"Goals are dreams with deadlines" -- Diana Scharf

Monday, April 29, 2013

Wholesale Clubs: Are They Worthwhile?

Shortly after Mr. W. and I started shopping together, he suggested that we purchase a BJ’s membership.  For those who aren’t familiar with BJ’s, it is a members-only wholesale club much like Costco or Sam’s Club. 

At first, I doubted that joining BJ’s would be worthwhile for us.  Sure, these memberships make sense (financially) for families with children: families that need to buy diapers, prepare kids’ lunches, feed pets, and wash more loads of laundry than we do.  But would it be worthwhile for our little two-person family?  I was skeptical that we would experience a large enough savings to offset the $50 annual membership fee that BJ’s charges.  Since we try to eat primarily local foods, I also wondered whether BJ’s would carry any of our preferred brands.    Furthermore, we have a compact apartment with limited storage space.  Clutter makes me irritable so I generally try to avoid stockpiling out of fear that we’ll end up with unsightly stacks of boxes.  Lastly, would we end up buying more than we needed, simply because the prices were lower than at retail stores?

We signed up for a BJ’s membership in January.  I recently did a price comparison for some of the items that we purchase on a regular basis.  I estimated our monthly usage for these staples, and then calculated the non-sale price at our regular grocery store versus BJ’s.  It turns out that we save approximately $32 per month by shopping at BJ’s.  Even though we only buy a few items, the $50 annual membership paid for itself after only the second month.  (Note: we also buy other items from BJ’s but I haven’t estimated our usage of those items with enough accuracy to include those calculations).      


Is a wholesale club membership right for you?  Here are some questions to help you make the determination:

·         How much is the membership fee? 

For us, the membership fee was $50.  That’s not exorbitant, but we certainly don’t want to throw $50 down the drain, either.

·         Does the club carry items that you regularly purchase?  If so, how much are they discounted? 

We were glad that the club carries my favorite brand of yogurt (Fage).  Yogurt can be pricey and I eat quite a lot of it.  If BJ’s hadn’t carried Fage, it might have been a deal breaker.  Yes, there are other, cheaper brands of Greek yogurt, but Fage is my favorite by far.  BJ’s also stocks one of our favorite brands of turkey bacon, Applegate Naturals.  The BJ’s prices are approximately 40-45% less than at the grocery store.  This is especially important since Fage and Applegate Naturals rarely go on sale at the grocery store.

·         How conveniently located is the club?

Our wholesale club is a 15-mile round trip.  By contrast, we have five grocery stores within easy/reasonable walking distance of our apartment.  However, the wholesale club is located in the same shopping center as some other retailers that we like to visit regularly (ie, Target, craft store, thrift store, Bed Bath & Beyond, Home Depot, etc).  We would probably drive to this shopping center at least once a month anyway, even if we didn't have a BJ's membership, so we don’t consider BJ’s to be out of the way. 

·         Do you have the space to store bulk items?  Will you use perishable items before they spoil?

Since we have limited storage space, we try to restrict the amount that we buy in bulk.  At a maximum, we only have 1-2 months’ worth of staples on hand at any given time.  When we buy non-perishable household items (i.e., cleaning supplies, paper products, etc), we usually store overflow in the trunks of our vehicles.  Limiting the amount that we buy also helps us to ensure that we use all perishable items by their expiration dates.

o  Do you plan to purchase any big ticket items in the near future?

These clubs often offer a fantastic savings on big-ticket purchases like electronics, furniture, and automotive items.  My car needed two new tires this month and we saved almost $100 by purchasing the tires from BJ’s rather than an automotive store.  The tire savings alone made the annual membership worthwhile.  I’ve also heard that BJ’s offers heavily discounted travel packages.  We haven’t looked into this, yet, but we’ll definitely consider it in the future.       


Do you have a wholesale club membership?  If so, has it been worthwhile for you and your family?

Thursday, April 25, 2013

20-Dollar Dates: Miniature Golf

A few weeks ago, Mr. W. suggested that we start arranging a weekly date night.  Although we're newlyweds, we've been a couple since April of 2005.  That's a long time!  After eight years, we're very comfortable spending time together.  We have many of the same interests and many of the same friends.  But we'd also like to keep our relationship interesting and exciting.  That's where date night comes in.  And really, how could I turn down a date with my husband?

Every week, one of us is responsible for planning a date night activity.  We also decided to set a $20-$25 limit for these dates.  In our household budget, we set aside $150 per month for joint discretionary funds.  In the past, this has typically gone towards dinner(s) at a nice restaurant.  But now, we'll use most of our joint discretionary funds towards our date night activities. 

For my first date, I decided on...mini golf! 

Image credit: Image credit: mg7 / 123RF Stock Photo

I honestly can't recall ever playing miniature golf before.  I must have played at least once, right?  Perhaps at a friend's birthday party or during a Girl Scout outing.  I feel like everyone plays mini golf some time in their childhood.  Well, it turns out that my lack of experience was readily apparent.  I'm pretty awful at it.  And Mr. W is pretty darn good, which was slightly irritating to me (not that I'm competitive, or anything).  But it was fun nonetheless. 

We went mini-golfing on a Saturday afternoon.  So I guess it was more of a "date day" than a "date night."  As we expected, there were lots of children.  But we were also pleasantly surprised to see that there were plenty of other couples without children.  This particular course had a safari theme, complete with a lion, a gorilla, and a hippo.  The theming was a little cheesy, but certainly creative.  It was an 18-hole course, which took us approximately 90-minutes to finish.  We went to a course that is part of a public recreation complex, so the tickets were less expensive than they would have been at a private mini-golf park.  Total cost: $8/each, or $16 total.  Score!

