Living without cash is an extreme idea, but Mark Boyle of The Freeconomy Community is doing it. In this article from The Guardian, he talks about his experiences and the reason behind his decision:

If we grew our own food, we wouldn’t waste a third of it as we do today. If we made our own tables and chairs, we wouldn’t throw them out the moment we changed the interior decor. If we had to clean our own drinking water, we probably wouldn’t contaminate it.

This article was controversial and received harsh criticism from some readers, which you can read if you scroll down to the comments section (Boyle responds to his critics here). As for my own opinion, while I don’t believe that everyone should (or can) do this, there are some important lessons we can take away from his experiment:

1) There are free or inexpensive solutions to most of our mundane problems, if we just get creative.

For example, here’s Boyle’s approach to getting free food:

There are four legs to the food-for-free table: foraging wild food, growing your own, bartering, and using waste grub, of which there is loads.

One of my goals in life is to grow at least 50% of what my family and pets eat. My garden right now isn’t successful enough to do that, but all I need is more research and practice. Bartering and foraging is something that Filipinos are good at, though foraging is harder in the suburbs. Still, I find the occasional wild malunggay, talbos ng kamote, and other vegetables growing in vacant lots.

As for using waste grub – the food that businesses and restaurants throw away – many Filipinos already do that. It’s called pangbabatchoy. Of course, they don’t do this by choice. They really have nothing else to eat, since they live on the streets. I saw a documentary about this a few years ago, and the only thing I can say is that I’m glad we don’t have as much food waste as they do in the UK (at least on the urban level, I don’t know about farm waste). Note that I’m not advocating this as an alternative.

So apart from bartering, foraging, and growing out own food, what other free solutions are out there?

• Set up a rain barrel system to harvest rainwater. You can use this rainwater to wash your car, water your plants, or even flush your toilet if you have plumbing skills. If you can get the barrel and pipes for free, that’s even better.
• Use kitchen and vegetable waste as compost. This will allow you to feed your garden at no cost. Warning: don’t compost dairy and meat products, manure, or plants that have been treated with chemicals.
• Pick up chopped branches and tree trunks and use as wood for furniture or decor. But only if you really want to do this, otherwise you’ll be spending hours suffering. I like doing this and actually made our Christmas tree. Even the shiny red ornaments I used were from a bag that my neighbors were gonna throw away (they were still good, I don’t know what they thought was wrong with them).

There are definitely more available solutions out there, more than I can cover in this post. The trick is to know how and where to look.

2) Let’s be conscious consumers.

Oftentimes the price of a product is rarely its sole price. For example, I found out that a certain company had union presidents murdered, and they continually commit human rights violations in their farms and factories all over the world. I can’t stand to bear that a single peso from my money would go to something like that, even if I used to enjoy some of their products in the past.

As Boyle pointed out in his article, there’s often this disconnect between us, the consumer, and the hands that make our products. While it’s impossible to find out all the practices of every company in the world, and our individual boycotts may not may much of a difference, being conscious consumers allows us to make purchases that align with our values.

What do you think of Mark Boyle’s cash-free life? Which aspects are applicable to your life? Which ones aren’t?

Image by lusi from sxc.hu

Seriously.

Here’s the thing, I used to watch TV idly as a way to relax. I’d turn it on and watch whatever was mildly interesting. Since I had a cable TV subscription, something was always on.

Then, I noticed something about myself. I would watch a show I didn’t even like. Even reruns. I called this “mindless entertainment”. After all, I was only unwinding. But the way TV sucks you in to watch one show after another, I found that I watched at least 3 hours each night. This amounted to at least 15 hours of TV per weekday. Even more hours were spent watching TV during weekends.

I realized that I had a problem when I was watching an episode of The OC for the third time. And I actually hated the show!

If I wanted to be more productive and have more free time, clearly I had to cut back on TV and find other ways to relax.

Now, I still have a TV but I rarely use it. When I was cutting back on expenses, I canceled my cable TV subscription. I have cable TV again because of someone who lives with me, but when she leaves I’m going to have it disconnected again.

