Our comfortable level of frugalness is frequently the subject of dinner conversations at our table. It usually starts with me bringing up a new idea or money saving method for us to try at home and my husband and I discussing whether that it is something we need to do. However, there come times when you need to strip your expenses to the bare minimum whether you are comfortable with that or not.

This morning I read Jeff Opdyke’s latest column about his need to revisit his budget due to an upcoming loss in income. It got me thinking, what would we do if my husband (God forbid) lost his job and we had to live off our emergency fund. What are our bare expenses and how long will the emergency fund last us?

Right now, we save more than 20% of my husband’s income. That would have to stop for a while. We would also have to reevaluate our monthly bills. Our cell phone plan would be one of the things that would go first, cut back from $60 to $20 for a prepaid phone. Cable sadly would have to go. Our cable includes phone and internet and our monthly bill is usually around $200 because of international calls. We will need internet for his job search so we could bring this one down to $110. Gas, electric and car insurance bills would remain the same because I really think our demand of those services is inelastic and we need the same level of coverage on our insurance. In average those three bills total $350. For the last three months we have spent $400 in HBA and food (including eating out). Let’s assume that stays the same. Our gas expense would go down since my husband wouldn’t be driving to work. Mortgage bill stays the same for the first six months.

All of this trims our monthly expenses by 27% and extends our emergency fund from six months of expenses worth to eight. That’s not very much is it? This exercise just made me realize that the bulk of our expenses is very inflexible (mortgage, insurance, basic utilities), which underlines the need for a sizable emergency fund. I understand even more how easy it is to fall in hard times when you are not adequately prepared for it.

In times of financial hardship it is necessary to cut back on your expenses to the minimum. However, as my exercise has shown, cutting back on some of our basic expenses is not possible in the short term. What happens when these basic expenses represent the majority of our household costs? We can dig ourselves in the hole pretty quickly even with a nice emergency fund when a financial hardship lasts longer than expected. It seems it is true we can never be fully prepared.

How long will your emergency fund last you if you had to live off it?

This past Saturday, as we were driving by the gas station, I told my husband that I expected gas to hit $5 a gallon by this August.

I think this target will be easily achieved in big cities where the price of gas is at or very near $4/gallon. Right now where I live is $3.79. I will not be surprised if it goes up up more than a dollar here. Apparently I am not the only one who thinks that.

I still remember when the last time was that we paid $1.25 per gallon. That was in May of 2003 as my husband filled the tank of the U-Haul truck we rented when we moved from Louisiana to Pennsylvania. That was five years ago.

I wouldn’t have believed back then that we would be paying three times that five years later.

Forget about the price of eggs, milk or diapers, what’s been really on my mind lately is the price of gas these days.

As I saw the price of gasoline continue to go up through the winter and now spring, I always thought “I can’t imagine how bad it will be this summer.” Summer is more than a month and a half away and it’s shaping to be pretty ugly. The price of a gallon of gasoline hit $3.62. Here, in this little tiny town of 9,000 in South Eastern Wisconsin.

This afternoon it hit me: I feel out of control. I know I can do something to make an impact on how much grocery prices affect me: I can eat less, cook more from scratch. I can use coupons; I can shop sales. But what can I really do to make an impact on how much we spend every month on transportation? Not very much, I think.

Some of the advice out there we are already doing: use cruise control, get rid of the junk in the trunk, keep within speed limit, change oil, keep tires inflated, combine errands, etc. What is the next thing to do: cut back on driving? and here is where I feel we are stumped. With the summer upon us, especially if you have had the winter we had, it is natural to feel the need to be out and about: take the kids to the park, to the pool, just be out enjoying the weather.

I feel I am not the only one biting my lower lip every time I stop by the pump. I think the majority of people feel powerless as far as this expense goes. I guess as the price hits $4 per gallon I will cut back and stay home two out of the five days of the week. I have always wondered, back at my last job there were people who drove 50 miles to get to work every day and 50 miles back. These people took on such long commutes because housing was cheaper as they moved more into the ex-burbs. How are these people coping today with housing prices slumping and gas prices through the roof? Do you know an extreme commuter? If so, how are they managing this expense?

Hooray for direct deposit and my husband having a social security number that ends somewhere between the numbers 00-19. We got our tax rebate this morning. Sadly, it is mostly accounted for. We have decided to use our tax rebate to stimulate the economy. At least we are going to be spending it in an area that needs a lot of help: New Orleans.

We are using part of it to visit the place where my husband and I met and got married. My husband and I are not from the south but we spent enough years down there to have learned to love it. I have been to many places in the United States, but Louisiana will always have a special spot in my heart. Like I said my husband and I met and were married there, but also the thing I love most about Louisiana is its food.

