Exjackly

It has been many years - something around a decade - since the last time I’ve been to the eye doctor. I’m going in tomorrow, and expect that he will want to put me in glasses or contacts. It isn’t because I am having trouble seeing. Instead,it is more that I feel like I am not seeing quite as well as I used to.

I know that to be frugal and responsible is to know what you want from the eye doctor, ask your questions, and avoid unnecessary extra visits. Knowing what is covered by the insurance plan also helps.

What I do not know is how to be frugal about prescription glasses and contacts. Anybody have any suggestions for me, assuming my concerns are realized?

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Retailers, friends and family make a very good team when it comes to trying to destroy our budgets around the holidays. The message that we get from TV, magazines, co-workers and neighbors backs them up too. Over and over again, we are browbeat with the ideas that no cost is too high for the holidays and that the more we spend on somebody, the more we love them.

Like you, many people have realized that it isn’t necessary to spend a lot to come up with meaningful gifts that tell the recipient how you feel about them. In an effort to help you think creatively and give you a chance to come up with the right gift for friends and family, here are 5 ways to save on gifts without being cheap about it.

1. Consolidate gifts. When giving to multiple members of the same household, it becomes easier to give a family gift. Rather than spending $10 or $20 per person on 6 uninspired gifts, make it a single $30-$40 gift instead. The gift will be nicer and better remembered, while you will wind up saving money.
2. Make a gift. This is not the macaroni and cotton ball craft project your mom lovingly accepted from you after school one day. Use your lifetime of learning to create something for somebody. If you are an amateur photographer, a mosaic of photos or a good sized enlargement may be a good choice. As a scrapbooker, memorialize something special about your friendship with somebody. The key here is that you are already using tools and materials you have on hand for your hobby. Plus, the gift will be truly unique and from the heart.
3. Agree not to give gifts. Do not be a Scrooge with this one. Talk to friends you have exchanged gifts with in the past. Point out that the friendship does not need those gifts. Instead, do something with those friends for a fraction of the cost. Meet them for dinner and split the bill during the holidays. Join them on a local sleigh ride. Whatever the activity is, make it about time with friends instead of gifts for friends.
4. Give to charity. Choose a charity and make a donation in the person’s name. Make certain they get a card explaining about the charity, why you chose it and what the donation is going to do. You can even get the other person involved in choosing the charity. This is especially good for dealing with people who have everything already.
5. Perform a Service. In our busy lives, there are always tasks that go undone because they are not urgent enough or important enough to keep up with. In other cases, it is too easy to let something go because it is unobtrusive and undemanding. For a highly appreciated gift, do something about it. For a family with young kids whose parents do not get time for themselves, movie tickets and babysitting may be a godsend. For an elderly friend, maintenance around the house may be even better. For a lonely single, including them in a holiday activity will tell them how much you care.

These gifts are better than cheap knick-knacks and can cost much less than a hectic day at the mall. They do require more thought, and may require more time. The personal nature of these gifts far outweighs these drawbacks, because what is more valuable to us in the long run than honest time and appreciation for the friends and family that make life worth living?

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At my house, the last of the Thanksgiving leftovers have been consumed, the dishes washed, and the decorations have been turned over to Christmas.  It is a festive time when we host friends and family more often than the rest of the year and a challenging time to stay in budget - financial and caloric.

The challenge for me is in the outdoor decorations.  By nature, I am a competitive guy.  I see the YouTube videos of the homes with thousands of lights dancing to music.  The neighbors down the street have enough lights to read legal documents comfortably.   I heard the guy on the next street over just got an extra electric box put in to handle his lights.  There’s even a few neighborhoods that police handle directing traffic at night.

I want outdoor decorations.  Lots of them, in all sorts of colors.   I like positive attention.  News reporters broadcasting from my front lawn because I have the best decorated house in the city is appealing.

But I won’t.

Christmas decorations are fun.  But they are not worth it.

I can buy enough lights to warm up the neighborhood.  But I cannot afford them.  I would have to buy that many lights on credit - which is simply not an option.  Just looking at prices for the LED light sets, which are more expensive but more energy efficient, I seethe price ranges from $.15 per light to $1 per light.  To get 10,000 lights to put up, it wouldcost at least $1,500, not counting extension cords, junction boxes, and controllers.
The scary part is that is small for a mega-display.

The other part of the cost that I do not want to pay, is the electric bill.  For example, look at LauderdaleChristmas.com.  The switched to energy efficient LED lighting, and their bill was still $384!  I’ve heard of others whose electric bill for December runs into the thousands of dollars.

So, I’ll stick with my existing 10 strands of lights, on a timer, and just spend some money on gas to drive around and look at the displays that other people have put together.  And count the savings all the way to the bank.

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Ahhh.  Black Friday.  Such a powerful kickoff to the holiday buying season.

