Wise Bread (Catherine Shaffer)

Ten Great Charities that Deserve Your Dollars This Year

Catherine Shaffer — Wed, 25 Mar 2009 16:44:13 +0000

These are difficult economic times, but I'm getting tired of being told to spend my money on stuff, as if my personal saving habits are somehow ruining the economy. I'm no economist, and maybe I'm full of crap, but it seems to me that when I save money by putting it in a bank account or investing it in stocks via my retirement plan, I am directly addressing the core problem of the economy right now--liquidity--in a much more direct way than if I were to go to the dollar store and stock up on easter decorations that I don't want anyway. I have a different proposition. Instead of throwing money at retailers, let's throw it at people who really need it--the poor and disenfranchised who are most at risk in an economic downturn. Here are my top ten charity picks. I'd love to know what your favorites are, and will post a followup in a week or so with an updated list of recommended charities. [Update: and now there are ten!]

1. The Carter Center

This is an amazing organization founded by Jimmy and Rosalynn Carter with a unique mission. Many of us are ardent supporters of disease foundations that seek to find a cure for a devastating disease such as cancer. The Carter Foundation seeks to bring known cures for terrible diseases to third world nations that cannot afford them. The Carter foundation is currently campaigning to eradicate guinea worm, a painful and dangerous parasitic infection, from the world. Guinea worm is easily prevented by filtering drinking water. However, many countries in Africa have been too poor to distribute simple coffee filters so that people can remove the worm larvae from their drinking water. The Carter foundation has made an amazing difference in saving millions of people from guinea worm at a cost of pennies per person. This is a very powerful use of your dollars, and if you have just a few dollars to donate, this is the charity that will stretch those dollars the most. The Carter Center has a five star rating on Charity Navigator, with a high percentage of donation going to actual program expenses.

2. Christian Foundation for Children and Aging

This is a child sponsorship charity with which I've had an amazingly good experience. For $30 a month, I sponsor a child to receive assistance through the foundation. Assistance includes education and basic needs. I am able to correspond with the child, and we have exchanged many letters and photos. CCFA gives you the option to choose a young child, an older child, or an elderly person to receive assistance, or you can choose the person most in need. I took the last option, and I promptly received a packet describing a child named Luis in Guatamala. I really wish I could publish the series of three pictures I received from the foundation, but that would not be considerate of his privacy. Luis was about 12, and in the first picture he looked very small for his age, was wearing ill-fitting clothes, and looked thoroughly miserable. A year later, I had a picture of a very handsome young man with a bright smile. Luis sends me wonderful letters which he always illustrates with colored pencil drawings. I am very proud of him, and I hope to one day take advantage of the CCFA travel program, which provides very reasonable accommodations for a visit with your sponsored child. Because of the differential in cost of living between the US and Guatamala, I am able to make a huge difference in one child's life while making a small sacrifice in my own. In fact, it's kind of embarassing, the gratitude that he has expressed, considering that $30 is an amount I can easily spend on nothing. CCFA also gets five stars on Charity Navigator.

3. American Red Cross

The Red Cross gets only two stars from charity navigator, indicating they need improvement in efficiency. Still, there's no other organization with the scope and vision of the Red Cross, and they are the only place you can donate blood instead of money. If you are able, consider giving at least a pint of blood to the red cross. The Red Cross does a great deal of disaster relief work. When my family was on vacation in Michigan's upper peninsula, in 2007, a major forest fire started within a few miles of our campground. We were not affected, but as it turned out, the Red Cross set up a tent with relief supplies near the firefighter's headquarters. Maybe they aren't the most efficienty charity working in this space, but I didn't see any other charities showing up at Four Corners crossings in da UP to offer relief to people who may be injured or displaced. I believe in this organization and will continue to support it. Some day, if my life calms down enough, I hope to become a trained Red Cross disaster volunteer in my community. (I looked at the training courses recently and sadly am not able to attend.)

4. International Committee of the Red Cross

This organization is doing critical relief work around the world. Right now, as we speak, there is a horrifying situation in Sri Lanka with tens of thousands of people trapped in a very small area, caught in cross fire between the Sri Lankan government and the Tamil Tiger rebels. the ICRC is the only aid organization with any access at all to this region, so if youw ant to help, this is the place to send your dollars. This is a terrible situation. News media have not been allowed in, but there are reports that people are using sheets of plastic for shelter and that bombs are falling among the crowds. These are people who are going to need immediate and comprehensive assistance as soon as they can be extracted from the situation.

5. Habitat for Humanity

What can you say about Habitat? Great charity, doing great work. They don't just give away houses, they make people work their butts off for them. This is a charity that strengthens communities, puts people in homes, and doesn't wreck the economy while doing it. They deserve your support.

6. Doernbecher Children's Hospital Foundation

I was going to recommend St. Jude Children's Hospital, but when I did some research, they seemed to have an unacceptably high overhead as opposed to the amount of donations that actually go to research and helping people. Instead, consider Doernbecher, which has a similar mission, and a five star rating on charity navigator.

7. American Near East Refugee Aid

This is an organization helping another trapped group of people--civilians in Gaza. I have a solicitation from them right here in my incoming mail box, and after looking them up online, I feel very comfortable sending a contribution.

8. Your local church, department of human services, or animal shelter

There are some needs that are best addressed locally. Consider contributions to your church or your local animal shelter. (Do not contribute to the HSUS until you have researched the organization. You may not agree with their goals or tactics, and they are not normally affiliated with the "humane society" in your town.) Also check with your state government or county human services department about organizations that help foster children. Foster children are some of the most needy, most disenfranchised people in our society. Often there are not enough beds in foster homes for them, so they live in unstable, crowded conditions. Children who have not been abused when they enter care often end up being abused by the time they leave care, and due to frequent moves between homes, they have a hard time holding onto possessions. Many small charities collect money to purchase simple things like suitcases and Christmas presents for foster children. Children aging out of the foster system need a lot of help getting started in life, as well, and in this economy, it's not as easy for them to find jobs, much less go to college. You might also consider becoming a foster parent. It's not for everyone, but there is such a great need, and most people find it very rewarding.

9. Sanford Health, South Dakota

This isn't actually a recommendation for a place to donate your money, since they don't seem to be actively soliciting donations. Instead, I want to share with you this story of Denny Sanford's $400 million gift to Sioux Falls Health System. Unlike many philanthropists, Sanford did not dictate the research mission of the hospital when he made the gift. Instead, he solicited proposals from scientists for a project that would completely cure a disease within his remaining life span. He's kind of old, so it's going to be a horse race! The process was judged by scientists, and the winner was type I diabetes. Research at Sanford Health will focus on curing Type I diabetes through beta cell regeneration, as quickly as possible. I mention it here in case anyone has a significant gift or bequest and may be interested in joining Sanford in this mission, or perhaps using Sanford's process to start their own research institution or foundation! This is philanthropy done right. [Update: You CAN contribute to Sanford Health. Go to www.sanfordproject.com and click on "Make a Gift Online."]

10. Doctors without Borders

Thanks to the commentors, I can now complete my list of ten, which I started and got stuck at number nine. (Math and blogging don't mix for me.) This is another charity that introduces itself. Nobel-prize winning, courageous, important. I am a supporter and I hope you will be, too.

Now, go! Make a leap of faith. Give your money away, and it will return to you tenfold, or so the saying goes. With an ROI like that, we can have 1000% growth in our economy in no time. What are your favorite charities? What are the best? The worst?

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Avoid Big Dental Bills with Safe and Inexpensive Products

Catherine Shaffer — Wed, 11 Mar 2009 20:01:45 +0000

Dental care is one of those big expenses that hits us in the pocketbook when we least expect it. Most people pay at least some of their dental bills out-of-pocket. Some people go in for a routine cleaning and come out with a schedule of appointments for thousands of dollars worth of restorative work. Traditional dentistry focuses on repairing the damage done by plaque-causing bacteria, but does little to address the underlying cause of decay and gum disease. A new trend called minimally invasive dentistry views these bacteria not as normal and unavoidable body flora, but as an aggressive bacterial infection that can be eliminated using a rational cleaning regimen.

Ellie Phillips is a Rochester, New York dentist and author of the dental advice blog Ask Dr. Ellie. In her blog (and in a forthcoming book), Dr. Ellie describes how she first became interested in minimally invasive dentistry (as it's now called). Her husband owned a restaurant, and the restaurant employees could not afford dental care. Out of a desire to provide some kind of inexpensive tools for preventive dental care, they installed a candy dispenser at the restaurant that contained xylitol candies. Xylitol is a natural sugar derived from birch trees. (If that sounds strange, think about how much maple syrup you've consumed. Same thing, except birch.)

