Apparently, drying your razor after you shave makes it last a lot longer. This is because the reason razors dull is in large part because of rust building up on the blade. By either drying the razor after using it or rinsing it in rubbing alcohol, you may be able to get the razor last twice as long. This is a new one for me, but it makes a lot of sense.

Today I went to the recycling center with a car full of stuff. 34 pounds of glass, a few pounds of aluminum cans, and a whole lot of plastic. Total earned: $9.18. It didn’t feel like all that much given how long it took to accumulate that many containers, sort them, and take them down to the center.

We sort most of the stuff as we put it in our recycling center (a container for each plastic type sits below our stairs in the garage) and the glass gets sorted by color before we head off to the center.

I was disappointed that some of the plastic earned either $0.00 per pound or was considered trash. So much for saving the earth. I don’t know what we’ll do with our $9.18. Mrs. Frugal suggested it will pay for part of our dinner tonight (we’re going out with a coupon to one of our favorite local restaurants).

It seems as though swimsuit season is right around the corner. The options for most of us are either to:

• wear the old one in our closet that either doesn’t fit any more or is faded from years of washings, or
• go out and search and search for one that fits our body and our budget, only to settle for one that hopefully fits either our body or our budget (and sometimes we don’t even get that right)

The basic money saving tips for buying a swimsuit are to buy at the end of the season (not much of a help right now), take care of the one you find that works by treating it well in the wash (bags for delicates) or soaking it in distilled water or de-chlorinated water for a few hours after swimming in a pool.

I’ve seen a video of a young woman make a bikini out of a dark t-shirt, but that’s taking things a little too far.

Thankfully, in the last few years many lower-priced stores are filling the need of good looking swimsuits at reasonable prices. Old Navy comes to mind in this category. You can also find some good deals at stores with deeper discounts such as Ross, but the challenge of making sense out of the chaos at our local Ross can be enough to stretch anyone’s patience, let alone someone who is struggling to find something that hides an imperfection or two while trying to find “outdoor underwear.”

I’d love to hear your ideas on how to save money when buying swimsuits. Just leave a comment in the section below. In the next newsletter, we’ll cover some of the better ideas.

It may sound funny, but if you were only to buy items that are on the bottom two shelves or the top two shelves in the grocery store aisles, you would save quite a bit.

The reason? Brands with either lots of bargaining power or lots of money (or both) provide incentives to the grocery store to place their items at eye-level. The store’s own (and often lower-cost) brand is often placed high or low on the shelves.

Obviously there are some things that this won’t work with. For example, if you’re looking for pure vanilla extract there may only be two options right next to each other. But when looking for cereal, cheeses, or or tortilla chips, you will often find the best deals high or low on the shelf.

Setting up a savings account for each goal you have at ING DIRECT is easy and it will help you really see how much you have saved toward a particular goal. If you will need your money within the next five years or so, the steps outlined in this article will help you get your savings moving.

Before Miss Soon-To-Be-Mrs. Frugal and I met, we both had ING DIRECT Orange Savings Accounts. Back then, the interest rate was about 5% , but it’s fallen quite a bit since then.

Although whatever ING DIRECT is offering will be higher than you’ll get in a bank account, as I write this it’s not a whole lot. But I still encourage people to sign up for an ING DIRECT Orange Savings Account because these accounts make it incredibly easy to set money aside for specific goals and there’s no minimum deposit required PLUS your money is FDIC insured.

Similar to other banks, ING DIRECT provides you with one login that has access to multiple accounts. To create your first account, click here to go to ING DIRECT’s account sign-up page.

Once you go to ING DIRECT’s site, you will be asked to fill out information about how your self and how you want to transfer money into the account. There is a verification process you’ll need to through so ING knows you have access to the bank account you’re transferring money from.

After everything is set up (it may take a couple of days), log into your ING DIRECT account and and find the link that says Open Another Account:

When you click on that, it will take you to a screen that asks what kind of account you want to open. You want the Orange Savings Account.

You will then be asked what ownership you want for the account (if you want it to be an individual account or a joint account). Select what you want and click Continue.

