Minding the Pennies

There’s an old English saying: Mind the pennies, and the pounds will take care of themselves. When I discovered the writing of Donna Freedman back in 2006, I began to really understand that attention to smaller details– particularly in the area of personal finance– will definitely help sort out the bigger picture.

When we moved from California to Texas, we got a letter from our roadside assistance provider, asking whether we wanted to transfer our membership to the chapter in our new home state. We filled out the form to reply in the affirmative, sent it back, and never heard from them again. Not even when the membership was up for renewal, and so it lapsed without our noticing.

Several months later, we received a bill for $60, due to a service call Mr. Vega had made after our membership ended. Or so the bill said. Yesterday, I made a phone call to sort that out. It took me half an hour on the phone (most of it on hold while the California representative talked to the Texas representative), but eventually it was made clear that the service call had indeed occurred before the coverage expired: “Please disregard that bill, Ma’am, and thank you for your patience.”

I haven’t figured out my Real Hourly Rate (as outlined in Your Money or Your Life, by Joe Dominguez and Vicki Robin) for this job yet, but I promise you it’s a far sight less than the $120/hour I “saved” by making that phone call.

Another, shorter phone call saved us a $25 returned-check fee (our first in many years!) several weeks ago. I had misjudged the amount of time it would take for the funds from my new-job paycheck to be available, and the auto-draft from the credit card we use for airline miles showed “insufficient funds.” Although they had every right to assess the fee, I called the credit card company and asked politely if they’d be willing to remove it as a one-time courtesy. Because I had never made a late payment or bounced a check to them before, they removed the surcharge immediately.

Were the phone calls worth it? You betcha! I’m grateful that we’ve gotten to a place in our finances where we don’t have to choose between paying an unexpected bill and keeping the lights on, but just because we can afford to pay for mistakes (theirs or ours) like that doesn’t mean we should. I shudder to think of how many erroneous charges we’ve paid for over the years because we couldn’t be bothered to deal with it.

Taking a few minutes to carefully review our bills as they arrive, and sometimes a few more minutes to make those phone calls, has helped us get out of debt, build an emergency fund, and start saving for a house much more quickly than we would have without such vigilance. And perhaps more importantly, taking the time to track down those smaller amounts of money has taught us discipline in our spending habits: after all, if I just spent half an hour clearing up a bill for $60, I’m much less likely to blow that money on a concert ticket or a cell-phone upgrade, or a shiny new pair of… well, of anything, really.

Pennies don’t buy much of anything these days, but keeping an eye on all of them is the best way to make sure their larger relatives don’t go too far astray.

What small savings have you come across lately, and how do you think they affect your finances overall?

When Plans go Awry

Last month, we were supposed to fly back to California to attend the wedding of one of our dearest friends. We felt very fortunate that many of our close friends were also on the guest list, so that we would be able to see many loved ones all at once. Our newest niece was born a few months ago, and we were looking forward to meeting her, as well. The flights had been booked and hotel rooms reserved months in advance.

And then I got sick.

Not just a little sick, either… I was running a temperature, my sinus cavities and ears were filled with fluid, I had a cough, and my throat felt like it was on fire. The doctor at the Urgent Care clinic sent me home with some powerful antibiotics and orders to stay in bed. There was no way I was getting on an airplane. What happened next is going to read like an advertisement for the companies we used, but we got such terrific service across the board that they earned the good word-of-mouth!

Fortunately, we had booked our flight using our Southwest Airlines Rapid Reward points, and there was no penalty for canceling the trip. All the points went back into our account. Our hotels had been booked through Hotels.com, and canceling by 6pm local time the day before meant that we wouldn’t have to pay a dime for the rooms we had reserved. Except that I didn’t throw in the towel until about 9pm local time. Mr Vega called customer service and explained the situation… And they let us cancel for free even though we were late! We had reserved our weeklong car rental through Hotwire.com, who also allowed us to cancel without penalty. Finally, we had each gotten some new clothes to wear to the wedding… which we returned, unworn, to the department stores where we bought them.

All in all, our canceled trip cost us… nothing.

I wish I could say that it was all due to my fantastic travel savvy, but the truth is, in a few cases, we were just lucky. To keep costs down, I frequently bid on and pre-pay for non-refundable rental cars at the name-your-own price sites, or reserve hotel rooms that come with very low rates and no-cancellation policies. To us, those are acceptable risks that we take in order to get the savings. This time, the travel gods (or the cancellation gods) were with us.

