As I wrote previously, we recently made plans to purchase a new MacBook for my wife. After much consideration and planning, we made the trip to the Apple store and came home with a shiny, new laptop. This plan generated some good reader comments, both on the aforementioned post and on the post I wrote recently asking, when is it okay to spend money.

I received some support for the purchase and some advice to not go through with it. I think we made a frugal purchase, though I will say it was probably borderline frugal. We could have bought a comparable Windows based laptop for less money, but we really don’t want any more Windows computers and we are already thrilled with the new Mac operating system (Leopard). We also waited for the MacBook hardware upgrades to go through, which happened about a week ago, so we got even more for our money.

Here are the details of the transaction. The retail price for the model we chose is $1,299. However, I work at a University and I saved $100 with my education discount. (Savings -$100)

We added a DVI to VGA adapter for $19, though we noticed that we did not get the education rate of $17 I had seen on the Apple store the day before (I didn’t notice or bring it up as we were paying). (Savings +$2)

Now for an unplanned part of the purchase, it turns out that Apple is offering a $100 rebate when you buy a computer and a printer, conveniently priced at $99.95. We went for that deal since our office printer has been running rather poorly for a while now. That was $100 more than we had planned to spend, yet if I assume we actually get the rebate (I already have it in an envelope ready for the mail) we are really only out the extra sales tax on the printer’s portion of the total. (Savings +$6.10 extra sales tax)

We went to the Apple store outside of the city sales tax area (8.1%), and only had to pay the county tax rate of 6.1%. On a side note, it’s rather sad that the rich part of town has a lower tax rate than the rest of the city, but we used it to our advantage. (Savings -$26.36)

I used my PayPal debit card with 1% cash back bonus to save an extra $13.98 on the final purchase price of $1,398.34. Hopefully we will receive our $100 rebate in 4 – 6 weeks without any problems. The printer is probably the worst part of the deal, but if we actually get the rebate it will turn out to be a good price for what seems to be a good printer (so far).

It is also worth noting that I was ready with an answer of ‘no’ for all of the extras the Apple salesperson was trying to get us to buy. She actually seemed visibly upset that I didn’t want Apple Care or want to pay for some service that would make me ‘first in line’ for the ‘genius bar’. I guess they must get nice commissions on those services, but they should really focus on being more helpful and friendly.

I budgeted $1,400 this month for the MacBook so we managed to stay just below that even with the extra cost of the printer. If the rebate works out as planned, we saved a total of $132.24 for our efforts.

So that’s it. That is our frugal (or extravagant) purchase for the month. I think we got a great quality computer, one that we really wanted and really enjoy. It’s a solid piece of hardware that if we take good care of will give us many years of great service. My wife is already letting her creativity run wild with the incredible software Apple includes for free and I think this is going to be a tremendous help to her at work (she’s a middle school teacher) and it will give her a great deal more flexibility to do her job (lots of grading and planning that she has to do at home).

The frugal/cheap/quality debate will continue- I think we made a wise purchase. What do you think?

By Eden, Sun 11 Nov 2007, Comments Categories: Frugality, Spending

Since the topic of cash back debit cards came up with the recent ING Direct 1% cash back offer (temporary promotion), I thought it was a good time to talk about how I am using my PayPal debit card to earn 1% cash back on my purchases all of the time.

I have had this PayPal account for a number of years, but rarely used it for everyday purchases. Last month it occurred to me that I could start transferring my spending money there as a way to help budget my spending (similar to the envelope system) and earn the 1% cash back bonus.

Not only do you earn cash back on purchases, but the money sitting in your PayPal account earns interest too (currently 4.88%). It is free to transfer money to and from your checking account, but it does take 3-4 business days so always give yourself plenty of time. You can make instant transfers, but I believe you can only do so with a fee.

For part of the month of October (only about two weeks of the month), I earned $5.35 cash back on this card. That isn’t a lot of money, but if you think about the interest you earn on regular checking and savings accounts, it’s a pretty good return on your dollars (it certainly blows away the interest earned on my small emergency fund). I put this money in my passive income fund, a category I am always looking for ways to grow, so I am working hard to try to maximize the bonus.

My plan for November is to use it a lot more and I will pay all of the bills I can with it, such as utilities and any other merchants who will accept it. I think I’ll earn quite a bit more this month and I will share the details next month. It takes some planning to get this done right because of the delay in transferring money so I started by looking at the money I would need to spend for the first two weeks of the month and made that transfer as early as I could.

Risk: Here is the biggest caveat, PayPal accounts are not FDIC insured! If PayPal fails and I lose my capital, all of this effort will be for nothing. For that reason, I don’t keep a lot of money in the account- only what I expect to need to spend for the month on things I can buy with a debit card. That being said, the fact that Ebay owns PayPal and PayPal is used all over the Internet for processing payments takes away most of my fear that it will go out of business.

I know there are better deals out there on rewards credit cards, but if you don’t want to use credit cards, this 1% deal is quite nice. Like any debit card, you can use it anywhere that takes credit. The cash back appears instantly on your account with each transaction that clears.

If you want to sign up and don’t yet have a PayPal account, you can use the link below to check it out. This is an affiliate link and I will get a bonus for new accounts. I didn’t write this post to try to earn a bonus, I only figured that since I’ve given PayPal this free promotion the least they could do is send me a little money.

