While we were away, we used disposable diapers for our son.  Before we left, we bought a package of 7th Generation diapers at the co-op where we now do all of our shopping.  They were definitely more expensive there ($20 for a pack of 35 diapers) than they would have been at a baby store, but we were in a hurry that day, and wanted to make just one stop.  We considered taking our cloth diapers along and washing them while we were there, but decided to just take the easy route this once.  It’s the first time we’ve ever bought disposable diapers for our son, and he’s 22 months old, so we gave ourselves a pass.

The first thing I noticed about the disposables is that they hold a lot more liquid than the cloth diapers.  I typically change our son about once every two hours, but I found that even after three or four hours a disposable diaper would still feel completely dry on the inside.  So the package we bought lasted for the whole trip, and we even have a few leftovers that we’ll give to a friend.

It was nice to have the convenience of disposables on our trip.  But I must say, I’m thrilled to be home and have our little guy back in his regular mama-made diapers.  For starters, the 7th Generation diapers still use the same crystalline absorbency technology that other disposable diapers use.  I like the fact that they don’t use bleach to whiten the diapers (they’re a light brown color), but I do feel better with plain old cloth on my baby’s behind… even if it isn’t as absorbent.  And no matter how convenient the disposables were, they didn’t come close to dispelling the guilt I felt about the bag full of diapers that we sent to the landfill this morning before we left.  There is no way I would be able to do that for two straight years.

I’ve always liked our homemade cloth diapers.  We’ve spent barely any money on them, they’re a cinch to use and keep clean, and I have no concerns about what’s in them.  And each week we just dump a tiny amount of trash into our outdoor bin (still using that same garbage bag we were using in January!)  Now that I’ve tried disposables too, I’m still just as sold on my cloth diapers.

We haven’t decided what we will ultimately do, but for now, we’re working through the process ourselves.  Just as with our taxes, we want to really understand the whole plan, rather than just hand it over to a lawyer.  The first step we took was to pay $14 for the Suze Orman protection package, which is teaching us a lot.  We’ve already used it to do my healthcare power of attorney and advance directive (still need to get it witnessed and notarized), and will do my husband’s this weekend.  That alone is worth more than the $14 we paid for the program.  We’ll go through the whole program, paying attention to the details and figuring out what questions we need to ask ourselves, and what the answers will be.  We may end up using a lawyer for the will and/or trust paperwork, but I want to understand all of the details before we show up in the law office – if we do at all.

One of the issues to which we hadn’t ever given much thought was inheritance in general.  I guess we had both just assumed we’d leave our estate to our son, but we hadn’t thought about it beyond that.  Once we started to consider it, we decided that we don’t like that idea at all.  In general, we’re both relatively opposed to the idea of people inheriting large sums of money.  Right now, our net worth isn’t much.  But it’s growing at a fairly good pace, and ten or fifteen years from now (to say nothing of fifty), it could be a considerable sum.  We have known several people who are aware that they stand to inherit large estates, and to be perfectly honest, we feel that the knowledge of the future inheritance has had a negative impact on those people.  Some even get irritated when their parents spend money, as they feel entitled to the money (?!?!)  Some don’t put much effort into saving or planning for the future, as they are simply counting on the inheritance to fund their retirements.  To each their own, but our opinion is that large inheritances are often more of a curse than a blessing.

We want to give our son the tools he’ll need to be successful in life.  We’re saving to help pay for his college education, but only $100/month, and we have no plans to fully fund his education – we want him to take an active part in that process too.   In general, we want to give our son the things that money can’t buy.  We want to teach him the value of money, and how to manage it responsibly, but we want him to earn his own money and make his own way in the world.  As soon as we had a conversation about this, it was an a-ha moment for both of us.  We didn’t want a will or trust that simply left everything to our son.

For now, our son is not even two yet.  If we both die, he’ll need a guardian, and he’s also the contingent beneficiary on our life insurance policies.  The guardian we’ve picked is just as frugal as we are, and the life insurance money would be more than enough to raise our son to adulthood and pay for college.  But what about the rest of our estate?  These are the questions we’re looking at now, and there are no easy answers.

We did take a first step earlier this week when we opened our SEP IRA accounts.  We each listed each other an our primary beneficiaries, but rather than listing our son as the secondary beneficiary, we each picked a favorite charity.  The nice thing about retirement accounts is that beneficiary designations make it very simple to transfer assets without a will.  The Vanguard forms we filled out just required us to check a box and list the charity of our choice – couldn’t have been easier.

Hopefully we’ll both live to be 110 and spend our last dime the day before we die.  But just in case, we’re working our way through this process.  I gotta say, I’ll be glad when we’re no longer pondering our mortality!

The finalists were chosen by the personal finance blogging community, including writers and readers, and I’m honored to be among the frugality blogs that were selected as finalists.  Voting begins on Wednesday, February 24th.  If you enjoy my blog, I’d love to get your vote.

