Coffee heat rising

Money Happens!

Well…we could say it re-happens. Got a tax refund of $2300, mostly because the college withholds taxes even though I don’t earn enough to pay them.

In an anchorite’s world, that’s a very nice chunk of money. It means I’ll have to draw down nothing from retirement savings to cover Q2 living expenses, and much less than planned for Q3. All the while, m’dears, not teaching freshman comp.

mwa  ha  ha!

It also plumped the Survival Savings fund, the “pool” that’s fed quarterly from Fidelity, from The Copyeditor’s Desk, and from teaching the online magazine writing course, and from which I draw a monthly allowance to meet expenses. It’s right back up to where it was on January 1.  Before the first-quarter disbursal, that fund had about $12,600.

I couldn’t freaking believe it.

So. Barring any new windfalls, Survival Savings will end the year with a balance of about six grand, significantly better than planned.

Since I probably can dispense with the Q3 drawdown from the S-corporation of $360 (we transferred most of the planned 2013 distributions in the form of loan repayments and dividends), in 2013 earned income should come to a grand total of $4800, for the two online courses.

2013 Pool

Meanwhile, revenues are flowing in to the S-corp at an acceptable rate. I’m not working very hard — believe I’ve developed an allergy to work — but I don’t have to work very hard to earn enough to adequately supplement Social Security, a 4 percent drawdown from savings, and the most minimal teaching schedule possible.

God is great, beer is good, people are crazy.

Stress-Free Finances: Close Out Revolving Debt

The biggest drain on your budget—and one of the biggest financial stressors around—is revolving debt: credit card and store card debt. The availability of easy credit in this country has had strange effects on the consumers’ psychology and on the way businesses work; IMHO it’s not especially good for either party.

The other day I saw an ad for those Bose headphones that are supposed to block out ambient sound, creating the illusion of silence. Like all things Bose, they’re expensive: three hundred bucks. So, the company offers an “easy” 0% payment plan on purchases between $299 and $1500.

Wow! For just $25 a month, we can have this miraculous electronic object, right now! Who can’t afford this? Let’s order one today…

What’s wrong with this picture? Well, to start with, that’s $25 a month that you’re committed to pay, not that you can pay if you happen to have an extra twenty-five bucks laying around. If something happens to stress your budget—you have a big dental bill; the kids need money to go on a school field trip to the marine biology station in Baja California; some chucklehead rear-ends you and you have to pay a big deductible on your car insurance—suddenly, it’s not so affordable. And to end with, when you realize you can get your hands on things you want without paying for them, quite naturally you’re likely to start grabbing everything you can get.

The result is your debt, most of it costing a lot more than 0% interest, soon gets out of hand. It starts to consume more and more of your monthly income, until you’re saddled with never-ending debt payments that leave nothing for you to spend on anything more than debt repayment and bare necessities. The cost of what you’re buying on the cuff increases by the amount of the interest: if you’re paying 18% interest on some credit card, a $100 purchase actually costs you $118. This means the value of every dollar you pay for an item is actually only 82 cents: $1.00 less 18 percent.

Meanwhile, businesses and lenders love it. Or so their management thinks… For the nonce, you’re buying with abandon and paying through the nose for the privilege. Merchandise is moving briskly, and you’re on the hook for a lucrative debt from which you may never get free. You are, in short, a cash cow.

However, eventually the cow will run out of milk. At some point, you will no longer be able to purchase much of anything, even necessities, especially if you lose your job or some other hardship comes your way. When people face hardship, as has been the case after the 2009 economic crash, they stop buying. And when consumers stop buying, businesses go belly-up.

That’s why, in the long run, revolving debt is as bad for business as it is for you and me. Eventually, it will drive us all into the hole.

The solution is easy: buy things when you can pay for them, not when you want them. If you can afford to pay $25 or $100 a month to a credit-card issuer, you can afford to pay $25 or $100 to yourself. Put the money into a savings account, and when you’ve accrued the $300 for the marvelous sound-blocking headphones, go to the store or the online site and buy them—and pay for them. In cash.

Now you own them; they don’t own you.

