I’ll actually start with the confession. Mr. and I are actually pretty well off. We certainly aren’t rich, but we’re more than ‘comfortable’. We’re certainly not broke, struggling to make ends me or even really worried about our finances.

I’m not bragging here, I’m saying it to make a point. Being frugal is for times of plenty AND times of want. Sure, as we had more room in our budget we added a few luxuries back in, but we still do our best to make sensible choices.

So why are we frugal?

Financial Security Now: Our goal is to have $30,000 in the bank (halfway there!), which is enough to cover our mortgage payments and our most necessary bills for a year. God forbid Mr. is seriously ill or injured, we want him to be able to concentrate on recovering rather than rushing to get back to work.

Saving Interest On Debt: Sure, we could keep paying off our mortgage at our current rate, but if we do, we’ll have paid an extra $300,000+ in interest at the end of 30 years (~6.5%). We borrowed roughly $260,000. Holy shit, that’s a lot of interest. By switching to a bi-weekly format and throwing the extra money we save elsewhere at it, we’ll be able to pay it off in 15 years, saving us a huge chunk of that $300k. I can think of a lot of things to do with an ‘extra’ $100k.

Giving Our Kid(s) A Headstart: Mr. graduated from college with a B.A. in Mechanical Engineering and over $60,000 in debt (at ~2%). We’ll be done paying that off just about the time we’re done paying off the mortgage (which is coincidentally about when our kid(s) will be preparing to go to college themselves). While we have no delusions of being able to pay their whole way if college costs keep increasing at this rate, we want to be able to save up enough so they’re not drowning in debt upon graduation.

A Comfortable Retirement: Presuming that the government hasn’t completely crashed and burned by 2050, Mr. will have a pension of 40% of his salary at the time of retirement. With our house paid off, that will probably be enough to live off of. But we don’t want to just survive, we want to have an awesome retirement. We want to travel, spoil the grandkids and enjoy our new freedom. We don’t want to rely on Social Security (who knows if it will still be around) so we’ll have to make that money come from investments that we need to start investing in NOW.

Not Being a Burden On Our Kid(s): While we’d love to leave a nice, fat inheritance for our kiddos, right now we’re concentrating on not being a financial burden on them. Mr. and I know that it’s likely we’ll be saddled with taking care of his mother after she retires. It’s not that we don’t love her, but that’s going to be a big burden on us and could jeopardize our ability to take care of our own kids and plan our retirement. We don’t want our kids to have to worry about whether Mom and Dad will be booted from our house or whether or not we can afford all our medications.

So what’s your motivation?

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Mrs. Micah wrote a post today about Financial Stories. Our childhood often has a deep impact on how we deal with money later in life. Having wildly different backgrounds can lead to clashes on money issues if you don’t make a conscious effort to look where your partner is coming from.

I was raised in an upper-middle class white bread family on Long Island. We lived in a big ol’ colonial my parents bought in the 70′s. While my parents were very careful not to spoil me, I was definitely never left wanting. I had a credit card in high school and my own card my freshman year of college. I did work once I turned 16, but it was to pay for my ‘fun money’ in college because my entire education was paid for by my parents.

Mr. was raised by immigrant parents in a little rental house in a lower class area. While they didn’t starve, they weren’t exactly swimming in money. Mr. started working as soon as he was able and we’ve been dealing with his $60,000+ in student loans since he graduated.

We often butt heads over money issues because of our different philosophies. I’m in favor of having a small emergency fund and then paying down debt ASAP to free up money, while Mr. favors a larger savings fund and just paying debt as it comes. I have a firm grasp of things like our grocery budget and little items, but I sometimes don’t get the scope of large purchases. Mr. has the big picture but has trouble realizing that multiple small payments add up quickly.

Fortunately, overall our vision is the same. We make a conscious effort to cut expenses and save, but also don’t want to be so cheap that we don’t enjoy life. If you have a spouse/partner who isn’t on board with your financial plan, you can run into some serious relationship problems. You don’t have to have matching childhoods, debts or even current financial situations to be able to work together, but you do have to have the same goals to work and live together.

Popularity: 3% [?]