But in addition to taking extra vitamins in the hopes of making sure that we never have to miss another trip, you can bet I’m going to read the fine print from now on when we book our travel, just to make sure we could get out of it if we needed to.

Work More, Earn More? Not Necessarily

A lttle over four months ago, Mr. Vega and I packed up a moving truck and left California for Texas, in pursuit of the American Dream. Real estate is cheaper here, we had read. Texas has no state income tax, and unemployment is lower, especially in Austin, our city of choice. What we didn’t quite plan for, however, is that while still much lower than in Southern California, the cost of living in Austin has increased dramatically over the past few years, and most incomes, including those in our fields of sales and service provision, haven’t kept pace. Our natural response was to kick into high gear at work, but we are coming to understand that working more doesn’t automatically mean earning more. Here are some things we’ve had to consider in our search for the sweet spot in our schedules:

In all freelance work, as in sales, it’s important to consider that opportunity cost is inherent in commitment. For every gig I accept, or every meeting Mr. Vega schedules, there will be others that we will miss. And while it’s unwise to try to keep one’s options so long that all the chances dry up, it’s generally a good idea to leave a little space in our schedules to take advantage of previously unforeseen opportunities. As a side benefit, rush jobs or last-minute gigs often come at a premium. In Los Angeles, same-day requests for service in my line of work are billed at a higher “emergency rate,” but that isn’t standard practice in Austin. What I’ve discovered as a freelancer is that, even though it’s out of the norm here, some clients are indeed willing to pay a 20% premium to have same-day service requests covered, and so I’ve gone against the grain and set my rates accordingly. In Mr. Vega’s line, the more urgently his customers need service, the more they’re willing to pay for it. If he were to schedule all his meetings three weeks out, he would run the risk of not being able to provide service to clients who need contracts signed today, so they can be up and running next week.

Profits aside, helping people handle their professional emergencies builds goodwill. There are many reasons besides procrastination that people need service at the eleventh hour: deals fall through, providers fall ill, and bad luck can befall anyone. Whatever we charge (and it’s not always more) for last-minute work, our clients and customers will hopefully remember that we came through when they were in a tight spot, and express their gratitude through referrals and repeat business.

Another good reason to avoid the temptation to over-book is that diversifying work environments grows word-of-mouth. We could keep the bulk of our efforts focused on a few select clients, but that increases the risk of decimating our income if we were to lose just one or two. Instead, we believe that the more people we can get our faces in front of, the more our phones are likely to ring. We need to leave a little margin in our days if we want to widen our sphere of influence in order to keep our income more stable.

Once the opportunities have been claimed, it’s important to bear in mind that working less can yield a higher-quality work product. There’s a joke sign I’ve seen hanging over the cash register in auto mechanics’ shops: “Good, Fast, or Cheap. Pick two.”  In order to earn more, we have to be willing to deliver a quality work product on-time, every time. The more over-booked we get, the more likely we are to cut corners or miss deadlines. And the more we do that, the more we have to lower our rates. So, declining work every once in a while allows us to do better in the work we do accept.

So, we’ve left some options open, and we’ve given ourselves time to do good work, but we also need to leave some room in our lives for self-care. Because in reputation-based careers such as ours, image is everything. I work closely with my clients, often when they are meeting new people, and am frequently viewed as an extension of them. If I am late, disheveled, or too exhausted to perform my duties well, that will reflect on the people I am assisting. One bad experience can result not only in losing that person or entity’s business, but also to developing a reputation as a service provider to avoid. And in sales, people are more likely to buy what you’re selling if they want what you have. The “used-car salesman” stereotype exists for a reason: too many salespeople have bought into the “work more, earn more” paradigm, and they come off creepy and desperate. But if a salesperson who appears fit, rested, and organized recommends a product or service, then unconsciously, folks are more likely to think that making the purchase just might make them a little more fit, rested, and organized. And because we allow ourselves a bit of time to attend to our lives outside of work, we’re not the people asking you to wait while we make personal phone calls or respond to texts. When we’re at work, we’re… well… working! Doesn’t that sound like someone you want working for you?