But what if you’re already in debt up to your schnozz? What if you’re at the point where all you can do is make the minimum payments on an array of credit cards that could be used to play Blackjack if only they had spades, diamonds, clubs, and hearts printed on them?

It’s discouraging, but it’s not hopeless. Lots of people have managed to get out of debt, and you can do it, too. Here are the strategies:

First, stop charging! Take the credit cards out of your wallet and stash them in your file cabinet. Until you get the debt paid off, if you can’t buy something in cash, don’t buy it. Put off purchases, large and small, until you have the cash to pay for them.

Next, try to consolidate credit-card debt on the lowest-interest card you can get. Some lenders offer rates as low as zero percent for limited periods. Try to transfer as much of your balance to a low- or zero-percent card as you can, giving yourself a period in which to pay down the balance that you can’t transfer first.

Call your card issuer and ask if you can work a better deal. Sometimes you can negotiate lower minimum payments in exchange for a higher interest rate, or a lower rate if you agree to make higher minimum payments.

I personally would never borrow against my house to pay off credit-card debt, because it’s too risky. However, if you still have equity in your house and you’re facing credit card debt in the range of thousands of dollars—and you know, beyond a shadow of a doubt, that you can be disciplined enough to pay it down and to stop charging on cards altogether—interest on a home equity loan is lower, by far, than credit-card interest, and it’s tax deductible in the same way mortgage interest is.

Once you have the debt moved into the lowest-interest instruments you can find, pay it off as fast as humanly possible.

To accomplish this, make a plan and stick with it. Write down your goals, figure out how to meet those goals, and write down your scheme. Post it on the refrigerator and check off your progress as you go.

The most commonly used plan is called “snowballing.” With this strategy, the debt-ridden consumer quits charging, continues to make minimum payments on all cards, and throws a specific extra payment toward principal on a specific debt. Say you owe on a Mastercard at 8 percent, a Visa card at 15 percent, and an American Express card at 21 percent. You would figure out what you can afford above and beyond minimum payments—suppose it’s $100 a month—and you would pay that toward the card that charges the highest rate. In the scenario above, you’d pay your extra $100 a month on the AMEX card.

As soon as that card is paid off, you take its minimum payment plus your $100 paydown budget and apply it to the next highest-interest card. So, if your minimum payment for the American Express card was $20 a month, you now have $120 freed up to pay toward the Visa card. Once the Visa card is paid off, you would add its minimum payment into your pay-down budget and apply that to the Mastercard. Supposing the Visa’s minimum payment was $15 a month, as soon as that card is paid off, you’ll have $135 a month ($120 + $15) to pay toward the Mastercard.

Your paydown budget is the maximum that you can afford. If you quit charging things and make it a point to live frugally, you may find that amount is a lot more than you expect. And building the paydown budget cumulatively will allow you to clear debt much faster than you may think.

Some people prefer to pay down the smallest debt first, rather than focusing on the debt with the highest interest rate. Psychologically, this is cheering: it feels great to get out from under a debt, any debt. Apply whichever strategy makes sense to you and will help you keep on track.

To “snowballing” you can add “snowflaking”: using every windfall that comes your way to pay down the debt. In this strategy, you apply your income tax return, your annual kickback on the Costco AMEX card, gifts in cash, yard-sale proceeds, income from side jobs, and every other nickel and dime to the debt you’re working on.

So…where do you get the money for that extra $100 or more a month? Two sources are at hand:

Side jobs and incidental income sources.

Generate More Income

Take on an extra job and apply all the net income to the debt.

About a year before the ax fell, I began to realize the Great Desert University would likely lay off me and all my staff. I had a $30,000 equity loan against my otherwise paid-off house. I did not want to have to deal with that in unemployment, and so I took on an adjunct teaching job at the university’s west campus. At the time, GDU was paying Ph.D.’s about $3300 per class. When they double-enrolled my two sections, I demanded—and got—double pay, earning the equivalent of teaching four sections. Between this amount, freelance editorial income, assiduous snowflaking, and a payment out of my savings, I succeeded in getting rid of the debt by the time the official canning announcement came down.

