Living On A Dime

Tag: debt

  • Save Money In The Kitchen – Easy Ways To Save on Groceries

    Save Money In The Kitchen – Easy Ways To Save on Groceries

    If you’re spending too much on your food bill, here are some easy ways to save money on groceries! Most people spend too much because they don’t know these simple tips!

    If you're spending too much on your food bill, here are some easy ways to save money on groceries! Most people spend too much because they don't know these simple tips!

    Save Money in the Kitchen

    If your grocery bill feels out of control, you’re not alone. For many people, cutting back on grocery budgets can be overwhelming. They know they’re spending too much, but don’t know where to begin to cut. Often, they fear that they will deprive themselves and their children if they become frugal.

    The good news is that there are ways to have your cake, eat it and save money in the kitchen at the same time. The whole secret is to start slowly.

    There are countless ways you can cut your food bill, but if you need to, target just one thing at a time. You won’t get overwhelmed, but you will still be saving money if you do only one thing.

    If you are a frugal beginner, try these simple suggestions for saving on your food bill:

    • Cooking frugally is like changing your diet. You need to learn gradually how to save money and cook frugally. Don’t expect that you will get your food bill down to $300 for four people in the first month if you are spending $600 a month right now.
    • Try cutting just $25.00 or $50.00 a month. Even if you cut back only $50.00 a month, you will save $600.00 a year. If you save just $1.00 a day that is $365.00 a year. You can then apply that $365.00 a year to paying off your credit cards. At 21 percent interest, you will save over $70 a year. This will eventually cause a snowball effect since the more you pay off, the less you pay to interest. When you pay less to interest, you have more each month to apply to paying off your overall debt. This means that as you pay off the debt, the rate that you can pay it off increases.
    • Before you shop, take a tour through your pantry and your refrigerator. Be organized! Don’t buy what’s already hiding in your kitchen.
    • If you’re a fan of coupons, remember this: It’s not what you save, it’s what you spend. If you save 30 cents on something you wouldn’t ordinarily buy anyway, you haven’t really saved anything.
    • A typical fruit item is significantly larger than one serving. Most people would be just as happy eating a small apple as eating a large one — so buy smaller fruits! You will save money by the pound.
    • This month, try two meatless meals a week (or one, if you’re a die hard meat fan).
    • Make simple meals. One-dish meals can contain your meat, your vegetable and your bread.
    • Drink water for your meals.
      • If your family is used to drinking milk, juice or pop for every meal then start by cutting juice from one meal or snack a day and drinking only water. After you get used to this, cut from another meal until you drink only water for meals and a glass of juice or milk at snack time.
      • You can also try allowing one glass of juice at meal times. Then serve water after the juice is gone.
      • You save over $500.00 a year by cutting just one glass of juice per person per day for a family of four.
    • Don’t assume that homemade is cheaper. If you get a VERY GOOD deal on chocolate chips and ingredients for candies, it is cheaper to make them than buying them pre-made. Make sure you do the calculations, though! If you don’t purchase them on sale, homemade candies can be more expensive than candies purchased at the store.
    • Stop wasting food. Give young children small portions. They can always have more if they are still hungry. Give them a half glass of juice and a half sandwich so you don’t waste uneaten food. Put food in the refrigerator right after the meal so it doesn’t spoil. Use leftovers for lunches, in other dishes or frozen in one portion sizes for a quick meal.
    • Don’t buy everything at one store. Prices vary greatly from one store to the next. Go to different stores to buy only their sale items. You will save more than the cost of your gas. It usually only takes half an hour to 45 minutes per store to get the items that are on sale including driving time. If you save a minimum of $20-$30 per trip, it is like “earning” $40-$60 an hour. If you save $60 spending one hour going to two different stores, it is four extra hours you might not have to work to pay for that same food purchased at the regular price.

    Most people don’t think they can live the frugal life and still be comfortable. I feed my family for $100 per person per month. Early in our marriage, when our household income averaged $22,000 a year, we paid off $20,000 in debt in five years—essentially an entire year’s income.

    That same principle still applies today.

    Even if you earn significantly more now, the math doesn’t change. Paying off one year’s income over five years is very achievable when you control everyday expenses—especially groceries. The higher your income, the easier it becomes if you avoid lifestyle creep and put those dollars to work intentionally.

    Keeping our grocery budget low was one of the key ways we made it happen. Small, consistent savings added up month after month—and they can for you, too. When cutting your grocery bill, it’s the little things that add up.

    [dining]

  • 6 Ways To Save On Your Grocery Bill – Easy Ideas Add Up Fast!

    6 Ways To Save On Your Grocery Bill – Easy Ideas Add Up Fast!

    One of the easiest places in your family budget to save money is on your food bill! Here are 6 simple, practical ways to cut your grocery bill and take control of your food spending. This post shares real-life strategies for frugal beginners, plus an easy, budget-friendly Green Chile recipe that shows how small changes can lead to big savings!

    One of the easiest places in your family budget to save money is on your food bill! Here are 6 simple, practical ways to cut your grocery bill and take control of your food spending. This post shares real-life strategies for frugal beginners, plus an easy, budget-friendly Green Chile recipe that shows how small changes can lead to big savings.

    6 Ways To Save On Your Grocery Bill

    For many people, making the decision to switch from two incomes to one can be a scary experience. You may know you’re spending too much, but figuring out where to start cutting back can be intimidating..

    Most people don’t think they can live the frugal life and still be comfortable. I currently feed my family of 4 on $400 per month. Back when we were first married, my husband earned an average of $22,000 per year over 5 years. During that same time, we paid off $20,000 in debt. Today, that means these same ideas can help you pay off debt equal to nearly a year’s income—simply by making small, consistent changes.ears.

    There are countless ways to save money, but if you’re new to frugal living, it’s best to start with simple, manageable steps. Your grocery bill is one of the easiest places to see quick results.

    • Before you shop, take a tour through your pantry and your refrigerator. Be organized!
    • Don’t buy what’s already hiding in your kitchen.
    • If you are a fan of coupons, remember this: It’s not what you save, it’s what you spend. If you save 30 cents on something you wouldn’t ordinarily buy anyway, you haven’t really saved anything.
    • A typical fruit item is significantly larger than one serving. Most people would be just as happy eating a small apple as eating a large one — so buy smaller fruits!
    • This month, try two meatless meals a week. Try one or two meatless meals each week. When you do use meat, treat it as an ingredient rather than the main dish. Recipes like the Green Chile below stretch as little as ½–1 pound of meat into multiple meals.
    • Cut back on the juice and milk. Reducing juice and milk purchases can free up money to buy sale items, which can help lower your grocery bill even more next month.

    [dining]

    This easy green chile recipe makes a light tasty meal when eaten with tortillas, but can also be used to top a lot of different Mexican themed dishes! It's super delicious!
    Print

    Easy Green Chile Recipe

    This easy green chile recipe makes a light tasty meal when eaten with tortillas, but can also be used to top a lot of different Mexican themed dishes! It's super delicious!
    Print Recipe

    5 Stars 4 Stars 3 Stars 2 Stars 1 Star

    5 from 1 review

    • Author: Tawra Kellam

    Ingredients

    1/2–1 lb. pork roast, or chops cubed into small pieces
    10 1/2 oz. chicken broth
    1 onion, finely chopped
    1/4 – 1/2 tsp. garlic powder
    1 (7 oz.) can green chiles, diced
    1/4 jalapeno, finely chopped
    1 Tbsp. butter
    1 tsp. salt
    2 Tbsp. flour or cornstarch, dissolved in water
    flour tortillas (or corn tortillas if you’re gluten free)

    Toppings

    cheddar cheese, grated
    lettuce, shredded
    tomato
    sour cream

    Instructions

    1. Simmer pork in broth on low for 10 minutes.
    2. Add all of the other ingredients except flour.
    3. Simmer 45 minutes.
    4. Thicken with flour or cornstarch so it is like a thick soup.
    5. Spoon about 1/4 cup into the center of a flour tortilla.
    6. Roll up tortilla.
    7. Top with more green chile.
    8. Sprinkle with cheese, lettuce and tomato.
    9. Top with sour cream, if desired.

    This green chile freezes really well.

    Notes

    • This easy green chile recipe calls for pork, but I also occasionally make it with cubed cooked chicken.
    • This recipe is a great way to use leftover pork or chicken.
    • If you like, you can make the green chile and instead of serving wrapped in a tortilla, you can use to pour over your favorite Mexican dishes like burritos or enchiladas.
    • This green chile recipe is also good served over rice and garnished with the cheese, lettuce and other toppings.

    Staying home and managing your budget isn’t about making drastic sacrifices—it’s about realizing that small changes add up over time. It’s the little things that really add up!

    Tawra

  • How Much Is Clutter Costing You?

    How Much Is Clutter Costing You?

    Living with clutter can have serious financial and emotional costs many of us might not have considered. Here are some thoughts about the cost of clutter and ideas about how to get it under control.

    How Much Is Clutter Costing You? Living with clutter can have serious financial and emotional costs. Here are some ideas about how to get it under control.

    How Much Is Clutter Costing You?

    We live in a society of extremes. People seem to be extremely in debt, extremely overweight and extremely disorganized. People everywhere are trying to come up with newer and better solutions to solve these problems but not many of their ideas are working.

    The solutions aren’t working because they are focusing on the wrong problem. For example, if your child comes to you and says “I have a drug problem.” You don’t sit them down and say, “Well let’s work on a way to get your grades up and then we’ll work on your drug problem.” How foolish that would be. The real problem is not the grades but the drugs. You take care of the drugs and the chances are pretty good that the grades will come up.

    For some of us, instead of focusing on getting out of debt or losing weight, we need to first give more serious thought to becoming organized. Does that sound crazy, almost laughable? Before you start laughing too hard, look at these examples and see if you can relate.

    How often do you go out to eat because your kitchen is a mess? If your kitchen is clean, chances are you would not only be more willing to fix dinner at home but in the morning you would fix breakfast and pack yourself a lunch, too.

    Here are some benefits of getting your kitchen organized:

    Organizing can reduce your wardrobe and laundry costs.

    • Do you keep buying more clothes because you are gaining weight from fast food or from the stress of your clutter?
    • How big is your wardrobe? Do you or your children own 30 pairs of jeans at $60 a pop because you don’t keep up with the laundry or because your closet is so stuffed you can’t find anything? That adds up to $1,800 worth of jeans. If you cut it down to even 10 pairs you would save $1,200. How many tops do you own? How about those shoes? Before you say, “There is no way I have that many jeans, shoes, or tops!” go count you clothes. You may be surprised…
    • How often do you toss a suit jacket on the floor or on the furniture and then later have to have it dry-cleaned because it’s wrinkled? Just think about what you could save on your dry cleaning bill if you kept a little more organized.

    Organizing can save you money in every aspect of your life.

    • Do you buy new items because you can’t find something? The cost of things like tools, glue, tape, ropes, garden tools, kitchen items, light bulbs, batteries, office supplies and other things really adds up.
    • How much do you pay each month in late fees on your bills because you can’t find them, your checkbook or even a stamp to mail them?

    Who is taking care of your home?

    Often, we think that the solution to our debt problem is for both spouses to work outside the home. At times we even compound the problem when one or both spouses take a second job.

    When both spouses work out of the home, who takes care of the house? Frequently, there is a constant battle between them about whose job it is to take care of some element of the housework. After all, the husband has been out working all day, so he doesn’t feel like it. Oh, but the wife has been working, too, so why can’t she take a break?

    Imagine if your boss at work decided to work a second full time job. How would this impact your workplace? Who would you ask if you couldn’t find products for your customers? What if there was no change because your boss was at his other job until after the bank closed? What if you needed help or advice from your boss, but he said, “Not now… I’m too tired from my other job?” How long would that company last? The same thing happens in many homes every day.

    Try something different!

    Would your family be better served if one spouse stayed home? Someone needs to be responsible for the bulk of the care and maintenance of the home and family. Ideally, everyone will share the work, but like in any other business, there has to be one person in charge. Otherwise, everyone will avoid the work and everything will descend into chaos.

    If this sounds like your home, you might sit down with your spouse and seriously consider whether one of you might take off work to try to get your home in order. Instead of thinking of staying at home as a prison sentence, think of it as another job to help save you money, reduce family stress and add more family comfort.

    If you’re considering staying home, get rid of the emotions and, with pen and paper (hopefully you can find one) in hand, write down the ways that being disorganized is costing you money. Be honest and try to cover even the small things. You might find that the money you are spending dealing with disorganization is equal to or more than one spouse’s take home pay.

    Organization has nothing to do with what is politically correct or what the media or other people tell you you need to do. It is a practical choice that you can make. I am NOT saying that you can’t work doing something that you love. I am saying that regardless of how your family handles it, the work of keeping the home has to get done.

    But we both want to work outside the home…

    If you feel that you and your spouse have to or both want to work, then try to come up with other ideas.

    • Would spending your vacation organizing things and deep cleaning give you enough of a jump start to help keep things organized? Maybe once you organized everything you could consider hiring someone to clean your house once a week. Before you say you can’t afford it, think about this: Which would cost less? Paying someone $50 a week to clean your house or paying for all the things that cost you money because you are not organized?
    • Consider whether it would be worth one spouse working part time instead of full time.
    • Try one simple thing like hanging up your clothes so you don’t have a cleaner’s expense or getting the whole family to pitch in with cleaning the kitchen at the end of each meal.

    What if you don’t know HOW To get organized?

    Maybe you do have the time, but you just don’t know how to get organized. If that is the case, then learn. Check out books at the library or search for help on the Internet. Better yet, find someone you know who is organized and ask them to teach you. Don’t be embarrassed to do this. Most people are more than willing to show you how to do things. Remember, those older women (and men) that seem to have it all together now didn’t start out that way. They’ve had 20 years or more practice and they remember what it was like to not have a clue where to start. Just ask.

    Instead of wasting your time and energy trying to bail the water out of your sinking boat by bailing faster or using a bigger bucket, fix the hole. CLEAN UP THE CLUTTER AND SAVE.

    [dining]

  • Stop Cutting Coupons and Start Saving!

    Stop Cutting Coupons and Start Saving!

    Stop Cutting Coupons and Start Saving! Here are some easy suggestions how you can save almost $10,000 in just one year cutting a few things from your food bill to help you save money. (more…)

  • How Getting Dressed Can TOTALLY Change Your LIFE!

    How Getting Dressed Can TOTALLY Change Your LIFE!

    There is one thing that can help you get organized now! Getting dressed first thing every day can totally change your life! Here are some reasons why… (more…)

  • Stop Eating Your Way Into Debt!

    Stop Eating Your Way Into Debt!

    Eating out is among the of the top causes of personal debt. Most of us hunt for the best interest rates on our mortgages and we complain about the terrible price of gas the whole time we are pumping it. (more…)

  • How Do I Make My Husband Change His Spending Habits?

    How Do I Make My Husband Change His Spending Habits?

    Money issues are one of the most common problems in marriage. One reader asks, How do I make my husband change so he doesn’t spend so much?

    Money issues are one of the most common problems in marriage. One reader asks, How do I make my husband change so he doesn't spend so much?

    How Do I Make My Husband Change His Spending Habits?

    Kristy writes: Hi Tawra and Jill! I need your help! I’ve been checking out your web site and reading your blog for quite a while now. I’ve also bought your book and subscribed to your newsletter. I’ve learned lots of useful tips from all those sources. I feel like I’ve come a long way on my road to becoming a tightwad!

    The problem is my husband. He’s not a complete spendthrift, however, we have a lot to work on. For example, we came home the other night and he turned on the air conditioner. I thought I was going to have a stroke! We were getting ready to go to bed. We have a ceiling fan in our room and the night before we had both gotten chilly with just the ceiling fan on. Here he was wanting to cool the whole house! We live in the South, so I’m not opposed to using the air conditioner when we need too, but it was only 72 degrees! We ended up getting into a little spat over the whole thing.

    There are other things he does as well. Like if he goes to the grocery store with me. I go with a precise list of what we need. I also have coupons to use. If he goes I end up buying much more than I had planned. He also gets so impatient that I’m not able to compare my coupons to the prices. I know the easy solution is to just not take him with me, but I don’t really like that solution. I want him to understand why it’s important to stick to the list, and why it’s important for me to take a little extra time to compare the coupons I have with the prices.

    Whenever I show him the grocery receipt (when I’ve gone by myself) he’s always impressed. I guess what I’m asking is, “What can I do to turn my husband into a tightwad?” I read Mike’s conversion story and I think it’s awesome. So tell me, what did you actually do the facilitate his change? Did you simply put your foot down and say, No, we’re not spending money on that? I don’t really want to do that since he’s the one making the money.

    I would just like to show him how great it is when we are able to spend less. Any suggestions you have would be much appreciated. Thank you so much for all your hard work and advice!

    Kristy

    Tawra: Kristy, First of all, congratulations on how far you’ve come in learning to spend your money more wisely. I can tell that you’re excited to see how much of a difference you have been able to make and that’s great!

    I can appreciate your frustration. My husband was a liberal spender when we married. It took several years for him to change his way of thinking.

    The thing that worked for us was that I led by example. When he saw me saving he was encouraged to do so too. There were a few times when I did say “there is no way we are buying that” and we got into some big fights over it. For the most part, I just saved the best I could. If he spent extra at the grocery store whenever we went, then I just went shopping without him. I had dinners and lunches made and ready so he wouldn’t be tempted to eat out.

    He came up with a system where he put all our debt on a chart on the wall. He tried to predict how long it would take us to pay off the debt and drew a line indicating the debt paydown. As we would make a payment he would mark that month off. It encouraged him to see the debt going down and so he wanted to save more. Pretty soon, the reality was that the paydown in real life was better than the chart predicted. Men are visual and this “visual scorecard” really helped him buy in.

    Another thing that helped was that he started calculating how many hours he had to work to pay for something. When he realized that it would take all of the money he earned in 1 1/2 years of work for a new car or 3 months for a used one, we bought the used car.

    You said in your letter “He also gets so impatient that I’m not able to compare my coupons to the prices. I know the easy solution is to just not take him with me, but I don’t really like that solution. I want him to understand why it’s important to stick to the list, and why it’s important for me to take a little extra time to compare the coupons I have with the prices.”

    Regarding the list — You don’t always have to precisely stick to a list to save money. There are always specials and maybe you see something that sounds good and you just want to buy it. That’s ok as long as you aren’t overly impulsive. Generally, the more impulsive a buyer you are, the more you want to restrict yourself to “the list”.

    If your husband doesn’t like to shop and if you spend more when he’s there, why do you insist that he goes with you? It seems like the best of all worlds is for you to shop without him. Why is it important for him to understand sticking to the list, and taking extra time to compare the coupons with the prices? Most men don’t like shopping. If he spends more at the store, but would rather not go, leave him home. Let shopping be your thing and let his thing be mowing the lawn or something else he does well.

    One thing that can be difficult in a marriage is the tendency for a person to want to be in control. If you know what the easy solution is, but you “don’t like it”, it looks like you want to have control over him in the situation. You won’t get control over him unless you want a divorce. Marriage is a partnership and he has to be a partner.

    Sometimes you just have to let it go. There were times when Mike would buy something that we really didn’t “need”. maybe he wanted to buy a CD or go out to eat, but I just let it go. He has to have control of the money too. Remember, this is a partnership, not a competition. Think about “net gain”. Whether or not he understands how you shop, if the outcome of your shopping is a financial gain for your family, you have a joint victory. If you think of it that way, you will both feel like you’re on the same team (and you are ;-).

    Here’s another angle on partnership. You said “Did you simply put your foot down and say, No, we’re not spending money on that? I don’t really want to do that since he’s the one making the money.” By saying that “he” is the one making the money, you are implying that your role in the marriage is not as important as his. You are “earning” just as much at home by doing all the things you do (meals, laundry, child care, etc.), so don’t feel bad about sharing in the decision about how you and your husband spend the family’s money.

    Because our financial situation was critical at the beginning, I did put my foot down. If you don’t have the money, you don’t have the money. Mike was used to going to the movie theater a lot and he liked to shoot a lot of pictures. He was in the habit of spending more when he was stressed or feeling low. When we started having trouble paying our bills, I told him that we would have to cut the movies and the picture taking. He didn’t like it and we had a lot of fights over those things, but he did understand that we were going to be in huge financial trouble if he didn’t stop spending.

    Here’s a practical example of a way you can try to bring him on board without irritating him: Instead of getting upset (“having a stroke”) about the air conditioner being turned on, say “Can we try using the fans first and see if that will cool us down enough?” or “Let’s turn on the air conditioner for an hour or so and then turn it off”. There are many ways of compromising when it comes to finances. Try to use a gentler approach whenever possible.

    You husband won’t change his view of money overnight, but if you can have a positive impact on your family financial situation and communicate how happy you are about the frugal “victories”, his thinking will change little by little. If, as you said, he is always impressed when you show him how much you saved, he is already starting to see the benefit! Hang in there and let us know how it goes!

    Tawra

    [dining]

  • Are “THEY” Ruining Your Finances?

    Are “THEY” Ruining Your Finances?

    "They" say you should spend your money in a certain way and you should have certain things to be happy. Is their advice really making your life better?

    Who Are They And Are “THEY” ruining your finances?

    They say that it is impossible for a family to live on one income. They say you need a bigger house for the tax deduction. They say schools need to budget for tablet computers for every student, even though they say they can’t afford to pay the teachers. They say that you need a compact car or alternative energy car because we’re going to run out of gas or the Earth is going to explode. They say you need a big SUV so you’ll be safe on the road. They say you need to be a vegetarian or vegan or you’ll die. They say you should eat a lot of meat so you’ll lose weight or you’ll die.

    Over the centuries, human beings have been compared to sheep over and over again. I never cease to be amazed at how true that is. If one sheep decides to head down a road that goes right over a cliff, they all follow. Even in history when people march and demand the right to be individuals they still always seem to dress and act alike. I remember the “flower children” of the 60’s. Even with their “free to be me” attitude, they were horrified if a man walked in with a suit and tie, since it was different from what they and their peers would wear.

    If children are doing drugs, drinking or just wearing strange outfits, they justify it because “everyone is doing it”. So often, the parent’s response is “If everyone jumps off a cliff that doesn’t mean you should do it, too.” Is that the story we tell them with our actions? Kids are very shrewd and have no tolerance for hypocrisy. We hurt our families and ourselves if we blindly follow the crowd. “They” have set a standard of living that we must live by– no matter what the cost. (I still haven’t figured out who “they” are but I don’t think I like “them” or “their” ideas.)

    Lady Shopping

    “They” say you can’t live on one income so many moms, who think it’s best for their families if they stay home, get jobs anyway because “they” say, “You can’t make it!” Never mind that the extra expense of child care, work clothes and (for many) “guilt offerings” purchased for their kids often exceed the extra income. “They” say that’s the way it’s supposed to be.

    How many dads have become only figures the kids wave good-bye to in the morning before heading off to two jobs because “they” say this is the world in which we live. Too many people who do this find that later in life their marriages are suffering, their kids are rebellious and resentful of their absence and the employer for whom they’ve worked, investing all their time “providing” for the family lays them off.

    “They” say you have to pay to send your children to college so they can become a success and make a lot of money. When did “they” come up with the idea that going to college makes a person successful? How many parents have accrued $40,000 or more in debt for their son or daughter’s degree, only to find the student working in a field that has nothing to do with his degree? A college education can certainly be a useful tool, but it is one that is wasted if the student doesn’t need it or fails to use it.

    I find that the most successful human beings are those whose parents spent time with them and had the time to teach them values, self confidence, self reliance and love. You can always lose your stuff, but you can’t lose your values or the knowledge that your parents love you.

    Stop basing your financial decisions (or any life decisions) on what “they” say you should be doing. Financial worries are the biggest cause of stress for Americans, leading to all sorts of physical and emotional problems. These worries are almost always avoidable, but many choose the worries over common sense.

    The point of this story is not that you should never spend any money on anything. The point is that it is important that you decide whether or not spending your time or money some particular way is a good idea for your family. Keep in mind that when “they” tell you you should do something, “they” are often trying to sell you something you don’t really need.

    Whenever you find yourself reflecting on your life and you realize you are doing something because “they” expect you to do it, tell “them” to butt out of your life, decide for yourself what is really best for you and your family and do it!

          -Jill

    If you often wonder where all of your money goes or if you need a more frugal mindset, check out Dig out Of Debt and learn more about how to keep more of your money.

    [dining]

  • How Can I Do A Better Job Managing My Bills?

    How Can I Do A Better Job Managing My Bills?

    People often have problems managing bills. Often the problems are disorganization or overly complex systems. Try these easy ideas to simplify your bills! (more…)

  • Frugal Ethics – When Frugal Becomes Just Plain Cheap

    Frugal Ethics – When Frugal Becomes Just Plain Cheap

    Frugal Ethics - When Frugal Becomes Just Plain Cheap

    Frugal Ethics – When Frugal Becomes Just Plain Cheap

    There are times when it’s tempting to lie, steal or break one of the other 10 Commandments to get a good deal but, in living frugally, we all need to stick to being honest. This is not always easy to do, but I want to give some examples that may help you stay honest. Here are some common tactics that some people use that are unethical and sometimes illegal: (more…)

  • How We Paid Off $20,000 Debt In 5 Years On $22,000/Year Income

    How We Paid Off $20,000 Debt In 5 Years On $22,000/Year Income

    Paying off debt can be a daunting thought, but its’ easier than you think. We paid off $20,000 debt when our income was just $22,000 per year. Here’s how we did it. (more…)

  • Dirty Dishes Cause Debt!

    Dirty Dishes Cause Debt!

    Are you trying to get out of debt or just save money for better things? Dirty dishes cause debt, so tackling the dirty dishes is the first step! (more…)

  • Spending Confessions: How I Got Smart About Money

    Spending Confessions: How I Got Smart About Money

    Spending habits determine whether we’re prosperous or always in financial turmoil. Here’s how I changed my spending habits and became smart about money. (more…)

  • These Hard Economic Times

    These Hard Economic Times

    These Hard Economic Times

    For a number of years, there has been a lot of talk about hard economic times. Even though the economy is down, does the talk match our spending habits? (more…)

  • 10 Ways to Lose Weight and Gain Money

    10 Ways to Lose Weight and Gain Money

    People often don’t realize that some of the same things that make you overweight also steal your money! Here are some easy steps to help you lose the weight and save money at the same time! (more…)

  • What Do I Do With My Tax Refund?

    What Do I Do With My Tax Refund?

    What Do I Do With My Tax Refund?

    It’s that time of year when all that "free" money starts rolling in. I’m talking about the bonus money– you know, the fun money (otherwise known as our tax refund)! That is the way so many of us think of a tax refund and, five minutes after we spend this year’s tax refund, we are already thinking about what we are going to do with next year’s refund money.

    Many of us look at getting a tax refund almost as if we have won the lottery. We are going to do so much with it and it seems to have such amazing powers. I mean a $1000 tax return can buy a car, furniture, a big screen TV or a family vacation all in one fell swoop. There is almost nothing it can’t do; no problem it can’t solve. It’s our mad money– our fun money.

    Not!!!!!!!!!

    If you have debt, a tax refund is none of the above. It is not mad money. It is the opportunity to move closer to getting out of the debt you have already committed to pay. If you have credit card debt, use your tax return to pay off that credit debt rather than to buy that big screen TV or the couch you have wanted.

    Use common sense and wise thinking when it comes to spending that tax return. It is no different than a regular paycheck. In fact, when you look at the fact that you make so much money a year, the tax refund is actually part of the salary that you say you make.

    Stop looking at it as a bonus and instead think of it as more income available to pay your debts. Once you pay off those debts, a tax refund can be a great opportunity to start a savings account.

    We get so many questions from people who are panicking and asking what we do for an emergency fund. Instead of throwing away that tax refund check on something that gives you instant pleasure, set aside that tax refund money for an emergency (keeping in mind that even most "emergencies" are not true emergencies).

    Once your debts are paid and you have enough savings, then use your refund for fun. We live in a society where we always put the cart before the horse. People used to get married and then have children but now it is common to have children and then get married. We used to carefully save our money and buy what we wanted from our stockpile but now we charge what we want and later try to figure out how to get the money to pay for it.

    Because of how we think about credit, many of us don’t give any serious thought to paying for something until it is worn out and we want to buy the next one. Once the item is worn out, how do most of us feel about still paying for it? "It’s not fair that I have to pay for this and I don’t even have it anymore…" Avoid the stress later — Pay off what you owe now and stop buying things on credit.

    If you are behind on your credit payments or if you’re not making the payments at all, use your tax refund as an opportunity to get current. When we buy an item on credit or with our credit card we are saying "If you let me have this product now I promise (vow) to give you money for it later". When we don’t pay our credit card bills it is no different than walking into a store, filling a basket with whatever we want and walking out with it. To my knowledge that is still called stealing. (I’ll have to check because they change the meaning of words so often to make them more politically correct. I mean who knows, maybe it’s not stealing anymore but just "temporarily using it until it is repossessed").

    When you literally put the cart before the horse, (kids before marriage, buying and then trying to save money to pay for something, etc.) it will cause extra stress in your life and will make it much harder to get where you are going.

    Re-think not only how to use your tax refunds more wisely but give the same consideration to any other "extra" money that comes into your life. Once you get a handle on your debt and your spending habits, you will be surprised how far your money will go. Start by making a wise decision about your tax refund.

    One other thought– Make sure you have your withholding set up with your employer to not take out so much money. Set up a direct deposit into your savings account and save it yourself instead. Considering the fact that many states are on the verge of bankruptcy do you really want to give over all that money so the government can just "save" it for you? You may not get it back one day.

    For more ideas to help you get out of debt, check out Dig Out of Debt!

     

  • Are You a Slave to Debt?

    Are You a Slave to Debt?

    Are You a Slave to Debt? Land of the Free and Home of the Brave?

    We Americans are proud of our freedom and our opposition to tyranny and slavery, but because of lack of self discipline, most of us are not free at all. We are enslaved by our emotions and our debt. Most of us would never consider agreeing to become indentured servants and yet, by our own lack of self discipline, many of us have sold ourselves into slavery. Have you ever thought about the fact that indentured servants usually had to work 7 years for their freedom and people who claim bankruptcy have black marks on their credit for 7 years? Are you a slave to debt?

    By now all those well meaning New Year’s resolutions have flown out the window, but don’t despair: all is not completely lost. Here are a few money saving tips and ideas that will get you back on track, save you money and will actually work.

    You say “I don’t want to be a slave to debt but I don’t know where to begin.” Just begin. Don’t over-think it. You don’t need to be a rocket scientist to know that you have to stop spending more than you earn.

    Have you ever told your child to go pick up the toys in their room only to have them start whining and crying, “But I don’t know what to do.” It’s frustrating to hear that in a child because you and I both know an eight year old knows he’s supposed to put his toys away and his dirty clothes in the hamper. He just doesn’t want to do it. That whining and excuse making in an adult is even harder to take. As in a child, it’s just an excuse to get out of doing something we don’t want to do. Stop spending more than you earn.

    Stop living a life of fear. Remember if you’re an American you live in the land of the free and the home of the BRAVE. There are two things that always amaze me. The first is grown adults that cower before a child a quarter their size and who is throwing a fit while demanding to buy a toy. The second is to watch a grown adult cower when looking at a desk or table piled with papers and bills. It’s just a bunch of paper, not a snake that is going to reach out and bite you. Be brave and start dealing with the papers and bills. Get them in order. Yes you may have to face some mistakes and things you don’t want to think about, but do it anyway. Then get on with your life. You don’t have to be a slave to debt! Learn from your mistakes and don’t make them again.

    Here are a few suggestions to get that overwhelming pile of papers under control:

    Quickly look at each paper and lay it into one of these 4 categories:

    1. TRASH – Throw out and/or shred immediately.
    2. FILES – Put in a box and set by file cabinet to sort and put in order some other day.

    3. BILLS – Sort them in order by the date that they are due. If things are really out of control write down a list of all your bills and how much you owe. This will help give you a reality check of where you stand with your bills. You need to be brave and honest with this.

      Using some common sense, start paying those bills. Pay your bills first. For a while, that may mean you have no money left for fun and entertainment, but that is the sacrifice you make for freedom.

    4. CORRESPONDENCE – Put correspondence in a pile. Read and deal with it after you have your bill pile out of the way.

    If you are a slave to debt, it’s time to get angry and say enough is enough. I will no longer be enslaved and start fighting for my freedom from debt, even if my biggest enemy is myself!

    Jill

    From: Dig Out Of Debt. For more easy and practical ways to save money and get out of debt, check out Dig out Of Debt and learn more about how to keep more of your money and free yourself from being a slave to debt!

  • “Keep Or Cut My Credit Cards?”

    “Keep Or Cut My Credit Cards?”

    Hope from New Jersey writes:

    I definitely can relate to living on a low income. I just paid off $3000 debt in less than a year playing the credit card game, making some financial sacrifices and getting a windfall. I love using a credit card (I only have one now with a $400 credit limit), but being in debt like that scares me. I don’t want to go back to that again. I’m thinking about getting rid of the card, but then what will I do to build a good credit history? I’m also afraid that I might need it one day. (I’m living on a low income with one special needs child and one child that’s not.) Should I keep my credit card or get rid of it?

    Tawra: Hope, we would suggest that you keep your credit card. Here’s why: Credit cards aren’t the problem –it’s self control that’s the problem. You sound like you have your spending under control, so I would suggest that you keep the card.

    I would use it for convenience when you know you have the money to pay it. Keeping a credit card is good for things like making online orders or for getting gas when you don’t have time to go to the bank and withdraw the cash. As long as you have the money to cover the charge and you don’t spend it on something else before you pay your credit card bill, you should be fine.

    Then pay it off each month so that you can build your credit. They are very handy to have around for those types of things. If you need a way to keep track of what you put on it just write it down in your check register and put a C in the left column so you know that is what was put on the credit card. This is also a handy way to double check and make sure they charged you correctly.

    A credit card can also help with emergencies, but you have to be careful what constitutes an emergency. If you use the card for an emergency, you have to expect to plan to sacrifice somewhere else to cover the emergency, but it sounds like you’ve already experienced this.

    This part is not really directed at you, Hope, but for other readers who are reading:

    Regarding emergencies, going out to eat or taking a vacation because you’re under stress is not an emergency. An emergency is something like a life and death hospital emergency, fixing the only car you have so you can go to work and earn money, etc. Keep in mind that even “emergencies” have to be paid for eventually!

    If you feel that you don’t have control of your spending, I would suggest only keeping a credit card for true emergencies.

    As for you, Hope, it sounds like you have done very well and are on your way to being permanently debt free. Congratulations on your hard work!

    From our Dig Out Of Debt e-book

     

    photo by: kanir

  • How To Get Out Of Debt!

    How To Get Out Of Debt!

    How To Get Out Of Debt

    How To Get Out Of Debt! Don’t Bury Your Head in the Sand!

    I had a dog once who, when I would scold him, would run and hide under the bed. He knew he had done something wrong and thought that by hiding he wouldn’t get into as much trouble. I think he figured if he couldn’t see me, I couldn’t see him and he wouldn’t get scolded.

    There was just one slight problem. He couldn’t fit under the bed. Only his head and front paws were hidden but his back half was in full view. He had put himself in the worst possible position but since he had buried himself under the bed he didn’t know that.

    It’s human (and critter) nature to think that, if I don’t acknowledge something, it won’t come to pass or it will go away and I won’t have to deal with it. We are often like the two year old who thinks there’s a monster in his room. He will cover his head up with a pillow thinking “If I can’t see the monster then the monster can’t see me and it will go away.”

    We adults laugh and think how silly this is. We know that if there really WAS a monster, hiding our head under a pillow would not help us. If anything, hiding our heads would make it worse because we can’t see what the monster is doing and so we are unable to come up with a plan of attack to protect ourselves. Meanwhile, the monster takes a bite out of our britches.

    Even though we find the dog or the two year old’s actions foolish and amusing, many of us do the very same thing when we don’t deal with our financial situation and our debt. Have you ever decided not to open a bill or look at a credit card statement because you don’t want to know what the balance is? Clicking your heels and saying “There’s no place like home” is not going to help.

    Don't Bury Your Head In The Sand!

    How about your bank statement? Do you balance it every month or just throw it in with the pile of unopened bills because you don’t want to know how much is in your account? I hear someone saying “But I don’t know how to balance it.” Then learn. There isn’t a bank in the world that isn’t willing to show you how to balance a checkbook if you ask.

    My grandson in the third grade has enough math skills to balance a checkbook but I often hear from college graduates, full of pride with their degrees, that they can’t balance a bank statement. It is just another excuse that helps them keep their heads buried in the sand. Learning to balance your checkbook is much easier, much less time consuming and much less stressful than hiding from the monster.

    Another excuse many people use is refusing to use cash. Often when helping people get their credit card debt under control, I suggest that they get rid of the credit cards and just carry a small amount of cash in their wallets. The first thing that I always hear (and I have honestly never yet had anyone say anything different) is “I can’t carry cash because I will spend it”. This statement makes no sense to me. What do they think they are doing when they pull out their credit cards to buy something? Lack of self control is lack of self control no matter how you package it.

    If you allow yourself $20 cash, don’t keep credit cards in your wallet and you are shopping you MAY spend the full $20, but when it is gone there just “ain’t no more” to spend. On the other hand, when you use a credit card, once you spend $20, you can pull it out again and spend another $20 and another and then maybe even $100. You don’t even have to keep track of how much you spend for the day. Just stuff the receipt away and put your head under the bed!

    If you have a credit card problem, you will end up spending 2-4 times as much with the credit card than if you just use cash… But this is why people in financial denial love credit cards… They don’t have to acknowledge or see how much they have spent. “If I don’t see it it won’t hurt me.”

    In 1 Corinthians 13:11, it says “When I was a child I talked like a child, I thought like a child, I reasoned like a child. When I became a man I put away childish things.” We need to put away childish or foolish actions where our money is concerned and start using adult reasoning concerning it.

    If this is you, stop burying your head in the sand! Stop being afraid and start taking an honest look at your finances. Open those bills, balance those bank statements and acknowledge how much you spend! Then figure out how to get it under control.

          -Jill

    P.S. Just to keep our e-mail box from overflowing with misunderstanding, I thought I should clarify this one thing: If your financial situation is fully under control, but you use a credit card for convenience or for reward points or some other reason and pay it off every month, this story is not referring to you. I am specifically addressing people who don’t know how much they spend or who do not spend within their income.

    For more easy and practical ways to save money and get out of debt, check out Dig out Of Debt and learn more about how to keep more of your money.

     

  • Debt Calculator

    Debt Calculator

    Get out of Debt Calculator

    Reduce Interest and Pay Off your Credit Cards!

    If you are serious about paying off credit debt, you might want to spend a little extra time on this page. This debt calculator will help you to see at the current rate that you are paying how long it will take you to pay off your credit cards and how much it will cost you.

     

     

    What is your total credit debt?

    What are your total monthly payments?

    What is the interest rate you are paying? (% APR)
     

    At the current payment, it will take you months to pay off your debt.

    By the time you pay it off the total payments will have been

    and you will have paid a total of in interest.

     
    I find it useful to enter my payments and APR as it is now and then what I would like it to be. If you have been to our How it Adds Up page, you might be interested in seeing how much difference it makes to cut something out of your monthly budget and apply the extra money to your credit debt. As an example, if you are considering cutting a $20 pizza twice a month, you might enter the information as it now is and then increasing the payment by the $40 you would have saved by NOT buying the extra pizzas.

    Pay extra attention to the interest. Unless you have an investment that is earning significantly more interest than the interest you are paying, the interest you are paying is simply money that is wasted. I talk to people who have credit cards with a high interest rate and are maintaining savings or retirement accounts earning low rates of interest. If you are paying 13% interest on a credit card and putting money into a retirement account earning 5%, you would be better off paying off the debt first.

     

  • Wouldn’t Tithing Less Leave More Room In Your Budget?

    Wouldn’t Tithing Less Leave More Room In Your Budget?

    Wouldn’t Tithing Less Leave More Room In Your Budget?

    Abdeli asks:

    I noticed that you give a sizeable amount in tithes. I am a Christian myself and give regularly but I can’t help but worry that perhaps giving less to the church might make your budget more lenient, say for emergencies and the such. I firmly believe that we should all live within our means and that the Lord will provide the rest. However, I also believe that we play an active role in helping ourselves, saving for our children’s education, etc. I have thoroughly enjoyed reading and learning through your articles."

    Many blessings,
    Abdeli

     

    Tawra: Dear Abdeli,

    I need to update the budget to reflect the fact that we do keep $500 in savings for emergencies. We won’t set aside more for emergencies until all our debt is gone. We have some debt from Mike’s video equipment that we need to pay off first. (note: we paid that off in 2006)

    No, I don’t think we should ever stop tithing or lower our tithes to save some money. Here’s why:

    First, just because we made some poor financial decisions doesn’t mean that it’s God’s responsibility to fix it for us. He can fix it if he wants, but our debt is the consequence of us trusting in the credit cards and not Him.

    Second, reducing our tithe is telling God, "I don’t think you can take care of me." God gives us everything we have and as recognition for that, he tells us to give 10% back to Him. It’s the least we can do to give him back the 10% to help others.

    Interestingly enough, the people I know who reduced their tithes to fund other things found that their finances were no better off when they weren’t tithing.

    It’s contradictory to say say "I can’t help but worry" but then turn around and say but we "if we live within our means the Lord will provide the rest". If you worry, then you aren’t trusting God. The Bible is full of commands for us not to worry. Taking money from God to pay for your kids education (an expense that I don’t believe parents should pay anyway for the most part) or to "help yourself" is not letting him take care of you.

    It’s all about trust. We either trust Him or we don’t. In a few weeks, we are going to be coming out with the story of how mom survived on $500 a month. She has a lot of examples of trusting in there and how God did the "impossible". That doesn’t mean that you go out and eat, put your kids in a bunch of activities, and spend what you want and then expect Him to come through if these things cause a crisis. Most people are more than able to have at least $500-$1000 savings if they really wanted to. Even my mom who lives on about $500 a month has that much saved.

    Anyway the point is, God asks that we depend on him and not ourselves.

    I’m glad that you enjoy our articles! Thanks for letting us know!

    -Tawra

    Update 2010: We have $3,000 in savings and are debt free except for our house. We are putting everything on it to get it paid off quickly. We hope in 3 years or less. We do have money in our business that we can use for an emergency that is set aside to reprint books.

     

    photo by: PhillipC

  • Get The Most Money Selling Your House

    Get The Most Money Selling Your House

    Get The Most Money Selling Your House

    By Tawra Kellam

    A clean neat house can add an additional $5,000- $10,000 to your asking price. Using this method we sold our house in 10 days.

    As soon as you find out that you are moving, start getting rid of things you don’t need or use any more. It is ridiculous to move things that are never used to another house. They will merely clutter your space as they did before. Get rid of all of it!!!

    To begin de-cluttering, start with one room or one cabinet at a time. Packing while carrying out your usual routine may make it easier. For example, pack the bathroom cabinet while the kids are in the tub or de-clutter a kitchen drawer while you are waiting for something to boil. You will be amazed how fast this method goes.

    Get rid of anything that is broken, old or that you just don’t like. Hold a garage sale, it not only eliminates things but can also provide a little cash. The goal is to eliminate clutter so don’t price your items to high! A good rule of thumb is 10%-25% of retail.

    As you go from room to room de-cluttering, organize using three boxes: one for garage sale items, one for things to give away and one for trash. When you take a break from organizing, keep the three boxes set up in the utility room or garage so that when you find something laying around you can toss it in the appropriate box.

    Keep an extra large trash can set up in the house. You won’t have to empty the trash as often.

     

    CLEANING YOUR HOME TO SELL

    Clutter is visually disturbing to potential buyers. One of the biggest reasons houses don’t sell is they are cluttered and/or dirty.

    When you are trying to sell your house and you will be showing it to potential buyers, pack up things that you only use occasionally. Stack all your packed boxes in the garage or the corner of a room. This NOT the time to make your house comfortable for you, but attractive to sell.

    After you have de-cluttered, it is time to DEEP CLEAN.

    KITCHEN – Clean the sink, stove and refrigerator. Don’t forget to clean the fronts of your cabinets. Wipe fingerprints off of everything, including walls and light switch plates. Remove as much as you can from the counter tops. Make sure that the space under your kitchen sink is clean because everyone always checks the plumbing under the sink. Sweep, mop the floor and empty the trash.

    BEDROOMS – Make beds, pick up clothes, clear off dressers, end tables and other furniture. Dust, vacuum and make sure closets are uncluttered, neat and clean.

    BATHROOM – Put away (meaning in a box or drawer out of site) all bathroom items including makeup, shampoos, baby toys and toiletries. Clean the sink, tub and toilet. One trick I learned while cleaning houses professionally was to take a soft cloth and dry everything well, to prevent water spots. It is especially important to shine the metal fixtures. Clean under the sink, empty the trash and wipe off light switch plates. Mop the floor. As in the kitchen, the less clutter you have, the better. Keep one nice set of towels handy that you can put out when you are showing the house.

    LIVING ROOM – Remove all unnecessary items that are laying around on the furniture including toys, magazines and newspapers. Remove all pictures and accessories that are not adding to the decor of the room, either pack them or garage sale them. Dust (don’t forget to dust the pictures on the walls) and vacuum.

    GARAGE – Don’t overlook the garage! Make sure things are neatly placed and sweep the floor. Place all items in boxes if you can. Neatly stacked boxes give a better impression than piles of stuff.

    Continue going through each room using the same basic ideas.

    If your carpets are dirty be sure to either rent a carpet cleaner or have them professionally cleaned. Seeing all kinds of carpet stains from kids is a big turn off to potential buyers.

     

    SHOWING YOUR HOUSE

    Keep a basket in each room so that you can quickly throw things in it when you have to show your home. This is particularly useful if you have children and you usually have toys on the floor. Hide the basket with a nice blanket.

    Don’t leave open trash cans sitting around.

    Turn lights on in every room including the garage. This will make the house show better.

    In a potpourri pot or pan, simmer some cinnamon with either or all of the following: ginger, nutmeg, or cloves. It is best to stay away from strong scented candles with berry, apple, peach or other similar smells because some people find these scents overpowering and unpleasant. Most people do however like the smell of cinnamon.

     

    IF YOUR HOUSE IS VACANT

    If you are leaving your home and it will be shown vacant, here are a couple of ideas to help make it show better.

    Take a few small terra cotta pots and fill with 2 or 3 stems of silk geraniums. (Geraniums aren’t necessarily my favorite flower but the bright red color works great for this purpose). Place them in several different corners of the house. A couple on the kitchen counter, one on the back of the toilet, or counter in the bathroom, a corner of the living room or on the mantle of the fireplace.

    Place a bouquet of real looking silk flowers and small bowl of potpourri in your entryway for people to see when they first walk in. First impressions are very important.

    Don’t get carried away by making the house look like a florist shop. It takes just a couple of splashes of color here and there to really warm up an empty house.

    From Dig Out Of Debt

     

    photo by: the truth about

  • Pay Off My Car or Put the Money in Savings?

    Pay Off My Car or Put the Money in Savings?

    Mike from Manitoba, Canada asks:

    “I have been trying to live more simply, and would like to become debt free so that I will be more free to make changes that reflect my new goals in my life.

    Last year I bought a new car. At the time I was already thinking about maybe giving up my old car and going without. Then my best friend bought a new car and I got caught up in the old “New Car Fever”. I have enough money in Savings to pay it off. The interest on the loan from the dealer is 2.9%. Should I put my savings into investments, or pay off the loan?

    I really don’t want to be a slave to my job (which I am not really happy at) for five years just so I have money coming in to pay off the car. What do you think I should do? I could sell the car, but then I’d be losing 30% of my investment and that doesn’t make sense either. I would really appreciate your advice in this matter.”

    Hi Mike. There are two ways to look at this. First if you have money in savings and it’s making more than 2.9% then it’s silly to pay off the car when you could be earning more money with it in savings or investments. Most savings accounts earn a minimum of 4% so you would actually be earning money by keeping the car payment and putting the money into savings instead.

    But….. If you hate your job and want to quit and paying off the car would put you in a position to do that, then I would pay it off.

    You’re looking at all wrong. Right now if you have the money in savings to pay it off you aren’t working to pay for the car but you are working to build up your investments. If you hate your job that much, save up enough for 3-6 months to pay for your bills and then you can look for another job.

    Sounds like you are doing a wonderful job to me!

    Tawra

    From: Dig Out Of Debt

    photo by: kenwilcox

  • Always Weigh The Cost

    Always Weigh The Cost

    Always Weigh The Cost – Home Theater Heist
    By Michael Kellam

    To the reader: I wrote this story in 2000 to illustrate why it is important to weigh the cost of items before buying them. I know that some of the prices may not reflect today’s prices, but if you read the entire story, the thought process still applies.

    Have you ever thought that some particular purchase would save you money? I often hear people talk about how they can save money by purchasing something that will save them in other ways. A good example of this is a custom home theater system. Many of my movie buff friends, awed by snazzy displays in electronics stores have convinced themselves that there is virtually no cost in this type of purchase. After all, it is difficult to find a first run movie theater that sells tickets for less than $6.50 each and many are substantially more. Surely, they reason, at say $8.00 per ticket, they would save money purchasing this system that attempts to approximate the theater experience. Is this really the case? Let’s weigh the cost!

    One particular friend purchased his system in stages. First he purchased the large screen television for a cost of around $2000. Then he purchased a mid range stereo system including a DVD player for another $2000. For these prices, surely the stereo would include speakers, but says my friend, that is not the case. He spent another $1500 purchasing speakers and a sub woofer because he likes the bass. My friend was telling me how he got a great deal because he purchased several of the components at once. He asserted that he “saved” several hundred dollars on the equipment and that the entire system would pay for itself since he would no longer incur the cost of seeing theatrical releases.

    Considering his assertions, my curiosity got the best of my and I began crunching numbers. I added his equipment costs and figured that his system cost $5500.00. At $8.00 per movie, that means he would have to watch 688 films on his home theater before it would pay for itself. Not bad, you might think. He might see that many films in two years if he watched one every day. Of course, this assumes he is watching films that he would have seen in the theater but chose to view them on his home theater instead or else he wouldn’t be saving money. My friend found that even with his home theater, he did not want to give up theatrical movies all together, so maybe it would take a little bit longer for the system to pay for itself.

    What my friend never figured into his numbers was that he was going to have to have DVD’s to watch on this new system. At the purchase price for DVD’s, suddenly it would be cheaper for him to watch a movie in the theater. His system could never pay for itself. My friend decided that he would instead rent the DVD’s from the local video store, where DVD’s rent for about $4.00 each. If all of the DVD’s he watches are rented, he only saves $4.00 over the price of watching the film in a theater. This means that we have to do the math all over again. Now for the system to pay for itself (dividing the $5500.00 system by the $4.00 savings), my friend would have to watch 1375 movies for the system to pay for itself. He would have to watch at least one movie every day for close to four years before the system pays for itself. Now my friend is serious about movies, but lets face it, one movie every day is a lot of movies.

    My friend never considered that after a couple of years, the technology would be so much better that he would want a new one. Sure his system was great, but look what they have now. Still, the system has not paid for itself so he must press on. He never considered that if he had simply paid the eight bucks to see a theater movie every day that he would be $3000 ahead at this point and not in hock for this stupid home theater. Heck he could have gone to the theater AND bought popcorn every day!

    What makes it worse is that my friend bought his system at one of those electronics stores with the 1 year same as cash. How can you beat that – no interest! What he didn’t know was that if the balance isn’t paid off by the end of the year, that the company charges all of the interest back to the date of the purchase as if it was never “same as cash”. To add insult to injury, the credit company charges 29% interest on purchases. That means that in addition to the $5500.00 my friend paid, he also has to pay $1595 PER YEAR interest until it is paid off. If he only pays the minimum payment of $150 per month, it will take him 91 months (7 ½ years) to pay off the system. The total cost of the system is then $13647 including $8147 in interest. This means that including the $4.00 savings per movie, he will have to watch 3412 movies before the system pays for itself. That is a heck of a lot of movies. If my friend watched a movie every day, it would take him more than nine years for the system to pay for itself. In this case, my friend could have paid full price to watch movies every day at the theater for more than nine years. In fact, the system is not really paying for itself if my friend would not otherwise have actually paid the $8.00 every day for nine years to see that many films. It also does not take into consideration that most people see at least SOME movies in discount theaters. If my friend would have seen a film in a discount theater, he would actually be spending more for each movie he chose to view on his home theater.

    What I have not mentioned here is that my friend works a job that pays him $20,000 per year. If he pays cash for the system (NOT using a credit card), he will have had to work over three months for no other reason but to pay for his home theater. If he uses a credit card, he will have had to work for more than 8 months to pay for the system. Now, I don’t know about you, but if I could take 3-8 months off of work and still live at the same standard of living, I would rather do that than go to a job and work more for someone else so I can “save” money purchasing a home theater that might not pay even for itself for nine years.

    I am not saying that home theaters are bad. I am simply saying that you should carefully weigh the cost of something before you purchase it, considering all things that affect the price. I personally would not purchase such a system when I can see a film in glorious Technicolor on the big screen as it was meant to be seen (in 2.35:1 wide screen of course). If you feel that it is worth it to you to spend the money on such a system, it is your prerogative to spend it on whatever you wish to spend (keeping in mind that you must want it more than that other thing you can’t afford after you have bought it). So go enjoy the movie! And say “Hi” to the ticket taker for me!

    If you need help trying to figure out how to weigh the cost of things you’re considering buying, you might want to check out Dig out Of Debt and learn more about how to keep more of your money.