frugal underground

Experts Say Economy Is Taking a Turn for the Better — What Have We Learned?

I know you may have thought you’d never hear the words good news and recession in the same sentence but that time has perhaps finally arrived. Financial experts are saying that signs are pointing towards an economy finally on the path to recovery, however long and arduous that road may be.

Now I’m no finance analyst, and this is not going to be some boring discussion about the factors that brought the country to the brink of depression, but what I’d just like to explore is how Americans have come out of this crisis. One thing’s for sure, though. We didn’t emerge unscathed. More resilient maybe, and with a few lesson tucked under our belt. Gone is the shop-’til-you-drop, devil-may-care mentality that was more often than not, dependent on easy credit from (then) low interest credit cards to home equity loans. But no sir, not anymore. The new America is now frugal. Here’s how I know that this is so:

• Carpooling or public commute is in. Prices of gasoline are slowly eating up a big chunk of our daily expenses. Because of this, it has become more practical to just take public transport or arrange for carpooling with colleagues. Compared to last year’s figures, the number of people who carpooled grew by 0.3%, while those who commuted jumped by 5%.

• Dollar stores are showing strong sales. Been to a Family Dollar, Dollar General, or Dollar Tree outlet lately? If you’re like most of us, you probably have. At a time when most retail businesses are cutting back and even closing shop, dollar stores have finally become mainstream for most consumers.

• More Americans are saving. From being nation of big spenders, America has become one of prudent savers. Five years ago, the rate at which people have been saving was at less than zero percent. As of May this year, the savings rate is already at 6.9% — and that’s even with interest rates at a record low.

• Less people are borrowing. Not that we could if we wanted to. Qualifications and terms for availing of credit have become so stringent that those who do want to borrow money find the proverbial doors slammed in their faces. Still, the general attitude prevailing with most people is to stay away from credit as much as possible.

• We don’t find sunny climates as tempting now. Or maybe we still do; but in the face of a slump of this magnitude, people have opted to stay put rather than move around. For the first time in so many years, Florida’s population is actually decreasing. And the same goes for taking family vacations too.

• We’ve learned to make do without many conveniences. Families have discovered the joys of just eating in on Friday and Saturday nights, and then watching a DVD. Some are canceling their cable subscriptions, bringing lunch to work, and taking advantage of events like the National Museum Day (free admission on that day) instead of sending their kids to science camp.

Whether saving just $5 or $500, it’s apparent that many Americans have realized that sometimes, the basics are just all we need.

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10 Interesting Money Facts about the King of Pop and My Thoughts on These

In his death, Michael Jackson, the King of Pop has left legions of fans mourning over one of the greatest pop artists the world has ever known. His legacy of music is one that will live on through the years despite his early demise.

I’ve grownup on Michael Jackson songs and for a time, was obsessed about learning how to “moonwalk” – until I finally just gave up. Being a Jackson fan however has not made me oblivious to the fact that in the later years, his finances, as with his career, were quickly taking a turn for the worse. When you think of the millions that have passed through his hands from being a performer extraordinaire, it’s just bewildering how he left this world reportedly awash in millions of debt as well.

Let’s take a closer look at some of these mind-boggling money facts:

$700 million – For the entire duration of his career, it is said that Michael Jackson earned at least this much in album sales, concert tours, and other business interests.

$115 million - Thriller, his second album released in 1982 which went on to become the best-selling album of all time with over 51 million copies sold (according to the Guinness Book of World Records), was estimated to have earned a whooping $115 million for the King of Pop.

$1.5 million - Was the settlement amount Michael received from Pepsi Co. after pyrotechnics accidentally caused his head to be burned while shooting a Pepsi commercial. He donated the whole amount to the Brotman Medical Center in Culver City, California where he was treated. Brotman later renamed its burn unit to “Michael Jackson Burn Center.”

$5 million - His share of the 1984 Victory Tour headlined by The Jacksons – an amount he later gave to charity.

$47.5 million – Was the amount he paid for a music catalogue of 4,000 songs including about 200 of the Beatles’ best tunes, which he bought from ATV Songs in 1985. This venture is said to have earned him about $300 million in later years.

$17 million - Neverland Ranch was reported to have cost this much way back in 1988 when he acquired it.

$20 to $30 million – Living the life of a music superstar apparently cost a lot. At some point in his life, Michael was reported to overspend in the tens of millions every year.

$4 million - Was how much the upkeep of Neverland cost. Enclosed in the 2,800-acre property were a private zoo, a movie theater, a ferris wheel, and a roller coaster.

