Baby, you can drive my car

With gas prices up $4 a gallon, what's a girl-on-the-go to do? First off, kiss those $1.50-a-gallon days aurevoir, because they are never coming back. 

Now that we've taken a sip of that reality, have you planned how you will accomodate the dramatic increase? Back home I had two cars: a Land Rover and a Miata (since moving out here, my parents have sold the Miata, boo!). Now that I've come to grips with how I'll miss toodling around town in my Miata (I'm a convertible kind of gal), I'm left with the CA option of the Land Rover, a 2-ton behemoth that drinks about $100+ per fill and gets 13 miles to the gallon. 

We all know the obvious ways of saving on gas, such as carpooling, or walking when a car isn't needed. (Us fashionistas have been guilty on more than one occasion of opting to drive across a shopping center parking lot instead of walk because we've been in stilettos all day.) But what about not-so-obvious gas-saving ways? For instance, did you know that by leaving your windows open while speeding down the freeway, you reduce your gas mileage by 10% because of the air drag? To break that down in dollar signs, if it costs you $60 to fill your gas tank now, that would be $6 you literally throw out the window! To be a Brunette on a Budget is to drive on a budget, too, so try these tricks next time you're at the wheel to get the most out of your gas tank:

• In this day and age, there is no need to allow your engine to warm up. Cars in the last couple of decades have been built to run shortly after they're started.
• Try to consolidate how many stops you make when you're out and about. Stopping and starting the engine continually is a dreadful waste.
• Yes, the car next to you at the light may look like it wants to race, as it revs its engine, but this isn't Meet the Parents, and in the end, you'll have the last laugh when the light hits green and they blast off with their pedal to the medal. Both engine revving and "jack-rabbit starts" are sure fire ways to drain your wallet. For all you smooth operators out there, remember to accelerate slowly from a dead stop and don't press the pedal down more than 1/4 of the distance between it and the floor.
• Believe it or not, what time of day you buy your gas can affect how much you spend. When you buy gas during the coolest time of the day (either in the early morning or late evening), you'll be buying it when it's at its densest; because pumps measures volumes (and not densities), you'll be getting more for your money.
• If you see a hill coming up, step on it sistah! You save gas by accelerating before you're on the hill rather than when you're climbing it.
• If you're one of those drivers who fancies huge, deep tread tires on your vehicle, beware! Not only is it lacking in lady-like demeanor, but the deep tread creates a sure-fire way of wasting gas.
• The faster you drive, the more gas you burn. I've heard that driving above 40 mph forces your ride to overcome much wind resistance. Of course, we can't always drive 40 mph everywhere, but remember this gem when you're going 60, 70, or even 80 mph. Driving 55 mph, for instance, saves you 21% in mileage over going 65 to 75 mph. (If you're going to follow this rule, though, please drive in the far right lane -- no one likes a slowpoke!)
• While you're driving, rest your perfectly pedicured tootsies on the ground, not the pedals! Apparently even the slightest amount of pressure puts a mechanical drag on your car's inner workings, which not only wears them down, but demands more fuel usage overall.
• Why take the rough road when you can take the smooth one? Dirt and gravel roads steal away as much as 30% of your mileage. Stylish girls should never be driving on dirt back roads, anyway.
• If it's been days since you cleaned out your trunk last, now is the perfect time to start. Nix any old rubbish in back, since extra weight wastes gas, especially when driving up hills. I have to admit I'm guilty of this. My trunk is replete with a random Emeril Lagassi 40-lb CAST-IRON SKILLET (it was a wedding present; I love making fajitas!), along with pairs shoes and heavy car tools Love uses for fixing our ride.

Moral of the story is gas is on it's way up, kiddies, so buckle up and save smartly!

Learn the lingo: Tax-deductible

This next ditty goes out to Sophia on this warm Thursday night, who's been reminding me lately that she'd like if it I wrote on anything tax-related, since she's never taken a hypnotic journey through tax land.

Tax-deductible:

A tax-deductible item, or tax deduction, off your income is when an expense is lopped off your adjusted gross income (also known as your total income) to reduce the amount of your income that is subject to tax. Still not making sense? Having a tax-deductible on your overall income basically allows you to shelter a part or parts of your salary from being taxed in total by the government. Sadly, it's not as easy as simply setting some money aside, with the vague hope that the government won't notice (there's a term for that, it's called tax evasion!). The IRS has a list of expenses, along with specific rules surrounding each one, that are legally considered tax-free. These expenses include (among others):

• A home mortgage.
• Apartment rent, if you make under a certain amount.
• Business expenses (including all expenses it might take to start your own business, travel and meals. Technically, these expenses can't exceed your total business income).
• Charitable contributions (if you save the receipts, this can even include all your old junk you donate to Goodwill!)
• Any expenses incurred in the removal of building barriers to the elderly and disabled.
• Union dues.
• Medical expenses that exceed a certain percent of your total income.
• Any work-related apparel. This can include uniforms, or necessary items such as safety googles, safety helmets or heavy-duty gloves or shoes.
• In some situations, moving expenses can be tax-deductible.

