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I’ve proven you can make credit mistakes and recover

Filed under: Credit Cards General on June 6, 2014 @ 2:07 pm

You would think with my current credit scores that I have always been a model credit citizen. But nothing could be further from the truth.

In fact, I am a testament to the fact that you can improve your score to good and even excellent ratings just by following a few simple rules.

Twenty years ago, I was vaguely aware of Equifax, one of the three credit bureaus (the other two are Experian and TransUnion), and I had never heard of FICO, the credit score company most lenders use when assessing your creditworthiness.

Here are some of the things I was doing wrong 20 years ago:

Living without a budget. This was at the heart of all of my money problems. I didn’t have kids, so I didn’t worry about the expenses of future years. I had enough money to travel and eat out, so there was no thought about saving. I just socked away money in my 401(k), and that was that. I remember my best friend telling me one January weekend that she couldn’t hang out because she needed to draw up her budget for the year. Until then, it had never occurred to me to do such a thing.

Using my credit card as a loan. Later, after we had kids, we incurred a fair amount of credit card debt. We weren’t buying extravagant items, and now we had a budget, but it wasn’t realistic, so we always seemed to have a balance on at least one card. Because we did that, we were paying ridiculously high interest rates. Mary Hiers of Mint talks about the forgotten items we fail to budget for, such as the annual power washing of your driveway and charitable donations. Make sure you include EVERYTHING when you draw up your budget.

Taking out a cash advance on my card. I only did this once, but that’s one too many times. You incur interest rates immediately with cash advances. Never a good plan.

Paying bills once a month. Most of my bills came at the first of the month in those days, so it was usually OK. But my card bills were high by the end of the month, something Eric Rosenberg of NarrowBridge avoids by paying twice monthly. And there were times when I was late on a bill, usually when I was overseas. I suffered for this when I applied for a loan in 1994. To this day, I don’t know what my score was, but the lender expressed concern about three late payments, likely reasons my interest rate wasn’t that great.

Only in recent years have I known what my score is, and I now pay more attention to my credit reports. The reality is that lenders care deeply about your score, so there are a few things you have to pay attention to. Here’s what I’ve learned over the years:

Pay on time, every time. Even if you have to make a minimum payment on a card, do it by the due date. No exceptions.

Pay in full. Don’t let yourself get behind on card bills. If at all possible, pay your card off every month. If you must have a balance, keep your credit utilization ratio to 30 percent or lower.

Use your credit cards. Don’t cut up your card and don’t lock it in a drawer. If you don’t want to think about it, put a small, recurring, automatic charge on it each month, such as your gym bill.

Follow these three simple rules, and you’ll see a noticeable uptick in your credit score within a year.

I made a lot of financial mistakes when I was younger, but I am proof that you can recover and enjoy an excellent credit score.  It’s only a matter of following three simple rules.

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5 money tips for organizing group excursions

Filed under: Credit Cards General on June 4, 2014 @ 1:51 pm

A few months ago, my husband, Joe, told me that tickets were going on sale for the Phish Summer 2014 tour. He floated an idea: Invite a few friends to go to the concert in Orange Beach, Ala., then, spend the next day by the ocean.

Before I knew it, I was agreeing to Joe buying seven tickets on our credit card, even though we were carrying 0-percent interest credit card debt, and I really didn’t want to use our credit cards until that was paid off. “Please? Everyone will pay us back right away,” he said sweetly.

So, Joe bought the tickets. Weeks went by, then over a month. I started to wonder about the Phish tickets, and I asked Joe about it. “Oh, could you draft up an email to ask people to pay us back?” he requested. A money argument ensued.

Within the next two weeks, one of our friends backed out of the trip and the rest paid us back — two via PayPal, two with cash and one with a check. Then — you guessed it — the check and the cash sat on the bookshelf in our front hall for another two weeks. (Also, someone might have swiped a bit of the cash to buy lunch.)