The concept of working more to earn more also reaches its limits when we find ourselves spending more money to maintain a busy work schedule. In our household, healthy eating is one of the first things to suffer when we get overbooked. We get so busy that cooking gives way to restaurant takeout, and eventually gets downgraded to fast food. “Just this once” becomes nearly every night, and then starts to include lunches, too. In addition to the expense of the food itself, the lack of quality nutrition contributes to lower energy levels and weakened immunity. The more poorly we’re eating, the less resilient we become, and eventually, our go-go work schedule leaves us sick and unable to work. Not to mention the weight gain, which can lead to having to buy new clothes that actually fit (Also, am I the only person who has ever bought clothes because I hadn’t found time to do laundry?) Minor clothing repairs can escalate into major wardrobe malfunctions when left undone due to busy-ness. Hectic schedules also deprive us of time to care for our homes and our cars… neglecting maintenance and repairs can be costly in the long-run, and few things are more embarrassing than exiting a cluttered, filthy car and finding yourself face-to-face with your client.

Keeping a too-busy life also harms personal relationships, which are a requirement for mental health and long-term happiness. After all, if we’re doing all this work to be able share the rewards with our loved ones, we’d better make sure there are some loved ones still around when we finally reach our financial goals!

To that end, I think it’s worth looking at why we’re so driven to earn. Perhaps you’ve heard the story of the American businessman who takes a vacation to Mexico, where he meets a young father who spends his mornings on the beach, fishing only enough to feed his family, and then spending the rest of the day with his wife and kids. The businessman tells the fisherman that he should fish all day in order to sell some of the fish and earn money, so that he can buy a boat and employ a crew to earn even more money. The Mexican fisherman asks the American what the result of all that work would be, to which the businessman replies “Well, after many years, if you work very hard, you can retire, and spend your days fishing on the beach with your wife and grandchildren.”

Certainly working and earning to better our lot in life is a noble goal… That’s exactly what we’re doing, and why we made our big cross-country move. But there comes a point at which simply doing more work starts to take us farther from what we’re trying to achieve, rather than moving us closer to our goals. As Mike Rowe says, “Work smart and hard,” and that’s exactly what we’re trying to do.

Texans are Nice, Y’all!

A few weeks ago, Husband went to get gardening supplies at a big home improvement store, and when he came out, an apologetic man was waiting by our car. The man’s car door had gotten away from him in the wind, and banged heck out of ours. So he did what his Daddy probably marched him to the neighbors’ house decades ago to learn after he broke their window with an errant baseball: he waited, apologized, and set out to make it right. By the time my husband came out, the man had contacted his own insurance company and told them to expect our call.

Mind you, I once got my car keyed in Los Angeles because my friend asked the guy parked next to us if he was really planning to just leave all the trash he had dumped in the parking lot. I’ve been screamed at by two different men at two different gas stations for not pulling up to the front pump (which had been occupied when I arrived). I was actually threatened with a gun in a church parking lot for touching someone’s parked car.

And while I’m sure there are (proportionally speaking) just as many mean, irrational, and mentally ill people in Austin as there are in Los Angeles, there also seems to be a culture of helpfulness and consideration here that a person could get used to. In every store we’ve been to, the employees have guided our experience with helpful information… And so have other customers, for that matter! We’ve been encouraged to try the house salsa, politely informed that growing soil suits our balcony gardening needs better than potting soil, and given a bite of the end piece of brisket to taste at Franklin’s Barbecue. At a burrito shop, when we were trying to choose between the refried beans and the pinto, the tattooed young woman with the blond pigtails who was serving us gently offered that we could in fact have some of each.

Such behaviors might seem like the minimum standard of service in a retail situation, but we’re accustomed to trying to navigate transactions with cashiers who are deeply involved in conversations with their co-workers, or flagging down restaurant servers who plan to drop our check as soon as they finish texting.

And it’s not limited to people who have something to gain from being nice to us: I started a new job last month, and everyone who works there made sure to introduce themselves and see how I was getting along. They answered my questions, recommended shortcuts, and high-fived me when I mastered something difficult. That’s a far cry from the nine years I spent working side-by-side with an ever-changing group of people, some of whose names I never learned. A year after I left, I’d occasionally bump into a colleague who would remark “Hey, I haven’t seen you at work lately, are you on nights now?” We just weren’t that invested in each other, I guess.

The nice man in the parking lot who sat and waited when he could have left a note, or just driven away may never know how much his kindness meant to us, but I hope it comes back to him a hundredfold. Because he, and everyone else that’s been nice to us over the last couple of months, did a lot to make us feel welcome in a place that we aren’t sure we belong yet. And just for today, that’s worth all the palm trees in California.