November 4, 2009

Rules of money engagement

The guest post on Money Tips from Poker at Bargaineering gave me a different perspective on the conversation we’re having at Fabulously Broke about personal spending limits.

As a once and former overachieving student, I like rules.  Not because they’re limiting and I like to obey, but because they offer a benchmark to measure performance and the opportunity to go you one better, much like the Stretch goal is to the SMART goal.  You’ve got to set the original goal first before you can beat it. [Note: I like my rules best.   Who doesn’t?] 

That’s why I kept moving my savings goals up as soon as I reached them – it’s boring not to have something to reach for. That’s not to say my rules don’t know how to limbo, they totally do.  And have.  And probably will again.  It’s ok, as long as I don’t completely shatter the major ones.

When talking about the upper spending limits we set and why, it seems we all have a personal comfort level up to which we can spend.  Spend more than that and we’re big squirmy excuse-making babies trying to justify the price tags.  Or maybe that’s just me ……

But I don’t know anyone who has a mathematical reason for why this can cost up to $100, but that can only cost $15.   The general levels rise and fall according to the feeling that one set of pricing is ok and the other is not, but why not set rules with a basis in fact?  Mathematical rules?  Ones that are rational?  I’m talking about the bankroll management from the article. 

I love the idea of setting your levels of spending by multiples of your available cash.  In the article, the example is between 30-50 multiples of the bankroll. I’d like to steal that formula as is, but it doesn’t quite work out because my expense budget is vastly smaller than my entire bankroll.  I’m protective of my savings, the multiple would be something insane like 300.  

In our cases, that formula could translate into a percentage of the clothing budget.  If you’re planning to save $100/month for clothing, perhaps each season gets 25%, or a weighted percentage because coats on sale tend to cost much more than bathing suits on sale.  By a ratio of 5 to 1, in fact.  If I were doing this, Winter would get 40%, and the other 3 seasons get 20%.  That’s not precisely fair, but it’s probably more true to shopping reality than people realize.  Breaking that down:

Winter: $480
Spring: $240
Summer: $240
Fall: $240

Right off the bat that tells you not to spend $400 before tax on a winter coat unless that’s the only thing you’re going to buy.

Of course, seasonality is only one way to break that down.  You could just take that whole annual budget of $1200 and allocate 80% for staples like jeans, daily wear shoes, accessories, etc.; 20% for specialty items. 

Truthfully much of this is hypothetical for me because I don’t yet have a clothing budget.  I’m definitely still just saying “$100 is too much for jeans, I’ll pay up to $40 for them” and “No summer dress can cost more than $20.”  As soon as my budget changes, though, I think it’d be great to implement a set of rational rules that I didn’t just make up as I encounter sales.

September 2, 2009

Economics of Food Service and Coupons

Today we put together one of our almost-frugally creative meals: bought a large bag of chips and juice boxes from Trader Joe’s for double the volume, if not half the price, and used a BOGO coupon at the sandwich place for $7. The sandwiches are something like a cross between Subway and Quiznos, but much better overall.

It got me thinking about the advertising and coupon model. I know most businesses (should) have a line item or budget for advertising expenses, but for simplicity’s sake, let’s assume that at the end of the day, the income generated needs to cover all outflow.

A bit of research into Val-Pak revealed that I can’t get pricing for the actual cooperative mail campaign, which is basically those blue envelopes you see in the mail chock full of coupon goodness, but they do estimate that your reach is 400k potential customers in a given time period.

Many restaurants are advertising during this economic slump, and two for one deals seem most common. Sit down eateries tend to offer one free entree with the purchase of one full priced entree plus two beverages, or some variation on that theme. Much like gas stations, the sandwich shop expects to recoup revenue in the form of extras: drinks, chips, and salads on the side. I think we all know by now that drinks carry huge profit margins for the restaurant, and a commonly touted cost-reduction strategy is to drink water instead of the highly overpriced soda.

But how many people really do spend the extra money on chips, drinks, and side salads? How many need to, of those that use the coupons, for the business to recoup the coupon discount? And how many MORE are needed to make up for those of us who only use the coupon as intended without buying extras? And in addition to all that, how much did they spend on advertising in those Valu-Paks in the first place?

August 26, 2009

How much is your time worth?

Emotionally, when is it worth it to you to spend money to save time (sanity)?

Shopping for shoes on a tight budget is no joke, and flying wingwoman on a bargain hunt is usually my thing …. BUT …. after a particularly draining and unproductive 6 hour shopping trip through 4 enormous big-box discount shoe stores 17 months ago for a friend, I swore off in-store shoe shopping for the next three lifetimes. Very dramatic, yes. But Lordy!

