This past year, my husband and I have been making a diligent effort to eat at home more, be more frugal and careful with our extraneous spending, and cut back on frivolous wants. I’m seeing progress in our overall budget. According to my QuickBook’s expense and income bar graph, we’ve spent much less this year than last, even though we didn’t make as much money. We’re moving in the right direction because of these following strategies:

• Grocery shopping at the 99-cent store. We are able to purchase soft drinks, Gatorade, and some bread and canned items for much less than at the grocery store.
• Reducing our driving. Recently, with the colder weather, I’ve been a little lazy about riding my bike, however I am still saving some gas by riding a few days a week to run errands or go to school or work.
• Reducing our wants. This is the first year that my husband has made an effort to reduce his wants;  he hasn’t gone out and purchased a new cell phone, he hasn’t wanted to purchase any electronics this year, and he has put his flat-panel television screen on hold indefinitely.

However, this weekend alone we spent over $50 on eating out, and the food wasn’t even that great. Actually, the food was pretty crappy! I analyzed how this happened by asking myself why we chose to eat out and consume greasy, horribly prepared food. The answer was simple: my husband, who works at home, wanted to get out of the house. He was feeling cooped up.  Our solution to this problem was to go out and eat! We could have chosen something more active, like a bike ride through the park, or a visit to a museum. But the cooler weather and time of day, evening, limited our activities down to going out to eat. That’s all we could come up with (and I was hungry!)

I realize that to really stick to our budget, and continue reducing our overall cost of dining out, I need to come up with some creative and fun activities that don’t revolve around food. So, I’m making a list to help me remember what options we have to solve our home-bound problem:

• Bike riding in the park with gloves, hat, and scarf. My husband enjoys this activity, as long as it isn’t too cold or too dark out.
• Getty Museum. This is one of our local, free museums. This is primarily a daytime activity, but early evening could work as well.
• Roller Skating. There’s a roller rink not too far from our house that my husband has been dying to check out. The prices aren’t too terribly steep, I think it would cost less than eating out and be way more fun.
• Board Games. We packed all of our board games when we thought we were moving to a less expensive living arrangement. However, I think I know where they are, so I can easily unpack them.
• Candy Cane Lane Cruising. This is seasonal, but a neighborhood only a few miles away from me is known for decking out their houses in Christmas lights. Between now and New Year’s this might be a great weekend activity.
• Playing Pool. Not too far from our house is a large pool hall. I’m guessing that a few rounds of pool and a couple of beers wouldn’t be that costly.

I’m stumped at this point. This is our problem, thinking of things to do at night that are inexpensive and nearby. With the holiday season near, we have a few holiday parties to attend, so that will get us out over the next several weeks. But after the holidays are over, we’ll be back to racking our brains for inexpensive, fun activities.

What activities entertain you and your loved ones in the evening that take place out of the house? Am I clearly missing some things from my list?

Windfalls in My Pocketbook

A couple of days ago, GetRichSlowly.org wrote an article about how saving large amounts on items, like refinancing a mortgage, can really add up to savings in your bank account. I guess my mailbox was listening, though it really wasn’t something I saved money on, because a large check I’ve been waiting on finally arrived. I knew that it was coming, but it was so late that I had kind of put it out of my mind. I had already budgeted all of our expenses for this month without that check. This means that 2/3 of this check will be deposited into our savings account.

On a side note, one of the pitfalls of owning your own business is being dependent on clients to pay their invoices in a timely manner. Sometimes, especially if the client is new, we will require a deposit to begin the project. However, some of our long term customers, who are in good standing, pay the bill in full when the project is complete. This year, because the economy has been so depressed, it is taking even our good clients a little longer to pay their bills, making us shuffle a little more than usual.

But back to savings, I have been really good with the 10% rule this week, my new goal for this year. A few smaller invoices have rolled in and I have promptly transferred 10% of the total to my savings account. Thank goodness for the ease of the internet, with a few clicks of the mouse, I can schedule a transfer within in minutes. With the new windfall, I will be able to stick more than 10% of it into savings, closer to 2/3 will be shoved in there. The other 1/3 will be set aside, perhaps for a used work truck that my husband would like to purchase, this hasn’t been completely thought out yet.