Most of us can find some paid work on the side. Deliver Away Debt’s blogger Jeff discovered he could earn $1400 to $1800 a month delivering pizzas for 22 hours a week. At that rate, with just the side job money alone, you could pay down a $30,000 debt in about 16 months.

Another source of income is selling things on Amazon, Craig’s List, and eBay. Clean out the closets, get rid of the dustcatching book collection, buy items at yard sales and estate sales and sell them for a profit online.

My neighbors used to run an under-the-table yard sale business. They would spend three or four  months running around to yard sales and scavenging throw-aways from the alleys (you’d be amazed at the perfectly good stuff people will discard!). They’d store the stuff in the garage, and then three or four times a year they would throw a huge yard sale. Over time, they learned how to price the stuff, and they made pretty good money at it.

Live Beneath Your Means

Your “means” is the actual amount of dollars you have on hand today, right now. Not tomorrow. Not next month. Not next year. Today.

That’s the principal behind frugality. Know how much you have on hand to spend, and spend only that. Or better yet: spend less than that—live beneath your means.

Remember, when you pay for something in cash, your dollar buy more because you’re not having to pay a premium in credit card interest. Each dollar is worth a whole dollar, not a dollar less 18 or 20 cents. Weirdly, when you don’t charge things, you have more money to buy things. So, as you can see, it actually pays you money to hold off purchases until you can afford to pay for them outright.

Much has been said about frugal living. Overall, though, its strategies look like this:

Live light on the land. Distinguish between needs and wants, and purchase and use only what you need.

Cultivate a minimalist lifestyle. Occupy only the space you need, and fill it only with the objects you need to live comfortably.

Figure out how much money you can spend and how much you can save.

Build a budget to manage spending and saving.

Use it up, wear it out, make it do, or do without. Often you’ll find you already have something that does the job, or in fact you don’t need to replace an item because you don’t really need it.

Buy things at a discount or don’t buy them at all. If a food or drug item you need is not on sale, buy the store brand, which is the made by the same suppliers that make the expensive brands and is cheaper.

Eat in, not out. Learn to cook. It’s easy, the food tastes better, and it’s healthier. And by the way, it’s lots cheaper.

Learn to fix things yourself. It’s not hard to change the oil in your car, and most of us can learn to use a screwdriver and a hammer. While some chores need a pro, many need little more than a few minutes of your time.

Learn to make things yourself. From household cleaners and toiletries to simple draperies, DIY products save a ton of money.

Shop at estate sales and thrift stores. Nowhere is it written that everything we purchase must be brand new. In fact, sometimes we can get better products by finding practically unused items second-hand.

Frugal habits can save quite a bit of money—enough that you will soon find yourself spending less than you budget. Use the amount to pay off that debt. Once you’re debt free, use it to live better or save it to live better in the future.

Stress-free Finances: Bank at a Credit Union

Yesterday morning I e-mailed the credit union to ask about prequalifying for a loan, should I decide to buy the house I’m presently coveting. Though my house is paid off and probably, when sold, will net enough to pay for the adored other house, which is on the market as a short sale, in the present conditions it could take quite a while to sell my house. So I’ll need a bridge loan to get into someplace else.

Forthwith an answer arrived in the mail. The lending overseer there suggested using their online form, but since it’s pretty generic and doesn’t allow me to explain that I will pay off the proposed loan quickly with principal from my sale of my present house, I e-mailed back and asked if we could meet. Once again she answered promptly—and she arranged a meeting with a loan officer at my convenience!

Can you imagine a bank doing anything at a customer’s convenience?

This is one of the reasons I do all my banking through a credit union: customer service is always primo. In fact, you’re regarded not as a “customer” (which in the banker’s mind seems to mean “mark”) but as a “member.” Unlike a bank, a credit union is a kind of co-op. It’s a nonprofit, operated by a board of volunteer directors elected by the members, whose purposes are to encourage thrift, provide loans at low rates, offer banking services to its members, and promote community development.

Credit unions offer the same products banks do—usually for lower costs or even no costs. I have never paid any fees at all for the use of my checking, savings, or money market accounts, for example, and credit unions don’t gouge you for the use of a debit card. Your money is insured by the National Credit Union Share Insurance Fund (NCUSIF), just as FDIC insures your deposits in a bank.

