March 02, 2011

Tightwad Gazette I Refresher - Day Two - March 2nd

As I have been re-reading this  book, I find that I am becoming resistant to spending money.  It just seems that Amy does have that influence on me.

Each Tightwad Gazette Book offers tips and also advice from Amy Dacyczyn. So as you read or follow this blog, please note that there are many tips that also go hand and hand with some good advice from Amy.

Also, some of these tips were new at the time the book came out and perhaps now would be considered not so new. But, there are a lot of tips in this book that people probably shunned back then but would gladly take on in the light of today’s economy.

Today’s reading opens up with Amy talking about living beyond your means or over the edge.

Pg. 15 - Amy is interesting as a person and author as she does say that she is a closet budget analyst but I also think she knows a lot about human behavior.

Amy talked about when she was single and she had a balance in her checking account between $1,000 and $1,500. When the balance exceeded $1,500, she would spend. When it dipped below $1,000, she would cease spending.

Amy goes on to say that there are some people that live close to the edge. They are the $10 to the next pay check guy.

Then there is the individual that lives beyond his means. He builds a mental gangplank beyond the edge that teeters. When an unexpected expense arises, neither of these individuals accept responsibility.

The person who maintains a cushion will occasionally approach the edge but will quickly work his way back to his Comfort zone.

Page 16 – Amy made this observation. People have told her about the shortage of income that leads to their troubles. But she noticed the things they possessed/ bought such as disposable diapers and sugary cereals.

“Even more responsible families on modest incomes nearly always have areas they can economize. They could give up red meat for dried beans.”

Amy is a sort of amateur budget analyst and when asked, even in desperate situations she could identify areas where they could save.

Amy made the significant cut backs in her family – eating oatmeal for breakfast vs. sugary cereal and she used cloth diapers.

When the living on the edge people can’t pay an extra expense, the fault can be found with all the extras they were not willing to give up in order to have the needed cushion.

If I were to ask Amy for advice as to how to save in my budget, she would automatically point to my having cablevision, getting my nails done, getting my hair professionally colored every three months and my hair professionally cut. She would also tell me to get rid of one of my vehicles, and more. In other words, she tells the truth. I could save a lot more money each month if I didn’t do the above, but I would be unhappy. BUT – if absolutely necessary we could do it and she is right. In fact, if I was working and I wanted to be home and it meant giving up the above, I would do it. We have a cushion in our budget even with some of our optional spending.
If we are having tremendous financial problems, yet live like we have more money and don’t make any to the bone budget cutbacks, we are going to continue to have financial problems. So the advice she gives here in my opinion goes even to two income families that are struggling financially.

The point is this. We have optional expenses that we spend our money on that if we chose to, we could do without and save a lot of money.

Pg. 17 – TIP ONE - Where can you get cheap drywall and lumber? Amy responded to this question by telling the person that they should shop around and educate themselves on what is the best price. Sometimes you can scrounge, but for big projects you will need to go to a store. Amy said that when they needed money for a big project they would divert funds from other areas such as food, clothing and entertainment to save up the extra cash.

Another source would be to watch for places being torn down and remodeled and you can scavenge.

In our town, until recently, they would have a once a year clean up time when you could put pretty much anything out by the curb, and the City would pick it up. Many, many people would go around in their cars looking for items and many men would look for any kind of lumber and such for projects.

TIP TWO – A reader wrote in to say that she extends the life of dryer sheets by cutting them into fourths. I have cut mine in half before, but have never thought about fourths. I will try this one.

TIP THREE – Another reader wrote about how to make your own dryer sheets by pouring a small amount of fabric softener (1 tablespoon) on a wash cloth. Toss in the dryer and use for several loads. This is a great idea if you use liquid fabric softener and forget to put it in the washing machine.

Pg. 19 – How can I Save on Formula – wrote in several readers.

Amy gave a recipe for homemade formula, but she also consulted with professionals who advised that this would be a distant third option behind breastfeeding and commercial formula. The recipe that she gave was the exact same recipe that was in my baby book that my mom used with me, using evaporated milk and Karo syrup.

As to commercial formula, the powdered version is usually the cheapest.

I thought it was interesting that Amy researched and answered this question. But that is Amy. She is willing to do some work to find an answer to someone’s question. Again, she was not a proponent of using homemade formula as she recognized that breastfeeding was best and since a breastfeeding mom doesn’t need that much more in her daily diet, it is the most affordable.

