Back in January, we decided that we needed a new bank.  We have finally checked that task off of our to-do list – better late than never I suppose.  Around the time we became frustrated with Wells Fargo, we also decided to sell our house, which meant several months of sprucing things up and going through the sale process.  Once we moved into our new place, we were just as busy, and it felt like a three ring circus around here for the last couple months.

But while Wells Fargo was relatively convenient at our old house (about a 20 minute bike ride), it is much less convenient here.  The closest branch is about 13 miles from here – not a quick bike trip that I can squeeze in between all my other tasks during the day.  That sealed the deal, and convinced us to go ahead with a change.

We are now the proud owners of business and personal accounts at our local credit union.  So far, we are thrilled.  The personal account pays 5.01% interest on all funds up to $25,000.  That is more than three times what ING is paying us right now, and was a huge selling point for us.  In addition, the credit union rebates ATM fees that other banks charge (automatically, no need to keep receipts), offers free bill pay (which our WF account did not), and delivers exceptional customer service – we’ve been blown away by the level of service we’ve received during our account set up process.

The credit union is about a mile from our house.  It’s in the local grocery store, which we can see in the distance if we look out our back door.  It takes just a few minutes to bike over there, and is also a nice walk with the dog.

Now I’m plowing through the switching process, which is not much fun.  That is the main reason I waited so long to do this – I knew it wouldn’t be fun.  I’ve started making a list of all the places I need to notify about the change, and there are 23 items on the list so far.  Plus bill pay setups, which I haven’t gotten to yet.  We had been with Wells Fargo for a long time, and our entire financial life is linked to them in one way or another.  It will take me a while to untangle all of that, but I know that this is worth the effort.  It will be nice to be earning such a good rate on our money, and it’s nice to feel like a valued customer.

Some of my readers had mentioned credit unions back in January when I detailed our troubles with Wells Fargo, and that was part of what inspired me to look into the idea – thank you!

We were cleaning last night, getting the house ready for a meeting with our new Realtor this morning (it went great, she’s great, life is great).  When I was cleaning the floor in my husband’s office, it struck me that he still works at the same small desk he had when I met him, eight years ago.  It’s actually the same desk he got when he was in college, so he’s had it since the mid-90s.  The office chair he uses was dumpster-dived not long after we met each other.

When I first met my husband, we were both working for a big company, and his desk was just part of his bedroom furniture.  Once he became self employed in early 2002, he started spending much more of his time at that desk.  He was thrilled to replace his very ragged office chair with our dumpster find, and has been working there ever since.  Seven years later, we’re still happily self-employed, and doing quite a bit better financially than we were in those early years.  But it would never occur to my husband to replace his desk or his chair, since they’re both still perfectly functional.

I sometimes get emails from readers asking for tips about how to become self-employed.  Of course there are lots of issues to address, but one that always comes to mind is don’t fake it till you make it.  I’ve seen people who became self employed and immediately sank several thousand dollars into new office furniture, even if they don’t meet with clients in their office (we don’t – everything we do is online and over the phone, so all that is required is a quiet office space with high speed internet and a good phone service).  There’s an endless amount of money that can be spent to get a business off the ground.  Some of it is necessary, and will have an impact on how your business performs.  But some of it is not, and will just extend the time until your business becomes profitable.  And since a good number of small businesses never become profitable, that initial expenditure might just end up being debt that you have to pay off once you secure another job.

If you’re looking to start a business or even just become self-employed part time, make sure that you apply the same frugal eye to business purchases that you do to all your other purchases.  Ask yourself if you need it, what sort of return on investment you’ll get, and whether there’s a less expensive option out there.  Don’t be fooled by the idea that business expenses are a tax write-off.  Yes, you can deduct business expenses, but it’s better to keep $100 in your pocket and pay $25 in taxes (just an example) than to spend that $100 on a business expense and save yourself the $25 in taxes.  You come out $75 ahead in the first scenario.  So unless you really need to spend the money, don’t let yourself be lulled into the idea that spending it is a good idea because of the tax write-off.

Starting a business is tough, no doubt about it.  And it’s likely that you won’t earn a whole lot of money in the beginning, no matter how hard you work.  By spending a bunch of money upfront without carefully considering whether the money really has to be spent, some people set themselves up for a stressful start to self-employment.

