I didn’t realize that an average American restaurant portion is 2-3 times larger than it should be.  After learning how to cook for myself, I discovered I can put together a gourmet steak dinner complete with grass fed beef, mashed potatoes, steamed vegetables and a glass of wine for about $12.  Total calories is about 400-500.  An equivalent meal at my favorite steakhouse costs $38, and weighs in at over 1000 calories!

My partner and I still enjoy dining out.  We do it economically, and stay slim.  This is how I did it, while still enjoying an occasional dinner out.

1. Take advantage of happy hour prices.  Seattle is blessed with numerous late night happy hour menus at top quality restaurants.  We have two chances daily to catch happy hour.  We enjoy two appetizer sized plates. This can be any two of the following: tacos, shrimp cocktail, chicken wings, nachos, hamburger sliders, salmon/crab cakes, wontons, bbq ribs, small pizza, beef/chicken satay, sashimi/sushi rolls, salads, or soups.  While not ‘health’ food, the portions are small and we’re sharing, so it’s not nearly as bad as eating it on our own. 
Average Saved: Our bill usually tops $24, including drinks at Seattle’s top restaurants.
Calories Saved: 400-1000

2. Share a plate.  Sometimes we’ll order an appetizer and a single main course, then share our plates.  Some restaurants frown on this and charge a $1-2 plate sharing fee.  This is still much cheaper (and fewer calories) than getting two entrees. 
Average Saved: $40
Calories Saved: 400-700

3. Don’t eat bread rolls or chips and salsa.  You’ll have plenty to eat with your meals.  Skip it, and you’ll avoid mindless snacking.
Average Saved: No cost savings here.  These are usually free items.
Calories Saved: 200-1000

4. Take leftovers for lunch.  I order my own entree plate, split all the food in half, then get a take home box.  That effectively gives me two meals for the price of one, and I’m eating closer to a single serving size. 
Average Saved: A $25 entree becomes a $12.50 dinner, and a $12.50 envy-of-the-lunchroom gourmet lunch.
Calories Saved: 400-800

5. Skip the alcohol.  Here’s a secret: restaurants almost never make money on the food.  The margins are very difficult to balance.  Most restaurants make a profit and pay their bills on the alcohol you buy with your meals.
Average Saved: There’s a bottle of cheap Washington red wine that my boyfriend and I frequently buy at Trader Joes’s for $4.99.  A typical bottle of wine has 4.5 glasses in it.  When we go to restaurants, I frequently see a glass of this particular wine for $5.  That’s $17.50 profit on a bottle.  If they bought it with a bulk discount, the profit is greater.  So buy your favorite bottle from Trader Joe’s and enjoy it at home after your dinner.
Calories Saved: For the weight loss portion of this tip, drink wine or beer instead of hard liquor.   It’s typically cheaper, saves calories, and saves strain on your liver.

6. Skip the dessert. My partner and I aren’t much for desserts, so this is an easy one for us.  Desserts are cheap, but the biggest savings is to the waistline.
Average Saved: $3-10
Calories Saved: 800-1600

After you’ve lost weight and paid off your debt, the trick is you have to keep doing it.  You can’t eat salads for a year, lose 30 pounds, then go back to eating double quarter pounders every day.  You can’t eat at home every night for however long it takes you to pay off debt, then go back to eating out every meal. 

I used these tips and trick to help me lose weight and eliminate my debt.  I lost 30 pounds 5 years ago, and have kept it off.  I paid off $35,000 worth of debt 2 years ago, and haven’t had a day of negative net worth since.  Now that I’m 30 pounds lighter and debt free, I continue to eat out like this.  I cook at home, and brown bag lunches six days a week. I eat happy hour snacks or dinner employing these tactics one day a week.

Save money and lose weight.  Two of the most popular new years resolution goals ever!  You can do it!

Be the change you want to see in the world. – Mahatma Gandhi

When I come across a difficult situation or a conflict, the ask the question: What did I do to influence this?

The trick is to phrase it so only my direct actions are in the picture. The wrong answers are, "I should have told my partner to do this", "I told my partner and if only he had listened to me". These are projecting actions onto another person, whom I have no control over. The only person whose actions I can control are mine.

To drive the right answers, I must drive the right questions. "Did my actions make things better or worse?" Removing anything that has to do with someone other than me. Not "My partner wasn’t listening to me," but "Did I listen to my partner?"

