Archive for category Frugality
Getting the Most Out of Your Per Diem
Photo by kainet
I was on a business trip recently with other members of my “team”. When the subject of dinner came up, one of the members, who will remain nameless, suggested the Golden Arches. That’s right, McDonalds. He wanted to try to make money on the trip, and wanted to stretch his per diem to the max. I should have seen this coming, because shortly after we checked in at the hotel, he ducked into a conference room, looking for free food and drink.
Per Diem - the 50 Cent tour
Per diem is latin for “per day”. Different per diem rates are established for various cities of travel by the General Services Administration. Obviously, New York City will have a higher per diem rate than Albany. The per diem is supposed to cover your meal expenses, as your airline, rental car, and hotel are covered separately. Some companies may require you to use a corporate credit card to pay for the per diem-covered meals; my company is not that Draconian. Not yet, anyway.
Gaming Your Per Diem
So, for each night that you’re away on business travel, you’re entitled to per diem. Some people will try to stretch their return home so that they arrive just after midnight, in order to squeeze an extra day of per diem out of the company. I would be careful when pulling this trick. If your plane lands at the airport at 8:00 pm, and the ride home from the airport is a half an hour, you might raise some eyebrows when you submit your expense report. Is it worth risking your reputation, and maybe your job, for an extra 50 bucks?
OK, break it up!
Some companies break the per diem up into breakfast, lunch, and dinner. So, if you arrive in the evening at your destination, you’re entitled to the dinner allowance only. If the company that you’re visiting provides you with lunch, you don’t get paid your lunch allowance. Again, many people try to slip this past the expense report people. Again, I wouldn’t risk my job for a lunch allowance. And if you’re required to charge your meals to your corporate card, you don’t have a snowball’s chance in hell in getting away with this trick.
I’m not on the guest list? There must be some mistake…
So, how do you maximize your per diem, legally? Many hotels offer coffee and/or continental breakfasts to their guests. These are undocumented on your hotel bill, and should not raise the eyebrows of the expense weenies. You could follow my colleague’s lead, and wander into cocktail receptions hosted by other companies in your hotel. He claims that he’s done this numerous times, and claims it’s a “networking” exercise. Yeah, right. He’s really after refreshments rather than new contacts.
“Meal money in Triple-A is $7.50 a day. In the big leagues it’s $15. I don’t know if they mean to have you eat half as much or half as well.” -Jim Bouton in Ball Four
So, to legally maximize your per diem, I would stick to lower-cost restaurants that provide quality food. Or, bring along a few protein bars, and avoid eating breakfast out. You’ll be eating healthier, passing up the starchy corn muffins and pancakes. Your waistline will thank you for it.
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My Thanksgiving Ritual
Posted by enrique s in Book & Product Reviews, Frugality, Rants, Self-Reliance on November 24th, 2009
Photo by theogeo
People develop different rituals to celebrate Thanksgiving. Laurel and Hardy fans may tune in to March of the Wooden Soldiers, or watch the Macy’s Parade. A local radio station plays Alice’s Restaurant in its entirety every year (I never tire from hearing the massacree again). Some may run in the local Turkey Trot, or pull a muscle or two in the neighborhood Turkey Bowl. Others will plop down on the couch as the plasma bathes them in images of whoever is clobbering the Detroit Lions this year. Some brave shoppers are getting their itineraries set for Black Friday. But I started a new ritual a couple of years ago, and it’s always put me in the right frame of mind for Turkey Day.
The ritual
I’ve always been able to empathize with other people’s suffering. I’ve got it pretty good, even though I tend to complain about life’s little annoyances. I’m grateful for the life I have, and here’s where my ritual comes in. Every year, about a week before Thanksgiving, I re-read a book to put me in the holiday frame of mind. The book is The Long Walk. It’s the story of a prison escape from a Siberian labor camp during World War II. Nothing like a tale of human deprivation to get you in the holiday spirit. Pass the stuffing…
The story
The Long Walk tells the story of one Slavomir Rawicz (I can’t pronounce his name, either), a Polish cavalry lieutenant who is captured by the Soviets during the invasion of Poland at the start of World War II. He spends a year in several prisons, each one worse than the last, before his sentencing to 25 years of hard labor. Oh, and he’s also tortured, packed into a standing-room-only railroad car, shipped thousands of miles across Russia, and then marched through the Siberian winter for several months before reaching the labor camp. He’s literally fed bread and water, and watches as the ranks of his fellow prisoners thin out due to disease and malnutrition. But the worst is yet to come!