What's miniature golf without a lion?

This was the "desert" section.  Notice the camel and the pyramids. 

As long as Mr. W. and I continue our 20-Dollar Dates, I'm planning to make these posts a regular feature.  I'd love to hear about ways that you and your significant other plan cheap dates together!

Tuesday, April 23, 2013

What Should You Do After Receiving a Raise?

Last week, Mr W. called me at work two times with the same five-minute period.  I was away from my desk, so I missed both calls.  He then sent me a text that said, "don't panic but pls call when you can."

In my experience, repeated attempts to contact me during business hours means one of two things: either something very good (adorable puppy sighting) or very bad (kidney stones) has happened.  In either case, it's generally a good idea to return the call ASAP. 

What was Mr. W's reason for calling?  Well, he'd received a raise.  In fact, a really spectacular 25% raise.  I imagine he must have felt something like this:

Image credit: min6939 / 123RF Stock Photo

So, what should you do after receiving a raise?  First things first, thank your boss.  Express your appreciation for the recognition, as well as the continued opportunity to contribute to the company/organization's mission.  Receiving a raise affirms that your company/organization values your work and recognizes your potential.  It's also proof that your employer wants you to stick around.  Having that vote of confidence feels great.

Then, some form of celebration is in order.  It doesn't have to be anything elaborate or expensive, but I firmly believe that happy life moments deserve a celebration.  I'm not saying you should spend $300+ per person for a dinner at Per Se.  We just enjoyed sushi from our favorite place.

Once you've had a chance to absorb the good news, assess how the raise will impact your financial goals.  What are you going to do with the extra money? 

This is NOT how we're planning to use the extra money.  At least, not any time in the near future.

Image credit: sparkstudio / 123RF Stock Photo

Mr. W. and I know we don't want to inflate our lifestyle.  We're not planning to buy a new car, rent a bigger apartment, or wear fancier clothes.  We already have what we need and feel very blessed in our current situation.  We're content with what we have.  In other words, there shouldn't be much change to our spending.  If anything, this raise confirmed our commitment to our existing financial goals.  Our goals haven't changed, but his raise could help us to reach them a little sooner. 

This is what we'll be doing with the extra funds:
  • Increasing retirement contributions
    • We haven't decided precisely how much to increase Mr. W's retirement contributions.  Most likely, we'll double the percentage that he was previously contributing. 

  • Paying down the car loan faster
    • Our car payment for Mr. W's car is $366/month (used Honda, 36 months at 4.6% APR).  We're planning to pay off an additional $100-$150/month. 

  • Saving more aggressively for our first home
    • By our rough calculations, we should be able to save about $4,000 more, per year, for a down payment.   This number will vary depending on how much more we allocate towards retirement and paying down the car loan.  I think we're still a few years away from buying our first home.  Nonetheless, it's good to know that we'll be able to put more money away for the down payment. 

How would you make use of a raise?

Monday, April 22, 2013

Resisting the Call of the Sale Sirens

This weekend, I felt as Odysseus must have felt when forcing himself to resist the temptation of the Sirens.  You remember the Sirens, right?  Those seductive sea nymphs who tried to lure the heroic traveler from his intended course with their beautiful voices.   
Why did I find myself so tempted this weekend?  Well, my inbox was bombarded with alluring emails from Saks Fifth Avenue, Bloomingdales, Lord & Taylor, Talbots, West Elm and J. Crew.  Each email promised that some exciting sale awaited me, and that this was my last chance to take advantage of the offer: “Hurry, ends tonight!  Annual Friends and Family sale. 25% off entire purchase. No items excluded!!!”

I used to find these offers difficult to resist.  The sense of urgency and opportunity (last chance! happens just once a year!) coupled with an attractive deal (25% off!) was a toxic combination.  Too often, I would find myself spending hundreds of dollars on clothes and shoes that I didn’t need.  Sometimes, it turned out that I didn’t even like what I was buying.   

Although I frequently yielded to the temptation to shop, I was never a shopaholic by the true definition of the word.  I didn’t live beyond my means.  I always paid off my bills at the end of every month.  But, I certainly bought more than I needed and spent more than I wanted to spend.  Shopping was preventing me from reaching my financial goals.  Even if shopping wasn't an addiction, it was certainly a problem. 

Now that I am paying more attention to my spending, I use a few tricks to help me ignore the call of those Sale Sirens. 

  • Set a budget, and stick to it: Each month, Mr. W. and I have a pre-determined amount that we can spend on unnecessary fun stuff.  I usually spend my discretionary funds on clothes, accessories, and cosmetics.  Once the money is gone, it’s gone.  If there is something we really, really want, but have already spent our funds for the month, we can “borrow” from the next month’s budget.  But, then we must catch up by underspending in the next month.    

  • Take a deep breath and wait: Sale emails are intended to communicate urgency.  The retailer wants you, the consumer, to believe that you must act immediately in order to take advantage of the deal.  The goal is to get you to pull the trigger before you can reconsider the purchase.   This is why flash sale sites, like Gilt and Beyond the Rack, are so effective.  In days past, I would buy items simply because I worried that I would miss the opportunity if I did not act RIGHT NOW.  My new approach is to force myself to wait at least two days between first seeing an item I like and purchasing said item.  If I find I still want the item two days later, and if I have the funds left in my budget, I’ll pull the trigger.  If the item is no longer available or the sale is over once those two days have passed, I won't be heartbroken. 

