Small Business Success | Small Business Mentoring

Original Article from Zenhabits

Every Tuesday is Finance & Family Day at Zen Habits.

Confession time: I’m a cheapskate. Some would say frugal, which sounds much more positive, but in reality I can be a real cheapskate.

I am fairly frugal (though not always), but sometimes I take it too far: I have T-shirts with holes in them, I never buy new clothes, we’re shopping for a new couch because our current one has holes in it, and I ran my current pair of running shoes until the soles fell off.

However, I have gradually learned to be frugal in many ways that I would recommend to others. I don’t think you should have holes in your couch, and you should definitely replace your running shoes more often than I do, but there are many ways to cut back on spending and live a more frugal lifestyle.

Why live frugally? First, because it allows you to spend less than you earn, and use the difference to pay off debt, save or invest. Or all three. Second, because the less you spend, the less you need to earn. And that means you can choose to work less, or work more but retire early. Or take mini retirements. You have more options with a frugal lifestyle.
I know what I’m going to hear in the comments, because it’s been done repeatedly with my other frugal articles: I have no life. This is boring. I might as well live in a box. You have to enjoy life sometimes.

All of which you might believe, but I believe I do have a life. A great one. One where I spend time with my family, where I have conversations and read and get outside and do things that are fun and exercise and focus on what’s important and spend my free time the way I want. This is a good life. Read this article for more.

So, if you’d like some tips on frugal living, here are just a few, from a cheapskate. I should note that I do most, but not all, of these tips.