Finally, you will be asked what you want to name the account and how you want to fund it. You will need to start the account with an opening balance, so select what account you want the money to come from (it will either be your existing ING DIRECT account or it will be your other checking account). Finally, choose how much you want to put in the account and click Continue.

This will take you to a confirmation page. Review the information and click Continue.

Once you have this all set up, you can go back to your accounts page and you should see the new account.

If you would like to set up an automatic deposit into this account, simply click AUTOMATIC SAVINGS PLAN (above your listed accounts) and tell the system how much you want deposited automatically into your accounts, where the money should come from, and how frequently you want deposits made.

To get started with this excellent tool ING DIRECT provides, click here to go to their home page.

A reader recently asked about how to keep her family’s grocery bill low while still buying organic food. Saving money on organic food can seem daunting…there’s a reason Whole Foods Market is often called Whole Paycheck.

Our family chooses not to buy organic food, in large part because of the cost. But I recognize that some families feel that buying organic is important or even necessary. The reader who wrote in explained that her son has autism and an organic diet is best for him.

So how do you buy organic food without spending your whole paycheck? Let’s take a look.

Buy from Local Farmers
The reader mentioned she buys from local Farmers’ Markets already, so this isn’t as much of a help for her, but if you aren’t already looking to local farmers you may be missing out on some good buys. The challenge with the local Farmers’ Market is that in many parts of the country, they don’t run year-round.

Look to Large Grocery Markets’ Brands
Many of the larger markets sell their own organic lines of foods. Known as Private Label items, these are often about 15% to 20% less than a brand-name item. Even Whole Foods has their own brand (called 365 Organic) that offers savings. (For example, a pound of organic, whole wheat spaghetti is $1.99 if you buy a brand name and $1.69 if you buy 365 Organic at my local Whole Foods Market.)

Look Online for Savings
I compared several items at Whole Foods and Amazon’s Grocery Store. This is where comparison shopping is required. Some items, such as organic olive oil, are much less expensive at Amazon. Ounce-for-ounce, organic extra virgin olive oil was 43.5 cents per ounce at Amazon and 63 cents per ounce at Whole Foods, a savings of 30%.

But other items were more expensive at Amazon. A 28-ounce can of diced tomatoes at Whole Foods cost $1.69 and the same amount at Amazon cost $2.77, 64% more expensive.

Break out your calculator because you’re going to need it to compare costs.

Buy What’s In Season
Years ago, people ate what was locally produced and fresh. Then we started to ship produce all around the world. No matter what time of year it is, most produce can be grown somewhere. The cost of shipping this food around the world to the price, so buying food grown 50 or 100 miles from your home will help. (This is why tip #1 above helps as well.)

What About You?
Do you have any tips for saving money on organic food at the supermarket? Please share your suggestions in the comments section.

I was going through a very popular book on personal finance (Dave Ramsey’s Financial Peace Revisited) and the author makes an assumption that concerned me.

I should preface this by saying that Dave Ramsey has done some excellent work helping people pay off debt and live much more financially-responsible lives.

So what is this assumption? He assumes investments will grow at an average rate of 12% per year. When I’m helping people with their finances, I assume a worst-case scenario and assume about 8.5%.

I decided to examine the returns of the Standard & Poor’s 500 Index. This is an index of the stocks of the largest 500 companies traded in the United States. I looked back to the earliest date possible, 1926.

What I found was that from 1926 through 2008, the average annual return was 9.8%.

Then I looked at all of the 40-year periods in this time (there are 44 40-year periods) and the average annual return of those periods was 11.1%.

Finally, I looked at all 25-year periods between 1926 and 2008 (there are 59 44-year periods) and the average annual return was 11.7%.

What does this all mean?
A difference between the 11.1% earned in the average 40-year period and the 12% Dave Ramsey assumes may not seem like much, but let’s say you invest $200 per month for 40 years at 12% and your friend invests at 11.1%. You would have just over $1.8 million and your friend would have about $1.44 million.

If you keep all of the numbers the same but change the time period to 25 years, you would have $320,000 and your friend would have $278,800, a difference of $41,000  or 14%.

