In honor of all the homeschoolers out there working to live within their (often reduced) means, I’m declaring today Finance Freebie Friday, with a link to a freebie finance tool!

Millionaire Mommy Next Door (my favorite finance blog) has created a free spreadsheet that helps you keep your needs and wants balanced within the realities of your actual income. [Read more]

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I saw that Why Homeschool found this hour-long interview with Elizabeth Warren, one of the authors of The Two-Income Trap: Why Middle-Class Parents are Going Broke.

This is one of my very favorite books. It explains so well why having two incomes can, indeed, be a terrible trap for many people. It was after I read this book a couple of years ago that I knew we were going to be in for some major problems in the U.S. real estate market.While I had known for a while that many people are lured to financial disaster by easy consumer credit, I had not put the pieces together to see that even many people who pay all their bills and live within their means are still vulnerable to financial disaster.There is a common perception that homeschoolers make a financial sacrifice to enable one parent to be available for child-rearing. This book, though, was proof positive for me that homeschooling is a great way to avoid the trap that many families find themselves facing. After reading this, I knew that homeschooling was actually going to strengthen our family’s overall financial security.

Essentially, much of the danger of the two income trap comes from rising home prices. While people spend less on necessities like groceries than they have historically, they spend a lot more on their mortgages.

This book argues that one of the main drives in the cost of housing has been the need to be located near good schools. Homes cost more in desirable school precincts, and the more people who want to live in that district, the more the houses cost.

Though the authors don’t have anything against having two incomes, they do see a huge problem when a family HAS to have two incomes in order to pay the mortgage.

If you have extra income just to pay for luxuries, vacations, or for saving money, it isn’t such a big problem. When one of you gets sick, or is laid off, your family can just cut back on those optional expenses, without being in danger of losing your home or going bankrupt.

If your family requires both incomes in order to make ends meet, you are in an incredibly precarious position. Most bankruptcies are caused by illness or job loss, not just running up credit card debt and living beyond your means.

If you are a one income family, then you have a great safety valve. If that one income is reduced or lost due to a layoff, or if expenses go up because of illnesses or other temporary factors, the unemployed spouse can go out and get a part-time or full-time job, until things get better.

If both spouses are already employed, then it is much more difficult to bring in more money in the case of an emergency. So one-income families are more solid, financially, than many two-income families, even though they may have to live a somewhat more frugal lifestyle on a day-to-day basis.

We homeschoolers don’t have to think about what school district we are near! Furthermore, if we do find ourselves needing to reduce our housing costs, we can just sell our house and buy a smaller one. We don’t have to agonize about kids switching schools mid-year, losing their entire social network at the same time that the family is undergoing many other challenges.

After reading The Two-Income Trap, I’m convinced that homeschooling is a great way for our family to build a stronger financial and emotional position. It is a responsible way to anticipate life’s unexpected problems, while building a lifestyle of family bonding.

And heck, I just realized that the book is on sale at Amazon for only $4.99. What a steal! Find it at your local library, or pick up a copy on Amazon to have for future reference and moral support when you start envying those big houses.

The Two-Income Trap: Why Middle-Class Parents are Going Broke

(This is an affiliate link, and helps generate a few cents for Bringing Up Learners if you buy through my link. If you enjoy my posts, you can send a little encouragement my way by making purchases on Amazon after clicking on one of my Amazon links (any book you want to buy, not just the ones I recommend!)

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On Monday I promised some more tips for using The Grocery Game to save on your grocery bill, so here you go:

Before I go any further, please let me say once more: The A#1 key to using coupons, no matter what your system, is that if you buy things you don’t need you aren’t saving money. “Do I really need this?” I suggest you make this question your mantra as you work with your coupons. When you first start out, the awesome deals tend to cloud your better judgment now and then! It will get easier, and you will be less susceptible to temptation as you get experience. Don’t beat yourself up about it if you make a mistake, but do keep trying.