By Eden, Thu 8 Nov 2007, Comments Categories: Deals, Saving, Spending

When is it okay to spend money and how the heck do you draw the line between frugal living and being a cheap miser?

This is something I am struggling with a lot lately. It started with my plan to purchase a new MacBook this month and continued with my October spending review.

I think I’m doing really well at saving money and cutting my spending, but I got some great comments on those aforementioned posts that made me start to wonder and I read this post about frugal living at Paid Twice and started to feel bad about the amount of money I spend on things I don’t need.

So when is it okay to spend some money? Should I have the attitude that I’m in debt and my money should only go to necessities until the debt is paid off? Is it okay to buy something if I budget for it and I have the cash to pay for it and it doesn’t harm my budget in any other way? It’s not like I’m looking for permission to make a purchase because obviously I am working hard at managing my money and this is something I have to figure out for myself. I’m really just looking for ideas on how to approach this issue. Please share your approach to the NEEDS vs WANTS battle and when you think it’s okay to loosen up and spend some money (if ever).

By Eden, Wed 7 Nov 2007, Comments Categories: Saving, Spending

I have identified a few problem areas or areas of opportunity in our monthly budget. These categories are the most variable and the most controllable out of everything (controllable as in they are not fixed expenses like utilities). For us, these categories are Groceries, Eating Out, Entertainment, and Household. Groceries is exactly that, only groceries. Eating Out is any restaurant, vending machine, or any other way to spend money on food that isn’t at the grocery store. Entertainment includes any sort of fun or recreation expense, such as video games, music, or going to an NFL game. Household is a broad category and includes anything we need around the house, such as paper towels, cat food, soap, etc… you get the idea.

The reason I chose to focus on these categories is that they are not strictly needs, but mostly wants and therefore not necessary to live on. Household and Groceries are part needs, part wants, while Eating Out and Entertainment are purely wants. I have found some large variation in these categories now that we are watching our spending closely and that leads me to believe there is room for savings.

Groceries- we spent $628 in August, $195 in September, and $460 in October. That is an average of $428 per month, but that still sounds like a lot for two people. The fact that we were under $200 once makes me think we can save a lot of money here and I have budgeted $300 for November as a place to start.

Eating Out- we spent $191 in August, $114 in September, and $230 in October. That is an average of $178 per month. Again, the fact that we ’survived’ September while only spending $114 on eating out makes me think we really don’t need to spend the $230 we did on October. I have budgeted $150 for November, which should be a nice medium.

Household-  more of the same pattern, $387 in August, $203 in September, and $279 in October. That is an average of $290 per month. All of those totals look high to me, but since the best we have done is $203, I am budgeting $225 in November and hoping we can come in below that.

Entertainment- would be more consistent, except for the unusual expense of going to a football game in September: $69 in August, $241 in September, and $40 in October. That is an average of $117 per month. I am going to budget $120 for November because I have a planned entertainment expense.

If I stick to my November budget of $795 for these four categories, I will save $218 over our previous average spending and I will save as much as $691 if you take the high spending month from each category. That is serious savings! On the other hand, if we take the low spending total for each month ($552), I may actually be spending $243 too much. That is a lot of spending!

My conclusion is that this is a difficult part of the budget to handle. These categories all come down to needs versus wants and how much money do we want to spend today to satisfy those needs and wants versus what we are giving up in the future to do so. I haven’t found the ideal solution yet, but I think that taking the time to review and looking for ways to cut spending is what it takes for success and on top of that it probably just takes some time and practice.

By Eden, Tue 6 Nov 2007, Comments Categories: Saving, Spending

Yes, that is right. I’m roughly $262K in debt and I’m buying a brand new laptop. Am I stupid or what?

We can make a pretty good case for why we need the new MacBook, but who really NEEDS a MacBook. We are making the choice to buy one in order to make life a little easier on my wife give her more productivity at work. We also want to play with iMovie!

We will be replacing an old desktop computer with the MacBook and selling an old iBook to help chip away at the price a little bit. Not only that, but I have the cash to pay for it, above and beyond our normal expenses and debt payments for the month, and I am saving $100 by getting the eduction price because I work at a University. We are also waiting for the rumored announcement of an updated MacBook before we pull the trigger on a purchase.

So how do you decide if you can afford something? I can pay cash for it. Yet I am also deeply in debt so the money should really be going toward debt payments. However, if I follow that logic to it’s end I really shouldn’t be buying anything. I should cut the cable TV, eat only Ramen noodles, and work by candlelight in my living room. Okay, that is a bit extreme, but my point is that I have chosen to spend money on certain things, even while I’m faced with this mountain of debt. I am choosing to extend the amount of time it takes me to become debt free, yet I am doing so to maintain a comfortable lifestyle. I have made a lot of lifestyle cuts already (believe it or not) and I keep trying to cut more each month, but I can only go so far. It’s not that I deserve these luxuries, but I can pay for them so I guess that is my choice. Spending $1,200 on the MacBook may not be the wisest move at this point in my life, but all it really means is about one more month to get all of my credit card debt paid off (my primary financial goal right now), so I can live with that for now.

What do you think? Is this stupid, acceptable, or something in between?

By Eden, Tue 30 Oct 2007, Comments Categories: Frugality, Life, Spending