Cutting costs anywhere that makes sense adds to that budgetary cushion that can be used to pay off debt, add to an emergency fund, save for college, or anything else.  One fairly easy way to do this is to reduce, or eliminate, trips to the vending machines down the hall.  The markup in our building borders on ridiculous now ($1.00 for a candy bar).  And what’s more, although Snickers® would like you to believe that it satisfies, candy usually just makes you hungrier.

Which brings me to my secret snacking weapon:  oatmeal. Plain, old-fashioned Quaker Oats.  Not the “instant” oats, but the big, giant container of oats.  I get ten pounds of oatmeal for under $8.  That breaks down to less than a dime per serving, and a serving is a full cup of oatmeal.  That’s a heck of a lot cheaper than a candy bar, and much more nutritious.

Here’s what I do.  Adapt to your tastes:

• Keep the oats dry in some kind of closed container. I use a plastic coffee container.
• Bring a 1/4-cup scoop to measure out a serving. Or a 1/2-cup.  Doesn’t matter too much.
• Scoop half of the oats into a mug, then put any flavorings you might want in. I use cinnamon ($4 for 11 ounces at Costco) and honey.
• Scoop the other half on top of the flavorings. I do this because pouring the hot water on in the next step makes the cinnamon clump if it’s on top.
• Pour hot water in to whatever level of consistency desired.

I tend not to get bored with the same foods over and over again, so this works well as a snack for me.  Even if you don’t want to go all-out with buying oatmeal 10 pounds at a time, the smaller container in the grocery store is still pretty cost-effective.

One of those little money saving things for your budgeting arsenal.

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OK, maybe that’s a bit of an exaggeration, especially when I’m about to talk about ketchup.

I went grocery shopping with my wife last night, and in the condiment section, shockingly, I found various brands of ketchup.  The store brand came in a number of sizes.  Here are two of them:

• 20 ounces for $1.79
• 24 ounces on sale for 10/$10.00, otherwise known as $1.00

Sure, the 24-ounce size was on sale, but it was still cheaper to buy the 24-ounce size even without the sale.  The more expensive 20-ounce bottle was an “easy-squeeze” bottle: the opening is on the bottom rather than the top, and has an extra valve that supposedly makes getting the ketchup out easier.  (I haven’t found it to be any easier than the non-easy-squeeze version, but that’s me.)

The fancy packaging raises the cost of the food. It’s the same deal with all of the 100-calorie serving packages:  crackers, cookies, trail mix, even soda.

That’s why I have big containers of food at work.  I buy oatmeal by the six pounds at Costco for $1 per pound.  Dried soybeans in the 39-ounce size.  Dried cranberries and raisins in the big bags.  You name it.  I can control the portions either by putting them in plastic bags, or by just having the big container at work and scooping out a serving (it’s 1/4 cup or some multiple fairly often).

Paying more for food and less for packaging is a good idea. Tell your friends!

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This economic downturn hasn’t been kind to a lot of people.  Jobs that haven’t been taken away from people have had their hours cut, their workload increased, or their cost of living allowances taken away.  Jobs that people used to be able to count on are on very fragile ground.

If this US Debt Clock is accurate, we’re getting a new person on the unemployment roster every 17 seconds now.

What can you count on in this economy?  I think the only thing that you can absolutely count on in this economy is that you can’t count on anything in this economy. Retirements have been upended by plummeting 401(k)s and IRAs.  Nest eggs have been cracked by crashing home values.  Many people, all of a sudden, won’t be able to retire.

It’s foolish to take anything for granted.  There’s far less within our control than we probably realize, and proposed solutions that aim to make things better will almost certainly just make them worse.

When you think about “preparing for the future,” think instead of “hedging against the future.”  How?

• Cushions, cushions. Bolster that emergency fund to buy time in the face of job loss.  Bolster your food supply in case price controls cause shortages.  (Price controls are another solution that will backfire.  Think gas station lines in the 1970s.)
• Diversify your investments. If you’re heavy in anything (or only have a couple of asset classes) look around some more.  And don’t forget to invest in yourself.
• Diversify your income streams. Only have one income stream?  Start working on another!  And then another.  Your one income stream can go bye-bye at any time.
• Retire into something rather than just retire. It would be great if one of your new income streams involves something you really enjoy, and can do well into the traditional retirement age.
• Take care of your health. I’ve recommitted to this. The less you need health care, the better, because it will be more expensive, and you’ll wait longer to get it.
• Pray.