Although membership is theoretically restricted, in recent years requirements have become so broad that just about anyone can join a credit union. Here in Arizona, for example, the Desert Schools Credit Union will accept anyone who lives, worships, or attends schools in Gila, Maricopa, or Pinal Counties or who is a member of the immediate family of anyone who qualifies. Many credit unions accept people who work for or do business with certain entities—I joined the Arizona State Savings and Credit Union before I started working for the Great Desert University, because a freelance contract with the State of Arizona made me a vendor for the state. However, anyone who goes to a public school or college or who works for one is also eligible.

“Members” can also be businesses. My S-corporation has a corporate account with the credit union.

The NCUA has a credit union locator that makes it easy to find an institution near you. Credit unions take most of the hassle and grief out of banking, and by and large employees treat you like a human being, not like a cow waiting to be milked.

True, it can be a hassle to move your accounts out of a bank. However, so many Americans have gotten fed up with big banks that many credit unions now provide simple, step-by-step guides and tools for switching automatic deposits and withdrawals. It’s not very difficult, and the payback in better service and lower fees is so worth it!

Once you’ve done business with a credit union, you’ll wonder why anyone ever goes near a national bank.

The Stress-free Finances Series (A Work in Progress)

What Do You Want?
Cultivate Minimalism
The Budget
Bank at a Credit Union
Deposit and Pay Automatically

Stress-free Finances: What Do You Want?

What do you want, financially? What should you want? Me, I know what I don’t want: I don’t especially want to be rich. I’m content to live in modest comfort, with no debt obligations to anyone.

Owning more money and possessions than I need doesn’t interest me, though I wouldn’t mind seeing a little more cash in savings now than I estimate it will take to carry me through to the end of life.

Obviously, this is a subjective thing: each of us needs to weigh what really matters in our lives and decide what will make us content. Our friend Evan, for example, premises his excellent blog on his goal of reaching multimillionaire status. Yet we see that as he celebrates his thirtieth birthday, he reflects on treasures that have nothing to do with money.

There’s a difference between contentment and happiness. Would I be happy if someone gave me a million bucks? Well, sure: I’d be tickled. Would I like to have a Jaguar and a cute little BMW roadster sitting in the garage? I suppose. (Ever had to take care of a Jag or a BMW? You need an apartment over the garage for the live-in mechanic).

But would those things make my life better? I doubt it. How would a fancy car that requires constant upkeep improve on an eleven-year-old Toyota that after 106,000 miles still runs like a top and gets me where I need to go with minimal maintenance? Would a million dollars buy peace, or just give me something else to worry about?

Contentment is being at peace with one’s surroundings. It’s a long-term thing, whereas happiness is a short-term thrill.

What I want is to reach a state of serendipity. By that I mean I wish to reconcile what makes me content with the demands of the culture around me. To the largest extent possible, I would like to be free of those demands, or at least to be able to pick and choose the demands worth complying with. I can do without being badgered to pay bills, to pay taxes, to drive through homicidal traffic every day to show up at a miserable job, to care for a lot of unnecessary junk, to respond to this and that and the other requirement imposed by someone else.

While having some money helps to achieve that goal, having a lot of it is irrelevant. At some point, it’s not money that matters; it’s attitude.

To my mind, one crucial way to spring free of societal demands is to get free of debt. All debt.

Another is to reduce your psychological and social dependence on the possession of things. If debt is slavery, stuff is the slave-master.

“We got more places than we got stuff. We’re gonna have to buy MORE STUFF!” The other day  a friend who’s a mortgage broker spoke of some incredible bargain a client landed when he bought a 12,000-square-foot house in the present depressed real estate market. Think of the amount of STUFF that lucky purchaser will have to acquire!

The time wasted chasing down the stuff.

The energy wasted cleaning and maintaining the stuff.

The landfill space wasted when the stuff wears out.

Of course, if you can afford a 12,000-square-foot hovel, you can spare some of that square footage for the Jaguar mechanic who lives over the garage. And you can afford a staff of house cleaners to dust and polish your stuff.

