Money Crashers: Two holiday articles

As longtime readers will know, I normally dislike all references to Christmas and other winter holidays before Thanksgiving is over. I've boycotted stores during the holiday season because they started their Black Friday sales on Thanksgiving Day; I even do my best to steer clear of stores that display premature holiday decorations before Thanksgiving. Of course, I have to work on holiday-related articles before Thanksgiving, since they have to be started that early if my clients want to get them online before the holidays have actually come and gone. But I still prefer not to promote the published articles until the end of November at the earliest.

However, for these two recently published pieces on Money Crashers, I'll make an exception. Because they both tackle the subject of cutting your holiday spending — and if you want to do that, you need to start planning before the holiday season is officially under way.

For instance, the first piece deals with the topic of making a holiday budget. Now, obviously, a holiday budget does you no good unless you make it before you actually begin any of your holiday shopping and spending. So it makes sense to start working on it now, iron out all the details, and have it all ready to go when Thanksgiving is over and the frenzy of holiday shopping begins. This piece explains how to create one, and offers a few tips on how to keep your spending within it once you actually get started.

How to Create a Holiday Budget & Stick to It – Strategize Your Spending

The second piece tackles the topic of holiday spending in more detail. It helps you strategize for saving on all aspects of the holiday, including gifts, decorating, travel, and entertaining. (Admittedly, those last two will probably look a bit different this year; we'll have to do them extra carefully if we plan to do them at all. But that's all the more reason to start planning ahead early.)

20 Ways to Save Money During the Holiday Season – Tips & Ideas

There are several more holiday articles in the pipeline at the moment, including a new one on ways to celebrate safely during a pandemic. I'll let you know about that one as soon as it pops up, too, so you'll have plenty of time to start planning. And there's one upcoming piece that's Thanksgiving-related, so I'll make sure to notify you about that one even more promptly.

Money Crashers: Living on the Minimum Wage – Is It Possible in 2020?

Five years ago, I published a Money Crashers article on the Live the Wage Challenge, which I had taken in the summer of 2014. I wrote about the parameters of the challenge; the experiences of politicians, bloggers, and others who had taken it; and the limitations of the challenge as a way to understand the difficulties of living on the federal minimum wage, which at that time had not been increased in six years.

Fast-forward to 2020: The minimum wage is still stuck at $7.25 per hour, and my editors at Money Crashers think it would be a bit more relevant to show how difficult it is for real people to live on this amount today. Hence, the piece has undergone a complete rewrite. Instead of talking about the self-imposed challenge of living on an imaginary minimum-wage budget for one week, it's now about the real challenges of trying to do it for a whole year.

I've created a fictional minimum-wage worker, called Kai (the most neutral-sounding name I could think of, allowing you to picture a man or a woman of any age or race) who makes the minimum wage, 40 hours a week, 52 weeks a year, with no time off for vacation or sick leave. The piece goes through Kai's budget piece by piece, showing what they pay for taxes (which, yes, minimum-wage workers do have), housing, utilities, transportation, food, health care, and everything else — and how it leaves them with essentially nothing for emergency or retirement savings. And, since Kai is only one imaginary person, I also look at some media profiles of real people living on minimum wage to show what they have to do to get by.

I'm rather proud of this new piece, and I would go so far as to call it a must-read for anyone who really wants to understand the current debate over raising the minimum wage. 

Living on the Minimum Wage – Is It Possible in 2020?

How our budget beats (and fails to beat) the averages

Brian and I have never kept a household budget, per se. We rigorously track all our household expenses, and each month I tally them up to figure out how much we've spent in different categories—house, food, car, and so on—but we've never set firm limits on how much we can spend in any given category. I just keep an eye on our spending, and if it looks like it's getting out of hand in any area, we look for ways to rein it in.

For the most part, I use these spending numbers only for internal comparisons: to compare what we've spent this month in a given category to what we spent last month, or last year. If it's lower, I pat myself on the back; if it's higher, I try to figure out why. But I seldom bother to compare what we spend with what other Americans spend.

Recently, though, an article on Money Talks News (MTN) called these numbers to my attention. Entitled "11 Expenses to Cut Now If You Want to Retire Early," it outlined how much the average U.S. household spends in various categories—housing, car, groceries, etc.—and then talked about ways to cut each of these expenses so you can reach financial independence more quickly. Since this is a goal we're shooting for, I went through the article and found that in most cases—but not all—we're already spending well below the average in these categories. So I thought it might be interesting to show how our budget compares to the average and how we're managing to keep it lower (or, in the few cases where it's higher, what's keeping it high). Instead of a collection of general tips like the MTN article, it'll be an actual case history of what one family did and how it worked (or didn't).

1. Shelter

According to MTN, the average U.S. household spent $11,747 on "shelter" in 2018. Consulting the Bureau of Labor Statistics (BLS) report from which they took the data, I found that "shelter" is defined to include rent, property taxes, mortgage payments, maintenance and repairs, and insurance. Since we don't pay rent and have already paid off our mortgage, I guessed that our housing expenses would be well below this average, but when I checked our actual expenses, I found they were a bit above it. Adding up our property tax, insurance, and "home maintenance/furnishing" expenses (averaged over the past three years), we spent more than $11,900.

So how did we manage to spend more than the average family while living in a relatively small, paid-off home? Well, a few different ways. First of all, we live in New Jersey, which holds the dubious honor of having the highest property taxes in the country. And our particular area's tax rate is above average even for New Jersey, so we pay close to the median in tax each year even though the value of our home is significantly below the median. And on top of that, we've spent around $11,300 on "home maintenance/furnishing" in the past three years, for an average of around $3,780 per year (though that included some large one-time expenses in the past three years, such as a new roof and water heater).

So what are we doing wrong? Mostly, just living in New Jersey, which happens to be an expensive place to live. When you compare our average annual shelter costs with the average for the Northeast, which you can see in this table from the BLS, we're well below the average. If the statistics were broken out to the state level, we'd probably be still further below the average for New Jersey.

Would any of MTN's tips on reducing housing costs help us? Well, maybe, but they're not really practical for us. Their first idea, "getting a roommate" (or in our case, a boarder) would require some retrofitting of the house, which would take a while to pay for itself, and it wouldn't be a very comfortable situation for us. "Downsizing" (which in our case would mean downgrading from a house to an apartment) and "moving in with relatives" are sacrifices we're definitely not prepared to make. And as for using our home to make money via Airbnb, when I searched listings for single-room rentals in our area, I found the going rate was around $30 per night. If we managed to rent out a room for one weekend a month—an optimistic assumption—we could only make around $720 per year, which wouldn't make much of a difference.

Fortunately, what we spend on housing by virtue of where we live, we make up for in other ways. Such as...

2. Groceries

The average U.S. household's spending on groceries was $4,646. Ours was about $2,600—less than 60 percent of the average. This is one area in which we're clearly doing well, but how come?

First of all, there are only two of us. The average number of people in a household (or "consumer unit"), according to the BLS, is two and a half, so you would expect our spending to be about 20 percent below average. But when you look at the average "married couple only" household (shown on this table), the average spending for "food at home" doesn't drop; it jumps to $5,000 per year. So compared to other married-couple households, we're actually spending less than 55 percent of the average.

So it's not the size of our household that's making the difference. Instead, it's probably what we eat. As I discovered when we did the Reverse SNAP Challenge five years ago, it's actually pretty easy to eat on a SNAP budget if you cook from scratch and eat very little meat. Other habits that proved very helpful were keeping a garden and doing our shopping at multiple stores, so we can get the best prices on all the different foods we buy. Of course, that only works if you happen to have multiple stores in your area, but even if you have only a couple, keeping a price book so you know which items to buy at Aldi and which to buy at Walmart will help you use your dollars as wisely as possible. And it will probably help you more than MTN's grocery-saving tips, which include using coupons (a strategy that usually doesn't save us much, though there are a few notable exceptions), buying bread at grocery outlets (not as cheap as baking your own), and storing your food so it won't spoil (a good idea, but don't most people do this already?).

3. Vehicle Purchases

In 2018, MTN says, the average household spent $3,975 on "vehicle purchases." That's not the total amount spent to own a car, including gas, insurance, repairs, and so on; that's just the amount spent to buy the car.