  • Be realistic about utility: I love pretty, trendy clothes.  I wish I could have a whole closet full of bright colors, imaginative prints, and shimmery fabrics.  I used to relish shopping at Anthropologie because of the brand’s unique design aesthetic.  But, if I’m being realistic, I have to admit that I can only wear these items on the weekends.  Most of my work wardrobe is fairly conservative and I don’t need anything new at the moment (correction: I desperately need a new pair of black flats.  But that’s really all I need).   And, I already have more “cool” weekend clothes than I can hope to wear in a year.  It would be silly to buy more.  I now focus on appreciating what I already have, and using these items in new and interesting ways. 

  • Avoid final sale items: Final sale items are usually attractive because they are heavily discounted.  But, they also can’t be returned or exchanged.  The good deal comes with a risk.  If an item doesn’t work out for some reason (fit, color, etc), you’ve just thrown money down the drain.  Even if the items “works,” it’s nice to have the option to change your mind and return the item.  I try to avoid final sale items, unless I’m absolutely certain that I want the item.

  •  If all else fails, remove the temptation: The easiest way to avoid the temptation to shop is to remove your exposure to the source of temptation: unsubscribe from retailer mailing lists, avoid shopping malls, discard catalogs, etc.  When Mr. W. and I were saving for our wedding, I went for about six months without setting foot in a mall.  I had no idea what colors or styles were “in” during spring 2012, but that was just fine.  My wallet was the healthier for it. 

  What are some ways that you resist the temptation to overspend?

Friday, April 19, 2013

Frugal Foods: Herb-Roasted Chicken



If you've been following this blog for some time, you probably know that Mr. W. and I have been trying to keep our grocery budget in check while also eating primarily local and seasonal foods.  Since chicken is the least expensive meat option, we have been eating lots of it. 

Recently, we started roasting a chicken every Sunday night and using the leftovers for several meals throughout the week.  It's an easy and inexpensive way to simplify meal preparation.  So far, we've used the leftover chicken for tacos/burritos, stir-fry, pasta dishes, panini sandwiches, soup, and various green salads. 

Mr. W. and I have different approaches to roasting a chicken.  When it's his turn to roast the chicken, he soaks it in brine overnight so that it remains moist while cooking.  I don't do the brine thing, but I brush the skin with herb-infused butter.  Either approach results in a juicy, flavorful chicken. 

I know what you must be thinking: J.W., I eat chicken because it's supposed to be healthier for me.  But now, you're telling me that I should slather butter on it?  Doesn't that defeat the purpose of eating chicken?

Really, this recipe does not use that much butter.  A little goes a long way, and I think the flavor boost is well worth the extra calories.  But I'll admit that this is not the most health-conscious way to prepare a chicken.  If you don't eat/don't like dark meat chicken, you can simply substitute bone-in split breasts for the whole roaster chicken.  But seriously, if you don't eat dark meat chicken, I think you're missing out. 

The following recipe was ever-so-slightly adapted from the Better Homes and Gardens New Cook Book (golly gee, that's a creative book title).

  • 1 3 - 3 1/2 lb whole chicken
  • 2 tablespoons butter
  • 2 cloves garlic, minced
  • 1 teaspoon dried basil
  • 1/2 teaspoon salt
  • 1/2 teaspoon ground sage
  • 1/2 teaspoon ground thyme
  • 1/4-1/2 teaspoon lemon-pepper seasoning

1. If chicken came with giblets, remove and discard (or, use them to make homemade stock).  Rinse chicken and pat dry with paper towels.  Use string or twine to tie the legs together.

2. In a small saucepan, combine butter, garlic, salt, and all herbs.  Melt over low heat to infuse butter with herb flavor.  Place chicken on rack in a large roasting pan.  Brush butter over chicken.

3. Roast chicken, uncovered, at 375 degrees.  A 3 lb. chicken will take approximately 1 1/4 hours to cook.  Internal temperature should be 180-185 degrees.  Let chicken rest approximately 10 minutes before carving.

*If you do not have a roasting pan, you can probably make do with what you have in your kitchen.  For instance, stack a metal cooling rack on top of a metal cookie sheet and use that as a makeshift roasting pan.  This will allow the juices to drain off while the chicken is cooking.

Tuesday, April 16, 2013

Leave it to the Pros: Things I Learned from a CFP

Mr. CFP, did you water my money tree today?

Did you know that April is National Financial Literacy month?  You probably did.  But if you didn't, don't feel bad.  I didn't realize it, either, until I received this incredibly helpful link from TIAA-Cref (my retirement plan provider).  The TIAA-Cref website contains a wealth of knowledge on a multitude of personal finance topics, both retirement-related and otherwise.  I'd highly recommend checking it out. 

Shortly after I started working for my current employer, I learned that I could meet with one of TIAA-Cref''s Certified Financial Planners to discuss my retirement goals as well as any other financial plans.  The human resources manager encouraged me to set up an appointment with a CFP.  "It's free," she explained.  "Why not take advantage?" 

She had a point, but I was apprehensive.  I was in my early-mid twenties, without any assets to speak of.  I barely felt like an adult, and a conversation about retirement accounts seemed like a very grown-up discussion.  Besides, financial planners were for wealthy folks, right? Wouldn't the financial advisor feel like I was wasting his/her time since my retirement account was such small potatoes?  Would s/he judge my financial decisions?  Would I have to tell the CFP that I had taken out a car loan with a double digit interest rate? (yeah, I know.  That was crazy.  Paid off that sucker in December and won't be doing that again.). 