How this changes how you save
Many people look at these numbers and say, “Well, there’s nothing I can do about it. I may as well invest and hope for the best.” That’s a very understandable position to take. Unfortunately, many people say, “Well, I’ll invest with the assumption of getting 12%.”

So let’s say you’re 40 years away from retirement and you decide you need $1.8 million when you retire. If you invest $200 per month and you only earn 11.1%, you will come up short. If you had invested $250 per month and figured you would only earn 11.1% you would reach your goal of $1.8 million in 40 years.

What to do about it now
As many of you start to pay off debt and begin to invest for future goals, sit down and think about whether it makes sense to stretch a little and invest a bit more each month in case your investments don’t earn this hypothetical 12% each year.

This is the third part of a series on setting financial goals with your spouse. Our first part helped you figure out what’s important to you and our second part talked about the importance of defining goals that are specific and measurable.

This article will be about how to plan your steps so you can move toward your goal with focus.

There’s an excellent time and task management book called Getting Things Done by David Allen. The overarching idea in the book is that the best way to tackle a project is to break it down into actionable steps.

This advice is perfect when it comes to setting financial goals. When you look at where you want your finances to be, sit down and think about what it will take to get there.

You will most likely need to make some changes in your spending and saving, and you might need to do some administrative tasks to start the ball rolling. I recommend separating these two parts of your planning by making one list that only has tasks. If your goal is to start saving for your children’s college expenses in a 529 plan, your task list might have the following:

• Look at 529 Plan offerings from your state, Charles Schwab, Vanguard, and Fidelity. Order hard copies of plans in order to look them over with your partner.
• Decide which plan fits your needs best based on minimum investments, amounts allowed to be invested, and funds offered by the plan.
• Sign up for plan and decide on investments use in the plan.

If you don’t know what to do for the second and third steps, look for resources on the internet. One good site for college savings is (naturally) savingforcollege.com.

Many couples don’t even begin saving for a future goal because they get don’t know what to do. It’s times like these that you may want to seek the advice of a fee-only financial planner. (More on finding a financial planner at the bottom of this email.) Don’t let yourself get tripped up because you don’t know the best way to split savings between stocks and bonds.

Moving Beyond Administrative Stuff
As I mentioned earlier, besides the administrative-type stuff required to plan for a financial goal you are going to need to decide how to find the money to put toward the goal.

Right now, all of your income is going somewhere. Even if you’re living well below your means, income is being placed into some sort of savings.

If you’re already living below your means and you’ve been saving into an emergency fund that has at least five or six months of your living expenses saved up in it, this step may be as simple as setting up an automatic deposit into the chosen account (in this case the 529).

If you are barely making ends meet, there are a couple of ways to go about examining your spending.

First, there are three levels of spending that you can look at reducing. First are the incidental expenses, often called discretionary expenses. Things that fall into this category are frequent trips to the local coffee shop or dinners out.

The next level of spending to examine is your essential-but-easy-to-address expenses. Clipping coupons for groceries or examining your cell phone expenses fits into this area. Some things require a phone call to a service provider (cable, cell phone, etc.) and others require an ongoing effort (such as clipping coupons).

The final (and most often overlooked) step is to to take a deep look at your lifestyle and see if your lifetsyle, income, and goals are mutually compatible.

The area this shows most is in housing and where we choose to live. Can you afford to live in your city, with the income your family has, and fund your goals? For some, the answer is that they can’t.

I’m not saying you should immediately pack and call the movers for a move to another state, but it is something worth thinking about.

Earning More
The final idea to look at is whether you or your spouse can earn more money. Whether it’s a second job or a part-time home business or a change to a different industry, are there things you can do to earn more?

Wrapping Things Up
Goal setting often feels tough because we don’t break things down into small steps. As you talk with your partner about what’s important to you and how to get there, keep in mind some of the things Dr. Dilley mentioned in the podcast on keeping financial harmony with your spouse (here’s a link to the entry with the podcast link).