Because I don’t really watch TV. And you know what, I think I owe at least some part of my financial stability to that. Here’s why:

• If you watch less TV you won’t be as prone to tempting ads. Don’t get me wrong, everyone is prone to being convinced by advertising, but at least by cutting back on TV you have less exposure. Also, ads take up around 1/4 of a show’s air time, and life’s too short to be spent watching random ads.
• You can do something more productive or restful for your downtime. This includes bonding with friends and family, reading, working on a side business, managing your money, or even sleeping.
• Foreign shows, news, and other forms of entertainment can be found for free online. You just need to know where to look. No need to pay a premium for subscriptions, and no need to wait a certain time/day for your favorite show. In other words, you get to choose carefully which shows you’ll invest your time in.

One disadvantage is that my friends give me crap about how I don’t know Kim Chiu, or who the latest matinee idol is, or how I’m a “loser” for not watching Pinoy Big Brother. But come on – as far as disadvantages go, who cares? I’m never the one who complains about not having enough time for sleep/hobbies/family.

Try it. Disconnect your cable TV subscription, if you have it. Turn off the TV set. You’ll be surprised at what you could accomplish. Why not add that to your list of goals for the new year?

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This is Day #20 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

Today’s Task: Maximize customer loyalty programs.

If you frequent particular malls, grocery stores, and other establishments, chances are you have some kind of customer loyalty card (or were at least offered one). Some examples of these programs include the Laking National Card, Mercury Drug’s Suki Card, and the SM Advantage Card. If you already have a customer loyalty card or plan on signing up for one, it helps to learn about the following things:

• Any partner establishments which will allow you to earn and redeem points,
• Expiration dates for membership and unredeemed points,
• Discounts and freebies you get with your loyalty card, and
• The availability of any additional opt-in services. (For example, the SM Advantage card allows you to opt-in for life insurance with 20 of your points.)

Many customer loyalty programs have their own web site, so a simple Google search can pull up the information you need. If this isn’t the case, the next time you’re visiting the establishment, request a brochure or flyer that can give you more info.

Of course, doing this only makes sense if you frequently go to that establishment and its affiliates. Otherwise, it’s going to be a waste of time. For example, it makes sense for me to get an SM Advantage card because I frequently go to SaveMore grocery, Makro, and Ace Hardware. If I only visit these establishments once or twice a year, it’s not worth the hassle.

Are you a member of any customer loyalty programs? How do you take advantage of it?

Did you know that whenever you’re receiving advice from an “expert” (real or otherwise), it’s likely that you’ve turned off your own ability to make decisions?

According to a recent study, research participants were asked to choose between receiving a sure amount of money or gambling on a riskier, yet higher paying lottery. Scans showed that the participants were activating the brain circuits that weighed risk vs. reward.

But, when an “expert” (actually a computer program) offered his advice, those brain circuits showed no activity. This means that when faced with seemingly expert opinion, our natural tendency is to stop weighing the decision ourselves.

“Most average people have this tendency to turn off their own capacity for making judgments when an expert comes into the picture,” says Gregory Berns, a neuroeconomist at Emory University in Atlanta.
Source: “Brain quirk could help explain financial crisis”, NewScientist.com

While I don’t think that this is solely to blame for the financial crisis, it explains why some people would make risky decisions without thinking twice about it.

So how do we prevent ourselves from relying too much on experts and making blind financial decisions? We need to do the research. In a previous post, I talked about how I only invest in things I understand well. If I don’t understand something yet I want to invest in it, I do the legwork and conduct research from multiple sources. I try to gain an above-average understanding about it. True, this limits the amount of things I can invest in, but at least I know what I’m doing and I don’t lose my money. Or my head.

With that said, I’d like to remind everyone that although I give advice here at Frugal Pinoy, I’ve always been an advocate of doing your own research. If you go back and read my previous posts, I always phrase my advice this way “…this is a personal choice for me, but do what’s right for you…” or “it depends on the situation”. I do this because I know that we all have different habits, priorities, and needs.