I arranged a meeting with TIAA-Cref's financial planner, despite my misgivings.  The CFP turned out to be a perfectly pleasant fellow.  He asked me a few basic questions to help him get an idea of my financial position:
  • How old are you?
  • What is your annual pre-tax salary?
  • What are you financial goals? 
  • Do you have any debt?
  • How much do you currently have in savings?

Over the course of the next 30 minutes, I learned several things from the CFP:

1. My asset allocations were much too conservative.  Prior to meeting with the CFP, my retirement annuity was 25% TIAA traditional, 30% equities, 10% real estate, 15% money market, and 20% bonds.  When I set up my retirement accounts, I selected a pre-determined allocation that was described as "moderately conservative."  I am risk averse, so this seemed like a good choice at the time.  The CFP told me that me that my allocations looked like they should if I were in my 50s, not in my 20s.  "If you're going to invest in money market or bonds at this stage of your life, you might as well put your money under your mattress." In my case, I should consider investing more heavily in equities.  Done.  I'm glad I learned this from the CFP, or I'd still be plugging money into fixed income instruments.  . 

2. 10% of my pre-tax income should go into my retirement account. I asked the CFP how much money I should save now in order to plan for a comfortable retirement in the future.  He replied that it depended on what type of retirement I envisioned.  However, a good rule of thumb was to invest at least 10% of pre-tax income throughout my working life.  In retrospect, I'm not certain if the CFP meant that my contribution should be at least 10%, or if the total contribution (including employer match) should equal 10%.  I wish I had asked.  I imagine he was referring to the total contribution, since employer contributions can vary so widely.  Currently, 15% of my gross income goes into my retirement account.  In the next few months, I'm planning to increase it to 20%.  I think it will become harder to save for retirement once we have more expenses (kids, mortgage), so now is the time to invest aggressively. 

3. I should have enough in savings to cover at least ten months of expenses.  When I met with the CFP, I had enough in my account to cover approximately four-five months of fixed expenses.  Given the uncertain market conditions and the dismal job market, the CFP encouraged me to save at least ten months of expenses.  Mr. W. and I are working to save at least a year's worth of fixed expenses (ie, things we can't cut out, like rent, car payments, insurance).

4. Consider opening a Roth IRA.  I'm still considering whether I want to open a Roth IRA, but it does seem like a wise choice. 

5. Everyone has an angle.  This isn't something the CFP told me, but something I gleaned after the fact.  When I told the CFP about my car loan, he didn't flinch.  In fact, he was a bit dismissive of transportation expenses in general.  At the time, I was spending more on transportation than I was spending on rent (granted, I lived in a crummy basement apartment with low, low rent).  For various reasons, it makes sense for me to live where we do, despite the long, expensive commute.  I was prepared to explain my rationale to the CFP because I expected him to be concerned by my high transportation expenses, or at least want to discuss it.  But he didn't.  "The way I see it," he said, "you'll always have commuting expenses.  Whether you're paying to repair a car, lease a car, buying a car, or paying for public transit, your transportation expenses will be relatively similar.  Transportation expenses aren't something I focus on."  I thought this seemed like a shortsighted conclusion.   But then it dawned on me: the CFP worked for my retirement plan provider.  He was focused primarily on one aspect of my financial position.  His company was in the business of "selling" retirement products.  Of course he wouldn't dwell on how much money I spent commuting to the workplace that would allow me to invest in his products! 

Have you spoken with a financial planner?  If so, what new insights did s/he provide?


Monday, April 15, 2013

Are Those Shoes an Investment? Probably Not (Sorry)

Image credit: deeboldrick / 123RF Stock Photo

A few years ago, I was an avid reader of fashion blogs.  I enjoyed the magazine-esque photography and the creative outfits.  However, I also noticed a disturbing trend: many of these bloggers spent an enormous amount of money on their clothing.  It was not uncommon for an outfit to feature several designer items that cost $1,000 each, if not more.  Chanel handbags, Christian Louboutin stilettos, etc.  It was like looking at a Saks Fifth Avenue catalog, except that these bloggers were supposedly "real people."  Very few of us regular folks can afford to spend that much on a single item.  As much as I enjoyed browsing these blogs, I kept asking myself, "how can they afford all this?" 

Obviously, I have no insight into the financial well-being of any of these bloggers.  Perhaps these individuals have found a way to make incredibly expensive purchases while still planning wisely for the future.  Perhaps these individuals have crippling credit card debt or a trust fund from a distant relative.  I'll never know and I suppose it's none of my business.   

At the same time, I also noticed a second, more disturbing trend: the movers and shakers in the fashion industry referred to designer items as "investment pieces" (see herehere and here).  The term "investment piece" was, and is, deployed as a euphemism to describe an exorbitantly expensive depreciating asset.  This is even more worrisome, because the everyday folks reading these magazines and blogs -- myself included -- may buy into the hype.  We may start to believe those tastemakers who claim that luxury goods are a bona fide investment.  We may even apply this faulty rationale to justify purchasing designer goods for ourselves. 

I am not contesting the idea that "you get what you pay for."  In fact, I think this idea is generally true.  Mr. W. and I are willing to spend money on our professional attire.  We prefer to purchase well-made and classic items that will last us for years and years.  However, we do not need to spend $1,000 in order to buy quality items.  I also do not contest the idea that "you must spend money to make money."  This saying is often true, as well.  However, it very rarely applies to consumer goods.  Yes, many adults should "invest" in a decent suit so that they can look professional and presentable during an interview.  Without owning a suit, Mr. W. and I would never have gotten our current jobs.  But as much as I stretch my imagination, I cannot think of any scenarios when owning a Louis Vuitton satchel or a Rolex watch would help me to earn money.   

