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Archive for the ‘Frugality’Category

5 Tips for Family Preparedness, Twins and Spouse Edition

So, if you don’t know my background, I’m 42, and my wife is 38.  We’ve been married 7 years.  We had assumed that children weren’t part of our future, as my wife has endometriosis, and she has tried all her life for kids (she had a 1st husband).  We had talked about adoption, and perhaps being foster parents, but nothing really felt right.  So we ran our business, loved on our dogs, and planned toward some land and a quiet retirement.

The Good Lord had other plans, and we were blessed with twins back in January.  For many people, this would have been a disaster.  My wife was without insurance. (She was uninsurable under the old system, and we couldn’t get her signed up on the ridiculous government healthcare site due to the technical issues.  When we finally did, it was too late to cover the birth, and would only take effect the following month.  Yep, ridiculous)  And while the business is doing OK, the massive increase in the number of survival stores in the past 2 years, plus some problems with an unethical competitor last year left us pretty damaged.  All in all, not what you hope life is going like when you hear ‘hey, its twins!’.

Wait, we had 3?

Wait, we had 3?

Still, the main benefit of preparedness is that what might be a catastrophe for one family is only an inconvenience for another.  Having twins brought into focus many of the things we have done right over the past number of years, plus some of the things we still need to work on.  Here are a couple things we did right that let us weather the storm without going bankrupt, as well as a couple more that provide me peace of mind every day.

1)  Save, save, and save some more:  I am pretty fanatical about saving.  And to be truly prepared, you have to be too.  In 2000, when I was flat broke and several thousand dollars in debt, I still saved.  So to those who don’t save, don’t tell me its because you can’t.  Every paycheck back then I took $5 and put it in an envelope; when saving is the FIRST thing you do, not the last, you can make it happen.  When I worked overtime or got a raise, I put away $5 more.  If I got a birthday card from Mom, half that money went in the envelope.  I remember the day, standing in a crappy 1 BR apartment, when I looked and I had $500 in the envelope.  I hadn’t seen $500 in a VERY long time.  (And only a couple times total up to that point in my life)

No matter what, I NEVER stopped saving, whether it was just a dollar or whether it was $50.  By developing a savings mindset, you learn self-control with your money.  So yes, it hurt like hell when we got hospital bills every day for a month for the delivery of our babies.  And yes, writing thousand dollar checks more than a few times sucked.  However, because we always put money aside, we were able to cover our bills without going into debt, and without relying on family or the government.

2)  Save more part 2:  NEVER BUY A NEW CAR:  Everyone hears this advice, and so many still don’t take it.  I don’t care what your reasoning is (unless you are independently wealthy and buying a new car doesn’t register on the checkbook), I’ve heard all the excuses.  ‘I have to have a reliable car…’ or ‘It’s for the kids…’  Guess what?  Everyone needs a safe, reliable car for themselves and their kids if they have them.  That still doesn’t mean you need a new car.  Back when I was at Dollar General, I desperately wanted a Toyota FJ Cruiser.  With my income at that time, any car dealer would have gladly sold me a new one.  A used one a couple of years old was going for $17k, something any bank would give me a personal car loan for.  My self-given budget before I started car shopping was $10k.  I bet you all know someone who would have bought the FJ Cruiser in my spot.

What did my wife and I do?  We searched cars.com, Craigslist, eBay and 5 other auto websites for 6 months until we found a perfect, clean, shiny 2005 Jeep Jiberty for $10,000 (this was 2007).  It was such a good deal the owner told me to walk away if I wanted to offer less.  And considering I sold my ‘old’ car, a cool little Toyota MR2 for $6300 (also paid for in cash from the money I saved by quitting smoking in 2003), I was only out of pocket around $4k.  Instead of giving in to the desire for the ‘new shiny’, we stuck to our budget and instead got the best deal we could for what we allocated toward a new vehicle.

Do you know what I drive today, even though we’re in much better financial shape than even back in 2007?  A 2005 Jeep Liberty we paid cash for in 2007.  It’s been incredibly dependable and such a huge blessing to our finances.