But time has passed and our business has grown, and we decided to revisit the retirement account question.  We looked at three options: the Individual 401k, the SIMPLE IRA, and the SEP IRA.  The 401k option would have allowed us to contribute a larger amount of money, since the contributions aren’t based on salary (we could each put up to $49,000 into a 401k).  The SIMPLE would have allowed us to contribute $11,500 of our salaries, plus up to a 3% match from our corporation.  The SEP allows our corporation to contribute up to 25% of our salaries into our accounts.

We debated the relative merits of each option, and discussed it with a representative at Vanguard, where we had decided to open our accounts.  The 401k allows the highest contribution, but is also the most complicated to set up and maintain.  And neither of us is going to come anywhere near having $49,000 to put into the account.  So the higher limit would pretty much be a waste at this point.  That narrowed the choice to the SEP or the SIMPLE, and we liked the simplicity of just having the contributions come straight from our corporation, without having to mess with paycheck deductions and contributions from multiple sources.  We’re an S corporation, so all of the money our business earns above expenses goes to us one way or another – either by salary or by distributions.  Now we’ll just have lower distributions and the the company will put money into each of our SEP IRAs each month – and the company will get a tax write off for doing so.

We’re still working at paying off our mortgage as quickly as possible, and we will continue to max out our IRAs and HSA, and keep contributing to our emergency fund and our son’s college account.  With all of that, I think that the restriction on the SEP that limits our maximum contribution to 25% of compensation will be more than enough.

It feels great to be opening our new SEP.  We completed all of the paperwork yesterday, and things should be on track for initial contributions in March.  After eight years of self-employment, our business is finally starting to be all grown up.

As with any financial ideas that you read on a blog, please don’t think that what works for us is the best option for you.  If you’re looking at setting up a retirement account for your business, do your research and talk with an accountant if you have questions.

In other news, my article was an editor’s pick in the Festival of Frugality today.  Thanks RC!

Money Beagle asks if the bank forced you to sign your mortgage.  Prepared to get fired up – there’s lots of discussion in the comments too.

You Have More Than You Think explains how friends don’t make friends overspend, when it comes to weddings.  My husband and I got married on top of a mountain in our hiking clothes.  I love this article!

No Debt Plan explains why doing your own taxes is a good idea.  I’ve been doing my own taxes for years.  Back in the day, it was simple – just a W2 and a 1040EZ, and I was all set.  I would do my own, and my husband’s (back before we were married) in about an hour each year.  Then we became self-employed and our taxes got much more complicated.  Instead of one W2 for each of us, we had about ten 1099s each, and tons of business expenses.  A few years later, we incorporated our business, and I had to contend with a corporate tax return, in addition to our personal return.  I thought about throwing in the towel and going to an accountant.  But I have a strong DIY nature, and more importantly, I wanted to really understand what the heck was going on with our taxes.  I didn’t want to just dump a bunch of paperwork off at the accountant’s office and come back a few weeks later to sign our returns.  So I poured over the tax laws, reading and re-reading things until they made sense.  There were some frustrating moments, for sure.  But I just finished our 2009 taxes, and it does seem to get easier every year.  I now have a very solid understanding of tax laws pertaining to an S-Corp (granted, only for our particular situation, where we have no employees – but hey, I’m not doing anybody else’s taxes, so that’s really all I need to understand).  I know how various expenses will impact our taxes, and I understand how the structure of our business and compensation impacts our personal return.  Yes, I have devoted a lot of hours to taxes over the years, but the knowledge I have gained seems well worth it to me.

Check out the carnival when you get a chance – I’m sure you’ll find lots of interesting reading.

These days, our only debt is our mortgage.  While it’s a much larger debt than our business debt was, it doesn’t feel as oppressive – although we still want to be rid of it, and are working to pay it down as fast as we can.  But the mortgage is just one aspect of our long term financial goals now; the rest is focused on retirement savings, cash savings, college savings, etc.  We’re just as focused on saving now as we were on paying of debt several years ago, but saving feels like fun.  There’s no fatigue from working to grow our nest egg, the way there was when we were digging out of a hole.  Both are satisfying, and both have the effect of increasing our net worth, but what we’re doing now feels a lot less stressful.

If you’re feeling fatigued by frugality – especially if you’re focusing on paying off debts – maybe it would help to divert a little bit of your extra money away from debt repayment and into a savings account.  For the first year that we were paying off debt, we didn’t save a dime – no emergency fund, no IRA contribution – everything went towards debt.  I wonder if maybe it would have been less exhausting if we had opened a savings account and put a little money into savings at the same time.  In the end, it all evens out, but if you’re considering giving up on frugality because you’re tired of it, taking a mini break now and then might do the trick to keep you on track long term.  Same goes for debt repayment:  As long as we keep the long term goals in sight, a little deviation now and then might be just what we need.