It turns out that the bad bacteria attempt to metabolize xylitol, but get “stuck” in mid-process and starve to death. Xylitol is, in effect, a mild, selective antibiotic that eliminates plaque-forming bacteria and encourages the growth of harmless probiotic strains (which we all need for good health). The bad bacteria form clumps and strings on teeth. This is what the dentist scrapes off at those biannual cleanings. The good bacteria form an invisible slippery film on the teeth.

What Dr. Ellie found was that when the employees started eating a hand full of xylitol mints each day, their teeth and gums became naturally healthier. (The scientific literature backs up her observations.) Given time, and freedom from harmful bacteria, says Dr. Ellie, your body can even repair small cavities. This is called remineralization.

Since that time, Dr. Ellie has developed an oral hygiene system that encourages good bacteria and eliminates bad bacteria. The system (“Clean White Teeth”) involves eating a minimum dose of xylitol each day, brushing with a scrupulously clean toothbrush, and using four specific products : Closys rinse, Listerine, ACT fluoride rinse, and plain Crest toothpaste. She has many testimonials from happy patients and blog readers whose dental problems have been completely reversed by this regimen. Dr. Ellie is very clear that she does not receive any payment from Johnson and Johnson, Pfizer, or any other corporation for endorsing these products.

The xylitol candies and all of the mouth rinses are not cheap. They cost more than the average person's oral hygeine routine. However, they are much cheaper than root canals, gingival surgery, and tooth implants.

In fact, I decided to try this system myself. First I have to give you some background. I never had a cavity in my life, but as of about three years ago, I did have some gingivitis, with a few periodontal pockets that my dentist was watching. We had many conversations about flossing. The problem: I was flossing regularly and doing everything recommended by the dentist, but my gums were not improving. My dentist, whom I do like very much, didn't have any new recommendations to offer, except to continue flossing.

Some time later, I decided to begin taking fish oil supplements, because I had been impressed by new research showing the benefits of omega-3 fatty acids for your overall health. Within about a month, I noticed my gums were a strange color. They were light pink! This is the color of healthy gums. Sure enough, when I went to the dentist, they couldn't get over what an improvement there had been in my gums. So that's my personal recommendation. The science on this is somewhat fuzzy (omega-3's are known to be beneficial for cardiovascular health, and cardio and gingival health have been shown to be linked). It's worth a try.

So when I started using Dr. Ellie's system, I already had pretty good teeth and gums. But like most everyone, I would have some sensitivity and bleeding during cleanings, and the hygienist spent some time scraping tartar. I usually got a lecture about flossing more.

I was eager to see if there would be any difference after I started the system. To my surprise, the hygienist found almost no tartar to scrape, and my gums had zero bleeding, except in one place where I had suffered bone loss from previous decades of simmering gingivitis. Again, they were very happy and impressed with my progress. I believe my largest periodontal pocket even measured a millimeter smaller.

So that's my personal testimonial. I am very happy to share this resource with Wise Bread readers. I would encourage you to go read through the Dr. Ellie blog archives. It's well worth the investment of time. She gives advice for many situations, including young children, cancer patients, and more. Medical science is just beginning to really explore the impact that microflora has on human health. So much is unknown. But after more than thirty years of being blamed for my own poor oral health, I am very happy to know that I just had an infection and was able to cure it naturally.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Looking at Your Expenses with New Eyes

Catherine Shaffer — Wed, 18 Feb 2009 15:41:18 +0000

A lot of people think that banks have high security, but the most fortified brick-and-mortar institution in my town is the local Comcast office. This is where you have to go to drop off broken cable boxes or pay your bill if it's late and you don't want your service turned off. The clerks work behind a thick shield of bullet-proof glass, and there are two-sided, bullet-proof boxes at every station for transferring equipment. Surveillance cameras are placed in the corners of the room, and a large poster by the door makes it easy to estimate your height as you leave the building with that bag of loot.

One day, after a couple of visits, I finally asked why there was so much security. I was told that the office takes in ridiculous amounts of cash each day. Enough to make it a more attractive target than many gas stations and convenience stores. Why so much? Well, to understand that, you have to spend some time waiting in line. If you watch carefully, at least fifty percent of the people in line ahead of you will be there for two purposes. One, to pay their overdue cable bill in cash, and two, to argue with the clerk about some aspect of the bill that they find unfair. For this reason, it's a good idea to go to there when you're in the mood for people-watching, as opposed to running late for something important.

Cable television isn't a life necessity. There's no bullet proof glass (as far as I know) at the local supermarket where you can pay your heating bill in cash at the last minute. But apparently people are willing to spend their last dollar on cable. As a case in point, last time I was at the Comcast office, dropping off a spare second cable box that no one was using anymore, a gentleman in front of me in line went to the window and offered to pay $150 in cash on his past due account, which was $495. That brought his balance down to $345. He then asked what his charges would be for his next bill. “You have $345 outstanding,” the clerk said.

“No, I just want to know what the new charges will be on the next bill,” he answered

“One hundred ninety-five,” she told him. He nodded, put away his receipt, and left.

This seems incredible to me. Obviously he can't afford $195/month for cable, or he wouldn't be so far behind on his charges. What kind of service even costs that much? Is there a cable package that cleans your house and polishes your silver while you watch? And he couldn't even pay the equivalent of one month's charges after running up a $500 tab. He paid just enough to keep the cable turned on for another month, but anyone with eyes could see this was a terrible financial choice he was making.

I'm not real comfortable making judgments on other people when I don't know the whole story, so I got to thinking. What are my blind spots? What do I maybe spend $200/month on that others would consider excessive? Chances are my overall family budget is greater than his, and includes luxuries that he would find excessive. Maybe he would think my pets are a waste of money. Maybe he would disapprove of my habit of driving decent cars and eating organic foods. Maybe he would frown on my SUV. (A lot of people would, but you try taking two mastiffs on vacation in a Toyota hatchback.) The truth is, if someone were standing behind me, watching me make all of my purchases, I would probably squirm a bit.

So, for me, there are two take-home lessons here. One is that entertainment in the form of cable television is very important to some people, to the point that they will take the last of their grocery money to the local Comcast office at the end of the month, instead of using it on groceries. We should all respect a force of nature this powerful. Second, that managing your money is always subject to personal priorities, and those priorities vary between individuals. Maybe the mythical $4 latte is really worth $4 to someone who really treasures that Starbucks run each morning. Maybe it is the one thing keeping him sane. The real question is do we know what our priorities are and how much they are costing us? What would our choices look like if they were examined with fresh eyes?

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Please Pass the October Surprise

Catherine Shaffer — Sat, 11 Oct 2008 13:49:49 +0000

I've always believed that mastery of vocabulary is at least halfway to mastery of the subject. Words are power--the kind of power commonly wielded by eggheads with pocket protectors, but power nonetheless. In the past weeks and months, I've seen a lot of new vocabulary thrown around in the media, and most of us are too busy ducking and diving out of the way to ask what all these crazy words mean. So let's demystify the language of the new economics, right here, right now. Here's a list of common terms you might encounter in your newspaper, on television, or even in a blog.

Commercial paper: This is an IOU, good for maybe a month or two. Unlike a regular IOU, it's written for very large amounts, and companies accept them from each other pretty much without question. Apparently, commercial paper is the way that many companies meet payroll and buy inventory. I always thought they used money. Who knew?

Credit default swap: Halfway between an insurance policy and a racetrack wager, this is a way that mortgage lenders made themselves feel safe giving loans to people about whom they otherwise knew nothing. No job? No documentation? No problem. We have a credit default swap.

Subprime debacle: The inevitable outcome of widespread use of credit default swaps to back sketchy loans. The word 'debacle' has somewhat of a Victorian ring to my ear. It sounds like something that might happen in “The Importance of Being Earnest.” This is how the whole mess was described earlier this year, when we were all in an enviable state of denial. Notably, a 'debacle' is nothing that ever happens to oneself. It always happens to other people. Like the time our neighbors, a husband and wife, met each other driving separate cars in opposite directions on our street, and proceeded to have a very loud argument between the two cars. Boy, was that ever a debacle. So glad I wasn't involved!

