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Laid Off? How To Protect Your Financial Security.

Once again, my favorite money-management newsletter comes to the rescue for those of you struggling with your finances after being laid off. I read the newsletter from T. Rowe Price religiously every month, and when I come across something worthwhile, I like sharing it with you guys. While there are many things people can do before they get laid off that can help with financial security, not many think about what they can do after they lose their jobs – and that’s where these 4 tips come in to play. For me, my biggest tip is to have an emergency fund that you constantly add to…it goes a long way to making you feel like you would be OK for a while if you lost your employment. But here is what the guys over at T. Rowe Price have to say, along with my thoughts on each:

Evaluate your expenses

Pretty obvious, right? But you would be surprised at how many unemployed people are still paying for cable TV, newspaper delivery, expensive cellphone plans, etc.. The first thing a recently unemployed person should consider doing (if they haven’t done so already) is to create a detailed budget to track every single penny that leaves their bank account. It is amazing how much we can spend without even realizing it! Of course, you have to pay for food, shelter, and insurance (if you have it), but most everything else can be reduced if you take a careful look at the expenditures.

Consider your income

The newsletter says that after you have created this detailed budget, you need to see where your financial resources are. Severance pay, unemployment, emergency funds, investments, side income – add up all of the places where you can pull money from to support yourself until you find another job. This will help give you a clearer picture of your exact situation. Also, don’t forget that the first $2,400 of unemployment pay is tax-free for 2009. You can also reduce the amount of taxes taken out of a spouses’ checks if need be, to bring more spendable dollars into your household.

Keep paying into retirement savings

I for one and not sure about this, but then again that’s why I don’t get the big bucks! I would probably still pay into my accounts, but I would definitely cut back on how much I was contributing if I was without a job. And I would try my best to avoid touching the money in the accounts to use for daily expenses, if I could help it. At a minimum, leave the money that is in there…in there. If you can swing it, consider continuing your contributions as well as you look for a new job.

Stick to the basics

Focusing on the basics of personal finance can help you get a grip on your exact situation and can help you feel more secure. Knowledge is power, they say! Besides, as the article says, when you are finally back on track with employment, imagine how good you will feel about your financial security because of the work you did while unemployed.

These are some good, solid tips on dealing with your finances if you find yourself unemployed. I wrote before about how my own brother has lost several jobs in the last couple of years due to the economy, but his emergency fund saved him every time and got him through. Because of that and my own experiences, that still remains my #1 tip for anyone – be sure to have some backup money hanging around “just in case”. What would you add to this list? Any of your own tips you would like to add?

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Inheriting 80 Year Old Tools – That Still Work Fine.

I just got back from my almost 3 week cross-country trip and before I start today’s post, I just wanted to say thanks to Matt from DebtFree Adventure for his amazing guest post “The Benefits of Frugal Living“. Thanks Matt!

One of the biggest reasons I drove back to Boston instead of taking the train as I normally do was because I was going to be bringing back a lot of very heavy stuff with me. When my grandfather died a few years back, I was the one who got all of his tools and equipment that he had been using since about 1930 or so. He was an electrician for his career, but he was also a jack-of-all-trades who could make or fix anything you wanted him to. And because of his career and abilities, he had a full workshop full of any and all tools and machinery you could think of – and most of it was at least 40+ years old in perfect working condition. My grandfather only bought “the good stuff” even in his later years, (when so many people just buy the cheapest thing they can find at stores like Walmart), because he knew that quality goods can last a lifetime or more. His equipment worked today like it did the day he bought it, and that’s because of two things:

1. He bought quality, heavy-duty stuff.
2. He took care of what he owned.

There are tools in some of the cases I brought back that are labeled with the date “1931” – and they still work just fine. They are nice and heavy, virtually indestructible, and will probably outlast me as well here on this earth. This is stuff that my grandfather used 80 years ago to do his job with, and here I am in 2009 using the same exact tools at my house – talk about getting your monies worth from a purchase! And while there are still companies who do build quality tools like in the old days (most of the Craftsman stuff from Sears is still great and still comes with a lifetime warranty, which is why I buy them), too often we as shoppers take the short-sighted route and buy the cheapest one of whatever we need that is on the rack in the store. And no doubt, within a few years, it needs replacing – with yet another cheap product that won’t last any longer. This leads to spending money on the same things over and over again while also adding to our landfills and garbage dumps, neither of which is a good thing to be doing. That’s why I can appreciate that my grandfather bought good stuff and took care of it so much – I now have it in my life to continue using, and hopefully I can hand it down to my kids as well. It’s amazing how far superior quality and care of belongings can go instead of falling for society’s constant desire to always have the newest, yet cheapest, product available. Do your part – don’t buy the cheapest product you can find; buy the best and keep it forever.