Thanks to The Censible Life for including this post in the Carnival of Personal Finance.

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Sun’s Financial Diary reported that the 2010 contribution limit for 401(k) accounts will remain at $16,500.  The announcement came from the IRS Thursday.  There had been speculation that the contribution limit could be reduced in light of a decreasing CPI (and, indeed, the CPI is down from a year ago.)

Sun ends the post with a question:

Now that there won’t be any increase in contribution limit next year, it doesn’t seem to be a big deal for one year. However, it is a big deal in the long term for those who max out their contribution every year. Just consider this: How much will today’s $500 be worth 20 or 30 years from now?

(Presumably, had the limit been increased, it well could have been by $500, as previous increases had been in multiples of $500.)

The question becomes one of a tradeoff:  Someone who would contribute the maximum allowable by law can contribute only $16,500 rather than $17,000.  This means that $500 more of this person’s investment contributions will be taxable in 2010 than would be the case if the contribution limit had been raised.

The contribution limit gets a lot of attention.  I suppose it’s the piece of the 401(k) puzzle that’s easiest to grasp (after one understands the pre-tax contribution thing).  It’s the part of the legislation that is addressed regularly.  It’s the number that usually gets raised (”We can contribute more!  Hooray!”) except next year it won’t, and some folks — Sun among them — think this is a loss for people saving to retirement.

The question about how much extra income could have been gained by allowing that extra $500 to grow tax-deferred is insignificant.  Why?  Because the money (and accumulated interest and compounded dividends) will be taxed when it’s taken out.  Who knows what the tax rate will be in two or three decades?  Would you want to be taxed now, or taxed later?

Going a step further, the tax tables aren’t the only thing that can change.  Just about all of the rules governing these accounts can change. How will the rules change, and to what extent?  I have no idea, but just because they haven’t changed significantly over their lifetime doesn’t mean they won’t.

So don’t worry about not being able to contribute more to your 401(k).  But I do encourage you to think about whether you’re contributing too much to your 401(k) already.

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No Credit Needed is taking his oldest daughter (ten years old) to open her first savings account.  He and his family have been free of consumer debt for over three and a half years now and this is a milestone in how he’s educating his children in wise money management.  Trips to the bank will be regular occurrences, and (hopefully) his daughter will become accustomed early to how this system works.

My daughter is four — “and a half,” as she likes to add — and we opened up a savings account before she could even say “money.”  We’ve put in the birthday checks that we didn’t spend on gifts for her in there, and she really doesn’t even know about it yet.  So, in a sense, she won’t get the experience of opening her “first” savings account, because we’ve already done that, but what’s hers is hers: it’s in her name now.

If you’ve been there, which route did you take?  Did you set up an account early, or did you wait until your kids “got it?”

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Five Cent Nickel published a post that discussed what things to consider when you have both debt to pay and money in the bank.  The main problem is that the difference in what the bank pays in interest is far below what one would pay on a typical credit card balance.  Holding on to a large bank account while slowing paying down a credit card balance means that there are a lot of interest expenses being paid to the credit card company.

Nickel’s advice isn’t one-size-fits-all, which is good:

… sit down and carefully consider how much money you really need to have sitting in the bank. $1000? Six months of expenses? Twelve months of expenses? The “right” answer will vary. But if you’ve got more than that amount stashed away, use the excess to attack your debt.

Not a thing wrong with this advice.  Some specific questions I would ask as you “carefully consider how much money you really need to have sitting in the bank” are these:

• How safe is your job?
• Do you have an independent source of income, either in a second job or a side business?
• Are you in an industry that is slashing hours or slashing jobs?
• Are you important enough to the revenue stream of your company that your job is safe?
• If you were to lose your biggest paycheck tomorrow, how long would your emergency fund last based on your current expenses?

If you have cash, this is your ace in the hole for weathering a long recession. An excess of money in the bank buys you time to replace a lost income source.  The more cash you have, the more time you have before bad things like late payments, defaults, foreclosure, and bankruptcy happen.

Here’s a specific example.  Let’s say you have $10,000 in the bank, and $15,000 in credit card debt, at some interest rate.  Your minimum monthly payment on the debt is, say, 2% of the balance, or $300, but let’s say you’re whittling it down a little faster than that, say $500/month.  Your monthly expenses are $2,000 per month, and you’re just about breaking even right now:  outflows match inflows.

So, at the moment, you have enough to cover five months’ worth of expenses ($2,000 per month times 5 months = $10,000) should you lose your job today.  You can even squeeze another two weeks out if you cut your debt repayment back down to the minimum.