By contrast, our annual expense for auto purchases is...well, I can't say how much it is, because we've only bought one new car in the 15 years we've been married, and it's only 9 years old, so I can't say how many years we'll have it. But if you consider that our last car was over 15 years old when it finally bit the dust (and that it died an untimely death in a crash, rather than being put out to pasture in its old age), it's certainly reasonable to assume that the one we have now will last us at least 15 years. And since we paid around $16,000 for it (cash), that means our per-year expense for owning it works out to about $1,066. If the car lasts more than 15 years, it will be even lower than that.

In this particular case, MTN's advice for saving is exactly the same as ours: buy the best car for you, then make it last as long as possible. Their advice to "consider buying a late-model used car" is also sound, though that word "consider" is important; when we compared the cost per year for a late-model Honda Fit to the new one we actually bought, we found that it wasn't actually any cheaper, and it didn't have as many safety features as the new one. So do the math before you decide.

4. Eating Out

The average family's expenditure for dining out was $3,459 in 2018. (For married-couple households, once again, it was actually higher than this average, at $4,065. Maybe families with kids just don't have the time to dine out very often.) Our expense for dining out was a much lower $424 per year, and for a very obvious reason: We hardly ever do it. Brian is a good cook and enjoys it, so we only eat out when we have a particular reason: to celebrate a birthday or anniversary, to entertain guests, because we're going to be on the road or otherwise away from home at dinnertime, because we have a craving for a specific food we can't make at home (though the number of such foods has diminished), or, most rarely of all, because neither of us has the energy to cook. So most of our "dining out" expenses are actually for smaller treats, like pizza at a game party or coffee at Starbucks, rather than an entire meal.

I realize not every family is lucky enough to have a member who's good at cooking and enjoys doing it. However, I maintain that anybody can cook, even if they don't love doing it, and can get better at it (and possibly enjoy it more) the more they practice. So here, again, my best advice for saving money on dining out coincides with MTN: do it less. And when you do eat out, make it count and go for something you couldn't make just as well at home.

5. Gas and Oil

That's for your car, not for your house. The average household, according to MTN, spent $2,109 on these in 2018, and the average married couple, according to the BLS, spent $2,236. I don't have a record of how much we spent on motor oil for our car, since our mechanic changes it for us and it's lumped in under "maintenance." However, I can say our expense for gasoline was $676, roughly one-third of the average.

Why so low? Two reasons: we only have one car between us, and we don't use it for everything. Brian rides his bike to work most of the time in the warm months, so the car sometimes sits unused for a week at a time. We still put a good number of miles on it — about 11,000 in the past year — what with our annual jaunt out to Indianapolis, shorter trips to visit friends in Virginia, and shorter trips around New Jersey for dance practice, concerts, errands, and such. But we prefer to walk or bike whenever we can.

One thing we don't do, though, is to use public transit instead as MTN suggests. In the first place, we don't really have any that could get us to all the places we need to go; our transit system here is mostly designed to funnel people into and out of New York and Philadelphia, not to get them from one place in New Jersey to another. And in the second place, a typical train trip generally costs quite a bit more than the gas required to drive it. If we could afford to give up a car entirely by using transit, that might be cheaper, but as we have a car, it's cheaper to use it than to take a bus or train even when one exists to take. (And sadly, according to CityLab, the transit situation in most U.S. cities is just as bad, if not worse. So for most car owners, MTN's advice simply isn't practical.)

6. Clothing and Footwear

This is another area where we're way below average. The average household spent $1,866 on these in 2018; last year, we spent $421. And that was an above-average year for us, including two new pairs of shoes for me to replace ones that had worn out.

How do we keep this cost low? First of all, by disregarding fashion almost completely. As a general rule, we buy new clothes only to replace old clothes that have worn out or are about to wear out (and only after at least attempting to repair them first). Pretty much everything we own was never particularly in fashion to begin with, so it doesn't matter if it falls out.

And second, we do much of our clothes shopping, maybe even most of it, at thrift stores. Our local one isn't very big, but it's cheap, and by checking there frequently, I can manage to find a surprising number of items that fit and are useful. And we always make a point of hitting the Indy-area Goodwill stores when we're in Indiana over Christmas. We can't get everything secondhand; shoes and jeans for me, in particular, aren't commonly available in my size. But we're able to keep our wardrobe fully stocked mainly with used clothes, which also happens to be the main tip recommended by MTN.

7. Cell Phone Service

This is probably the one expense that makes us look more like we belong on an episode of Extreme Cheapskates than any other. The average US household spends $1,188 per year on cell phones; we spend roughly $161. Although I finally took the plunge and bought myself a smartphone after my purse was stolen in 2018, I only use the most bare-bones plan for it that I could get from Red Pocket: $10 a month (plus tax) for 500 minutes, 500 texts, and 500 MB of data, none of which I've ever come anywhere close to using up. And Brian still has our old feature phone with its $3-per-month (plus tax) prepaid plan from T-Mobile.

Admittedly, this may not be quite a fair comparison, since many families these days are using their cell phones as their primary phones, while we still pay $40 a month for a landline. But our combo of a landline plus minimal cell phone use is still significantly cheaper than the average cost for cell phones alone, and it has the added advantage of ensuring that we can't ever be those people who can't go five minutes without checking their phones.

8. Car Insurance

Not much savings here. The average household's annual expense for car insurance is $976, while ours is around $750. And that's for only a single car, with low-to-average mileage. We already follow MTN's advice for keeping the cost down by shopping around yearly; it's just that there's only so low you can go in New Jersey, even with one car that's nine years old and a clean driving record. Just as it's an expensive place to live, it's an expensive place to drive. Probably, in both cases, because there are so many other people doing the same.

9. Alcoholic Drinks

On our expense spreadsheet, alcoholic drinks get lumped in with groceries, so I can't tell at a glance just how much we spend on them each year. However, I can do a quick back-of-the-envelope calculation. We buy the cheap tawny port from Trader Joe's for six bucks a bottle whenever it's available, and it takes Brian about two weeks to go through a bottle, so that works out to around $156 a year. We can't always get the cheap stuff, so occasionally we fill in with a more expensive, though never really expensive bottle — maybe fifteen to twenty bucks — and we occasionally pick up a bottle of bottom-shelf gin or rum, or a liqueur of some kind. (The cheap vodka we buy to make vanilla extract doesn't really count, since it isn't a drink but a food ingredient.)

So, at a rough estimation, you might say we spend around $200 a year on alcohol — less than half the $583 spent by the average household. We've tried MTN's tip of shopping for alcohol at warehouse stores, but Costco doesn't seem to carry tawny port, and their other liquors, though undoubtedly a good value, are higher-quality than we actually need. So, Trader Joe's it is.

10. Medicines

This category, which includes "prescription drugs, over-the-counter drugs, and vitamins," costs the average household $483 a year. Presumably that's the amount they pay out of pocket, not counting any costs that are covered by insurance. I don't know exactly how much we pay for this category, since it's all lumped in under "health care" on my expense sheet, but at a guess, I'd say it's pretty close to this average. Brian only takes one medicine every day, but I require an assortment of meds and supplements to keep me in fighting trim, and while none of them costs all that much, it all adds up. MTN's advice to use a prescription discount card wouldn't really help us, since insurance already picks up most of the cost of our prescriptions, and comparing prices for OTC drugs (and buying generic when possible) is something we do already. Oh well.

11. Cleaning Supplies

OK, we're going out with a bang on this category. The average household apparently spends $184 per year on cleaning supplies, which includes laundry detergent. MTN tells readers "it’s relatively easy and inexpensive to make" your own detergent, but that's only true if by "relatively" they mean relative to making, say, your own clothes. Compared to buying detergent at the store, making your own is neither easy nor particularly inexpensive, as I calculated back in 2013. It might not save you any money at all, and it's certainly a much bigger hassle to make and use.

We, on the other hand, have been using the same big bottle of Kirkland Signature Ultra Clean detergent for over a year, and we still have maybe a quarter of it left. (In theory, the bottle is only good for 140 loads and should have been gone long ago, but we never use close to a full capful, and our clothes don't seem to be noticeably less clean as a result.) If we assume it will last us a total of 18 months, that works out to about $10 per year. The other commercial cleaning products we buy are:

• OxiClean Versatile Stain Remover, which we use for cleaning the toilet and occasionally for getting stains out of laundry. An $8 carton lasts us about 8 months, so that's $12 per year.
• Dish soap — usually the cheap stuff from Aldi, which costs $1.89 per bottle. A 24-ounce bottle lasts us maybe 3 months, so that's another $7.56 per year.
• Mrs. Meyer's Clean Day Multi-Surface Everyday Cleaner, which we bought on a whim at Target to see if it did a better job on our grease-spattered walls than ordinary vinegar and water. It did, but not that much, so we haven't used it often; this $4 bottle will probably last us a couple of years. So that's another $2 per year.
• For really, really tough stains on walls and appliances and such, HDX Easy Erasers — a Magic Eraser knock-off from Home Depot. We only bust one of these out a few times a year, so a $4 box of six erasers will probably last us two years, adding $2 per year to the list.

