Frugal in the Fruitlands

I stopped at Hannaford last night to pick up a few essentials for sandwiches. We went through the express lane, because we only had a few items (deli meat and cheese, wraps, cream cheese), and I was surprised to see my order ring up at $35. I briefly thought food prices really have gone up, huh?

While Matt was swiping his card, I looked at the cashier’s screen then, and noticed the only double-digit item: Black Forest turkey ham: 1 lb @ $19.75.

Matt realized it at the same time I did. “What?” he said, at the same time I said, “That’s not right.” The sign at the deli had said $4.49/lb, but now I realized that the sticker from the deli read $19.75/lb. Why I didn’t notice this mistake when I put it in my cart, I don’t know.

They gladly fixed the error and gave me a shiny new $20 bill back. My only regret is that I didn’t catch the error before Matt swiped his card, because cash, as I’ve discussed before, has a different psychological weight than plastic.

What’s also alarming is that I caught the error simply because there was another row of digits - they could have charged me $9.95/lb and I probably wouldn’t have noticed.

3 Comments »

Thanks to all the folks - here and on my LJ - who have given me advice on my Subaru and its transmission problems. It seems I have a few options:

• Have a new or rebuilt transmission installed. This costs ~$2,000, and most are guaranteed for 70,000 miles. However, there’s also the argument that this is just throwing good money after bad, especially since I happen to know that the Subaru also needs new struts and has a bent right front wheel.
• Buy a used car. It would probably be no more than five years old or $10,000. We would likely go for a compact or sub-compact, and hold off on getting a hauling vehicle until our next vehicle breaks down.
• Lease a new car. Some readers view this as a “long-term rental” and are skeptical of it, but others point out that since you’re driving a new vehicle under warranty, you won’t pay nearly as much in maintenance. Plus, it arguably costs the same over a ten-year period - and while you do call the used car your own at the end, you may not have much more car left to drive at that point.

So the plan is this:

1. Cool down for a couple more days. I have a lot of data to process and it’s not good to do it while too emotionally wrought.
2. Call my mechanic and ask him if a replacement is feasible and sensible. If it is, ask him about how much it would cost and if he can refer me to someone who could do it. (He might be able to himself, but I doubt it from the way he talked about it).
3. Take the car to the dealership, tell them it was diagnosed with a major transmission issue, and get a second opinion and an estimate on replacement costs. Stress that they are NOT to fix anything without my approval. My goal in this is to find out if other ‘99 Outbacks have had similar issues and if the dealership is willing to be helpful in any way to keep us as customers. I’m distrustful of dealerships, though, so I don’t have much hope here.
4. Get Consumer Report’s New Car Buying Guide out of the library and read up on leasing and some new car models that interest me, such as the Honda Fit.
5. Figure out how much we car we can actually afford.
6. Shop a lease while simultaneously shopping for a used car, so that we can get an idea of how much the two will cost us over the long-term.

In the end I am hoping to figure out what the most frugal option is - repair, buy used, or lease (notice how buying new is Right Out). I’m not convinced that conventional wisdom re: owning vs. leasing is correct (look how wrong I was about owning vs. renting), and I want to do the math myself.

1 Comment »

For a bit now the Subaru has been making a high-pitched whine when accelerating. Bringing it to my mechanic to fix, he diagnosed a major transmission problem and gave the car three months to live.

I have no idea how this happened. The mechanic suggested that transmissions shouldn’t fail like that, and that the fluid level might have been neglected, but we’re pretty good about checking stuff like that. According to Consumer Reports, 1999 Outbacks have a much greater than average risk of having major transmission problems, so we may not be to blame at all.

Either way, we’ll be replacing the Subaru - far before the 1994 Tercel, amusingly. Now I’m wishing we hadn’t put our $6,500 federal tax refund towards the mortage! We still have our emergency fund *wince* + our MA tax refund + our government bribe economic stimulus rebate - around $3,000, total. This is clearly not enough to buy a quality used car, and I would like to finance as little as possible, given the ripoff that auto loans usually are.

Since we do have another vehicle, we may be able to delay the purchase until we can afford it. Unfortunately having one car is just not a viable option for us long-term, as we live in an area with unreliable public transport and there are days when I need to drive separately from Matt, for doctor’s appointments, classes, etc. Believe me, I wish it weren’t so. I hate driving and maintaining cars in the worst way.

We’re also not sure if we want to replace it with a wagon/small SUV (nothing bigger than a Forester), because we do need some carrying capacity. On the other hand, with gas prices such as they are, another compact wouldn’t be a bad idea for our daily commute - and we showed this weekend that you can even fit 10 5-foot fence posts and 100 feet of chicken wire in a Tercel.

On the wagon front, the Subaru Forester and the Toyota Matrix look promising. From what CR says (I picked their Used Car Buying Guide up from the library), the Forester has some engine problems before 2003, and of course the Matrix wasn’t made before 2002, so there are some price implications there. If we go the compact route, the Corolla is, of course, consistently rated highly; and the Echo/Yaris do okay. The Honda Civic is also appealing, as is the Scion xA or xB.