In 2010, my wife wanted something bigger to help with her eBay business.  Again, we could have afforded (according to conventional thinking of the average car salesman) a new or newish Tahoe or the like.  After a month of shopping, my wife found a 1999 Chevy Suburban with 121,000 miles.  We wrote a check for $6950.  What is my wife driving today?  A 1999 Chevy Suburban.  I imagine we’ve saved $30,000-$40,000 since we met over what the average family spends on vehicles.  Please take my advice on this if you are tight on your finances; vehicles tend to be the #1 budget buster for most families.

3)  A food storage program can cut many food costs in half:  We’re not big couponers, though my wife and I have talked about getting into it.  However, we still do what we can to save on groceries, and our food storage lets us do that pretty easily.  The financial benefits of food storage is what really convinced my wife to let us start prepping more heavily.  How so?  Our food storage system means that we store about 90 days worth of all the groceries we regularly eat in our basement.  The result is we generally don’t ever have to pay full price for any of our groceries.  When our peanut butter comes up Buy-one-get-one at Publix, we don’t just buy 2 jars…we buy 10-20.  So we get a years worth of peanut butter for half the cost of picking it up one jar at a time when we run out.  Because the majority of our food, from pasta to fish sticks, comes up eventually buy one get one, by having a storage program we essentially cut our grocery costs in half, without trying to finagle the system with coupons (though to those folks who can, more power to you!).  Most of our other items (plus our paper products) we buy at Sam’s, and get a discount by buying in bulk.

4)  Know where your finances are:  For a long time I worried that if I died, my wife would have a hard time figuring out where all our finances were.  We have multiple checking accounts for home and business, IRA’s, a 401(k) from my old job, an HSA for me, and a couple of savings accounts.  In most households, one person handles the finances, generally whoever is most money savvy, whether husband or wife.  For our family, that is me.  But what happens if something happens to us?  It is imperative our spouses or someone responsible knows about our finances as well.

I created a special folder on our computer called ‘For My Wife, If I Die Go here’.  My wife laughed, but is genuinely thankful that the information she needs is readily available if something happens to me.  It contains a spreadsheet of all of our accounts, insurance policies, passwords, and balances (which I try to update every 3 months or so).  It would be a terrible hassle for my wife to try to figure out all this on her own if she were mourning the loss of her husband, if she even knew where to look.  I even put in some advice as to what I recommend she spend the modest amount of life insurance money on (Pay off the house and rental mainly, and save anything left).  This way, I’ve done what I can to protect my family to the best of my ability should something happen to me.

Write down all your financial info somewhere, whether on a spreadsheet or in a notebook.  And then make sure your spouse knows where it is and how to interpret it.

5)  Try Out The Auction Lifestyle:  I started writing a book I was planning to call ‘The eBay Lifestyle’ a few years back…until eBay sent me a cease and desist order.  While I never finished the book, my wife and I continue to live what I now call ‘The Auction Lifestyle’.  In short, all it means is that my wife and I understand the value of things, because we think about where we spend every penny.  When you understand the value of ‘stuff’, you tend to make smart spending decisions. (including NOT spending on many things)

An Example:  The hospital rented us a heavy duty breast pump for a few weeks after my wife’s delivery.  Because we have twins, pumping is a constant in our house.  After things got a touch settled, my wife and I started looking at the costs involved in renting the breast pump.  Over 2 years, the cost was going to be $1500.  Not unreasonable, was my initial reaction.  However, we were able to find the same breast pump used on Craigslist (with a bunch of bottles and nipples to boot!) for $500.  We returned the hospital one and bought the used one on Craigslist.  Better still, after we are done with it, we will likely be able to resell the pump for the same $500 we paid for it.  With just a little bit of effort, we saved close to $1500.

We do that same math with essentially every purchase we make over $100.  By buying quality used items we can often resell, our costs for most hard goods (over time) is very close to $0.  Our entire nursery set, which includes 2 cribs, a changing table, lamp, chair, bouncy seats, etc, which new could have cost us over $3500, we spent $1000 on.  (And we know several families, a couple of whom live mostly paycheck-to-paycheck, who would just put the $3500 on credit cards).  And after we are done with it, we will be able to sell all of it for very close to what we paid.

