Recession and Revised Plans

Last year I posted about an extremely ambitious personal finance plan that my husband and I took on in July. We wanted to pay down the principle on our mortgage by an additional $50,000 - above and beyond the paydown we'd see with just our normal monthly payments - over the following 12 months.

Well, that was before it was generally known that the US had entered a recession in December of 2007. Despite the downturn in the economy, we did very well with our goal up until the beginning of 2009. We have not reached it, and as of January, we decided to change tactics and put that goal on hold. You see, right now it looks as though my husband will be out of a job at the end of June.

By any middle-class measure, he's very well compensated for what he does. But he works on a contract basis, and right now it looks somewhat unlikely that his contract will be renewed after June 30th. He had a job offer late last year that appealed to him, and which he intended to accept after June. But that offer evaporated along with the rest of the economy several weeks ago.

Having no debt other than our mortgage, and having built a cash emergency savings to cover six months of expenses, we're situated as well as can be expected to weather a period of unemployment for the main breadwinner in our household. I've been more diligent about doing the various things I do to earn money. And we can be fairly sure we won't go hungry any time soon, given the garden I have all planned out for this year. Still, it's a scary thing to contemplate: losing our income.

Right now we still have almost four months of continued income to count on, and that much time for him to look for other job opportunities, hustle for an extension of his contract, and hope that the economy recovers somewhat. In February I canceled the additional principle payments that we were making automatically each month along with our normal monthly payment. That money will buffer our cash savings for the next four months. If my husband finds another job by June, we'll be able to take that money and apply it to our mortgage as a lump sum payment. If not, well, we'll be using it for necessities.

My plan right now is to either refinance or recast our mortgage in early May if my husband has not secured another job. That will lower our required mortgage payment and let us live longer on our emergency fund. If our finances pick up again, nothing would prevent us from resuming automatic additional principle payments each month, though less of our required monthly payment would be applied to the principle. Still, if we lose our main income, that's a price worth paying.

On the other hand, we are also considering a major expenditure that's not, strictly speaking, a requirement. We've asked for estimates for a solar PV and solar thermal installation that would cut our heating bills down to almost nothing. I have no idea what those estimates are going to look like. Before we would pay out money for that, we'd also have our home evaluated for additional insulation needs.

This may sound paradoxical: that we're contemplating a significant discretionary expense when we anticipate the need to live on our savings. We see it this way though; if the economy remains so weak that my husband cannot find a decent job, we want to be able to heat our house next winter without spending much money. Heating is a major expense in our annual budget, and since we heat with oil, that expense is perilously tied to shrinking supplies of fossil fuel. I'm also concerned about the possibility of hyper-inflation. If that occurred, not only would the value of our cash savings be less, but the cost of oil and electricity might easily become prohibitively expensive. Finally, we reckon that a home with solar electricity generation and low heating costs will hold its value better than many other homes. In other words, it looks like a smart investment to us right now.

We've yet to see the estimates for such an installation, so we don't know whether we'll take that plunge. But it's on the table. And if the price is right we may be able to pay for it with a bonus we're expecting based on last year's performance by the company my husband works for. (For the record, that company is not in the financial/banking sector, nor anywhere near it.)

The smaller amounts of money from my earnings that were occasionally applied to our principle are also accumulating rather than being paid out. But part of these funds are being set aside in my mind for spending as well. Mind you, I'm not planning on any frivolous purchases, but I would like to invest in some items that will be of long-term value to us, no matter what happens with the economy. I figure some responsible spending won't be amiss in these tough times either. On my list of things to buy are some extra sets of long underwear for both of us during the coming spring sales, a solar oven, some solar lanterns, and some materials to build housing for some meat rabbits, and to modify our mobile chicken coop this spring. If there's money left after that, I'll buy another 50-pound bag of bread flour, though I'm almost afraid to know what the price has risen to. Basically, I'm looking to put about $500 into things that will hold their value and pay dividends for our budget year after year.