$30 million – The amount reportedly spent already by AEG Live, the organizer for Jackson’s series of 50 concerts set to start supposedly on July 13, 2009. An estimated 800,000 people have already bought their tickets.

$236 million – The King of Pop’s estimated net worth as of 2007.

Looking at these figures, here are perhaps some of the lessons we can pick up from them:

Give as much as you receive.

Maybe Michael did lead too lavish a lifestyle. But he was also known for his philanthropic work that span across countries around the world. Hungry children, the poor in Africa, hospitals, and the HIV/AIDS research were only a few of those who benefited from his largesse.

Invest in worthwhile ventures.

Before all the trappings of the superstar life got to him, Michael Jackson was also a savvy businessman. Proof of this is his going into the music cataloguing business, which proved to be his one lifeline when the going got tough.

Spend less than what you earn.

Whether we earn by the tens or the millions, the basic principle of not spending more than you earn applies obviously applies to all walks of life.

Have a care for the future.

It’s sad to see that for all the people surrounding him, he was really financially ill-advised. And because most of us will never have the chance to make even a tenth of what Michael Jackson earned in a year, it makes it even more important for us to keep our own goals and security in mind.

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I’m a reader.  In fact, I’m a voracious reader.

I’m also more than a little of a gadget fiend.  I love technology, but I can’t always justify spending the money on a new gadget.   As regular readers may know, last week I went and bought a new Sony Reader at Borders.  I got a good deal on it, I had a coupon so it was $199 rather than $299, but that’s still a lot of money.

So, why was it worth it?

I could go on about the experience of reading on the Sony Reader:  it uses the same technology as the Kindle so it’s much more like reading a book than staring at a screen.  I could talk about the convenience of having 99 books in a device that fits in a cargo pocket on my shorts.

But this being the Frugal Underground I think I’ll focus on the financial justification for buying the device.

Read the rest of this entry »

Popularity: 10% [?]

Kids sure are learning quickly these days. Between the internet and cable TV, youngsters tend to pick up a lot of stuff that in our days, we wouldn’t even begin to know about until later in life. Some of the info they manage to glean can be pretty interesting (for instance, my three-year-old already knows several Spanish words thanks to Nickelodeon’s Dora the Explorer), if not downright useful.

That said, I’m also amazed at how much kids can teach their parents in turn just by being themselves. I’m a work-at-home mom myself, and I’ve had the pleasure of being able to observe my sons, ages 6 and 3, at close range while they are unaware of it. I must say that the monetary lessons I’ve learned from them are just as valuable as any of the personal finance tips that I’ve come across in blogs and magazines. Let me share with you some of them:

• The best things in life are free. It’s cliché, I know. But the more I think about it, the more I’ve realized that this maxim is nowhere near as evidently practiced than in the lives of innocent kids.

  Whenever it rains, my boys are always asking me to allow them to run around in the rain and while I’m usually hesitant about it, the shrieks of pleasure I hear when I finally cave in overrides whatever concerns I have about their catching colds or slipping on the ground. Not that I still wouldn’t love having a pool in the house, but for the kids at least, a good frolic in the pouring rain will do the trick as well.

• Cheap can also be good. I can’t exactly remember at what stage in my life it was when I started to think that the good stuff always came with a hefty price tag but since then, that has always been my mindset; and this is true for many adults as well. For kids however, what is good is whatever brings them enjoyment.

  I’ve all too often made the mistake of buying toys for my kids which we could barely afford just for the satisfaction of knowing we gave the “best” to them. Well, I’ve also been disappointed many times when my gifts were met with enthusiasm that wasn’t any different from the other “unbranded” toys they received. Now I’m not saying that we should just forgo of the more expensive things in life even if we have the means to afford them and just think cheap, affordable, discounts, sales, etc. But then again, with an economic recession on our hands, it never hurts to adopt the kids’ way of thinking once in a while, and settle for less than best.

• Don’t count out the nickels and dimes. My husband and I often talk to the kids about plans of buying a new car, but we were always careful to emphasize that this would be something that would happen in the future yet as we have not saved enough for it. As soon as the goal of “saving up for the new car” firmed up in their minds however, they became quite enthusiastic about the plan (not even about the car, but more so about the saving part), putting in whatever small bills and change they manage to wangle from their grandparents or earn from doing odd “jobs” in the house, into their coin banks. We’re still nowhere near owning that dream car, but perhaps if we show even half of the zest that the young ones are doing with their nickels and dimes, we could probably get there much faster.
• Money shouldn’t be too complicated. With kids, a simple “we don’t have money for that” is taken as is. Of course, oftentimes a parent’s “no” is met with whines or tantrums or sulking for older kids, but after sometime, young children can readily come to terms with the fact that they can’t get what they want and just move on to other endeavors. Not so with adults. Every so often (or is it too often?), a “we don’t have money for that” is converted to “let’s just charge it to the credit card” – an ill-advised move considering the skyrocketing credit card interest rates these days. Why not simplify things and just let a no be a no, as kids do.

