Our son has been making me proud lately with his unexpected frugal remarks.  The first one came as he browsed the toy aisle in a CVS pharmacy while we waited for a prescription to be filled.  As he played with the trucks he said:

“we won’t get these… they’re too expensive”

Then the next night when I went to take out the garbage I left the door open a crack.  He jumped up from across the room and yelled:

“Dad, close the door you’re letting out all the warm air”

Just last night he was running around the house turning off the lights.  He told me:

“we don’t leave the lights on, they might burn out”

Understanding Scarcity?

Of course, I’m sure he’s heard me say similar things before but I think it’s cool he’s making the connection between the frugal action and the reason behind it.  He knows the reason that we don’t buy randomly buy toys in the store is because they’re too expensive (or a rip-off as I sometimes say). 

He doesn’t really know what expensive means but he knows it’s a good reason NOT to do something.  He doesn’t understand that it costs money to create warm air in the winter or electricity for lights; but he does know that you don’t want to waste the air or the light bulbs.

I can tell he doesn’t get the overall concept of conserving your resources because of little things; like tonight he used 8 sheets of toilet paper to dry up a little spot on the floor.  He also likes to flush the toilet multiple times just so he can watch the water go down.  So far he’s only picked up on specific behaviors, not the idea as a whole.

Frugality Genes

So all this seems behavioral, stuff he’s learned from watching and listening to my wife and I. We learned it from our parents, and they learned those behaviors from theirs. What I wonder is whether any of these tendencies are inherited rather than learned.  Are there genetic characteristics that lend themselves to conserving what you have and not wasting your resources?

I doubt there is a “frugality gene” but what about the cavemen that were hunting and gathering ages ago?  Were there some families that were a little more lavish with their food and belongings or were they all “frugal” with their resources?  We often think of survival of the fittest as the strongest and fastest but maybe it was also the most frugal?  Did the family that could make the woolly mammoth meat last an extra few weeks survive while the others perished?

Maybe nature was too harsh at that point in our history and every person knew to conserve as much as possible or die.  However, as society evolved I can’t help but think frugal tendencies emerged as commerce started to develop.

The Cheap Inherit the Earth

I know there’s a Biblical passage something along the lines of the meek shall inherit the Earth.  Well maybe for the time being it will be the cheap who inherit the Earth. When the foolish spenders fall into foreclosure and bankruptcy and the stock market plunges, those with frugal genes can tap into their long accumulated rainy day funds and buy stock and property at a big discount.  Maybe as they’re bargain shopping they should be thanking their ancestors for passing on frugal genes?

What do you think?

Saving money on your restaurant bill is simply a matter of doing several small things that can add up to big savings.  I cover most of them last year in how to cut your restaurant bill big time but I’ll cover a few of them here and add in one that I missed.

Main Course & Appetizers

Spending less at a restaurant doesn’t necessarily mean eating less food.  For example, at some restaurants the portion sizes are big enough that you can split a meal with the family member or friend you’re eating with.  This works especially well at establishments that bring out chips and salsa, bread, salad, or some other complimentary food prior to the meal. 

Of course, there are other pre-meal options that aren’t free at all.  Appetizers can be quite expensive for the amount of food you get from them. They can cost half or two thirds the cost of your main dish so avoiding them can save you some money.

Drink Costs

Drinks have a pretty big markup, it’s hard to believe that some places charge $2 for a glass of soda with your meal.  Alcohol is even more expensive, a few drinks can really tack onto your bill.  It may be strange if you’re used to having a Coke with dinner, but ordering water will certainly cut your restaurant bill.

Deal of the Day

Many restaurants offer specials on the weeknights to help bring people in during their slower times. You can save money by always knowing which establishment in town is offering the deal of the day.  Also, don’t forget restaurants that offer free meals on your birthday!

Buy Less, Pay Less

One tip that really made some people mad last time I wrote about restaurant savings was “Spend Less, Tip Less”. This isn’t really a tip as much as it is a reminder.  The idea is that there are costs to eating out that are based on the total cost of your meal.

