This blog contains some simple tips and advice from two regular guys. We're not accountants, financial advisors, or brokers, so follow, ignore, or discuss our ideas as you see fit.

Friday, September 30, 2011

Pretending You're Broke

Posted By Paul

Like many families, my family is contantly savings towards various goals, and one thing we've decided to try recently is the "Pretend You're Broke" strategy.

We're not doing the super crazy version that I've heard of where you go to churches and other places in order to get food donated for the needy (which is not only extreme, but it seems the worst kind of immorality unless you actually are in dire straits), or where you steal office supplies from work or stop tipping servers (also not cool). Instead we're just going to try to take a month or two and pretend that we're broke as a way to manage our spending and really get a leg up on our savings goals.

For example, now whenever I consider buying a new book/dvd/etc., I ask myself: "Would I buy this if I lost my job and was trying to get by on unemployment?" Most of the time the answer is no, and so I just pass on the purchase or try to find a cheaper alternative.

A few things that have come out of this experiment are:

-My family is eating out less. We still dine out with friends occasionally, but we rarely do the "let's go the restaurant because it's quicker or easier" thing. It helps that we have a small child since in many ways eating at home actually is the quickest and easiest option.

-It's kind of fun to try to come up with cheaper alternatives when it's voluntary. Choices that would be depressing if they were a necessity become empowering when they are done voluntarily.

-We find that with a little one there are often cheap alternatives that the child actually prefers. Our little one is now at the age where he can actually say what he would like to do. I am often amazed at how instead of the pricier things to do (the zoo, child activity center, etc.) he will often pick things that are incredibly cheap or free (like he will want to go to the park, or once he wanted to go to CostCo and watch the tire center put the new tires on cars).

-Some of the things we've tried might become permanent parts of our life. We've discovered that cutting back on restaurants is a sacrifice we are happy to make when in return we get to make improvements to our house or put money towards a trip.

If you find yourself wanting to try to save a little extra money for something, try taking a month and pretending you're broke. We've already learned from the experiment.

Wednesday, September 28, 2011

Article: 8 signs you're flirting with financial ruin

Posted By Paul

A cool little article. It listed 8 signs of financial ruin.

I thought the 8 signs they listed were good ones and I was happy to see that none applied to me.

I especially liked the signs that they listed like paying late fees on your bills or having bounced checks. The signs that aren't disastrous in themselves but serve as early warning signals of big problems to come.

Here is the article:

8 signs you're flirting with financial ruin

Saturday, September 17, 2011

A Dry Run For The Budget

Hi Everyone,

Sorry that I've been out of touch for so long, other aspects of the summer have kept me so busy that I haven't been able to post.

One new item in my world is that with a small child I've been thinking a lot about how to prepare for the future and possible expenses looming on the horizon.

For example, my kid isn't even school age yet, but I often wonder if private school might be something we'd want to look at sometime during his education (or if it's even something we could afford).

So as an experiment I did a quick estimate of what private school tuition costs per month (which by the way is very difficult since they seem to vary quite a bit) and I took that number and invented a monthly 'bill' for that amount.

So on the first of the month I take that amount and pretend to pay that bill. I actually take the money and just move it into a savings account that I created specifically for this purpose.

My hope is that this experiment will do two things:

1- It will give me an idea of how much adjustment it takes to cover this kind of bill every month.
2 - The money itself goes into a savings account that I can use for whatever (including giving me a head start on any future education costs).

It really is just an experiment to see what my family can reasonably afford and what kind of sacrifices we need to make in order to afford it. This helps me get a handle on large expenses that might be coming in the future and mentally prepare for these choices.