For everything else, we follow MTN's advice and use homemade cleaners — mostly vinegar and water. I don't keep track of how much vinegar we use specifically for cleaning purposes, but I know that a gallon of white vinegar costs us only $2 to $3 and lasts us for at least a year, so we can't possibly be spending more than $2 a year on that.

So, in total, we're probably spending around $36 a year in this category, less than 20 percent of the average. And it's as simple as (1) sticking to vinegar and water whenever we can, and (2) not using more of the commercial cleaners than we absolutely have to.


So there you have it: why we spend more than average in some categories, and how we spend less in others to make up for it. Of course, I realize that your situation may be completely different from ours, so maybe some of the things that work for us won't work for you. For instance, if you live way out in the boonies, and/or you have several kids, getting by with one car might not be practical for your family. But at least some of the savings tricks that work for our family — like using homemade cleaners, rarely eating out, and buying new clothes only when old ones wear out — can almost certainly work for yours. And then, too, you may be able to save in ways that we can't right now, like living in a small apartment or using public transportation exclusively.

It all comes back to what I've always maintained: there's no right way or wrong way to be ecofrugal. It's all about finding what works for you. (Of course, if you know of any other great savings tips applicable to everyone that we're not currently using, I'm always eager to learn more!)

Money Crashers: 4 Budgeting Alternatives to Meet Your Financial Goals

I'm about to confess something that's probably pretty shocking for a personal finance writer: I don't have a household budget. In fact, I've never had one.

Now, this is not to say that I don't keep track of my household spending. I do, and pretty rigorously at that. This started way back when Brian and I were courting, when we began keeping track of the amount each of us spent traveling to visit the other and splitting the cost; later, when we set up housekeeping together, we started tracking how much each of us spent on joint household expenses and balancing out the difference at the the end of each month. By the time we got married and combined finances, I had decided that having this record of how we spent our money was useful, so I just kept doing it, only with a single column for our expenses instead of two. And eventually, I decided to start recording all these expenses in a spreadsheet, so that I could keep track of how much we spent in each category and tamp it down if it started getting too high. So I am very much aware of where our money goes.

What I've never done is to set any strict, specific limits on how we could spend it. That is, my spreadsheet tells us that last month we spent $202 on food, but it doesn't say that we're only allowed to spend $202 (or $250, or $300) on food this month. I just keep track of the numbers and note when they move up or down by any significant amount, in which case I (a) look for ways to cut back if necessary, and (b) usually, write a post here about the reason.

Now, according to the mainstream finance community, this failure to maintain a personal budget should mean that all our attempts to save money and meet financial goals are doomed from the start. The vast majority of articles on how to save (including one I wrote myself two years ago) lead off with, "Make a budget," and many of them (though not mine) warn that without one, it's basically impossible to control your spending. The clear assumption is that if you don't set firm limits on your spending in specific areas, you'll automatically run through all your money, leaving nothing for savings, and never get any nearer to your financial goals.

However, I happen to think that our own experience shows this isn't true, at least not for everyone. After all, in all the years Brian and I have lived together without a budget, we've managed to not only buy a house but pay it off, and are now aiming for financial independence and possible early retirement some time in the next five years. So clearly, the lack of a budget has not, in itself, been enough to derail our efforts to save.

Nor are we alone in this. Several other successful individuals—including an investment guru who achieved financial independence at age 37, a finance blogger who accumulated $256,000 in retirement savings by the age of 28, and Amy Dacyczyn of "Tightwad Gazette" fame (all hail the Frugal Zealot!)—all say they have never had formal budgets, and some of them go so far as to say budgets don't work.

Personally, I think that's a bit of an overstatement. Budgets clearly do work for some people, but that doesn't mean that they're an absolute necessity for everyone. In my latest Money Crashers article, I've outlined some of the reasons budgets don't work for everybody and described four alternatives—including our own tracking method—that can work without all the restrictions, or all the paperwork, of a formal budget.

Now, if you already have a budget and you're happy with it, great—you don't need to read this article. But if you don't have a budget, or if you keep trying to make one and can never stick to it, this piece could be just what you need to get your finances on track. And if your finances, like ours, are already on track despite the lack of a budget, yet you still feel obscurely guilty for not having one, this article can help you put those concerns to rest.

 4 Budgeting Alternatives to Meet Your Financial Goals

Money Crashers: How to Stop Living Paycheck to Paycheck

My latest piece for Money Crashers is about another topic I have been fortunate enough to have no personal experience with: living paycheck to paycheck. Apparently, this places me in the minority, as a survey I found at CareerBuilder says more than three-quarters of American workers currently live this way. Even among people making over $100,000 a year, nearly one in ten said they always or usually lived paycheck to paycheck.

Based on this survey, it looks like simply making enough money isn't the key to escaping the paycheck-to-paycheck trap. So what is?

I looked into what experts at Forbes, The Balance, U.S. News, and Quicken Loans had to say on the subject, and boiled their advice down to a six-step plan:

1. Track your spending
2. Make a budget
3. Cut your expenses
4. Boost your income
5. Jump-start your savings
6. Stay on target

There's more to it than that, of course, and you can learn all the details in the article, as well as what definitely won't help (relying on debt). Read about it here: How to Stop Living Paycheck to Paycheck.

We're more frugal than the Frugalwoods (no fooling)!

I know that in the world of frugal-living blogs, I'm a very small fish in a pretty big pond. With just over 1,000 posts total and an average of around 2,000 page views per month, I can't compare to leading lights like Mr. Money Mustache, J.D. Roth of Get Rich Slowly, or the team of experts at Wise Bread. And that's okay. I've got my little niche, and I'm pretty content within it.

But sometimes, reading these more successful blogs, I start to feel inadequate—not about my blog's modest scale, but about my finances. These bloggers boast about how they were able to retire in their early 30s just by cutting out luxuries and investing sensibly, and I think, "Well, gee, I do all that—how come I'm 45 years old and not financially independent yet? What am I doing wrong?"

The answer, it turns out, could be that there's nothing at all wrong with how I spend my money—I'm just not making as much as they are.

This came home to me recently when I came across an article in The Guardian by Elizabeth Willard Thames of the popular Frugalwoods blog. She and her husband Nate have built their brand around their personal success story, which reads kind of like Horatio Alger meets Henry David Thoreau: they both had high-powered careers and a big house in the city, but they weren't happy with that lifestyle, so they decided to scale back, save up, and trade it all in for a cozy homestead on 66 acres in Vermont.

In her article, "Mrs. Frugalwoods" insists, "My husband, Nate, and I are not exceptional people...we’ve never won the lottery or had investment banker salaries or been the beneficiaries of inheritances or trust funds." She goes on to concede that they are "extraordinarily privileged" to have had parents who were well-educated and financially stable, so they could grow up "happy, warm, well-educated, [and] well-cared-for," but that just seems like rubbing it in: basically, she's implying that anyone else (like me) who had a similar upbringing could retire at age 32 and buy a farm in Vermont if they really wanted to. The fact that I'm still working for a living in my forties just proves that I'm not trying hard enough.

However, before I could get too glum about this, I happened upon a second article about the Frugalwoods that tackled their story from a completely different angle. The Outline points out that the Frugalwoods' story of achieving financial independence through "extreme frugality" leaves out one rather important fact: how much money they actually have.

The Frugalwoods are "tight-lipped about their income," the article says, but there are enough financial clues on their blog to make it clear that their rags-to-riches story doesn't exactly start with rags. For instance, they reveal that they bought a $460,000, four-bedroom house in Cambridge back in 2012, which they were later able to rent out for $4,400 per month. (That property alone brings them close to $27,000 in income, even after you deduct the cost of a property manager, taxes, and the mortgage they're still paying on it.) And in a 2014 post, Liz notes that they've both maxed out their 401(k) contributions, to the tune of $35,000 a year—a sum they don't even count when calculating their annual savings rate at just over 71 percent of their income.