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Money Quote Friday – Life Of Honest Poverty Edition.

“Learn to live a life of honest poverty, if you must, and turn to more important matters than transporting gold to your grave.” ““ Credenda


I am almost back home from vacation after 2.5 weeks away! I hope you guys have a nice weekend, and see you soon!

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The Benefits of Frugal Living.

This is a guest post from Matt, a 33 year old IT manager and blogger who is passionate about helping himself and others get out of debt. He writes about personal finance and debt-free living at Debt Free Adventure. To connect with Matt visit his blog, subscribe to his RSS Feed and/or follow him on Twitter.

A National Issue

For the last 100 years the American economic machine of gross abundance and mass consumption has truly been a wonder to behold. Sparsely could one have predicted that such national prosperity could be created, realized, enjoyed, and dismantled with the velocity, beauty, and wonder of a shooting star. Is our prosperity fleeting like the fiery tail of a distant passing comet, or are we simply in a national slump? Is frugality here to stay or is it too just a flash in the pan for Americans… another coping mechanism of a people who seem to be able to adapt to any crisis laid at their feet? I do not know the answer to these questions, and will leave the debate of such up to the economists of the day. Instead I choose to focus on my individual situation, what I feel compelled to do, and how I intend to do it long into the future.

A Personal Background…

Like many modern governmental, corporate, and individual budgets the country over — fiscal irresponsibility was the central theme of our family finances. Although we were not spending as irresponsibly as many, because normal consumption rates had become so perverted, my wife & I were sheepishly spending more than we earned, which was ultimately creating a financial reality with which we were rarely pleased. I am willing to bet that much of what I have written is quite familiar to many of you… please read on. You see… throughout our first 3 1/2 years of marriage my wife and I followed the financial concepts of complacency without any real concern for the consequences of our ignorant choices. We continued down that path until January of 2009… when we finally woke up to the true end to which we were heading. I wanted to give a brief synopsis of how we turned our financial situation around, and the benefits we have realized along the way. The steps we took and those we implore you to follow, are the obvious ones that are gone over regularly here on MyTwoDollars such as:

  • Start spending less than you earn
  • Exercise frugality
  • Reduce your expenses
  • Increase income if at all possible, and work to diversify your income streams as much as possible
  • Give liberally
  • Save your money

Since my wife & I have begun exercising frugality in our lives we have noticed many incredible benefits. Some of these benefits were expected, and some never entered into our minds, but are simply the harvest we reap from a life of wise, deliberate choices.

5 Random Benefits of a Frugal Life

This list is by no means all inclusive, but is simply a collection of 5 specific benefits I wanted to share with you today.

1. Saving Money – This may be the most obvious benefit of adopting frugality, but it most certainly needs to be mentioned. I would wager to say that, in the long run, a focus on frugality has been the single best money saver for our household. Frugal living builds on itself, always saves you money, and is addictive… in a good way.
2. Sustainable Lifestyle – By practicing money saving habits in all areas of our home we have adopted a strict reuse philosophy. Not only has it vastly decreased the trash we produce, but has even cut down on the amount of recycling we return because we simply recycle a lot of things back into our home. We save most commercial package containers for reuse. We have all but eliminated our use of air conditioning, and use our furnace far less. This reduces both the amount of coal our local power plant has to burn and also the natural gas we consume. We ride our bikes more often and have went from using 2 vehicles to using only 1 vehicle, which also has many health benefits.
3. Increased Creativity – Whenever we used to need ANYTHING the first thought in our mind was to rush to the store… but not any more. More accurately, that is normally the last thing we think of. We have begun making so many different household staples such as homemade laundry detergent, yogurt, crackers, cards, gifts, homemade dishwasher detergent, we installed our own paver patio and back yard. I could go on and on, but rather than wax repetitive, I would just like to stress the benefits of the creative mindset you gain when living life from a frugal perspective. I cannot move onto the next point without mentioning what a HUGE blessing it was to cancel our TV service. It was one of the tougher decisions to make, but has turned out to be one of the best… hands down and has greatly bolstered both our availabe time and our level of creativity!
4. Increased Joy – One of the least talked about benefits of adopting a frugal lifestyle is the fact that you have a much higher degree of satisfaction with your financial choices that ultimately lead to ever increasing amounts of joy. Couple this with the other benefits mentioned above, and you can see how exercising simplicity, discipline, & wisdom can lead to a much more loving and joyous family life. I know this has been a huge reality for my wife and I.
5. Self Reliance – Because we are making more and more of our own food staples and household products we are becoming increasingly more self-reliant. This is a passion of mine that I never realized was so closely related to living frugally. We are growing a hearty vegetable garden and have installed rain barrels to irrigate it for free. As I mentioned in a few of the points above, we no longer look to consume first… but rather first look to create. This spills over into every area of life and is an enormous blessing that cannot rightfully be explained unless you experience it first hand!

