White Orchid Melody

Everyone wants to save a buck where they can, but in our daily lives we often miss those opportunites.  You really have to pay attention to make sure you are getting the best price.  For example, we were getting cat and dog food at Petsmart last week, and the label on the shelf showed $5 off the regular price of dog food.  When we got to the check out, however, it rang up at full price.  Fortunately I was paying attention.  I explained to the cashier that the food was labeled $5 off on the shelf.  She had to walk back there with me to verify this, of course.  Turns out the tag was from last week’s sale, but since it was still on the shelf, she honored the price, and we saved $5.  That is a pretty good return on an investment of 2 or 3 minutes of my time.  It shows how important it is to make sure your receipts reflect the advertised prices.

Other times, it isn’t so simple.  We recently bought a travel system (carseat/stroller) for the baby.  This was one of the most expensive baby purchases we’ve made.  The day we checked out they gave us coupons for 15% off starting the next week.   That was annoying.  I’d liked to have saved 15% on that item!  Then, the next day I get a 15% off coupon emailed from the store, which was even retroactive a few days.  Had they sent it on time I could have used it on the travel system.  I debated on whether we should return the system (we haven’t used it yet) and buy another with the coupon.  The coupons say “not valid on prior purchases” so I didn’t think they would do a price adjustment.  I debated over this for just over a week, then decided I should at least call and speak to the manager.  When I called and explained the situation, she said they typically only make adjustments for the first 7 days, which I’d just missed.  So, I asked her if she could make an exception.  She said yes, I’d just need to come into the store and see her for the refund.  That saved us $43!  And we didn’t have to go through the hassle of returning the item.  It pays to ask! 

I had a nice breakfast friday, with some friends with whom I’d worked at May Co.  We got to talking about how different our lives are now versus when we were working.  We were all making quite a bit of money, especially by midwestern standards.  But we were all equally miserable.  Where did all that money even go?  I can’t believe how much I spent on clothes and shoes and crap for the house.  A bunch of stuff I really didn’t need.  And I probably wasn’t as bad as most people.  But it was like a compulsion.  I’d go to a store and feel like I HAD to buy something.  It was a way of filling the void left by an abusive workplace.  We were so degraded there.  There was constant criticism.  Our VP even admitted once that they were so negative and hard on us because they truly believed we wouldn’t work as hard if they gave us praise.  Wow, hard to believe that company went out of business!  Anyway, all three of us are on different career paths now.  We could have gone and gotten fashion jobs making as much or more than we were at May, but we opted out of that whole scene.  We were all really burnt out and bitter and our self esteem had suffered.  We each realized that the money just wasn’t worth that. So even though our household incomes had been basically cut in half after quitting, we were much happier.  And the interesting part was that our standards of living hadn’t really changed.  All that money was pretty much down the drain to make up for our misery at work.  I think a great deal of Americans fall into that pattern of rewarding themselves for putting up with an awful job, whether it is through shopping, drinking, or whatever addictive entertainment makes those 40+ hours a week tolerable. And why? For an illusion of security?  Because working a 9-5 (or so) is a guaranteed paycheck?  Well tell that to all those who’ve unexpectedly lost their jobs due to mergers and consolidations.  There is no such thing as job security; it’s like Santa or the Easter Bunny.  Of course, sometimes a job is necessary.  Somebody has to bring in the money to pay the bills.  The point of my reflection on my working days is that they were a big waste of my time because of how I spent my money.  I should have been stashing away as much of my paycheck as possible to pay off student loans and for savings.  At least that would have some tangible benefit for the future.  If I had to have a job again, I would look at things very differently.  I would make sure I was maximizing my income and using it in the absolute smartest way possible.  It never makes sense to say “I deserve this because I work so hard.”  If you wouldn’t buy it if you didn’t have the job, you shouldn’t buy it at all.  Reward yourself by building a nest egg that will either let you retire from your job early, or maybe just quit altogether and pursue a different path.  But realize that spending your money by shopping for things you really don’t need or by eating out all the time or by going to happy hour every friday won’t solve the problem at hand.  That is just treating the symptoms, not what is causing them. 

