A quiet night in: an exercise in frugal saving.

image1As much as any couple, family or group of friends might like going out, it’s never cheap. Whether it’s fine dining or going out to your local bar or restaurant, these are costs that add up all too easily. They may seem cheap once in a while but once you start doing it on a weekly or semi-regular basis, it becomes a larger and larger chunk of your expenses.

In contrast to this, understanding the benefits of a quiet night in can prove useful. More than offering something different and relaxing it can demonstrate a way to stay cheap and cost effective whilst still enjoying the usual perks of life.

Food

If you go out to eat, you should know how much this can cost. Cooking for yourself is usually the cheapest but there are still other options. For instance, if you have the urge for Chinese food, it may be cheaper for everyone to pool money together for chinese takeaways than visit your local restaurant. It’s much cheaper and doesn’t have the added costs of additional drinks and restaurant prices and other service charges that are often forgotten about.

Entertainment

Likewise, if you’re not going out, there is nothing to stop you from being social. Your home can prove entertaining enough with the right company. Cheap entertainment can be anything from a movie rental (if you’re only going to watch it once, don’t buy something you don’t need) to various games, which offer entertainment again and again. These are all cheap, whether you use it once or buy it to use again and again. This is another lesson to be learnt in saving, by understanding the real value of something.

If you come across some movies that you and your friends love, it makes sense to purchase the DVD so you can all watch it whenever you like. Luckily, you can save money by ordering your DVDs online, so you do not have to worry about breaking the bank. To make things more interesting, consider having each person purchase a DVD online and then choosing between your favorites every time you gather.

Additional expenses

Hopefully the two areas above should highlight how easy it is to cut down on those little costs for every social occasion but there are always other areas to look at. Take your appearance, for instance. If you don’t go out to an expensive restaurant you might not need to risk your best shirt or shoes. It can also save on other expenses, such as getting a taxi home late if you’ve been drinking or other travel costs.  So, next time you think you might go out, suggest staying in to the others and see how much can be saved.

Can the Crew from “Deadliest Catch” Obtain Life Insurance?

Believe it, or not, yes! It sure would cost them, though.

If you take away the fact that they’re all surely covered fully due to being on a highly popular television show, they would just be fishermen. Which, if you don’t know, is ranked as the most dangerous occupation by the U.S. Bureau of Labor Statistics.

If you’re shocked by this and think “surely there must be occupations more dangerous!” then you should know that the statistics don’t lie. They’re based off of the number accidents and injuries that result in fatalities each year while on-the-job; unfortunately, fishermen have the most.

So, how would they be able to obtain life insurance then?

Obtaining life insurance isn’t the issue; obtaining life insurance affordably is. No matter what the situation is—whether you have pre-existing conditions, smoke/chew tobacco, or have a dangerous job—there are life insurance options available, you just have to be willing to pay the extra cost.

You can learn more about a Suncorp life insurance quote to suit you & your family directly on their website.

Just how expensive is this “extra cost”?

Premium rates fluctuate from insurance company to insurance company, but on the low end, those with high-risk occupations, are looking at an extra $2.50 per $1,000 of coverage that they purchase, compared to those with low-risk occupations. Of course, this is only if you decide to go with a commercial insurance policy, as opposed to other options that are available.

What are these other options?

 

GROUP LIFE INSURANCE –

Most high-risk occupations come with employer, union, or association dispensed benefits that will more-than-likely include life insurance; this type of life insurance is called group life insurance. “There’s usually a life insurance option for everyone, even in high-risk jobs. For example, a police or fire department gets group coverage for employees. Loggers can get coverage through an association,” says Tony Steuer, United Policyholder’s Director of Financial Preparedness.

Unfortunately, not all group life insurance policies are made equally. For those in the military, this coverage is extensive enough and is handled through its own government-sponsored agency, but for many others in high-risk jobs, coverage amounts can range between $20,000 and $50,000; slim pickings, in some cases. After funeral costs, your loved ones aren’t left with much if you don’t have any other investments lined up to provide for them.

Another drawback is that as soon as you leave your job, your coverage will usually cease; leaving you without life insurance, possibly at an older age, when it’s harder and more expensive to obtain a commercial policy.

 

GUARANTEED-ISSUE LIFE INSURANCE –

Guaranteed-issue policies have their uses, but aren’t always the most practical. They can be useful in that they don’t require medical exams and are open to all occupations; if your occupation is making it difficult for you to even obtain coverage with expensive premiums, these policies can come in handy.