When it came time to reserve the vacation rental, and to pay the required deposit by credit card, I told Joe someone else in the group would have to use their plastic. Luckily, one of our friends volunteered.

Planning a summer trip with friends or family? Group vacations can be a fun bonding experience, but coordinating the money can cause hassles and even credit card debt with interest.

If you’re planning a group trip, here are five tips for dealing with the finances to avoid the inconvenience and added expense:

  • Keep it small. CreditKarma.com recommends keeping group trips to three or four people to reduce headaches. With a smaller group, the expenses are, presumably, less of a burden for one person to put on a credit card.
  • Set a budget in the planning stages. Maybe you’re sitting around at a happy hour with friends and, before you know it, someone has proposed a trip and you’ve agreed to go without knowing how much it will cost. Instead, do the reverse: Set a budget first and get input from everyone in the party before making any reservations, recommends travel blogger Heather Yamada-Hosley, writing for Lifehacker.
  • Think carefully before volunteering your credit card. If you have credit card debt or a history of iffy money management, it’s probably not the best idea to volunteer your card to pay a large group expense — even if you will get reimbursed. As you can see from our checks-and-cash-in-the-front-hall example, it can take some time and wrangling to collect money owed, deposit it, wait for the deposit to post, then pay your credit card bill. On the other hand, if you have a rewards card with no balance on it — and plenty of money in the bank just in case — you might decide getting the points or miles for the group expense looks pretty good, and that you’re willing to take the chance someone could flake out.
  • Create a kitty for small expenses. If you’ll be taking taxis or grabbing group lunches or ice cream on the fly, get everyone to kick some cash in to create a group fund, Lifehacker recommends.
  • Consider a travel-planning tool. The online travel planning tool Travefy allows you to plan group trips and handle the splitting of expenses. One caveat: Travefy charges a 1.5 percent fee for collecting and distributing funds, plus the sender has to pay a fee of 2.5 percent plus 30 cents for using a debit or credit card. But you might decide it’s worth it to simplify group payments.

And finally: Communicate with your fellow travelers, from the planning stages through the journey home, Yamada-Hosley writes. I agree — and next time Joe proposes a group trip, I plan to talk it through fully before either of us pulls out the credit card.

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How to embrace your shredder … and what to discard

Filed under: Credit Cards General on May 30, 2014 @ 12:20 pm

I’m a bit of a purger.

When furniture or a knickknack breaks, I’m inclined to throw it away, rather than save it for 10 years, hoping I’ll find someone who can fix it.

I wasn’t always that way.

About 10 years ago, I owned a table that had been my great-grandmother’s. Then, with slight pressure, the frame cracked in two. I was heart-broken. I knew it was too heavy to transport on my own, and even if someone could repair it, would I ever trust it again around small children?

That 100-year-old table stayed in my dining room for a year, too loved to be thrown away. But, eventually, after much internal struggle, I came to the realization that our lives would be just as full without the repaired table. So, with the help of neighbors, we hauled the table to the curb. I’ve never looked back.

That act was so freeing for me. I’ve since rented dumpsters twice, purging my house of items we no longer use, whether broken or of a prior decade. I love having a house free of clutter, no small task when you have two teenage boys.

But there’s one thing I wasn’t able to free myself of completely: mail.

I knew that I should be destroying statements, credit card offers, old credit cards for reasons of security, but I couldn’t seem to get myself to Office Depot to use their shredder. What if I needed that scrap of paper at some point? My old tendencies of holding onto things too long remained with mail. But eventually, the mail pile would get to me, and I’d cut up the cards and bills in a spontaneous purge. But I still couldn’t take that final step toward shredding. It was too permanent.

Then, I began packing for the move to our new house. I found a box of old checks I hadn’t thrown away since our last move. My husband, Mo, saw me tearing up the checks and took charge. He bought a shredder from Best Buy, brought it home and plopped it down in the dining room. Within minutes, I was shredding old bills and the old checks. The kids took their turn. Even the collie came by and sniffed this noisy new contraption.

