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Laura Rowley Money & Happiness

Laura Rowley, Money & Happiness

Some Thoughts for Your Pennies

by Laura Rowley

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Posted on Thursday, September 27, 2007, 12:00AM

My husband and I just celebrated our 15th wedding anniversary, and we have a recurring goofy argument that's endured for as long as our union: I want him to brown-bag his lunch to work, and he steadfastly refuses.

Brown-bag Brouhaha

He implies that there's something undignified about carrying a brown paper bag to Manhattan on the train. I offer to buy him a cool lunchbox, emblazoned with the action figure of his choice. He argues that lunch is an important opportunity to meet clients. I suggest that if a client meeting comes up, he can store my hearty array of delectable deli delights in his office refrigerator.

He argues that our income is adequate enough for him to afford a sandwich at his favorite midtown Italian deli, where he can talk with Joe, the owner, about football's New York Giants. I suggest he could stop in and get a $1 cup of coffee after his brown-bag lunch and still banter with Joe about which Manning brother is a superior quarterback.

Why this marital standoff over an $8 daily ritual? Because I'm convinced that for the average person who wants to build wealth, pennies count.

Penny-Pinchers Made Good

People disdain pennies. They pass them on the sidewalk. There was even talk a few years ago of the Treasury abolishing the lowly penny. Instead of saving pennies, pundits urge you to get rich quick by investing in exotic commodities, or (a few years ago) buying a heap of real estate with no money down and flipping it for a quick profit.

The latest gambit is to start a business and milk it for big bucks. A "Financial Freedom" invitation that arrived in the mail this week instructed me to attend a seminar at a Newark airport hotel so I could start my own all-cash, home-based vending business. It read: "Laura, you CAN have it all ... more money than you've ever dreamed of, and the time and freedom to enjoy it!"

Pennies aren't sexy. (Frankly, home-based vending doesn't sound that sexy to me, either.) But pennies have a funny way of snowballing into dollars, and then hundreds, and then thousands, especially if you use them to buy the stocks of well-managed companies. Consider the story of a parking attendant who earns $20,000 a year but has amassed a $500,000 equity portfolio. Or the one about a group of New Yorkers who managed to save for a down payment on a (very expensive, very tiny) piece of the Big Apple. Or the clan of seven dubbed "America's cheapest family," who paid off their mortgage in nine years on a salary of $35,000 a year.

Splitting the Difference

My husband and I amassed a very old-fashioned 20 percent down payment on our house over a dozen years by watching pennies. We lived with roommates before we married; took the subway instead of cabs; and refused to buy a car (even after the Manhattan Budget Rent-a-Car failed to honor our Christmas-day reservation, and we had to schlep on the bus to south Jersey laden with boxes, bags, and a 19-month-old).

Yet despite our success in saving, my husband doesn't think you can penny-pinch your way to prosperity. He says we should focus less on $8 lunches and more on increasing our income -- something we have the potential to do, since we're both self-employed.

I do agree that you sometimes have to spend money to make money. For instance, I hired a sitter this fall to pick up the kids from school and drive them to their after-school activities -- since, as I discovered, driving kids to their after-school activities with a laptop in tow is a surefire way to lose both your productivity and your mind. (And expose your children to an unseemly amount of traffic-induced cursing.) It also tends to push your workload into the nights and weekends, which is a surefire way to lose touch with your family and known forms of human leisure.

But wealth accumulation results from a mix of figuring out when to invest in hired help, business lunches, or technology to boost your earnings, and when to save pennies.

A Gift from the Fed

I've been thinking about pennies because of the Federal Reserve's surprise half-point cut in short-term interest rates on Sept. 18. Interest rates on consumer debt -- such as credit cards, auto loans, and home equity loans -- are expected to fall over the next few months. A half-point decline in interest rates would put an extra $30 a year into the pocket of someone with $7,000 in credit card debt, according to CardTrak.com.

That $30 is $2.50 a month -- more than eight pennies a day. But if you're in debt, those are pennies from heaven. At a minimum, keep the amount of your payment constant, so the $30 discount you receive from the lower interest rate goes to reducing your principal.

Better yet, take the opportunity to find some extra pennies to shovel a little more money at your loans. Although I don't have debt except for a low-interest, 30-year mortgage, I periodically review my spending to see if I'm getting good value for my money. I recently canceled my Netflix subscription, at $13.99 a month, because the DVDs were coming in and sitting on the mail pile. I didn't have the time to watch them, especially with school, homework, and extracurriculars back in full swing.

