Frugaling

Being Frugal Should Not Be A Race To The Bottom

How can you maximize your money
and minimize the environmental impact?

Living within your means – at times – necessitates the cheapest, lowest cost product. Unfortunately, this isn’t always the fairest on the environment. Some of the most affordable products come from half-a-world away in distance, and the people are subjected to abject poverty (i.e., parts of China, India, and Haiti). The labor conditions are grotesque for many and the poverty is encouraged by continued international spending. In fairness, this is an economic slant that I’m coming from, and it’s called: “Race to the bottom.” (Wikipedia)

India Slums Class Frugal Race To The Bottom — *Photo: ToGa Wanderings*

Race to the bottom theorizes that the globalization and efficiency of markets can have a negative impact on the worker conditions, living wages, and much more. Essentially, when we are frugaling by buying the cheapest product, there’s an indirect consequence that includes wage suppression and continued poverty. To make the cheapest products, there must be consequences. Shipping the cheapest toys, clothing, and cleaning products burns countless amounts of fossil fuels. Between the Earth-destroying consequences and poor worker conditions, frugal spenders should try to go beyond this – when possible.

The consequences of inaction or continued spending decisions that are only aimed at the cheapest version can be harmful, externally and internally. Every day you can make little decisions for yourself and those around you. There are choices we can make that benefit everyone.

Coffee

Waking up to a fair-trade, organic coffee is a perfect example of putting good in and getting good out. Think fair trade is too expensive? Check out Target’s Archer Farms Brand for $6 a pound. That’s cheaper than Starbucks, Dunkin’ Donuts, and a wealth of other popular brand names – not to mention it tastes great! The soap and detergents you use can be harmful, rough on your skin, and non-biodegradable.

Soap

Buying a gentler, biodegradable soap/detergent will keep your clothes in healthy shape and longer, while caring for the waste water that ensues. Some of the cheapest vegetables and fruits are the most pesticide-laden commodities in the marketplace. Those pesticides pollute the farms and waterways in production, and you invariably digest some of them.

Vegetables

Organic and pesticide-free can be expensive, but you can try to stay away from the worst polluters (e.g., bell peppers, apples, and cucumbers – see more here). Cows that are given growth hormones and antibiotics are harming our ability to fight infection and causing serious medical complications.

Milk

The cheapest milks and cheeses on the market are often from these ill fed animals. Look for the cheapest breads, and you’ll find bleached, enriched products that likely contain high fructose corn syrup. These breads have been stripped of their intended nutrients and injected with fake, man-made sugar syrups. I, for one, aim to do better.

Poor Man’s Guide To Failing At Investing

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Wall Street Bull Money — *Photo: thenails*

Addicted to the stock market

As a high school student, I envisioned entering the world of finance. I enjoyed watching the market movements, and loved reading Jim Cramer’s Confessions of a Street Addict. After I matriculated to college, I made a sudden switch to psychology and never looked back until I began writing, firsthand, about becoming more frugal.

Investing held a special place in my heart and I had amassed about $4,000 in a Roth IRA prior to graduating college. The funds were invested in a diverse array of stocks and exchange-traded funds (ETFs). Unfortunately, financial demands grew every day as a graduate student and I opted to liquidate much of my portfolio for tuition payments and living expenses.

Graduate school and my sinking portfolio

In capitulating to serious financial demands and poor budgeting, I lost something I loved. I know it sounds funny, but investing wasn’t about the money for me. The money was the medium necessary to engage in a mental game I enjoyed. If I could research, understand, and time an investment well, I could profit greatly from it. This spoke to me on an intellectual level.

But by selling off my stocks and ETFs to pay for the present, I no longer had the impetus nor motivation to research and select stocks. With a measly $1,000 left in my Roth IRA, no investment could be diverse or well-balanced across sectors. Investor fees would eat up any gains I saw. Even as I try to become financially fit and solvent, there are parts of me that feel this incredible pressure because I don’t have enough to invest smartly.

