Money for Nothing Monday: Opening Retirement Accounts

Once you’ve completed the steps in the first Money Monday segment, (the principles for most of which, once again, were instilled in me by Ramit Sethi of I Can Teach You to Be Rich) you should begin to think about your retirement accounts. Hopefully you’re already taking advantage of any pre-tax savings plan your company offers, most commonly a 401(k). Contribute the minimum to your 401(k) that will enable the company match (if any, in this economy), and then gauge your ability to live without a little bit extra, up to the max (usually $15K/year or thereabouts). At a young age it’s unlikely you’ll contribute any more than 5% or so, but the more you do, the lower your taxable income right now. The older you are, the more you should (and can legally) contribute.


Your company's plan will have a financial adviser who can help you understand the mutual funds offered in their particular plan, but you will need to choose your own. Think about how many years your money will spend in the market before you want to draw it out (i.e. retire). If you have many working years ahead of you, be more aggressive in your allocation; if you’re retiring soon, choose conservative—thankfully the work is done for you when they categorize the various funds.

If you are not employed by a company offering a 401(k), pension or profit-sharing scheme of some sort, you will need to look into a personal retirement fund like a Roth IRA (Individual Retirement Account). You can pay to have these managed by a professional broker, of course, but another option is to use an online trading site like E*Trade or TDAmeritrade, where you can buy into funds and individual stocks for a low per-trade fee and barely any maintenance (monetary or time-wise). Ramit suggests you buy a target-date fund, which basically manages your money for you based on when you plan to need the money (again, the formula has to do with how much risk you can withstand in the short-term; historically, the stock market does always return). Once you have selected your retirement account provider, research the various options they allow you to buy into. Most have a minimum contribution, so you should have $500 to $1000 transferred to the account in order to buy (plus any applicable fees). If you don’t have that much to put away, you can wait until you do, or you can get yourself excited about retirement funds (woo-hoo!) and buy a small amount of some stock that you really love or believe in (yeah, I mentioned I have a little Harley and Vicky’s stock?) and then wait until you have enough for a (boring old) target date fund.

If you contribute annually to your Roth IRA, your tax burden will be lower (you can contribute a few months into the new year for the previous year, too) and you will, of course, be growing your savings for the long run. Try not to trade too much unless it’s just fun money for you—trades cost money and the way to make money is to stick with a good stock or fun for the long haul. The best thing about the target date fund (or perhaps just not caring if your favored stock does well for the moment) is the “set it and forget it” (probably Ramit’s via the infomercial guy, I don’t recall) mentality. Once you are contributing regularly to a fund like this, your money will grow without you even paying attention. Try not to freak out at minor ups and downs. Mantra: Long Haul.

If you have at least one of these retirement accounts, you’re on your way to being able to maybe retire! Nice. If you do not, maybe get rid of some of the stuff you’ve accumulated and stop buying stuff for a while so you can get on that. It’s never too early, and it’s really never too late unless you want to be rich and not just get by (in which case it’s now or never).

Happy Saving!

Thrifty Eats: Batch Cooking

Sundays are a wonderful day to kick back, enjoy the weather if it's lovely out, and perhaps get some chores and projects done around the house. I try to reserve a few hours of my Sunday to cook in bulk, no matter what my other obligations and desires are, because it ends up saving so much time and effort throughout the week, never mind money!



The first step in this process is to take stock of your pantry and refrigerator. If you're a Virgo, you will likely love this one: make a list of what you have on hand, with food group categories and quantities (this can be fun and be made permanent in Excel, if you are a spreadsheet girl like Struggling to Be Stylish). With a quick glance at your list you should be able to come up with one or two meals that can be made with only a few additional ingredients. Cross off your items as you include them on a separate meal-planning list, and create a shopping list for what you're missing while you're at it. Trust me, it sounds complex but you will waste so much less and avoid spending on take-out because you can't figure out what to make! Be sure to actually examine all foods you're planning to use and toss any expired produce or growing-its-own-colony bread. Once you've disovered what you need and made room for it, step two is, obviously, going shopping.

The old adages will serve you well here: don't shop on an empty stomach. Avoid the middle aisles where the chips and cookies live and try to stick to the whole, fresh foods around the perimeter. Make a list and stick to it. Try not to bring children who are easily swayed by fancy packaging and promises of gobs of salt and sugar.