I also stopped buying cases of small plastic water bottles at Costco for the kids' lunches, and replaced them with washable containers (mainly for environmental reasons, but the savings is about $20 a month). And I nixed cases of diet soda, which, while cheap and sweet, are unhealthy and unnecessary (and, ironically, believed to contribute to obesity). For more easy savings ideas, click here.

Let the Pinching Begin

Clearly, the overlooked penny deserves a little more respect in a culture where saving is out of fashion. According to the U.S. Commerce Department's Bureau of Economic Analysis, Americans have been spending more than they earn since mid-2005. That's a relatively new development; as recently as the early 1980s, U.S. consumers saved more than 10 percent of their after-tax earnings on average.

Pennies count, so spend them wisely. At the New American Dream organization web site, you can download a free "Wallet Buddy" -- a small paper folder for your credit or debit card, imprinted with 13 questions to consider before you swipe. For more tips for smart savers, see my blog.

My 15th-anniversary gift to my husband is to stop nagging him about brown-bagging. Because we both have better things to do with our time -- for instance, discuss how much he spends on tailgating at Giants games.

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  • Yahoo! Finance User - Wednesday, October 3, 2007, 12:44PM ET  Report Abuse

    • Overall: 5/5

    I'm with you, Laura. Give yourself 8 dollars a day-a match for his sandwich-and show him the results of your 8 dollars saved over time. I do this. DH gets a sum for Vegas vacations, I go to Vegas, too, & take the same gamble money sum and invest in stock market. Wow! Even I was surprised at my fabulous results.

  • sportsfan - Tuesday, October 2, 2007, 4:03PM ET  Report Abuse

    • Overall: 3/5

    I give it 3 stars because, though it is a very good article, i feel it really only applies to young people. For young people, wasting pennies adds up to serious money when one considers compound interest. We could be talking 6 figures. However, someone in their 50's, saving pennies really isn't going to matter much towards retirement, since the money can't compound. Better that the 50 year old enjoy a sandwich.

  • B C - Tuesday, October 2, 2007, 4:00PM ET  Report Abuse

    • Overall: 5/5

    Let the man have his sandwich and conversation. Friends and little daily delights make life worth living...as long as you're saving each week, what's a sandwich among friends?

  • J - Tuesday, October 2, 2007, 3:23PM ET  Report Abuse

    • Overall: 4/5

    With regards to the posters who advocate the "spend more to save more" lifestyle - most of your comments revolve around getting "weird looks from your boss if you use a brown bag" or wear average clothing or such. I've never understood that - I brownbag it every day, wear basically normal clothes (never paid more than $20 for a shirt, and usually a lot less), drive a Toyota, but work in a field where I "do lunch" at nice restaurants with a lot of zeros both on the table and "on the table." Compared with my collegues who indulge in the lifestyle, I've never felt left out of contacts or stifled professionally in any way. The only real difference is that I have the option to retire practically whenever I want and don't have the anxiety about worrying if I'll get laid off in case the company stock drops or something. I wonder if those who are knocking frugal living because of not wanting to leave some sort of nebulous "impression" on their boss or clients or whatever have actually tried it?