Don’t listen to anyone’s advice blindly – even mine. Because you should be the prime expert of your own finances.

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It’s  going to be my 25th birthday soon, and I want to celebrate the occasion with some wine.  But buying wine can be intimidating especially if it’s your first time.  Many people say that the more expensive a wine is, the better it tastes, but this isn’t necessarily true.  Here are some ways to make informed wine purchases:

Know that it’s all in the mind.  I came across a study that showed how pricing controls people’s enjoyment of wine.  Here’s a basic description of the study:

Dr Rangel gave his volunteers sips of what he said were five different wines made from cabernet sauvignon grapes, priced at between $5 and $90 a bottle. He told each of them the price of the wine in question as he did so. Except, of course, that he was fibbing. He actually used only three wines. He served up two of them twice at different prices.
Source: The Economist

The results? People said they enjoyed the “more expensive” wines, even if they were exactly the same as the less expensive wines.  A blind tasting version of the same experiment where no prices were indicated showed that the volunteers could tell that the same wine was served twice.

In other words, people enjoy more expensive wines because their brain is playing tricks on them.

Decant it.  In the old days, decanting was done to remove the sediment from the wine.  However, the wine making process has improved since then, and nowadays decanting is done to mix the wine with air and open up the flavors.  Doing so makes the wine less acidic, compared to serving it just after uncorking.  This is especially important for young wines, and it can make inexpensive wines taste much better.

Note that you don’t need a fancy wine decanter to do this.  In most cases, a glass pitcher will do.

In this video from WineLibraryTV, Gary Vaynerchuck talks about the benefits of wine decanting and how to do it.

Go with your own taste.  Only your tastebuds can measure how sulit your wine purchase is, so go with what you like.  If you really don’t like that P200 wine, don’t buy it.  It’s just like throwing P200 down the drain.  Conversely, if you don’t like an expensive wine, don’t buy it either.

Learn about wine.  The more you know about wine, the less intimidating it will be to shop for the best deal.  You won’t be subconsciously forced by salespeople to buy the most expensive thing around.  Here are some great resources to learn more about wine:

• Cork’d – a site with user-submitted reviews on different wines
• Wine Library TV -videos about wine, presented by the entertaining  GaryVaynerchuck
• Wine for Newbies – a blog about wine for those who are new to it

The next time there’s a special occasion that calls for wine, it’s important to make an informed choice.  Doing so can not only stretch your peso, but expand your enjoyment as well.
What wines have you tried? Which did you like best, and how much were they?

My partner sent me this interesting article from Yugatech, saying that Globe’s quarterly report shows that postpaid subscribers spend 7 times more than prepaid subscribers. Here’s a quote from that article:

A recent press release from Globe Telecom indicated that their average revenue per Postpaid subscriber is Php1,492 for the 2nd quarter of 2008. On the other hand, average revenue from Globe Prepaid subscribers is just Php206. TM subscribers even spend less — Php107

Why is this the case? Probably because prepaid subscribers become more aware of what they spend, since every time they need to restock their cellphone credits, they have to get cash out from their wallet.  There’s already prepaid cable TV, and the possibility of having prepaid electricity.  How will these options, especially the one for electricity, affect consumer spending habits?

Since going prepaid or doing away with subscriptions altogether generally forces consumers to spend less, it’s a method that many personal finance gurus recommend. Blogger Ramit Sethi calls this the A La Carte Method, in the article he talks about the many benefits of this method, however, he also mentions a disadvantage:

The big downside is that this method requires you to un-automate your life, which is the price you pay for saving money. I encourage you to use this if you find yourself short of cash and wondering why you can’t save more money each month.

Personally, I’m a prepaid Globe subscriber and I spend roughly P30 a week on cellphone credits.  I didn’t have cable TV until recently (just to watch the Olympics), but the Destiny Cable subscription is much cheaper in the long run than the Skycable Prepaid. However, I could easily go back to having no cable TV at all, since most of the things I want to watch are available through the internet and I didn’t have to follow channel schedules (I did it for over a year and didn’t miss cable that much).  How about you, how much of your expenses are prepaid?