I must recognize the things within my control. If I get a fee, I ask myself, "What can I do to prevent this from happening again?" I don’t think about the ways anyone else screwed up. "My landlord cashed the check early." I think about what I can do. I can’t control what my landlord did. What was my part in this? If I had not sent the check early, would this have happened anyway? Do I have a cashflow problem? Am I running my accounts too close to zero? Am I buying frivolous things? It’s easier to change what I do, rather than try to change what they do.

If this sounds like putting all the blame on myself, it’s not. I ask the question, "Did this happen to me on purpose?" The answer is usually no; people make mistakes. Did I WANT a fee? Did my landlord WANT me to have a fee? Did the bank MAKE the landlord go to the bank early? Unlikely. Thus, there is no blame.

What about issues on a collective scale? Can I alone fix the problems with global warming? Why bother if I can’t change it? I am not in direct control of global warming. I alone cannot change the situation. I do my part to reduce my impact. I take my own reusable grocery bags to the store, drive less by working from home a few days of the week, find a more energy efficient car, and adopt more energy efficiency in my home.

If no one else in the world joins me, then what I do alone will not change what is already in motion. That is no reason to not do this myself. I change what little part of the world I can directly change – me.

 

Money is often cited as the leading cause of divorce in the western world.  When I found this article Money isn’t the culprit in most divorces, it made me think, is this true?

Money does not wreck relationships.  Lack of communication and compromise does.  Money just happens to be the catalyst in which poor communication and compromise occurs.

When dating evolves to a point where you are considering ‘the next level’ whether moving in together or marriage, it’s time to come clean about your debts and priorities.  Who pays for the dinner and movies is inadequate information about financial compatibility.

At the same time, until you both are ready to have a serious relationship, the state of your finances is nobody’s business but your own.  Confessing about your bankruptcy in the first couple of months of dating may put forth uncomfortable questions about whether you are with a person to be bailed out. Do what you feel comfortable with.

Show your strength and independence.  If you need to reveal an embarrassing and unpleasant topic, admit your mistake, and say you are taking charge of it.  Keep your finances separate until you have agreed to combine finances in marriage.  Do not accept money gifts or loans from your partner.  Thank them, but let them know your debts before you come into marriage is your problem.  Have them settled before you commit so it does not become a source of contention or liability on your future.  Your partner will love and respect you for it.  If they become angry or insistent about it – be wary.  They may be trying to control you through money.

If your partner is the one with money troubles, do not give them money gifts or loans.  Do not think you can try to solve their money problems.  If things don’t work out, you are going to feel like a fool.  If they have a serious debt problem, let them know you have concerns about it and it may jeopardize any long term plans you may have together.  Be wary if they try to make you feel guilty about not helping them.  You should feel empathy, but not obligated.

If they have acknowledged personal responsibility, then your emotional support will be appreciated. Congratulate them on their achievements!

You can talk to them about it, and give them passive advice, but know that ultimately, you cannot change the other person.  You can only change yourself.  If they do not want to change, lash out at you, and refuse to have an honest discussion about it, weigh your options carefully.  30-40-50 years of union with someone is a long time.  5 years with someone who wrecks your credit can impact your life in direct (bankruptcy) or indirect (losing compound interest savings) ways for at least as long.   If you have children, you will never be entirely separated from your partner, even if you split.  Memories of a painful separation lasts a lifetime.

If your partner comes to you with a criticism, thank them, as uncomfortable as it is.  Reward them for being open and honest.  Before becoming defensive, take a moment and be self reflective.  Does my partner have a point?  Do I have a spending problem?  It also swings the other way, too.  Am I cheapskate?  Am I an ungenerous penny pincher?  Agree with the person that you can see how they would feel that way.  You may also bring up any concerns you have.  Open discussion means there is your side too.

If they say these things to you lashing out in anger, walk away and talk later.  Just as you reward someone for honest communication, refuse to reward bad behavior.  Perhaps they have a point, but they owe you a calm and reasonable discussion about it.

Learn how to negotiate and compromise.  If your partner says you spend too much money on shoes, say, ‘I see your point.  I need new shoes for work, where a neat clean image is important.  If I buy a new pair of shoes, I will donate or sell an old pair that I have’.  Then follow through with it.  If you don’t, you will lose respect.  Lose enough respect, and it’s over.  Money didn’t cause that – you did.