Unfortunately, you’re going to pay for that handiness to the tune of nearly 3 to 5 times as much as the already expensive premiums you might have paid.

What’s the best way for someone in a high-risk occupation to go?

It’s highly recommended that you seek out the professional assistance of a life insurance agent whose expertise specifically resides within the high-risk occupation field. As Gary Dworkin, Chairman of the National Independent Life Brokerage Agencies, states, “The most important thing an individual can do is feel comfortable with their agent—that he or she represents more than one company and has resources to fully shop and survey the market through the brokerage community.”

Ah, the Financial Implications of a Dreamer Marrying an Uber-Realist…

The other day after a financial discussion with the better half, I couldn’t help but think (for the hundredth time), how very different we were when it comes to approaching financial decisions. I am a dreamer. A hopeless, optimistic dreamer who sometimes loses sight of reality completely. The better half on the other hand is a very conservative realist. He is so much “in touch with” reality that, the world’s best pliers probably cannot pry him away to fantasy world.

Personal finance is such a personal thing. Every person has a very different level of risk tolerance and a very different approach to finances. Here is a hypothetical, highly dramatized and exaggerated story to illustrate how very different the better half and I are.

If I were in the middle of a desert, and was shown half a glass of water, after a few moments of initial anxiety, I would start dreaming of how great it would be if I could somehow find a way to fill the rest of the glass with water. Heck, while I was at it, if I could only manage to find some lemons and sugar, I could have a whole glass of lemonade. Oh, and if I could just make the whole process repeatable, I could put up a lemonade stand. And I could get so rich selling lemonade to all the thirsty people in the desert!

On the other hand, if the better half were on a river boat and shown a half glass of water, as he sipped it, he would think, hmmm… it’s really hot, and the glass is already half empty. The water is going to evaporate soon and we won’t have anything to drink. I read some place that the river water has too much contamination and the water may be undrinkable. How much money do I have to buy bottled water? Will my family die of thirst? Maybe I should cut this vacation short and get back to work so I can make more money and have enough to buy bottled water for my family.

We both have a very common end goal – to be comfortably well off, shield our kids from having to live with financial worries and be able to retire without being dependent on anyone for our upkeep. If we can leave something behind for the next generation, all the more better. But the way we approach it is so different.

While these completely opposite attitudes sometimes cause some friction, the fact that both of us are marching towards the same goal helps keep things in perspective. And we tend to balance out each others’ over the top attitudes. If it weren’t for me the better half would probably be living in a tiny apartment, with all his money stashed under the bed, and be working 23 hours a day. If it weren’t for him, I would have probably been one of the statistic that lost the house because I was upside down on the mortgage and didn’t have a steady job since I was too busy chasing an Internet dream.

So together we march. To two separate tunes. In the same direction, but on different sides of the road. Someday, one of my eccentric grandiose plans will make us a boat load of money. Until them, I am content to let him guide us using his sensible “get rich slowly” mantra.

Air Travel Checklist for the Frugal Minded Traveler

So you spent hours finding the best bargain air fare and are now a very proud owner of an incredibly priced air ticket for your next business/vacation jaunt. But if you don’t watch out, all your efforts will be undermined by what you spend at the airport!!! Here is a simple checklist I put together based on our recent weekend trip to help avoid some unnecessary expenditure during air travel.

Take a bottle of water!
I usually do this, but this time we left for the airport in such a hurry that I didn’t think of it until it was too late. In the airport I decided to buy a bottle of water. Guess how much it cost? $3 + change!!! For a half liter bottle!!! You can get a case of 24 bottles for that price in the local grocery store! Everything is just too expensive in the airport! (Update: Please check comments below which indicate that even sealed water bottles are not allowed through security! Thanks Plonkee, Grad Girl and Strange bird for pointing it out.)

Pack a snack/meal
Earlier, airlines used to provide meals when your flight was longer than 3 hours or so. On shorter flights you would usually get peanuts or other snacks. These days most airlines operate in major cost cutting modes, and hence no longer offer these things that we took for granted earlier. If you want to have a meal on the flight, you have to pay extra. If you are lucky, they may serve you a tiny sachet of mini-pretzels (which by the way, I detest). So unless you want to pay $3 for a snack pack or $5 for a skinny sandwich, pack you own snacks or sandwich or fruits.