1. Go with one car. Many families have two or more cars. Besides your house, your car is probably your most expensive item. If you can do with one, you should. My wife and I both work, and we have six kids, and yet we have learned to manage with one car.
2. Go with a smaller house. Just because you can afford a larger house, doesn’t mean you should live in one. Live in as small a house as you can and still be comfortable. I don’t mean you should live in a one-room apartment with a family of four … you know what I mean. You can save thousands a year with a smaller house. Many times, if you get rid of a lot of clutter, you don’t need a large house.
3. Go with a smaller car. Again, you can save thousands by going with a smaller car. A car instead of an SUV, for example, is a big savings. Be comfortable, but don’t overdo it. You’ll save a lot on gas this way too.
4. Rent rather than own. This will probably spark a huge debate, as it always does. The thing is, just don’t assume that buying is the better investment. If you calculate the interest you pay on a mortgage, the cost of insurance and maintenance, buying is often much more costly than renting … and if you rent, save money, and then invest the difference, you can actually end up well ahead in the long run. Now, it’s not a given, so do a comparison, factoring in all expenses. Here’s a more in-depth article.
5. Look for used first. If you need something — I mean really need it, not just want it — see if someone you know has one that they don’t use or need anymore. Send out an email to family or friends, or just ask around. You might be surprised. I was about to buy a printer, and then found out my mom just bought a laser printer and didn’t need her old inkjet … saving me close to 100 smackeroos. If no one you know owns one, try freecycle.org or craigslist.org. Then look to buy used, at garage sales or thrift shops. You can find a bargain if you look around.
6. Eat out less. One of the biggest expenses in our daily lives is eating out — the average person spends well over $2,000 a year on eating out. Restaurants are expensive, including fast-food (not to mention the health hazards). It’s much cheaper to cook your own food. Our family creates a weekly menu, then we buy the groceries, and cook dinner (and lunch) each evening. Lately I’ve even been prepping it in the morning, so it’s a snap when we get home.
7. Eat out frugally. If you do eat out, check out these money-saving tips.
8. Brown bag it to work. Instead of eating out for lunch, bring your lunch. More here.
9. Adopt a minimalist wardrobe. This tip won’t be for everybody, but I try for a minimalist wardrobe. I generally wear jeans or casual pants, a T-shirt or Polo-type shirt, and sandals or shoes. Plain, solid colors are my favorite. Everything goes with everything else, and I don’t have too many clothes. This saves me the stress of picking out an outfit, and I don’t need as many clothes.
10. Stop online impulse buys. This was a problem for me before I canceled my credit card. I used to buy online a couple of times a week. Now I buy maybe once every couple of months, using PayPal or someone else’s credit card. I’m not saying you have to go to this extreme, but realize that online buying can be way too easy (you don’t even have to go to a store) and therefore, we make too many impulse buys. Buy online if you really need something and it’ll save you money, but beware the impulse buy. See 30-day list tip below.
11. Don’t shop. Don’t go to the mall or other shopping area or department store to look around and shop. Go to a store if you know what you need, and then get out. Many times people go shopping, with a vague idea of what they want, and get caught up buying much more. Or they go just for fun, as a form of entertainment. That ends up costing a lot. It can really add up. Instead, stay away from shopping areas and find other ways to have fun (more below).
12. Use a 30-day list. To curb impulse buys, create a 30-day list. When you want to buy something, other than a true necessity (medicine or food, for example), put it on this list, with the date you added it to the list. And make it a rule that you can’t buy anything for at least 30 days after you put it on the list. And stick to it. You’ll find that you buy a lot less with this system.
13. Cut out cable. I’ve talked about how I cut out cable before. It saves me money every month (in my area, about $60, or more than $700 a year), and also forces me to do things like read and have conversations and go outside. Win win.
14. Use the library. Instead of buying books, check them out. The library often also has a great selection of DVDs (depending on your area), saving you even more. Now who needs cable?
15. Find free entertainment. Find cheap ways to have fun. Entertainment often ends up costing a lot of money, if you go to the movies, buy concessions, or go out at night, go to the bar, etc. The average person spends about $1,800 a year on entertainment (not including eating out). Now, I’m not saying you shouldn’t have fun … but there are cheaper ways to do it. Here are a few ideas. Here’s a frugal family’
    s fun and cheap weekend.
16. Frugal exercise. Exercise is important, but it doesn’t have to cost a lot of money. Here are some tips.
17. Stay healthy. Easier said than done, I know, but staying healthy can save you tons of money on doctor’s visits, hospital bills, and medicine over the long run. An ounce of prevention, and all that. Eat healthily, and exercise. Simple and effective.
18. Commute by bike. Even if you own a car, commuting by bike will save you gas, and get you in shape at the same time. I highly recommend it. Here are my tips.