The 10% rule has been easy to follow so far because the invoices have been under $500. So each saved amount totaled somewhere between $50 and $15. Small enough amounts that don’t make a difference in our total spending, but do make a difference in our savings when I add them up. This week I have another large check coming in, the 10% rule should also apply to it as well, but it will be a more significant figure, more like $470. This kind of amount I will notice removed from our regular checking account, our main account that we use for everyday purchases and bills. However, because I have budgeted our monthly bills and the income we have coming in this month, that 10% shouldn’t affect our monthly spending. I should even be able to pay down our line of credit by $400 – $500 this month as well.

The trick to all of this is budgeting, click here for my most recent budget outlined.

My husband and I have been really saving on our groceries. We’ve been scouring the 99-cent store for dry goods, bread, and even some vegetables like lettuce. We then hit our regular grocery store for meat, milk, and some frozen goods. I have been able to get my lunches down to under $2.00, and my breakfast for under $.25. My weekly meals are pretty monotonous, but it works for me. Here is a breakdown of my Monday – Friday breakfast and lunch menu:

• Breakfast: 1/2 cup of oatmeal, a few dried cranberries, and brown sugar. I put all of these ingredients into a small Tupperware container, then just add hot water. Very healthy. Total Cost: $.20 (my large oatmeal and dried cranberries cost about $9.00, but lasts 2 months- or 40 working days)
• Lunch: 1 cup of Easy Mac macaroni and cheese, one cup of applesauce (no sugar added), one small bag of animal cookies. Somewhat healthy, the mac and cheese is a little high in sodium. Total Cost: $1.59

I also usually have a snack in the late afternoon, like cereal (I am a cereal lover and have always been!) For dinner, my husband and I usually have tacos (turkey or beef, which ever is on sale), hamburgers, spaghetti, chili and cornbread, or something easy and inexpensive. My husband also gets creative with the ingredients we have lying around and will make pizza using homemade pizza dough, or purchase a Bobelli pizza crust, throwing on fresh veggies for the toppings. Last night, to help get rid of the sniffles,  we had hot and sour soup and spring rolls. The spring rolls were frozen, made by the Chung brand, and very good, we were quite surprised.

Queso on the Grill

Eating so inexpensively allows us to splurge occasionally. For instance, my husband loves cooking outdoors. On the weekends, when the weather is sunny, warm, and perfect, he’ll purchase baby back ribs or sirloin steak and marinate them for a full day. After the spices have thoroughly soaked in, he’ll grill them to perfection.  We also include veggies to go with our meal, or a salad.

You’ll notice that I didn’t mention cooking myself, not once. That’s because I don’t cook. The extent of my cooking boils down to heating up pre-made garlic bread or making an easy mix corn bread, both side items. Main meals are generally my husband’s fortay. Luckily my husband knew this before we were married, so it’s never been an issue. Thank goodness for frozen meals, too!

I’m the expert on running on fumes. To be more specific, I run on fumes in a number of ways. Let me count them for you:

1. I can go about 3 hours in the morning on a Starbucks coffee alone. No food, just java juice, teaching 5- and 6-year old’s how to read up until their recess time. I run my body on a highly caffinated and sugary drink. (Sometimes this includes a 45 minute bike ride to school on a beautiful day).
2. I work a total of 12 hours a day, if I include my travel time. I start the work day at 8am (no travel included here) and finish around 6:30 pm or 7pm, depending on the day. I teach, I help my husband with his graphic design business, I post daily, and I have homework to complete. I rarely have time to breathe, let alone have a sit-down meal. (There’s a trend building here I think).
3. I can stretch our bank account dollars until our next payment arrives, whether it’s a client we’re waiting on, or my monthly (yes, monthly) paycheck. The most frustrating part of owning your own business is the infrequent payments; some clients pay within a week or two, others pay on a monthly basis, and still others take their time and pay when they feel like it, pushing 45 – 60 days at times.
4. I can hyper-mile our car until the gas light has been on for a full day running on fumes, or ride my bike if I feel like not filling that day. This isn’t as difficult for my husband and me since he works from home and rarely needs our one vehicle, and I enjoy biking to and from work or school.

I’ve always been a very active person, I can’t sit still for very long or remain unproductive. I’m not ADD or ADHD, I know what this looks like, I can actually focus on tasks and complete them. I just like to stay busy. I’ve been like this since I was a child; playing outside until the street lights came on, babysitting when I was a teenager, working two jobs or more jobs when I was attending college for my BA in my early 20’s. It’s very difficult for me to just sit.