Now you have to hire, pay, remit taxes for, and supervise those people. And you get to deal with the mountains of paperwork, workplace rules, and taxation the come the way of every employer in this country. If stress is your pleasure, now you’re in paradise: there’s nothing like management and HR tasks to add stress to your life.

How much more peaceful to own only what you really need: to have just enough around you to fit a human-sized life.

To my mind, money is another form of stuff. It’s something that has to be acquired, stored somewhere (not under the bed but in arcane spaces like the stock market, bonds, real estate, and bank accounts), and managed. It has to be dusted off, cleaned, and put back away—often by paid agents with whom, like household staff, you have to deal in ways that consume time, attention, and energy.

It’s not that we don’t need money, nor that we don’t need a little stuff. Obviously, we need a roof over our heads, a table to eat dinner at, and some pots and pans to cook in. My point is that none of us needs more than enough provide a comfortable home just large enough to house us, a healthy diet, adequate transportation, and the tools to educate ourselves and stay in touch with the people around us.

That amounts to a great deal less than a pile of junk sufficient to fill 12,000 square feet. Or even, for most families, 3,000 square feet. Or 2,000 square feet. Stuff may make us happy, but that’s temporary. Contentment is permanent, because it’s based on the things that matter.

The things that matter are, by and large, free: a growing child, a bouncing puppy,  a good friend, a beautiful day, a lovely sunset. And freedom from stress.

What, really, do you want?

Stress-Free Finances: Cultivate Minimalism

As we’ll see in this series, the key to stress-free finances is to live not within your means but under your means. Your goal is to live comfortably on less than you earn. Preferably, on lots less. If you’re bringing home, say, $3,000 a month, you would like to live on $2,000 or, at most, $2,500.

It’s not very difficult. The strategy is to determine what you really need and what you want, and then pare back the junk and the services to a level that’s as close as you can get to the need level, within reason.

I say “within reason” because I don’t believe it’s necessary to live like an anchorite to stabilize your finances and keep financial worries under control. Nor do we have to live like robber barons to be comfortable. What we’re looking for is a happy medium. To find that, you quietly engineer your expenses so that your cost of living is significantly less than your income, and then keep those costs as steady as possible—or even cut them—as your income rises.

The surest way to cut regular, unavoidable costs is to pay off debt and then, once free of it, to stay out of debt by never charging more than you have coming in during a specific period. At first, this strategy may require you to increase outgo, as you pay more than the minimum toward charge cards, student loans, and auto payments. But keep the faith: obviously after a time you’ll get this albatross off your neck, and then the amount you were paying toward it will no longer be going out the door. You have better things to do with this money; namely, saving it for a rainy day, for the kids’ education, and for your own retirement.

The second, surprisingly effective strategy is to pursue a minimalist lifestyle. Look around you: how much sheer junk do you own? Do you collect doodads that have their own collection—of dust? Does your closet shelter clothing that you haven’t worn in a year or more? Are the shelves groaning under decorator items waiting for you to dust them? Got an extra phone, computer, television, pair of skis that you really didn’t need in the first place? Subscribing to 110 premium cable channels when in fact you mostly watch only a dozen, or mostly rent movies? How many times this year did you use that boat in the side yard?


Exercise Number One: lighten your load! Declutter the house and the yard. If you’re not using something, if it decoratively collects dust, or if serves no urgent purpose, get rid of it. Yard-sale it, Craig’s-List it, e-Bay it, donate it, recycle it!

As a first step, this process makes you feel amazingly liberated. Just getting rid of the junk makes your home look bigger and brighter, frees you of a bunch of stuff to take care of, and leaves you feeling about ten pounds lighter. Speaking of your home…

Right-size Your Home

If you’ve not locked yourself into an underwater mortgage, consider this fact: A house or apartment should suffice to fill your needs and only your needs. No extra rooms are needed. No empty basements need apply. All you need is enough space for you and your family to occupy.If you’re buying, try to avoid spending on more square feet than you need. With real estate still running upwards of $90 a square foot, one extra 10 x 10 “sun room,” “hobby room,” or “guest bedroom”can cost you $9,000. Or more. Plus tax. Plus insurance.