In 2002, when my husband and I went house shopping the first time around, we used a Realtor who was recommended by the mortgage broker we were using.  He had impressive credentials.  He had been in the business since 1986, was Realtor of the year in this area at least once, was in the ‘hall of fame’ and ‘platinum club’ for ReMax, and obviously sells a lot of property.

Since then, he’s called us several times a year – birthdays, anniversary, house anniversary.  He sends us all sorts of marketing stuff, and it made sense that when we were ready to put this house on the market, we called him earlier this week.  He came out to meet with us last night.  When he walked in the door, we were 100% sure that we would be listing our house with him.  We weren’t interviewing him or considering other options – he was our choice.  The deal was his to lose, and he did so in grand style.

First of all, he started telling us about another business that he’s running, and how he’s got a big presentation for it next week.  He was obviously excited about it, and more power to him.  But when you’re meeting with a client, it’s probably best to make sure that you focus completely on what you’re supposed to be doing for the client.  It’s not a good idea to create doubts in a potential client’s mind about your focus and dedication to the task at hand.  That was mistake number one.

Then he sat down with a huge sheaf of papers and started talking about the statistics of the local real estate market over the last few years.  This went on for about half an hour.  Frankly, we didn’t give a damn.  We’re selling our house.  We know the market isn’t as good as it has been in recent years, but we’ve made our decision and we’re moving forward with it.  We’re not on the fence and needing to be convinced to put our house out there on the market.  It struck me as odd that he would spend so much time on something that didn’t really apply in our situation.  He didn’t ask if we wanted to discuss any of that stuff, he just did it.  That was mistake number two:  when you’re in sales, you should keep your mouth shut as much as possible, ask open-ended questions, and let the clients lead the conversation.  Once you know where they are and what they want, you can much better address their actual needs.

After 30 minutes of telling us about the real estate market, he started bringing up the politics behind the economic situation.  He said that the mortgage crisis happened because congress forced banks to write 55% of their loans for people who “couldn’t afford loans”.  Hmmm.  Congress forcing anything requires legislation, which has to be written down somewhere.  When my husband called him on this, he said that you won’t find this little gem written anywhere.  So I guess it’s imaginary legislation.  But anyway, we moved on.

I went upstairs to change a diaper, and as I was coming back down I heard him telling my husband that he and his family went to a Tea Party last month.  Oh. My. Goodness.  Did you seriously just come into our home for the purpose of doing business with us, and then bring up such a politically charged topic without knowing where we stand on the issue?  Aren’t you a marketing professional?  Are you going to do this with potential buyers who might otherwise be interested in our house?  It’s one thing to bring up politics with friends or family, where business deals aren’t on the line.  Or when business deals are on the line and you’re sure that the clients are of the same mindset you are.  But telling potential clients that you want to a Tea Party without knowing their political views strikes me as particularly un-savvy.

After he left, my husband and I decided that we didn’t want to work with him.  He may be a great Realtor, but there were just too many red flags, and we were left with a very uncomfortable feeling about the whole thing.  My husband started researching online, and found another Realtor who sounded quite impressive.  He called to leave a message (it was 10:30pm) and she answered the phone.

The first Realtor spent so much time talking politics and economics that he never really got around to discussing what he would do to actually sell our house.  The lady we spoke with last night got right down to business.  She will come to meet with us on Monday morning, to look at our house.  Then she will take us with her to go look at several houses in our neighborhood that are for sale, to get a good idea of what else is available, how they compare to our house, and how they’re priced.  Then she will have a professional stager come in to consult with us and give us ideas (yay! – we’ve been doing it on our own, and some professional tips would be great!).  Then she will send in a professional photographer to take pictures of the house (there’s no additional fee for these services – they’re included in her fee).  Already, in a 15 minute phone call, she had gotten far more into what we were actually interested in – the business of selling our home – than the other guy did in an hour and a half.

And she charges 5%.

We are thrilled to be working with her.  My husband called the other guy this morning and let him know that we were using a different Realtor, and explained why.  The guy tried to defend his arguments, which just seems silly.  This is business, not a dinner party (or a tea party!)  By not asking questions, by sticking to a tired routine, by going on about another business venture, and by bringing up politics, the first Realtor lost himself a commission that would likely have been around $12,000.