I know most preppers are pretty good with their money, and are usually frugal.  However, I know one prepper (a great friend, don’t get me wrong) who bought not one, but two new cars in the past 5 years…and who wonders why he never gets their student loan debt paid off.  Luckily, he finally took some good advice and started an online retail business like ours, and is going to be able to dig his family out of debt very quickly.=)

What most of this advice boils down to is:  Be intentional with your money.  If you do that, over time you will be much more prepared to deal with what life throws your way.

13

03 2014

Crazy Prepper Non-Spending Challenge 2012

I remember reading Robinson Crusoe as a child, and being fascinated by the constant counting of things.  The protagonist (the way I remember it) kept perfect track of his supplies.  Bullets, food, nails, boards, everything.  He realized the rationing of his goods was the key to his survival.  I think many of us probably feel the same way, and it is one reason we are drawn to survival fiction, post-apocalyptic movies and the like.  We live in such a time of abundance, that even our poorest could be ranked as royalty in many places of the world today, let alone among our forefathers.  A little bit in the back of our heads, we wonder if we could survive in such bleak situations with just what we have on hand (or worse still, without anything on hand).  And perhaps we even wish to (not realizing the privation many of our ancestors really faced):  to be able to turn off the iPods, throw out the cell phones, the computers, and just exist with nature without all the noise of a 21st century existence.  While my wife and I won’t be going to any Crusoe-esque extremes, we are going to extremely limit our intake of new goods in the first half of 2012.

So what spurred this?

Late last year I found some Grand Canyon sized holes in our monthly budget.  I noticed toward the end of the year we weren’t able to put as much toward the principal of our home as we had been, and that our savings hadn’t grown at all since autumn.  If anything, it had shrunk.  Part of that was the ginormous COBRA check I wrote in December; I pre-paid it until it expires in September 2012.  I did that mainly because I don’t like worrying about forgetting it month to month and it is such an important item.   Plus, because of my wife’s Fibromyalgia, I have been unable to find other coverage for us, which had been my hope.  (Because it would have provided some tax benefits.  We’ll end up getting an expensive guaranteed-issue policy once our COBRA expires.) Part of it has been additional competition in the marketplace.  While the overall ‘prepping’ marketplace grew in 2011, the number of businesses entering the market far outstripped any new revenue.  (A small warning to anyone who is thinking of entering the market this year.)  And part of it, when looking honestly at our budget, was a large chunk of discretionary spending; things like eating out, going to the movies and the like.  We have always been fairly frugal even in the best of times, but we hadn’t really been controlling our spending well since we have both been working from home.

Coming up next  is tax season, and I really don’t have a good handle on what that will bring.  As a small business owner I’ve been paying quarterly taxes, and I do have some withholding from my previous job.  However, due to having to pay both SS and FICA on top of regular income taxes, I’m worried we’re going to have to write a huge check to the IRS in April and that it could wipe out almost half our savings, putting us right back to where we were when I quit my previous job.  Nearly a year into this, that is the last place I want to be. 

So after some long discussion with my wife, she suggested we try to put our preps to some additional use, and to cut our discretionary spending to $0 for the first six months of 2012.  This will give us a better handle on our overall budget, help us determine what our preps are missing, and force us to re-evaluate our needs in terms of nutrition and entertainment.  For example, we have board games on the shelf we’ve never played, so why are we buying new ones?  We have books we’ve never read, blogs we haven’t written and projects we haven’t completed, and this will give us a chance to get to many things we let slip for too long, while allowing us to spend quality time together.

So the rules of the game are we’re only allowed $20/week for fresh food and random expenses, and a tank of gas every 2 weeks (unless the business necessitates otherwise).   While we still have preps in the basement and anything in the pantry, we’re not to spend anything except for business expenses.  This is made a little more complicated due to the impending demise of our $100 Craigslist dishwasher (it’s lasted 2 years, so I still think it was a deal).  Right now it’s making some horrible racket while it washes, so we’re guessing its only a matter of time before it dies.   Hand-washing dishes certainly won’t kill us, but that is time we won’t have available to do other things. 