File folders vs. clip ‘n’ sort

The two basic filing methods for storing your coupons are to either put each weeks’ coupon inserts in a file folder, or to go ahead and cut out the coupons so they can be sorted by category. Either method works with The Grocery Game. I started out using file folders - I marked each folder with that week’s date, and put the two or three coupon inserts inside. This worked well for a while, but it does have a few drawbacks. Every time you want a coupon, you have find the right folder, and then flip through the appropriate insert to find the coupon you want. That makes for a lot of flipping back and forth! Also, it gets difficult to purge the expired coupons, since some of them expire within a month, while others are good for 6 months or more.

Eventually, after I had amassed a huge stack of folders, I decided to clip and sort from that point on. It takes a few minutes to snip out all the coupons, but not as long as I had thought. I can realistically get the whole week’s coupons clipped and sorted in about 15-20 minutes. When it is time to retrieve the coupons, it is much easier to refer to categories, rather than flipping back through the inserts. The grocery game list tends to be sorted by category, so often I just grab the “toiletries” pile and all the coupons I need are right in one spot. Also, about every month or two, I quickly flip through the coupons and purge any that expired unused. This keeps the number of coupons down to a manageable level.

If you do clip and sort, try putting the new coupons at the front of each section each week. That helps you know where in the group to look for a particular coupon. If the list shows that a coupon is recent, you know to look near the front. If the coupon is from several months ago, you know to look near the back. This will cut your search time even more.

Keep in mind

The store’s sales tend to rotate, so in order to save the most you will need to stock up when things are on sale. If you build up sufficient reserves, then you can live off of your sale items until they go on special again. Whether or not you’ll be able to get all of your groceries at the lowest prices depends on several variables. I’ve found that we can get enough free or 50 cent toothpaste for a small army, as well as all the shampoo I want for $1-2 a bottle, or less. At some point, you have to stop buying all but the best deals for those, or you’ll be drowning in them. On the other hand, there are some other things, like soups, yougurt, and canned/frozen vegetables, where we eat more than we have coupons for. In this case, especially if you have a large family, you could consider buying one or more extra copies of your local paper, so that you will have enough coupons. Many grocery stores will honor up to 3 of the same coupon. It only costs an extra dollar or two for the paper, which more than pays for itself if you need more coupons.

Final tip

Finally, you’ll probably notice several coupons for restaurants as you are going through the inserts. I recommend clipping these and storing them either in your purse or in your car’s glove box. (This tip also applies to those community coupon books you buy or receive in the mail.) This way you’ll have them handy when you need them. If you have to remember to get them out before you leave the house, you won’t do it. Besides, we hardly ever decide on where we’re going until we’re halfway there!

Remember, if you don’t have the discipline to coupon responsibly, then the responsible thing to do is to skip couponing. You’ll waste a lot of time, you won’t save yourself any money, and you’ll end up with lots of waste and junk. If you think you do have what it takes to get the most out of coupons, then give it a try. With a little practice, you should be able to find real savings, which is always great when you are trying to live within your means!

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I say yes and no. There are a few big problems with using coupons:

• It takes time to clip, sort, and decide which coupons to use, and sometimes it takes a LOT of time.
• Coupons are usually for name brand items that are more expensive to begin with. In that case, you may not actually save money over buying a similar item in a store brand, or in bulk at a warehouse club like Costco.
• Coupons require a lot of self-discipline. Many of them are for items you wouldn’t normally use. If you buy a lot of extra junk with coupons, you are not saving money. If you buy food your family doesn’t like with coupons, you are not saving money. If you get your kids hooked on a new snack that you will have to pay full price for next week, you are not saving money.

Despite these drawbacks, I do currently use coupons, and I recommend them to others as well. What has worked to help me overcome some of the problems associated with coupons is a very nifty service called www.thegrocerygame.com. (Note that I’m not being paid to refer them - I just think they offer a very useful service that saves you much more than it costs.)

What is The Grocery Game? Well, it is a service that catalogs all the coupons you receive in your local newspaper. It also tracks all the sales for the grocery store that you select. Each week, you receive a list of products that are available for a good price. In most cases, these will be items that are both on sale and with a coupon. This means that you can save 50% or more on the majority of the list’s items. Because stores tend to rotate their sales over a three month period, you can stock up on sale items each time they come up, and they can hold you over until the next time they go on sale! With The Grocery Game, you don’t have to try to decide on your own when to use what coupons. They tell you when you can get the best deals by combining sale prices and coupons. If you buy from their list, you’ll always get great prices, and yes, you’ll even get some items for free.

