Review: The Art of Barter
Every Sunday, The Simple Dollar reviews a personal finance book or other book of interest.
A while back, I wrote a post called “Askers, Guessers, and Personal Finance” that proposed that bartering and negotiation are much easier for some people than for others, depending on their personality and the culture in which they were raised. I’m very much in the “guesser” camp, which means that I often have difficulty negotiating with others, asking for things, and bartering.
After that realization, I’ve spent some significant time focusing on improving my willingness to ask for and trade for things, and thus when I spotted The Art of Barter by Karen Hoffman and Shera Dalin on the shelf at my local library, I snatched it right up.
The book basically makes the case for bartering – in other words, offering one good or service in direct exchange for another good or service without cash in the middle – and discusses how exactly to go about it in many different situations. I myself have found bartering to be very useful and often do it with people I know – but will this book offer enough advice for me to attempt it in other situations?
1 | What Barter Can Do for You
The big advantage of bartering is (obviously) saving cash, because you can then conserve your cash resources for the things you can’t acquire through bartering. The authors go on to argue, however, that bartering can also save you time or improve the quality of your time through swapping skills, as well as open the door to building friendships and other long-term relationships because of the intimate nature of bartering. Bartering also teaches patience, which is an absolute necessity for bartering and for successful living in other areas.
2 | The Barter Lurking Around Your House
What do you have to barter with? Your home is filled with things, from the unused stuff in your closet to the space itself. Quite often, I encourage people to clean out their closets and sell off unused stuff when they find themselves in a financially challenging place. Hoffman and Dalin carry it further, suggesting you constantly look at the stuff around you as a source of bartering and lending in order to maximize the value of your time and possessions and energy.
3 | Trading Like a Pro
Where can you go to start bartering? The authors offer a handful of suggestions, but the easiest place to start is online, starting with sites like Craigslist and PaperBackSwap that facilitate bartering over the internet and allow you to do the bartering from home. One key point: use photos and as much (honest) documentation as you can for the things you trade – and expect the same from the people you trade with, so it’s clear exactly what you’re giving and receiving in a trade.
4 | Trading in the Fast Lane
Here, Hoffman and Dalin suggest joining a bartering exchange, something I’m unfamiliar with (aside from some co-ops, there’s nothing like this in my area that I’ve been able to find). The authors discuss many varieties of these, from swap meets to “time banks” (where people essentially trade their skilled time with others). How do you find such things? Start Googling, looking for bartering in your specific area.
5 | The Upsides and Downsides of Barter
The authors discuss some of the downsides of bartering here, and they mostly focus on patience (you’ve got to have it), taxes (you’re going to have to pay them), and some inconvenience (everything you want won’t always be available or convenient). Obviously, the impact of these things vary depending on your specific situation (for example, exchanges usually handle any tax issues for you – and I’ll mention them more below), but the benefits of bartering almost always outweigh the drawbacks.
6 | There’s No Place Like (Someone Else’s) Home
Your home itself is often a great thing to barter. For example, you can barter a stay in your home for a stay in someone else’s home, saving a great deal of money on family vacations. Another example: you can literally swap real estate with other people, saving a great deal on costs if you’re willing to – or need to – move. The convenience of doing this can make up for a bit of inequity in property value, after all.
7 | Barter, Taxes, and You
First, the good news: you don’t have to pay taxes on bartering if the barter was the incidental sale of personal property and the trades are not part of the way you earn an income. This covers most bartering that people will do. However, some people will try to trade items in such a way that they make a profit from it – buy an item for $20, trade it, trade that item, and then sell the item for $60. That’s a net gain of $40, and you are required to pay taxes on that. The chapter outlines how you go about doing that – it’s pretty straightforward.
8 | Charity Expands with Barter
The idea here is that you don’t have to just donate cash to a charity – you can also donate your time, your talents, and specific items that you own that may be of use to the charity. Rather than just writing a check, find out what the charities you care about actually need and see if you can give that, instead. Think of charity on a broader scale, too – are there individual people you can help with your skills and time and energy and possessions?
9 | Child’s Play: Barter for Kids
Get your children involved with trading as early as possible. In fact, my own children are starting to do this – they’re about to sign up for their own PaperBackSwap account where they’ll trade some of their books that they no longer read for other children’s books that they might read, now or in the future. You can also encourage them to trade with family and friends – just be sure that all guardians and parents are aware of the specifics of the trade so there are no issues later on.
10 | Barter and Your New Small Business
There’s no reason you can’t barter to help your small business. Perhaps you can trade your rent for some services provided by your business, or accept some bartered items in exchange for items your business sells. In the end, the focus should be on maximizing your return at the end of the year – just don’t forget that bartering can be a big part of increasing the value of your business without directly disrupting your cash flow.
11 | Barter as a Career
Bartering as a career? The authors discuss many niche careers for people who are very good at the social nuances of bartering, such as brokering or running a barter exchange. I can definitely see a role for this as a side business – for example, you set up a swap meet where people pay a dollar to get in and you do all the work of getting the space reserved and the tables ready.
12 | Barter to Your Health!
The final chapter discusses the sticky issue of bartering for health care, something that is fairly controversial in the medical community. Should doctors accept a barter for the medical care they provide? I think it’s very much up to the individual doctor and should not ever be expected. Many doctors seem to accept limited amounts of bartering as a form of charitable work.
Is The Art of Barter Worth Reading?