Now, I think our lifestyle is pretty frugal, but our savings rate has never been anywhere close to 71 percent. We currently save a bit more than 50 percent of our take-home pay, and back when we still had a mortgage, it was less than 40 percent. So I started wondering: how do the Frugalwoods really do it? Just how low are their expenses? Are they really living on that much less than we do—in the Boston area, no less—or are they just making a lot more?

It seems impossible to say, given that the Frugalwoods refuse to disclose their income—but taking another look at that 2014 blog entry, I realized that I actually had all the information I needed to figure it out for myself. After noting that they saved 71.4% of their income for 2014, Mrs. Frugalwoods goes on to add that "If we include both of our 401K contributions...our savings rate is 93.07%." And since she'd already said their 401(k)s were maxed out at $17,500 each, it was clear that this $35,000 per year represented 21.67% of their total income. Thus, their total income for the year was $161,513.61.

Now here's where things start to look weird. If their income was $161,514, and they saved about 93 percent of it in total, that means the amount they actually lived on was 7 percent of it, or $11,305. Except, as they disclosed in their post about renting out their house, their mortgage payment and taxes on their Cambridge house come to $1,921.66 per month, or $23,060 per year. Clearly, the math on that does not work.

More likely, what they mean is that if they counted the $35,000 they saved out of their pre-tax income toward the amount they saved out of their take-home income, their savings would be 93 percent. (Actually, it wouldn't, because the taxes that also came out of that pre-tax income would also have to be counted as an expense—but we don't have enough info to figure out what the right number would be.) So I'm assuming that the $161,513.61 a year I came up with for the Frugalwoods' income is really their take-home pay, not gross. And since we know they saved 71.4 percent of that, the amount of that they actually spent was 28.6 percent of it, or $46,192.89.

Armed with this figure, I clicked over to my budget spreadsheet, where I've been tracking all our expenses since 2005, to figure out how much we spent in 2014. The answer was $28,902.66—more than $17,000 less than the Frugalwoods.

However, it only took me a few minutes to figure out that this wasn't really a fair comparison. By 2014, we'd already paid off our mortgage, so our living expenses were naturally much lower than theirs. So I went back a little further and looked at our expenses for the year right before we paid off the mortgage: October 2012 through September 2013. For that period, our total living expenses came to $38,983.65—still a good seven grand below the Frugalwoods' level of "extreme frugality." Apparently, we were actually living more frugally, despite spending over 60 percent our our income, than they were while spending less than 30 percent of theirs.

Now, the point of this isn't to brag. Well, maybe just a little, but the main point of it is that if you, like me, have been reading blogs like Frugalwoods and thinking, "Oh man, I've never been able to save 71 percent of my income, I must be doing it all wrong, I'll never be able to buy my farm in Vermont"—stop. Instead, substitute this thought: "My financial situation is unique, and I can't reasonably compare my savings rate to some blogger's (especially one who's refusing to disclose his or her income). What I can do is to learn as many tricks as I can to cut my expenses so that I can close in on financial independence as fast as is reasonably possible for me."

And if that's your goal, it would appear that maybe you actually could learn a trick or two from a little-fish blog like this one that even hot shots like the Frugalwoods haven't picked up yet.

Money Crashers: Avoid Frugal Fatigue with Cheap Luxuries

I've always made a point of stressing, on this site and off it, that frugality isn't the same thing as deprivation. Ideally, in fact, living a frugal life means you have more money and time to spend on the things that really matter to you. As I put it in this 2010 entry, "we really can have our cake and eat it too, as long as we're willing to bake it ourselves."

The problem is that a lot of people don't really know how to cut back without going to extremes. They'll try to trim their budgets down to the absolute bare bones, and then after a few weeks of feeling deprived, they snap and go on a spending binge. Then follows self-recrimination, a vow to turn over a new leaf, another period of self-denial...and the cycle repeats itself.

The best way to avoid this problem—sometimes known as "frugal fatigue"—is to make sure you allow yourself to indulge a little while you're saving money. There are plenty of treats that you can enjoy for very little money or even no money at all, such as fluffy TV shows, hand-picked flowers, homemade coffee treats, cozy bedding, library books, online puzzles, and other forms of cheap entertainment. Little luxuries like these make a frugal lifestyle a joyful and abundant one.

This is the theme of my latest Money Crashers article. I outline the causes and symptoms of frugal fatigue and then offer a list of cheap luxuries that can alleviate it, such as fresh flowers, fancy toiletries, home-cooked gourmet meals, and even the extra-plushy toilet paper. I give prices for each item on the list and discuss ways of lowering the cost still more, so you can stretch your "mad money" as far as possible.

Read all about these luxuries that won't break the bank here:

How to Avoid Frugal Fatigue by Indulging in These 12 Cheap Luxuries

Money Crashers: What Is a Living Wage?

For the last year or so, there's been a lot of noise at all levels of government about raising the minimum wage. Folks on the left (mostly) clamor for a $15 minimum, insisting that anything less is not a true "living wage"; those on the right (mostly) insist that raising the minimum wage to this level will hurt small businesses and ultimately throw more people out of work.

I don't have the economic skills to say whether the second argument is true, but I figured I could at least address the first. So in my latest Money Crashers article, I delve into the question of what a true living wage is.

This turns out to be a more complicated question than it appears, because it depends on so many factors. Location matters, because the cost of living is much higher in some parts of the country than others; so does family size, because obviously it takes more money to raise a family than to support only yourself. And, of course, there's the thorny question of what is an acceptable minimum standard of living. Obviously, you need a roof over your head and enough food to stay healthy, but what about, say, Internet access? Health care? Retirement savings?

In the article, I talk about the ways various organizations have attempted to answer this question, and the pros and cons of each model. I also discuss how cost of living varies by location and draw some conclusions about the most useful way to address the minimum wage issue.

Check it out here: What Is a Living Wage? – Minimum Income for Basic Needs Above Poverty

Money Crashers: How Much House Can I Afford?

When Brian and I first decided to buy a house, back in 2006, we spent over a year shopping before we found one we were happy with. That's mostly because we absolutely refused to compromise on two things: location and price. We didn't want to buy a house at all if it wasn't in a walkable town, with a short commute to work for Brian - which, around here, pretty much narrowed it down to Highland Park or Metuchen. And we didn't want to buy one if it would stretch us too far financially, which pretty much capped our price range at $350,000 total. And frankly, houses in Highland Park and Metuchen for less than $350K were pretty few and far between.

From time to time, people would try to persuade us we should consider looking outside our price range. Our real estate agent, and even occasionally my mom, would encourage us to "just take a look" at a house that was priced somewhere between $350,000 and $450,000, arguing that if we liked it, we could probably talk the seller down on the price. But we held firm. If it didn't fit our budget, we didn't want to see it - because we didn't want to take the risk of falling head over heels in love with a house that we couldn't really afford. If we ever started feeling like we "just had to have" this home, regardless of price, we knew we could talk ourselves into a mortgage that would stretch us thin - and leave us no wiggle room if either of us were ever out of work for any length of time. And in the end, our stubbornness paid off; we found this house, which ticked off all the boxes on our "must have" list and came in well below $350K.

So how did we come up with this number in the first place? In a word, math. First, we determined how much of our monthly income was already spoken for, and how much wiggle room we wanted our budget to have. Based on that, we worked out what percentage of our income we could afford to put toward our housing payment and still feel comfortable. Working backward from that, we were able to figure out how big a mortgage we could manage. And finally, we figured out what we could afford for a down payment, and added that in to come up with the total price.

If that whole description was a little too fast for you, don't worry; my latest article for Money Crashers covers the whole process in much more detail. First, I go into some detail about the hazards of buying too much house - the problems that Brian and I were so eager to avoid when we bought this one. Then, I go through the whole process of finding the right price, including the factors that affect what you can afford (such as your down payment). And finally, I talk about what you can do if you find - as we did - that your target price is so low you can't find any houses in your area to fit it. (Ideas include saving up a bigger down payment, paying off outstanding debts, improving your credit, or looking for special programs to help low-income buyers.)

Get the skinny here: How Much House Can I Afford?

Money Crashers: 5 Best Money-Saving Strategies

As I've noted before, occasionally companies looking for free publicity send me press releases about their work in the hopes that I'll write about it for Money Crashers. They can be pretty persistent, too; if I just delete the messages with no response, they usually follow up a few days later to ask, "Did you get my e-mail? I would be happy to discuss it with you!" I've actually had to resort to sending a form reply, politely thanking them for the message and explaining that I can't respond to it personally "due to the large volume of such requests I receive," but I'll certainly consider the information and use it if I can. Then, most of the time, I dump the message straight into the trash.

