Reading – Page 2 – Frugal Living

Frugal Book Club #8 – Zero Waste Home

August 24, 2015 by Andrew Leave a Comment

This summer on our epic trip out west, we spent some time with my sister and her family. She knows all about our frugal ways and thought we would enjoy a book she was looking to banish from her home. Zero Waste Home by Bea Johnson recalls her family’s personal journey to producing zero trash by using the 5 R’s (in order).

Refuse

The most important ‘R’ of Johnson’s plan is to ‘refuse, refuse, refuse’. If you can keep items from entering your house to begin with, the battle is already won. As a parent, I have learned that for every one child, there is about 10x the amount of toys, clothing, and paraphernalia. Once a kid outgrows something, it seems like every parent is looking to ship it out of the house, and who better to send it to than you, the parent with the younger child. Saying “No thank you” is one of the easiest ways to limit the amount of waste your home generates. Of course, if you truly need it, you can accept something. Just think long and hard if little Timmy really needs a 6th pair of pants or toy #84.

Reduce

Reducing the demand for certain products, Johnson harps on single use plastics (SUPs), will reduce their production and that helps to ultimately keep our landfills emptier. When the cashier at the store asks if you’d like a bag, or throws your single item into a bag, first refuse, then reduce the demand of sups by using your own canvas tote. While many plastics can be recycled, recycling still takes energy in the form of transportation and processing. Also, some plastics are down cycled, meaning that they can only be recycled once in their lifetime. Johnson recommends using metal and glass containers in lieu of plastic ones as those materials are longer lasting and have better recycling attributes.

Reuse

This summer we have been doing quite a bit of reusing in the form of scavenging furniture and reselling it. Just yesterday we picked up a nice drop down table that was destined for the landfill. We’ll probably get 40-50 bucks for it. Most of the items that we resell require zero elbow grease beyond taking pictures of them and posting an ad online.

Another area closer to home that we have started to reuse is with cloth napkins. Shae found a super clearance sale and picked up 16 napkins for a total of $1.50. They look and feel more upscale than disposable paper napkins and are good for our pocket book and environment!

Recycle

Recycling is the fourth ‘R’ and Johnson seemed to have a fairly negative view on recycling as a whole. Personally, I love recycling. Our municipality has a single stream program, meaning you just toss anything and everything that is recyclable into a 96 gallon bin and wheel it to the curb every other week for pickup. Easy peasy!

Rot

You’ve refused what you could, reduced what you couldn’t refuse, reused and repurposed items in your house, and recycled but you still have some trash. Anything that has trickled this far down stream in a zero waste home would be compostable. Of course, I am not as dedicated as Mrs Johnson, so I still have some trash at the end of the day. However, we were inspired by the book to start composting. We asked around and did some research into the different styles of composting. What we ended up settling on was a milk crate system.

Our system is based off this Instructable. We bartered books (that we were going to get rid of anyway) for milk crates. As a side note, please do not steal milk crates from the back of stores. They are set out there for the truck to pick up and return to the dairy. The rest of the material for our compost system we had lying around so it didn’t cost us anything extra to set this up.

Reading and NASCAR

August 6, 2015 by Andrew Leave a Comment

Last week we turned in our summer reading logs. Every participant that completed the program received a bag of goodies, mostly coupons to local businesses. The kids program got considerably more than the adults and Frugal Boy may have to surrender several of the free cookies that he is entitled to. After all, we did all of the reading! The adults were entered into a raffle and as luck would have it, my name got drawn. I had a choice of a $25 gift card to a variety of local establishments. I ended up choosing the one for the butcher we frequent. Mmmmm, $25 worth of meat! That will go a lot further than $25 at one of the upscale restaurants.

Frugal Boy continues to develop in leaps and bounds. This morning when he fell and skinned his knee he hardly even paused to whine about it. Play time and learning are too important to be slowed down by a river of blood. As parents, we try not to make a big deal about little ouchies and it is nice to see that he remains calm as well.