If you are buying things compulsively and you don’t really need them, then you don’t have a strong negotiation point.  Concede.

Take a long, deep look in the mirror.  Let’s say you get married or move in together.  Your partner had lots of money in savings, good credit and no debts before they met you.  You have creditors calling you and couldn’t get a credit card even during a period of lax credit checks.  Suddenly, both of you are having trouble making ends meet.  Your rent check bounces.  Who is most likely to have influenced this situation?

Closing Thoughts

Talking about your past is uncomfortable.  There’s always something embarrassing we wish we could never reveal.  However, when you are talking about a committed relationship, you need to put everything on the table, especially the uncomfortable topics.  Despite the openness and honesty, there is a chance your partner will choose to not accept it.  It is painful, but it is their right.  You cannot try to choose for another person by keeping secrets.  You can only choose what’s right for you.  Sometimes, you might be the one who decides to walk away.

What’s your take?  Why do most divorcing couples list ‘money’ as the reason?  Do they mean something else?  Why are people willing to disclose their credit for a car loan, but are terrified of sharing it with someone they want a relationship with?

How Much Emergency Savings Should I Have? Should I invest in more stocks than bonds?

Every personal finance blogger has their own opinion about this. Most of them say you should have at least 3-6 months if you are single, and up to a year if you are married with children. The best strategy that works for me is the one from the New York Times in their story: Legacy of a Crisis: A Generation Shy of Risk.

Basically, it says that your investment risks should reflect more on what you do for a living than your risk tolerance or time horizon. If you work in a steady income, tenured field like teachers or government employees, then your investments can have more risk since you are less likely to lose your main source of income. Your raises are likely to be steady, but not earth shattering. If you work in a volatile field like banking or technology, then your investments should be more stable. Bankers and tech workers tend to have boom and bust incomes just like the stock market – time of plenty, and time of starving.

I fall into the latter category. I have done this intuitively for some time, but the NYTimes article is the first time I’ve seen it explained this way. I have a higher than normal emergency fund to cover basic expenses. I could stretch it out even further if I needed to. I have zero debts – no student loans, credit cards, mortgages or car payments. The reason is because the fewer liabilities I have, the less likely I am to run into trouble if I am laid off. It also affords me some mobility. If jobs dry up in Seattle, I can move where there are jobs. I save my money in cash until I can afford to buy a major purchase. This allows me to dip into the washer/dryer fund if I ran into a hardship year, instead of being saddled with a payment due for the washer and dryer.

My retirement investments are on the conservative side; index funds that are a mix of some stocks and mostly bonds. Once again, this is due to the volatility of my profession. If I end up on the wrong side of a down cycle at retirement like we’re seeing now, it could be disastrous for my plans for a cabana, botox, and leisurely days in Margaritaville.

I opt for a wealth preservation strategy while times are good. My skills could be completely obsolete in 20-30 years. If I end up in a down cycle year at retirement, I may have a very tough time even choosing to delay my retirement. Technology is an industry that favors the youthful, unfairly as it is. In order to keep my income growing, at some point I will need self sustaining income not tied to my employment. Thus, my retirement income is designed to be from more stable sources (not just 401Ks and IRAs), while my career is more volatile in my prime income years.

This is could apply to anyone, but if you work in a field with highs and lows, this is especially important. I’ve seen more than one tech worker surprised by a layoff with a nasty Audi payment and no savings.

I used to be proud of filling my bookshelves with as many books as possible.  I dreamed of having a study/library packed with books.  Then I had to move across the country.  Packing and moving my books became the most dreaded part.  There were so many heavy boxes to move!  Especially the tech books.  How many of those books have I gone back and reread?  Very few.

I very rarely buy brand new books anymore.  I have a rule for movies and books:

if read/watched more than twice, buy (used if possible);

else rent/borrow

I still have stacks and stacks of fiction books from my past.  There are specialty books that are hard to find at the library or used book store, and have to be bought new.   Current programming and technology books, for example, are rotated in and out most frequently.

Thus, if I want to buy a new book, I try to sell my old ones on Amazon.  This usually works out to about a 3 to 1 ratio.  At that rate, I make rapid progress on decluttering my bookshelf.