Full Speed Ahead

Most friends and family members comment on my fast-walking pace as I zip around the neighborhood, school, or store. I physically can’t walk slowly, it hurts my hips, which you would think would be just the opposite. Whether I’ve eaten a balanced, nutritious meal, or I’ve only had my sugary Starbucks drink, my speed remains the same: full speed ahead.

When my husband and I visit our families, we become restless while the television is blasting in the background and our relatives are in a vegetative state on the couch. We fidget and squirm until we finally get up and leave for a bike ride, or a drive to the store, or a bar for a drink (not that I’m a big drinker – I’m always the designated driver, a complete tee-totatler). With the holiday season coming up, we’re making our plans and dreading the family visits. We love our families, but we don’t necessarily like how they celebrate the holidays, in front of the TV! So, we must decide how we are going to keep busy, active, and productive over the holiday season, whether I’m running on fumes or a full tank.

I’ve recently been reading Jonathan Kozol’s Shame of the Nation as an assignment for one of my teaching credential courses. Lately, I’ve only had time to read books that have been assigned, and not so much for pleasure. However, I find Shame of the Nation intriguing and pleasurable to read. One particular chapter described how state testing and test results have molded school curriculum’s, primarily in urban schools, towards a utilitarian type teaching model. Meaning, the students were being taught in subjects that would eventually employ them in specific industries and businesses. The curriculum was also limited to what would be on the state test, so many children were lacking common knowledge of history and science. What particularly sparked my interest was Kozol’s opinion that these children were being boxed into a certain career path and had very few choices. Basically, they weren’t being taught how to think independently or creatively. His explanation of this method of teaching inner-city children, is that there worth was viewed as less important factors in the overall economy. (I’m summarizing his view point in this statement).

This lead me to thinking that these school-to-work programs, as they are called, are formed upon a consumer-based economy. What would happen if our economy changed and it wasn’t so consumer driven? How would these school-to-work programs succeed if there wasn’t a need for so many restaurant cooks at the Hilton (one particular school-to-work example in the book). My thought behind this is what is to come of our future generation if we gear them towards a specific trade, but then that trade doesn’t exist in the future?

Unemployment Chart - Google

Today,  I read an article in the Los Angeles Times that our nation’s unemployment figure is 9.8%, however, this may not truly reflect the entire unemployment rate. They estimated it could be as high as 17%! The article also went on to describe how our economy may be coming out of this recession, but the employment will most likely lag behind for some time to come. Our current economic model is based on consumers purchasing items. If consumers are out of work, or scared because they might lose their jobs, they aren’t spending their money on frivolous items. This ultimately affects our economy.

If people’s spending habits change, due to this recession, what will the future economic model look like? Will our economy shrink? Will people, who have lost their jobs, have to become creative thinkers and start their own business or freelance permanently? What will the students, who are enrolled in the school-to-work program, do once they graduate? If they haven’t been taught how to think independently, or creatively, or lack the skills outside of the trade they have been taught, what kind of future do they have?

I obviously have many questions and not many answers. My obvious solution to educating our future children is allowing them to think outside the box, be creative, get those higher-thinking skills in place. This is something state testing doesn’t test, nor is it something that can be measured in a standardized test. Of course students need solid reading and math skills for everyday activities and tasks, but they also need to be knowledgeable in history and science, and ask thought-provoking questions about things that interest them. If we want to continue to be a prominent country in a world economic model, we need to prepare children accordingly.

What are your thoughts about the future of our economy? Will our economic model change or shrink? Are there other successful economic models to compare ours to? Should children be viewed as assets and taught specific trades if they are viewed as not being capable of far greater things? I’m curious to know what other’s think, feel free to share your thoughts.

Our Current Water Level - Yikes! We're almost out of H2O

Most of my life I’ve lived in Southern California, a fairly arid region. We hardly ever experience thunderstorms, or summer rain showers. From June through late November or December, our precipitation is minimal to none. Over the past few years, however, we have experience prolonged periods of dryness (prolonged meaning it stops raining in March and doesn’t rain again until the following January!), so that officially puts us in a state of drought. Our municipal department of water and power has put us on alert and is limiting how much water we can use. They are prohibiting spraying off sidewalks and driveways, limiting our garden and lawn watering to twice a week, and sending out tips on how to conserve water in the home.