The final $1,000 and failing at investing

With my final $1,000 in a Vanguard account, I’ve made some interesting investment decisions. I was invested in Tesla (TSLA) for years and years, it doubled to $55 a share and I decided to take the profits and sell the position. Honestly, I didn’t want to sell the whole position – I just wanted to conserve some gains and let the profits run.

But when you have next to no money for investment purposes and really small positions in different stocks, you can’t smartly buy and sell stocks. I still believed in Tesla’s business model and future, but wanted to prevent from losing all the gains. This Catch-22 of investing is dangerous and subverts your ability to realize significant financial gains. Over the next month or so, Tesla would go on to about $150 per share – tripling from my sale point and increasing about 500% from my original investment. I had missed the largest gains.

In high school, I invested in Apple when they were around $20-30 a share. Unfortunately, I only had a few hundred dollars in my name. To conserve the profits, I sold the position after the market madly invested in Apple’s iPhone release and catapulted it to $80-90 per share. While I appreciated the 300% gain, I wanted to see the investment continue – I needed more money to defend the profits and position.

It takes money to make money

This trite cliche is entirely true when it comes to investment decisions. Sure, you could get lucky, have an individual stock run up big and take the profits at the perfect time, but you could also miss out on ever-increasing gains and opportunities. The reality is that investing takes a certain amount of funds – $1,000 is hardly enough. While my student loans loom, I’ll be focusing my energy on paying those off first.

There’s still a part of me that misses being involved actively in investing and dedicating a portion of my week to researching and studying up on the market’s developments. This is a very clear consequence to the financial situation I find myself in nowadays. Until then, I am stuck kicking around $1,000 in a Roth IRA, waiting for small gains here and there. This is not a recipe for success.

Cut Costs On Your Daily Commute With These Gas Savings

By Frugaling 9 Comments

Gas Savings Commute Russia Gif — *At least your commute isn’t this bad*

This is a contribution from Syed of The Broke Professional! He runs an up and coming personal finance site for working professionals. On top of that, he’s a practicing doctor. Thanks for the article, Syed!

Cars give you the freedom to go wherever you want – anytime you want. It’s a climate-controlled environment, built for listening to music and rocking out. But, convenience has a cost – cars are no exception. Car insurance, maintenance, depreciation, and gas can quickly devour a healthy budget. Luckily, there are some easy ways to save some money when filling up your tank.

Drive slower

As with most things in life, the middle ground is usually the right way to go – conserving gas is no exception. Most modern car engines work most efficiently when cruising at 55 mph. Going any faster will force the car to burn off more gas than it needs to, which translates to a lower overall gas mileage.

Plan ahead to find a good price

Use websites such as gasbuddy.com and/or billshrink.com to find and get alerted to the best gas prices in your area. You can also simply take notice of cheap stations when driving around and use them when you are in the area. But beware not to drive too far out of the way just to save a couple of cents off a gallon as the time and gas spent going to the station can negate your per gallon savings.

Consider a rewards credit card

The best way to use reward credit cards is to use it on stuff you already buy. Gas is a must. By using a rewards card, you’ll receive cash back and points on purchases you’d be making either way. Likewise, a lot of cash back cards offer rotating, 5% categories on gas purchases throughout the year. If you use rewards cards wisely, you should always be saving on gas purchases.

Check your tires

Tire pressure should be checked regularly, as it can fluctuate with outside temperature. It’s important to make sure your tires are filled to their optimum pressure not only for the longevity of the tire but also for your gas mileage. According to the US Department of Transportation, under-inflated tires waste about 5 million gallons of fuel every day. A poorly inflated tire has to work harder to produce the same speed as an optimum inflated tire, which burns more gas. Tire pressure can be checked by a simple pressure gauge which can be found at any auto parts store or at most gas stations.

Replace your air filter

The air filter is responsible for keeping out useless stuff from the environment such as dirt and bugs. These things can really hurt engine performance. If the air filter is in need of being replaced, that can affect gas mileage because the engine is not working as efficiently as it should. According to a survey by Advanced Auto Parts, a dirty air filter can reduce gas mileage by as much as 20%. Most filters should be replaced every 5,000 miles, but your cars manual should have the exact information.