Referring to any designer good as an "investment" is quite misleading.  In order for something to be an investment, there must be a reasonable expectation that its value will increase over time, or that the purchase will enable the purchaser to earn money that s/he could not have otherwise earned.  I have no problem with people buying luxury goods, provided they have the funds.  However, it's simply inaccurate to call clothing or accessories an investment.  99.9% of the time, luxury goods are depreciating assets.   

Depending on one's priorities, designer items may feel like a worthwhile purchase.  At times, I wish I could buy these things.  If I had the winning lottery ticket, the first thing I'd do is spring for a pair of Jimmy Choo pumps.  But please, stop trying to trick me into thinking that a pair of Prada sunglasses is an "investment."  Just admit that you like fancy things, and leave it at that! 

NB: I should explain that this post is NOT directed at anyone in particular.  It reflects a general frustration with fashion advertising.  I don't personally know anyone who buys luxury items and claims they are an investment.  I do know one lady with an ongoing obsession with Chanel...but she fully admits to the extravagance. 

Wednesday, April 10, 2013

Small Splurges: DIY Spa Day

I’ve never been one to indulge in manicures, facials, or spa days.  Don’t get me wrong, I love the idea of pampering myself.  But it seldom happens.  Either I run out of time or I just can’t bring myself to shell out the money.  Sometimes I run out of patience (you mean I have to wait for my nails to dry?). I can count on one unpolished hand the number of manicures I had last year.  How many?  Precisely three. Yep, three.  And each of those instances related to our wedding.  Given that we aren’t planning another wedding anytime soon, I guess three times was probably my “record high” for annual manicures.  Someone should notify the almanac.

This past weekend, Mr. W. was away and I had the apartment to myself.  It seemed like the perfect opportunity to indulge in some pampering.  Spa day!  What a treat!  But here’s the rub: I didn’t want to spend any money.  It was going to be a DIY spa day, using only ingredients and items we already had on hand. 

I sorted through the contents of our fridge and scrounged around in our bathroom cabinets to see what I could find.  We had a bag of eucalyptus-scented epsom soaking salts that were originally purchased for muscle relief.  When mixed with a little unscented soap, the soaking salts would make for an aromatic bubble bath.  The bag was perhaps $4-5 at our drugstore.  I attacked the bathtub with a sponge and cleanser so that it would be squeaky clean (well, as clean as a tub in an old apartment can be, anyway).  I Googled “DIY facial mask” and “DIY sugar scrub” to see what the internet would yield.  Lots of recipes called for various essential oils or extracts that we didn’t have.  Pass.  Essential oils can be expensive and I wasn’t certain I would use them frequently enough to warrant a purchase.  Plus, I didn’t want to run yet another errand.  Spa day was intended to be a relaxing endeavor, after all.  Finally, I came across two recipes (here and here) that seemed promising.  I tweaked them a little and was quite pleased with the results. 

I whipped up these simple concoctions early in the day and then stashed them in the fridge so that they would be ready to use in the evening.  And if you’re thinking that these recipes sound good enough to eat, you’re correct…not that I licked the spoon, or anything silly like that.   When I was finally ready for my spa day/evening, I just lit a candle, filled the tub with warm water, and poured myself a glass of wine. 


Creamy Chocolate Facial Mask

  • 1 – 1 ½ tsp yogurt (thick yogurt such as Greek or Skyr works best)
  • 1 tsp honey
  • 1 tsp cocoa powder

Mix all ingredients together in a small bowl.  Chill at least 30 minutes, until ready to use.  Spread onto face with fingers, and leave on face for about 10 minutes.  Rinse off gently with warm water. 


This felt seriously indulgent to spread on the skin.  The texture was a bit like chocolate ganache and the taste was like chocolate pudding.  I almost felt guilty while applying this mask…like I was playing with my food.  Just be careful when you wash it off since the chocolate mixture has a tendency to splatter!


Citrus Sugar Scrub

  •  ½ cup white sugar
  • ¼ cup brown sugar
  • 2 Tbs. citrus juice (I used key lime juice)
  • 1 Tbs. olive oil


Mix all ingredients together in a small bowl.  Chill until ready to use.  Apply to areas of dry skin, such as elbows and heels, and rinse off with warm water.


I enjoyed the fresh, bright scent of this exfoliating scrub. The recipe made a large enough batch that I have plenty left over for another use. 

I also planned to give myself a mani/pedi at the end of the night.  But after soaking in the tub, I was so relaxed that I just felt like curling up in bed and reading a book.  Like I said, I’m not so great at nail care.
Nail polish, why do you elude me?!

I'd love to hear some of your DIY relaxation tips.  How do you treat yourself without spending a fortune?

Monday, April 8, 2013

Why We're Waiting to Buy a House

In last week’s post on mortgage rates, I explored how interest rates and down payments impact the cost of purchasing a home.   For the purposes of my analysis, I restricted the variables to these two factors.  I recognize that my analysis only looked at two sides of a very complex story.  As with all major financial decisions, the choice to purchase a home should be based on more than two factors alone. 