The biggest mistake most Americans make when shopping for produce is buying far too much. If you've planned your meals you should know exactly what you need, and perhaps grab a few extra pieces of fruit for snacks. Don't worry that you'll run out-- you can always go to the store again if need be. It makes a lot more sense to shop twice a week than to end up throwing out piles of spoiled greens and smooshy zucchinis.

I like to do much of the washing and chopping immediately when I get home from the market so that vegetable snacks are easy to grab instead of junk. I keep Tupperware filled with carrot and celery sticks stacked on one side of the fridge, and sometimes diced peppers for quick meals as well. This is when I begin a big pot of chili or pasta with vegetables, also, while I'm getting the rest of the groceries put away and the kitchen cleaned up again. When it's done and cooled, I separate it into containers, label them and freeze them. Then I have my very own "Lean Cuisines" for work lunches or nights I am only cooking for myself. Saving $5-$10 at every meal by not getting takeout is definitely worth the extra effort.

Here are a few of my own "batch cooking" recipes, all of which are ridiculously easy and freeze tremendously well, published on SparkRecipes by SparkPeople (a terrific free healthy lifestyle site if that's something you're interested in!):

Vegetarian Chili
Lentil Stew
Spinach Mushroom pasta

Invest in a label-maker or just use small post-its to indicate what something is and when it was made, whether you store it in the fridge or freezer. Most leftovers have a shelf-life of one week. Most frozen goods can be stored six months to a year. Indicate when it should be tossed by, not just when it was made! Here's my fridge with the new system in place:




You're looking at a whopping 9 cubic feet of storage space (about a third of your average fridge) so planning is essential for me. You may not want or need to be quite this OCD about it, but keeping things visible, neat and labeled will help diminish the amount of money and food you waste.

The last thing I'll mention here is that these frozen meals and any leftovers should never be reheated in their plastic containers. Ziploc has pledged to not put any terrible, horrible, no-good, very-bad dioxins or BPAs in their products, but no other brand has to my knowledge, and due to a lack of awareness/caring/FDA testing or regulation, we're still unsure how dangerous many other plastics in common use are. Better to defrost at room temperature until it's possible to slide your meal out and into glass (or microwave-safe ceramic without metal-based glazes) before microwaving. Or as a last resort in a time pinch, nuke for a few seconds to defrost/loosen from the plastic before doing most of the actual cooking in glass or ceramic.

Do you enjoy batch cooking? If so, please share a favorite recipe (it doesn't have to be meatless by any means, by the way).

Happy cooking!

Tightwad Tuesday: Wine in a Box

If you are a wine drinker, an excellent way to save cash is to buy boxed instead of bottled. Some of the most prolific and popular American vineyards, such as Turning Leaf and Woodbridge, are beginning to offer most of their varieties in a box (with a bag-and-spigot system housed inside). The advantage is that the wine stays fresh longer because it is not exposed to air until poured, and the transportation costs and fuel expenditures are far, far lower without the glass—one large box equals four to five bottles but weighs only as much as one or two.


Hopefully some of the smaller craft vineyards will catch on to this trend. I've seen some from the Pacific Northwest embracing non-glass packaging technologies, selling .75 liter lined cardboard containers. Some purists and sommelier-types likely demur, but proponents claim that the new methods are superior to cork, which can degrade and crumble or allow oxygenation to spoil the wine. For some good information on the method and its advantages, check out About Boxed Wine. There is also a Chowhound discussion on the subject.

You could always invest in a lovely decanter set so that no one but you ever has to know the source of your party libations. Here are some options in several price ranges (click pics to buy):

Mirabel Decanter from Crate & Barrel, $36.95

Bohemian decanter from Pottery Barn, $29.00



Riedel Vivant decanter at Target, $16.99



Milk glass decanter at Swanky Lady Vintage on Etsy, $10

"Swanky Vintage Pressed Glass Decanter" at To Hell in a Handbag on Etsy, $7

(For more awesome inexpensive vintage options, check out my Etsy favorites!)

If you really can’t abide your wine a box, consider a simple, inexpensive table wine. The French don’t drink expensive wine at every meal; usually it’s the equivalent of what those in the know dubbed “Two Buck Chuck,” the Charles Shaw brand sold at Trader Joe’s. Not every store is permitted by town bylaws to sell alcohol, unfortunately, but if one near you does, stock up on this perfectly decent brand for $2-3 a bottle. In general, except for on special occasions, try to stick with wine produced in your own country (in your own area is even better if you are on good terroir), to reduce the transport impact.