Link to an Article on How to Find a Financial Planner

This is going to be the first post of a series on setting financial goals with your spouse. Most articles on goal setting (including some I’ve written myself on other blogs) go through some basic steps:

• Think about what is important to you
• Define specific goals that are both quantifiable and reachable
• Plan the steps necessary to get there
• Check your progress along the way and make corrections as needed

Walking through this list will get you quite a way down the road toward meeting your goals. In order to keep this post brief, I am going to focus on tips to help you figure out what is important to you.

How Do You Spend Extra Money?
Every time we choose to purchase something, we are putting more value on the item we’re purchasing than something else.

For example, let’s say your after-tax income each month is $3,500. You spend $1,000 on your rent or mortgage, $2,000 on everything else, and save or invest $500.

By paying your rent each month instead of living in your car and putting $1,500 into savings, you are making the (relatively easy) decision that shelter and putting $500 per month into savings is more important than saving $1,500 per month for retirement.

I know this is silly, but it shows that each financial decision we make shows us a little bit about our priorities.

What Do You Talk About?
Those topics you always come back to in conversations may be a hint of what is important to you. Finding patterns in your conversations may help you know your priorities.

Ask Yourself Big-Dream Questions
Ask yourself what you would do if you found out you inherited $1 million from a long-lost relative. Would you pay off debt? Would you buy a home? Would you invest since stocks are at record-low prices right now?

Asking yourself these questions may provide some insight into what you would love to do. If you haven’t started down the path of  meeting these dreams, the next blog post will go over how to make your priorities into goals.

Follow this link to the next post in the series (How to Define Specific Financial Goals).

Saving money for your child’s college education can be difficult, but figuring out the best tools to get there shouldn’t be.  Before the 529 plan was written into law by Congress, college saving was done either through taxable accounts or through complicated educational trusts. The 529 is our preferred method for saving for someone’s education, but there are many firms offering 529 plans, so this is meant to be a guide to figuring out how they work.

Contribution Limits
Gifts to 529 plans are treated the same way as cash gifts to the recipient. As such, gifts of up to $12,000 per donor given to a beneficiary ($24,000 per married couple filing jointly) are not taxed. More than one taxpayer may give to a beneficiary’s 529 plan. In other words, two parents may give $24,000 per year and a single grandparent could give $12,000 per year.

Liftetime contribution limits vary by plan, but they tend to hover around $290,000 to $310,000 per beneficiary. Lifetime contribution is defined as the total account value, not the value of all the contributions. Once the account value reaches this amount (whether through gifts of the combination of gifts and investment performance), contributions may no longer be given to the fund. (If the investments continue to perform well, the account will grow beyond the contribution limit.)In order to receive the benefit of compounding, gifts to 529 plans may be given for future years, up to a maximum of five years. In other words, a taxpayer may give five years worth of gifts in year one ($60,000 for individuals and $120,000 for couples filing jointly), provided they do not give any other gifts in years two through five. The taxpayer may give this up-front gift to any number of beneficiaries they choose. This means a parent may give the five-year amount to three children in year one (again, $60,000 for individuals and $120,000 for couples filing jointly).

In addition, the taxpayer must file a notice with the IRS that the gift was made in such a way that it would apply to future years.

Differences Between Plans     
Plans are managed by an investment firm but administered by an individual state. For example, the Vanguard 529 Plan is managed by Vanguard and administered by the state of Nevada. The Schwab 529 Plan is managed by Charles Schwab and administered by the state of Kansas.

These plans allow the beneficiary to attend a school outside of the state in which they are administered.

As mentioned in the Contribution Limits section above, the liftetime contribution limit differs between plans based on how the plan calculates the cost of college. The state of Kansas (Schwab’s plan) calculates the cost of eight years of private tuition at a private, Midwest university, but the state of Nevada (Vanguard’s plan) measures it based on its geographic region. A benefit of 529 plans is that they can be moved from one manager to another, thus placing a different contribution limit on the account.

Investment choices vary by manager as well. Some plans provide only age-based options that adjust based on the approximate number of years between now and the beneficiary’s projected year of entering college.

Possibly one of the best investments Mrs. Frugal and I have made has been Quicken, the personal finance software from Intuit. After updating our finances for the week, I have a fairly accurate understanding of where our money went.