If you figure the tip as a percentage of the total bill, then the less you spend on food, the less you tip.  If you server does a stellar job and you want to throw in extra for the tip to say thanks, that’s up to you.  Just remember, the same concept applies to sales tax, the smaller your bill, the less tax you pay. 

Use Coupons

One of the tips that I forgot last time that some of the readers pointed out was to use coupons for your meals.  You can often find them in newspapers or coupon mailers, save them in an envolope and use them later when it’s time to eat out.

You can also find some pretty cheap deals on restaurant gift certificates over at Restaurant.com

These money saving tips are part of the series on saving money on entertainment.  So far we’ve covered how to save money on your television bill, and save money at the movies.

Do you often wonder where you money goes? Do you struggle to save money after all of your bills are paid? The problem is your budget, or lack of a budget. Less than 5% of the households in the United States keep a consistent household budget, and that is why 95% of the nation struggles with money. The word “budget” has a negative connotation to many people. You don’t want to be constrained by a budget, and you think it will run your life. It could do that, but if you budget correctly, it will actually free you from living paycheck to paycheck.

The Basics of Budgeting for Married Couples

• Start doing it the moment you get married. The more you wait to start a budget, the less likely that it will become a habit in your household.
• Create a budget together. One of you might like maintaining and forming the budget than the other, but you BOTH need to be present to contribute to the budgeting plan for that month or period of time.
• Choose how you will keep your budget organized. You can use a pencil and paper, Microsoft Excel, Quickbooks, MS Money, or you can use an online application such as Mint.com.
• Write down all of your monthly recurring bills such as utilities, mortgage, cable, debt payments, and insurance. Then, estimate your other monthly expenses that tend to fluctuate such as food, gas, entertainment, clothing, and car maintenance.
• Continue to tweak your variable expense allowances over the next three months.

Budgets are not perfect, and they can make life a little frustrating at first. It’s no different than starting an exercise regime. Your body will resist the exercise at first, because it’s not used to doing it, but it will get easier the more you do it. Budgeting is the same way. Here are some common budgeting struggles that newlyweds often face:

One spouse is on board to budget, but the other is not. Talk through it, and try to figure out the root of the issue. Do you share the same goals with money? If you can’t come to a resolution, then seek out marriage counseling. You can’t have one spouse following a budget while the other spends whatever they want. It won’t work.

Neither one of you has the will power to follow the budget. Seek out another couple to keep you accountable. Ask friends of yours to keep you accountable with your budget. They can call you once a week to see how it is going. If you have someone else asking you about it, it will help you follow the budget better, because you’ll feel embarassed if you keep telling them that you busted the budget.

You get easily frustrated that the budget isn’t working. You will not get immediate results with a new budget. It takes three or four months to tweak the budget and start seeing results. Once you get it right, you’ll quickly see how much more money you have at the end of the month.

Here are a couple of free excel files to help you track your plan to get out of debt and create a budget.

• Budget Worksheet
• Debt Elimination Plan

Remember, budgeting is a way of life. You must develop the habit of budgeting, or you’ll drop it like any other fad. Once you see the results and the immediate income boost by spending your money on paper before you spend it, you’ll get excited. So, get excited, and start your budget today.

If you’re facing the challenge of decorating your dorm room on a shoestring budget, then here are some ideas that might help.

Get things for free if you can – If you need a coffee pot, a bookcase, or some plastic storage bins, ask your friends and family for them first. You may be surprised by what they will be willing to give you to help you along your way. If they do give you necessary items for free, remember to drop them a quick thank you note or email to show that you appreciated the gift.

Check out the local thrift stores – You can get lamps, pictures, and sometimes gently used furniture very cheaply. You would be shocked at a lot of the fun retro items you will find there – especially the lamps!

The average cost is around $3 – $5 per item. Furniture usually runs $15 to $25 dollars. Remember that you are only going to use these things for a little while, and you will not be nearly as angry if your roommate comes in drunk and knocks over a $2 lamp, or throws up on a $15 chair.

