First, the hard facts:

Iced Tea and Ramen

Launched: 2009 July 11
Closed: 2010 September 2
Total posts made, including this one: 13

I registered the domain with a quite different purpose in mind. That purpose ceased to exist and I had the domain without a clear use for it. Rather than just abandon it, I figured a frugality/financial advice blog would fit the name rather well.

However, I completely overestimated my own ability to maintain motivation needed to maintain two blogs. In fact, in the interim, I started a third blog, Quinn’s Big City before fully developing this one, my second. Due to the differing circumstances behind its launch, Quinn’s Big City was a bit more successful. My original blog, Rant Roulette is also going strong. I’m probably better known for both of those blogs than I ever would have been known for this one.

I probably should have thought things through more than I did, and/or chosen a topic I would write more about on a more regular basis. I am disappointed because I fell short of what could have been, and it is difficult for me to be proud of what little success I’ve had with it when I could have had so much more. That said, it’s time for me to move on. I probably will start yet another blog soon, and I will maintain the existing entries I have made to this blog somewhere.

For now, I am keeping the archives up here. Commenting on the existing entries, all the way back to the first one, will remain open for at least the next few weeks (2010 October 15). Sometime after that date I will close comments, make the final backups, convert the blog to a static site, and then think about where the archives will be housed long term.

Thank you for your interest and support.

So in the digital age, the question becomes “How does one keep track of one’s budget without breaking that same budget?” I’ve used a program called GnuCash for this purpose for the past four years or so.

There’s one big thing which turns off some people, maybe even a lot of people, from GnuCash. That “thing” is the concept of double-entry accounting, which is intimidating to non-accountants but actually relatively easy to grasp. To those that have been using something like Quicken (which uses a category system) it can be a bit confusing and backwards at first. But it’s really based on a simple concept, and that simple concept is: the entire ledger adds up to zero. Put another way, for every transaction there is an equal and opposite transaction (with apologies to Sir Isaac Newton).

Unless you’re starting out flat broke, you will probably have a non-zero net worth when you begin using accounting software of any sort. Even these come from another account in the system, called an equity account (the default GnuCash setup uses “Equity:Opening Balances”). When the books are closed out for the year the ending balances go back into an equity account.

You may be used to Quicken’s use of categories. In GnuCash, the same income and expense tracking is done with accounts. A paycheck or check from a client will come from an income account and go into a bank account. Expenses will go into an appropriate expense account. Liabilities such as credit cards or loans are tracked with a liability account. The value of fixed assets can be tracked with an asset account; it is acceptable to include only the most expensive items such as a house or vehicle (full value can be included, as the liability account for the loan would count against your total net worth in a net worth report).

Now, there are times when you will have money coming back out of an expense account, or even money going back into an income account. Take the following situation: You go shopping for new clothes, and the total comes out to around ¤300. Only after getting home do you realize one of the three pairs of shoes you bought have a defect. You take the shoes back and get a refund of ¤40. That refund would come out of the appropriate expense account. This holds true no matter how you paid for a purchase, whether by credit card, debit card, cash, or check.

A similar situation would occur if (horror of horrors) you are paid with a bounced check that winds up being no good; in this case, it would go back into your income account. Likewise, for reimbursements of expenses incurred while on a company trip, the reimbursement check should be applied first to the expense account first charged to; the ideal solution for frequent travelers would be to set up an “expenses pending reimbursement” asset account (as the expenses the company is reimbursing you for are in fact a debt from the company owed to you).

What about expenses that are one line item on a bank statement, but go into more than one expense account (personal care items bought at a grocery store instead of making a separate trip to the drugstore later)? That’s where split transactions come in. A grocery store trip totalling, say, ¤75 with ¤20 of that being personal care items can thus be accounted for properly. Cash back on a debit card transaction is handled the same way, except the other account is a cash account.

The benefit of double-entry accounting is that finding out how much, say, one’s grocery expenses are total, year-to-date, is as simple as opening up that account. For last month? Just subtract the balance from the balance from a month ago. Is it a bit more effort? Maybe, at first.

GnuCash also includes a financial calculator for figuring out loan payments or other interest transactions, as well as a reconcile feature for verifying the accuracy of bank account and credit card account statements.

Far from the least of GnuCash’s advantages is that GnuCash is available as free software under the GNU General Public License (free as in freedom). This means two important things: there are no licensing fees for GnuCash and never will be, and any GnuCash user is free to download the source code to add features or fix bugs, or hire the programmer of their choice to do so on their behalf. See http://www.gnu.org/philosophy/ for more information about the philosophy of the GNU Project and the Free Software Foundation.