I can’t recommend using some sort of financial tracking program highly enough. It breaks down our spending ino categories that we set. We know how much we spend at Starbucks, on gasoline, and dining out.

There are two keys to making a personal finance program work in your relationship.

One is that someone needs to be responsible for updating the expenses and income every so often. I recommend at least once a week, as it’s easy to forget what an expense was after seven days. The other key is that you have to sit down together on a regular basis and talk about how you’re doing with your spending. I recommend at least once a week when you’re first staring out.

I also recommend that you make a date night out of your finances. Print out the reports for your spending and go to a coffee shop or dinner to talk about things. It gets you out of the house and it keeps things a little bit on the lighter side.

What I’ve found while working with couples’ finances is that their perception of their financial situation is much worse than it really is. Many times, people feel out of control with their spending not because they are out of control, but because they don’t know where the dollars are going.

As you begin to track expenses, you may see that financial control is a few tweaks away. A little less spending on daily coffee, eating out at less expensive restaurants, cutting back on the premium channels on cable, and before you know it, you’ve saved $100 or more each month.

One thing to keep in mind is to approach these conversations in love rather than in frustration. If your partner spends more than you would like him/her to, talk about how you can make it easier to spend less.

For example, I have begun to make lattes for Mrs. Frugal before she heads off to work. On Fridays, we go to the local coffee shop and get coffee together before going our separate ways. (Starbucks stores sell their syrups in the bottle for making drinks at home and we bought a pump top from Smart & Final.) My making drinks has become a small act of service and it’s saved us some time in the morning.

As you talk with your partner about money, you will begin to realize not just how they spend, but you’ll begin to see why they spend what they do. By talking about your expenses, you will have a more intimate knowledge of your partner, and isn’t that much of what a committed relationship is all about?

It’s always interesting when clients come to us with the following situation:

They have saved quite a bit in their retirement accounts through work (either their 401k or 403b), but their finances are in slight disarray. Often, they may have an IRA of some sort that had been set up at a brokerage, but the IRA was never fully funded. In addition, they don’t have much saved in their emergency fund and they may have some debt, or worse, late charges on their credit report.

At first I wondered how people are able to save so much in their company retirement plan, yet everything else is all fouled up. The only explanation I can come up with is the power of auto pilot.

The automatic deductions from a paycheck into the retirement plan have been their saving grace.

Now, let’s take a look at how to get everything on auto pilot

Credit Cards

Most banks offer auto pay for their credit cards, but often the only option is to pay the minimum payment. Mrs. Frugal and I pay off our credit cards each month (with the exception of a couple that have very low interest rates). So I use a free email reminder service to tell me when to pay the card. The one I use is called Memo to Me.

After setting up an account, you are able to set up reminder emails on a daily, weekly, every x weeks, monthly, or annually basis. I am reminded on the 22nd of each month to pay off my cards via email.

Saving

Mrs. Frugal and I have set up automatic deposits into our ING Orange Savings account. These, too, can be set up on a specific frequency (weekly, bi-weekly, or monthly).

ING has a nice feature. You are able to set up several accounts under the same login and name them whatever you want. We have several accounts (auto, travel, gifts, emergency fund) that are funded based on our budget. Since auto expenses, gifts (especially around Christmas), and travel expenses are irregular.

In order to set up extra accounts:

1. Log in to your account.
2. Go to “Open an Account” on the left near the top.
3. Choose “Open Now” under “Orange Savings Account” (near the top left of the main part of the page).
4. Select the type of account you want to set up.
5. Give it a nickname (auto, gifts, etc.) and define how you want to fund it (you can select either an external account or another ING account).
6. Agree to the terms and condition and click “Open Account.”

In order to set up automatic deposits:

1. Click “Transfer Money.”
2. Enter the amount you want transferred.
3. Select where the money comes from and into what account you want it deposited.
4. Under “When” select “Automatic Savings Plan.”
5. Then define the frequency and when you want the deposits to start.
6. Click “Transfer” and the deposits will begin on the date you defined.

This needs to be done for each account you want to deposit into.

By paying your credit card bills and saving automatically, you will soon be on your way to having some control in your financial life.