Shelf Life & Expiry Dates

How long can you keep milk in the refrigerator? Is it still drinkable or do you have to throw out that milk carton? Can you save money by using products that are past their expiry dates? What do terms such as "sell by," "use by," "best by," really mean? What does a frugal person do with products that happen to be past the "used by," "best by," etc. dates?

Here is a roundup of useful resources to explain the confusing jargon that manufacturers use and the expiry dates of most products:

• Shelf Life Advice
  A very useful site to find out the shelf life of a particular product. Enter product in search box to find out its shelf life and storage information.
  
  
• Food Expiration Dates: What Do They Really Mean? (Yahoo Green)
  
  
• Expiration Dates (OrganizeYourLife.org).
  A near-exhaustive and very useful list of how long you can keep food, household, beauty and cosmetic products.
  


• Do Food Expiry Dates Really Matter? (WebMD.com)
  An informative discussion about the confusing mix of terms used by manufacturers on their products.
  


• The Secret Code of Beer Expiration Dates (Consumerist.com).
  How to decode the mysterious codes that breweries use on to indicate how old your beer is.

Roundup: Interesting Financial Planning Articles

Roundup of interesting financial planning articles:

• Checking Your Free Consumer & Credit Reports (My Money Blog)
  


• Budget For Real Life (Money Magazine)
  


• 10 Things Your Funeral Director Won't Tell You (Smart Money)

Seven New Rules For The First Time House Buyer

Are you a first time buyer jumping into the housing market? Confused by the conflicting advice from realtors, mortgage brokers, bankers, as well as well-meaning friends and family members?

The New York Times columnist, Ron Lieber's latest column, Seven New Rules For The First Time House Buyer sets out to debunk a long-standing but underexamined maxim of real estate, "you should always stretch financially when buying your first home," which got many first time buyers into hot soup in the first place, straight into the clutches of realtors and lenders who were only too willing to lend them the extra needed to finance that extra stretch.

It's now back to the basics, since the myth that housing prices only go up and up has been shattered by the recent financial downturn. To summarize, here the seven new rules:

1. Get a fixed rate mortgage, put 20% down and borrow 80%, and aim to spend between 35%-45% of your pretax monthly income on your monthly mortgage payment.


2. The best case for people stretching their income are those in their 20s and 30s, who are starting out in their careers, rather than those in their 40s and 50s.


3. Before buying a house, do a realistic projection of future income flow, asking oneself: what if one spouse loses a job? what if there are children? etc.


4. Too many people forget to factor in the costs of maintaining a house into their calculations on affordability.


5. Buy either the cheapest or the best, but not in the middle. Why? If you can't afford the best, buy a cheap starter home and diligently save up for the best.


6. Consider stretching out the home over time (i.e., making renovations or expansions over time) rather than stretching up to buy an expensive home


7. The 8-hour rule: can you sleep soundly at night or will you stay up worrying about monthly payments? If it's the latter, than the house isn't for you.

As a homeowner who is still living in a house that I bought 6 years ago, here are the rules that guided my own home purchase:

1. I put 20% down and borrowed 80% on a 30-year fixed mortgage.


2. I budgeted for the home based on one income (mine) instead of the combined income of my spouse and I. This turned out to be prescient because my wife chose to leave the workforce to look after our kid, making me the sole breadwinner. Our monthly mortgage payment is comfortably within 40% of my monthly income. I'm glad that we fended off bankers, mortgage brokers and realtors who suggested that we used our combined income to buy a bigger home--no income stretching for us.


3. I aim to accelerate the paydowm of the mortgage by making a 13th monthly payment.

Link: Seven New Rules For The First Time House Buyer (New York Times)
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Saving During Tough Times

This week, ABC World News is running a series entitled, The New Normal, where ordinary Americans share their struggles, hopes and dreams about coping with the severe economic downturn. Highlights of this series include:

• Are you a good saver? Five things to ask
  

• Suze Orman: Tough Talk, Pink Lemonade
  

• No More Job Security?
  

• Embrace Your Inner Cheapskate

• No More Maternity Leave?

• Fantasy Mortgages

Affordable Steaks for Summer Grilling

Summer is just round the corner and the aroma of sizzling steak is wafting gently over many backyards. In case you're wondering whether it's possible to grill steaks without breaking the bank, the Washington Post is helpfully offering you tips on how to search for affordable cuts of steaks, as well as how to grill those steaks:

• Affordable Steaks That Make The Cut (also available in PDF)


• Nine Affordable Cuts of Steak For Summer Grilling


• Tips for Grilling Steaks

Frugal Living & Planning for College

One of the biggest bill a family will face, besides buying a home, is college education. The average price of college education in the U.S. has risen well above the average rate of inflation. For the longest time, families cope with the ever rising cost of college by drawing equity from their homes or borrowing ever larger amounts of student loans, especially from private lenders. But with the collapse of the housing and financial sectors, many families are being forced to rethink their college planning strategies.

What if you are the frugal sort with no intention of going into massive debt to finance your offspring's education? What if you are heading to college and not wanting to graduate with a heavy debt load?

It comes as no surprise that many families and their kids are looking more and more toward the public university as an affordable choice that offers value-for-money college education. But as a recent Money Magazine article warns us, with soaring applications and diminishing state budgets, public universities may not be the panacea to college tuition sticker shock.

So what can you do about the ever rising college tuition bill? An earlier Money Magazine article, Ease the Tuition Squeeze offers six tips for dealing with this dilemma:

1. use your savings strategically
2. apply higher - and lower
3. play it safer
4. borrow smart
5. make tuition less taxing
6. stop worrying (at least for now)
   

Links:

• The Trouble With Public Colleges
• Ease the Tuition Squeeze

Changing Values: From Borrow/Spend to Save/Being Frugal

Here is another recent article from the folks at Money magazine that talks about frugality and saving money: How the Crisis is Changing You. This article makes the case that frugality and saving money are in, debt and plastic are out, and bling is bad. The author, Dan Kadlec claims that the financial crisis and its ensuing economic meltdown have engendered a major shift in the financial values of Americans that he thinks will persist over time.

