Since paying off our non-mortgage debt with a Dave-Suze hybrid approach and vowing to only pay cash for all purchases going forward (we do use credit cards for the reward points and then pay them off completely before the grace period is up), we have had a few big-ticket items come up that have rattled us a bit. These have included a new A/C unit when ours completely broke down ($7,800 minus a $1500 tax credit), a car breakdown, and now foundation problems due to the severe drought. In each of these instances we have had several options which amounted to paying the cash up front for the item or slicing the huge cost up into monthly payments with interest or other fees. Taking the A/C unit replacement of last summer as an example, here’s how our options looked:

• Pay Cash: $7,800
• Pay by credit card and do a 0% balance transfer for 12 months: $650 per month + cost of balance transfer
• Financing through the company: $650 per month + interest

We don’t want to get ourselves back into debt and have taken great pains to save up enough money to be able to afford what life has to throw at us. But just because we have the money set aside does not mean it is easy to spend. In fact, we are finding it extremely unpalatable to spend money now. Savings represents money we have all ready worked for, whereas borrowing represents money we have not worked for yet, and so perhaps that is why it is so hard to part with savings—we all ready know how much work went into that money. Let’s face it: breaking down big ticket items into small monthly payments against future earnings makes the purchase price much more digestible than having to pay with earned cash all at once.

Retailers know this, which is why you can now pay monthly payments on an assortment of items besides vehicles and mortgages. In fact, typically monthly installments or monthly payments are interest free for a time period because they don’t need the extra profits from interest rates—they know you are much more likely to purchase a high-end item if they tell you what the monthly payment is going to be, and so by adopting this model, they make more sales. Infomercials break down products into “three monthly payments of just $19.95” (really $59.85), jewelry (diamond earrings for $495.00 or just 5 payments of $99), Dell’s monthly automatic payment plan allows you to pay just $20 per month (really $499.00). See how monthly payments make everything seem affordable to you right now?

Aside from the obvious benefits of not having to pay interest and not mortgaging your future by paying with credit, paying cash for everything also does have another surprising benefit I did not foresee: a reason to scrutinize the total purchase price of whatever you need and want. Doing so brings a lot of clarity to the situation and has all ready helped us to walk away from some purchases and stash away even more cash. The downside? The purchase price of even necessary big ticket items has sometimes led us into paralysis mode due to its large price tag.

Do you pay cash for everything, or are you looking to incorporate this into your future finances once you pay off your debt? If you have experience with this, has it changed your purchase decision-making at all?  

“Deride not what I say because of its simplicity. Truth is always simple.” – George Samuel Clason

Last week I highlighted The Richest Man in Babylon by discussing the five laws of gold and how the rich or those with meager means are not immune to them. Perhaps I got a little ahead of myself, as there are many of us who are not at the point of following the Five Laws of Gold. Sure, it’s great to get a head start on understanding how gold works…but what if you have no gold to work with?

If this describes you, you are suffering from a ‘lean purse’. Let’s take a look at George Clason’s seven cures to a lean purse and how to put them into action.               

Start Thy Purse to Fattening

“For every ten coins thou placest within thy purse take out for use but nine. Thy purse will start to fatten at once and its increasing weight will feel good in thy hand and bring satisfaction to thy soul.” If you remember from the previous article, Arkad from Babylon is our teacher in this book. He allays everyone’s doubts about being able to get by without spending all of your income by detailing his own experience with a lean purse and how when he began to only take nine coins out of it for every ten placed into it he did not suffer. In the same way, you may think that only spending 9 out of every 10 dollars will lead to deprivation, but that does not have to be the case.

Arkad distinguishes between short term gains and long term gains, and asks if you desire jewels, finery, and more food (short term gains) or if you desire more substantial belongings, gold, lands, and income-bringing investment? “The coins thou takest from they purse bring the first. The coins thou leavest within it will bring the latter.”

Action: Save at least 10% of your income.

Control Thy Expenditures

Every one of Arkad’s pupils makes a different salary from one another…yet every person in the room has a lean purse. How could this be? Wouldn’t you think that the people who make more money should have fatter purses than the people with meager incomes? This is a clear example that people spend more than they need to, even if they believe their spending to be on necessities only. Arkad speaks the truth here “…[t]hat what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary.” Think about promotions, raises, extra money, and those received by others. How often does this money just become absorbed into our monthly expenses and we begin to wonder how it is that we are making more money and still not saving any of it?