There’s also the leasing option. Django’s been trying to convince me that this is the way for my car-despising self to go, and I don’t disbelieve him - it’s just that, short of shopping for a lease directly, dealerships aren’t exactly forthcoming with the figures I need to determine if this is the right choice for us.

What are your thoughts on this situation?

10 Comments »

In honor of my monthly challenge to exercise 30 minutes daily, this is health and finance month on Frugal in the Fruitlands.

Five years ago, I had just graduated from college and was living in Haverhill, working part-time at an auto supply. I had the afternoons free, and it seemed to be a great opportunity to get in shape. Near my job there was a Workout World, and I decided to walk in one day and check it out.

That was my first mistake.

The Hard Sell. When I inquired about a membership, I was greeted by a chipper employee and given a tour of the facilities. It wasn’t until after this tour that I sat down with the bleach-blond, over-tanned owner and was shown a contract and a schedule of fees. The monthly fee was $19.99, but together with the sign-up costs, the membership would cost me over $400 in the first year.

I was hesitant.

She promptly lowered the sign-up fees by $50.

I was still uncertain: “You know what?” I said, “Let me think about this and come back tomorrow.” She lowered the fee again, and said they weren’t sure the monthly rate was going to stay at $19.99 a month for long, but if I paid them $10 today, they would hold the rate for me for a week.

… yeah, that was a big lie. If you’re at all familiar with Workout World, you know that’s their gimmick: $19.99 a month. It’s right on their sign. It’s still $19.99 a month, five years later. No way in hell were they going to raise the rates.

But I was an idiot. I paid the fee, and came back the next day and signed up (admittedly, at a greatly reduced sign-up fee. I hate to think what would happen if I didn’t try to exit my seat as quickly as possible).

In retrospect, I realize that from the moment I walked in, they had me. They showed me the gym first, so I would see all the nice features. Then they put me in a position from which I could not politely extract myself. Their goal, of course, is to get you to buy right now. They know if they get you out of their sight, you’re not going to come back. They let me “get away” with the $10 fee with the logic that if I pay them $10 today, I’m likely to come back, thanks to our friend the sunk cost fallacy.

Continue Reading »

7 Comments »

Every budget has a “mystery” category. For us, that box is called “Cash.”

For the most part, my husband and I pay for everything with a credit card and pay the balance off in full every month. But sometimes we come across something that we can’t pay for with credit - or even a check or debit. We need cash: for a co-pay. For entrance to a board-gaming event. To get snacks out of a vending machine.

Inevitably what happens is that we take $20, or $40, or $60 out. That money gets dutifully recorded in our budget software - under the heading of “Cash.” At the end of the month, I look at the Cash category and realize that $200 or $300 has flowed through our hands, basically unaccounted for.

Some personal finance gurus advocate a cash-only lifestyle as a way to get out of debt and find financial freedom. Cash in hand, they argue, is more tangible, and thus we are more aware of it slipping through our fingers every time we buy a latte.

I would argue, however, that cash in hand is prey for the the sunk cost fallacy.

What is the sunk-cost fallacy? Let Wikipedia answer the question! Many people have strong misgivings about “wasting” resources. This is called “loss aversion”. In the above example involving a non-refundable movie ticket, many people, for example, would feel obligated to go to the movie despite not really wanting to, because doing otherwise would be wasting the ticket price; they feel they passed the point of no return. This is sometimes called the sunk cost fallacy. Economists would label this behavior “irrational”: It is inefficient because it misallocates resources by depending on information that is irrelevant to the decision being made. Colloquially, this is known as “throwing good money after bad”

I’m not alone in this behavior, either. Shuchong discusses this, too, in “Cash to Burn: Why a Credit-Only Lifestyle Works for Me.”

I had very good intentions. I took out $40, because I went to the thrift store, and they only take cash. I spent $19 at the thrift store. What I should have done was re-deposit the extra $20 when I passed the ATM on the way home. What I did do was spend about $3 on pizza, because I forgot to pack lunch one day this week. And then $3.25 on a video rental (My roommate had never seen a James Bond movie before. I had to rectify this glaring gap in her cultural education, poor deprived child, and the library was closed for the evening. It was an emergency AND money well spent.) Another $3 for vitamins at CVS. And I must have spent another $6.00 somewhere, because I only have $5.75 left.

Here are some of my suggestions-to-self (and to you) about stopping this gap:

• Instead of taking out $20 every time I need to pay a co-pay for a lunchtime doctor’s appointment, I should make it a point to take the checkbook with me that day instead.
• The post office accepts credit cards. No, really.
• The dining hall at Brandeis accepts credit cards. No, really.
• Pre-registering for conventions means you won’t be coughing up $60 cash at the door.
• The next time the clerk at High Farms Variety - the only place to get the coveted town garbage bags - tells me they can’t accept my credit (or debit!) card for purchases under $20, I’ll remind them that they’re breaking their service agreement with the credit card company by doing so. I can’t guarantee that telling them this will help, but notifying the credit card company might.

