TheU-versepackageincludedunlimitedlongdistance,too,soIcouldcancelourlong-distancecarrier,whichaveraged$3.60amonth.

Ibrieflyconsideredinvitingourcableprovidertomakeacounteroffer,butthelousycustomerservice,frequentlineupchangesandserviceoutages,andcraptastictechsupportgavemenoreasontowanttocontinuedoingbusinesswiththatbunchofdunces.Plus,anysavingstheycouldofferwouldbenowhereasvaluableasthegleeIexperiencedincallingtocancel.IfeltlikeRhettButlerstormingoutofTarainGonewiththeWind,butinsteadofgrowling,“Frankly,mydear,Idon’tgiveadamn,”IwascacklingliketheJokerinTheDarkKnight.Also,themansionisinflames.

Butwait—astheysayonlate-nightTVads—therewasmore!Myold,slowInternetservicehadbeenwithAT&T,atacostof$44.95amonthwhenI’dsignedupfouryearsago,butthatpricehaddropped.AllIhadtodoatanypointwascalltogetthelowerrate,theservicereptoldme,butIhadneverasked.Thereprefundedtwomonthsoftheoverpayments.Inaddition,mynewTV-phone-Internetservicescamewithintroductorypricesthatsavedacombined$324duringthefirstsixmonths.Ialsogota$200AT&Tgiftcard.

Tocapitoff,abogus“third-party”voicemailservicehadsomehowbecomeaddedtomyphoneaccount.Buriedinthelistofchargeswas$14.95everymonthforsomethingcalledOrbitTelecomvoicemail,somekindofWeb-basedvoicemessagingservice.Someoneinthehouse—likelymyson,Li’lMoney—clickedonapop-upadwhilebrowsingtheWebandunwittinglysignedusup.ThatwaseasilycanceledwithacalltoOrbit,whiletheAT&Tservicereprefundedthecharges.

Phone,cable,andInternet

Thesethreeservicesareincreasinglyinterconnected,andsavingononeoftendependsonincreasingyouruseofanother.Theeasiestoptionistolookatbundlesofservices,whichcanincludecellphoneservice,too.Formaximumsavings,youshouldconsiderunbundling,butthat’sgoingtotakemoretimeandresearch.Thetrade-offofconvenienceversusmoneyisacommonone,andyoudon’tknowifit’sgoingtobeworththeextratroubleuntilafteryou’veidentifiedyourpotentialsavings.Still,it’sworthatryifyoucansparealittletime.

Freeingupcash

Eachregularmonthlybillinthehouse—especiallyutilities—shouldgetathoroughgoing-overeveryyearortwoifyouwanttokeepalidoncosts.PlansforcableTVpackagesorcellphoneserviceareever-changing,introductorydealsexpire,andservicechargesmysteriouslyappear,whilenewcompetitorsshowuptooffermoreattractivedeals.Athoroughauditofeachchargeonabillandanhourortwoofcomparisonshoppingcanbemorethanworthyourwhile.

Evenifyoudon’tmoveanypartofyourservice,startwiththeeasystuff,which,Ihavetoaddonceagain,carriestheriskofmakingyoufeelreally,reallydumb.Combyourstatementforthekindsofadd-onchargesliketheWebmessagingserviceIdiscovered.NotonlydidInotordertheservice,butsinceIdidn’tknowitwasthere,Ihadneverevenusedit.Isimplyoverlookeditonmybill,monthaftermonth.Overthecourseofsixmonths,thatwasnearly$90downthedrain.

Itdoesn’thavetobesomeborderlinescam,either,butmightbechargesforservicesthatyouoncethoughtsoundedgoodbutyounolongeruse.Asecondphonenumber,along-distanceplan,abunchoffeatureslikethree-waycallingorcallforwarding:anyofthesemayhaveoutlivedtheirusefulnessandcanbetrimmedfromyourbillwithnoinconvenienceatall.

Evenifyoudon’tfeellikecomparisonshopping,simplycallyourphonecompany(ifyou’reafossillikemewhoinsistsonmaintainingalandline),cableprovider,orwhateverandaskforacheaperplanoranynewdiscounts.That’swhathappenedwithmyInternetaccess—thepricejustdroppedovertime.Oryourcablecompanymayhaveintroducedanewpackagethatallowsyoutogetyourfavoritechannelsatalowerprice.Thephrase“Moneyfortheasking”directlyapplieshere.Sodoes“Dialingfordollars.”Sodoes“Areyounuts?Pick

upthephoneandstopwastingyourmoney!”

Makingendsmeet

Youshoulddefinitelybebargainhuntingonallthisstuff:cable,Internet,phone,andlong-distanceplans.Butyoualsoshouldbelookingateliminatingtheseserviceswhereyoucan.Let’sstartwithyourphoneline.

IfyouhaveInternetaccessathome,youcanskipyourlocalphonecompanyanduseaservicethatroutesyourcallsovertheInternetusingtheVoiceoverInternetProtocol(VoIP).Youcankeepyournumber(usuallyforafee),andyou’llhavetobuysomekindofboxtoattachtoyournetconnection.Monthlyfeesareanywherefrom$5to$30,andsetupfeesareabout$30.Youmayalsohavetopaysomelocaltaxesandaccessfees,butyoualreadypaythosewithyourregularlandline.Therealsomaybecancellationfees,somakesureyougetthirtydaysormoretotrytheservicebeforeyou’relockedin.Skype,magicJack,Net2Phone,Vonage,andOomaarejustafewoftheproviders.OnefeaturetolookforwiththesevirtualphoneservicesisEnhanced911,wheretheproviderassignsanaddresstoyournumbersothatfire,police,andotheremergencyresponderscanlocateyouifyoumakeanemergency911call.

ThisassumesyouhavehomeInternetaccess—butdoyouneedit?Ifyouuseasmartphoneortabletwithwirelessconnectivityanddon’tdoalotofheavyonlinework,yourcellularconnectionmaygiveyoualltheWebaccessyouneedtosimplychecke-mail,postFacebookupdates,andhandleotheronlinetaskswithappsoramobilebrowser.(Idon’tevenconsiderperusingCraigslistandeBaybecausethat’swhywegotowork,right?)YoualsocantryusingyoursmartphoneasamobilehotspotandconnectingyourcomputerstotheInternetthatway,especiallyifyouhaveoneofthoseincreasinglyhard-to-findunlimiteddataplans.ThenyoucancancelyourhomeInternet.Butthatmeansyoueitherneedtokeepaconventionallandlineifyouwantahomephone,orcutthecordcompletelyanddependsolelyonyourcellphone.

Thepointistoavoidpayingforthesamethingtwice.Whenmoneyistight,havingtwowaysofmakingphonecallsortwowaysofaccessingtheInternetmeansyou’vegotatleastonewaytosave.Soweightheoptionsandaddupthecosts.Thedecidingfactoriswhat’sgoingtokeepyourtotalutilitycostslowest.IfaccessingtheWebthroughyoursmartphonemeansyou’llbepilingupbigmobiledatacharges,thenkeepinghomeInternetaccessmakessense,andstick

withasimple,dumb-stylecellphone.You’regoingtohavetochecktheoptions,getprices,thengetoutasheetofpaperandadditalluptofindtheleastexpensivewayofmeetingyourneeds.

Thecheapestcallingoptionmightbetokeepabasiclandlineandditchyourcellphonealtogether.Ifyou’rethekindofpersonwhoactuallyenjoyshavingperiodsoftimewhenyoucan’tbereachedbyyourboss,relatives,orautomatedcallswithcreditcardoffersfrom“Rachel,”youmayfindthisoptionnotonlyfrugalbutdownrightappealing.ButIdorealizethattoday,askingpeopletogowithoutacellphoneislikeaskingthemtolivewithouteyebrows.

Whenitcomestocableservice,Ithinkweprettymuchneedtoestablishthatthisisaluxury,althoughit’sonethatvariesaccordingtoyourlifestyleandlocation.I’velivedinNewYorkCityfortwodifferentstretcheswithoutaTVandIwashappynottohaveone.Thefirsttime,aftercollege,Iwasjusttooflatbroketobuyone.Then,bythetimeIdidhavethescratchtobuyaTV,I’dfoundsomanyfascinatingpeopleandplacesinthecitythatIdidn’thavetimetowatchit.ThesecondtimeIwasagraduatefellowandrealizedthatevenrerunsofGilligan’sIslandwouldbemoreinterestingthangrindingthroughmacroeconomics,so,inoneofthefewwisedecisionsIcansayI’veevermade,IfocusedonmystudiesandonceagainwentTV-less.

It’snotthatI’moneofthoseanti-TVsnobs,andevenifIwere,havingayoungsterwillprettymuchbeatthatrightoutofyouwhenyouwitnessthecalmingpowersBearintheBigBlueHousehasoveradistressedtoddler.Still,weneedtoagreethatanyfamilycouldlivejustfinewithoutexpensivecableservice.ConsidercancelingallbutbasiccableandaugmentingyourviewingwithaNetflixsubscriptionandvideosfromyourlocallibrary.Ifyou’vegotahigh-definition(HD)television(oraddaset-topconverterforanolderTVset)youcangethigh-definitionbroadcastsignalswithjusttheadditionofanappropriateHDantenna.TheConsumerElectronicsAssociationhasevencreatedaWebsitedesignedtohelpyoufigureoutwhichtypeofantennayouneed.1TiVo,thefolksbehindthedigitalvideorecordingservice,makesaTiVoboxthataccessesandrecordsHDprogramming,too.JustcombiningHDbroadcastandrentalsfromNetflix,theRedboxatyoursupermarket,orborrowingfromthelibrarygivesyouagoodrangeofentertainmentchoicesrightthere.You’vegotModernFamilyandTheHungerGames,butyou’llhavetolearntolivewithoutGameofThronesuntilyoucanpickuptheDVDofthelastseasonatyourlibrary.

Whenitcomestoaccessingcablechannelswithoutcableservice,thereare

moreandmoreonlineoptionseveryday,andtheyallleavememoreandmoreconfused.UsingoneofthesewillrequireyoutokeepInternetaccess,possiblyatahigherspeedthanyou’repayingfornow.TherearestreamingoptionsovertheWeb,suchasHulu,andthereallmanneroflittleblackboxesthatwillconnecttheWebtoyourtelevisionandgiveyouaccesstomost—butnotall—programmingforamonthlysubscriptioncharge.TiVoPremiereserviceoffersmostcablechannels,andtherearegizmosavailablefromAppleTV,Roku,Vizio,Simple.TV,andprobablytwonewonesthatwentintobusinessasItypedthatlastsentence.YoualsohaveoptionsthroughAmazonandiTunesandeventhroughgamesystemssuchasXboxandWii.

SinceIamoneoftheolds,Iaskedasmartyoungwhippersnapperatworkaboutallofit.Kevinusessomecombinationofthreeofthesethings,and,fromwhatIcouldgather,savesmoneyandisveryhappywithallofit.ThatwasallIcouldgather,though,becauseafterhesaid,“Yeah,itworksprettygood...,”Ihadnoearthlyideawhathewastalkingabout.Still,Igleanedenoughinformationtofigurethisout:becareful.

IfyoustartsigningupfornewstreamingTVsubscriptionsorbuyaset-topbox,HDMIcables,orevenanewHDTVset,youaregoingtodefeatthewholebudget-cuttinggoal.Youalsomaynotwanttoinvestthetimeorundergowhatisguaranteedtobesomeleveloftechfrustrationtogeteverythingworkingtogether.But,ifyouhavethetimeandtheinclination(oraccesstothekindofhandytwelve-year-oldgeekwhoamuseshimselfbywiringtoasterovenstoactivatetheDeathStar),youcantryit.Butlet’smakethisgroundrule:anyoutlayofcashthatyou“invest”inanefforttoreduceyourcablebillmustpayforitselfwithinsixmonthsorless.Yes,IamgivingyouatemporarydispensationfromoneofThe$1,000Challengecommandments(“Thoushaltnotspendtosave”),sodon’tabuseit.

Trythisapproach:First,createalistofprogramsandchannelsyouregularlywatch.Next,figureoutifanyofyourexistingtechnologycangiveyouaccesstoall,most,orsomeofit.Nowresearchthesimplest,leastexpensiveoptionstofillinthegaps(notthecoolest,latest,all-in-onegizmothatwillimpressyourfriendsandallowyoutoremotelymonitorthetirepressureonyourbackyardgasgrill).Additallup,andifitresultsinalowerongoingmonthlycostthancableandthesavingscoversany“capitaloutlay”(Ilovetoslingthatbiz-schoollingo!)ofcashinsixmonthsorless,goaheadandtryit.Ifnot,cutdowntobasiccableorsurviveonbroadcastTVandhittheDVDshelvesatthelibrary.

PinchingpenniessohardthatLincolngetsaheadache

Ifyouuseacellphone,killthelandlineorviceversa(we’lltalkaboutsavingoncellphoneplansinabit).You’regoingtohavetolivewithonephone.You’llalsoneedtocancelcableandInternet.Yes,it’sharsh,butwe’redesperatehere.YoucangetmoviesandDVDsofTVshowsatthelibraryorlearntolivewithbroadcastTVusingtheHDTVtacticsdescribedearlier.Hitpawnshopsandconsignmentstoresforvideosforyourselfandthekids.(Awarning:YoumaybethrilledtofindOldYellerfor99cents,butyou’regoingtouseuptwicethatmuchintissueswhenTravisgetsouthisrifletowardtheend.Andyou’lldefinitelyneedtokeepthefamilydogoutoftheroom,unlessyouneedtosendamessageaboutwhathappenstomuttsthatchewonthediningroomfurniture.)

Youngonesareespeciallyunlikelytomisscableifyousubstituteaselectionofvideostoplayoverandoverandoverandover.Andover.Evenwhenwehadallkindsofcostlypremiumcableatthehouse,Li’lMoneyinsistedonwatchingthesameDisneySingAlongSongsvideosomanytimesthataslongasIlive—andnomatterhowhardItry—Iwillnever,everforgeteverynoteofBillyJoelsinging“WhyShouldIWorry”fromOliver&Company.(He’sgot“streetsavoirfaire,”which—Ithinkweallcanagree—inajustworldwouldbeapainfullydebilitatingvenerealdisease.)MyonlydefensewastogetthekidhookedonTheJungleBookbecauseyouneverdogettiredofLouisPrimaswingingawayon“IWan’naBeLikeYou.”(Addedbenefit:yougetthehouseworkdonealotfaster.)

IthinktheonlytimeyoushouldconsiderkeepinghomeInternetaccesswhentimesaretoughisifyouarefreelancingorworkingfromhomeandneedaccesstokeepthatmoneycomingin.IknowtheWebisessentialtoanyjobsearch,butyoudon’tneed24/7access,sousethelibrary.(Infact,it’sprobablyhealthierforyouandbetterforyourjobhuntifyoudon’tsitthereinyourunderwear,nursingaPielsLightwhileendlesslyhitting“refresh”onSimplyHired.comat2inthemorning.)Ifyou’vegotatrustingneighborandyoubotharestringentwithyourbrowsersecurity,consideringsplittingthecostofaccesswithsomeoneelsenearbyandsharingaWi-Ficonnection.AvoidcoffeeshopswithfreeWi-Fiifyou’regoingtofeelguiltyandenduppaying$12foracappuccinoto“rent”yourtableatMeanieBeanie’sHouseofLikeableLattes.Remember:cheapisgood,butfreeisbetter.

Iknowthatgivingupthelittlethingsfeelslikeabigthingwhenyou’restrapped.Iknowyou’reusedtocominghomeandflippingonTheRealHousewivesofIshpemingandcheckinginonFacebookorFoursquare.Youfeel

like,“HowcanIbesobrokethatIcan’taffordthis?”Butthoselittlethingsadduptobigexpenses,andyouneedtostripthingsdowntothebarebones.

AllIcansuggestistobeproudofwhatyouaccomplishinshavingyourexpensesdowntokeepyourselfafloatuntilthingsimprove.Knowingthat,whateverhappens,youcangetbyfornowcanbeveryempowering,and,whenyourfinancialcrisispasses,itwillbeagreatsourceofstrength.Ifyoudidgetthat99-centOldYellerDVD,you’llrecallthatatonepoint,thefathercounsels,“Nowandthen,fornogoodreason,lifewillhauloffandknockamanflat.”

Yes,itdoes.Justdowhatyouneedtodotogetbackup.

Cellphones

Whenitcametocellphoneservice,Iwasn’tallthateagertoshoparound.InMetroDetroit,VerizonWirelessisconsistentlyratedashavingthebestcoverage,and,sinceImostlyusemycellphoneasaphone,notamusicplayerorgamingdevice,that’sthemostimportantconsideration,especiallysinceI’mareporterandIdriveaneighteen-year-oldcar.Butthatdidn’tmeanIcouldn’tfindsavingshere,too.

AssoonasIcalledtoaskaboutloweringmybill,Iinstantlyknockedoff$10amonththankstoanewserviceplan.Iwasabletosaveanother$15becauseacheaperdataplanhadbeenintroduced.Finally,Isaved$15morebycancelingabroadbandconnectionoptionI“temporarily”addedbeforevacationsothatIcouldusemycellphoneasamodemformylaptop.Then,ofcourse,Iforgottocancelit,andthechargewounduponeverybillformonthsafterward.Alltold,itwasanother$40ofsavingsinoneshortphonecall.

Freeingupcash

Thebestbetistocompareserviceandcoverageandcomparisonshop,ifthere’sagoodalternativeprovider.Thisisaloteasiernowthatconsumershavetherighttokeepthesamecellphonenumber,unliketheoldendays,whenweputupwithunbelievabletonsofcrapfromcellphonecarriersbecauseweweredesperatetohangontothephonenumberthatwastheonlypointofcontactforfriends,family,freelanceclients,andoldgirlfriendswhodrunk-dialyouat3a.m.

Onceagain,lookoverthebillforadd-ons,likemybroadbandconnection

option,orsomemobilemessagingservice,ring-tonesubscription,orothernonsenseyoumayhaveaccidentallyaddedorthatmayhavebeencrammedonbyascammer.Finally,askifyou’reeligibleforanydiscountsbasedonwhereyouwork,gotoschool,orsomeotheraffiliation.Forexample,Igetan8percentdiscountonmycellservicebecauseI’maAAAmember.

Startwithreviewinghowmanyminutesofcalls,howmanytexts,andmuchdatayou’reusingeverymonth.Typically,whenyousignupforacellphoneplan,you’reguessingathowmuchtimeyou’lluseeachmonth.Then,onceyou’vegotaplan,youtendtostickwithit,evenifyou’rewildlyoverpayingfortimeyoudon’tuse.Ifyou’veunderestimated,youknowitrightawaybecauseyougethitwithoveragechargesandyouselectanewplan,butifyouoverestimatedyourusage,thetendencyistojustkeepoverpayingwithasenseofreliefthatyouaren’trackingupextracharges.

Becausewedidn’tgrowupwithcellphones,Mrs.FunnyMoneyandIdidn’tstartoutasbigtexters.Askingsomeoneoverfortytosendatextmessageislikeaskinghimtorunamarathononhisthumbs.It’seasier—andusuallyfaster—forustosimplydriveoverandtalktoyou.Ofcourse,sinceit’sacellphone,wedimwittedoldsoftentrytocallpeopleorevenleavevoicemessages.Youngstersfrownonphonesbeingusedforvoicetransmission,however,andlookatsomeonemyagemakingacallonaniPhoneasifwewereusingittochiselmessagesontoacavewall.

Asourfriend’schildrenbecameoldenoughtohavephones(whichiswhat,twenty-eightmonthsnow?),theirparentsbitthebulletandlearnedhowtotexttheirkids,thenturnedtheirnewfoundthumbsavvyonus,theirfriendswho’veknownthemsincethedayswhenweallboughteight-trackstogether.Thenourbaby-sitterswereincreasinglyonlyavailableviatext.Thentheyhiredthosesnottykidsatworkwhotextyoufromthenextdesk,askingyoutopleasemoveyourwalkerofftheiriPadchargingcord.So,Mrs.FunnyMoneyandIweredraggedintothetextinguniverse,although,sincebothofusarewritersandeditors,ourmessagesemployfullyspelled-outwordsandpunctuation.Yes,whenIuseasemicoloninatextmessageitiswithaconjunctiveverbtoconnectrelatedthoughts,notbecauseIamwinkingatyou.

Becausewewereinfrequenttexters,ouroriginalcellplansdidn’tincludeanytextmessagingcoverageatall;itwascheapertopayforeachmessage.Butasthemessagespickedupandcoworkersstartedtexting“LOL”tousduringmeetings,thechargesmounted.(Andwhydoyoudothat?Iaminthesamemeeting.Icanseeandhearyoulaughing,soIdon’tneedtoknowthatit’s“out

loud,”doI?)Therealculpritbehindourever-risingtextmessagebillswas,ofcourse,Li’lMoney,whocontinuedtodoamazinglycutethingsthatmywifewouldphotographwithhercellphonecameratoinstantlysharesothatIcouldberemindedatanymomentthatbothhischildhoodandmylifewereslippingaway.Thatwillbeanother50cents,sir.Andthistime,pleasedon’tpayinIndian-headpennies.

Duringarecentmonth,ourtextmessagestotaledmorethan$20,soitwastimetoshopforanotherplanfortheFunnyMoneyfamilyandanotherreminderthatchangeisaconstant,especiallywhenitcomestofinances.Leftignored,thosetextchargeswillhurt,and,asthekidstext,“IAGTKOM”(IAin’tGotThatKindofMoney).LOL,or,aswegrown-upsusedtosay,“Ha!”

Makingendsmeet

Ifyoudropyourlandlineandmakeyourcellphoneyouroneandonlypointofcontact,keepaneyeonyourbill.Yourvoiceusagemaygoup,resultinginhigherchargesthatshrink—orentirelyeatup—anysavings.Monitoryourusageandadjustyourcallingplantokeepthecostsmanageable.

Ifyou’renotlockedintoacontract,dosomeaggressivecomparisonshopping.OnegoodcomparisonsiteisBillShrink.com,whichcanlogontoyourwirelessaccount,analyzeyourcallingpatterns,andrecommendalternatives.(Ididn’tfindittobeentirelyaccurateinestimatingmycurrentmonthlycosts,however,sodouble-checkthecalculationsagainstafewofyourrecentbills.Therecommendedplansdid,however,savemeabout$40amonth.)Alsocheckoutprepaidcellphoneplans,especiallyonesthatwillletyourolloveranyunusedminutesfrommonthtomonth,whichcanmakesenseifyouaren’taheavycaller.

Ifyouarelockedintoacontract,youmayfaceabigearlyterminationfeeifyoutrytoswitchcarriers.Talktoyourserviceproviderandgetthebestdealyoucanwhileyouwaitforyourcontracttoexpire,orbalanceyourmonthlysavingsagainsttheterminationfeeandseeifyou’llcomeoutaheadsoonenoughtomakepayingthefeeworthwhile.Beforeyougiveupandstickwithaplan,though,doalittlehomeworkontheWebtoseeifyouareentitledtoquitwithoutapenalty.If,forexample,yourcontracttermschanged,thatmayallowyoutoexityourcontractwithoutpenalty.Anotheroptionistoseeifcuttingdowntothecheapestpossiblecallingplanfortherestofyourcontractischeaperthanthe

terminationfee.Ifso,makethatmove,cancelthecontractwhenitexpires,andsellyouroldphonetogetbacksomeofthedough.

PinchingpenniessohardthatLincolngetsaheadache

Ifditchingalandlineforacellphoneisyourcheapestoption,useallthetacticsdescribedabove.Andonemore:ifyouhavefamilymembersoraclosefriendwithoneofthoseall-inclusivefamilyplans,askifyoucanjointheplanandcontributeafewbucksamonthtowardtheircosts.

AnotheroptionistheLifelineprogram.UnderaprogramsponsoredbytheFederalCommunicationsCommission,ifyourincomeis135percentofthepovertylevel(about$20,000forafamilyoftwo)orless,youqualifyforonediscountprepaidwirelessphoneperhousehold.Youalsoqualifyifyoureceivecertaintypesofaid,suchasHeadStartforyourchild,TemporaryAssistanceforNeedyFamilies,orMedicaid.ThisserviceisprovidedbythefederalUniversalServiceFund,whichyou’vepaidforyearsaspartofyourphonebill,sodon’tbeshyaboutclaimingthebenefitifyounowqualify.YoucancheckyoureligibilityandfindLifelineprovidersinyourstatebygoingtolifelinesupport.org2,orcalltheUniversalServiceAdministrativeCompany(whichadministratestheprogram)at888-641-8722,theFCCat888-CALL-FCC,oryourlocaltelephonecompany.Andhey,thosetoll-freenumberscostyouwhenyoudialfromacellphone,sofindalandlinetomakethose“free”calls.

Water,gas,andelectricity

Tacklingthebigutilityexpensessuchaswater,gas,andelectricitywasjusttooinvolvedforaone-weekcost-cuttingexperiment,soIlargelyskippedthesecosts.Usually,savinghereinvolvescomplicated,long-termoptionsthatrequireshellingoutseriouscash,suchasdrillingawell,installingenergy-efficientwindowsandinsulation,orbuyingasolarwaterheater.Thesetacticsmaypayoffoverseveralyears,butIwaslookingtosavenow,andIwasn’tgoingtopayoutbigbuckstodaytosaveafewdollarsamonthsomedayaftertheDetroitLionswinSuperBowlCCCXCVII(that’s397tousnon-Romans).

Yes,Iknowthefederalgovernmentofferstaxcreditsofupto30percentofthecostformakingcertainenergy-efficientimprovementstoyourhome.Butthatmeansyoustillpaytheother70percent.It’sagreatinvestment,butuntil

you’vegototherfinancialprioritiestakencareofandcansavetopayforthoseimprovementsupfront,leavethemforanotherday.

Inthemeantime,youshouldcertainlytakeallthestepsyoucantoconservewater,electricity,andgas.Youcanstartwithahomeenergyauditfromyourelectriccompany.Whiletheinspectormightrecommendsomeexpensiveimprovements,chancesarethere’llbesomesmallones,too.Sochangethoselightbulbs,turnoffyourcomputeratnight,andcleanyourrefrigeratorcoils.

Aprogrammablethermostatcanbeagoodadditionthat’snottooexpensive,butthesavingsoftenaren’tasbigasyoumightexpect.OnestudyinFloridafoundhome-coolingcostswentupwhenadjustablethermostatswereinstalledbecauseresidentssetthetemperaturelowerforthetimeswhentheywerehome.Itmostlydependsonyourconsistencyinprogrammingthethingandthetemperaturesyouselect—justthesameaswithamanualthermostat.Eitherway,savingonheatingandcoolingcostsmeansmoreblanketsandsweatersinthewinterandmoreT-shirts,shorts,andfansinthesummer.

Ifyou’vegotanairconditioner,seewhetheryourelectricutilityoffersaplanthatputsyourAConaseparateelectricalmeterandgivestheutilitytheoptiontobrieflyturnitoffduringperiodsofpeakelectricityuse.TheCoolCurrentsplan,whichwon’tturnoffyourACformorethanfifteenminuteseveryhalfhour,limitedtoeighthoursduringa24-hourperiod,givesMetroDetroithomeownersdiscountedratesonelectricityfortheirair-conditioning.DTEEnergyestimatesthathomeownerscansaveupto20percentofftheirair-conditioningcoststhisway.

Naturally,youshouldfixleakyfaucetsanddropabottleofwaterinthetoilettanktoreducethecostofeachflush(avoidtheoldbricktechnique,sinceitcandissolveandsendsedimentintoyourplumbing).Tocutdownonwateringlawnsandgardens,lookforfreemulchandtryyourhandatsomexeriscapingtokeepthingsfromgettingbrown.Localpowercompaniestrimalotoftreesthatgrowtointerferewithpowerlines.They’lloftenrunthebranchesandotherwoodthroughachipperandofferthesomewhatroughmulchfreeforthetaking.

Levelbillingisautilityoptionthatdoesn’treallysaveyoumoneybutdoesmakeiteasiertopayyourbillsandplanyourbudget.Ittakesyourannualgas,electric,orwaterbillanddividesitupevenlyforthenexttwelvemonthssothatyouhaveoneconsistentpaymentinsteadofa$60gasbillinJulyanda$250oneinJanuary.Attheendofyourtwelvemonths,thebilladjuststoreflectcurrentpricesandyouractualusage.Noteveryutilitycompanyofferstheseplans,butifyoursdoes,itaddsawelcomebitofpredictabilitytoyourmonthlycashflow.

Savingonallthemajorutilitiescomesdowntocommonsenseandconservation:thelessyouuse,thelessyoupay.Shuttheheatregistersinemptyrooms,usethetoasteroveninsteadofthebigoven,defrostthefreezer,etc.Usealltheresource-reducingtacticsyoucanfind.Plus,whileyou’resavingmoney,youcanhelpsavetheplanet.Thisisimportantbecause,iftheplanetgetssopollutedthatwehavetoescapetoNewtGingrich’sfifty-firststatemooncolony,youcanjustimaginewhatHBOisgonnachargetogetCurbYourEnthusiasmattheSeaofTranquility.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89

Week3—Utilities...$139.39Totalmonthlysavings...$313.89

Lefttocut...$686.11

Imadetheweek’s$100goalpluscoveredalltheshortfallfromWeek1andafewextrabuckstoboot.Thatleftmewith$686.11stilltocut.Addingitallup,myimmediatesavingsfromafewphonecallscameto$139.39inongoingmonthlysavings,plus$653.80(!)intemporarydiscountsorrefunds,includingthe$200giftcard.

Besidesthesavings,IfinallygottowalkovertothecableboxanddosomethingI’vebeenitchingtodoforyears—flipoffmycablecompany.

T

5

KidCosts

WeDiscoverHowa99-CentMargaritaDeployedatJusttheRightMomentTurnsintoaLifetimeTabof$286,860

henexttargetonmylistwasthe“KidCosts”category.Thatmeantfocusingonexpensesrelatedtomyboy,FunnyMoneyJr.,or,aswecallhim,Li’l

Money(’cuzthat’sallheleavesus).Thiswasatoughone.Hisfoodandothercostswereinwiththerestofthefamilybudget.And,sincehewassevenyearsoldatthetime,hedidn’trunupextrabills,suchassportsleagues,carinsurance,orbail.

Alltheotherkidcategoriesofferedlittlehopeofsavings,fromhisbargain-pricedcollegesavingsplantonominalpublicschoolfees.Mywifefindsincrediblebargainsonhisclothes,andIoccasionallyrootthroughtheofficesupplycabinetforschoolsupplies.(Yourunafewgreasepencilsunderahacksawandtellmethatisn’tthesamethingascrayons.)Knockingouthissummerdaycampseemedlikeanoption,butIrealizedanysavingstherewouldbemorethanoffsetbyhismother’sincreasedspendingonprescriptionsandtequila.

ThebeancountersattheU.S.DepartmentofAgricultureregularlytakesometimeofffromcountingbeanstototeupthecostsofraisingachild.Themostrecentpricetag:$286,860togetakidtoageeighteenwhenadjustedforinflationfrom2010onward.Andthatdoesn’tevenincludesomecrucialexpensesoftheteenageyears,suchasiPods,carfenders,andtattooremoval.

ThisputskidsnearthetopofthelistofluxurygoodsthesedaysintheUnitedStates,ifyoudefineluxurygoodsas“somethinghardlyanyonecanafford.”That’sthecaseforlotsofrecession-rackedfamiliesintheUnitedStates.Asof

2009,accordingtotheNationalCenterforHealthStatistics,theU.S.birthratedroppedfromtherecordhighof4.3millionbabiesin2007to4.1million—thelowestinacentury.

Theperfecttimetofigurehowyou’llpayforakidisbeforeyouhaveonerunningaround,soakingupjuiceboxesandyoureverylastdime.OneadvantagetheFunnyMoneyfamilyhadwasthefactthatwehadoursonaftermostofourfriendsspawned,andtheywereonlytoohappytodelugeuswiththeirunusedbabymateriel,fromcribstoplaycastlestoBarneytapes(Ineverwillforgiveyouforthebigpurpledemon,Rory!).SomuchbabystuffwasdumpedonusthatthehousetookonthelookofaLilliputianlandfill.Wenevervisitedthehomeofanyonewithchildrenwhenwedidn’tleavewithbagsofbottles,squeakytoys,andfootedonesies.Ourfriends,GretchenandSteve,oncecompletelydisassembledafive-foot-highplasticplayhouseandstuffedtheentirethingintothebackofmyRoadmasterwagonwhileIwasgettingasecondhelpingofpotatosaladontheirpatio.

Morethanonce,asweleftafriend’shousetotingarmloadsofbabyparaphernalia,thefrontdoorclosedonthebeginningsofamaritalsquabblethatwentalmostexactlylikethis:

Husband:Why’dyougivethemallthebabyclothes?Whatifweneedthemagain?Wife:Hahahahahahahahaha!

Oncethekidshavearrivedonthesceneandgottenoldenoughtopipeupaskingforanewbike,wardrobe,CaribbeanDisneycruise,orMyFirstLargeHadronCollider,youneedtoreinintheirassumptionsthatmoneygrowsnotontreesbutmagicallyinsideDad’swalletandMom’spurseeverynight,kindoflikeafungusbackedbytheFederalReserve.Thisisoftenaspecialdutyfordads.OnthelistofDaddyto-do’s,“TeachKidstheValueofaBuck”issituatedneartheverytop,rightbetween“Don’tTalkBacktoYourMother”and“Here’sHowtoPlay‘TheStar-SpangledBanner’withYourArmpit.”

Whetheryou’relookingtointroduceyourchildrentotheconceptofspendingwiselyoryou’redesperatetosavebecauseyougotlaidoff,havethemoneydiscussionwithyourkidsinadvancewarnsLouManza,professorofpsychologyatLebanonValleyCollegeinPennsylvania.

“Ifsomething’sbeengoingonformonthsandmonths,sitthekidsdownbeforehandandexplainittothem,”Manzasays.“Don’tjustspringitonthemin

thecaronthewaytothestore.”Tailoryourfinancialdiscussiontotheage,maturity,andtemperamentof

yourchild,andfocusongivingthemchoicesandhelpingthemfeelthattheyhavesomecontrolinthesituation.

“Youcanmakethemunderstandthateveryoneneedstosave,we’reafamily,andeverybodyhelpsout,”Manzasays.“Youcantellthem,‘Momiscuttingbacklikethis,andDadlikethis,’soit’snotjustthekidwho’spayingtheprice.”

Bytheway,thisstrategyworkswithholidaysandvacations,too.Itmightbedifficult,butifyoucanadjustfamilyexpectations—starting,mostimportantly,withyourown—youcanteachsomeimportantlessonsinfinancialresponsibility.Ifyoudecideanexpensivevacationisn’tinthecreditcardsthisyear,getthewholefamilyinvolvedinplanningyourstaycation.Setabudgetandleteachfamilymemberplanadayofoutings.Orperhapsfortheholidaysyoumightalldecidetoconcentrateyourspendingononebigfamilygift—suchasavacation—andforgoapileofpresentsunderthetree.Orthefamilycanorganizeagaragesaletogether,thekidscanopttogiveupsomeoftheirallowance,ortheycanagreetocancelcableforamonthortwo,orwhatever.Makeabudgetandaplan,cutbackorredirectspending,dosomethingtoearnsomeextramoney,andgeteveryoneinvolved.

Whateveryoudo,don’tsay,“We’rebroke.”That’sonlygoingtofrightenthekidsandisalmostasbadassayingnothing(ifyou’reworriedaboutmoney,thekidswillpickuponit).Youdon’twantthekidstosuddenlyhavevisionsofyourfamilypushingashoppingcartdownthealley.Instead,focusontheneedtomakechoicesaboutwhereyourmoneygoesandonhavingthekidslearntospendmoneywisely.It’simportantbecausekidsoftendon’tmaketheconnectionbetweenthefamilybudgetandday-to-dayspending.I’mnotsayingyouhavetobreakoutlastyear’staxreturnbeforeeachshoppingtrip,butjustthatyouwantthekids(andmaybeyou,too)tounderstandthatmoneyisafiniteresource,notsomethingthatautomaticallycomesoutofthewallatthebank.

Foodandclothing

Whenitcomestoyourkids,youwanttogivethemeverything,butchildrenwilldojustfineiftheydon’thavethelatestdesigner-labelovercoatthatthey’lloutgrowafteroneseason.Upuntilthetweenyears,kidsareprettyeasytoshopfor—it’sbasicallywhateverMomorDadpicksout.Rightnow,Li’lMoney

couldcarelesswhetherhisshirtscomefromthethriftshop,thoughI’msurethatbyhishighschoolyearshe’llbedemandinga$50vintageT-shirtthat’sdistressedjustsothatitlookslikeitcamefrom...athriftshop.Theanswerhereistogiveyourkidsabudgetshortlybeforetheystartcaringaboutclothesandletthemstarttomaketheirownchoices.

Oneapproachistogiveeachkidaclothingallowanceandguidelinesabouthowmanyshirts,pants,andsocksareneeded,andwhatisorisn’tacceptablefortheschool(orfamily)dresscode.Beyondthat,theycanbuywhattheywant.Iftheyspendless,theycankeepthemoney.Ifyourbudgetispinched,letthekidskeephalfofwhattheysave,orsomesetamount,like$20,justaslongasyougivethemanincentivetoshopwisely.Conversely,ifthekidswanttospendmorethantheallowedamount,theyhavetocomeupwiththedifferenceontheirown.