Finding ways to ensure that portions of your income are tax-deductible is a fabulous way to save more money that would have otherwise gone to Uncle Sam, because it lowers your total taxable income. Say you make $28,000 per year, and you pay $1,000 in rent every month. Last I checked, the cutoff point for rent being tax-deductible was if you made $30,000 or less, so you would essentially shelter $12,000 worth of rent per year from being taxed, which means more money for you in the long run!

Learn the lingo: Debt Consolidation

Before I began learning about finance, it was the terms involved that seemed the most intimidating to me, and I know I'm not alone. With words and acronyms such as "EBITDA," "managed futures," "margins" and "tax-deferred income," it can seem like a whole other language! And with a language that sounds so....well, boring.....why would you want to learn how to speak it, right?

Believe it or not, all those boring terms are actually relevant to your life. If you ever want to 1.) invest in the stock market, 2.) learn ways to legally shelter your income from excessive taxes, 3.) buy a house, 4.) apply for a loan, or 5.) find a mutual fund to manage your investments, among countless other things that pertain to your money, you need to learn the lingo. So, without further ado, here's the first of my daily definition series. . .

Debt Consolidation:

Debt consolidation is when you do just that: consolidate (or merge) your debt into a single loan or debt. Let's say you have three loans, totaling $13,000:

• A high-interest Macy's credit card, with $3,000 left to pay off,
• a high-interest Bank of America (BofA) car loan, with $8,000 left to pay off,
• and a low-interest Washington Mutual (WaMu) credit card with $2,000 left to pay off.

Since three out of your two debts are high interest, consolidating them under one umbrella, such as your WaMu credit card, makes more sense because you'll be paying a lower interest rate on your combined debt of $13,000. I know what you're already thinking -- why would WaMu want to assume responsibility for the $11,000 I have in car loans and Macy's credit cards?
Simple! What basically happens with debt consolidation is that WaMu agrees to pay off your car loan and credit card entirely, but then you owe WaMu the amount they paid off ($11,000), plus a lower interest rate than what you would have paid to BofA and Macy's. WaMu is cutting you a deal of sorts: by owing them the money instead of BofA and Macy's, they are rewarding you with a lower interest rate, which saves you lots of money you'd have otherwise been throwing away on higher interest rates. Debt consolidation is also a great thing because it allows you to pay off your unified debt with one payment every month, instead of three separate payments (in this case). With this increased organization, it encourages you to remember paying your single bill on time every month.
The downside to debt consolidation is that it frees up credit cards that were otherwise full, tempting you to start spending with them again, but resist temptation and pay off your existing debt first!

"Let's go back, back to the beginning"

I suppose one of the first things I should have written about when I started this site is how to set up your own budget since this is a website about personal finance and budgeting, after all. If you're already reading this, I assume you know how important it is to secure your financial future (if not, read my previous posts!), and first step in doing that is to do the following four things:

• Budget: The backbone of personal finance is a budget. I know, the word sounds intimidating, as well as boring and uptight, right? Well it doesn't have to be! Most people, even if they don't keep a budget on a paper, keep a daily budget in their mind. Ever thought twice before buying that book, because you know if you spend the money you won't be able to buy that sweater? Then you're already budgeting. It's important, though, to start listing out your specific budget to gain a bird's eye view on your money, what you spend it on, how often, whether you're over-spending in areas you could cut back on, etc. Need help on how to get started creating a budget? Click here, print out and start budgeting!


• Rein in your costs: After you've filled out your fancy little budget, now you should have a clearer picture of where you can start cutting your expenses. Do you really need that $4 Starbucks latte every morning? Do you buy your hair products directly from a salon, or do you save money by buying them at Target? These are the kinds of questions you'll be asking yourself as you start mapping out where you can shave off dollars here and there. Every dollar ends up counting in the long run.