Frugal Book Club #7 – The Ultimate Cheapskate’s Road Map to True Riches

July 17, 2015 by Andrew 1 Comment

It’s mid July and it is HOT. The obvious answer to escape the heat is to head on down to your public library, find a good book, and cross off some check boxes on your summer reading program.

I just finished, and Shae had finished before me, reading Jeff Yeager’s book, The Ultimate Cheapskate’s Road Map to True Riches, A Practical (and Fun) Guide to Enjoying Life More by Spending Less.

The author, Mr Yeager, is a retired CEO of a nonprofit hostel organization. After spending a lifetime of working in the nonprofit space, Yeager understands a thing or two about squeezing every dollar. It follows that his take on personal finance ignores the income side of the equation and focuses purely on expenses.

The book centralizes around the concept of “money steps”. The example given early on is that of the typical teenager who works a job to afford the car that gets them to the job. Yeager argues that the teenager could just stay home sans car and skip earning money (and trading time in the process). If time is money, then surely money is time. We know that we have a finite amount of time on this earth, so why waste it trading it for money?

If you are familiar with Suze Orman then you will understand when I describe Yeager’s philosophies as the anti-Orman. If you are unfamiliar with her, then here is the quick rundown. Ms Orman has penned a number of successful personal finance books that encourage readers to give up small daily expenses, like the morning Starbucks coffee. By doing so, Orman hypothesizes that the savings will snowball and secure an easy retirement. Yeager pokes at this style of personal finance. He pokes hard at it (yes he also uses a lot of old man sexual innuendos in the book). Yeager’s argument in his book, where he calls her out by name several times, is that any small daily savings will simply be spent elsewhere in the day. Even if someone has enough control not to spend that money and put it in a savings account, it’ll likely be raided at the first sign of trouble. Instead, Yeager advocates pinching dollars, not pennies. Each chapter in the Cheapskate book focuses on a major line item in our lives.

Healthcare

Chapter 4, Warning: Money May Be Hazardous to Your Health, examines how many money steps the typical American goes through that end up destroying their health.

Work at job, earn money -> Eat out -> Get fat -> Work at job, earn money -> Get gym membership -> etc. etc.

I had never heard of it before, and maybe it is a Jeff Yeager original, but he details his way of grocery shopping. His one and very simple rule is to not spend more than a $1/pound on anything at the store. While it isn’t an unbreakable rule, the reasoning behind it is simple. The food pyramid and cost pyramid are inversely related. The grains, rice, and other bulk portions of your diet are easy to pick up for less than a dollar a pound. Fruit and veggies are similarly cheap. Red meat is a once in a while food.

As for staying fit, he writes that everybody should do as much as possible for themselves. The yard needs mowed, that’s a great workout. Home improvement list to knock out, that should burn off a few calories. Walking and biking instead of having other people shuttle you around is also beneficial to your health.

Housing

Buy a Home, Not a Castle, hits on two major points. GPS homes, a home that requires satellite positioning to navigate, are excessive and ‘starter’ homes are bunk.

Our grandparents didn’t buy a starter home, they bought one house and lived there all their lives. Today, many people climb the home ladder. Buy a starter home > live there for 5 years > buy a bigger home > repeat repeat repeat. Not only is there the financial loss (the first few years of a 30 year mortgage are primarily interest and you don’t build much equity) but there is also the societal problem of people not putting down roots and truly belonging to a community. Why invest the time to get to know your neighbors, volunteer at an organization, or participate in democracy, when you are going to pick up and leave for a bigger and ‘better’ home in a matter of months.

Transportation, Gadgets, Entertainment, and More

These are all topics that have their own chapters. I’d encourage you to pick the book up at your local library and read it yourself. The 230 page book is a quick read (and humorous if you are into old man sex jokes). Most of the points in the book, we had already been applying in our daily lives. I guess it was more of a reaffirmation of our own lifestyle. Yes, cheapskate can be cool and was once the norm!