More importantly, over the holidays we broke the oven portion of our range (The filament cracked, and we’ve been unable to find another for this make and model.), making cooking a little more challenging.  We still have the use of the top burners.  This might actually be a small blessing in terms of ‘learning to live without’.  We’ll be cooking on our Bubba Keg (probably the best cooking device ever invented), in a small portable camp oven my wife bought at Costco last year (propane), and on our propane grill.  We have 4 tanks of propane and a bag and a half of lump charcoal.  Rationing those two items will probably be the most challenging, and is what made me think of Robinson Crusoe. 

So we’ll keep you periodically updated as to how things are going.  My wife is already doing some crafty stuff while watching TV (she’s making pompom rugs, whatever those are), and I’m working on some business stuff and a little extra blogging.  If any of you have any prepper related goals, drop me  a line, I’d love to hear about them!

09

01 2012

5 Ways to Build a Debt-Free Business

Sixth months ago today I quit my day job at a very respected Fortune 200 company.  Scary, yes.  I worried about my wife, our home, our pets, and whether this crazy idea could really take care of them all.  Today, I thank everyone who has helped us answer that question.  Our customers, our suppliers, and even our critics.  We’ve made our share of mistakes, but each one has helped us build a better business.

This weekend I leave for a trip to Vegas for Pack Expo, the largest packaging conference in the US.  Just a simple (and very inexpensive) business trip makes me realize how far we’ve come.  I used to travel infrequently when I worked for the giant corporation, and I almost always hated it.  Now that I am doing it as the owner of a company, the entire feel is different.  I’ve scheduled something almost every hour of the day, to try to maximize the products and services I might be able to offer to our customers when I get back.  I’m excited to meet some of my suppliers face-to-face for the first time.  I’m looking forward to letting my wife demonstrate her knowledge as well, as she’ll be running the whole kit and caboodle while I’m gone.

After sixth months of living the ‘American Dream’, one of the most enjoyable parts of my job now is talking to people, friends and family, and often customers, about the possibilities…both in my life and career, and theirs.  At the same time that I am approaching venture capitalists and angel investors about some ideas I would like to turn into reality, I do my best to offer those around me the same on a smaller scale.  I tell folks, yes, you really can quit your jobs.  You can build a business from scratch, with cash and without debt.  Yes, there are still opportunities for those who will take them.

If I had to offer 5 pieces of advice to someone considering starting a business or trying to figure out how to grow one they already have, here they are:

1:  Do more with your brand.

Many folks get stuck in what they are doing and don’t realize there are many ways to monetize or spread a brand.  I’d love to see my local electrician or plumber start a Facebook page or blog and answer basic questions for free.  While I know our blog has been pretty thin much of the time, we try to add value with Advice and Beans here, our little newsletter we put in each order now, and our Facebook page.   We also aim to be accessible by phone or email and to share what we know (or don’t know) openly.  I know many businesses that do their best to give away as little information (for free at least) as possible, and that is one of the worst ways to grow your business.  The more ways you can interact with a customer, the more chances to make a positive impression, which in turn (with hope) lead to more sales or recommendations to others.

2:  Don’t be afraid to try something new.

While several of our product lines other than the food storage supplies haven’t done great, we have had some success with the most random things (For example, we almost sold out of the new Stormproof Matches we are carrying in the store at the Gun Show this past weekend).  Both my wife and I recognize that Preparedness, while a great niche, is also a pretty small one in terms of the overall market.  Backing oneself into a corner is not a great way to stay in business if one product line turns sour.  And so, we are always on the lookout for new products and services to offer.  In fact, we’ve got some ideas on the drawing board we hope to patent, and that could be huge in the market.

3:  Grow only as fast as you can afford.

Our office is still in our home.  We sublet some warehouse space, but just enough to work from.  It’s sometimes inconvenient to have our entire bottom floor devoted to the business, but we never would have been able to sustain a decent cash flow if we had to rent an office or dedicated warehouse space.  I’ve heard more than a few folks tell me you can’t start a business without loans and capital, and it just isn’t true.

We started our business buying a couple of cases of product at time.  Then we ordered half a pallet.  Then a full pallet.  Now, some of our shipments can take up half a tractor trailer.  The main benefit of this type of growth is you prove your market, and you’re unlikely to be stuck with a ton of stuff you’ll never be able to sell.

4:  Everything needs to have more than one purpose.

