As the Treasury Manager of the company, and the writer of this blog, I try my hardest not to get caught up in it, though I admit it’s hard. As a personal finance writer, I preach to be conservative with your money: save, invest prudently, and keep an emergency fund; and as a financial professional in charge of all of a companies cash I act the same way, because if there is one thing I know, it’s that the party always ends.

Adorning the walls of my office I have hung constant reminders of this: vintage advertisements for Chrysler and Chevrolet. Every time I look up and see the ad for “The New 1967 Chevrolet Pickup” or the “Silver Anniversary Edition Chrysler New Yorker,” I think about what their management would have said at that time had someone approached them to announce that their company would go bankrupt. As much as I’d like to think they’d sit down and ask “how? when?” I have a feeling that they would have laughed it off. After all it was the heyday of the automobile!

Think about approaching an internet startup in 2000 (really, any startup will do), with the same information. Money was being handed out left and right, it was a huge party!, but the vast majority of them got caught up in the party and never looked at the bottom line. For a prime example, watch the movie e-dreams which follows the rise and fall of kozmo.com.

What about telling Bear Stearns in 2005? Worldcom or Enron in 2000? Blockbuster in 1999? All of these companies were at the peaks of their “Party” stage in these times, only to go drastically downhill a few short years later.

With all this said, I’m not against the “party,” in fact I love the party stage it’s fun and very exciting, but like any party, you have to party like the party will end, or else you wake up in the bushes wondering where your clothes went.

In personal finance partying like the party will end means saving, planning for retirement, and keeping an emergency fund, all while still enjoying your money. In the business world, that means always keeping an eye on costs (I just saved the company $15k by changing vendors for deposit tickets), managing the funds prudently (and safely), always striving for efficiency, and growing the business at a manageable pace.

If you stick with this advice, the party will last longer, and you’ll be prepared if it abruptly ends.

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In other cultures around the world, you are considered stupid or odd if you don’t talk money. In most parts of the world if you buy something without haggling the salesman will probably make fun of you for being a sucker as soon as you walk away. In America haggling is only considered acceptable in 3 scenarios. The first scenario is if you are buying something from a street vendor (like in New York), the second when you are buying something off of craigslist, and finally, haggling is OK when you are buying a big ticket item like a car or a house.

For some reason society has deemed it alright to negotiate and talk money in these scenarios, but if haggling is acceptable in these scenarios, why isn’t it acceptable in your daily spending? If just by asking for a discount you could get one would you go against this social norm?

I frequently go against this norm, it doesn’t always work, but when it does it feels great. Think about it from the salesman’s perspective, if 5% or 10% off will close the deal and allow them get on to helping the next customer why not? And if 10% off saves you $5 will it be worth the awkward moment? The worst thing that could happen is that they will say no.

Talking money does not only mean haggling, it means sharing your salary, something strictly forbidden in America.

In other cultures sharing your salary is not about bragging, it’s just normal everyday conversation. Xin Lu over at Wise Bread wrote a great post about how her Chinese culture influences her money habits. In the post she talks about how her father once helped a friend get a 20% raise, something that would not have been possible had they not been talking about salaries.

If by sharing your salary a friend could tell you that you are undervalued and try to help you get a higher salary is it OK? If you got a 20% raise I’m pretty sure you’d think so.

Recently I started a new job, and by talking about the offered salary and benefits of the job with someone else, that person helped me to effectively negotiate the offer . Does it feel odd for me to know that someone else knows my salary? Yes a little, but the person who helped was glad to do it and I am extremely grateful to him for it. Sure, at the end of the day I was the one doing the negotiations, and yes, it was a bit awkward, but it was well worth it.

The point here is that Money shouldn’t be taboo. Not everyone is rich, and there is nothing wrong with that, but our culture has ingrained in us that money separates us and defines us. Nothing could be more wrong. Money is something that needs to be talked about by more people, finances cause people more stress than anything, and they are the number one cause for divorce; but if we would all be more open about money we might be able to help each other and it could all change.

Do you talk openly about money? Why or why not?

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After I hung up the phone I kept asking myself, “Am I truly happy?” and “What could I do to make myself happier?”

…and thus a personal journey of self discovery began.

I could bore you with an endless array of what I found about myself, or I could answer it for you in a simple sentence that might contradict the American dream: the opportunity cost of owning a house at 23 sucks.

No, we aren’t hurting financially like many Americans. We bought a house that we could afford, we got a low interest, fixed rate loan, and we put down a good sized down payment (10%). We have an almost fully funded emergency fund, we are both employed, and we live a frugal lifestyle. The issue comes when I look at the opportunity cost of home ownership, or what we could be doing if we didn’t own a house.