Liquidity crisis: Until recently, I would have told you that a liquidity crisis is what happened when my sixty-pound puppy wasn't put outside often enough. But apparently, 'liquidity crisis' is actually what happens when you can't borrow enough money to keep going. Next time your buddy asks you for $100, just until next payday, you'll know he's having a liquidity crisis. Let's just hope that his employer is not relying on commercial paper to make payroll, or his liquidity crisis will become yours. Which, when I think about it, is the essential circular nature of this whole mess.

Tranch: This is a silly, made-up word that big investor types use to explain why they can't look closely at the history of individual mortgages bought and sold by their companies. See, it's in a “tranch.” It's meant to evoke bundles, or “bunches,” which are sort of shrink-wrapped so you can't open them up and look in side. Someone once suggested calling them “faggots,” but that idea was quickly shouted down.

Toxic assets: Imagine that pirates Larry and Lunt from Jonah, the Veggie Tales movie, had successfully invested their prize money from the Mr. Twisty's Twisted Cheese Curls Sweepstakes in cheese curls, as they wished to do. And suppose that after they bought those cheese curls, but before they had a chance to resell them at a profit, they learned that the cheese curls had been manufactured in China (not Nineveh), and that they had high levels of melamine...

Mortgage meltdown: This is the same as subprime debacle, but a bit later in history, when everyone is feeling that it is not so funny anymore. It's like those neighbors shouting in the street are suddenly in your living room, and their car is parked in your driveway, and their trunk is full of those toxic cheese curls, and it turns out they are radioactive, not toxic, and they are going into nuclear meltdown!

Irrational despair: This is one half of a very small set of emotions which Wall Street stock traders are capable of (the other being irrational exuberance). Their severely limited emotional range literally controls our economy, while regulators feebly scold them from afar.

Economic collapse: In physics, there is conservation of matter and energy. Sadly, there is no law of conservation of money in economics. Money can simply disappear, and if enough of it does so, you have economic collapse.

Iceland: A small country in the extreme north populated by the descendants of Vikings which has recently experienced economic collapse (see above). If not rescued by other nations of the world, Iceland will have no choice but to replenish its coffers by raiding the coastlines of Europe and America. Guys with names like Sven and Eric Ericson, with Swedish Chef accents, will be burning our houses and raping our women. Also, they will be sending millions of emails that read, “Dear Friend, We would like to offer you a unique business opportunity...” (with Swedish Chef accents).

October surprise: As if having toilet paper in your trees and rotten pumpkins smashed in your driveway were not enough of a surprise, the October surprise is lore believed by stockbrokers and other Wall Street types (see 'Irrational despair,' above). Apparently, people who work in the New York Stock Exchange are among the most superstitious people on Earth. To a man, they take vacations each year in Ireland to hunt leprechauns, and can be found any time clutching rabbits feet, voodoo charms, saints medallions, and all manner of good luck items. Apparently, these denizens of the trading floor believe bad things happen in October, and in the way of many such prophecies, it happens to frequently be self-fulfilling.

So that, in a nutshell, is the lingo. Know it, understand it, use it wisely. And yet, one thing is still missing. We still don't have a comprehensive phrase to describe the whole phenomenon. I submitted my entry, “The Great Economic Shitstorm of 2008,” to Ben Bernanke, but I haven't received a response from him yet.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Financial Peace in Hard Times

Catherine Shaffer — Tue, 30 Sep 2008 15:08:02 +0000

Six months ago, I had plans. Lots of them. Career plans. Vacation plans. Financial plans. Then everything fell apart. My mother became ill. She had already been ill, having been diagnosed with cancer in 2005. However, her general health deteriorated drastically in March, and there followed five weeks of hospitalization, followed by a major life change. She moved in with me, and I became her primary caregiver.

One crisis followed another. When we thought we had her other health problems resolved, we learned the cancer was back. For a long time it seemed everything was getting worse, and suddenly we were spending more time in the Emergency Room than some of the people who actually worked there (or so it seemed). I started to feel like I was friends with the security guard who printed out my badge each time. Unlike on television, you tend not to meet the same doctors and nurses on repeat visits—in fact, over the course of maybe a dozen emergency trips, we never saw the same medical staff twice. Only my friend the security guard. In the middle of all of Mom's health problems, my husband fell ill, and also made a couple of trips to the hospital.

I am pretty sure there was a whole month where we had a doctor's appointment or a hospital stay every single day. One day, after a long and stressful summer, I decided that, for once, I was going to take my son to the pool with friends and relax. And so I did. I sat there in a pool lounger, knotted up with tension from my scalp to the soles of my feet, and things seemed slightly better. I told my friend, “I think I am starting to relax.” Then I got home and my neighbor told me that an ambulance had arrived to take Mom away. That's how my summer went.

Where am I going with this? Well, all my plans were dashed to matchsticks. The career plans got put on hold. The vacation plans went down the toilet. Everything was postponed, canceled, or ruined. Except for those financial plans. See, last year, my husband and I got serious about paying off all of our consumer debt, and getting on a robust budget that included savings for many of life's little surprises. I began keeping track of every penny we spent, and aggressively paying off our creditors. I used much of Dave Ramsey's program, and established a $1000 emergency fund. At first, it was difficult. With the increased credit payments, we were barely breaking even every month. Twice within the first six months, I had to dip into the $1000 emergency fund and then repay the fund.

Sooner than I thought, we sent in our last credit card payment, and shortly after that, our last car payment. All of a sudden we were debt free except for the mortgage. That was in March.

And you know what happened in March. So here's the thing. All of that planning and work carried us straight through to today. We've had a couple of automobile breakdowns, a couple of budget overruns, some ups and downs in income, and one very strange pet accident. We've eaten far more restaurant meals than any budget-conscious family should. Gas prices have gone up. Groceries have gone up. But we're okay. I was able to pay in cash for every unforeseen emergency, and focus on what mattered most—my family and my health. All of the sacrifices we made to get on top of our consumer debt were absolutely worth it.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

DVDs Freer than Free--No, Really, Really Free

Catherine Shaffer — Sun, 06 Apr 2008 03:00:38 +0000

I noticed Paul's interesting article (NEVER Pay for a Redbox DVD Rental Again ) about using Redbox codes to rent movies for free, and in theory, I am all for it. But we don't have Redbox nearby, and I would never manage to return a movie in 24 hours with my crazy life. Fortunately, I have a diabolical method of getting movies for free. Even free-er than Redbox free! Nowadays, I laugh as I drive by Hollywood video. Why did I ever pay $4 to rent a movie? Why, God, why?

Here's the secret. I use the library. I know that's not really a secret. It was even mentioned in the comments to Paul's post, but then quickly dismissed and/or ignored. I think the idea deserves to be revisited. See, most people assumed that you can't get the videos you want at the library, especially new releases. But I've been getting just about any DVD I could ask for from the library using the computerized request system. I combine this with my reading wish list, enter my requests, and a few days later, I get an email saying my DVDs are waiting for me. I even put in electronic requests for materials that are not on loan, because I am too darn lazy to go to the shelf and look them up alphabetically. I just walk up to the hold shelf, grab the materials with my name on it, zap them through the self checkout, and walk out without paying a dime.

The library has a full selection of new releases, and also popular television shows. We do maintain a netflix subscription, because there are some things we haven't found in the library. However, lately I have been experimenting with interlibrary loan for books. If the book is not found in the library catalog, you get the option to "search other libraries" and the system will look for your selection in the interlibrary lending system. I wasn't sure if this option existed for DVD's, so just now I went to my local library web page and searched for a DVD I was pretty sure they didn't have. Sure enough, I found it in a library in a neighboring town, and was offered the opportunity to request it.

Since I've been using the library pretty heavily, I've noticed something interesting. A lot of other people are, too! I have one book on request in which I started out as the 135th request. It may seem like, with a month-long loan period, I would never get the book, but when I looked at the record, my library owned 45 copies, and was in the process of acquiring dozens more. That means that the library is not as much of a free ride as we thought. They are a major purchaser of books, DVDs, CDs, and other media, using taxpayer dollars, and there's no need to feel guilty about using it. They seem to keep enough books in stock so that the hold queue is about three deep. So for a book with 140 holds, they owned 50 copies. That seems completely reasonable to me.

