Gather Little by Little

Just by writing this title, I already know that people won’t agree with this strategy. How can you tell people to get rid of their emergency fund while we are in one of the most important recessions ever? So please, keep reading until the end of the post, I promise to make sense

First things first, I am a big fan of the “pay yourself first” technique when it comes to personal finance. If you consider yourself as a priority creditor, you will put money aside for your personal finance and then, live off the rest. Many of my clients are asking the same question with regards to extra money: Should I pay down my debt or invest the difference?

Some people will build a 6 month emergency fund, others will invest the money in a stock portfolio and the rest will pay down their debt. But in many cases, the best investment would be to pay down their debt. And if you have an emergency fund, you should use it to pay off any existing debt such as your credit cards or create additional room on your home equity line of credit.

Savings accounts don’t offer much interest

When I advise my clients on what to do with their money, we find money market funds and saving accounts offering less than a 2% yield. So, here you are technically losing money if you put it aside in an emergency fund. How come? The answer comes in 2 words: taxes & inflation.

Historical inflation is over 2% and most economists expect it to keep an average pace of 2%. So, if you are marking 1.50% in your savings account and you pay 25% in taxes; you are left with a real return of 1.125%. Therefore, if the inflation is 2%, you will be lose almost 1% of your purchasing power per year. You don’t need to read an investment guide to understand that this is not the best way to increase your net worth, right?

On the other hand, credit card interest rates are much higher

Unless you were able to get a zero percent balance transfer credit card, you are probably paying around 10% on your credit card (if not higher). Therefore, you could use the money in your emergency fund (making 1.5%) and pay off debt at 10%. This method helps you  multiply your investment yield by more than 6 times when compared to a money market fund.

We’re in a recession, what happens if I lose my job and no longer have an emergency fund?

I guess this is the part I like the most about personal finance; there are no black and white answers! A few years ago, I would have answered back: take your whole emergency fund and pay off your debt. If you need money because you have lost your job, just use your line of credit for the time being.

However, since the recent credit crunch, we have seen financial institutions using the fine print to their advantage in order to cut credit limits to millions of upstanding individuals. The banks were so panicked that they simply looked to decrease their exposure to risk.

So I am not saying that everyone should cash in his entire emergency fund.

However, I think that if you have 3 months emergency funds (everybody should be looking to cover 3 to 6 months of income according to financial planning guidelines), you may use a few weeks’ or a month’s worth of income to pay off a few credit cards.

Once this is done, you can use the snowball effect to reimburse your emergency fund. Therefore, you will save a great deal of money in interest and you won’t be exposed to big risk.

Using the snowball (taking the money used to pay off one debt in full and add it to make a bigger payment on the following one) in order to reimburse your emergency fund will be a great way to make sure you replace your emergency fund to the level it was a few months earlier.

Author: Mike.

Image source:

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This passage is one of the most instructive passages regarding money in the New Testament. The end of this letter is more or less a simple thank you note to the Philippian church, but it throws back the curtains to show the secret of Paul’s contentment in Christ. The passage does not need a great deal of commentary, but let us just look at a few things that have been a challenge and encouragement to me. I hope your financial insight is deepened as well:

But I rejoiced in the Lord greatly, that now at last you have revived your concern for me; indeed, you were concerned before, but you lacked opportunity.

The Philippian believers were paying attention. They walked a little in Paul’s shoes and recognized that he needed help. Then they started to look for an opportunity to help.

Not that I speak from want, for I have learned to be content in whatever circumstances I am. I know how to get along with humble means, and I also know how to live in prosperity;

Think about the times in your life when you have been the most happy. Chances are, many of those happy memories happened when you did not have a great deal of cash. Paul has learned how to be content in every situation – and if you know anything about the life of Paul, you know that physical comfort was rarely a part of the equation. This was a guy who was stoned, beaten, imprisoned and shipwrecked on a regular basis. He did not own his own home, he walked everywhere he went, had no health insurance and did not have a regular paycheck. He fully depended on God for every necessity of life.

I think the most important lesson to be learned is that we can survive on a whole lot less than we think we can.

In any and every circumstance I have learned the secret of being filled and going hungry, both of having abundance and suffering need. I can do all things through Him who strengthens me.

Now we move to one of the most abused quotations in all of Scripture: “I can do all things through Him who strengthens me”. We have all heard this promised used for everything from athletic events to tasks at work to musical performances to cooking a meal. However, when we stop to consider the context, we realize that Paul was talking specifically about money!