Good to know that Wells Fargo is making good use of their bailout money afterall.  I suppose it is more important to take the employees on a Vegas vacation than to keep credit available for small businesses with spotless credit.

For now, we’re using the credit card that I got back in 1997 for our business needs.  We only have five or six charges per month, and all of them are automatically charged.  We switched two of them today, and I’ll do the others tomorrow.  My first card was from CitiBank, and ironically it’s still active even though I haven’t used it in years.  I blew the dust off the card I had, noticed that it had not expired (they’ve been sending me new cards every few years, even though I wasn’t using the account), and called them to have them issue a second card in my husband’s name.

We’ll use the Citi card for our business needs for the time being.  It’s only a few hundred dollars a month, and we can pay the bill from our corporate checking account (I keep meticulous records, and the card won’t be used for anything non-business).  The other option was to use our regular personal credit card and reimburse ourselves, but that’s one more layer of record-keeping that I’d have to do, and I perfer to keep things as simple as possible.

We are still considering switching to a credit union (reader comments have been encouraging in that regard), but we want to figure out where we’re going to be living before we go through that process.  Anyway, for now I’m just so happy for the good executives at Wells Fargo.  It’s great to know that they get to take a sweet vacation using tax dollars.

Yesterday we finally got our letters in the mail from Wells Fargo, officially letting us know that they had closed our business credit card accounts.  The letter is ridiculous, and I thought I’d share it with you all.  It’s good for a laugh anyway.  They mention that they closed the accounts and that they understand that we will have questions about why this happened and what steps we can take now.  The letter goes on to say “to save you time and give you the most direct path to the answers you need, we have included “The Guide” on the reverse side of this letter.  It provides you with the information that we believe you will find most important and useful”.

So I turn over the letter, wondering what brilliant insights “The Guide” will offer.  First, it mentions the supposed reasons why the accounts were closed (as I described in my last post, their reasons don’t make much sense, but it’s convenient for them that the reasons are purely subjective, proprietary, and impossible to fight).  Then, they included some advide that they say will increase the likelihood that they will someday be able to reinstate our account (thanks, but I think we’ll pass on that).  Here are their words of wisdom:

• Ensure all accounts are handled satisfactory.  Unsatisfactory performance may include untimely payments, items returned for insufficient funds, involuntary closures or overdraft occurances (um, excuse me, but does what you just did count as an involuntary closure?  Just curious)
• Work to preserve your credit and avoid building excessive additional credit balances.
• Make sure there are no late payments on any of your accounts.

I minored in math in college.  That advice from the helpful folks at Wells Fargo would be like someone telling me that I really ought to brush up on algebra.  Thanks guys – we’ll be sure to work on that.  In the 12 – 15 years that we’ve had credit, neither of us have ever had a bounced check, overdraft, late payment, etc.  We pay off our credit card every month, and have always done so other than the couple years after we started our business (late 2003 – 2006, during which time we carried balances but always paid far more than the minimum payment, and were always on time).

We’re a week out from finding out that our accounts were closed, and at this point I see a lot of humor in their letter.  If we had received it a week ago, it would have just made me angry, but staying angry doesn’t do anyone any good.  We are going to look at other bank options, but we’re not going to rush into a decision.  I like the idea of a credit union, but we want to make sure that we get one that has a local branch in the town where we’re hoping to move.  So we’ll see what our options are and weigh the pros and cons.  Switching banks will be a very time consuming process because of all the direct deposits we have to our business account and all of the automatic payments we have coming out of our accounts.  It’s not something I want to do without comparing a lot of options, but it is something that I’m motivated to do thanks to this little episode.

An open letter to Wells Fargo and anyone else who cares:

Dear Wells Fargo,

I have been banking with you for six years.  My husband has been with you since the mid-90s.  When we bought our house and consolidated our finances, we decided to merge my bank accounts with his and move everything to your bank (in hindsight, I wish we had moved him to my bank instead, but you know what they say about hindsight).  We added my name to his checking account, and opened a joint credit card through Wells Fargo.  Our Heloc is also through your bank, and has been ever since we bought our house.  Three years ago, we incorporated our business and opened a business checking account, along with a corporate credit card for each of us.  Last month we opened a corporate money market savings account.