We’ve often heard about letting kid be kids, but why not let adults be kids for a change – that is, when it comes to dealing with personal finance. If only we could somehow acquire a bit of children’s resiliency in money matters, life could be so much simpler and perhaps, less stressful.

Popularity: 9% [?]

Photo by NURR

You should always have a plan when you are going to spend money. Consider just three areas where we regularly save by planning.

Groceries. Planning the meals to cover a week or two weeks will help you stick to a budget. Instead of buying food on impulse, you can plan each meal ahead and get the necessary ingredients. You should also make sure that you check the levels of household cleaners and toiletries. Avoiding an extra trip to the store will bring down the chances of an impulse purchase.

Entertainment. Everyone likes to get out and have fun. If you really need to get out once in a while, plan an inexpensive night out. Set the amount you will spend and stick to it. If you use cash only, you will be more inclined to stick to budget.

Major purchases. You can save a fortune if you explore your options. When looking for a car, furniture or major appliances, there is much room for error. Think about quality. It might not be the best choice to buy the cheapest thing out there, because it may not last as long. Check the consumer ratings on the brands you are considering. You don’t have to pay top dollar, but cheap isn’t the way to go with certain things.

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Quality time with family is so important. When money is tight, it is sometimes difficult to figure out how to make a worthwhile vacation on a budget. Here’s how you can get the most out of a family vacation without spending all of your savings.

Photo by elephantsgerald

Take short trips. You can visit amusement parks, local carnivals, local fairs, museums, aquariums and zoos for very little money. Small children will appreciate getting out of the house, and are easily entertained with animals and rides. Site seeing is also a nice change of pace, and you can have a family picnic.

If you want a real get away, drive. Saving money on flight costs will allow some flex in the budget for admissions and food. Also, if you have your own car, you won’t have to rent one. You may also want to find out how much the public transportation in the area is between the hotel and the attraction.

A three night stay in a hotel is just long enough to relax and enjoy a break. If you plan a shorter trip, always budget for the cost of an extra night, just in case. Shortening the stay will save some money, and if you save enough for a longer stay, you can use the extra money for special dinners or souvenirs.

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Ever since I posted a quick blurb about going to a Trendwest presentation, I’ve been getting comments, emails, and searches about Trendwest. It’s clear that people are looking for info, so I’m going to do a short series on Trendwest and you.

This first post is kind of an overview designed to help you understand what Trendwest does.

Trendwest is basically an improved timeshare program. In a traditional timeshare setup, you buy partial ownership in a property, and then are guaranteed a certain amount of time each year to use the property (a week is common). Typically, you have the same week each year at the same property. It’s much cheaper than owning a vacation home, but provides many of the same benefits.

Timeshares were really big in the sixties and seventies because of their affordability and convenience. After a while, though, some of the owners decided they wanted to mix it up a little, and started trading their weeks (”my week in Arizona for your week in Florida?”). This made the timeshare idea a bit more flexible.

Trendwest has effectively formalized the trading system and abstracted it from the “my week” concept. With Trendwest, you buy points, not time at a specific place at a specific time. Your points can then be spent for time at any of the Trendwest locations (of which there are many). This improves on the timeshare idea because you have more flexibility with less hassle.

When you buy Trendwest points, you’re buying them permanently. For instance, if you buy 12,000 points, you get 12,000 points each and every year for your one-time cost (plus an annual maintenance fee). Trendwest emphasizes this (as they should) because of the long-term value. They like to point out that you can even leave your Trendwest ownership to your kids. The comparison is “owning vs. renting”, and it mostly holds up.

In addition to their core program, Trendwest also offers some other associated perks. The one that interests me the most is something they call Bonus Time, which allows you to pay cash (instead of points) at a drastically reduced rate. You can also save up points over time and borrow ahead, both of which are convenient options for longer trips at more exotic locations.

The bottom line is, Trendwest is very convenient. In the next post, I’m going to help you consider the value they offer, and whether it might be a bargain for you.