I’m not quite there yet.  My goal is to fit only the essential books that I need in a couple of book boxes.  I try not to buy fiction books anymore, and opt for the library when I can.

I doubt I could be a true monetary monk minimalist, but I’m sure I can have a neat desk and bookshelf with items that I truly need.

6 years ago I was 40 pounds overweight and obese.  I was in denial about it.  When I looked in the mirror, I didn’t see a fat person – I was thin and active in my teens.  I blamed ‘slow metabolism’ for my lack of weight loss.  It wasn’t slow metabolism – it was lack of exercise and too many empty calories.  I started logging my calories and was horrified to discover the truth.  I was in fact responsible for my own situation.

There was a correlation between how I was managing my diet and my finances. I wasn’t paying attention to either.

I started dieting and getting my debt under control at about the same time.  I don’t think this was coincidental.  I sat down with both of them and analyzed what I was doing wrong.  Then I changed.  If the scale (or balance ledger) didn’t budge, I kept analyzing what I was doing.  If I was eating right and exercising, I kept at it.  If I was eating too much happy hour, I cut back (which worked to save both calories and money – double goal efficiency). Neither of them gave overnight results, but over time I made progress. I still haven’t reached all my goals, but I’m working on it.

I lost 30 pounds and have kept it off for about 3 years (am working on the last 10).  I got my debt strategy under control about 3 years ago and have been debt free for almost a year.  I have not reverted back to either of my bad habits that lead to my weight gain or debt accumulation.  I recognized what I was doing wrong.  Then I recognized what I was doing right.  There are some things that are beyond your control, as I’ve written previously in Half Dozen Finances Within Your Control.  Recognize the things that are within your control, and do your best prepare for the “Oh crap” situations that you can’t.

Let’s assume you are in a nightmare scenario.  You are laid off.  You have a mortgage, credit card debt and a small amount of money in an emergency savings fund.  You were just starting to pay off your bills, and save in your fund.  You could be out of work for 6 months to a year, and you only have 1-3 months of money in your savings account.  There’s not much you can do.  You have to figure out how to stretch what you have.

It’s great that you have that emergency savings.  Try to minimize the use of your credit cards (stop altogether if possible) and stretch that money out as far as you can.

Get a list of all your recurring expenses.  If you have cable, usually people would say this is the first to go.  I say it depends.  If you live in an area where cable is your only choice for high speed internet, then you should probably keep it.  I live in Seattle where there is an abundance of free WiFi coffee shops, so I would cancel my service.  Losing internet is not an option in today’s world.  It’s a necessity to find jobs competitively.

I would not drop my cable and switch to another carrier.  There will be signup fees and a new modem purchase for DSL (or other).  These are expenses cannot be afforded at the moment.  Drop the cable to basic and keep the internet.  Cancel TiVo or On-Demand subscriptions.  I watch my favorite shows (Lost, Heroes) and movies when I want on Hulu.com or Netflix.

Don’t cancel Netflix.  Same with the World of Warcraft subscription.  This is different than what most people would say.  Why I say that is because I’d go crazy if I don’t have something fun to do.  Also, if there is entertainment at home, I am less likely to spend money at the bars and club, which are clearly a must-go expense.  If you have the discipline to dust off your old stand alone games without a subscription, canceling your WoW account would obviously be even better.

If you have an expensive cell phone plan, this can be tricky.  Normally, this is also an area that you would want to trim back on.  It gets tricky because of contract terms.  This is why I don’t have an iPhone – I don’t want to be locked into a 2 year contract for this reason.  Here is what I would do.  The contract should be for service with AT&T, not the iPhone itself.  Even the cheapest iPhone plan ($60) is more expensive than basic AT&T mobile phone service.  I would see if I could buy a cheap basic phone, and have AT&T transfer your phone number and contract to that phone, then end your iPhone service.  Sell your iPhone.  I don’t have an AT&T phone or iPhone, so I’m not sure if this will work.  Call AT&T and ask.

Eat at home.  I’ve started a series on Recession Recipes at my Calorie Crunch blog. These are designed to be easy, minimal cooking skill (can you boil water and chop an onion?), economical recipes that almost anyone can fit in their schedule.