When Mr. W. and I discuss purchasing a home, we rarely talk about interest rates and down payments alone.  Here are some of the other factors that we’re constantly considering:

  • Taxes:  I didn’t discuss property taxes in my analysis since they aren’t impacted by interest rates or down payment.   But these are big-ticket expenses that can’t be overlooked.  Annual taxes in our area are about $7,000-$8,500 for a $350,000 home.  On a monthly basis, that works out to be approximately half of what our principal + interest payment would be.  Yikes! In addition, the tax records for these homes show that it’s not uncommon for taxes to spike by $500-$1000 in a single year, with no change in the property assessment.  The taxes support a very good school system, so we understand why people are still clamoring to buy in this area.  However, there isn’t an immediate need for us to live in a top-notch school district since we don’t have kids just yet.  This high tax rate is enough to deter us from buying a home for several years.  

  • Insurance: One of our targeted neighborhoods experienced flooding during Hurricane Irene.  Although this town is inland it has a large river that is prone to flooding.  Obviously, we would buy a home that is far, far away from the river.  However, it is possible that homeowner’s and flood insurance for the entire municipality will increase after recent events.   

  • Maintenance/Repairs: The cost of home maintenance and repairs can add up quickly.  We enjoy working with our hands, so we plan to take care of all indoor and outdoor home maintenance ourselves.  We’ll also take care of any non-structural improvements.  Nonetheless, the tools and materials will cost a pretty penny...money that we probably would not need to spend as renters.  For instance, Mr. W. made me this kitchen island as a wedding gift (love that man!).  Even though it was a DIY project, the materials still cost around $200 since he used high-quality lumber.  Yes, it was a savings in comparison to the $500 inspiration piece from Crate and Barrel.   But it certainly wasn’t cheap!
He gave me an island (no, not THAT kind of island!)

  • Job/income stability: This probably goes without saying, but I would remiss if I were to exclude job/income stability from the equation.  Mr. W. and I both work in salaried positions, so we know precisely how much we’ll bring home in any given month.  This makes financial planning easier than if we worked on commission or as contract employees.  Mr. W.’s job is very stable, with good pay.  My job is less stable, but the pay is a little better.  If my employment situation changes, we don’t want to have made commitments that leave us scraping the bottom of the barrel.      

  • Debt-to-income ratio:  Right now, Mr. W. and I have monthly debt payments of $366 for his car loan (36 months at 4.6% interest).  Based on our combined income, we could comfortably afford a $350,000 starter home.  But once we buy a house, we would like to be able to cover our mortgage and car payments with the lower of our two salaries (see above).  And, we should also have enough left over to pay for car insurance, utilities, and groceries.  This is a very conservative approach, but we think it’s best for our peace of mind.  We don’t want to sign a mortgage and then spend 30-years worrying that we may not be able to afford it.  Based on a back-of the envelope calculation this means…we need to earn more before we buy a home.        

  • Appreciation: Given our proximity to New York, we expect home prices to increase considerably once the economy has made a full recovery.  The fear of being “priced out” of our preferred neighborhoods causes us concern.   This is an argument for buying sooner rather than later.  However, we also don’t want to rush into the decision to purchase a home. 

  • Local economy:  the local economy is relatively robust and diverse, thanks again to the Big Apple.  However, if the local economy were structured in such a way that it revolved primarily around one specific industry (automotive, tourism, oil, etc), the housing market would be more dependent on other economic conditions, whether favorable or unfavorable.  I would be hesitant to buy in this situation.    
  • Geographic stability:  Mr. W. and I may decide that we want to try living in a different city/state before settling down and doing the “two kids + golden retriever + white picket fence” thing.  As long as we remain open to relocating in the near future, renting is probably the better option for us.  It’s much easier and less expensive to break a lease than it is to sell a home.  If we buy and sell the same home within five years, there is a strong likelihood that our mortgage would be underwater, even if we put 20-30% down and even if the home value has appreciated by 3-4% annually.      

  • Other personal or financial goals:  Mr. W. and I have toyed with the idea of pursuing additional educational/professional development opportunities.  These endeavors would be costly and would not be subsidized by our employers.  We haven’t yet determined whether the investment of time and money would be worthwhile.  However, it makes sense for us to maintain some liquidity in our assets so that we can pursue these options if we so choose.
What factors impacted/will impact your decision to buy a home?  Are they the same factors as we're considering?

Friday, April 5, 2013

What's Your Take: Extreme Cheapskates

image credit: www.someecards.com
Have you seen the TLC show Extreme Cheapskates?  For those who haven’t seen this series, each episode chronicles the life of an individual who has made decisions that, to the rest of society, seem unreasonably cheap.  I don’t just mean frugal, I mean “re-uses old dental floss” cheap.  For instance, there is a woman who doesn’t buy groceries, but rather dumpster dives in the Whole Foods trash bins.  Her rationale is that Whole Foods throws out high-quality prepared foods that are “perfectly safe” to eat.  She’s an accountant who owns her Manhattan apartment outright, so she could certainly afford to purchase food for herself.  She also refuses to buy toilet paper, but I’ll let you imagine how that works (one word: ick).  The individuals who are featured on this show are employed in well-paying professions, and presumably have the means to loosen their purse strings a little.  According to the show, many of these people maintain savings accounts in the six figures, so it is not the case that they are struggling to make ends meet.   

In most cases, I try to withhold judgment on the financial decisions that other people make.   I think there should be always be a balance between living frugally and maintaining a reasonable quality of life.   For each person or family, the balance will be different.  That’s what makes personal finance so personal.  People have to decide what makes sense for them and their family members.  As an outsider, I rarely know the specific circumstances informing those decisions.  So long as people have planned for their financial futures and the futures of their loved ones, I try to keep my mouth shut.  No one likes unsolicited advice, however well-intended it may be.  

