My post on money-saving tips for new parents is part of this week’s Carnival of Personal Finance, which is hosted by Stocktradingtogo.com and features tips on how to select an online broker. It also contains great posts from other personal finance bloggers on topics ranging from saving and budgeting to stock investing and real estate. Check it out!

My husband and I had our first child last month.  We’re thrilled with the arrival of our new son, but in sticker shock over the cost of essential baby items (diapers anyone?).  However, through trial and error (as well as the help of friends and family), we’ve come up with a list of money-saving tips for new parents.

• Accept gently used baby items from family and friends.  We received a baby swing, papasan chair, bassinet, baby clothing, high chair, changing table, car seat and bottle warmer from friends whose own kids had outgrown these things.
• Talk to friends and family about what worked and didn’t work.  Other parents are a great source of baby product information.  You might see a baby gadget that looks like a “must have,” but talking to a friend might reveal that the thing was a piece of junk.  Talk to a variety of people and find someone that has similar tastes and spending habits as you do.  Obviously, the friend who buys every new gadget is not going to give you good tips on essentials.  Your friends may have disagreements on what they like (”Diaper Genie beats the Diaper Champ!  No, it doesn’t!”), but at least you’ll get an idea what worked for different people.
• Get a copy of “Baby Bargains.”  Many people consider this book to be the bible on baby shopping.  This book was written by the same authors of the “Bridal Bargains Book,” and is full of reviews and suggestions.  The authors are good at trying to sort through what is a “nice thing to have” versus an essential.  They provide comparison guides, reader reviews, and talk about the best place to buy things.  One chart shows the cost for Huggies diapers at 8 different retail stores.  Another useful tip in the book was to avoid baby bedding sets.  The sets cost over $150 and contain items such as quilts that you’ll never use.
• Watch out for anything targeted for babies.  This is especially true for baby furniture, which are marked up simply because it’s a specialty market, just like wedding stuff.  Find out what you need to buy (”Baby Bargains” has some suggestions), how much you want to spend, and go to both baby specialty and regular furniture stores to comparison-shop.  We had a doozy of a time finding a reasonably priced baby dresser, but finally settled on a solid wood dresser that cost about $350.00 at an unfinished furniture store.  A comparable finished dresser would have cost upwards of $600.00.  I’ve never stained any furniture before, but it was remarkably easy to do and only cost me $23 in materials and about an 1 hour of total work spread over a couple days.
• Comparison shop online.  We found a great stroller for $90.00 on Amazon.  The same stroller was selling for $150 at a local store.  We also bought a pack-and-play which was on clearance at Target.com.  The reason it was on clearance?  The design print was being discontinued.  Because we didn’t care if our pack-and-play matched the stroller or car seat, we were perfectly happy to buy the item at a considerable discount.  Manufacturers routinely obsolete items to introduce new patterns and color schemes.
• Scour Sunday circulars for deals on diapers.  With newborns going through 10 or more a day, diapers are one of your biggest daily expenses.  Through the circulars, we found a great deal at Target; buy two large packs of diapers for $19.00 each and get a $5 gift card.  We used that gift card and rolled it right back into the next pack of diapers.  But be careful not to load up on too many diapers at once.  Babies grow like weeds and will graduate to the next size in no time at all.
• Sign up for baby product “clubs.”  Similac, Pampers, Huggies and many other baby item manufacturers have “clubs” that you can sign up for.  Once you sign up, you’ll start to get coupons in the mail for their products.  Similac sends out $5 coupons to members.  That’s a 20% savings off a large jar of formula powder.  We’ve also gotten lots of coupons from Pampers.
• Don’t go crazy with the cute baby stuff.  Remember that your adorable newborn baby will be a walking, talking kid before you know it.  So there is no need to sink thousands of dollars in that solid cherry oak crib, no matter how fabulous it looks in the store.  We bought a glider and ottoman from Walmart for $120, which is a fraction of the cost at the local baby store.  Although the fabric and pattern doesn’t look as chic as the gliders in the potterybarn kids catalog, we did not want to spend a small fortune on something we’ll only use for a couple of years.

Hopefully this list will help you save a few bucks.  Also, keep in mind that generous friends and family will likely inundate you with gifts of clothing, toys, gift cards, cash, etc.  So if you are expecting a child, resist the temptation to run to Babies-R-Us to stock up.  You may need to buy less than you think.

