The Rewards of Frugality: Verna Oller

I woke up to a great story this morning. A woman from Long Beach lived frugally, frugally enough to leave $4.5 million in bequests upon her passing. Her story shows the real benefits of living a vital and thrifty existence. I hope you love her smile like I did.

Return to the House Debate

In case you haven't figured it out, I would really love to have a house. It seems to be some sort of end goal for me. I want to be able to grow my own fruits and veggies, and let my dog outside to pee without having to walk him to the nearest dog park.

Recently, I decided to start a business, and am trying to do it the frugal way. One of the things I've been wrestling with is my location. There is the possibility of renting a space in a community co-op. Rent, utilities, and wi-fi would run between $300-323 per month. Our current apartment rent is pretty cheap at $505/month with mandatory $12 renter's insurance, a (necessary) storage unit is an additional $45/month and coin laundry is $30/month. Also, our lease is up in January, and our rent could go up to market rate at $555/month. So I did the math. Our total comparable monthly "space" expenses would be approximately $915/month up to $965 in January. Geez, when I put it in print I feel a little panicky.

What is giving me pause, is my business doesn't necessarily require a commercial space. I could work quite easily outside of a spare bedroom in my home with an exterior entrance. But I automatically went to looking at a commercial space as our 484 sf open studio won't cut it, not to mention our complex doesn't allow you to operate a business that may include even minimal traffic. I started wondering about a different solution.

The different solution led me to the possibility of renting or buying a house. With interest rates as low as they are, I decided to look into any assistance grants for purchases. It turns out that our local Neighborhood Stabilization Program has been extended to incorporate almost the entire county. Our NSP offers "middle-income buyers" (those who make less than 120% of the median income) up to $50,000 for down payment, closing costs, repairs, and, in some cases, mortgage reduction on houses that are in foreclosure or close to it. The NSP is structured as a no-interest loan, deferred until you sell the house. From what I can tell, we wouldn't qualify for a lot, but we would certainly qualify for a small 2-3 bedroom fixer, which the NSP would allow us to do.

If I could keep our payment, interest, taxes, and insurance below $700, it would be more than worth our while to examine homeownership. I know a lot of people would roll their eyes at the sort of house you can get for a $700 payment, but we don't care. We live simply, it's just us and the dog, and in our area, with this market, you can get quite a bit in the $110,000 neighborhood.

There are certainly other expenses to think about. I did recently find out that our friends pay less in electricity for their 1100 sf house than we do for our studio. Some of this I think is probably because of the Xbox360, but some of it is also due to being boxed in on all sides by our neighbors. During the winter our electricity bill skyrocketed to triple digits because our neighbors were away during the major freeze and snow. I felt like we were paying to heat everyone else's place cause when I walked in the door, our thermostat showed 52 degrees! However, we pay far less for WSG (water, sewer, gas) than most, as we're on a fixed rate.

And what if something breaks? I would be far more concerned if it weren't for the NSP program. NSP funding requires five separate inspections that must be passed, or repairs must be made to bring compliance. These inspections include full home and property inspections, pest/dry rot inspections, a lead risk audit, and even an energy efficiency audit. Since most of our friends are in the building trades, and I spent quite a bit of time in construction myself I'm not concerned about most repairs. As long as the house has good bones, we'll be fine.

It's certainly a lot to think about. I'm worried that taking on a separate space would be too much of a financial waste. And as much as we love it, we've always known that our place is probably temporary. It's not the small space; it's the neighbors that smoke so we can't use our balcony, no place to plant anything, paying $2.25 per load of laundry and the neighbor that randomly likes to blast Bohemian Rhapsody at 1:00 in the morning when we have to be up at 5:30 a.m.

Any thoughts?

Frugal Business Cents (Pun Intended)

I feel like I'm always apologizing for my absence these days, but at least now I have a happy excuse. I'm starting a business. Lately, I'd been getting burned out on cutting expenses, mainly because we couldn't cut anymore. There comes a point where the budget can't trim anymore without starvation or mental saturation. Sometimes, you have to focus on increasing income.

It's actually quite difficult to start a business on a budget. There are some expenses that there is just no getting around or reducing. While I would like to, I don't think our state business office feels very negotiable when it comes to license fees. There are several places where I am able to cut costs though:

1. Business/Professional Liability Insurance - This isn't necessary for everyone, but I have a lot of contact with the general public and it's very important for me. I shopped around through several carriers and was able to determine that a lot of them had "services" (and I use the term loosely) that weren't for me. I'm busy enough that I don't consider a local chapter with mandatory meetings a bonus, but I do like professional discounts for cell phone plans and health/life insurance. In reality, saving $10 a month on my cell phone plan will almost cover my policy cost. I did find that it was very difficult to "compare apples to apples" when it came to coverage. Many prided themselves on some sort of special amenity so I had to do a value cost analysis, i.e. How much value am I getting for the money I'm putting out? Is what I'm getting worth it to me? Does it meet my requirements?

2. Location - When it comes to starting a small business there are a surprising amount of options for location. You can (sometimes) use your home. You can share a space with another business person. In my case I have to consider accessibility to clientele, myself, parking, and more. I think I'm going to be locating myself in an artist's community space. It should work well for me and offer many networking opportunities.

3. Furnishings - Everything else can be bought the same way I buy anything else, on craigslist and ebay at a fraction of the cost.

4. Marketing - A lot of marketing doesn't actually have to cost you anything other than a phone, paper, and printer ink. I have referral cards set up that incentivize my clients passing on my information. I participate in appropriate networking events. And NEVER be afraid to introduce yourself.

I have to say I'm both trepidatious and excited for what's in the works. As soon as I secure my space I'm trading services for help with painting and flooring. Now if I can just find someone who will trade my expertise for cleaning my house, my life will be complete!

MT Recipe: Try "Garbage Pizza"

We always have garbage soup. Even though it's incredibly random based on whatever happens to be in the refrigerator, it's started to always taste the same. While looking at bread machine recipes I stumbled on a great addition to the house...homemade pizza dough!

Tonight we're having "garbage pizza." It will include what we currently have in the fridge (a bit of turkey breast, onion, sliced red and yellow bell pepper, and some onion). I'm super excited because I got a great deal on flour at Target, and now I actually have the opportunity to use it!

The recipe for the crust is from hillbillyhousewife.com. It is:

• 1-1/4 cups water (plus 1 or 2 more tablespoons if necessary)
• 3 tablespoons olive or other vegetable oil
• 1 teaspoon salt
• 4 cups bread flour or all purpose flour
• 2 teaspoons active dry yeast

We'll let you know how it turns out!