More than anything, The Art of Barter felt like an encouragement to get out there and barter with others rather than a directly useful guide. Many of the topics seemed directed towards people who are constantly out there bartering and trying to make a profit from trading, which is a group that doesn’t really include me.
However, if you’re really into bartering and need a big dollop of good advice – or you’re like me, just getting started and needing a little encouragement, The Art of Barter is a worthwhile and entertaining read.
Continue reading Review: The Art of Barter …
From The Simple Dollar.
The Simple Dollar Time Machine: May 15, 2010
Many newer readers of The Simple Dollar haven’t been exposed to the hundreds of great articles in the archives of the site, so this is a weekly series that highlights the five best posts from one year ago this week, two years ago this week, and three years ago this week. I call it … the Time Machine.
One Year Ago (May 9 – May 15, 2009)
Seven Steps Towards Minimizing Your Junk Mail and Unwanted Calls These are nothing but a time-consuming (and on occasion, money consuming) nuisance. You’re just better off putting in a few minutes to get rid of this stuff now.
Some Thoughts on the Tightwad Gazette’s “Flexible Casserole Recipe” The basic idea behind this “casserole” is brilliant – it can help turn almost anything you have laying around the house into a meal, and quite often a tasty (and reasonably healthy) one.
Health and Money: The Power of Independent Steps The more things you can do on your own time to improve your health, the better off you are because you’ll be spending less on health care and improving your own quality of life.
Some Thoughts on Haggling Haggling really only works if you have the right personality. Of course, there are also some social consequences to haggling, too.
The Reliability Bell Curve: What Does “More Reliability” Actually Mean? Having something that’s “more reliable” isn’t a guarantee of a longer lifespan. Instead, it’s merely a very strong likelihood of it. How much is that likelihood worth?
Two Years Ago (May 9 – May 15, 2008)
Holding a Monthly Family Financial Meeting … And How It Can Benefit Your Marriage and Educate Your Children The best thing you can do to keep your finances straight is talk about it with your partner. The best way to teach kids about money is to talk to them frankly about it. Why not do both at the same time?
An Interview With Amy Dacyczyn, The Author of The Tightwad Gazette This is one of the best experiences I’ve ever had as author of The Simple Dollar.
Making Your Own Homemade Oatmeal Packets: A Visual Guide and Cost Analysis The biggest thing I would change now is to replace the oatmeal with steel-cut oatmeal. I’d also perhaps alter some of the ingredients a bit in a few of the flavor samples.
The Sucker Factor: The Cost of Being Unable to Say No – And How to Get Out of It If you can’t say no, then other people are going to walk right over you and step on you on their way up. You’ve got to learn how to control your own destiny.
The Battle Between the Stuff I Want and the Guilt I’m Left With I often feel very guilty when I spend money on stuff I want that I don’t really need. Here’s how I deal with that.
Three Years Ago (May 9 – May 15, 2007)
42 Ways That Going Green Saves A Ton Of Money There’s a lot of overlap between frugality and environmental responsibility.
Remembering The Flood of 1993 And What It Taught Me The Mississippi River Flood of 1993 did a real number on my hometown. We were directly unscathed, but many relatives lost their homes and several came to live with us for quite a while afterwards.
How Personal Productivity and Personal Development Are Connected To Personal Finance I think it’s impossible to separate personal growth from personal finance. Personal growth makes personal finance work.
Teaching Entrepreneurship and Investing: Eight Ideas For Parents Who Want To Instill Good Personal Finance Values One of my biggest goals over the next decade or two is to teach our children strong personal finance and entrepreneurial values.
Setting Up A House Buying Worksheet This worksheet was invaluable to us as we moved through the house-buying process.
If you’d like to browse through more of the archives, visit the chronology, where all posts are listed in chronological order.
Nine Ways to Get More out of The Simple Dollar
This is kind of a FAQ for new readers and is posted each week along with the Time Machine. Here are nine great ways for new readers to dig deeper into The Simple Dollar.
1. Subscribe by email or RSS. Visiting The Simple Dollar’s website is great, but for many people, it’s more convenient to receive the articles in another form. It’s easy to join 60,000 other subscribers and get The Simple Dollar’s content by email or in your RSS feeder (if you’re unfamiliar with RSS, check out Google Reader.
2. Comment. Each article on The Simple Dollar has lively discussion. Just click on the green square in the upper right of each article on the website and join in!
3. Read my story of financial meltdown and recovery. The Simple Dollar isn’t based on what I’ve read in books or learned in school. I’ve made a lifetime of financial mistakes – The Simple Dollar is a record of what works for me during the process of getting my life on a better track.
4. Download my free 49 page e-book. Everything You Ever Really Needed to Know About Personal Finance On Just One Page is completely free. It summarizes all of the key lessons I’ve learned along the way about personal finance in one tidy package – in fact, all of the main principles can be found right on the cover.
5. Follow me on Twitter – or other social networks. I post tons of interesting articles, quotes, follow-up material, commentary, and other material on Twitter. Follow me! If you’re unfamiliar with Twitter, it’s essentially an open discussion forum for people to share ideas and thoughts with other like-minded folks – you just choose the people you want to listen to and their ideas and thoughts are all delivered to you on a single page.
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6. Dig through “31 Days to Fix Your Finances.” 31 Days to Fix Your Finances is an article series that outlines how you can get a grip on your finances over the course of a month.
7. Send me your questions and suggestions. Send me an email and let me know what you’re thinking, what you’d like to see, and any questions you might have. I try to respond to as many emails as possible and I read them all. I may even use your question in a future article!