Carry a magazine or book
I had my book this time. But the better half forgot his. Since I had stopped to pick up water anyway, he decided to pick up a newspaper and a magazine. Between the water and the reading material, by the time we walked out that store we had bid adieu to a $10 bill and some change 🙁 I think we still got away easy, since the girl in front for us in the checkout line bought stuff worth close to $40! And no, she was not buying any souvenirs or anything. All she had was a book and drink, a pack of trail mix and I think a chap stick! So, carry your magazine or book with you. Even if you vow to buy only a newspaper at the store, you never know what you will “remember” once you are inside the store. Better to avoid the trip to the airport book store all together than risk spending money on unnecessary stuff.

Check your carry on luggage for banned items such as lotions, perfumes etc.
This one really bothered me 🙁 I carry a lot of junk in my handbag – you never know when you will need a bottle of lotion or hand sanitizer etc. So, on my trip up, I had made sure that all the stuff I had in my handbag met the 3oz per bottle limit and were in a neat Ziploc bag. But somewhere during the weekend my (new and relatively expensive) big tube of sunscreen lotion had found its way into my hand bag. And while we walked past the security it raised red flags. The lady asked if she could open my bag to search it, and found the offending lotion. I had no choice but to let her confiscate it. Fortunately, it was just a bottle of sun screen lotion. If it was one of the expensive perfumes or lotions, it would have sent a dagger right through my heart to watch her throw it away in the bin of banned items!

Make sure you carry the charger for cell phone, laptop in your hand luggage
These are more for contingencies than a real necessity. But if you are on a work trip and need to use your laptop or phone while you are in the airport, make sure you take your chargers in your carry-on luggage. You never know when a flight might be delayed or cancelled or how long you will be stuck in an airport. Most airports have abundant power supply outlets that you can plug into. So make sure you carry your charger with you.

If you take a rental car, make sure you top off the tank before returning.
If you do not top off the tank before returning your car, the rental companies will do it for you. Only, they are a lot worse than the oil companies and charge you almost twice the cost of gas at the pump. So, always, make sure you have enough time on your trip to the airport to fill gas! Another tip here is to try and fill the gas at a pump away from the airport. I have noticed that as you get closer to the airport, the gas prices seem to increase. This may be a one off thing, but, we are still glad we filled our gas at a pump on the way which had cheaper gas than those by the airport.

For longer trips, carry your own head phones
I have made a few international and cross-country trips. During such long trips, a good set of headphones in a life saver. Not only can you keep yourself occupied through in-flight entertainment, but if you have an excessively chatty and nosy person sitting next to you, having the headphones on, is a subtle way saying “shut up, and leave me alone” 🙂 It used to be that airlines used to offer passengers with complimentary set of headphones before. But recently, I have noticed that more and more airlines charge you for it. So, if you have a long flight, make sure you take your head phones with you.

Ok, that’s all I have for now. If I think of anything more, I will continue to add to this list. If you have some items on your checklist that don’t appear here, or if you have some interesting stories about the items listed above, please do share by leaving a comment below.

Credit Card Arbitrage (Plus an Image of the $2,000 we Made…)

They say a picture speaks a thousand words. So, here is a picture of my bank statement showing the passive income from credit card arbitrage in the short span of 9 months. I had mentioned earlier about my first attempt at credit card arbitrage. Well, the CD came due on the 1st of June and we made around $2,000 in free money (The picture does not show the interest payment for the last month).

If you are new to credit card arbitrage, here’s a quick and dirty explanation of how it works: Remember those 0% balance transfer offers you receive in your mail box every day? Well, you accept the offer and park the money in a safe place and earn interest on it. That’s all there is to it. But wait! Before you head off and take on a pile of debt, here are a few questions you should ask yourself to determine if you are suited to play this game.

    1. Are you organized enough to make the monthly payments on time?

This one is the most important requirement if you want to play this game. If you are not an organized person and have a history of missing payments, you must stop reading right now and forget that you ever heard about credit card arbitrage! See, here’s how it works. When the credit card company makes you that offer, they add a clause that if you ever miss a payment, you have to give up your first born to life long indenture to the credit card companies. Well, not quite, but close enough. Your interest rate will jump up suddenly from 0% to possibly in excess of 20% depending on the kind of card you carry. So, if you are not organized to stay on top of things all the time then this game is not for you. Sorry.

    1. Are you disciplined not to use the money for anything else?

Even the best laid plans can go wrong. No matter how organized you are, there is a remote possibility that things will stray off track during that one fateful month. Or, the credit card companies may just decide to change the rates for no reason whatsoever – yes, they can do that. So, you should, at all time, be able to pull the money out and repay the credit card within on a short notice within a short time frame. That means that you should have easy access to the credit card money – every day, all the time. If you have a weakness for gambling or are addicted to investing or have a business that is constantly in need of money or any other temptation to use that money, and you lack the discipline to not give in to the urge, then please, do yourself a favor and stay away!

