As I had mentioned in an earlier post I’ve had a paradigm shift in how I look at credit cards.  My past attitude is that credit cards were evil without much in the way of exception.  I don’t have the same strong opinion any more.  Before I’m struck down with hate email or comments with great intensity let me clarify that most people who don’t like credit cards, when provoked to a good, long think, will agree with me.  The credit cards that get abused are a symptom!  Just like money isn’t evil by itself, credit cards are not evil by themselves.  If you pay off your credit card each and every month and maximize your return on the credit card’s reward program then the credit card is not a problem for you.

The symptom of debt is actually a symptom of the root problem: lack of self control.  If you understand where your finances are and you maximize your use of the card within the constraints of your budget, you might be able to pay for your family’s vacation in rewards.  James, a long time reader of my blogging (I don’t recall how James found me, but I’ve been grateful for the things I’ve learned from him and his commenting), actually left a comment stating that’s what he does some time ago.

My dad, a financially astute guy, uses his Discover card for as many expenses as he can and maximizes his rewards this way.  I have to admit to thinking this was crack smoking crazy until I realized that I was putting the blame on the wrong thing.  I’m not recommending everyone get as many credit cards as they can or that folks use credit cards if they can’t control themselves when they have access to the credit cards, but I am saying that I recognize that my previous stance was legalism.  As Romans 14:23b states: “…whatever is not from faith is sin.”  Don’t spend a dime that is not spent in reliance on the Lord.  This could be spent virtually with a credit card or literally with cash, but if you’re doing it out of compulsion and not in the abiding life of Christ, then its not the right attitude or way to be spending money in the first place!

This isn’t just a paradigm shift, this is a right-aligning with what the word of God teaches about walking by faith.  If I make a law about credit cards then I have failed to see the fullness of my relationship with Christ in the area I have created the law in.  I died to the law and the nature of the law when I was identified in Christ’s death, burial and resurrection.  I’m going to pay off my credit cards, cancel all but one, and then as I abide in Christ, I’ll focus on my heavenly relationship, knowing those earn eternal rewards, and use the Discover to maximize the earthly rewards which might just be used to help those in need (Romans 12:13).

With this last trip to Indy I was watching the price of gas because every ten cents of gas price increase cost me roughly $20.00 $10.00 [editor: fixed bad math from tiredness] more for the trip. My car is a Honda CRV, it gets roughly 32 miles per hour (not the EPA gas rating, but with AC and various other things in play, that’s the average). I had to drive over 1,000 miles and so that meant about four fill ups (including driving around in Indiana) per direction. Each tank fill up was 12 gallons or so [it holds 14 gallons, but you have to pick where you can get gas driving through Kansas]. We ended up paying closer to $4.00 a gallon at most locations. The first lesson learned: know the gas math of your trip so you’re not surprised.

I mentioned the $4.00 a gallon above. We left on Memorial Day Weekend. This is a classic time for gas stations to jack prices up. Somehow they don’t call it price gouging I watched the price of gas jump by ten cents between Thursday and Saturday when we left. By taking a day off and leaving one day earlier, I could have saved some money (though it would have cost me a day off).

Lastly, we’ve still got one Discover card and this Discover card has a special 5% cash back bonus on various purchased at different times of the year. We’re doing our best to pay off the discover card as quickly as possible. However, since I knew we’d be spending so much money on gas we pre-paid the amount we had budgeted for gas on the discover card to get the cash back bonus. This is part of a paradigm shift I’ve gone through, but I’ll write about that later. Credit cards are a major temptation when our minds aren’t focused on heavenly things and so we get caught up in their trap - a clarifying blog post will be forthcoming. We’re not using credit cards for credit, this was a pre-paid spend that will allow us to get some relief, minor as it is, on the cost of gas. We didn’t use it for anything but pre-paid, known expenses and came out having pre-paid more on the card than we spent. Between June and September Discover is offering 5% cash back on gas - we’re going to participate in that discount.

So: remember to do the gas math, remember to plan, as best as you can, around known pricing schedules, and figure out how to maximize your dollar.

With gas prices this high you’ll have fewer problems getting friends to join you for lunch in the brown bag club.  If they drive a few miles every day for lunch they could be spending a $5.00 bill every week just to pay extra to eat out.  Then, by wooing them into the frugality club you could ease them into doing other things more efficiently.