We walked miles through soulless outlet malls, made all the more torturous by the hordes of screaming children and No Good Shoes. If we’d walked out of there with a halfway decent bargain, I would have been over the moon. As it was, we only found a single decent pair of shoes to even try and they were way out of her budget.

Recently, my only chance to spend some time with another girlfriend was to join her shoe shopping expedition. Teeth gritted, I agreed, lacing up my comfy new running shoes and lightening my pockets of anything that might weigh down my aching bones. “Haven’t seen her in over a year,” I grumped, “probably won’t get another chance before June next year.”

She picked a rather obscure (to me) shop, a wee little bit of a specialty shop, and didn’t name any other destinations when we set the itinerary. Another shrug from me, and off we went.

To my surprise, she spotted over a dozen pairs of possibilities in our first pass. That’s more than I see in full search of any run-of-the-mill DSW or Nordstrom Rack! (Then again, if I were the buyer, they would all have been eliminated on price alone. The cheapest regularly priced pair was $68!) My only job was to evaluate the look of the shoe, sitting on a comfortable couch, as the sales assistants brought wave after wave of shoeboxes. All told, she must have gone through 30 pairs, and they were unfailingly courteous and reasonably attentive.

After nearly three hours of sitting and chatting, lacing new pairs, and restuffing the unwanted shoes, she picked her favorite pair and paid $75 for them. As we sat and caught up over coffee and lemonade, I had a rather discomfiting sense that as a bargain shopper, I may have reached my emotional limit on the subject of shoes.

Once upon a time, not too long ago, I prided myself on finding a good deal on anything I bought, ever. Now, I might just hate fruitless shoe hunting enough to be willing to pony up full price on a comfortable, high-quality pair of shoes.

Honestly, that’s sort of disappointing. It’s not so much an unwillingness to sacrifice on quality by paying lower prices for a cheaper good. I just can’t stand the process! Seems like a wuss of a cop-out.

June 2, 2009

Weekend Wins

  • I’m getting better at this cooking thing. Dinner creation: sole, quinoa cooked in a rice-like fashion, and lemon butter haricot verts! [Right, green beans. But the schmancy packaging said haricot verts.]

  • And I made a luscious lobster macaroni and cheese, which I forgot to capture on digi-film because we dug in so quickly. It might even be better than my last favorite mac’n’cheese incarnation. I can think of a few changes I’d make to it, though.
  • We saw UP this weekend. It was so good. Very cute, moving, a little sad (yes, I teared up), but very good.
  • New shoes, 35% off, filed under budget-cheat because they were a gift. They won’t be the multi-purpose walking/casual shoes I was really looking for, but that’s ok because these 993s hug my heels and support them like a good friend. And yes, 35% off is hardly my style when the shoes still ring up to $95, so I can only take my solace in knowing that we clocked in the world’s shortest shoe shopping expedition. Walked in, looked at the wall for a minute, pointed at the ones I wanted. Not counting the time it took Dorky Sales Guy to find the shoes, the selection and decision process took 7 minutes, tops.

  • New 1/2 sleeve button down shirt for work, on sale and another 20% off because the shirt was missing a button. Silly people: the shirt comes with an extra button! But of course no big-box retailer is going to pay their employees to sew on a button to save $5. So I will! Thank you.
  • And my PF blogger win? We sprung for the 3-D tickets because it was an earlier showing. We used premium movie passes worth $10.50 each, and paid the 3-D surcharge ($5) with a gift card. Total: $26.50. I’m not sure what kind of math they were using for that, though, because 21+5=$26. Except we got to the theatre a little late and the place was packed to the rafters; the only empty seats were in the front row. We’re too old for that nonsense, so we went to Customer Service to exchange the tickets for a later, non 3-D showing. I offered the CS rep our gift card to replenish with $5, and waited. And waited. And waited some more. I could see he was having trouble, at one point fumbling with his own wallet, and I started to grin evilly.

    I had no intention of causing trouble for the poor guy, I was just trying to save him the use of a new gift card! But, evidently, as the sweat beads formed on his forehead, I realized he didn’t know how or simply couldn’t add the $5 to the card. He returned with two tickets in hand for the later showing, a free movie voucher card, and said “it’ll be just a minute.” My friend was happy, willing to walk away with the free movie voucher which was worth another $9.50. I, however, stood firm. If nothing else, I insisted, he had to return with the gift card – we still have $5 on that thing and that’s cash value! I don’t care if the value of the voucher was almost equal to the $10 in GC that he owed, I expected that gift card with $5 back. Friend thought I was pushing it, I simply smiled and shooed him off.

    Five minutes later, the discombobulated fellow returned, flush with apology, another free movie pass, and the original gift card. I graciously told him not to worry about it, confirmed that the gift card still had the remaining $5 on it, and walked away with two free movie tickets, worth $10 each, in exchange for the “loss” of a $5 value on the gift card.