    1. Do you have plans for taking any large loans in the near future?

Some call the debt incurred through credit card arbitrage as “good” debt since the money borrowed works very hard to make more money for you. But call a debt by any name, it is still debt. So it will lower your credit score temporarily and it will look bad on any future loan applications you make. So if you plan on buying a car through financing or applying for a mortgage in the future, stay away from the balance transfer game until after you are done with your other loans. I have heard people say that your credit score will bounce back after you repay the money borrowed through balance transfer and in fact your credit score could increase due to reduced overall utilization. But I would not take any chances. We did not get into the 0% balance transfer game until we had already secured our mortgage and locked in a low fixed rate.

    1. Can you control the spending you charge to your credit card?

One of the not-so-well-known rules put forth by credit card companies is that any payment you make will always be applied to the lowest interest balance first. What that means is, if you have a credit card with 0% APR on balance transfer and 10% APR on purchases, any monthly payment you make will be applied to the balance transfer amount. Say if you have transferred a balance of $10,000. And you forget and use the same card for purchases, say for the amount of $1000. Then any payment you make will apply to the $10,000 balance, while the $1000 balance will be charged an interest of 10% every month until you have paid the balance of $10,000 in full. So you need to keep track of what cards are used for what and never make the mistake of using the card used for balance transfers for purchases.

    1. Will the “debt” bother you?

Like I mentioned before, call credit card arbitrage by any name, but the fact of the matter is that it is “debt”. If it bothers you to carry debt, you should not get into this game. When we started out, the better half and I got into this game together – me with two cards and the better half with one card. With just one or two cards to manage per head, it was not really that bad. While I was excited to be making passive income, the better half was stressed out about carrying debt (I wrote about it in detail here, in case you are interested). So, this game is not for everyone. You need to be able to handle debt if you want to play this game.

    1. Do you have a good credit score?

This is in a way a game of economies of scale. If you have a low credit score, and have access to only a few thousand dollars in credit, then this game is probably not worth it. Also, if you do not qualify for 0% APR, then it will not be worth it. Earlier (when we used balance transfer offers to consolidate our debt), we had come across several offers with no fees. But these days it seems like most cards charge a balance transfer fee. Until recently, it used to be around 3%-5% of the amount you borrow, capped to anywhere in the range of $30 to $150. But these days, I heard several credit card companies (notably, Citibank?) is removing the cap. So unless you have a large credit line and have the negotiating power to reduce or eliminate the fees, the game will just not pay out enough. And for both large credit lines and negotiating power, you need to have a good credit score.

    1. Can you keep learning without getting complacent or bored?

Credit cards have a lot of bad rap. And for a good reason. They do not offer you a loan with 0% interest out of the goodness of their heart. It is just the candy coating for a very bitter pill inside. The aim of the credit card companies is to lure you and trap you. There are several ways they hope to make money off of you – (a) if you miss a payment you will be slapped with steep rates (b) there are many fees associated with balance transfers (c) if you do not remember to repay the money before the offer period ends, the rate goes up (d) any payment you make will apply for the lowest interest debt first and so on and so forth. If you want to play this game, you should always stay in step with the rules put forth credit card companies. Keep reading and stay informed. The Fat Wallet finance forum is a great place to learn from the experiences of several veterans in this field. If you want to play this game you should be excited by the prospect of playing this game and staying on top of things. If reading about the credit card fine print bores you, you should stay away!

Overall, I would like to stress that this is not a game for everyone. That said, if your answers to the above questions have convinced you at that you are a perfect candidate for this game, then Congratulations! Welcome to ring of lion tamers that have found a way to make the big bad credit card companies purr and dance to our tunes. Here is a good place to start reading about it some more.

The Charm of Old Fashioned Values

In the days when an ice cream sundae cost much less, a 10-year old boy entered a hotel coffee shop and sat at a table. A waitress put a glass of water in front of him. “How much is an ice cream sundae?” “Fifty cents,” replied the waitress. The little boy pulled his hand out of his pocket and studied a number of coins in it. “How much is a dish of plain ice cream?” he inquired. Some people were now waiting for a table and the waitress was a bit impatient. “Thirty-five cents,” she said brusquely. The little boy again counted the coins. “I’ll have the plain ice cream,” he said. The waitress brought the ice cream, put the bill on the table, and walked away. The boy finished the ice cream, paid the cashier and departed. When the waitress came back, she began wiping down the table and then swallowed hard at what she saw. There, placed neatly beside the empty dish, were two nickels and five pennies – her tip.