Instead of trying to satiate all of our desires—desires will never fade and even the wealthy cannot satiate all of their desires—we need to think about being 100% satisfied with each coin spent (nine out of every ten). By prioritizing our money, it enables us “to realize thy most cherished desires by defending them from casual wants.”

Action: Make a list of necessary expenses and desires; prioritize your spending so that you do not spend more than 90% of your earnings.

Make Thy Gold Multiply

Arkad does not want us to leave our extra gold from the two cures above in our purses or under a mattress at home. “Gold in a purse is gratifying to own and satisfieth a miserly soul but earns nothing…wealth is not in the coins he carries in his purse; it is in the income he buildeth, the golden stream that continually floweth into his purse and keepeth it always bulging.” Arkad wants us to put each of our coin (or dollar) to labor so that it can reproduce like rabbits.

Action: Find a way for your money to earn money. This can be through a savings account, CDs, stocks, bonds, etc.

Guard Thy Treasures from Loss

“The first sound principle of investment is security for thy principal…Be not misled by thine own romantic desires to make wealth rapidly.”

Action: Invest with a sound understanding of risk to your principal; stay away from investments that seem too good to be true.

Make of Thy Dwelling a Profitable Investment

By owning a home “…thou canst pay the money lender with the same regularity as thou didst pay the landlord. Because each payment will reduce thy indebtedness to the money lender a few years will satisfy his loan. Then thy heart be glad because thou wilt own in thy own right a valuable property and thy only cost will be the king’s taxes.” Some housing markets do not work this way, but when Paul and I were deciding whether or not to purchase a home in Houston from a financial perspective, I quickly determined that it made perfect sense. Houston’s real estate is so cheap that you can find a home where you will only be paying a few hundred dollars more per month than if you rent when you include insurance and taxes. In fact, our actual mortgage payment each month is $100 less than what we were spending to rent from a landlord a property we would never own or build equity in. It was an easy decision for us. Of course, you also have to take into consideration home maintenance, closing costs, tax increases, etc.

Action: Do a cost analysis of renting versus owning a home in your house market; decide if it makes sense to own or rent after including all costs involved.

Insure a Future Income

Arkad states that “…a lean purse to a man no longer able to earn or to a family without its head is a sore tragedy.” Because his book takes place in Babylonian times when there is no insurance, he introduces this idea as a future possibility: “In my mind rests a belief that some day wise-thinking men will devise a plan to insure against death whereby many men pay in but a trifling sum regularly, the aggregate making a handsome sum for the family of each member who passeth to the beyond.”

Action: How will you provide for your family’s future should you pass away? Clason suggests securing insurance of some type.

Increase Thy Ability to Earn

“Always do the affairs of man change and improve because keen-minded men seek greater skill that they may better serve those upon whose patronage they depend. Therefore, I urge all men to be in the front rank of progress and not to stand still, lest they be left behind.”We should all be continually improving our skill set and becoming greater assets to our employers and in our businesses.

At the same time, we should start with small goals, achieve them, and the goals and results will gradually increase in size. By learning to attain small goals, you will train yourself to secure larger ones. Wealth is accumulated first in small sums and then in larger ones as you become more capable, so start small and go from there.

Action: Continue to invest in yourself in ways that will help your career and income-earning potential. Start small in saving and investing and celebrate your accomplishments. For example, if you set a goal of saving $2,500 this year, break it down into mini-goals of $208.33 per month.  Next year shoot for $5,000.

                These cures may seem a little overwhelming at first. Just remember to start from the beginning and work your way through. The first two cures go hand-in-hand: control your expenditures so that you can save 10% of your income, and really everything else flows from them.

                Are you suffering from a lean purse?  

Part of the Carnival of Personal Finance # 317 Edition.

Paul and I are all too aware of the type of sticky financial situations life can throw at you. In the summer of 2008, Paul was laid off from his position. Just two weeks later while he was visiting me in Florida with the extra time on his hands, I came home early from work with a box and a tissue in hand. I also watched both sets of my parents go through bankruptcy, which was after they each went through the financial and emotional upheaval of divorce.

