Blog: James Studinger

James Studinger is the owner of the JPStudinger Group, a wealth-management company. James was an instrumental advisor on Michigan's new 529 College Savings Plan and is the author of Wealth Is a Choice. James will be writing about building wealth through and outside business in Michigan's tough economy.

James Studinger - Post 5: Offense, Defence And Going Green?

For most of this week I’ve been talking about building wealth by investing our time and money into appreciating assets (Buy Appreciating Stuff Often or BASO). When economies are tough, it can seem like there is nothing to reinvest. So today I’m going to give you some practical ideas to free up your cash.  

In Wealth Is a Choice I frequently discuss financial offense and defense. Offense is the money you bring in, and defense is what you do with it. When people feel behind, they often believe increasing income is the only solution. There are many in Michigan losing their jobs, or who have become overextended. I won’t deny that more income can be helpful, but I also believe that we are not sufficiently working with the income we already have.

And until we are, it is possible that no amount of income will be enough. The economic winds may be so fierce in Michigan that none of us are safe from the gails. Even for those who are employed and living within their means, strengthening your defense during good times is paramount to keeping afloat even if we’re not always so lucky. 

Go Green?  

Books like Deep Economy (Bill McKibben) and Common Wealth (Jeffrey Sachs) point out that America makes inefficient use of our resources, and that this trend can not be sustained. Do we need to buy less (live less) in order to waste less? Or is it possible that by wasting less we might just find ourselves spending less, and therefore saving more? David Bach Author of Go Green Live Rich believes you can, and so do I.

A couple of years ago, looking out my window at all the gas guzzling vehicles in the parking lot, I wrote an article that suggested if we paid more attention to how many barrels of oil we consume (rather than focus on the price of gas) then eventually gas prices would reduce. The amount of my income that goes to gasoline may be less than last year, but that alone won’t tell me if I used more or less gasoline. It is the collective habits of the masses that most influence the future cost of transportation.  

So this year my wife and I did some experimenting. We tried using fewer resources. We began frequent car pooling. We took that a step further, and dusted off the bikes. It’s a 7.5 mile trip one-way, but amazingly we discovered it only added 15 minutes to the commute. It also gave us a great workout, and replaced some time needed at the gym. It has its realities, the first week I got a flat. And one tends to get a little sweaty. But we worked around those issues and functioned just fine. With office space so available in Michigan, next year when our office lease is up and we’ll move to a location much closer to home, making manual commute more reasonable and likely. 

We began buying food in bulk, and composting (turning waste into nutrients) the veggie scraps. Next year we’ll have a real nice little garden, which won’t replace the grocery store, but it will make a difference. We joined a food co-op and got a weekly supply of locally grown veggies. We have a big freezer in the garage, and I get my annual meat supply from a couple farmer friends (giving more Michiganders a little more income rather than some corporation located outside our state. Plus, my average cost per pound is only around $3.50 and it’s all organic.

I see families get more creative with toys for their kids. During a taping of Ken Stern's new Detroit Public Television show, he said he’d be giving friends gift certificates for Christmas, but not for stores, but instead, for his time (babysitting kids, helping shovel their snow, cooking a meal for them). Remember, cardboard boxes make great forts and drawings are fantastic birthday cards.

We do much of our communication via email, and try to reduce the number of things printed. Instead of mailing client holiday cards we send them an email that we’ve donated the expense to charity. When we take notes, it’s usually on the backs of useless scrap paper. So we recycle paper once before it’s shredded and recycled again. Through this, something very interesting happened with our trash. I used to pile up bags each Tuesday for pick-up, now I usually just have one small bag of trash, and one box of recycle. We use less - spend less, but still buy the things we want. But we are not spending as much money for packaging or convenience. 

Take a month off spending 

If you want to see what’s possible but can’t commit to a massive yearlong change, then just take one month. For one month, brown bag it for lunch, don’t go shopping for new clothes, don’t sign up for new memberships, and see how much less you can spend that month. Re-think the way you buy groceries. Go through the cupboards and see what’s there. Look around your community for free family events. Get involved to improve your neighborhood. And more than just not spending money - see if you can improve your net worth. Rather than feeling trapped inside and watching TV, brainstorm and see if there are fun things you can do that also might increase income. Rediscover your strengths. Spend some good ole’ wholesome American family time with friends and have them over for a pot-luck.

I’ve posted a free "Cash Flow Worksheet (Budget)" on my website. It’s in an excel format, so please feel free to download it and alter the fields to personalize your budget.

The good thing about a bad economy is that it’s easier to make the shift to living frugally. We’re all in this together and even the Jones’s are cutting back. And we might discover that this whole "Go Green" thing is reconnecting to those around us and building stronger communities. 

I’ve enjoyed this week, and hope it gave you some good practical ideas. Please continue to share your thoughts and ideas.