If you’re not sure whether this is something that would be worthwhile for you, they offer a four week trial for only $1. If you use just one coupon, the trial will have paid for itself! After the trial is up, it only costs $10 every 8 weeks. I usually save between $15 and $30 every week in coupons (not even counting the store sales), so this is very cost effective.

In practice, the process works like this:

1. Remove your coupon inserts from the Sunday newspaper.
2. You have a couple of choices about how to file the coupons. You can just stick each week’s intact inserts into a separate file folder, or you can go ahead and cut the coupons out, sorting them by item type.
3. Log on to your account and print out this weeks’ list of good buys.
4. Decide which items you want from the list, and pull any relevant coupons from the file.
5. Go shopping.

Even the first week that you start collecting coupons, you will probably find enough to get some good deals, and each week you’ll collect more and more. Within 12 weeks, you’ll have virtually all of the coupons used on the list.

This service helps cut down the amount of time you spend trying to decide which coupons to use each week. And, because you use most of the coupons when the products are also on sale, you receive deeper discounts. This means many of the deals are much better than buying store brands or shopping at warehouse clubs. I still shop at Costco for some things, but I’m getting most things at the supermarket, now.

As great as this service is, though, the third problem with coupons that I listed above is still an issue. You must practice self-discipline, because even if you save 50% or more on something, if it is something your family doesn’t need you are still not saving money!

Stay tuned for extra hints and tips I’ve learned for using The Grocery Game to save money on your grocery bill . . .

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This newspaper article is part of a series exposing just how sleazy the builder Beazer Homes seems to be. Before I get into the particulars of this article, I just want to say upfront that I had some inkling of their exact level of sleaziness several years ago, when my husband and I saw an SUV driving around our hometown. The car owner had commissioned a custom tire cover that read, “Beazer Homes’ Foundations Crack and Sink”. Not a good sign. You have to figure that any builder who really cared about their reputation would do whatever it took to keep that kind of negative advertising off the road.

In the past year, The Charlotte Observer has been writing article after article detailing the various lows to which this builder seems to have sunk. They have been accused of misleading customers and lying to lenders in order to have people approved for loans that they could not afford. Several of their low-cost subdivisions have huge foreclosure rates, causing property values to plummet, and trapping the remaining residents, who can no longer sell their homes for enough to cover their outstanding mortgages. In fact, 1 out of every 5 original owners have been foreclosed upon in some neighborhoods.

Clearly, there was quite a bit of unethical, if not outright illegal, stuff going on with this builder. But this new article raises some tough questions for home buyers, and it turns out that one particular piece of the tragedy could have been avoided with just a little bit of homework on their part.

Essentially, this latest article details how the builder offered to pay home buyers’ closing costs if they arranged their financing through Beazer. The catch turned out to be that the rates their lender offered were upwards of 1% more than the average interest rates at the time, and significantly increased home buyers’ monthly payments over what they might have gotten elsewhere.

The article lays most of the blame for consumers’ overpaying on Beazer, and I have to agree that this company seems to be highly unethical. In this case, though, I have to admit that what the article really exposed was the shocking and tragic lack of financial knowledge or expertise shown by some home buyers.

Look at it this way: Buying a home is the single largest purchase that many people will ever make. They are buying something worth many times their yearly salary, and they will be paying for it for the next 30 years, in many cases. It will take up more of their monthly income than virtually any other single category of spending. Yet it is apparent that many people who would shop around for a good deal on a $300 television set as a matter of course, don’t think to get even one comparison quote when they buy a mortgage.

For instance:

Franklin says she didn’t shop around because she trusted the company and believed it was giving her a good deal. Now she is struggling to keep the home.

 

Fact is, you can get virtually any interest rate imaginable on a mortgage, depending on the bells and whistles that are included. If you make no down payment or have a limited or blemished credit history, rest assured you will be paying more. Likewise if you are getting discounted closing costs, in many cases. Just because a lender will sign you up for a given rate does not meant that the rate is a good deal.