Beforethathappens,doyourbesttoturnyourkidsintosmartshoppers.Takethemshoppingwithyousothattheycanseehowmanybrand-newitemsendupinthriftandconsignmentstores.WhenLi’lMoneywasborn,friendsgaveussomegorgeouslarger-sizedclothingforhimtogrowinto,includingoneveryhandsomeoutfitwithasweaterfortripsupnorthattheholidays.BythetimeChristmasrolledaround,however,thekidhadalreadyoutgrowntheclothes,andhecertainlyhadn’tgottenachancetoweartheminthe90-degreeheatofsouthFlorida.Offtothethriftshoptheywent,stillwrappedandtagged,muchtothedelightofsomeotherbargain-huntingparent.

Alsotrytobuylargersizeswhenyoucan.Myboylookedfineandwascomfortableinaslightlyoversizedjacketthatlastedfromthefourthgradetothefifth.Andwhenhewaswearingsize6shoes,wekeptaneyeoutforanysize7sthatwereonsaleratherthanhavingtopayfullpricelateronwhenhistoesburstthroughhisboots.Whenwefindagoodselectionof$2T-shirtsonvacation,wegetonetherightsizefornow,twobiggeronesforlater.

Withfood,we’vetriedtokeephimfromgettingtoostuckonanyonebrandofanythingsothatwedon’tgetameltdownwhen,forexample,hehastosufferthecrushingindignityofeatingstore-brandcerealinsteadofCheerios.Learninghowtoshopatgrocerystoresandstockingupwhenitemsareattheircheapestgoesalongwaywiththiskindofstuff,asI’lldiscussinchapter10.Theoneplacewe’vefailediswithstrawberrymilk.Howthekideverheardofit,I’llneverknow,butonedayatthegrocerystorehespiedaboxofpowderedstrawberrymilkmixandinsistedhewoulddiewithoutit.Wewerehappytoencouragehimtodrinkmilk,andwhenitbecamearegularitemonthegrocery

list,wefoundthebrandofstrawberry-flavoredpowderthatcosttheleastperserving.

Thatworkedgreatuntilthegrocerystorestartedcarryingpremixedstrawberrymilk(curseyou,PrairieFarms!)andthekiddeclaredhewoulddrinkonlythat.Sometimesthestrawberrymilkisonsale,butusuallyit’sabetterbuytogettheregularmilk(whichisoftenonsale)andthrowinadime’sworthofstrawberrypowder.Asanyparentwilltellyou,arguing“It’sthesamething!”won’tgetyoutoofarwithakidwho’smadeuphisorhermind.Andwhenmyboysetshisopinion,it’slockeddownsotightthatyou’llactuallyhearthe“doink-doink”soundfromLaw&Order.

Butoneofthefewconvenientthingsaboutkidsisthatwhenthey’reyoung,theygotobedbeforeyoudo,andwhenthey’reolder,theyholeupintheirroomswithouttheleastinterestinhowMomandDadhandlethedomesticchores,aslongasitdoesn’tinvolvethem.So...thekidwasn’taround,Iwascleaningupinthekitchen,andIhappenedtohavethisemptyjugfromthepremixedstrawberrymilkthathedrainedinworld-recordtime.Who’stoknowifregularmilkhappenstogetpouredintoitalongwiththecheaperstrawberry-flavoredpowder?Thesametacticcanworkwithanyofakid’smust-haveingestiblesthatcomeinabox,bottle,ortin.Thebagofstore-brandChocolateFrostedSugarBombscerealfitsjustfineintotheboxfromthepremiumbrand,too.

Okay,callmeacoward.Buthearmeout.Veteranparentsalwayssayyou’vegottopickyourbattles,butthatforcesyouintochoosingbetweenfightingorcapitulating(bytheway,“capitulating”isanSATwordhe’llknowlaterbecauseIscrimpedonstrawberrymilknowsowecanaffordatutorinhighschool).RatherthanchoosingbetweenbeingaScroogewhoputshisfootdownorawimpwhocavesintothechild’sdemands,IchooseinsteadtobeGenerousDad,thegreatgiverofallgoodthingswhomiraculouslymakesitallfitintothefamilybudget.Baitandswitchisillegalonlyiftheappliancestoredoesit.Besides,thisisstrawberry-flavoredmilk.It’snotlikeI’mswappinghis2010Châteauneuf-du-PapeforsomeTwoBuckChuck.

Freeingupcash

Withinfants,yourfirststopshouldbeawholesalebuyingclubsuchasCostco.Thesavingsonformula(ifyouneedit)anddisposablediapers(ifyougothatway)willmorethanpayfortheannualmembership.Justdon’tgetcarriedaway

withtheawesome$1,200stainless-steelbackyardgrilling“system”andblowyourbudget.AnotheroptiontoconsiderisAmazonMom(genderstereotypingmuch,Amazon?),whichallowsyoutosubscribetoregulardeliveriesofbabystuffatadiscount.Yousave5percentwithuptofourdeliveriesamonth,15percentwithfiveormore.Thatcutsaboxof194Pampersfrom25centsapiecetoeither23centsor20cents.Plus,yougetfreeshippingandyoucancombinetheAmazonMomplanwithAmazonPrimediscountsaswell.Youmayevenbeabletoapplyadditionaldiscounts,suchasspecialoffersfromparentingmagazines,tosavemore.

YoucanfindarundownonthewholestrategyatBabyCheapskate.com.Thatsite—andotherbabydiscountsites,whichunfortunatelyinsistonfocusingonmoms—areanothersourceforgreatdeals.BabyCheapskate.comrecentlydugupanicedealontheLittleTikesCozyCoupe,theubiquitousred-and-yellowtoddlercarthatLi’lMoneygravitatedtowardasifitwerehisdestinywhenhewastwoyearsold.Hisfavoritepart?Thedriver’sdoorthatopensandcloses.IoncewatchedhimgetinandoutofhisCozyCoupemorethanfortytimesstraight.Wescoredagreatdealononeatababyconsignmentstore,andmyadviceisifyouseeone,grabit.Aswewalkedoutweenduredthebaleful,jealousstaresofotherparents.Ifyoumustbuynew,hitthebabysitesforadeal;butwhenyourkidoutgrowsit,remembertogetsomeofyourdoughbackattheconsignmentstore.

Forotherfoodandclothes,itcomesdowntohowfrugalyouwantorneedtobe.Youcanhitthefarmers’marketandmakeamonth’sworthofstrainedpeasforlessthanhalfthecostofpreparedbabyfood,oryoucancouponlikecrazyandgetagreatdealatthestore.TherearemorebooksandblogsaboutfrugallivingthanIcanbegintocount,andyoucangleangoodtips(andsomecrazy,extremeones,too)fromallofthem.Usingthegroceryshoppingapproachesoutlinedinchapter10worksforus,alongwithtakingadvantageofsalesandoutletstores.

Makingendsmeet

Youneedtomovefromtheconvenientsideoffrugaltothesidethatrequiresmoretimeandeffort.Insteadofanoccasionaltriptotheconsignmentstore,makearegularcircuitofconsignmentandthriftshopsaswellaslocalgaragesales.Babiesandkidsoutgrowmostclothes(except,inmyexperience,shoes)

beforetheywearthemout.Somehow,Li’lMoneycanpoundthroughapairofdiscountsneakersinafewscantmonths.Fortunately,he’snotnearlyashardonhisboots,soinourhousewinterlastsuntilMother’sDay.(SinceweliveinMichigan,that’snotreallymuchofstretch.)

AnothersourceofclothingbargainsiseBay,wheremomstendtobundleupallthestuffakidhasoutgrownandauctionthewholelot.For$20youcanobtainanentireseason’swardrobeifyou’relucky,andanythingthatdoesn’tfitcanbedonatedtothethriftstore(takeapicture,getareceipt,andtakethetaxdeduction).Youcansimilarlyselloffwhatyourkidhasoutgrownandcutthecostevenmore.

Swappingwithotherparentsisanotheroption,andyoucanfindororganizeaclothingswapthroughyourneighborhood,church,communitycenter,orschool.Anythingstainedorexcessivelyworngetsthrownout,ofcourse,buttherestisupfortrading;youswaponeitemforeachoneyoubring.Andyoudon’thavetolimitittoclothes,butcanaddbabyblankets,maternityclothes,toys,andmore.I’veevenseenswapsforunusedChristmasdecorations.

PinchingpenniessohardthatLincolngetsaheadache

Goasfrugalasyoucan.StartwithanyandallofthetipsfromMaryHuntatEverydayCheapskate.com.Wornthroughanoldpairofflannelpajamapantsorshirt?MeetyournewSwifferpads.Dishescomingoutofthedishwasherlessthanclean?Trycleaningoutthesprayer-armholeswithahangerinsteadofbuyinganewonefor$500.AndMary’shomemadelaundrydetergentrecipecutsyourcostperloadfrom35centsto3cents.Maryalsohaswonderfuladviceonlivingdebt-free,soifthat’soneofyourfinancialgoals,you’llfindheradvicedoublyhelpfulattheDebtFreeLiving.comsite.

WhatisprettymuchthebibleforfrugallivingisAmyDacyczyn’sTightwadGazette.LongbeforetheInternet,Dacyczynpublishedanewsletterfilledwithtipsonhowsheandherhusbandraisedapasselofkidsona$30,000annualsalaryandmanagedtosave$39,000insevenyears.Dacyczynhasretiredasthecountry’sleadingpenny-pinchingpublisher,butshecollectedthebestofheradviceinTheCompleteTightwadGazette.Checkthelibraryforacopy,orfindausedornewcopyonline.1

Ifyourincomehastakenahugehit,checkwithyourcountysocialservicesagenciesandyourchurchforprogramsthatcanhelpyouandyourfamilyover

thehump,andapplyforanysupportprogramsyoucan.You’vepaidtaxesallyourlife,andthisiswhy.Atthispointinthepostrecessionlandscape,nobodyshouldfeelanyqualmsaboutclaimingwhatevertheycanfromthegovernmenttheysupport.Foodpantries,volunteerprograms,andmorearetheretohelppeopleinjustyoursituation.Applyforeverything.Iwasstunnedwhenthespecialkindergartenprogrammysonwenttogaveusapartialscholarship,butwewouldn’thavegottenitifwehadn’tasked.

Mostimportant,letyourfriendsandextendedfamilyknowwhatyouneed.Youdon’thavetogivepeopleafullfinancialdisclosuretoletthemknowthatthingsaretight.They’vebeentightforalmosteveryonethelastfewyears,andmyfeelingisthatit’smadepeoplemorewillingtosharewhateverextratheyhave.AfriendofMrs.FunnyMoneylovestoshopestatesalesandsomehowwoundupwithafreecanningpot.Nowweenjoythemostwonderfulhomemadetomatosauceallwinterlong.Afriendofafriendwantedtoclearoutastorageunitwherehehadabunchoftileremnantsandheofferedusourpick.Ittransformedouruglycementpatiointoabackyardretreat.AndwhenmywifementionedtoacoworkerthatLi’lMoneyhadjoinedtheCubScouts,sheprovideduswiththeuniformhersonhadoutgrown.Everydimeyoudon’tspendisadimeyouhaveforsomethingessential,sodon’tbeshy.

Inourcase,cuttingthefoodbudgetwasafamilyeffortthatwetookuplaterinThe$1,000Challenge,becausebythattimewewerewellbeyondtheyearsofformulaandbabyfood.Wealsoweren’tspendingalotofmoneyonclothingforLi’lMoney,probablybecausethelong-sufferingMrs.FunnyMoneyalreadyusedallthetacticsdescribedheretokeeptheboydressedatadiscount.And,fortunatelyforus,hedoesn’tseemtobethekindofkidwho’sgoingtodemandexpensiveboots,thelatestsneakers,ordesigner-labelgoodswhenhegetstohighschool.Thatwilljustleavealltheotherteencosts,suchasthousandsforrobot-designcamp,driver’straining,astronomicalcarinsurance,andenoughorthodontiatorivalthefrontendofa’49Buick.

Schoolsupplies

I’vefoundthatshoppingforyourkid’sschoolsuppliesisoneofthosethingsthatreallyneedstobedonewellinadvance.Otherwise,alltheotherparentsatworkwillgettotheofficesupplyclosetaheadofyou.

Moreimportantly,back-to-schooltimeisthefirstlegofthefamily’sTriple

Crownofdebt.Itstartswhenyoudon’tplan,budget,orsaveforschoolsuppliesbut,hey,JuniorneedsanAvengersbackpackandMissywantsfourteenHelloKittynotebooks,so,alongwithabunchofclothes,itallgoesonacreditcard.Youfigureyou’llpayitoffinthenextfewmonths.

ThencomesChristmas,thesecondlegofthedebtTripleCrown,and,wham,youcan’tscrimptherebecausethekidsareonlyyoungonce,yourwifedeservesmorethanalittlesomethingforputtingupwithyouallyear,andit’syourturntohosttheholidaydinner,completewithmashedorganicBrusselssproutsshapedlikeaturkeytokeepyourcousinhappy,becauseshe’snowaveganWiccanwho’sactuallycelebratingtheFeastofUllr.Theholidaysarepriceless,astheyusedtosayintheMasterCardads,andthat’sexactlyhowyouwillfinancethisone.Butyou’llbegettingthattaxrefundcheckintimetowipeoutyourtabfromDecemberpluswhateverstubborndebtisleftfromschoolshopping.Sixmonths,tops,andyou’llhavethatcreditcardbalancebacktozero.

Butthenit’sofftotheracesonceagain,thistimewithsummervacation,theBelmontStakesofthefamilydebtcircuit.Thisistheyearyoupromisedyourwife(who’sstillputtingupwithyou)somethingspecial,andthekidshaveneverhadthechancetoseetheGrandCanyon,theCzechRepublic,ortheGowanusCanal.So...outcomesthecreditcard,andthatnewdebtgetspiledontopoftheChristmasandback-to-schoolspending,which,bytheway,isjustaroundthecorner—again.

Beforeyouletthedebthorsesoutofthegate,stopanddoalittleplanninginthefall.Thebigofficesupplystoresanddiscountstoresstartrunningallkindsofback-to-schoolspecialswellbeforeSeptember.(You’llknowwhenthatis,becauseit’saboutthetimetheyhaulouttheChristmascarolsforthestoresoundsystems.)Withalittleplanningyouwon’tgobroke,andyou’llevengetanotherchancetoschoolyourkidsinbudgeting,shopping,andspending.

Freeingupcash

Startbygoingthroughallthestuffleftfromlastyearorthatyoualreadyhaveonhand.You’dbesurprisedathowmuchyoucanwinnowdownyourback-to-schoolshoppinglistifyougetyourkidtorealizethatthecentimetersontherulerfromfourthgradestillworkinfifthgrade.It’salsoareasontodissuadelittlekidsfrompickingoutaDoratheExplorercalculatorthatthey’llbetooembarrassedtouseinmiddleschool.

Havingyourstudentputsomeofhisorherownmoneyintotheback-to-schoolbudgetisagoodidea,too,especiallyfordiscretionaryitemssuchasclothesorelectronicgadgets,suggestsNinaSutton,authorofTheChicMom’sGuidetoFeelingFabulous.Parentscansetupsomequickandeasychores,suchashavingthekidscleantheirroomseachnight,sotheycanearnaportionofthemoneyalreadybeingbudgetedbeforegoingshopping.

“Ifthey’redoingsomethingtoearnthatmoney,theyfeelsomeresponsibilityforthepurchases,”Suttonsays.Foryoungerkids,stickingtothebudgetmaybeassimpleasaddinguppurchasesontheirshoppinglistsandcrossingoffitems.Forolderstudents,shesuggestsusinggiftcardstogivethemafeelingofcontrolandresponsibility.“Withthegiftcard,theyneedtochoosehowthey’regoingtospendit,butwhenit’sdone,it’sdone,”Suttonsays.

Makingendsmeet

Onceyougetyourshoppinglisttogether,sitdownwithyourkidsandsortoutneedsversuswants.Ayoungstermightbemorewillingtoacceptusinglastyear’sbackpackandbinderifitstretchesthebudgettocoverJustinBieberstickersfortheirlocker.(Kids:wetrytoprotectthemwithhandsanitizerandschool-bussafetybelts,whenwhattheyreallyneedtobeshieldedfromistheirownbadtaste.)

AtthebeginningofAugust,startkeepinganeyeoutforback-to-schoolspecials,suchas10-for-$1pencilsornotebooks,whichmayshowupatthesupermarketordrugstorejustasoftenasatdiscountandofficesupplystores.Asapersonwhostillworksatandreadsanactualprintednewspaper,letmepointoutthattheadinsertsintheSundayeditionareyourbestbetforfindingandcomparingoffers(also,yourhandsabsorbaspecialingredientfromnewspaperinkthathelpspreventgumdisease).Lastfall,forexample,twoofthebigofficesupplystoresadvertisedfreebackpackswitha$10purchaseofotherschoolitems.

Parentswithfashion-consciouskidsmightwanttoholdbacksomeofthebudgetfortheirclothingandjustbuyoneortwooutfitsforthestartofschool.Thatway,thekidscanshoptheclearancesaleslater,and,iftheirclassmatesaresportingsomehotnewlookthatyourkidsmissed,theycanfillinanywardrobegapslater,insteadofbuyingclothestheymaynotendupwearing.

Beyondteachingmoneymanagementandshoppingskills,parentscanuse

back-to-schooltimeforlessonsinappliedmath,whetherit’ssubtractionandadditionforfirstgradersorcalculatingandcomparingtheper-unitcostofa$3bagoftenpensversusa$4.25packagethatholdstwenty-four.

PinchingpenniessohardthatLincolngetsaheadache

Betweenreusingleftoveritemsfrompreviousyearsandshavingyourshoppinglistdowntothebasics,trytocovertheessentialsbutleavemaybetwoorthreenewthingsthatthekidscanget—withinreason.Askaroundtoseeifyourfriendsandotherparentscanfillinthegaps.Inmycase,I’vereceivedenoughpressreleasesandfinancialstudiesstuffedintoringbindersthatIcouldoutfitLi’lMoney’sentireclass.Iftenth-grademathrequiresaparticularmodelofgraphingcalculator,forexample,youcantryeBayorCraigslist,butchancesarethatthereareplentyofthosegizmosgatheringdustinthehomesofanyeleventhgradersyouknow.Yourkid’solderfriends(ortheirparents)willbegladtopartwiththeiroldoneforafewbucks.

Formorehelp,checkwithlocalsocialserviceagenciesandyourchurch.Sincetherecession,I’vefoundseveralcompaniesandcharitiesgivingawayschoolsupplies,andmyownchurch,theverygenerousandwonderfulFirstPresbyterianChurchofBirmingham,collectsschoolsuppliestodistributetofolkswhoneedtospendtheirmoneyelsewhere.CheckwithyournearestUnitedWay,andalsosearchontheWebforaschoolsupplygiveawayeventinyourarea.TheyoftentakeplaceinJuly,so,again,startlookingearlierthantheweekbeforeschoolstarts.

Onceagain,Icouldn’tfindalotofsavingsinthiscategory,becausewewerealreadyprettygoodatkeepingcostslow.Mrs.FunnyMoneypickedupasturdyLands’Endbackpackonsaleforabout$14,andit’slastedfouryearswithnosignsofgivingout.It’sintheboy’sfavoritecolorratherthanbeingadornedbysomekid-TVabominationsuchasBarney,theeviloff-key,brain-rottingdinosaurevenkidsloathebythirdgrade,soLi’lMoneydoesn’tgripeaboutusingityearafteryear.

Thebigsurpriseishowmanyofhisschoolsuppliescanbereusedfromyeartoyear.Thetrickistodigthroughthewholelotattheendoftheschoolyear,figureoutwhatcanbekeptfornextyear,andthenputitallsafelyawaysothatthegluesticks,crayons,andscissorsdon’tgoAWOLoverthesummerorgetdraggedouttothesandbox.Andifthekidinsistsonbrand-newpencilsnextfall,

hecanpickanyboxhewantsatthedollarstore.

Healthcare

Whenyouhavechildrenyoulosenotjustyoursanity,sexlife,andcarkeysbutyourvocabularyaswell.Thisexplainswhyotherwisesophisticatedprofessionalsexcusethemselvesfrombusinessmeetingsto“gopotty”andconcludephoneconversationswith“buh-bye.”Adultconversationisevenmorefracturedinourhousebecause,asImentionedearlier,Li’lMoneyisalate-talker.

Latetalkingisalittlelikedyslexiafortheears,buthehasmadeastoundingprogresswithlanguage,thankstolotsofeffort,patience,andunreimbursedspeechtherapy.Butasatoddler,theconfusingcommunicationsdraggedoutpottytrainingtothepointwhereIthoughthewouldn’tbeoutofPampersuntilIwasinDepends.Butwhentheboygottheknackofusingthebathroomheembracedtheconceptwithgusto.Whennaturecalledonthethen-four-year-oldkidonedayatthehomeimprovementstore,Iturnedtoleadhimtothemen’sroom,onlytofindhimuponaplatformofplumbingitems—plantedinfrontofa$400designertoiletthatsoonwouldnolongerbefordisplaypurposesonly.

Imanagedtoavoidpayingforthatpriceyporcelain,whichwouldhavecomeontopoftheaverageof$815ayearMichiganfamilieswithspecial-needskidsspendonout-of-pocketcosts.Inourcase,thatincludesout-of-statespecialistsandconsultants,plusprivatespeechandreadingtherapy,plusa$190-an-hourspecialeducationattorneytokeepourlocalschoolsystemfrommakingthecommon—butextremelyharmful—mistakeofpushingalatetalkerintoautismprograms.

Noneofitcomescheap,andnoneofitiscoveredbyinsurance.ButthereisoneplaceIfoundabreak:taxes.Settingupaflexiblespendingaccounttocover$4,000ofourmedicalexpensestookthatmoneyrightoffthetopofmysalary,reducingmytaxableincomeandmytaxbill.Themoneyisdeductedfromeachpaycheckandaddedtoaspecialaccount.Ithenfilehealthcareclaimsagainsttheaccount,andI’mreimbursedtax-free.Atourtaxrates,thatknockedaneven$1,200offourprojectedtaxtabtoUncleSamfortheyear,accordingtothehandy-dandyIRSwithholdingcalculator.2ThesamebreakappliestotheMichiganstateincometax,whichcut$174offourstatetaxbill,foratotalof$114.50inmonthlysavings,whichshowsupineachpaycheckaftermy

withholdingwasadjusted.Whilethetaxbreakcertainlyhelps,itdoesn’tcompletelysolvetheproblem,

sincewhatwegetbackontaxesisonlyabout30percentofthemoneyweputout.Michigan,likemanyotherstates,nowrequiresinsurancecompaniestopayforautismtherapies,butthatleavesfamilieslikemine,withkidswhohaveotherdevelopmentalissues,onourown.Still,wemuddlethrough.MywifebecameparticularlyadeptatinterpretingLi’lMoney’srequests,explaining,“Hesaysit’stimefortheplayground,”whenIasked,“Whydoeshewanttoputsocksonthepumpkin?”

Althoughhesometimesstillusesjusttwoorthreewordswhenotherkidsusetwoorthreesentences,Li’lMoneygetshismessageacross.Afterworkinglateonenightandmissingthechancetotuckhimin,Isatwithmycoffeethenextmorningashetrundledoutofbed.Heshuffledoverinhispajamasandthrewhisarmsaroundme.“Luv,”hedeclaredasheputhisheadonmyshoulder.

Idon’tgetit.Ifhe’stheonewithfewwords,howcomeI’mtheoneleftspeechless?

Freeingupcash

Thegoodnewsisthatmostcompanieswithanykindofdecentbenefitsprogramofferaflexiblespendinghealthcareaccount.Thebadnewsisthatyoucanshelteronly$2,500ayearnow.Thishitsfamilieslikeminethatshelloutalotforhealthcareduringtheyear,butthefactisthatmostpeopleusingaflexaccountsetasidequiteabitless.

Comparisonshoppingwhenbenefitsenrollmenttimecomesaroundinthefallisanotherwaytoseeifyoucansave.Co-paysonmedicalvisitsandprescriptionsseemtogoupeveryyear,alongwiththedeductible.Ifyourworkplaceoffersmorethanoneoption,don’tjustautomaticallyrenewyourplaneveryyear,butconsiderhowyourqualifiedhealthcarespendinginthepastyearwouldfitintoalltheoptionsandloweryourcosts.Or,ifyourspousehasahealthplan,comparetheplanstoseewhichworksbestforyouatthelowestcost.

Ifyou’reusingaflexaccount,remembertheonebigcaveat:youneedtospendallthemoneyduringthecalendaryearoryouloseit.Sobaseyourwithholdingonyouractualmedicalspending,whichisanothergoodreasontotrackyourspendingandmaintainabudget.

Makingendsmeet

Startshoppingaggressivelyforallyourhealthcarespending,fromprescriptionstohealthplans.Talktoyourdoctor,pharmacist,andanytherapistsorserviceprovidersandaskthemhowyoucansave,especiallyifyou’regoingwithoutinsurance.

Ifyou’velostinsurancebecauseyoulostyourjob,you’reprobablyeligibleforCOBRA,anacronymforafederallawthatgivesyousixtydaystocontinueyourhealthcoveragebypickinguptheentirepremiumyourself.COBRAcoversspousesandkids,aswellaspeoplewholoseinsurancebecauseofdivorce,areductioninhoursatwork,ifyougottoooldtostayonyourparents’policy,orifyouwereonarelative’spolicywhenthatpersonbecameoldenoughtoswitchtoMedicare.

COBRAisn’tusuallyanaffordableoptionifyoulostajob,becausethepremiumyoupaidasanemployeewaslikelylessthanathird,orevenafifth,ofthetotalcostyouremployerwaspaying.Privatecoverage,onaverage,willcostlessthanhalfofwhatyou’llpayforCOBRA.Onetacticistoshopforprivateinsurance,andmixandmatchprivateandCOBRAcoverage,usingCOBRAforthosefamilymemberswhocan’tgetcomparable,affordableprivatecoverage.

IfyoudogowithCOBRAbutareworkingtolandanewjobandthebenefitsitbrings,considerthisfreetrickforfillingtheCOBRAgap.YouhavesixtydaystodecidewhethertosignupforCOBRA,andanotherforty-fivedaystopayyourfirstpremium.Ifyougethitwithamajormedicalexpenseinthosesixtydays,youcanoptintoCOBRAandbecoveredretroactively,andyoustillhavemorethanamonthtocomeupwiththefirstpremiumpayment.

Ifyou’vegotasidejob,moonlight,orworkasafreelancer,lookforhealthcarecoveragethroughtradegroupsandprofessionalassociations,orseeifyoucangetgroupcoverageasasmallbusiness.Fourteenstatesletyouqualifyasa“groupofone”forgrouprates,3andallstatesallowyoutoqualifywithtwoemployees.IfyourwifemaintainstheWebpageforyourfreelanceyak-groomingbusiness,seeifyoucansetthingsuptoqualify.Naturally,therewillbehoopstojumpthrough,andtherewillbeplentyofredtape,because,youknow,insurance.Anotheroptionisshort-termgapinsurancepoliciescoveringonlycatastrophicillnessesandaccidents.Callseveralinsuranceagentsandcompareoptions.Agoodguidetothebasicsofbuyingyourownhealthinsuranceisatwww.insure.com.4

PinchingpenniessohardthatLincolngetsaheadache

Asalways,freeisbetterthancheap,sostartwithanyoptionsyoucanfindforfreehealthcareforyourkids(andyou).Ifyou’reoutofwork,startwithallthesocialserviceagenciesandgovernmentprogramssuchasMedicaidandtheChildren’sHealthInsuranceProgram,eventhoughitwillbefrustratingandoftenfeellikeawasteoftime.YourlocalUnitedWayisalsoagoodsource.Again,thisiswhyyouandyourfamilypaidtaxesallthoseyearsandwhyyoumadethat$20weeklypaycheckdeductiontoUnitedWay.(Makeanotetoyourselfthatwhenyoudogetbacktowork,you’llcontributeagain.)

Fortypicalcare,checkoutwalk-inclinics,urgentcarecenters,andeventhehealthcareoptionsincreasinglyprovidedbyTargetandsomeofthebigdrugstorechains.Needtocheckyourbloodpressure?Skipthe$60cuffandregularlystopatWalgreensandusethefreemachineinstead.Whenitcomestoprescriptions,alimitednumberofcommonlyprescribeddrugsareavailablefromKroger,Target,Meijer,FoodCity,andotherbigchains.Letyourdoctorknowthatyouwantlower-pricedgenericsratherthanmoreexpensivebrand-namedrugs,oraskifyoucansubstituteanover-the-counterremedy.Ifyou’refacingaco-payonprescriptions,askyourdoctorforaninety-dayprescriptioninsteadofthirtydays,orforpillsatdoublethedosethatyoucancutinhalf(say,500mginsteadof250mg),orboth,tostretchyourtimebetweenpayingforrefills.AlsocheckoutthePartnershipforPrescriptionAssistance,5whichaimstohelpspeoplewithoutprescriptiondrugcoverage,andNeedyMeds,6whichlistsprogramstohelpyoufinddiscountedmedications.

Whenitcomestotests,remindyourdoctorthatyou’repayingoutofpocketandaskifeachoneisreallynecessaryorcanbepostponed.Withtreatments,asktopayMedicarerates(whicharelower)orifyourdoctor’spracticeoffersaslidingscaleoffeesbasedonincome.Lookforacommunitycenterthatoffersfreeorlow-costmedicalservices,7andcheckoutotherlow-costinsuranceoptionsathealthcare.gov.TheNationalAssociationofFreeandCharitableClinicslistsfreeandcharitableclinics.8Alsocheckoutmedicalcentersandteachinghospitalsnearyou.

Inmanycases,doctorscangetyoufreesamples,soletthemknowthatyou’reinatightsituation.IhadonephysicianwhomadeitapointtostockpilearidiculousquantityofsamplesinaclosetthatlookedlikeitcontainedanentireRiteAid.Hewouldn’thavecaredifIdroveagold-platedMercedes,andheroutinelyhandedoutafullcourseofsampledrugstotreataninfectionorrash.

Ifyouendupneedingamedicalprocedureandyou’repayingforityourself,dosomecomparisonshopping.Thecostofservicesvarieswidelyevenwithinasmallarea.Manystatesrequirehospitalstoposttheirrates,andotherhospitalsvoluntarilydoso.Searchonlinefor“hospitalpricing”inyourstate.InMichigan,forexample,manyhospitalsparticipateinlistingratesonline.9InMetroDetroit,theaveragechargefordeliveringababyrangesfrommorethan$14,000atonehospitaltolessthan$6,000atanother.Inaddition,contactahospitalombudsmanorpatientrepresentativetodiscusschargesandpaymentassistanceplansbeforehand.

It’lltakesomediggingandhassleandlotsofphonecalls,sobeprepared,butit’sbetterthanlettingyourkidgowithoutcare.IneverexpectedthatwewouldqualifyforapartialscholarshipinthepreschoolspeechtherapyprogramLi’lMoneyattended,eitherbecausetherewerelotsoffolksworseoffthanwewereorbecausetheprogramwouldhavebeenoversubscribed.Butsomehowwedid,andtheboygotthehelpheneededwithouttoomuchofahittoourbudget.

ItstillremainstobeseenhowaccesstohealthcareanditscostwillchangeundertheAffordableCareAct,whichisstillrollingouthealthexchangesinseveralstatesalongwithotherincentivesandlimitsonhealthcarecosts.Focusonyourneeds,keepaneyeoutfornewinformation,andasklotsandlotsofquestions.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89

Week3—Utilities...$139.39Week4—KidCosts...$114.50Totalmonthlysavings...$428.39

Lefttocut...$571.61

Wealreadywereprettyfrugalwithfood,clothes,andschoolsuppliesforLi’lMoney,butthetaxmovetorunourspeechtherapyandhealthcareexpensesthroughaflexiblehealthspendingaccountputmeoverthe$100goalinthiscategory,foratotalof$428.39incuts.Thatleft$571.61stilltocuttomakemy

$1,000goal.AsforteachingLi’lMoneyimportantlifelessonsaboutmoney,he’sbecome

averygoodsaver,ifanimpatientone.Althoughhe’squicktoexclaim,“Icansavethemoney!”whenheseessomethinghewants,therealitythatit’lltakefourorfiveweeksofallowanceisn’tmetwiththesameenthusiasm.Ioftenmakehimacountdowncalendarsohecantickoffthedaysandfeellikehe’smakingprogress,evenifhe’sjustwaitingfornextweek’sallowance.

What’smoreinterestingishowmanymoneylessonsmyboyhasreinforcedformeandMrs.FunnyMoney.Babiesshowupandsomehow,magically,thefamilybudgetstretchestoaccommodatecribs,diapers,andthecollectedworksofElmo,alltothetuneofhundredsofdollarsamonth.What’sastonishingisthatthesameparentswouldhavesworntheycouldn’tsaveanywherenearthatamountayearbeforethekidwasborn.Sure,thebudgetstretcheshard,butitrarelysnaps.ThelatesongwriterBillMorrisseyonceputitsuccinctly,“There’sBudinthe’fridgeinsteadofBecks/AndIain’tseenanysideeffects.”

Likewise,awalkthroughthetoystorewithLi’lMoneybecomesalastinglessoninthedangersofinstantgratificationatanyage.Justasitbecomesobviousthatyou’regoingtogobroke$3.99atatimerightthereintheHotWheelsaisle,itsinksintotheparentalconsciousnessthatyoualsocangobroke$39.99atatimedownatthemall.Later,whenyounoticethattheT-shirtthatfittheboyjustfinetwomonthsagonowbarelyreachesbelowhisneck,yousuddenlyrealizethattomorrowdoescome.Suddenlyafutureofscoutcamp,driver’sed,college,andhisweddingdayarebreathingdownmyneck,alongwiththerealizationthatifhe’sgettingolder,Imightbe,too.That’saboutthetimeIswitchedmylittleguy’sbedtimestoryfromTheRunawayBunnytodramaticreadingsfrommy401(k)prospectus.

WhenIputitalltogether—budgeting,expensereduction,deferredspending,andlong-termsavings—I’dsaymylittleboyhasgivenmeaprettygoodfinancialeducationinafewshortyears.Andwhenitcomestoteachinghisoldmanthevalueofabuck?Let’sjustsaythat99-centmargaritaIboughtMrs.FunnyMoneyallthoseyearsagowasthebestinvestmentIevermade.

T

6

WorkExpenses

Yes,There’stheExpenseofParkingandaWorkWardrobe,butDon’tOverlooktheNever-EndingPsychicCostsInflictedby

ABBA

hewholepointofworkingistomakemoney,butitturnsoutthatholdingajobisaprettyexpensiveproposition.There’sthecostofyourworkclothes,yourcommutetowork,lunch,and

parking,plusintangibles,suchasthecosttoyourself-esteemwhenit’sgrovelingtimebeforethebossandthecosttoyoursanitywhenyournearestcoworkerspendshoursmumblingalongtoherdownloadsofABBA’sgreatesthits.(Idon’tcarehowmanyVolvosorhowmuchAbsolutvodkatheysendus,theSwedescanneverundothatdamage.)

ButwhenIwenttotrimmywork-relatedspendingformynextinstallmentofThe$1,000Challenge,mostofthoseexpensesdidn’tshowup.Commutingcostswerepartofautoexpenses;lunchandclothingcameoutofmypersonalspending;andtheXanaxco-paysfellunderthemedicalcategory.

Myonlybigwork-relatedcostswereseveralnewspapersubscriptions,includingDetroit’sfinestbroadsheet,professionaljournalismreviews,andchildcareforLi’lMoney.Mrs.FunnyMoneywasworkingthreedaysaweek,withtwoafternoonshiftsthatoverlappedwithmyworkhours,soourrosterofsitterscouldrackuptosixhoursaday.That’sanaverageof$126aweektokeepthekidfromingestingaweek’ssupplyofTeddyGrahamsorflushingthediningroomdrapes.Thenthereweretheadditionalcostsofcareduringschoolbreaksandsummervacation,includingaddedhoursforthesittersandday-campfees.

Thefivenewspaperswegeteverydayatmyhousewouldseemlikea

temptingtargetforcostcutting,especiallywhenyouconsiderthatsomenationalpublications,suchasTheWallStreetJournal,cancostmorethan$300ayear.Butmymotherdidn’thaveanychildrendumbenoughtobecomeanewspapercolumnistwhowritesaboutwhatagreatideaitistocancelyournewspapersubscriptions.(Andremember,aspecialingredientinnewsprintinkgetsabsorbedthroughyourhandsandhelpspreventgumdisease!)Sofindinganysavingsinthework-expensecategorymeantIwasgoingtohavetofocusonthecostsoftendingtoLi’lMoneyorfindingwaystomakemycommutecheaper.

Professionalexpenses

Whetherit’stoolsoruniformsforyourjob,professionaleducationrequirements,training,journalsubscriptions,uniondues,orparking,cuttingthiscategoryisn’tgoingtogiveyoumuchwiggleroom.ThebestIcansuggestistomakesureyoutakeallthetaxbreaksyoucanfind,trytogetsomecostscoveredbyyouremployer,takeadvantageofdiscounts,andcutoutasmuchasyoucan.