The escape
He plots an escape with several other prisoners, and they head south towards Afghanistan. The only problem is that they literally have only the clothes on their backs, and a few meager supplies. Not the ideal setup for crossing the Gobi Desert! As members of the escape party perish from the hardships, they are reduced to eating snakes. Then, they run into yet another obstacle: the Himalayas. And guess who forgot to pack mountain climbing gear?
The lesson
You might think that I have a screw loose, or that I’m some goth kid that cuts himself. Wrong on both counts. A story like The Long Walk reminds me that I shouldn’t complain if my steak isn’t cooked to my specifications, or if my son forgot to take out the garbage. These guys survive under the most arduous conditions, with no material possessions. They’re thankful for an extra length of cloth to wrap around their bloody feet. Talk about extreme frugality!
So in the days leading up to Thanksgiving, I immerse myself in the agony of a young Polish man from nearly 70 years ago, and the turkey tastes that much better, the Sam Adams seems that much colder, the Ashton cigars taste that much richer, and the football game is that more enjoyable, because I can appreciate what I have.
What are some of your Thanksgiving rituals?
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Sandbagging Your Personal Budget
Photo by 8zil
sand·bag (s
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One of the program managers that I work with likes to hedge his bets by painting a bleaker picture than he should, in order to easily “make his numbers”. He’s a sandbagger extraordinaire, and I marvel at how he gets away with it. He’ll forecast his sales with a three-month slip in deliveries, even though he knows that he’s bound to the contractual dates. He pads his cost estimates on projects, never projecting any savings until the project is over. He should have theme music playing when he walks to the podium, maybe Led Zeppelin’s “When the Levee Breaks”. The accountants hate him, and I always take his forecasts with a grain of salt. In his world, the buzzards are always circling overhead, and there is no upside. He errs on the side of caution. If he ever loses his job, there’s a levee somewhere that could use his expertise.
Uhh, where did I put those sandbags?
Actually, he may have a point. What if we apply this concept to our personal budgets? You know, when we project next year’s expenses. Wait, you mean you haven’t done that yet? I’ve already forecasted two years into the future. Maybe I’m overzealous, but I like to have my path laid out in front of me. If you’d like, you can use the budget file that I created in Excel that I talked about in this post: Low Budget.
Time to fill them up
My point is, leaving a little breathing room in your budget is a good thing. The extra padding that you add to your expenses will cover the little things that we never budget for. I can think of several examples of unexpected expenses, such as:
- School pictures;
- Magazine subscriptions that you forgot about renewing;
- Fees for school field trips;
- Girl Scout cookie drives at work.
So, how exactly do we accomplish this? I like to look back at my expenses from year to year. I’ll calculate the escalation in cost as a percent, and add that to the latest expense amount for that budget item. For example, let’s look at car insurance. I’ll look back at my last three years, and come up with an average growth rate in the premiums:
Car Insurance Premiums
- 2006: $2,000
- 2007: $2,100, a 5% growth
- 2008: $2,400, a 14.3% growth
- 2009: $2,500, a 4.2% growth
I can take the average growth for the period in question, and add that to the current year’s expense to come up with a number for next year. In this case, I can just take the increases by year and divide by three. That would give me 7.8%. If I wanted to get technical, I could take the $500 increase and divide it by three, and then divide the answer by 2,000, which would give me 8.3%. Whatever. I’ll round it to 8%. It’s close enough for a projection. That would compute to a $200 increase over the current premium. Now, I’ll sandbag it by adding another 2%, or $50. In total, I’ll add 10% onto this year’s premium, or $250. The extra fifty bucks will either go in my pocket, or pay for some other middling expense that I forgot to budget for. I’ll use this process for any expense item that varies from year to year. Any items with fixed payment amounts, like a car loan, wouldn’t get any padding.