So what are you waiting for?

Get started today by taking at least one frugal step to increase the financial security of your family. Remember that frugality builds upon itself but the ball will not start rolling on its own… you have to push it. What was the first and/or best frugal choice you have made so far? Also, what are some benefits you have realized since adopting a frugal lifestyle?

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What I Drive Doesn’t Try To Define Me Or To Impress Others.

Only a few more days of vacation! While I finalize things around here and get back on the road in 2 days, please enjoy one of my favorite and most popular posts from a year ago. I will be back next week with all new stuff, so thanks for your patience in the mean time!

Granted, I will be the first to admit that when I was in my early to mid-twenties, I definitely cared about what everyone else thought of my clothes and my cars. I think most people do care up until a certain age, and I was no different. I bought nice clothes, expensive cars, went out to eat way too much, and just charged myself into credit card debt – all to try to impress other people. I fell for that lifestyle hook, line and sinker – and found myself staring at a lifestyle I could not afford and tens of thousands of dollars in credit card debt…for nothing! What did I have to show for it? Not much! In the last 5 years of living in Los Angeles I got over myself and stopped caring so much, worked to pay off the debt, bought cheaper cars, and overall revamped my lifestyle so that it was affordable…after all, I didn’t really care anymore what Los Angelenos thought of my belongings. But I had no idea that there were places where people did not care at all, not one iota – until we moved here.

And it seems to me that most people are happier because of it.

We are not in a competition here to see whose rims are shinier, whose stereo is louder, whose house is bigger or who has the coolest new clothes. No one here it into talking about where their second home is, where they vacation, or where they sent their kids last summer. People here are just living…and it is something that we are settling into quite nicely. Everywhere we go, people wave and say hello, even if you just happen to both stop at a stop sign at the same time. I don’t know any of these people yet; I just moved here 2 months ago (now over a year ago). But yet the majority of people treat everyone as a friend or family member, like “we are all in this together“, and it is quite refreshing. In L.A., if you took an extra 2 seconds at a green light to start moving, you got blaring horns and 3 middle fingers. Here? Nothing…people are patient and not in a hurry to blast their way down the street. It is so different from where we came from and I have already felt my blood pressure drop!

The state car seems to be a Subaru, as that is what most people drive. Not exactly a status-symbol, huh? And not a single one of them is clean and shiny like in Los Angeles, as they are all covered in mud, the tires are brown and filled with stones, and many windshields are cracked. I used to get our cars washed every week or so in Los Angeles, where the only dirt they got on them was from the pollution. Here? I hosed off the car once in the past 60 days…it’s just how it is around here. And my 14 year old Jeep, which I bought in February, hasn’t seen soap for about 3 months!

I guess my point is that it just shouldn’t matter to anyone else what you drive, what clothes you wear, what restaurants you eat at, or where you go on vacation – and we have found a place where nobody cares about any of that stuff and it is an amazing feeling to be free of those feelings. As much as we tried to live that way in L.A., we still came in contact with many people who looked down on you because you drove a Subaru rather than a BMW, or you worked as a teacher rather than as a TV producer. It was quite unhealthy but we didn’t realize just how bad it was until we moved away. I like nice things as much as the next guy, but when and if I were to buy them they will be for me, and not because I thought anyone else would be impressed.

If you spend your life trying to impress and keep up with everyone else, you are not living your own life but rather living theirs. Living on your own terms saves money, saves your sanity, and saves your dignity!

Lifestyle
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