The last point notwithstanding, I’ve been looking for a small retail space to open a modest preparedness store in Nashville.  However, instead of just renting anything that comes along, I have several criteria for the space.  For example, it has to have a dock, so that I can stop renting the warehouse space and accept pallet deliveries.   However, I also remember how hard it was when I first started the business to figure out how to receive deliveries…so to defray costs I would offer others the opportunity to use my dock and storage space for their own businesses.

I would also go into a space knowing that a retail preparedness store might not be the biggest draw, so my goal would only be to cover my costs through walk-in traffic.  We’re a mail-order company, and we’re good at it.  That would still be our main focus, and a storefront would really just be a place for us to work that isn’t our house!=)

Another example is the enclosed trailer we just bought.  The business is a 24/7 machine, and we recognize that.  However, having a trailer will allow us to take the business on the road, so we don’t come to resent not having many days off or vacations.  Next month we’ll be taking our first trip to visit family in Connecticut.  However, we’ll be outfitting the trailer with a computer and printer to process orders, and shelving to accommodate inventory.  We’ll be putting advertising on the sides to hopefully draw some business while we’re on the road; we’ll stop along the way to answer questions or visit with our customers.

So never just buy something with only one purpose in mind; always work to maximize the return of every investment.

5:  Just Do It.

Nike came up with one of the best slogans ever.  I’ve talked to literally hundreds of people who feel stuck in their jobs and their lives.  But do you know how many of them were actually willing to give up their TV time, or their Youtube watching, or their weekends, to really try to start something?  None.  Not one.  Heck, I’ve offered to buy people their first shipment of wholesale inventory if they wanted to try selling something on eBay (yes, I also expected a return if they made a profit), and I still haven’t been able to get any takers.

For many years I was those people, so I completely understand how easy it is to be trapped in a particular lifestyle.  I watched my brother and my father come up with literally dozens of ideas that with a little work could have been profitable businesses.  My brother died two years ago at 42, never having tried any of them.  My father is 73, with all the time in the world, and I can’t get him to either.

To be honest, I think that is the reason I actually pulled the trigger.  I didn’t want to end up like I did, giving my brother’s eulogy.  I talked about how brilliant, and friendly, and open, and funny, and loving he was, and how much people adored him.  What I really wanted to say was that he took his ideas, and made them real…but I couldn’t.  Heck, I would rather have said he tried and failed, than never tried at all.  And that’s what I want someone to say about me.

While I hope to be still selling Mylar Bags and Oxygen Absorbers in 25 years, I also plan to have 5 other businesses running as well.  Once I actually started this business, it was like a wave…I saw the opportunities available in everything today.  I have ideas for several pieces of software, for a unique shooting range, a game store, a theme park…and each idea is the stepping stone for the next.  Don’t ever believe there is not something out there for you to do, if you choose to try.   I think every 20-something, every single mother, every corporate middle-manager, every unemployed carpenter, has the same potential to build and manage a business.

If they’ll just try.

 

 

23

09 2011

Living From the Pantry, Take 3

I saw this post referenced at The Simple Dollar and it brought back fond memories.  The first time our wife and I went without grocery shopping last year, we went a little over 7 weeks without buying anything.  At that time, we were actually using powdered milk for drinking, so didn’t even need anything as far as perishables were concerned.  We did it again late last year and lasted about a month, though there was a little more cheating involved as my wife was diagnosed with a gluten allergy and requires more fresh foods.

Due to some upcoming concerns about our budget, we have decided to give it another shot.  Our pantry is packed full, we have a freezer that has a hundred pounds of meat and chicken in it, and a cooler stocked with water and Gatorade.  The only thing I usually find myself wanting and running out of is chocolate.  However, I think the wife has some cake mix and I stashed a box of Chips Deluxe last week after a buy-one-get-one event at Publix, so I hope I’ll be ok for sweets.  I mentioned that we had so much, we could probably go more than a month, but she’s drawing the line right now, so we’ll see!

For a more thorough example of one families adventure in non-shopping, see this series of posts!  Wish us luck!

24

02 2011

Echoes…

Great post from Rural Revolution.  It covers some of the economic thoughts we’ve discussed here before.

14

10 2010