All of this has left me slightly fearful when it comes to money. Even though money might be coming in one day, it’s not necessarily going to continue flowing in the next, so we should not spend all of our take-home pay. Who is to say that we won’t experience a medical situation? What if one of us cannot work one day? What if social security continues going downhill and there is nothing left for us when we retire at the future retirement age of 85 (looks like it’s heading that way, right)? Even if we are not overspending or in debt, if we were to spend money as if we are going to continue at our current rate with no regard for the future, then we could find ourselves in a pickle rather quickly. I am not a doom and gloom conspiracy theorist by any means, but I have a healthy respect for the future, and an even healthier respect for the unknown. This is why I am such a diligent saver. Savings are not an option for me but a necessity.

While some of the situations I have mentioned were self-induced, others were not. Whether self-induced or not, having a cushion of savings will make any situation much more palatable. It is much more digestible to place money restraints on yourself than to have them placed on you. And by choosing to place money restraints on yourself and living below your means, you will put yourself and your family in a much better financial situation for when life decides to throw that curveball. The reason is twofold: money restraints equal extra savings in the bank, and also teaches you to live on a lower income, thus making the transition to one much more smoothly.

Here are some money restraints you may wish to pursue to jumpstart your savings and deflate your lifestyle. While “deflating your lifestyle” really doesn’t sound like fun at all, what will be fun is watching the balance in your savings account grow at a much faster pace.

Live on One Paycheck in a Two Paycheck Household

If you are a two-income household, you can choose to live on one person’s paycheck only. This could act like a simulation for the future in case one of you loses a job, wants to start your own business, or wants to stay home to raise children, or it could be used as a strategy to boost your savings dramatically. Paul and I currently do this; we live on his income, and use my income for savings for both short term and long term goals. Granted, he makes a sizable amount more than I do, so to ensure that we could still survive on my income alone, I have an excel sheet budget where I calculate out our costs and living expenses. We can do this with either one of our incomes; but it would be super tight on mine (sounds like a fun challenge to me!).

Pay a Pretend Mortgage

Many financial gurus give this advice: if you want to purchase a home, begin “paying” a mortgage into your savings account to see if you truly can afford one. Fortunately, homes in Texas are much cheaper than where I am from (the Northeast), so you can actually find one that is close to what you would pay in rent anyway. What would be a good exercise is to take the mortgage that the bank feels you can handle (and the bank will balloon this figure), and pay this every month into a savings account. Not only will you build up money towards a down payment, but you will get to determine what monthly mortgage payment you are comfortable with, and not the one the bank thinks you can afford. Paul and I ensured that our mortgage payment could be paid by either his salary or my salary alone, along with all of our other monthly expenses. That means we took the paycheck with the least amount in it (mine!) and based our comfort level off of that.

Live on Last Year’s Pay

Though you may not have received a pay increase in the last few years due to the recession, you can always go back to living on the income you made from an earlier time period, such as when you graduated college and got your first job or three pay increases ago. Look up an old pay statement, or look in the archive to your bank account, and figure out what that amount used to be. Adjust your spending accordingly, and have the extra pay automatically withdrawn into your savings account. You used to be able to live on this amount, so chances are good that you can still do so (unless you have suffered from considerable ‘lifestyle inflation’).

Execute Your Emergency Financial Plan

Do you have an emergency financial plan? This is your plan for when you lose a job, or have another small financial catastrophe hit. What bills can you give up (cancel cable, internet, cell phone plans, etc.)? Are there debts (mortgage, student loans, credit card debt, etc.) that you are overpaying on that you can go back down to the minimum requirements to increase your cash flow? Perhaps you can defer your student loan payments (if you have them), or even temporarily suspend your car insurance if you are no longer driving it around. With my insurance company I was able to do this while traveling abroad. For $10 per month, we could keep insurance, but have it temporarily suspended, thus keeping any discounts we receive for tenure.

While you may not want to do some of these things while just pretending, execute a few of them and reap the savings to build up your emergency fund. If you don’t wish to do any of these, it is still a good idea to take this time to write up an “I lost my job” budget in excel.

Do you place financial restraints on your household in order to save more money? I’d love to hear about it!