Bripbrap is another personal finance blog that I enjoy reading.  In a recent post, he makes a lot of excellent points about how to make your workday more productive and pleasant.  As a full-time member of the “rat race,” I going to elaborate on a couple of Bripbrap’s points.

Point 14: Take off your shoes, wash your hands and shower when you get home.  Bripbrap advises you to incorporate this routine into your workday to slough off all of the nasty germs you may have picked up in the subway.  Another reason to get out of your work clothes immediately is so that you can get out of “work” mode and relax.  It’s hard to unwind when you’re still donning your starched shirt and itchy wool suit at the dinner table.

Point 12: Leave work early.  Bripbrap advises you to take the evenings for yourself and create your own wealth.  I wholeheartedly agree, which is why I ditched a job that required 70 to 80 hour workweeks for a (more or less) 9 to 5 job, where I could go home at a reasonable hour.  In my old job, I could never predict when I would be able to go home on a daily basis, and most weekends were devoted to more work.  Pretty bad, eh?  It got so bad that I worked 45 days in a row with not a single day off.  I was putting all of my energy and time into the job at the expense of my personal life and my finances.  Even though I was making more money at that job, I ended up spending more money to manage my life outside work.  Because of the hellish hours, I had to spend money hiring a cleaning person, gardener, etc., to do the tasks that I had no time to do.  With no time for comparison shopping, I also found myself spending more on purchases purely because of the convenience factor.  Moreover, I had no time left over to manage my finances.

However, I now have a more humane work-life balance, with more time to spend on developing business ventures and researching investing opportunities.  The result?  My net worth has increased significantly!  Being a dedicated employee is a good thing; devoting yourself lock, stock and barrel to your employer at the expense of all else is not a healthy or financially smart existence.  A job is just a job; it could disappear at anytime for any reason (as Bripbrap notes, witness the unfortunate employees of Bear Stearns).  But the opportunities and wealth that you build for yourself in your downtime stay with you.

How do the wealthy get rich?  A few of us hit it big through God-given talents like singing or acting.  Others, like Mark Zuckerberg of Facebook, merge a skill, e.g. computer programming, with an innovative idea and buyers willing to pay mind-boggling sums for his or her creation.

Others try to become wealthy quickly by flipping houses or becoming day traders.  Eventually, however, most of these get-rich-quick dreamers crap out because the market they invested in has collapsed, they borrowed too much money, or they went out and spent every dime they had (and more) on fancy dinners, designer clothing, limousines, and extravagant trips.

Most wealthy people, however, do it the old “boring” way, choosing to accumulate their money slowly and steadily.  This is the thesis of the book, “The Millionaire Next Door” by Stanley J. Thomas and William D. Danko.  Through interviews with hundreds of millionaires, Thomas and Danko concluded that many of them accumulate wealth through living below their means, shunning conspicuous consumption, and allocating wealth in a productive way to make more money. 

I can see this from personal observation of my Uncle Frank, a self-made millionaire many times over.  He never read “the Millionaire Next Door” but seems to represent the classic example of one, with habits such as the following:

Living below his means:

• Has always socked money away, even as a civil servant making a paltry government salary with three kids to support.
• Refuses to buy coffee at Starbucks.  McDonalds coffee will do just fine.
• Has never incurred credit card debt.
• Has lived in the same home (like Warren Buffet) for decades, even after he became wealthy.

Shunning conspicuous consumption:

• Brushes off random comments by business associates that his clothes are not Brooks Brothers chic.
• Has never driven an expensive European vehicle like Mercedes or BMW.
• Doesn’t sport expensive cuff-links or a gold Rolex watch.

Allocating wealth in a productive way:

• Used savings from his job as a civil servant to start his business and make investments.
• Reinvests his profits in his business instead of spending it on purely consumer items, like a boat or a second home at the beach.
• Funded college and graduate school for his kids, instead of buying them fancy cars and clothes.
• When he travels for work, he’s more likely to stay at the Hampton Inn over the St. Regis, unless he gets a very good deal on the hotel rate.
• For international trips, he uses a consolidator to get the cheapest business class seats.