If we are somehow able to squeak through this year without a loss of income - and that's a big if - I would like to start another savings fund for an electric assist bicycle. I understand that these are quite expensive. But I know that sooner or later we are going to have to confront the end of affordable gasoline. A bicycle was my transportation for many years out of necessity, and therefore I've never regarded cycling as recreation, as my husband does. We live in a quite hilly area, and it's more than three miles to reach the nearest spot where we could grocery shop or fill a prescription. The bulk food store is 17 miles away along the flattest route. There is very, very little public transportation in our area, and none right now that would get us to the places we shop. It would be faster for me to walk to the nearest grocery store than to take a bus, and I'd still have to walk most of the route anyway. So far, an electric assist bike is the best transportation solution I've been able to think of to the end of cheap petroleum, and it wouldn't be much fun, or even manageable, on many winter days.

Well, that's where we're at in this recession. I'm not feeling sorry for us; I know we're better situated than many. Still, like everyone else, we are feeling the anxiety. My heart really goes out to those who are already dealing with job losses and financial disaster. If you're not yet in crisis, please think about spending wisely where you are able to do so. Remember that food banks and other charities are stretched incredibly thin right now. If you can afford it, check that box to add a few dollars to your utility bill payment to keep someone else's electricity from being shut off. Plant your garden this year, and share what you can. We're in for more tough times ahead.

Unexpected: $342.28

I spent much of yesterday at the veterinarian's office, dealing with my suddenly sick and very frail cat. She'd been delighted to see us over the weekend on our return from a four-day trip. She was her usual perky, social, affectionate, and vocal self. Tuesday morning she was walking shakily with her head held low, had watery eyes, and wasn't eating.

At the vet she was found to be dehydrated, and to have an elevated temperature. And she gave an unsolicited stool sample on the exam table. What can I say? Shit literally happens at a vet's office. The doctor was game enough to declare the offering useful for diagnostic tests. The good news is that most of the potential problems have been ruled out (feline leukemia, feline AIDS, kidney and liver failure), one problem has been diagnosed (roundworms), her dehydration was treated with subcutaneous fluids, and the remaining likely condition (thyroid) is treatable. She also ate some food overnight, used the litter box, and looks much better this morning, though she's still slower and more subdued than usual. She's now complaining about not being allowed outdoors.

The bad news is that the examination, treatment, blood work, and other tests cost me almost $350. My cat is going to be fourteen years old this summer, and while she's had her share of injuries from tussling with other animals, she's never before needed treatment for any kind of illness. In other words, we've been very lucky with her, given that she's an indoor-outdoor cat. But still, $350 is a lot of money. I can't say I'm thrilled about carving that extra amount out of our budget this month. Yes, we have a $25 line item for pet expenses each month that we have been routinely underspending. But we're not so disciplined as to keep that unspent money in a sub-account in some bank account. Fortunately, paying off the credit card isn't going to be a big problem for us, but it still more than doubles our average yearly expense for having a beloved feline companion in our lives.

I don't begrudge the cost. Having a pet is a serious commitment and responsibility, no less than having a child. Before I get jumped for that statement, I recognize that the responsibility for raising a child is much, much larger, more complicated, and legally enforceable. Nonetheless, both are cases of taking responsibility for the care and well being of another living creature. Getting a pet - or a farm animal - medical treatment when they need it is a moral imperative, in my opinion.

So I'm just going to wind up the post with a plea to potential pet owners, or pet owners who haven't yet experienced any costs beyond shots, spaying, and feed. Please remember that sooner or later your pet is likely to need treatment that will cost a significant chunk of change. Budget for it now, before it's needed. It's a terrible feeling to see your pet in pain or weak with illness. It was bad enough worrying about my cat's health. At least I didn't have the additional worry about where the money for her treatment would come from. Please, please, please don't let poor planning put you in the position of being unable to care for an animal that you have chosen to make dependent upon you. Over a pet's lifetime, you're likely to need upwards of $1500 for their food and medical costs. Plan for unexpected expenses. They'll happen sooner or later.