  • SD - Tuesday, October 2, 2007, 3:07PM ET  Report Abuse

    • Overall: 2/5

    So, the only way to pinch pennies is to find faults in your spouse's spending patterns? What about your own spending habits? You make it sound like he's living large, eating out and partying with friends, while you're justified to hire help because you're so overburdened with domestic issues. How much do you spend on makeup? I bet it's more than your husband spends on his makeup. Maybe he can whip up some home-made cosmetic products for you at a fraction of the retail cost; that should save a whole bunch of pennies! There are two surefire ways to wealth: live like a penny-pinching scrooge or use some form of deception, deceit or dishonesty to part fools from their money. Since we can't all make a monopoly on operating systems and charge unfair prices for it long after creating the wealthiest man in the world, maybe we should take a clue from the homeless. They own very little, and what they do have they own free and clear. Find a nice refridgerator box and move your family into it. This will save you a lot of money right off the bat: no down payment, no mortgage costs, and no property taxes. Not to mention no utility costs: water, electric, gas. You certainly won't be tempted to buy media: cable, satellite, DVDs, CDs, etc. And as seen on TV recently, you can feed your family by dumpster diving. (It's the latest craze in NYC!) All of this would be better than allowing your husband to have a few indulgences to maintain his mental health. (I can't imagine he spends more on himself than he makes, so losing his income stream after he gets put away for committing a violent act would undoubtedly be a financial set back.) And why does that $8 deli sandwich taste better than your "hearty array"? Heck, you've just outlawed diet soda due to it's unhealthiness; you're sure to turn pastrami and swiss on rye into tofu and sprouts on rice cakes! You may as well feed him saw dust! Or maybe you're right. It's better that your husband be miserable and grow to resent you. At least until you feel your family is wealthy and healthy enough to tackle $8 deli sandwiches. Like maybe when you're in your 90s. Maybe. [Hey, if his lunch tab bothers you that much, give him a choice. He can brown bag it. Or he can continue with his $2k/year deli addiction, in which you also receive a $2k/year lunch budget. Whatever you don't spend you get to keep for yourself. To be even more fair be sure to adjust the budgets for healthy caloric intake; he may require 2300 Cal/day whereas you may only need 1900 Cal/day. (Consult a nutritionist.) He may reconsider when you take a cruise every year with your girlfriends without him. And if he's a walking heart attack let his doctor nag him about greasy, fatty, artery-clogging sandwiches.] Now, let's talk about your shoes ...

  • Yahoo! Finance User - Tuesday, October 2, 2007, 1:31PM ET  Report Abuse

    • Overall: 4/5

    Very pertinent advice that's overlooked by a lot of people. Each cent you don't spend is a penny you don't have earn. Also got a kick out of ".....buying a heap of real estate with no money down and flipping it for a quick profit." Sound like any other "experts" we know?

  • Erik - Tuesday, October 2, 2007, 1:09PM ET  Report Abuse

    • Overall: 1/5

    This all boils down to how much your personal time is worth. For me the time it takes to shop, prepare food, package it, etc. is worth far more than the $8.00 I'd spend getting lunch out on the clock. This is not to mention the opportunity cost of missing out on the possibility of scoring clients or job offers in a specific lunching environment that you missed because you made lunch at home and ate hunched over your desk. If free time is habitually used for income generating activity, it even furthers the cause to not waste time preparing food.

  • darrylb - Monday, October 1, 2007, 9:40AM ET  Report Abuse

    • Overall: 5/5

    my first serious read of ms. rowly. this is very pertinent and inspiring without being overwhelming. everyone can build wealth by making pennies count. we all can budget and be glad about it so that we have some pennies left to use wisely. i've decided to bookmark and subscribe to her blog!!

  • Doc Rog - Monday, October 1, 2007, 9:34AM ET  Report Abuse

    • Overall: 4/5

    I don't understand some of the responses that I have read concerning this article such as "you should concentrate on becoming more productive", etc. How about a combination of both--offense (productivity), and defense (watching how much goes out and to what). For just a joke, about 3-4 yrs. ago, I opened an extra joint mutual fund account with $1,000.00. Since then, my wife and I have funded it with NOTHING but the extra dimes, quarters, nickles, and pennies that each of us accumulates on a daily basis. The account is now worth about $23,000.00 with absolutely no effort whatsoever. Although this account pales in comparison with our others, this is easily the most fun to watch grow, given that it is entirely funded with what previously I would have called 'throw-away' money or expendable change. I can only imagine in another 5-10 yrs. what this will be worth. Thinking back, I actually opened this account 4 yrs. ago. Little bitty things do add up.

  • Undertaker - Monday, October 1, 2007, 8:42AM ET  Report Abuse

    • Overall: 1/5

    Live life cheaply, then die giving the money to your children and look from the heavens as they spend all 10 million dollars at Las Vegas in 4 days. Not bad, at least they didn't stay for only one night there.

  • Yahoo! Finance User - Monday, October 1, 2007, 7:13AM ET  Report Abuse

    • Overall: 3/5

    I will be happy if pennies are revered because it helps in times of dire need & a thousand miles too begins with a step,you know.Small things shouldnt be despised because everything great today started from the scratch! Eg:Macdonals,ENRON,VW,Apple computers etc.