By sandbagging your expenses, you’ll create a cushion in your budget for any unexpected items that arise. And you won’t feel like a cheapskate when Girl Scout cookie season starts at work.
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Getting the Most Out of Your Per Diem Photo by kainet I was on a business trip recently with other members of my "team". When the subject of dinner came up, one of the members, who will remain nameless, suggested the Golden Arches. That's right, McDonalds. He wanted to try to make money on the trip, and......
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Jumping on the Yankees Bandwagon
Posted by enrique s in Career, Frugality, Rants, Self-Reliance on November 5th, 2009
Basking in the glow of yet another championship, I was greeted at work this morning by a preponderance of Yankees paraphernalia (I didn’t notice any Phillies or Mets caps. Even the Red Sox fans are keeping their heads down this week). Not that I mind; I am a big fan. But many of these “fans” have just recently jumped on the bandwagon. They weren’t around when the team started off lousy. Like sharks, they must have smelled the blood in the water.
Frontrunners
This happened when the Giants won the Super Bowl a couple of years ago, too. But I’ve found that the most egregious bandwagon jumpers in the workplace. These are the people that hover around the periphery of a challenging project, keeping their distance until success is assured, usually by someone who’s heavily involved. Look at any photo that’s posted of the honored “XYZ Team” and you’ll find at least one person who didn’t contribute much to the effort. These frontrunners weren’t there for the tribulations, but they are immortalized in the lobby photo.
Like rats jumping ship
As much as they seek to be included in the adulations, you can bet that they’ll be conspicuously absent when the project goes bad. They’ll have moved on to a more successful project, leaving the blame for someone else. I’ve worked with a guy who made this an art form. He kept getting reassigned before the shit hit the fan, and left his mess for other people to clean up. Some companies perpetuate this behavior, as they encourage turnover to promote employee development. Too often, it becomes The Peter Principle incarnate.
Secret decoder ring
So, how do you recognize a true bandwagon jumper for who they are? Is there a special way of identifying these sharks, a secret decoder ring for frontrunners? I’m afraid not. You’ll probably wind up getting screwed by one, and you’ll be wiser the next time. Over time, you’ll know who you can count on, and who’ll jump ship at the first sign of trouble. The ones you can count on will stand by you through thick and thin. Make sure that you return the favor.
So, I’ll share the ecstasy of this Yankees championship with the frontrunners. It’s easy to be a fan when things are good; they never had to suffer through horror of Celerino Sanchez at third base, or of Stump Merrill making out a lineup card. But I know they’ll disappear at the first sign of trouble. I’ll just make sure that I watch my back.
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The Trojan Horse of Purchased Vacation
Photo by quaziefoto
It’s signup time for our annual benefits elections at work, and one of the options that we have is the ability to “purchase” additional vacation time. What this means is that you can elect to have the company deduct from your paycheck the cost of this additional time off. A percentage of the vacation cost is deducted each week from your paycheck, on a pre-tax basis, because it’s wages that you are voluntarily forfeiting. It’s treated the same way tax-wise as your 401(k) contribution.
How it works
For instance, if you make $25 per hour, and would like an extra week’s vacation for next year, the company will multiply the $25 times 40 hours to arrive at $1,000. The $1,000 will be divided by the number of weeks, 52, to arrive at a weekly deduction of $19.23. Therefor, your weekly gross pay would be reduced by $19.23, resulting in $980.77, and lowering your gross wages for the year by $1,000.
Vacate now, pay later
You get to use this purchased vacation just like good-old regular vacation. It gets added to your vacation “bank” on January 1st, so you get to use it right away, while you spread your “payments” out over the remainder of the year. You could burn the entire 40 hours in January on an island vacation, and not make your last “payment” until December. Sounds like a sweet deal, doesn’t it?
A public relations coup
Why does the company offer this benefit? You could say that the company values healthy, rested, stress-free workers. But I’m a realist, and see the financial benefit to the company. You are, in effect, signing up for a voluntary furlough. The company will save a week’s pay, albeit spread out over the entire year. Multiply that by hundreds, if not thousands of employees who opt for the same deal, and voilà! The company has improved its cash flow without inflicting any pain. In fact, the company looks like a benevolent Big Brother, because it has given the employees the illusion of a benefit, improving corporate goodwill, while reducing your annual pay. The employees think that they’re getting something for nothing. Just like the Trojan Horse (or, if you’re a Monty Python fan, the Trojan Rabbit). This is genius, I tell you!