Freeingupcash

Aslongastheyequal2percentofmyadjustedgrossincome,Icandeductthecostofallthosenewspapersubscriptionsandprofessionaljournalsasawork-relatedbusinessexpense,whichIalreadydid.Infact,youcandeductseveralwork-relatedcosts,suchasprofessionalassociationdues,workexpensesthatyouaren’treimbursedfor,andevenahomeofficeifyouarerequiredtomaintainone(becareful,though,astheIRShasgottenverypickyaboutthisone,anditcanmarkyouasaudit-bait).Youalsocanwriteoffjob-relatededucationalexpenses,job-searchexpenses,toolsandsupplies,workuniforms,anddepreciationonacomputerrequiredforwork.Ifyoutravelbetweenoffices,youcandeductthatexpense,butnotyournormalcommutingcosts.Insomecases,youcanevendeductbusinessgiftsandentertainment.ChecktheIRS.govWebsitefordetails,1becausethereareveryspecificrulesandlimits,orconsultataxprofessional.Youhavetoitemizetoclaimthesedeductions,whichwillbemoreeffortifyouusuallyfileashortformorEZtaxreturnand,ifyoupaysomeonetoprepareyoutaxes,thatwillcostmore.

Makingendsmeet

Forthingslikeprofessionaljournals,associationmemberships,andthelike,seeifyoucanexpensethoseitemsatwork.Insteadofgettingasmalltaxdeduction,that’llsaveyoutheentireamount.Oneapproachistofindoutwhetheryourprofessionalassociationwilldiscountgroupmemberships.Forexample,oneofmyjournalismsocietiesoffersbulkmembershipstonewspapersthatsignupalloftheireligiblemembers,whichalsogivesthepaperabreakonenteringthesociety’sannualjournalismcontest,sinceonlymemberscanenter.Evenifyouremployerdoesn’twanttobearthecost,youcanreimbursethemandgetthelowergrouprate.

Youcanlookforprofessionalpublicationsatthelibraryorsplitthecostofsubscriptionswithcoworkers.Anythingthatisavailableonlineiseasytoshare,oryoucanhaveanythingthat’sstillprintedsenttotheoffice.Or,ifyourcompanyisdoingokay,askyourbosstocoverthecostofasubscription.

PinchingpenniessohardLincolngetsaheadache

Eliminatewhateveryoucan,ofcourse.Ifyou’restillinschool,lookforeducationaldiscountsonstudentmembershipsorsubscriptions.Atsomeprofessionalworkshops,students,interns,andothersmaybeabletotradeworkingattheregistrationdeskorhelpingsetuptheeventfordiscountedorfreeregistration.

Whileyoushoulddeductanyandallprofessionalexpensesyoucan,ifyourincomeislowenough,youcanalsoclaimadditionaltaxbenefitsthroughtheEarnedIncomeTaxCredit.Aimedatlow-incomewageearners,theEITCcouldhaveputupto$5,891inyourpocketafterfilingyour2012taxreturn.Theideaisthatthecostsofworking,includingchildcareandtransportation,caneatupsomuchofapaycheckthatlow-incomeworkerswouldmakemoremoneyonpublicassistanceorsimplycan’taffordtowork,sothistaxcreditbolsterstheirpaychecks.Workerswhoearnlessthan$50,270annuallymaybeeligibleforthecredit,whichaveraged$2,200in2011.Asmallcreditisavailableevenifyoudon’thavechildren.AbouttwodozenstatesalsooffertheirownversionoftheEarnedIncomeTaxCredit,socheckyourstatetaxinformation,too.(MichiganrecentlykilledourstateEITCsowecouldcutbusinesstaxes,because,youknow,it’smoreimportanttohelpthecorporationsthatunderpaytheirworkerssomuchthattheiremployeesqualifyas“theworkingpoor.”)

Ifyouhaven’theardabouttheEITC,ormistakenlythinkyouwon’tqualify,you’renotalone.AstudybytheNewAmericaFoundationfoundthatinCaliforniaaloneduring2009,anestimated800,000Californiansmissed$1.2billioninEITCrefunds,anaverageof$1,400perfamily.Overall,one-fifthofallfamiliesthatqualifyforthecreditfailtoclaimit.

ThebestpartisthattheEITCisarefundabletaxcredit.Mosttaxdeductionsjustknockdownpartofyouroveralltaxbill.Arefundablecredit,however,actuallypromptsthegovernmenttosendyouacheck.Thiscreditgetsoverlookedbyalotoflow-incomeparentswhodon’tneedtofileareturn.(Ifyouqualifyandhaven’tclaimedthecreditinpastyears,youcanamendyourpasttaxreturnsforuptothreeyearsorfileaclaimforpastyearsandgetatidywindfall.)

Youcanestimatetheamountofyourtaxcreditateitcoutreach.org2andcheckyoureligibilitybyusingtheEITCAssistantfromtheIRS.3Thisisn’ttheeasiestthingtoclaim,sogetfreetaxhelpfromtheIRS.govWebsite,bycallingyourlocal211or311communityinformationservice,orfromataxpreparationvolunteer.BetweenJanuaryandApril,theIRSVolunteerIncomeTaxAssistanceprogramoffersfreetaxhelp,whichyoucanfindbygoingtotheIRSWebsite4orbycalling800-906-9887.OldertaxpayerscanalsogethelpfromtheTaxCounselingfortheElderlyandAARPFoundation’sTaxAideprogramsataarp.org5orbycalling888-227-7669.

Formyself,theonlysavingsIgetonprofessionalexpensesisagroupmembershiptoonebusinessjournalismsocietyatworkandwhateverIcandeductonmytaxes.Thesavingsequalswhateveryourmarginaltaxrateis,soinmycaseit’sabout25centsoneverydollar.SinceIalreadyclaimedthosedeductions,itwasn’tgoingtoaddtomycostcuttingforthisproject.Thatmeantfindinganysavingsinthework-expensecategorywasgoingtohavetofocusoncommuting(whichIalreadytackledinchapter2)orthecostsoftendingtotheyoung’un.

Commuting

Ialreadyfocusedonthecostsofcars,insurance,andsoonearlier,soIwon’tspendalotoftimegoingoverthesameground,butyoucan’tescapethefactthatthebiggestusemostofusmakeofourvehiclesisgettingbackandforthtowork.AsmoreAmericanshavemovedouttothesuburbsforschools,thetwo-

carfamilyhasbecomeanecessity,especiallysincebothparentsusuallyhavetoworktoaffordhigher-pricedsuburbanhousing.

Freeingupcash

Considerthis:basedonAAA’snationalaverageof59.6centspermile,you’repaying$298ayearforeachmileyoudrivetowork,assumingyoucommutefivedaysaweekforfiftyweeksayear.Plus,thefartherawayyouwork,themorehoursofchildcareyouneed.Mydailycommutecostsanestimated$8,882ayear,at59.6centspermile,plusothercosts,suchasparkingandtolls.AddMrs.FunnyMoney’sthree-day-a-weekcommuteandit’sanother$5,329.Alltogether,ourafter-taxcostofgoingbackandforthtoworkismorethan$14,000ayear.

Anythingthatyoucandotoshortenyourcommute—oreliminateitentirely—isgoingtosaveyoumoney(andprobablycutyourchildcarecosts,too).Thatincludesworkingflexiblehourssuchasfourdaysaweekinsteadoffive,evenifthat’snoteveryweek.Ifthere’sabranchorsatelliteofficeclosertohome,seeifyoucanmoveyourjobthereinsteadofdoingitatthefarawaydowntownheadquarters.Evenifyourbossisoneofthose“out-of-sight,out-of-mind”Neanderthals,maybehe’llgofortwodaysaweek,whichwillstillsaveyousomedough.And,ofcourse,ifyourjob(and,moreimportant,yourboss,Mr.CaveDweller)willallowyoutoworkfromhomeforevenoneortwodaysaweek,thatwillalsomakeaverynicedentinyourjob-relatedcosts.

Makingendsmeet

Youknow,modernAmericansjustdon’tgettoknowoneanotherthewayourancestorsdidbackintheoldendays,whentheycrossedthefrontierinwagontrains,raisedbarnstogether,anduseddial-upmodems.Onewaytoreclaimthatold-timeycommunityspiritiscarpooling.

Onceyou’vecutdownthecostofdrivingbyyourselfasmuchaspossible,lookatthepossibilityofdrivingwithotherpeoplewhowillsharethecostofgas,tolls,andparking.Ifyoucan’tarrangeacarpoolorride-share,fireuptheInterwebsandseeifyoucanfindcarpoollistingsforyourcounty,oraride-matchingservice,oftenthroughyourcountyorstatetransportationdepartments.

Thedownside,ofcourse,isthateverysomanyweeksyou’regoingtoberidinginTracie’sminivan,inhalingCheeriosdustwhilesheblastsABBA.

Probably“DancingQueen.”Oh,whoamIkidding?It’sTracie;ofcourseitwillbe“DancingQueen.”Justgrinandbearit,orpackoneortwoofthoseairline-sizeAbsolutvodkas.

PinchingpenniessohardthatLincolngetsaheadache

Hereinmass-transit-impairedMotown,alternativestothecarareapproachedwithgeneralsuspicion(aswellastorchesandpitchforks).IftheGoodLordwantedustowalk,myhometownsays,hewouldhavegivenuswheelsinsteadoffeet.Butifmasstransitisalikelieroptionwhereyoulive,checktoseeifyouremployeroffersadiscountonmonthlypasses.Otherwise,askifyouremployeroffersQualifiedTransportationBenefits,alsocalledaCommuterSavingsAccountoraCommuterExpenseReimbursementAccount.

Thisworkslikeahealthcareordependentcaresavingsaccount,allowingyoutoshelter$245amonthforpublictransportation(includingavanpool)and/or$245monthlyforparking.Youcanhavebothtypesofaccountsif,forexample,youtakeatrainanduseapark-and-ridelot,butyoucanonlyusetheparkingaccountforparkingexpenses,andthetransitaccountformasstransitcosts.

Insomecasesemployersprovidepublictransitpassesorevenarrangeavanpoolserviceasafringebenefit,andthevalueofthesewillbetax-freetoyou,whichisanevenbetterdeal,sinceyou’renotpayingandnotbeingtaxedonthebenefit,either.Attheveryleastyoueliminatetaxesonthemoneyyoupayforyourcommute,whichboostsyourtake-homepay.Thisisaworkplacebenefit,socheckwithyourpersonneloffice.Youremployercanalsogiveyou$20permonth,tax-free,tocoverexpensesforbicyclecommuting.

Alsocheckwithyourlocalsocialserviceagenciesandcharitiestoseeifyoucangetcommutingassistance,suchasdiscountmasstransitpasses.Someareasevenhaveprogramstoofferemergencyaidforautomobilecosts,suchastitlefeesandinsurance.

Childcare

It’stemptingfortwoworkingparentstojustkeepworkingasusualandlineupdaycare,butthiscanresultinthefamilybudgettakingabighit,withthechildcaretabeatingupmuchofoneparent’ssalary.Thisistheconundrumthatmany

familiesface:workingtopayaday-carebillthateatsupallthewagesfromworking.Italsoposesanotherquestion:Whybotherhavingkidsifyou’renotgoingtobearoundtoraisethem?

ThisissuewasconvenientlysolvedfortheFunnyMoneyfamilybythe2001recessionand“jobless”(atleastforme)recoverythatfollowedthetech-stockmeltdownandtheSeptember11terroristattacks.IhadjustfinishedafellowshipatColumbiaUniversityand,thankstotheburstingoftheInternetbubble,woundupwithnojobatmypreviousemployer,anonlinecompanywhosestockslumpedtoaround60centsashare(ofcourse,Iwasholdingthousandsofshares,toboot).AnoffertomanagethreedailybusinessnewspaperswasthenfrozenduringMrs.FunnyMoney’sfirsttrimester.So,backinFlorida,Iendedupasastay-at-homefreelancingdad,assistedbyGrandpaVerne.

WedideventuallyputLi’lMoneyindaycare,mostlybecause,asanonlychild,heneededtogoplaywithotherkids.Still,Itreasuremytimeasastay-at-homedad,evenifitdoesincludeonelandmarkdiaperchangingaftertheboysomehowingestedwhatmusthavebeenajarofGerberStrainedRancidSkunkSpleens.Ithinkwehadtorepainttheceilingafterthatone,andtheroommayhavebrieflybeendeclaredanEPASuperfundsite.

Eventuallymyfreelanceincomepickedupandourbudgetleveledoff,butwithmuchfewerextrasthanduringtheB.C.(beforechild)era.ThatallchangedwhenwemovedtoDetroitandthecombinationofLi’lMoney’sspecialeducationneedsandtheGreatRecessepressionwallopedmywife’sopportunitiestowork.

Theannualcostofchildcareaveragesanywherefromabout$4,600inMississippitonearly$15,000inMassachusettsforaninfantinachildcarecenter,accordingtoChildCareAware,whilethecostofcaringforafour-year-oldinahome-basedchildcarefacilityranfromabout$4,100inSouthCarolinatoaround$9,600inNewYork.Foraschool-agedchildinmycurrenthomestateofMichigan,thestudyfoundthecostrangedfrom$3,500to$4,500.

Howanyonefamilyhandleschildcareisacustomjob,dependingonlocation,resources,familymembers,schooloptions,andtheneedsofthekidsthemselves.Thingsgetabiteasieroncealltheoffspringareinschool,butthatstillleavesyouwiththequestionofhowtocareforandsupervisethemduringsummervacations,winterbreaks,andteacher-trainingdays.HereinthesuburbsofWimpyAcresEstates,Mrs.FunnyMoneyandIhaveevenbeenforcedtoscrambleforchildcarewhenschoolwascanceledbecauseof“freezingfog.”Yes,thatisarealthing,anditdrovemyFlorida-bredwifenuts,especiallyafter

schoolhadbeencanceledtheweekbeforeonaccountof“heavyfrost.”Shespluttered,“What’snextforyouoh-sohardywinter-lovingMichiganians?Closingschoolbecauseofexcessivedew?”

Freeingupcash

Ifyou’vegotchildcarearrangementsinplacethatkeepeverybodyfeelingsafe,happy,andrelativelyunstressed,letmesaythatthisisthelastpartofyourbudgetwhereyouwanttodoeventhesmallestamountoftinkering.Also,pleasebuymynextlotteryticket.Ifyou’repaying$500aweekfordaycare,youcertainlywanttoshoparound,buttreadcarefully.Inmyexperience,it’slikelythatyourperfectarrangementsonlylastsolonguntilthenannygetsmarried,theday-carecentercloses,orthebaby-sittergetsacceptedtoStateU(Mostly)NormalCollege.

Thefastestwaytosavingsonchildcareisanotherveryvaluabletaxdodge:thedependentcarecredit.Thisallowsyoutoclaimacreditof20to35percentofexpensesupto$3,000foronekidwhoisthirteenoryounger,$6,000fortwoormore,aslongasthatcareisnecessaryforyoutowork(oryouandyourspouse,ifyoufilejointly).Thecreditshrinksasyoumakemoremoney.Therangeisfrom$600forhigher-incometaxpayerswithonekidto$2,100fortwoormoreinahouseholdwithaloweradjustedgrossincome.

Thecreditalsoappliestoanyotherdependent,includingaspousewho,accordingtotheIRS,“isphysicallyormentallyincapableofself-care”andliveswithyouforatleasthalftheyear.(Ladies,thefactthat,lefttohisowndevices,yourhusbandwouldwearthesamesocksforaweekandsubsistonadietofBudweiserandFunyunswhilezoningouttorerunsofIceRoadTruckersdoesn’tcountas“incapableofself-care,”althoughit’sanargumentIwouldlovetoseeplayoutintaxcourt.)

Youcandeductpaymentsforchildcaremadetosomerelatives,butnotyourspouse,anotherdependent,oneofthekid’sparents,oranotheroneofyourprogenyyoungerthannineteen.Youalsocandeductpaymentsforsummerdaycamp(butnotsleep-awaycamp)ifyousendthekidstheresoyoucangotowork.And,obviously,youandyourspouseneedtohaveearnedincomesincethewholepointofthecreditistoallowparentstogotowork.

There’sjustonelittlecatch:toclaimthiscredityouaregoingtoneedtonamenames(andtaxpayerIDs)whenitcomestoyourchildcareprovider(s),so

ifyouhaveaprivatesitterornanny,you’llbeoutinganyonewhogetspaidoffthebooks.Ifyoupaymorethan$1,800ayeartomostcaregivers,youqualifyasahouseholdemployerandneedtopaySocialSecurityandMedicaretaxesof7.65percent,whileyoursitterfacesa5.65percenttax.Ifyoupaymorethan$1,000inanyquarter,youalsoneedtopaya0.6percentunemploymenttax,plusanystatetaxes.

Onwagesof$2,300,forexample,yourshareoftheSocialSecurityandMedicaretaxescomesto$176andyoursitterpays$130,foratotalof$306pluswhateverstateandfederalunemploymenttaxyoumayowe.Ifyourmarginalfederaltaxrateis25percent,adependentcaretaxcrediton$2,300isworth$575.So,ifyoupaybothchunksofthetaxes,you’restillaheadby$269.Adjustyourtaxwithholdingandyoucanredirectthat$22.41amonthtowardretirementsavings,debtreduction,orotherfinancialgoals.Plus,you’llhavethenicewarmfeelingthatcomesfromdoingyourpatriotictaxdutywhilealsospendingqualitytimewithIRSFormsW-2,W-3,2441,ScheduleH,andeitherForm944or943.AndwhenPresidentObamacalls,yourlackof“nanny-tax”offenseswillsendyournominationsailingrightthroughtheSenatesoyoucanbecomeournewambassadortothePacificIslandcommonwealthofTuvalu.(It’ssinking,sopackyoursnorkel,ambassador.)

Ifthat’salltoomuchhassle,consideradependentcaresavingsaccount.ThisoperatesmuchlikethehealthcareflexiblespendingaccountIemployedforbigsavingsinchapter5.It’sabenefitfromyouremployer,includedinmostdecentbenefitplans,thatallowsyoutoshelterupto$5,000fromtaxesperfamily(or$2,500ifyou’remarriedfilingseparately).Themoneyisdeductedfromyourregularpaycheckandyoufileclaimstogetreimbursedtax-free.Alsolikeahealthcareflexaccount,youhavetousethemoneyupbytheendofthecalendaryear,andthenfileclaimsbyacertaindeadline,oryouloseanyunclaimedmoney.And,likewiththedependentcaretaxcredit,youhavetoidentifyyourcareproviders,whichcanmeanpayingnannytaxes.Youalsocan’tpayanonworkingspousetolookafteryourownkids,andyouneedtohaveearnedincome.

Inmanycasesthespendingaccountwillbeabetterdealthanthetaxcredit,especiallyifyouhaveahigherincomeandpaymorethanthetaxcredit’s$3,000(or$6,000)expensecapforchildcareduringtheyear.Youcan’tclaimthesameexpensesforthetaxcreditifyou’vepaidthemunderadependentcarespendingaccount,butyoucanuseadouble-playstrategy.Ifyoupay$7,000inchildcareexpenseseachyear,shelter$5,000inthespendingaccount,thenclaimthetax

creditagainsttheremaining$2,000.Youcanfindaverycoolinteractive,printableworksheetfromtheFSAFEDS

programoftheU.S.OfficeofPersonnelManagementthatcalculateshowyou’lldowitheitheradependentcaresavingsaccountortaxcreditatfsafeds.com.6

Makingendsmeet

Let’sgetalittleradicalhereandthinkaboutwhyyouwork:tomakemoney,right?So,afterthecostofchildcare(plusyourcommuteandotherexpenses),doyou?

TakethecaseofMrs.FunnyMoney.Betweenthecostsofherthreedaysofcommutingandtwoorthreedaysofchildcareeveryweek,ittakesthefirst$11,000ofhersalaryforustobreakevenonherwork-relatedexpenses.Ifsheweretogeta$20,000salary,that’sonly$9,000gross,or$525amonthaftertaxes.Admittedly,that’susingtheofficialcommutingcostof59.6centspermile,andouractualout-of-pocketexpensesforgasarelessthanthat,butwedotendtooverlooktheincreasedmaintenance,insurance,andwearandtearonthesecondcar.Still,it’sagoodexercisetoaskwhethershecouldn’tmake$9,000closertoorevenworkingfromhome,whichwouldlowerthecostofworking,makeoneofthecarslastlonger,lowerourtaxableincome(andpossiblyourtaxrate),andstillleaveuswiththesamenetamountofcasheverymonth.

IdidexactlythisshortlyafterLi’lMoneywasborn.Iwasofferedajobwritinginvestmentanalysisinthefarawayofficeofafinancialservicesfirm.Thesalarywas$55,000,whichsoundedimpressivetoanunemployedstay-at-homedad,butthecostsofdaycarenearthatoffice,tollsonFlorida’sTurnpike,andgasforalengthycommuteeachwayreducedittoabout$24,000,or$2,000amonthbeforetaxes.Therewerealsoadditionalquality-of-lifeconsiderations,suchashavingtoloadmybabyboyinthecarat7a.m.andnotgettinghimbackhomeuntilatleast6p.m.,nottheleastofwhichwouldhavebeenDaddy’slifelongdebilitatingguilt.

ItookmyquandarytoasuccessfulfreelancingfriendwhoassuredmethatIcouldbuildupmyownindependentwritingtothesameincomelevel,soIturneddownthejobandgladlystayedhomewithmyboy.Ittookninemonthstostartgeneratinganaverageincomeof$2,000amonth,andsomeyearsIdidevenbetter.

Iworkedwithonedadwhofoundamorenovelapproachtothechildcare

issue.Afterhisdaughterwasborn,heshiftedtoanightjobwhilehiswifeworkeddays.Thisreducedtheirbaby-sittingcostsandincreasedtheparents’involvementwiththebaby.Theyhadjustaslightoverlapintheirworkschedulesduringthelateafternoon,whentheyhiredasitterforaboutninetyminutesbetweenthetimeheleftforworkandhiswifearrivedhome.

PinchingpenniessohardthatLincolngetsaheadache

Forchildcare,shoparoundforproviderswhomayofferascholarshiporfeesonaslidingscaleforfamilieswho’vetakenahittotheirincome.Moststatesocialservicedepartmentsandearlychildhoodfoundationsoffersubsidiestolow-incomeparents,too.Alsocheckwithyourcompany;largerfirmsmaynegotiateadiscountwitharecommendedday-carefacilitynearbyasanemployeebenefit.Ifyourcompanydoesn’t,maybenowisthetimetogatherupsomesignaturesfromotherworkingparentsandpetitionthebenefitsdepartmenttoadddiscountdaycare.

Anotheroptionthatmightbecheaperwithpreschoolkidsistofindoutifyourschoolsystemoffershalf-dayprekindergartenforfour-year-olds.Evenifit’snotfree,itcanbecheaperthandaycare.Militaryfamilies,includingactiveanddeployedmembersoftheNationalGuardandreserves,shouldcheckwithOperationMilitaryChildCareaboutchildcaresubsidies.ContactChildCareAwareat800-424-2246oratchildcareaware.org.7Churches,youthorganizations,andcommunitycentersalsoofferchildcareandafter-schoolprogramsthatmaygiveyoumoreaffordableoptions.Don’tforgettocheckwithyourlocalcolleges,whichoftenrunveryniceday-careoptionsfortheirownstafforaspartofteachertrainingandofferunusedslotstothepublic,foracharge.Oryoumaybeabletolookforqualifiedsittersamongstudentteachersorthosestudyingchilddevelopment.

Ifyoucanfindafewlike-mindedneighbors,coworkers,orothers,considersettingupaday-carecooperative,whereseveralfamilieshireonenannyorsittertolookafterasmallgroupofchildren.Thecareprovidercangetagoodincomewhileeachindividualpayslessorcancontributetime,materials,orspacefortheproject.You’llneedtosetupeverythinginwriting,appointoneparent(notthewholegang)tonegotiatewithandsupervisethecareprovider,andsetrulesabouthowmuchnoticeanyparentmustgivebeforepullingoutoftheco-optokeeponeortwomembersfromsuddenlygettingstuckbearingtheentirecost.

Ifyou’vegotanyrelativeswhocanhelpout,evenoneortwodaysaweek,seewhethertheycanbecoaxedintoaction.Maybeanauntcanbetheresponsibleadultonhandwiththekids,withaneighbororstudenthiredasamother’shelpertoassistwithanystrenuouschores(orDEFCON1stinkydiapers).Betweenfamily,subsidies,communitygroups,andfriendsandneighbors,youcantrytocobbletogetheraplanthatoffersalternativestowritingabigday-carecheckeveryweek.It’lltakesomeresearchandphonecallsandincludesomehassles.Plusyou’llneedacoupleofbackupplans,sincethemoremovingpartsyoursolutionhas,themorelikelyitisthatproblemswillcropup.

Betweenmyworkingathome,GrandpaVerne,andafewhoursadayatareasonablypricedlocalday-carefacility,wehadbetter,moreaffordablecareforLi’lMoneythanifI’dtakenthatfull-timejob.Whenmyfreelanceworkincreased,ImademoremoneythanIwouldhaveworkingforsomeoneelse.ThereweredaysGrandpaorLi’lMoneytookillandmyworkschedulegotshottohellfortheday,soI’dmakeitupbyworkingaftertheboywasinbed.Thehasslefactorwasmuchhigher,butsowasmyincome,and,moreimportant,Igottospendtimecaringformysoninsteadofstuckintraffic.AndI’malmostfullyrecoveredaftertheToxicDiaperfromHell,exceptforacoupleofbaldspotsonmyeyebrows.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89

Week3—Utilities...$139.39Week4—KidCosts...$114.50Week5—WorkExpenses...$90Totalmonthlysavings...$518.39

Lefttocut...$481.61

Trimmingourchildcarecostspresentedatoughbalancingact.Ifwecutbackontheirhourstoomuch,thebestsitterswouldhavedroppedtheFunnyMoneyfamily.Ineededsitterssmartenoughtohelpakidwithspecialneedsthroughhishomework,notsometweengirlsgivinghimplotpointstothelatestTwilight

installment.Childcareisalwaysagnarlyproblem,withnoeasyordependablesolutions.

Butinthiscasetheanswerissimple:Dad.SinceI’mareporter,there’ssomeleewayinmyschedule,buttoooftenIlet

workslipintotheeveningwhenitisn’tstrictlynecessary.Startingworkearlierortakinganondeadlinestoryhomewouldshaveanhourormoreoffeachday’sbaby-sittingtab.Thatsavessomerealmoneyoverthecourseofamonthwithoutmakingabigcutinthehoursforoursitters.AndIgettoescapefromanycoworkersstilltunelesslyhummingalongto“DancingQueen.”

Someplanningandhustletogethomesothatthesittersputinonlyeighthoursaweekreducedourchildcarecostsby$30aweek.IfiguredIcoulddothatthreeweeksamonth,sothatifonenightFederalReservechairmanBenBernankeistrappedinarunawayballoon,Icanworklateandwe’llstillsave$90amonth.

Itwasn’tquitethe$100Iwasaimingfor,butwiththeextrasavingsI’dpiledupinthepreviousweeks,Istillbroughtthefive-weektotalto$518.39,beatingthe$100-per-weekgoalfortheproject.

Ofcourse,keepingthebaby-sitters’hourslowwillmeanrearrangingmyscheduleandtakingworkhome,but,assomeoneoncesang,“Iworkallnight,Iworkallday,topaythebillsIhavetopay.”

Sadly,itwasABBA.

A

7

PersonalSpending

It’sthe“Don’tAsk,Don’tTell”ofFamilyFinances,SoNever,EverInformMeThat“Waxing”Doesn’tInvolveaTriptotheCar

Wash

fterfivecolumnsaveragingmorethan$100aweekinsavings,Iwasfeelingprettygood.Iwassavingmoney,myreaderslikedthestories,and

my$1,000goalwassolidlyinsight.MyreverieendedwhenIsawthenextcategoryinmyten-weekbudget-

cuttingeffort:personalspending.WouldmywifeandIbemiredinadebateoverthecostoftheperfecthaircolorist?WouldIhavetodefendmypurchasesofcollectiblelugnutsandLovePotionNo.9(akagin)?WouldIblurtout,“Pedicure?Whoelselooksatyourfeet?”therebyensuringthatmyboy,Li’lMoney,remainedanonlychild?

Surprisingly,no.ThankstoRobinThompsonatBudgetWiseConsulting,wemade“personal

spending”themagicalfamilybudgetcategorythatensuresweddedandfinancialbliss,withnoargumentsaboutwhyIcan’tspend$30ondesignerducttapeoraccusationsthatMrs.FunnyMoneyfritteredawayourhard-earnedcashatthenailsalon.Toeliminatepettysquabblingoverpettycash,wedecidedthatfamilymoneywouldbedividedintocategoriesof“Yours,”“Mine,”and“Ours.”Mostincomeandexpenseswouldbe“ours,”buteachspousewouldgetmoneytospendasheorshesawfit.

Personalmoneyisjustthat:personal.It’sthe“don’task,don’ttell”categoryoffamilyfinances.Forawhile,weeachhadseparatecheckingaccountslinkedtothemainfamilyaccount,andaslongaschecksdidn’tbounceIdidn’tpayany

attention,noteventrackingorcategorizingthepurchases.Iclosedthoseaccountswhenthebankuppedtheminimumbalancerequirementandstartedhittinguswithfees.Buteventhen,personalspending,eitheronacreditcard,bycheck,orwithadebitcard,wasn’tanythingIbotheredtrackingbeyondclassifyingthetransactionsas“spending.”

Acheckofthismurkycornerofourfinances—don’task,don’ttell,remember?—foundthatMrs.FunnyMoneyandIeachaveragedslightlymorethan$52aweekinspendingonsnacks,skincream,visitstoStarbucks,andothersundries.MostofthatshowedupascashwithdrawalsfromATMs,butdebitcardpurchasesgavemeanotionofwheremypersonalmoneywasgoing—andtherecertainlyseemedtoberoomtosave.

Mybiggestpersonaloutflowwaslunch,whichIshouldpack,notonlyforfinancialreasonsbutforhealthreasonsaswell,sinceIworkafewblocksfromDetroit’stwogreatestConeyIslandrestaurants.TheuglysurprisewasthatI’dpaidalmost$10amonthinbankfeesduringtheyear,forATMsurchargesorwhentheaccountbalancefelltothepointofincurringamaintenancefee.

Robinhadtheanswer:cash.“Whenitcomestodebitandcreditcards,Icallit‘magicmoney,’”Thompson

toldme.“Youneverseeitasspendingrealmoney.”Mostly,shetoldme,theproblemisn’twithourbig,monthlymust-paybills,suchasthemortgage,butinourless-structureddiscretionaryspending.“Thesevariableexpensesgetusintotroublebecausethey’repronetoimpulsespending,”shesaid.“Wedon’tsay,‘Wow!Letmemakeanextracarpayment!’”

Robinsuggestedmanagingyourcashusingtheold-fashionedenvelopesystemmentionedinchapter1.Later,weadoptedtheenvelopesystemformostofourspendingonentertainment.Andtocutdownonthehassleofhavingallkindsofcheckswaitingtogetcashedbyvariousbaby-sitters(andhavinganyforgottenonestriggeranoverdraft),Iusecashforthoseexpenses,too.

Spendingwithcashdoesn’tjustmakewhatyou’redoingseemmorerealascomparedtoswipingapieceofplastic;it’salsophysicallymoreuncomfortable.AstudybyPriyaRaghubir,oftheSternSchoolofBusinessatNewYorkUniversity,andJoydeepSrivastava,oftheRobertH.SmithSchoolofBusinessattheUniversityofMaryland,CollegePark,foundthat“themoretransparentthepaymentoutflow,thegreatertheaversiontospending,orhigherthe‘painofpaying.’”1

Inotherwords,stickingacrowbarintoyourwallettodragoutactualfilthylinengreenbackssendsthemessagetoyourprimitive,survival-orientedcaveman

brain,“Thisisreal,dude,andwhoknowswhenwemightreallyneedthesebillssometimeinthefuture,whenthepterodactylsattack.”Whenyou’vegotonlya$20and$10billleftinyourwalletandpaydayisn’tuntilnextweek,thatsubtlemessageiswhatconvincesyoutoforgopickingupthatmagazineinthelobby,candybarinthevendingmachine,orJaws3-D:TheDirector’sCutatthedrugstore.

Payingwithanykindofcreditcard,though,promptsshopperstospend12to18percentmore.Itdoesn’tmatterwhatitis—acreditcard,debitcard,giftcardorcertificate,Monopolymoney,IOU,excesschildren,oreventrinketsandbeads—usinganythingbuthardcurrencyunleashesyourinnerdrunkensailorwhowillslapdownhisAmericanExpressCadmiumCardfortheBlu-rayboxedcollector’seditionofHotTubTimeMachine,LittleFockers,andPaulBlart:MallCop.Andgimmetwoboxesofthosemicrowaveknishes,too.

ATMandbankfees

Thiswasmybiggestembarrassmentoftheentireten-weekseriesofcolumns:thefactthatIwaspayingabout$10amonthinfeestogetbackmyownmoneyattheautomatictellermachine.I’verailedagainsttheseoutrageousfeesforyearsandyetIstillgotnabbedbythem.

YougethitbyATMfeeswhenyouwithdrawcashfromamachinethatisn’townedbyyourbank.Actually,yougethittwice.Firstthere’stheconveniencechargefromtheownerofwhateverATMyou’reusing.In2012,accordingtomybuddiesatBankrate.com,youpaidarecordaverageof$2.50totheowneroftheATM,a4percentincreasefromthepreviousyear.2Thatfeeisdisclosedatthemachine,usuallywithasignontheoutside(thoughthatrequirementwasrecentlywaivedbytheObamaadministrationbanklackeys)andwithawarningstatementonthescreenduringyourtransaction.

You’llfindthesefeesinplaceswheretheATMownerhasyouoverabarrel,suchasatanairportorthequaint,cash-onlycidermill,aswellasspotswhereyouprobablyshouldn’tbewithdrawingcash:casinos,stripclubs,racetracks,andotherlocaleswhereit’sasafebetthatyou’renotmakingthehealthiestfinancialdecisions.

Ontopofthat,yourownbank(that’sright,theplacethatalreadyhasyourmoneyandisdutyboundtoletyouactuallygetatyourdoughonceinawhile)hitsyouwithitsownfeeforgoingoutsidethebank’sownATMnetwork.In

2012,thatchargeaveraged$1.57,up11percentfrom2011,accordingtoBankrate.Ifyouthinkthattotalof$4.07inaverageATMfeesforjustonetransactionisworththe“convenience,”lookatitthisway:ifyouwithdraw$40forlunchorafter-workdrinkswiththegang,youpaida10percentfeejusttograbtwo$20bills.

IwilladmitthatsomeofthatmoneygoestothenetworksthatruntheATMsystem,soit’snotallgoingtothebanks.Ontheotherhand,banksneedtoadmitthathavingcustomersuseanyATMischeaperthanwhatitcoststhemtooperatebrick-and-mortarbranchesoreveningandweekend-drive-throughwindows,andmuchlessthanprocessingchecks,andthatifcustomerscouldn’tconvenientlyaccesstheirveryownmoneyinsomemanner,thenthosepeoplewouldn’tbebankcustomersforlong.WithmostcheckingaccountsthatyouaccessthroughanATM,thebankisn’tpayingyouadimeofinterest(andattoday’srates,that’saboutallyou’dgeteveniftheydid).Instead,thebankisloaningyourmoneyoutandissupposedtomakeitsprofitsonthespreadbetweenthe00.00percentinterestthatitpaysyouandwhatitchargesonloans.(Aquaintconcept,Iknow.)

Instead,banksnowmakemorethan20percentoftheirincomefromstickinganever-increasingnumberofever-increasingfeestoitsowndepositors.NewfederalbankingrulesandacrackdownbytheConsumerFinanceProtectionBureaulimitsomefees,butit’slikesqueezingasausage—thebankfeesjustpopoutsomewhereelse.

YoucansidestepATMfeeswithsomeshoppingandplanning.OnlinebanksandsomecreditunionswillgiveyouasetnumberoffreeATMtransactionseachmonthatanymachine,ortheyrebateanyATMfeesyoupay.Creditunionsalsooperateafee-freenetworkofmachines,whichyoucanfindat:

CreditUnionNationalAssociation3

TheCO-OPNetwork4

Allpoint5

STAR6

MoneyPass7

SUM8

That’shelpful,ofcourse,butwhenyouneedcashyouhavetoaccessoneormoreoftheselistsandhopethere’saparticipatingATMcloseathand,whichisn’talwayspossible.Once,atDisneyWorld,IfeltallsmugthatI’dlookedup

freeATMsattheparkbeforewelefthome.Well,youtryfindingthestand-aloneATMoftheDisneyemployeecreditunionthat’ssituatedatsomefarawayshuttlestopinoneoftheemployee—Imean,“castmember”—parkinglots.PerhapsyouaremorefrugalthanI,butIamnottakingabusrideouttoReedyCreekImprovementDistrictConservationArea3-AjusttosavethecostofoneATMfee.Closertohome(asin,threeblocksfrommyhouse),there’sanotherfreeATMlistedattheelectricutilityrepaircenter,whichisadepotforbig,hulkingelectric-linerepairtrucksbehindbarbed-wire-toppedfences.IsupposeIcouldaccesscashthereduringworkinghours,butdrivingaroundalltheparkedbuckettrucksat1a.m.onSaturdaynighttogetcashforthebaby-sitterafteranightoutwithMrs.FunnyMoneyprobablywon’twork,anditmightgetmeshotbyasecurityguard.