  • Yahoo! Finance User - Monday, October 1, 2007, 7:11AM ET  Report Abuse

    • Overall: 4/5

    What is wrong with all the readers on yahoo!Finance? First of all, if an article does not apply, appeal to you, DON"T FINISH READING IT, and don't leave a negative and uninformed message. I don't believe the message here from Laura or Anya says do exactly as I write/do, but save wherever you can. I am a good saver buit can't manage roomates, so I live in my own apt. But I can manage to live without an expensive car (like all my friends) so I driver an 8 year old decent car. I do carry lunch to work sometimes (doesn't have to be in a brown bag), but when I can't, I just can't. - not the end of the world. I am constantly looking for ways to make more, including stocks, bonds, 401K's, investments in education, a little entrepreneurship and so forth. It's the bigger picture. So if an article does not fully apply to you, try grasping the bigger picture and move on. by the way, I do put all pennies I come across in a container and just for the hell of it and do have quite sum.

  • Sandra - Monday, October 1, 2007, 7:02AM ET  Report Abuse

    • Overall: 4/5

    I WONT HESITATE TO PICK UP A PENNY.. IT TOOK MY HUSBAND AND I 10 YEARS TO FILL UP A WATER COOLER JUG TO THE TOP FOR IT TO GET STOLEN... WE NEVER FOUND OUT HOW MUCH WAS IN THERE.. BUT ANYWAY... I ALWAYS PICK UP PENNIES.. BECAUSE THEY DO ADD UP... WE HAVE STARTED OUR 2ND JUG AND IT IS HALF FULL AND IT HAS ONLY TAKEN US 2 1/2 YRS. I ALWAYS TELL MY 7 YR. OLD TO PICK UP A PENNY SHE SEE ON THE STREET BECUASE IT IS GONNA HELP US PAY FOR OUR DISNEY TRIP NEXT YEAR... I ENJOYED YOUR COLUMN..

  • sammu - Monday, October 1, 2007, 6:30AM ET  Report Abuse

    • Overall: 1/5

    There is a saying penny wise pound foolish. i find the article with the same moral. Instead of being cheap one should try to maximize the gains by doing productive work. the amount you waste in nagging for pennies can be better used in producing something which may help you to earn more dollars

  • John - Monday, October 1, 2007, 6:22AM ET  Report Abuse

    • Overall: 1/5

    The idea is good but the story is self indulgent. And I shouldn't have to sign in to rate a story that anyone can see on the Yahoo! home page. What if I want to be anonymous? What if I didn't have a Yahoo! ID? This signing in business is just another way to be tracked, like cattle.

  • Joey - Monday, October 1, 2007, 6:15AM ET  Report Abuse

    • Overall: 1/5

    Stop being lazy, go to college, get a good job. I guess too many people find this hard to do and they have to pick pennys off the street. Pennys will not make a big enough difference.

  • Patty - Monday, October 1, 2007, 3:34AM ET  Report Abuse

    • Overall: 4/5

    A few years ago when my daughter and I were leaving a store I watched her stop and pick all the pennies out her change and toss them on the ground. I was peeved. I told her that those pennies add up and should be put into a jar. She scoffed at the idea. I proceeded to save every penny I recieved or found [!] and save them. At the end of the year I rolled them and turned them in for bills. I threw $64.00 on the table in front of my daughter and she said, "What is this?" I told her it was one year's worth of those stupid pennies. In her economy car it was a few weeks of gasoline, or a payment on the electric bill, or some cash to get her through until her next paycheck after Christmas. A small amount to most people but certainly not if you are like millions of people such as herself that sometimes struggle to pay bills. She was impressed. Imagine I said if you stopped buying a couple of coffee's a day and took a thermos instead. Let me see $1.79 x 2 = $3.58 X 5 days a week = $17.90 x 4 weeks = $71.60 x lets say 50 weeks = $358.00 a year. For my daughter that is one car payment and part of her insurance. I asked her how many other things she could be more frugal about. Maybe she doesn't need to struggle to pay bills if a little more of her mother's cheapness were incorporated into her lifestyle. Small changes can add up, and suddenly you are not as bad off with the income you make as you thought you were!

  • Peter - Monday, October 1, 2007, 3:24AM ET  Report Abuse

    • Overall: 3/5

    if you can save without going out of your way, why not? but agree with the "spend money to make money" attitude

  • J-Smoothie - Monday, October 1, 2007, 3:18AM ET  Report Abuse

    • Overall: 5/5

    This was an article that made me think. It is true that really no one is saving these days. At age 22, I just started saving for a house. Save whatever you can, when you can, you never know when the savings acct might save your life. Even if it was for a specific thing, tomorrow is never promised and you may need that stack of pennies just sitting around. I put all my lose change into a culligan jug. That is the begining of my son's college savings. When I am ready it will become more than just a jug on the floor.