Rethinking the Non-Negotiable

I've written before on frugality creep, and the incremental changes that happen when saving money becomes a mindset, a way of life. It's very difficult - and very uncomfortable - to shift too quickly from an average endebted, consumeristic lifestyle to severe pennypinching. In our lives the shift from spending to saving has been gradual and is ongoing.

For me there were certain big changes that happened early on, mostly the obvious ones: keeping and using a price comparison book, switching to CF light bulbs, hanging all my laundry up to dry, eating out less and less, learning to bake bread, selling off extra vehicles. But even as I enthusiastically set aside old habits and took up new ones, there were certain exemptions to my spending habits that I wasn't even willing to consider giving up. I think that's normal, and if you're new to frugality I think it's okay to devote your energies to learning new habits and skills for the time being. But when the new habits and skills have become routine, and the frugality bug has still got you bad, there comes a time when those exemptions start looking more and more profligate. Then it's time to reconsider them.

Confession time: I'm vain about my appearance in one particular way. I always wear foundation makeup when I'm out in public. I don't wear lipstick or eye makeup more than a few times per year, and most of the time I couldn't care less what clothes I'm wearing (so long as they're clean and warm enough). But for many long years I've spent good money on a cosmetics counter brand of foundation. I go through about two and a half bottles per year. That probably adds up to about $100 per year.

This was something I just wasn't willing to consider cutting out of my budget for quite a while. It quietly held non-negotiable status, and was paid for out of my mad money budget. Now you may argue that $100 per year isn't very much money, and that's the exact argument I made to myself. But $100 is $100, and there are lots of efforts I make to save us even smaller amounts per year. Why turn around and blow that much on a non-necessity? So recently I decided that I needed to at least consider some alternatives. If I couldn't simply give it up and let the world see my splotchy skin and the occasional zit, then I would at least try a cheaper brand. Off I went to visit the drugstore cosmetics aisle, a trip I hadn't made since high school.

You know what? On my very first try I found a product that matches my skin tone, has a good SPF rating, and works just about as well as the high end stuff I've been buying for years. It's a little bit thinner than my usual brand, so I may use a little more each day. But it costs less than a third as much for the same size bottle of the expensive stuff I've used for so long. I feel pretty foolish for having let a mental prejudice get in the way of saving money for all these years. And I feel silly for still refusing to be seen without foundation. But I do feel good about finding a cheaper alternative that works. Now I have no reason to go to the mall, ever.

We still have some non-negotiables in our budget. I'm not thrilled about these, but unless and until the feces really hits the rotating oscillator, my husband isn't giving up his beer, and my dirty little canned soda habit will continue.

What are your non-negotiables? Have you managed to overcome any? Please share in the comments!

Being the Squeaky Wheel

Today my husband was in the mood to nag. Fortunately, he got on the phone and started politely interrogating the company that provides us with a package of phone and internet services. We're not crazy about this company, but we live in an area where there aren't all that many providers to choose from. Our package includes very high speed internet access and unlimited long distance calling. Normally, these would both be unwarranted luxuries. However, because my husband has been telecommuting about half time for the last two years, and will be telecommuting about 80% in the new year, these are both really fundamental to his job.

We got this package almost two years ago, and at the time it cost us $95 per month. In the time we've had it, the monthly charge has crept up by about $18 per month. We weren't happy about it, but calling around told us that there were no better deals. But today my husband got ahold of a customer service rep and had them go over every detail of the plan, as well as pricing information for alternate plans. He's pretty devious. All he did was spend about 45 minutes having the rep explain every line item on our bill, and go over the pricing for other local, regional and long distance calling plans, as well as pricing for different internet connection speeds. During all this time he was up front that we were looking to trim costs for our plan, and willing to cut parts of it or find another provider entirely.

In the end the rep offered him a $20 reduction per month for the next 12 months. That's $240 for the next year that can go to our mortgage instead. That 45-minute phone call was effectively worth $320 per hour. Not bad, wouldn't you say? This is the kind of thing that brings a warm, devious glow to our hearts. The squeaky wheel got the grease. And he got his urge to pester out of his system without taking it out on me! I call that a good day.