My husband and I have been very good at conserving our water. We have stopped watering the lawn altogether; it’s really very hard to have a beautiful green lawn with a minimal watering schedule, so we’ve given up on the lawn for now. We have purchased drought-resistant container plants, we only have to water them twice a week. We have reduced the amount of laundry we wash, I’m trying to get better at wearing pants that aren’t dirty twice instead of only once and drying towels in the dryer instead of immediately throwing them in the laundry if they are still clean. We’re even doing the whole, “If it’s yellow, let it mellow” routine in one of our bathrooms. Our toilets are old, and since we live in a rental, we aren’t replacing them anytime soon. Our water usage over the past few months has been below our limit (28 HCF), which makes me feel like our efforts are paying off.

What made me think about our limited amount of rain are the trees around our house. Lately, they have been shedding their bark, splitting and cracking right though the branches, and looking like they are in distress. These aren’t immature trees, they are older trees that we have never, in our four years of living here, had to water individually. I’m beginning to think that the lack of rain, and our limiting the amount of water we are using around the house, is causing them to die.

One particularly stressed tree is a huge shade tree in our front lawn. It basically shades the whole front of our house. Its branches reach over our roof. One large branch, that leans over our roof, has a huge, gaping crack down the center. I’m afraid that in our next big wind storm (fall is the season for wind here in Southern California) that branch is going to crack in half and topple onto our roof! My dilemna is should I water the trees deeply and hope to reduce the amount of damage that’s been done or wait it out for the rain to come? What if the rain doesn’t come? Perhaps Southern California will turn into a desert in the coming future and all the large trees will eventually die out due to lack of water. Obviously, to resolve the current distressed trees, I think I can use a little bit of our water and give them all a deep watering this weekend!

My husband and I have been really good about paying off our credit cards and saving some money. We’ve also revised our budget for the coming months that will take us into ’savings-mode’ as we start the new year. Our budget is looking great, we can pat ourselves on the back. However, we still have a couple of really large bills that we now have to tackle.

To begin with, we took out a line of credit a few years back to get our business through the slower summer season. We had recently hired a full-time employee and we really wanted to keep him. We originally thought we’d only use half the amount of the line of credit and pay it back within 6-12 months. Well, sometimes if you open a can of worms, you get a rotten smell, and that ’s exactly what happened. Instead of only using half the line of credit, we gobbled up the whole thing and at a horrible APR. (Maybe my analogy isn’t the best one, but you get the picture!)

We made the monthly payments in the beginning, which were a whopping $275 a month, then I fell behind. I was able to get them back on track within a couple of months, but with an APR of close to 30%, the finance charges and late fees had added hundreds of dollars to the original loan amount. My husband was able to work out a deal with them and reduce our APR for a limited time, it allowed me to catch up on payments and reduce the total due back to the original loaned amount.

We are now at square one again, meaning I’m looking at a $9,000 loan with payments averaging $275 a month. So, our new strategy is to pay this sucker off as quick as we can. Our first step, which we are taking this coming month, is to pay off $1,000 of the loan. This will reduce the total to $8,000. The $1,000 will most likely be coming out of our savings OR an outstanding invoice that we are waiting on (click here to see our outstanding client invoices.) In November, my goal is to then pay another $500, or close to $1,000 if I can, to reduce the loan amount to $7,500 or less. If we can get this monster of a loan down to a more manageable $6,000 or less by the end of this year, we will be looking pretty good.

Our other two large items that we owe money on, which aren’t that unfamiliar to most people, is a student loan, totaling $10,000, and a car loan, totaling $11,000. Both of these loans have decent APR’s and affordable monthly payments. We’d like to tackle the car loan in the beginning of next year, but this will largely be due to our success on paying down our line of credit. My husband and I both think that we will be able to get approved for a mortgage if we have a car and student loan. Although, a mortgage broker may not look so kindly on the line of credit.

