Why I Love Life Without Television

The following is a guest post by Nicole Ouelette of Breaking Even, Inc. If you enjoy this post, be sure to check out the Breaking Even Blog.

“Did you watch American Idol?”

“Hey about that guy on the Today Show this morning?”

“When’s the game on tonight?”

When you start paying attention, it is amazing to find how many conversations rely on television. You only start noticing when you don’t have it.

I’ve only had cable television for two years of the last ten. I am now in a period sans television.

You wouldn’t know it talking to me. I follow enough news and celebrity gossip online to know what’s going on. I am only sometimes completely out of the loop.

“Why don’t you just get cable?” people have asked me.

I’ve found there are several reasons (some monetary but mostly personal health-related) to not have cable.

I save the money I would pay on a cable bill. The two years I did have cable, it was included in my rent. I find that I can find better ways to spend $60 or more a month. . . like high speed internet.
I save money on electricity to run the television. Sure there is a television that we have to watch movies but not running the television means one less electronic device is running.
If you do have a favorite show, there are plenty of ways to watch it without having cable. You can watch many shows online. You can also rent or buy the DVD of a season of your favorite program. You can borrow from you local library or a friend for free. You can have it all, without commercials, which brings me to…<
I’m not constantly seeing commercials that make me want to buy things. While I can’t prove this, I bet people who don’t watch commercials buy less.
Television leads to higher incidence of obesity and depression. When I had cable, I was headed towards both as I ended up watching hours of it every day.
I have more time to do other things. I walk the dog, I blog, I read… There are so many things in life that I do that not watching television seems like a very small thing to not do.
I have less negative energy in my life. I don’t know if it’s less electromagnetic waves or less reality television but I feel like I have less negativity in my life.

All this said, it is clear that I don’t have the willpower to turn off my television. If you can watch an hour or two a day and then turn it off, more power to you. If you can watch television and still do what you need and want to do, good for you. I am not disciplined in that way. And I think maybe at least a few other people aren’t either.

No matter what, I know that having at least one no television night is doable by everyone. As kids my family had it. We ate dinner and played games usually. It was kind of fun, since we were purposely not turning the television. My mom usually made a special snack. I highly recommend it for anyone. If you live alone, make it the night you have friends over for a potluck dinner. When I lived alone, having my friends over one night a week forced me to socialize initially but after a few weeks, I was looking forward to Wednesday nights and the happiness that only real people can provide.

If you do want to watch less television, 43Folders has some great tips. Actually, I’d recommend anyone who thinks television is too big a part in their lives to skim the article because it’s pretty interesting.

So here’s to more money in your pocket and a happier life being less controlled by a cathode ray box.

April 29, 2008 · Filed Under Commentary, guest post

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Do Not Worry About Tomorrow

The following is a guest post by Lynnae of Being Frugal.net, a blog about frugality and getting out of debt. If you enjoy this post, consider subscribing to Being Frugal.net via RSS or email.

We’re living in tough times these days. The news pundits are using the word “recession” freely. Even John McCain said it. The prices of milk, eggs, and gasoline are skyrocketing. And the latest news is that Costco and Sam’s Club are rationing rice, because there may be a rice shortage.

With all the bad news, it’s easy to panic. Will we be able to afford life’s necessities? Is my job secure? Is my home’s value going to tank?

As Christians, though, we are not to worry. One of my favorite passages of scripture is Matthew 6:25-27.

“Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more important than food, and the body more important than clothes? Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they? Who of you by worrying can add a single hour to his life?

There are some things in life that are beyond our control. We can do what we can to prepare. If you feel your job is in jeopardy, start saving money for an emergency fund. If your budget is tight, pay off your debt, so you can free up some money for your monthly budget. Being prepared is important. But sometimes there isn’t time to prepare.

Last year my husband lost his job twice. We were somewhat prepared for the first job loss. We had an emergency fund. By the second time he lost his job, we had used most of our emergency fund. Then thanks to an accountant’s error, we ended up owing over $5000 in taxes this month. With all those financial hits in succession, there just wasn’t time to prepare.

Still, the Lord tells us not to worry. He’s got it under control, even if we don’t, which seems to be most of the time in my life. Sometimes the road isn’t easy. God never promised that it would be. But God does promise to provide for our needs. Food. Shelter. Clothing.

I can testify that we have never gone without life’s necessities, despite being in dire financial straits many, many times. And through our recent trials, even though on paper it didn’t look like we were going to make it, somehow we kept bringing in enough money to cover our emergencies.