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Continue reading The Simple Dollar Time Machine: May 15, 2010 …
From The Simple Dollar.
The People Around You
The single biggest advantage I’ve had in my life is that I’ve largely been surrounded by supportive people. My wife, my parents, my closest friends – all of them have always been incredibly positive towards everything I’ve ever chosen to do.
My mind continually goes back to the period in my life where I was trying to convince myself to make the leap into being a full-time writer. Rather than saying it’s something I couldn’t do or shouldn’t do, all of them encouraged me to do it when I decided the time was right.
Yes, they offered me input. Some of it was definitely constructive criticism. Yet I always knew that whatever I ended up choosing, they would be supportive and offer me any help they could even if they didn’t think the decision was the right one.
That made all the difference in the world in my decision to become a writer and a much more present father.
Photo by Daniel E. Bruce. Licensed under CC 2.0 Attribution Generic.
Supportive People in Your Life
The supportive people in your life often make all the difference between success and failure.
They tell you that you can do it rather than telling you that you can’t. Yes, sometimes we do attempt things that are simply beyond our reach, but we can never succeed if we never try, and we never try if we’re constantly told that we can’t do it. A supportive person tells you that you can do it, not that you can’t.
They encourage you to stretch yourself beyond where you think you can go. A truly supportive person can be aggressive and pushing, like a great coach. They encourage you to step beyond what you think you can do and push yourself even further than that.
They point you upwards when things look down. They don’t abandon you when you fail. Instead, they stick by you and tell you that things will shape up.
They encourage the better aspects of who you are. Either by example or by advice, they encourage the more positive aspects of your talents and your personality. The more you use them, the more prevalent they become as a natural part of who you are and how you behave.
They make you feel good about who you are. No one is perfect and it’s easy to get caught up in the negatives, especially when the people around you regularly point them out. Instead, look for the people who point out the positives and make you feel better about the person you naturally are.
They don’t expect you to be someone else to please them. If people are truly supportive, you don’t have to put on an act just to please them. You can be yourself and your natural positives simply come to the forefront.
You need to seek out the supportive people in your life and work on those relationships. Make an effort to spend more time around the people that make you feel good about yourself and what you’re doing and give you a sense that you can do it, whatever it is that you’re trying to accomplish.
If you’re trying to adopt new habits, seek out people who already have those habits ingrained in their life and will help you with theirs. If they are truly supportive, they won’t care that you make mistakes (aside from merely wanting to help you past them). That type of attitude from the people around you makes everything possible.
Photo by McKay Savage. Licensed under CC 2.0 Attribution Generic.
Minimize the Unsupportive People.
On the flip side of the coin is the unsupportive people. They’re the people in your life who you have to put on an act for. They’re the people who make you feel less happy about who you are and what you’re capable of. They’re the people who encourage your worst traits.
One of the most powerful moves you can make is to minimize the presence of such negative people in your life. For some people, this may mean moving away from a lot of the relationships in their life or away from relationships that they view as being deeply important.
Unless you’re personally responsible for that person (you’re a parent or a guardian), there is no relationship you shouldn’t back away from if that relationship is introducing negativity into your life.
Seek out a new set of activities. Break your routine. Instead of going out with the same set of negative people, go to a community activity. Call up an old friend you haven’t seen in a long time. Try something completely new.
You don’t have to define yourself by the negative people around you. There’s a world full of people out there and quite a lot of them are positive, well-meaning people. Spend your energy seeking them out and building relationships with them and leave the negative people in the dust.
Photo by the U.S. Army. Licensed under CC 2.0 Attribution Generic.
Be Supportive
Yes, it’s powerful to seek out supportive people and reduce your connection with unsupportive people, but you can have a profound influence on the supportiveness of those around you by simply being supportive of others.
Avoid negativity towards others. It’s easy sometimes to just say something negative towards someone who has made some form of a mistake, but such negative comments have both a negative effect on the person you say it to (often more than you realize) as well as a negative effect on you, reinforcing your own behavior as a negative person and an impression that bystanders gain of you as a negative person.
Look for something positive to say. On the other hand, saying something positive about someone else (or doing something positive with your time) has the opposite effect. It lifts the person you reach out to and also lifts (in a subtler way) the bystanders.
The positivity and negativity you give out comes back to you. If you’re negative, the people around you see you as being negative. You bring out negative behavior in others and you mutually bring each other down.
On the other hand, if you’re positve, the people around you see you as being positive. It brings out their positive behavior and they strive to bring you up.
It seems so simple, but it’s often so hard. Be positive towards others and seek out positive people and you’ll suddenly find that the world lifts you up instead of holding you down.
Continue reading The People Around You …
From The Simple Dollar.
AD’s 75 frugality blogs that will change your life
The AccountingDegree.com bloggers have been researching and assembling some very good lists of personal finance blogs.
The posts are not just a list of links, but include a quick description of each blog’s specialty or personality. I’m familiar with a lot of the listed bloggers, and you’ll want to learn from their expertise too.
One of the [...]
Continue reading AD’s 75 frugality blogs that will change your life …
From Monroe on a Budget.
Digital Photography: Taking Portraits Better Than the Pros
Time for taking portraits of your kids? You can probably do an even better job of capturing their personality in photos than the pros. Here’s how.
Continue reading Digital Photography: Taking Portraits Better Than the Pros …
From The Dollar Stretcher Featured Content.