If you find yourself at the grocery store and you find yourself buying coffee and you find yourself buying coffee out of those bins (which I should take pictures of so that you know EXACTLY what I mean) with the little pull levers that release the whole beans into the paper bags: STOP!  That isn’t to say that you shouldn’t buy that coffee as much as it is to say this: beware the funky flavored crud.

I had company in town and I didn’t purchase them the high end [high quality but not high priced] stuff I usually buy because they don’t like it (I offer and they generally refuse it).  But I did buy them what was supposed to be 10% Kona beans because I’m nice like that.  Except that the lemurs that put the coffee in the bins put the kona (read: hawaiian beans are in here) next to the hazelnut flavored coffee.  Note the word flavored.  That word should be a big warning sign.  They should label it, “Death star coffee flavored like hazelnuts so that the death will be sweet.”  But they don’t.

If you buy coffee that is supposed to be just plain coffee flavored out of the chute next to the flavored death star stuff then spill a little of the beans into the bag and then smell the beans.  Your nose should be able to tell if miracles have happened and your kona coffee smells like coffee or if the evil siths of hazelnut have taken over and your imported beans are really just polluted with bad ju-ju.

Save your money on the coffee that’s been polluted, report to a store manager that the devil responsible for putting the coffee in that chute should be chastised heavily, and then buy something else that may not be what you wanted, but will not be polluted.  Unless of course you’re into flavored coffee, in which case by all means just dump the arabica beans into the bag and proceed with your business.  I’m embarrassed to have written this post because I prefer home roasted coffee if possible.  But I’m a coffee snob and I have to deal with that burden every day.

What’s the most extremely frugal thing you  do?   A man I know lives on a corner and he parks his car on the street and backs the car around the corner instead of going straight because it wears his tires out just slightly less than pulling a U-turn and then taking a right handed turn.  I am insanely anal about turning off lights and computer monitors around our house (we have two).  I also like to keep “fart fans” on as short as possible in the bathroom (and wish I simply had windows upstairs, though the basement doesn’t need one in the bathroom).

Tonight we bought 30 bags of goldfish crackers at the grocery store because they were on special and that was the limit.  They cost us fifty cents each and so we spent fifteen dollars on enough goldfish crackers to last quite a bit of time.  Our daughters like them and the big containers can’t compete with that per-bag price.

So… what is the most extreme frugal behavior you practice?  Have you done anything above normal like buy thirty bags of goldfish crackers?

If you like watching shows but don’t have or like the idea of paying for a DVR then save a few bucks and check out hulu.com.  It’s free to use and is sponsored by the TV networks.  That means that its free, legal media over the internet.  Yes, you have to watch it on a device connected to the internet, but I think that you can use a bunch of different devices that will do that, or you could just watch on a desktop computer or a laptop computer.

TV isn’t the most valuable thing you can do with your time, but its quite nice to have control over when you watch various things and know that the

I had written about freezing your pillow if you have allergies when this blog started last year.  Since then I’ve had various people link in looking for some sort of technique.  I guess I assumed that everyone would know to do the following:

1. Remove the pillow case from the pillow (if you have no case on the pillow skip to step two)
2. Acquire a plastic bag such as a kitchen wastebasket trash bag and hold it open while making sure that your head goes nowhere inside of the bag to avoid suffocation
3. Insert the pillow into the plastic bag making sure that it fits in smoothly and is comfortable.  It’s going into the freezer so we have to at least be humane about the pillows placement in the bag
4. Clear out space in the freezer that is big enough to squish the pillow into.  You may consider turning off the ice maker and removing the ice tray if that looks like it may fit some of the space of the pillow.  If you have a firm pillow you will probably want to fit the pillow in a width wise direction rather than causing lots of tension in a depth wise orientation, it could open the freezer and reduce the effectiveness of pillow freezing.
5. Freeze the pillow for a work day while you’re out earning money
6. Remove the pillow from the freezer and bag about an hour before you go to bed so as to let your head lay down on a warmish pillow
7. Sleep well

We don’t generally have to deal with collections.  To my knowledge I have been ahead or on time with all of my payments for a year and a half.  Unfortunately this last Saturday we got a call form a store credit card collection agency that I was completely unaware of.  My wife was also unaware of the problem as we ran into some issues with email notification and spam filters combining to a net gain of nothing and a net loss of a stupid interest rate and late fee.  We’ve paid the card and now we’ll cancel it.  I don’t like store cards and I don’t know why this one was signed up for, I think my wife was offered tremendous savings of some sort.  We’ve lost the savings, but gained a lesson.