As it turns out, the hot books, movies, and cds are perpetually loaned out, and your only chance of getting them is to use the request system. (I always figured that mostly if I couldn't find it on the shelf, I couldn't get it from the library.) Waiting for things really hasn't been a problem, since new requests are coming up for me every few days. My biggest challenge has been keeping up with all the material I have requested. In fact, my Netflix queue has gone rather stale since we got a big batch of DVDs from the library. There is no limit on the number of items you can take out. You can keep DVDs for a week, and if no one has requested them, you can renew them nearly indefinitely. My library sends me an email a few days before materials are due, and I have made it part of my daily routine to pop in to the library web page and check my list of checked out items (up to 35 items right now!). If something is due that day, I try to renew it, or put it on the shelf next to the door to drop off on my daily errands. Often, at the same time, I swipe my holds from the hold shelf. (You do need a good home organization system for library materials if you are going to have a lot of them. I try to keep the DVDs near the TV, or on a shelf by the door.)

I don't know if I've talked you into using your public library more. I may have talked myself in to canceling my Netflix subscription! We already canceled our cable subscription and are frankly not missing it between DVD rentals and the odd iTunes purchase for very new TV shows. To ease the transition, at first we bought some current TV shows on iTunes for our son, but very quickly we weaned him onto older stuff we could get from the library. He is enjoying Looney Tunes now every bit as much as I did in my childhood, and we get them FREE from the library.

But if you're still with me after all of this, here is an extra bonus for Michigan residents. Libraries in Southeast Michigan are loaning out free tickets to area museums now through October. Tickets are available in twos or fours for a long list of museums both big and small, including the DIA and other major attractions.

Now, I expect the next installment in the Wise Bread DVD rental category will be about how to get someone to pay you to rent them. Anyone?

(Life has been pretty busy lately, but I'll be back soon with more entries in my real estate rental series soon.)

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

So You Want to be a Landlord? Part II: How Do You Actually Make Money?

Catherine Shaffer — Thu, 13 Mar 2008 23:31:35 +0000

I know we're not completely done talking about risk in this series (see the first post here ), but Paid Twice, from I've Paid Twice For This Already asks an excellent question with regard to the rent vs. buy debate. Namely, if you can save more money by renting a house than buying, then what is your landlord doing?

So I ask my readers - how does this work? Anyone know how renting can be so much less expensive than buying, yet the home’s actual owners don’t lose piles of money?

You can read the whole post over at Someone Had to Buy the House You Rent.

The truth is that rents sometimes do not cover the monthly costs of owning the rental home, so how is it that these real estate gurus make their money? A lot of people think that it must involve unfair tactics, such as buying investment property at below-market rates from gullible elderly people, but there can't possibly be enough gullible elderly people to keep the whole industry going. Others think it must be because all of the property is fully paid for, or that it was financed for better terms than today's rates. However, economically speaking, rental rates in today's dollars have to somehow make sense with today's property values and interest rates. And remember that not all rental property is residential. There are a lot of investors out there buying office and industrial space to rent out. How does it all work?

What we need here is a calculator and the back of an envelope. The first thing we need to do is identify the two different sources of income from investment property. The first is equity appreciation. This is a primary strategy for some real estate investors, who target undervalued real estate, or real estate in areas likely to increase in value, and then buy and hold until they decide to sell. There are many types of rental property, and even in a down market like today's (or especially in a down market) you can make money this way.

The second income stream is rents. A lot of landlords buy up properties and hold onto them indefinitely, living off the rents, which will increase proportionate to the finance expenses of the property the longer you hold it. Although some landlords may focus on one strategy or the other, the truth is that both are in play for any given property.

Getting out the envelope, let's make some assumptions (and remember the back of our envelope is small, so we are not going to to be excessively detailed about this).

We are buying an investment property today for $200,000, with a $60,000 down payment (30%) and financing it for 6.75% for thirty years. The going rate for a mortgage on your primary residence today is 6.13%, so 6.75% should be about right for an investment property.

First, the monthly expenses.

Monthly mortgage payment (principle and interest): $908.04
Taxes and insurance (50 mills): $483.33
Water utilities (typically renters don't pay for this themselves): $50
Maintenance (sinking fund*): $166
Total: $1607.37

The rent you can charge is determined both by market demand and costs. This particular house is a two bedroom, one bathroom starter home, and $1100/month is all you can get for it.

Your monthly cash flow for the house is -$507.37. Ouch!

Why would anyone do this? Well, let's look at things a different way, by checking out your profits.

First, there's your equity appreciation. Let's go with the doomsayers for now and assume you can barely keep up with inflation on your investment, so it's going to appreciate at a modest 5% per year. (Feel free to play around with different numbers on your own time.)

Market value up 5%: $10,000
Rent collected: $13,200
Interest Payments: -$9450
Property taxes and insurance: -$5800
Maintenance: -$2000
Net profit: $5950

That's a 9.9% annual return on your investment of a $60,000 down payment. Not bad!

Now, this doesn't "feel" like a profit to the landlord because much of it is tied up in unrealized capital gain, and the monthly payment includes principle, so some of the monthly "cost" is money he's paying toward his debt liability. In other words, the small principle payment ($1492.05 the first year) is not really "cost." That is money paid back to himself.

There are also income taxes on the $13,200 in rents to be considered. However, the IRS gives you a lot of deductions for owning rental property, including the ability to depreciate the entire property (the structure of the building, that is, not the land) and appliances or equipment you use for your rental business. For that reason, the effect on your bottom line at tax time could actually be to reduce your tax liability. (I am deliberately avoiding a full discussion of taxes here. That's another post.)

Although we could decrease that 9.9% annual return further by taking into account income tax, when looking at comparable investments, such as the stock market, it is customary not to deduct what you expect to pay in income or capital gains tax and so we won't do that here, but simply note that a 9.9% annual return compares quite nicely to what you can expect from stock market investments and mutual funds. Most people should be glad to get around 10% per year on any investment, before taxes, brokerage fees, and inflation.

And this is why landlords lord lands. It doesn't require dishonesty, just a healthy tolerance for risk (which we'll talk about next time) and occasional conflict. Oh, and about $60,000 cash.

*This assumes you are replacing your roof, furnace, and exterior paint or siding and windows every thirty years, and you are doing some miscellaneous repairs each year.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

So You Want to be a Landlord? Part I

Catherine Shaffer — Mon, 10 Mar 2008 16:50:24 +0000

With dropping home prices, a long term investment in real estate is looking pretty attractive. Whether you want to buy rental property outright, or renting is your plan B when your house doesn't sell, the most important thing you need to think about before you become a landlord or landlady is risk. The concept of risk in renting property tends to draw blank stares. After all, you have insurance on the property. You have a lease. What's the problem?

Understanding the answer to that requires a shift in your thinking. Most of us are renters at some point in our lives, whether in college, or while we are working that first job, saving up for a down payment, or in a transitional period in life. When you are renting, it seems like the landlord has all of the power. He chooses the the paint color on the inside of the house, what trees or shrubs you have in your yard, when your lawn gets mowed or your driveway cleared of snow. When your toilet breaks or your roof leaks, a repairman shows up, paid for by your landlord. When your rent is late, even a teeny tiny bit, that landlord is on your butt like white on rice. And when your lease is up for renewal, the rent goes up as inexorably as the rising sun.

And yet, when you trade places, and suddenly you are the landlord, as in a horror movie, you realize the tenant has all of the power. The tenant physically occupies your property. They can damage the structure or the appliances. Their pets pee on the carpet and chew up the woodwork. If they sell drugs, the police could literally seize your property. And the tenant controls that ultimate item of power, the rent check, which you desperately need--on time--in order to pay the mortgage each month. In fact, unless you are very lucky, the rent check probably won't cover the mortgage. Worst of all, if your tenant suddenly turns deadbeat, it can take months to evict them from the house, and all the while that mortgage payment has to be made, on time, every month, or you could lose the house to foreclosure. A myriad of laws and advocacy organizations protect the rights of the tenant, but as a landlord or landlady, you are always the bad guy, and if things get ugly, you will be pretty much on your own.

Are you scared yet? You should be. If you decide to go ahead and become a landlord or landlady for the first time, here are some tips for controlling that risk.

1. Screen your tenants. You will be tempted to rent to the first non-scary person or couple that puts in an application, but be choosy. Make sure that you do a credit check and check references on your prospective tenant. If those thing don't check out, don't rent to them! This is no time to be "nice." Don't rent to the person who deserves the house. Rent to the person who can pay for it. Find out what their income is and do the math.

2. Don't rent to section eight tenants. This is not a rule for life, just for your first experience as a landlord. When you have dozens of units, and enough cash reserves to carry you through some unexpected vacancies, then you have my blessing to take on section eight tenants. In fact, please do. But your first time out, you should turn down section eight applications.