Having a shredder is the next natural step for a purger. It allows for instant gratification when you are trying to clean up the mail pile, the last bastion of hoarding. But there is the risk you will freeze when you are trying to make decisions. Lifehacker.com posts that once you decide what documents to keep (he lists some suggestions), you should shred everything else. He writes, “A good rule of thumb to think about when you’re deciding what to keep is to think about how hard that document is to replace.”

FightIdentityTheft.com says you should shred anything with a signature, account number, Social Security number, or legal or medical information. They go into much more detail, advising you even shred address labels from junk mail and magazines.

TheNest.com advises that you pick a shredder that does more than cut your documents lengthwise. There are cross-cut, confetti and diamond-cut shredders. Mo bought a cross-cut shredder.

I can’t believe it took me this long to finally get a shredder. And if it hadn’t been for the quick-thinking of Mo, I might still be cutting checks with scissors (although I admit to a slight tinge of panic every time I run something in the shredder). If getting rid of the table was my first big step toward purging, the shredder was the next natural progression.

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Is the cost of hiring for chores worth the money?

Filed under: Credit Cards General on May 28, 2014 @ 12:53 pm

There are two things Americans never seem to have enough of: time and money. So, how do you decide whether to save money by doing a task yourself or save time by hiring it out?

As a frugal freelancer with a job that can easily stretch beyond traditional working hours, I often struggle with this. Just in the past few months, I’ve had to decide whether to hire out various tasks: interior house painting (I was going to hire a pro but decided to do it myself), yard work (I hired a landscaper to get my wild yard under control, but plan to do the upkeep myself), and exterior painting (I’m hiring a pro due to lead-based paint issues.)

So, sometimes, deciding whether to outsource involves more than a simple numbers calculation. Here are four tips on how to decide whether to save money by tackling a task yourself:

  1. Hire someone if you can use the time to make more money. If you’re self-employed or have a side gig, consider outsourcing chores, then use that time to earn more money than you spend, the blog Suburban Finance points out. I’d add a caveat: Be honest with yourself. Will you really spend the extra time making money? Or will you park in front of the TV with old episodes of “The King of Queens” and a tub of cookie dough ice cream?
  2. Ask yourself: How well can you do the task? If the chore you’re considering outsourcing is easy, like mopping the floor, it’s a no-brainer. But what about fixing a leaky faucet or changing your brake pads? If you’re confident that you can do a competent and efficient job, you might consider DIY. But if you don’t have the skills, you could botch the job, end up outsourcing it and lose even more time and money. In my case, part of the reason I chose to paint the interior of my house is because I like painting, and I’m pretty good at it.
  3. Gauge your stress level. Maybe your to-do list is so overloaded that you feel you can’t take on one more thing. In that case, it might be worth it to hire a pro. Suburban Finance recommends you outsource if you’re not carrying debt, and if you have trouble fitting personal items like exercise or family time into your schedule.
  4. Look at your financial picture. This is critical: Don’t pay for a non-essential service with a high-interest credit card if you can’t pay your bill in full right away. If you’re struggling to get out from under high-interest debt, rolling up your sleeves and doing something yourself might be your best option. When my husband and I had high-interest credit card debt and he had a flexible schedule, he took on many tasks — such as yard work and growing some of our food — that we sometimes pay for now. Personal finance site Money Crashers notes that you can save $50 by washing and detailing your own car and even more by filing your own taxes.

When I was growing up, I learned the value of DIY from my dad, a guy who still changes his own oil and brake pads and recently fixed a 20-year-old vacuum cleaner by watching how-to videos on YouTube. So, outsourcing chores I could do still feels a tiny bit decadent to me, and I’m not sure I could ever bring myself to hire someone to clean my house.

But I’d argue that hiring a pro often has its place, despite the price tag.