Pg. 22 TIP FOUR One reader wrote in that they are sensitive to prescription drugs and would take one or two doses only to have her doctor switch the prescription. She learned from her pharmacist that she could buy as few as 3 pills at a time in order to see first if she would have any side effects and without wasting a full prescription.

I would be interested to see if you can still do this and tomorrow I will be picking up a prescription and I will try to remember to ask my pharmacist.

But the downside of this came from another reader that said some pharmacies charge a dispensing fee each time so this may not be a money saver.

I respond to it this way, if I could buy a few pills to see first if they are going to work, I would do it and pay the small dispensing fee. Why? Because we have read so many times in the newspaper about our water supply being contaminated by drugs that people don’t use anymore so they pour them down the drain or flush them. I think it would be better to pay a little extra money in order to save our environment.

Pg. 23 – Calculating the Net Value of a Second Income.

Amy makes this statement: “Families choose a two income lifestyle for very good reasons. In the lowest income groups it is usually an economic necessity. I know of many cases when the wife works because her husband’s job lacks security or sufficient benefits. Usually the purpose of the second income is to elevate the standard of living.”

I would say that many women now work because their husbands are unemployed, they need retirement money, because of our economy they feel secure and need the second income, they work because they are grateful to have a job and they love their jobs. I have to say that everyone today is mindful of being grateful to have a job.

As to the statement about raising the standard of living, I do believe this can be true in some circumstances. But, that is up to the couple and it is their choice.

Amy isn’t condemning working woman, she is just pointing out that when she meets women, many of them say that they have to work. After talking with them they admit that they are genuinely enriched by their jobs. However, it perhaps is easier to say that you have to work.

Amy does go into great lengths to take a husband’s salary of $25,000 and a wife’s salary of $15,000 and looking at taxes and how the wife’s salary probably puts the couple in a higher tax bracket along with the costs of working such as transportation, child care, working wardrobe, more money on convenience foods and eating out then the wife’s actual net income is reduced to $4,000. Then Amy goes into great length of discussing how that $4,000 could even be reduced if the wife stayed home. “How much can the food bill be cut by gardening, canning, freezing, elimination of convenience foods, meals out, school lunches and improved shipping skills?”

Other ways she said that the family could save that $4,000 was by eliminating services the family is currently using such as a house cleaner. Saving on birthdays and holidays with homemade gifts and foods. Buying clothes at garage sales and thrift stores, watching for sales, learning to sew and repairing clothing.

What about using cloth diapers instead of disposables? I used cloth diapers on my boys as much as possible and I only used disposable at night time or when we went to church or on vacation. I always told myself that I was saving 25 cents per diaper when I used cloth diapers. As to the 25 cents, that is 1993 and 1994 prices.

Amy makes another interesting comment “If you decide you want to scale back to one income, you must be sure you are willing to actually economize in the ways you factored in.”

I have advised women that are considering quitting their jobs to stay home, they need to work out a one income budget and then while working try to live on that budget. There still may be some extra expenses devoted to working, but at least then you get a little bit of an idea of what you will have to do to live on that one income.

Tomorrow we will be reading pages 25 through 35. Amy D. talks about Halloween Costumes, creating a Price Book and Buying Food in Bulk.

Post your comments. Agree or disagree with what Amy has said or agree or disagree with me on my comments. Add more ideas to these topics if you have them.


Anonymous said...

I thought the same thing when reading amy. There are a few things she would point out that I could get rid of. I get my car washed professionally every month or two, there are some book I buy that I could probably get from the library.

Even though I am back to work, we are living as if we only have my husbands income and using mine for paying off debt and investing.


Maureen said...

Thanks Martha I am now catching up on this series and enjoying it thoroughly.
I never used dosposable nappies as they were of a very poor standard which constantly leaked, when my two were babies.
At the moment I dont even own a tumble dryer so no electricity used also no need for dryer sheets.
I am going to be picking up on the idea of freezing sandwiches, I may make up a weeks supply for Foxx and myself on a Sunday.
I need a car for work and as this independence means I can work overtime then this is a no brainer for me, I own this little old car outright.
I have cut down the use of many convenience foods, although we cant live without our tins of Baked Beans, I have pulled out my breadmaker. and have just recently bought myself a yogurt Maker. now I will need to source some cheap ways of using them.
loving the series Martha keep em coming......