Low man on the totem pole
Of course, most of the people that purchase vacation are probably newer, recently-hired employees, the low people on the totem pole, with little accrued time in their vacation banks. For them, this looks like a good deal. And by THEM, I mean ME, since I frequently change jobs, and many times can be considered a new employee. But in my case, I also get a week’s worth of personal time, and two weeks’ worth of sick time. That’s 6 weeks, counting my 3 weeks’ worth of regular vacation. And I didn’t even include the 10 paid holidays that I get each year. If I’m out more than 6 weeks in a year, I probably should start looking for a new job, because I live in America, land of never-ending work. Companies are more liberal with vacation time in other countries, like Lithuania and Brazil, where a minimum of 4 weeks vacation is mandated by law.
Trojan Horse
I’m not saying that you shouldn’t purchase vacation; you might have a valid reason for needing the extra time off. I’m just saying that you should weigh the advantages (extra time off) against the disadvantages (less money in your pocket) before jumping on the bandwagon with the other lemmings. You may feel it’s a gift from your company, while it’s really a Trojan Horse to your personal finances. You’re really signing up for a pay cut. I’m not falling for it, and like the French castle defenders in Monty Python and the Holy Grail, I’m flinging the Trojan Rabbit right back at them.
How about you? Are you planning on purchasing any vacation from your employer next year? Do you think it’s a good idea, and that I’m wrong? Let me know in the comments.
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A Game of Inches
Photo by Mulad
“Annual income twenty pounds, annual expenditure nineteen pounds and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
- Mr. Micawber, from David Copperfield
There is a narrow margin between victory and defeat; between joy and misery; between savings and debt. Look at any sport. A one-point difference made the Giants the winners of Super Bowl XXV, while the Bills suffered the first of four Super Bowl losses. Such a narrow margin. If Scott Norwood’s kick hadn’t gone wide right, who knows what would have happened? The Bills may have started a winning streak instead.
Narrow Margin
Branch Rickey said baseball is a game of inches. Just look at the ground ball that went through Bill Buckner’s legs in the 1986 World Series, or Derek Jeter’s home run that a fan snagged from Tony Tarasco in the 1996 playoffs. The same can be said of personal finance. Spend a little more than you earn, and you’re going to owe someone. But cut back just a little, and you can stick that savings in the bank. It’s important to be the one with the extra cash, because you’ll be earning interest, instead of owing it. Like in baseball, you should start accumulating savings in the early innings, so that you can cruise later on in the game.
Moving the chains
But enough with the baseball metaphors. Let’s move on to football! In order to get a first down in football, you need to gain ten yards. This moves the chains, and gets you closer to the end zone, which is the ultimate goal. Gain a little on each play, and keep moving forward (savings). Lose yardage due to a sack, and you move backward (debt). If you gain more than you lose, you should move down the field to the end zone (financial independence). But the path to financial independence is different from scoring a touchdown, because there’s one element missing in football: Interest.
Interest
Ah, the magic of compound interest. If you gain 5 yards in football, the referee isn’t going to tack on any extra yards. That’s the one advantage of savings: someone will pay you for holding your money. It’s also the big disadvantage of being in debt, as you have to pay someone else to use their money:
Interest [on debt] never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours. … Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.
- J. Reuben Clark Jr. in Conference Report, Apr. 1938:103.
So, let’s win this game of inches. Spend less than you earn. Keep moving those chains toward the end zone. Choose happiness over misery.
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September 2009 Recap
Photo by LeSmou Imperator
September was a good month, if you’re a New York sports fan. The Bombers clinched another division title, and the Giants are undefeated. Now, if A.J. Burnett can get himself straightened out, and the Giants don’t suffer any more injuries, October should be even better!