Which of your regular utility bills might be worth reviewing? Could you spare 45 minutes for a tedious phone call that might save you a few hundred bucks?

The $50 Monthly Grocery Challenge - How It Might Be Done

I've had a challenging budget goal for groceries every month since May of this year. Could we spend no more than $50 per month for our food? I've made regular reports on my attempts to meet this challenge. But I thought I'd sum up my findings and thoughts in this post.

Everyone's constraints and advantages will differ when approaching such a tight budget. Our constraints were that with few exceptions I buy organic, especially where meat and dairy products are concerned. I also try very hard to support local agriculture by shopping at the farmers' market. Could I get cheaper milk and fruit? Of course. But I personally wouldn't feel good about eating it. If our financial situation were truly dire, that preference would become a luxury we couldn't afford. But we're not there yet. Also, neither of us was prepared to subsist on ramen noodles. We weren't going to eat an unhealthy diet just for the sake of meeting this goal.

Our advantages were several. We have laying hens and a huge vegetable garden, a chest freezer with plenty of meat, fish, and homemade bread, and a well-stocked pantry with lots of shelf-stable cooking ingredients. Also, we only had to feed two adults. And I didn't have to include the meals my husband ate when he traveled for work, which was a significant part of the time.

I failed every month at meeting my own self-imposed grocery budget. But am I going to let that stop me from giving advice? Heck, no! Having made the attempt, here are my thoughts on how to go about feeding yourself if you need to cut back radically.

1. Stop eating out. This should go without saying, but I'll say it anyway right off the bat. No lattes, no fast food, no deli sandwiches. Unless you have a coupon or gift certificate that makes food from a restaurant completely free, eating out is out of the question on this budget.

2. Shop your pantry/freezer/garden. The first and most obvious thing to do is to use up what you've already paid for. If you have food sitting around the house, now is the time to get creative and prepare meals using what is already available to you. This is how we were able to get even within striking distance of our budgetary goal.

3. Glean or forage. Never turn down free wholesome food. If someone offers you something edible - be it an overgrown zucchini from their garden or groundfall apples - accept it graciously and then use it. Learn what wild foods are available in your area and learn to appreciate them. Nuts, fruits, roots, wild greens - there's a whole world of edible food out there. Check Euell Gibbons' classic Stalking The Wild Asparagus out of the library. If you haven't already read it, it'll surprise you. If you see a fruit tree in your neighborhood with fallen fruits all over the ground, politely approach the owners and ask if you might collect the fruits. (Be aware of the risks with groundfall fruits however.)

4. Buy only cooking ingredients, never prepared foods. With very few exceptions, there's no way to meet such a strict budget while buying any sort of convenience food. So skip all prepared foods. Buy rolled oats instead of breakfast cereal and dried pasta instead of Chef Boyardee. Forego snack foods, alcohol, single-serving anything, and any purchased beverage other than milk. Stick to the produce aisle, the aisle with the canned and shelf-stable goods, and the frozen vegetable section.

5. Shop the loss leaders. Most chain grocery stores have a weekly advertisement about their sale items. Oftentimes these prices are so good that the store will not make any money on them, and will even take a loss. That's their decision. Your decision is to be one of the smart customers. Let another customer fulfill the store's expectation that the impulse buys and unnecessary purchases will cover their costs. Buy what they're promoting, and nothing else but what you really need to cook cheap but healthy meals.

6. Stop wasting food. On such a tight budget, there is no room whatsoever for letting food go to waste. Keep track of what is in your refrigerator and your fruit bowl. Pull any perishable items out to the front of the shelf where you will see them everyday. Make it a high priority to use stuff up before it goes bad. Also reconsider every scrap of food that you would otherwise throw away. Maybe you don't like to eat chicken skin. But did you know that the fat in it can be rendered down? It's called schmaltz, and it's used a lot in Jewish cooking. That's a few tablespoons of fat that can replace butter or cooking oil in another dish. Waste not, want not. So start thinking outside of the box when it comes to your food.