Today, if you’re worried about what the future holds, remember that God will never leave you nor forsake you. When times are tough, He is there. When it seems you’re alone, He is there. You may not see it now, but when you’re through this storm, you’ll be able to look back and marvel at His provision.

Have you ever been in a situation where you’ve witnessed God’s miraculous provision?

April 27, 2008 · Filed Under Commentary, guest post

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Gas Costs Getting You Down?

This guest post was written by Mike from Quest For Four Pillars. Feel free to visit his site and subscribe to his feed.

One of the most common financial complaints that I hear is that the price of gasoline is too high. I agree that it’s tough to see higher fill-up costs at the pump, but I sometimes wonder if some consumers doth protest way too much? Most people have bigger expenses than gasoline to worry about and gas costs are one of easiest expenses to reduce.

Gas prices are visible and frequent

If you own a car and use it regularly, then you will probably be familiar with market gas prices since you probably buy gas at least once or twice a month (or a lot more frequently). Because gas is a commodity and is sold in standard unit prices, it’s very easy to compare the price with other gas stations and with the price you paid last week. For most other consumer goods, the unit costs are not as quite as transparent

How much of your budget goes towards gasoline costs?

This will vary widely for different people but in my case we spend about 2% of our net pay on gasoline. This is probably on the low side since we don’t use our car everyday. Groceries, on the other hand, take up about 16% of our budget. Keep in mind that our grocery budget includes a lot of common household items such as diapers, kitty litter etc.

My point is that if I want to cut back on our expenses or even just complain about them, I should focus on what’s important. Our gasoline bill could double and it wouldn’t make a big impact to our budget. If our grocery bill doubled then we would be hurting. I suspect the average consumer has many other expenses which are much bigger than gasoline costs.

How to lower your gas costs

Here are a few ideas on how to lower your gas costs. There are many other lists on the internet which are a lot more comprehensive but I’ve tried to stick with a few solid ideas that if applicable, will make a significant difference.

Drive less - If you can reduce your driving then you will reduce your gas consumption by a proportional amount. This can accomplished by planning your trips better - if you drive to the grocery store seven times a week then do some planning and cut the trips down to twice a week. If you can carpool or take transit to work instead of driving then you will save money.

Drive slower - the faster and more aggressively you drive, the more gas you burn. No more racing!

If you can’t beat ‘em, join ‘em

Consider investing in oil related companies. The stock prices won’t be perfectly correlated to your gasoline costs but over the long run if the price of oil keeps rising then your stocks (I would look into buying an exchange traded fund) should perform well.

Guest Post: The Beauty of Sinking Funds

This post was written by “Toblerone” at Simple Mom. Feel free to visit her site and subscribe to her feed.

Our family follows Dave Ramsey’s baby steps, and in a recent post on my blog explaining Baby Step 3, I mentioned “sinking funds.” It’s a simple financial strategy, and it’s not new, but it has enormously helped our family’s finances. And I encourage you to start using sinking funds even while paying off debt via the debt snowball.

Simply put, sinking funds are a reserve of money set aside for some purpose. It’s a commonly used business and government practice, and it should be part of a healthy personal budget as well. If you think of your family as a company that you’ve been assigned to manage, it would only make sense to make sure you have funds readily available for the many things that surface on any given year.

Why Sinking Funds are Needed

Think of all those non-monthly payments or purchases you face on a regular basis. For some people, auto insurance shows up once or twice a year. What about new school clothes for your kiddos? These aren’t things you spend money on each month, but you still need to pay for them when they show up.

Nothing can screw up a debt-free plan quite like these irregular expenses. In fact, I’ll bet that’s how many people find themselves in debt.

“What? Christmas is only three weeks away? There’s no money in the budget - I guess we’ll have to whip out the Master Card.”

“Why oh why did our insurance bill arrive just when we had to pay for Sally’s recital costume? Looks like it’s Visa to the rescue again.”

If you know these irregular expenses are headed your way, it would only make sense to set aside a small portion of each budget towards them. This, in a nutshell, is sinking funds.

How Sinking Funds Work

Christmas is an easy example. Let’s say you calculate a need of $500 for your Christmas holiday (gifts, decorations, cards, extra food - the whole shebang). It’s now March 7, about nine months away until the next season. If you didn’t start saving for Christmas 08 in January 08, that means you have nine months to complete your Christmas 08 fund - and 500 divided by 9 is $55.56. That’s how much you should list in “Christmas” as part of your regular, monthly budget.

(A side note: some people prefer to budget according to their paycheck, not just by the month. If this is you, and if you get paid biweekly, then you’ll calculate how many paychecks you anticipate from now until Christmas, and divide into that number, not the months.)