Other Articles You May Enjoy:

Bank It!
Deciding to Go from Two Incomes to One
Radical Saving

Financial Help & Information 

For IVA Help & Advice.

Debt solutions To Suit You.

Avoiding/Dealing with Bankruptcy

Personal Saving: the portion of personal income that is left over after personal current taxes and outlays
for personal consumption expenditures, nonmortgage interest payments, and net current transfers to government and the rest of the world.

Personal Saving Rate (PSR): the ratio of personal saving to disposable personal income (expressed as a percentage).

Saving money in America made a small comeback during the recession, as it does whenever the economy dips. As people grew more wary of the economy and the short-term future, they decided to save more income in case of possible lay-offs, inflation, etc. In the third quarter of 2008, right before the market collapsed, the rate was just 3.5% of income. Then in the fourth quarter of 2008, it “shot up” to over 5% (there is sarcasm in those quotes).

Now that the economy has supposedly turned around (personally I don’t believe we are out of the dark water yet), people are feeling more optimistic. This is reflected in the decrease in the Personal Saving Rate, from a high of just over 7% in the 2^nd quarter of 2009, to less than 5.5% in the fourth quarter of 2010. In fact, the rate has been steadily dropping for the last three quarters because people are spending more money.

Computing the Personal Saving Rate

The Personal Savings Rate is basically [Personal Outlays/(Personal Income-Personal Taxes)].

But what does the Bureau of Economic Analysis include in these categories? The Personal Saving Rate does not account for capital gains in its computation as an income resource. It also does not designate your house as a savings account (and for good reason, as we have seen), as money paid into a mortgage to build up equity does not increase your savings.

Even considering the fact that the above two items are not included into the PSR computation, I still feel that a personal savings rate of 3.5% or even 7% is pathetic. It’s basically Americans trading 40, 50, 60+ hours of their time each week for a few dollars being added to their bank account after all bills are paid. The rate is so low, even at its “peak” during the recession, that I started to suspect that retirement contributions to an IRA or 401(K) could not possibly be included in the percentage. When I looked into the methodology of how the data is collected, I found out that retirement contributions are included; disposable income is what’s left in your paycheck after taxes, not after 401(K) or other retirement contributions. Ouch.

Our Personal Saving Rate for 2010

Calculating our annual Personal Savings Rate is one of my favorite things to do. On Friday I whipped out my calculator, added up our income from all of our tax documents, added up the amount we put into our savings accounts and retirement accounts for 2010, and then plugged everything into an equation. Drum roll please….we managed to put 42.9% of our after-tax income into a variety of short and long term savings last year!

However, some of our savings accounts are open so that we can save money for the short term, which means that we spent some of our saved money. Our largest expenditures for 2010 (all of which were paid for in cash) were our wedding, our honeymoon to Austria, and our new Central A/C and Heater. So how much did we keep for good at the end of the year? We managed to permanently set aside 29.8% of our 2010 income.

Our Personal Saving Rate Goal for 2011

In a year where we had lots of large expenditures, and seeing how the PSR nationally is a mere 5.5%, I should be super excited with our 29.8% of permanent savings. I am…but I have my eyes set on a much larger percentage for 2011: 50%. This will include both our short and long term savings, and it will (hopefully) be permanent. After discussing this with Paul, we have decided that it will definitely be a challenge, but we are certainly up for that!

What was your personal saving rate for last year, and what do you hope to accomplish for this year? Check back on Wednesday when I discuss strategies that can help you in meeting your savings goals.

Other Articles You May Enjoy:

Add a Boatload of Money to Your Savings Account in One Year Even if You Are Living Paycheck-to-Paycheck
How to Not Save for a Downpayment
The Saved Quarter Challenge
What Should my Savings Rate Be?
Are Our Spending Habits the Product of Biology or the Environment?

Please note: If you are my ex and are reading this, then it is not your jewelry I pawned!

Ever since being engaged (we are E+ two weeks now, as my fiancée likes to keep track of time after the big day), I have had this consuming desire within me to organize, de-clutter and simplify every aspect of our lives. I suppose I can only relate it to the fierce nesting a woman supposedly goes through during her pregnancy when the entire house must be cleaned and organized and perfect for this next big stage in her life.