I don’t remember when it was that I read the story first, but it left a very deep impression on me. There is something very charming about the story. The way the old-fashioned values are depicted touches me every time I read it. Some of you mind find it too sappy, but somehow every time I read it, it steers right past the cynical outer shell and reaches the softie hidden within.

The latest discussion in the festivals of frugality about frugal vs cheap (here and here) reminded me of this story. But rather than focus on the tipping aspect, I want to focus today on the values. How many 10 year olds today who are short on cash would behave in a similar fashion? In a world where 8 year olds demand to have their own personal cell phones, where parents stand in line in front for the stores for hours to get the first box of Wii for their over-indulged kids, and where plastic is more a way of life than cold hard cash, is there any room for passing on these kind of values to our future generations? Or have they become too “old-fashioned” already?

I am an optimist to the core. Even though I am surrounded by examples to the contrary, I have hopes that we can in fact instill these values in our kids. For every 10 parents that think parenting means showering their kids with gifts and giving in to every whim, I see one or two that raise the kids to appreciate the value of money. Who teach their kids the age old values of respect and dignity; charity and generosity.

At the young age, children are like sponges. They learn an incredible amount from just observing their surroundings. And since they spend most of their time at home, learning begins at home. So, the first step towards instilling these time-old values is by example. We need to look into ourselves and see how we would behave in similar situations. It may not be obvious like an ice cream sundae that we run out of money for. How about that discussion over the kitchen counter about whether to tip the maid or not? Maybe junior is within ear shot and is learning from your hesitation to pay the tips that tipping is not that important a virtue after all. On the other hand, a kid that overhears someone compliment you about how generous you are or some other such talk, will learn to take pride in the value of giving at a very early age.

Next, we need to look at who we surround ourselves with. Are some of the friends cheapskates? We all know people like that. You know, the ones that brag about saving a few dollars because the cashier “did not count the change properly”? Our children will learn a lot from the way we interact with such people as well! It is important that we make it clear to our children at a very early age that behavior like that is not admired in our household. We need to admonish our kids when they bully other kids for lunch money or try to mooch off of other kids’ pocket money. It’s a delicate balance – to teach to generous and also be frugal, to share while still conserving. Values like this need to be taught while kids are still very young so they become second nature.

 

5 Budgeting Blunders

    1. Being too restrictive or strict

When people start out making a budget, they are usually motivated by some recent happenings in their life, or reading inspirational material on this subject, or some such event. So, when they set out to prepare a budget they are all excited and determined. This could result in a budget that is overly restrictive. This can be detrimental to any budget. Think of the New Year’s resolutions – at the start of the year millions of people vow to cut out all fatty snacks and to exercise everyday. Yet, only few of them continue to keep their resolution past the first week. The ones that succeed are those that don’t attempt any dramatic changes, but rather add healthy habits a little at a time. The same thing works for budgeting too. Instead of cutting out all the fun stuff in one shot, start slowly by reducing a little bit of the excess at a time.

    1. Trying to track every penny, or trying to track every single expenditure manually

When the better half and I started our war on credit card debt, we started out with a simple scheme. At the beginning of the month, we would write down all the bills for the month ahead, and decide how much would be paid towards each bill and leave only that which is absolutely necessary in the checking account. All day-to-day financial transactions were handled using a separate credit card, that should be paid in full at the end of the month. The reason this budgeting mechanism worked for us, and we were able to eliminate $40K+ in debt, is because, this system did not require us to track every penny, or to manually keep track of individual expenditure. Having to make a note of every expenditure and accounting for every penny can easily get very tiresome very soon, and could ruin the drive to stick with a budget. To this day, we use this mechanism of automating for our monthly budgeting where all but the absolutely necessary amount is automatically put into different accounts and only the amount left over in checking account can be spent. An expense can be charged to a credit card only if the bill can be paid in full at the end of each month, and we only use one credit card for day-to-day transactions making it easy to track our expenditure.

    1. Failing to plan for unexpected expenditures

It is easy to plan ahead for known expenses. For instance, every month you know how much is require for rent/mortgage, utilities, phone, transportation costs etc. In addition, it is possible to mark a part of the budget for miscellaneous expenditure too. But how do you plan for entirely unexpected events? That is where an emergency fund comes in handy. Determine how much you would like to have in your emergency fund. (Ben @ Money Smart Life has put together a great article about this with help from many other bloggers that you may want to check out.) Every month put away a small amount of your pay check towards the emergency fund. Without an emergency fund (or some form of fallback plan), it is easy for small disturbances to throw your whole budget off the tracks.  Read How To Save Money – My Best Money Saving Tips.