This is kind of a random list of various penny-pinching skin, hair, nail, and body care tips I’ve learned over the years, somewhat out of necessity. Yes, this article applies almost equally to men as much as women.

General

Compare unit prices (price per ounce, liter, gram, kilogram) to make sure you’re making a properly informed decision. If you have two bottles of facial cleanser, one for ¤10 for 500 mL, another for ¤6 for 250 mL, do the math and realize the ¤10 bottle is the better deal from a unit pricing standpoint (all other things being equal).

Skin care

A lot of people swear by the adage “you get what you pay for” when it comes to skin care products. I’ve heard of certain masks (usually spelled “masques” at this price point), cleansers, scrubs, etc. sold at truly frightening prices. The quality tends to go up a bit as the price increases but beyond a certain point the difference is truly negligible and there are exceptions to the rule where products at a lower price point are actually better than those at a higher price point.

At least some of the time, “for men” packaging and branding is an excuse to pad the profit margin just a bit more. Of course, sometimes the “for men” products are truly a different product, but often not. The thing that the manufacturers are counting on, of course, is that men won’t bother to comparison shop with similar products not marked “for men,” won’t consider it an “apples to apples” comparison, or are willing to pay significantly higher prices just for silly differences like a different scent. You don’t have to play into their hands.

Baking soda can be used as a scrub by mixing with water, lotion, or cleanser.
Planet Green has more information on how to do this.

Body care:

One can make one’s own body powder with ingredients such as cornstarch and baking soda. http://www.rachelssupply.com/dust.htm has a few recipes as well as the ingredients themselves.

In a real pinch, cornstarch can be used by itself; it is the primary ingredient in most bath powders and many baby powders, though it will cake up a bit in the absence of an anti-caking agent (the most common being tricalcium phosphate). One may also mix cornstarch with another cornstarch-based powder to stretch an existing supply.

Nail care:

If you’re out of money for nail polish or remover, or don’t like the look of polished nails, try a nail buffer, usually available for less than the cost of one bottle of polish, but will last much longer. There are two-step, three-step, and four-step versions; some of the four-step versions contain a side that is actually designed for smoothing the edge of the nail, not the surface. I recently scored a two-step buffer at a local drugstore for $2.59, usually smaller versions with three steps are available for $2 or less. Sometimes the quality is lacking at dollar stores though.

As recently posted on creditcards.com, with the change in credit card regulations comes the greedy credit card banks looking to replace lost income. Some of these aren’t exactly new but worth mentioning nonetheless. In summary:

• Reward redemption fees: This borders on bait-and-switch, offering a “reward” and then charging to redeem it. Supposedly for administrative expenses, this is typically no more than $50, and is often waived if you register online.

• Foreign transaction fees: You need not actually travel to incur this, just involve a foreign bank somehow, and poof! Instant fee. This is usually up to 3% of transaction amount. If you’re travelling abroad, you can possibly get a better deal by using traveler’s checks denominated in the destination country’s currency. (note: not a traveler’s check card, which is a prepaid debit card and usually much more expensive)

• Reward recovery fee: Charged to reinstate reward points withdrawn due to default (not paying on time). Highly variable; American Express charges $29, some issuers don’t charge it at all even if the terms say they reserve the right to.

• Activity fee: Ironically, replaces the former inactivity fee limited by the Credit CARD Act to cards unused for over a year. Now, card issuers charge $50 to $100 and rebate it if you charge over a certain amount per year. (Probably not what the legislators that wrote the Credit CARD Act had in mind, either.)

• Payment protection fees: This is a completely optional insurance plan that costs around .9% of your balance (90 cents per $100). It’s not called insurance, of course, but that’s what it is. Best avoided if you carry a large balance; the money can be put aside into a savings account instead where it’s earning interest for you. This can be a significant amount: for a $5,000 balance, about $45 per month. Over a year that’s $540, which should easily cover six months of minimum payments. Another way to look at it: that .9% per month is comparable to an additional 10.8% APR. There’s an easy way around this one: don’t sign up for it.

• Paper statement fees: Not surprisingly in our increasingly electronic era, banks now charge to mail out hard copy. At least some banks are; I’d expect this to become more common in the coming years but it’s not terribly common right now. As long as the fee is reasonable (about $1-2 per month) it’s no huge cause for concern if you actually need a paper statement, but just say no to unmitigated greed such as Bank of America’s $9 per month paper statement fee.