Unlike some phases or emotions which can send a person to compulsive shopping, compulsive eating, etc., this one is actually quite lucrative (would you expect any less from me at this point?)!  By cleaning out the recesses of our closets, drawers, hope chests, and jewelry box, I have made a small profit, and have decided that all money earned will be donated to our honeymoon fund.

It started with our guest room closet, aka the pit for things we don’t have a place for. I took everything out of it and made distinct piles: donations, throw away, sell. I threw away all of my fiancées wire hangers (think Mommy Dearest the movie), organized all of my photos into neat little photo boxes, and ruthlessly sorted through a lot of belongings. Next I focused my attention on our book shelves—Paul and I are both avid readers and each have our own book shelf. Between the two of us, we came up with 15 books we no longer want to sell at a used book store.

As I was walking back into the bedroom with a handful of old clothes, my jewelry box caught my eye. How about I sell my ex boyfriend’s jewelry and put it towards our honeymoon as well? Quite frankly I thought my idea was brilliant, although I am sure many others have done the same thing in the past. I picked out two necklaces, a bracelet, and two rings and cleaned them using jewelry cleaner. Now, I have never been to a pawn show before, and my imagination conjured up sleazy men with slicked-back hair, little spectacles and smoke-filled rooms. To my surprise, this was not the case, although the pawn shop I went to (The Write Pawn and Jewelry Co.) did have metal bar doors for an entranceway (this is most likely due to its location on Westheimer). In all but twenty minutes, I walked out of the place with a smile on my face, some money in my hand, and a feeling of weight lifted off of my shoulders.

Here is a breakdown of what I have been able to sell so far:

• Laptop Case: $10, Paid $15 for it
• Cell phone: $25, Paid $0 for it
• Jewelry: $50, Paid $0 for it
• Books: $15, Paid approximately $75 for them

With the books we sold, we were able to buy a copy of a used “How to Buy a House for Dummies” for $7.00. The rest of the money, as well as any other profits from sales, will be going into our honeymoon account. One hundred dollars is not much money, but this exercise has been more valuable as an intangible cleansing of the past for me, as well as a way to make room for us—and our belongings—to grow together.

Hurrah to simplifying and decluttering!

There are a lot of people living paycheck to paycheck, out of necessity. So how are they supposed to pull themselves up and out of debt, or build up a savings in order to break the paycheck-to-paycheck cycle? It will take some commitment, planning, and perhaps some psychological warfare, but here are some ideas to get you started:

1. First Off, Make Your Savings Account a Black Hole: Something that I like to do is automatically withdrawal a budgeted amount from my checking account into my savings account before I pay any bills. I almost make it into a game—once that money hits my savings account, I would rather cut off my right pinky finger before transferring it back to my checking to cover bills. The money becomes dead to me. This makes me creative sometimes in finding solutions, or tests my patience as I wait to have things replaced until next month in order to keep that money in my savings account. You may surprise yourself at ingenious ways you come up with to not touch that money. And then…it happens! The next month has all ready arrived, and that money is now safe and sound, earning interest.
2. Deposit Your Two Extra Paychecks: Most people on salary are paid on a bi-weekly basis, receiving a total of 26 paychecks, and some are on a weekly basis, receiving a total of 52 paychecks. That means that for two months out of the year, when there are five weeks in that month, you receive three paychecks instead of two (or five paychecks instead of 4 if you are paid weekly)! Since your budget and bills are set up for two paychecks per month, take advantage of this ‘extra’ money by depositing it directly into your savings account. Without much effort, that equals an entire months’ pay that you will save over the next year. (Please note, if you are paid monthly like I am, or you are paid two times per month (like the 2^nd and 4^th Friday, then this scenario will not occur for you).  
3. Contribute the Max or Desired Amount to Your Roth/Traditional IRA in 10 Months Instead of 12: The current limit for Roth/Traditional IRA contributions is $5,000 per year (for 50+ you can contribute $6,000). Divide this out by ten months, or $500-$600 per month (depending upon your age). Automatically deposit this amount each month, and then turn off your contributions for November and December, as you are unable to contribute more. Instead, turn on your savings account contributions, and reap an extra $1000-1200 to put in there. Even if you are not maxing out a Roth or Traditional IRA, figure out what you would like to contribute, and divide by 10 months instead of 12, and have that amount automatically deposited into your IRA account. For the last two months of the year, deposit it into your savings.
4. Lower Your Fixed Expenses: If you own a home, you can shop around for lower home insurance, as well as fight the appraisal to your home to see if you can get your tax load lowered. If you get these lowered and pay into an escrow, have the company where you keep your escrow account reassess and lower your monthly payments—cash you can now put into a savings account. If you own a car, shop around for lower car insurance. Pit competitive internet and cable companies against one another with sales ads and sign onto a contract for a lower rate with a new or existing company. If you rent an apartment, refer others to the apartment complex and ask for a break on your rent in return. Bank all of your savings as if you were still paying the bill.
5. Give Your Recurring Bills a Summer Break: For summer vacation this year when your kids are home and most hot t.v. shows are on hiatus (like Lost, Desperate Housewives, etc.), get rid of your cable and internet (make sure you will not incur fees for doing this). Instead, trek to the library to enjoy magazines, books, internet use, and free DVDs. Also check out Hulu and purchase a $2-$10 HDMI cord to run from your laptop or computer to your television to see some of your favorite shows for free. During times of good weather, drop your gym membership and run/walk/hop outside instead. You can always sign back onto these services, and in the meantime, you can bank some extra cash (24-hour fitness has a month-to-month contract, do other gyms).
6. Skip Grocery Shopping: If you normally shop each week, skip one week and live off of what is in your cupboards, fridge and freezer all ready. If you shop every other week, try to shop just once for the month! Most of us have stockpiles of food, and we need to cash in on them every now and then to reap the benefits. If you stock up for hurricane season, eat through some of your hurricane supplies at the end of that season (okay…I know Chef Boyardee does not seem that appealing, and is not all that healthy, but tuna fish and such will work! You can donate the rest). Bank the extra $100 or $200 from not shopping. Repeat this every six months.   
7. Deposit Any Tax Returns: Have a tax return coming to you from 2010? Instead of earmarking it for stuff, direct deposit it into your savings account, not your checking. If you are disciplined enough in saving money, work with your HR department to have less money withheld for taxes, leaving you more money each month to put into the bank. If you own a home or have substantial medical bills and you can take an itemized deduction this year instead of the standard, make sure to clean out your closets and make donations. You can use the online free service ItsDeductible in order to keep track of the value of what you donate, and then you can get a bigger tax refund.
8. Displace Some of your Vacation Costs: Is an annual vacation part included in your paycheck-to-paycheck budget? Displace some of your expenses at home while you are away by calling your car insurance company and making your auto policy temporary for the two weeks or week you will be gone. This will save you some money. Also, turn your water heater to “vacation” mode, or off while you are gone. Turn your thermostat up or down depending on what time of year you leave, shut your blinds and curtains to help temperature fluctuations and for security purposes, and find a neighbor or friend who can cat or dog sit for you instead of paying a kennel. You can return the favor on their next vacation.

Since September of 2009, I made a goal to put $2500 into savings to be used for our honeymoon using as little of our own 9-5 paycheck money as possible. I am happy to report, just 22 days away from leaving on our honeymoon, that we have succeeded in doing this. We thought outside of the box, and pulled in extra income through freelance writing, rebates, carpooling, etc. All of the hard work of saving is over for us, we’ve got our passports, the airfare and hotels are all booked, so needless to say, we are ready to splurge and enjoy ourselves! 

               Before we tally everything up, let’s look at how we did with adding money to our savings goal in March:

• $15 Oil of Olay rebate
• $10 eHow earnings
• $100 Freelance income
• $250 Wedding Shower money

This brings the total to $2334.78, with $165.22 still needed and only a little more than half a month to do this in. Unfortunately, I was not able to make up a larger portion since the last post (what I had to sell was not worth as much as I had hoped, but I will be holding onto it for a future use!). Even though we have half a month to go, and will probably make up the $165.22 before then, I would like to do an overall summary now and close out this savings goal.