Now, say instead that you threw $5,000 at that debt.  Your minimum payment drops to 2% or $10,000, or $200, which is great.  But your bank account now stretches less than three months. You have only about half the time to replace that income should it go away.  Not a good position to be in.

Cash in the bank is recession insurance. It does carry a cost if you have debt to pay off: interest spread.  But once you make the decision to pay down your debt with your cash in the bank, it’s not available to you anymore. The credit card company won’t give it back to you, and if they loan it to you, it will be at very high interest rate.  You may as well start charging on your card again.

People questioned Suze Orman when she advised not paying down debt as quickly as she had advised before, but I don’t think it’s bad advice at all.  A bolstered emergency fund is an excellent idea in this economic climate.  I might go so far as to say that you can’t have enough emergency fund right now.

If you should lose your job, you’ll be glad that you have as much as you do.

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I hit upon a post by My Dollar Plan that had a couple more click-through rebate sites I hadn’t heard of.  This is great, because I can add them to the mix of six shopping rebate sites I already know about.  These sites compete with one another – they all want you to click through their site, because nothing good happens for them until affiliate commissions are triggered – which means that you can pick and choose the site that treats you the best.

BigCrumbs – BigCrumbs is the first click-through rebates program that I’ve seen that lets you decide how you want to earn money through them.  There are two kinds of membership (both are free, of course).  The first membership level, “CrumbSaver,” is better for people who want to shop, but don’t expect to refer many people to the site.  The rebates are higher at this level than at the second level, “CrumbEarner.” The advantage of the CrumbEarner level is that you get a kickback of the rebates that your referrals earn.  Another nice feature of BigCrumbs is that you can promote your eBay Store directly in BigCrumbs (if you have one!)  This means more exposure for your listings.  Payments for BigCrumbs activity are sent monthly.  There is no minimum payout, either!

Cashbaq -As the image says, there’s a $5 bonus on sign-up.  Minimum payout is $10 (paid monthly) so just sign up for Cashbaq and you’re halfway to your first payout.  What caught my eye about this rebate site is the huge number of stores it covers: 2,700 stores!  Some of these aren’t stores per se but online services and the like.  There is a kickback on rebates made by referrals as well.  Payment is monthly either through Paypal or by check.

My Dollar Plan also pointed me toward a site that beat me to the punch on an idea I had myself:  Ev’Reward.  Once you’ve signed up for the rebate sites (on the post you’re reading, and on this one) then you can choose the merchant you want to shop at, and see, side-by-side, all of the rebate sites that offer a reward, and how much.  This makes pitting the sites against one another a piece of cake.

Merchants want your business, and rebate sites want your business, too!  Go where your money is treated the best!

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Once again, no good deed goes unpunished.

Seems like people are testing their personal financial waters, are finding that the temperature is a little uncomfortable, and are saving more and spending less, of all things.

Well, some folks are saying, “Enough of that!”  Stuart Hoffman, chief economist at PNC Financial Services Group Inc., says: “I wish I could say the rise in the savings rate is over.”

Oh no, not that!  We should all just go further into debt for the sake of the economy.  I suppose we can’t blame Mr. Hoffman too much for wanting us all to save less.  Thrift is bad for his business.

Reduced consumer spending aggravates a recession, and wholesale reduced consumer spending really does a number on it.  This is what the article refers to as the “paradox of thrift” — doing things in our best financial interest as individuals (saving) works against the economy as a whole, especially when we all do it simultaneously.

But it’s thrift that will get the economy going again in the long run. Real growth is driven by production, not spending.  Spending follows production in a healthy economy, not the other way around.  As the markets slide toward levels not seen since Clinton’s first term, despite record-breaking levels of economic stimulation, it’s becoming clearer (to me, anyway) that we can’t, and won’t, be able to buy our way out of this one the same way we bought our way out of the early 1990s and the early 2000s.

We’re going to have to save. The businesses that rely on people buying stuff now will suffer, and some will go out of business, like Circuit City did this past weekend.  People who saved on the sidelines were able to buy our local CC store’s shelving for dimes on the dollar, if not cents on the dollar.  By the truckload.  They’ll be able to sell them to businesses who are waiting on the sidelines to expand, who will survive the downturn.

Those who have saved will be able to take advantage of lots of opportunities.

So here’s what I say to those who think an increase in personal savings rate is bad:  I’m not buying it.

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