I’vefoundthatit’seasiertosimplyhaveastashofcash.Youdon’thavetocarryyourentirewadinyourwalletorpurseatalltimesthough.Everypayday,Iwithdrawourbiweeklyallotmentforbaby-sitters,entertainment,andspendingcashforbothmeandMrs.FunnyMoney.Cashforsittersandentertainmentgoesintotwospecialenvelopes(andno,Iamnottellingyouwhereinthehouse).IdistributethespendingcashtoMrs.FunnyMoney,who,forallIknow,buriesitinaMasonjarinasnowbankorstashesitinhersnood.Istowmineinthesockdrawer,whereIcangrabwhatIneedwhenI’mchoosingbetweenthesweatsocksandargyles.(“Hmmm,Ineedcashandit’stimetodolaundry.”)

NoATMfees,noguessinghowmuchspendingcashisinyouraccountversusmoneysetasideforrentorthecarpayment.UsingcashmeansIcan’t“forget”aboutanATMwithdrawalandtakeouttoomuchcash,resultinginanothersky-highbankfee,likea$35dingforoverdrawingouraccount.IfIdorunshort,IcanalwayshitanATM,borrowfromafriend,orwriteacheck.Butoverall,goingwiththegreenlowersifnoteliminatesoutrightthehabitofthrowingmymoneyawayjusttogetmyownmoney.

Freeingupcash

Shoparoundwhenchoosingyourbank,comparingfees,accesstoATMs,minimumbalancerequirements,andoverdraftcharges.Freecheckingappearstobedwindlingbecauselawsnowpreventbanksfrompiggingoutonyour“free”accountbysuckingyourbalancedrywithaplethoraofhiddenfees.Youcanstillfindfreechecking(tryacreditunion),butyoumayhavetolookaround.

Anotherwaythatyouendup“paying”forfreecheckingisbykeepingaminimumbalanceinyouraccount.Thatamountalsohasriseninrecentyears,toanaverageof$723.02,up23percentbetween2010and2011.Keeplessthanthatondepositandyoufaceamonthlyfeejusttokeepyouraccountopen.Thataveraged$5.48amonthlastyear,up25percentfromtheyearbefore.Atsomebanks,theminimumbalancerequirementis$5,000.

Themajorityofbanks,however,willwaivemonthlyaccountfeesifyouhavedirectdepositordobusinesswiththebankinsomeotherway.Overall,95percentofcheckingaccountsoffersomewaytoavoidamonthlyservicecharge.Butthatdoesn’tmeanyourbankwilltellyouaboutitiftheyupthefeesorrequirementsonyouraccount.Moreoften,thebankchangestherulesinthefineprintoftheaccountstatementyoudon’treadeachmonth,thenslapsyouwiththenewfeelateron.Ifyoudon’tnotice,ordon’tcomplain,you’relosingeachmonth.Sotakesometimetofindoutiftherearecheapercheckingoptionsfortheaskingatyourownbank.ThemoneymarketsavingsaccountatmybankuppedtheminimumbalanceandstarteddingingmyaccountformonthlyservicefeesuntilIswitchedtoastraightsavingsaccount.Thedifferenceinthepatheticinterestratewas,Irecall,aquarterofapoint.

Ifyoutravelalotanddon’tliketocarrywadsofcash,lookintooneofthegrowingnumberofonlinebanksthatwillletyouaccessATMswithoutafee.Withtheuseofmobiletechnologyfordepositsfromasmartphoneoracomputerattachedtoascanner,youmayfindthatyoucansimplyavoidthefee-for-allthatcomeswithaconventionalbrick-and-mortarbank.

Makingendsmeet

Ifyou’restretchingeverydollaruntilitwhineslikeatoddlerbeingforcedtoeatrutabaga,keepacloseeyeonyourbankcharges.Now,youmaythinkthatskippingcashandputtingeverythingonadebitcardisagoodbet:itavoidsATMfees,youcantrackevery$2youspendonstamps,andyoudon’trunupanycreditcarddebt.Butchancesareyourcheckingaccountbalancegetsdowntoasingledigitadayortwobeforepayday,andthenonemistimeddebit-cardpurchase,forgottencheck,oroverlookedautomateddebitcangetyouslappedwithabounced-checkcharge.That’soften35bucks,andifyougethitwithone,chancesareyou’relikelytogethitwithmore.Often,thebankpaysyourtransaction,basedonyourdeposithistory,throughsomethingcalleda“courtesy

overdraft,”whichalsocarriesthesameheftyfeeasbouncingacheck.Thereasonisthatthesekindsoffeesarenearlypure,risk-freeprofitforthe

banks.Theycoveryourtransactionforadayortwo,untilyournextpaycheckisdeposited,andcollectafeethat,ifitwerealoan,wouldamounttoausuriousrateof900percent.Bankssneakedcourtesyoverdraftcoverageontocheckingaccountsforyears,claimingitwasacustomerservice,but,oddly,itwasonetheyhidinthefineprintofthecontractsratherthantoutingonbillboards.Alsohidden:themuchcheaperoptionsforoverdraftprotection,suchaslinkingyourcheckingaccounttoalineofcredit,acreditcard,orasavingsaccount.Newfederalbankinglawsrequiredbankstogetup-frontapprovalfromcustomersfor“courtesy”overdraftcoverage,andbankswentonascarecampaigntofrightencustomersintothinkingtheyhadnootheroptions.

Whilebankcustomersatleasthavetooptinforsuchgrotesquelyexpensiveoverdraft“protection”thesedays,anothertrulyscummybanktrickremainslegal,atleastfornow.Thisisthepracticeof“checkordering,”inwhichbanksclearyourchecksanddebittransactionsnotbychecknumberorintheorderreceived.Instead,thebanksterscleartheseitemsfromthelargesttransactiontothesmallest.Whatthisdoesiscreatethegreatestpossiblenumberofoverdrafts—andfeesforbankers.

Ifyouhavea$100balanceandhavetransactionsfor$10,$20,$40,and$80hittheaccountonthesameday,clearingthelargestamountfirstresultsinthreeoverdraftcharges,eventhoughonlyoneitem—the$80check—putsyouoveryourlimit.Thedifferencetothebankisthattheyget$105forthreeoverdraftsinsteadofjustonealreadyridiculouslyinflated$35fee.Foryearsbankerstoldmetomyfaceforyearsthatitwas“tobetterserveourcustomers,”claimingcustomerswantedbig-ticketitemssuchasthemortgageandcarpaymentclearedfirst.Infact,banksweresoselflessinofferingoverdrafts,purelytohumoruscustomers,thattheyneverevenchargedusforthewheelbarrowsneededtohaulallthatextracash,anestimatedtotalof$20billionfromdebitandATMoverdraftsin2009.

YeteverytimeIdaredthemtoshowmeresearchprovingthatcustomersdid,indeed,preferhavingtheirbiggestchecksanddebitsclearedfirst,theycouldn’t.Bankstersalsocouldn’tdigupthatmythicalresearchwhentheygothauledintocourtovercheckordering,whichpromptedBankofAmericatosettleonesuitcoveringthirteenmillionaccountsfor$410millionaftera2½-yearfight.CitibankandWellsFargochangedtheirpolicytwoyearsagotoendcheckordering,andsomelargerbanksalsodeclinedebitcardtransactionsthatwill

promptoverdrafts.Butdespitethreatsfromregulators,thepracticeisstillinuseatmanybanks.

Thebottomlineisthis:First,ifanyoneatabanksayssomethingisbeingdone“toserveyoubetter,”grabyourwallet,yourgasmask,andapooper-scooper.Second,makesureyouhavetheleastexpensiveoverdraftprotectionpossibleonyourcheckingaccount.Ifyouhavecashstashedinanemergencyaccountorsavingsaccountthatisn’tearningmuch,moveittoalinkedaccounttocoveryouroverdrafts,sincethat’susuallythecheapestoption.Third,makesureyouneverhavetouseit.Keepafinancialcalendar(orevenjustadatedlist)thatshowswhenbigtransactionsregularlyhityouraccount,suchasanautomatedstudentloanormortgagepayment,orregularlyaddthoseitemstoyourcheckregisterorbankingsoftware.Andthankstoonlinebanking,youcancheckyourbalanceanytimeofdayornight,sodothatonceinawhile,especiallyinthelastfewdaysbeforepaydaywhenthingsgettight.Anddon’tforgettorecordpaperchecks;theyaren’tdeductedfromyouronlineavailablebalanceuntilthey’vebeencashed.

Anotheroptionistosetupaccountalertstowarnyoubye-mailortextmessageifyourbalancefallsbelowacertainlimit.Smartphoneuserscanseeiftheirbankhasamobileapptocheckbalancesbyphoneorothermobilegizmo.

Yes,Iknowthatamarriedcouplewithautomateddepositsanddebits,twodebit/ATMcards,andcheckbooksarejustnaturallygoingtorunintotroubletrackingtheiraccountbalances.It’seasytosay,“Don’twritecheckswhenyoudon’thavethemoney,”butit’snotsoeasytodowhenmoderntechnologyismakingthathardertotrack,andespeciallywhenthievingbankstersaretryingtorigyouraccountsotheycandrainoutmorefees.Thisiswhycashisagoodoptionforallthose$7lunchesand$3lattesand$12cabrides.Usingcashinsulatesyourcheckingaccountfromhavinganyoftheselittleitemsbecomeabigbouncedcheckcharge,aswellashelpsyoukeepyourpersonalspendingwithinyourbudgetedallotments.

PinchingpenniessohardthatLincolngetsaheadache

PaycashwhenyoucanandavoidATMchargesliketheywerethelatestepisodeofGirls.Ifyou’restuck,getcashbackatagroceryordrugstore,butdon’tthrowyourmoneyawayongumorasnack.Getsomethingyouknowyouneed,likeacanofdicedtomatoes,aboxoftissues,or,evenbetter,thelatesteditionofyour

localnewspaper.(Remember:newspaperinkabsorbedbyyourhandshelpspreventgumdisease.Trustme;Iwaspre-medfortwoweeks.)

Asmuchaspossible,payyourbig,regularexpensesoutofyourcheckingaccountandmakeyourvariable,discretionaryday-to-daypurchasesoutofyourweeklycashallotment.Ofcourse,you’restillgoingtoneedtobuysomethingswithplastic,suchasonlinepurchases,planetickets,andrentalcars.Onceagain,whileitseemslikeitmightbethereasonable,financiallyresponsiblethingtodotouseadebitcardratherthanacreditcard,thinkagain.

Whentimesarehard,youwanttoavoidputtinganythingonyourMasterCardorVisa,andyou’reprobablyregrettingthethingsyou’vealreadychargedandstillarepayingoff.Naturally,you’rekeepingyourcreditlineopenforemergencies,suchasadoctor’svisitornewtransmission.Soyoumakeyourroutinepurchases,especiallyonline,withadebitcard.Butthatcanbedangerous.

First,inthecaseoffraud,yourcreditcardliabilityislimitedto$50byfederallaw.Andifyouhaveproblemswithavendoryoucandisputeacreditcardchargebecausethere’sasortoffirewallbetweenyouandyouractualmoney—thecreditcardissuerwhopaysthevendorand,inturn,getspaidbyyou.Withdebitcards,abankmayvoluntarilylimityourliabilityforfraudulentcharges,butthat’satthebank’sdiscretion,notyourlegalright.Andifyouhaveadisputeaboutanonlineitemthatthevendorsayswasshippedbutyouneverreceived,yourmoneyisalreadygone.Ifyouwantitback,you’lllikelybestucktryingtogetthevendortodotherightthing.

Usingacreditcardinsteadofadebitcardassumesyoupayoffthosecreditcardchargesinsteadoflettingthemmountup.Theeasieststrategyistopayoffnewchargeswhenyougetthebill,or,ifyou’reorderingonline,justopenupanewbrowsertab,gotoonlinebillpaying,andsendapaymentforthesameamounttoyourcreditcardcompanyrightthenandthere.Evenifyouendupdisputingthecharge,yourmoneyiseithercreditedbacktoyouorappliedtoyourcardbalance.Ifyoucan’tqualifyforacardordon’ttrustyourselfwithone,consideronlineoptionssuchasPayPalorgivingmoneytoafamilymemberorfriendandhavingthemusetheircardtomakethepurchase.

AhugenumberofAmericansavoidhavingbankaccountsaltogetherbecausetheyfearlosingcashtobanksthatgrabtheirfeesfirst,makingabankaccountmoreexpensivethangoingtoacheck-cashingoutletorevenapaydaylender.AccordingtotheFederalDepositInsuranceCorporation,aroundninemillionU.S.householdsdon’thaveatraditionalbankaccount,whiletwenty-onemillion

Americansarelackingintraditionalbankingservices.Soyou’renotaloneifyou’rebypassingabank,butultimatelyyouarepayingmoreformoneyorders,checkcashing,prepaiddebitcards,andmore.Ifyou’vebeenscaredofffrombanks,shopyourlocalcreditunionsandletthemknowyouwantasimplecheckingaccountthatwon’ttriggerfees,soyoucanpayyourbillsandkeepyourmoneysafebetweencashwithdrawals.Thenskiporlockupthedebitcardsoyoucanmoreeasilytrackyourbalance.

Mrs.FunnyMoneyandIsticktocashformostofourpersonalspending,andweuseourbank’sonlinebill-payingservice.GasandgroceriesgoonanAmericanExpresscardthatgivesusdoublerewardmilesforthosepurchases,whichcutsourfuturevacationcosts.Thatcardisautomaticallypaideachmonth,butAmExsendsane-mailwarningbeforethebillisdue,soIcanmakesureit’scovered.Thatjustleaveschecksformedicalbillsorthefertilizerservice,plusthebigrecurringexpensessuchasthecommunitydockingfee,whichwesaveforeverymonthallyear-roundandaretrackedinmycalendar.Allthat’sleftistheodddebit-cardtransactionforthingslikegrubtreatmentsandspackleat(WhyDidIEverBuya)HomeDepot.

Allofthisminimizesthenumberofourmonthlybanktransactions,especiallycasualdebit-cardpurchasesthataretooeasytoforget,andconsequentlyitlimitsthenumberofopportunitiesforourbanktopulloneofitsscummy,fee-inducingtricks.

Lunch

Okay,soATMfeesweren’tthebiggestchunkofmyownpersonalspending,buttheywerethemostmaddening.IfeltbetteraboutwhatIspentonlunch,whichatleastgavemesomethingformymoney,evenifitwasmoneyIcouldhavebeensavingbypackingmyownmiddaymealandsnacks.

Atthesametime,payingforlunchmostdaysoughttocausemeasmuchembarrassmentasblowingcashtogetmyowncashoutofamachineinthewall.Inmycarefree,scufflin’bachelordays,myrefrigeratorlookedlikethesetGeorgeLucasusedfortheiceplanetHoth.ItusuallyheldnothingmorethanexpiredmilkformymorningcoffeeandleftoverChinesetakeoutthatlookedlikeitwaseitherveryfreshbroccoliorveryoldbeeflomein.ButonceIarrivedatmyhappydomesticated“Ido”days,thefridgewasfull.Isimplywasn’torganizedorthoughtfulenoughtopacksomethingbeforeblowingoutofthe

houseinthemorning.Worse,theleftoversweregoingtowasteandunhealthypurchasedlunchesweregoingtowaist—mine.

There’saninterestingsimilaritybetweenbudgetsanddiets.Unlikeotherbadbehaviors,youcan’tquitoverspendingandovereatingbygoingcoldturkey.(Mmmmm...coldturkeysandwiches!)If,forexample,you’vepickedupthehabitofsnortingPCPtoboostyourmood,youcanquitthataltogetherandknowthatlifeisgoingtoimprove.Butthereisn’tanygoodwayto“justsayno”tocaloriesanddollarsthatdoesn’tleaveyoustarving,evicted,orboth.Theonlyanswerismoderationandcontrol,whichismoreofachallengeand,quitefrankly,onethatallofuswillwinsomedaysandloseonothers.AsIwritethisonSt.Patrick’sDay,letmejustsaythatwhenitcomestomoderationandcontrol,thisisnotlookingliketheirday.

Freeingupcash

You’dbeamazedathowlittleeffortittakestosaveasignificantamountonlunch.Atypicallunchinthecafeteriausedtorunmeabout$7total,andoftenincludedtheever-temptingpizzatheoldDetroitNewslunchroomturnedout.Instead,IdiscoveredIcouldgetaweek’sworthofWeightWatchersmicrowaveentrées,twobagsoffrozenmixedvegetables,andahalf-dozenbottlesofgenericseltzerandcutmycosttoabout$4aday.Sharinganewsroomcoffeemakerwithahalfdozenothercaffeineaddictsbroughtmyhabitdownfromasmuchas$3.50adaytothepriceofcontributingacanofcoffeeonceamonth.Thewholethinginvolvedonestopatthegrocerystoreaweek,oneTupperwarebowl,andrememberingtotaketwominutestograbthestuffinthemorning.(Okay,threeminutes,sinceIhadtowashtheTupperwareafterforgettingtoputitinthedishwasher.)Iwassavingupto$50amonthoncoffeealone,andevenmoreifIwatchedforsales.

Thinkthat’snotmuch?Let’ssayyouhaveacreditcardwithan18.9percentinterestrateanda$5,000balance.Sticktotheminimumpaymenteachmonthandinabout11-and-a-halfyearsyou’llhavepaidbackmorethan$8,100.Nowaddthe$50you’resavingeachmonthfrombringingyourowncoffeetoyourminimummonthlypaymentandyou’llpaythatcardbalanceoffinfouryearsandtwomonthsandsavenearly$1,500ininterest.Sobuyyourowncoffee—justpromisemeyouwon’tbuyanyFrenchvanilla,whichalwaystasteslikeIgotmycanofcoffeegroundsmixedupwithMrs.FunnyMoney’spotpourri.

Mydailysavingsoncoffeeandlunchaddeduptomorethan$60amonthinpotentialsavings.(That’s$15aweektimes4.3weekspermonth,because52weeksayeardividedby12months=4.3weekstoeachmonth.Gotit?)Ididn’tcompletelysticktothatschedule,andIforgottopacklunchonsomedaysoryieldedtotheconvenienceofcafeteriacoffeeoverbrewinganewpot.Ofcourse,thefrozenlunchesandcoffeewereshiftedtothegrocerybudget,soitwasn’tallnetsavings,butIdealtwithreducingourgroceryspendinglaterinmycost-cuttingproject.EvenifIgotsloppyandonlybroughtmylunchfromhometwodaysaweek,ourpersonalspendingwasgoingtobearelativelyeasycategoryforfindingsavings.I’djusthavetonegotiateexactlyhowmuchwecouldcutwithMrs.FunnyMoney.

Makingendsmeet

Stretchthingsevenfurtherbyplanningaheadtouseleftovers.Ifyou’resmart,you’reshoppingthegroceriessaleshardeachweek,stockingyourpantryandfreezer,andthenplanningyourmealsaroundthoseitemsyoualreadyhave,pluspickingupveggiesanddairy.Ifyoutaketheextrasteptomakeyourmenugenerateenoughleftoverstoprovidelunch,oratleastthebasisoflunch,youcansaveevenmoreandeathealthier.

IfI’mmakingmyauntFrannie’sridiculouslyeasyandwonderfulchili,forexample,IjustdoubletherecipeandIamsetforlunch.Icouldeatthatallweek,quitehonestly,althoughIhaven’tyetworkeduptoeggsandchiliforbreakfast.Inthesameway,aninexpensivebottomroundroastyieldssandwichmeatandtheleftoverlettucefromasaladmakesagoodbaseforalovelylunchtimeantipasto.

Thisstrategyinvolvesonepotentialproblem:certainotherpeopleinmyhouseholdwhodon’thappentobemysonwilloftenbogarttheleftovers,leavingawide,hungrygapbetweenmymoney-savingidealandmystomach-growlingreality.Eitherpackthoseleftoversforyourownlunchrightaway,or,moreresponsibly,discusswhogetswhatwhenyouplanthemenu.

Therewillbedayswhenit’snotfeasibletopackalunchandotherdayswhenyou’resimplysickofbrown-baggingit.Dowhatyoucanbybringingyourlunchmostdays,andthensplurgeandgoouttolunchwiththegangeveryonceinawhile.Justmakeitatreatwhenyoubuylunchandgetsomethingreallygoodinsteadofblowingyourmoneyonasoggyvending-machinesandwichyou

couldhavemadebetterandcheaperyourself.

PinchingpenniessohardthatLincolngetsaheadache

Eithergetinvitedtoalotofbusinesslunchesorlearntolovethebrownbag.Ifyou’refinancialsqueakinessiscausedbybeingoutofwork,thatmakeseatingathomemucheasier,butalsoalotmoreboring,isolating,andfrustrating.Evenifyoudohaveajob,it’sstilllimitingtochowdowninfrontofyourcomputereveryday.Yougetbored,yougetfrustrated,andthenyouthink,screwit,I’mnevergonnagetahead,andnextthingyouknowyou’retakingthewholedepartmentoutforbarbecue.

Let’sbeclear:nobodyhandlestheirmoneyperfectlyallthetime,leastofallme.IamnotgoingtosayInevergotsickofthehassleofbringinglunchandeatingthesamething.Ioccasionallysaid,“Thehellwithit,”andorderedatoothsomesandwichfromthedeliandpaidextrafordelivery.Ithappens.Butifyouhaveasetback,shrugitoffanddon’tconsiderthatitwilldoomyoutogrindingpenuryfortherestofyourlife.Thenthinkaboutwhatcausedyoutothrowinthetowel.Eatingthesamethingeverydayforamonth?That’lldoit.Agonizingovereverypossibleexpenditureandseeingalifetimeofdoomifyoudon’tdoeverythinginthecheapestpossibleway?That’llreallygetyou.Youcan’tsucceedatcuttingyourbudgetwitharadical,unsustainableapproachthatleavesyounowiggleroomorfunandnooptionsexceptstrictdiscipline24/7.Takingthatattitudeisjustasbadasacrashdiet.Youcankeepitupforaweekortwo,butthenyoujustgivebackallyourprogress.

Tothatend,seeifyoucan’tmakelunchtimeawaytobolsteryourprogressandgoodintentions.IlovethisstorysharedonthebudgetingsiteLearnVest.combyErinFrankofNewYorkCity.9Frankworksinpublishingandcreditsagroup“moneylunch”withsomecoworkersforhelpingherknockout$35,000indebtonasalaryofjust$30,000.Aftersharingherdebtworries(mostlystudentloansbutalsocreditcarddebt)withafewcoworkers,theydecidedtobrown-bagittogether.Meetingregularlyinaconferenceroomatwork,theysharedmoney-savingstrategies,createdbudgets,plannedemergencysavingsaccounts,andsharedbooksandarticlesonvariousfinancialstrategies.

Thatkindofarrangementwithafewfriendseitherfromhomeoratworkcancreateagoodsupportnetworkforthekindoflonghaulthat’srequiredtoputyourfinancesinorder.Ithelpstohaveafewnonjudgmentalbuddies,notonlyso

thatyoucanseethatyou’renotalonebutalsotohelpcelebrateoneanother’sprogress.Andinsteadofyouallbrown-baggingit,youcanthrowapotlucklunchorevenorganizeamealexchange.Forexample,inagroupoffourbudgetcutters,ImakeabatchofAuntFrannie’schiliandbringthreeextraservingsinfreezerbagstoshare.Mythreepalsdothesamewiththeirmacandcheese,chickenandrice,ormeatloafandweallhavethreenewmealsforthepriceofjustscalingupourhomecooking.

Peopleusesupportgroupsforeverythingfromquittingcracktowritingnovels,andifthosetwinscourgescanbeconquered,there’snoreasonyoucan’tdothesamething.Andifyouincludeme,youmightjustscoreatasteofAuntFrannie’schili.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89

Week3—Utilities...$139.39Week4—KidCosts...$114.50Week5—WorkExpenses...$90

Week6—PersonalSpending...$104Totalmonthlysavings...$622.39

Lefttocut...$377.61

Beyondbankfeesandlunch,whoknowshowyouoranyoneelsewillmanagetocutbackwhenitcomestopersonaldiscretionaryspending?LordknowsthatIdon’twanttoknowwhatMrs.FunnyMoneyspendsherpersonalcashonandhowshecutback,andIcertainlywouldbeembarrassedtohaveherknowhowstupidlyIspentmycashinthepast.Butlunchisagoodplacetostartcutting,andpayinganykindofbankfeeisjustlikeburningyourmoney,exceptlessfun.

Howeveryouspend,you’relikelytospendlessonacashdiet.Ifyoucan’tmakethatwork,thenyou’veprobablysetaspendinglimitthat’sunreasonablylow,sogobackandadjust.Andwhenyoudochoosetospend,getthethingsthatgiveyougoodvalueforyourmoneyandareimportanttoyouinsteadofcasually

throwingaway$3hereand$5there.Ifyougiveupthemediocreoverpricedvending-machinesnacks,youstillcanaffordthegoodgin.

Wehadgoodluckusingtheenvelopesystem.Fromnowon,cashgoesintooneenvelopeforMrs.FunnyMoneyandanotherforme,alongwithcashforsittersandentertainment.Whenit’sgone,we’redoneuntilthenextpayday.Ifwebuysomethingonlinewithacreditcard,cashcomesoutoftheappropriateenvelopeandgetsdepositedinthecheckingaccounttocoverthecharge.

Afterweighingalltheoptions,Mrs.FunnyMoneyandIagreedthatwecouldeachgetbyonpersonalspendingof$40aweekinsteadofmorethan$52.Ifwesavedabunchonlunch,coffee,andbankfees,thatfreedupmoneyforwhateverelseeitherofuswanted,aslongaswestucktothe$40weeklylimit.Thatsaved$104amonth,withnaryamaritalsquabble,thankstotheverycooperativeandunderstandingMrs.FunnyMoney.Ideally,ournewall-cashapproachwillallowustofindwaystotrimwithoutcuttingoutthethingsthatareimportanttoeachofus.

“Afterall,”saidMrs.FunnyMoney,battinghereyelashes,“newmakeupandniceclothesmakemefeelromantic.”

“Oh,sweetie,”Isaid,handingheramartini,“that’swhattheginisfor.”

A

8

Entertainment

IfYouMustResorttotheIndignityofUsingaCoupon—andYouMust—FirstAskYourselfWWBD?(WhatWouldBogieDo?)

fterseveralweeksofsavingmorethan$100,Iwasonaroll.Myfamilywassavingmoney,readerslikedthecolumns,andI’dmanagedtokeepraccoon

offthemenu.ButthingssuddenlyturneddiscouragingwhenIturnedmybudget-cuttingeffortstotheFunnyMoneyfamily’sentertainmentexpenses.Iwassupposedtobecuttingmyspendingthereby$100inWeek7,butallIwantedtodowasspendmore.Addingitup,itdidn’tlooklikeMrs.FunnyMoneyandIwerehavingmuchfuntocutinthefirstplace.

Movies,concerts,andespeciallydiningoutaresomeofthefirstthingsanypersonalfinanceexpertwilltellyoutocutwhenthingsgettight—anditmakessense.Ifyoudon’thaveanadequateemergencyfund,arecarryingcreditcarddebt,oraren’tsavingforretirement,youneedtocutbackonthegoodtimesnowtoavoidbadtimeslater.Andifyou’veseenyourincomedroporlostajob,it’sevenmoreimportant.

Butfirst,youneedtobehavingsomefuntocutbackon.AsIscannedourlistofentertainmentspending,afewthingsweremissing:

limos,finerestaurants,concerts,plays,nightclubs,and—moreimportantly—baby-sitters.Intheirplacewasthelocalsportspub,diner,gym,and,seventhonthelist,McDonald’s.Allexceedinglyfamilyfriendly,andallplacesweregularlytookmyboy.ButentertainingLi’lMoneylefthisparentswithli’lfun.

Nowdon’tgetmewrong:there’snofunlikefamilyfun.Visitingthepoolatthegymputsuchasmileonmyboy’sfacethatI’dplayinanABBAcoverbandfortipsbeforeI’dcutthegymmembershipfromthebudget.Andafamilymovie

orbreakfastoutatthestartoftheweekendwaslikewiseworthwhile.Butoutof$366amonthinentertainmentspending,justone-sixthwenttodatenightsforMr.andMrs.FunnyMoney—andthatwasinagoodmonth.Insteadofwhisperingsweetnothingsintomymoneyhoney’searovercrepessuzette,IwasshoutingabovethedinattheBurgerKingplayground.

Look:ifeverymealoutcomeswithatoy,it’stimetorethinkhowthefunfundsarespent.Itwasclearlytimeforusnotonlytocutoutcasualdrive-bysatthedrive-throughbutalsotoreallocateourentertainmentexpensestomoviesreleasedbyastudiootherthanDisney.OurmovetoMichigancameonlyafewyearsafterLi’lMoneyarrived,andhismotherandIhadn’tcompletelymadethementalswitchfrombeingachildlesscouplewithtwoincomesandnightsandweekendsofftobeingthekindsofpeoplewhospendanentireweekendsleeping,eating,shopping,andcleaningwithouteverchangingoutofoursweatpants.

Mrs.FunnyMoney’sscheduleofworkingWednesday,Friday,andSundaynightsdidn’thelpeither.OntheseeveningsI’dmakedinnerandleaveaplateoutforher.Then,asshesleptinthenextmorning,I’dchecktoseeifshehadeaten.ThewholethingwasaboutasromanticasleavingcookiesoutforSantaClaus.

Cuttingourspendingonentertainmentwhileatthesametimefindingmorewaystogettheplanetsthatruleourschedulesandbudgettoalignformoredatenightswasgoingtobeachallenge.Butlookingoverwhatourfinancessaidaboutthestateofourromanticlifeledmetoonesimpleconclusion:whenitcametodiningout,itwastimetogivechickenfingersthefinger.

Diningout

Sinceweareparentsofagrade-schooler,mostofourentertainmentspendingrevolvesaroundmoviesandeatingout.FamilyfunwasmostlyCubScoutactivitiesfortheboy,familyget-togethersintheparknexttothelake,andtheoddtriptoamuseum,sciencecenter,oranythingwithatrain.Vacationsareaseparatecategorywheretheexpenseiscoveredbyadditionalsavingsorfreelanceincome,soIdon’tmakeitpartofthebudget.Instead,it’san“extra”thatneedstobecoveredwith“extra”money,nottheregularhouseholdincomefrompaychecks.

Economizingonmovieswaseasy.Weswitchedtoearlierweekendshowtimesthatwerecheaperandsignedupforadiscountcardthatrewardeduswith

freepopcornorbeveragesaftersomanyfilms.Mrs.FunnyMoneyandIalsotrimmedourmovieviewingtotakeadvantageofourcableofferingsorlibraryDVDs.Ourcriterionbecamewhetherafilmwas“big-screenworthy”orwouldlosetoomuchintranslationfromamovietheatertotheTVscreen.ThatmeanswegoouttoseeLincolnandLifeofPibutwaitforBachelorettetoshowuponcable(andthen,Ihope,findsomethingelsetodo).Sincethegymthatwejoinedforpoolprivilegesoffersaparents’nightoutdealonceamonth,wecanscorecheapbabysitting($20)andamovieatreasonablerates.

Thatjustlefteatingoutasthebignuttocrack.

Freeingupcash

There’sanoldsayingthat,whateveryouwantinlife,youcangetitcheap,easy,orgood,butyoucan’thaveallthree.That’scertainlytruewitheatingout.Weweregettingalotofdrive-throughorpick-upfoodthatcertainlywaseasybutprobablynotgood(oratleasthealthy).And,onceIaddedupallthequickhitsat$8hereand$3there,Isawthatitwasn’tallthatcheap,either.

Thereasonwasouroveralllackofpreparationwhenitcametoshoppingandmenuplanning,andourfailuretocoordinateLi’lMoney’sdinnerwithhisparents’habitofnoteatingtheirowneveningmealuntilatleast9p.m.Iftherewasnothinginthefridgeorfreezerandnobodyfeltlikerunningtothegrocerystore,thedefaultwastopickupsomethingfromacasualrestaurantorfast-foodjoint.Insteadofgettingsomethingfunforourmoney,wewerejustpluggingholesintheweeklymenu.

Thisreallyhadmoretodowiththegrocerycategorythatcamelaterinmybudget-cuttingexperiment,butonceagainitdemonstrateshowlettingonebudgetcategorygetoutofcontrolcanslopovertodisruptothers.Inthesamewaythatplanningtheweek’scooking,meals,andgroceryshoppingcutsdownonpersonalspendingforlunchduringtheweek,italsoreinsintheurgetothrowawayyourentertainmentmoneybygrabbingready-madegrubjustbecauseyou’reirritableandhungryandyoudon’tknowwhattocook.

Onceagain,thisiswhereswitchingyourdiscretionaryspendingtocashcanhelpout.Aswiththepersonalspendingdescribedinthelastchapter,wedecidedtoswitchourentertainmentspendingtoacash-onlysystem.Theallotmentforourentertainmentexpensesgoesintoaspecialenvelopeaftereachpayday,andthat’situntilthenextcheckarrives.Ifweforgettograbcashandputamealout

onadebitorcreditcard,thecashgetsremovedlateranddepositedtocoverthebill.Whenthemoney’sgone,youeitherhavetofindsomeothercash(ifI’veworkedathomeforadayandsavedontheafter-schoolbabysitting,forexample,thensomecashisfreedup)oryougowithout.

Thisnotonlysetsalimitonspendingbutitalsodampenstheurgetospendspontaneouslywithoutthinking.IfLi’lMoneywasagitatinginthebackseatforchickenfromthedrive-throughandIhadn’tpickedupafewbucksfromtheentertainmentenvelopebeforewelefthome,Ifacedthreechoices.Ieitherswipethedebitcardandremembertomoveenoughcashtocovertheexpensetothebankdepositenvelope,usemyownpersonalspendingcash,orconvincetheboytowaitforsomehealthierair-poppedpopcornandjuicewhenwegothome.

RememberingtotransfercashwasjustenoughhasslethatI’dgethomeandforget,whichcontinuedtheproblemofoverspendingonfastfood.Usingmyowncash,Ifound,motivatedmetomoreoftenremembertoreimbursemyself,and,ifIdidn’t,itforcedmetocutbackonmyownspending,leavingthecashintheentertainmentenvelopeuntouched.Thebeststrategy,ofcourse,wastosubstitutesomethingthekidlikesathomeand,Ihope,teachhimavaluablelessonindeferringgratification,oratleastgivehimplentyofmaterialtochewoverwithhisfuturetherapist.

I’lladdthatseeingthecashpileupintheentertainmentenvelopeturnedouttobethebiggestmotivatorofall.Iwasslightlythrilledwhen,aftergettingcashfromapaycheck,I’dgotorefreshtheentertainmentenvelopeandfindcashleftoverfromtheprevioustwoweeks.I’dstealthilycountuptheleftoverbills,compareittothecostofanightoutandasitter,andseehowmuchmoreweneeded.ThatgapwasenoughtomakesurethatMrs.FunnyMoneyandIrememberedtosetasidecouponsfromthenewspaperadinsertsforthecasualrestaurantswe’dhitwithLi’lMoney,andtorecallwhichonesletkidseatfreeonwhichdays.

ThesystemworkedwellenoughthatIalsoswitchedthebabysittingpaymentstocash.First,itmadeiteasiertobalancethecheckingaccount,insteadofhavingmultiplechecksfor$25or$36floatingaroundtoahalfdozendifferentsitters,whomightcashthemonlysporadically.Moreimportant,itmotivatedmetogethomeontimeorevenearlysothatthebabysittingenvelopewouldaccumulateitsownbuildupofcashthatcouldbereallocatedtoadatenight.Ievenpickedupsomecolorfulexpandingcardboardenvelopesandbrokeoutthelabelmaker.Iresistedtheurgetostartclippingoutpicturesoffancydinnersanddancingcouplescladinballgownsandtuxedostodecoupagethe

envelopes,lestthewholethingstarttolooklikesomethirteen-year-oldgirl’sPinterestboard.AlthoughImightstillcaveandtapeonacolorphotoofajuicyribeyeandawell-chilledmartini.

Clearly,ifpayingwithcashcausesaphysicalreactionakintopainaswesawinchapter7,savingcashmusthaveanequalandoppositeeffect,justlikeinphysics,right?Well,accordingtoaUniversityofMinnesotastudy,thesoothingpowerofgreenbacksisn’tjustpsychological.Actuallyhandlingcashcaneasethestingofphysicalpain,emotionaldiscomfort,orpersonalslights.Thestudyhadsubjectscountoutpaperormoney,thendiptheirhandsintoscaldingwater.Thesubjectswhohandledthemoneyreportedfeelinglesspain.1

Whichgivesmeanidea.NowwhenLi’lMoneystartsuphiswhiningwhenwebypassMcDonald’s,Iknowjustwhatdo.Whilehequietsdownsassoonashegetsasnackathome,thesamedoesn’talwaysapplytoDaddy’sjanglednervesandheadache.NowIcanjustrubtheextraentertainmentcashagainstmytemples.

Makingendsmeet

C’mere.Overhere.Listenclosely.Guys,Iamgoingtotellyouhowtodriveawomancrazyinfewerthantenwords,andIdonotmean,“Notnow,honey,thegameison.”Ladies,Imustwarnyouthatthisall-powerfultechniqueisthekindofpotentaphrodisiacthatwillcauseyourhusbandtoviewyouasacombinationofRachaelRayandJessicaRabbitinyogapants.

Whateveryourgender,IamtrustingthatyouwillusethepowerofwhatIamabouttorevealonlyforgoodandnotforevil,suchasgettingoutofyourturntochaperonetheCubScoutsleep-away.

