Playing Poor

I just finished a book called Two Dollars a Day.  It's part of the Prime reading library.  I highly recommend it.  Honestly, it wasn't what I was expecting it to be, but it was fairly eye-opening.  The book follows the experiences of a handful of families in the United States living on $2.00 per day per person.  For the record, that is the threshold that the World Bank uses to classify someone as living in "extreme poverty."  It’s the kind of poverty that you don't expect in the modern US, but exists in shadow economies in big cities and small towns and rural areas.

It kind of hit home for me because I’m only maybe two generations out from that kind of life.  My grandfather told stories of life as a boy on the farm during the Great Depression and how it didn’t matter because they were poor before the Depression, they were poor during it, and they were poor afterwards.  He did manage to work his way out of that and into a decent mid-century, middle-class life.  I wish I’d paid more attention to some of the skills that my grandparents tried to teach me instead of having to learn them from YouTube videos.  I live in one of the 10 poorest states in the country, so the kind of rural poverty that the book talks about is something that I’ve grown up seeing in the countryside.  

That got me thinking about how I'm handling my finances.  I've been following the FIRE (financial independence, retire early) movement for a while now.  I don't know that I'll ever have the RE part down, unless I am offered an early out, but the FI part intrigues me.  I think it’s a natural extension of budgeting, especially for a numbers geek that enjoys budgeting and playing with my money.  

If you only count what I spend on non-savings expenses (i.e. don't count what I save each month even though those are listed as expenses in my budget), I'm spending about 75% of what is considered average in my state and only a few hundred dollars a year beyond what the expanded Medicaid cutoff would be if my state had opted in.  All that is to say that I live quite a bit under my means.  I was a broke college kid for basically my entire 20s, and I never really grew out of it.

But I'm just playing poor.  What does that mean?  It means that while I often feel and live like I'm living paycheck to paycheck, an unexpected emergency is not going to send my life into a tailspin because my entire paycheck isn’t being eaten by the daily necessities.  It means that I don't have to sit up at night and worry about money, and when I do it's because I'm trying to squeeze another 1% into savings.  It means that my kid won't have to suffer because he's sick, but the only pediatrician in town that takes his insurance is closed and I can't afford to private pay anywhere else.  I will price compare everything to get the best deal, but he will have all the school supplies on his list.  His clothes might have been bought at thrift stores and consignment sales, but he will have an overabundance of them and they will be clean.  It means that I will have what is apparently a tiny grocery budget and eat out very, very little.  But there will be more than just ramen noodles and beans and rice.  For that matter, I'm able to do that because I can afford a working fridge and freezer and stove.  And if one of those goes out, we can buy a new one, but I can guarantee that we will do everything we can to fix the old one first.  

Privilege is a hell of a thing.  For some reason, a lot of people have an almost visceral reaction when it's pointed out that they benefited from it.  Like, we get it, you work hard, but so do plenty of other people who are simply trying to keep their head above water.  They might even be working harder than you are because being poor, truly poor, is HARD.  It's expensive.  Simply acknowledging that you have been lucky doesn't take away from your accomplishments.  I fully admit that I am lucky enough to have a ton of advantages that make FI, and maybe even RE, a realistic and achievable goal.  It's great that you pulled yourself up by your bootstraps, but please acknowledge that you were lucky enough to have shoes to begin with.  

Confession Time

As much as I'd like to pretend that I've always had my financial shit together, I'm here today to confess that that's not really the case.  Now, I've always kind of been a saver. As a kid, I saved my allowance for months to buy the Super Nintendo and was livid when my mom made me share it with my brother who had spent all of his allowance. By college, I had managed to put up a small savings account, which came in handy when the store I worked at closed and I didn't have a job for awhile.

Then, because I was young and stupid, I married a man who was terrible with money.  There would have been fewer red flags in Soviet Russia than what he was waving.  He came from Old Money.  The kind that had long since dried up in his family line, but because he still carried the name he felt like he had to keep up with his cousins.  He thought that as long as there was money in the checking account, it was free game to be spent.  I went from having no credit cards and some savings to having no savings and a couple of thousand in CC debt.  I'm not blameless in this.  I didn't have the lady balls to stand up to him.  Any time I did, it turned into a full-on manchild tantrum and for awhile it just wasn't worth it.  

I learned a lot about budgeting and being frugal during this time.  I pretty much had to be frugal at this point in my life just to keep the balancing act going. I learned how to use coupons and stretch a grocery budget.  I knew how to work the CVS system because it was the only way I could afford milk every week.  I tweaked the budget spreadsheet into an early iteration of what became the cashflow tool.  It was the only way to juggle bills and make sure that nothing got cut off and that the mortgage got paid.