I’ve been reading a book that I checked out from the library entitled, The Complete Tightwad Gazette.  It is basically a series of newsletters from the 6 year run of the Tightwad Gazette.  It is a compilation of articles and research from the author, as well as lots of helpful hints sent in from readers. 

The tips tend to be about getting the maximum use out of the minimum expense.  So, buying things used (or getting them free from friends/family) and then maintaining them rather than just throwing them out when they need a repair.  This is fiscally and ecologically sound advice.  I once read an article by a “green” home designer who pointed out that spending extra money for “green” was absurd because the most economical choice was usually also the most ecological choice, such as building a smaller house.  The author of the Tightwad Gazette, who titles herself, the “frugal zealot” points out that there are a few cases where buying new is best, such as with freezers/refrigerators (due to improvements in efficiency) and with computers (due to improvements in technology).  But almost everything else, she buys used or salvages from free sources. 

This got me thinking about my business plan for the shop I’d like to open.  I’m working with a consultant on this and have written the business plan and even did a “faux shopping” exercise where I priced out everything I’d need for the shop.  Well, turns out it was going to be much more expensive than I could afford to open.  So, I have a few choices.  One, abandon the idea altogether and find something more attainable.  Two, save up for years and years until I can afford it.  Or, three, find a way to do it cheaper.  I’ve been pondering over that last option for a few months now.  How can I make this happen sooner and for less cash?  I wasn’t really thinking about the business when I started reading this book, but then I read an article in the book about a lady who had started a bed and breakfast.  They bought the 20 room Victorian as a fixer-upper and started by renovating the common areas and a few guest rooms.  As they brought in money from the first few guest rooms, they worked on renovating more.  Meanwhile, they furnished the place with elegant pieces from estate sales, yard sales, flea markets and the like.  They also bartered and traded for certain items.  They had a dream and made it happen on their terms.  How inspiring! 

So it got me thinking about my “faux shopping” exercise.  I’d chosen everything brand new from retail sources.  I’d found the cheapest versions for the look I wanted, but still, I was paying a premium for all that “newness.”  What if I took the time to accumulate the items from a variety of thrifty sources, including yard sales and thrift shops?  How would that affect my budget?  I think it could make a huge difference.  Some of the ideas that appealed to me:

1.  Estate/Yard Sales - tables, chairs, storage pieces, baskets, kid’s paint brushes, decorative items such as faux foliage, flatware, serving dishes, books

2.  Flea Markets - decorative items, furniture

3.  Building Supply (or surplus) Stores - the ReStore, run by Habitat for Humanity, has a random, ever-changing selection of building supplies, from tile to cabinets, to windows.  Some of these items could be transformed into storage and display pieces for the shop.

4.  Home Improvement Stores - reject paints: the ones that people had mixed and then didn’t claim, or that were mixed incorrectly.  This could be great for adding color and fun to the salvaged furniture. 

5.  Other - I’d also like to look into going out of business sales and overstock type outlets.  I’m not sure what exists in this area, but even a trip to Chicago could be worth it, if there were some good sources for used/discount supplies.

The biggest chunk of change in my business plan was the rent on a space.  The area I was originally looking into was fairly expensive and buying was not an option.  But I’ve been considering other neighborhoods, such as close to our own home, where we might be able to purchase as space, rather than leasing.  Ideally, we’d find an old building with storefronts on the lower level and apartments above.  We could rent the apartments to cover some of the mortgage, which would ease some of the business expenses.  Plus if you own the building, you can build out however you’d like. 

We’re not the average entrepreneurs who would need contractors and such to fix up and outfit a space.  That will be a great savings on our part.  If we own the building and are getting rental income from residential space, we can take our time fixing up the retail space without the pressure of that monthly rent outlay.  So the combination of buying our own building and outfitting it with frugal finds gives me hope that my dream of opening the shop in the not so long term future may actually be possible.