Make it yourself – There is nothing cooler than quirky, hand-made items in a dorm room. If you are crafty, you can check out your local home depot for cinder blocks, particle board, cheap paint, a hammer, and some nails. The possibilities really are endless.

Drop in on the Dollar Store – Organizers, mirrors, school supplies, bath items, and even toothpaste are all cheap and readily available at your local dollar store. Definitely visit Dollar General, Big Lots, Everything’s a Dollar, etc. before you hit the bigger departments stores. Take a list with you, and cross off everything you can as cheaply as you can – your wallet will thank you!

Wait to buy larger items until you meet your roommate – Why pay full price for that mini-fridge all by yourself? What if they bring one too? Instead, get to know them a bit, talk about what you would both like to have in your room, wait for a sale, and split the cost.

Consider creative ways to decorate – Get together with your roommate and buy some colored chalk. You can do murals on the walls together (chalk washes off easily), and have “the room” that everyone talks about. Whatever you do, avoid laminating your posters. When I went to college, I thought laminating my posters would be cheaper than framing them. It was not! Total cost to laminate 6 posters: $80. Total cost for used frames at Goodwill: $12.

Check your local newspaper and Craigslist – You can usually find some excellent deals on just about everything in the classified sections of your newspaper, or online at Craigslist.org. You can pick up curtains, a desk, possibly even a computer this way.

The Last Step: Hit Walmart, Target and K-Mart – Once you buy everything you can at a discount, then check out the superstores. They still have good deals on items. You can even do a little pre-shopping online to see what they have, and how much it costs. Spending 30 minutes surfing the web to compare deals will save you a lot of money, (and gas!) because you won’t have to run from store to store looking for a specific item.

As you head off to college, remember that many of these first items may get torn up, used up, or just not fit your style anymore after about a year. Even though you might be tempted to buy a $200 desk, or a $350 comforter set, it’s probably better to err on the side of caution. I honestly don’t think I still own even one item that I decorated my dorm room with in college. So, why not pay less for items that will probably turn out to be temporary in the long run?

College is all about figuring out where you are going in life. Give yourself the freedom to change your style any time you want to – without feeling guilty over the price of re-decorating.

Check back tomorrow for a review of the best banks for college students where we’ll cover accounts like ING Electric Orange checking and Washington Mutual checking.

These ideas on thrifty dorm room decor, furniture, and accessories are part of the College Student Money Guide.

Are you planning a trip to a theme park this summer?  If so, it’s possible to pay a bundle for tickets, lodging, and meals if you don’t plan ahead.  The good news is you can visit somewhere like Universal Studios, Disneyland, or Six Flags and have a good time without spending all your money.  You don’t have to be like Clark Griswold at Wally World, you can get into the park and enjoy the rides for less than most other people spend without taking it to the extremes that he did in the National Lampoon’s Vacation movie.

Save Money on Food
Saving money on food is an important consideration when you are at these amusement parks.  Discounts can be found on admission tickets, but for food it gets a bit more difficult.  Prices are typically overinflated and every option in the park is expensive.  Since the parks don’t offer any cheap alternatives, you have to make up your own to cut back on costs. Here are a few ways you can save money on food:

• Bring your own water bottle and refill it in the bathrooms or at water fountains.  This alone will save you $10 or more per person. 
• Bring snacks to munch on at the park instead of investing in $5 pretzels and popcorn. Check whether the park allows you to bring in food from outside.  If not, make sure you hide it really well : )
• Eat a hefty breakfast before you leave for the park, bring along some sandwiches for lunch, and then on the way home stop for a late dinner.  You will save at least 50% of your bill by avoiding the food at these amusement parks.
• Share meals.  Many amusement park meals (especially Disney) have large meals that are great for sharing.  If you must eat at the park, share the meal between two people and save some money.

Save on Admission
With food costs under control on your amusement park trip, the next way to save is to look at admission prices.  Whenever possible, book large amusement park trips, such as Disney, Universal Studios or even Busch Gardens and Williamsburg in the off season.  Even just the last couple of weeks of school are a great time to get discounted prices on admission tickets.  Most of these parks, especially Disney parks, do not sell discount admission tickets to agents any other time. 

If you have to go during peak season check to see if any organizations you’re a part of offer discounts. For example at Disney, military members get discounted rates and AAA offers lower rates for multi-day passes.  Anyone can usually save a little money by purchasing tickets ahead of time through the park website instead of at the gate.

Buy a Package Deal
Another way to save on admission prices to amusement parks is to inquire about package deals. In order to draw in the tourists, hotels that service theme parks sometimes offer free or highly discounted park tickets if you’ll stay at their hotel. Do your homework to be sure this is a good idea, obviously it’s not worth cheap tickets if your hotel room is too expensive. In addition to searching for advertised deals, you can even inquire with hotels that aren’t publicizing the package.

Avoid Buying Souvenirs
As you probably already know everything at amusement parks is overpriced, souvenirs included. The best way to remember your trip is by taking pictures with family and friends. When you get back home you can turn the pictures into a wide variety of souvenirs. A guy at work used his photos to order a mouse pad with a picture of his family at Disney, much better than a cheap trinket if you ask me, and also cheaper than loading up on expensive souvenirs.

These tips should help you save money on your food and theme park tickets while on your summer vacation. Remember, spending less money doesn’t mean having less fun. It just means you’re paying less for your fun and that you might even be able to afford more of it!

Check back soon for the next travel finance article where we’ll look at saving money on plane tickets.

I hate shopping!  Luckily for me, my wife not only enjoys it but is a master at finding good deals.  She saves us lots of money by using time as her ally.

Wait Out the Store
One strategy she uses is to find something she’s interested in and then stakes it out.  She’ll keep an eye on it to see if the price drops or they have a sale then swoop in for the kill. This technique is typically used on larger ticket items; you wouldn’t want to spend all your time watching the price of toilet paper.  It will also take you longer to buy certain things since you may be waiting for months at a time but you’ll definitely save some cash.

Buy Off Season
Another approach she takes that saves us 50–75% off of retail prices is to buy during the off season.  This works especially well for clothing, just today she cleaned up on baby clothes at the Children’s Place. She bought our son his wardrobe for next winter as the store cleaned out winter clothes to make room for spring/summer attire.

Her strategy was to cover his basic clothing needs for next winter and she saved around 65% on her total bill.  The follow up technique that’s even cheaper is to hit garage sales next summer where we can find kids clothes for next to nothing and fill in the gaps.

Obviously it would be nice to buy everything that cheaply at garage sales but little boy’s clothes pose a problem. We’ve found the majority of kids clothes at garage sales are for little girls.  It seems parents tend to buy girls more clothes in general so they just have more to get rid of.  In addition, little boys are pretty hard on their clothes so they’re more likely to wear out the knees and elbows to the point where parents don’t even try and sell them at a garage sale.

Whether you’re buying at a retail store, garage sale, or on eBay. Buying off-season can save you tons of money.  All it takes is a little planning : )

Should I be paying taxes on my eBay income?  This was a question I was faced with yesterday from my friend / business partner as we celebrated our earnings for December. Our eBay partnership has been a success so far, bringing in over $700 for me last month!

When he asked me whether he needed to be reporting the income that he earned on eBay I turned to a resource by a friend of mine that’s all about managing your taxes on eBay sales, eBay Tax Tips Book. I ran him through the list of nine factors that the IRS looks at to determine if you are trying to make a profit, or if you’re just enjoying a hobby:

1. Whether you run the activity in a business like manner
2. How much time and effort you put into making a profit
3. Whether you depend on the activity for your livelihood
4. Whether your losses were due to conditions beyond your control
5. Whether you changed your operating methods to improve profitability
6. Whether you or your advisors have the knowledge needed to carry on a successful business
7. Whether you successfully made a profit in similar activities in the past
8. Whether the activity makes a profit in some years, and how much
9. Whether you can expect to make a profit in the future from the activity

He answered yes to enough of the questions that we determined he needed to establish a business entity to manage his eBay income and expenses. So yes, he should be reporting his income, in addition to tracking his expenses so he can offset some of the earnings and bring down the total tax bill. 

Of course, in order to deduct those expenses he’ll need to be able to prove he’s running a business.  We went over some things he can do to show that he’s indeed operating a business and not just a hobby:

· Get an employer identification number (EIN)
· Apply for a business name
· Have a separate checking account to be used for business transactions
· Hire an accountant to keep his books
· Create a business plan
· Keep track of the time he spends each week doing business activities
· Consult other business owners or advisors to help make his business profitable

I know he wasn’t happy with my answers since it meant some of the profit our partnership generated for him would have to be paid to Uncle Sam but it’s better that he starts tracking it now rather than wait until tax season and have to play catch up.

I doubt anyone would contest the idea that Christmas is becoming more commercialized than in the past. Christmas decorations adorn the stores before Halloween has come and gone.

For many people, the rush to start the holiday season did not bring warm feelings of holiday cheer. Instead, the mental cash register starts ringing and the financial obligations of Christmas become a heavy burden. Thus, many people are often depressed throughout the holidays

For many, 2007 has been a difficult year economically. Keeping food on the table has been the priority; forget having anything extra to spend for Christmas. In fact, a family I know, who have 4 small children, says that Santa is not coming to their house this year.

How sad that Christmas has become a time of financial burden. So, I am going to take an idea from a reader’s recent comment, and suggest a homemade holiday.

First, may I suggest reading Little House on the Prairie by Laura Ingalls Wilder? Once you read how last century’s families had to live during the holidays; most of us will actually feel wealthy. Next, I want to suggest some good Christmas ideas that will not result in a slew of bills come January:

Cookies: Who doesn’t like to eat? Make a plate of Christmas goodies to give to friends and family this holiday season. It is a thoughtful gift that took you time, because you cared, yet cost very little.

Christmas Cards: Make the cards this year. Especially if you have children, make homemade Christmas cards. As a mom, an Aunt, a daughter, and a friend, I love handmade cards. For every card, the giver has shared his/her heart. It is not a present pulled off the shelf out of a sense of obligation.

IOUs: I mentioned this in a previous post. If my daughter gave me an IOU to cook supper one night, do a chore, or something else, I would be touched, and her wallet would not get thinner.

Crafts: One year, I made Christmas tree ornaments. You can make them from family photos and things you probably already have around the house. If you crochet, you can make snowflakes, bells, angels, and more with a little crochet thread and time. You don’t even have to buy the starch to make them stiff and formed. Boiled equal parts of water and sugar will do the trick. (Sticky at first, the dry ornaments will no longer be sugary to the touch.)

Cocoa: Make batches of homemade cocoa mix, put it in a decorate jar. It can make a yummy gift for months to come.

Okay, now I am passing the baton. We already have great ideas from one reader who wants to bring the Joy of Christmas before the financial burden. What are your ideas? How are you making a homemade holiday this year?

Tina

Have you thought about your New Year’s resolutions yet for next year?  How about knowing where your money is going, knowing where you want it to go, saving more, and reducing debt?  Sound like a tall order?  If you set some specific financial goals for yourself, you’re much more likely to achieve some of them.  Check out the suggestions below, tailor them to meet your needs for next year:

Track your spending
If you haven’t purchased financial accounting software or set up a reliable accounting method of your own, this is the year to do it. Diligent expense tracking is the first critical step to getting personal finances in order.

Write down your goals
Have you ever written down the big things you want in life? Granted, all great dreams don’t cost money, but many of them do. Money buys freedom – to travel, to retire early, to start a business, to change careers.  Putting goals in writing gives them a formality and a starting point for the planning you must do.