When I was 26 I left him and moved back home.  I walked walked away from the house, the mortgage, his car loan.  I figured that in seven years I could have a chance to be happier and have terrible credit that was getting better or I could be miserable and have terrible credit that was getting worse.  I knew that he wouldn't pay them and I was mostly right.  The mortgage payment I made before I left was the last one that ever got made.  The house was gone before the divorce was even finalized.  Luckily, this was at the very beginning of the housing crisis, so the bank was still issuing full-credit bids on foreclosures so there was no deficiency on it.  I suspect that things would have been much worse just a few months later.  

At that point, we had about $10k in credit card debt.  Half of it was on cards that were in my name with him named as the authorized user and half in his name with me as an AU.  The first draft of the divorce decree that his attorney sent over demanded that I cut a check for "my half" of the credit card bills and he would take care of paying them.  I'm not sure my attorney has ever seen someone laugh that hard in his office before.  Even if I could have conjured that kind of money out of my ass, I trusted him to pay my bills about as much as I trust gas-station egg-salad sandwiches.  In the end, we each got the ones in our respective names.  I had some late (very late) payments on them, but eventually got them paid off about four years later.   

He managed to keep his car for about 8 months, but it eventually went too.  It sold at auction and there was a deficiency, but I was never contacted about it.  He filed for bankruptcy a few days after the car was picked up, so it's likely that that helped me out.  I also spent several years under the radar.  On paper, I owned nothing.  I sold my car to my dad.  I lived with my parents or in my grandparents' house.  I had a checking account that was always empty because I went back to school.

I'm on the other side now.  My credit is awesome again.  I'm remarried with a kiddo.  My new husband is...better....with money.  But we still have separate finances.  He does have some issues with impulse spending that can be serious if not kept in check.  I know that if shit hits the fan that I can take care of myself and my son.  Life is good and getting better.  I'm never going back there again.

How I Got Here

It's pretty much a given that most people's financial education starts at home. Some people learn what to do with money. Some people learn what NOT to do with money. I learned a little of both.

My parents aren't exactly terrible with money. They made a lot of the typical knucklehead moves like buying a timeshare or refinancing the mortgage multiple times. They probably shouldn't have credit cards as they tend to go through the cycle of:

1.) Run up the credit card balances
 2.) Do something drastic to pay them off (see multiple refis above)
3.) Close all but one "for emergencies"
4.) Rinse and repeat

That being said, they've never been evicted and they've never defaulted, that I know of.  We never went hungry.  They didn't have to worry about saving for retirement because they both have pensions, though dad did a handful of part-time gigs starting basically the day after he retired from his full-time government job.

My maternal grandparents were great financial role models. They were stereotypical children of the Depression, though my grandfather was quick to tell you that the Depression never made a difference because they were poor before it happened and poor afterwards. They used everything they could and when they were done with it, they used it for something else. My grandmother made a lot of my mother's clothes when she was a child (and a few unfortunate outfits for me as a kid). They grew food and canned/froze it for the rest of the year. No lie, when I cleaned out their deep freeze in 2010, there was frozen corn that they had grown in 1998. And he would have insisted that it was still fine. They invested. My grandfather had a monthly ritual of calling around all the local banks to see who had the best CD rates for the one that was coming due that month. I'm pretty sure I get my love of playing with my money from him.

 My paternal grandparents were...not so great role models. Though it wasn't until they passed that anyone had any idea how bad it really was. I mean, as a kid you don't quite understand the reality of the absolute mountain of gifts at Christmas when grandma and grandpa are on a fixed income. My dad was the executor of the estate when we found out that they owed something like $40k on 13 different cards and had already taken out a loan against their house and land to pay them down. I still remember the calls, and the calls, and more calls. The scummy creditors who tried to convince my dad that it was his responsibility, as the executor, to pay them even if it meant paying them out of his own pocket.  I remember some of his very...colorful...replies to that request.  It took months to straighten everything out and, in the end, they weren't able to save the house.

From all this, I can say that I probably got my saver personality from my maternal grandparents. There are quite a few skills that I wished I'd paid more attention to, but at least I have YouTube because my mom paid even less attention than I did. All in all, I'd say that I was very, very lucky to be able to (mostly) learn from watching my parents struggle. I think that my paternal grandparents situation is the one that had the most impact on me. I was 15 when it all went down, so it was still fresh on my mind when I went to college. Because of that, I resisted the credit card companies who were set up outside the university bookstore pushing free t-shirts and pizzas for filling out credit card apps.