I find Extreme Cheapskates quite intriguing.  These folks have found ways to save some serious dough.  That’s commendable.  But I also can’t believe that the decisions and lifestyles portrayed in the show would be appealing to many other people – even people who like to stretch their dollar to its fullest potential.  Many of the folks featured on Extreme Cheapskates make decisions that seem to negatively impact the individual’s ability to function within society.  Sometimes the behaviors are unhygienic or otherwise unsafe.  And in many cases, the individuals featured on Extreme Cheapskates make decisions that fail to account for the needs (physical or emotional) of their family members.  The show portrays the cheapskate as the money-management tyrant who refuses to accept input from his or her loved ones.  I think this is the part that most bothers me.  (Of course, it’s possible that the stubborn, tyrannical aspect is created for television.  Without drama, the reality T.V. formula doesn’t work.  Maybe all these penny-pinching decisions are made with full buy-in from the families.  We’ll never know.)

In a recent guest post on Budget and the Beach, My Money Design wrote about creating wealth that matters.  This post resonated deeply with me.  At times, my focus has become so narrow that I look only at the bottom line and lose sight of what truly matters to me: my husband, my family, my faith, my friends, the kids we hope to have, and the causes that are near to my heart.  It’s easy to forget that the point of saving money is not to hoard a bunch of cash, but to have enough financial stability that we can achieve our life goals.       

So here’s my question: Where is the line between frugal and just plain cheap?  How do you balance frugality with your life goals?  What’s your take on Extreme Cheapskates?

Thursday, April 4, 2013

Why Interest Rates Matter

Alexander Hamilton, first U.S. Treasury Secretary

If you know nothing else about Alexander Hamilton, you probably know that he was killed in a duel with Aaron Burr (remember this "Got Milk" commercial?).  But did you also know that he was the first United States Secretary of the Treasury?  Two of his major fiscal policies included creation of the U.S. Mint and a central bank for the emerging nation.  Although the “First Bank of the United States” later became defunct, I think it would be fair to say that Alexander Hamilton was responsible for building much of the financial structure that still exists in the United States government.  Another fun fact: Hamilton was considered quite handsome in his day.  Personally, I think he resembles Mel Gibson – nothing wrong with that. 

Anyway, on to the real content of this post: interest rates

After a March meeting of the Federal Open Market Committee (FOMC), the Federal Reserve released a statement regarding its anticipated treatment of interest rates.   The statement was vague, but the Fed announced its intention to keep interest rates low for the immediate future.  The Fed also specified several benchmarks that it will use in order to determine the appropriate time to discontinue its current “easy money” policies.  As I understand it, so long as inflation does not increase significantly, the Fed will wait for unemployment to dip below 6.5% before it considers raising interest rates.  The Fed projects that interest rates will remain low throughout 2013 and 2014, but these low rates will not continue indefinitely.  I will be thrilled once unemployment percentages return to a more manageable level.  In this most recent recession, several loved ones were victim to layoffs that lasted anywhere from two months to six years, and I know their experience was not unique. 

However, as aspiring home owners, we wish that interest rates wouldn’t increase as a result of the economic rebound.  Since Mr. W. and I would like to buy a house within the next 3-4 years, we’re very interested in interest rates.  These predictions have led me to ask: Precisely when will interest rates rise?  How much will they rise? What are interest rates going to look like in 2016 and 2017? And most importantly to us, How will interest rates affect the cost of purchasing a home?

Unfortunately, I can’t answer the first three questions.  If you happen to own a crystal ball, feel free to share your economic forecasts with those of us non-magical folks.  Thanks.

The fact of the matter is that lower interest rates decrease the incentive to have a large down payment.  I've been wondering whether it would be better to take advantage of current borrowing conditions (ie, buying sooner) or save as much as possible for a down payment (ie, buying later).   

Although I can’t predict the future, I can estimate how interest rates will impact the cost of purchasing a home.  I’m a bit of a numbers geek, so I spent some time crunching numbers and playing around with various mortgage scenarios.  In the analysis that follows, I’ve concentrated primarily on the total cost of the down payment, principal, interest, and PMI (if applicable).  I’ve assumed a 30-year mortgage since it is the most common choice.   I’ve also assumed purchasing a $350,000 home because this will probably be a good ballpark when Mr. W and I start looking for a starter home: two- or three- bedroom, one-bath single family home that is in a good school district, but needs a bit of TLC. 

This is what I learned: Interest rates matter.  Truly, they do.  In fact, getting a low interest rate could save more money than having a hefty down payment.  That conclusion is a bit scary, for two reasons: 1) it flies in the face of traditional wisdom that you should only buy a home once you have saved at least 20% for a down payment, and 2) we have control over how much we save, but we can’t control interest rates (unless you’re the chair of the Federal Reserve, which I’m not).

In a perfect world, we could buy a home with a low interest rate and standard down payment.  Let’s take a look at this “perfect world” scenario.     


In this perfect world, let’s suppose we buy a $350,000 home with 20% down and a 3.5% interest rate.  In my analysis, this is Plan A/Option 1.  This means that our loan amount is $280,000, for which we’ll have a monthly mortgage payment of $1,257.  Over the life of the mortgage, we will pay $172,637 in interest.  The total cost to buy the home is $522,637.  At 3.5% interest, it costs us $.617 to borrow a dollar (this is the “interest/principal ratio”). 