Once in a while, however, I get an e-mail on a topic that I think I actually can get an interesting article out of. And recently, I got one that was an absolute bonanza. It was a link to the results of a survey by Claris Finance, which asked people about the best and worst financial decisions they'd made in their lives. Looking them over, I realized they could probably provide meat for not one but several articles on how to save money, make sound decisions, and avoid financial regrets.

For instance, one section of the survey asked people about what strategies they'd tried to save money, and which ones actually worked for them. This stuck me as solid, practical information that pretty much anyone could benefit from. So in this article, I explore the five strategies that people found most useful, how well each one worked, and how to make them work for you. For instance, I outline the steps in making a budget (the #1 saving strategy people found useful), offer tips on how to eat out less (the #2 strategy), and go into detail about how to avoid different types of consumer debt (the #4 strategy).

Learn all about the five money-saving tips that actually work, and how to follow them, in the full article: 5 Best Money-Saving Strategies Proven to Work for Anyone. And keep an eye out for my other Money Crashers articles based on the same financial survey, coming soon.

Money Crashers: How to Stop Wasting Money

Since I started writing for Money Crashers, I've been receiving occasional e-mails from companies hoping that I'll want to mention their latest product or service in an article. I usually ignore these, but occasionally they send me something that's interesting enough to catch my attention. One recent example was a link sent to me by someone at HLoom about a survey the company had done on financial waste. It asked 2,000 Americans what they waste most money on and then broke down the results by gender, age, income, and region of the country.

Since ecofrugality is pretty much all about avoiding waste, this piece intrigued me. The part I found most interesting was the question about which wasteful expenses people were and were not willing to cut back on. Mind you, these are expenses that people personally admit are a waste of money—yet in some cases, they apparently prefer to keep wasting money on them. To my ecofrugal mind, that seems like a paradox; if it's money well spent, it's not a waste, and if it isn't, why keep spending it? But apparently the folks who took this survey define the word "waste" a bit differently than I do. (This may be the fault of the survey designers; as far as I can tell, they never explicitly stated what they meant by "waste," so each of those 2,000 people could be interpreting it a different way.)

Some of the responses they gave to this question seemed particularly odd. For instance, most people say they are willing to cut back on restaurant meals and alcoholic beverages, but not on food waste—meals and ingredients that go uneaten. This seems to me like a complete no-brainer; food you're not eating doesn't benefit you in any way, so why would you want to keep spending money on it? But apparently the folks who took this survey are convinced that doing what it takes to waste less food would have such a negative impact on their lives that they'd rather cut back on clothes, cigarettes, or even home heating.

Another puzzling expense people say they wouldn't cut was bottled water. Only about 11 percent of the respondents think they waste money on it, but those who do apparently consider it a worthwhile waste. Even if they know tap water is cheaper (and, in most parts of the country, just as safe and tasty), they just aren't prepared to let go of their bottles.

Anyway, all this seemed like a fertile enough field that I decided to devote a whole Money Crashers article to exploring it. The post examines the areas in which different people are most likely to waste money, how they vary based on demographics, and which forms of waste people are and aren't willing to cut. Then I go on to discuss ways of wasting less money in all these areas—without making the kinds of sacrifices that survey respondents appear to be afraid of.

Here's the full article: How to Stop Wasting Money and Save on Common Everyday Expenses

Money Crashers: How to Become Financially Independent

It's been a few years now since Brian and I, having paid off our mortgage, decided to set our sights on Financial Independence (FI) as our new long-term goal. At that time, I did what I considered some extremely rough back-of-the-envelope calculations to figure out how long it might take us to reach this goal, based on our present rates of spending and saving. I made a guess, based on the historical averages for the federal funds rate, that we could count on our investments to bring in a return of 4 percent each year. True, this doesn't look like such a safe assumption now, when the federal funds rate has been stuck at close to zero for over five years—but then, back in the late '70s and early '80s, it was at over 10 percent for nearly the same period, and often above 15 percent. So my theory was that it all balances out.

Since then, I've discovered that my wild guess is actually a well-established rule of thumb, generally known as the 4 percent rule. It's based on a 1998 study called the Trinity Study, which found that as long as you have about half your retirement funds invested in stocks, you can safely withdraw 4 percent of the total each year without depleting your reserves. Over the long term, this rule holds through all the ups and downs of the market. Numerous financial bloggers, from Trent Hamm of The Simple Dollar (whom I don't always consider reliable) to J.D. Roth of Get Rich Slowly and Mr. Money Mustache (both of whom I generally trust), rely on the 4 percent rule. And while many sources, from CNBC to the New York Times, have questioned whether the rule still applies in today's economy, a 2015 study found that for households with "considerable wealth"—enough to ride out a market downturn—it's still a reasonable guideline.

The main thing that struck me back then, as I fiddled with the numbers, was how much more benefit you get from cutting your expenses than you do from increasing your income by the same amount. Every dollar you add to your income (after taxes) helps you once: you can add it to your savings. But every dollar you cut from your expenses helps you twice: it increases your savings, and it decreases the total amount you need to save, because you now need less to live on. According to my calculations, a hypothetical saver who trimmed $5,000 a year from his expenses would shorten his time to FI by more than twice as much as he would be getting a $5,000 raise.

All this struck me as so interesting and useful that I decided to turn it into a post for Money Crashers, so I could share it with a wider audience. In the first part of the article, I outline the formula I used (which, I acknowledge, is still a very rough approximation) for calculating how long it will take you to reach FI at your present rates of spending and saving. Then I go into ways to reach FI faster by saving more, and I go into specific strategies for earning more and spending less (with an explanation of why the second approach helps you more). And finally, I outline a simple approach to investing for financial independence, known as a lazy portfolio. Investing this way means:

1. Pick out two or three funds with low fees—either ETFs or index funds that cover the whole market as broadly as possible;
2. Invest a fixed amount in each of these funds every month (automatically, if possible, so you don't even have to think about it); and then
3. Just hold the funds until you're ready to start withdrawing. Don't try to adjust based on performance or market conditions; that's a good way to guess wrong and withdraw your money at exactly the wrong time. Just sit tight, and let it work out in the long run.

I first learned about this strategy from Andrew Tobias, one of my personal household gods, and it's worked out well for me—especially the part about not having to think about it. The term "lazy portfolio" was new to me until I started working on this article, but now that I know it, I'm going to use it often in casual conversation.

So if you want the complete scoop on everything you need to know to become financially independent, you can check out the complete article here: How to Become Financially Independent Quickly Using the FI Formula. However, I would ask you to please disregard that word "quickly" in the title, which was added by the editor. I do not, anywhere in the article, promise that this strategy will help you reach FI quickly; I only help you figure out how quickly you can do it, and then suggest some tips for getting there a little faster. But it is not, in any way, a get-rich-quick scheme, and if you click on the article looking for one, you will surely be disappointed.

Money Crashers: Private School vs. Public School

Following on the heels of my Money Crashers article about how to compare types of diapers, here's one on another topic that becomes important to parents pretty much the minute those kids are out of diapers: education. Specifically, the choice between public schools and private schools, and the cost of each.

We all know, of course, that private school costs money. But sending your kids to a top-rated public school costs money too, because houses in those districts are expensive. So the question is, which actually costs more: ponying up for private school tuition, or taking on a hefty mortgage so your kids can go to the best public school?

The short answer seems to be that if you have just one child, private school is cheaper, but with two or more, public school is a better deal. But that's just a general rule, because there are all kinds of factors that come into play, such as where you live, what kind of school you're considering, and what financial aid options might be open to you.

So to get the details on the relative costs of public and private school, check out the full article: Private School vs. Public School – Cost & Comparison

Two Frugality Meters

These days, my frugality is a pretty big part of my identity. After all, I write about personal finance and smart shopping for Money Crashers and ConsumerSearch during the week, and then I come here on the weekend to post about my thrift shopping adventures and DIY projects. When someone asks me, "What do you do?" the most honest answer I could give would probably be, "I tell people how to save money."

So on those rare occasions when I do spend a large chunk of money, it kind of throws me for a loop. Yesterday, for instance, I went on a bit of a shoe-shopping spree. As I've noted before, it's very hard for me to find shoes that fit both my oddly shaped feet and my vegetarian lifestyle, so any time I see a pair that looks like it could possibly be suitable, it's very tempting to snap it up—even if I know I might end up just having to return it. Last year, in fact, I ended up buying and returning several pairs of shoes in quick succession, spending about $20 in shipping fees and still having no shoes to show for it. After that, I started refusing on principle to buy shoes online unless both shipping and returns were free, so at least I wouldn't have to pay just to try the shoes on.

