October 2008 Newsletter

Living on Less

In response to the current market uncertainty, your financial advisor suggests cutting back on your spending and trying to save more money. This sounds dangerously close to "living on a budget," something you gave up years ago. How to start? Many of you have never lived through a recession or job layoff before and may not be experienced at frugality. We researched many different sources and offer the following suggestions, hopefully ideas that will make this process more pleasant for you. Please tell us your favorites and we'll add them to our list!

Potlucks: with your friends, with your neighbors, with your co-workers. You can have a theme (recipes from The Great Depression) or a contest (best use of Spam).
Pack your Lunch to Work
Carpool or Mass Transit
Video parties: How about a Paul Newman Retrospective? Or documentaries about Third World countries, to really make you appreciate your indoor plumbing? Invite your friends!
Simple Holidays: Instead of traditional gift-giving, how about getting the family together and doing a craft project? Tie dye shirts, make collages of your favorite things, make CDs of your favorite songs to exchange with each other, teach each other how to knit, bake cookies, make gingerbread houses.
Share Resources: Get together with your friends or neighbors and find out who has a power washer, an edger, an electric drill, pickup truck, an extension ladder, a carpet shampooer, a sewing machine, a bocce game, a vacation house. See also, North Portland Tool Lending Library.
Share Talents: Hate to clean house but love to cook? How about a swap with a friend who finds housework relaxing? Or trade babysitting services with another family. Or find someone who will repaint your bedroom in exchange for you knitting her an afghan. Be creative!
Rediscover Happy Hour Dining: Back when we were poor college students/newly employed people, we would take advantage of the free chips and salsa served with our beer during happy hour. Now there are several restaurants in town who offer reduced price happy hour menus that are quite delicious - for only $3 to $6 per item. A local restaurant "Oscar and Albert" offers a bowl of tomato soup and half a grilled cheese sandwich "Recession Lunch" for $3.00. See also, http://www.unthirsty.com/.
Reduce, Reuse, Recycle
Clothing Exchanges: If you are lucky enough to have friends that wear the same size that you do, get together for a clothing exchange. That red velour jacket you have worn the past three Christmases will be new to your girlfriend and her family; she will have something in her closet that will be fun for you to wear.
Layoff the Extras: can't you do without your premium cable channel, unlimited cell phone text messaging, new video game for a few months?
Rediscover the Library: Your local library has a great selection of books, movies and music that you can rent for free. Or organize your own lending library with friends.
Conserve Utilities: Put on a sweater, turn off the lights, only run the dishwasher when it is full.
Rent out a Room: Are you an empty nester? Consider renting out one of the kids' rooms to a single person or couple. You may even enjoy the extra company!
Revise your Travel Plans: For my sister's 60th birthday, she changed her destination from Tuscany to Napa, at great cost savings. Others are doing a "staycation" at home, or trading homes with a friend. Check out Elder Hostel trips and bargain hunting websites.
Track your Spending: If you don't regularly track where your money goes, now is the time to find out. You may be surprised at how much you are spending on something that is not that important to you.

If cutting back is very challenging for you, see if you can figure out how to make it palatable. Talk to your friends and family for inspiration and encouragement. Remember, we can't control the stock markets but we can control our spending.

Investment Workshop

Clients may also find help coping with their emotions around investing by attending -- or re-attending -- our in-house workshop. Over the years, we have noticed that after clients come to "Investor Boot Camp," they are often better able to understand and cope with their portfolio volatility.

Our next sessions will be held Saturday November 1st, and Saturday December 6th, from 9:30 to 11:30 AM at our office. Please register online or contact Jessi to reserve a spot for you or a friend. As always, there is no charge.

Time for Insurance Review?

The maximum mortality charges used by insurance companies have been updated for our modern life expectancies, and the result is a lower cost of basic insurance protection. The following tables show how the charges have decreased from the 1958 and 1980 mortality tables, to the current one from 2001, for a 55 year old male and 45 year old female.

	Male Age 55 (cost per 1,000)	Female Age 45 (cost per 1,000)
1958	$13.00	$4.17
1980	$10.47	$3.56
2001	$6.17	$1.87

Even though the most current table is called "2001," the rates are just now going into effect. It may be worthwhile to review your insurance policies with your agent and see if you could purchase any needed replacement coverage at a lower cost—another cost savings idea to add to the list!