• Dig yourself out of debt: Maybe you shouldn't have taken out that loan to go to Europe...or charged the entire trip on a credit card after your loan was denied. Maybe your college loan has got the best of you and is taking eons to pay off. Or maybe you wished you had waited till you bought that new car right after graduation. Whatever the case, you can't make money or save while you are in debt. Why? Because when you borrow money, you are being charged a fee to be able to use it. This fee is called "interest" and it's what you have to pay on top of the money you borrow. Using credit isn't a bad thing; we all need a good credit history to make the bigger purchases in our lives, such as buying a house. But if the monthly payments on your credit card or loan begin accumulating and it's getting harder for you to make the payments, then it's time to get your financial life in order. Wanna know the secret to digging yourself out of debt? Pay more than the monthly minimum every month. You aren't really "saving" if you're losing money by taking longer to pay off borrowed money. Why take 5 to 10 years to pay off a credit card with the minimum amount every month (the minimum will cost you thousands of dollars in interest over that period), when you could pay it off as fast as possible and save for bigger, better things?


• Save for Retirement: I've said it before and I'll say it again -- the majority of us will need a nest egg to fall back on once we retire, retire early, or if something bad happens and you aren't able to work anymore (the last case is also a good reason to begin investing in a company insurance policy!) . The "or's" are endless. Don't get lazy with saving and think that someone else, such as a family member or spouse, will save for you and dig you out if and when you're in too deep. Take advantage of the fabulous tax benefits of investing in IRAs and 401(k)s -- doing so is essentially taking out an insurance plan on your financial life!

Guess who just got a free iTouch!?

Me! Woot!! Unfortunately, I had to spend $1,200 on a new computer to get it, but it's a free iTouch nonetheless (retail value: $300). I'm not the type to fritter my money away on snazzy electronics, but my 2004 iBook laptop was on its last legs, so Love and I decided we would use our stimulus check (thanks, George!) of $1,200 on a new MacBook for moi. The iTouch just happened to be included in the deal, which is excellent because now I can check how my stocks are doing in the market during the times when I'm not at my computer. On top of the free iTouch, we also got $100 off because Love is a student and, well, I guess Apple wants to reward its buyers for learnin' the 3 Rs! ;) My new laptop is equally fabulous; I can now load webpages in less than five minutes and open multiple applications without my comp freezing. I feel like a whole new woman!

Moral of the story: Now is a GREAT time to invest in a new Mac (if you need one). Not only do you get $100 off for being a student (if you are one), but you also get your very own iTouch, which you can use to further your budget in a myriad of ways (i.e., following the stock market, reading up financial advice, finding the best deals in town, etc.)!*

*(Checking Facebook 12 hours a day on your new iTouch will not, sadly, make you any money).

The 411 on 401(k)

Not all stocks are (obviously) created equally, and although I herald the benefits of investing, it's important to assess the risk involved, 401(k) included. It turns out, losing money in your 401(k) during some years is a good thing, according to J. Michael Scarborough, president of Scarborough Capital Management and author of 401(k) Knowledge. Scarborough argues that a "properly invested" person will lose money at times (in a 401k) because a smart investor needs exposure to stock funds to meet retirement goals (read: investing in the stock market, though it comes with risk, is a good thing, especially when done through a 401(k)).

For those of you who are still unfamiliar with how 401(k)s work, what happens is you set up a contract of sorts with your employer, specifying a certain percentage of every paycheck that will go directly into a mutual fund account (I opted for 3% per paycheck). That money gets automatically put into a mutual fund, where it is re-invested in certain stocks (associated with a general choice on your end of what type of investment you want the fund managers to be making -- perhaps an emerging markets plan, where they invest in overseas, higher-risk companies? Or perhaps you'd like a more long-term growth package? Etc., etc.) I chose the Growth and Income, lower-risk package.

The 401(k) investment does not guarantee returns every year. There will be down months and maybe even years, especially in today's dilapidating market, but the overall point is that in the end, you will have a hefty sum to pull out all for yourself once you're ready for the bluer skies of office-free life.

Selecting the right retirement plan can be tricky, and many like to fall back on their employers to make the decision for them. In most cases, companies leave the deciding up to you, though, to decrease the risk of them making the "wrong" decision and getting blamed (read: plethora of lawsuits). Scarborough says that currently, many workers could be making better choices by not, for example, "being loyal" and investing in their company stock, when the company doesn't really care. He says investing like this limits employees' diversification.

Scarborough also mentions that the worst thing an employee can do -- are you ready for it boys and girls? -- is to turn down an offer to participate in a 401(k) in the hopes that someone will come along and provide retirement moolah. This could include counting on finding a husband or wife to save for them, hoping that an inheritance will come to fruition right around when you plan on retiring, or that "someday" a big promotion will come along and make saving easier.

"To make the assumption that someone, somewhere is going to provide is a crapshoot," Scarborough says. "Retirement does, in fact, happen for most of us." The financial guru, in turn, says the biggest reform he'd like to see in 401(k) plans is that every employee would be required to sign up.