Frugality and Being Social
Recently, I had a conversation with a friend of mine about some of the things I write about here on The Simple Dollar. Even though she’s struggling with some serious debt issues, she told me flatly that she didn’t want to take most of the advice given on The Simple Dollar. When I asked her why, she breathed in deep and told me the following (paraphrased):
I don’t want to be a “frugal” person. I don’t want to be the person who is no fun because I’m always chasing every dime and I’m always vetoing the fun things to do. I don’t want to be the person that leaves out cheap toilet paper for guests. I don’t want to just sit at home every night cackling as I count my pennies. I want to have a life.
First of all, it’s clear from these statements that my friend puts a great deal of value on how she appears to others. She desires an active and vibrant social life, to the point where it would seem that it’s one of the central values in her life. She wants to spend a lot of time with her friends and family – the people she cares the most about.
Hand in hand with that central desire is a desire to not alienate them through penny pinching. She aims to keep the people in her social circle happy and she wants to be involved in whatever things come along.
Both of those things are completely fine – in fact, they’re a healthy part of an extroverted personality (in moderation, of course). The problem here is that having a social life and being frugal are far from contradictory, as my friend likes to believe.
Let’s look at each of the comments.
I don’t want to be the person who is no fun because I’m always chasing every dime.
The statement here implies that she thinks she won’t be enjoyable for others to hang out around if she chases every dime. In response to that, I would simply say that most of the benefits of frugality come from choices made when no one else is around. Buying light bulbs isn’t a social event, nor is setting up an emergency fund. Grocery and household supply shopping isn’t a social event, either. Yet those are the times when many of the money-saving choices are made.
If your social experience is a key value for you, don’t cut back on it. Instead, focus on the multitude of things going on in your life that aren’t subject to social constraints.
I don’t want to be the person who is no fun because I’m always vetoing the fun things to do.
Simple. Don’t veto the fun things to do.
In fact, why not be the one who suggests fun things to do? In your spare time, think of some things that would be genuinely fun for the people in your social circle and then do some research on how to do them inexpensively. Then, when it comes time to plan a social event, pipe up with your idea. Not only will it be cheaper than throwing yourself into something without any forethought, but if you put your mind to it at other times, you’re likely to come up with some brilliant ideas to boot. You actually won’t be the downer – instead, you’ll be the person who comes up with the good ideas.
I don’t want to be the person that leaves out cheap toilet paper for guests.
Then don’t leave out cheap toilet paper for guests.
If you have multiple bathrooms in your home, designate one as the bathroom that guests use and stock it with the finest toiletries. Then, use the other bathroom yourself and use generics in there. It’s a room that’s just yours – no one else will ever use it. Since the guest bathroom will likely be used less than the one you regularly use, you’ll buy a lot more of the inexpensive stuff than the expensive stuff, trimming your budget quite easily.
Again, it’s all about what’s a personal value to you, and being a good hostess is an important value to her.
I don’t want to just sit at home every night cackling as I count my pennies.
Then don’t sit at home every night cackling as you count your pennies.
There are countless things to do all over the place that don’t require a major outlay of money. Take a serious look around your community. Look at the community calendar. Find out about the many things your city’s parks and recreation department has to offer.
Frugality is not about sitting at home and counting your pennies. It’s all about figuring out what exactly you want out of life, then doing exactly that while minimizing the cost of it. The pieces of your life that aren’t part of that picture of exactly what you want out of life are the parts you can trim.
If you value your social life, then focus on your social life. The rest of your life are the areas where you can cut. If you have a calendar that’s full of social activities every night, do you really need cable or a land telephone line? If you thrive on your friends and family, why not think ahead and come up with things that are a blast and save all of you a few bucks over the regular price of admission? And on those rare occasions when you are home, you don’t really need a flat panel television and thousands of dollars’ worth of decorations when the core value of your life is outside the home. Decorate tastefully and take your time with it to find bargains on things you actually want.
Being social is not the opposite of being frugal. They often go hand in hand.
Continue reading Frugality and Being Social …
From The Simple Dollar.
Another Daniel Update
Although I never said it outright, some of you may have guessed that we don’t do routine doctor’s visits. We don’t vax and our kids are developing normally. We’ve had some bad experience with doctors in the past and hadn’t found one we were comfortable with in our area.
While in the hospital, I was discussing follow-up visits with one of pediatricians. I told her we had had bad experiences with some in our town. She asked if we vax, and recommended a D.O. who was non-vax friendly.
We had our first visit yesterday and I am very happy to report we have found a doctor that I trust. Where there is concern that this could all be a genetic disorder, we are going to continue to go.
The doctor is sure we don’t need more physical therapy, as Daniel is walking, running, climbing, even pushing his brother down. Daniel still has a few lingering confidence issues, where he isn’t sure he can make it physically, but he has proven himself well.
One thing that was brought up was possible speech therapy. There are two reasons for this.
Daniel has developed a Maine accent. Neither Dan nor I have a Maine accent. Maine accents are generally reserved for those in the Downeast region of Maine, around Bangor, Maine (pronounce ban-Gore, not ban-ger). We have never lived there, but we say our fare share of “wicked” when we are not talking about something evil. Otherwise, we sound like normal Massachusetts folk, just like everyone else in Maine. My son, however, now pronounces “more” as “moy-ah” and “talker” as “tock-ah”.