You’re going to have to find creative ways to stretch your money to pay your mortgage.  I am assuming that if you hadn’t been laid off, you would already be fine with your mortgage payments.  If you have a spare room or basement with junk, empty it and rent it to a college student.  There’s still high demand for rentals.  Your new housemate can help subsidize a fraction of your mortgage.  It will at least stretch your savings a small bit, buying you a little more time.

Pay the minimums on your credit card and do not miss a payment! You cannot afford for them to assess penalties, late fees and increase your interest rate. As soon as you get the bill from them, send the minimum immediately. Do not try to float close to the due date and earn a little more interest on your savings – it’s not going to help you at this point.   You need to make sure that payment gets there on time.  If you miss a single payment, it’s game over.  You will go into the credit card debt spiral with no near term end. 

Do not use credit cards for emergencies.  This is why you need an emergency savings account with good hard cash.  If you do not have an account with cash, how are you going to make the minimums on your credit cards?

Do not listen to people who say if you don’t spend, then we can’t revive the economy.  If you lost your main income and are living on savings, you are in survival mode.  You are in no position to be a consumer.

For those of us who still have jobs, keep pushing down that debt and put as much as you can into the emergency savings account.

Let’s go over some of the basics.

It saves you money.  This is true.  I can buy a grass fed prime steak with asparagus, mashed potatoes and a glass of wine for less than half of what it costs to eat out at a comparable quality restaurant.  My average prime steak dinner with the fixings costs me an average of $14 per plate, including the glass of wine.  Increase to $16 if I have 2 glasses of wine.  Tipping is not necessary, but compliments ensures there will be no crying.  This dinner with wine at my favorite restaurant in Seattle would cost me close to $60 per plate.

You don’t need to be ultra frugal to do this.  Whole Foods isn’t known for being cheap eats, but grass fed steak is delicious.  If you want to save a few bucks, meat from the chain supermarkets are fine (but rather bland).   If you are just learning to cook, don’t practice with the finest steaks from Whole Foods right away.  Cooking steak to temperature is an advanced skill that takes some practice to learn to do right.

I buy my veggies and produce from farmer’s markets, which are in abundance in Seattle. 

The wine usually comes from Trader Joe’s.  A good bottle of wine doesn’t have to cost a fortune.   It’s even easier to get a great quality wine for under $10 if you live in wine country like Washington or California.

You know what ingredients are in it.  I’m certain there’s never any spit in my food.  Or food coloring, or pig feet, or whatever.

It’s Healthier.  Most restaurants go very heavy on the fat and oil.  It tastes gooood, but it also packs on extra calories.  Most of us have desk jobs, so this is a bad combo.  Restaurants typically serve portions 2-3 sizes larger than we need.  This can also contribute to the ‘spread’.  Over the years, I’ve become very good at making single serve portions for 1 or 2 people.  My food waste is down, not to mention my girly waist.

So those are the basics that are usually covered by most personal finance enthusiasts.  How do you find time to do this as a young career professional?

Cooking Classes.  First, you need to learn how to cook.  You need to know how to use your knives and pans.  If you have a good paying job, look around in your area for cooking classes taught by chefs.  They are not cheap, so pick wisely when you are first starting out.  I recommend classes with knife skills, and cooking basics to start with.  Cooking classes are also great to mingle, at least, in the Seattle area.  A lot of single professionals here take cooking classes to network or meet other singles.  With the economic downturn, this is probably a more expensive option that can easily be replaced with alternatives.

If your budget is tight, there’s the Food Network on cable TV.  I learned most of my cooking skills and techniques from Alton Brown’s “Good Eats” and Rachael Ray’s “30 Minute Meals”.  I’ve now graduated to Martha Stewart.  Rachael Ray’s methods works really well for what I’m talking about here.  Chop stuff up, throw it in a pot, and eat.  Plus she shows you how to multitask many dishes.  Start the pasta boiling while chopping up veggies for your sauce.  Alton Brown is geeky fun that you can eat.

If you canceled your cable because you’re so bogged down in debt and are cutting out lattes, then there’s the internet.  Search on YouTube for free videos on how to dice or chop an onion.  Then go to All Recipes and find recipes for stir fry.

Once you have a few basic skills, you can make almost anything.  I still can’t make Indian curries.