New Year’s Resolutions are an interesting thing.  They are notoriously broken or forgotten about.  It was interesting just working at the Y last year, seeing all the people sign up at the new year and within a few months fall by the wayside.  I think the issue is that one day doesn’t change who you are or alter your well ingrained habits.  I think desires change as well.  I wanted to post some of my resolutions or goals for the year in a series this week, starting today with our financial goals.

We had a list of goals for 2007, most of which were not met.  I don’t feel bad about that because there were other priorities.  For example, one of the things was to buy another investment property.  But we’ve had a vacant unit for 6 months, so obviously it wouldn’t be prudent to buy another property until our cash flow is better.  That goal is on the list again for this year though.  I think we’d both like to find a property that doesn’t require as much work however.  With a baby we won’t be able to go through the same labor intensive process anyway.  And honestly, I question how much our labor paid off.  On our last building, we finished the work and started the refinance process expecting a certain appraisal.  The appraisal came in low due to the appraiser being overly conservative and running comparables against buildings that weren’t comparable.  Because of that, we weren’t really rewarded for our labor in terms of being able to extract cash for repaying the fix up costs, much less having cash for another purchase.  It was a very frustrating experience.  So, for the next building we may be looking for something that just requires some paint and primping up.  With the market down, we may actually be able to find something that is in decent shape and has cash flow.  Anyway, it’s on the goal list again, so we’ll see what happens. 

Also on my list is to re-read and actually do the exercises from Your Money or Your Life.  I’d checked it out from the library and read it, but I wanted Brian to read it too.  I think the exercises are best if done together as a couple.  So, I bought it for him for Christmas (but I guess it was for both of us).  Anyway, I think we’ll read a chapter at a time together and go through and do the exercises.  I think it would help to bring us where we need to be with our finances.  Not that we really have any issues looming, but with a growing family it will be easy to let expenses slip in here and there.   I guess I’d just like to have a better mental grasp on everything. 

Along with streamlining our finances and saving money, we’ll continue to simplify our life as much as possible.  Brian has been going through the basement pulling things to post on craigslist.org.  He’s sold a couple of things so far.  Whatever doesn’t sell there will be in a big yard sale this spring/summer.  Then whatever is left will be off to Goodwill.  I’d like to purge as much as possible.  A person really needs very little.  We have all sorts of crap we don’t use.  We’ve even talked about moving into a smaller place, a two family unit perhaps, to motivate us to downsize further.  It would actually be nice to get rid of so much junk that the house would feel too big and then move to a smaller space.  That would be more efficient than moving and then trying to deal with whatever didn’t fit!  Either way — whether we stay here or move into a smaller place, it will be nice to have less stuff around.  The other compelling aspect of moving into a two family would be the financial benefit.  Right now we have equity tied up in our home that we could be using to generate cash flow from an investment property, and we also have a mortgage payment.  With a two family, that equity could be transferred into an investment, and while one apartment wouldn’t pay the full mortgage, it would pay a good bit of it.  That would free up cash for us to pay off our student loans faster.  I am very grateful for my education, but it is amazing what a burden those student loan payments are!  It would be nice to have those paid off as soon as possible.  Then once we had the student loans paid off and that cash free, we could consider a single family home again.  I don’t know how likely that scenario is; we are both pretty comfortable in our house.  But it is under consideration.  It is important to think outside the box and challenge preconceived notions about what you really “need.”  Resolving to continue simplifying means constantly asking yourself whether all the stuff in your life adds value or just drains resources. 

I finished reading Your Money or Your Life.  Now I’ll go back, reread, and apply the techniques.  There was a chapter on defining work that got me thinking.  One of the concepts was to take the pressure off finding the perfect job by realizing that the only thing you get from a job that you can’t get elsewhere is pay.  So, find a job with good pay and maximize the return on your time.  Meanwhile, you minimize expenses and increase savings until you have enough savings to produce passive income to cover all your expenses.  Then you can work your dream job without having to worry about how much money you make doing it. 