Here are my favorite posts from the past month:
Earn Your Street Cred Like 50 Cent
Dexter’s Code for the Non-Sociopathic
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Sandbagging Your Personal Budget Photo by 8zil sand·bag (sndbg) v.intr. Slang To downplay or misrepresent one's ability in order to deceive someone, especially in gambling. One of the program managers that I work with likes to hedge his bets by painting a bleaker picture than he should, in order to easily "make his...... -
Throw Out the Cookbook "If everyone is thinking alike, someone isn't thinking." - General George Patton My company is big on standardization. Really big. So big, that we roll out an endless array of new systems, accompanied by training in a classroom setting, to make sure we're all doing things the same way. ......
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5 Years to Pay Off a $100K Debt
Photo by quaziefoto
A Wisconsin family won the Professional Achievement and Counseling Excellence (PACE) Award for paying down $106K in debt. You can read the original article by clicking the following link:
The Biggest Losers (of Debt): How a Family Shed $106,000 in Debt
While they still have a mortgage, they’ve eliminated $89K in credit card balances and a $17K loan to family members. While I applaud them for their efforts, I wonder, how do you rack up $89K in credit card debt? The interest payments must have been enormous. At what point did they feel they needed credit counseling help? $50K? $75K? It seems like they waited a little too long to put on the brakes.
The family wasn’t a victim of a balloon mortgage; in fact, they rented their home:
Not that the Hildebrandts’ lifestyle was lavish. The couple, along with their twin daughters, Heidi and Holly, lived in a rented 1,000 square foot townhome. Vacations consisted of visits to extended family members in the Midwest. Russell was a chemist with a Twin Cities-based environmental testing laboratory; Kandy was a stay-at-home mom and home-schooled their daughters.
It seems that the family had its share of medical problems, and continued to tithe to their church, even though they were sinking deeper into debt. If I were in their shoes, the tithing would have been the first thing that I cut back on. I know, I’m a cynical Catholic, and I’m going to hell. But 10% of your salary is a big nut. Well, the husband was a better man than me, and refused to file for bankruptcy even while he continued to tithe. Instead, the family signed up with a credit counseling service and vowed to stick to a five-year plan to eliminate their debt.
It was rough sailing from the beginning. The family couldn’t come up with the $2,000 per month to pay their creditors. This equated to half of their take-home pay. They had to make sacrifices:
Several steps were key to making the plan work. Kandy and Russell eliminated discretionary spending. Kandy began buying generic food and frequenting thrift stores for clothing purchases. They stopped exchanging Christmas and birthday gifts with each other and their relatives.
The husband took on a second job, cleaning a local grocery store several nights a week. They made do with one car. Their credit card balances started to slowly decrease.
And then the wife got pregnant again.
The couple could have thrown in the towel with the new baby expenses, but they used their new addition as a positive, and remained on track to pay off their debts. They paid off their credit cards 6 months ahead of schedule. They even used the first-time home buyers tax credit to purchase a home.
So, all that they have left is a mortgage payment. At least they bought the house after the bubble burst, so they’re not underwater. While I admire their determination, and their execution, I would have done things a little differently:
Send the kids to public school - The kids were homeschooled. Nothing wrong with that, but by sending them to public school, you’d free up their mother (You see where this is going).
The wife gets a job - Another income, even for a limited period of time, would be a big help. Apply it directly to the debt payments. That should knock some months off the schedule.
Cut back on the tithing - (Watches for thunderbolt from above) I’m sure this suggestion would be dismissed by this family, but I would at least cut this back a little. I mean, the kids didn’t even get Christmas presents!
Don’t get me wrong, they did a great job getting out of debt. I just would have done some things differently. What about you? Is there some opportunity that they missed?
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Beware of Debit Card Overdraft Fees
Photo by Medmoiselle T
A recent Yahoo! Finance article highlighted the new tricks that banks are using to increase their profit margins. Here’s the link: Overspending on Debit Cards is a Boon to Banks
People who use debit cards for purchases are making the banks smile. The reason is that many people don’t have enough in their checking account to cover their debit card purchases. This allows the bank to charge an overdraft fee, which increases the bank’s profits. Yay! I knew that bailout money was going to a good cause. But, you might be thinking, shouldn’t the banks try to help their customers by limiting their overdrafts? What, are you a communist or something?