My son has started pausing mid-word. Instead of normal “yeah” he says “yea… ah”. Instead of “game” he says “gay… ame”. Maybe they are two descriptions of the same problem. Anyway, we are going to keep an ear on it and get back to the doctor about progress.
Other than the newly developed speech impediment, Daniel is back to himself. He’s a little unsure of himself at times, but he has pulled through rapidly. His personality has fully returned and he is back to micromanaging his brother’s play.
Continue reading Another Daniel Update …
From Under $1000 Per Month.
Reader Mailbag #99
Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.
Do you get involved when someone you care about (sibling/friend) is heading down the road to financial ruin. If yes, how would you get involved, and to what extent?
Without getting into too much detail, my sister/husband/children are all living way beyond their means. His income from a construction business has dropped considerably, but they continue to spend like he is making a six figure income. We know they are already having some financial trouble, but they seem unwilling or unable to adjust to their new situation.
- John
This is a situation that requires a lot of care. Quite often, when one person in a friendship sincerely feels that the way they live their life is in some way better than the way their friend lives their life, it can very easily put some sand in the oil and really damage the friendship. The person thinks they’re helping their friend, while the friend feels looked down upon and resentful.
Rather than being heavy-handed about it, just have a casual talk with your friend. Tell them that you went through a financial hard time yourself in the past and give them a copy of a simple personal finance book that can help them with their problems – then let it drop. Do not hammer the person. Do not insist that they change their ways. They have to find the path to financial freedom themselves – you can lead a horse to water, but you can’t make it drink, and if you try to force the horse to drink, you’ll find yourself kicked.
I would probably recommend Dave Ramsey’s book The Total Money Makeover for this very situation, but it somewhat depends on the personality of the friend.
I’d like your opinion on my current predicament.
I’m in the military, I don’t like my job, and I’m in a lot of debt. My options from this point are: 1. Continue serving the two years I owe, create a budget that will eliminate my credit card debt ($23K) by my separation date, making the huge pay cut more manageable, and be incredibly unhappy until then. 2. Petition to separate within the next 6 months, use the GI Bill to begin my Masters and cover minimum credit card payments (unless I find a job), and be MUCH happier. I have been in the military for 5 years now and knew since the beginning that it was not my passion. I tried separating last May, couldn’t find a job a month out, then withdrew my separation from fear that I wouldn’t be able to pay my bills. Of course, I didn’t consider then as I am now moving back home to eliminate the lodging expense and using the GI Bill for school and other bills. I have nothing in savings or investments.
- Cassie
The most financially sound choice is to stay in the military for now – that’s fairly clear.
What’s not as clear is what exactly “incredibly unhappy” means. There’s an enormous difference between “I don’t like my job” unhappy and “I’m going to kill myself if this goes on another day” unhappy.
If it’s the latter, the situation is truly untenable and you should get out as soon as you can. However, if it’s the former, I would encourage you to stay in the military and get yourself in a much better position before leaping into a different life.
My suggestion would be to put off your separation for a month. During that month, dig deep into the aspects of your life that bring you happiness. You might just find that your current situation is more tenable than you think right now, and if that’s the case, the choice is clear.
I am 25 years old and have a steady job in California. My parents live in Ohio and want me to buy an income property near them. The house rents for $700/ month. There is also a small apartment above the garage that rents for $300/ month. Both units are currently occupied and the renters want to stay.
The house is listed at $115,000. I can have close to 25% down if I clean out most of my savings, not counting IRA’s and 401k. I am thinking that the mortage will be aroud $600/ month, if the units were vacant I could still handle the monthly payment.
This seems almost too good to be true. What are your thoughts?
- Stephen
You’re missing more than a few costs. Property insurance, property taxes, landlord insurance, and landlord-related (read: higher than usual) maintenance costs are all going to go right on top of the pile here, meaning your costs are going to be significantly higher than just the $600 a month for the mortgage if you choose to go this route.
I would also be concerned about what a property inspection might reveal. A house big enough for two rental units selling for $115,000 sets off my alarm bells as being a bit on the low side, especially given the rents that people are paying, which indicates that it’s not in the least expensive neighborhood (such a house in my hometown, for instance, would rent for less).
Don’t jump into this feet first or you might regret it. Get quotes on the insurance you’ll need. Get a property inspection and also calculate what it’ll cost to get things up to snuff. Find out what the annual taxes are on the property. Then, take a serious look at whether or not you can really swing it.
Do you have any recommendations for billing related tracking? I have accrued multiple clients in a side business I run, and most of the payments I receive are to be recurring, and each varies by client. I am looking for something (maybe a spreadsheet) that will make it easy to track recurring payments for each client, including the amounts, and the time frame for which they have already paid.
- Seth
It sounds like you’ve got a very small business that’s nowhere near the level of needing an industrial-strength accounting package but is busy enough to stretch your ability to keep track of things. If that’s the case, the first place I would start looking is the accounting and billing software category at Download.com.
After reading through the reviews of several of the packages, my pick for you would probably be Microsoft Office Accounting Express. It’s free, integrates well with other Office products, and upgrades to a more full-fledged package when you need it later on (like Dynamics GP.
If you don’t like the Microsoft route, I’d look at Quickbooks Simple Start free edition. Again, it provides a nice upgrade path when you need more horsepower, but gives you what you need today.
What health insurance do you have if you’re self employed?
- Bob
Right now, our entire family uses my wife’s health care benefits, but that was the case already before I switched careers because her health care has always been better than mine.