Still not sure about why you should save by investing in a 401(k)? Read my earlier article, "When I'm 64."

A pain in the pump

As I'm sure you're well aware of, crude oil prices are on an ever-rising ascent with no drop in sight, which means gas is quickly becoming a pain in the pump. Forget being offered coupons these days: with the average price of gas across the country rising to rest slightly above $4 per gallon today, it looks like oil is becoming the new currency -- in the form of gas cards -- that companies are using to lure consumers into their web.

Hotels.com is rewarding guests who book a minimum three nights through them with a $50 gas card; many smaller banks are offering the same deal to customers opening checking accounts with them. Is golf your thing? If you buy certain drivers from Callaway Golf Co., it's likely that you'll be rewarded with a $100 gas card for choosing them. "Free gas" is becoming the new benchmark for giveaway goodies that companies, well, give away.

I'm all for it! With all the talk of hybrid cars and their ilk, most of the country (including my Hyundai) runs on good old-fashioned gasoline, so when companies offer to essentially fill up for you, I say lap up the offers -- but with one caveat.

Don't get lured into buying more than you normally spend just because your purchase comes with something "free." It's an easy trap to fall into, but just ask yourself, as you're handing over your check card or cash, "Do I really need this? Or am I just buying it because it comes with perks?" Those incessant Borders Rewards coupons that continually flood my inbox are a perfect example of this mentality of buying. Do you really need that dvd box set of every season of Seinfeld right now, or are you just impulse-buying it because you've got a 30% off coupon in your back pocket? (By the way, try Amazon.com, I guarantee it's cheaper.)

That being said, if you are in the market for a new set of clubs, or need to find a hotel to stay in, let the wooing of the free gas cards begin! If you have to spend the money, you may as well earn some back -- especially when these offers probably won't be around for the long term. According to Carnegie Mellon University marketing professor Baohong Sun, the free gas card trend should fade by the end of summer.

How it pays to save

I have a confession to make: I am addicted to sales. Retail sales, to be exact. More than I love shopping, I love a great bargain. Finding one is like unearthing black gold in our current economy, but it can be frustrating for many -- sifting through endless merchandise is a daunting task, but this Brunette on a Budget is always up for a challenge, especially when faced with the spectacle of one Saturday afternoon. After lazing by the pool Saturday morning with Love and Sophia in 98-degree weather, we braved the oppressive humidity to make a day of it at a mall some 20 miles south (The Nordstrom Rack (NR) was what initially drew me to the site).

Behold the power of how a fabulous sale will help get you by in today's recessionary environment:

• BCBG Sweater - Originally $160 at Nordstrom, bought at NR for $30.
• Khaki slacks - Originally $88 at Nordstroms, bought at NR for $25.
• White circle statement necklace - Originally $14 at Nordies, bought for $4 at NR (Ok, not huge savings, but it was a great deal for an impulse buy).
• Michael Kors khaki trenchcoat - Originally $160 at Nordies, bought at NR for $80!!!!! (It's not a Burberry, but it will have to do for the next few years. It fit like it was made for me).
• Khaki slacks - Originally $88 at Nordies, bought at NR for $25.
• Calvin Klein necktie - Originally $88 at Nordies, bought at NR for $24. (For Love.)
• Ben Sherman dress shirt - Originally $85, bought at NR for $17.
• White cropped pants - Originally $44 at Banana Republic, bought at the Banana Republic factory store for $23.

That's $499 in total savings!

That 500 bucks I would have otherwise spent on full-priced (or near full-priced) clothing at Nordstroms, I can now save to use later on various other "stuff," such as a handful of nice dinners out, two airplane tickets to California, or a couple iPhones for us to use. Or, I can take my "winnings" and pad my savings account with it. All the flexiblity with extra money I free up reminds me of why I love saving in the first place. It's a game -- play it!

Let them eat coupons

Many people gripe that they never have enough money -- even I've been guilty of uttering it on more than one occasion -- but while most think it's because they don't make enough, it's usually because they don't save enough.

Guess which income bracket (as a whole) routinely visits websites such as SlickDeals.net and FatWallet.com to garner ultimate savings? Or, for that matter, which income bracket scours the Internet the most, looking for above-fabulous deals and printable coupons? If you guessed low-income web surfers, you're wrong. According to a still-relevant article published in Time Magazine in September of 2007, statistics show that the web traffic to the aforementioned sites, for example, actually hail from the wealthiest segment of Internet users! Thirty-two percent of Fat Wallet users, for instance, earn between $60,000 and $100,000 per year, while 13.9% earn between $100,000 and $150,000. The same goes for Ebates.com -- over 23% of visitors to the website earn over $100,000 per year!