What about you? Does money flow throw your hands faster with a credit card, or with cash?

7 Comments »

I’ve been chatting with Sydney of Retirement: A Full Time Job about her path to retirement. Sydney is a great inspiration to me because her retirement at 44 was due to having a well-paying job she loved, socking away any funds that came her way, and… making a conscious decision not to have children.

No Kids = Greater Financial Freedom

I’ve written before about my childfree status. Early in our relationship, my husband and I idly discussed the possibility of children, but at some point we just turned to each other and said, “Really, are we ever going to be ready to give up our financial freedom for kids?” As a result, our financial future is clearer and our path to retirement is shorter. Every time I see a finance article talk about starting a college savings plan, I cross my fingers and give thanks that I never have to worry about that. I know that when the house is paid off, I can pretty much retire. Hell, I can predict when the house is going to be paid off. I don’t have to worry about outgrowing this one. It’s a real joy to know that I don’t owe anything to a little being, no matter how adorable they may be.

Continue Reading »

7 Comments »

Bankrate.com presents Market History: Learning What to Do From Past Recessions. Everything old is new again, as Bankrate discusses the history of oil prices, real estate bubbles, gold, and foreign investments. I wish they had brought up what Money mentioned last month: that over the past 100 years, stocks have consistently outperformed gold. That’s advice that some people I know desperately need right now.

Delayed, but good: Robert Reich, former U.S. Secretary of Labor, writes about The Real Recession Problem: Consumers Are At the End of Their Ropes (h/t to Brian). We’re finally reaping the whirlwind of widening inequality and ever more concentrated wealth, he writes, acknowledging that there is more to this financial situation than just “HOMG yuppies bought bigger houses than they could afford!” This makes him rare among American finance writers I’ve encountered, who seem to ignore the social inequalities in how sub-prime mortgages were sold to minority and immigrant families by shady lenders. (The BBC’s The U.S. Subprime Crisis in Graphics in another good resource).

On a lighter note, I’ve discovered the new-ish Retirement: A Full-Time Job blog. I, too, aspire to be a “young retired bitch.”

Leo writes about The Magical Power of Focus and reminds me that- ooh, shiny!

1 Comment »

Pun fully intended.

Last night, as my husband and I drove home together, I was feeling positive for the first time in months about our finances. Over the past year, we had built a small emergency fund, replaced one of our ugly, high-interest credit cards with a card with 7.99% APR, cut back on our expenses, and paid off thousands of dollars extra on our high-interest second mortgage. In addition, we expect a large tax refund this year (and yes, I know a tax refund is simply an interest-free loan to the federal government - but that’s a conversation for another day). I had changed my payroll allocations just that day so that I was putting $20 a month into savings, and we were about to schedule an appointment with our mortgage lender to see if we could refinance into a better interest rate. I held hands with Matt and thanked him for everything he had done to help our financial situation over the past year.

And then this morning…

… the brakes went out on the Tercel as Matt after he dropped me off at work today.

Continue Reading »

3 Comments »

The Simple Dollar’s post today, “Maximizing the Free (or Nearly Free) Things That Make You Feel Good,” got me thinking.

If I read through my library of unread books…
Played through my library of unplayed games…
Watched all my unwatched DVDs or downloads…
Knitted through my yarn stash….

… it’d keep me entertained for the rest of my life. Just off the top of my head, I could: read the first four books of Stephen King’s Dark Tower series, finish playing Oblivion (hell, play through the two Morrowind expansions that I never got through), watch all of Irresponsible Captain Tylor, and learn to make socks.

And this is ignoring such things as board games, which can be played again and again, and of which we have a sizable collection.

So why are we paying for two MMO subscriptions, a 3-per Netflix account, and cable? By eliminating those services, it would save us $188 per month. ($31.98 for two WoW accounts, $39.98 for two CoH accounts, $98 for cable - though that includes cable Internet, and they can have my bandwidth when they pry it from my cold, dead hands - and $17.84 for Netflix), or $2,256 per year, or $15,453 in 5 years (if invested at a conservative 4% interest and compounded annually). That might even buy you a sandwich in 2013 dollars!

Question to readers, and to my husband (the most important reader): How can we realistically cut back on these services and not resign my husband to a life of Wii Tennis?

4 Comments »

Off the top of your head, can you name some of the “conventional wisdom” about owning a home?
- It’s an investment.
- It will grow in value.
- Everyone wants to live in a house.
- If you’re renting, you’re just throwing your money away.
- Owning a home gives you a sense of satisfaction.

Pretty much whatever you can name, I bought into. I was further encouraged by my parents, who couldn’t go a week without asking us if we were going to buy a house. Obviously, we’d followed the life script by getting married; now we needed a house!

Continue Reading »

4 Comments »