    1. Counting the chicken before the eggs hatch

This is the risk involved in any form of advanced planning. For instance, in our budget for this year, we had earmarked the money to be received in the form of annual bonus for payment towards our investment property. But to our dismay, we did not receive a bonus this year. For a while it seemed like things were going to be a bit bad, but we put off some vacation plans and shuffled things around a bit and managed the put together the required amount. I guess we were fortunate since we had a lot of wiggle room in our budget. Without the options to shuffle things around, things could have easily gotten quite ugly. It is necessary that you take your future income into account while putting together a budget, but make sure that the amount is not earmarked for critical expenses and that there is a plan B, if things don’t quite work out the way you expected.

    1. Finally, its all about the attitude

If you start out with a budget thinking that it’s a boring chore, very soon it will start to grate on your nerves and you will find it hard to stick with your plans. Even the best intentions will be useless if you cannot follow through. So make sure you start out with a good attitude. Think of it as the ticket to your financial freedom. Revel in your reduced debt. Take pride in your bank balance as it grows. Think of it as a challenge to go from where you are to where you want to be. Dream of retiring in a calm serene place. OK… that’s my dream, you can replace it what you want 🙂 But you get the idea. Make budgeting fun. Make it something you want to do instead of something that you have to do.

Murphy’s Laws for the Workplace

(This post is a part of the “weekend’s are for fun” series.)

Law 1: When you are hard at work, no one notices. The moment you open your browser and start surfing, your boss will walk in.

Law 2: When your stock options finally vest, they will be worthless.

Law 3: If you are in a meeting making a presentation to all the big shots, your laptop will freeze right in the middle of the presentation.

Law 4: If you are in a meeting with some lame-ass peers, the presenter’s laptop will not freeze even if there’s blood oozing out of your ears from all the boring droning.

Law 5: If a product fails, it’s because you are a stupid engineer. If the product is a runaway success then it’s because of the great management your company has!

Law 6: If a company claims to have a good work-life balance, beware. The definition of work-life balance usually is — you do the work, the upper manager has a life.

Law 7: You will be paired with the biggest moron on the team, if your project is technically challenging.

Law 8: You will be paired with the biggest credit-grabbing kiss-ass on the team, if your project has high visibility.

Law 9: You will be paired with the laziest bum on the team, if your project has tight deadlines.

Law 10: If you are a I-like-a-quiet-workspace person, your cube will be right next to the office gossip spending all the time gabbing on the phone.

Law 11: Conversely, if you are an office gossip, your cube will be right next to the I-like-a-quiet-workspace kind of person, so you don’t get any juicy gossip.

Law 12: If you have a product that can make coffee, prepare presentations, and create kickass code all by itself, your marketing team will come up with an ad campaign for a garden variety boring widget.

Law 13: On the other hand, if your product is really just a garden variety boring widget, your marketing team will promise a 100 different high profile clients that you will deliver a product that can make coffee, prepare presentations, and create kickass code all by itself, and while it’s at it solve the world hunger problem.

Law 14: When you don’t have any hobbies that can be done easily from a work place, you will have no deadlines and too much time on your hands. The moment you pick up a hobby that can be done from your work place (hmmm…. blogging?), it will shower deadlines.

Law 15: Your clients will almost always want the product immediately after a long weekend so you can work while the rest of the world is having a vacation.

Law 16: If the deadline is just before the long weekend, something will keep breaking, preventing you from completing it on time.

Law 17: There will always be a traffic jam on the mornings that you wake up late, and have an early meeting.

Law 18: Every time you go to the coffee room, there will be the last cup coffee left and now it’s your turn to brew a fresh pot.

Just venting out some steam. It’s quite therapeutic actually! Feel free to add your own “Murphy’s Laws for the Workplace” if you would like 🙂

Lessons from “Think Like a Kid, Make Millions…”

In my last post I discussed an episode of the TV series Big Idea which airs stories and interviews with successful entrepreneurs. This particular episode was focused on parents who noticed what their children needed/liked, came up with clever ideas and pursued these opportunities to become millionaires. What I found most inspiring about this episode was that every single one of these millionaires were at some point regular moms and pops going about their every day business just like you and me. When opportunity came knocking, they did not hesitate to open the door. And let it walk right into their possibly very busy lives and let it change the course of their destiny. Today we look at some of the lessons we can learn from their success. Who knows, someday others might be watch you and me on TV discussing about our rags-to-riches stories 🙂

Not all success stories start with a business plan
Out of the six stories we looked at, only one started out with a formal business plan! In the other cases, it was just the business of going about the every day life that brought these people in contact with the opportunities that eventually brought them success. They just had an open mind and the enterprising spirit. How about you? Are you prepared to let an opportunity walk into your life? Or are you so busy looking for one, then you will not realize if one were to come looking for you?