We’ve done some research into what it would take for us to self-insure (in the event that my wife chooses to switch careers or something to that effect) and we found some good things and some bad things. The good: even if you can’t find insurance because of a pre-existing condition, you can usually find some insurance in many states thanks to the existence of high risk pools in those states, which bargain collectively for policies. The bad: almost every option is painfully expensive. You’re either going to have to be earning a lot or you’re going to have to live with high deductibles.
If you want to know more about it, the place to start is HealthInsurance.org, which has a truckload of information.
my family of 4 is planning a trip to Walt Disney World this year. Of course I want the best experience possible without leaving a major hole in my pocket book… any tips or suggestions?
- Michelle
Five suggestions:
1. Shop around for tickets. There is no “best” place for airline tickets – they’re all roughly equal, but some sites seem to have better rates with some specific airlines and some specific routes. Look at lots of options before you buy.
2. Compare flying to driving and even to using a train to get there. Amtrak does go to Orlando, after all.
3. Consider camping when you arrive. This works well for some people (like us, who love camping) but not so well for others.
4. Consider buying an Entertainment book for Orlando. Since you’ll likely be hitting lots of sites in that area and eating out some, it will probably pay for itself on the trip. If you wait until close to your departure, you’ll probably get a further discount on the book.
5. Make as many meals for yourself as possible. Get sandwich supplies and make them yourself. Fill up backpacks with food and take them with you where you go. Don’t pay high prices for food if you don’t have to.
I’m curious what you think about having a set budget for charity when a crisis such as the one in Haiti occurs. Should you have an “emergency fund” for charity, so you can make an immediate contribution without busting your budget? “Borrow” money from next year’s charity budget and donate now? Not do anything, but perhaps re-evaluate the charities you donate to, and next year give more to ones that help in crisis such as this?
- Joseph
I have an annual amount that I plan to give to charity each year. With a few exceptions (where I’m dead certain we will be giving a certain amount to a charity, like Iowa Public Radio), we let this roll until the end of the year and then give of what’s left in the last week of the year.
Thus, if something like Haiti happens, we can give within this charity budget and not have to worry about it. We just keep the receipt and use it when we total up at the end of the year.
It’s much easier if you just keep a running tally of your charity spending somewhere, like in a spreadsheet.
I have $3000 that I rolled over many years ago from a 401K to a traditional IRA. I would like to roll that money into my Vanguard Roth IRA just to have less institutions that I do business with. What are the rules for converting from a traditional to a Roth IRA? What things do I need to consider before doing so?
- Stephanie
The big thing is that you’re going to have to pay income taxes on the amount you roll over into the Roth IRA now (once it’s rolled over, you won’t have to pay those taxes later on, of course). Depending on your tax bracket, that means Uncle Sam will eat somewhere around 25% of the money. However, you’ll effectively get it back in retirement – and, if your investment options are better at Vanguard, you’ll probably earn more, too.
One big thing to think about: what do you expect your income tax rate to be in retirement? Do you expect it to be lower than it is now? It’s hard to judge this, but I would expect that if my income in retirement is going to be a lot lower than it is right now, my rate in retirement will be lower. If it’s about the same, I would expect my rate in retirement to be higher.
Now, if your rate in retirement will probably be lower than it is now, it’s not a great move to roll things over, because you’ll pay more taxes on it now than you will then. Only make this move if you think your retirement income will be somewhat comparable to what you’re making now.
I graduated from college 1 year ago and have been able to save about $30,000 from working and living at home. Now I am ready to move out and have contemplated either purchasing a home in downtown Baltimore (however, the median house price for my desired location/amenities is about $300,000 and I would definitely have at least 1 roommate) or renting with some roommates for about $600/month rent. My question is, would it make sense for me to try to purchase a house or rent? And, if I choose to rent, what should I do with my savings? Right now I have it in an online savings account earning 1.55% APR just because I want it easily accessible if I choose to purchase a home.
- Joe
First of all, 10% down on a 30 year mortgage means you’re either going to be paying PMI or paying a higher rate because you don’t have that 20% down. So, if nothing else, I’d say to wait until you have at least 20% down before buying.
Let’s say you did have 20% down. You’d then be taking out a 30 year fixed rate mortgage for $240,000 at, say, 5%. Your monthly payment would be $1,638.37, and that wouldn’t include property taxes or homeowners’ insurance. Alternately, you could rent at $600 a month.
If I were you, until there were additional reasons to buy (familial or otherwise), I would continue to rent. Save until you have at least a 20% down payment, then make the move when you’re ready.
As for saving it, if you must have it liquid, a savings account is probably the best choice for you. However, if you’re going to save for that 20% down payment, that gives you at least a year or two in which you won’t be spending the money. In that time frame, a CD is probably the best choice for you, but if the timeframe is longer, you may want to look at putting at least a small percentage into stocks or some other investment.
With the economy in such turmoil, I’m thinking that we may be headed for another Great Depression. There a lot of people who believe this. Do you have any tips from your grandparents or other sources for living on practically nothing? I bookmarked the recipes from that lady Clara whom you highlighted in the Simple Dollar last year who told about what her mother cooked for the bleak depression years, but I wanted something I could print and save for when I will need it.
Thinking this way has made me re-evaluate how I live, what I’m spending my money on, and what’s important. I realize that I’ve accumulated things to make my life more convenient and enjoyable without much thought as to what I really need. Now I’m faced with the situation of getting rid of gobs of “stuff” , and feeling remorse that I’ve wasted money over the years on such unimportant things.