  • Yahoo! Finance User - Monday, October 1, 2007, 3:16AM ET  Report Abuse

    • Overall: 2/5

    Yes penny pinching has its benefits but i don't think it should be at the expense of someone you love specially if that person is not willing to. Don't make your husband feel guilty for enjoying his lunch... I'm sure he works hard and will do anything and everything to give his family a good life. Let him have his lunch.

  • Ric - Monday, October 1, 2007, 2:51AM ET  Report Abuse

    • Overall: 3/5

    I am only 37 years old and while some view me as quirky (because I DO pick up those extra pennies and such on the ground) or cheap because I do buy cheap and save as much as I can; I deposit into my savings account over $60/month from the "chump" change people dismiss so easily. I call it free money.

  • B - Monday, October 1, 2007, 2:48AM ET  Report Abuse

    • Overall: 4/5

    There was a saying about Pennies being good luck. When I was a kid & I'd find a penny on the ground, I would pick it up & put it in my shoe. I wish I had saved all those pennies I found. I'd have a nice little nest egg now. Anyway, this is a great article. I'm fascinated with pennies. So I found this guy who is collecting pennies. When he collects a million, he will buy something & pay in all pennies. Why doesn't everyone pay for more things in pennies? Pennies are interesting. Check it out - www.sendmepennies.com

  • DarleneT - Monday, October 1, 2007, 2:45AM ET  Report Abuse

    • Overall: 4/5

    If people would take time to read between the lines. It wasn't about "brown bags" or "pennies", it was about saving money wherever you can. Who has not heard the phrase " A little goes a long way". Saving even a little bit at a time adds up. So, quit complaining about her patting herself on the back. She just wanted to give you nonsense people a little sensible advice.

  • Muga W - Monday, October 1, 2007, 2:41AM ET  Report Abuse

    • Overall: 2/5

    Penny pinching is ridiculous! There are better ways of making money or improving cash flow, than pinching pennies

  • Trala - Monday, October 1, 2007, 2:36AM ET  Report Abuse

    • Overall: 1/5

    omg...this was so out of left field. Who edited this?? And saving pennies...yeah if you live to 90 might pay off.

  • tazachusetts - Monday, October 1, 2007, 2:02AM ET  Report Abuse

    • Overall: 5/5

    Don't laugh everyone I have done it since I was little and it has amassed into 15- 20 grand over the years. my mother always wondered why my pants were heavy and why I always looked at the ground while walking. You know the old saying a penny is worth good luch well I remember finding a 29 dollar bill laying there finders keepers. now how many pennies is that? I have so many jars that I use to fill and a nice fat savings to put them in.

  • davidr - Monday, October 1, 2007, 1:37AM ET  Report Abuse

    • Overall: 1/5

    Pinching pennies might very well be a great idea, but other than brown-bagging lunch, you've offered not one bit of practical advice. I agree with another commenter: nothing but patting yourself on your bag. Poor article (and I'd never left a comments previous to this on yahoo).

  • Yahoo! Finance User - Monday, October 1, 2007, 1:26AM ET  Report Abuse

    • Overall: 1/5

    Less back-patting and more useful info...

  • Judith - Monday, October 1, 2007, 1:24AM ET  Report Abuse

    • Overall: 5/5

    Don't scoff at pinching pennies. We elders with social security do it all the time. I love to see what I can save each month. Rainy day time, you know.

  • Yahoo! Finance User - Monday, October 1, 2007, 1:07AM ET  Report Abuse

    • Overall: 1/5

    You can pinch pennies all your life. Thoughts of investing money and putting moneys in the right places is wise. Putting money where money needs to be is wise. To pinch pennies is a waste of time. To know where your putting your money is the key. To say well I can get it cheaper somewhere else. If money is all we care about. We're buying something we will not want. A devalued human race where peoples sweat and blood are bliss. We don't care because china makes everything cheaper. We go for that biggest money. We bought problems with our lead paints, we bought problems with our earths pollution. We bought problems with poverty. The only thing when we love our money to much, is that we bought our seat in hell too. Spend money wisely, know where it goes to hopefully help your neighbor and not screw him over. Where he invests money back to you. Let our money be recyclable so that everyone can have some.To say oh I'm trying to pay my bills and make a go of it. Don't give me that because I'm in the same shoes. When we invest in our futures, we invest in more than we know. We dont spend time with our kids, we dont spend time with loved ones. We invest. Invest. Invest. Invest. I have to pay bills too. I'm not making much over poverty. Invest. Dont pinch, wont make you an inch.

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