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The real secret to high credit scores

Filed under: Credit Cards General on May 16, 2014 @ 8:00 am

I’ve told you about my storied credit scores — they’re in the 800s.

My lender gushed about them when my husband and I recently took out a mortgage. Mo’s scores are actually higher than mine — he has an 831, which is apparently unheard of.

You might think with scores like those, we are obsessing about them, checking them multiple times a year through MyFico.com, and taking out cards that provide scores as a free service. But, nothing could be further from the truth.

What is our secret? How do we maintain enviable credit scores, get rock-bottom interest rates on our mortgage and obtain credit limit increases without asking?

It’s simply this: We forget about our scores.

That’s right. All we do is … nothing. No obsessing. No scheming. In fact, Mo and I didn’t even know our credit scores until two years ago.

We do check our credit reports, though, through AnnualCreditReport.com, a free service that allows you to check your reports annually at the three major credit bureaus, Experian, Equifax and TransUnion. We are primarily looking for incorrect or suspicious information. But the credit scores? We save those for the lenders to check.

Why? Because if you are doing everything right and checking your reports for suspicious activity, the great scores will follow.

Here’s what I mean by “doing everything right.”

Quizzle.com’s Ann-Marie Murphy breaks it down to six steps for the budding consumer. At the heart of her advice:

  •  Only charge what you can afford to pay off in full.
  •  Pay on time every month.

Do those two things, and the rest falls into line. You can take out more credit cards; you can vary your types of loans; you can avoid cash advances. You can do these things to improve your score, but what it really comes down to is paying on time and paying off your credit cards in full each month.

CreditCardGuide.com’s Editor-at-Large Erica Sandberg explains to one reader the best way to raise your credit scores, pointing out that the way you use your credit cards can make or break your scores.

Erica also explains that multiple types of credit help your score, and it’s true that Mo and I have had diverse credit over the years. But we didn’t do it intentionally. We just lived our lives, paid our bills and kept our jobs. (I might add that there is hope for the at-home mom. I was at home for a decade, and my score was actually above Mo’s when we finally checked them two years ago.)

Let’s say you don’t want to have credit cards, which, owned correctly, are the easiest way to build your credit. There are alternatives such as using installment loans responsibly, as Experian‘s Maxine Sweet explains to a reader. Geoff Williams goes into more detail about how to build credit without credit cards in his article for US News & World Report.

Mo and I have pretty much kept our financial affairs simple over the years, and I believe that has been key to our great scores. We didn’t even know about the FICO score until two years ago, much less how it’s calculated. (To learn how the FICO is calculated, read Erica’s piece on the subject.)

As tempting as it might be to check our scores often, now that we know that ours are great, we are resisting the urge. We’ll just keep living our lives, paying our bills and only borrowing what we can afford to pay back. It’s really that simple.

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Budget for gifts or pay the consequences

Filed under: Credit Cards General on May 14, 2014 @ 9:16 am

For many years, my husband Joe and I never budgeted for gifts. Then, every gift-giving occasion caught us by surprise. This seems like a small issue, but it caused assorted problems for us. For example:

  • It messed up our budget. This wasn’t a big deal if we just needed to grab a bottle of wine or a gift card for a casual friend’s birthday party. It was a bigger deal if we had to give multiple gifts in the same month, or a pricier gift, such as a wedding present for a close friend or relative.
  • It caused stress. It doesn’t matter whether it’s flowers or an oil change: When you fail to budget for something, weird things can happen psychologically. In my case, I’d put off making a decision about the gift since it wasn’t budgeted. The whole thing became more complicated: How much should I spend? What category should the money come from?
  • It caused resentment. Failing to plan for gifts annoyed me and made gift-giving more of an obligation than a joy.

But last year, Joe and I sat down and tried to eliminate vagueness in our budget — for example, we had been shoving things we didn’t plan for into random categories after we spent the money. We did this with gifts.

Now, we keep a “gifts” line item on the spreadsheet we use for our monthly budget. We plan the budget at the beginning of each month, and that line item forces us to think about upcoming presents. If there are none, we put down $0, leaving the category as a reminder for the next month.