Frugal Book Club #6 – The Bogleheads’ Guide to Investing

February 8, 2015 by Andrew Leave a Comment

If I had to recommend just one book about investing, I would recommend The Bogleheads’ Guide to Investing. It presents information in a very easy to digest format and the authors cover many different subjects that are relevant to all stages of life, from what to do with that first paycheck, all the way to how to plan an estate.

I was able to skim through the book in a single night, mostly because I am already familiar with the Boglehead approach to investing. Hint, it is the same one advocated by Vanguard.

So if you haven’t jumped into the investment pool yet because of fears or apprehension, then this is the book for you. If you are already swimming in the waters and want a refresher, this is also the book for you.

Frugal Book Club #5 – Deflation

January 26, 2015 by Andrew Leave a Comment

Deflation, by Chris Farrell, covers a topic that is almost unheard of in present day America, what happens when prices fall? We are so accustomed to inflation, the opposite of deflation, where prices rise over time and a dollar is worth less tomorrow than it is today that we hardly even think about deflation.

In his book, Mr Farrell argues that the next century will be ruled by deflation. He pins the trend reversal on increasing globalization, the spread of capitalism, and the internet. I can attest to the internet’s deflationary power because I experience it first hand with my software business. Not only can I sell to customers around the world, I also have to compete with other companies around the world. Some of those companies reside in 2nd or 3rd world countries with lower costs of living and lower income needs. That means they can drag my prices down. To remain competitive, companies including my own lose pricing power and the customer gains it.

It sounds like deflation is a great thing for John and Jane Doe consumer right? Well, as companies lower prices to remain competitive, they bring in less revenue. Why should I buy a car today when it will be cheaper tomorrow? With less revenue due to slimmer margins and deferred sales, businesses cannot support their payroll expenses. Worker wages are often referred to as “sticky”, meaning that workers are resistant to lowering wages. Who *wants* to have their income cut?! When a business cannot lower wages across the board, they resort to laying off workers. Sure, a carton of eggs in deflationary times might only cost 50¢ but that doesn’t help the unemployed person very much.

The biggest losers in a prolonged deflation are debt holders. The “Buy it now, pay for it later” mentality of inflationary times does not transition well to a deflationary setting. Consider this scenario. John Doe buys a house with a $250,000 30 year mortgage at 4%. At the time he buys the house, he is making the median American income of $50,000. The monthly mortgage payment is around $1200. That would peg his yearly housing costs around 29%, a number that falls into the popular rule of thumb to keep housing costs below 30% of gross income. Fifteen years later amidst constant deflation and his income may have been reduced to $30,000, but his mortgage has not deflated. It now consumes 48% of his gross income. Everything else that John buys costs less due to deflation, but his mortgage payment has not decreased.

Is Mr. Farrell a doomsday sayer or is there some merit to his predictions? According to Vanguard’s 2015 Global Economic and Investment Outlook deflation is a concern of well learned economists.

A deflationary threat will likely continue to hover over the world. In aggregate, reflationary monetary policies will continue to counteract the disinflationary drag of post-financial crisis global deleveraging. As suggested in Vanguard’s past outlooks, recent consumer price inflation remains near generational lows and, in several major economies, is below the targeted inflation rate.

Key drivers of U.S. consumer inflation generally point to price stability, with core inflation in the 1%–3% range over the next several years. Nascent wage pressures should build in the United States in 2015 and beyond, but low commodity prices and the prospects of a strong U.S. dollar should keep inflation expectations anchored. In Europe, deflation remains a significant risk that will not soon disappear

Some of those words might have stuck out to you, like “targeted inflation rate” and “price stability”. After learning hard lessons over the past century, central banks have agreed that a targeted inflation rate of about 2% is ideal. They try and control that by raising or lowering interest rates (this is what ultimately sets your mortgage rate) and adding or removing money from circulation (liquidity).

I wouldn’t recommend the book Deflation to anyone unless they were die hard monetary fans. The book reads a lot like a term paper or thesis and tends to take its time snaking around various historic examples and anecdotes to make its points. I had to check it out of the library twice and still gave up before finishing it. You can read more about macro economics (what inflation and deflation are categorized under) on this website.