19. Carpool or ride the bus. OK, you don’t want to bike it. So find a friend or neighbor who works near you, and arrange a carpool. Or take public transportation. Simple advice, but something a lot of people ignore.
20. Walk. Often we drive to the corner store, or to a school that’s less than a mile away. Leave a few minutes early, walk, burn some calories, and save gas.
21. Sell your clutter. This is not so much saving money as making it, but the frugal, simplifying cheapskate, like myself, will want to declutter and make a few bucks doing it. Hold a garage sale or sell it on eBay. It’s amazing what some people will buy. See the Simple Dollar’s post on this.
22. Frugal gifting. Gifts can cost a lot of money over the course of a year. Look for ways to do it cheaply. Make a gift, or give a consumable. My family enjoys getting and giving cookies, for example. Here are some ideas.
23. Quit smoking. Not the easiest way to save, I know. It’s hard. But I did it, and so have many, many others. Not only will you save on cigarettes (which are expensive over the long run), but also associated costs (I used to buy a soda or beer to go with my cigarettes) … and of course the huge, long-term medical costs. In less than 2 years of not smoking, I’ve saved well more than $3,000. Here are my tips for quitting.
24. Alcohol in moderation. If you drink one beer or a few beers a day, that adds up to big money each month. Some drink even more than that. It’s expensive. If you can cut your drinking to the occasional party, and once in awhile with friends (not all the time), you’ll save tons.
25. Sweets in moderation. Desserts and sweet snacks give us lots of calories with no nutrition. And we pay a premium price for that, in dollars and in our deteriorating health. Cut back on sweets (don’t eliminate them entirely of course) to save money and cut calories.
26. Drink water. Often we drink lots of calories through sodas, coffee, alcohol, juices, tea, etc. And that costs a lot too. Drink water, save money, save calories. Here are some tips for forming the water habit.
27. Batch your errands. Instead of running an errand or two every day, batch them into one errand day, and plan your most efficient route, to save gas and time. Also do as much bill-paying online as possible, to eliminate some errands.
28. Stay home. Becoming a homebody might not sound like a lot of fun, but it really can be. I love staying home with my family. We can do all kinds of fun things at home. Or I can spend a day alone, if the family is at school, and really enjoy it. It’s quiet and peaceful, I can read or watch a good movie or respond to comments on my blog or write. Staying home can save tons, in eating out expenses, shopping expenses, gas, and incidentals.
29. Stop using credit cards. Credit cards are not evil. And before you flame me, once again, I realize that they can be used to good purpose. If that’s how you use them, then that’s good, skip this tip. For others, credit cards make buying too easy, and end up making them buy too much.Not only that, but if you don’t pay your bill in full each month, they will cost you a lot in interest. The average American with at least 1 credit card has more than $8,500 in credit card debt. Don’t make that mistake. Here’s my story.
30. Cancel subscriptions. With the wealth of information and entertainment online, do you really need magazine subscriptions? With all the news online, do you really need a newspaper subscription? If you can get DVDs for free or cheap, do you really need a Netflix subscription? Don’t flame me if you think you do need any of these — I’m just asking you to consider whether they’re really essential — the answer might be yes. Also consider other subscriptions you might be paying for — I’m not saying you should cancel everything, but seriously consider whether they can be canceled without much loss of value. Read more.
31. Make your own. I won’t go into all the possibilities here, but many times we buy things when really, we could make them ourselves for much cheaper if we get a little creative. Now, this might take a little more time and effort, but it can be fun, especially if you make it a family project. We recently made our own (very simple) bookshelves with only a couple of pieces of lumber, instead of buying them. If you don’t know how to make something, search for it online. You’ll most likely find some instructions.
32. Do it yourself. Instead of hiring someone to do something, try doing it yourself. Sure, it takes some time and effort, but it’s satisfying, and of course cheaper. It’s also educational, if you don’t know how to do it — again, do an online search, read up on it, and give it a go. Frugality freaks are DIYers.
33. Stop paying interest. I mentioned the interest of credit cards, and auto loans, and mortgages. I consider them a waste of money. I’ve talked about how to live without credit before, and I recommend it for a frugal lifestyle. Consider any other accounts or loans where you pay interest, and see if you can eventually eliminate as much of these as possible.
34. Reduce convenience foods. Frozen foods, microwaveable stuff, junk food … anything that’s packaged and prepared for our convenience is not only more expensive than something you cook yourself, but also most likely less healthy. I’m not saying to eliminate these completely, but reduce consumption.