Essentially what the rich and famous, I mean frugal, are showing us is that it takes more than just making a lot of money to be "rich." It takes saving. The most-searched terms within the higher-income demographic included such keywords as "cheap," "discount" and "bargain," and usually gravitated toward travel-sector specific niches, such as "cheap hotels," "cheap cruises," flights and car rentals. Interestingly enough, when higher-income people search for consumer items such as cars or electronics, they are less likely to attach "cheap" or "bargain" to the search term -- probably because they expect travel to have the widest range of pricetag fluctuations.

So, if high-incomers are browsing discount sites more than low-incomers, where are the low-incomers dwelling on the net? According to the Time article, it turns out they are exploring designer clothes, expensive cars and exotic electronics.

And sometimes, a cell phone isn't just a cell phone, especially to the lower-income demographic. The climax of this moral resides in a statistic from the Apple iPhone website. Yes, we'd all love one, but at about $399 to $499 a pop, they are one expensive form of communication. Interestingly enough (at least since late last year), "the income segment with the highest percentage of visitors to the iPhone site was 18 to 24 years of age, earning less than $30,000 per year." And then we wonder why many of us can't afford to buy a home in our 20s and 30s....even in our 40s.

Simply put, saving is a state of mind that, as evidenced, even the rich can afford! As cliche as it sounds, don't become a statistic.

Coming Out About Outlets

This past weekend, I had the fabulous idea of trekking to an outlet mall that my coworkers have been raving about. "Look at my Burberry underwear I paid $7 for!" said Willie from advertising, exposing the tell-tale novacheck plaid waistband of his new pair of Burberry tightie-whities above his pants. He then bragged that he had bought three Burberry scarves for $19 each -- ALL at the outlets. It was like waving a hot dog infront of a morbidly obese ballpark food junkie. All I knew was that I, too, had to cash in on the savings.

So my sister Sophia (who's staying with us for the summer), Love and I all piled in the Accento to make our way up to the infamous "Leesburg Premium Outlets" in Northern Virginia. Lolar bear was intially going to partake in the journey, but with temperatures approaching 85 degrees, having a toasted Lola in the car while she waited for us in the parking lot was not the kind of hot dog I wanted waved infront me.

I was a bit apprehensive to going up, what with gas prices at current levels, and the distance of the outlets from us (a little over 40 miles), along with my past misfortune in finding NOTHING whenever I do venture to outlet stores, I was afraid the trip, and my time, would be wasted. Always the one to succumb to curiosity, though, I said "why not." It was a balmy Sunday, after all, and we had no other plans.

On the way up, we hit two toll roads we hadn't accounted for -- not terrible, they collectively cost $4.25 one way, but roundtrip that is an extra $8.50, on top of the gas it cost. Once we pulled off the freeway 40 miles later, my eyes twinkled at all the dazzling signs of Coach, Off 5th, Banana Republic, all replete with promises of discounts and markdowns.

Two hours later, as I trudged back to the car with Love and Sophia in tow, let me just say I was overwhelmingingly disappointed. We had traipsed to the far nether regions of the sprawling outdoor mall and back, and all I had to show for it was a pair of brown capris I bought at Banana for $23. Love had more luck than I did (as he usually does), and made out like a Banana bandit with polos and sweaters. Let me tell you why I was disappointed.

Sure, it was fun just hanging out and pilfering through pants and polos, but was it worth it? No. I firmly believe, and this latest trip just reaffirmed my theory, that outlet and their "sales" are mainly a myth. Case in point: We went into Lacoste and Diesel, and found jeans and shirts that are much cheaper at Nordstrom's half-yearly sale than they are at "discount" prices at the outlets. And there were many things I saw on Sunday that I know are cheaper online. Remember those $19 scarves Willie boasted about? Try $199. I told him to double-check his bank statement, as it looked like he might have forgotten to see a second "9."

That's not to say that you can never find a good deal at an outlet store, but do you really want to spend all Sunday riffling through some discount rack at the Off 5th outlet, just so you can find a reject 7 for all Mankind shirt in a hideous color from two seasons ago? I can think of 10 other ways I'd rather spend a Sunday. Not only that, but the cost of gas and tolls roundtrip completely negates the "savings" you gain from shopping at the outlets; you may as well just troll your local mall for a clutch deal.

Suffice to say, unless I happen upon an outlet on my weekend shopping excursions, I highly doubt I would ever make a special trip again -- I would just end up toting a pair of cropped pants and disappointment home at the end of the day.