Some may ask “does this guy have any fun?”  Others may question why make money if you can’t enjoy it?  However, this presumes that everyone wants to buy Hummers and live in McMansions with debt up to their eyeballs.  People like Uncle Frank don’t get their kicks by going to the mall every weekend.  They derive enjoyment and satisfaction out of the challenges of building wealth and the accruing benefits of financial freedom.   They have shunned instant gratification to achieve their long-term goals.   

The wealthy approach money and their lives differently than the average working Joe.  Check out Ryan Taylor’s Millionaire Money Habits for ways that millionaires think about their money.

In February, I wrote about a purchase that I made at a local children’s store (Recession Survival Tips - Negotiating a Better Deal) in which I asked for the online price of a mattress.  The online price was only available online.  I wanted to purchase the item in the store.  At first, the manager did not want to give me the online price.  However, she realized that if she didn’t give it to me, I was just going to go home and order it online, and it would cost her more to ship it to me.  She gave me the online price.  We both won because she made a sale, and a profit, and I got what I wanted immediately. 

In today’s NY Times, there is an article about bargaining with retailers .  Apparently, bargaining is back in vogue.  Retailers want to make sales, consumers want to save money.  The article says that before the 1850’s, bargaining used to be common.  I don’t think bargaining ever went out of style for those of us always looking for the best deal.  In Asia, every item is negotiable.  In fact, the vendor will often chase after you in order to make the sale.  Bargaining is a fact of life for most of the world.

You’re used to negotiating car prices, but I think you should consider bargaining for anything that has a high markup.  On these items, the retailer can afford to make a profit, and you can save some money.  Everyone wins.  The following items are good candidates for bargaining:

• Jewelry
• High end consumer goods (TV’s, furniture)
• Any type of service (car repair, home repair/remodeling, event planning and services)
• Anything being sold on commission
• Anything that’s available cheaper online

You should approach bargaining with a plan.  You need to know how much an item sells for both in your local market and online.  If you have a competitor’s price on hand, the retailer will be much more likely to bargain with you.  If you’re able to determine how much an item costs the retailer, you’ll have the upper hand in negotiations.  However, that information may be hard to come by.  When I’m shopping in China, I usually start out with a starting bid of 10% of the asking price.  They expect you to bargain, so the prices are marked up accordingly.  Don’t be afraid to walk away from the sale.  It’s one of your strongest bargaining tools.  If the retailer knows that they’re going to lose the sale, they may change their mind very quickly.  Also, don’t be afraid to mention the competitors.  Retailers usually have an idea of their competitors prices.  If they know that you know you can go somewhere else for a better deal, they’ll be more willing to bargain.  In my opinion, everything’s negotiable.

The New York Times advises readers not to panic over their finances, amist growing worries about a prolonged and painful recession.  Instead, the Times recommends that people take stock of their financial situation by doing the following (I’ve added my comments in bold):

• Take a hard look at your job situation.  Could a layoff be in your immediate future?  If you’re not sure, it’s probably a good idea to dust off your resume, update it, and begin networking now.  As I’ve recommended in prior posts, consider creating other streams of income that have nothing to do with your current job, such as teaching at your local community college or becoming a mystery shopper.
• Review your debt situation - ask yourself, can you afford your lifestyle?  Are you struggling to cover your monthly expenses?  If you are unsure, check out www.about.com’s post on the warning signs you have too much debt.  The Wall Street Journal recently reported on the increased demand at food banks from middle-class families.  One family who bought a house that was too big and a car that was too expensive had to go to the food bank because they couldn’t afford both the loan payments and groceries.  Not being able to afford food in this country is pretty shocking and sad.  However, if I were to choose between a BMW and food, I’d take the food.
• Resist the urge to stop investing in the market.  Do not let your emotions get the better of you by buying high and selling low.  I’ve heard several people complain about the recent declines in the stock market.  One friend wanted to stop investing altogether because she couldn’t bear the $20,000 haircut that her 401(k) account just took in the last month.  This is precisely the wrong time to stop investing.  The Oracle of Omaha, Warren Buffet, has said that the stock market is the only place where people run away when there are bargains to be had. 
• If you are planning to refinance your home or buy a new home, borrow the proceeds using a 30 year fixed rate mortgage, not an ARM.  This should be a no-brainer, with all of the fallout over the subprime mess.  If you currently have an ARM loan, start researching interest rates for 30 year fixed loans.  The Federal Reserve’s recent interest rate cuts should trickle down in the next three months.  However, because Wall Street and investors are so jittery about mortgage loans, interest rates have been fluctuating day-to-day.  The key is to lock in a rate during a dip, which may be as brief as one day.