At the end of college I fell into the trap of being married to a super-spender.  He had both a drug problem and a keeping-up-with-the-Joneses problem.  I left that marriage with between five and six thousand dollars worth of credit card debt with a foreclosure and a car repo on my credit report.  In what is now a funny side note, when I got the first draft of the divorce papers from his attorney my ex demanded that I cut him a check for "my half" of the credit card bills.  We had similar amounts on cards in each name.  No joint cards.  Seeing as how he had never dealt with the checking account or bills while we were married and wouldn't even know where to start to pay my credit cards, I not-so-politely turned down his "generous" offer.  I'll post about the shitstorm that was that time of my life soon.

After that, I moved back in with my parents.  I took a shit job and then quickly moved on to bartending.  That was about the time I decided that I had to get myself back into school.  I saved up and paid for my first two classes in cash.  Because I already had a degree, most of my general ed classes were already out of the way and there were only a handful of my new major classes that I had the pre-reqs for.  I tended bar at night and went to class in the mornings, paying as I went.

Eventually, I landed a co-op position that allowed me, nay required me, to go to school full-time and work 10-32 hours a week, depending on my school schedule.  They paid books and tuition.  That job transitioned to full-time a week after graduation.  That was 7 years ago.  I still owe them 2 more years for all the tuition they paid, but I mostly like my job so that's not a big deal.  It's also a great paying job for my area with fantastic benefits and one of the best retirement plans available.

I'm remarried with a kiddo now.  He's not fantastic with money, but understands that and lets me handle everything.  I like it that way.

Thrifty Thursday

I had intended to start doing a feature called Thrifty Thursday today to document my absolute love of all things thrift stores.  Seriously, anyone who knows me knows that I love some thrift store shopping.  I love everything about it.  The prices.  The thrill of the hunt.  The unique finds.  I really love the concept of giving new life to old things.  Now there are a few things that absolutely draw the line at.  I don't do matresses or cushioned furniture or anything else that could bring bedbugs into my house.  I also don't do socks or underwear (ewww).  There is a grey area for me and that area is shoes.  I don't like shoe shopping.  I've been wearing the same pair of work shoes for the last 15+ years and they need to be replaced.  Badly.  So, what's the big deal?

The deal is that they are Dr. Martens and they were on the expensive side when I bought them.  And in the last decade and a half, production of them has moved from England to Asia and with the move, the quality has reportedly gone down.  Now, some production has been moved back to England, but they are significantly more expensive.  What's a girl to do?

Enter Poshmark.  It's a site to buy and sell used clothes, shoes, and accessories.  I've had very good luck with sellers over the last couple of years, so I checked them out.  I hit the like button on several pairs that were my size, made in England, and listed for a price I could live with.  I even found a pair of the exact shoes I have.  Within an hour of my liking that pair, I got an offer from the seller.  She, or Poshmark on her behalf perhaps, offered $20 off and free shipping.  Yes, please.  Now hopefully I can get 15 more years out of this pair. 

Grocery shopping basics

We are a family of 3. Two adults and a bottomless pit of a 5 year-old. My goal is to average $2/person/meal. I shop every two weeks and plan about 10 dinners per shopping trip. Why 10? Because at least one, maybe two, of those planned meals will be something that I can double, triple, or quadruple and freeze. So, a few nights a week are either something out of the freezer or leftovers. Tonite is a freezer night.

The process starts by checking out what's on sale, specifically meat. I have a list of the various grocery stores in the area and what days their sales run. Most sales cycles around here run Wed-Tues, so I usually start at least thinking about my menu on the Wednesday a week before I pick up my order.

Once I have an idea what's on sale, I start building my menu. If there's something at a fantastic price I'll pick three or four meals with that and fill in the rest with other stuff. My family would riot if we ate chicken 14 straight days, so I do try to mix it up. I also buy a little extra when stuff is on sale so that I have a decent mix of things in the freezer. Speaking of the freezer, I do also like to keep that in mind when I'm picking out the menu so that I cycle through the stuff there. Also, since most of it was bought on sale, I'm cutting my per meal price down.

To organize things, I use an app called Pepperplate. It lets you collect and tag recipes and will build a shopping list for you. You can choose your own tags, but at minimum, I tag recipes with the kind of protein it has. That way if pork is on sale, I can quickly filter down to just the pork recipes. I can also create a calendar to plan which meals go on which days. I do schedule some meals, especially for meals that have ingredients that won't last two weeks in the fridge. I try to schedule those meals for earlier in the week. I also like to schedule time-intensive meals for weekends. It helps with the "what's for dinner" dilemma.