This time, however, I found a way around that problem. After discovering an attractive, comfortable-looking, leather-free pair of three-season shoes on a website that did not offer free returns, I did a little investigation and found that the same shoes were also available online at Kohl's—so if they didn't fit, I could return them to a Kohl's store at no charge. And since several reviewers on the site said the shoes run large, I decided to order them in both my usual 6 1/2 wide and a 6 wide, figuring I could keep whichever pair fits and return the other. While I was at it, I decided to check the same site for a nice pair of boots—and when I didn't find any, I surfed over to Payless and took advantage of a sale there to buy two pairs of boots, a dressy pair and a sturdy snow boot.

So altogether, I spent about $140 on shoes in one day—something that's extremely out of character for me. Admittedly, no single pair cost more than $60...and I was able to use coupon codes on both purchases to knock an additional 15 to 30 percent off...and I know I'm going to return at least one of the four pairs. But even so, it kind of shook my self-image. Could anyone who spends that much on footwear, I asked myself, really describe herself as frugal?

Fortunately, I knew just how to set my mind at ease on this point. There are two different tools available online that prove I'm frugal—at least compared to other Americans of my income level.

The first one, called the Frugal Meter, lives on the Shnugi Personal Finance website (a name I swear I am not making up). It's incredibly simple to use: you just punch in your monthly expenses, based on your household budget, and then list the income range to which you want to compare yourself. When I tried it, the site told us we spend "a bit less than average" compared to others in our income range: however, by "a bit less," it means "for every 100 people there are about 7 who spend less or the same." To me, that sounds like a lot less, but I guess it's the number that really matters.

Unfortunately, after looking at the comments on the article, I started wondering whether the number itself was all that useful. For instance, one commenter asked whether the figure for expenses was supposed to include taxes and got the reply "Expenses include all taxes." Well, my household budget doesn't cover taxes as an expense, so I had to go consult last year's tax returns to figure out how much we actually pay in taxes per month—and when I tacked those on, our household expenses jumped from the 7th to the 21st percentile. But then I realized the numbers still weren't right, because the site also says expenses should not include "your retirement saving contributions (pension, SS, 401k or IRA)," and the figure I was using for taxes included Social Security taxes. And trying to sift out how much of last year's tax payment was for Social Security, while allowing for all the various deductions we take, was just too tangled a task to be worth the effort.

So, since this simple little calculator proved so complicated in practice, I moved on to the Frugalometer on the Frugal Fringe site, which looked a little more sophisticated. This one asks for three numbers—your annual pre-tax income, your annual expenses ("excluding social security and pension payments"), and your annual state and federal taxes—and gives specific instructions on how to calculate each one. Once you enter them all in, it compares the numbers to data from the Bureau of Labor's annual Consumer Expenditure Survey (CES) and gives you a "Frugalometer score" to show how you stack up.

When I punched in our numbers on this one, it gave me a score of 251 (as compared to the average of 100) and a grade of A+++. However, I quickly realized that this calculator, too, had one serious flaw. I was already familiar enough with the CES to know that it includes health care costs as part of "annual household expenses"—but our biggest health care expense is the insurance premiums that get deducted directly from Brian's paycheck, and thus never make it into our household budget at all. Frugal Fringe's instructions for calculating your annual expenses don't account for this; they just say to figure out how much you charge to each of your credit cards in a year, how much you pay in checks and online bill payments, and so on, and add it all together. A pre-tax premium that never makes it into your bank account obviously doesn't come out of it. Given that the average "consumer unit" spends $2,868 a year on health insurance, and the average couple spends $4,040, that's a pretty big expense to leave out.

So, once again, I turned to our records, using Brian's final paystub for 2015 to figure out how much we'd spent in pre-tax dollars on health and dental expenses. That came to about $5,840, which I tacked on to our income in box 2. Our Frugalometer score instantly dropped from 251 to 209—still good, but not nearly as outstanding as it looked at first blush. (I wrote a comment on the Frugal Fringe site to point out the flaw in the Frugalometer's formula and proposed adding a fourth box for health expenses, but so far my comment hasn't showed up on the site.)

The good news, though, is that even our modified Frugalometer score is high enough to earn us an A+++ grade. So as far as A. Noonan Moose, the blogger at Frugal Fringe, is concerned (this is another name I swear I am not making up), we're doing great—my latest shoe-buying binge notwithstanding. And after all, even if I end up keeping three of the four pairs, that's about $100 for what should be at least a year's worth of shoes—not so bad when you consider that, according to the CES, the average couple spends $367 on footwear each year. If I can manage to make even one of my new pairs of shoes last for two years or more, I should be way ahead of the game.

Money Crashers: Financial Benefits of Marriage vs. Being Single

Back in 2011, I made two posts here exploring the idea of how marriage affects your finances. In the first, I questioned the idea that it's easier for young, single people to save than it is for couples with kids. Drawing on data from the Bureau of Labor Statistics, I showed that while most people under 25 (who tend to be childless) have lower expenditures, they also have lower incomes, and consequently lower savings, than householders with kids.

In the second post, I discussed a study I'd seen that found couples in lasting marriages tend to accumulate wealth faster than single people. I then explored the reasons why it might be easier for couples to save, many of which have to do with the fact that they typically share one household rather than maintaining two, and speculated that two single people sharing a home might have the best of both worlds

This two articles together became the inspiration for my latest Money Crashers post, which explores the financial pros and cons of being married as opposed to being single. First, I take a detailed look at the costs and benefits of marriage—from wedding expenses to taxes and benefits to the risk of divorce. Then, I consider how having children changes the picture for both single and married people, and how the benefits of sharing a home apply to both. I wrap the whole thing up with some savings tips for both groups, including the importance of communicating with your partner about money for married couples and some frugal dating tips for singles. Here's the full article: Financial Benefits of Marriage vs. Being Single – What’s Better?

Back to the 70s

A recent post on the Dollar Stretcher forums invited readers to flash back to the 1970s (presumably in a hot tub time machine) and compare their lifestyle and budget today with what they had back then. It shared an article by financial writer Liz Pulliam Weston in which she compared the homes, cars, and other trappings of 1970s life with what we have today. Weston points out that back then, people used to live "rich, fulfilling lives" without many of the things many modern Americans consider necessities, including microwave ovens, home computers, cell phones, cable TV, and in many cases, air conditioning. They also lived in smaller houses, drove smaller cars, and spent less on dining out, vacations, and entertainment. By dialing back to a 1970s lifestyle, she suggests, we could save lots of money and still enjoy the same quality of life we had back then.

It's an interesting premise that makes for an amusing article, but I see several problems with it:

1. First, happiness economics shows that quality of life isn't just about what you have; it also depends on you have relative to others in your peer group. So living without a home computer and an Internet connection back in the '70s, when no one else had these things either, is quite a different matter from living without them today, when all your friends and neighbors have them. It would be a bit living in the '70s without a home phone, and arguing that everyone got along just fine without them back before World War I.
2. Second, Weston's '70s budget focuses on all the things that were cheaper back in the '70s while glossing over the things for which we used to pay a lot more and get a lot less. Sure, back in the Disco Era no one had to pay for cable TV, but if you wanted to see a movie, you had to go to the theater and shell out two bucks for it. Today, by contrast, for eight dollars a month - only $1.76 in 1975 dollars - you can subscribe to Netflix or Hulu and have hundreds of movies at your fingertips, plus the complete runs of entire TV series. No one back then had an MP3 player - but a good 8-track stereo system cost $500, or $2,262 in today's dollars. Plus, it was big and clunky and you had to switch out the tapes by hand.
3. And finally, Weston doesn't mention the fact that a lot of the things we do spend more on today are things we can't simply scale back to '70s levels. Health care, for instance. In 1975, according to the Kaiser Family Foundation, the average American spent $170 out of pocket on health care ($601 in 2013 dollars). By 2013, that number had risen to $1,076. Even assuming that you would want to limit yourself to the type of health care available 40 years ago, you wouldn't be able to get it; that system no longer exists.