35. Travel frugally. I actually don’t travel (or haven’t for years), but if you do have to travel, some advance planning can save you money. Airfare is most expensive, usually, so look to buy your ticket in advance, and look for deals. Also consider train travel. Shop around for car rental rates, as they can vary greatly (or use public transportation). Look for cheaper accommodations, or stay with a friend or relative. Just a note: I do plan to travel, but not until I finally eliminate all of my debt.
36. Cut the cell phone. This will not be a popular suggestion either. If you don’t like it, move on to the next one. It’s not for everybody. But think about this: 20 years ago, most people didn’t have cell phon
    es. And miraculously, they survived. A cell phone is not a necessity. It’s a convenience. When people needed to make a call, 20 years ago, they either waited until they got to a destination (wait to make a phone call?! omg!), or pulled over and used a pay phone or a phone in a business establishment.
37. Cut your own hair. Again, this one isn’t for everybody. Personally, I use electric clippers to shave my head. It’s easy, it’s cheap, it’s minimalist, it’s care-free. I don’t worry about my hair getting messed up, or having to fix it in the morning. However, I’m not saying you should shave your head. Many people cut their own hair, in many simple but nice hairstyles, long or short. Saves money, and time.
38. Maintain stuff. This is a no-brainer, but we don’t often think about it: if you take care of what you have, it will last longer. You’ll then spend less on buying new stuff. When you buy something worth maintaining, take a few minutes to read the maintenance manual, and create a maintenance checklist that you can attach to the item. For important things like your car’s oil changes or tune-ups, put them in your calendar.
39. Save energy. There are little things we can do to lower our power bill. I don’t use a dryer or hot water heater, although those are a little extreme. Try these tips.
40. Save gas. With the rising price of gas (and no end in sight), fuel has become a major monthly expense for many people. Small things can add up to big savings. Try these tips.
41. Only buy bargain clothing (when you need clothes). OK, so you’re a cheapskate like me who only buys clothes when the old clothes have too many arm or leg holes. But now you need new clothing. I mean really need it. So instead of buying new, look for thrift shops with good clothes. Or buy new, but only buy the stuff that’s 50% off. Look for the bargains, and you’ll save a ton.
42. Telecommute. Telecommuting doesn’t necessarily give you your dream job, but it’s definitely a step in the right direction. But in addition to allowing you to work in your underwear (and who doesn’t have that dream?), telecommuting saves money on gas, on eating out (if you eat lunch at a restaurant), and on buying expensive work clothes (all you need to buy is underwear, right? And no, don’t buy used underwear).
43. Plan ahead. Sure, easy to say, hard to implement. But if you make it a habit to think ahead to things that are coming up in your life, you can save a lot of money. For example, if you think about where you’re going to get your meals when you go out to do errands, you can pack a lunch or dinner instead of eating out. If you pack a big container of iced water, you don’t need to buy expensive bottled water. If you know that a birthday is coming up, you can buy a gift on sale instead of spending more at the last minute.
44. Cook ahead. If you have one free day a week (or even a month), cook food in big batches and freeze in dinner-sized portions. I don’t do this all the time, but I have done it and it saves money (buying big can often save) as well as time. You have to plan it out a bit, coming up with a menu and shopping, cooking enough meals for a week or a month. But once you’re done, your meals each night (and for lunch if you like) are quick and easy. This saves you from eating out or eating convenience food when you’re hungry but too tired to cook.
45. Wash clothes less. Some people wear clothes and then wash them, but I’ve gotten into the habit of wearing my clothes more than once if they’re not really dirty. I use my nose as a test — I don’t want to wear clothes that smell, but most times the clothes are still perfectly clean. This saves on washing.
46. Sun-dry clothes. When my parents were young, everyone used a clothesline to dry clothes. Now dryers are ubiquitous, because they’re fast. But if you don’t wash a ton of clothes, it’s not that hard to take a few minutes to hang them up. You’ll save a lot in electricity, plus your clothes last longer.
47. Eat less meat. I’m not saying you have to become a vegetarian (although you could always give it a try), but once in awhile, eat meatless dishes. Pasta, vegetarian chili (see my recipe halfway down this article), vegetarian Indian or Thai dishes, falafels with humus and pitas and tomatoes and lettuce … there are plenty of tasty dishes without meat. And as meat is expensive (well, the fresh kind is … Spam is cheap), you’ll save money on meatless dishes. Again, I’m assuming you cook with fresh meat, not canned.
48. Save on groceries. For my family of eight, groceries is a major expense. With some simple habits, we’ve been able to save a lot of money. See more here.
49. Frugal Christmas. Christmas is expensive, especially in America (if you live in an area that doesn’t celebrate Christmas with a huge amount of buying, or doesn’t celebrate it at all, skip this tip). People go on crazy shopping gorges. It’s insane. While it makes the retailers and manufacturers happy, it doesn’t make our bank accounts happy. Break out of the cycle and find cheaper ways to celebrate Christmas. Here are some great ways to do that, and here are some more.
50. Eat a cheap breakfast. Here are some great ones.