3. Get help from a lawyer. Spend a few bucks to get your lease written up by a well-qualified attorney.

4. Avoid situations that seem strange or "funny" to you. Use your spidey sense to weed out applications that seem weird, strange, off, or otherwise not right.

5. Obey the fair housing laws. You are not allowed to discriminate on the basis of race, color, national origin, religion, sex, familial status or handicap. Obey this law scrupulously to reduce your legal risk.

6. Have proper insurance. Don't skimp on insurance for this very valuable asset.

7. Rent to people with pets. Although pets can do a lot of damage to the house, that effect is balanced by the fact that pet owners tend toward "family" values. If you have a Mom, a Dad, a kid, and a dog, you're probably going to get a rent check every month. As a bonus, your pool of applicants will be larger, because most landlords don't allow pets. Think of it this way. Would you rather replace a carpet for $500, or evict someone who was growing pot in the basement? If you've got an applicant with good references, good credit, a steady job, a family, and a pet, take it as a good sign. Obviously, it goes without saying that you should not rent to shady-looking people just because they have pets.

8. Maintain good relations with your tenants. Respect their space. Respond promptly to maintenance calls. Be understanding of the occasional rent check that arrives late. Don't sweat the small stuff, because a bad tenant is so much worse than you can possibly imagine. Remember that they are more afraid of you than you are of them.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Longtime Mac Users Punished for Loyalty

Catherine Shaffer — Mon, 18 Feb 2008 14:53:24 +0000

I'm an unapologetic Mac-junkie. I've got an old, dead Mac laptop that I can't bear to part with from 1996. Our iMac is still up and running, having recently been put out to pasture after a disk drive malfunction. I eagerly bought one of the early iPods, and still use it all the time. And I'm writing to you now from my G4 Cube, which was a gift from a friend years ago. I've watched other Mac lovers fall away from the True Faith, one-by-one, but I never thought it would happen to me. However, yesterday when we brought home the newest addition to our Mac family, an 80 Gb iPod Classic, it would be my turn to be disillusioned. After you pay the hefty $249 price tag, plus an extra $30 for a wall charger (they used to bundle those in for free), plus $55 for the composite AV cable for your TV, plus any other little extras you may need, there is a hidden cost that blows up in your face when you get it home.

In short, the new iPods are not compatible with any operating system before OS 10.4.8. There's a good discussion of the problem here. Basically, if you don't have a newer operating system, you have to buy it before you can use your iPod. If you can't run the newest OS, Leopard, you need to call Apple tech support and they'll graciously sell you the outdated and obsolete Tiger for $129. You can imagine what I said to this gracious offer, after plunking down $350 for the device.

In a way, I should have seen it coming. I had recently spent several hours trying to get my brother-in-law's two new iPods (shuffle and nano) to sync with his PC. But I assumed that it was a Mac/PC thing, and that it could never happen to me. And yet it did. My computer stubbornly refused to recognize the device.

Now, I've seen the criticism that some of those True Believers have directed at those of us disillusioned ones, left behind by the shiny new OS's. We should have read the system requirements on the box.. I admit it. I didn't. There are two reasons for that. One is that after so many years of being able to count on my computer to handle a variety of devices without complaint, it simply never occurred to me. The iPod is a standalone device. All I need my computer to do is exchange data with it. And since my computer has no problem running the newest versions of iTunes and Quicktime, I never expected that there would be any compatibility issues. Moreover, it's become standard and expected for all of these handheld devices to connect to any computer via USB cable. I would never think to check for system requirements for my digital camera or my cell phone.

The other reason is more practical. I never got my hands on the box until I paid for it. We had extensive conversations with the salespeople, in which compatibility never came up, then they unlocked a cabinet, took a box out, and carried it to a cash register. I don't blame them for this. I think they were under the influence of the Mac "it just works" mind-control field as much as I was. Neither do I blame them for not handing me the box and letting me wander around the store with it.

Ultimately, Apple has failed to provide a technical justification for this. The technical support representative made it sound like it was a law of nature or something. "You can't make a device be compatible with an older computer," she said. Sort of like you can't make a zebra be friends with a crocodile? Huh? Wtf? This is obviously just an old-fashioned wallet grab. I can see the marketing execs, in their board room, poring over numbers representing people who were still using older versions of Macs and operating systems. "What if we could force them to buy a new operating system with their iPod? Better yet, maybe they'll decide after all that trouble to buy a new computer. What a slam dunk!"

In fact, I suspect not merely a failure to support the older OS, but some kind of deliberate cloaking of the device, forcing it to be invisible to the older OS. Why else would the computer not even be able to see that there is something plugged into its USB port? And if that's the case, perchance this nasty little easter egg is also turning on accidentally with certain other computers and operating systems, which might explain why my brother-in-law's children were unable to use the iPods they received for Christmas on their PC.

What all of this comes down to, for me, is that I am tired of the platform wars. Enough is enough already. I'm tired of manufacturers trying to force me to buy equipment I don't want and need, or pointless "upgrades" (I shudder to think of my old cube trying to run a bloated newer operating system), just so that I can listen to a song, or download TV shows from iTunes (which, by the way, I was planning to do extensively). I'm tired of trying to exchange text files with people who have some subtly different document format, and seeing all of my formatting turned into gibberish. I'm tired of declaring loyalty to one manufacturer or another just because I bought their product.

When I take my car in for repairs, the mechanic never tells me that my older model car is "no longer supported," or that my new tires are incompatible with my older chassis. I am not forced to stop using my refrigerator because my new food is suddenly incompatible with it. And while I'm on the subject, I don't understand why I need a desktop or a laptop computer at all to use my iPod or my other smart devices. Has no one ever thought of making an ethernet or wireless adapter so that we can download our tunes directly from the internet? Of course not! Because then people might decide they don't need a $2000 laptop just so they can listen to music in the car. Slam dunk!

We ended up connecting the new iPod to a truly ancient PC that we have in the basement, then transferred the video files through our home network so that my son could finally watch his favorite cartoon on it. But we are not pleased.

This is a message to all of you entrepreneurial geeky types out there. I want a smart, hand held device that "just works--really." I want it to be platform agnostic, so that I can use any file type with it. I want it be robust, long-lasting, and durable. I want it to do a lot of jobs for me, but be ridiculously simple-minded to use. I want it to come with a decent warranty and be totally independent so that I never have to connect it to my computer unless I want to. You give me this, and you've got a customer for life. And I have a feeling there are a lot of other folks out there who feel the same way.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Is Six Figures Really That Much?

Catherine Shaffer — Wed, 13 Feb 2008 16:08:48 +0000

There's a fascinating discussion going on over at Free Money Finance about families who are struggling to get by on six figure incomes. The overall tone of the discussion is wincingly critical. And I can understand why. For a very long time, the term "six figure" income was used to indicate that someone was very well-off. But the buying power of a six figure income has been eroded quite a bit by inflation, since my childhood, when only basketball stars and corporate CEO's made six figure incomes. Nowadays, six figures is still above average, but its buying power in terms of lifestyle may have eroded even more than the value of a dollar, as those of us within striking distance of six figures have learned to our regret.

My husband and I earned $96,000 from our respective jobs last year. This is our best year, yet. But this year, like every year, we are looking at that number and wondering where it all went. We aren't profligate spenders. We're both lifelong tightwads who live in a modest 1300 square foot home and drive two older vehicles. One is ten years old, the other five years old. We send our child (he's in the "middle" between the two cars in age) to public schools, and we buy most of our clothes either on extreme clearance or at resale shops. When we make a major purchase, we do research and look for great deals.

Are we struggling? Far from it. We contribute to retirement accounts, give to charity, enjoy one or two modest vacations per year, and have made good progress paying down some debts from previous, leaner years. We are not living paycheck to paycheck. But barely...

See, this six figure lifestyle isn't all it's cracked up to be. My minivan has a rust hole all the way through one of its doors. And right now I am wearing a sweater that is fraying at the cuff. Where is my Mercedes Benz? And why can't I afford to shop at The Gap or Eddie Bauer for all our clothes?

If the American dream is living in a nice house in the suburbs (3 bedrooms, 2 baths, finished basement rec room with "man cave," swimming pool in the back yard), driving two newer cars, taking family vacations to the Grand Canyon, having a "date night" once per week, cell phones for each family member, flat screen TVs, buying your clothes, furniture, and appliances brand new--well, I'm sorry but $100,000 year doesn't cover it. Not even close.