Happy cost-cutting and crystal-shoppin' :)

Money Monday: Money for Nothing

Even if you’re living paycheck to paycheck, it is unspeakably essential that you start setting aside anything you can, for retirement and in case of a layoff or medical emergency, even if those possibilities seem less remote than imminent starvation. (Difficult to care about social security shortfalls when you want to gnaw your own arm off for sustenance, I know.) The simple math facts are that the earlier in life you begin to save, the less you actually have to put away in the long run in order to have a decent retirement (or at least hopefully not die naked in a ditch). So even if it’s only $20, which you make returning cans or forgoing one latte per week, start a savings account and contribute to it regularly. Do it NOW.


I’ve had an account with ING for a year now, and I couldn’t be happier. They pay a slightly higher interest rate than most banks because they are online only and don’t have to support expensive edifices. They also usually hand you $25 or $50 for joining or adding a checking account… email me for a referral and we’ll probably both get some dollars ;) There are other options- check out this article for comparisons. You could start a regular savings account at your brick-and-mortar bank too, but my favorite thing about ING, pointed out recently by my financial guru, Ramit Sethi (of I Will Teach You to Be Rich), is the “Bucket” system.

For someone very visual and very Virgo like me, being able to move money in and out of labeled accounts within my savings account (they call it opening a “new one but it’s just a sub-account) is the best method of saving for specific goals ever invented. It's like having jars labeled "Summer Vacation,"House Down Payment," "In Case My Job Goes Up in Flames," "Car With Four Wheels," except you can't steal quarters for laundry or bus fare out of them.

My new “buckets” are the main “Dez-Savings” that I transfer money into, and then:

VACATION

HOME IMPROVEMENT

EMERGENCY

WEDDING

My dream dress by The Secret Boutique on Etsy, $650 (custom)

Right now I have a month and a half’s pay in Emergency, slightly more in both Wedding and Home Improvement, and about week’s pay in Vacation. If I hadn’t diverted $1000 to my Roth IRA to buy a target-date mutual fund (more on this when I discuss Ramit’s book in detail), I’d be a lot closer to re-doing the kitchen, setting an actual wedding date and location, and planning a honeymoon. Oh well. It seemed like the thing to do at the time, but it took a great deal of straining against impulses for instant gratification.

If you’re one of those lucky people who has achieved most of the improvements and toys and sojourns that your heart desires and you have money languishing in a savings account, even a high-ish interest one, you should probably move some of it out into a Roth, CD, or other investment. (By the way, I am a firm believer in having some fun money in the market: I bought a tinch of Harley and a wee bit of Victoria’s Secret stock when I was in my early twenties, and I hang on to them, in addition to my more sensible holdings. They say buy what you love, don’t they?)

The next thing to do, once you have set up your savings accounts, is to find ways to cut expenses and up your income so that you can increase your rate of savings. You simply must track your expenses. Some people really like to do so electronically, through a service like Mint or their own bank’s online statements. The only problem with this solution is a little-known ethical one: most small business owners are charged several dollars per debit or credit transaction by the issuing bank or the card machine leasing agent. They have to take cards because “no one carries cash anymore” but they lose money on every transaction. This eliminates their already-miniscule profit margins and helps to drive them out of business, destroying neighborhoods and contributing to the Walmartification of America.

If you can get off of the debit card habit, give yourself a cash allowance and keep strict track of how much you have on you and how much you’re spending on incidentals. If you run out, examine where it all went. And try to do a little bit better next time (or re-evaluate whether your allotment is realistic). Think of your spending like you’re on a business trip and will have to account for every penny or it’s lost to you forever. Learn to ask for a receipt every time and to collect them in a centralized place (if you find a gorgeous flat wallet or pouch or a small notebook with a pocket , you’ll adore looking at it so much you’ll remember to put the receipts in it. Hopefully).

Pink Giraffe wallet clutch by DesignSK on Amazon, $13.99

Growing your savings is akin to tending a garden: plenty of work-- but in the end, enjoyable. Do avoid fixating on the long-term—retirement— so much that you forget about surrounding yourself with beauty, rest and relaxation, and the occasional rich meal prepared by someone else or good bottle of imported wine that makes life worthwhile.

