Don’t Feed the Alligators

Replacing Items that Put You in Debt

Author: MITBeta

11.19.2008

photo figure credit: cinz

We have a 10+ year old stereo receiver that I paid $1500 when I was a senior in college (and in all likelyhood paid several hundred more in interest in the years that followed).  The motor that controls the volume knob on the stereo when you use the remote control has been on the fritz for over 4 years.  Now, whenever the remote doesn’t work, I walk over and rap hard on the volume knob until the motor starts working again.

We have a universal remote control that has truly lived up to its name: Harmony.  Logitech makes a line of these remotes that allow not only my wife, but also anyone who visits our house the ability to turn the TV, stereo, DVD, VCR, Tivo, etc. on, off, change the channels, fast forward, etc., with little to no coaching in a very intuitive way.  It even has a help button on it that gets things back on track if necessary.  Over the last year or so some of the buttons have stopped working.  As a stopgap measure I was able to reprogram some of the lesser used buttons to take over for some of the failing ones.

As I look around our house, I see many items that we purchased when we made more money and had less expenses, items that put us in debt, or items whose purchase kept us from getting out of debt: laptops, a big screen TV, stereo, fancy universal remote control, espresso machine, air purifiers, exercise equipment, etc., etc.

Some of these purchases are doing nothing but collecting dust, and that’s okay.  We’re older, we’re wiser.

Others, however, are essential, daily use items.  The stereo and the remote are two examples, as is the TV.  Someday these things are going to wear out, die, or otherwise stop working and require replacement.  What I struggle with now is the question of what to replace these luxuries with.  We have gotten used to having some expensive things, many of which we could not afford when we bought them — but now having done so, paid off the debt, and gotten on with life, find many of these items to be indispensable.  When these items do inevitably die, do we “deserve” to replace them with like items?  Do we need another 43″ TV?  $1500 stereo? $600 coffee maker?

Luckily for us, the nature of technology has made it such that we can buy replacements for many of these items that are many times better than what we’ve got now, and are also several times cheaper.  An eight year old 43″ rear projection TV can be put to shame by a 40″ flat panel display for less than half the price paid for the original TV.  A similar cost reduction and improvement can be found in the stereo market.

Yet despite the ability to replace many of these items with lower cost, higher quality products today, there is still the nag that I feel every time I start to spec out something like this.  I always start to need this feature or that feature that I don’t have today, but can’t possibly imagine living without for the next 10 years.  The truth is that many of the features that I overpaid for on these current items I don’t even use: 800 lines of resolution on my standard definition TV (nobody can even tell me how to take advantage of this…), 7 channel, multi-room capability on the “flagship” receiver, etc.

Additionally, the cost bar has already been set high by these initial purchases, and since we’re in a better financial situation now than we were 5 or 10 years ago, the rationalization starts to creep in: Go ahead, by another $1500 receiver — you’re going to use it every day, you’re going to keep it for 10 years, it’s going to sound so much better than the $750 one — in fact, spend a little more this time since you’re so much better off.

And herein lies the difficulty with keeping our financial house in order: we’re human and we have wants, dreams, desires, etc.  It’s not easy to deny oneself the things one “deserves”.  Many people have estimated what percentage of personal finance is math and what percent is psychology.  All seem to agree that the former is low and the latter is high.

All of this is not to say that if we have the money to do so (which we don’t at the moment), and that we’re meeting or exceeding all of our other personal finance goals, that we should not buy whatever we want.  We most definitely should.  But that still doesn’t mean that we should not approach the replacement of items like this with frugality in mind.  We’re still going to end up with products that are better by our standards than the items that need replacing, but avoiding lifestyle inflation will keep more of our hard earned money in our pockets and working even harder for us on our other financial goals. I hope that when the time comes we’ll have the discipline we need to remember this.

Have you ever been faced with replacing an item that you couldn’t afford the first time? How do you avoid the urge to buy more features than you really need?

Frugal Baby: Special Edition - Expanding the family

Author: ScrapperMom

11.03.2008

photo figure credit: Yogi

As I enter my third trimester of pregnancy it is time to look at the family finances and the implications on our budget of having two children. How much did it actually cost to have our daughter? I think we did well on the financial front and tried to be frugal parents. In fact, we only attributed $818.38 directly to Daughter #1 in her first year. So then the next question is how much will it cost to expand the family? We saw how much it cost to have 2 dogs! Hopefully in the first year the 2nd baby won’t cost nearly so much. At least we have health insurance for the babies!

I read a blog recently and was shocked. Connie says in the post that they had spent $14,000 from conception to birth. I thought this amount was exorbitant. Read the breakdown of costs here. I can’t imagine spending that much on our first child, and I know the second will not cost that much either. Luckily for us we only had to pay one co-pay for all our prenatal care. A lot of the big ticket items are things we got from other people or things we will be reusing for the second baby, including nursery furniture, maternity clothes and diapers (we are using cloth). Diapers alone cost us a total of $156.78, though this doesn’t count the cost of water and soap. However, I know our high efficiency washer and dryer are not that costly to run

Some ways we have cut down on spending will continue with a second child, like using cloth diapers. This will save on the recurring diaper costs most parents face. We are also starting potty training early and have had some great successes. I would really like to only have one child in diapers at a time even if they are cloth! I do intend to breastfeed our next child. Not having to buy formula certainly was helpful in staying on budget. I also made my own baby food from normal foods that I would be buying for us (pureed vegetables, fruits, etc.) I have all the equipment, which was actually a very small to negligible start-up cost, consisting of covered ice cube trays, ziplock bags and a food processor that we already owned.