Our high-yield savings account is not with Wells Fargo, because as far as I know you do not offer one.  And our HSA and IRAs are with investment brokerage firms.  But all of our other banking is done with your bank, and has been for a long time.  We have a perfect record with you and with every other bank/lender/financial institution we’ve ever done business with.

Last Sunday, we got an email from a vendor we use for our business, letting us know that an automatic payment had been declined.   I called the 24 hour number on the back of my corporate credit card to find out what was up.  I was informed by a very nice employee that our credit cards had been closed as of January 20th.  Well that’s lovely – any particular reason why?  The gentleman told me that they were closed because of a report from Experian.  But I would have to call back the next morning to talk to someone during normal business hours to get more information.   That doesn’t make for a particularly good evening.

We called the next morning and talked to another rep who told us that the reason the cards were closed was because of low usage on the accounts.  To back up a bit, when we opened the credit cards, we told the business banking rep at our local Wells Fargo that we would only be spending about $300 – $500/month on our cards.  But we were given accounts with $10,000 credit limits.  True to our word, we’ve put approximately $400/month on the cards over the last three years.  We always pay the balance in full, and have never paid any fees or interest on our corporate credit cards.  But the cards are essential to our business.  All of the charges are automatic, recurring bills from vendors for services that we cannot operate without.

So on Monday morning we were told that our cards were closed because of low usage.  We asked to speak to a supervisor and were told that one would call us back.  But that never happened.  The next day, I called back to try to get a supervisor on the phone.  The person I spoke with on Tuesday told me that our cards were closed because of BOTH low usage and a report from Experian that indicated (according to Wells Fargo) that the balances on our personal credit cards were too high and that the amount of time our credit had been active was too short.

I spent 45 minutes on the phone with two people on Tuesday morning trying to figure out what was going on.  Conveniently enough, I had copies of our credit reports and credit scores from Experian and TransUnion from the same week that Wells Fargo had apparently gotten their report from Experian.  According to the credit scores I paid for when I got our credit reports, my husband’s credit is better than 93% of Americans, and mine is better than 78%.  So it would seem that you must be closing an awful lot of accounts. There’s not much we can do about the length of time our credit has been active (we haven’t closed any accounts recently), and it’s been active now for three years longer than it had been when you gave us $20,000 in credit (even though we told you we only needed about $500).  I discussed with the rep the fact that we don’t carry balances on any credit cards (confirmed by the credit reports), and that we charge a small fraction of the limit on our personal Wells Fargo card and AmEx each month, and pay off the balances in full.  She didn’t know what to say other than that she was sorry.  As for the low usage factor, no one at Wells Fargo was able to tell me what your requirement is for usage.  That sure does make it hard to adhere to, now doesn’t it?

The reps we spoke with earlier this week told us that notification was sent to us on January 20th, informing us about the accounts being closed.  Today is the 29th, and we haven’t received anything yet.  Did you send the letters on one of your horse-drawn wagons?  Just curious.

So, you want to know what I think?  About three weeks ago, I called to see if we could have our cards set up with automatic payment from our Wells Fargo corporate checking account.  Since we always pay the balance in full anyway, I figured it would make my life easier if I didn’t have to write checks from the account each month, and could just have the balances paid on the due dates.  Ironically, we got our credit card bills on Tuesday, and notification was included with the statements telling us that the balance would be deducted from our corporate checking account on the due date.  So now Wells Fargo is well aware that we will never be interest-paying clients.  We never have been, although I suppose the possibility was always there.  Until we set our accounts to be automatically paid in full each month.

Once you knew that we would never be interest-paying or fee-paying clients, you decided to get rid of us.  But you did it in a way that we can never fight.  Your minimum usage requirement is supposedly a corporate secret.  And while the information contained in credit reports is objective and can be contested (ours is all accurate), a company’s use of that data is subjective, and we can’t argue with how you interpret a credit report.

I truly felt sorry for the Wells Fargo reps I spoke with earlier this week.  They seemed resigned to having a pretty rough time of it right now.  I asked them if this was happening to a lot of clients, and they both said yes.  I was very upset, but I was restrained and apologized to the reps for being upset.  I’m guessing that a lot of your clients weren’t so polite.

The most frustrating part of all this is the $25 billion in tax dollars that Wells Fargo received in the banking bailout.  You’re welcome.