This is not a promise that I can ask out a pretty girl or figure out a complicated computer program or dunk a basketball. Paul is saying that the key to contentment does not lie in having financial security, but rather in realizing that God can meet our every need – whether we have money or not. He is not bound by impossible financial straits. He can clothe, feed, and shelter you even if you have no money – and if you don’t have those things, He is still enough.

Nevertheless, you have done well to share with me in my affliction. You yourselves also know, Philippians, that at the first preaching of the gospel, after I left Macedonia, no church shared with me in the matter of giving and receiving but you alone; for even in Thessalonica you sent a gift more than once for my needs. Not that I seek the gift itself, but I seek for the profit which increases to your account.

Paul is commending the Philippians for their generosity – a generosity that was not shared by any of the other churches in which Paul ministered. It is important to see that Paul was not a televangelist who “needs” your money – shyster who is getting rich off the goodwill of well-meaning people. No, Paul knew that God did not need money to care for his needs, but he was happy that the Philippian church was investing in his ministry and sharing in the blessing that comes from giving.

But I have received everything in full and have an abundance; I am amply supplied, having received from Epaphroditus what you have sent, a fragrant aroma, an acceptable sacrifice, well-pleasing to God.

Have you ever given someone the perfect gift? The gift that hits exactly the right balance between utility and luxury, the gift that the person uses for years to follow? Remember that feeling? That is how Paul wants the Philippian church to feel. He called their gift a “fragrant aroma”. It is a great compliment when someone tells you that you smell good.

How do you think the church responded after Paul’s words? I like to think that they were challenged to find more ways to give to others.

And my God will supply all your needs according to His riches in glory in Christ Jesus. Now to our God and Father be the glory forever and ever. Amen.

Once again, the believer in Christ can have absolute confidence that God will meet his needs. There is no problem, financial or otherwise that God cannot handle. He will always give us what we need – and what we need is fodder for another post!

Article by Stew

Photo by Vanessa Pike-Russell

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Festival of Frugality – Life Stages & Home Ownership Lesson Edition

Welcome to the #201 Festival of Frugality!

If you are new to Gather Little By Little, I can suggest a few of our great posts:

- How to open an online store

- Alternative Income From Internet

- My own Budget Spreadsheet

- You Need a Budget Review

This edition is about life stages and home ownership. When we are young, most dream of owning our first home. It may be small, it may be old, but once it is ours, it’s the most beautiful place on earth to live!

The Condo:

Condominiums are perhaps the most frugal way to become an owner. While it doesn’t cost much more than an apartment on a monthly basis, you can build equity while paying down your mortgage and the condo should grow in value. After a few years, you may be interested in leaving the condo, take the equity from it to buy a townhouse and rent out your condo! Here are the best Frugal Tips of this carnival:

Craig Ford presents How to Avoid the Restaurant to Save Money posted at Money Help For Christians.

Mr Credit Card presents Why I Collect Miles posted at Ask Mr Credit Card.

Peter presents How To Get The Best Deal When Signing Up For Cable Or Satellite TV posted at Bible Money Matters.

J.D. Roth presents Pay Yourself First posted at Get Rich Slowly.

MoneyNing presents Help Your Children Visualize Money Mangement with the Four Jars Approach posted at Money Ning.

The Townhouse:

Half condo, half house, it is the perfect size for a young family that wanted a backyard but didn’t want to spend 50% of their monthly budget on a mortgage payment. This is definitely another frugal way to become an owner.

Kris presents A Beginner’s Guide to Beans, Plus 42 Bean Recipes posted at Cheap Healthy Good.

Paul Williams presents Do It Yourself: Why Your Time Is Not Worth As Much As You Think posted at Provident Planning.

Make it from Scratch presents Homemade Herb Blends posted at Make It From Scratch.

Baker presents 92 Quotes About Debt That’ll Make You Think, Laugh, & Tweet! posted at Man Vs. Debt.

Northern Cheapskate presents Flexible Spending Accounts Help You Save posted at Northern Cheapskate.

Jeff Rose presents Dave Ramsey’s Baby Steps Explained posted at Jeff Rose.

The Family CEO presents Another Way to Make Money with Mr. Rebates posted at The Family CEO.

FMF presents Help a Reader: Asking for a Discount posted at Free Money Finance.

The Bungalow:

Usually a bit older than new constructions, bungalows are perfect when you need space and you want to raise a family. You now have a great backyard to play with the children and enough room for a pool if you like. While the bungalow provides a good standard of comfort, it is normally less expensive than the 2 storey cottage.