How independent and self sufficient can we really become? I’d be most interested on your comments and suggestions.
- Junia
It’s very possible today to live a completely self-sufficient lifestyle without reliance on any external sources at all. The big question is what type of quality of life are you looking for?
Do you want electricity? In that case, you’ll probably need some sort of generating capacity. If you live in the Midwest, as I do, a wind turbine is one possibility, but to be self-sufficient, you would also need to know how to repair it and maintain it. Do you want water? That means you’d have to dig a well – or have it dug for you. If you want sustainable food, you’re going to have to get into some degree of agriculture, raising livestock and plants from non-hybridized seed sources. These things are all possible. These things all have significant startup costs, but once they’re running, there’s not much cost other than work.
An alternate question would be what do you consider an acceptable level of self-sustainability? Recipes like Clara’s are great, but they still rely on sources for all of those food items. If that’s the kind of thing you’re looking for – merely tips for how to live if we were suddenly whisked back to the 1930s – there are many, many internet sites devoted to such things. This page, for example, has a ton of Depression-era recipes.
The real concern, I think, is that you have a sense that your current skill set would not function well in an economic depression. If this is a genuine concern for you, spend some time developing the skills. Start a garden. Make recipes with very basic foodstuffs. Take control of your own home repairs. Go as far down that path as you’d like, so that you know how to do these things. Not only are they useful life skills, they save money and they often teach you a lot about yourself as you’re learning them.
Got any questions? Ask them in the comments and I’ll try to include them in a future reader mailbag.
Continue reading Reader Mailbag #99 …
From The Simple Dollar.
Christmas Thank you Notes
From: Robin Souder
At Christmas time, the kids are so excited to get
the mail and find greetings from loved ones and
friends. Although Christmas cards are dwindling
more and more with each year as the technology
age expands, the acknowledgement and gratitude of
a gift is still of crucial importance in our
family. As the cards come in, I ask the children
to pick out their favorite designs.
Most of the time, the opposite side of the front
of a Christmas card is blank. In that case, I
cut the front from the card and turn it into a
postcard for my kids to use as a thank you
postcard, a notecard, or a gift tag.
As a thank you for a Christmas gift, the front of
the card is perfect. I draw a line down the
center of the blank side vertically to resemble a
postcard. I let the child write the thank you
message on the left side with the address on the
right. Postage for postcards is cheaper than a
letter.
I know most people will say that an email is even
cheaper, but I am finding that those who send a
gift, love seeing the handwritten thank you of a
child, or an adult for that matter. ( especially
those gift givers who are from an older
generation.)
Cherish those who have come before us, as they
have enlightened us with the beauty of
personality, character and the work of the hands!
Continue reading Christmas Thank you Notes …
From Living On A Dime Blog » Living On A Dime Blog.
Never Eat Alone: Expanding Your Circle
This is the eighth of sixteen parts of a “book club” reading and discussion of Keith Ferrazzi and Tahl Raz’s Never Eat Alone, where this book on building a lifelong community of colleagues, contacts, friends, and mentors is teased apart and looked at in detail. This entry covers the fifteenth and sixteenth chapters, “Connecting with Connectors” and “Expanding Your Circle,” which appear on pages 105 through 127.
One of my old friends, Darwin, is a connector. He’s simply one of those people who knows lots of other people and often knows exactly who to call in any given situation. He’s also deeply in touch with what’s going on in the community.
In other words, Darwin is the type of person that’s infinitely useful to have as a friend – and because he’s so useful, he tends to attract lots of friends.
Naturally, this ties into his personality. He’s a gregarious extrovert who’s good with names and has a strong sense of tact. That goes a long way toward making the grade.
Still, in the end, there’s something else there – an innate desire to connect with others, perhaps. Even though Darwin and I have very little community overlap at this point, I can still call him up and ask for help if I need it – and if he can’t provide it, he probably knows someone who can.
That’s valuable, any way you slice it.
Weak Ties
On page 129, Ferrazzi cites a 1974 study by Mark Granovetter that explains how the small relationships we build with lots of people – acquaintances, distant friends, members of the same club – really help us:
As a result of the study, Granovetter immortalized the phrase “the strength of weak ties” by showing persuasively that when it comes to finding out about new jobs – or, for that matter, new information or new ideas – “weak ties” are generally more important than those you consider strong. Why is that? Think about it. Many of your closest friends generally do the same work and exist in roughly the same world as you do. That’s why they seldom know information that you don’t already know.
Your weak ties, on the other hand, generally occupy a very different world than you do. They’re hanging out with different people, often in different world, with access to a whole inventory of knowledge and information unavailable to you and your close friends.
I have a ton of weak ties in the blogging community. I send them emails every once in a while, read their blogs (and comment regularly), and link to them in my weekly roundups and on my sideboard. If they ever visit the mid-Iowa area (which simply isn’t a hotbed of blogging, other than a few moderately well-known very conservative political bloggers), I usually will go out and have a drink or a meal with them.
Yet, time and time again, when I’ve had a major project and I’ve needed help, I’ve been able to tap this community. I have dozens upon dozens of people I can write to for suggestions when I’m traveling, for ideas for an upcoming book, for a guest post in a pinch, and for getting the word out about anything big I’m doing (like a new book).
These weak ties are a big part of the success of The Simple Dollar. I’d call all of these people my friends – but they’re not close friends. We share passions, but are separated by distance and a lack of a long history with each other.