J. Money over at Budgets Are Sexy has put together a great list of crazy jobs that we frugal folk have held over the years.  My days as a dishroom girl in a dorm cafeteria are chronicled, along with plenty of other good jobs that will either make you grateful for your 9 – 5 or make you want to think outside the box and find creative employment.  One of my friends had a job a few years ago that involved finding dead sheep for the Division of Wildlife.  She lives in a rural mountain area, and when bears kill sheep, the ranchers are entitled to a payment from the DOW.  But they were having problems with excessive claims, so they hired my friend to verify that bears had killed the sheep in question.  Ranchers would find the dead sheep, report them to the DOW with GPS coordinates.  Then my friend would head out with her GPS, trekking over the mountains to find the dead sheep and verify that they had been killed by bears (yes, she had to go through a class to learn how to determine if a sheep had been killed by a bear).  I think she got $150 per sheep, and basically got paid to go hiking, although there was quite a bit of bushwacking involved.  Apparently bears don’t stick to the hiking trails.

I got a comment today on my post about our financial goals that I thought was worth further discussion.  Dave wrote:

“I don’t know much about you but it seems like you folks have plenty of money. Anyone know of a blog directed toward the working poor? Somebody making / surviving on $30K a year?”

Dave, you make a very good point, and one that I’ve thought about a lot as I write a blog focused on frugal living.  But as as recently as 2004 we were indeed living on about $30K.  That year, our savings amounted to $100/month into our IRAs and that was it.  We were frugal out of necessity.  When we found out that my husband would need $5000 worth of dental work that year, I took a second job at the library, shelving books for $8/hour to pay off the dental bill.

When I started this blog in 2006, we were still in debt and although our income had increased a little beyond $30K, it still wasn’t huge.  Over the last couple years our income has increased further, but our lifestyle has stayed about the same.  Yes, we could spend more money now.  But we choose not to, because we’d rather save for the future than spend everything we have right now.

We’re actually earning a pretty typical income for two college-educated professionals in our 30s.  But we’re still in the same modest house we bought six years ago (we plan to stay, and are paying off the mortgage as quickly as possible).  We still drive cars that were made when nobody outside of Arkansas had ever heard of Bill Clinton.  We buy all of our clothing in thrift stores (and rarely shop at all, even at thrift stores).  I think the last time we went out to eat was in September when my in-laws were visiting.  Yes, we have options – we could choose to drive new cars, upgrade our house, shop at the mall, and go to Starbucks.  But instead we’d rather pretend that we still earn $30K and save the rest.

In order to make our goals happen next year, our family of three will have to keep our monthly expenses to about $2500, including the mortgage and health insurance, which amount to about $1500 together.  I feel confident that we can do it, because we’re used to living frugally.  Being forced to make do on very little money in the past taught us that we really don’t need a lot of money at all.  Now that we have more money, we’re able to give to causes that matter to us and save for the future, since we’re still perfectly happy with our frugal life.

I remember when I started blogging, I read NCN’s blog and was amazed at how much money his yearly savings amounted to.  I remember thinking that he was saving nearly as much as we were earning in a year.  And that served as a huge motivator for me.   The nice thing about being committed to living frugally is that if you work hard and focus on increasing your salary, chances are it will go up as the years go by.  But although the cost of living will increase too, frugal habits will mean that your expenses won’t increase as much as those of the people around you.  I’m sure that people see me pulling out of the thrift store parking lot in my 91 Civic and assume that I’m poor.  And that’s fine with me.

I’ll open the rest of Dave’s comment up to my readers:  what are your favorite blogs written by people who are working to stretch small incomes?  And what about your own experiences – have you found that frugal habits you developed years ago have stayed with you even though your income might have grown to the point where you don’t have to be frugal anymore?  Anyone finding that well-ingrained frugal habits are helping them weather the current recession?  I think this is a great topic for discussion – are you frugal because you want to be, or because you have to be?  For us it started out as a necessity, and then just became a way of life.  My guess is that a lot of other people find the same thing – once they get used to living frugally, they notice that big TVs and shopping at the mall and cars and fancy houses no longer hold much appeal.