Below are the final tallies for each category:

• Freelance Writing Income: $760
• Bank Account Opening Bonuses: $421
• Wedding Shower Cash Gifts: $325
• Rebates: $222.49
• Our Paycheck Money: $200
• Sold Stuff Craigslist: $141.29
• Carpooling: $104
• Research Study: $75
• eHow Income: $54
• SendEarnings Surveys: $27
• Miscellaneous: $5

I hope this serves as an example that while it may seem that putting small denominations of money into savings here or there, and getting a few rebates does not add up, if you give all of your miscellaneous money a purpose, then you can save up for something very large, and very tangible in your life. For us, it’s off to Austria!

Hello Everyone! We were able to add $301.99 to our honeymoon savings goal this month, bringing the total to $1,670.78 (check out progress bar in right hand column). The breakdown is below:

• $121 from ING Checking Account Opening Bonus
• $120 from Freelance Writing Income
• $11 Hasbro Rebate
• $9.99 Oil of Olay Bodywash Rebate
• $10 Gas Rebate
• $30 Carpooling

How are you doing with your savings goal? Have you started a new one for the New Year?

Hello Frugal Confessions Readers!

If you check out the progress bar for paying cash for our honeymoon, you will see that we are now at 54% of our goal! While that is wonderful…I realized the other day that our honeymoon is just three and a half months away. Needless to say, we need to get moving.

We added $122 to our savings account in December from the following sources:

• $5.00 Dulcolax rebate
• $3.00 rebate from Comcast for overpaying the previous month (not sure how that happened…)
• $85 from freelance writing income
• $15 from eHow income
• $14 from carpooling (was paid more…but this is how much made it towards our goal)

Wish us luck in January!

I am not talking about going into the wilds of Australia for six months until you come out a man. I am talking about literally walking about your home, apartment, car, and life in order to examine the things that allow your life to run smoothly and at the level of affluence you have become accustomed to.

Two weeks ago on the Suze Orman show, Suze offered up what I thought to be great advice. It was a segment called “Get Real”, and she basically said that even if you are doing well financially—you have emergency savings, your cars are paid off, your IRAs are funded—before you think about splurging on a large purchase, do a walkabout in your life and figure out what could go wrong next.

            I took this advice and walked around our own home in the middle of the show. I must admit, after doing this for awhile, all of our appliances and belongings started looking less like fixtures, and more like liabilities. My eyes first rested on our washer and dryer, which were a nice leftover from the previous owners. Granted, the washer and dryer have been working great for the last three months, but they show some serious signs of aging (not least of which is the rust cutting through the paint like metal shards). We don’t know how old these appliances are, but we do know that our current budget has factored in that these appliances will last forever. Wrong answer.

            We have a newly bought used vehicle with 113,000 miles on it, so should definitely start saving specifically for when this vehicle dies, or for car repairs in the next few years.

            Our water heater is over 8 years old. Average life of a water heater? 8-10 years.

            Our mattress was gently used when I traded my desktop computer with my sister for it back in 2005 after graduating college. Granted it is still extremely comfortable, but average life span of a mattress is around 10 years. That is only 4-5 years away!

Laptops only last a few years (my last one was great for 5 years, which I have heard is considered ancient to many people), so we can expect to have to replace ours in the next 2-3 years.

Needless to say, I need to begin thinking about starting a “When Things Go Wrong Fund” outside of our emergency savings account. Why do I want two of these types of accounts? Well, I view our emergency fund account as covering our day-to-day basics and necessities should either of us lose our job, get hurt, etc. This new account would specifically cover large, “unpredictable” expenses that are sure to creep up, such as home maintenance, car repairs and the like.

Another great idea is our home warranty, which has been particularly helpful thus far as our ancient heaters stopped working several weekends ago when the temperature dropped into the 30s, and our dishwasher just died on us Thursday night. Our real estate agent had the great foresight to write into our contract that the previous owners would pay for a serviceplus package at American Home Shield (AHS) home warranty company for the first year in our home. This covers not only the basic things, like water heaters, furnaces, A/C units, etc., but also items that were installed incorrectly, out of code units, and dishwashers (hurrah!). We have all ready called our service twice, and paid $60 each time to have work done on our home. What a relief it was! Granted, there are varying reviews about home warranties, and I think that would make a great article, but thus far we have been satisfied with ours.

Go ahead and do a Walkabout in your own home. How are things measuring up? What could go wrong next?