If your job is stable, your mortgage and other living expenses are manageable and you are continuing to invest in your 401(k) without worry, then stay the course.  As the Times advises, keep doing what you’re doing. 

The Times article also says don’t panic in these recessionary times.  However, my view is that if you are living paycheck to paycheck, you need to scare yourself silly into taking action.  Conjure up images of soup kitchens and homeless shelters, if you have to, because you may be one paycheck away from living in a tent like other former homeowners in so-called “subprime shantytowns.”  They are apparently cropping up in Los Angeles and other hard-hit areas in California.

Winning the lottery is the ultimate dream of most people who plod along in their jobs and get excited when the Powerball lottery hits $200 million.  Like them, I used to buy lottery tickets in a pool with my co-workers, dreaming of the day that I could leave work and utter that famous Johnny Paycheck line “take this job and shove it.”  However, I stopped shelling out the dollars after my Uncle Bill, the real estate tycoon, advised me that I shouldn’t do it because “buying lottery tickets is for poor people.”  He didn’t elaborate, but I interpreted his comment to mean that instead of relying on an impossible windfall, I needed to work for my money.  Upon further reflection, I puzzled over why so many of my colleagues, who are well-paid, educated professionals, play the lottery.  All of these people have a roof over their heads and plenty of food.  There’s nothing so dire in their lives that it requires $100 million to fix.

What is the appeal of the lottery?  To pay off those college loans?  How about a cushion for unexpected medical expenses?  Hardly not.  When was the last time you saw a lottery winner on TV say “I’m going to put aside the cash for my retirement or unexpected health care costs or my grandchildren’s college tuition fund.”  It’s usually more like ”I’m getting a Hummer and she’s getting a Mercedes, and then we’re going to buy mansions for our 12 grandchildren.”  Lottery winners are like kids in a candy store and the candy is FREE.  The problem is that you end up eating way too much candy.  The lottery winner usually overspends on yachts, jets, homes, leacherous relatives and friends, and winds up even more broke (or broken) than before he or she won (Bankrate.com’s Unlucky lottery winners who lost their money).  Being independently wealthy when winning the lottery doesn’t seem to help.  Look at Jack Whittaker, a West Virginia businessman who was the winner of what was then the biggest Powerball jackpot in history.  Whittaker, already wealthy, took home $113 million in a lump sum payment in 2002, but since then has been plagued with personal problems arising from that lottery win, including the death of his granddaughter, numerous lawsuits, and marital difficulties.

Not all windfalls are bad karma.  Depending on the source of the windfall, you might spend it differently.  Look at the bonus you receive from work.  Would you spend it in the same manner as lottery winnings?  Because that bonus is your hard-earned cash, you might not burn through it as quickly.  Instead of putting a down payment on a gold-plated hummer, you might fund your IRA, pay off some credit card debt, and splurge by going out for a nice dinner.

So, before you go out and buy 50 lottery tickets, think about why you’re buying these tickets.  Is it because you want to become the classic overconsumer that many lottery winners have become?  Do you want to run from greedy relatives and friends who want a piece of the lottery pie?  Or was taking a match and burning up the cash instead not an option?  What I’m doing now is taking that money and investing it in an S&P index fund.  That investment may not reach $100 million by the time I’m 65, but it’ll be worth more than some shredded lottery tickets.

What separates successful entrepreneurs from the rest of the pack?  Why do some people spot the lucrative opportunities that others miss?  Here are some offhand thoughts on these questions.

• Entrepreneurs are not afraid of failure.  They are not the people that refuse to try anything “risky” or give up something after the first attempt.  They try, they fail, they try again.  Eventually they hit on something big.  A family friend, Uncle Bill, is a very successful real estate investor.  When he started investing, he bought a rundown duplex apartment.  The tenants didn’t pay the rent and eventually skipped town.  When Uncle Bill checked out the apartment, he discovered that they had trashed the place, complete with rotting groceries and ripped furniture.  Uncle Bill could have thrown in the towel at that point, as he had a full-time job with the government.  But he cleaned the place up, found more reliable tenants, and continued to invest through the years in cash-flow positive properties, eventually moving on to commercial real estate.  He made money, either through appreciation or rental income, on nearly all of his real estate deals, including the trashed duplex.  If Uncle Bill had become discouraged and quit after the first try, he might still be a civil servant, probably bored out of his mind. 

