Beating Broke

Personal Finance from the Broke Perspective

Archives for November 2010

Saving Money by Cooking at Home

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On the long list of things that you can do while saving money, one thing that invariably makes it’s way to the top 10 is to brown bag lunches and to cook at home.  If you’ve ever sat down and figured out how much you spend eating out each month (we have, it’s in the budget), you know that food, and dining out in particular, can be  a real drain on the budget.

One thing that really holds many people back from cooking at home and even from taking bag lunches to work is that they never really learned how to cook.  Either their parents never brought them into the kitchen to help, or their parents just never cooked at home either.  Either way, many of the simple skills that those who do cook take for granted are a complete mystery to others.  Some of those skills are being replaced with machines and such that can do the task, but those are usually expensive and if you’re trying to save money, aren’t really an option.

Pork Chop with Apples and Blue CheeseBut, it’s not an excuse!  You can learn those skills rather easily.  Need to know how to boil an egg?  Search for “boil an egg” on the internet.  Anyone who can read, can make their own food.  With the internet at our fingers, you can easily search for recipes.  Stuffing?  How about Pineapple Stuffing.  Chicken?  Here’s a whole list of chicken breast recipes! Here’s instructions on how to make beef jerky!  Most have pretty detailed instructions.  And, besides, what’s the worst that could happen?  You ruin some food?  I’d bet you could try at least once or twice more and still not equal what the same meal would cost at a restaurant!

The bottom line is this.  Not knowing something isn’t an excuse.  Some things will take time to learn, but you can learn many of these basic skills, with repeated practice, in less than a month.  Challenge yourself!  Take a month off of eating out.  Only eat in for those 30 days.  And, no, I don’t mean delivery.  Or Digiornos.  Start with raw ingredients and go from there, using a recipe.  After a while, you get to know how certain things taste and how they go together and you can even forget the recipe.

Photo Credit: thatedeguy, on Flickr

Early Retirement Extreme

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Early Retirement Extreme

By: Jacob Lund Fisker

When many of us think of retirement, we think of some far off time in our future when we’ve saved enough money and reached an age where the government will allow us to withdraw our money without significant penalties.  When Jacob Lund Fisker thinks about retirement, he’s thinking about the here and now.  You see, Jacob retired when he was 33.  How?  By following  the principles that he outlines in the book.

What this book has done for me is to turn much of what I thought about personal finance on it’s head.  At this point, I can’t say whether I will attempt to try and join the ERE army or not, but I can guarantee you that I will be looking at things from a different point of view from here on out.

The book itself is dense.  Dense in that it’s packed full of information.  There’s no way that one read through will be enough.  You’ve either got to read it several times, or supplement that first reading with plenty of reading of Jacob’s blog.  It reads (the book, not the blog) much like a textbook does.  It’s even segmented into sections the way a textbook would be.  Luckily, it’s not all facts and figures and there’s a bit of discernible humanity in there as well.  Jacob lays out how he managed to retire at 33 by some extreme saving.  Then he goes into how he lives off of less than $10,000 a year that he draws from his investments and a few odd jobs (that he enjoys) during the year.

By no means is the Early Retirement Extreme going to be for everyone.  It’s a hard read.  But, it is well worth the read.  It’s the “thinking man”s personal finance book.  It’s not chock full of anecdotal evidence, but raw hard facts and numbers.  It will change the way you think about personal finance, and life in general.

You can buy it directly from the Printer or from Amazon(click the picture)

Obligations of the Buyer

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With all the news lately about people “walking away” from their mortgages, increasing bankruptcies, and debt consolidation/repayment schemes, I got to thinking about what the obligations of the buyer are.  And, also, the ways that we as a society have made it easy to sidestep those obligations.

Obligations

What are our obligations when we buy something?  Does buying a pack of gum carry different obligations than buying a house?  Naturally, we have obligations to ourselves as to the upkeep and use of that which we buy.  If I buy a house, I have an obligation to myself to do what I can to make that house last as long as possible and remain structurally sound.  If I buy a pack of gum, it’s a lesser commitment, but that obligation still exists as an obligation to not let my purchase go to waste and either chew the gum or give it to someone to chew.

What obligations to we have to the seller when we buy something?  There are two ways to look at this.  The first scenario involves paying cash for something.  If the full purchase price that was negotiated is satisfied, I don’t believe you have any obligation to the seller.  However, if the purchase involves debt of some sort, there are obligations that arise.  If you purchase with a credit card, there is an obligation to pay that debt to the credit card company.  The same is true for a mortgage, a car, and even a pack of gum.  Not only do you have an obligation to pay the debt, but you also have another obligation to yourself to learn what that debt is going to cost you.  This last obligation is the one that was most ignored during the fiasco that we like to call a housing bubble.  Many ignored the facts of what their new houses were going to cost and bought them anyways.

Sidesteps

In the pursuit of a consumerist society, these obligations can sometimes get in the way.  If I ignored the obligation to know the cost of debt and bought a house anyways, I likely entered into an agreement to pay a mortgage company a set amount each month.  Recently, it’s become popularized to demonize the banks that lent the money to people as the sole problem and, as a result, it’s become no big deal to merely “walk away” (default, or stop paying) on a mortgage.  The reasoning follows that it’s better to default on the mortgage than remain paying on a house that is worth less than what the purchase price was, or that has had payments adjusted higher.

Bankruptcy OK!In the same way, the obligation to pay credit card bills, auto loans, and most other consumer debt has been sidestepped.  It’s no longer a social stigma to declare bankruptcy.  Many, knowing they are about to file for bankruptcy, will go out and max out their credit lines in anticipation of the bankruptcy cleaning the slate.

As these sidesteps become more and more common, the social stigma will decrease even further.  If everybody is doing it, it’s hard to demonize something.  You might demonize your friend.  Or relative.

Of course, this isn’t to say that defaulting on a mortgage should never happen.  Or that bankruptcy should never be declared.  It happens.  It’s the rampant social acceptance of these situations that is troubling.  What happens when it becomes commonplace for mortgage borrowers to default?  The loans become more expensive.  The banks have to cover their costs to repossess the house, the staff to service the loan, and associated costs with trying to resell the house.  Where is that money going to come from?  They aren’t going to just pay it out of the kindness of their hearts.  They’ll pass it on to the customer.  Suddenly, mortgages will become even more front loaded with fees and interest.  When bankruptcies become more commonplace, credit availability is going to decrease.  We’ve already seen that recently.  People who could easily get a credit card before will be denied.

All of this is all the more reason to avoid debt whenever possible.  If society isn’t going to do it, hold yourself to your obligations as a buyer.  Obligate yourself to paying off your debt.  Then, obligate yourself to paying in cash from then on.

photo credit: EJP Photo