Tyler presents I Am Responsible for the Corporate World’s Waste, or A Lesson in Micro Economics posted at Frugally Green.

Joe B presents Take that Call posted at TheCreditToolBox.com.

Canadian CC presents How a Good Credit Score Can Make You Save Money on Credit Cards posted at Canadian CC.

Sarah Eliza presents Wallet-Friendly Ways to Make a Difference TODAY, aka “Broke” and “Charitable” can still go hand-in-hand! ;P posted at Devastate Boredom.

The Debtress presents Seasonal Spending Habits posted at - The Debtress Blog -.

MLR presents Budgeting Worksheet for Teens posted at My Life ROI, Getting the Best Return On Life.

scheng1 presents How healthy is your personal finance: How to save money part one posted at How healthy is your personal finance.

Cecil Dellison presents Tougher Credit Card Situation Helping Pawn Shops | Clearchoicecreditcards posted at Clear Choice Credit Cards.

2 Storey Cottage:

We are now getting into bigger and nicer stages of homes and as expected, the payments become much higher too! If you don’t have a 2 income household, you may have a hard time going on vacation and maintaining this type of house, Doctors and stock brokers notwithstanding. While this option provides you with more comfort, this is definitely not the most frugal choice of property!

freefrombroke presents Make Extra Money Cleaning Homes posted at Free From Broke.

Madison presents 10 Surprising Things You Can Turn Into Cash posted at My Dollar Plan.

Cecil Dellison presents Do Consumers Need to Worry about Credit Card Processing posted at Clear Choice Credit Cards.

FIRE Finance presents Top 5 Freebie Websites! posted at FIRE Finance.

Tom @ Canadian Finance Blog presents How Much Does Raising A Child Cost? | The Canadian Finance Blog posted at The Canadian Finance Blog.

Banker Saver presents Money Saving Strategies During Hard Times posted at Banker Saver.

Bucksome presents Did the Ice Cream Shrink? posted at Buck$ome Boomer’s Journey to Retirement.

Kyle presents Frugal Neighborhood Food and Fun posted at Suburban Dollar.

The Smarter Wallet presents Buy Electronics On Discount At These Shopping Sites posted at The Smarter Wallet.

The Luxury Home:

Hey congrats! Everyone looks at your house when they walk through the neighbourhood. However, there is a very important question you must ask yourself: can you afford your desires?

SVB presents MyPoints, MemoLink, MySurvey Online Shopping Sites For Point Rewards posted at The Digerati Life.

Ben presents Furnance Repair Bill posted at Furnance Repair Bill.

Kristia presents Four Money Saving Swap Ideas for the Winter and Holidays posted at Family Balance Sheet.

Elle presents Emergency Kit For Your Car posted at Couple Money.

Miss M presents Pet First Aid posted at M is for Money.

Patrick @ Military Money presents 2009 Veterans Day Discounts posted at Military Finance Network.

Studenomist presents Payday Loan Marketing Tactics posted at Studenomics.

Ray @ Financial Highway presents Gold Investment posted at Financial Highway.

DR presents Blockbuster Review – Online and Brick and Mortar Style posted at The Dough Roller.

The American Dream:

Based on luxury or tax saving purposes (you heard from your accountant that your mortgage interest payments were tax deductible, didn’t you?), you now have a huge house. You can almost call it a mansion. But there is just one problem; there is a foreclosure sign in front of it!

David presents Credit Card Offers for Pet Lovers posted at Credit Card Offers IQ.

Wojciech Kulicki presents Eat Well, Lose Weight, and Save Some Money posted at Fiscal Fizzle.

The Everyday Minimalist presents How to deal with and stop bad gifts posted at The Everyday Minimalist.
Matthew Paulson presents Cash for Appliances is Coming – What Consumers Need to Know posted at American Consumer News.

Andy presents Frugality and Location posted at Tight Fisted Miser.

Sometimes, you are better off living happily in a simple home and keep it than impressing everyone with a huge mansion albeit only for a few months! I hope you have enjoyed the carnival!

Author: Mike.

Image source: compujeramey, ohad, corydalus, reno tahoe, respres

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Everybody is looking for ways to make extra money these days. Since I started working for money around age 12 or 13, I have always had several streams of income. Someday, I hope to be able to live on a 40 hour workweek . . . someday. But until that happens, here are some extra ways to make some cash. Keep your eyes open, be creative, find something that works for you.