Now that the shopping list is built, check off the things that are already in your pantry, fridge, and/or freezer. There is no use buying something that you already have, unless it's something you use a lot and it's at a rock bottom price (I'll write a separate post about that later...I promise).

Next, I put everything that's left on the list into a Walmart shopping cart. This is my baseline price. Let me tell you, online grocery shopping is a game-changer. I save a ton of money just on not making impulse purchases. Do you have any idea how much less I spend just by virtue of not taking the husband and/ or kiddo into the store? Also, there's no more standing in one grocery store trying to remember if X is cheaper down the street. I can easily see if the Walmart regular price is more or less than the advertised price at the other stores. Sometimes it is, sometimes it isn't. Finally, I don't have to be that person standing in the aisle with a calculator trying to figure out what's the best deal (I've so been that person). And if I do go over budget, it's easy to look back over my cart to see what can go back without having to backtrack across the store.

But remember how we built our shopping list based on what was on sale? Now that the WM cart is full, I go back to that ad and see if it's really a good deal or not. If that item is still cheaper at the other store, and it's cheaper enough to make it worth it, I'll take it out of the WM cart and buy it at the other store. I'm not going to drive 15 miles out of my way to save 37 cents, but if it's a store I'm going to be passing anyway and I'd save $8 then I'll do it. This is also a good opportunity to check out all the other items in the ad. If there's something that's slightly cheaper than baseline go ahead and get it somewhere else, and take it out of your WM cart. For everything else, just pick it up.

I tend to not go to more than one other store a week unless it's just a smoking deal or it's something that we use a lot of. I've found that a lot of times, all the local stores will have the same basic things on sale at the same time, so it just depends on who has it cheaper and how far out of my way they are. As for this week, we're looking at pork loin roast and boneless country style ribs for under $2/lb and Sweet Baby Ray's BBQ sauce for 99 cents (that's almost half the price of Walmart, y'all). I'm thinking we'll be doing some BBQ in the crockpot. for under $1/serving. That will leave plenty of room for veggies and starches, if you eat those, and still be under $2.

It was almost too pretty of a piece of meat to cut up...

Now's time to hit the sales items that might not necessarily be on your list.  I try to make it a game to see how close I can get to my allotted amount without going over.  This can be things that are on sale because of the sales cycle like ketchup just before Memorial Day or things that are nearing their sell-by date.  Today's find was a beautiful beef roast for just under $12, or $4.50/lb.  It's a little more than we would normally pay for meat, but it's a  fantastic price for stew meat.  To keep us under our $2 goal, we might use this for beef stew and only use a half pound per batch.  So, I took it home and chunked it up and froze it in a single layer.  Once it's frozen enough that it won't stick together, I'll throw it in a container that I can scoop it out of when i need it.

....Almost.  I'll get at least 4 and probably 5 meals out of this.

What are you doing this week to optimize the grocery bill?

Cutting the Cord

Like a lot of people, we cut the cable cord.  It's been long enough now that I feel pretty confident giving you all my review of the different services we use. 

First of all, we eased into streaming.  My husband wasn't really convinced, but our cable/Internet bill had become ridiculous.  It had finally crept up above $200/month and I was beyond done.  I bought a Fire Stick on sale and added it to the main TV.  We used it, along with the regular cable, for a couple of weeks.  Then the storm hit and since we were moving out of the house anyway, it seemed like as good of time as any to cancel U-Verse.  While we were living with mom and dad the rooms we stayed in didn't have a cable drop, so we had to either stream our TV or go downstairs and be sociable. 

We currently use Prime, Netflix, and Boomerang the most.  We also use PlutoTV and FreeDive occasionally.  And of course, YouTube.  So, let's talk about them, huh?