That doesn’t mean they’re not valuable – they are, and I’m quite happy to help them when they ask. They’re just simply “weak ties” – and I’ve found that, time and time again, a pile of “weak ties” can be more helpful than just a few strong ones.
I Don’t Want to Do This
On page 130, Ferrazzi makes a case as to why you probably shouldn’t want to be a “super connector”:
[...] what’s most important is developing deep and trusting relationships, not superficial contacts. Despite Granovetter’s research, I believe friendships are the foundation for a truly powerful network. For most of us, cultivating a lengthy list of mere acquaintances on top of the effort devoted to your circle of friends is just too draining. The thought of being obligated to another hundred or so people – sending birthday cards, dinner invites, and all that stuff that we do for those close to us – seems outlandishly taxing.
Only, for some, it’s not. These people are super connectors.
I’m not a super connector. I’ve probably got more connections in my address book than the average person, but I’m far from the level of many people I know. Nor do I really want to be – I’m simply not outgoing enough and the thought of adding hundreds more cards to my Christmas card list seems painful.
Instead, I’m happy with the set of close friends and the larger set of “weak ties” that I have. I don’t feel a strong need to focus on building stronger ties with all of those “weak tie” folks – not that I dislike them, but that there’s some factor (usually distance) that makes building a stronger tie more difficult.
So, for now, I’ll focus on just keeping those relationships healthy – and occasionally adding a few more weak ties or building a new deep relationship.
If You’re Not A Super Connector…
… then what should you do? Ferrazzi summarizes it clearly on page 137:
In one word: connect. In four better words: connect with the connectors.
As I mentioned at the start, one of my friends is clearly a “super connector” of sorts. I have a few other friends who are also very strong connectors, each with surprisingly little overlap with each other.
What I find is that these people tend to be particularly valuable friends. By default, if I need help with some fairly non-personal area of my life, they’re among the first ones I turn to, simply because I know they have access to answers.
It’s well worth your time to figure out the people around you who are exceptional connectors – and befriend them.
Finding a Partner
What if you don’t know any “super connectors” but want to meet lots of new and interesting people? One effective way to do it is to find a partner of sorts – someone who also wants to meet lots of new and interesting people. A peer in your workplace, perhaps. On page 139, Ferrazzi lays it out:
The most efficient way to enlarge and tap the full potential of your circle of friends is, quite simply, to connect your circle with someone else’s. I don’t think of a network of people as a “net,” into which you wrangle contacts like a school of struggling cod. Again, it’s like the internet, an interconnecting series of links in which each link works collaboratively to strengthen and expand the overall community.
Such collaboration means seeing each person in your network as a partner. Like a business in which cofounders take responsibility for different parts of the company, networking partners help each other, and by extension their respective networks, by taking responsibility for that part of the web that is theirs and providing access to it as needed. In other words, they exchange networks. The boundaries of any network are fluid and constantly open.
To put it simply, Ferrazzi is advocating meeting the friends of your friends.
This actually is a great way to meet new, interesting people and build new friendships. Accept invitations to events where you know some of the people – and those people know the rest of the people. Then, encourage the people you know to introduce you to the people you don’t.
You can facilitate the same thing yourself by hosting a party where you know all of the guests, but some of the guests may not know each other. This allows you to introduce them to each other and perhaps provide the foundation of a new, useful friendship between two people you’re concerned about.
A “Shared” Party
So how do you utilize such sharing? On page 140, Ferrazzi offers a great example of a dinner party:
“Lisa, let’s share a few months of dinner parties. You hold a dinner party at the Bel-Air and give me half the invite list. Then I’ll hold one of my dinner parties and give you half of the list. We’ll split the tab for each event, saving each of us a bundle of money., and together we’ll meet a lot of new, exciting people. By cohosting the events, we’ll make them that much more successful.”
Co-hosting parties almost always results in an interesting mix of people, as both hosts are drawing on their circle of friends which often have little overlap. This provides a great opportunity for you to meet these people, plus have the opportunity to build new relationships between the guests, many of whom won’t also know each other.
To some this seems uncomfortable, but in practice, it goes surprisingly well. All of the guests are in the same boat – they know one of the hosts. This provides a very nice conversation opener with people – you’re in the same situation, so you can talk about the gathering – and each other – from a similar perspective.
I’ve been to two gatherings like this and each time I wound up building a few new relationships out of the event. That’s worthwhile, if you ask me.
Never Forget…
A good point of advice comes on page 141, something that applies very well to all social situations:
Never forget the person that brought you to the dance. I once mistakenly invited a brand new friend to a party without inviting the person who introduced us. It was a terrible mistake, and an unfortunate lapse of judgment on my part.
This is an important key to remember for your own benefit, because the person that brought you is often the person who is most effective at introducing you around and facilitating your friendships. Until you’ve established a good relationship on your own, it’s always good to have the “person in the middle” available.
On the flip side, it’s very good to be that “person in the middle.” If you are, that means you’re adding value to both people’s lives by introducing them both to someone that they might value. If their friendship takes off, their impression of you will only grow.
Whenever I have a chance to introduce people who I think might hit it off, I always take that chance. I don’t try to set up dates or anything, but I do make an effort to make sure they know each other. If they click, everyone’s a winner.
On Wednesday, we’ll tackle the seventeenth and eighteenth chapters – “The Art of Small Talk” and “Health, Wealth, and Children.”
Continue reading Never Eat Alone: Expanding Your Circle …
From The Simple Dollar.