Well, I want to open my own shop and I’m torn on the timing of it.  Do I open it in the next year and use that to make money, or do I wait until we are financially independent to open it so that I don’t have to stress over whether or not it is making money?  According to this book, I should employ myself in whatever ways make the most money.  It is highly unlikely that a shop would bring me more money than some of the other things I’m qualified to do.  But, as a business owner there is an investment and potential return if you grow it into a successful endeavor and then sell it.  Having the shop without worrying about income is a comforting thought–the easy way out.  It lets you off the hook of having to work hard to market and grow the business.  It makes failure less scary.  Going out on your own while you and your family depend on your income is daunting.  That fear of failure looms large.  But successful people are those who are willing to take risks. 

I tend to overthink everything.  I want the planning completely done before I take a step.  Which means I don’t take many steps.  I find myself deliberating over whether I should pursue multiple paths to income or find a lucrative, yet tolerable full time job.  With a baby on the way, I lean away from any full time endeavor.  My fear on either path is that I won’t like what I choose and will have wasted the time and effort getting there.  Meanwhile, I waste all sorts of time with this internal dialogue, debating with myself.  I keep telling myself “just do it!”  But my brain keeps answering back, “do what?”  The answer is probably “anything.”  I guess I need motivation.  A reason to make the effort other than my own happiness since I’m capricious and happiness isn’t guaranteed.  Perhaps I could pursue any of the fifty different ways to make money with the goal of saving that money to open a shop.  At least then there is a fixed goal. 

I started reading Your Money or Your Life this week.  If you’ve done any reading about simple living, you’ve probably heard of it.  I must admit, I was a bit skeptical.  As I have mentioned before, I think frugality often goes hand in hand with a scarcity mentality.  So I was a bit wary of a book all about frugality.  But, I’ve been pleasantly surprised.  It’s actually much more in line with my views than I was expecting. 

It encourages you to align your spending with your values, through a system of tracking and charting.  I haven’t started any of the tracking yet, as I want to read through the whole book first.  I think Brian should read it too, then we could track how our spending relates to our values as a couple. 

The chapter I read last night asks you to redefine what “work” means to you.  A job is just “paid employment.”  The only thing you get from your job that you can’t get elsewhere is the “paid” aspect.  All those other reasons for going to work, social fulfillment, learning opportunities, time structuring, you can get from other sources.  The authors talk about how people search for a Mr. or Ms. Right Job like they would a significant other.  This puts pressure on people to have all their needs met in one place, which is impossible.  Even those who love their jobs don’t get all of their physical and emotional needs met there.  So, I guess the overall concept (though I’ve not finished the book yet!) is to reduce your spending to align with your values, start thinking of “paid employment” as what you do for money, and then, either work until you save enough to not have a job, or spend less time on your job so that you can spend more time now on the things that truly gratify you. 

One of the difficult parts of this for me is finding passion and value in my life outside of paid employment.  I hardly know what to do with myself without that….Obviously I wasn’t put on this earth to design clothes.  So what then?  Even with thinking of starting businesses you need a value base underneath that goes beyond your motivation to make money.  I’m still working on what that means for me.  I bought into the whole “go to college, get a great job, work hard, buy things” mentality really early.  It’s hard to break that now.  But I’m still young and so ahead of the game, I think. 

I’m grateful that Brian and I are figuring things out now.  We’ll be better parents for it, just knowing that there’s not one formula for success, but rather a system of trial and error.  I think it is really important to teach your children that it is okay to make a mistake, just learn from it and move on.  I’ve always been terrified of failing, which in turn makes one risk adverse.  I have lots of great ideas but have a hard time acting on them because of the fear of failure.  It isn’t always obvious that fear is the problem, sometimes it looks like there are a million other reasons.  But that psychological state of fear attracts all the obstacles into your path.  A self-fulfilling prophecy of sorts.  So, I think the book will be helpful in reevaluating what my values are and how that relates to what I earn money from and spend money on.  If you have a strong value based reason for pursuing a business endeavor, you are less likely to let fear block your way.