The thing about owning a house is that no matter how much financial knowledge you have you can never really account for the opportunity costs of this often emotional purchase that is deemed a “necessity.”

I think about how much money we spend each month on our mortgage, taxes, insurance, utilities, and HOA dues and I cringe when I think about what else we could be doing with half of that money if we had bought a less expensive house, or even if we were renting. One of us could work while the other focused on entrepreneurial ventures or attended grad school. We could work for a year, save up, then quit our jobs and travel the world for a year. Even if we waited another year we could have saved up enough money to put an even larger down payment on a house, thus lowering the future monthly burden.

I look at our house as the reason why we have to work. I feel like I work a job not because I want to (even though I do), but because I have to, and this feeling of burden makes work seem like a chore instead of a learning experience.

So I challenge you, as you are tempted by a free $8,000 first time home buyer credit, to truly think about how much money you want to spend on a house, and the opportunities that you will give up as a result.

For the record, my wife disagrees with me. Her rational (and mine at the time of purchase) was that we bought a house in which we could grow into and start a family, while this is true, I believe that the only thing that would make me a happier person right now would be owning a less expensive house that wouldn’t feel like a burden.

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The following is a guest post by my wife, Mary.  My comments are in bold.

Health Insurance is a privilege, something that shouldn’t be taken for granted, but also something that is earned by many as a benefit of being employed by a company that shells out thousands of dollars per employee to subsidize the insurance and ensure that their employees are taken care of. Despite whatever plan an individual chooses the basic concept remains the same; pay co-pay up front to obtain services from your doctor of choice (either in-network or out-of-network).

I consider myself to be a healthy person who exercises, maintains a good weight, eats well balanced meals, and listens to my body. But along with these habits comes another money saving and sometimes even life-saving choice to have annual physicals with my primary care doctor. In physicals the doctor runs blood work, checks for cancer and overall health. Being in my twenties, my health is something I want to stay on top of in order to treat any possibly issues now before they could become a huge roadblock. Aside from that any early sign of cancer could save my life, let alone $$. Unfortunately, this is something that many Americans opt out of to cut costs but something relatively inexpensive considering the potential health complications that could spiral out of control if not caught sooner rather than later. Preventative Healthcare is not something that should be taken lightly, even if you think you are healthy.

At my most recent physical this past December I paid my $25 co-pay and left as usual. Surprisingly this past week I received a bill from my doctor’s office for 2 lab tests totaling to $160. I was about to call their office with my Flex spending card in hand when I thought that maybe I should speak to my insurance company about why they didn’t cover these 2 tests. They didn’t seem out of the ordinary to me and I was “in-network.”

After spending a total of 30 minutes between talking with my doctor’s billing office and then my insurance company, the insurance company finally admitted their “mistake” and I was able to save myself $160. I was furious that my insurance company was “cherry picking” my health bills. When challenged the operator from the insurance company actually agreed that if I had not called to dispute the charges I would end up flipping their bill because of a “mistake.” So although having health insurance is a privilege, just realize your health care provider might try to cut corners any way they can and it is up to you to clean up their mess.

Mary’s story exemplifies being “On The Ball,” one of The 7 Effective Habits of Highly Frugal People . By knowing what our insurance covers, she successfully challenged a charge and ended up saving us $160!

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Now that we have moved into our house, I’ve found myself at a loss of ideas and motivation to post.  As I’ve been trying to analyze why I feel this way, I’ve come to the conclusion that it’s because I’m beginning to feel like a hypocrite.  We live in a very nice new house, that we have worked very hard for, however we have had a great deal of help getting here.

First, we got a huge leg up from my wife’s brother and his wife.  They currently own two houses in the Dallas area and offered to let us live in one of them, rent free, as long as we maintained it and paid the utilities.  So far we have not been able to thank them enough for the head start they gave us on saving for a house.  We lived there for about a year, and by living frugally we were able to live on my wife’s salary while saving all of mine.  This enabled us to have a good sized down payment on our house and to fully fund an emergency fund.

Next, my in-laws gave my wife her mom’s old car for her graduation.  Which is a very generous gift by any standards, but when her mom’s old car was a mint condition Lexus SC 430 with low miles, it’s above and beyond.  We were able to sell the car for a large sum, which enabled us to put a very large down payment on our Volvo, and put the rest into the down payment on our house.

Finally, something that I have written about previously, but a check that my grandmother gave me when I was young.  I was able to invest and exponentially grow it.  This money paid for Mary’s engagement ring and our wedding rings.  It also paid off all of our debt after college, and for some of our furniture.

Living in our nice new house I have to say it is hard to feel like we are living frugally, in the truest since of the word we definitely are not.  We have a new 2500 sqft house (for 2 people), and we drive a new car that we make payments on (when we could have paid cash), but what I have really come to realize in the last few months writing this is that being frugal isn’t about being stingy, cheap, or not wanting to spend money.  What being frugal is really about is choices.