Sinking Funds For Our Family: an example

Sinking funds is an easy enough concept. But like many things in life, it’s one thing to use this method on paper; it’s quite another to put your money where your… idea… is. Sinking funds can get really fuzzy and confusing when they’re all lumped together in one savings account. Even when you keep detailed monthly records of what dollar is assigned to what, all this can rapidly become overwhelming. At least it did for me.

That’s why sinking funds didn’t work for us… until recently. Thanks to ING, we can open as many savings accounts as we want, and it doesn’t cost us a dime. We can even customize each account with a different name, and we can seamlessly automate transfers from our checking account to our various savings accounts.

We currently have five savings accounts, respectively named “Emergency Fund,” “Giving,” “Holidays & Gifts,” “Vacation,” and “Work Expenses.” Each month when our paycheck arrives, we have ING automatically transfer a set amount from our checking account into each of these accounts. Most of the money stays parked in these accounts for months at a time, until expenses arise that fit these categories.

When we need funds for these categories, we simply transfer the needed amount back into our checking account and use the amount for that expense. Very easy.

The Takeaway

I should mention that during debt elimination, the type of sinking funds you have should be limited to the necessities. For the most part, you don’t need to focus on a family vacation or a new couch when your overarching financial goal is debt freedom. So limit sinking funds for things like quarterly and annual bills and necessities. When you’re debt-free, then you can start saving for the extra stuff.

And like I said, I think sinking funds are crucial especially during a season of debt reduction. The last thing you want to do is accrue more debt. With a Baby Emergency Fund of $1,000 and some basic sinking funds in place, it becomes so much easier to know exactly how much you can pile on your debt snowball.

Simple Mom is about simplicity and streamlining the chaotic job of MOM, with a bent towards stay-at-home moms or work-from-home moms. I am passionate about simplicity and balanced living, and am convinced that when Mom is doing well, the whole family thrives. Simple Mom highlights tools and resources that make this possible - it’s life hacks for home managers.

April 21, 2008 · Filed Under Commentary, guest post

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Guest Post: Concentrate On Savings

This guest post was written by Mike from Quest For Four Pillars. Feel free to visit his site and subscribe to his feed.

I was talking with my sister a while back about investing and she was asking about some of the types of investments that I own. I am a passive investor and own mostly exchange traded funds. Since she is moving to Asia later this year, she doesn’t have access to the same exchange traded funds that I do and was worried about missing out or not having the best investments. My answer for her was - don’t worry about the exact investments you own - the main thing is your savings. If you spend less than you earn, hopefully a lot less than you earn, then you will be fine. You don’t need to have the absolute best investment plan to secure your financial future.

What are savings?

I define savings as using your earnings to increase your net worth. If you earn $1000 and pay off some debt then you have saved that money and your net worth has increased. Normal savings of course, is when you have the actual cash and can keep it in the bank or invest it. Ultimately your financial security depends on how much money you have - how you got there doesn’t really matter. Whether you invested in bonds, stocks, expensive mutual funds - whatever - that is not as important as how much money you saved in the first place.

Some proof

I set up a little financial model to show the effects of investment return compared to rate of savings. Basically I want to compare one person who save a lot of money but gets a low rate of return with another person who is a much better investor and consequently gets a higher rate of return - but they don’t save as much. The question is who ends up with the most money?

Scenario

Saver Bob saves $10,000 per year and invests in a tax-free account. Saver Bob is very conservative and can’t stand the thought of his investments declining in value so he invests in government bonds which pay 4% per year.
Trader Tim saves $5000 per year and also invests in a tax-free account. Trader Tim is very aggressive with his money and invests only in equities which have a higher expected rate of return compared to bonds, but are also a lot riskier since he can lose money. Trader Tim is a pretty successful and get 8% per year which is double that of Saver Bob’s 4% return.
After 20 years, who has the most money? The saver with the low rate of return or the not-so-good saver with a much better rate of return? The answer is that Saver Bob wins the race by quite a bit. Saver Bob ends up with $320,000 which is 27% more than Trader Tim’s total of $252,000.

Summary

We saw from our example that the investor who saved twice as much but got only half the return, ended up with a lot more money. The point is that you should put more effort into saving money rather than how to invest it. I’m not suggesting that it doesn’t matter how you invest - just that it shouldn’t get the same priority as the saving. Once you have your costs under control and feel like you have maximized your savings, then worry more about things like asset allocation, investments etc.
If you liked this post then please check out Quest For Four Pillars for plenty more just like it!

April 18, 2008 · Filed Under Commentary, guest post

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