1. Yard Work – Many people are looking for help with various jobs around the home. Mowing, shoveling, weeding, cleaning out roof gutters, raking and more are all ways to generate money for your budget. How can you get these jobs? You can post your card or a flier at your local hardware store or laundromat. Another way to get work is to volunteer to help out a senior citizen with their work and let word-of-mouth do the rest. The thing about yard work is that there are no set rates and it will not pay the same as your regular job, but extra money is extra money . . .
2. Blogging – Publishing a blog is easy, but sticking with it over the long haul is difficult. I did not generate any serious income from blogging until I had been doing it for over a year and half. However, blogging can be a reliable source of income if you have the ability to write, post interesting content and keep at it.
3. Sell stuff on Ebay or Craiglist – I used to sell things on Ebay, but lately, Craiglist has really worked for us – both in selling and buying. Look around your house, I am sure that we all have things we can sell. Kids clothes, furniture, electronics,  power tools, even coupons can be sold online for very little hassle or up front investment on your part.
4. Babysitting – I know, you have not babysat since you were fourteen . . . but if you are a stay-at-home-mom, let your friends know that you are willing to take in a child or two during the day. There are many working mothers who prefer that their child is in a home rather than an institutional daycare. Mrs. Stew makes a lot of extra money this way.
5. Sewing and alterations – Sewing is somewhat of a lost art, but if you are one of the few with talents in this area, let others know! There is always sewing to be done in conjunction with weddings, find a couple of those and you will be in good shape.
6. Window cleaning - This job might fall under the yard work category up above, but most homeowners despise window cleaning and many lack the equipment necessary. If you have a ladder, you can be in business. A Saturday of window cleaning could really jump start your debt reduction or emergency fund savings.
7. Painting - Painting is another one of those love-hate jobs, but if you are willing there is no end of work. I recently helped a couple paint their rental apartment and soon realized that my painting experience could someday be a real moneymaker.
8. Cleaning houses – This is another job that Mrs. Stew used early in our marriage to make extra cash. It was a little shocking to me to realize the number of people who want nothing to do with cleaning their own homes. If you need cash, a little mopping and vacuuming could be just the ticket.
9. Crafts – This is not my cup of tea at all, but Mrs. Stew has several friends who make crafts and accessories to seel on a website called Etsy. If you are crafty, you might be able to spin straw into gold . . .
10. Home shows – Once again, this is not my thing, but there are many people who sell really useful things like kids books, cooking utensils, vitamins and through home parties. If you find a product that you are passionate about, you might be able to take advantage of this alternate stream of income.
11. Photography - People are finding that studio photography is out of their reach, furthermore, many want pictures taken outside. The age of digital photography has made picture taking accessible for all of us. If you can develop a reputation, you can make money in evenings and weekends.
12. Haircuts – This might work better for college students, but at the college I attended, there was at least one guy or girl in every dorm who had a pair of clippers and could cut hair. For some of them, this was the only employment they had all the way through college. Think about it, maybe it is an idea that could work for you.
13. Pet care – Walking dogs, picking up yard waste, giving baths, changing bedding and cat boxes. Pets come with a lot of work and there are a lot of pet owners who would not mind spending a little money to avoid some of those responsibilities. I am not a big fan of pets, but pet care might prove to be a way for you to earn some “walking around” money.

If I know GLBL readers, a few more ideas are on the way – feel free to add to the list by leaving a comment.

Article by Stew

Photo by Tim in Sydney

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Here are some articles that I like this week. I hope you find something to think about!

Craig Ford at Moolanomy asked should parents have a financial double standard for sons and daughters? I have both.

Mighty Bargain Hunter is worried that the new credit card legislation will result in higher costs for responsible credit card users. He might be over reacting, but the history of government interference in private enterprise is not good. It almost always has unintended consequences.

Patrick at Cash Money Life helps us find the best rates on a Roth IRA.

Peter at Bible Money Matters reveals his low cost television set-up. When I was a kid, my parents had a low-cost television arrangement as well. It was called “read a book”. Not sure that will work for my kids . . .

Madison at My Dollar Plan just joined a credit union.

Mr. Cheap at 4Pillars believes that working with computers nerds might require some understanding.

Green Panda Treehouse warns against being taken by modeling scams. I feel pretty sure that if someone ever offered to buy pictures of me, I would know it was a scam.

That’s the list! Enjoy your weekend and remember, don’t just spend money, spend time with family.

Article by Stew

Photo by mysticchildz

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