Here’showitworks:YouentertheroomandpryherawayfromFacebook(inthecaseofawoman)orprodhimoffthecouch(man).Lookinghimorherintenselyintheeye,youreachintoyourpocket/wallet/bodice/chestwadersandwithdrawanintriguingslipofpaper.Wordlessly,youunfolditandpresentittoyourmate.Maintainingeyecontact,andinalow,sultryvoice,speakthesewords:“Weeknightdatenight.With.A.Coupon.”

Trustme,you’regonnaneedeithersmellingsaltsoracigarette.Whetherit’saGrouponboughtonline,acouponclippedfromthenewspaper

(remember:preventsgumdisease!),oratwo-for-onedealfromayourcreditcardcompany,nothingperksuptheweekofahard-coremarriedcouplelikethe

promiseofamidweekmealthat’seatennotoffthecoffeetablebutfromanactuallinentableclothatarestaurantwherethemaîtred’sniffs,“Boosterseat,monsieur?IdonotthinkIamacquaintedwithzeterm.”

Whenmoney’stightit’sreallytemptingtozerooutyourspendingonanykindofentertainment,especiallyeatingout.ButIsimplybelievethisisunsustainable.Ifyoudon’tgetalittlecrazy,you’regonnagomorethanalittlecrazy.It’sbettertoplanandfindthekindofdealthatmakesyoubothgo“Squeee!”atthethoughtofrewardingyourselfforyourbudgetdiscipline.Lockingdowneverydimemeansthateventuallysomethingsnapsand,whenyoufinallytrackdownyourwifesomewhereinVegas,youfindhereatingcaviarofftheabsofaChippendalesdancer.

Trustme.Mealplanning,shoppingforbargainsatthegrocerystore,andlearningtoloveeverypartofthechicken—excepttheMcNugget!—willbemucheasiertobearifyougetoutforagoodcrabcakeonceinawhile.Otherwise,youbecomeoneverycrabbycakeyourself.

It’seasytosignupforonlinedealsitessuchasGroupon,whichwille-mailyouspecials.Don’tgrabeveryonethatcomesyourway,sincethatdefeatsthemoney-savingaspectofthisproject,andyou’relikelytoendupbuyingdealsthatexpirebeforeyoucanclaimthem.AtTheDetroitNews,wehaveourownsimilaroffer,DealChicken,whichpresentsoffersfromouradvertisers,sochecktoseeifyourlocalpaperoffersitorsomethingsimilar.OthersitesincludeLivingSocial,AmazonLocal,andTravelzoo.LookaroundontheWebandtestoutoneortwoatatimetokeepfrombeingoverwhelmed.Setupyoure-mailsothattheoffersgotoonefoldersoyoucanreviewthemwithouthavingthemclogupyourinbox,causingyoutomissthatimportante-mailaboutyourforthcomingGeniusGrant(I’mstillwaiting,MacArthurFoundation....).

Naturally,yourweeklynewspaperflyersandcouponmailingsshouldbereviewedinsteadoftrashedorthrowninthefireplace,andcheckValpak.com,theonlinesitefortheoutfitthatmailsoutthosebigpackagesofcoupons.Anotherverygoodresourceistheadsinthenewspaper’sweekendentertainmentsections,whichusuallyappearonFridayorThursday,andthelocalalternativepaper(lookbetweentheadsforDUIlawyers).Butoftenthebestsourcesfordiscountsarecompanieswithwhichyoualreadydobusiness.

SomeofthebestdiningdealsI’veevergottencameviamyAmericanExpresscard.Duringslowtimesoftheyear,restaurantswouldoccasionallysendoutdiscountcardsthatknockedasmuchas$50offamealatanupscalesteakhouse,forinstance.Ican’tpredictwhenthesethingswillshowup,but,along

withreviewingtheoffersstuffedinmymonthlystatement,itmakesgoingthroughthejunkmailmorelikeascavengerhunt,andifyoudon’t,you’llregretit.DuringabusyperiodlastfallIletthepromotionalmailingspileupunopened,andwhenIwentthroughthestackIfoundtwoexpiredpromotionsforafreeentréeataveryupscalejoint.IfurtivelyranthemthroughtheshredderbeforeMrs.FunnyMoneycouldfindoutaboutthemissedopportunity.

Othersourcesincludegettingonthemailing(ore-mail)listsofyourfavoriterestaurants,ortheonesyouwanttobeyourfavoriterestaurants,andjustkeepinganeyeoutwhenyou’rethere.Restaurantstendtopromotethemselvesthemosttotheirrepeatcustomers,so,forinstance,themostlikelyspottoseethattheHarborHousedownthestreetoffersaSaturday-nightdealwithtwoentréesfor$30isbystoppingbytheHarborHouseonceinawhile.

Onceyoulandadiningdeal,don’tundothefrugalitybygoinghog-wildondrinks,appetizers,anddessert.Applyyourcouponordeal,knowwhatyoucanafford,andsplitanappetizerordessertifyoumust.Aglassofwineapieceoracarafeofthehousestuffwillbefinewithdinner.Plus,youdon’twanttolingertoolongandrunupthebabysitterbill.But,ifyou’vesavedenoughtogowholehogandit’sinyourbudget,thenshootthemoonandtell’emtobringonthecheesecourse.

I’llsharethisstrategythatmyparentsemployedwhenourfamilyfirstmovedtothesuburbsandtheirfunfundswerescarce.Mymomsetasideajarforalltheirquarters.Ifshehadtwobitsleftaftergroceryshoppingormydadhadafewinhispocketattheendoftheday,intothejartheywent(thiswastheearly1970s,somaybeusedollarbillstoday).Afterenoughmoneyhadpiledup,itwasdatenightforMomandDad.Thiscouldtakeawhile,sotostretchtheirbucksandincreasethefrequency,theyskippedcocktailsattherestaurant.Now,foranIrish-Catholiccouple,youmightthinkthiswoulddefeatthewholepointofthething,butMomwasresourceful.OnceDadwasallfreshenedupandshehadonherdressandfancyshoes,theyleftusboysinthebasementgameroom,brokeouttheboozeandmixednuts,andadjournedtothelivingroom,whichinthatera,wasoff-limitstothekids(thevelvetropesmymomhunginthedoorwaywereasubtlereminder).Therethey’dholdtheirowndiscounthappyhourbeforeheadingtotherestaurant.

Ifyou’reusingacoupon,bewarnedthatthiscanbeanissueforsomepeople—notablymen.Thereasonisthatfussingwithscrapsofpaperseemswimpy,notmanly.TrytoimagineBogartusingacoupon.OrPaulNewman.JohnWaynemighthaveusedacoupon,butonlytorollacigaretteone-handedonhorseback

whilefiringasix-shooter.Anddon’teventhinkaboutSeanConnery’sJamesBondusingone:

Bond:Adrymartini.Barman:Oui,monsieur.Bond:ThreemeasuresofGordon’s,oneofvodka,halfameasureofKinaLillet.Shakeituntilit’sicecold,thenaddalargethinsliceoflemonpeel.Gotit?Barman:Oui,monsieur.Bond:Err,Isay,Ihavea30-percent-offGrouponforanymixeddrink.CanI

stillusethat?

Notsuave.YoucanjusthearPussyGaloresnickering.Couponssimplygoagainstaguy’sinnerbigspender,who,insteadof

unfoldingaclippingfor$1off,screams,“Throwdowna$50andtell’emtokeepthechange!”Nonetheless,realmencanusecoupons—wejustgetsomeoneelsetopushthepaper,preferablyachild,awoman,oraFrenchman.Here’showBogiewouldhandleitattheendofCasablanca.

CaptainRenault:ItmightbeagoodideaforyoutodisappearfromCasablancaforawhile.Rick:Icoulduseatrip.Butitdoesn’tmakeanydifferenceaboutourbet.Youstillowemetenthousandfrancs.CaptainRenault:Howaboutabuy-one,get-one-freecouponforappetizersatBennigan’s!Rick:Louie,Ithinkthisisthebeginningofabeautifulfriendship.

Soremember:lookfordealsandclipthosecoupons,andthecostofadatenightwon’tamounttoahillofbeansinthiscrazyworld.

PinchingpenniessohardthatLincolngetsaheadache

Youmaybebroke,butyoustillgottahavesomefun,andcheapfunisthebestkindofall.Diningoutisgoingtobetricky,andrarewhenyourfinancesputyouupagainstthewall,butitispossible.

First,throwoutyourdinnerplansandsubstitutelunch,whichisoftenlessexpensive.Youmayalsobeabletoparkthekidsatanactivityandskipthecost

ofasitter.Anotherbonusisthatit’seasiertogetreservationsandlingeratyourtablethanitisduringtheSaturday-nightdinnerrush.You’realsomorelikelytoskipexpensivedrinksorlimityourselftoasingleglassofwineatlunch.Nowinestewardrollsouttheportcartatnoontime.Andifyoudoneedtoimbibe,seewhetherit’sabetterdealtobringyourownbottleofwineandpaythecorkagefeeatbetterrestaurants.Thisisn’tanoptioninmyhomestateofMichigan,becauseourstateliquorcontrolboardisrunbymoney-grubbingPuritans.Butifyouliveinamoreenlightenedlocale,callaheadandasktherestaurantwhatthey’llchargetohandleyourbottle.Justpleasedon’tbringanythinginabox,and,ifyoudo,don’tyoudarementionthatthiswasmyidea.

Anotherwaytokeepyourdiningbilllowistoeatintheoff-season.Summerisaslowtimeformanyrestaurants,anditcanbeabigtimeforbargains.Forafewyearsofmymisspentyouth,IwastheeditoroverseeingrestaurantreviewsinPalmBeach.Oncethe90-degreedaysandinfestationsoflovebugsdrovethesnowbirdsbacknorthinMay,thefinerrestaurantstrottedouttheirsummermenus.Thesefeaturedfour-starselectionsatnearlyterrestrialprices,ofteninprixfixedealsthatofferedanappetizer,salad,entrée,anddessertforoneprice.Thepracticeisprettycommon,soyoushouldfinditbeingofferedduringwhatevertheoff-seasoniswhereyoulive,too.ChecktheFridayentertainmentsectioninyournewspaper(gumdisease!)andwatchtheonlinespecials,orcheckwiththerestaurantsthemselves.Anotherpotentialbargainspotisrestaurantsinhotelsandresorts.Theyhavetoremainopen,butwithasmallernumberofguestsduringtheslackseason,theyoftenrunspecialstofillthediningroomwithlocals.

AnothertacticcomesfrommyformerrunningbuddyinNewYorkCity,TheBigManfromBrooklyn,who’snowhappilyensconcedinFlorida(where,unlikemostcitytransplants,hedoesn’tinsistondriving32mphinthepassinglineoftheturnpikewithhisblinkerpermanentlyon).TheBigManhasbecomeamysteryshopper,whichmeanshegetspaidtotryoutavarietyofgoodsandservices,thenfilesadetailedreporttoaidthecompanyinimprovingitsproductsandcustomerservice.Atfirst,TheBigManfocusedonservicesthatheusuallypaidfor,suchasoilchanges,buthecanalsoscoreassignmentstocheckoutmovietheaters,andhe’saddedsomeimpressivelyupscalerestaurantstohisroster.It’sextrawork,andmosttimesitstillcostshimafewbucksintheend,butit’stheperfectwaytogetsomeentertainmentfornearlyfree.

“Itcertainlyworksifyou’vegotthreehoursandcantypeandpayattentiontodetails,”TheBigMansays.“You’renotsavingmoneyifit’snotstuffyouhave

todo.Idon’thavetostayinahotelinFortLauderdaleorgotoOutbackSteakhouse,butIdohavetogetmyoilchanged,soifImystery-shopaJiffyLube,that’s40bucksinmypocket.ButIcangetdressedup,takemymomouttoafancysteakhouse,andgeta$200mealforthreehours’worthofwork.”

Todothat,TheBigManhassignedupwithamysteryshoppingserviceande-mailstovolunteerforspecificassignments,whicharepostedeachmonth.Hethenhasavarietyofdetailedobservationshehastoreport,includingspecificaspectsofhiscustomerexperience,suchashowlonghewaitedtobegreeted,didhenoticeamanageronhand,andevenhowhismenuwaspresentedatthetable.Hemayhavetofollowaspecificproceduretomakethereservation,bringacompanion,orderadrinkatthebarfirst,notetheconditionoftherestrooms,andorderasetnumberofdishes.Andhehastosubmitallthiswithinabouttwelvetotwenty-fourhoursaftervisitingtherestaurant.

TheBigManfoundhismysteryshoppingcompanybysearchingtheWeb,butwatchoutforfrauds.Anyplacethatrequiresyoutopaymoneyupfrontshouldautomaticallybeconsideredsuspect,anddefinitelycheckwiththeBetterBusinessBureauandsearchonlineforcomplaintsbeforeputtingupanyofyourowncashandhopingtobereimbursed.AgoodplacetostartisattheWebsiteoftheMysteryShoppingProvidersAssociationNorthAmerica,2thetradeassociationrepresentingthe“customerexperiencemetricsindustry.”TheWebsiteincludesagoodguideforthosewhowanttobecomeshoppers,anditoffersacertificationprogram($15or$75),whichmayormaynothelpyoulandmoreworkbutisdesigned,theassociationsays,totrainshoppersonwhattoexpectandtooffertipsonhowtoworkefficiently.Thesitealsohasafullrundownonavoidingscamsandnotesthatrealmysteryshoppingfirmsdon’taskyoutopaythemoroffertopayyouinadvance,whichisascamtostickyouwithabadcheck.Youcanchecklegitimatemysteryshoppingfirmsattheassociation’ssiteandcontactthemdirectly.

Theonedrawbacktomysteryshoppingisthat...it’samystery.Thatmeansyou’renottellingthestaffandeatingforfree,butinsteadpayingupfrontandwaitingtobereimbursedonceyoufileyourreport.You’llneedtoeitherfloatthecashinadvanceorcarrythechargeonyourcreditcard.Ifyouuseplastic,bedisciplinedenoughtodeposityourentirepaymenttocoverthecharges.Don’tusethemoneyforotherpurposeswhileyourcardbalanceswells,sinceaddingdebtdefeatstheideaofsavingmoney.

Inmanycases,TheBigMannotes,whatyou’repaidwon’tcovertheentirecostofyourpurchase,butinthatevent,he’swarnedinadvance.Healsochecks

onlinetoseemenuprices.Adinnerfortwoatahigh-endsteakhouse,forexample,runsabout$220withtax,tip,andvalet,butheonlygets$200forthereview.Atothertimeshehasmystery-shoppedaCheckersdrive-through,amucheasierassignment.“ThatwasthecostofaNo.3combothatIdidn’thavetospend,andIdidn’thavetohavepeanutbutterforlunchonTuesday.”Arecentassignmenttomystery-shopamovietheateroffered$7andcoveredtwoticketsandupto$6forabeverage.

Overall,TheBigMansays,“Thecompaniesknowexactlywhattheywant,andifyou’rewillingtodoitandwaitforyourmoney,youcangohaveaverynicedinnerfornearlyfree.”

Otherdiningdealsincludefrequent-dinercards,whichofferitemssuchasafreeentréeormealforeverytenpaidmeals.TheEntertainment.comcouponbook(basedrightinhereinMetroDetroit,I’llnote),whichisoftensoldduringfund-raisersbyschoolsandothernonprofitgroups,canbeanothersourceofsavings.Acouponforcarrentalspaidforthepriceofthebookinourcase,andtherewereenoughofferingsfromrestaurantsweknowweliketomakeitworththeefforttodineonspecificdaysorfromlimitedmenus.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89

Week3—Utilities...$139.39Week4—KidCosts...$114.50Week5—WorkExpenses...$90

Week6—PersonalSpending...$104Week7—Entertainment...$108Totalmonthlysavings...$730.39

Lefttocut...$269.61

Withourentertainmentexpensesaveraging$85aweek,thebulkofitwasfordiningout,with$66amonthgoingtothegymsothatLi’lMoneycouldplayinthepool.Inthelastmonththerehadbeenexactlyonegrown-ups-onlyouting,forawhopping$55—notevenasmuchasthegymmembership.Afewmonths

earlier,itwasallfast-foodandfamilydining,withnaryadatenightinthebunch.Itwasclearlynotgoingtohurtanybodyinourhousehold(and,infact,it

wouldmakeushealthier)tocutbackonthiscategoryaltogetherandtodirectmoreofwhatwaslefttorestaurantsthatdon’tfeaturesporks.Trimming$25aweekproducedmonthlysavingsofabout$108(remember:52weeksayeardividedby12months=4.3weekstoeachmonth).Theentertainmentcategorywasagoodcandidateforacash-onlyenvelopespendingapproach,whichnotonlydiscouragesoverlycasualspendingoncasualdiningbutalsoencouragesstockpilingcashforabignightinsteadofaBigMac.

Thequesttosavecanbecomeallaboutspendingless,butyoualsoneedtoweighhowmuchyougetforyourmoney.Inourcase,itwasn’tenough.Andsincewecouldn’taddacouplehundredbucksamonthforvisitstorestaurantsthatdon’thandoutcrayonswhentheyseatyou,wenotonlyneededtospendless,butwealsoneededtothinkmoreaboutwherewedidthatspending.

IdecidedweshouldcelebrateournewapproachtofunattheFunnyMoneyhouseandplannedasophisticatednightofgrown-upamusement.Itwouldbejustthekindofadults-onlybondingthatholdsamarriagetogether.

“Honey,”IsaidtoMrs.FunnyMoney,“let’sgooutandhavesomefuntonight.”

“Youbet!”shereplied,headingforthedoor.“ButifyougethomebeforeIdo,leavetheporchlighton.”

A

9

LifeInsurance

ABigMonthlyBillIstheAnswertoMyNightlyPrayer,“AndIfIDieBeforeIWake,IPrayMyWifeaHugeWadofCashTakes”

fterfixingupourfunfund,Ihadtodealwitharealdowner:lifeinsurance.Yes,itwasoneofourtoptenspendingcategories,andthemonthly

premiumswerenearlyasmuchasourentertainmentbudget.Whichpromptsthequestion:WhatdoesitsayaboutusthatMrs.FunnyMoneyandIspendnearlyasmuchjusttryingtolivealittleaswedoonaninvestmentthat’llpayoffonlyifoneofusdies?

It’snoshockthatentertainmentandmealsoutclaimacoupleofhundreddollarsamonthfromourbudget.Butitwasquitesurprising—andseemeddeeplyunfair—tofindthatamountnearlymatchedbyour$299monthlylifeinsurancepremiums.And,aswithanychinaIchiporspillsIneglecttowipeup,Iblamemyboy,Li’lMoney.

DuringtheB.C.(beforechild)era,Mrs.FunnyMoneyandIcarriedlifeinsurancethatcoveredlittlemorethanpayingoffthemortgage.Thatcoveragecameasabenefitfromourtwofull-timejobs,whichprovidedaboutayear’sworthofincometothebereftsurvivingspouse.Beyondthat,bothofusmadegoodsalariesthatwouldalloweitheroneofustocarryonalone,usinganyextramoneyfromlifeinsurancepayoutstoovercomeourgrief,inthearmsofeitherHarrisonFordortheladiesoftheVictoria’sSecretcatalog.

AfterwemovedtoDetroit,Ibecamethefamily’sprimarybreadwinner,andmyuntimelydeathwouldcallforapayoutthatretiredallourdebtsandwouldsupportmywifeandsonatleastuntiltheboyisthroughcollege.AndshouldMrs.FunnyMoneyprematurelyshuffleoffthismortalcoil,I’dneedagood-size

wadtocovereverythingshedoes,fromactingaschauffeurandcooktoteacherandnanny.

ThesekindsofshiftingfamilysituationsarewhyinsurancecoverageshouldbereviewedeverytwoyearsaccordingtoRonaldOstezanJr.ofInsurancePartnersAgencyofAmericainTroy,Michigan.

Insomecases,hesaid,policyholdersneglecttochangetheirbeneficiariesandendupleavingafatinsurancechecktoanex-spouse.Inothercases,coverageneedstobechanged,familymembershavebeenaddedorpassedon,orwholelifeanduniversallifepoliciesthatincludeinvestmentelementsdidn’tperformwellbecauseofchanginginterestrates.

Here’sthething:anykindofinsuranceisabet.Abetagainstyougettingontheplanewiththethreebadengines,thedrunkpilot,andtheflightattendantwhojustbrokeupwithherfiancé.Abetagainstawrong-waydriverwhothinksyourexitrampishisfreewayentrancebacktoPassaic.Abetagainstwhatyourememberfromshopclassthirtyyearsagoversusthelabelonthebackofyourstereoampthatsays“NOUSER-SERVICEABLECOMPONENTSINSIDE!”

Butthisisabetthatyoureally,reallydon’twanttowin,and,whenyoulose,youshouldcountyourselflucky.It’slikeallthosepeoplewhoworryaboutsomeweirdworst-casescenario(bears,volcanoes,or,worse,bearsthatthrowyouintoavolcano)andfigurethatworryingaboutthosethingsmeanstheywon’thappen.Carinsurancemeansanalienspaceshipwon’tlandonmywife’sMercury.Homeowner’sinsurancemeansmyhousewasn’tbuiltoverazombiemooseburialground.Disabilityinsurancemeansthecollatoronthecopymachineatworkwon’tseizemyfestiveHalloweentieanddragmynogginthroughthestaplerattachment.Whenyouwritethatcheckorseethatautomateddebitforthepremium,youaremorethanfreetoresentit,justaslongasyourememberthatlosingabetagainstlosingyourownlifeisagreatbigwin.

Howmuchinsurancedoyouneedtoleavebehindforyourlovedones?Ifyoucanaffordit,youshouldtrytocover:

Payingoffallhouseholddebts,includingthemortgage.Ayear’sworthoflivingexpensesforyourlovedones,sotheycanfigureoutjustwhattodonowthatyou’regone.Enoughmoneytosupportchildrenandotherminordependentsthroughcollege.And,ifyourspousedoesn’tworkoutsidethehome,enoughmoneytosupporthimorherthroughtoretirement,oratleastmakeupforthe

lossofyourincome.

Thatcanadduptoaprettybigtab.Thecheapestapproachtocoveringitallisterminsurance.Asthenamesuggests,itcoversyouforafixedterm.Thenthecoverageexpires,andallyourpremiumpaymentsarelostforever.Which,again,shouldbeareasontocelebrate.

Inmycase,IaimtopayeverythingoffandsupportMrs.FunnyMoneyandLi’lMoneythroughthekid’scollegegraduation,afterwhichtheWidowFunnyMoneycanstartclaimingourretirementbenefits.Ifigurethatacool$1millioninvestedconservativelycanproduceenoughincometodothetrick(remember,initialinsurancepayoutsaren’ttaxedasincome).

It’strickierwithMrs.FunnyMoney,especiallywhenshewasn’tworkingoutsidethehome.HerlackofincomemadeithardtogetasmuchcoverageasIfeltweneeded.Youcan’treallyputapriceonthevalueofacaring,nurturingmom,butthatdoesn’tmeanpeopledon’ttry.ThefolksatInsure.comestimatedthe2012valueofamomat$60,182(downabout2percentfrom2011,sostepitup,ladies),butIthinktheinsuranceguysvastlyunderestimatethestreetvalueofareal-worldmother.1

Accordingtothe“MomSalaryWizard”atSalary.com,2afull-timemotherofoneschool-agedchildinmyhomeofOaklandCounty,Michigan,putsinninety-fivehoursaweekaseverythingfromchauffeurtojanitortologisticsanalyst,atamedianvalueof$116,000ayear,or$141,000onthehighend.(Forstay-at-homedads,the“wizard”calculatesfifty-threehoursaweekwithamedianvalueof$64,000andahighof$81,000,butIthinkthisfigureignorestheamountofeffortittakestocallyourwifeatworkseventeentimesadayforguidanceinoperatingtheCrock-Pot.)

Thepricetagonaworkingmomisless—amedianofabout$69,000andahighof$85,000—butthat’scountingonlythevalueofhereffortsathome.Togetafullpictureoftheinsuranceneeds,addthenetincomeaworkingmotheralsoproduces.Eitherway,ifoneparentdisappears,youneedtocovernotonlywhateverfinancialcontributionsheorshewasmakingtothefamilybutalsothevalueofeverythingelseheorshecontributes,fromlaundryandyardworktocookingandsumppumpmaintenance.

IfMrs.FunnyMoneywereto,shallwesay,involuntarilyenterthefertilizingbusiness,thatwouldleavemewithsevenmoreyearstotendtoLi’lMoneybeforetheboyheadsofftocollege,meaningI’dneedaninflation-adjustedpayoutof$999,000atthemedianleveland$1.2milliononthehighend.Which

definitelyprovesthatIamnotexaggeratingwhenItellher,“Honey,youlooklikeamillionbucks!”

Asswellashavingalltherightinsurancecanbe,thereisalotofuselessstuffoutthere.Forexample,youmayhaveburialinsuranceonyourkids,somethingthatsomehowgetssoldaroundthetimebabiesareborn.Youmayhavecancerinsuranceorsomeoddbreedofshort-termdisabilitycoveragemarketedbyaduck.Mostofthisspecializedstuffisn’tagoodbuyandmaynotbenecessary.Cheapterminsurancecancoveranyfinalexpenses.Ifyouhaveachildwithmajorhealthissues,juvenilelifeinsurancemightbeasmartmovewhenthey’reyoung,butsortthatoutwithagoodagent.Inmostcasesyouarebetteroffsavingthepremiumsontheseveryspecifictypesofpoliciesandputtingthemoneytowardgoodcomprehensivelife,disability,andhealthinsurance,aswellasyouremergencysavings.

Freeingupcash

Therearetwodifferenttypesoflifeinsurance:termandwholelife.Term,aswediscussedearlier,isabetbetweenyouandtheinsurancecompanythatyouwon’texpirebeforeyourcoveragedoes.Remember,ifyoulosethebet(youdon’tdie),youwinbecause,hey,youdidn’tdie.

Adrawbackisthatoncethetermexpires,thepremiumsyou’vepaidaregoneforgood.Buyingawholelifepolicy—alsocalled“permanentinsurance”—putsyourpremiumtoworkasaninvestmentaswellasprovidingapayoutiftragedystrikes.Thisaddedbenefitdoesn’tcomeforfree,whichiswhywholelifeinsuranceismoreexpensive.WholelifecanalsocarryhighercommissionsandfeesandcanofferamuchmorelimitedrangeofinvestmentoptionsthanthethousandsofmutualfundsyoucanaccessthrougharegularoldIndividualRetirementAccount.

Atthemostbasiclevel,financialplannerssaythatit’susuallysimplerandcheapertokeepyourinsuranceandinvestingseparate.Insuranceisaboutmanagingrisk(“Whatifapianofallsonme?”),whileinvestingisaboutgrowingyourmoney(“IthinksharesofSteinwayInc.areabouttotakeoff!”).Personally,Ithinkit’sgenerallybesttopursueeachgoalseparatelybypurchasingterminsurancetocoveryourneedsandinvestingseparatelyinawell-diversifiedportfoliooflow-costmutualorexchange-tradedfunds.Thisadvice,however,won’tworkforeveryone,becausewholelifeinsurancecanbeusefulinspecific

situations,suchasinsuringchildrenwithmajorhealthissueswhomayhavetroublebuyingtheirownpolicieslaterinlife.Youcanalsotakeloansagainstawholelifepolicy,skippremiumpaymentsattimes,andtakeadvantageofallkindsofotheroptions.

Wholelifeinsurancealsoisaveryniftyandhighlyflexibleestate-planningtool.Ifyou’reoneofthoserareindividualswhoregularlymaxoutcontributionstoyour401(k)orsimilarworkplaceretirementsavingsplanaswellasyourIRAoptions(bothregularandRoth),awholelifepolicycanofferbigtaxadvantagesforshelteringinvestmentsfromUncleSam.WhichiswhyaskinganyquestionofagoodpersonalfinanceadvisorisliketheoldjokeaboutRonaldReagan’sunderwear.WhentheGipperisasked,“Boxersorbriefs?”heresponds,“Depends.”Figuringoutwhichinsuranceapproachisbestforyoudependsonallkindsofveryindividualfactorsaboutyou,yourfamilyandbusiness,andyourfinancialgoals.Therightkindofwholelifepolicymightbetheperfecttooltomeetyourneeds,butsomightterminsurance.What’stherightanswer?Depends.

Whatthisallmeansisthatwhateverkindofinsuranceyouhave,youneedtomakesureitfitsyourneedsandfitsthemnow.So,ifyouhaven’tgottenhelpinmakinganoverallinsuranceassessmentinseveralyears(orever),getyourselfanappointmentwithacoupleofwell-establishedindependentinsuranceagentsandstartgatheringadvice.Evenifyoudon’tneedtomakeamajorchangeinyourcoverage,itstillpaystoshoparoundandcompareprices,whichvarydramatically.Ifyoudecidetostickwithwholelife,forexample,lookforalow-loadorno-loadpolicywithlowerexpenses,whichcanbehardtofindbutareusuallyofferedthroughfee-onlyfinancialplanners.

Iknowthatinsuranceagentssometimesgetabadrap.There’sanoldsaying,“Insurancedoesn’tgetpurchased,itgetssold,”whichisasmuchaboutourunwillingnesstorecognizeourmortalityasitisabouttheaggressivetacticsofsomeinsuranceagents.I’vemetpeoplewhoweresoldstunninglyoverpricedandinappropriatevariablelifeannuitiesafterattendinga“free”steak-dinner“investmentseminar”atalocalhotel.Attheheightofthefinancialdownturn,asstocksandmostinvestmentsweretakingsavagebeatings,manyinvestorstangleduptheirrealinsuranceneedswiththeirworriesabouttheirinvestmentsandwrappedthemupinvariousinsuranceproducts.Ifthisappliestoyou,youneedtogetsomeexperthelptolookobjectivelyatyourinsurancerequirements,whichwillbedifferentthanyourinvestmentgoals.

Ontheotherhand,I’vealsoseenourfamilyinsuranceagentdoaflatly

wonderfuljobatprotectingandmanagingthenesteggmylatefatherleftformymomusingastrategythatincludedsomeverygoodfixedannuities.Likeautomechanicsandwaitresses,therearegoodinsuranceagents—evengreatones—andbadones.YoucanfindaguidetoevaluatingagentsatInsure.com.3Ifyoufindanagentwho’swellversedinallaspectsoffinancialplanning,heorshecangaugehowyourinsurancefitsintoyouroverallplan.Butifyouarelookingforamorecomprehensiveapproachtoyourfinancesthanjustmakingsureyourspousecanpaythebillsandgetthekidsthroughcollegeafteryoucatchthebigdirtnap,tryanindependent,fee-onlycertifiedfinancialplanner.YoucanfindalistofthosefolksontheWebsiteoftheCertifiedFinancialPlannerBoardofStandards.4

Makingendsmeet

Ifyou’rejustsqueakingby,terminsurancewilllikelybeyourbestbet,but,again,talktoacoupleofagentsbeforeyoumakeadecision.Youcanalsocomparepricesandfindalotofgoodinformationonline.Thebetteryouunderstandthisstuff,thebettershopperyou’llbe.

Beforeyoustartcomparingprices,stopandreevaluateyourneeds.Inmycase,IboughtmylastbiglifeinsurancepolicywhenLi’lMoneywasfiveyearsoldandthestockmarketwasclimbingtoarecordhigh.Thenumberofyearsoffamilyexpensesthepolicywouldneedtocoverissmallernow,but,thankstotherecession,soisthenesteggIexpectedMrs.FunnyMoneytoseefromourretirementaccounts.Sosomerecalculatingmaybeinorderforourfamily,anditprobablyisforyours,too.

Ifyourneedshavechangedandyouthinkyou’llwantcoverageforseveralmoredecadessothatamoreexpensivewholelifepolicymakessense—orthatyou’llhavetomovethatwayinthefuture—considerstartingwithcheaperterminsurancebutgettingapolicythatyoucanconverttopermanentlifeinsurance.

Theruleofthumbwithinsuranceisthattheyoungeryouarewhenyoubuyit,theloweryourpremiumwillbe.Rememberhowinsuranceisabet?Well,ifyoubuylifeinsuranceatninetyyearsold,there’sagoodchancetheinsurancecompanywon’tcollectmanymonthsofpremiumsbeforeyoudie,andyourcostsreflectthat.

(Thesameappliestolong-termcareinsurance,whichcoversthecostsofillnessandoldage.Expertsrecommendthatyoustartshoppingforthatcoverage

inyourearlyfifties,soIguessthatshouldbeaddedtomyto-dolistforthisyear,andI’llhavetodosomemorebudgetcuttingelsewheretooffsetthecost.ImayfinallyhavetostartusingthoseAARPdiscounts.Damn.)

Onceyou’vecomparedpricesandupdatedyourcoverage,thereareafewotherthingsyoucandotobringdownyourpremium.Oneistolookatthepricebreaksavailableasyoumovethroughlevelsofcoverage.Lifeinsurancetendstogetpricedatsomuchper$1,000ofcoverage,butthatrateoftengoesdownasyouhitcertainlevels.So,iftheper-$1,000ratedropsabove,say,$250,000,itcanbecheapertoget$260,000ofcoveragethan$225,000.Anotheroptionistostartwithalow-levelwholelifepolicyandaddingterminsurancetoitthroughwhat’sknownasarider,whichaddsonspecificbenefits.

Oneitemtonixistheaccidentaldeath(ordoubleindemnity)rider,whichpaysextraifyougetflattenedwiththeaforementionedpianoinsteadofslowlysuccumbingtoberiberi.Now,stopandthinkaboutthis:Howwillthefinancialneedsofyourfamilyreallychangebecauseofthemannerinwhichyoudie?Well,ifyousuccumbtosomedread,lingeringdisease,youmightleavebehindquiteapileofhospitalbills.Butadoubleindemnityrideronlypaysoffifyoudieinanaccident.What’sthebigextracostthere?FlyingyourcorpsebackfromthatweekendinVegas?(Where,inalllikelihood,yourlastwordswere“Hey,honey!Watchthis!”)

TheonlywayIcanseethatanaccidentaldeathridermightbeagoodbuyisifyouworkinaverydangerousjobandcan’taffordtobuyalltheregularlifeinsurancecoverageyourfamilyneeds.(Bytheway,accordingtotheU.S.LaborDepartment,themostdangerousjobintheUnitedStatesistaxidriverandnot,asyouprobablyimagined,firefighter,liontamer,orpediatricdentist.)Formostofus,however,doubleindemnitycoverageisnothingmorethanawayforaninsuranceagenttograbafewmorebucks.Ifyoudobuydoubleindemnitycoverage,don’ttellyourspouseoryou’llneverenjoyanotherBarbaraStanwyckmovieagain.

Ingeneral,lookatwhatanytypeofriderissupposedtocoverandseewhetheryou’rebetteroffjustbuyingmorecoverage,gettingaseparatepolicy,orself-insuringbyputtingwhatyou’dspendonthepremiumintoyouremergencyfund.Ariderthatguaranteesyoucanincreaseyourcoveragelaterwithnomedicalcheckupcanbeskippedifyoujustbuytheextracoveragenowinsteadofwaiting.Along-termcarerider,forexample,canbecomplicated,anditmightbebettersimplytoshopforaseparatelong-termcarepolicy.

Lifeinsurancecoveragethatspecificallypaysoffyourmortgageorsends

yourkidtocollegeissimplytoonarrowtomakegoodfinancialsense.Instead,usethatmoneytoprepayyourmortgage(ifitmakessense),savetoacollegefund,orsimplyincreaseyouroveralllifeinsurancetocoverthosecosts.Thefirstreasonfordoingsoisthatthemostlikelyscenarioisthatyou’renotgoingtodieanytimesoon,butyoustillneedtopaythemortgageandgetJuniorandMissyofftostudyarthistoryandbonghitsatStateU.Thesecondreasonisthatyourspouse’sfinancialsituationmightmeanthatheorsheusesyourlifeinsurancepayoutforsomethingotherthanpayingthemortgage,suchasnow,whenthestockmarketisrisingandmortgageratesareatnear-recordlows.Ormaybeyourkidwinsascholarshiporgoestoelectrician’sschool.

Thatsaid,eventhemostcomplicatedandspecificriderdoeshaveagoodreasonforexisting,evenifitdoesn’tapplytomostpeople.Ifyourfamilymedicalhistoryincludesbig,scarydiseasesthatyouhaveagoodreasontoworryabout,theoptiontoaddguaranteedlifecoveragewithnomedicalcheckupcanbeawaytolockinalowpremiumbeforeyoudisplayanysymptoms.Likewise,anaccelerateddeathbenefit,whichpaysacertainpercentageofthefacevalueofyourpolicyifyoubecometerminallyill,mightmakesenseforsomeonewhoisathighriskforoneofthoseconditions.So,again,it’sgoingtodepend.Thepointistogeteducated,shoparound,shoparoundsomemore,knowwhatyou’rebuying,andmakeadecisionthatworksforyou.ButifyoujuststartcheckingoffboxesonapolicyataWebsiteorontheothersideofasalesperson’sdesk,you’reprobablyoverpayingforyourcoverage.