A few months ago, I started making my own salad dressing.  I had always done the vinegar and oil thing, but my husband prefers creamy dressings, and I like to mix it up a bit too.  I got this book as a gift, and my favorite thing about it has been the salad dressings.  My favorite is made of nutritional yeast, celery, hemp seeds, herbs, miso, lemon juice, and some flaxseed oil, and I always add some apple cider vinegar.  It’s so tasty that I usually eat the leftovers with a spoon, straight from the blender.  It’s nutritious, made entirely of ingredients that I have on hand in my kitchen (no mystery stuff), and so much less expensive than the dressings I used to buy.  I can change the flavor by switching the herbs (cilantro instead of basil, for example), and I can make just enough for one or two meals so that it’s always fresh.  It usually takes about five minutes to make a great dressing.

I’ve started experimenting, and have had lots of luck with adding and subtracting ingredients – most of my dressing attempts have been successful, even though I’m usually winging it, just using whatever I have on hand and tossing it in the blender, using lemon juice and/or apple cider vinegar as a base.  An added bonus is that there’s no salad dressing jars to recycle or reuse afterwards – just a blender to clean.

Do any of you make your own salad dressings?  Any favorite recipes or secret ingredients to share?

Jacob lives in an RV, and leads a very simple – and happy – life.  My family has a house with 3/4 of an acre of land, but we also lead a simple, happy life.  Our expenses are quite a bit higher than Jacob’s, mainly because of the house.  But we have a 15 year mortgage with a fixed 4.625% interest rate, and we’re working hard to pay it off in less than half of the scheduled time.  Once we do, our expenses will drop considerably, since our mortgage accounts for about half of our monthly expenses.

We’re also working towards our goal of growing most of our own food, which will further reduce our expenses (food is our highest expense after the mortgage).  Buying a house with a large yard was a big part of our long term plan, and it feels great to make extra payments on our mortgage every month, knowing that we’re working towards owning our own mini-farm someday.

Right now, we’re saving about 50% of our after-tax income (I include the extra we pay toward the mortgage in this figure).  I’m so impressed by Jacob’s story, and inspired to keep focusing on our long-term goals.  Retirement means different things to different people, but I think that everyone would appreciate more time to devote to things that they love rather than things that they must do in order to earn money (for a small percentage of people, these are one and the same, but for most people, there are plenty of things they would rather do than whatever it is they do to generate an income).  If you’re interested, check out Jacob’s blog and get inspired to start saving for your own independence day!

Sheri’s recent posts detailing her bulk food purchases inspired me to try again to see if I could find something similar.  I started with hemp seeds.  I had been buying them from our local store in 8 ounce bags.  We would go through a bag every week, and they were about $8 each.  Expensive, plus all of the wasted packaging was a bummer.  So last week I went to the source (I buy Manitoba Harvest hemp seeds) and ordered two 5 pound buckets of seeds.  They came to a total of $100 ($10/lb as opposed to the $16/lb I was paying when I bought them in little packages each week).  Shipping was free, and the buckets arrived today.  My bulk food buying has begun!

Then this morning we went to check out the food co-op in the nearby town.  The health food store where we normally shop is local to our state, but the co-op is even more local.  Right away I liked the bulk bins (mostly organic) that allow customers to reuse their own containers rather than prepackaging stuff in little plastic bags.  The store was small and quaint, but well-stocked.  And the best part is their bulk buying program.  They can order anything that their distributer carries (which is a lot more than what is available in the store), and members get all bulk orders for 20% above wholesale (as opposed to 40% – 50% above wholesale for non-members).  To become members, we had to buy a share in the co-op, which cost $160.  If we ever move or decide we don’t want to be members (both highly unlikely!) we can sell our share back to them.  So we bought a share, and are now proud co-op members.  I love the fact that we’re supporting a local business that is fully focused on healthy living and local, organic food.  I am also SO FREAKIN EXCITED to place my first bulk order!  I’ve been making a list of all the things I use a lot of, and I’ll place my order sometime in the next week or so.

As an added bonus, co-op members get dividends each year, based on the profitability of the store.  Here’s hoping they do well!

We’ve started our seedlings for the garden, and are very excited about all the food we’re hoping to grow here this summer.  It will be great to have our own vegetables straight from the back yard.  We’re going to let a few of the new trees bear fruit this summer, but we’re planning to pluck the buds off most of them so that they can focus on their roots this year.  So this summer our own crops will be mostly veggies… but one of these days, most of our food will (hopefully!) be as local as can be – grown within 50 yards of our back door.

Anybody else having luck with buying food in bulk?  Growing your own?  Tips for storing food that you grow or purchase in bulk?