I think many people are so intimidated by the home buying process that they put their trust in the friendly face who works in the model home sales office, instead of in their own common sense. When we feel that we are out of our area of expertise, we naturally want someone who is familiar with the process to guide us. That’s a very valuable and correct instinct. As a rule, however, it is wise to expect people who are trying to sell you something to act in their own best interests, rather than yours. I’m not trying to be cynical here, and of course there are many very upstanding salespeople in this world. I’m the kind of person who can’t imagine that the individual I’m dealing with has anything but the best of intentions. I’m inherently compelled to give them the benefit of the doubt.

When you are buying a house, however, you really cannot afford to take that chance. Trust, if you like, but definitely verify. Spend some amount of time looking to see what the usual interest rates are, and contact 2 or 3 other lenders to see what they could offer you. If nobody else will give you a loan, you should seriously consider whether you really can afford this.

What do you have to lose? Only thousands of dollars if you don’t do it.

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Because it seems like most people aren’t, these days.

You’re hearing about it a lot more in the last couple of years. One great book on this subject, Green With Envy, has some fascinating stories about how keeping up with the Joneses is pushing more and more people into financial irresponsibility, and often financial ruin. What’s worse, it isn’t just the lower or even middle classes who are susceptible. It seems even the most well-to-do households are putting themselves in financial peril to support increasingly costly lifestyles.

People may not necessarily be thinking to themselves, “Boy, old Jonesey across the street just got a Harley, so now I have to get one, too, or I’ll be the laughingstock of the neighborhood.” But they are saying, “Wow, look at that cool Harley - I want one of those, and I should be able to afford it, because old Jonesy across the street doesn’t make more money than me.” If they have to buy on credit, they do it with a smile. Credit is so pervasive in our culture these days that I have to wonder if money really does grow on trees now, and I just didn’t get that memo.
Upward mobility has long been a key part of the American Dream. For generations parents have worked hard to provide for their children, in the hopes that their children would have an even more prosperous life than they themselves had. This dream inspired hard work, creativity, and innovation, so don’t get me wrong - There’s nothing wrong with having aspirations!

The easy access to credit which has come about in the past couple of decades, though, has changed the game entirely. Nowadays, there often seems to be no good reason not to have all those things you are working so hard towards right now, whether you can currently afford them or not. The Amerian Dream is within our grasp; we can almost taste it. We deserve it. We work hard. Everyone else is doing it, and if they can afford it, so can we. If we don’t do it, we’ll feel like we’ll fall farther and farther behind.

We wonder how our neighbors afford the new car and the ski vacations and the new house. Plus, their children are taking every enrichment class known to man, and going to private school, too, not to mention all the clothing and equipment that is necessary to outfit the kids in the manner that is expected. How can they do that?

The answer is: they probably have to take a lot of chances. They often have to earn two incomes, and pray that one of the breadwinners doesn’t get sick or laid off. There is no margin for error left, so if either one of the breadwinners does get sick or laid off they are almost certainly headed toward financial bankruptcy if it goes on for any length of time at all.

Here’s the thing (and it’s a cliche because it is true): money does not equal happiness. We’ve heard it over and over, but nobody seems to really believe it. It’s true, though. Sure, if you have no money, or very little, then making enough to actually survive on is unquestionably important to your happiness. Beyond that, though, more and more money doesn’t automatically lead to more and more happiness. Most people never seem to get enough money, no matter how much they earn. It’s also why so many lottery winners end up broke and miserable. The more we have, the more we think we need, and we keep going until we’ve pushed to the limit and (thanks to easy credit) far beyond. Then we’re in a hole that seems hopeless. Unless we stop what we are doing and start spending less than we earn, the ultimate outlook is not good.

These days there isn’t a whole lot of societal support for people who want to try to use their money responsibly. They tend to be viewed as overly cautious, penny-pinching (or even stingy), and possibly even poor, because their lifestyle may be somewhat less extravagant than their peers. In the not too distant future, though, they will be able to actually use much more of their money, since interest payments won’t be gobbling away at it. Patience and hard work pay off big time, so if you put your money to work for you, instead of you being a slave to your debtors, you might be amazed at the results. The peace of mind alone is priceless.

I spend a lot of time looking for tips, resources, and encouragement to support our financial goals, and I’m exited to share what I’ve learned here. So, check back often for the latest! You can find a way to do this that works for you!

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