Mary and I choose to live in a nice new house, we choose to drive a nice new car, and we choose to make sacrifices to afford both of them.  We take our lunch to work.  We don’t eat out much.  We carpool.  We don’t have cable.  We use coupons. We don’t belong to a gym, instead we workout on our own…which will hopefully be a future post.  Mary made the drapes in our bedroom from nice fabric she found deeply discounted.

As you can see, although we may not be the true poster couple for being “young and frugal,” we like to think that we are wise with our money, and we are able to enjoy the choices that we make, while still saving for retirement.

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I was in a retail store with my wife, and I had a cashier call other stores to check stock on an item.  As I was waiting for my answer, a woman (around 25) walked up to the register with an item.  It rang up as $8.50.

She turned to the cashier, “This was marked as 50% off.”

“Oh,” replied the cashier who was in his early 20s, “ok, I’ll just make an adjustment,”  He the proceeded to ring up the item again.

“That’s not right” said the woman.  ”50% of $8.50…$4.50.”

At this point I would have been alright, people make mistakes, but I was still biting my tongue.

The cashier thinks about it, and then REACHES FOR A CALCULATOR!  At this point I couldn’t take it any more, and proceeded to make an ass out of myself.

“Uhhh…$4.25,” I interjected.

Both parties, thought about it for what seemed like at least a minute, and I got a combined “Oh yeah.”

I should have stopped at that, but for some reason, unknown to me, I had to continue with the smartass comment of “yep, gotta love that elementary math!”  

I immediately felt like a huge ass, I apologized, and left the store.

Now, I know I was an asshole and I probably should have kept my mouth shut, but really?  Needing a calculator for something like that?  Are we really a generation that can’t do remedial math in their heads?  Are we that reliant on technology that we can’t think for ourselves?

How can you expect to budget while you shop if you can’t do things like that?  I love sale racks (who doesn’t?) but I always have an understanding of what I will be charged before I pay.  That way I know if the cashier makes a mistake in ringing me up, it’s a basic way to save money, and a skill that everyone should have, if you don’t watch out for your own wallet no one will!  Yes, this issue was over a quarter, but imagine if it was a higher ticket item?

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I write (what is for the most part) a personal finance blog, so you’d think that I would track every penney, but I don’t.  We budget to pay ourselves first (savings/retirement), pay all of our bills, and then everything else is give and take.  One month we might go over on eating out, but we won’t touch our clothing budget, so we call it even; but over the last month as we have moved I have learned a very valuable lesson.

Once you start spending, it’s hard to stop.  It’s like the floodgates of your bank account open, and the next thing you know, you’re asking how your credit card bill got that high!?

We realized this week that we have run our credit card bills up much more than we realized.  It’s not like we have purchased large items, it’s a great number of little things that we did not appropriately budget for.  For instance, the last two weekends we have been out of town, and we did not adequately budget for food for either weekend.  Plus being gone on the weekend messed up our schedule, so we didn’t go to the grocery store to stock up for the week as we usually do, so we ended up eating out.  Then we moved, there was no point in us buying tons of food when we would have to move it, so we ate out more.  

Our move was a beast by itself.  Thank goodness I have friends and family who were willing to come help when I offered free beer (which no one ended up drinking!).  I rented the largest Budget truck available, for 24 hours, found a coupon code online to nock off 10%, and then surprised myself when I was able to negotiate another 15% off at the truck rental place.

Somehow a great number of little things added up.  The only major things I can remember buying are drapes and blinds for the house (which we came in way under our budget for!…to bad we went over everything else!)

This will serve to be a very interesting month.  We will soon make our first mortgage payment (yikes!), and we’ll get to see how close we were in our estimates for our new utility bills!  Plus, we’ll map out a plan to pay off our credit card bills.  Which right now I’m thinking will involve pulling some funds out of savings and tightening the budget to replace the money over the next few months (and hoping for a decent raise soon!)

Also, allow me to apologize for this seeming rant.  As you know it’s been over two weeks since I’ve really posted anything of substance, so A. I’m a little rusty, and B. it helps to just start writing to get the wheels moving sometimes!

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Everywhere I look small “upgrades” are popping up that I know I can find cheaper elsewhere, or that I can do myself without having to pay the builders up charge for, and it pains me every time I give the go ahead for them to do something else when I know I’m being ripped off.  I can’t haggle with them, I’m not in a position to.  I already signed the contract to build the house and put down earnest money, so I’m at my builders mercy.