PinchingpenniessohardthatLincolngetsaheadache

Ifyouhaveafull-timejob,startbycheckingyouremployeebenefits.Youmayalreadyhavesomefreeorverycheaplifeinsurancecoverageofuptooneyearofyoursalary,andmanycompanieswillallowyoutobuyadditionalcoverage,usuallyuptodoubleortripleyourannualearnings.Coverageupto$50,000istax-freetoyou,andpayoutstoyoursurvivorsunderthatamountwon’tbetaxed,either.Butanythingoverthatamount,includingadditionalpremiumsyoupay,willbepaidwithafter-taxdollars.Sincethatwillloweryourtake-homepay,shoparoundandseewhetherit’scheapertobuyyourowncoverage,whichhastheadditionalbenefitthatyouwon’tloseitifyouloseyourjob.Ontheotherhand,makesurethatwhatevercoverageyou’reautomaticallygettingfromyouremployerisfactoredintoyouroverallinsuranceneeds.Ifyoudecideit’lltake

$300,000tocoveryourfamilyandyou’realreadygetting$50,000atwork,youcanloweryouroutsidecoverage.

Whatelseisfreewhenitcomestoloweringyourlifeinsurancetab?We’vealreadytalkedaboutknockingoutexcessivecoverageandunneededriders,determininganappropriatelevelofcoverage,andcomparisonshopping.Butthere’sonemoreoption:gethealthier.Whenitcomestothatwholebettingscenario,insurancecompanieslongagofiguredoutthatpeoplewhoareoverweight,havehighcholesterol,smoke,andhaveotherlifestylerisksaremorelikelytodiewhilethey’recovered.Naturally,theinsurancecompanieschargemoreforthoseconditions.

Ifyou’vehadsomeserioushealthissues,youmayhavegoneoutandpurchaseda“guaranteedissue”lifeinsurancepolicy,whichrequiresnomedicalscreeningandonlythatyouanswersomebasicmedicalquestions.Ifyouhadtroublefindingaregularpolicy,thismayhaveseemedlikeyouronlyoption.Abetterchoicemaybetoshopforaninsurerthatspecializesincoveringpeoplewithyourspecificcondition.Thesecompaniesusuallyhaveabetter,morenuancedapproachtopricingthatreflectshowyou’remanagingachroniccondition,suchasdiabetes,thatcanloweryourpremiums.Theconditionsthatgethitwiththehighestpremiumsareheartdisease,cancer,diabetes,obesity,andasthmaorotherpulmonaryconditions.Ifyouhavetroublefindingaffordablecoverage,askyourbrokertocheckwithcarriersthatspecializein“impairedrisk”insurance.

Thenextstepistogethealthier.Smokerscanpaytwicetherateonsomepoliciesasnonsmokers,andthatincludesusersofe-cigarettes,cigars,pipes,weed,andhookahs.Idon’tknowifthegroupofsmokersincludesthekindofguywhoputsahardsearonhissteaksoverthecharcoalgrill,butgive’emtime.And,yes,smokelesstobaccocounts,too.Whenitcomestoloweringyourcosts,however,youhavetoquit,notlieaboutquitting,or,ifyoudieofsmoking-relateddisease,yourinsurancemaynotpayoff.Losingweight,loweringyourcholesterolorbloodpressure,andkeepingchronicconditionsincheckbyfollowingmedicaladviceallcanhelpyouloweryourriskprofileandyourpremium.Evenifyou’vealreadygotapolicy,requestareviewifyou’veimprovedyourhealth.Insure.comhassomeveryhelpfultipsonwhatyoushouldandshouldn’tdobeforeaninsurancephysical,suchaslimitingyourcaffeineintakeforforty-eighthours.5You’llbegrumpy,butyou’llpayless.

Similarly,ifyouusedtohaveadangerousoccupationthatresultedinahigherlifeinsurancepremium—say,assky-divinginstructorwhomoonlightedasa

bomb-disposaltechnician—renegotiateyourcoveragenowthatyou’reanactuaryworkinginanice,safeoffice.

Anotherfreeoptionfortrimmingyourinsurancecosts,ifyoucanswingit,istoswitchfrommonthlytoannualorsemiannualpayments,whichwillloweryourcostby10to20percent.Thiscanbequiteachunkofcashforanoldfartlikemewithahigh-valuepolicy,butforahealthyyoungpersonlookingfor$250,000ofcoverage,theannualpremiumcouldbelessthan$200.Evenifyouonlysave$20ayearthisway,that’s$20thatcangoforsomethingelse.

Disabilityinsurance

Whenmostpeoplethinkaboutinsurance,it’slifeinsurance,butthetruthisthatalthoughwe’reallgoingtodie,mostofuswon’tdoitwhilethekidsareingradeschool.AccordingtotheSocialSecurityAdministrationandtheNationalVitalStatisticsSystem,youaremuchmorelikelytobeinjuredortoosicktoworkthantodiebeforeretirement.Youaremorethantwentytimesmorelikelytodieafterhittingretirementagethanbeforeyouseeyourforty-fourthbirthday.Ontheotherhand,morethanoneoutofeveryfourworkersintheirtwentiestodaywillbecomedisabledatsomepointbeforethey’reoldenoughtoretire.Ifyou’redisabledformorethanninetydays,youarelikelytobedisabledforuptotwoyears.

Whatthismeansisthatifyouwanttofocusoninsurance,worrymoreaboutdisabilitythandeath,especiallyifyou’reyoung.Insomecases,yougetshort-andlong-termdisabilitycoveragethroughyourworkplace,whichtypicallyreplaces50to60percentofyourincomeafterninetydaysforlong-termdisabilities.Thatcoverageischeap,about$30amonth,evenifyouhavetopayforityourself,accordingtotheConsumerFederationofAmerica.Unfortunately,theBureauofLaborStatisticsfindsthat68percentofprivate-sectorworkerslackdisabilitycoverage.

Buyingyourowncoverageisoneanswer.Insomecases,youcancontinuetopayforaworkplacepolicyatthesamelowgrouprateifyoumoveon.Onebenefitofbuyingyourown,however,isthatyou’llalwayshaveit,andthepaymentswon’tbetaxedasincome,whilepaymentsfromapretaxworkplacebenefitaretaxed.Toproduce$3,000ofmonthlyincomeforme,thepremiumonanindependentshort-termdisabilitypolicywouldbeabout$68amonth.Thepaymentswouldbetax-free,kickinafterninetydays,andlastforuptotwo

years.Icouldpaymoreandgetcoveragethatstartsinthirtydays.Balancewhateverworkplacebenefitsyouget(vacationandsicktimecancoveracoupleofweeksinmostcases)withyoursavingstoseewhatyou’dneedtoscrapeby.Forlonger-termcoverage,Icouldaddapolicythatrunsfortenyearsoruptoagesixty-seven.Thecostdependsonyourage,health,andgender,howlongyouwantbenefitstolast,andhowmuchtimeyoucanaffordtowaituntilthepolicystartssendingyouchecks.

Anotherimportantdistinctionbetweenworkplacedisabilitypoliciesandthoseyoubuyonyourownisthat,underfederallaw,withaworkplacepolicyyoucan’tsueforadditionaldamagesifyourclaimisdenied.Thismeansthoseinsurersaren’tworriedaboutgettinghitwithdamagesiftheyturndownyourclaim,which,accordingtosomeexperts,makesthempickieraboutapprovingpayments.

AnotherdisabilitybenefitcomesviaSocialSecurityDisabilityInsurance,butthattakesawhiletoprocess,perhapsasmuchassixmonths,and,withplentyofgovernment-mandatedredtape,there’snoguaranteeyou’llactuallycollect.Theaveragebenefitin2012wasabout$1,100,accordingtotheSocialSecurityAdministration,coveringconditionsexpectedtolastforatleastayearor—bummeralert—causeyourdeath.MostprivatedisabilitypolicieswillrequireyoutoapplyforSSDIbenefitsanddeductanymoneyyoureceivefromtheirpaymentstoyou.OnceyouqualifyforSocialSecuritydisabilitybenefitsyoucanapplyforMedicare,butthere’satwo-yearwaitingperiod.Untilthen,you’llalsohavetocoveryourownhealthinsurancecosts,soplanforthat,too.

Finally,whenshoppingfordisabilityinsurance,paycloseattentiontohowthepolicydefines“disability.”Isitwhenyou’reunabletodoyourjob,anysimilarjob,oranyjobthatpaysthesameasyouroldsalary?Inaddition,long-termconditionsmaybecappedatamaximumpayoutforcertainconditions,suchasmentalillness.Alsoaskwhatthepolicymeansbyincome;itusuallydoesn’tincludebonusesandcommissions.Sincelong-termbenefitscanlastforalifetime,lookforacost-of-livingadjustmentsothatyourpayoutswon’tbeerodedbyinflation.Makesureyouunderstandhowmuchyou’llcollect,whenyoucancollect—andwhenyoucan’t.

Formoreinformationondisabilitycoverage,checkouttheWebsitesoftheCouncilforDisabilityAwareness6andtheSocialSecurityAdministration,7ordownloadaguidefromUSA.gov.8

Freeingupcash

Chancesareyou’vebeenfocusedonlifeinsuranceratherthandisability,sofirstassessyourneeds.Asyoushoparoundforyourlifeinsurancepolicies,lookattheoptionstoaddprivatedisabilityinsurance.Thesavingsyoufindonlifeinsurancemayoffsetwhatyou’llpayfordisabilitycoverage.Andremembertoseeifanyofyourcurrentpoliciesallowtheoptiontoadddisabilityasariderorotherfeatureandwhetherthatmightbecheaperthanbuyingaseparatedisabilitypolicy.

Ifyoudecideyou’vebeenspendingtoomuchonlifeinsuranceandwanttoshiftthatmoneytodisabilitycoverage,don’tcancelyourlifeinsurancepolicyuntilyou’vegottenareplacement.Youmayfindthatanewpolicyismoreexpensiveorhardertofind.Ifyouhaven’thadaphysicalinawhile,aninsuranceexammightturnupsomethingthatwouldraiseyourrateordisqualifyyouforcoverage.

Makingendsmeet

Ifyou’vegotaworkplacepolicy,checktofindoutifyoucancontinuethatcoverageifyouleaveyourjob.Ifthat’sthecase,youcancontinuetogetbywithwhatyou’vegotatwork,thenpaytotakeitwithyouifyouleave.Ifyourpremiumisincludedasabenefitorpartlysubsidizedbyyouremployer,you’llhavetopickupthatexpense,butbecauseofthegroupratesprovidedtoemployers,it’llprobablybelessexpensivethanbuyingyourownindividualpolicy.

Ifyou’veoptedinforadditionalcoverage,youcanconsidertemporarilycuttingbacktosavemoneyforawhile.Inmanycasesanemployermightofferlimiteddisabilitypaymentsorcoverage—say,50percentofyourpay—butyoucanpickupthecostofincreasingthecoverageto60percentormore.Ifyoudidthatyearsago,youcanoptforaloweramountofcoveragenow,thenreturntothehigherlevelwhenyou’vegotmorebreathingroominyourbudget.Checkwithyourbenefitsrepinhumanresources,or,asweold-timerscallit,“personnel.”

PinchingpenniessohardthatLincolngetsaheadache

Ifyou’vegotworkplacecoverage,that’syourbestbet.Beyondthat,you’lleitherneedtodigupthemoneytopayforabasicpolicytocoveryouifyoucan’tworkorbuildupyoursavingsandsupportnetwork.Andthatgoeswithoutsayingifyou’rescrapingbyandnotworking,sinceyou’vegotnoincometoinsure.

Problemslikegettingtoosickorhurttoworkshowthewisdomoftheoldhippieaphorism,“Lifeislikeajunksandwich,man.Themorebreadyouhave,thelessjunkyouswallow.”Thatisthephilosophybehindestablishinganemergencyfund;evenifyouonlysockawayacouplehundreddollars,itcanmakeabigdifference.Startbysettingasideeventhesmallestamount—aslittleas$10aweek—automaticallyinasavingsaccount.Isuggest2percentofeachpaycheck,or$2outofevery$100youtakehome.Putitinaninterest-bearingaccountwithalowminimumbalance,suchasanonlinemoneymarketsavingsaccount.Thisaddsthebenefitthatyoucan’tinstantlydrainyouremergencyfundwhenyousuddenlydecidetoredefine“emergency”as“drunkenroadtriptoDaytonaBeach.”

Yourrainy-dayfundwon’tgrowmuch,butatleastit’sthere.At2percent,you’llsavetheequivalentofoneweek’spayeveryyear.Sincetheminimumgoalmostplannersrecommendisenoughmoneytocoverthreemonthsoflivingexpenses,youcanseethatregularlysavingasmallamountisaslowwaytogo.Ontheotherhand,Icanthinkofmany,manytimesinmyscufflin’WashingtonHeightsdaysinNewYorkwhereeventhatsmallamountofmoneywouldhavemadeabig,bigdifferenceinsolvingaproblem.Ifyourdisabilitystretchesonforyears,eventhebiggestemergencyfundwon’tcoverallofyourexpenses,butitcancoveryouifyoulosesixweeksofworkbecauseofabadlybrokenleg,anditcanpreventthekindofshort-termfinancialproblemsthatcanspiralintoarealcrisis.

So,trytoupthatsavingsrateonaregularbasis,maybeaddinganother1or2percenteveryfewmonths.Butyoucanmakeabigger,fastergainbymakingasolemnpromisetoyourselfthatyou’llputatleasthalfofanykindoffinancialwindfallintoyouremergencyfund.Thatmeansataxrefunddoesn’tequalablowoutweekendgetaway,butmaybeanicedinneroutandabigchunkaddedtotheemergencyfund.Ifyougetpaidweekly,therearefourfive-paycheckmonthsintheyear(twoifyougetpaidsemimonthly),soyoushoulddedicateasmuchasyoucanofthose“extra”checkstoyourrainy-dayaccount.

Whilethethree-monthruleisagoodone(andsincetherecessionIhavemetmanygoodfinancialexpertswhorecommendeightmonthsofemergencysavings),don’tletthatdiscourageyou.Setashort-termgoal—$500or$1,000—

andworktowardthatinwhateverwayyoucan,evenifitonlyinvolvescashinginyourreturnableBudweisercans.Remember,youdon’tneedtocoverthreemonthsofearnings,justthreemonthsoflivingexpenses,which,ifyoudoallthetrimmingwe’rediscussinghereinthisveryhandyandentertainingbookyousowiselypurchased(oratleastborrowedfromthelibrary),islessthanyourtotalmonthlyincome.

Personally,theFunnyMoneyfamilyhasneveraccumulatedmorethanslightlyovertwomonthsoflivingexpensesinouremergencyfund.But,sincewereplenisheditwheneverpossiblefromwindfalls,itsawusthroughanearlyten-yearperiodwhenwewentfromtwofull-timeincomestooneorone-and-a-half,atbest.ButIcan’tdiscountluckandthefactthattheprimebreadwinneralwaysmanagedtostayemployed,soI’mstillworkingtoboostthatbalancewellbeyondthethree-monthminimum.“It’sbettertobeluckythansmart,”goesthesaying,butifyou’resmartenoughtohavesomesavings,yourluckwillstretchawholelotfurther.

Ifyoucanaffordit,havinganemergencyfundanddisabilityinsuranceisyourbestapproach,becauseyou’llhavemoreoptionsandmoreofafinancialcushionifyoudobecomedisabled.So,ifthingsimprove,leaveyouremergencyfundintactandgoshoppingfordisabilitycoverage.But,ifyoudon’thaveanyincome,you’regoingtohavetoself-insurewithyourownsavings.

Ifyoubecomedisabled,youmaygetsomeadditionalprotectionfromSocialSecurityDisabilityInsurance,butthatcanbehardtocollect.Considerthatin2012,2.8millionpeopleappliedfordisabilitybenefits,butonly980,000claimswereapproved,arateof35percent.Aninjuryordisabilitymayalsobecoveredbyworkerscompensationinyourstate,butthatwon’tapplyifyourinjuryhappensoffthejob,whichisfarmorecommon.Still,youshouldapplyfortheseandanyotherassistanceprogramsforwhichyouqualifyifyou’resickorinjuredandunabletowork.Justrememberthatbeyondyourownsavings,yourowninsurance,andthecharityoffamilyandfriends,therearen’tanyguarantees.

Wills,medicaldirectives,andmore

Iknowthatthisthrillingdiscussionofdeath,dismemberment,anddisability—andtheminutiaeofthevaryingapproachestoinsuringitall—hasyouperchedontheedgeofyourseat,meaningthatyoucan’twaittofinishthischapter,leapup,andgodojustaboutanythingelse,suchaspaintabarn.ButIwouldbe

irresponsibleifIdidn’trundownalistofotherstepsyoushouldtaketoinsureyourfamilyfinancesincaseofamajoremergency,suchashavinganup-to-datewill.It’ssaidthatyou’renotreallydeaduntilsomeonesaysyournameforthelasttimeonEarth.Well,diewithoutawillandyouaregoingtobedamnednearimmortal,asthepeoplestuckwithsortingoutyouraffairsintheunendingcircleofprobatemutteryournameoftenanddarkly.

So,let’smakesurethatyouhaveallofthefollowing.Anup-to-datewill:Singlefolkswithnokidscangetbywithcheaporfree

formsfromWebsitesorsoftware,butifyouhavelotsofassetsorchildrentoprovidefor,you’llneedalawyer.Foragoodoverview,checkoutNolo.com(theyalsosellsoftwaretohelpyoumakeyourownwill,whichI’venevertried).Onewaytokeepyourcostsdownistouseanonlineorsoftwareproductasatooltocreateyourownwill,thenhaveanattorneycheckitover.Ifyou’restrapped,lookforlegalclinicsorcallalawschooltoseeiftheyofferhelp.

Adurablepowerofattorney:Thisprovidesforsomeonetomakedecisionsincaseyouaretemporarilyincapacitated(or,aswecallitatmyhouse,“Saturdaymorning”).Generallythisisyourspouse,butyoushouldalsodesignatesomeoneasyoursecondary“agent”ifyourfirstchoiceisunavailableorunwilling.Thatway,someonecanmakedecisionsifbothyouandyourspouselapseintoshortcomasaftereatingfromthesametrayofdollar-storesushi.

Youcanfindformsonline,oftenfromyourstatebarassociationorattorneygeneral’soffice.Yourfinancialinstitutionsmayhavetheirownforms,andusingthosewillmakeiteasiertodealwiththemspecifically.Again,freeforms,Websites,andsoftwareareagoodstart,butunlessthepaperworkcomesfromanofficialsource,suchasyourstatebar,itwouldbebesttohaveitlookedoverorpreparedbyanattorney.Youfolkswithlegalinsuranceshouldgetafreewilloradiscountedoneeveryfewyears,soaskaboutthat.

Healthcarepowerofattorney:Thisallowssomeonetomakehealthcaredecisionsforyouifyouareincapacitated.Youcanfindtheseonline(IfoundagoodoneatRighttoLifeofMichigan,forexample),9butyouneedtokeepthisup-to-date,ashealthcarelawschange.Ifyouhaveaveryoldonethatwascompletedbeforehealthcareprivacylawswereinstituted,itwon’tbeaccepted.Thatmeansyoucouldactuallyputsomeoneinthepositionofbeingchargedwithmakingyourhealthcaredecisionswhileleavingthemunauthorizedtoactuallydiscussyourmedicalproblemswithyourdoctors.Sogetthenewforms,orhopetheyguessright.

Listofaccountsandpasswords:Collectallofyourinsuranceaccountsandcontactnumbers,yourlog-inandpasswordsforyouronlinesavingsaccounts,andsoon.Thishasbeencalledyour“deathdossier,”andthefolksatTheWallStreetJournalhaveaniftygraphiccalled“The25DocumentsYouNeedBeforeYouDie,”whichoutlinesjustabouteverythingyouneedtoleavebehindforthoseyouleavebehind.10Note:nothavingthesedoesn’tmeanyouwon’tdie,justthatthehaplessschmucksortingoutfourfilecabinetsofyourbankstatementsgoingbacktothe’70swillwishhecould.

Beneficiaries:Makesureyourretirementaccounts,bankaccounts,lifeinsurance,andotherpoliciesalldesignateanup-to-datebeneficiarywhogetsyourdoughwhenyougo.Atthisverymoment,therearethousandsofex-wivesinthiscountrywho’llgetalloftheirfirsthusbands’insuranceand401(k)payoutsiftheguykicksofftomorrow,allbecausehe’sneverupdatedasimplelittleform.Updatingyourbeneficiariesavoidsexpensiveprobatehasslesandallowsyourgrievingspousetopaythebillsinsteadofbeingevictedwhileheorsheiswranglingwithlawyers.(Also,wouldn’tWranglingwithLawyersmakeagreatrealityshow?I’menvisioningattorneysinthree-piecesuitstryingtooutrunrodeocowboysonhorsebackasgrievingwidowsandorphanscheer.TVproducers,callme!)Don’t,however,nameminorchildrenasbeneficiaries,whichwillcreateallkindsofprobatetrouble.Instead,getyourwilldoneandestablishatrustforthekids,andthetrustwillbecomethebeneficiary.

Updateitall:Gotmarried?Gotdivorced?Gotanynewkids?(Hint:checkthesofacushions.)Anybiglifechangemeansit’stimetocheckandupdatealloftheabove—yourwill,yourinsurance,theworks.Youmightthinkthisisn’taproblem,butbelieveme,itis.Asanexample,Mrs.FunnyMoneyhadaveryniceemployeestockoptionplanatheroldjob,whichbuiltupatidysumovermorethantwodecades.Hadsomethinguntimelyhappenedtoher,therewaspaperworknamingme(and,byextension,thenearestPorschedealer)asthebeneficiary.

Butalthoughshehasn’tdied,hercompanydid,andherstockbenefitwasautomaticallytransferredtoanewlycreatedIndividualRetirementAccountafterthebankruptcy.ThatnewIRAhadnobeneficiarynameduntilsherecentlygotalettersaying,ineffect,“Hey,wedon’tseeabeneficiaryhere,and,shouldsomethingdireoccur,surelyanicegallikeyoumusthaveaspecialsomeonetoreceiveallthisdough.”

Thatwaslastmonth,butthemoneywastransferredtotheIRAsixmonthsago,andduringthattimeIwouldn’thavebeenabletogetapennyofitwithouta

lotofhassleandcost.Fortunately,she’sbeeneatinghervegetables,soitwasn’tanissue,whichismaybethenicestthingIeverwillsayaboutBrusselssprouts.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89

Week3—Utilities...$139.39Week4—KidCosts...$114.50Week5—WorkExpenses...$90

Week6—PersonalSpending...$104Week7—Entertainment...$108Week8—LifeInsurance...$64.40Totalmonthlysavings...$794.79

Lefttocut...$205.21

BecauseI’dbeenaprettycarefulshopperoninsurance,Ididn’tfindmuchsavingsinthiscategory.Ialreadypaidforincreaseddisabilityinsuranceatwork,butthatwascheap.Beyondthat,myonlyotherinsurancewasthebargain-basementrateona$100,000policythatIdescribedinchapter3.WehadboughtlimitedcoverageforMrs.FunnyMoneyaftermovingtoMichigan,andthatwasatagoodratesincethepolicywasonlyafewyearsold.

TheonlywayIcouldsavewastoshoparoundandcombinemyseparatelifeinsurancepolicies.Ourfamilyinsuranceguru,RonOstezan,pricednewpoliciesandestimatedI’dsaveanaverageof$64.40amonth.Thatwaswellshyofthe$100insavingsIwashopingfor,butwiththeextracostcuttingfrompreviousweeks,Istillcameclosetothe$800goalfortheeightweeksofmybudget-cuttingexperiment,missingitbyamere$5.21.Thatleft$205.21stilltocutfromthetworemainingbudgetcategories.

IalsodiscoveredthatMrs.FunnyMoneywascompletelycluelessaboutourlifeinsurancecoverage.ShehadtunedouteverythingI’deversaidonthesubject,puttingitonthelistoftopicstosafelyignore,alistthatincludes“specsforthenewtablesaw,”“PinewoodDerbyspeedtips,”and“everywordmyhusbandhaseverutteredaboutfly-fishing.”

Iwastakenabackatfirst,thenreassuredthatshetrustedmetomakesuresheandLi’lMoneywereadequatelyprovidedforintheeventofmyuntimelydemiseandduringwhatI’msurewouldbeaminimumfive-yearperiodofmourning.

“Soyou’rereallynotworriedaboutwhatyou’dgetifIdied?”Iasked.Mrs.FunnyMoneysurveyedthebleakMichiganwinterlandscapeoutour

window.“Oh,IknowexactlywhatI’dget,”mywifesaidevenly.“AcondoinMiami.”

M

10

Groceries

OrWhyYourAuthorSuspectsThere’saDarnGoodReasonThatYouDon’tSeeTVAdsProclaiming,“Mutton!It’sWhat’sfor

Dinner!”

ywholereasonfortacklingThe$1,000Challengewasfood.WhenmyDetroitNewscolleague,theshy,teetotalingwallflowerCharlieLeDuff,

turnedinacolumnwherehedescribedaguysellingraccoonroasts,itgotmethinking.Haditcometothis?WerepeoplereallyshowingupatthedoorofGlemieDeanBeasley,alicensedDetroitraccoonhunter,furrier,andmeatsalesman,andheadinghomewithraccoonasanentrée?

Theideaofeatingraccoonwasoddlyintriguing,anditappealedtothegrittyurbanscavengergenethatIthinkallDetroitersinheritatbirth.ItriedtofigureoutexactlyhowI’dgetMrs.FunnyMoneytogoforaraccoonroast.Beasleybarbecueshiswithavinegarbrineandspicesandsaysittasteslikemutton.Ididn’tthinkIcouldsellheronthat,sinceIdon’tseealotofTVadstouting,“Mutton!It’swhat’sfordinner!”Maybe,Ithought,IcoulddressitupinafancymustardsauceandshrouditinaFrenchphrase,likecuissederatonlaveuràlaNormandeetsonécraséedepommesdeterre.Orperhaps,withDetroitbeingsoclosetotheCanadianborder,IcouldwhipupaFrench-Canadianinspiredragout,perhapsafricasséedechatsauvage.

Alas,non.Icouldn’tthinkofanyscenariowhereIendedthemealsaying,“Andguesswhat,honey?It’sraccoon!”thatdidn’tinvolveMrs.FunnyMoneyrushingfirsttothebathroomandthentodivorcecourt.

Fortunately,IwasabletoabandontheideaofservingupfricasseeoffurrybanditthankstoanotherlanguageIwaslearningtospeak.RatherthanFrench,I

tookupthestudyof“couponish.”AndthemostusefulwordofallthatIlearnedwas“BOGO.”(Itstandsfor“BuyOne,GetOneFree,”astheydroptheF.It’snottobeconfusedwithYOLO—“YouOnlyLiveOnce”—whichisthephraseyoungstersusetoexcuseanythingexcessiveorstupidthesedays.Suchaschowingdownonraccoon.)

ThankstoBOGO,assoonasIfinishthisparagraphIwillsitdownnottoraccoonbuttoatoothsomebottomroundroastthatcostmeexactly$0.00perpound.TheotherroastthatIboughttogetthisonefreewas$5.99apoundonsale,soIendeduppaying$3apoundforboth.Mr.Beasley’s$12raccoonroastservesfour,whilethebottomroastservestwo,whichmeansthemathworksoutagainstraccoon,at$3aserving,andinfavoroftheroundroastat$1.50perplate.Theonlywayraccoonwouldbeabetterdealwereifthecritterknockedonmybackdoor,doffedhispelt,andclimbedrightintotheovenonhisown.

MyintroductiontolingoofsupermarketsavingscamethankstoTeriGault,founderoftheGroceryGame,anonlineguideforcombiningcouponsandstoresalestoproducesizablesavings.Gault’scompanysurveystenthousanditemsatmajorgrocerychainseachweektofindwhichareattheirlowestpriceandmatchesthemupwithavailablecouponsforadditionalsavings.

Herstrategyreliesonthefactthatmostitemsinthesupermarketgoonsaleatsomepointeverytwelveweeks,downtotheirrock-bottomcost.Addingthecouponsfromnewspaperinsertsandsigningupformailersfromthegrocerystorecutsthecostevenmore,occasionallyevenmakingsomeitemsfree.WhenTeritookmeshoppingonavisittoDetroit,wescoredtwogallonsoffreemilkbypurchasingseveralboxesofcerealwithaspecialcoupon.Bypullingoutthecouponsandstockingupwhenevergrits,Gatorade,orGladbagswereattheirlowestprices,sheexplained,Icouldlikelycutmyalreadytrimhouseholdgrocerytabof$532amonthinhalf.Thetrick,shesaid,istoplanmealsaroundthecheapstuffyou’vestockeduponinsteadofmakingaweeklymenufirstandthenshoppingtofillitin.

Doingthelatter“putspeopleinaviciouscycleofpayingfullpricefor70to80percentofwhattheybuy,”Gaultsaid.SurveysofGroceryGameusers,whopay$5fortheweeklyguide,findthesavingsforafamilyoffouraverages$512amonth,sheadded.Partlythat’sbecauseshelooksatallthesavingsonfoodthatcomewithstrategicgroceryshoppingthatreplacesfastfoodandanymealsthatareeatenoutsimplybecausethere’snothinginthehouseornodinnerhasbeenplanned.

Theresultisthatyoucanenjoysomesignificantsavingswithouteatinglikea

pauper.Thetechniqueisprettyeasytopickup,andevenifyoudon’tuseTeri’ssystem,youcanjuststartkeepinganeyeoutforspecialsandsales.Thebottomroundroast,forexample,Ispiedwhilepoppingintothestoretopickupsomethingformymom.Irecognizeditasapreviousgooddealandsnappeditup.Sureenough,whenIchecked,thereitwasontheweeklyGroceryGamelistmarkedinblue,Teri’scodefor“invest,”indicatingsomethingyoushouldstockupon—ifyou’lleatit.Thistendstofitinwithmyownphilosophyofbuildingsystematicsavingsintothethingsandservicesyoubuymostfrequently.

Takingafurtherlookatthecurrentlist,Iseeredandyellowbellpeppersonsalefor$1apiece.Thesearestaplesinourhouse,eitherforgrillingwithothervegetablesinthesummer,or,inwinter,sautéedwithonions,turkeymeatballs,andthemouthwateringtomatosauceMrs.FunnyMoneycanswithourfriendCynthia.Ihadalreadypurchasedfrozengroundturkeyatarock-bottompriceatCostcoafewmonthsbeforeandconvertedthefirstfewpoundsintoabatchofspicedmeatballs,whichwesplitintotwo-servingbatchesinseparatefreezerbags.NowIcangrab$2worthofpeppersandsautéthemwiththeonions,oliveoil,andgarlicalreadyathome.Whilethat’scookingIthawthemeatballs,throwhalfajarofsauceinthepan,addthemeatballs,andthere’sareallygood,reallycheapmaindish.Icouldaddpastatostretchitout(TerilistsMueller’sWholeGrainat$1.17thisweek,notarock-bottomprice,butgoodifyouneedit),butIusuallyjustgrabamanager’sspecialonabaggedsaladmixandskipthecarbs.

Anotherrecentitemonsalewaswholecookedlobster,$5eachforsomeprettysmallones,12to14ounces.GenerallyIprefera2½-pounderwithlemonanddrawnbutter,thankyou,butforaValentine’sweekenddinner,Igrabbedthreeofthelittleguys,pickedoutthemeat,andmadearecipeoflobsterstewwithapastrylid.Thatdidn’tinvolveanythingotherthangrabbingaleekandalemonandusingthestaplesathome(butter,spices),half-and-half(alreadyonhandforMrs.FunnyMoney’smorningcoffee),andsomeleftoverpuffpastrystuckinthebackoffreezer.Iaddedasaladandoneofthefreshhalf-baguettesthatgoonsaleatthelocalgourmetmarketafter4p.m.forhalfprice.At$20(pluswhitewine,alreadyonhand),itmadeforaslightlypriceydinnerfortwoathome,butforaspecialweekendmealitwasaheckuvalotcheaperthangettingasitterandgoingout.

Theideaisthat,whateverapproachyouusetoshoppingforfood,ifyoustockyourpantryandfreezerwithstuffyoulikewhenit’scheap,youcanplanyourmealsaroundwhat’sonhandandwhat’scheaporfreshthisweekatthestore,thefarmers’market,orevenyourowngarden.Andyoudon’thaveto

concentrateonpackaged,processedstufforeatthingsyoudon’tlikejustbecausethey’reonsalethisweek.Thedownsideisthatittakessomeplanning,butyoudon’tneedtoshopeveryweekotherthantopickupdairyandvegetables.Onthoseoccasions,IwillchecktheblueitemsonTeri’slistandtrytograbafew.SometimesIdon’tevenneedtodothat,sinceInowrecognizetherealbargainsastheycomearoundagain.

Iammuchmorelaxaboutusingcoupons,mostlybecauseIhavewastedalotoftimeongrocerycouponsinthepast.MostcouponsIfoundwereforitemswedidn’tuse,anditturnedoutthatevenwith50centsoff,name-branditemsoftencostmorethanstorebrands.WiththeGroceryGame,Ionlyneedtokeeptwotypesofcoupons,thosethatcomeinthemailandthosefromtheSundaypaper.Idon’tevenclipthem,butIjustfilethembydateinamanilafolderandpullthemoutwhenthey’recalledfor.Iusuallyforget,though,andjustconcentrateonthebigsaleitems.

Freeingupcash

Onceuponatime,whenthenewlywedMr.andMrs.FunnyMoneyhadtwoincomesandhadn’tsentencedourselvestodeathbychildren,wemadeoutasortofmenu,wentshopping,andaddedwhateversuitedourfancy.Thenwepaidthebillbecausewhateveritcostwaswhatfoodcosts,right?Hahahaha!Itwasasimplertime,andbythatImeanwewereidiots.

Ifyou’renotputtinganykindofthoughtintohowyoushopforgroceriesandplanyourmeals,yourgrocerybillisgoingtobetheeasiestplacetoscoresomebigsavingsinyourfamilybudget.Youdon’thavetospendhourscollectingcoupons,runfromstoretostore,orconvertyourgarageintoagiantwalk-inpantry,either.Start,asalways,withtheitemsyouusethemostandlookforwaystoconsistentlyfindthemcheaper.

Onebigpayoffcomesfromnongroceryitems,suchaspapergoods,sandwichbags,dishwashersoap,andsoforth.I’vefoundthebestbalancebetweenpriceandqualityatwarehousestoressuchasCostco,andinmostcasesthestorebrandworksfine.Otherwise,atyourgrocerystore,startwiththecheapeststuffyoucanfindand,ifit’snotgoodenough,workuptotheleastexpensiveacceptablebrand.Ididthiswithpapertowels,whichareamajorfoodgroupatourhouse,atleastwhenIcook.I’dbuyacheaproll,takeithome,and,whenIunwrappedit,putthewrapperinsidethecardboardtube.Onthenextshoppingtrip,Itookthe

wrapperwithme.Ifthetowelshadbeenlousy,Imoveduptothenextpricelevel.Ifthetowelsworkedfine,thenIkeptgettingthatbrand.

Thenextstepisswitchingtostorebrandsandgenericsforpackagedfood.Ihavefoundnocanneditem,forexample,wherethestorebrandisn’tjustasgoodasanationallyadvertisedbrand.Also,mostcannedgoodsatourhouse,suchasthedicedtomatoesthatgointoAuntFrannie’schili,areusedinrecipeswherespicesandotheringredientsaregoingtodrownoutanysubtledifferencebetweenthenationalbrandandageneric.Infact,exceptinrarecases(maybeafavoritepastasauce,balsamicvinegar,oroliveoil),Idon’tthinkyou’lltasteanydifferencewhenitcomestomostthingsthatarecanned,packaged,orbottled.TheonlytwothingsonearthwhereIinsistonaspecificbrandaremayonnaise(Hellmann’s,anddon’tyoudarebringmeanyofthatMiracleWhipstuff!)andInglehoffercreamyhorseradish.Sincewemaybebuyajarofeachtwiceayear,we’renottalkingaboutbigbuckshere.

That’llgetyousomesavingsrightthere,withnoeffortotherthanscanningtheshelftolookforcheaperbrands.Whenitcomestothingslikeproduce,dairy,andmeat,you’llneedtocheckouttheweeklystorespecials,manager’sspecials,andflierstoseewhat’sonsale.Oryoucanuseatrackingservice,suchasGroceryGame.Also,keepaneyeoutforpricestickersandin-storepromotionsindicatingthatthestoremaybeclearingoutslowsellers.Whenyouspytheseitemsonsale,stockup.Onceyoubecomeconsciousofpricesandconsistentlyshopforthesameitemsinthesamestores,you’llrecognizethat,say,99centsapoundforfrozenturkeybreast(especiallythekindyourwifelikes)isadealandthatyoushouldgrabacoupleforthefreezer.

Anothereasywaytosaveongroceriesistoseeifyourstorehasaloyaltyprogram.HereinMichigan,grocerystoresarebigoneverydaylowprices—butonlyforcustomerswithastoreloyaltycard.Thenyougetthespecials,theten-for-$1promotions,andsoon.Thestoremanagersdon’tdothisoutofthegoodnessoftheirhearts,ofcourse,buttokeepyoucomingbackandtotailortheinventoryandspecialstowhattheyseeyoubuyingeverytimeyouswipethatloyaltycard.But,everysooften,wegetamailingoutofthebluewithcustomizedcouponsforthingswetendtobuy.Thatpackagealsoincludesoneortwocustomerappreciationcouponsthatoffer$5offany$50grocerypurchaseor$2offany$10(excludingmilk)fromthedairydepartment.That,myfriends,isfreemoney,andyoudidn’tevenhavetoprintityourselfandfacefederalcharges.