Moral of the story: read the terms and conditions of your cards and accounts carefully and keep track of changes to them. If you find something that’s outrageous, take it up with your bank/card issuer, and start looking for alternatives. Most changes in terms and conditions will not affect you if you quit using your card before they take effect and you inform the issuer you wish to close your account.

As detailed in this WalletPop article, there is a forthcoming change in how banks handle debit card transactions. If you are in the US and you have a bank account, you have probably gotten something in the mail or with your online statement about opting in to continue something like “courtesy pay” or “bounce protection.” I’m going to explain why it is a bad idea to opt-in and why the opt-in requirement came about.

Until 2010 July 01, financial institutions (banks and credit unions) are allowed to accept debit card transactions which would take the balance negative, at their discretion (usually up to a negative balance of $200 or $300, sometimes more than that). The institution charges a fee per occurence, typically in the $25 to $40 range (sometimes capped at two, three, or four fees per day). Until recently this was a huge revenue stream especially for for-profit banks, but it came at the expense of those who could least afford the fees. (The APR for an overdraft equal to the overdraft fee ($25 for a $25 overdraft, etc) for one day is 36,500% and is even higher for overdrafts where the fee exceeds the transaction amount. This makes payday loans look like a bargain.)

The banks (and even some credit unions) are using heavy-handed, aggressive scare tactics to try and convince people to opt-in to continue this “protection.” They cite such things as being stranded with no money and the fee being a relative bargain by comparison. The reality is, the computers behind debit card transaction approvals are stupid and will just as easily charge the fee for going one penny over at a coffee shop as they will for an emergency tow or car repair. Of course they will! The banks have no reason to tell the difference and a typical overdraft fee is almost pure profit!

My advice is simple: don’t opt-in. If you need an emergency credit card with, say, a $500 limit, get one, and then use it only for emergencies. If you decide to ignore my advice and opt-in to a “courtesy pay” arrangement anyway, keep close tabs on your account balance, and only overdraw a deposit account as a last resort.

A similar rule has already gone into effect for credit cards and discretionary overlimit approvals. I advise not opting in to these either, for similar reasons.

I know, it’s been a while. But I’m back here. Really, in 2010 you’re going to see a lot more posted here. I’m not happy with the relatively low article count here and I know the rest of you probably are not either.

For those that never really understood it, I’m going to write a quick little blurb on buying in bulk and unit pricing. This is also going to debut what’s going to be a new standard on this blog: use of the ISO non-country-specific currency symbol ¤ where the actual unit doesn’t really matter. Feel free to mentally replace ¤ with $, £, €, ¥, etc. and adjust.

Unit pricing is calculated by taking the price of the item and dividing by the amount of product contained within. It is important to know how to calculate unit pricing because sometimes stores mark down smaller price items and sometimes these smaller size items are temporarily a better deal than buying the larger size items.

Consider the following example for a store’s regular prices (plausible, but completely fictitious, I just made these up):

¤0.60 for a 12 oz. (355 mL) can of soda
¤2.50 for a six-pack of 12 oz. cans of soda (72 oz., 2.13 L)
¤4.50 for a twelve-pack of 12 oz. cans of soda (144 oz., 4.26 L)
¤1.90 for a 2 L bottle of soda
¤2.75 for a 3 L bottle of soda

Calculating unit prices for all of these (per liter, just for an example, rounded off to the nearest ¤0.01/L):

¤0.60 / 0.355 L = ¤1.69/L
¤2.50 / 2.13 L  = ¤1.17/L
¤4.50 / 4.26 L  = ¤1.05/L
¤1.90 / 2 L     = ¤0.95/L
¤2.75 / 3 L     = ¤0.92/L

As you can see, the 3 L bottle is the best deal, judging by unit price. Now, that does not always mean it is the best deal. Certain circumstances may make large bottles impractical, such as when one is hosting a party. To go along with those bottled sodas, one must then purchase plastic cups, keep ice handy, etc. When going on a road trip it’s much easier to throw twelve cans in an ice-filled cooler and drink straight out of the can, versus fiddling with larger bottles and cups. If inconvenience outweighs the lower cost, it’s not really a better deal at all.

Now, let’s say this particular supermarket marks down the 2L bottles to ¤1.60. The new unit price then becomes:

¤1.60 / 2 L = ¤0.80/L

¤3.80 / 4.26 L  = ¤0.89/L