I’m going to skip the ‘we’re all beautiful in unique ways’ and get straight to the practicalities of our beauty routines. They can get really expensive really quickly if you’re not watching your spending, usually as a result of a ‘it’s only X amount of dollars’ syndrome. Sure $10 for a new mascara isn’t expensive, but then you add a new lipliner, lipstick, foundation, concealer, blush, eyeliner, eyeshadow, hair cut/dye, mani/pedicure, shampoo, conditioner, bodywash, facial soap, styling product, styling tools, moisturizer…

1. Get pretty from the inside out. You’ll need less product on the outside if you’re healthy. Drink lots of water for healthy skin (and to avoid nasty dehydration headaches – which is what hangovers are). Get enough sleep and you’ll naturally minimize the bags under your eyes. Get enough exercise so you’re not piling the makeup on your eyes to draw attention away from a double chin. Eat properly so your nails, hair and skin get enough nutrients and you don’t need to buy fancy products to put them back in.
2. Adjust your ideals. The beauty ideal in the US is unrealistic unless you have a full-time styling team to spend 4 hours doing your hair end make-up in the morning and to follow you around all day for touch ups. Oh, and you would have to somehow Photoshop yourself in real life. Get a grip on reality and recognize that it’s our ‘flaws’ that make us look human and unique features can actually add to your face.
3. Know that you’re one hot lady. If you know you look fabulous, you will look fabulous. If you slouch and look like you think you’re an eyesore, you will be one. You can look ‘polished’ without makeup if you have the bearing and confident attitude of someone who spent hours in front of the mirror that morning.
4. Consolidate and Reduce. Do you REALLY need the entire new MAC eyeshadow palette or can you settle for just 3 or 4? Can you use one of the 3-in-1 blush/lipcolor/shadow products? Do you really need 5 kinds of soap in the shower? How many different fragrance lines from Bath and Body Works do you really need? A lot of the time we buy into the consumer frenzy and buy a million and one ‘new’ products that are really just the same thing in different packaging. Pigment is pigment and soap is soap.
5. Only use what you need. Don’t slather everything on. You only need a quarter sized amount of most hair products, and you don’t need half a cup of bodywash to make a satisfying lather.
6. Use every last bit. Dont’ waste the last 1/4 of a product because of poorly designed packaging. Scoop the last of the lipstick out and put it in an old lipgloss pot (this is also a fun way to combine multiple colors into a new one). Swish some water into your shampoo bottle and get that last wash out. Turn that lotion bottle upside down and shake, shake, shake.
7. Let your hair grow. No, I’m not advocating you stop shaving your legs. Longer hair styles need fewer maintenance cuts. A pixie cut needs work every 3-4 weeks, but long layers only need a trim every few months. Shorter styles also generally need more product to style.
8. Work with your hair. If your hair is naturally stick straight, don’t aim for a wavy or curly style for daily wear. Curly-haired ladies, don’t try to straighten your hair everyday. You’ll use less product, waste less time, and won’t require fancy heat styling tools or chemical treatments  in order to get what you want.
9. D.I.Y. There are plenty of salon treatments you can do at home, ranging from dyeing your hair to waxing to a manicure. A quick google search will bring up tons of tutorials and videos on how to do these yourself. (If you are bleaching blonde or going red, get your hair dyed at the salon, you don’t want to mess those up.)
10. Make your own. If it exists, someone has made a homemade (and possibly green) version of it. Try bathnbodyrecipes.com.

Popularity: 2% [?]

I know, I know, everyone is freaking out about the recession. But if you’ve already gotten the whole ‘not spending more than I make’ and ‘secure job’ thing down, now is a great time to buy a house.

With all the foreclosures going on, the same amount of money that would have gotten you a decent townhouse can now get you a decent detached house a little farther into the suburbs. (For those of you who want to stay true to being an urbanite, it can net you a sweet condominium, townhouse or apartment that some idiot can no longer afford)

That said, there are a lot of pitfalls to buying a foreclosure:

1. There are two main kinds of people who are foreclosed on. The kind of people who no longer give a shit about the house and do their best to break, destroy or steal things and the kind of people who really care, but can no longer afford to take care of the house. You will be spending roughly 10%-25% over the purchase price of the home on necessary repairs (I don’t recommend buying a house that needs more work than that). Since your mortgage won’t cover those costs and borrowing off of your equity on a new home is idiotic at the moment, you will need a LOT of cash on hand to make the purchase.

