Monday, March 2, 2009

Creative financial knowledge to get through the depression

This will be a continuing series. Stop back often.

Ran into a guy I used to work with the other day. He went into real estate sales in the mid-‘90s. He has used up all his savings, including his retirement funds. He has an MBA and is currently literally flipping burgers at In-and-Out.


He’s got three strikes for finding a job – over 40 (46), male, intelligent. His fourth strike is he has a proven track record of creating profits for companies.


Using up your savings is a bad idea. Another friend was recently amazed at my proclivity for saving money, even in lean times. Always pay God first and yourself second.


So today’s marketing sociologist lesson is looking at how to deal with, or handle, money.


Credit Cards

First, let’s talk about credit cards. I believe people like Clark Howard and Dave Ramsey are great for our nation’s economy, but I disagree with them about one thing – cutting up your credit card.


A principle I taught my children when they were growing up was, “if you don’t have the money in the bank, don’t put it on a credit card.”


I love cash back or “partner” credit cards (an example is air miles). I used Discover, but their customer service has fallen to a point I’m not comfortable with, plus I learned after years of using it, you don’t get one percent until you reach certain spending levels.


Let me make it clear one more time, when you use these credit cards, you have the capability of paying off what you put on them monthly; or you don’t put it on the card. If you have a “gambler” personality, listen to Clark Howard and Dave Ramsey; cut up that credit card.


Now let’s use an illustration. I have a card that gives me one percent back in bonus at a famous coffee shop. When I opened the account, they put $20 on my bonus account for my first purchase plus donated $5 to some green organization.


Even with bonus points, those $3-4 daily coffees get expensive. So here’s a secret. Spend the money (bonus if you want) to buy a coffee maker and an inexpensive bean grinder. I saw an espresso maker on sale several years back for $25. I bought two to have one in reserve. So let’s figure you spend $2 per day on espresso. In one month, I saved that. That’s more than $400 savings per year. I found a bean grinder for $20. So I use the bonuses I get to buy coffee beans. Since it accrues faster than I can spend it, I found at Christmas time people love gift cards from this coffee place.


Lessons in frugality

Yes, I’ve been frugal before being frugal was cool. It was lessons forced on me by my parents. My father would not get married until he had enough money literally to buy the farm. Granted, he was in his early 40s when his first child was born, but he had 40 acres in the suburbs of one of the nation’s largest cities. Not bad for an Irish-immigrant who had to work his way over on a freighter.


Food stamps

I meet people who say they would never take government handouts. Why not? The government has its hand out to you every April 15. People getting food stamps, welfare, etc. are creating jobs locally. Let’s say you get $140 per month in food stamps. You didn’t have that money before. That’s $140 returned to your state by Washington. Enough of those $140 food stamps creates jobs at the grocery store, which creates laundromats, apartments, on and on. Its taxpayers money coming back home.


It doesn’t take much to apply. Most states you’re able to apply online (which you can get at most libraries free). Some are barbaric and make you sit all day in their offices (did I mention Arizona?), but if you're single, it’s a great place to meet people.


Sales, sales, sales

I have expounded before on my closet full of Perry Ellis suits and clothing. Dillard’s did it again this weekend. They had a 70 percent off section, then an additional 40 percent off on top of that. That’s close to free. Let’s see, an $80 pair of pants = $24 at 70 percent then = 14.40 with the extra 40 percent. Add in taxes and those $80 pants are under $16.


Below is one of my grocery receipts. Tuna, which should be part of most diets, is usually $1. Last week it was 2 for $1. You stock up. Many people do coupons. Good for them. I stock up during the specials, or sometimes I go without. I’ll discuss that in a minute.


So I bought the tuna and a couple other items, also on sale. I hate stores using the little cards, but this store does (Albertson’s did away with it – hooray!) So my initial bill was 30.08. Swipe my card, it comes to 13.88. A savings of $16.20! More than half – the way life should be.


I make sure I grocery shop in Phoenix, where there is no tax on food sales, unlike surrounding communities.


Today was “old people” discount at local grocery stores. I haven’t had orange juice for a month, and I grew up having it immediately when waking. Current, or list, price is around $2.50 per quart. Today it is on sale for 88 cents! Same with milk. Same with Coke (my daughter hates it that she learned to call all soda Coke from me. Seems where she lives now, they don’t call it “coke.” An orange thing in a can – coke. Mountain Dew – coke.)


I was ready to use my "buy 5 coffees get one free" card at the coffee counter (took me 8 months to get those 5). Yet when I walked in, the store is celebrating old people day with coffee and cookies – wah-hoo. Save that card for another day.


My bill for milk and Coke was over $17. With the sale savings, plus 10 percent discount on seniors’ day, I paid $5.46. That’s almost a third of a savings. More Wah-hoo.


New living quarters

Yesterday I was at the library. I saw people living in pickups with camper shells. Let’s see, my home is worth over $100,000. If I got a camper shell like on the red pickup below, that would probably run $30,000 (always buy used). That would give about $60,000 to put in a retirement plan and get the tax deduction.


That thing had a bathroom, stove and kitchen. Don’t buy those expensive RVs to live in. Get this!


With cell phones and wireless broadband, this is as good as any home. I could park on the beach and have an inexpensive beach home – why pay millions for a beach home when I can use this?


More on saving later. Tune back in.






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