So I don't think it's fair to say that Americans in general live more extravagant lives than we did in the '70s; it's just that we spend our money on different things. As a reality check (and for the sake of nostalgia), here's a peek at the way we lived when I was growing up:

• The house we lived in was technically a 3-bedroom, though it also had a den that we used as a guest room; it just didn't have a closet. I can't honestly remember whether it had central AC, but I know we didn't use it most of the time. Instead, we had a big whole-house fan that made this really powerful WHOOOOOSH when you turned it on. (My folks still have it, I think, but nowadays they just run the AC all summer.)
• We had a washer and dryer; my mom experimented with a clothesline, but our back yard just wasn't well set up for it. I don't remember exactly how old I was when we got the dishwasher, but I remember it was a big deal. We pretty much had to reconfigure the whole kitchen to make room for it. I think we got our first microwave while I was in junior high or high school.
• According to Weston, the majority of US households in the 1970s didn't have two cars, but we did. The town we lived in was (and still is) quite small and isolated, and you can't get much of anywhere on foot. When my parents first moved to New Jersey they had only one car, but they quickly realized my dad needed one to get to work and my mom needed one to get to anyplace else while he was at work. (I remember she told me later how ridiculously bourgeois that second car made her feel.) The cars they drove throughout my grade school years - an old Ford Fairmont and an even older Plymouth Valiant - didn't have air conditioning. When the Valiant died, my mom got a "new" Mazda that came with air conditioning, but my dad replaced the Ford with a stripped-down Geo Prizm that didn't. That was the car I got my driver's license on at age 17, and 20 years later he sold the same car to us - badly rusted, but still running strong - after our old Honda met with an untimely death.
• I'm just old enough (my sister probably isn't) to remember when we had only one small black-and-white TV. When we got our first color TV, which was SO COOL, the smaller set moved downstairs, so for most of my childhood we had two. However, until my teen years (I think it was actually after I left for college), we didn't have cable. Instead, we used a rooftop antenna with an "antenna rotator" to reposition it. You turned the knob and it made this THUNK-thunk, THUNK-thunk sound as it reoriented itself to pick up either the New York stations or the Philly stations. And, of course, we also had a record player (which could play 33s, 45s, AND 78s) and a tape player, though we never owned an 8-track player.

So how does this compare to our lifestyle today? Well, our house is actually a product of the 1970s - as near as we can tell, it was built in 1971 - so it's much smaller than most modern homes, with just 936 feet above ground. However, since we've also finished most of the basement, it probably has about as much usable space as the house I grew up in. And with three bedrooms and two full baths for just the two of us, it certainly gives us more living space. We have a washer and dryer, but we generally don't use the dryer (except in the wintertime when clothes hung out on the line would freeze solid). We've never had a dishwasher, but we have a microwave that we use all the time - though we can also function with just our gas stove during a power outage.

Now that I work from home, Brian and I can easily get by with one car (which has AC, since that's standard these days). For us, a second car would be a luxury - but high-speed Internet connection is a necessity. But on the other hand, thanks to that high-speed connection, we no don't need cable (and I'm still a little embarrassed about having had it for two years, even if it was just to save money). We have just one TV set, a modest-sized flat-screen, but we have...let's see...four computers: my desktop, Brian's work laptop, the "media spud" that he built before Roku and Fire Stick became available, and a little Raspberry Pi that he fools around with, plus a tablet (with a nifty homemade case). We still don't own a smartphone, just one basic cell phone with a $3 a month prepaid plan, and one landline. We used to have a little SanDisk music player, but we gave it to my mom, and we haven't felt the need to replace it. Our car has a built-in music player that runs off a flash drive, and at home we listen to music on the computer. (Yeah, audiophiles can gripe about the sound quality, but I'm willing to sacrifice a little high- and low-end fidelity for the sake of being able to listen to any song in my collection, at any time, at the click of a mouse.)

So do we have more today than we had when I was growing up? Yes, definitely: we have the Internet, and that changes everything. (Without it, I wouldn't have seen this article in the first place...and I wouldn't have a blog to share my thoughts about it.) But is our lifestyle more expensive or more extravagant than it was then? Honestly, I'd have to say no. Sure, we spend more a lot more money on some specific things that we didn't have back then, like our broadband connection...but if you look at all the things it replaces, from movie tickets to newspaper subscriptions to books, I think you'll find it more than balances out.

So in short, I don't think the modern world is more decadent than the '70s; it's just different. And 40 years from now, assuming I'm still around then, I'll probably look back on the life we lived today and marvel just as much at how much more we have...and how much we no longer need.

Money Crashers: Living on Minimum Wage - Is It Possible?

My latest Money Crashers article covers the Live the Wage Challenge, which I took last summer. In the article, I compare my experience taking the challenge with the experiences of the various politicians and other bloggers who tried it (spoiler alert: I made it through the week on minimum wage, but most others didn't). I also discuss the various flaws in the challenge that I identified while taking it, and I link to the New York Times interactive calculator that I think is a much better tool for figuring out how well you could manage on minimum wage.

Here's the full article: Living on Minimum Wage - Is It Possible? (Live the Wage Challenge)

April Spending Results

Last month, when Bankrate announced its "no-spend month" challenge, I announced in turn that I would be taking the challenge in a modified form. Instead of skipping all spending on everything other than "necessities" (defined as "gasoline, groceries, rent, utilities, etc.," with that "etc." left as an exercise for the reader), I planned to write down all my expenses and sort them into three categories: clear necessities, clear luxuries, and investment purchases. This last category is for all the things that I didn't absolutely need to buy, because I could survive without them, but that would save me money or otherwise make a clear improvement in my quality of life over the long run.

Now that April is over, I can announce the results of this experiment. I already disclosed my first week's expenses and the categories they fell into, but I think listing all my individual purchases for the whole month would get too tedious, so I'll just give the totals for each category, along with a bit of detail about what went into it.

Necessities: $2,550

Nearly two thirds of this was for our quarterly property taxes, which come due at the end of April. The rest included groceries, gas, personal care items (such as toothbrushes and all the skin care products I bought at the beginning of the month), the monthly premium for our pet insurance, and some basic maintenance for our car and our heating system.

It also included one item I was really annoyed about: a traffic ticket. On our way home from Morris dance practice on Thursday, we got pulled over by a police officer who explained, in the nicest possible way, that our car's registration was expired. This came as a shock to both of us, because we hadn't received any sort of notice from the Motor Vehicle Commission that our registration was up for renewal, and our inspection sticker was good until 2016. But when we checked the registration cards themselves, sure enough, they said that they were only good until February 2015. The cop obviously believed our story, because he said he was going to treat it as a minor violation that wouldn't put any points on Brian's license—but we still ended up paying $56 for the ticket, plus an extra $2 "convenience fee" to renew our registration online so that we wouldn't still be driving around with an expired one. Not to mention that it took me a couple of hours on the Web and on the phone figuring out how to renew it online, since the first thing it asks for is the confirmation code from your registration renewal form—which, of course, we didn't have.

Paying what Dave Ramsay calls "the stupid tax" is annoying enough when you're paying for your own stupidity—for example, if you get the notice to renew your car registration and forget to do it—but having to pay $58 for someone else's stupidity is really, really annoying. But on the whole, taking a whole day to go in to court and contest the ticket would probably have been even more annoying, especially if it didn't work. At least by paying the $58 up front, we could put the whole mess behind us. So I think it's fair to classify it as a necessary expenditure, even if it's one we shouldn't have had to pay.

Luxuries: $74.72

The biggest category here was food. We only ate one meal out (a lunch in Princeton that broke up our day of yard-saling), but we also frittered a way a dollar here and there on sweets: irresistibly priced candy on sale after Easter, a bun from the bakery, dessert and coffee at the Minstrel concert, ice cream with the Morris team after a performance. On top of that, we spent $12.83 on an unusual purchase for us: a bottle of wine from the Rite Aid. Over Christmas vacation, my brother- and sister-in-law had taken us to the New Day Craft Meadery, a place that makes and serves different varieties of cider and mead, and we'd liked some of them quite a bit, so when we spotted this bottle of "honey wine" at the Rite Aid, we decided to splurge. On the whole, though, we didn't like it as much as most of the meads we sampled at New Craft, nor even as much as the $6 port wine Brian buys from Trader Joe's. So this wasn't a particularly worthwhile luxury.