Some readers may think we’re crazy to be thinking of purchasing a house when we still have close to $30,000 in outstanding debt. However, our rent alone is $1,800 a month, which is affordable in Los Angeles. I’ve used a few mortgage calculators and if we can actually find a house for $250,000 – $270,000, our mortgage payment will be less than our rent. Even once I add in property taxes and home owners insurance, our total monthly payment should be close to what we are paying in rent. So, my thought is, “Why throw this money to my landlord, and watch as he uses it to improve his house next door, when I could be paying it toward something I own?” Literally, every time we pay rent, my slum-landlord (who lives next door) does something cosmetic to his house within two days of receiving our payment. That really irks me.

Does anyone have thoughts on my debt repayment plan? Obviously, I still have a way to go over the next few months, but any suggestions are helpful. What about purchasing a home even with our outstanding debt?

It's been too hot for me, and we're now in fall!

Let me preface this post by saying that it’s been over 100-degrees every day for the past week, so this may be contributing to my negativity. With that said, the more I search the homes for sale, the more I think, “Why do I continue to live in Los Angeles?” I’ve been browsing multiple websites for both land and home sales and let me just say $275,000 doesn’t get you much of a house, or any house, for that matter. Earlier in the year, there seemed to be a much larger inventory of homes in the smallish square foot range that were moderate fixer-uppers. Currently, the homes for under $300,000 are in really bad areas, are falling down (literally), or will most likely sell for much more than the listing price.

What I’m finding is that many homes that appear in decent condition and are priced below $300,000 are being sold at almost $400,000! This is ridiculous considering these homes are under 1,500 square feet and still need some work. Is Los Angeles the most over priced city? I would have to agree and say, yes. If you average out the square foot cost of homes in my area, they are at about $319 per square feet. That seems high especially since the homes are old, most were built in the early 1950’s.

So, why do I stay, you may wonder? Well, usually our weather is beautiful. However, over the past three years my husband and I have noticed that we have been getting some unusual heatwaves, lasting for over a week with temperatures topping 108-degrees. When I was a child, this was very rare. Yes, we would get some hot days, but nothing like what I’ve seen lately. We’ve also been in a drought for the past few years, so I’m beginning to wonder if we will eventually have to move toward Arizona-type landscaping. I fear that our unusual weather patterns may be with us a while, perhaps due to global warming. If this is the case, I might as well move to Arizona for half the cost and live in an arid climate with 180 days of 100-degree weather.

There is another reason for why I stay in Los Angeles, our city’s diversity is unlike anywhere else (except, perhaps New York City). My husband and I love the diversity of the city and all the different sections of town. If it weren’t for the horrible traffic, I think we’d enjoy venturing out towards downtown more often. We enjoy seeing different people out and about in our community. Our cultural diversity makes the city come alive.

Hopefully, as we near the beginning of the year and the temperatures cool down, the real estate market will begin to look more promising. I won’t be as irritated at the weather and may feel more optimistic. I may also have to expand our searchable area and look farther north or east, this is a possiblity my husband and I have discussed. C’est la Vie!

My husband and I have run our small business for 10 years. I help him with small projects, big projects, and I also do all the invoicing and accounting. Most of the time, our great clients pay promptly and return to us with their next project. Every so often, a new, small job, goes south and I have to write a small amount off as a loss. However, this happens very rarely and it’s never for a very large amount. But, recently, with the economy in the doll-drums, our largest client who we have worked for over a year, has been holding on to two very large invoices.

This particular client, we’ll call them ‘A’,  always takes their time to pay. Usually, their estimated time from invoicing to payment is between 4 – 5 weeks. This is well over our usual 30-day grace period. But, they have been a very lucrative client and we have made decent money off of them, so I haven’t complained. That is, until now.

Let me back track a bit. In July, my husband went to meet with ‘A’, they are in a state next to ours. One of the topics that he brought up to the client was we’d like to be paid monthly, or every 30-days, instead of the 35-45 days they had been paying. He even said he’d give them a reduced hourly rate if they could pay monthly. They agreed. When he returned from his trip, we sent them two separate estimates for their 2 separate projects. They agreed to the estimates and I sent over the invoices. Our target completion date was September 17th.  We had thought that they would send us a partial payment with in the original 30-days. That never happened.

After the 30-days was up, we waited, and we waited, and we waited. I sent their accountant a pleasant email asking of the status of our invoices. I never heard back from her. (I now know she no longer works for this company).