It’s funny but I remember the places I have been to by their food. For example, I will always remember Philly for the cheese steaks, San Francisco for its chowder, Tennessee for its barbecue ribs, Chicago for its hot dogs. But there isn’t a place in my list where food is as delicious as in New Orleans. I can’t wait to have some jambalaya, crawfish etouffee, beignets, a muffuletta, crawfish boil, the list could go on and on.

My husband is attending a conference there at the end of June and the prospect of eating all of this delicious food clouded my judgment because I decided that I could tag along with a 6 month and a three year old. After we bought the tickets I realized that I had forgotten what it was like to live in a hotel for six days with a two year old (last year). How bad is it going to be now that a six month old has been added to the party? I will find out soon enough.

So after the cost of the tickets for my three year old and myself, some spending money while we are down there and the money we are going to spend getting our dog ear tubes; our rebate is all accounted for. What do you have planned for your rebate if you are getting one?

After a month and a half of not looking at our finances, I finally did it this past weekend.

With the visit of my sister and then my husband’s surgery the first thing to fall of my regular to-do list was overseeing our finances. Why is it that when everything is going OK money is always in my mind, but when things get busy this is the first thing to fall off the radar? I don’t know, but it is a serious weakness and we are paying for it now.

First, lets start with the mistakes that led to the current situation.

• In February we got our state and federal tax refunds and these were never deposited into our savings accounts. I moved the money out of our checking but left them in the savings account tied to it.
• Also, in March we got my husband’s yearly bonus and this was also sent to this savings account.
• Then in March we have the visit from my sister and this led to extra spending.
• My husband took charge of paying medical bills while I paid the rest but we never sat down to go over all of this together.

Where are we now? After going over all of our bank transactions since February and having paid off everything that was owed, we are “missing” $1400. Some of it is the money we spent while my sister was here. Our dogs also had their yearly check up for a total of $380. We did buy a DVD player for a trip we have this summer (more on that later) but that was $200. The rest is unaccounted for.

I am a bit disappointed in this. This means less money we can send to savings, but at least is not debt we incurred which I am glad about. Between now and the end of June I am pushing our budget harder to make up some of this money. I have made a list of the money we have coming in from now until then and a plan of how we are going to pay ourselves back this money. I just realized something, I feel disappointed because maybe even if we didn’t incur any credit card debt, we took this money from our planned savings and I feel we are now our own creditors. Umm, interesting thought.

I leave you with this now. We are heading down to Chicago this weekend. Have a great one!

One of my favorite columns in the Wall Street Journal “Fiscally Fit” had a very informative article a few days ago about how to protect your children from identity theft. I never considered identity theft until my credit card information was stolen a few years ago. We still don’t know how it happened, I think it might have been when I purchased an item via Amazon but from a third party vendor. But it happened and I am glad we were able to resolve it satisfactorily in our favor.

Then right around the same time my first son was born I read an article about identity theft in children. In this case the hospital where the child in case had been born had a very poor information security policy in place. In this day and age when so much hinges on how clean our credit is, it is terrifying to think that our children could get a start in life with a damaged record.

Terri Cullen’s tips for protecting your children include:

1. Be diligent about who you give your children’s social security number to. Ask them why the number is needed and how they will protect that information. In many cases providing your children’s SSN may not be necessary at all. This could be the case for Dentist or Doctor’s visits. If your children are under your insurance plan, these offices need your SSN not the child’s.
2. Consider it a red flag if you start receiving credit offers on your child’s name. If ever something like this exist contact the company issuing the offer and ask if your child has an account open with them. Ask that they remove him from their mailing address, you may have to write a letter to have this done.
3. Finally, she suggests you confirm that your child doesn’t have a credit report by contacting the three credit bureaus directly. Here’s the information on how to go about doing that.

I know the alternative of having to contact the credit bureaus may seem daunting. But I think protecting our children’s future makes it worthwhile.

Source: Fiscally Fit by Terri Cullen “How to Stop Identity Thieves from targeting Your Children”

According to the Money Magazine (May 08), the results of a study show that more than 50% of grandparents think it is important to invest in the future of their grandchildren. Results show that in average grandparents save $3150 for their first grandchild and $1350 for the second.

Now the magazine goes on to say that grandma loves the first born more than the second born. However, being a newly parent of two I understand that with increasing families the amount you can save for each child diminishes. We have been blessed with generous grandparents on both sides. My mom may not have much money but she has time and love to devote to her grandchildren. On his side, they have already contributed equally to both children’s 529 accounts.