When life gives you lemons, make lemonade
While all the stories are inspiring, there was one that touched me a lot. It was the story of Amilya of Soapworks. When she found that her child was severely allergic to allergens in common detergents, she started making her own soap. Her home made soap helped reduce her son’s allergies, so she started producing more and distributing them to other parents with children suffering from allergies. It was these people who saw the benefit of her soap that urged her to make her product commercial. Now if you are cynical, you may scoff at the story as a bunch of marketing BS. Well, it may be. And it may not be. Whatever is the truth, there is a lesson to learn here. If life gives you lemons, make lemonade!

If you think you have a killer product, don’t give up because others don’t see a potential yet
If someone told you they had a bar of soap they made in their kitchen sink, would you buy that? Or would you rather buy a branded soap at the super market? If someone told you they want to make toys with a lot of satin tags because “kids love them”, would you fund that project? Most likely not. And yet, these ideas made their thinkers millionaires. You need to have faith in your ideas. Until it is a success, nobody else can see the potential quite like the way you can. So if you think you have something worth pursuing, go for it. Do not listen to what others have to say.

Now is always a good time to start something
All of these people had a life going on when the ideas struck them. Some had corporate jobs. Others were home makers with three kids. They all had busy schedules. And long to-do lists. If they had put off the idea until the time was right I doubt, we would be talking about them today. Life keeps happening around you. If you think you have an idea that worth pursuing, now is as good a time as any to go for it.

Be willing to work your butt off
While all of them seem to have accomplished a lot in a very short period of time, none of it happened overnight. And during the early stages, people kept their day jobs. Launching an idea off the ground is a lot of work. One common thread I found in all these stories is how hard they had to work at it!

You need to have the passion
I am sure every single one of these ventures had a stage where things were successful enough to keep the owners very busy, while at the same time not successful enough to be able to afford additional help. And I am sure every single one of these ventures also had a time when it looked like all the efforts were in vain. Add to that the pressures and demands of every day life. In order to survive through all these, you need to have a passion for what you do!

Scope out the market, check out your competition
There is a fine line between believing in yourself in spite of what others say, and embarking on a grand venture while being completely out of touch with reality. You may believe you have the perfect product. But can you make others believe so too? If not, how do you plan on selling your product to them? What are the other products out there can eclipse you? How is the competition doing? Keep your head in the clouds, but your feet planted firmly on the ground!

Check if you can patent/copyright your idea/product
I think two of the stories talked about this. It is a brilliant idea. Yes, a patent attorney will charge you $100 for an hour of consultation. But if he can find a way such that you, and only you, have sole rights to a product that you have thought up, then I think that $100 is money well spent. If you think you really have a killer idea, then looking up the options to patent/copyright the idea, should definitely be high up on your to-do list.

If the company gets too big for you to handle, don’t hesitate to get a partner, or sell the business
Several of these people had partners. Some of them sold the business when it started to get big. Yes, it may be your baby. But you need to know when to hold on and when to let go.

One of the things I like about being in the US, is that it really is a land of opportunities. If you have an open mind, then opportunities will find their way to you. With some hard work and a dash of luck, you can really rise from wherever you are, and get to wherever you want to be. If you are one of the fortunate ones that have already started on an entrepreneurial venture, good luck! Maybe I will write about you some day 🙂 If not, then no need to fret. Just keep your mind open, and I am sure an opportunity (or two) will find its way to you!

How Frugal Are You?

Ask a bunch of people about what frugality means to them, and chances are you will have as many different answers as the number of people you spoke to. Frugality, to me, is like a dial with a spectrum of choices rather than one fixed way of doing things. Moreover, depending on the circumstances and the situation you are in, you may choose to set the knob on this dial to different points. At one end of the dial are severely miserly folks who are so cheap all the time that it disgusts you to be in the same room as them. At the other end of the spectrum you have the seriously non-frugal, spendthrift people, who give in to every indulgent thought that occurs to them and go into debt to fuel their extravagance. In the personal finance blogosphere though I think most people aim to find a balance between the two extremes. Yes, there are some admitted misers (names omitted – who am I to judge?). And there are several people who were spendthrifts at some point in time (including me, to a certain extent), but are now moving a knob of the dial a little bit at a time towards achieving a more frugal lifestyle.

