Tightwad Gazette III - Day One - June 28th

And so we begin the Tightwad Gazette III.  I'm not going to list daily readings this time.  Instead I will just start profiling each reading and you will easily be able to follow along.  I usually try to read and "digest" about 6 to 7 pages per post.

As a reminder, I didn't write the Tightwad Gazette III and the ideas that I highlight are those of the author, Amy Dacyczyn.  I am reading the book and giving you the "Cliff Note" version.  Also any comments that I make will be underlined in each post.  Be sure to add comments of your own.

PAGE 3 - DROWNING IN RISING EXPECTATIONS

Amy starts this article by saying that there is a common idea going around among the “Baby Boomers” that middle class people couldn’t afford to have children anymore on their middle class incomes. Amy started her newsletter because she believed that to be false. It is her belief that people are victims of their own inflated expectations.

Politicians feed this by convincing people that they are hurting and one political party can bring back opportunity. There are the news reports that inflation has made income decline and so on.

Amy wrote this book back in 1996 when we were beginning the boom years, but now two years after the Great Recession ended many people have not recovered financially and may never recover. Incomes have declined, prices have gone up and we don’t know what is around the corner, BUT we do know that we don’t have to sit and take it as there are some things we can do. For example, live on as little as possible so that you can pay your bills and perhaps even put some money away in savings. I have always felt that the statement “expenses rise to meet income” is so true. The days of “if I lose my job I can get a new one within a short period of time” are gone. Learning to live on less and lower your expectations is the way to live now.

People feel poorer because they have come to expect more. They buy more stuff; each driving age family member has a car of their own; people travel a lot more; people spend an exorbitant amount of money on hobbies and recreation; people don’t cook at home and they eat out.

The reason people feel priced out of the housing market is because they want houses that are so much bigger and better. Though the average family is smaller, the average modern, new house is twice as big as the average one built after World War II.

I was watching CNBC this afternoon and Tom Brokaw’s documentary “Baby Boomers” was on. Tom talked about the parents of Baby Boomers that bought homes that had around 1200 square footage and their children want to build the monster homes that have a master suite that is like an apartment. Each house must have bedrooms for each family member plus for guests, the kitchens are almost as big as a small apartment and then there are the 4 car garages, the great rooms and more. Homes are no longer places for shelter and family life alone but have gone beyond shelter to large enough that a family member can be alone in the same house even when everyone is home. Having the biggest, best, newest home is the mantra.

Amy says “that even if there is a financial inequity, complaining about it wastes emotional energy. You could use this same energy to be even more creative than your parents were. For example, our family expenditure for food and clothing is almost the same as what my parents spent for these items 25 years ago, and this isn’t adjusted for inflation.”

We have 2 cars and 1 truck in our family that were purchased before I lost my job. Back then if I knew I was going to lose my job, we would only have 2 vehicles and I would share my car with our son. But now with one car being paid off this month and the truck being paid off in 3 more months, we will be correcting this in the future by not replacing one of those vehicles when it wears out.

I don’t feel as if I am going backward financially by not being able to afford the things that our family could afford when we had two paychecks coming in. Many people think that if you are driving a 2008 vehicle and you replace it with a 2006 vehicle, then you are going backwards financially by not continually buying newer and newer. The same is true of building a home. Many people feel that they have not achieved a major milestone by building their own home. Instead they should look at home ownership as shelter and a cozy place for your family to live. Living in a 1200 square foot 3 bedroom ranch with 1 bathroom does not mean that you are less successful in life than the family that is living in a 3000 square foot “monstrous” brand new home.

Page 5 – MACARONI MIRACLE

Many times Amy is able to purchase the standard Macaroni and Cheese dinners (similar to Kraft) for only 25 cents. She adds some meat or tuna to make a quick meal. It is about the only convenience food that she purchases. Amy did look into the cheese powder and except for the food coloring; the ingredients didn’t appear to be “fake food.” A reader had written in to say that she was able to get the cheese powder in bulk at a health food store and wondered if by adding store bought bulk macaroni if it was cheaper than the boxes. However, Amy was consistently able to get the boxes on sale cheaper than the buying in bulk items.

This is one item that you can keep on hand and make it into a quick casserole or even a pasta salad.

Page 6 – THE KIDS’ CLOTHING INVENTORY

Amy spent about $50 annually to dress her six kids with an average of $8.33 per kid. This includes winter outerwear. Socks and underwear were purchased new. Many clothing items were given to their family by their relatives and many items were purchased used.

Amy kept an inventory sheet on each kid as to what clothes they wore and the sizes along with what clothes that child had in their closet to wear. So for one child she wrote down the number of winter shirts and the sizes. This was to ensure that gaps and surpluses don’t occur. For example, one child ran short on shoes so she knew that in the future she needed to make sure they had enough shoes for the year.

Since manufacturers differ in their sizes, Amy started to measure the clothing to make sure that she would be getting the correct sizes at garage sales. For example, she would measure inseams and also would measure shoes for the correct size. Then when an item was needed she would take a tape measure along with her to a garage sale and it was easy to measure and know that pants and shoes would fit her child.

I think this is a good idea from the standpoint of clothing does shrink after washing, so you may look at an article at a garage sale and think that you are buying the correct size only to find out the item had done some shrinking. Measuring ensures a good fit.

Amy kept a list of the sizes along with the measurements that went with that size so she could make sure the clothing would fit. For example size 2 in pants measures to be an 8 ½” waist (measured in the front) and 11 ½ inch inseam.

Even if you didn’t keep a list of the sizes, but only took an inventory of your children’s clothing you would be able to see if they needed any “new” clothing for a season. Then you would be able to go ahead and buy those items before they were needed as compared to going to a garage sale and buying everything “willy nilly”. Having a plan to buy only what is needed and nothing beyond that will save you money, even at garage sales. Also just because items are cheaper at a garage sale doesn’t mean that you buy your child 10 dresses, 15 pairs of pants and 25 shirts. Money is money so only buy what your child needs.

Having a clothing inventory for every member of the family would be a good idea too. Think of the money you will save by not going out and buying extra items when you aren’t sure if you really need them or not.

Tomorrow's reading will cover such things as comparing your food budget to other families, some reader tips and buying dented, dated and discounted food items.