Another luxury category was entertainment. This wasn't a particularly big-ticket item: we spent $7.99 on our Hulu Plus subscription and also made two trips to the Minstrel. As volunteers, we didn't pay the $9 admission fee, but we put $10 each night into the creel as a tip for the performers. The rest of our luxury expenses were kind of miscellaneous: $5 for clothing items (pants from the thrift shop, a sweater and some shoes at a yard sale), $1 for the hurricane lampshade I used to make my cat-safe vase (which I'm pleased to say is still keeping the prying paws at bay), $2 for makeup (concealer, which is just about all I ever use), and $5 for a new cat toy. I debated whether to call that an investment purchase, but I decided since the cats had plenty of toys already, this one was definitely unnecessary. We mostly bought it out of curiosity to see how they respond to catnip. (Answer: quite favorably at first, but they quickly lose interest.)

Investments: $680.91

The bulk of this was for our monthly giving. I ended up classifying it as an investment purchase because it didn't really feel right to call a donation to Doctors Without Borders a necessity, but it clearly wasn't a luxury either. It may seem like a stretch to call it an investment, but not if you think of it as an investment in the future of the world as a whole, rather than just our personal lives.

The next biggest category was home improvement. We spent $130 on a new orbital sander and sandpaper, which Brian plans to use to refinish all the doors throughout the main floor of the house. (One down, nine to go.) This project produces a ridiculous amount of dust, so we also had to invest $6 in a new filter for our Shop-Vac. And we also spent around $4 on some carpet samples for our new DIY cat tree.

Aside from that, it was a little of this and a little of that: a phone we picked up at a yard sale to replace an old one that no longer rings, a bread knife from a yard sale that will serve for cutting bagels and other breads that won't fit in our fiddle-bow knife, a new battery for Brian's watch, his new corded beard trimmer (which we hope will last much longer than the cordless ones), and some cork strips to repair his clarinet. This isn't a necessity, because he doesn't have to play the clarinet in order to survive, but it doesn't quite seem like a luxury either, because our Morris team can't perform if Brian doesn't play the clarinet, and he can't continue to play it without fixing it. So it's not just Brian's hobby, but also my hobby—and my primary form of exercise—that's at stake. I think that's enough to qualify the purchase as an investment rather than a luxury. And anyway, it's only $6.50.

So overall, our spending breaks down as:

As I predicted, our spending on necessities and those hard-to-classify investment purchases dwarfed our spending on luxuries. But even more importantly, all the luxuries that we bought were items we considered carefully and deemed to be worth the price. We didn't have to go out for ice cream with the dance team or buy a bottle of wine, but we decided, upon reflection, that these little luxuries were worth splurging on. So I can say with confidence that while we treat ourselves to the occasional splurge, mindless spending—what the financial fast is designed to combat—is definitely not a problem for us.

Savings Challenge, Week 6: Spending journal

Last week, the 52-Week Savings Challenge topic at Bankrate.com was an idea that I'd already considered and rejected as unhelpful. This week, by contrast, the savings challenge is unhelpful to me for exactly the opposite reason: it's something I already do all the time, as a matter of course. The challenge is to "keep a weekly 'spend' journal," meticulously tracking every dollar you spend over the course of the week. Doing this, according to the experts quoted in the article, helps you see exactly where your money is going and where you might be able to cut back. The idea is that once you see how much "that daily Starbucks Frappuccino or sushi lunch" is costing you over a whole week—or, when multiplied by 52, over a whole year—you'll realize that this money could be put to much better use.

According to Michael McCall, one of the experts quoted in the article, this exercise is useful because "most people truly do not know where their money is being spent and the volume." However, I know for a fact that I'm not one of those people, because, as I noted last week, I always track my spending anyway. I started doing this back when Brian and I were courting and used to fly across the country to visit each other. We decided to keep track of all the money we spent on these trips so that we could split the cost evenly between us. Later, when he moved in, we took to doing the same thing with our household expenditures: we kept a list on the refrigerator door on which each of us would jot down anything we'd purchased that the two of us would share. At the end of the month we'd total up what each of us had spent, and whoever had spent less would give the other a check for half the difference. So by the time we got married and started drawing all our funds out of a joint account, we were already in the habit of writing down our expenditures, and we decided to keep it up, only in one column instead of two. This written record proved to be handy for all sorts of things, like:

• Remembering where we'd bought something in case we later wanted to return it—or, by contrast, to find another one that matched
• Working out a budget, because we already knew roughly how much we were spending each month in different categories
• Estimating how much we spend each year and how much we save, so we can track our progress toward financial independence 
• Comparing our spending to that of other households, so we'd know how good a job we were doing of keeping our expenses in check

We have even, once in a while, used the information from this tracking sheet to rein in our spending a bit. For instance, after a couple of months of totting up the cost of our habit of eating out every Thursday night before Morris dance practice, we decided to shift our schedule around on Thursdays, having an early dinner before driving down to Princeton for practice. (This turned out to save us time, too, as the traffic gets lighter after 6:30 pm.) We didn't save as much money this way as Bankrate reporter Jeanine Skowronski (I swear I am not making that name up), who discovered when she took the challenge that she's spending over $4,000 each year on restaurant lunches, bottled water, and Gatorade, but we still made a nice little dent in our monthly food budget.

At this point, however, all those wasteful little habits that were hiding in our spending record have already been ferreted out and fixed. So while it would be quite easy for me to take this week's challenge, just by doing what I'm already doing, it's unlikely I'd learn much from it. So instead, I'm going to to use this week's challenge as an opportunity to take a peek at my results so far for last week's challenge (the "financial fast"). I decided that, rather than buy nothing but "necessities" for a whole month, I would instead track my spending as usual and sort it into three categories: definite necessities, definite luxuries, and sensible investment purchases. (This last category is for things I don't absolutely need, but which will be very useful in the long run.) Here's my spending list for the first week in April, broken down by category:

NECESSITIES: $126.53 (81 percent of spending)

• April 1: bottle of body wash: $5.76 
• bottle of skin lotion: $8.16
• groceries: $12.53
• April 2: facial sponge: $1.92
• cat food: $31.02
• groceries: $7.97
• April 3: OTC medicines: $33.28
• April 6: groceries: $8.37
• April 7: orthotic insoles, vitamin pills: $17.52

LUXURIES: $1.05 (1 percent of spending)

• April 6: candy, $1.05

INVESTMENTS: $27.75 (18 percent of spending)

• April 3, new battery for Brian's watch: $4.50
• April 4, new beard trimmer for Brian: $23.25
• pens: $1.07

As I noted in my previous post, some of these purchases were kind of hard to classify. For instance, should the skin lotion I bought to treat my KP be considered medicine, which would make it a definite necessity, or is it really a cosmetic, which would be a definite luxury? I ended up taking my cue on this from a report on luxury spending covered on the Conversable Economist blog, which classified all "personal care" products as necessities. Thus, I treated all the products I bought last week to help get my KP under control as necessary expenses.

I could have treated Brian's new beard trimmer (bought to replace an old one with a gradually failing battery) as a "personal care" expense as well, but I decided that since it takes the place of a trip to the barber, it really belongs in the category of "apparel and services." The report treated spending in this category as "indeterminate," neither obvious necessity nor obvious luxury. (Wearing clothes of some sort, unless you live in a nudist colony in a very warm climate, is clearly a necessity, but replacing them as often as many people do is clearly not, so it could go either way.) I think it's a good example of an investment purchase, because it's not something we absolutely needed; even if you concede that a neatly trimmed beard is a necessity, the old trimmer was still technically working; it just took all day to charge. But the new one will save him a lot of time and annoyance, and the old one was definitely not long for this world anyhow, so I think it made sense to invest in something more reliable. (Every cordless trimmer he has ever owned, regardless of brand, has died within a couple of years due to battery failure, so this time we just went for a corded model.)

So basically, the only thing on my list that was clearly a luxury item was the marked-down candy I bought at the Rite Aid on Easter Monday. I could have fudged this by calling it a "grocery" item, but I decided that since it wasn't bought at a grocery store, it didn't really count. So my rule for the rest of the month is going to be that all food bought at grocery stores, even sweets, counts as "groceries" and therefore necessities—but food bought anywhere else, including restaurants, coffeehouses, vending machines, and non-food stores, is a luxury.

So far, then, necessities have accounted for most of our spending, while outright luxuries have accounted for only a tiny percentage. Of course, there are still three weeks left in the month, so that may change, but if I were making the call at this point, I'd have to say that we're doing a pretty good job of avoiding unnecessary spending. Which, if you think about it, might just make us living proof that this week's challenge—tracking your expenditures—really works. We've been doing it regularly for over ten years now, and we've got mindless spending pretty much licked.