And one of the hardest times to be a frugal shopper.  It isn’t because of the holiday deals directly.  If there is something that you have been wanting and saving for, that fits in your budget, and it happens to be on sale now may be the best time to buy it.

Stores are not looking for that kind of shopper however.  What they love to see is the person that comes in with the circular ad, running too late to get the doorbusters but still looking to load up for the holidays.  This is the person that buys the deals because they are deals.  Not because they have somebody specific in mind to gift the item to.  Not because they have a need for that product. They are buying it just because of the savings and a vague idea of what they may do with it.

From me to you today, I hope that you found some great deals at the stores this morning and find more throughout the holidays.  More importantly though, I hope that those deals are for what you need, chose, and budgeted for in advance so that the good times will continue past the holidays and into the years ahead.

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I have to admit that I am set in my ways when it comes to certain things.  One of them is sports.  I not only love to play sports but for a few select sports, being a spectator is also a lot of fun.

Growing up and traveling have enabled me to enjoy watching top level professional sports.  NHL, NFL, MLB, even soccer (pre-MLS) have given me a lot of enjoyment.  However, the top leagues share one thing - the tickets are expensive.

Minor league sports on the other hand are much less expensive.   That is where my enjoyment of sports hits the budget.  With the cost being so much lower, I always want to be at the games.  This means that I am - and have been - a season ticket holder in one form or another for a combined 10 seasons or more.  Different sports, different cities, different situations.

At $1400 a year for 2 seats to the local hockey team (Go Idaho Steelheads), plus downtown parking and playoffs it does add up.  So it is definitely not on my list of most frugal decisions ever.   It has been worth it.  I’ve enjoyed the time spent, met a few new people, and it regularly forces me to change my routine and get out and have fun.

All of that was happening before they won any league championships too.  Now that they’ve won 2, the excitement and fun of those playoffs was even better.

The funny part is that I cannot  explain why it is so much fun.  Boiled down, I am rooting for men I do not know, playing a sport I have not played, to accomplish things I cannot do and paying for the experience.  What an odd world.

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As I talked about recently, my wallet disappeared and reappeared recently.  When it disappeared, I did the immediate right thing and canceled all my cards and asked for replacements.

The more interesting part was how the process compared from place to place.

All of the companies have an automated answering service that is supposed to ensure that you get to the correct department for help.

One had an option right on the first menu to report a lost/stolen card and it rang through to a person immediately.

One would not let me proceed without my card number and it was not until I stopped pressing buttons trying to get to a person that it finally decided that the automated system could not help me.  I actually got frustrated enough with this one to scream at the phone.

One took a couple of menus, but got me to the right person.  The big plus was that person was not only solved that problem, but did a good job handing me off to somebody else for another issue on the same call.

All of them promised the replacement cards in 10 business days except one - which promised it in 3 days.  All of the cards but one arrived in 5 days.  The missing one has still not arrived, but it has not been 10 business days yet.

I found it most interesting that 60% underpromised and overdelivered on the arrival date for the replacements.  20% overpromised but matched the rest.   The other 20% is on pace to match what they promised.

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It is carnival time once again. This week, I have posts included in two carnivals.

• The Scale of the Federal Deficit is included in the Carnival of Personal Finance #125 hosted at My Two Dollars
• Leasing a New Car Makes No Sense is included in the Carnival of Debt Reduction #112 at Cash Money Life

Carnival of Personal Finance

With there being 74 articles in this week’s carnival, I thought I would take some time and point out some that I found interesting.  They are:

• How To Buy On Ebay and Get the Best Deal at Money Blue Book
• Real Estate: Know What Can Be Fixed… at Searchlight Crusade
• Can We Really Afford to ‘Move Up’ at A Penny Closer
• And of course, where would we be if we couldn’t talk about Marriage and Money at My Good Cents

Carnival of Debt Reduction

Debt Reduction is such a need for so many people, that I would be remiss if I did not offer a selection of my favorite articles from this carnival too.  There are many more worth reading too.

• Money, Matter, and More Musings asks Will You Spoil Your Children If You Give Them Substantial Economic Gifts?
• At Green Panda Treehouse, the question is Pay Off Debt or Start Savings (Chicken or the Egg)
• Free Money Finance tackles Issues Not Usually Addressed When Discussing Paying Off Home Debt
• In one of the best articles this week, Me Vs. Debt has a good rant against credit card policies and a positive review of Prosper.  Watch out for a couple of words, but enjoy it at Goodbye 30% APR
• My Two Dollars takes a tone I like about bankruptcy.  David suggests that if you got yourself into trouble, you should learn, make changes, and get yourself out of trouble rather than ditching what you can through bankruptcy.  Read the whole post at Why You Should Avoid Bankruptcy When You Spend Yourself Into Debt. Now, his exclusion for extenuating circumstances like massive medical bills does occur more often than we would like to admit.  It would be great if we could demonize everybody who files for bankruptcy as being irresponsible, but that isn’t true. For those that are irresponsible, it would be better to actually learn about personal management and responsibility than to give them a clean slate to keep on doing the same thing.