Why would I voluntarily get ripped off you might ask?  Because as I plan ahead for all of our upcoming expenses like drapes, blinds, rugs, random furniture (although we have most), deposits on utilities, moving costs… It’s easier to lump it all in and finance it so that I’m not out anymore cash after I seemingly drain my accounts at closing, because I will not allow us to dip into our emergency fund for these items.  Really the only thing we aren’t having them do that they can is hang our drapes and install our doggy door ($350 for something I can do myself in a hour is too much for me to bare).

At the end of the day, and especially as our country is testing the waters of economic uncertainty, emergency funds are too important to tap into for non emergencies.  And I’m proud to say that even though we may be paying an up charge on these items, our emergency fund will remain in tact and actually grow a bit due to the rolling in of some of our closing costs, so in the case of an actual financial emergency we will have money to keep us afloat.

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We admit that we are stretching ourselves to buy our first house (I think that’s something that most people do), but as we are re-evaluating our budget (less than a month until we move in!) we have found ourselves looking forward to our raises in the fall (even if it just equates to a cost of living raise) because let’s face it…as much as budgeting is important, no one likes sticking to a strict budget, so we look towards the future at what we will be making and what we can spend (or save) at that point in time

I think our problem is that we are always looking to acquire more. We want more and don’t want to make sacrifices to get more.

As Mary and I caught ourselves looking forward at what we will be earning and what will increase in our budget I thought to myself, why not look backwards?

Why not live on last years salary? Say your salary was X last year and it increased to Y this year. If you live on last years salary and budget you inadvertently save Y-X all year. Then when your salary increases to Z you can live on Y and save Z-Y.

This concept allows you to save more and forces you to permanently (ideally) live below your means. It’s simple, but a great and easy way to save!

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1. Carpool. Mary and I are lucky enough to work at the same company, so it makes sense for us to carpool. By our calculation, we are saving at least $200 per month by this little step. Sure, it sucks sometimes when one of us has to work later, leaving the other with nothing to do, but we always remind each other how much money and time (Carpool lane) carpooling saves us.

2. Change the oil on time. Staying up to date on engine oil changes helps your car run better and get the most out of your gas. I make sure to change the oil in our Acura every 5,000 miles (Oil Co’s recommend 3,000 miles, car makers say 5,000), and every 7500 miles in our Volvo (synthetic oil).

3. Get a high performance air filter. K&N air filters are expensive, but they pay for themselves in the long run. They come with a 1 million mile warranty because you clean them instead of replace them, plus you can get up to 10% better gas mileage because they allow your engine to breathe better and give you better performance. I received 10% better gas mileage in my old Jeep when I put in a K&N filter. Note: Mr. Dave points out in the comments, that high performance filters are not recommended for some engines like the VW TDi engine.  Though if you have that engine you’re beating all of us on MPG anyway.

4. Inflate the tires. Making sure your tires are inflated to the recommended PSI will increase your gas mileage because a fully inflated tire offers less resistance when you are coasting.

5. Coast. If you have an onboard computer, have you ever set it to give you the instantaneous MPG? You will probably notice that when your foot is off the gas your MPG skyrockets. So if you see a red light ahead let off the gas, there is no need to speed to a stop, it’s just a waste of gas and you’ll have to replace your brakes sooner.

6. A/C or Windows Down? It’s summer, it’s hot, so what do you do? This all depends on what you are doing. If you are driving at highway speeds, roll the windows up and use the A/C, because the drag of the windows being down really hurts the gas mileage. Driving around town? Roll ‘em down!

7. Don’t carry around extra crap! Weight directly affects your gas mileage. The more stuff you have weighing down your car the worse MPG you get. So lose the golf clubs, toolbox, and other random stuff unless you need it.

8. Plan your routes. UPS saved millions of dollars a year in gas by rerouting their trucks to limit the number of left turns, and you can save money too! Plan your routes in the most efficient way possible. Generally right turns are faster and they use less gas waiting at lights than left turns, so why not try it out!

9. Get a gas card! Many credit card companies offer cash back on gas purchases, so why not!? You’re going to be spending the money anyway, so you might as well earn up to 5% cash back. Or even better get a gas company card, brand loyalty pays you in savings!

10. Don’t use E85. What? But the government said it’s going to be our saving grace and I want to help save the environment! I’m all for saving the environment when it is in my financial interest (like compact florescent lights that will pay for themselves), but if it will cost me more money, I’m less likely to do it. E85 is cheaper, and your car may run on it, but according to AutoTrader it contains 27% less energy than 87 Octane (the cheap stuff). That means you get 27% less MPG using E85. The only time it’s in your financial interest is when E85 is less than 73% of the cost of 87 Octane. At my local station, E85 is about 30-40 cents cheaper per gallon than 87 Octane. $3.20 / $3.50 is 91%… not in your financial interest.

I hope you can put these ideas to good use, and if you’ve got any more, feel free to leave them in the comments!

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