If I have to shop garage sales, clip coupons, and rinse out ziploc bags to afford my modest, working-class lifestyle on just under 100 grand, how the heck would I be able to send two children to college? This is the stuff of nightmares. We are working hard right now to pay off old debts (we are almost done), to build up emergency savings, and try to get a tiny bit ahead. But it's hard. Every time we think we're making progress, we get knocked back by something like a major car repair, a leaky roof, a sidewalk assessment, or a $4000 veterinary bill (yes, that actually happened to us). I'm just hoping that between whatever we can scrape together for a college fund, and what we can earn when the time comes, that we can keep up with those bills. Maybe by 2018, colleges and the government will no longer consider families that earn $100,000 to be "rich," and will make some financial aid available. I'm not betting on it.

Here are some amusing suggestions from FMF's comment thread:

Move to the inner city for less expensive housing.

Get rid of your cable TV and/or premium channels.

Move to another area of the country.

Drive cheaper cars.

These are all perfectly reasonable suggestions for cutting your costs, but why should someone who is making six figures have to live in the ghetto and drive old cars? And if premium cable television is not intended for six figure households, then who is it for--those who make $1,000,000/year or more? If new cars aren't for middle class Americans with average or above average incomes, then why are all those commercials showing up on my favorite TV shows?

Something has changed since the 1970's when Mike Brady was able to support his wife, six kids, the dog and the housekeeper on a single income in relative style and comfort. Instead of criticizing people in the upper income brackets because they can't afford their lifestyles, maybe we should take another look at our expectations. Why are we all getting poorer? What is a realistic middle class lifestyle? Do we even know anymore?

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

How I Grocery Shop

Catherine Shaffer — Mon, 11 Feb 2008 15:10:40 +0000

Being Frugal asks how we grocery shop, and I thought it was a pretty interesting question.

First, I will commit heresy by saying that I no longer write a full weekly menu. Pause for stunned silence. Yes, that's right! Instead of writing a menu each week, as I have done for several years, I recently switched to using the "pantry principle," an idea from The Complete Tightwad Gazette (affiliate link). The concept is that you fill your pantry with foods that you use frequently, then plan meals out of the pantry, rather than the newspaper fliers.

For quite a lot of years, I wasn't such a good meal planner. Being a Busy Mom, I would go to the store, often without a list, and buy stuff that looked good to eat, sort of putting together meals in my head. You can actually do okay with this, and I always tried to shop sales. However, I had a lot of trouble getting meals on the table in the evening, and it happened quite often that I was missing some crucial ingredient for a meal I wanted to make.

The next step in my evolution was being a meal planner. I planned a full week's worth of menus at a time, then shopped for what I needed for that week. I saved money by buying only what I needed, and by using the weekly sales to plan my menus. It also became easier to get dinner on the table each day, especially when I came up with the concept of the regular rotating menu. For example, Sunday was "chicken day," Monday was "spaghetti day," etc. One pitfall was that I tended to overplan. I would carefully plan seven meals, and then we would end up cooking and eating four or five of them. Sometimes that meant wasting fresh ingredients. I tried to compensate by leaving "leftover days," but the truth is you never know whether you're going to have leftovers until you have them, so it's hard to plan ahead for leftovers unless you are psychic.

Eventually, I wanted to save more money, and I had encountered by then Amy Dacyczyn's pantry principle. Frankly, I was kind of skeptical at first, so I continued planning weekly menus while making a bigger effort to shop loss leaders, use coupons, and stock up on frequently used items. It took a couple of months to fully stock the pantry and freezer, but we eventually got to the point where I had a good selection of foods on hand, it was all organized, and I was rotating stuff so that things did not go bad or get wasted. At the same time, a different thing happened. I started making much more of an effort to use up everything--everything--rather than throwing food away. I learned the art of leftover cuisine and began improvising and substituting lots of things in recipes. And it worked! When you are being very careful about using every bit of food, you don't need a lot of "de novo" menu ideas, because 3/4 of your dinners will be made with leftover bits of this and that. And that's when I converted to the pantry principle. Nowadays, I plan my dinner the night before or the morning of, based on ingredients we have in the house. If my family wants something different, or if I want to try a new recipe, I put the extra ingredients that I need for it on my grocery list and get it next time I go to the store. So, in a sense, I've come full circle. Except now I am "shopping" from my home pantry, refrigerator, and freezer, instead of from the grocery store.

One neat thing about this method is that it's a double bonus. Firstly, whenever I find something in the freezer or pantry that I forgot about, that's almost too old to keep, it's like getting food for free! Secondly, it takes some of the pressure off in terms of meal planning. I just rummage around and come up with something like spinach, mung beans, and mystery meat from the freezer. Okay, it's a meal!

So, with that as a preamble, here is how I'm doing my grocery shopping nowadays. I have a subscription to my local paper, so each Sunday morning I grab the paper and cut out the coupons that I want, erring on the side of keeping ones I'm not sure about. (Lately, the coupon inserts have been pretty lean.) At that time, I look through the Walgreen's and CVS ads, but I don't make any specific plans. I make a mental note of deals that look good. I also check out the Meijer sales. I put all three circulars in my magazine basket and wait for the other grocery fliers to show up later in the week, and I glance through them as they arrive. Meanwhile, I check various online sources to see if there are any really hot deals, especially at CVS or Walgreen's. At some point in the week, I'll make a run to CVS, Walgreen's, Rite Aid, a dollar store, or another store to pick up an advertised sale item or two. It's my personal rule not to go to every single store every week, so if two stores have equally good deals, I pick one and stick to my choice.

On Thursday night, I plan the grocery outing. My favorite way to make a grocery list is to include the prices of the items, either exact prices from my price book or memory, or estimated prices. I find that for me the best way to stick to my grocery budget is if I actually know how much I'm spending in advance. That way, I can do my cutting on paper, rather than getting all confused in the store. I don't always have time for this, though. I pull out coupons I know I'm going to be using, but I also take my coupon organizer into the store with me, in case I see unadvertised specials or clearance deals.

First I go to Sav-a-lot, which is our local low cost grocery, and get produce and some other things at this store. I have mixed feelings about Sav-a-lot, because my hubby once found a cockroach in a package of cream cheese. I decided to give them another chance (roaches happen to the best of us), but if it happens again, we are out of there. After Sav-a-lot, I usually go to Kroger and get sale items, there. Lastly, and this is the step that gives me trouble, I try to go downtown to a butcher that carries locally raised, organic meats and get a couple of chunks of meat. This ends up being pretty inconvenient, usually, especially after I've been to two stores already.

Once every two or three months, I'll go to Sam's Club and stock up on flour, yeast, olive oil, and other select items. A couple times a year, I drive to downtown Detroit, which is an adventure, and buy meat in bulk at Detroit's Eastern market (I promise to blog it next time I do). We get a great deal on the prices, and although I don't know much about the history of the meat, we choose a lot of lamb and goat so that we know at least it's grass-fed, not raised on a feed lot. I also patronize Trader Joe's on occasion (although it's so seductive in terms of impulse buys), as well as some of our nice local markets.

Lately, I'm really feeling like I spend too much time going to multiple stores, so I'm experimenting with limiting myself to two stores per week, and buying more from each one, so that I can be more efficient. I've also joined our local food cooperative, which was a chunk of change up front, but should save us money in the form of member rebates and discounts on the purchase of dry goods in bulk. It will also allow us to add more organic foods without stretching the budget.

Our monthly grocery budget is $350, and our "eating out" budget is about $150 (that includes every trip to the vending machine, every lunch, every pizza, every bag of movie popcorn), for our family of three. The grocery budget also includes about $90/month in dairy products we have delivered from Calder Dairy, which costs a bit more than grocery store prices, but not as much as you think. (About $5/gallon for glass-bottled, hormone free, gently pasteurized, amazingly delicious milk.) Also in the "grocery" category are all of our toiletries, OTC meds, personal hygeine products, soaps, shampoos, batteries, plastic bags and wraps, paper products, beer and wine, etc. So it is a pretty challenging budget.

And that's it! It's pretty complicated, really, but the more I get into the swing of it, the less time consuming it is. How do you shop for groceries?