Houses that fit are back in style, and they were coming back long before the recession hit. Take a look at Sara Susanka and Kira Obolensky’s books on the not-so-big house for some ideas on how inviting and comfortable a human-sized dwelling can look. And if bungalow size is larger than you need, Little House on a Small Planet, by Shay Solomon, Nigel Valdez, and Frances Moore Lappe, will inspire a wealth of ideas about how to build your financial and spiritual wealth by living in the right space.

Rent, Don’t Buy

Consider renting instead of buying, at least until you can save up more than 20% of a house’s purchase price. By now most of us have come to understand that all the persuasive palaver to the effect that renting is pouring money down the drain and the mortgage deduction offers us all some vast tax advantage is just so much hooey. Too many Americans watched their money flow down the drain, all right—after they purchased homes guaranteed to increase in value with mortgages costing far more than they could afford when they lost their jobs.

Renting has several sterling advantages:

First, most of the time you’re not responsible for repairs. New homebuyers are often shocked to learn how much homeownership actually costs, once all those trips to Home Depot are factored in. Roof repairs, plumbing repairs, mold abatement, dead tree removal: yike! Let the landlord pay for it—he can take it as a tax deduction.

Second, renting gives you mobility. Consider the number of people who can’t pursue job offers in other cities because they’re locked into mortgages for more than their homes are worth. Renters can move pretty much any time they please.

And third, because a renter saves money on maintenance bills, your overall shelter costs are lower than a homeowner’s. Stash the savings in an investment account.

Select a Safe but Not Extravagant Neighborhood

Look for homes on the outer fringes of upscale areas. Often residents share the better schools of their more affluent neighbors but not the prices of the larger, gaudier homes. Before renting or buying, check the local crime reports. Google “Crime Reports” plus your city or state, or try

Keep Transportation Costs within Reason

If you’re a couple, possibly you can get by with just one car. One person might car-pool to work, or one might drop off and pick up the other during the morning and evening commutes. By all means, if you’re lucky enough to live in a city with decent public transit, use it!

But if the adults in the house each really need a car, why buy new? Excellent late-model vehicles can be had at very reasonable costs—let someone else pay for that outlandish first-year depreciation. Once you’ve driven a new car off the lot, it’s an instant used car, anyway. Insurance and registration costs are lower on older cars, making them a much better buy for anyone even faintly interested in building wealth.

In considering the cost of a place to live, keep in mind the cost of commuting. Gasoline, upkeep, and wear and tear on a vehicle are real costs to living in the suburbs. One Lifehacker writer reckons that over ten years, a 40-minute commute—considered by many to be within reason—will set the driver back $125,000. You can figure it out for yourself with this handy calculator. Though a more centrally located home may cost more than a stick-and-styrofoam number halfway to the Timbuktu, the expense of commuting may outweigh the higher rent or mortgage. And the savings in time and stress provided by a shorter commute are huge.

Note, too, that a car for a teenager is really not a need. Let the kids wait until they can afford the payments and the insurance (to say nothing of the speeding tickets) before they take off on wheels.

Dress Modestly

Where does it say you have to wear Ralph Lauren or Banana Republic to work? Attractive, generic clothing is to be found at Penney’s, Target, even Costco. If you’ll feel just too, too humiliated appearing in public in anything less than Armani, try shopping in upscale thrift shops. I just found my second St. John outfit at My Sister’s Closet. Looks like it was made for me! The store is awash in designer labels for men as well as women, ranging from professional attire to dressy and casual.

Select Friends Who Live Modestly

High-living peers exert an outrageous amount of pressure on us to spend more than we need: eating out, shopping at unnecessarily expensive stores, traveling to places we don’t need to go, driving expensive cars we don’t need to drive.

I used to hang out with a woman who had a million-dollar appetite. Even though her present husband was a mid-level bureaucrat, she still lived as though she were married to the one who owned the thoroughbred ranch in Kentucky—yeah, the place where she once entertained Queen Elizabeth II. This lady liked company as she made the rounds of Saks and the various boutiques she favored. Just being with her in a store virtually guaranteed that I would buy a new Eileen Fisher or some such…even as I knew very well that 99.9% of the places I went did not require me to surface in a designer costume. I exaggerate not: after a couple of these shopping junkets, I developed the habit of returning everything I bought a day or two later!