Do you agree?

Article Link: How the Crisis is Changing You

11 Ways to Save Money Now

Here's the latest online piece from the Money magazine team that touches on a subject that is dear to my heart: 11 Ways to Save Money Now. My favorites are:

#3: Accept the new norm and set realistic investment goals
How true! In other words, we have to accept the reality that we won't see the kind of outlandish returns of the 1990s and early 2000s for a long, long time, and therefore we have to plan accordingly.

#4: Lose Rate By Refinancing Your Mortgage
My take: But this works only if you are (1) gainfully employed with a real full time job (i.e., "no job, no loan" is the new banking mantra), and (2) you have real equity in your house (i.e., your house is now under water). If you are the lucky few, take advantage of it. Otherwise, blame your mortgage broker for tempting you into a loan that is way too much for your finances.

#5: Juice your credit score an extra 20 points
Easy steps, but require discipline to pay down that revolving balance though...

#6: Go cold turkey on monthly services...
#7: Turn off the TV...
This advice really works. I save a bundle by not having cable (since 2003), no Netflick, Blockbuster, etc. As for #7, I watch over-the-air digital HD broadcast with rabbit ears antenna on my digital LCD TV, borrow DVDs from my neighborhood public library and use hulu.com, boxee.tv, etc., to watch older full-length movies on a netbook that is hooked up to my LCD TV). Cutting a few dollars here and there and we're talking about real, cold hard cash being saved!

#8: Reorganize your insurance drawer
I did that in 2008 and save several hundred dollars by raising the deductible on my car insurance to $1,000/- and my home fire insurance to 2% instead of $500.00. Think about it: you don't want to claim insurance on small claims to avoid insurance companies jacking up your premiums. It makes more sense to save money by having the highest possible deductible and be disciplined enough to put that money saved into your emergency fund in a high yield online savings account. That way, the money and interest earned go to you and not to the insurance company.

11. Start your own "working capital" fund
Very good advice (my 12-month emergency fund also covers job search expenses, in case I'm laid off).

Article Link: 11 Ways to Save Money Now

Free 49-page Personal Finance E-book from The Simple Dollar

The Simple Dollar is offering a free 49-page personal finance e-book (in PDF format), Everything You Need to Know About Personal Finance on Just One Page, which collects and discusses Trent Hamm's favorite ideas and strategies about good financial planning and frugal living in one highly readable book. Here you will find Trent discussing in detail, his five-point plan for personal finance success:

1. Spend less than you earn (My comment: how true! Frugality and saving is still the best way to personal finance success, and not leveraging and gambling).


2. Earn more (Trent offers lots of strategies to increase your income and earning potential)


3. Life Frugal! (My comment: my sentiments exactly!). In this section, Trent outlines 100 great tips for frugal living, as well as things to avoid.


4. Manage your Money! Here Trent outlines all the steps you can take to manage your money well, e.g., pay off high interest debts, build emergency fund, etc.


5. Control your own destiny! How true.
   

In addition, Trent also includes his recommendations of personal finance books and blogs that you could read or follow.

In short, this free e-book is worth your time, not only because Trent has so generously shared it for free under the Creative Commons license, but his ideas and strategies are commonsensical yet ignored by many folks who fall prey to shortcuts that only lead to financial ruin.

Damage Control for your credit score

Last Thursday (April 30, 2009), the Washington Post's personal finance columnist Michelle Singletary discussed the issue of involuntary credit card cancellation by the card issuer and its impact on one's credit score in her Color of Money column. She discusses two possible scenarios: (1) where a card hasn't been used in ages and the cardholder pays off the credit bill in full every month, (2) where a card holder carries a balance. Singletary rightly concludes that in the first scenario, there is no need for any damage control. But that is not the case for the second scenario, since the closure of a credit card will reduce the card holder's total utilization rate.

As I explained in an earlier blog posting, Credit Cards & Frugal Living, I was not happy when Bank of America unilaterally closed my AAA Visa Card (formerly a gas rebate card issued by MBNA) which has been dormant for ages. Since I pay off all my credit cards in full every month, my credit utilization rate is not affected by the closure and my FICO score remains in the excellent range.

Indeed, I totally agree with Singletary's ending sentence: "It would be great if the long-term impact of this credit crunch is people relying less on credit and more on cash." I treat my credit cards as "cash" and use them as my monthly float and to get rebates for statement credit (thereby bringing down my actual credit card bill every couple of months). As far as I am concerned, there is nothing wrong in using credit cards if you are able to withhold an equivalent amount in cash in your bank account to pay off all your credit cards in full at the end of each billing cycle. Otherwise, credit cards become a trap that ensnares a person in a vicious debt cycle.

Making Tough Calls in College Choices

The Washington Post article, Downturn Toughens Choice of University reveals the tough realities facing many incoming college students. Should they choose a public or private college? For the first time in a long while, students and their parents are thinking hard about going into heavy debt for a college education.

Personally, I don't see the point of borrowing $50,000 or more for an undergraduate education. Coming from a frugal family, I chose an in-state public university that offered me a 50% tuition grant-in-aid and the balance 50% from a subsidized loan. That was the best decision I ever made. I repaid my subsidized student loan in five years by making extra payments along the way. My graduate education was financed with my own savings together with a collection of different scholarships, grants, assistantships and work study awards that I cobbled together.

It is possible to be frugal and get a stellar college education. You just have to look beyond the hype.