Yes,Isaidit—coupons.Okay,Iknowwhatyou’rethinking:Brian,didyou

justsaythe“Cword”?You’vewatchedthoseTVspecialsandthereisnowayyouaregoingtobecomeoneofthosewackycouponfanaticswhofillthesparebedroomwithbargaincatfoodtotradewiththeirneighborsforoatmeal.

Irememberthecaseof“CouponConnie”fromtheearly1990sinsouthFlorida.Conniebecamenationallyknownforbeingabletousecouponstothepointthatshe’dwalkoutofagrocerystorewithanentirecartoffreeitems,withthestorerefundingcashontopofitall.Conniewasknowntorummagethroughtrashbinsforboxtopsandproductcodestoredeem,buteventuallyshewoundupbeinginadvertentlysnaggedintoacriminaloperationthatexchangedcounterfeitcouponsbymail.AfederaljudgegaveConnietwenty-sevenmonthsinprison,eventhoughhefeltshehadn’tactuallysetouttobreakthelaw.(AtthetimeItriedtoconvincemynewspapertousetheheadline“CouponConnieGetsClipped,”buttheeditorsignoredme.Buthereitis,twenty-twoyearslater,inmybook,soputthatinyourninety-dayperformanceimprovementplan,suckers!)

So,yes,Icanseehowit’seasytogetcarriedawaywithcoupons,sowe’llholdoffonthatabit.Inthemeantime,let’stalkaboutsavingongroceriesbydoingmorewithwhatyouget,whetherit’swithacouponornot.FortheFunnyMoneyfamily,realsavingscomesfromcookingstuffonceandusingitforseveralmeals.ThatbargainturkeybreastImentioned?FirstitgotroastedforaniceSaturdayfamilysit-downdinner.(Yes,weactuallygottwoworkingparentsandtheirchildhomeatthesametime,sittingdownatthesametable,and,mostamazingofall,forgoingchickennuggetsandalleatingthesamething.IhavealertedTheGuinnessBookofWorldRecords.)

Theremainingturkeywentforsandwiches,areheatedleftoverdinner,andalastsandwichortwowithcannedsoupwhenIworkedlate,andthentheremainingcarcassgotstuffedintoaslowcookeralongwithabouquetofspices,onions,andwhateverwasgettingreadyturninthevegetablebin.Mrs.FunnyMoneyleftthatbubblingdownforadayorso,andwehadabigbatchoflovelyhomemadeturkeysouptoeatandfreeze.Theoriginalturkeycostlessthan$10andyieldedatleastsixmeals.BenFranklinwasn’tkiddingwhenhecalleditanoblebird.

Thesametrickworkswith2poundsofflanksteakonsalefor$3.99apound.Two12-ouncesteaksgetmarinatedandgrilledforLondonbroil,withoneservedfordinnerandtheothersavedtotopaCaesarsaladlaterintheweek.Theremainingmeatiscutupforbeefstir-fryoverbrownrice.Thefreshgreenbeansonsalegetusedasasidedishforthefirstdinner,withsomesavedforthestir-frylater,too.

Substitutingorskippingingredientsisanotheroption.ThatflanksteakinthegrilledCaesarstandsinforaribeye.Afishdishwithginger,chiles,soysauce,andsherrycancallforredsnapperallitwants,likesomepiscatorialStanleyKowalskicryingoutfor“Stella!Stella!,”butI’vemadeitwithtilapia,itworksgreatwithcatfishand,ifyou’reintherightmood,thecheap,farm-raisedsalmonfromCostco.The99-centpackageofmanager’sspecialhamburgerbunscanstandinfortoastandsandwichbreadthisweek.Andthecrèmefraîchethat’srequiredforthelobsterstewImentionedearlier,atmorethan$5foran8-ouncecontainer?Thatrecipeisjustfinewithoutit(butdon’tratmeouttoTheNewYorkTimes,okay?).

Putitalltogetherand,whenitcomestogroceryshopping,thisisthelow-hangingfruit(ha!)thatcansaveyoualotofmoneywithoutalotofeffort.

Makingendsmeet

Youaregoingtohavetomakeyourpeacewithusingcouponsandrealizeyoucandoitwithoutbecomingthekindofcrazycatladywhospendswholedayscollectingthem,thentiesuptheentirecheckoutlinewhileshefishesoutafistfulofnewspaperclippings,halfofthemexpired,andthenspendsahalfhourarguingwiththecheckoutclerkbeforetryingtopaywithadouble-endorsed,third-party,out-of-statecheck.

Youcanspendnomorethanhouraweekplanningyourshopping,breezethroughthecheckout,andsavehundredsofdollarsamonth.Ifyouneedanymoremotivation,considerthis:TheLexusES350,accordingtoreviewersatEdmunds.com,isacar“forbuyerswhoputthehighestpriorityoncomfortandluxury,”withanoveralllevelofopulencethatoffers“theutmostinrefinementandrelaxation.”

WhydoImentionthisvehicle?Becauseofmyfriend,DoreenChristensen,theconsumerreporteratthesouthFloridaSun-SentinelandawomanwhotreatspayingfullpriceforanythingthewaySupermanapproachesKryptonite.DoreenhasanewLexusES350,andshe’spayingforitwithgrocerycoupons.

Doreenaimstocoverhercarpaymenteachmonthwiththemoneyshesavesbyusingcoupons.Inoneimpressiveshoppingexcursion,shesaved$450onacartstuffedwithfoodandstaplesbycombiningcoupons,storespecials,andalittleplanning.AsofMarch,she’dalreadysavedenoughtomakethepaymentsonherLexusthroughSeptember.

“Peopleassumethisishardtodo,”Doreensays.“Justtryit,andwhenyouseehowmuchyousave,you’llbehooked.I’mnotadvocatingstockingupahundredbottlesofsyrupinyourbedroom,butnotusingadollar-offcouponwouldbeliketaking$1andthrowingitintothestreet.”

Toclaimbigsavings,Doreensaysyoujustneedtotakefivesteps.First,signupforloyaltyorpreferredcustomerdiscountsatyourfavorite

grocerystoreandgetonthemailinglistfortheweeklystoreflyersorotherspecials.Ifthere’sarewardsprogramthatgivesbackmoneyordiscountsongas,signupforthat,too.Afterall,gasandgroceriesaresomethingmostofusbuyeveryweek.Foradditionalsavings,looktoseeifyourregulargrocerystoreoffersgasdiscountswithitsloyaltycardprogram,andlookforonlinecouponoffersthatautomaticallyworkifyoulinkthemtoyourloyaltycard.

Ifyourstoreoffersane-couponprogramthatwillsendyoucouponsviae-mailordirectlytoyoursmartphone,signupforthat,too.I’veaddedtheKeyRingapptomysmartphone,whichstoresmyloyaltycardssothatIcanscanmyphonescreenatthecheckoutinsteadofclutteringupmykeyringwithadozenofthoseannoyinglittlepiecesofplastic.TheKeyRingappalsoautomaticallydownloadsspecialoffersandexclusivecouponsandlinkstoweeklystoreflyers.CardStarisasimilarapp,andthere’salsoaniPhone-onlyappcalledPassbook.

Thenextiteminthecoupontoolbox,Doreensays,istogettwocopiesoftheSundaynewspaper(remember:gumdisease!).You’reonlysavingcouponsforthingsyouuse,itemsthatarefree,anditemsthatarebuyone,getonefree.Thereasonyouwanttwoofthenewspapercouponsisbecause,hey,morecoupons,andsoyoucancombinethemwhenyoufindabuyone,getonefree(BOGO)saleatthestore.Doreenexplains,“Iftherearebuyone,getonefreesalesyoucanusetwomanufacturerorstorecoupons,becauseyou’rebuyingtwoitems.That’saverysimplewaytoreallydoubleupyoursavings.”AndifyouhaveaBOGOcouponfromthemanufacturerandfindaBOGOsaleatthestore,usethecouponandgetbothitemsforfree,plustax.(Couponpoliciesvaryfromstoretostore,butmostallowthistactic.)

Third,gatheradditionalcouponsfromafewselectsources.Thatincludesonlinecouponsites,suchasCoupons.comandSmartSource.com.Ifyourgrocerystorehonorscompetitors’coupons,eithersaveinsertsandflyersfromotherstores,orvisittheirWebsites,suchasTarget.com,forprintablecoupons.Formoresavings,searchtheWebforcouponmatch-upsitesthatpairyourstore’sweeklyspecialswithcurrentcoupons.Ittakesalittleresearchandyouhavetofigureoutthedifferencebetweena“catalina”(couponsprintedatthe

checkoutregister)anda“blinkie”(asmallelectronicdeviceinstoreaisleswithblinkinglightsthatprintscouponsforanearbyitem),but,again,youarelookingonlyforitemsyouuseorhugesalesonsomethingyou’dsubstituteforapreferredbrand.TheGroceryGamealsoofferscouponmatching.

Fourth,gotothemanufacturer’sWebsiteforbrandsyoufrequentlybuy,suchasKellogg’sorProcter&Gamble.Besidesfindingprintablecouponsatthosesites,youalsocanregisterforcouponsorsignupforsamplesofproductsorbrandsyoufrequentlyuse,andgetcouponsorevenfreesamplesofnewproducts,whichalsousuallycomewithadditionalcoupons.

Lastly,don’tforgetsocialmedia.GoingonFacebookto“like”yourfavoritebrandormanufactureralsobringsyouadditionalcouponsandsamples.Signupforfreebiesandspecialoffers.

Whatyou’relookingtodoisfindacoupleofcouponsourcesthatwillconsistentlyworkforyouwithoutalotoftimeandhassle,sodon’tfeelthatyouhavetodothisallatonce.Youcansampleoneortwomatch-upsitesaweekbeforeyoudoyourshoppinginsteadofplowingthroughtwodozendifferentsitesonsomekindofday-longextremecouponingbender.Ifyoudon’tweigheverypossiblepurchasebutjustlookforthingsyoualreadyuse,itwillhelpcutdownonyourcoupon-huntingtime.

Comegrocery-shoppingtime,you’relookingtocombinecouponswithBOGOsorstorespecials.Or,ifthey’reofferedinyourarea,shopondouble-coupondays,whenstoreswillgiveyoutwicethefacevalueofacoupon,makinganofferof50centsoffworth$1.You’realsolookingtocombineor“stack”coupons,includingcompetitor,store,andmanufacturercoupons.Here’sanexamplefromDoreen:Atkinsfrozenentréesarenormally$3.99.Shecombinedamanufacturer’s$1-offcouponwiththestore’sbuyone,getonefreesale,meaninghertwelveentréescost$12insteadof$48.That’slunchfortwoweeksat$1adayplus$36towardhercarpayment.

Doreenestimatesshespendsabouttwentyminutesgettingherlisttogetherandcheckingstoreflyersandcouponsbeforeshopping.Atthestore,Isometimeshavetosearchtofindasaleitem,whichisofteninaseparatedisplay,ortoseewhetherthegenericisstillcheaperthananamebrandwitha50-cents-offcoupon.Butitpaysoff.

“Igottothegrocerystoreat2:30andIgothomeat4andIwon’thavetogobacknextweek,”Doreensaidofarecenttrip.“Ispent$99andsaved$127.That’sgoingtocovermefortwoweeks.EverythingIboughtwassomethingIamgoingtouse.Byclippingcoupons,Isavedmyself$127.Idon’twanttohand

overthatmoneytothegrocerystore.”

PinchingpenniessohardthatLincolngetsaheadache

Thefirststepistodothemostwithwhatyouhave.TheNaturalResourcesDefenseCouncilcitesstudiesshowingthatAmericanhouseholdswaste$40billioninfoodeveryyear.1About20percentofthatcomesfromvegetablesand15percentfromfruit,andI’mnotsurprised.Atourhouse,thevegetablebinintherefrigeratoralwaysseemstocontainsomewitheredscallions,mushroomsturningtojustmush,oranapplethat’sgonesobadit’sabouttostartdatingCharlieSheen.

Onesolutionistoshopmorefrequentlyforthingsthatwillspoil,sinceIalwaysseemtooverestimatehowmanyvegetablesIwilleat,orendupwithawholeheadoflettucebutthenonlyuseafewleavesforasandwich.Insteadofshoppingforvegetablesallatoncewithabigcoupon-ladenmoney-savingtrip,trimtheveggielistandthenhitthestoremidweektorefreshthedairyandvegetablesasneeded.

Thismeansyouneedtokeepjustashortlist,hittheperimeterofthestore,wheretheveggiesandmilkare,andavoidthecenteraislesfullofexpensivesnacks,treats,andsoda.Thiscanbehardifyouhaveoneormorechildrenintow,aswhenyouhitthegrocerystoreafterpickingupthekidsfromschool.Suddenly,youfindthecartfilledwithOreos,Goldfishcrackers,juiceboxes,andothermust-havesforthekids,oryouenduparguingwithanddraggingabunchofsullen,grumblingchildrenthroughthestore.WithLi’lMoney,Itakeoneoftwotactics:Hecanchooseonethingandonethingonly(subjecttomyapproval),andthat’sit.OrIusethistrickfrommyformereditor,Mark“TheCloser”Truby.Ifthegrocerystoreisclosetoadollarstore,Itelltheboythatifhehelpsmewiththeshoppinganddoesn’twhine,beg,plead,scream,orotherwisecomplain,hecanbuyanythinginthedollarstore.Foramere$1.06(withsalestax),Igetaquick,peacefulshoppingtripandhegetstomakethedollarstorehisoyster.

Anotheroptionistobuildmealsaroundnotonlywhat’sinyourpantrybutwhat’sgettingreadytoturninthefridge.Thatsoon-to-wiltleftoverlettucedictatesthattonight’sdinnerisasaladNiçoise,madewithbargaintunafish.Thosefadingzucchinissuggestastir-fry,vegetablestock,ormaybesometastybutcheapzucchinilatkes(thezucchinireplacesthepotatoesandit’shealthier.

Addapplesauceandsometurkeysausagesandyouareliving,pal.).Ofcourse,vegetablesaren’ttheonlyleftovers.Mymom,raisedduringthe

Depression,wouldoccasionallydeclare,“It’smust-go-downnight.”Thatmeantthatabacklogofsmallportionsofleftovers,datedproduce,ormeatwaspilingupinthefridgeandwasgoingtobedisposedofthroughus,herlovingfamily,nottheInSinkErator.We’dpickfromthesmorgasbordofleftovers,withmaybeavegetableorsideofmashedpotatoesthrownin,andtheworlddidn’tcometoanendjustbecauseweweren’talleatingexactlythesamething.

Naturally,anythingyoucangrowinyourgardenisnearlyfree,andthingssuchascarrots,tomatoes,zucchini,beansofanytype,andsquashareprettyeasytocultivate.WegrewthreekindsoflettuceaswellassomeherbsintheFunnyMoneykitchengardenlastyear,andwehadbettersaladsthanwecould’veboughtfornexttonothingallsummer.Mypaternalgrandfather,FrankO’ConnorSr.,whoraisedtenkidsduringtheDepression,rotatedgreenbeans,polebeans,andwaxbeansthroughhisgardenforthewholesummer.TherewasonelateJulyweekthatmybrotherandIstayedwithFrankandGrandmaClaraatthelakeandIthoughtweweregoingtoturnintobeans.

Farmers’marketsandfoodco-opsareotheroptionstostretchafoodbudget,buttheyalsodemandthatyouadaptyourmenustousewhat’scheapandinseason.Thewaytoreallyenjoyseasonalingredientsistocheckouttherecipesinyournewspaper,orgoonlineandfindstoriesfromplaceswithreallygoodfoodsections.MycoworkerKateLawson,TheDetroitNewsfoodeditor,comesupwithdandystuffoveratDetroitNews.comeveryThursday,andtheCityKitchencolumnonTheNewYorkTimesWebsitealwayshassomethinginseasonandterrific.If,forexample,youseeanicebagoflittleneckclamsonsaleatCostco,asIdidrecently,theCityKitchenrecipeforclamsandpastaismorethanjustthething.2

Also,don’toverlookU-pickfarms,especiallyifyou’reintocanning.Whetherit’sapplesorblueberries,thesekindsofoutingscanprovideanafternoon’sworthofoutdooractivityaswell.WhenmyparentsvisitedusinFloridaduringstrawberryseason,mymotherandIspentoneofourmostmemorableafternoonspickingfreshstrawberriesandwintertomatoesataplaceoutonStateRoad7.Wehitthedelionthewayhome,whichhadjustmarkeddownafreshbatchofbuffalomozzarella.ThateveningwehadamemorablemealthatstartedwithinsalataCapreseandendedwithstrawberriesandwhippedcreamoverfreshdropbiscuits.Itmighthavebeencheap,butittastedlikeamillionbucks.

Anotherlow-costoptionistostretchwhatyou’recooking.IfirstlearnedthistechniquefrommySarahLawrenceCollegepalLaurieLytel,whoisnowNevada’sfinestfamilytherapist.Laurieboughtfrozenorangejuiceand,insteadofaddingthreecansofwater,threwinfour.Voilà—onemoredayofjuiceforfree!Extendthattechniquebyaddingmorerice,vegetables,ornoodlestoturnarecipethatservessixintoonethatserveseight.Iroutinelydoubleuptheamountoftomatoesandonionsinmychiliandanygroundbeefcasserole,andtheextravitaminCandfibergoesdoesusallgood.Andforrealbargainrecipes(plusmanymoretips,couponlinks,andmore)Iliketoscan5dollardinners.com,whichevenoffersaweeklymealplanner.Makeadoublebatchandfreezetheleftovers.

Ofcourse,ifyouareinadiresituationyoushouldabsolutelytakeadvantageofanyfoodassistanceprogramsyoucanfind.Rightnow,wehavemorepeopleonfoodstampsinthiscountrythanonunemployment,sodon’thesitatetoseeifyouqualify,evenifyou’vegotajob.AlsolookforfoodpantriesinyourareabycheckingwithUnitedWayandlocalsocialserviceagenciesandchurches.

Ifyouwanttogoreallyhard-coretosaveonfood,youcanraiserabbitsorchickens,butconsiderthehassle,neighbors,zoninglaws,andyourownsqueamishness.DollyFreed’sveryinterestingbookPossumLivingdetailsherexperiencelivingonnexttonoincome,inpartbyrelyingonasteadysupplyofhome-raisedrabbitmeat.3InherinformativeandentertainingMaketheBread,BuytheButter,JenniferReesegivesdetailsandrecipesbasedonherownexperienceafterlosingajobanddecidingtofindoutjustwhenhomemadebeatsstore-bought,andviceversa.4Onceyou’vemadeyourownguacamoleyou’llnevergoback—andyou’llsavemoney.Justmakesureyoudon’tspenditallonbeerwhenyouinviteyourfriendsovertosampleyourkillerguac.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89

Week3—Utilities...$139.39Week4—KidCosts...$114.50Week5—WorkExpenses...$90

Week6—PersonalSpending...$104Week7—Entertainment...$108Week8—LifeInsurance...$64.40Week9—Groceries...$37.23

Totalmonthlysavings...$832.02

Lefttocut...$167.98

Accordingtomybudget,livingexpensesateupto10percentofourfamilyincome,andtwo-thirdsofthatwasgroceries.Buttryingtoshrinkthegrocerybillshowedthatsavingonfoodwasgoingtocomeinnibbles,notbigbites,leavingmefarshortoftheweek’s$100goal.

IfoundtheGroceryGameeasytouse.Ittookaboutahalfhourofplanning,aswellassometrompingaroundthestoretofindthesaleitems.Butoursavingsafterfourweeksweren’tverydramatic—$37.23forthemonth,thoughweaddedalotofitemstothefreezerandpantry.AsGaultnoted,savingsatthestartarelowuntilGroceryGameusersgothroughafullcycleofsavings.

We’dalreadybeencuttingbackonfoodandothersupermarketsundries,buyingpapergoodsinbulkatawarehouseclub,splurgingonpremiumsteaksonlywhentheywereonabigsale,andswitchingmostlytostorebrandsandgenericsforeverythingelse.

“Itdoesn’tsurprisemethatyou’renotsavingalotyet,becauseyouwerealreadyagoodsaver,”Gaultsaid.“Whatyou’redoingisamassingthingsyou’llusebeyondthenexttwelveweeks.Afterthat,yourneedsarebasicallyjustyourproduceandmilkandreplenishingyourinvestments.”

That’sencouraging,andIhadtalkedtooneMetroDetroiterwhodid,indeed,slashhersupermarketspendingby50percentwiththeGroceryGame.Butatthemomentmyattemptatcuttingthefoodbudgetleftabittertasteinmymouth.Italsoleft$167.98insavingsIhadtofindinmylastcategory:housing.

Forgetraccoon.ItlookedlikeIwasgoingtoendupeatingcrow.

T

11

Housing

YouCan’tDriveYourHouse,butYouCanLiveinYourCar,andatLeastThenYouWon’tHavetoDealwithaPropertyAppraisal

hefinalweekofThe$1,000ChallengecametheweekofChristmas,thusintroducinganew,short-livedholidaytradition.Besidesthedeckingofthe

hallsandthecarolingofthechoirs,Ihadthehasslingofthemortgage.Ifthat’snotpartofyourholidayobservance,countyourselflucky.Ifitis,thenyouaddedtherareChristmasEvetraditionoflisteningnotfortheprancingandpawingofreindeerontheroofbutforthecalloftherealestateappraiser.

Thatdecidedlynonjoyousstrainechoedasthoughonhighbecausethelastcolumninmycost-cuttingseriescoveredtryingtorefinancemymortgage.Tomaketheproject’s$1,000goal,Iwaslookingtoslicenearly$170outofthehousepayment,includinginsurance,taxes,andmaintenance.RefinancingthemortgageseemedthebestbettosavethekindofdoughIneededtofind.Afterall,housingcostsarethetopbudgetcategoryformostfamilies,soakingupmorethanaquarterofallgrossincome.Iftherewasanywheretosave,Ithoughtitoughttobehere.

Maybeitwas,buttherewasnowayIwasgoingtofindoutanytimesoon.Thankstothemortgagemaniathatputusintherecession,allkindsofrules

havebeenaddedtoasimplehomerefinancing,especiallytheappraisal.Myfirststepwastogatherrecommendationsforlocalmortgagebrokers.Ifoundonethatdidn’tchargeanapplicationfeeuntilanappraisalhadbeenconducted,sothatIwouldn’twaste$400or$500innonrefundableapplicationfeesontopofa$300appraisalbillifmyhome’svaluedidn’tqualifyforanewloan.

Icalculatedthatrefinancingmy5.5percentmortgageto4.875percent,and

rollingthebalanceofasmallvariableratehomeequityline,wouldhavecut$113frommymonthlyhousingcost.

Ibadlyneedtoscorethesavings,whichwouldputmewithin60bucksofmy$1,000goal.SoIgotthemortgagebrokertotellhermanagertotelltheindependentthird-partyappraisalmanagementfirmtotelltheindependentrealestateappraiserthatIneededtheappraisalbeforeChristmas.Theyallputabig“rush”onthejob—whichwasthenscheduledtobedeliveredonJanuary4,weeksaftermyfinalcolumn.ThatmeantIneededtolookelsewherefortheweek’ssavings.

Myotherhousingcostsdidn’toffermuchhopeeither.Myinsuranceandtaxeswerealreadylow,butIdidcutthemaidservicetoonceamonth,whichsaved$60.IfItrainedthedustbunniestomarchinformation,Ithought,maybeMrs.FunnyMoneyandIcouldchargeadmission,oreventaketheshowontheroad.Thatstillleftmewithmorethan$100tocutfrommybudget.Iwasgoingtohavetokeeplooking—butwhere?

Freeingupcash

Sincemybudget-cuttingexperiment,interestrateshaveonlygonedown,thankstooursucktasticeconomyandtheweak“recovery”thatcontinuestobehobbled,inlargepart,bytheongoingcrisisofforeclosuresanddrasticallyloweredhomevalues,whicheveninearly2013remainofftheirpeakbymorethan30percentinmuchofthecountry.Thatmeansanyonewhoboughtahouseafterfallof2003probablyowesmoreontheirmortgagethantheirhomeisworth.(AsofMarch,anyoneinMetroDetroitwhoboughtafterthesummerof1996haslikelylostmoney.)

Ifyoucanswingarefinancingandrateshaven’trisentoohigh,itcanbeworthit.Withmortgagerateshoveringaround3.60percentduringthefirstquarterof2013,thatlefthomeownerspayingjustslightlyabovetheaverageannual3percentrateofinflationtoborrowmoneyforthreedecades.Inotherwords,evenatlowinflationrates,injustafewyearsyou’llbepayingbacktheloanwithmoneythat’scheaperthanitistoday.Thesavingsona$100,000,5.5percentloanrefinancedto3.6percentismorethan$110offyourmonthlypayment,ormorethan$40,000insavedinterestduringthelifeoftheloan.Anotherreasontorefinanceisifyouhaveanadjustable-rateloan.Theratemaybelessthanthegoingratesonfixed-termloansnow,butyou’dbewisetorefi

andlockinapermanentlylowratebeforeyourloanadjustsabovethecurrentlowrates.Someadjustableloanswillletyoulockinafixedrateatsomepointduringyourloan,socheckthatoptionfirst,sinceyou’llavoidthecostsofrefinancing.It’llprobablybequicker,too.

Beforeyourefinance,youhavetodealwithtwoquestions:Canyouaffordit?And,ifso,canyouqualifyforanewloan?

Whetheryoucanaffordarefinancecomesdowntohowmuchyou’llsaveandhowlongitwilltakeforthesavingstocoveryournewloancosts.Therulestokeepinmindforamodern-dayrefinancingaresimple:itshouldnotlengthenthetermoftheloan;itshouldpayforitselfintwenty-fourmonthsorless;and,otherthanloanfees,itshouldnotraiseyourloanbalance.Personally,ItrytopaycashforthecostofrefinancingratherthanrollthecostsintothenewloanbecauseIdon’twanttoaddmoredebtandenduppayinginterest—nomatterhowlow—ontherefinancingchargesforthenexttenortwentyyears.

So,getoutyourcalculatorandascratchpadand...

Dothemath:First,figureouthowmuchyou’llbeabletosave,maybeusingthemortgageandreficalculatorsatBankrate.com.1Ifyou’refiveyearsintoa$150,000thirty-yearloan,themonthlysavingsonswitchingfromarateof5.5percentto4percentfortheremainingtwenty-fiveyearscomesto$93amonth.Dosomemoremath:Totalupthefeesandotherrefinancingcostsandfigureoutyourbreak-evenpoint.If,usingtheexampleabove,itcosts$1,800torefinance,you’dmakeyourmoneybackinlessthantwentymonths.Ifitwilltaketoolongtorecoupyouroutlay,lookforaloanwithnopointsandnocosts.Yourlowest-costbetwilloftenbetorefinancewithyourcurrentlender,especiallyifyouhaven’thadtheloanforalongtime.Ifthepropertysurveysandotherpaperworkaren’ttooold,somelenderswon’trequirenewdocuments,whichmakestherefinancingprocessfasterandcheaper.Fixyourrate:Formostpeople,there’snoreasontomonkeyaroundwithadjustable-rateorinterest-onlyloans.Lowerfixedratesvirtuallyerasethe“savings”fromthosekindsofgimmickyloans.Thesavingsonafixed-rateloanat3.6percentversusanadjustablemortgageat2.68percentwheretherateisfixedforfiveyearsandthenadjustsannually(a5/1adjustable-ratemortgage,orARM)comesoutto$72amonth.Ifthat’sthesoledifferenceinbeingabletoaffordarefi,thenyoumight

wanttoskipit.Evenifyoudorecoupthecostsinthefirstfewyears,you’llcertainlybepayinghigherrateswhentheloanstartsadjustingaftertheinitialfixedperiod.If,however,theincreaseiscappedandyouwon’tstayinthehouseallthatlong(mostofusmoveabouteverytenyears,onaverage),thenanARMcanworkforyou.Justbesurethatyouunderstandexactlyhowhighyourloancanadjustinanyoneyearandduringthelifeoftheloan,andmakesureitwillbeaffordableatthoselevels.Thinklong-term:Shopforamortgagebankerorbrokerthesamewayyoushopforamechanic:youneedsomeoneyoutrustwho’sbeeninbusinessformanyyearsandwillbethereformoreyearstocome.AsIsuggestedearlier,trytofindsomeonewhowillarrangetohaveyourhomeappraisedbeforechargingaloanapplicationfee.Thatwayifthehome’svaluedoesn’tqualify,youwon’tlosetheapplicationfee.

Animportantstepinrefinancingistoavoidlengtheningthetermofyourloan.Ifyou’realreadyseveralyearsintoathirty-yearmortgage,goingbacktostartoverwithanotherthirty-yearloanwilladdallthoseyearsofinterestbackontoyournewmortgage.Evenifyourmonthlypaymentislower,yourtotalcostisgoingtobehigher.Andbecausemortgagesarefront-loadedtopaymostlyinterestatthebeginningoftheloan,you’llowemoreonthebalanceofyourrefinancedloanafterfiveyearsthanyoudidontheoriginal,higher-ratemortgage.

Assumingarefinancemakessense,thenextstepistofindoutifyou’llqualifyforanewloan.Lendershavedrasticallytighteneduptheirunderwritingstandardssincetheburstingofthemortgagebubble,eveninsistingonradicalnotionslikefindingouthowmuchmoneyyoumakeandwhetheryou’llactuallybeabletorepaytheloan.

Thefirststepisyourcreditscore.Anythingaround720(outof850points)orhigherwillgetyouthebestrates,whileanythingbelow620meansyou’reunlikelytoobtainanewmortgageateventheworstrates.Youaren’tentitledtoafreecopyofyourcreditscore,butyoucangetafreeestimateontheWeb.Bankrate.comhasagoodestimator,2orbuyyourscorefromFairIsaacCorporation,thefolkswhoinventedthecreditscore.3Don’tgoanywhereelse,anddon’tsignupfor“free”creditmonitoringorotherservicesbecausethereisnosuchthing,nomatterwhatthesingingpiratestoldyouinthatTVad.

Yourmortgagebrokerwill,inalllikelihood,runacreditscoreonyou,too,

andyoushouldbewaryofanyonewhoquotesyouasetratebeforeatleastaskingaboutyourcredithistory.Ifyourscoreismarginaltherearestepsyoucantaketoboostyourscoreinjustafewmonths.Thebiggestoneistomakeeverysinglecreditpaymentontime,sincethatcountsforthebiggestsingleportionofyourcreditscore.Youalsocanmovearoundyourcreditcardbalances,raiseyourcreditlimits,andtakeotherstepsthatwillhelpimprovethismystical,magicalcredittalisman.Formoreinformation,headbacktothediscussionofcreditscoresunder“Insurance”inchapter2orgetacopyofYourCreditScore,YourMoney&What’satStake,byLizWeston.4

Thenextstepisdeterminingwhetheryouowemoreonyourhomethanitscurrentappraisedvalue.Iftheratiooftheloanamounttothevalueofthehomeis80percentorless,you’reagoodcandidateforarefiwithlotsoflenders,sogoshoparound.(Here’sthemath:LOANAMOUNTdividedbyHOMEVALUE=yourloan-to-valueratio.)Iftheloan-to-valueratio(orLTV,inmortgage-speak)is97percentorless,youmayfindrefinancingavailable,butyou’lllikelyhavetopayforadditionalprivatemortgageinsurance.Ifyou’renorthof100percentandarecurrentonyourpayments,youroptionsaretoseeifyourlenderwillrefinancethehome,orlooktorefinanceundertheHomeAffordableRefinanceProgram(HARP).HARP,whichstartedin2009,gotofftoashakystart,butithasbeenreworkedtobecomeHARP2.0,whicheliminatedanylimitontheloan-to-valueamount.NewlegislationmeansmoreadjustmentscametoHARPin2013.

ThebigdrawbacktoHARPisthatitcoversonlyloansownedbythegovernment-backedmortgageinsurersFannieMaeandFreddieMacbeforeJune1,2009.(Youcancheckyourloanonlineatfanniemae.com5orbycalling800-732-6643,oratfreddiemac.com6orbycalling800-373-3343.)Aseparaterefinanceprogram,calledtheFHAStreamline,isavailableforhomeownerswithFHAloans.Ifyoudon’thavealoanthroughFannieMae,FreddieMac,ortheFHA,stilltrylocalmortgagebrokersandyourownlenderandservicer,sincethepoliciesandguidelinesseemtoshifteveryfewmonths.YoualsoshouldcheckwithaHUD-certifiedhousingcounselor.YoucanfindthelistatHUD.gov7orbycalling888-995-4673.

Ifyouhaveasecondmortgage,homeequitylineofcredit,orhomeequityloan,thatcancomplicatearefinance,sincethatlenderwillalsohavetosignoffonthenewmortgage.Thisislessofaproblemifyouhavetheequityloanwiththesamelenderasthemortgageorifyouhaveenoughequitytorefinancebothloansunderthenewmortgage.Anotheroptionistoseeifyoucandotherefi

throughthelenderwhoownstheequityloanorsecondmortgage.Afinaloptionforsomehomeownerswhoowemorethantheirpropertyis

worthiswhat’scalleda“cash-in”refi.Insteadoftakingcashoutofthehome,youbringcashtotheclosingtopaythemortgagebalancedowntoanacceptableloan-to-valueratio.Thisisn’tgoingtobetherightapproachunlessyou’vegotyourfinancesingoodshape,withnoothermajordebtandasolidemergencyfund.Itcanmakesenseifyou’reonthebubbleandjustshyofgettingdowntoaqualifyingloan-to-valuerateorifyou’vegotalotofcashsittingaroundthatyou’resickofseeingearnpracticallynothinginabankaccount.Cashinginisalsoanoptiontowipeoutahomeequityloansothatyoucanrefinancethefirstmortgage.

Twofinalcaveats:So-calledno-costrefisaren’tfree;theyjustchargeaslightlyhigherratetocovertheclosingcosts.Also,arefinancethatlowersyourinterestwillalsolowertheamountofinterestyou’llbeabletodeductonyourtaxesnextyear.Don’tassumeyourdeductionswillbethesame;checktheinterestusinganyonlineloanamortizationcalculatorandseehowthatmightchangeyourtaxwithholdingusingtheveryniftywithholdingcalculatoratIRS.gov.8

Makingendsmeet

First,lookoveralltheelementsofyourhousepaymentandseeifyoucanloweroreliminateanyofthem.Typically,housepaymentsincludeprincipalandinterestontheloan,butalsotaxesandinsurance,whichyoupayintoanescrowfund.Evenifyoupaythemyourself,insuranceandtaxesarestillpartofyouroverallhousingcost.Startwithyourhomeownersinsurance.Youcanlowerthedeductible,eliminatesomeoptionalriders,andshopthepolicyaroundtoseeifyoucansaveonthepremium.Checktoseeifyougotsomethinglikemortgagelifeinsurance,whichpaysoffthemortgageifyoudie.Thisisusuallymorelimitedandmoreexpensivethanbuyinggoodbasicterminsurance,asdiscussedinchapter9.

Thenextstepislookingatyourtaxbill.Intheverylikelyeventthatthevalueofyourhousehasdroppedinthepastseveralyears,yourmunicipality’sassessmentofthevalueofyourpropertyshouldhavebeenlowered,too,resultinginasmallertaxbillforyou.Butespeciallyinhardtimes,localassessorsmaytakeaconservativeviewtowardloweringassessmentsinorderto

keeptaxrevenuecomingin.Procedurestochallengeyourassessmentvarybystate.

InMichigan,Igotoaboardinmytown,andifIwanttoappealtheirdecision,Ihavealimitedwindowtotakeittoastatepanel.Somelocaltaxspecialistshavemadeapracticeoutofhandlingtheseappeals,andIcouldhireonestartingat$100.You’llhavetocheckwithyourlocalassessorandperhapsthestatetreasurer’sofficetoseehowthingsworkwhereyoulive.Forthemostpart,it’saninvestmentoftime,researchingrecentcomparablesalesinyourarea,anddoingalittlehomeworktosubmitanappealbasedonwhatyourpropertyisreallyworth.Yourfinaltaxbillisbasedonacertainchargepereach$1,000oftaxablevalueonyourhouse,soyoucancalculateanypotentialsavingswithsomesimplemultiplication.Ifyoushave$20,000offyourtaxablevalueandyourtaxrate(“mileage”)is$5per$1,000,you’lltrimyourtaxbillby$100ayear(20,000dividedby1,000,times$5).

Anothermortgageoptionyoucanaffordtodump,ifyouuseit,isabiweeklymortgageprogram.Theseareprogramsthat,forafee,takehalfyourmortgagepaymenteverytwoweekssothat,bytheendoftheyear,you’vemadetwenty-sixhalf-payments,resultinginanextrathirteenthfullpaymentonyourmortgageeachyear.Thisprepayingcanknockseveralyearsoffathirty-yearmortgage.Butyoucandoityourselfforfree,andyoudon’tneedtotieupabigwadofyourmoneyeverytwoweeks.Instead,putone-twelfthofyourmonthlypaymentasideinasavingsaccounteachmonth,andthensendintheextrapaymentyourselfwhenyou’vegotathirteenthpaymentbuiltup.Thatway,youhavethemoneyavailableifyouneedit.Which,atthispoint,youdo.Ifyouweresavingseparatelythiswayyoucouldeasilytakethemoneyoutandstoppayingintoiteachmonth.Ifyou’reinabiweeklypaymentprogramandyoucancelit,you’llgetmorecontroloveryourmonthlycashflowaswellascutoutanyfeesyoupayfortheprivilegeofprepayingyourownhomeloan.