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Marketing Messes With Your Head

Catherine Shaffer — Mon, 14 Jan 2008 18:11:59 +0000

A new study out today in PNAS confirms what we always suspected was true. The higher the price you pay for a product, the greater your subjective experience of pleasure in the product. For a tightwad like me, that's a no brainer. Of course people think that expensive stuff is better. Most of the time, I feel a smug satisfaction knowing that I can enjoy the same quality for a fraction of the price, or free. But here's the kicker. That pleasure experience is real, according to Caltech researchers Hilke Plassmann, John O'Doherty, Baba Shiv, and Antonio Rangel. At first I felt that this was clearly the devil's work, but as I was polishing the cobalt blue enamel on my Aga range this morning, I had a change of heart. Maybe, sometimes, pleasure is worth the price we pay for it.

Take for example that Russian caviar I was served at an intimate New Year's soiree by a friend. Sure, I knew that sturgeon caviar from Russia was not something you could find at Kroger for $1/can. But I almost choked when, halfway through the appetizers, the hostess mentioned that the one-pound tin had cost $1000. My first impulse was to protest that this was too much to spend entertaining our humble selves. But the can was already open, and half of it in my stomach. Instead, I did what any reasonable person would. I ate more! Did it taste better after that little revelation? Oh, God, yes.

And consider that Aga range I mentioned above. It retails for over $5000. (Their higher end products cost much, much more.) Even though we've been unfailingly thrifty about most of our purchases, we settled on the Aga because we wanted a quality professional range, and because it was cute. (No, really, it is extremely cute.) Now, it turns out that only one of the seven functions on the multifunction oven works properly, and that apparently you have to wait upwards of two months for parts to be delivered. (Indeed, it is the Jaguar of ovens.) I could have had better function in a $600 range from my neighborhood appliance superstore. In fact, I said as much to the customer service representative, in emphatic tones, when I reported that the heating element in the boiler was literally cold to the touch after ten minutes of “preheating.” It speaks to the degree of mutual self-delusionment of the premium product marketing phenomenon that he attempted to convince me that it was taking an hour to heat up because it was better than other ranges. And that I almost believed him. But do I love that hunk of metal? I sure do, yep.

Or how about that $1500 quality purebred mastiff puppy I purchased last year? Just fifty percent more than a tin of caviar. When I picked him up, the breeder showed me the “old English” bloodlines in his pedigree. The price included a great deal of genetic testing for known problems in the breed, plus some of his early veterinary care. He's a great dog. The best. Could we have brought home a great dog from the humane society? Absolutely. In fact, eight months after we brought Chewbacca home, our neighbors gave us their puppy of the same breed, and he's great, too. Do we feel that our 1.5 G was wasted on Chewie? No, actually. We should feel that way, but we don't. Chewie's our tuxedo dog. Courage our dog in handmedown dungarees. He will always be the object of affectionate joking about theoretical mongrels lurking in his pedigree.

My first impulse upon hearing about this story was to wonder what we can do to defend ourselves from price-point induced mania. But the answer is clear when you think about it. When you've saved and planned for that big purchase, know what you're paying for. And if some of that is not strictly objectively measurable in terms of quality or quantity, is your satisfaction and enjoyment worth the price? That's up to you.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Scammers Stole All of My Grandma's Money

Catherine Shaffer — Thu, 03 Jan 2008 15:00:53 +0000

The trouble started innocently enough. For as long as I can remember, Grandma bought a lottery ticket each and every week. She promised us, her children and grandchildren, that when she won (not if), she would solve all of our financial problems. Grandma was the ultimate giver. She was generous with her time, her love, and especially with food. A child of the Great Depression, she has a love of abundance, and a dread of hunger and deprivation. It is her personal tragedy that these motives led her to total financial ruin late in life, as she willingly handed her life savings, over $100,000, to con artists and thieves.

In addition to buying lottery tickets, Grandma liked to send away for offers and sweepstakes she found in magazines and newspapers. This is when things began to get bad. Naturally, she gave away her phone number and address when she filled out these forms, and that led to receiving more offers in the mail, which she filled out in turn. She loved the idea of winning a lot of money, and she was a regular with Publisher's Clearing House. The thing is, some of these sweepstakes offers are less than honest in their presentation. They come packaged to look as if you've already won something, and you only have to send in for your winnings. The outside of the envelope trumpets "You've won $10,000 [Your Name Here]!" and you have to read carefully to find out that you haven't actually won anything. This is relatively harmless when all they want to collect from you is your address and phone number, but not all of the mailings were so benign. Grandma began to get mailings asking for entry fees in order to win the big prize, and she sent these willingly, assuming that for her small entry fee she was going to get a big payout. She never seemed to understand that this was a lie.

Eventually, pure scammers got a hold of Grandma's address and phone number. They sent letters asking for thousands of dollars in exchange for some promised jackpot. Grandma sent it. She began to go through her savings accounts, spending money rapidly on one scam after another. My Aunt saw what was going on and became alarmed, but she could not convince Grandma that these people were stealing the money. Although the activity was illegal, there was no way to track down the scammers or hold them accountable. She convinced Grandma to change her phone number, but Grandma simply gave it away again, and soon enough the scammers found her again. My aunt, desperate, contacted the state attorney general, who tried to help by personally calling Grandma to talk her out of giving away any of her money. This didn't work. Grandma was convinced, remember, that it was not a matter of if she would win the big jackpot, but when. It's a fair bet that she was also a full-fledged gambling addict by this point--about five years ago, at age 85.

The scamming continued, and Grandma blew through her savings at a rapid rate. The scams became increasingly less subtle. For example, someone would send her a check for $3000. Then the someone would call and tell her they made a mistake, and if she would return their $3000 (by personal check), they would send her $6000. Can you see how this works? The original check is bad. So it bounces, and Grandma has sent them $3000, and not received anything. Of course she never hears from them again. Eventually, all of her money was gone. Over $100,000.

This is the point in the article where I'm supposed to tell you what to do about this, or how to keep your parents or grandparents from being scammed. The problem is, I've got nothing. If your loved one will not defend him or herself, then there is nothing you can do but watch it happen, like a car crash drawn out over a decade.

You could look at this from the outside, and say that the problem could be solved this way or that way. Why didn't someone seize power-of-attorney over Grandma's finances? Well, my Aunt tried, and didn't succeed. The courts were not able to find Grandma mentally incompetent, although they were as horrified by the situation as anyone. My Aunt merely permanently damaged her relationship with her mother, replacing love and trust with bitterness, anger, and resentment. My Aunt also tried things like talking to the bank manager, asking him not to allow Grandma to withdraw all of her money. Unfortunately, there is no way within the law for the bank manager to help with this. And of course she tried talking to Grandma. Tried. And tried. And tried.

Recently, Grandma was diagnosed with Alzheimer's, which finally sheds some light on her bizarre behavior. She is starting to receive treatment. But nothing will bring her savings back. She is penniless, and has stopped sending money to scam artists only because she has nothing left to send. Her health is very poor, and she could benefit from a home health aid and a housekeeper, but the money she would have used to pay for these services is gone. She will be taken care of, because she has children and grandchildren who love her. But that's not what she wanted. She wanted to take care of us.

I don't think there's anything we can do, or could have done, individually, to keep this from happening to her. But she's not the only one. Can we change the law to be tougher on scammers, to crack down harder on misleading mailings or phone calls (none of this happened on the internet)? Can we do a better job protecting the privacy of senior citizens and other vulnerable populations? What about tweaks to banking laws to prevent people from being taken in by bad check scams? There has to be some way to hold these thieves accountable, and get back money that was stolen.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

You're a Chump if you Pay Full Price for That

Catherine Shaffer — Sat, 29 Dec 2007 19:56:29 +0000

Couponing and bargain shopping are not for everyone. It takes some time to clip the coupons, organize them, and keep track of sales at all of your favorite stores. But since I've gotten into it, I realized I was missing out on some very simple deals. A number of retailers and manufacturers run perpetual sales or coupon deals on products such that you would be a chump to pay full price for them.