    I could probably have suggested that he simply load up a new card, but that would have been pushing it. He needed to towel off as it was. 🙂

April 28, 2009

Shopping, shopping, irony!

CVS: Picked up another tube of Neutrogena Rapid Clear, a nostrum I’ve hopes to cut out of my life once life and skin become less stressed (on sale, $6.99);
Trying out the Neutrogena Sunblock, Ultra Sheer Dry Touch SPF 70, to ward off sun cancer once I start all that vacationing and sunbathing 😉 (on sale, $9.99);
= $18.xx, and *$5 Extra Care Bucks for buying $15 of Neutrogena products

* ECB to be used towards two packs of Q-tips (2 for $5). I hate paying real money for cotton and paper products.

Vons: Bananas, three (on sale, 86 cents);
New white potatoes, half pound for boiling (not on sale, $1.50);
Spinach, one bag (on sale, $1);
Corn, two ears (on sale, $1.58);
Classico pasta sauce, 2 jars (on sale, $4);
Store brand pastas, 2 boxes 1 lb each (on sale, free with sauce purchase);
= $8.46

Ironic: Digging through my office supplies bag from the desk, I noticed the expiration date on the Tums for the first time. (exp: July 2009) Hah! That is completely a sign of better things to come. In my world. Where I live.

March 13, 2009

Finally Friday

And here’s what’s been rattling around upstairs:

1) Want to save more. How can I save more? (Assuredly, this period of binge-saving will be followed by a period of purge-spending. Just came off that spell a couple days ago.)
Thanks to the recent spate of car activity, monthly expenses have come down by $500. That‘s why the expense fund seems so robust. That can be directed to savings right away. What else can I cut out?

2) If the period of unemployment lasts through, say, the end of the year, I’ll have missed out a lot on retirement contributions. The goal is to have a lot of cash in the cushion, but what if some of that cash were stashed? Not too much of it, but an uptick in contributions seems like a good idea. It’s the opposite of DCA – investing in large lumpy sums for the next three months in anticipation of none at all from July through December, but I think it’s better than nothing at all.

3) Speaking of stashing, what about diversification? Ought I revisit the trad/Roth IRAs? There’s still time for 08 and 09 contributions.

During this period of uncertainty, cash certainly reigns (and yes, I still want my 50K of savings for lack of a more secure position) but there’s always an itch to earn more than sub-2% interest rates.

Grocery store scores:

Last night’s trot ’round to the Fresh ‘n’ Easy turned up a 4-pack of “snacking apples,” 4 for $0.75 marked down from $2.89. They were a bit over a pound, so that’s not a bad per pound price.

Also, the red russets were 3 lbs for $2.88. On the pricier side until checkout revealed a $1.88 price tag.

Certainly not a comprehensive shop, but it was a quickie run, primarily for a fruit for lunch tomorrow. Meant to grab a couple of the monster-sized burritos at $2 per, they looked to be at least 1.5 pounds but I couldn’t be sure they would last the weekend for next week’s meals and I’m not sure that I wanted them for the weekend. All told, never came near to using the $2 off coupon. (Minimum purchase, $10).

December 10, 2008

Stuff and Nonsense

I’m making a little checklist of things I want to get with my gift card for Bed, Bath and Beyond left from last year that wasn’t used on wedding presents. I didn’t want more stuff during a time of decluttering, but they’re kind of important.

Perhaps a field trip with a fistful of coupons will be my reward when I finish best three of six ongoing projects:

1. Photo organization
2. Submit 5 applications
3. Send out christmas cards with photos from #1.
4. Decluttering under my bed or desk.
5. Exercise!
6. Christmas presents: wrapping (1) or getting (2).

You might notice that I left out a whole bunch of more difficult things to accomplish off that list like dealing with family, finances, or even goal setting for next year. 🙂

Things I need:

1. 2 bath towels; soft and fluffy.
2. Water bottle. Or thermos? Have wanted a nice one since year picked it up because I still cannot decide which is the more economical AND sensible choice. Either way, I keep using the same old plastic water bottles, recycling them after a while and they pile up in between. Prefer to have just one bottle around.

Actually, I can’t remember what else I wanted anymore. I do remember discussing getting a really nice professional flat iron through a friend of a friend for 50% off for myself. Maybe I should get two and give the other to my girlfriend. Huh… that could be a nice gift for a couple gals, actually. Girls, would you appreciate a flat iron as a gift or is that too humdrum?

Late Note: Check off numbers 2 (2 of 5 sent), 5 (got a few minutes in) and 6 (wrapped one) as partially done. I’m really good at getting partials done. Completion’s a whole other thing. Busy day ahead.

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