Recently, when it was time for me to PayPal my sister $50 for my half of our traditional Mother’s Day gift of fresh morel mushrooms (our mom hunts morels, but doesn’t always find them), I didn’t stress. We had the money budgeted.

I think we also buy better gifts because we have time to plan — after all, thoughtfulness counts for a lot. Think of the best gifts you’ve ever gotten: The thought that went into them made you feel understood and loved.

Do you have wedding, graduation or birthday gifts to give this season? Here are three tips from personal finance experts on how to fit those presents into your budget:

  1. Make sure you budget enough. If you’re giving cash, it’s easy to know how much to budget. But if you’re giving a tangible gift, you might want to budget a little extra, according to Miriam Caldwell, blogger for the Money in Your 20s section on About.com. And, if you’re mailing the item, add in postage costs.
  2. Don’t forget the office. If you work in an office, you’ve probably experienced the surprise of getting hit with a birthday pool request. It’s smart to plan for these occasions so you’re not short of cash, Caldwell recommends.
  3. Be kind to your budget. Just because you hear about someone else giving a $100 or $200 gift every time someone gets a degree or ties the knot, doesn’t mean you have to, too. Broke Girl’s Guide offers a list of nice but budget-friendly wedding gifts, and The Dollar Stretcher offers ideas for frugal graduation gifts.

Just the act of budgeting will allow you more creativity with gifts — and I can tell you from experience that last-minute gifts tend to cost a lot more than ones you have time to plan.

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Financial planners are our friends … really

Filed under: Credit Cards General on May 7, 2014 @ 10:56 am

For the past year, I’ve been saying I want to sit down with my husband, Joe, and a fee-only financial planner to look at our overall financial picture. I want advice on what we can be doing better — especially in terms of retirement investment. But, I keep putting it off. Why?

A fee-only financial planner is a professional who charges for services but does not accept any commissions for selling products. You can find one via the National Association of Personal Financial Advisors.

Joe and I were somewhat financially irresponsible in our 20s. Then we both made major career changes (he went back to grad school to become a college professor, and I went into freelance writing) and the recession hit. Now that we’ve come out well on the other side, I know we have some catching up to do.

Getting all that sorted out will be a relief. So, why am I dreading it so much? I can break it down into several reasons:

  • General anxiety about opening up our finances, and possibly being judged for mistakes.
  • Fear that I might have to spend hours gathering financial information to prepare for the meeting (the same reason I hate tax season).
  • The fee — even though I know it will pay for itself many times over, actually paying for advice isn’t cheap.

It turns out I’m not alone. In fact, in February, USA Today ran this headline: “Do you have ‘financial adviser anxiety?’”

In the article, financial psychologist Brad Klontz says that shame around money keeps many Americans stuck.

The article cites an Australian report that found almost half of adults surveyed expressed mild anxiety about meeting with a financial adviser, while about one quarter had moderate to severe anxiety.

But Marv Kaye, a certified financial planner, writes that clients shouldn’t worry.

Financial planners are “accustomed to seeing clients with dysfunctional financial backgrounds,” Kaye writes.

In fact, a good financial planner will look at your situation objectively and try to be sensitive and detached while making recommendations. So, your initial nervousness should quickly turn to relief, he writes.

If you want to seek the services of a financial planner, but you’ve been putting it off, certified financial planner Jeff Rose provides tips on the personal finance blog Get Rich Slowly.

He gives great advice on how to check your adviser’s background and qualifications. For example, he advises you to not only check the planner’s credentials, but to understand what they mean.

Just don’t use checking out the adviser’s credentials as a way to procrastinate even longer.

Now that I know what I know, I feel a little silly. I’m not sure anymore why I worried about meeting with a financial planner. What’s my next plan of action? I’m picking up the phone to make an appointment right now.