When dealing with a collection person remember several things about their job:

1. Their job is to get money from you
2. They are rewarded for getting money from you
3. They are trained to ignore your personal situation and to demand money
4. They hear all sorts of everything every day and are numb to what you have to say
5. Rational discussions don’t mean anything because their job is not to be rational, it is to get money from you

So in dealing with these people, and they are people, though they may seem like monsters or jerks or rude people, just realize that their job is not to wave fees, reduce penalties, take your side, or help you get things straightened out.  In fact, in most cases you shouldn’t even talk to them.  The best way to deal with them is to not deal with them.  Instead, if you get a call from a collections agency, find out who it is they’re collecting for and then call the company they’re collecting for and bypass their job’s inherent socially aggressive issues.

Remember that they’re trying to figure out your payer type.  That is they’re looking for the type of person you are to find the argument that will talk you into paying them right now, which means they get rewarded. As soon as they get rude tell them they can stop being rude and work with you or you’ll hang up.  They may respond in various ways, but in the end don’t let their attitude cause you to get worked up.  This is what happens to me when I’m discussing things with people and they begin to ignore intellect and rationality.  They know that if you’re emotionally charged that this will get you to act one way or another.  Don’t let them get you worked up.  Hang up first.

Remember that if you’re legitimately in debt to someone you should attempt to pay it as soon as possible, but don’t let their problem be your problem.  Tell them that you’re glad to know the total you owe and you’ll figure out how you can go ahead and pay it on your time and schedule.  Say, “Thank you, good-bye,” and then hang up.  Don’t give them a foot in the door.  Hang up and then genuinely figure out how you can pay your debt and put it behind you.

If you’re a newer reader you may not be familiar with the Credit Rate Reduction Rally.  One of the purposes behind the rally was to build a movement that is about optimizing interest rates for people paying off debt.  In my case doing this on one of our cards reduced the interest we’re paying per month (which also includes a lower balance from making payments) by $125.00 a month.  That would be like saving roughly $1,400.00 in one year’s time [calculated loosely with the assumption of a reducing balance with minimum payments].  Or three Nintendo Wii’s, several car payments, a very, very nice bottle of wine, a Mac Book with memory upgrade, or a nice donation to a charity.

Have you sat down and calculated how much money you might save by getting your interest rates reduced?  Be persistent, be consistent, and make them change your interest rate.  It could change your future!

Have you ever wished you had an extra $200.00 a month? I know I used to wish that. The moved buffer theory is the theory that you should be putting the buffer in your budget at the ‘top’ of the budget rather than in each category. A buffer is an excess amount of money that is put in place to deal with a greater demand on your finances than is normal. If you’re familiar with “emergency funds” then you might describe the buffer as a preventative emergency fund built into your plan. If you are like me then you originally set up your budget with the buffers into different categories so that each category could absorb fluctuations in the category.

Evaluate the chart above representing a traditionally buffered set of categories. Can you see that the categories with buffers are theoretically more likely to use the buffer? By giving yourself access to more money you are more likely to absorb the buffer. The problem is that you should have some buffer somewhere because in real life all of the numbers are not known ahead of time (unless you are super lucky). By setting yourself up with a ’safe’ budget you are more likely to overspend potential savings (which is not the same as blowing out every budget category in overspending).

Instead, I would propose that you actually calculate a conservative amount for each budget category. What would you say to cutting each category by 20% and moving that buffer into its own category that goes untouched and your target for expenditure is reduced? That way if you over-spend in a category (or the water bill shows up and you find out you took showers that were too long, or watered the garden a wee more liberally than you had expected) you have a buffer category with funds for paying the water bill, but you don’t find yourself likely to spend a lot more in each category. The weakest link in your budget, the category that you’re overspending on, is dealt with, and you can review it for next month to see if it needs more funds, but you don’t just feed all of the categories excess money each month.

There is little doubt that real life will happen, and the potential for surprises is great, but by taking out some of the waste where it didn’t appear to be in the first place, you may save yourself a lot more money in the long run. If you can save $50.00 a month in reduced buffer excess and put it into an investment fund, pay off debt, or possibly grow other areas of your life, its worth considering! I have begun to see a several hundred dollar a month buffer that I didn’t know existed because before I was spending it. Consider your choices as you budget. This method may not work for everyone, but for us, it has been a real relief.

Note: The Moved Buffer Theory Budget is based on the Theory of Constraints by Eliyahu M. Goldratt - only applied where I haven’t seen it applied yet. You might consider checking out Critical Chain, a book that applies the Theory of Constraints to business management.