We went to a retirement party on Friday evening. It was for a man my husband and I both worked with back in our bad old corporate days. Being back at that office revived a lot of memories for both of us. Some good (like meeting each other) but mostly bad (like 13 hour days, intense pressure from clients and corporate management, a long commute…) We were struck by the contrast between our lives then and our life now. My husband quit that job in 2002, and I left in 2003. The next few years were very difficult financially. Some months we barely made enough money to pay the mortgage, and everything else went on the credit card. I wouldn’t want to go through it again, and I’m glad that we’ve gotten ourselves back on reasonably solid ground as far as money goes, and that our business is doing well. But I’d do it all over again rather than still be working at my corporate job.

We got caught up on the last five years of office news – who quit, who got promoted, etc. There were a few colleagues I worked with as a manager who have been promoted several times since I left. I have no doubt that had I stayed, I would be earning a lot more money than I am today. But being at the office literally gave me shivers, and there is no doubt in my mind that I made the right choice. The freedom, flexibility, and overall happiness that we have is worth more than any salary I could be making at my old job. We get to snuggle with our baby in the mornings instead of jumping out of bed before dawn to be at the office by 7. We get to eat lunch together and have our baby with us during the day. We have dinner together, and go for a bike ride or walk as a family afterwards. We aren’t rich money wise, but we have enough to pay our mortgage and our day to day expenses and save for the future at the same time.

We drive old cars. We wear second hand clothes. We use homemade cloth diapers. We watch movies once they come out on DVD and we can borrow them from the library. We go for bike rides for entertainment. We go out to eat about once a month, sometimes less than that. We look for creative ways to save money, and it works. We’re able to live very well on less money than either one of us would be making if we had stayed at our corporate job. And we can’t even begin to describe how much happier we are with the life we have now. Simplifying and cutting back on expenses in order to be able to work for ourselves has paid off in so many ways. And I definitely wouldn’t trade my current life for the fat paycheck at the corporate job. There are some things that money really can’t buy, and those are the things I have now.

In other news, Stephanie at Focus Organic has put together a great Carnival Of all Things Eco.  Check it out for some great ideas on frugal, green living.

We’re so close to the end of our painting project. We got our HOA to give us an extension to the end of the month, and it looks like we’re going to make it. We’ll probably have to spend two evenings this week and then it will be done. (actually, it looks like about two hours worth of work left, but every time I estimate a timeframe for a home improvement project, it takes us three times that long, so I’m going to give us two evenings and not be disappointed).

This weekend, we worked on the really high parts of the house. The top of the chimney, and the gables at the front and back of the house on the upper story. Our 22 foot ladder wouldn’t reach them, so we rented a ladder. We had thought about buying a used one on Craigs list, but everything we found was at least $100. We rented a 40 foot ladder for $26, and now we don’t have to store it anywhere. This is the first time in over five years that we’ve ever needed a ladder taller than the one we have, so it didn’t make much sense to buy one and have to store it. We picked up the rental ladder yesterday at about 11:30 am. We worked until dark last night – about 8:30. Then we got up at 5am and were outside painting by the time it was light. (bonus – it’s much cooler at 6am than it is at noon… something we night owls don’t usually get to enjoy). We worked all morning, taking turns on the high ladder. It’s nerve racking being up that high, and very tiring – probably because every muscle in your body is tense the whole time, hoping that you’re not going to end up skewered on the picket fence way down there. So we found that it worked better if we switched off, with one of us working on the shorter ladder and the other on the tall ladder. Half the battle was moving the darn thing. It weighed 200 pounds – seriously. Getting it into position would take us at least half an hour each time we needed to move it. Guess we got our workout in today.

We finished the last high spot, got the ladder loaded back on the roof racks of my trusty civic, and returned it to the store, with two minutes to spare. Now we only need to do the back side of the chimney (we just have to stand on the roof behind the chimney to do that) and one section of trim where we can stand on a patio roof. We’ve bought 10 gallons of wall paint, 3 gallons of trim paint, and 16 tubes of caulk. When you add in the ladder rental, the grand total comes to $360. Not bad for a full exterior paint job. We started about the middle of June, but we took a couple weeks of recently when my husband’s family was in town. My family pitched in one day last month and helped us make huge progress – otherwise we’d probably be working on it until September. It’s looking great, and although painting a house is not that high on my summer fun activities list, it feels great to have done it, and I’m so glad that we did it ourselves for just the cost of materials, instead of paying someone else to do it.

Next up… the HOA says we have to paint our fence. I think we’re going to put in a vinyl fence instead – either way, that will be next weekend’s project.