Now, let’s suppose that interest rates start to increase.  Plan A/Option 2.  At 4%, it would cost us $551,235 to buy that same $350,000 home.   The cost to borrow a dollar at 4% increases to $.719.  Now let’s consider Plan A/Option 4.  At 5% interest, it would cost us $611,116 to buy a $350,000 home, and the cost to borrow a dollar would be $.933.  That’s not a pretty picture.   Obviously, the best option is to buy the home at 3.5% interest.  No big surprise there.   

Unfortunately, life isn’t perfect.  We don’t currently have $70,000 saved for a down payment and there aren’t many houses around here that are less than $350,000.  So let’s move on to another scenario, “Plan B”.  

In this group of scenarios I’ve assumed that, for every year we wait to buy a home, we save an additional 5% towards the down payment.  I’ve also assumed that interest rates increase by approximately .5% on an annual basis. 


In Plan B/Option 1, we put 10% down and are able to get a 3.5% interest rate.  Since we didn’t have 20% for a down payment, we must pay PMI of $142/month for the first 6.9 years of our mortgage*.  The monthly mortgage payment, before PMI, is $1,414.  Including PMI, the total cost to buy our home would be $555,954.  We'd pay just under $12,000 in PMI.  The cost to borrow a dollar (interest plus PMI, divided by loan principal) is $.654.  That’s not so bad, right?

Now, let’s suppose that we wait until we have 20% for a down payment, by which time interest rates have increased to 4.5%.  This is Plan B/Option 3.  We wouldn’t have to pay PMI in this scenario, which is great.  However, the total cost to buy our home would be $580,739.  The cost to borrow a dollar would be $.82.  Even though we put twice as much down on the house, and we didn't pay PMI, we would still end up spending almost $25,000 more to buy the same home.  And that's just the difference of 3.5% versus 4.5% interest.  And now let’s suppose we decide to really pinch our pennies and are able to put 30% down on the home.  Plan B/Option 5.  It takes us two years to save the extra cash, by which time interest is a not-so-nice 5.5%.  We would be paying $605,790 to buy a $350,000 home, and the cost to borrow a dollar would be a whopping $1.04.  You mean I have to pay more in interest than I’ve borrowed?! Yikes.  Somehow that feels like highway robbery.   Paying PMI is often stigmatized, but in this scenario it might be the best option. 

You might look at Plan B and wonder, “J.W, do you actually expect to get a 3.5% interest rate if you’re only putting 10% down?  Isn’t that wishful thinking?”  Perhaps.  I think it would depend on our credit scores as well as our debt-to-income ratio.  In both of these categories, I believe Mr. W and I would qualify for a low rate from lenders…but I could be wrong.  And you might also wonder whether interest rates would really increase at .5% per year.   Maybe that’s too steep an increase, although it wasn’t so long ago that mortgage rates were 4.75% (I remember when my parents refinanced their house from 5.375% to 4.75%.  I think that was in 2010).  Both of these would be fair criticisms, so let’s look at a third set of scenarios, “Plan C.”

In “Plan C,” I’ve assumed that we would qualify for a 3.75% loan if we were to put 10% down on a house.  As with “Plan B”, I’ve assumed that for every year we wait to buy a home we can save an additional 5% towards the down payment.  I’ve also assumed that interest rates only increase by .25% per year.    


In Plan C/Option 1, we buy the same $350,000 house with 10% down and a 3.75% loan.  Much as in Plan B/Option 1, we pay PMI of $142/month for 7.2 years*.  Our monthly mortgage payments are $1,459 before PMI.  Including PMI, the total cost to buy the house is $572,420, and the cost to borrow a dollar would be $.706.  If we delay buying a home until we have 20% interest, we would no longer pay PMI, but interest rates would be 4.25%.   This is Plan C/Option 3.  The total cost to buy the home would be $565,875, and the cost to borrow a dollar would be $ .771.  In this scenario, we can see why having a larger down payment is financially beneficial.  Now, let’s suppose we wait two years longer and are able to squirrel away enough for a 30% down payment.  Plan C/Option 5.  Interest rates are now 4.75%.  The total cost to buy the home would be $565,093, and the cost to borrow a dollar is $.878.  In terms of total cost, this is incredibly similar to Plan C/Option 3.  Plan C is intriguing because there is such a small difference in cost between Options 1-5. 

Of course, there are several additional financial considerations to purchasing a home that should be taken into account.  To keep this post from becoming even longer (are your eyes glazing over, yet?), I'll share those considerations in another post.  

All in all, this exercise didn’t leave us with any “Ah-ha!” moments.  We still don’t know exactly when it will be the right time to buy a home.   What we did learn was that it’s expensive to borrow money.   We now understand why some folks insist on paying cash for their homes.  We also learned that we should pay attention to interest rates.  For now, we’re not rushing into buying a home.  For several reasons, we know that now is not the right time for us.  But depending what happens with interest rates, the right time could be sooner than the 3-4 year goal we laid out in our plan.  Until then, we’ll continue to save for a home in the hopes of being ready to buy when we decide the time is right.

For those who are saving towards a home, would you ever consider putting less than 20% down? 

*Explanation on PMI calculation: For purposes of these calculations, PMI is included until 23% equity is established.  Lenders are required to remove PMI once 22% equity is established and if all mortgage payments have been made on schedule.  However, the process to remove PMI from the mortgage requires an appraisal and may take several months, so 23% equity has been used in this analysis.  PMI calculations assume that the home value remains consistent with the purchase price. 

**Disclosure: As a reminder, I'm not a financial advisor or CFP.  I've also never worked in the mortgage or loan industry.  The content of this blog is not intended to be used as financial advice, but is simply my perspective on what will work best for my household.