Banks market it as overdraft protection, and the fees it generates have become an important source of income for the banking industry at a time of big losses in other operations. This year alone, banks are expected to bring in $27 billion by covering overdrafts on checking accounts, typically on debit card purchases or checks that exceed a customer’s balance.
Holy smoke! $27 billion made off of people not paying attention. Here’s some good advice: PAY ATTENTION! Don’t be a spend-first sucker. Keep an eye on that checking account balance, because the banks have bent the rules to get even more creative:
Some banks further increase their revenue by manipulating the order of a customer’s transactions in a way that causes more of them to incur overdraft fees.
“Banks will let you overspend on your debit card in a way that is much, much more expensive than almost any credit card,” said Eric Halperin, director of the Washington office of the Center for Responsible Lending.
I guess that would be considered “thinking outside the box” by the banks. They’ve just found another way to exploit their customers, the same people who will foot the bill for the financial bailout. No good deed goes unpunished. They’ll even let you keep on spending because:
In fact, banks now make more covering overdrafts than they do on penalty fees from credit cards.
I rarely make debit card purchases. I like to use my credit cards to rack up rewards points, and then I pay off the balance the next month. But debit cards don’t offer the same protections as credit cards, so be careful. Just look at the case of this poor schlub:
When Peter Means returned to graduate school after a career as a civil servant, he turned to a debit card to help him spend his money more carefully.
So he was stunned when his bank charged him seven $34 fees to cover seven purchases when there was not enough cash in his account, notifying him only afterward. He paid $4.14 for a coffee at Starbucks — and a $34 fee. He got the $6.50 student discount at the movie theater — but no discount on the $34 fee. He paid $6.76 at Lowe’s for screws — and yet another $34 fee. All told, he owed $238 in extra charges for just a day’s worth of activity.
Mr. Means, who is 59 and lives in Colorado, figured employees at his bank, Wells Fargo, would show some mercy since each purchase was less than $12. In addition, a deposit from a few days earlier would have covered everything had it not taken days to clear. But they would not budge.
How nice, they notified him afterward. And they dragged their heels on clearing his deposit. So for $38.14, he got a very expensive cup of joe from Starbucks. Let his $238 in overdraft fees be a lesson to us all: be careful when making debit card purchases, and for Pete’s sake, check your balance first.
Has anyone out there fallen prey to the overdraft fee game? Check out this book for more ways the banks try to screw us:
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Cut $1,500 From Your Energy Bill
Consumer Reports recently listed 4 strategies to lower your energy bill by $1,500. You can read the original article by following this link: Cut Your Energy Bills.
Heating & Cooling - $550 savings
- Eliminate leaks
- Check insulation levels
- Correct ductwork
- Lock double-hung windows to prevent air from escaping
- Open curtains on south-facing windows during the day
- Install a programmable thermostat
We’ve followed the above suggestions. We also close the blinds during the summer to cut down on air conditioner use. One of my friends installed a whole-house fan to eliminate his AC use.
Water Consumption - $400 savings
- Stop drips
- Lower the water heater temperature to 120°
- Insulate hot water pipes
- Insulate your water heater
- Don’t pre-rinse dishes
- Install aerators to faucets
You can add “take shorter showers” to save water. Also, when you run the tub faucet to warm the water, save the cold water for flushing or watering plants instead of letting it run down the drain.
Recycling - $250 savings
- Use RecycleBank on a pay-as-you-go basis
- Return your deposit bottles
- Donate unwanted items for a tax break
- Start a compost bin
- Buy reusable grocery bags
You can usually get credit for your recycled printer ink cartridges. Staples was offering $3 back per ink cartridge when you buy a new cartridge.
Electricity Use - $300 savings
- Use power strips to shut off “vampire” appliances
- Set your computer to hibernate
- Turn off lights when leaving a room
- Change to CFL bulbs
- Replace old appliances with more energy-efficient models
You could also dine by candlelight if you’re the romantic type. We have our lights set on timers to reduce energy consumption. You could use this to see how much juice your appliances are using:
Kill-A-Watt Electricity Usage Monitor
What steps have you taken to cut your energy bill?
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