Written By John. T. Orcutt

Myth 1: Under the NEW bankruptcy law, there’s no more
bankruptcy and no more help (or it’s too late to file).

Not True. In fact…nothing could be further from the truth. Sure you heard it in the press, but it’s just not true. The news media overcooked the whole story. The truth is that you can do almost everything under the NEW law that you could do under the OLD law. In some ways, the new law actually increased the benefits of filing bankruptcy.

Myth 2: Everyone will know you have filed for bankruptcy.
Unless you’re a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors and the people who you tell. While it’s true that your bankruptcy is a matter of public record, the number of filings is so massive, that unless someone is specifically trying to track down information on you, there is almost no likelihood that anyone will even know you filed. However…telling someone that someone else filed bankruptcy is good gossip…just like telling a someone you heard so-and-so is getting a divorce. So…if you don’t want everyone you know to know you filed bankruptcy….you need to keep the information to yourself. As for newspapers…my experience is that most papers don’t include information about who filed bankruptcy…. and even if they did…think about it….who would be interested enough to read that stuff.

Myth 3: You will lose everything you have.
Nothing could be further from the truth. The fact is….most people who file bankruptcy don’t lose anything.
First….while laws vary from State to State, every State has exemptions that protect certain kinds of property. Using Texas as an example…..there are exemptions to protect such things as your house, your car, your truck, household goods and furnishings, IRAs, retirement plans, the cash value in life insurance, wages, and personal injury claims.  In the rare situation where there is more property than can be protected by available exemptions…there is Chapter 13. In Chapter 13…you can even keep this property by paying a higher Chapter 13 plan payment.
Second…..as mentioned above (Myth 2)….filing bankruptcy does not generally wipe out liens. Therefore…if you want to keep a car, truck, home or business equipment that serves as collateral for a loan….you need to keep paying on the debt. If you make these payments and have exemptions to cover any value above what is owed….you can rest assured you will be able to keep these items.

Myth 4: You will never be able to own anything again.
A surprising number of people believe this….but this is completely false. In the future…you can buy, own and possess whatever you can afford.

Myth 5: You will never get credit again.
Quite the contrary. Filing bankruptcy gets rid of debt….and getting rid of debt puts you in a position to handle more credit….and this makes you look more attractive to would-be lenders. In my experience…..unfortunately….it won’t be long before you’re getting credit card offers again. I say “unfortunately” because I don’t want you to get right back in debt again. At first…the would-be lenders will want more money down and will want to charge you higher interest rates. However….over time….if you are careful, and keep your job, and start saving money, and pay your bills, and do things that will put good marks on your credit report….the quality of your credit will get better and better. Generally…in my experience…if a client has not re-established good credit in 18 to 24 months…sufficient to buy a car or even a house….it’s not because they filed bankruptcy. It generally means that something else has happened after the bankruptcy to hurt their credit.

Myth 6: Filing bankruptcy will hurt your credit for 10 years.
Not true. You are getting 2 completely different concepts confused with each other. You are getting the fact that bankruptcy is reported on your credit report for 10 years mixed up with the effect that reporting will have on your credit. Just because something is reported on your credit report does NOT necessarily mean it will have a negative effect on your credit standing.
First…let’s get one thing out in the open. By the time you need to make an appointment to see a bankruptcy attorney…..your credit is already messed up or maxed out…or both. This being the case….you have no credit for bankruptcy to hurt.
Furthermore…as I mentioned above…in my experience…if you have not re-established good credit in 18 to 24 months after you file bankruptcy…..most likely….it has nothing to do with the fact that you….once upon a time….filed bankruptcy…and it certainly has absolutely nothing to do with the fact that your credit history still shows an old bankruptcy.

Myth 7: If you’re married…both you and your spouse have to file for bankruptcy.
Not true. In many cases…where both husband and wife have a lot of debt….it makes sense and saves money for them to both file….but it is never a requirement under the law. We have many cases where only one spouse has filed. The good news is that generally….if it makes sense for both spouses to file together….they can both file for the price of one filing.

Myth 8: It’s really hard to file for bankruptcy.
No….it’s not….at least not in the hands of an experienced bankruptcy attorney. In the hands of an experienced bankruptcy attorney…filing bankruptcy is easy. The decision to file may be hard…but once the decision is made…the filing part is easy.

Myth 9: Only deadbeats file for bankruptcy.
Not true. Most of the people who file bankruptcy are good, honest, hard-working people…just like you and me….who file as a last resort….after months or years struggling to pay the bills that left over from some life-changing experience, such as a divorce, the loss of a job, a failed business venture, a serious illness, or some family emergency…or because they honestly and mistakenly fell into debt at a young age before they knew better…before they knew anything about budgeting or how to manage money.

Myth 10: Filing bankruptcy means you’re a bad person.
Not true. There’s a reason over 1,000,000 Americans file bankruptcy each year…and it’s not because they’re bad people. Lots of good, honest, hard-working people fall on hard times. Let’s face it….life can be brutal….and sometimes…the money’s just not there. The bankruptcy law were created with this in mind…to make sure you have a way….if need be….to get free from the burden of debt…so that you…and your family….can have a second chance at a “fresh start”.