Fill up late

It’s interesting to see when people start feeling uneasy about the level of gas left in their tank. Some feel the need to fill up when the empty light is on, while others like to fill up if half a tank is gone. For gas mileage purposes, it is better to fill up as late as you can, because having less gas will make your car lighter and more fuel efficient. Just don’t wait until you are stranded on the side of the road!

Ferrari Supercars Gas Savings Tips — *Photo: Axion23*

Consider a fuel efficient car or a hybrid

Many people drive cars that just are not very fuel efficient. Consider trading in for a fuel efficient vehicle and/or hybrid. ConsumerReports.com has comprehensive lists of which cars have the best mileage.

Drive less

Many people can’t think of another way to get to work or school other than driving. While not practical for everyone, some people can use services like public transportation, carpooling, biking, or simply walking to get to their destination. Not using your car helps the environment and your health.

Most people spend hundreds of dollars a month on gas. Enlist these tips for quick, easy gas savings! What do you do to save on gas?

Conquer Your Urge To Spend?

By Frugaling 7 Comments

Quicksand Picture — *Photo: hoodooyoudo*

Deep within the recesses of your mind are primal, animalistic urges to spend more than you should. We are born and bred to consume and prosper – shopping comes easy. As the Black Friday madness shows, we can easily gorge on the materialistic desires that haunt us. When we set budgets and realize our fallibility, the urge to spend can easily be replaced by grit to overcome. It is at this point that we are effectively fighting our demons and the unbalanced budget.

Fighting is tiring

But have you ever been in a fight? Whether emotional or physical, fighting is tiring and draining and scary. It strikes a similar but different evolutionary instinct, and can lead to severe psychological distress. Frequently, future frugalers get frustrated by their urges to spend, and punish themselves by cutting credit cards and focusing on creating a rock-solid monthly budget. I’m afraid this energy is misdirected, at times.

Oft-repeated cliches about making more than you spend and creating an emergency fund are abstract concepts, goals that miss the steps needed to get there. More fundamentally, even the steps ignore the reasons behind your desire for change – to become more frugal. What is motivating you to save money and have a better life?

From foundations comes successes

See, what the personal finance world is missing is credit for the psychological foundations. Everyone comes with a certain amount baggage and history. This past influences how we treat money and save (or not). Without recognizing this past, we may not be able to recognize where we err in the future.

In the past, I had a piss poor habit of going to malls to browse and shop because I loved the smiles and energy. The aromatic storefronts welcomed me, clothes glistened from spotlights, and the service was friendly. The problem was most pronounced when I felt alone and/or unfulfilled. Bottom line, for me, shopping and spending beyond my means was directly related to loneliness and purposelessness.

Realizing your own need shopping and/or unbalanced spending leads to a foundation for change and budgetary hope. A house cannot be built without a foundation. But more fitting, a house cannot be afforded without a budgetary foundation. How do you become aware of your motivation for wanton spending?

The metaphor of quicksand

Remember those old movies where the bad guy falls into a pool of quicksand, and the more he struggles, the faster it sucks him under? In quicksand, struggling is the worst thing you can possibly do. The way to survive is to lie back, spread out your arms, and float on the surface. It’s tricky, because every instinct tells you to struggle; but if you do so, you’ll drown. –Russell Harris

Debt and financial despair is like quicksand. The more you fight to get out of it, the harder it seems. It is easy, when you’re working to improve your situation, to berate and punish yourself for these ills. Fortunately, there’s another way – a paradox of sorts to becoming frugal and financially solvent.

As the quote says, if you build a foundation for a different reaction to your struggles, you may find calm. In calmness, we can begin righting our course and find a balanced budget. Deficits can be defeating, but they don’t necessitate a battle.

Fighting, flexing, attacking, and breaking your need for spend is a recipe for disaster. Rather, relax and reason are the solution for a positive future. Now, you’re ready to save money with mindfulness!

Frugaling