Today I prefer the company of people with more common sense.

Eat Great Food—at Home

Cooking is not very hard. Neither is shopping for food. Even if your idea of a home-cooked dinner is something that comes out of a microwave, dining at home is many, many times more economical than eating out. And nine times out of ten, you can prepare a meal that’s far superior to what you can get in any but the most expensive restaurants.

Last night I had prime sirloin tips (purchased at Costco at a dollar less per pound than the choice ribeyes), scalloped potatoes, glorious corn on the cob, a glass of very palatable wine, and a bowl of fresh strawberries. The whole meal cost about what one glass of Cabernet would have run at the sort of place that serves prime beef sautéed in butter. You understand…I eat like that every night. And I live on less than 30 grand a year.

Resist Filling Your Life with Junk

Who doesn’t need this…and this…and this…?

Imagine having to take care of it all!

And imagine the cost, over time, involved in collecting all that junk. He who restrains himself wins the jackpot.

Do It Yourself

Some of us are handier than others. But most people can drive a nail or turn a screwdriver. Changing the oil in your car is not nuclear physics. Neither is sewing flat-panel curtains or replacing a toilet handle. Try to learn how to do at least some of the things around the house. The savings can be significant.

Sometimes, too, one discovers the truth of the old saw that if you want something done right, you should do it yourself. When I was employed, I could afford cleaning ladies. Occasionally I would hire them. One wrecked a parquet floor by applying undiluted Murphy’s Oil Soap with a janitorial dustmop. Another pair created several weekends of hands-and-knees work for me when they smeared undiluted Simple Green all over 1860 square feet of tile, thinking they were mopping. Gerardo the Yard Dude, who handles physical work I can no longer do, has a sidekick who breaks parts of the irrigation system and then, to stay out of trouble, hides the parts so that I don’t find out about it until some plant dies.

The frugal life is a lot less stressful than the heedless one. You end up with less real estate to clean and maintain, less junk to find places for and keep clean, better food, nicer clothing, cheaper wheels, fewer messes created by other people, less debt, and more money.

And as they say…money isn’t everything, but it sure beats whatever’s in second place.

Stress-Free Finances: Deposit and Pay Electronically

Once you’ve built a reliable budget, you know certain recurring bills are always the same. Others may change from month to month, but they can’t safely be evaded. Paying these bills with checks amounts to a major hassle and, given the ever-increasing cost of postage, an annoying extra expense. Check-writing also subjects you to some risk: your payment could get lost or stolen in the mail, leaving your bill unpaid and you in hot water. And having a piece of paper with your account number, name, phone number, and signature on it bounce from hand to hand sharply increases your exposure to identity theft.

It’s much safer, much easier, and far more reliable to pay bills through your bank or credit union’s Bill-Pay system. At my credit union, this service is free.

Bill-Pay allows me either to set up regularly recurring automatic payments or to send payments manually each month. I use automatic payment for bills that are the same each month, such as insurance premiums and the Cox bill. This is extremely convenient, because I don’t have to do a thing to get the bills paid. For figures that vary from month to month, such as the utility bills, when the statements arrive I just click on a button, fill in the current balance, set the date for payment to be delivered, and click “pay.”

Once I’ve created a payee, it remains on the credit union’s payee list until I delete it, so I don’t have to re-enter data each month.

To “pay myself first” by depositing monthly savings promptly, I use the credit union’s scheduled funds transfer function. This is extremely easy to set up and relieves me of having to remember to do it each month. At any time, these scheduled transactions can be changed or canceled.

It’s also possible to do a one-time scheduled electronic transfer. For example, to pay the $2100 property tax bill this year, I needed to move money out of the money market savings account where I accrue savings for annual bills into my checking account and then pay the County Treasurer from checking. Well, since that sinking fund is in the money market to earn interest, I didn’t want to move the money until it was actually time to pay the bill, but neither did I wish to try to remember to do this manually on the appointed date. So I arranged a one-time transfer from money market to checking to take place on the first of the month, and then scheduled the property tax bill to be paid on the second. In that way, I got a full month’s interest on the $2100, the bill was paid on time, and I didn’t have to think about it again.