• Amazon Prime:  There's a pretty good chance that we'd have this even if we didn't stream TV, but I'm pretty sure that if Amazon ever split the video portion off into it's own separate entity a la Amazon Music Unlimited then we wouldn't bother subscribing to it.  The selection of movies and shows is just okay and the menu teases you with selections that are available "to rent" and not included as part of Prime.  I did enjoy the Mind Over Money series
• Netflix:  What can I say?  It's the original streamer.  The selection is good.  The menu is straightforward.  What you see is what you get as far as being included with the subscription price.  The bad news is that the price keeps going up.  Right now, it's still worth it, but the playing field is changing and I'm not sure for the better.  They are throwing a lot of money into original content, a lot of which is really good.  I can't wait for the next season of Stranger Things.
• Boomerang:  This is for the kiddo.  It's probably the one we get the most value out of.  It runs in the ballpark of $40/year and worth every penny.  Lots of old school cartoons:  Scooby Doo, Jetsons, Flintstones, Tom and Jerry, etc.  My only complaint about it is that unlike Netflix, it doesn't have an attention check after every couple of episodes.  It will play all day or night if it gets left on.  That's no bueno when you're not on an unlimited data plan.
• PlutoTV and FreeDive:  I'm bundling these together because they are super similar.  The lineup of content is even very similar.  This is a good way to get some of those Discovery Channel shows that I used to be such a sucker for.  Pluto does have a live option, in addition to on-demand, where you can watch their channels like you would watch regular TV channels.  We've been doing mostly on-demand for years anyway, so this doesn't matter much to us.  There is a live news channel though if you want to keep up with the news that way.  Both PlutoTV and FreeDive are free services and thus have ads.  They are pretty short, but can't be fast-forwarded through.  FreeDive seems to do a better job of placing the ads in natural breaks.  Pluto will sometimes stick an ad right in the middle of a sentence.  The content isn't super new or super vast, but it's definitely worth more than what you pay for it.
• YouTube:  Here I'm talking about just YouTube, not YouTubeTV.  I like the ease of casting a video from my phone to the TV using the app.  It's interface on the TV is kind of clunky, but it's another free option.  I like watching older shows, even if the quality is lacking.  I torture the kiddo by making him watch old episodes of Sea Hunt.  Good times.  

I'm very interested in the service Disney is planning to introduce soon.  At $6-7 a month, it is a little more expensive than Boomerang, which it would likely replace.  I have my doubts that Disney will be able to hold it at that price for very long either.  Time will tell whether or not this is something that will become part of our lineup.  There is a very real danger of adding more and more subscriptions without analyzing which ones you are actually watching.  We've been saying for years that we would like to be able to only pay for the channels we want.  Now, we're getting closer to that reality, and are finding that at $3-7 per channel, it may not be any cheaper to do so.  

One percent at a time

So, one thing that I've been really working on lately is increasing my savings rate.  At the end of last year, I adjusted my W-4 withholding, cut cable, and increased my retirement contributions by 9%.  I was able to get an additional 1% in February when I received a COL adjustment to my paycheck.  I'm currently at about 30% between my work plan and my Roth IRA.  During next open season, I'm going to add a HDHP and HSA to the mix as well.  But is there anything else I can do?

The idea of optimization is that you can make little steps in your every day life to get closer to your goals.  So, my goal has become to decrease my expenses and/or increase my income 1% at a time.  I mean, why not?  It's "just" 1%.  A few dollars a day, really.  Enough to feed one of Sally Struthers' kids.  Or buy Alex Trebek's life insurance.  But that 1% can be huge.  I'm only about 4% away from maxing out my work plan.  If I can find money that can be better optimized as savings then I want to do it. 

Because 1% seems like such a small amount, I started looking at the things that can be cut easily.  The low-hanging fruit, if you will.  So, I started reading articles with titles like '15 Simple Tips for Saving Money."  And what I found was....that I'm already a cheap bastard.  Seriously, tips like "Don't buy $5 coffee" and "Make a budget and stick to it."  In all my searching, the only tip I found helpful was one about keeping your car tachometer below 2000 RPMs to improve gas mileage.  That shit works, yo. 

So, back to the drawing board.  I started looking at what my expenses were vs. what I had budgeted for them.  I found that on average I was budgeting about $5 too much a week for gas and $10 per month too much for electricity.  Now we're getting somewhere.  When I run the 2020 budget in a couple of weeks I'll be able to budget less for those two items. 

I've also cut the amount that I spend on groceries down about $10 every two weeks.  My grocery bill is already pretty bare bones, so after this, there's not a whole lot of room to cut it down anymore.  I've got a post planned for my shopping strategy, so I won't go too much into it here. 

Finally, I took a look at my utilities and realized that my Internet company had introduced new plans.  The plan I'd been on was for 600 GB per month at 150 mbps.  The new plan was 600 GB per month at 200 mbps....for $15 less each month.  I couldn't make that change online...I did have to actually call and talk to an actual human being...the horror!  No, actually she was very nice and didn't give me any grief about switching plans. 

All of those little tweaks gave me the 1% I needed to increase contributions again.  Just three more percent to go...