2. Dealing with a bank owned home is a lot different than dealing with an owner. The banks drag their feet on things, are unwilling to negotiate and often the selling agent for the home is working with a ton of other foreclosures and doesn’t have the time to make a full effort.

3. The initial appraisal on the house will be VERY low. This means that sometimes you will need to make up the difference between what the bank will give you for a mortgage and what the actual selling price is. The FHA appraisors are especially brutal. It also means that you will have very little equity until you spend the dough to fix the house up.

4. Your property taxes can still be as high as if the house were in great shape. You can ask for a reappraisal of course, but the local government will drag its feet and their appraisers inflate as much as the FHA deflates the appraisal. (1)

5. There are always hidden problems. This happens all the time with homes, but it’s especially bad when the home hasn’t been taken care of for months.  Your inspector may not catch them because most of the time the utitilites have been turned off for months and things may not start leaking until weeks after they’re turned on.

6. Speaking of inspectors, Foreclosures are almost always ‘as is’. Even if your inspector catches the problem before purchase, the bank is going to tell you to take it or leave it.

7. If you see a house you want, you’ll have to jump on it immediately. You will have very little time to deliberate. I can’t tell you how many times Mr. and I missed out on a house after it had only been on the market for a few days. (The houses you see on the market for months usually have something horribly wrong with them.)

8. Moldy basements. Not a little just… ugh, I can’t even tell you some of the levels of mold and mildew we’ve seen.

I honestly think that buying a foreclosure is a great idea if you have the cash and time to fix it up before moving in.

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It’s probably a little early in my blog to start pissing people off, but I don’t care.

I wish people would stop blaming credit cards for their poor spending habits. It’s not the credit card that gets people into debt, it’s their inability to budget and cut their spending. Occasionally you do run into someone who legitimately lost their hand-to-mouth job and has built up their debt just trying to stay afloat until they find work, but the overwhelming majority of Americans in consumer debt just made dumb decisions.

I got my first credit card when I was sixteen, right after I got my first job. It was co-signed with my mother, and I was made aware that I was going to be paying for my purchases and if I didn’t (or couldn’t) one way or another my parents were going to recover the money. Even being your typical teen girl I still managed to keep within my meager budget (I was also saving for college afterall.)

I got my first solo card my freshman year of college. Yes, the kind that everyone says will ruin you for life and send you spiraling into an enormous debt burden that you will never dig yourself out of. I admit I once missed a payment, but it was because I coming was home for the summer and somehow the bill got packed away. Oops. Every other month, that sucker was paid in full.

A Visa card never forced anyone to buy a TV. My MasterCard has never put a gun to my head and told me to buy a pair of shoes I can’t afford. I’m honest with myself when I want to buy something I shouldn’t. Am I a perfect angel 100% of the time? Absolutely not, but the farthest I’ve ever gone into credit card debt was $200 and that was supplies for my business (and was paid back in full a month later.)

Don’t misunderstand me, I’m not saying people people with poor spending habits are dumb. Neither am I saying people with good ones are geniuses or somehow superior.  My brother, who is much smarter than I am, got himself into a ridiculous amount of debt in college. He understands personal finance just fine, he just made really stupid decisions. He now recognizes he has pretty crappy impulse control and lets his wife handle most of the money now.

By all means, if you know you are an impulse buyer and shouldn’t have a standing credit line, cancel your card. Some people can’t have credit cards, and that’s fine. Just stop blaming the card for your troubles and stop looking at me like I’m an idiot for having credit cards and using them. They are not the problem, poor spending habits are.

Image by http://www.sxc.hu

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It’s not a steal, a deal, a sale or a bargain if you didn’t intend to buy anything in the first place.