I know I was a chump for many years, paying full retail price when I could have gotten the same thing for as much as 50% off. Here's a short list of items I've come across in my rounds that I never need to pay full price for:

Vitamins and supplements under brand names such as Nature Made, Nature's Bounty, Sundown, and store brands like Meijer regularly go on sale as "buy one, get one free" or BOGO. You can either stock up on your favorite brand when it's on sale, or simply buy whatever is the best deal when you need it. A big bottle of fish oil capsules typically runs $12-$15 at regular price, so without the BOGO deal, you are paying quite a lot for your supplement.
There is almost always a sale, deal, or coupon promotion going on for name brand batteries such as Energizer, Duracell, and Rayovac. I never buy batteries unless I can get at least a dollar off with a coupon, preferably combined with a sale price, such as $5.29 for an 8-pack of AA's. I really was a chump all those times when I paid the full $9 price for the same product.
Tide laundry detergent goes on sale on a regular cycle. You can't always find a coupon for it, but it's obvious that Procter and Gamble are not expecting you to pay $12 for a 40 load bottle. We like Tide, so I wait for it to go on sale for $5.99, and use a coupon if I have one.
Brand name cold remedies and other over-the-counter medicines like Tylenol and Robitussin have coupon promotions running all the time. Sometimes the coupon is right on the outside of the package, but the cashier doesn't always peel it off and scan it, so make sure you get your credit for it. Generics are usually a better deal, even after coupons, but if you save some of those coupons that are floating around and use them with a sale, you can get the name-brand cheaper than the generic.
Unless you have a sensitivity or other reason to be brand loyal, you can almost always get your contact lens solution on sale or free. Right, free. Since I've been looking, I've found a couple of free-after-rebate deals on contact lens solution. Even if you can't find an amazingly great deal like that, you can usually find a sale for $2 or $3 off. If you are brand loyal, wait for your favorite brand to go on sale, then buy a 3-4 month supply.

This is just a small selection of the numerous products that are overpriced so that they can become "bargains." Once you start looking for these deals, you'll have your own list. In addition to individual products that you can almost always buy for less than full retail price, there are a number of store promotions and other easy deals you should be aware of.

Anything from JoAnn Fabrics is at least 40% off. Every single week, JoAnn's publishes a coupon for 40% off any regularly priced item. Additionally, they have weekly sales, rotating through most of their stock. JoAnn (whoever she is) doesn't expect you to pay those high retail prices. You can get 40% off any time, unless it's one of those weeks where they have 50% off. If you can get more than one copy of the circular, you can get more than one coupon, and those are good for separate items in the same transaction. Or, if the cashier balks, have him or her ring you up separately. We have two JoAnn's stores here, and one of them stocks the circular at the front of the store, so you can pull out as many coupons as you want (I take my scissors with me to the store). The other store does not, although they are bigger and stocked better. If i need to go to the big store, I stop and get extra coupons at the small store first. It kills me to think of all the times I paid full retail price for a fabric or other item from the store, not realizing that I could have used a 40% off coupon. I am even a former JoAnn's employee, and I didn't know that. (Although at the time, about fifteen years ago, I don't recall ever seeing coupons come through at the register.)
I don't usually shop at Michael's, but I've noticed that they have the same ongoing 40% off coupon deal that JoAnn's does. So you should be able to get anything at Michael's for 40% off. I actually went shopping there recently without my coupon, and was kicking my own butt all the way home, because I could have saved at least $10 if I had brought it.
Similarly, Linens and Things and Bed, Bath, and Beyond run perpetual 20% of coupon promotions. These coupons are usually good for sale and clearance priced merchandise, although there is a list of brand names at the bottom that it does not apply to. So almost anything you buy at these stores, you can get an additional 20% off.
Lowe's and Home Depot don't run coupon promotions all the time, but a couple of times a year, they send out coupons such as $10 off $50 or 10% off. I have also heard (though I haven't tried this) that Lowe's honors competitor's coupons. So even though you can't always count on getting a deal at these stores, if you have a project you are planning, it may be worthwhile to wait for a coupon to turn up. If it comes in your Sunday paper, run out and buy several more papers. Then you can use the coupon for several items. For example, when we were buying paint for our house, we scraped together several coupons, and divided the purchase so we would be able to use them all. Those coupons can really add up to a lot when you are working on a big project.
Likewise, Cabela's often has coupons for a dollar amount off of your purchase above a certain price. If you are planning a major purchase of outdoor recreation or hunting equipment, don't pay full price at Cabela's. (You'll notice that the prices are on the high side anyway.) We got new coupons in the mail from Cabela's nearly every day for a while leading up to Christmas.
Free Money! Many stores print out special coupons with your receipt. It's shocking how many people throw these coupons away, or forget to take them. Every time I use the self-checkout lane at Kroger, I find a coupon someone forgot to take with their purchase. Last time, the coupon was "$3 off your next order." I used the coupon immediately for my own purchase. People, this is free money. I'm sorry to say this, but if you leave those coupons behind, or throw them out with your receipt, you really are a chump. Put it in your wallet next to your other money, and use it next time you shop at the same store. In my area, these special coupons (called catalinas by expert couponers) are available at Kroger and Meijer stores. So keep your catalinas, and be on the lookout for ones left behind by other shoppers.

These are just some of the easy deals that I've become aware of. It doesn't take a lot of effort to save money on these things. Once you start looking around, you'll make your own list. Many retailers and manufacturers are using these tactics to get people excited about buying a product for what they think is an amazing price. And some people will actually pay the inflated price, not knowing that they can get it for half the price next week. All of this maneuvering makes me a little bit tired, and I've come to really appreciate the "every day low price" policy of stores like Trader Joe's. However, Trader Joe's doesn't have everything, so it's a good idea to get familiar with the pricing strategies for products you buy frequently. Of course, once you get used to saving money on these "easy" deals, you may decide you don't want to pay full price for anything. Thus, a couponer is born.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.

Reusing Your Christmas Cards

Catherine Shaffer — Fri, 28 Dec 2007 23:37:38 +0000

After the holiday dust settles, the question of what to do with received Christmas cards can induce fits of guilt. I am sure that there are some super-organized people out there that file each and every Christmas card by year and by the name of the sender, and get them out periodically to reminisce. The hypothetical existence of these people makes the rest of us twitch when we attempt to toss our old cards in the trash. Thus begins the shadow life of the Christmas card--buried in a drawer somewhere, fallen on the floor under the desk, stuffed in a box and stored in the attic or the basement. Some of us feel okay about tossing them in the recycling bin. That's environmentally friendly, right? But still it feels rather disrespectful.

What if there was a way to honor the beauty and intentions behind your received Christmas cards, while at the same time allowing you to get rid of the darned things without guilt? By cannibalizing the cards your friends and family send you, you can save your conscience, save the earth, and save a buck.

This all started with my annual December 26 bargain hunting mission. On this day each year, I purchase cards for the following year. The cards I liked best this year were sets of "make your own" blank cards that come with decorations you can glue on (I got them from Dollar Tree on 50% off clearance). I thought it would be fun to send a unique hand made Christmas card to everyone on my list next year.

When I got home, I couldn't wait to get started. I don't usually have time to spend an afternoon playing around with scissors and glue, so it was quite a treat. I learned early on that with home made Christmas cards, less is more. This Christmas card started out looking pretty good. Then I went and glued on some gold sequins. Notice the strings of hot glue and the uneven spacing? Don't do that. I'm going to have my son inscribe this one. That will render it from pathetic to adorable.

A lot of my cards turned out pretty nice, though. And if they looked home made, it was in a good way. Soon, I was out of ideas. I had a little square of gold-foil covered cardstock I wanted to use, but nothing to stick on top of it. Glancing around, my eye fell on the display of Christmas cards in our dining room. It wasn't long before I found the perfect image to glue on top of my gold foil, and I came up with this:

It was my nicest card. I found many other pictures and motifs to reuse among our collection of cards.

To make your own cards, you can start with a kit like I did. (Promise me you will only buy them on clearance, though.) Or you can use a nice heavy paper or cardstock. In addition to pieces cut out from other cards, you can use stickers, rub-on ornament decorations (I had good luck with these), craft foam shapes, glitter glue, crayons, feathers--really, the sky's the limit. This is a great project for kids, and you can work them at it, sweatshop style, during those long winter, spring, and summer vacations. ("Make another one for Aunt Violet, and this time I want you to really feel it!")

Now I suppose you could argue that buying ready-made cards is just as cheap. And you would be right. But cards left over after Christmas tend not to be the cream of the crop. Sometimes the designs are cheesy. Or, the design might be beautiful, but the message inside too religious, too secular, or simply too weird to actually send to all of your friends and family. By creating my own cards I am able to send my loved ones exactly what I want them to have, which is a holiday greeting that will make them feel loved and appreciated. And if the card they receive is a frankensteinian re-creation of a card they themselves sent, it just might make them smile, too. Best of all, what to do with it is now their problem.

Written by Catherine Shaffer and published on Wise Bread. Read more articles from Wise Bread.