Get a CrockPot. They’re not just for church picnics and soccer moms!  They are so freaking easy.  Chop an onion (see YouTube above), chop a carrot, celery, potatoes, stew meat, a can of tomato sauce, 1/2 cup water, salt/pepper, and throw it in your pot section the night before you go to work.  Put in the the fridge.  In the morning before you go to work, put it in the crockpot base and turn on low.  When you come home, dinner’s done!  Get a bowl, a spoon and your Netflix.

Grocery Shopping.  Where to find the time to go grocery shopping?  The weekends.  I buy a week’s worth of produce and meat on Sunday, which as a single person is not much.  A 1 pound steak (which makes two-three steak dinners with the proper portion control) and a package with 4 chicken breasts.   Because I live in Seattle, there’s usually 1/4 lb of fresh salmon in there too. I tend to pre-prepare my food chopping for the week.  I call it my “Martha Stewart” Sundays.  I chop up an onion and bell peppers, then put it in a container in the fridge.  When I cook during the week, I’ve already done my chopping.  I just need to throw it in the pan.  I used to buy my produce (and a croissant) at Pike Place Market in the morning, do my chopping mid morning, then meet my friends somewhere fun in the afternoon.  There is no slaving in the kitchen all day in my life.

The Downside. Now the really crappy part to all of this is the dishes.  I feel your pain – I hate dishes.  But it’s got to be done.  I find that if I wash dishes as I go, after chopping and throwing in the pan, that it’s easier to maintain.  A bit of multitasking.  A dishwasher is also a darn fine thing.

Between Rachael Ray’s 30 minute cooking style and a crockpot, I eat healthy meals at home most days of the week.  I still have time to go to the gym, read/write blogs, do my homework, have fun with friends and hold down a full time job.  I go out for happy hour or a nice dinner a couple times a week.

The summary:

I received a long email recently from an utterly despondent woman (that I’ll call Ellen) who was caught in a devastating situation. A year ago, she was a stay-at-home mother with three preschool-aged children. Her husband worked at a high-paying job that seemed to have great long-term potential and it seemed as though their life was set.

Then, very suddenly, her husband died in a car accident, and there wasn’t much life insurance money. Within months, she was back in the workplace at a fairly low paying job, her family had moved into a tiny apartment, and the house was up for sale. Then, just as quickly, she was laid off from that job and the house sold for roughly what was still owed on it. Within a year, she was back living in her parents’ basement, a single mother with three young children and few assets to her name, searching for any job in her field of expertise while working as a gas station attendant.

There are many families who choose to be single earners while one parent stays at home. There are many good, and valid reasons for doing so. However, there is significant risk of a catastrophic situation described by Ellen. The stay at home parent has been out of the work force for a long time, and is behind in skills and work experience. The health insurance they depended on is suddenly gone. The assets they had saved isn’t adequate, and she realizes it too late.

No one can see the future, however, everyone can assess their risk areas. For single earner families, what happens when your husband is suddenly out of the equation? Gets fired from his job? Dies in an accident? Decides he’s just not in love with you any more? Plane crashes on a weird tropical island and he can’t escape?

Emergency Fund. Yeah, you knew I was going to say that. No matter whether you are a single or dual income family, you have got to make sure you have enough money saved that will take you through 3,6, or 12 months worth of bills. That will buy you some time if one of those situations occurs. You can focus on your grief and getting things in order for your next step. If you have children, this is your number one priority.

Keep working on your skills. In today’s internet age, there’s no reason why you can’t keep current on some of your area of expertise or learn a new skill. If you were a web designer before quitting your job, keep designing. Learn a hobby or skill where you can make side money that can turn into a career if need be. JK Rowling is the ultimate inspiration for this. Some professions will be easier to do this than others.

Life insurance is a tricky one. Not everyone will qualify. It is not easy to get, but it’s easy to get trapped by a scummy plan. I would rather rely on my own income potential and investments. You can withdraw from Social Security, 401Ks, and IRAs in some dire circumstances. I would rather put money I would pay to a life insurance policy into one of these instead, but your mileage may vary. Of course, a 401K or IRA won’t help you if you don’t have them or are not a beneficiary. If you are dependent on a single earner, make sure you are involved with this.

I know it sucks to think about whether the one you love is going to be suddenly gone. But if you realize you would be sh*t up the creek instead of grieving, and think you could handle it, you need to start thinking about it.