Myth 11: Filing for bankruptcy will hurt your credit.
That’s not true. Think about it. By the time you come to a bankruptcy attorney….your credit is already either messed up or maxed out. And if it’s already messed up or maxed out….how can bankruptcy hurt it?
The big surprise for my clients is when I tell them that filing bankruptcy can actually help them re-build their credit. Bankruptcy gets rid of debt….and getting rid of debt puts you in a better position to handle new credit….if only someone will give it to you. Therefore….bankruptcy is the first step in the process of re-building your credit.

Myth 12: Even if you file for bankruptcy, creditors will still harass you and your family.
This is NOT true. In fact, nothing could be further from the truth. The minute you file bankruptcy, the Bankruptcy Court issues an order telling all of your creditors to leave you alone. No more phone calls. No more collection letters. No more lawsuits. No repossessions. No foreclosures. Nothing. This order has a name. It is called the “automatic stay”; and it is issued pursuant to 11 United States Code, Section 362. The automatic stay prohibits you from any and all collections actions. After you file bankruptcy
, the creditor is not even allowed to talk to you. In addition, the creditor must stop any collection attempts already started. The automatic stay is very powerful, and puts the full weight of the United States Courts to work for you, to make sure your creditors leave you alone. If a creditor violates the automatic stay, you have the right to bring the creditor before the Court for Contempt of Court, and to be compensated accordingly. Believe me, Bankruptcy Court Judges do not take kindly to creditors who ignore the automatic stay, and these Judges have been known to punish creditors severely. Very simply, once you file for bankruptcy, creditors must leave you alone or suffer the consequences.

Myth 13: If you file for bankruptcy, it may cause more family troubles and may even lead to divorce.
This is NOT true. Usually, it works just the opposite. Filing bankruptcy is not the problem. The problem is not being able to pay your bills. All good, honest, hard-working people feel a strong need to pay their bills, and not being able to do so, causes them to feel tremendous stress. Unless you do something to relieve this stress, the stress can quickly build to the breaking point….the marriage breaking point. Bankruptcy is designed to get you out from under the burden of debt, to protect your property and to lower your stress level. If your experience is like that of other couples, you will find that filing bankruptcy… and lowering the stress level…. can be a crucial first step in bringing the love and caring back into your relationship….which…..in turn…..gives your marriage a fighting chance.

Myth 14: You cannot get rid of back taxes through bankruptcy.
We get rid of old “income” taxes for our clients all the time. By “old”…I mean income taxes more than 3 years old. Under the law…there are 3 or 4 qualifications that have to be met….but once these are met….these taxes are gone. Please note: Filing bankruptcy does NOT get rid of withholding or sales taxes…no matter how old they are.

Myth 15: You can only file once for bankruptcy protection.
The truth is….you can file and get a ‘discharge’ under Chapter 7 once every 8 years. As for filing a Chapter 7 after filing and getting a discharge in Chapter 13, the wait is 6 years, computed from ‘date of filing’ to ‘date of filing’. As for filing a case under Chapter 13 of the Bankruptcy Code….the wait is only 4 years after a prior discharged Chapter 7 or 2 years after a prior discharged Chapter 13 case, computed from ‘date of filing’ to ‘date of filing’.
There is no required wait time between bankruptcy flings, if the prior bankruptcy case was ‘dismissed’, as opposed to ‘discharged’, unless there is a specific court order to the contrary.

Myth 16: You can pick and choose which debts and property to list in your bankruptcy.
I’m sorry…but you cannot. Doing so would be against the law. Under the law…when you file bankruptcy…you have to list all your property and all your debts. Most people want to leave out a debt because it is their intent to keep paying on it. The good news….on this score….is that you can achieve the same goal, even though you have to list the debt. If you want to keep paying on a debt…after bankruptcy….you can. After bankruptcy….you can go back and pay anybody you want. In fact…after you file bankruptcy….there are some debts you have to keep paying on. For instance….if you have a car, truck or house loan….even though you list the debt in your bankruptcy….if you want to keep the car, truck or house….you have to keep paying on the debt. More importantly….you need to know this. As long as you stay current on the loan…and keep the property properly insured….you are protected under the law …. and you get to keep the property….because…under the law…the creditor is stuck with you and can’t do anything about it.