One huge consideration for us is how 2 children will change the dynamic for me and working from home. I anticipate it being fairly easy in the beginning when the baby will be napping frequently. After that it may be very difficult to line up naps in order to continue to get 2 - 2 1/2 hrs during the day and at first the baby will not have such an early bedtime and may require my attention in the evenings when I get a lot of work done now. There are a few options I can look into. Options like grandparents coming 1 day per week for a few hours to help out or mommy’s helpers. There is also a 9am-1pm nursery school up the street. If I can send my daughter there a few times a week I might be able to work while the baby naps as I did with our first. Of course this hinges on me being able to find hours to work, see my other recent post.

It will definitely be a big change. I suppose we won’t know how it will go until it happens. Until then we will run the budget numbers with and without my full income to see where we stand. I’m guessing we won’t be living on Ramen Noodles either way, but we might be taking some tips from some of the frugal mom bloggers, like “I’m an organzing Junkie” and “Simple Mom” out there and eating some vegetarian meals a few times a week to save money and round out our week of meals with less expensive options!

Let’s hear from our subscribers. If you have more than one child, how do you juggle your responsibilities and how to do you cut costs as your little mouths to feed, cloth and entertain increase?

Jacksonville Vacation Roundup 2008

Author: MITBeta

09.27.2008

photo figure credit: ScrapperMom

Michelle asks:

"How was the vacation?"

In a word: Fantastic!  We got to meet the newest member of our extended family (on that side, anyway…) who is already one and half!  We got to catch up with family that we haven’t seen in over 2 years.  We got to know new wives, girlfriends, and old friends a lot better.  Thanks to all of them for taking the time out of their busy schedules, providing places to stay, cooking dinner, etc.  This picture is the pool at the hotel in Orlando, which the kids loved.

As a follow up to my original post on this topic, I thought I would offer a post-trip analysis on how we did financially. It’s important to note that while we put nearly everything below on our rewards credit card, it will all be paid off by the end of the month because we had already set aside the funding for this trip.

I’ll start with the area in which I feel we did the worst from a frugal perspective: Dining out.  In total we purchased 9 meals out and they totaled $378.  This breaks down to $42 per family-meal, or $17 per person per meal if we count dear daughter #1 as a half person who shared what we ate most of the time.  Given that we ate a total of 22 meals, 9 represents only 40%.  We easily could have converted a couple of dinners out into dinners at home, but then again, we were on vacation…  We did manage to convert a couple of these meals into lunches the next day since the portions were often too big! I should also point out that this total included drinks with meals as well, which as you know can get pretty expensive.  During one meal we paid close to $9 for an 8 ounce rum and coke!

Relating to dining, our grocery bill came in at $141.  As described in the initial article, we had a lot of opportunity to prepare meals, especially breakfasts and lunches.  If you put all of our food spending together, the per person per meal average comes down to $9.50.  The grocery bill includes a 12 pack of beer that we brought to a party, as well as a lot of bottled water that we wouldn’t normally buy at home, but the local water was terrible!

In the category of transportation, we got a great deal on airline tickets: we purchased 3 seats for $597 on JetBlue.  The in-flight entertainment, especially Animal Planet and the XM station for Radio Disney went a long way to keeping our 21 month old busy on the flight each way.  In total, we spent $378 (Yes, exactly the same as on dining out!) on the rental of a mini-van and the fuel we needed for a week.  We drove the van over 500 miles since we went down to Disney, and much of the time the van was nearly at capacity with 4 adults and 2 toddlers in car seats.

Our short jaunt to Disney cost us both on the ticket side and on lodging.  We somehow thought that we still had tickets that we could use at Disney, which would have given us “free” entry to the park.  Unfortunately this was not the case, and we ended up having to buy 2 adult, single day passes for a total of $160.  Yes, that hurt.  The Magic Kingdom is a great place, but honestly I think it’s looking a bit dated, and I’ve been to a number of better parks in recent years that cost a lot less than this.  But it’s the American Way to take your kids to Disney, right?  The lodging for one night was not bad at $90.  This was our share of the split on the condo that we shared with my cousin and his family.

We spent a total of $23 on items that didn’t fit into any of these other categories.  This included a Christmas ornament from Disney, and a couple of magazines at the airport.  We successfully resisted the urge to spend $17 on a fan-assisted squirt bottle in Disney on a 93 degree, scorching hot day.  We also avoiding having to purchase every cute stuffed animal that DD#1 got her hands on.

Last, and far from least, we spent $720 at the Dog Kennel.  As outlined in this article, our dogs are expensive.  It definitely hurts to have to budget 30% of every trip we take to kenneling the dogs, and it’s the first thing that pops into my head whenever we consider a trip.  We spent a few years trying to find the right mix of costs for kenneling.  In this business, the saying is true: You get what you pay for.  We were horrified upon retrieving our dogs from a budget kennel on one trip, and they didn’t want to come home when we tried to get them from a super-expensive kennel.  Eventually we found a “just right” kennel that treats them well — but not too well.  This is certainly an area that will factor into any future pet decisions.  It’s a good argument against having two pets.

In total, we spent $2487.  This is a lot less than ScrapperMom and I spent on a lavish Quebec trip a number of years ago, but more than we have spent on a vacation in some time.  Was it worth it?  It’s hard to put a price-tag on the experiences that we had.  If pressed, however, I would have to say that the cost was worth it since it meshes with our values: notice that we have only a couple of magazines and a Christmas ornament to show for this expenditure.  We don’t place a high value on “stuff”, but rather experiences and time spent with family and friends.  You can’t put a price on that.  This trip would have been a lot less fun if we just went to Florida by ourselves…

We’re already looking forward to a mini-vacation in November as we travel to New Jersey to celebrate a wedding!