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Google Hangout on Air about business cards

Filed under: Business on May 2, 2014 @ 10:39 am

We use them to pay for our cell phone bills, getting points in the process. They get us into airport lounges when we’re traveling so we can avoid the screaming babies. We even use them as financing, although we know we shouldn’t.

Credit cards are huge in the U.S. for the small-business owner.

In fact, only 16 percent of small-business owners told the National Small Business Association that they don’t use credit cards. And a third of the businesspeople polled, who were interviewed in January 2014, said they had used cards as a form of financing in the last year to meet capital needs.

Yes, credit cards are a big deal to American businesspeople. But understanding them isn’t easy. There are small-business credit cards and personal cards. There are corporate cards. Some aren’t protected by the CARD Act and the Truth in Lending Act. And you can be personally liable for the debt incurred, even if it’s a business card. That’s why CreditCardGuide.com decided to take on some of the work for you by asking the tough questions.

Catch our Google Hangout on Air when our guest, Greg Meyer, the Credit Union Guy, tells us about the ins and outs of business credit cards.

Greg has 30 years of experience in banking and lending. Today, he is Meriwest Credit Union‘s community relations manager in San Jose, Calif., helping Silicon Valley families with credit, retirement and banking problems.

Greg talks with our dynamic editor-at-large, Erica Sandberg, about everything you need to know before you choose a business card.

Some of the information Greg shares:

  • What you should know about the CARD Act and business cards.
  • When a business credit card comes in handy.
  • How to know if you need a higher personal credit score to get a business card.
  • The differences between a corporate and a small-business card.
  • Whether it’s harder to get approved for a business card and what card issuers look for.
  • If there is a time when a personal card is best.

 

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Old house’s shine loses luster with expenses

Filed under: Credit Cards General on April 30, 2014 @ 11:54 am

I love old houses: In fact, mine was built in the 1880s. It’s an adorable little yellow Victorian cottage.

When I post pictures of it on Facebook, my friends say they’re jealous. But they wouldn’t be if they saw the not-so-cute maintenance costs I’m facing.

My husband, Joe, and I bought our house less than three years ago, but the paint on the exterior already is flaking. We have to get it repainted, and it’s pretty urgent: If we don’t, wood will rot, leading to even greater expense.

Painting a house exterior is a big job, but I was ready to roll up my sleeves and save us some money. Then I learned that houses as old as ours almost certainly have lead paint underneath the surface layers of color. So, the repainting is best left to a pro certified by the state in lead paint removal.

We got some quotes and — thanks, in part, to the fact that the painters have to follow special procedures for the lead, including putting down a tarp to collect all the paint that chips off — we’re looking at almost $8,000.

On top of that, we have another urgent problem — leaks in our roof, which is made of pressed metal shingles that I thought were oh-so-sweet when we bought the house. So, tack on another $2,000. This is another repair that can’t wait.

According to OldHouseWeb.com, most old houses have at least one major system — electrical, plumbing, roofing or heating — in need of a major update.

Now, Joe and I, having just shelled out a bunch of money for a remodel of the interior of our house, have had to wrestle with our options for funding the outside repairs: credit card vs. loan.

While we’d love to wait a little while and save up, that’s not an option. Both of our repairs make Consumer Reports‘ list of five home repairs you shouldn’t put off, lest they become bigger issues that could cost you even more money. (They are gutter problems, roofing or siding issues, pest problems, mold or mildew growth and foundation cracks.)