We finally got to the bottom of our outstanding invoices this week. (We are now in week 8!) The work detailed on both invoices is almost complete. The incomplete work is due to ‘A’ not having their material ready. So, a very small part of both invoices isn’t complete because they are holding up the project. Talking to the so called ‘project manager’ about our invoices was not very encouraging. He basically said that they couldn’t pay on the invoices until the work was complete. I asked if he could give me a due date, maybe mid-October, on the items they needed to provide us with. He said that the way they work around there (slow), it would take a couple of months.

I'm not happy!

Of course, at this point, I was thinking in my head, “You guys are jerks! We gave you a reduced hourly rate and this is how we are treated!?” I kindly asked, again with patience due to working with children, if we could at least get 50% of both invoices paid. The ‘project manager’ said he would talk to the ‘person in charge’ and see if that was possible.

Well, let me just say that on top of being exasperated about this invoice hullabaloo, I now know we must ask for a deposit with this client from here on out. Obviously, their financial situation has changed. Ours has as well! Since these two invoices total close to $6,000, we have had to dip into our house savings to cover business expenses.

Here is my list of what I’d like to do with late paying clients, feel free to add any to my comments:

• drop them off a cliff
• replace their website with a “this client can’t pay his bills on time” message (I have the power to do this, but I’m really not this mean)
• send them a stink bomb
• send them rotten tomatoes
• forward their calls to some racy 800 number phone line
• forward their emails and respond with “we stink, don’t call us, we don’t pay our bills on time” message (again, I have the power, but I’m much too nice!)

The bottom line, sometimes owning your own business and depending on others to pay prompty really stinks!

My husband and I are trying to cut expenses where ever we can so that we can save more money. Budgeting our monthly expenses is one way to see where we spend frivolously. I use two methods to do this. The first one is to list all of our expenses in an excel spreadsheet, this gives me a baseline of our monthly expenses, and where I can possibly save money. The second method I use is looking at QuickBooks reports. I use QuickBooks for my check register and for invoicing clients. The income to expenses bar graphs and summary help me visualize where the money is actually going. First, I revise our monthly expenses in excel:

Monthly Budget

We recently reduced our employee’s hours, so we are saving $1,535 a month, while my husband’s business is a bit slow. We are hoping to reduce our hosting bill by $60 a month as well, to reduce our business expenses.

Looking at the monthly budget, our rental house is costing us the most, followed by meals and personal items. I also noticed that I over-estimated our monthly phone bill, we are actually paying $45 less a month. We could save money if we took care of our lawn ourselves. However, my husband has become friends with our gardener and doesn’t want him to suffer financially by discontinuing his service. So, for now, we need to keep this expense in the budget.

Another alternative I see in this budget, is reducing our rent and living expenses. Recently, our landlord became worried when I paid him rent out of two different accounts. I mentioned to my husband that maybe he would be willing to take a couple of hundred dollars off the monthly rent during this difficult economic period. My husband is still thinking this option through. He thinks the landlord’s worry is mostly based on him wondering how much longer will continue paying him rent, and not so much out of the goodness of his heart. Perhaps he’s right.

My second method of figuring out our budget, is looking at my QuickBooks report and finding where the money goes. It mostly lines up with my excel budget:

QuickBooks Expenses by Percentage and Total Spent for 2009

Again, our housing expenses (rent and utilities) make up the majority of our expenses. Combined, the two items total 34.29% of our total budget. Business and personal expenses come in a close second. However, we should see the business expenses lowered over the coming months as well as working towards reiging in our personal expeditures. If we could knock $500 a month off our budget, that would be more money we could save.

One obvious math glitch is that if you divide the QuickBooks expenses over the last 8.5 months, you’ll see that we’ve actually been spending $7,258 a month. That’s almost $2,000 more than what I’ve budgeted. However, I think I’ve left off some expenses on my excel budget. For instance, I forgot to factor in our life insurance, which is about $45 a month. I also didn’t add in the $1,800 I am spending each semester for school. Yet, these two items still don’t reflect the difference. It seems that we’ve spent more than what I’ve budgeted.

To counter this and make sure we stick closely to the excel budget, my husband and I sat down and discussed each item and vowed to reduce the amount spent on our personal expenses, meals, and groceries.  I’ll follow up in a few months and see if I’ve gotten closer to my excel budget.