Let’s say you realize that you need a new cocktail dress for all these events you keep getting invitations for. You want to be a knockout, but want something that will be classic and last a few years so you budget yourself $300 for a new dress and start shopping. After a week, you fall in love with this dress. Not only is it well within your budget, but you have a 20% off coupon that you’ve snagged from RetailMeNot. That, my friends, is a good deal and a smart purchase.

On the other hand, let’s say your walking down the street with a girlfriend. You spot a clearance sale sign in the window of a favorite shop and you decide to go in t. After a couple of minutes, you find a cute dress at 50% off of $200 and figure you might as well buy it since it’s half off. In this case, you didn’t save $100, you spent $100 on something you didn’t need and probably didn’t want all that badly.

Ladies aren’t the only ones guilty of this *looks pointedly at oversized television gracing the Frugal Urbanite living room*. If you hadn’t intended to buy it in the first place and don’t need it, it’s not a bargain no matter how good the sale seems.

An occasional impulse purchase isn’t going to wreck your life (just make sure you have a little ‘fun money’ squirreled away for this sort of thing) but you need to realize that regularly accumulating stuff just because it was on sale is a pretty stupid practice, whether it be four boxes of cereal you will never eat or another black cocktail dress when you already own three.

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I’m not going to claim that a cocktail party is a frugal way to entertain. I am, however, going to tell you how to throw a frugal cocktail party.

To estimate the amount of food and drink needed, figure every guest will have one drink per 2 hours of party and two of every hors d’oeuvre (more if the party is during dinner hours)

First off, you do not need a fully stocked bar to have a successful cocktail party. The true point of a cocktail party is socializing, not booze. A frugal host/hostess will serve 1 or 2 set cocktails (perhaps cosmopolitans and martinis,) an inexpensive American wine, beer and soda(pop). You will also need seltzer, (non-sparkling) water, and ice. If you do not own the appropriate glasses, borrow them from friends and family. (You can also buy cheap plastic bar ware at a discount party store, but you will be consuming and disposing of a lot of waste.) If you don’t know vodka from varnish, ask a friend to bartend.

Your munchies don’t need to be expensive to be spectacular. A lot of the appeal is going to be visual, so now is the time to break out all those fancy serving vessels or borrow some from friends. Try stacking contrasting containers, for example a dark colored bowl on a glass plate. Displaying items at different heights also adds to the appeal; you can cover sturdy boxes with a table cloth or get creative with things like a stack of books, an upside down cake stand or other items to provide different levels. Don’t forget your garnishes, and if they’re edible, all the better. Carrot curls, radish roses and other vegetable garnishes are quite easy to make with practice and you can always go with the favorite standby of curly parsley, lettuce or other leafy vegetable.

As for the munchies themselves, you’ll want at least five different kinds, and try to avoid messy items or things that need two hands because guests will be trying to hold a glass and balance a plate at the same time. It may be tempting to buy frozen hors d’oeuvres, but most aren’t difficult to make, just time consuming. You can make most of the same kinds ahead of time and freeze them yourself to reheat at party time.

Spreads on pita are always popular (try Carrot Spread or hummus,) as well as cheese and crackers, seasonal cut fruiit like apples, pears and grapes (sprinkle with a lemon juice and water solution to prevent browning,) mixed nuts, frittatas, and mini-sandwiches or wraps (slice a de-crusted sandwich into fourths or a wrap into slices.) There are millions of recipes out there on the internet, so you should be able to find plenty within your budget and skill level.

There are a ton of inexpensive decorating ideas floating around the net. My personal favorites are stringing up white Christmas lights (or placing them in a large glass fishbowl), making an arrangement of all those decorative candles you’ve been hoarding (don’t light them all unless their scents are harmonious,) placing cut tree branches in a vase and hanging vintage crystal dangles, beads or more Christmas lights from them, filling vases or other glass containers with citrus fruit, and using old silk scarves over lampshades for mood lighting (just make sure they can’t touch the hot bulb.)

With a little forethought and planning you can have quite a swanky party on a limited budget. Since one of the biggest expenditures for a cocktail party is the alcohol (surprise, surprise) you can save yourself from overspending (and ending up with an apartment full of half empty bottles) by limiting the kinds of drinks rather than the quality or quantity.

Image from stock.xchng

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