• They don’t waste precious weekend hours watching the Simpsons TV show marathon on cable.  Don’t get me wrong - some downtime over the weekend is needed after a long week at the office.  However, in my desire to become self-employed, I find that my free time is better spent working and progressing on my goals rather than lounging on the couch.  Ross Perot apparently worked as a consultant for IBM while he was getting his business, Electronic Data Systems, off the ground.  Do you think he spent hours watching “I Love Lucy?”  How much time do you waste watching the tube?

• They are not “penny wise, pound foolish.”  In other words, they don’t waste their energy and time on business ideas that cannot turn into a sustainable business or will only make pennies for them.  Several years ago, my husband and I joined a friend to sell used wares at a local flea market.  We split the cost of renting our little booth and sold stuff that we wanted to get rid of, like clothing, books, an old microwave, etc.  We never made more than $75 for several hours of usually hard labor.  When we told Uncle Bill about our efforts, he sensibly said “nobody ever got rich hawking a few dusty, used items out of the trunk of one’s car.”  He told us to make better use of our time and come up with a business idea that would make real money.  Lesson learned.

So, these are just a few thoughts on what successful entrepreneurs might be thinking.  Is there anything that you would add to this list?

The biggest financial news story today?  The breathtaking collapse of Wall Street firm Bear Stearns, which JP Morgan agreed to buy over the weekend for a mere $2.00 a share, a pittance compared to the trading price of the firm one year ago - a whopping $170.00 a share and even last Friday, when it was still at about $30.00 a share.  So, investors big and small alike are certainly being burned in this mess, but what about the employees of the firm?  It’s a virtual certainty that with the buyout by JP Morgan, a large portion of the 14,000 employees of Bear Stearns will lose their jobs.  What’s more, the firm is one-third owned by its employees.  Most Wall Street firms, including Bear, pay employees a large portion of compensation in company stock.  So if the stock tanks (recall Enron), there goes your hard-earned salary.  All in all, it’s a pretty bad picture for the employees, who are facing a double whammy - -layoffs and the shocking plunge in value of their company stock.

CNBC reported today that employees of the firm were commenting off camera that their retirement and college savings funds had been wiped out and that after decades of work, they would “have to start over.”  If this can happen to a large investment bank like Bear Stearns, who isn’t vulnerable?  What’s the lesson learned here?  As the financial experts say, don’t have your job and all of your investments tied up in the same company.  If the company is going south financially, that means its stock is probably not doing very well.  In good times, everyone is flush with cash and excitement, but the bad times can hurt a lot more.  When my husband’s tech company filed for bankruptcy and went through eight rounds of layoffs after the tech bubble burst, the employees were reeling from the loss of jobs and stock options.  To add salt to the wounds, for the employees that were spared, my husband included, the company suspended its matching contributions on employee 401(k)s and raises were minimal to nonexistent until the economy picked back up.  Considering that many of us derive most of our money from our jobs, it makes sense to spread our cash around a little, and not rely on the bigwigs in the corner office to shape our destiny.  To me, that means:

• Don’t invest all your cash in company stock.  Be diversified.  Open an account at Vanguard investments and buy index funds.
• Create a second source of income, like teaching yoga or, hey, blogging, so that the cash stream doesn’t completely dry up if you do lose your job.
• Look into buying rental property that can generate some extra cash for you.  Make sure that the rent you charge more than covers your mortgage, taxes, insurance, repairs, and tenant vacancies.  That way, you can breathe easier with some positive cash flow from an investment that is not tied to your job.  For us, having the cash flow from rental property puts us at tremendous ease.
• Network, network, network while you still have a job (I have got to work on this too).  That way, you’re not scrambling to call everyone you ever met and their buddies to beg for job help if you are suddenly facing a layoff.  It just smacks too much of desperation.

 Of course you cannot spend your nights worrying about whether you are going to get the ax at work.  There are macroeconomic problems, such as the subprime mess and ensuing credit crunch, that many of us did not create and cannot control.  However, with these “uncertain economic times,” one cannot be too prepared in the event of a personal financial tsunami. 

This week’s Parade magazine has some helpful tips on dealing with possible scams during tax season (”Save Money on Taxes” by Lynn Brenner, