No Debt MBA

I love Jacob's post about living like a student over at ERE.  I too have some fond memories of my college days with activities that were near free but tons of fun.  One of the frustrating things about being in business school is that students here don't act or spend like students a lot of the time.  Most activities involve going out and spending money,  there are plenty of expensive trips abroad each weekend, and BMWs are much more common than hand me down Civics. I actually have more luck engaging in student-like gatherings such as game nights, potlucks, or movie nights with friends outside of business school who are gainfully employed full time.  What gives?

How do you feel about living like a student?  Can't get enough or can't get away fast enough?

Of course now that I'm on the record about how sometimes my desire for comfort saves me money, I find an article highlighting research about the opposite.  An article from Wired's Frontal Cortex column describes research that concludes that people are willing to spend more and take more risks when they're in a comfortable environment.  The Wynn casino is a great applied example of this.  After redesigning their casino around comfort rather than obfuscation, the Wynn broke profit records and is still very successful considering its age. In one study students who were exposed to relaxing images and music were willing to pay about 15% more for all sorts of items.

This study makes me wonder if stress is actually good for my budget (in a very short term, bottom line sense).  Certainly I'm not relaxed when I'm stressed, avoiding the 15% over valuation, but I find that when I'm stressed I seek control on any front I can exert it, spending being one that is particularly a crutch for me.  I believe I do spend less when I'm stressed and in reciprocal, would spend more when I'm relaxed.  However, I don't know the extent to which this is a problem for me since I would say I naturally err on the side of under spending.  I would say my greater problem by far is a need for tight control of my spending when stressed.

Do you spend more when you're relaxed?  Less when you're stressed?  Do you think it should be an area of concern?

I am on a mini-crusade to toughen up a bit before summer ends.  This may include some extra strength training, running or other conditioning, but more importantly it's a mental exercise.  I want to become habitually stronger in my will power.  Our expenses and stress will tend to rise as I'm starting school this fall for a variety of reasons.  I'll be busy with school, my SO's projects at work continue to ramp up, and historically we tend to spend more as we go through the winter to combat the dreary and the cold.  I want to fight that trend this year, giving me some buffer and tenacity for next year which will probably be even busier.  To do so I need to be tougher than I am.

When you’re tough the stuff that everyone else complains about becomes a non-issue.  Being more stoic and equipped with a just do it attitude you can accomplish more with the same money.  It is focused around identifying the practical goal of the activity and removing the extra costs or work that don’t add value to the goal.

For example, if you need to get to a doctor’s appointment transportation is the goal and walking or biking to accomplish it saves transit money, gas or bus fare.  You forgo the luxury of sitting idle during your trip.  If you’re tough you'll continue to walk or bike even when it's hot, cold, raining, snowing, or humid out.  And when it’s hot or cold out you won’t immediately jump to cranking the thermostat up or down; you’ll stick it out or make a moderate adjustment.

Dinner may not have turned out the greatest, but the goal is to feed yourself and the food is still nutritious fuel even if it’s a bit burnt or seasoned weird or mushy so you eat it anyway and learn from your mistakes instead of ordering delivery.  After all the food is here and already made.  When you do order pizza you go pick it up yourself, you’re not too busy, harried, or tired to do it, instead of paying the delivery fee.  If delivery is free, take it, of course.

There are also non-monetary benefits to developing a thicker skin and determined mindset.  You can also accomplish more than you otherwise would.  When you can tell yourself, "no, I will sit down and write a blog post for tomorrow instead of watching Hulu or the like" you are using your time more productively.  (This, of course, is never something I struggle with...)  Similarly, your house will be cleaner, your car neater, and life will flow more smoothly.  You will not spend 20 minutes procrastinating over taking out the trash instead of mindlessly reading the internet.  It will get done and then you can move on.  Clutter and unwashed dishes adds significantly to my baseline stress level so over the past couple months I have consciously worked to become better at washing all dishes immediately after the meal is done.  Including breakfast.  It's quicker with the layout of our kitchen, I feel accomplished and I'm less stressed later.

You'll also look better when you're tougher.  When I visited my business school of choice I noticed that the current students were decidedly heavier than the prospective ones.  I'm betting that I'll actually be in better shape a year from now if I keep up my bike/walk to campus and for errands and keep disciplined enough to maintain cooking from scratch every night.  But beyond cutting a nice figure, the extra weight can cost a bundle.

Sure this isn't a magical transformation that happens over night, but there is a distinct sliding scale of "can-do" in life and inching up that scale has incremental benefits that can make the attitude self-reinforcing. 

Gift giving to promote frugality may not be the sexiest wish list and may be met with some puzzled stares, but for my birthday I'd love to get something totally practical that helped me achieve my financial goals.  (NB: I am so not normal in this regard, your gift recipients may vary).  I hate gifts for the sake of meeting a social obligation and impractical gifts in general.  Cut flowers, gift certificates to stores I never go to like Bed, Bath, and Beyond, knickknacks or a T-shirt from your latest vacation are all things I would rather do without.  I'd rather get no gift at all and save everyone the trouble than get something I don't need.

I really want practical gifts.  Even better would be gifts that save me money.  These would truly be gifts that kept on giving.  So what would be on my ultimate money saving gift wish list?

• Really good tupperware to make brown bagging easier and less messy
• Bike gear like lights and a rack to help me commute and run errands without my car
• A good, energy efficient slow or pressure cooker, compact please to fit my small home
• A kill-a-watt electricity meter might never be cost effective if we bought it ourselves, but I'd love to get it as a gift
• New camping gear to promote frugal vacations 
• An oil spritzer to reduce mess and cut down on our use of olive oil
• Money is always a good stand by 
• Socks - I hate shopping and wear through socks like crazy.  Please solve my problem for me. 
• Consumables like wine, beer, excellent cheese and other substances I can enjoy and avoid eating out, but stop taking up room quickly

Would you want to find any of these items under your Christmas tree?  What items would you like to get that would help you slash your budget? Do you know anyone who would welcome gifts that supported frugality?

It's Friday, thank goodness, and I've already checked out for the weekend so here's some lovely fluff for you.  I bring you a list of 25 excellent summer activities that are highly affordable if you do it right ;).  Summer is winding down so it's time to make sure you get out and enjoy it!  I love summer, but I'm on a budget, shocker I know, so here are some cheap ideas I brainstormed for our weekend.  It is my goal to indulge in at least five of these this weekend for some lazy and easy summer fun:

1. Go fishing 
2. Take a walk
3. Read a book in the shade - from the library
4. Go to the dog park
5. Play some frisbee, catch, kickball, or soccer
6. Look for free events near you like concerts, out door movies, Shakespeare outdoors etc
7. Grill
8. Take pictures of all the fun you're having
9. Go for a bike ride
10. Take a trip to a you-pick farm
11. Tackle some house projects that have been on the wish list
12. Plant a garden
13. Do some yoga
14. Cook some new recipes
15. Hang out by the pool
16. Go hiking 
17. Take the dog for a walk
18. Visit a new state or local park
19. Make a corn hole or horseshoes game for your back yard
20. Have you tried bocce?
21. Watch the sunset
22. Visit the beach
23. Enjoy summer's in season produce
24. Eat some ice cream (we recently made ice cream sandwiches mmmm....)
25. Nap in the sun
    

When J Money at Budgets are Sexy posted one of his reader comments about being so strapped for cash while paying for school that practically all he ate for three months was "50 lbs of pinto beans and 40 lbs of rice and some soy sauce" and that "When the loose change I would find would be enough to buy a packet of Ramen it was a day of pure heaven."  I just wondered where is his family?  What about his friends?  He says he came from a working poor family with two teachers, but even $5 a month would have made a huge difference in his diet.  My parents have always been able and willing to provide that kind of assistance and much, much more.  Similarly, if I were working as hard and eating as little as Tim describes my extended family would happily chip in the $20 a month that would get me to work or class and bring some veggies into my diet and I would do the same for them. 

When my car broke down on my way back to college my senior year my parents came and picked me up so I wouldn't have to find, get to, and pay for a hotel until my car was fixed.  It was especially good since my car didn't end up leaving the shop until five days later at which point my father drove me back to pick it up and continue my drive to school.

My SO and I have, very fortunately, never been unemployed and a steady stream of paychecks has been a big help in our financial success.  Our support systems through family and friends have been very key in landing many of our jobs.  My previous job I discovered through the advice of a friend.  He suggested a niche field I had never heard of, but my experience qualified me for and sent my resume to the manager of hiring at a company he'd worked with.  That landed me a fascinating new job that paid me 30% more than my previous one.

When my SO went looking for a job a year ago another friend pulled through with a reference to a person at a sought-after company whose HR department was known to be a resume black hole.  My SO landed the job but that friend was key in getting the interview.  When my SO traveled to the city of the new job on short notice for an interview we looked to friends for free housing for the night before and after. We've returned the same favors for different friends and try to help out in other areas. 

I wouldn't hesitate to help out a friend who was in that student's situation.  I might not give them money, but I would certainly visit them potluck-style and leave the leftovers or have them over frequently if transportation wasn't an issue.  Carpooling where I pick up the tab would also be something I'd offer if appropriate.  That being said, I never have done anything like this either because none of my friends or family have been in such dire straits or I haven't been aware of their situation.  Now I'm wondering if any of my friends are in this situation but have too much pride to let anyone know, just like the original commenter.

Do you have a support network?  Who's in it and when has it helped you out?  Have you come to a friend or family member's aid?

Though it's not possible for everyone (50 mile commutes I'm looking at you, move closer to work! ;) ) I'm taking a stand today and advocating that you ditch the car, skip the train, and walk to work.  Okay, biking to work would be just as good.  But no matter your human powered form of transportation (Razor scooter anyone?), try it!  

According to the Nationwide Personal Transportation Survey, 25 percent of all trips are made within a mile of the home, 40 percent of all trips are within two miles of the home, and 50 percent of the working population commutes five miles or less to work. Yet more than 82 percent of trips five miles or less are made by personal motor vehicle.  League of American Bicyclists

Those statistics are pretty sad.  It means that there are plenty of people out there who could bike or walk more than they currently do.  I know you think in your area it'll be tough because of traffic, weather, you name it, but everyone thinks that.  At least look into it.  It may be easier than you think.

Google Maps now provides biking directions in addition to directions for public transit, walking and good ol' driving.  There are also a ton of resources out there for people looking to start bike commuting.  Try googling "bike route" and your city's name or other quick searches.  In my area you can find resources that detail bike lines, bike paths and identify roads with safer and slower traffic.  I wouldn't have thought of Atlanta as a bike friendly city, for example, but the resources at the Atlanta Bicycle Coalition tell a different story.  What's available in your town?

Here are four big reasons you should human power your way to work instead of your normal commute (for those of you who already walk, bike, scooter, etc nicely done!):

1. Walking is cheap.  No gas money, paying for parking passes, train tickets, tolls, car maintenance or subway fare.  My guess is that practical shoes come in at pennies per mile. Biking has a higher set up cost if you don't already own a bike, but you can usually find a decent bike used for about $100 and buy lights, fenders, a lock and a rack for another $100 or so.  Don't forget a helmet!  Then, aside from new tubes for flats, you're set for years.  If you start walking or biking to work you might also be able to ditch your gym membership.  How much do you actually use it anyway?  Plus on my walk to work I typically pick up more in change than my blog makes in Adsense revenue.  (Okay that isn't big money, but neither is blogging...)
2. Walking or biking is good for you.  Given that our nation has an obesity epidemic, I'm fairly confident that a little extra exercise would help most of you out.  Call it multi-tasking since everyone loves that - you're commuting and exercising. The CDC recommends 2.5 hours of moderate exercise like brisk walking per week.  Sounds like your 15 minute bike ride to work would hit that each week with only a little sweat.  For those of you with potentially longer walking/biking commutes just remember that the 2.5 hours is the minimum.  The CDC recommends increasing your exercise to five hours per week for greater health benefits and says: "If you go beyond 300 minutes a week of moderate-intensity activity, or 150 minutes a week of vigorous-intensity activity, you'll gain even more health benefits." Personally, I've found that when exercise is built into my routine I get way more of it so walking to work has been an easy way for me to stay active and keep my weight just fine. 
3. Biking to work is good for the environment.  Halting your daily drive to work and swapping it for a pedal-powered work out or a leisurely, relaxing walk is going to make a much bigger difference in your carbon footprint than using reusable bags.  PS - It's even better than driving a Prius to work.  Lord that over the Jonses of the holier than thou environmental group near you.
4. Your human powered commute will make you feel good.   You'll feel good about saving money.  You'll feel even better about your health.  Plus the environmental benefits are a nice cherry on top.  I've also found that there's just something fundamentally good about taking a walk.  Maybe it's the endorphins, but even if I leave work stressed or angry, by the time I'm halfway through my walk home I'm feeling much better and by the time I get home I'm practically chipper.  It's guaranteed me time during my day or a chance to call family while I walk.

 So, tell me, how many of you walk or bike to work?  How many of you are going to try?  Work at home folks.... we're all jealous, but do you walk or bike for errands?

How can anyone argue that the public library system isn't one of the best benefits freely available to everyone?  Even in the dinky small town we used to live in where our county only had one fairly small library building and a book mobile I still could consistently find something there that was interesting to read.  I always love going into the library and knowing that I could have just about any book in there and read it without regard to my budget or having to worry if it was exactly the right book.  If it wasn't what I needed I could just return it and try another one.

I'm currently career shopping, looking for a potential career path out of business school.  I have a couple options in mind that I might be a good fit for and would be interested in pursuing but I'm trying to learn about the array of options that are typically available to students graduating from my school.  Internet has been sketchy off and on recently at our place so I decided to go for some good old fashioned books.

I went online to our library system's website.  Found about half a dozen books that seemed relevant and marked them to be transferred and held for me at our local branch.  Three days later I get an email to tell me half of them have already shown up.  I walk over to the library with my SO after work and pick the books up.  In and out in about two minutes! One of the three books was really useful but the other books were only so-so.  I'm satisfied since I can renew the useful one to reread sections of and return the other two.  In a few more days I'll have found more relevant books that I'll again check out for free.

Right now I'm using our library for career research, but here are some other areas where I've used library resources to save money or gain knowledge in the past:

• Learning about investing
• Standardized test prep
• Cooking ideas
• Free entertainment through fiction books or movie rentals
• How-to references for various projects
• Information on starting a small business
• Tax advice for the self employed
• Free internet access when ours was out
• Hiking guides and trip research

My favorite part?  If I just need a resource about a particular topic or something entertaining to watch or read, I can often have a book that meets my needs in hand faster from the library than from Amazon.  Really, I can have it in as little as half an hour if I have the time and the library is open. 

Do you patronize your local library?  What resources do you use?

Frugality can seem so down and dour.  How can I cut expenses? Do I really need that?  What else can I penny pinch?  So let me fill you in on some things I'm excited about and their relative frugality:

• Having my bike all fixed up and kitted out for commuting this fall - I'm very excited to have this done a little bit before classes start so I have some time to do some fun riding too.  Biking is so much faster than walking and I'm excited to explore our area in a new way.  Yeah, my bike's been out of commission for a while.
• Frugal? - Commuting by bike yes.  The $100 I've spent on gear in the last several weeks, maybe, maybe not.  Cheap as I could make it while still buying stuff that will last and it should pay for itself through transportation savings within one to two months of commuting by bike.
• One week of vacation - I have one blissful week of unscheduled vacation that I'm taking off before school starts. My SO and I arranged to take the same week off so we'll get some quality time in relaxing before business school busyness sets in.
• Frugal? - We're staying relatively local and definitely cheap so the vacation won't be expensive, but I won't be getting paid during that week either.  So as frugal as this vacation could be and still serve its purpose.
•  Picking out a few fiction books for vacation - I recently rediscovered our local library (it's been a busy summer!) and am looking forward to picking out some books to read that don't have to serve any purpose and having time to read them or at least use them to shield my face from the sun while I nap.
• Frugal? - Definitely!
• Starting business school - I'm really excited to start classes and dig in and learn something new.  Does that make me a total dork?  I'm also looking forward to meeting all the really sweet people who are going to be my peers and network for the next two years and beyond.
• Frugal? - Is spending six-figures on a degree frugal?  The first semester is a sunk cost so I might as well make the most of it ;)
• Enjoying the remainder of summer - We have a picnic, outdoor theater, outdoor movie and a museum visit on our agenda in the coming weeks plus some long walks to enjoy the weather and the time we have now. I'm also trying to plan a fun outing by bike to celebrate being done with the bike work!
• Frugal? - Super! It's all free!  Now I just have to make time for all of it...

What are you looking forward to right now?  Is it frugal?

There's plenty of talk about how much it costs to put on a wedding (hint: think five figures) and how the bridal/wedding industry is out of control with extra services, expenses and markups.  But I'm not getting married this summer so let's talk about how expensive it is to be a guest at one of these weddings.  Now don't get me wrong, it's great fun and a privilege to be invited to and attend the wedding of good friends or family tying the knot, but it's pricey! Call me cheap, sure, but think about the total cost:

• Card - $5
• Clothes - $0-$200 depending on what's in your wardrobe
• Gift - $50-$150 is what I'm seeing these days
• Wrapping for the gift - $10
• Hotel - $100-$300 per night if it's not local
• Transportation $20-$1000 plane tickets for a destination wedding or a cab/parking for a local one

So you're looking at a minimum of $75 if you're cheap and your hosts are too to $2,000 or more.  We attended a wedding last weekend with a total cost to us of $375.  Ouch! That's half a month's rent for us! 

Have you been to a wedding this summer?  How much did it cost you?  Are you paying for a wedding?  Tell me that my costs are miniscule or how you're saving your guests money!

As I've mentioned before, I'm on a tight budget trying to pay for my MBA in cash.  However, I don't usually feel deprived on my budget because all my basic needs are met and I have a little wiggle room for small indulgences each week.  I use that wiggle room to hit some of the occasional cravings I have and to feel self indulgent while still keeping my budget intact.  I find if I'm proactive with this and am a little looser with small purchases I never find myself with a hundred dollar or more spending spree.  Here are some of my luxuries:

• Small plates - We turn clearing out the fridge into something fun instead of dreaded by making a few small plates out of the leftovers.  Artfully presented and with a little extra sprucing up it's not a problem to finish what's left.
• Fresh herbs - We lucked out with a neighbor who loves to garden but can't keep up with the enormous container garden she's created with herbs.  So we've been welcomed to take a few snips here and there just to keep things tidy.  Fresh herbs can make any meal feel a lot nicer or fancier than it might otherwise feel.
• Call your food fancy names - I don't do this literally.  I would have had a hard time keeping a straight telling my SO that last night's dinner was going to be "herb encrusted roasted eggplant over a bed of fettuccine with an olive oil garlic sauce" since it was eggplant we got as a steal but was going bad in our fridge that I threw on the grill, neglected to put enough marinade on, and later added whatever looked good in the herb garden, garlic powder, and extra olive oil with on top of the pasta we had on hand.  But it was pretty good and it's better than many meals we've had out.  I try to give myself credit where credit is due and feel good about what I put on the table so sometimes my SO and I will come up with the restaurant name for what we've just made.  It's entertaining and reminds us that we really do eat well.
• Buying what I want - On occasion I make sure to satisfy a craving.  Most nights when I want dessert I'll ignore the feeling, but sometimes I'll go out to a store near us which sells small chocolates for $.25 each and buy two.  The walk is good for me and the serving size makes it hard to overindulge in cost or consumption.  
• A mug of something hot - Coffee with milk or tea with sugar and mint feels like manna from heaven on a cold winter day or when you're a little sleep deprived. Giving myself the space to sip from a mug without stress or distraction until I'm done feels very civilized and wealthy.  I actually don't get the same level of calm or enjoyment at a coffee shop that I do at home since Starbucks and the like tend to be busy, loud, and have terrible taste in music. 
• Doing something cliche - A typical dinner and a movie date can run you over $50 after tickets and without even ordering wine with dinner.  Instead, we opt for romantic cliches like long walks holding hands, picnics in the park, watching the sun set over the water, or splitting an ice cream cone together. 
• Trying something new - We found pluots on sale 8 for $1 and bought them to have something new to try.  (For those of you not in the know, a pluot is a plum apricot hybrid) They replaced our usual apple, orange, banana or strawberry mix for the week and helped make things feel fresh.
• Letting something go to waste - This isn't the best advice, but being able to just hand wave and let something go to waste without worrying makes me feel like Marie Antoinette, completely isolated from financial reality.  Those pluots we bought?  They were okay, but after six I was sick of them.  When I found the other two in the back of the fridge a week later into the trash they went without regret.  At $.25, it was a small price to pay to feel rich.
• Being lazy - Cutting myself a break in other areas helps my overall stress level and makes me feel self indulgent without spending any money.  So if I don't want to do dishes one night and feel worn out, I won't do dishes.  They can wait until the morning.  Like everything else this isn't a regular habit but an occasional indulgence.  Usually in the morning after a good night's sleep I'll tackle them without a problem. Plus I've found that being lazy can save me money.

What are some of your frugal indulgences?

What would you do if $1million fell into your lap?  An inheritance from a far flung relative, won the lottery,  or something else caused the money to magically appear in your life.  There plenty of stories of misery from lottery winners but let's pretend that life's all peaches and roses and you can spend it how you wish.

Realistically I'd do something boring and responsible like invest it in low-risk bonds like TIPS or something, diversify, and live off the proceeds.  Even at 2% per year I'd be happy as a clam living off of half and leaving the rest to compound.  We have a $25 grocery budget, I think I can manage a nice lifestyle for two on the interest.

But that's no fun to write about at the moment.  So let's say I had to spend it all in one year.  That's more fun.

How would I blow $1,000,000?  Actually I have a much easier time spending large sums of money than small ones.  With a million dollars in the bank and needing to clear it all out in a year I'd first shell out for a nice sail boat.  With a six figure budget I'd be able to buy one that was both gorgeous and practical, a boat that could take me anywhere.  I'd buy something like this:


That's a 50' Hinckley yawl priced at a cool $395,000.  I'd buy one of those beauties from the '70s when they were solid fiberglass rocks.   I'd be picky and look for a gem with a navy blue hull and teak interior (I don't like the interior of the one above) who'd been excellently maintained.

Even $1 million wouldn't be enough to buy one new, but that's okay.  I'd use the rest of the money to buy the gear and and do any maintenance or refurb needed to take her across oceans and live aboard.  I'd then sail around the world taking my sweet time for as long as the money lasted. If I could keep half of it and only spend half on the boat, I could sail for practically forever though maintaining a boat of that size in excellent condition can take a pretty penny.

I'd sail around the US and through the Panama canal, hop all the islands in the Caribbean  then move on the the Med and Europe or Africa.  Friends and family could come visit and stay with us as we sailed around their country of choice.  Visiting everywhere accessible by boat could take the rest of my lifetime so I'd consider my million well spent.

What would you do?

This is a Yakezie meme.  Check out Yes, I am Cheap on Friday for a round-up of all the posts. 

For all the talk of extreme couponing, frugalistas, and the new frugality these days and in the wake of the recession, it is still pretty unacceptable in some circles to be watching your wallet more than everyone else.  If you're in the land of conspicuous consumption and, for whatever reason, need to blend in and keep up, then you need to find inconspicuous savings.

So to still save and avoid the questions, notice or even derision of your acquaintances or colleagues you might want to find invisible ways to save.  Areas you can cut in your budget and no one but you and your piggy bank knows the difference.  So if you need to keep your frugality under the radar here are a few good ways to put it to use without anyone the wiser:

1. Car insurance - Shop around for the best rate and raise your deductible to what you can afford to self insure. 
2. Cell phone plans - There may still be pressure to upgrade to a smart phone but no one except you has to know how much data or text messages you use.  If you don't really use your phone or need to find savings, cut your data plan to the minimum.  Of course, you'll need to monitor your usage since going over can be pricey, but most carriers have phone numbers or websites that make it easy to track.
3. Buy some of your groceries generic - If you're the only one who sees them then why do brand names matter?
4. Use gift cards for stores you regularly shop at and buy them at a discount online - The fact that your gift cards all cost you 80% of face value can stay between you and me.  This can discount your keep up with the Jonses wardrobe.
5. Use coupons and sales when you shop alone - How often do friends or co-workers join you as you shop for toiletries or groceries?  Go ahead and penny pinch to your heart's content here.
6. Avoid bank fees, paying interest and other invisible money pits - When money leaves your hands it should be bringing you value.  Interest on debt, parking tickets, overdraft fees and so on don't do this.  While you're at it, make sure your investments are in low fee accounts and vehicles.
7. Negotiate your bills - Call Comcast, Verizon, your power company and who ever else you have regular bills with and negotiate.  Politely ask for better deals or to have advertised deals matched.   How much you pay for your DirectTV is irrelevant when you have the guys over to watch ESPN 10 1/2.
8. Thrift store or vintage shops - The fashionista movement has made this more acceptable, but if you can find quality brands of barely used clothes at a fraction of the price you might just save some money.
9. Mind your taxes - Use a 401k, FSA, HSA, or 529 accounts and every available deduction and credit to your advantage.  Plan ahead a bit and minimize your tax burden.  When tax time comes around and everyone complains, keep your savings mum and try to sympathize.

 Of course even if you aren't in a situation where you need to hide your frugal, you can still use these strategies.  I use them and I have the fabulous and true excuse of a looming tuition bill to get out of pricey outings or conspicuous consumption.

What's your experience? Do you keep your interest in personal finance or your thrifty habits under wraps?

I loved this quote from an LA Times article about a man selling bean pies on a street corner:

He's learned to always keep an eye out for oncoming traffic, even as he watches for drivers in old vehicles.

Beat-up cars mean good customers. "Because they got no car notes, the car is paid off," Muhammad said. "The ones in the shiny new cars, they're sweating because they have the car notes, they got no extra money. It's economics, man."

I'd never heard of bean pies before, but I love that this guy is reaffirming the lessons of books like The Millionaire Next Door through his personal experience, not because he's read it in a book.  

The Wall Street Journal reported on a survey recently that measures how the wealthy define being wealthy.  Called "Top Five Signs That You're Wealthy" (does anyone else find that title ridiculous?) the article covers the five indicators that people investible assets over $3 million called out to define someone as "wealthy".  Those five signs boiled down to a certain amount in the bank or enough money to buy whatever I want and do whatever I want, to make $1.6 million seem like not a lot of money, or to have minions. 

I certainly aspire to having enough money to pursue my passions or retire, one of their definitions, and I would say that I already have enough money to buy most of what I want on a daily basis.  I don't imagine that even if I had huge amounts of money I would buy a lot more than I do now, though I do imagine I'd spend more to get exactly the right item and buy for really good quality. I hope I never think that a salary of $1.6 million a year is "not a lot of money" unless there is hyper inflation since that is a ridiculous salary.  As for the "magic number" in the bank since we're only talking about investible assets I'd probably say around $2 million in the bank would make me feel quite wealthy and would accomplish the buying and pursuing a passion metrics.


The survey also indicated that most of these people considered their money to be an important or somewhat important measure of their self worth which I found a bit sad.  However, it does make sense since those who consider money to be important to them are more likely to acquire it.  So in a sense the survey group self-selected for the trait of measuring their own value through their bank balances.  Around 70% of all respondents said their family, friends and children were most important to them, though that sentiment isn't reflected in their definition of wealth.

So I'm going to pass along the Wall Street Journal's question to you.  "Can you finish the sentence 'You know you’re wealthy when…'?"

There's a stereotype about how graduate students live.  Eating nothing but ramen, riding their bikes everywhere, and generally being as cheap as possible.  I've certainly heard stories of my own parents' graduate school days of living on as little as possible featuring cold apartments in the winter, junky old cars, and buying everything they owned from thrift stores or getting it for free.  As I've mentioned before, I'll probably be adhering way more closely to this sort of lifestyle than the stereotype of an MBA grad while I'm in school (and let's be honest, probably well beyond that too).

But it seems to me that this fabled grad student lifestyle might be going the way of the dodo.  I have a lot of friends in graduate schools that live really comfortably with regular trips to bars and restaurants, a fair amount of travel, nice weddings, newer cars, and more.  This is a lot more expensive than the stereotypical budget, but I'm fairly certain that stipends for PhD's have barely kept up with inflation and I know that the cost of a professional degree has grown faster than inflation.  So what's going on here?  Are parents bankrolling a professional lifestyle for their pre-professional children? Are students bankrolling their current consumption levels with student loans?  I think that for professional school students it's mostly the latter and for other graduate school students it's more the former.

But business school students are sort of a special case here.  An MBA is one of the few degrees where it is nearly requisite to have held a full time job before attending.  So business school students have acclimated to having a certain amount of income and liberty to spend for their lifestyles.  It's also possible that they will have substantial savings to bankroll their way through school or that an employer will bankroll the experience for them.  In 2007-2008 about 40% of MBA students received employer tuition assistance, with an average benefit of $6,271.10 according to FinAid.  So in most cases employers only bankroll a small portion of the cost of an MBA, not enough to allow the student to support a six-figure lifestyle. So putting savings aside, MBA students are largely using student loans to finance their lifestyles in anticipation of a job after graduation that will easily cover their loan payments, lifestyle and more.

What happened to the idea that you could work your way through school? Heck, what happened to living cheap while you were a student?  I can't help looking at Pepsi's Indra Nooyi's description of working nights for grocery money and thinking that would a pretty uncommon sight on campuses these days.  Maybe it was uncommon in her day too, I don't know.  All I'm realizing is that I was raised in a family of scientists expecting a graduate school experience very similar to my parents' and an MBA is so not the same. 

What do you think?  Are graduate students less able to work their way through school since costs have risen faster than wages so they just finance it all?  Is the stereotypical graduate student lifestyle a thing of the past?

We used to live in a small town.  Well it was big for the area, nothing bigger in the county, but still only 8,000 people.  I've lived in several major cities and always hear people knock small town or rural life mostly for being boring and uncultured.  But I have to say I loved living in our small town more than pretty much anywhere else I've lived.  Here are some of the reasons why:

• You can have unique ideas.  Think about it.  You have a one in a million idea of going to a gorgeous park for a romantic picnic alone to watch the sunset.  You live in a city of five million.  Your one in a million idea probably occurred to four other people who are also bringing their SOs expecting a romantic picnic alone.  Instead you have a party of ten all trying to do the same thing.  In a small town you can actually be the only person trying to do something.  This is great if you want to go freegan, pick those wild black berries you spotted down the road, save money on romantic dinners by doing picnics or anything else where less competition saves you money or makes an activity more enjoyable.
• Things are close.  All of our friends except one were within easy walking distance when we lived in our small town.  Now we don't live within walking distance of any of our friends though we are slowly making friends with our neighbors.  It was also an easy walk to downtown shops, museums, and the farmer's market.
• Things are cheap.  This is where some small towns really shine.  Our apartment in our small town cost a fraction of what a comparable apartment would cost in our current location.  We are paying easily three times as much in rent as we would have been had we stayed in the small town.  Ouch.  To add insult to injury everything else also seems to cost more as well from restaurants and basic groceries to services and fees.  Did I mention we had to leave behind $1 drafts and a beloved $2 Guinness draft when we moved from our small town?
• You spend less.  With fewer shops to tempt me I definitely spent less on shopping than I otherwise would have.  Similarly there are fewer restaurants and bars so cooking at home, hosting potlucks, or dinner parties all seem more viable as a way to interject variety in your social life. 
• Events are free.  Our town regularly threw parades, festivals, concerts and the like and the majority of the time these events were completely free.  From historic tours to art galleries, museums, music, and the outdoors small towns have more going on than most people think and they don't charge the exorbitant prices a lot of cities do since demand is softer.  Sure you won't see a Picasso exhibit or hear the hottest bands, but many people just want to get out and be exposed to new music, art and ideas in a social atmosphere which is completely possible.

Those are just the financial reasons I loved living in a small town.  There are many lifestyle reasons as well.  Of course there are financial reasons against living in a small town like fewer jobs and potentially a weaker economy. 

What do you think of small town living?

Business school is supposed to be pretty busy with classes, speakers, clubs, networking, researching companies, socializing etc.  We also don't exactly lead stress-free lives now.  But regardless of how full my calendar gets, how many things I need to get done, or the social outings scheduled for the night I will make time to cook. These days nearly every meal I eat is prepared by me or my SO at home.  We eat out for about one meal a week and might attend a potluck for another. I expect this consistency to waver a bit while I'm in school, but to still mostly maintain home cooked meals as my primary food source.  Here's some reasons why:

1. It saves money.  Shocker here, right?  Generally speaking, meals are $1 or less when we tupperware it or prepare it at home. It's hard to beat that.
2.  It keeps me at a healthy weight.  I gained the freshman five, sophomore seven, junior five, and senior eight while in college.  That's 25lbs.  Once I graduated and starting cooking for myself instead of eating in a cafeteria all the weight just sort of disappeared naturally and I felt way better than before. I refuse to repeat this experience with business school.  Plus, on my last visit to campus I got the definite sense that students are a little bit porkier than prospective students.  Not surprising, but I don't want that to be to me.
3. I eat healthier when I cook.  My home cooked meals have fewer calories than take out or cafeteria fare which keeps my weight under control, but when I cook I also incorporate healthier ingredients.  Our meals have more vegetables and whole grains and less cheese, meat, or partially hydrogenated oils than nearly anything you can buy for a reasonable price. 
4. It gives me important time to connect with my SO.  Unfortunately business school is likely going to mean less time spent with my significant other.  What little time we will have we will have to make the most of.  Cooking accomplishes all of these other goals, we get fed, and it's something we really enjoy doing together.
5. Cooking is excellent decompression time.  I'm thinking that it's precisely because my schedule will be so full during business school that I should take extra effort to make time for cooking.  Cooking relaxes me and allows me to transition from work to home.
6. My salary coming out of business school may be higher.  People at a healthy weight make more money and I fully expect this to hold true graduating from business school.  One would also expect confident, healthy people to perform better in interviews.  There have been several studies linking weight gain to lower incomes, job prestige and accumulation of wealth.  For example, one found a 1% increase in BMI corresponded with a 0.6% reduction in income and a 0.4% reduction in job prestige.  I don't like those trends.  That's about $700 per year lost on a newly minted MBA's salary for only a pound of gained weight.  If I repeated my undergrad weight gain I'd be losing out on over $10,000 in salary and face an appreciable drop in job prestige.  No thank you.

Making time to cook is an investment in my long term health and well being.  It also helps my stress levels, self confidence and relationship with my significant other. Finally, there are major financial savings from my cooking habit.  In this light, the question almost becomes why wouldn't I cook.

Do you cook at home?

Smart Money has an interesting article up about buying more happiness.  The article highlights eight swaps or free ways to use your money better to improve you happiness most of which are profiled in a research study from academic researchers. I feel like this sort of information is applicable to everyone, who doesn't want to be happier? But I'm especially interested since I'm looking at a tightened budget over the next few years but want to maintain (or improve!) my current level of happiness. Here's a synopsis and my comments:

1. Experiences not stuff - "Subjects overwhelmingly reported that they derived more happiness from things they did than things they own."  SM specifically recommends a vacation over a new car.  This one has been all over the news and blogs recently, fueled by this type of research and especially focuses on travel. I'm no travel fiend but I do appreciate the happy memories of a day at the beach or learning something new with my SO. 
2. Help others - Altruism and volunteering are classic feel-good activities that are no surprise here but are still often overlooked.
3. Focus on small purchases -I completely agree with this approach.  Two small 15 cent chocolates from the store down the street can make me very happy but a new outfit at $150 does not make me a thousand times happier.  Similarly a new car would not make me 100,000 times happier.  I definitely try to think as small as possible when trying to buy some happiness for myself and almost always I don't feel deprived, I feel really excited about my treat.
4. Go easy on insurance - This fails to really look at the potential happiness downside.  While people may adapt just as easily to negative things as positive ones as the article claims, I am skeptical when it comes to losing your home, health or other major financial catastrophe.  However, getting rid of the laptop warranty as in their example seems pretty reasonable especially if you can self insure.
5.  Save and pay cash - Another tactic that I employ and agree with.  Anticipation is really at least half the fun and paying cash means happiness now won't reduce happiness later. Similarly, reliving what made you happy is another free way to get more out of your purchase.  SO and I often take these walks down memory lane, "Do you remember that time we...." and it never fails to bring a smile to my face.
6. Think it through - Basically this approach was to think through the down sides before assuming a purchase would make you happy.  This only seems like the normal, prudent thing to do before any purchase, but is especially important for a highly anticipated one.
7. Don't shop too carefully - Allowing what should have been a happy moment to become a stressful one can often be a result of trying to hard to optimize the experience or purchase. I wrestle with this sometimes and striking a balance, while sometimes difficult, is crucial to happiness.
8. Repeat - SM wisely points out that we all have a track record of what makes us happy and that we can use that data to be happier in the future. Knowing yourself is a big advantage and one I'm working on.

How do you buy happiness?