Consider advice on taxes and planning
Maybe you’ve always winged it with your taxes and considered your company 401(k) the ticket to your financial future. Chances are your planning is inadequate. Start getting references on good tax professionals and consider sitting down with a financial planning professional to discuss your current retirement savings picture and what you can do to improve it.

Cut your credit card debt
If you can’t ever seem to get yourself completely out of credit card debt, make this the year to do it. Take inventory of your balances, figure out if you can consolidate them under your lowest rate card, and resolve to pay off an amount that exceeds the minimum — on time, every month.  Oh, and pay cash from now on.

Save more
If you haven’t signed up for your employer’s 401(k) plan or begun a savings plan tailored for the self-employed, this is the year. And resolve to save at least five to 10 percent of your take-home pay as you’re able to afford, and place the maximum in whatever retirement savings plans you qualify for.

Get ahead on your mortgage
This advice isn’t for everybody, but if you’ve paid off your credit cards by paying more than the minimum, apply the same principle to your mortgage payment. Every dollar you prepay will potentially save thousands in interest over the life of the loan if you plan to stay in your home long-term. In fact, if you make one extra payment a year, either at once or in equal monthly shares over the course of a year, you can cut a 30-year loan down to 21 years.  Just don’t short your investment plans to do it.

Invest in yourself
If going back to college or taking specific coursework will help you advance in your career, plan to do it. If investing in a health club membership that you actually will use makes sense for your health, do it.

Redefine the way you shop
If you’re an impulse shopper, break the habit in ’08. As a suggestion, get a legal pad and make that your centralized shopping list – use a single page for groceries, stock-up goods (it’s wise to start buying essentials in bulk if you can measure the savings), essential clothing or big expenditures you’ll need to make at specific times. Taking that pad with you wherever you spend money is a good way to keep a grip on your wallet – as long as you don’t stray from what’s written down.

Cook more
Even if you can’t boil water, eating out is one of the biggest drains on the American household budget. The National Restaurant Association reported that in 2004, the average household spent $2,434 in restaurants, equal to $974 per person. Start small – resolve to cook at least one or two meals a week you like that will be cheaper at home. If it’s drudgery, you won’t keep it up.

Attack the miscellaneous column
Do you really need deluxe cable? How much are you paying for your Internet service? Can you wear a sweater around the house and lower the thermostat? In every budget, there are items that can be cut – or at least trimmed. Take a hard look at all your “essentials” to see how essential they really are. Aim for a target of at least 10 percent and start setting that money aside on a regular basis.

This post is produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

How many books can your kid go through in five minutes?  Never wanting to spend more than a few seconds on a page our little guy can speed through his pile of books in no time flat.  So what do you do, buy more books to make a bigger stack?  No way, use the Internet!

Flickr Adventure
As I checked my email the other night my son pointed to the screen from his perch on my knee and yelled his favorite word, Car!  Sure enough, he was eagerly pointing to an ad for the new Honda Accord.  His ever first interaction with a computer gave me an idea so I opened up the popular photo sharing site Flickr.

I typed in Honda Accord and was rewarded with another enthusiastic burst of pointing and yelling from my son.  I moved on to his favorite animal, he panted frantically and pointed excitedly as a list of puppy pictures popped up.  We were on a roll! He and I spent the next 15 minutes on Flickr cruising through all his favorite images with him either saying the name of the object or making its sign. 

Save Money on Kids Books
What a cool way to expose a little person to the world and its much cheaper than buying tons of baby books.  We have a cat book that’s filled with images of about 30 cats in different poses.  Why pay money for a boring book of the same 30 images you see over and over when you can surf the web to find new and interesting pictures every day for free! 

Kids aren’t always patient so I looked for a few ways to get the pictures he liked faster. To get better results search for a specific terms instead of generic words. If you look for Honda Accord instead of car or Golden Retriever instead of dog you’re likely to get relevant images.  Once you find a picture you’re looking for you can also click on the tags next to the picture, such as accord, that will take you to a grouping of pictures all on that topic.

Welcome to the digital age junior!