7. Produce your own food: garden, raise animals, fish, or hunt. This one is going to be a tough sell for those who don't already raise some of their own food. But there's really no way that I can see to come close to living on $50 worth of purchased food per month without directly producing some of my own food myself. Eggs and vegetables that are "free" to me have been the cornerstone of many, many meals for us during these months of the challenge. All of these options require lead time, effort, an investment in tools and/or licenses, and they're all easier to do once you've gotten some experience. (Who was it that said, "Experience is something you get after you need it.") You can't snap your fingers and have a productive garden or a starter flock of laying hens. If you don't have the tools or the permits needed to hunt or fish, you probably can't afford them if you need to live on $50 worth of food per month. But you can make long term plans to do these things. Or make friends with someone who already does. Gardeners often have extra food, and they nearly always have weeds to pull and work that should really get done if only they could find the time. (Trust me on this one.) Some hunters have extra meat that they'd be willing to barter for. Offer to trade a little labor for some food. You may also pick up some skills or tips to help you do it better yourself when you can. And by the way, chickens love kitchen scraps, which helps enormously with #6.

8. Eat less meat. Unless you're practicing one of the options mentioned in #7, other sources of protein are usually cheaper than meat. Eggs, dried beans, and tofu, and sometimes even dairy are all fine, protein-rich alternatives. I'm not saying you need to become a vegetarian. But unless you hunt, raise animals for meat, or have already stocked up on a lot of meat before you begin trying to live within this budget, meat is going to have to play a small role in your diet. Get past the idea that a proper lunch or dinner must include a large serving of meat. Instead, think of meat as a garnish or a flavoring ingredient. We often put a few slivers of parboiled bacon on our homemade pizza. The whole rice-and-beans idea sounds pretty dismal, I admit. But have you tried Cuban black beans lately? Or the combination of lentils and basmati rice with some sauteed onions and herbs? Give it a try. You may surprise yourself with how good these cheap alternatives can be.

9. Learn to cook. If you already know how, you're well situated for this budgetary challenge. If not, then learn the basics. This is not the time to try to master chicken Kiev or beef Wellington. Learn to cook pasta with fresh or frozen vegetables and a few pantry staples such as canned tomatoes and olive oil. Learn to make potato-garlic soup. Learn to bake bread - it's a lot easier than you may think. Turn to the library for solid cookbooks on the basics. I recommend Joy of Cooking, The New Best Recipe, and How to Cook Everything Vegetarian. All of these books will give you clear instructions on how to prepare simple, healthy foods.

10. Have a meal plan and a shopping list. Inventory your pantry and freezer, then sit down with a pen and paper to create a meal plan for the week. Build on what you already have. Then look at those store fliers and see what you can add without spending much money. List the meals you will prepare from those items and plan for leftovers wherever you can. Create a shopping list of what you need to buy and then stick to it like glue when you shop. Unless you see a spectacular unadvertised deal that you know you can incorporate into your meal plan, shop for only what is on your list. Don't go to the store hungry, or with hungry kids.

11. Skip the coupons. This is going to surprise many people. But when you're on a very tight grocery budget, coupons are rarely a good strategy. Few coupons are available for the most basic cooking ingredients. You may save a dollar on that frozen dinner, or that over-processed, over-packaged snack item. But you're probably better off spending the same after-coupon amount on potatoes, beans, or pasta. A large banana and a mug of tea brewed at home will be about as much as one serving of frozen orange juice. By sticking with basic ingredients you'll avoid the chemical additives and preservatives as well. Coupons will save you a little money if you insist on paying the premium for processed foods. But it's nearly always the better route - financially and health-wise - to buy basic ingredients and prepare the food at home. Now coupons for TP, those are worth using.