I hope you enjoy both carnivals.  They were a pleasure to read through and I am glad to have been included.

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I regularly spend time thinking about what my goals are for my life and if those goals are compatible, etc.

Today, a stray thought popped through my head that won’t let go.  It is hammering on me and I cannot decide which way makes more sense.

It has to do with my legacy and any inheritance that I will eventually leave to my heirs.  Since part of my goals involves building up a significant amount of assets, what to do with them after I am gone is a question to be answered.   There really seem to be just two options for it: give them away or give them to my heirs.

Both options have their appeal.  On on hand, it would be an opportunity to make an impact for what I believe strongly in by giving lasting gifts to organizations that are support what I care about.  On the other, is the notion of making life easy (too easy?) for my family.

Warren Buffet and Bill Gates have already addressed this question for themselves - choosing to give most of their fortunes (admittedly, much bigger than anything I expect to amass) to charities and reserving just a small portion for their families.

What are your thoughts?

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In my local newspaper, there was an article by Dave Ramsey recently talking about leasing a car.  In the article, it had some generalities and ultimately came down against leases completely, suggesting instead that the reader buy a two year old car because the most depreciation happens the first two years of ownership.

Now, I cannot argue against ‘downgrading’ to a two year old car from a new car.  Financially, it makes a lot more sense and is a lot easier to work into a budget.  For those of us that can control the desire to continually be driving something new and shiny, purchasing is almost always the better option.

I respect Dave Ramsey and do not wish to argue against his stance for personal financial responsibility.  Making our choices, living with them, and making an extra effort to do the right thing is important as an individual and as a society.  Despite this trust, I cannot take an article at strict face value.  I want to know why somebody says something.

In the article, Dave says, “The only one who comes out to the good in an auto lease is the dealership” and “…or as we call if ‘fleecing’ a car…” Such a blanket statements deserve to be looked at.  Dave does reference articles by Consumer Reports, Consumer Federation of America, and Smart Money Magazine.  That makes me expect his recommendation will be born out by looking at an example.

Buying

For the example, I will be looking at a $30,000 car.  To simplify the comparison, I will assume that insurance, maintenance, DMV fees and parking fees are the same over the 4 year comparison period.

This makes our comparison essentially the cost of the lease versus the depreciation on the car.

Since Dave provided the figure that the average car loses 60% of its value in the first 4 years, we get the following for buying the car:

• Purchase price: $30,000
• Depreciation:   $18,000
• Residual Value: $12,000

Thus, the loss/cost of the new car - ignoring the opportunity cost of spending $30,000 up front - is $18,000.

Leasing

Checking the same assumption at Ford, using a 2008 Mustang in their lease calculator (Sales price $30,000, No down payment or trade-in, 60000 mile limit) we get an estimated cost of $933 due at lease signing and $458 a month payment.  This gives us:

• Due at signing: $933
• Monthly Payments: $21,984
• Total Cost: $22,917

Conclusion

Using this example, it initially looks like Dave Ramsey is being accurate.  Essentially, it costs $4,917 extra to lease the car over buying it - a 27% premium.  Over 4 years, that is a good return for the dealership.  Especially since the people they choose to lease to have better than average credit and are generally unlikely to default on the payments.

However, I do like to try to be thorough.  Since we made the assumption that you can buy the car for cash to simplify the comparison, what if we assume that you have the $30,000 in cash when leasing too. How much do you have to make on the money to come out even if you invest the money you do not spend up front in the lease?

In other words, to make $4,917 over 4 years in interest on the decreasing $30,000 balance, what interest rate (compounded monthly) will it take?

Crunching the numbers in my spreadsheet, I get that it would take a 6.662% after tax investment return for you to break even in the lease vs buy comparison.  If you are in the 35% tax bracket, that translates to a 10.25% pretax rate of return.

Reference

Bankrate Car Lease Calculator

Suze Orman - Buy vs Lease

Edmunds Compares the Cost I want to highlight this article.  This one adds some information on buying a used car as well, which really helps to drive home the point that buying or leasing a new car is not the best way to minimize your long term cost of ownership.

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As a follow-up to yesterday’s talk about losing my wallet, there is good news.

The wallet disappeared Tuesday evening during a two hour span of time. I searched for it and asked other people in the group if they had seen it. Ultimately, I conceded defeat and reported it missing.

Thursday evening, after going through the trouble of replacing my driver’s license and canceling my cards, the wallet was turned in. It surprised the staff there too - they said they had never had a wallet get turned in after it was reported stolen.

When I arrived to pick it up, we were all surprised that everything except the cash ($6) was still in there.  Nothing missing, no attempts made to use the cards before they were canceled. Nothing was even out of place.

A pleasant end to a not so fun experience.

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