Happy saving!

Thrifty Stylist Boston Talks Money, Not Shopping (Well, OK, a Little Shopping)

We have recently launched ourselves into a whole-hearted effort to take control of our finances, due in large part to Ramit Sethi and the book and blog "I will teach you to be rich." Because it's all fine and good to buy at bargain prices, but when you don't stop yourself it really does add up!

The thing we love most about Ramit is, of course, that he doesn't tell you to stop shopping. On the contrary- he tells the story of a friend who spends about $5,000 on Manolos and such every year. But she budgets it in, friends, and is still saving for her future, because she cuts corners in other places, like sharing an apartment. How many of us can say that we've planned our shopping so carefully?

We thought we'd share some of our recent "conquests" in the money-saving arena and other things we were already doing right, in case you're thinking about a similar path.

1. Contacted the IRS, who is holding our 2008 refund due to us filing for an extension in 2004 and then never actually filing (although we did pay!). This means that -- if the paperwork ever comes-- we can file for the missing year and receive a refund for that year as well as the one that's due for 2008! We aren't a big fan of confrontation or the telephone, so this took a lot of guts for us, but they were surprisingly helpful (us: "lost all of the paperwork in a move." Them: "We'll send you a packet with everything you need to file." !!! Way cool!) This probably saved us about $4000. That we haven't had for ages because we were too scared to call. Don't be scared. They're in the business of public service, lest we forget-- they're really not always the big bad wolf.

2. Got our credit report, which wasn't as bad as we had expected (only one late payment, when we totally didn't get our Target bill, grrrr. They even said when we called "oh yes, it looks like the bill came back to us." Bleh! We stopped using the card since they hiked the interest rate. Not worth it.) Then, we called our bank to see about refinancing our mortgage since according to "popular wisdom," we should have a better rate due to our credit score. Not that they've called back, but it's a step toward saving more. (Hold on, calling again... Woohoo! Finally got a live human and a recommendation about something called "rate modification" which is different from refinancing... We'll see how that goes!) UPDATE: For a $1500 fee, they are willing to "recalculate" or something rather than actually refinancing (saving us re-inspection, closing costs, etc.) and drop us to their prevailing (almost half a percentage lower) rate-- which, if we're doing our math correctly on the mortgage calculator, will save us $69,000 over the life of the loan! Let's see... $1500 now or $69,000 later? SOLD! (Now for that tax refund... cough... Or maybe this is a good time to transfer some $ out of that down payment subaccount!)

3. Canceled cable. What a waste of $60/month! The only things we ever really watch are What Not To Wear on Friday nights and the Simpsons. New Simpsons are on Hulu the day afterwards, and we have our beloved fashion blogs to make up for missing Stacy and Clinton, so really, what was the point?

4. As we mentioned in our "At Home" post, we are making our own cleaning products, using washable napkins and hand towels, and have joined a CSA to cut down on our grocery bill (drastically!). We're also trying to bring breakfast and lunch to work and cook dinner just about every day (er, trying being the operative word here).

5. Started tracking our spending religiously, whether keeping receipts or updating our "expenses/income" spreadsheet at work. After a month or so of this, we'll examine where our money is really going and try to adjust accordingly. We'll set a real BUDGET for clothing purchases that fits into our income stream, rather than saying "ooh! We got paid! Shopping time!"

Thankfully we were already on the right track, though; we have zero credit card debt (never got one- we know ourselves too well!); already had a 401(K) to which we're contributing the percentage allowing us to receive the max match; had opened a Roth IRA in our early 20s (which has lost several thousand dollars since then, oops... we picked stocks we loved and/or thought would do well, instead of investing in a decent "target date fund," which we now have done thanks to Ramit, so maybe it'll stop tanking so hard), and had opened an ING Orange Savings high(ish)-interest account, to which we contribute with a small automatic monthly deduction from checking.

Our fiance was laid off in May and is moving in with us in October, (our housemate moved out this month so we have two months with no help with the bills!) so it's really imperative that we take care of this now.

We still need to get a real credit card to start building more credit, since we've never had a car or anything... and apparently paying a mortgage on time for 12 years doesn't account for much.

How conscious are you of how much you spend? How about saving?

Has anyone else read Ramit's book? Highly recommended! Let us know your thoughts!

Happy saving and conscious spending ;)