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I’m writing this from an affordable vacation rental, which happily came with wi-fi—hence the reason I feel free to dole out advice on this subject. Here’s what worked for me:

• Be as flexible as possible. Originally we were thinking about going to Yellowstone. I’ve never been, and we were going to be in the general area for an obligatory trip, so we thought, why not extend it into an actual vacation?

  Good idea, but trying to find someplace we wanted to stay in the general Yellowstone area was downright depressing. First, it’s high season in Yellowstone. Mid-summer is when all the cool kids want to go there. Even the dive motels were relatively expensive and mostly booked solid.

  So what did we do? We considered other options. We consulted a map of to see what was in a reasonable distance of our route back home, and came across several good options. There were two areas that are well-known for their winter activities, and as a result, end up having abundant (and low-season-priced) accommodations in the summer. They’re still very nice areas in the summer, with lots of biking and nature attractions.

  Bottom line: being flexible means can help you find a nice location at low-season rates.

• Carefully consider your needs. Travelling with kids is a lot different than a “just the two of us” getaway. Attraction-centric trips are also very different than trips where the goal is to just lay low.

  Think about your schedule, and what you’ll need out of your accomodations. If you’ll be in or around your lodgings most of the time, it makes sense to find something with a kitchenette—you’ll be able to save on meals. If you’re going to be at Disneyland all day, or meeting friends and family members for meals out, then the extra cost of a kitchenette may be just that: an extra cost.

  Likewise, staying somewhere with a pool may or may not matter to a single guy or someone with a full agenda, but it can be a huge benefit on a family vacation—for the included cost, you have hours of fun and entertainment.

  Bottom line: being specific about your needs will save you time searching and money on your trip when you don’t pay for things you won’t use.

• Look for individuals. Property management companies can be a good resource to find lots of options, but in my experience, working with an individual can save a lot of money. Obviously this isn’t an issue with hotel/motel/lodge kinds of places, but when you’re looking for a house or a condo, you can sometimes find really excellent deals when you move away from the “standardized pricing” of a larger agent.
• Try alternate sources of information. This made the biggest difference for us out of all the tips here. It can be fast and easy to use Travelocity or its competitors to find a place to stay, but you’ll pay for it—especially if you’re looking for something other than a hotel.

  I mentioned our trip idea to my mom, and she told me that her sister has a cabin in the Yellowstone area. The timing didn’t work out (it was already rented for some of the days we were looking for) but it brings up an important point: you don’t know who your contacts know, and this could be a great resource. It’s easy enough to just mention that you’re thinking about taking a trip in such-and-such area, and see if anyone knows someone with an unrented vacation rental.

  The method that was successful for me was craigslist. It eventually occured to me that I use craigslist for all sorts of work-related things (finding freelance gigs, finding contractors to do work for me, that kind of thing) so why not use it for finding a place to stay on vacation? This ties into the “Look for individuals” tip since most listings on craigslist are from individuals.

  Once we’d narrowed our locations down to the two summer-is-low-season spots, I pulled up the respective craigslist sites and looked under vacation rentals. This involves a lot of sorting the wheat from the chaff, because there were all sorts of things listed that were out of our price range, but it wasn’t hard to find several properties in both locations that were within our budget and actually had a lot more features than we expected.

  In the end, we chose a craigslist-located condo that is much nicer than the standard hotel setup, and much cheaper. In fact, when we drove in yesterday, we passed a standard hotel, so I just looked up their rates: a full $60/night more for something comparable. Multiply that over our four-night stay and it really adds up!

I hope these tips help you the next time you plan a vacation… and now I’m off to go enjoy some more of mine!

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Some research says it can.

I just read an interesting article on the topic called “C’mon, get happy. Seriously, it pays.” According to the article,

“[researchers] found that those with a song in their hearts are more likely to, among other things:

• Get a job interview
• Be employed
• Perform well at work
• Get higher evaluations from bosses
• Make more money
• Have jobs with more autonomy, meaning and variety
• Avoid job burnout

Sounds like quite the deal, huh? And the important take-away from this info is that the research suggest that some people are successful because they’re happy, rather than happy because they’re successful (which seems like the order what most of us would expect).

They also found that how often you’re happy matters more than how happy you are when you’re happiest. (It’s more a question of your general disposition.)

Of course, happiness isn’t everything—other qualities (like talent, perserverance, etc.) can make you successful even if you’re a sourpuss. But I’d suggest that happier people can also get by with less, so aside from doing better at work, they also can save more money.

What would make you a happier person? Can you do it right now? Or do you even go for this idea?

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