Infact,youshouldn’tbeprepayingyourmortgageatallifyouarebarelygettingby,havedebt,havenoemergencysavings,oraren’tsavingadequatelyforretirement.Prepayingyourtax-deductible,usuallylow-ratemortgageisprettymuchthelastthingyoushoulddoifyouhaveanyotherfinancialconcerns.Partlythisisbecauseyoulosetheopportunitytocompoundinvestmentsforretirement.Ifyou’resendingextramoneytoyourmortgagethatcouldgointoyourworkplace401(k)orsimilarplanandbematchedbyyouremployer,youcouldbelosingoutonfreemoneyfromyouremployermatchthatwillalsocompoundovertime.(Evenifyoudon’treceiveamatch,you’restill

missingthegainsfromcompoundingovertime.)Worstofall,whatevermoneyyouprepayonyourmortgageistiedupinyourhouse,makingitveryhardtogetatitifyourunintofinancialproblems,orimpossibleifyoudon’thaveanyequity.

Youmaybeofferedordecidetopursueamortgagemodification,whichiswhereyourmortgageservicerreducesyourinterestrateor,inrarecases,eventheamountoftheprincipal.Whilesomeservicershavetheirownprograms,thebigoneistheU.S.Treasury–backedHomeAffordableModificationProgram(HAMP).However,ifyouapply,youneedtobevery,verycareful.Inmyreporting,I’vefoundmanyhomeownerswhoendedupworseoffbecauseofHAMP,andmanywerepushedintoforeclosureandruinedbecauseofservicergreedandincompetenceandpatheticallypoorgovernmentoversight.HAMPhasrecentlybeensubjectedtomorerules,andthenewConsumerFinanceProtectionBureauhasjumpedintoreinintheworstmortgage-servicingabuses,butyoushouldstillproceedwithgreatcautioninpursuingamodification.

Youcanwindupwithtwoproblems,whichoccurduringthe“trial”phaseofamodification,whereyourmonthlypaymentsaretemporarilylowered.Ifyoumakethemsuccessfully,youaresupposedtogetyourmodificationmadepermanent,butmanyhomeownersgetturneddown,oftenbecausetheservicerwillmakemoremoneyonabadtrialmodificationandaforeclosure.AccordingtotheObamaadministration’sownstatistics,morehomeownershavebeenkickedoutof“trial”modificationsthanhavereceivedpermanentones.(Housingexpertsestimateanother800,000homeownerswereimproperlyturneddowncompletely,aluckybreakformanyofthemwhoavoidedthehorrorsofabusted“trial”modification.)

Theproblemisthatduringyour“trial”paymentperiod,yourservicerislikelytoreportyourpaymentsaslatetothecreditbureaus,whichisgoingtoruinyourcredit,especiallywhena“trial”stretchesbeyondthreemonthstosixmonthsorevenayearormore.Theotherthingisthatwhenthemodificationisdenied,theservicercandemandthebalanceofallyourtemporarilyloweredpayments,alongwithaddedfeesandlatecharges.Ifyoudon’tcoughupallthatcashrightaway,theservicercan(andoftenwill)initiateforeclosureproceedings.Insomecases,theadditionalbalancegetsaddedontotheendoftheexistingloanterm,stillleavingyouworseoffthanwhenyoustarted.

TheaddedinsultisthatapplyingforaHAMPmodificationisn’teasy.Servicersfrequentlylosepaperwork,misdirectphonecalls,failtorespond,giveoutincorrectinformation,andrequiremultiplesubmissionsofpaystubs,tax

returns,andotherdocuments.Muchofitishandledbyfax,phone,andexpressmail,sincee-mailisunheard-ofduringtheprocess.Insomecasesservicers“dualtrack”aloaninmodification,meaningthattheyareseekingtoforecloseormayhavealreadystartedforeclosureevenwhile“trial”modificationpaymentsarebeingmade.

Somepeople,though,havegottensignificantmodifications,especiallyiftheyhadhigh-ratemortgagestobeginwith.Ifyouhavethewherewithaltochurnthroughthepaperworkandredtaperequiredforamodification,keepgoodwrittenrecordsandwritedownthefullnameofanyoneyoudealwithandthedateonwhichyoutalked.Sendanydocumentsbycertifiedmail,andwheneveryou’regivennewinformationortoldtomakeachange,sendaletterspellingoutyourunderstandingofwhat’shappeningandwhatisbeingtoldtoyoubywhom.Keepcopies.Astheprocessdragson,expecttosendinnewdocumentssuchaspaystubsandtaxstatements.Iftheonespreviouslysubmittedbecomeoutdated(usuallymorethanninetydaysold),theservicermayusethatasanexcusetodenyyourmodification,oftenwithoutrequestingnewerones.

Ifyougeta“trial”modification,bankthedifferenceinaseparateaccountsothatyouhavethemoneyonhandifyour“trial”modisdenied.Also,beforeacceptingamodification,findoutexactlyhowtheloweredpaymentswillbereportedtocreditbureausandweightherisktoyourcredit.TrytoworkwithaHUD-certifiedhousingcounselor,anddon’tlistentoanyonewhosaysthatyoumustbedelinquentonyourloantoqualify,whichisn’ttrueforowner-occupiedhomes.Startingoutsixtydayslatewhenyourequestthemodificationisverylikelytotriggertheforeclosureprocess.

PinchingpenniessohardthatLincolngetsaheadache

Asdiscussedearlier,refinancingintoanewthirty-yearmortgage,evenifyouarealreadyseveralyearsintoyourcurrentloan,costsmoreinthelongrunandsetsyoubackinbuildingequityinyourhome.But,ifyou’rereallypressedandarefiwillsignificantlyloweryourmonthlypayment,it’sworthconsideringtogettheshort-termreliefnow.Later,whenyourfinancialsituationimproves,youcanconsiderprepayingyourmortgageprincipaltoloweryouroverallinterestcostandcatchuponequity,ifthat’sappropriate.Butfirstconsiderotheroptions,evenifitmeansleavingthehome.Ifstayingandrefinancingdoesmakesense,you’lllikelywanttorollasmuchofthereficostintothenewloanaspossible,

butyou’llalsoneedtocomeupwithacertainamountofcash.Makesureyou’vegotenoughcashavailablebeforeyoustartlayingoutmoneyforapplicationfeesandotherrefiexpenses.

Lessexpensiveoptionsforloweringyourcostofhousingincluderentingoutaroom,ideallytosomeoneyouknow,suchasafriendorthechildofarelativeattendingschoolnearbyorasummerinternfromwork.Justhowandwithwhomyouwanttoshareyourhomeisaverypersonalchoice,butmakesureyouarrangethisasabusinessdealfirstandforemost.Spelloutallthetermsbeforehandandinwritinganduseastate-approvedlease.Alsotryashort-termrentalatfirsttoseewhetherthiskindofthingisgoingtobecomfortableforyou.Youmayalsowanttorunabackgroundandcreditcheckonyourpotentialtenants.

Ifyouwanttobestrictlylegalaboutthings,incomeyougetfromrentingyourhomeistaxable,butyoucanalsodeductashareofyourmortgage,interest,andotherhousingexpensestooffsetthetax.Youalsoneedtocheckyourlocallawsonrenting,oratleastgaugewhetheryourneighborswillcomplainwhenyousuddenlytakeafamilyoffourintoyoursparebedroom.Youshouldcheckwithyourinsuranceagenttomakesureyou’recoveredand,ifpossible,haveanylong-termrenterstakeouttheirownrentalinsurancetocovertheirownpersonalpropertyandliability.

Amoredrasticoptionistorentoutyourentirehousewhileyoumovesomewherelessexpensive,suchasinwitharelative.Thisisgoingtobemorecomplicated,andyoumaywanttoconsultwithapropertymanagerwhocanhandlethedetails,unlessyoureallywanttobealandlord,whichyouprobablydon’t.Dependingonthecircumstances,therecanbesignificantrisksandhasslesinvolvedinrentingyourhome,nottheleastofwhichisthattherentyouchargemightnotcoveryourentiremonthlypaymentformortgage,insurance,andtaxes.Butitisonewaytohangontoahomethatyoucan’trefinanceuntilyourfinancialsituationimprovesoruntilthemarketvalueincreasesandyoucansellorrefinancethehome.

Sellingthehomeandmovingtosomethingcheaperisanotherpossibility,butitalsocomeswithitsownsetofcostsandhassles,includingcleaningupyourhometomakeitmarketable,findingalistingagent,andbearingthecostoffindingandmovingtoanewplace.Youcantryashortsaleifyoujustwanttogetoutfromunderahomeyoucannolongerafford,whichiswhereyourlenderagreestoletyousellthehomeforlessthanwhatyouowe.Thisinvolvesallthecostandhassleofaregularsale,plusmore,whichI’msureisjustwhat’s

missingfromyourlife.Itcantakeuptosixmonthsorlongertogetyourlender’sapprovalforashort

salewhenyoufinallygetanoffer.Alsobeawarethatashortsalewillsignificantlyloweryourcreditscore,solineupanynewloansandlivingarrangementsbeforehand,sincelandlordswillcheckyourscorebeforerenting.Ashortsaleisalsolikelytomakeitdifficulttoqualifyforanewmortgageforthenextseveralyears,withathree-yearwaitafterashortsalerequiredtoqualifyforanFHAloan.Finally,ashortsaledoesn’tnecessarilymeanyoudon’tstillowethefullamounttoyourlender.Unlessyougetaspecificreleaseforthedeficiencybetweenwhatwasowedandthepriceforwhichthepropertysold,yourlendermaybeabletopursueyouforthebalanceforyearstocome,withinterestadded.Insomecases,lendershaverequiredsellerstotakeoutapersonalloanfortheunpaidbalance.Bankshavebecomemuchmorewillingtoconsidershortsalesinthelastfewyears,however,becauseitisbetterforthemthanhavingyoudefaultandletthehousegointoforeclosure.Beforestartingtheprocessconsultarealestateagentwithconsiderableshort-saleexperience,aswellasarealestateattorneyexperiencedwithshortsales,toprotectyourselfagainstareallybigclaimlater.

Whateveryoudo,don’tfallforoneofthemanyschemesandscamsthatpreyondesperatehomeowners,wheremiddlemenpromisetheycanhelpyou“save”yourhouse.Thelegitimateonesareofdubiousvalueatbest,andmanyareoutrightscams.Youshouldbeespeciallywaryofanyonewhowantstotakeyourpaymentinsteadofhavingyousendittothelender,aswellasanyonewhowantstobepaidupfront.Variousschemesthatpromiseto“wipeout”yourdebtsareafraud,andofferstobuyyourhouseandleaseitbacktoyouareveryriskyatbest,andmostareconsdesignedtotakebothyourhouseandyourmoney.Donot,underanyconditions,signoveryourdeedoraquitclaimdeedwithouttalkingtoyourownattorneyfirst.Foralistofhome-savingscams,checkoutthewarningsfromtheOfficeoftheComptrolleroftheCurrencyatOCC.gov.9

Ifyourfinancesarereallyinturmoil,noneofthismayhelp,andyouneedtoconsider,rationallyanddispassionately,whetheryoucanrealisticallyaffordyourhouse.Ifyourincomehastakenahugehit,youhavenosignificantassetsotherthanretirementaccounts,andyou’vebeenunemployedforalongtime,theprospectsofbeingabletokeepmakingyourhousepaymentaredim.Ifyouarealreadybehindonyourpayments,they’reevenworse.Butasbadasthingsare,youcangetyourselfintoevenmoretroublebytryingtokeepyourhome.

Manyhomeowners,hopingthatamiracle—oratleastajob—willcome

through,draintheirfamilyresourcestotryandkeepahomeorstrugglethroughatrialmodification.Thatincludestakingmoneyoutofretirementaccountsorborrowingfromrelatives,oftenusingupassetsthatcanbeprotectedinbankruptcy.Theupshotisthatstrugglinghomeownersdepletealltheirresourcesandstilllosetheirhomes,leavingthemwithnomoneytofindanewplacetoliveandputtingtheirretirementandfuturefinancesatrisk.

Ifyoucannotmakeyourhomepayment,startwithacertifieddebtcounselorand/orHUD-approvedhousingcounselorfromthelistatHUD.gov.Alsocontactanexperiencedconsumerbankruptcyattorney,preferablyonewithforeclosureexperience.Youwantsomeonewhohasbeenhandlingbankruptciesforyears,notjustalawyerwhoswitchedovertobankruptcieswhentheeconomyturnedsour.I’veseensometerribleadvicehandedoutbyotherwisegoodattorneyswhowereinexperiencedwithpersonalbankruptcyandforeclosure.Ifyourattorneythinksit’sokay,contactthemortgagelenderorservicer,whomayofferyou“cashforkeys,”payingyouafewthousandtomoveoutquicklyandleavethehomeingoodcondition.

Asdifficultastepasthisistoconsider,makesureyouweighallyouroptionsbeforespendingeverylastdimetryingtohangontowhatis,despiteyourunderstandableattachmenttoit,justapieceofproperty.Yourlong-termresponsibilityistoprovideforyourselfandyourfamily.InMichigan,forexample,foreclosedhomeownershaveasix-monthredemptionperiodafterthesheriff’ssaleofthepropertyduringwhichtheycanredeemthepropertyiftheyraisethemoney.It’salsosixmonthstostayinthehome,saveupasmuchcashaspossible,selloffyourappliances,andfindanotherplacetolive.Duringthistime,keeppayingtheinsurance(toprotectyourself)andtheminimumtokeepthelights,water,andheaton,saveyourmoney,andmakeyourplanstomoveforwardinlife.Itwillbeunpleasant,tosaytheleast,buttakecomfortindoingtherightthingforyouandyourfamilyandthatyoucertainlyaren’talone.

Boatandmiscellaneous

TheshortfallfrommydelayedrefinancingmeantIhadtoexpandintosomemorebudgetcategories.Iscanneddowntotheeleventh-largestcategoryofourfamilyspending,whichwastheFunnyMoneyfamilyfleet.Thisamateurarmadaconsistedofathirty-year-olddeckboatthatwaspaidforbutneededrepairsallthetime,oftensinkingthemonthlybudget.Wehadalsobeenhangingontoits

slightlyoldertwin,whichhaddiedayearbeforebutwhich,ontheadviceofourmechanic,BigTom,wekeptforparts.

Youmaynothaveaboat,inwhichcase,goodforyou,becauseyoudon’thavetospendthelastweekendinOctobersloshingaroundinborrowedchestwaderspullingyourdockoutofforty-degreewaterbecauseyou’retoocheaptopayforadockserviceandyourwifeinsistsongettingeverylastIndiansummerweekendofuseoutofyourvessel.

Butcertainlyyouwillhaveexpensesbeyondyourtenlargestspendingcategories,soifyoucan’thityoursavingsgoalbycuttingthebiggestthings,startlookingthroughtheless-bigthingsinyourbudget.Maybeit’sasnowmobile,arecreationalvehicle,oranexpensivehobby(suchascompetinginextremedoggrooming)thatinvolvesequipmentthatregularlybreaksdown,blowsup,orotherwisecreatesunexpectedmaintenanceissues.Whateveritis,cuttingoutunnecessaryexpendituresandsettingupabudgetedmonthlyamountformaintenance,improvements,andsuppliescansmoothouttheunexpectedexpensesthatwillshowuptosinkyourbudgetwithoutwarning

ThefirstboatingexpenseIcouldcutwaspayingtostoretheoldboat,whichhadtogo.Thestoragebillwaspaiduntilspring,andafterthatBigTomandIwouldpulloffthepartswewanted,scraptherest,andsellthetrailer.

Ialsoneedtobudgetmoreconsistentlyforrepairs.Inthepreviousyear,myboat-relatedexpendituresaveragedasurprising$244.38amonth,anumberthatincludedthedockfeeandseveraltripstothemechanicthatleftmediggingdeepintomynextpaycheck.Insteadofcomingupwithmoneyeachtimetheboatbreaksdown,itwouldworkbettertobudgetforrepairsandannualfees,thensetthatmoneyasideeachmonthinaseparatesavingsaccount.Withaboatbuiltin1979,unusedrepairmoneywon’tgounusedforlong.Anyexcesscashcanbuildupfromyeartoyeartoprovideacushionforoccasionslikelastsummer,whenseveralfixeswereneeded.ThatwaywecankeeptheagingSSMoneyPitonthewaterwithoutfloatingacreditcardbalanceorsinkingthefamilybudget.

Makingongoingpaymentstoareservefundforanykindofbigannualexpense,ortocovermaintenanceorrepairs,isreallyaformofself-insuringforwhenthebilgepumpbreaksorwhentheboatpropandImanagetofindthatlowspotinthechannelwithalltherocks(again).Iaveragedoutthelastthreeyearsofboatrepairs,plusannualfeesfordockingandregistration,andfoundthatIcouldkeepanadequateboatreservefundgoingfor$145amonth.(IguessIcouldcallitasinkingfund,butthatwouldjustbetemptingfate.)Thisproducedsavingsof$99.38andgotmetantalizinglyclosetomyfinal$1,000savingsgoal

—lessthan$9short.SowhereelsecouldIsave?

Homemaintenance

Backtothehomefront,itturnedoutthatourmonthlyhomemaintenanceandrepairbudgethadalsobecomeinflatedbecause,liketheboat,therewereafewbigone-timeexpensesthepreviousyear.Insteadofthe$100permonthweaverageinmostyears,thepreviousyearworkedouttomorethan$250amonth,boostingtherepairandmaintenanceaverageoverthepastfewyearsto$135amonth.Trimmingthatto$125andaccruingthedifferenceintheannualexpense/repairsaccountmeantIcouldcutanother$10amonthandstillbuildanadequatereservefundtocoverbigthings.

TheBottomLine

Goal:$1,000

Week1—Transportation...$41.61Week2—Miscellaneous...$132.89

Week3—Utilities...$139.39Week4—KidCosts...$114.50Week5—WorkExpenses...$90

Week6—PersonalSpending...$104Week7—Entertainment...$108Week8—LifeInsurance...$64.40Week9—Groceries...$37.23Week10—Housing...$169.38

Totalmonthlysavings...$1,001.40

Wait—wasIdone?I’dmadeit—justbarely—pasttheproject’s$1,000goal,butonlybycuttingintoaneleventhcategory,including$60cutfrommaidservice,$99.38fromboatmaintenance,and$10fromhomemaintenance.Itbroughtthefinalweek’ssavingsto$169.38,justenoughtoputmeanentire$1.40overThe$1,000Challengegoal.AndImayhavesavedevenmore.Mrs.FunnyMoneyandIstillwerewaitingtoseebiggersavingsonlifeinsurancepremiums,thenewgroceryshoppingplan,and,iftheappraisalevergotdone,

theeventualhomerefinancing.Iwaitedfortheheavenstoopenandachoirofangelstobeamdownina

shaftofsunlightabovemypaper-strewndesk,strummingthe“OdetoJoy”ontheirgoldenharps.Nothing.NoteventheToothFairyplaying“PenniesfromHeaven”onaplastickazoo.Nonetheless,Ibreathedasighofrelief.Myeditorsbreathedasighofrelief.AndMrs.FunnyMoney—whohadbeenoh,soterriblythrilledtohavethedetailsofourfamilyfinancesspreadalloverthehometownpapereachweek—breathedaverybigsighofrelief.

Inafewmonths,allthatextrabreathingroomintheFunnyMoneyfamilybudgetwasalifesaver—andnotjustforme.Thecreditcardbalancesshrank,thespeechspecialistsgotpaid,andaweekendanniversarytripwasn’toutofthequestion.Whenawoodchuckburrowedunderthefoundationofthehouse,wecouldevenaffordtohirea“wildliferelocationspecialist.”Hesethistrap,thenreturnedthenextdaytofinditoccupied—byaraccoon.

“Whatdoyouwantmetodowithhim?”thetrapperasked.Ilookedovertheraccoon’sfat,furryhaunchesandtriedtochannelthespirit

ofGlemieDeanBeasley,Motown’sfavoriteraccoonroaster.Icalledbacktothekitchen,“Honey,what’sfordinner?”“I’mgettingaroastoutofthefreezer,”Mrs.FunnyMoneyanswered.SoIletthefurrylittlebanditloose.AsIwatchedhimscamperofftowardthe

lakeatleastoneofus,Iknew,feltliketheluckiestcritterinDetroit.

S

Conclusion

o,whathavelearnedinourjourneythroughthisusefulandwittytome?

A.Tosavethemostcashasquicklyaspossible,focusonyourlargestrecurringexpensesandexamineeveryalternative,fromthesimplesttothemostradicallyruthless.

B.Don’tspendmoneytosavemoney.C.Readingprintednewspapers(especiallyTheDetroitNews)helpspreventgumdisease.(Forbestresults,wrapeachday’sfrontpagearoundthehandleofaSonicaretoothbrushuseddaily.Wait—didn’tImentionthatpartbefore?)

D.Yourresultswill—andshould—vary.

It’sbeenaboutfouryearssinceIconcludedmyten-weekseriesofcost-cuttingcolumns,whichmeansI’vesavedmyfamilynearly$48,000sincethen.WhichisnotsaythatI’vegotahugestashofcashsetaside,butwehavehadmoneytotackleeverythingfromwoodchuckeradicationtocolonoscopies.So,yeah,thegoodtimesareindeedrollingattheFunnyMoneyhouse.

We’vealsohadthewherewithaltohandlethosesituationswhenalittle-knownautomotivewidget—theexcessfundssensor—istriggeredinoneofourcars.Ifyou’veneverheardoftheexcessfundssensor,orEFSforshort,itisanextremelysensitivedevicethattriggersamajormalfunctionofyourvehicleanytimethesensordiscernsanunexpectedpositivebalanceinyourbankaccount.Forexample,thereceiptofa$900taxrefundisguaranteedtoactivatetheEFSandresultinacorresponding$1,100transmissionrepair.

Whichisalltosaythatanythinginlifeisgoingtocostmoreandtakelongerthanyouexpect,includingjustgoingaboutyourdailylifewhiletryingtoavoiddebt,saveforthefuture,andnotbeforcedtodrinkthecheapScotch.Money

maynotbuyhappiness,butitbuysaheckuvalotmorethanbeingbroke.HavingalittleextramoneyisthedifferencebetweenwalkinghomeintherainorbeingabletocallAAAwhenyourcarbreaksdown.Ifnothingelse,havingsomemoneymeansthatwhenthetreebranchcrashesthroughyourroofsomewindynight,evenifyoucan’taffordtherepair,atleastyoucancovertheholewiththereallygoodbluetarp.

IfIhavelearnedanythingfromthisexperiment,it’sthatsuccessinmanagingyourhouseholdbudgetisdefinedbyhavingmoremonthsthannotwhenyouhitacloseapproximationofyourgoal.Nonetheless,sticktoit.Thepointisn’ttoreachpenny-pinchingperfectionbuttomakesurethatwhateveryouspendismoneyyoureallydoneedtospend,andthatwhenyouspendit,you’regettingthebestvalueavailable.Ifyouendthismonthsaving$1morethanlastmonth,you’remakingprogress,sodon’ttakeitasapersonalfailingthatgaswentup30centsagallonthisweek.Monitoryourresults,changeyourtactics,and,whennecessary,adjustyourexpectations.Tosaythatbudgetingisn’tasciencebutanartisadrasticunderstatement.Thetruthisthatbudgetingisareallyinexactandsloppyart,liketryingtore-createTheLastSupperoutofchilicheesefries.

Nonetheless,IcantruthfullyreportthateverypennyofsavingsI’vedescribedinthisbookwasgenuineandthatMrs.FunnyMoneyandIactedrightawayonatleast90percentofallthecost-cuttingopportunitieswefound.Afewmovesweredelayedforawhile,suchasrepricingourlifeinsurancecoverageuntilwesettledsomehealthissues,orwaitingtoemptytheoldjunkoutofthegarageandbasementbeforewecouldcancelthestorageunitandrefillthegarageandbasementwithnewoldjunk.

Forthemostpart,we’vebeenabletostickwiththebulkofthebudgetingmoveswestartednearlyfouryearsago.Theutilitybillsandmiscellaneousexpenseshavestayeddown,andwesaveevenmoreonautoexpensessinceMrs.FunnyMoneystoppedworkingnights,whichallowsustoridetogetherontwoofthethreedayssheheadsdowntown.There’sbeensomebackslidingattimes,admittedly,especiallyongroceryshopping,sinceplanninganddoingabiggroceryruneveryweekortwoisalmostasmuchfunforFlorida-bredMrs.FunnyMoneyasanice-fishingtripinJanuary.

Still,inanyrelationshipthereisboundtobesomefriction—realorimagined—whenitcomestoputtingyoursavingstrategiesintopractice.AfewmonthsagoIfoundwholechickensonsaleandstockedupwithfour,planningtoroastoneformydinnerwhileMrs.FunnyMoneywasoutworkingfortheevening.ThenIrealizedthatroastingonewasasmuchworkasroastingallofthemand

decidedtodoallfouratonce.Wedon’townfourroastingpans,soIoptedforbeer-canroasting,whichinvolvessittingonabeercanpartlyinsertedintothecavitybetweenthelegs(ofthechickens).

Iarrangedachoruslineoffowlintheovenandroastedaway,withallthebirdsturningoutbeautifully.Ipackeduptheextras,washedoutthebeercansforrecycling,andheadedofftobed,impressedwithmyownculinaryandbudgetingprowess.SoIwasdismayedthenextmorningwhenIwasgreetedwithabalefuleyeandanicy,accusatorytoneafterMrs.FunnyMoneypouredhercoffeeandnoticedthestackofcansonthecounter.

“Lookslikeyouhadyourselfquitethelittlepartylastnight,”shesneered.IeventuallypersuadedMrs.FunnyMoneythatherhusbandhadspentthe

eveningfillingthefreezerinsteadofemptyingmostofacheapsix-pack.Theonlythingthatreallyconvincedher?ThefactthatI’dusedanoff-brandbeerinsteadofanexpensiveGermanimportclearlyprovedthatthebrewwentintothebirds,notme.

Whichbringsus,inaway,tothemoralofthiswholebook:ifyoubuyEastToledoPigswillLagerLiteforyourcheapchickens,youcanaffordthegoodstuffforyourself.

Acknowledgments

IwanttothankmyeditoratPortfolio,MariaGagliano,forgivingmetheonethingeachandeverynewspaperwritertrulyneeds:money.Bythat,Imeanhavingenoughfaithinmyideasandabilitytogivemeabig-timepublishingcontractsothatImightseemyworkliningtheshelvesofAmerica’sremainingmajorbookstores(bothofthem).Inaddition,Ican’tthankMariaenoughforherdeftandsureeditingofmymanuscript.Also,forthemoney.

Thatsamethanksgoestomyagent,SamFleishmanofLiteraryArtistsAgency,whoresurrectedtheideaforthisbookand,thankstohisownverygreatenthusiasm,talent,andbookbizsavvy,landedusadealinjustsixweeks,evenafterthisbookproposalhadlanguishedfortwoyears.Also,Samhandlesthemoney.

Anotheragent,myfriendLoriPerkins,providedinvaluableinsightintotheworldofpublishinginperson,viaTwitter,andthroughherbookTheInsider’sGuidetoGettinganAgent.NewSchoolwritingteacher,author,andconsultant(andformerfifth-gradegirlfriend)SueShapiroalsoprovidedinvaluableguidanceandencouragement,asdidherhusband,theverygraciousandwittyCharlieRubin.

IalsohavetomentionthelateWallStreetJournalcolumnistJeffZaslow,whofirstencouragedmetopursuetheideaforthisbook.Theinspirationtoturnmyoriginal“GrandExperiment”columnsintosomethingmorecamefromTerriThompson,directoroftheprestigiousKnight-BagehotFellowshipinbusinessatColumbiaUniversity’sGraduateSchoolofJournalism.Icanstillhearhershout,“Thisshouldbeabook!”whenshecalledtotellmethatI’dwontheChristopherJ.WellesMemorialPrizeforthe“GrandExperiment”columns,andthatsenseofexcitementkeptmepluggingawayatthisproject,evenwhenfewothersseemedtosharedherenthusiasm.

AtTheDetroitNews,IhavetothankMarkTrubyandDonNaussformakingmeacolumnistinthefirstplaceandwho,withSueBurzynskiBullard,

championedacolumnthatmusthavebeensomethingquiteabitdifferentfromwhattheyexpected.IwanttothankpublisherJonWolmanforhisstrongsupportandforallowingmetoreusesomematerialfrommycolumns,andMichaelBrownforarrangingallthelegaldetails.IalsowanttothankSueCarneyforbackingtheoriginal“GrandExperiment”series,andJoannaFirestoneforcontinuingtosupportthecolumn.MaryElsonofTribuneMediaServicesdeservesthanksforaddingFunnyMoneytothelineupofqualityTMSfeatures,asdoesJamesLowerforhispatienceandattentiontodetailinfine-tuningmyweeklyeffortsforthesyndicate.

Mostofall,Iwanttotrulythankmybiggestfanandbestfriend,RichFriedman,andmybest-evercoworkerandpsychologicalbodyguard,ChristineTierney,foralltheiradvice,help,encouragement,andsupport.Whoeverwrote“Friendsdoubleourjoyanddivideourgrief”clearlyhadtheminmind.

Thisbookwouldn’tbepossible(ornecessary)withoutthespinelessDemocratsandobstructionistRepublicans,Teabillymorons,lyingbanksters,incompetentandobliviousTreasuryofficials,greedymortgageservicers,cynicalcorporateexecutives,andtheirobsequiouslobbyists,aswellasausterity-worshipingeconomists,ignorantBeltwaydeficitscolds,bondvigilantes,and,lastbutnotleast,thosecluelessregurgitatorsoffailedconventionalwisdomwhocallthemselvespoliticalandeconomiccommentators.You’veallkepttheAmericaneconomyinsuchdirestraitsthatabookaboutbudgetcuttingwrittenattheendoftheGreatRecessepressionin2009isneedednowmorethanever,evenafterfouryearsof“recovery.”Really,guys,youshouldn’thave.

Finally,totheworking(andhoping-to-work)menandwomenofthiscountrywhodotheirbesttoearnaliving,contributetosociety,andprovidefortheirfamiliesatatimewhentheirownbosses,bankers,governmentservants,andelectedrepresentativesaredoingeverythingintheirpowertomakeyoufeeljustthatmuchmorescaredandpooreveryday,Ihopethisbookhelpsalittle.

Anoteaboutlatetalkers:I’vementionedthatmysonisa“latetalker,”whichreferstoachildwhoinitiallyshowslimitedvocabularydevelopmentateighteentothirtymonthsold,despitebeingintelligent,responsive,engaged,andotherwisetypical.Therecanbealotofreasonsforthis,andmostlate-talkingkidswilleventuallycatchupintheirlanguageiftheygettherighthelp.Theyoftenaremisdiagnosedasautistic,andtheycandemonstratesomeautistic-lookingbehaviorsintheirattemptstonavigatetheworldwiththeirlimitedlanguage.Autismprogramsarethewrongwaytoremedylatetalkinginchildrenwhoaren’tautisticandcanactuallymakethesituationmuchworse.Ifyou

suspectlatetalkingisanissueforyourchild,visittheLateTalkersFoundationonline,1contacttheNaturalLateTalkerssupportgroup,2andconsultanexperiencedspeechpathologist.It’salsohelpfultoreadTheEinsteinSyndrome:BrightChildrenWhoTalkLateandLate-TalkingChildren,bothbytheeconomistThomasSowell.3

Youcane-mailmeatbrian@funnymoneyblog.comorfollowmeatwww.funnymoneyblog.comandonTwitter@BrianOCTweet.Letmeknowwhatadviceworkedforyou,whatdidn’t,andifIgotanythingwrong.Ontheblogyoucanfindlinkstoalloftheonlinereferencesmentionedinthisbook,plustherecipesfromchapter10.(Yes,evenAuntFrannie’sChili.)

Mrs.FunnyMoneyandFunnyMoneyJr.,or,aswecallhim,Li’lMoney(’cuzthat’sallheleavesus),arecharactersentirelybasedonmyfamily.ThisisnotbecauseIammakingstuffup,butbecauseanyonewhowroteahumorousnewspapercolumnthatusedtherealnamesofhiswifeandsonandreportedtheirdialogueverbatimwouldsoonfindhimselfwithoutacolumn,afamily,or,morelikely,both.Nonetheless,everythingdescribedinthisbookactuallyoccurred,soIwon’thavetofaceascoldingfromOprah.Finally,Ican’tthankmywifeandsonenoughfortheirpatience,forbearance,understanding,andgeneralgoodhumorintoleratingmyhabitofminingourfamilylifeformaterial.Asanauthorwithadayjob,I’dliketothinkIwrotethisbookinmysparetime,butIreallywroteitinmyfamily’ssparetime.

Noraccoonswereharmedintheproductionofthisbook.

Notes

21.www.edmunds.com/car-leasing/3-ways-to-turn-your-lease-into-cash.html.2.www.bankrate.com/brm/news/Financial_Literacy/fico-estimator.asp.3.LizWeston,YourCreditScore,YourMoney&What’satStake(UpdatedEdition):HowtoImprovethe3-DigitNumberThatShapesYourFinancialFuture(FTPress,2009).

4.www.irs.gov/uac/Qualified-Transportation-Fringe-Benefits-under-ARRA.5.ChrisBalish,HowtoLiveWellWithoutOwningaCar:SaveMoney,BreatheEasier,andGetMoreMileageOutofLife(TenSpeedPress,2006).

31.www.salvationarmyusa.org/usn/www_usn_2.nsf/vw-search/D477340FFA28755C8525743D0049D1EF?opendocument.

41.www.antennaweb.org.2.www.lifelinesupport.org/ls.

51.AmyDacyczyn,TheCompleteTightwadGazette(Villard,1998).2.www.irs.gov/Individuals/IRS-Withholding-Calculator.3.www.statehealthfacts.org/comparetable.jsp?cat=7&ind=350.4.www.insure.com/articles/healthinsurance/individual-health-coverage.html.5.https://www.pparx.org.6.www.needymeds.org.7.http://findahealthcenter.hrsa.gov/Search_HCC.aspx.8.www.nafcclinics.org.9.www.mhakeystonecenter.org/patients.htm.

6

1.www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses.2.http://eitcoutreach.org/the-eic-estimator.3.http://www.irs.gov/Individuals/Earned-Income-Tax-Credit-(EITC)----Use-the-EITC-Assistant-to-Find-Out-if-You-Should-Claim-it.

4.www.irs.gov/Individuals/Find-a-Location-for-Free-Tax-Prep.5.www.aarp.org/applications/VMISLocator/searchTaxAideLocations.action.6.https://www.fsafeds.com/forms/dcfsa_worksheet.pdf.7.http://childcareaware.org/parents-and-guardians.

71.www.apa.org/news/press/releases/2008/09/credit-cash.aspx.2.www.bankrate.com/finance/checking/checking-fees-record-highs-in-2012.aspx.3.www.cuna.org/data/consumer/atm/welcome.html.4.www.theco-opnetwork.org.5.www.allpointnetwork.com.6.www.star.com/locator.7.www.moneypass.com.8.www.sum-atm.com.9.www.learnvest.com/2013/01/how-i-paid-off-35000-of-debt-over-lunch.

81.http://www1.umn.edu/news/features/2010/UR_CONTENT_183285.html.2.http://mysteryshop.org.

91.www.insure.com/articles/lifeinsurance/the-mothers-day-index.html.2.www.salary.com/mom-paycheck.3.www.insure.com/home-insurance/agent-selection.html.4.www.cfp.net.5.www.insure.com/articles/lifeinsurance/get-better-lifeinsurance-rates.html.6.www.disabilitycanhappen.org.7.www.socialsecurity.gov/pubs/EN-05-10029.pdf.8.http://publications.usa.gov/USAPubs.php?PubID=6042.9.www.rtl.org/action_center/pdfs/DPOA.pdf.10.http://online.wsj.com/article/SB10001424052702303627104576410234039258092.html#project%3DDOC110702%26articleTabs%3Dinteractive.

101.www.nrdc.org/living/eatingwell/files/foodwaste_2pgr.pdf.2.www.nytimes.com/2012/09/05/dining/clams-and-pasta-a-quick-ocean-meal.html?hpw.3.DollyFreed,PossumLiving:HowtoLiveWellWithoutaJobandwith(Almost)NoMoney(TinHouseBooks,2010).

4.JenniferReese,MaketheBread,BuytheButter:WhatYouShouldandShouldn’tCookfromScratch—Over120RecipesfortheBestHomemadeFoods(AtriaBooks,2011).

111.www.bankrate.com/calculators/index-of-mortgage-calculators.aspx.2.www.bankrate.com/calculators/credit-score-fico-calculator.aspx.3.www.myfico.com.4.LizWeston,YourCreditScore,YourMoney&What’satStake(UpdatedEdition):HowtoImprovethe3-DigitNumberthatShapesYourFinancialFuture(FTPress,2009).

5.www.fanniemae.com/loanlookup.6.https://ww3.freddiemac.com/corporate.7.www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.8.www.irs.gov/Individuals/IRS-Withholding-Calculator.9.www.occ.gov/news-issuances/consumer-advisories/2011/consumer-advisory-2011-1.html.

Acknowledgments1.www.latetalkersconsulting.com.2.www.naturallatetalkers.com.3.ThomasSowell,TheEinsteinSyndrome:BrightChildrenWhoTalkLate(BasicBooks,2002);andThomasSowell,LateTalkingChildren(BasicBooks,1998).

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