Recently the credit union subscribed to a new service called PoP, which allows you to pay individuals. This competes directly with PayPal, which can give you a sharp ding on certain transactions—PoP appears to be free. And you don’t have to wait three to ten days for money to transfer from your account to PayPal to before you can transfer money to an individual. Perfect for kids away at college…and for my business’s subcontractors!

Just as you can pay your bills and transfer funds electronically, people, businesses, and government agencies that owe you can and should deposit funds electronically to your checking account.

Most employers prefer to direct-deposit paychecks. This requires you to go to the employer’s HR site and download or print out your pay statement, but that minor inconvenience is as nothing compared to having to traipse to the bank with a check. The money hits your account on payday, not whenever you get around to going to the bank, and not whenever the bank gets around to posting the check. And it never gets lost!

State agencies that disburse Unemployment Insurance checks resist direct-depositing, apparently because they’re getting some vigorish from banks to load your UI onto debit cards, which are subject to the usual bank gouges plus some unpredictable ones. But you can insist that they direct-deposit your Unemployment check. And you definitely should: it will save you a lot of hassle and bank charges.

Social Security cheerfully direct-deposits old-age benefits. I’m not eligible for veteran’s benefits or a pension, but no doubt they can be direct-deposited, too. I do have Fidelity direct-deposit the tiny drawdown I have to take to remain eligible for the state’s retiree sick leave payout; this amounts to 77 cents a month. The annual sick leave payout (RASL) of about $4,500 net is also direct-deposited.

Then there are the folks who just insist on paying with checks.

Banks and credit unions now have a feature that allows you to stay friends with these people: you can scan a check to a JPEG and then electronically deposit that! Depending on the quality and speed of your scanner, it’s a little bit of a hassle…but it sure is better than trudging to the bank.

All these tools, now available through most banks and credit unions, work to reduce financial stress. They save you the time and hassle of having to drive through traffic to make routine transactions; they guarantee that your bills get paid on time (assuming you have enough cash in your account to cover them!); and they make saving easy and automatic.


PoP decidedly is not free. When you send a payment, the charge is $5 for standard delivery and $8 for same-day delivery.

Depending on the amount, this may be more or less than PayPal. Paypal is cheaper than PoP for amounts below $162. When you get above $162, you start to save money as long as you’re using standard delivery. At $265, you could get the next day delivery for the same as PayPal’s “some day my love will come” service, and anything above $265, PoP’s express delivery would be cheaper than Paypal.

Unless you ask the bank in person, you don’t find out how much these fees are until after you’ve signed on. The terms of service contain some onerous conditions hidden deep in the fine print.

If you have a payment that needs to be delivered across the country today, it may be worth the cost (and the risk). But otherwise…for small amounts, eventually PayPal will do its thing.

The New York Times has been holding forth about how online banking entangles customers with pricey fees and discourages them from changing banks.

If your bank charges for the bill-pay service, that’s yet another good reason to move to a credit union! Credit unions do not abuse their customers.

But if you’re setting up payments on  your end—either paying manually or arranging for BillPay to send a specified figure to a creditor—turning off BillPay involves nothing more than a click of a mouse. You can then pay with checks for a month or two until you get all your funds settled at the new institution, or put enough cash in the new account to cover your bills and set up the manual, your-end-rules type of Bill Pay there.

Automatic payment’s only impediment to closing a bank account and moving money to a better institution would happen when you have allowed a creditor to engross money from your account from its end. This is how automatic bill-pay used to work: You gave your routing information to the utility company, a mortgage lender, or an insurer, and they sucked your payment out of your account on a given day.

I still have my utility bills and my long-term care insurance paid in this way. The credit union’s manager told me it’s a bad idea, and he said that insurance companies in particular were hard to disengage from this method. However, it seems likely that if you called and wrote their billing department and announced the account was being closed and you would pay with a new method, it would register.