Let’s look at this spectrum in reference to some of the discussion in the finance blogosphere. Let’s start at the extreme that disgusts many of us – the cheapskates. So what separates cheap from frugal?

There is a lot of discussion about this in the finance blogosphere. The two posts that I like a lot, as much for the content by the authors, as for the comments by the readers, are Ramit’s post about cheap vs frugal @ I will teach you to be rich and JLP’s Question of the day – frugal vs cheap @ All financial matters. From the discussion in those posts (and in my opinion) this is more of an attitude issue. It is about whether a person is responsible (frugal) or selfish (cheap). It is about whether a person tries to save money at the expense of others (cheap) or tries to save money provided it does not have negative impact on others (frugal). It’s about whether a person foregoes a coke but leaves a tip (frugal) or whether a person forgoes the tip, but has the coke, or not (cheap). It’s about character and behavior. I think the quote below by Ramit sums it up beautifully –

Cheap people care about the cost of something.
Frugal people care about the value of something.

 

As we move up the spectrum of frugality, the next set of people we see are the extreme frugalists. No, they are not necessarily cheap. But they take frugality to an extreme. Consider these posts for example – Extreme Frugality: Growing Tomatoes In A Bra And Other Interesting Frugal Ideas by Golbguru @ Money, Matter and More Musings and Seriously Thrifty? Some Wild Ways To Save by SVB @ The Digerati Life. Before the authors come at me with a stick, let me point out – the authors do not claim to be extremely frugal – these are just some amusing methods that they have come across and have presented it on their blogs for our amusements. There are a lot of possibly practical, but amazingly whacky ideas here that I could not bring myself to use no matter what. For instance, I would never smear mayonnaise on my body to save some money on moisturizers, or ever impose a limit on the number of squares of the toilet paper that can be used in my household. Eeewww.

That said, some people do practice extreme frugality. Maybe out of necessity, or maybe out of habit. I have an aunt back home who was raised in a family with limited resources. In her mind, telephone is a luxury not to be over indulged. Now, she is quite well off. But she has never owned a cell phone. And even when we call on a land line she is very abrupt in her conversation, even though back home, incoming calls are free. When she does talk, she speaks very briskly to cram as much as possible in as little time as possible – like in one of the ads that used to air on TV. No kidding. We have asked her several times to relax, but the habit is just too ingrained in her. Even though phone calls cost only a few pennies per minute, and we being so far away from home crave for these conversations, she scolds us that we should be more careful and not throw away all our money at the telephone companies, and hangs up!

The next part of the spectrum of frugality is where I believe most of us belong. It is a broad range though and different people find different things that work for them. For instance, Dawn at Frugal for life recommends that you use coupons and consider them equal to money while Nick @ Punny Money cannot make it a part of his life style even when he consciously tried. Some people prefer to drive an old car – for instance I wrote here why I was not going to buy a new car. While others prefer to go for it but make sure they get the best bang for the buck. For instance Nickel @ Five Cent Nickel wrote about his experience of buying the vehicle they really wanted here. Tricia @ Blogging Away Debt skips professional haircuts for her whole family (including herself!) as part of her frugal routine. On the other hand, the English major @ An English Major’s Money spent $200 in one visit to her hair stylist! While that may sound extravagant, based on her other articles, I get the feeling she is a fairly frugal person.

What I am trying to get at is, the knob on the frugality dial is set at different points for different people. What one person is comfortable being frugal about, the other person might consider his/her main indulgence. One of the frugal blogs I love reading is by Jenn @ Frugal Upstate as much for the great frugality tips as for the solid frugal philosophy. But I was quite surprised to read an article where she confesses that in her household, for two drivers, they have 3 motor cycles, 5 cars and a camper. Does that suddenly make Jenn any less frugal? Heck no! Like I said before, I believe that we not only choose which part of the frugal spectrum we want to be, but also, vary our choices based on a particular situation.

There is no hard and fast rule as to what is frugal or how frugal one should be. What I strive for is to make frugality a part of my subconscious mind, so that every time I have a choice to make, I find the spot that is most comfortable for me on the frugality dial, in terms of pleasure, dignity, self respect etc., while managing to remain frugal. It’s a balancing act – if you push too hard, the quality of your life and relationship will degrade dramatically. The graph below makes an effort to plot my frugal philosophy.