I'm not saying that doing all - or even any - of this is easy. Nor am I saying that this will guarantee that you can feed two adults on $50 of purchased food each month. After all, I failed every time I tried with this Challenge, even with all the advantages I had. Living on so small a grocery budget will require discipline and effort. If you plan carefully enough, know how to cook, and have some sources of "free" food (either from storage, gleaning, or your own production), this should be doable.

Finally, a serious note. I've written all of the above from the perspective of someone choosing this strict budget as a voluntary challenge. If you're reading this because your immediate financial situation is so dire that this is not an option but a necessity, then seek help from a foodbank, a church, or any charity that will help you put food on the table. This is not a time to stand on pride. My understanding is that it takes months to be approved for the foodstamp program, so you may not be able to rely on it in the short term, but get the process started as soon as possible. By the time you're approved, you may not need it and you can graciously decline the aid. But better to give your future self that option than ignore a valuable resource that may make all the difference. If you are looking ahead to serious longterm financial constraints, then you should seriously consider every possibility of growing or raising your own food.


Related Posts:
May Challenge report
June Challenge report
July-August Challenge report
Four Cornerstone Meals for Frugal Living

$50 Per Month for Groceries - Second Report

A while back I posted about a personal frugal challenge, to spend only $50 per month on groceries. There were a few clauses and exceptional circumstances to this limit, but it was a working goal in May and June. I thought I'd post an update on how the challenge went in June, and let you know that I'm continuing it this month.

We missed the mark in June by about $20, spending almost exactly $70 on groceries for the month. As usual, dairy accounted for a significant part of the total. We buy organic milk and cream, going through 1 1/2 to 2 gallons of milk per month, and one or two pints of cream. Even though we used a $1 coupon each time we bought milk, it's still pricey.

The big shift in June though was that the local farmers' market is now in full swing, and I simply could not find it within myself to say no to locally grown fruits and berries. We don't eat a great deal of fruit, because we try hard to eat seasonally. And other than apples and melons, neither of which is close to ready yet, we don't grow any fruit ourselves. So it's very hard to pass up the opportunity to get something that's an annual treat when we've mostly gone without fresh fruit since last summer. Then there's the added bonus of directly supporting local farms, something that's personally very important to me. Yet even just buying a pint of cherries, blueberries, or strawberries each week accounted for at least three dollars. It doesn't sound like much, does it? But 4 weeks x $3 is $12, and that's almost 25% of our food budget goal for the month. We also bought some locally produced cheese, which turned out to be excellent, at the farmers' market.

There was a significant offset in costs thanks to our garden though. In June we had far more lettuce, zucchini, kale, chard, cabbage, and fresh herbs coming out of the garden than we could keep up with. A good bit of produce got put up for later consumption, and this will be an ongoing task throughout the summer. So we had little need for fresh produce other than onions and garlic. And of course, our laying hens continued to provide us with nearly free eggs.

The other budget buster for June was, once again, soda. I don't want to blame this one on my husband, because heaven knows I drink plenty of the stuff if it's around. But I will say that the purchase happened when I sent him off to the grocery store alone. He saw a "good deal" and couldn't pass it up. So we spent a whopping $22 for five cases of soda. Clearly, this stuff is a menace to our frugality efforts.

I had been drinking homemade watermelon shrub from last summer as a substitute for soda, but we ran through our supply of it rather quickly. My husband also got into the habit of charging a container of tap water with his CO2 tank leftover from his homebrewing days. He was using that and some fruit juice to make himself mixed drinks. As much as he liked this, he succumbed to the temptation of a promotion, and we're now back to drinking soda by the can. I can see I'm going to need to put more thought into good substitutions for soft drinks.

Things are more or less on track for another shot at the $50 Grocery Challenge for the month of July. The garden is now producing tomatoes. And we harvested about 90 heads of garlic. So we're pretty well set to go without needing to buy any produce, other than a little fruit, for this month. I'll let you know how it goes.


Related Posts:
Four Cornerstone Meals for Frugal Living
$50 Monthly Grocery Challenge: How it Might Be Done