So, if you’re facing one of these urgent repairs, like we are, your financing options include:

  • A credit card. If you use a credit card, it’s important to calculate how quickly you can pay off your balance and how much interest you’ll pay. If you can get a 0 percent deal, that could be a good option — if you know you can pay off the total within the introductory period.
  • A home equity loan or line of credit. These loans use your home as collateral. With a home equity loan, you get the funds in a lump sum, whereas in a home equity line of credit, you can take out money as you need it. The Federal Trade Commission offers a guide to home equity loans and credit lines; it points out that you could put your home at risk if you can’t make payments.
  • A cash-out refinance of your mortgage. This replaces your current mortgage with a new one, for a certain dollar amount higher than what you owe. You use that amount for home repairs and, ideally, you get a better interest rate on your mortgage. At TheMortgageReports.com, blogger Dan Green explains cash-out refinancing. It’s worth noting that it can be complicated and comes with closing costs.
  • A personal loan from your credit union or bank. This option is unsecured, so the interest likely will be higher than with a home equity loan.

We’ve crunched the numbers, and we’re planning to use some money from our emergency fund, then take the remainder of what we need as a home equity line of credit from our bank. They’re running a special of 1.99 percent interest for a year, and we know we can pay the loan off in that time period.

In the future, I’ll be rethinking my love for old houses. Or, at the very least, I’ll make a list of expected home maintenance projects and crunch the numbers before I sign on the dotted line.

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Is frugality the new ‘in’ lifestyle?

Filed under: Credit Cards General on April 25, 2014 @ 9:32 am

As the daughter of Depression-era babies, I witnessed frugality of a bygone era.

Mom carefully folded and saved wrapping paper after presents were opened on Christmas Day. I remember going through the living room and picking up the ribbons and bows for her while she cut and pressed the wrapping paper.

And Dad didn’t turn the air conditioner on — in Florida summers. If the unit was turned on, it was only during the day. Floor fans were used at night.

My parents said with pride that cars were like washing machines for them — devoid of status symbol. They got their first microwave oven after I moved out in the 1980s. I grew up with the black-and-white TV that they had grudgingly bought in 1959 after the pleas of my eldest brother, who wanted to be like the other boys on the block.

Their families had lived comfortably in the 1930s, but my parents were products of their time. My mom told stories of homeless men coming to the kitchen door of her mother’s home to ask for a plate of food. The men would then mark the sidewalk so others knew that my grandmother’s home was a place that would provide a plate to those in need.

Although more sheltered, my father had his own Depression and wartime experiences, and grew his own victory garden as a boy, which launched a lifelong love of plants and gardening.

They grew up to be careful with their things, and more careful with their money. A car was driven until it had absolutely no life left. A toaster, as beat-up as it might look, was kept as long as it could be repaired.

Contrast that to the 1980s to 2000s. Consumerism was the norm and even encouraged. Malls were the hangouts of choice for at-home moms (I know… I was frequently asked to go) and teenagers (a place my boys wouldn’t be caught dead in today). A girlfriend of mine and our friends proudly wore shirts that read “Veni Vidi Visa… I came, I saw, I shopped.”

Until the Great Recession, it was routine for families to live beyond their means. Credit cards were maxed out and second homes were bought. But foreclosed homes and lost jobs took a lot out of us. People began buying and renting smaller dwellings, such as Penny of Penniless Parenting, whose family of four downsized to a 525-square-foot apartment in 2010. And we are steadily cutting back on credit card debt, as a TransUnion study shows.

Part of this push toward frugality is necessity. For example, there has been a steady decline in homeownership since 2004, according to the Census Bureau, with median asking prices up overall during that same period. Food, natural gas and more are getting more expensive, as the Bureau of Labor Statistics reports.

But necessity is only part of the picture. There’s a return to simplicity in the younger generations. CreditCardGuide.com blogger Allie Johnson shares a car with her husband. At my previous jobs, employees commuted with their spouses rather than driving separate cars, and more than one person rode his bike to work.

You’ll hear pride in people’s voices when they talk about sharing a car with their spouse or buying an older, smaller home in an area that encourages walking. It’s almost as though people enjoy the challenge of cutting costs. One of my younger former coworkers was known for his cost-cutting techniques, even turning them into articles.

So, my parents’ mindset may seem old-fashioned to Baby Boomers, but Gen Y and Millennials are embracing the simplicity of frugality. There’s value again in maintaining a simple life.

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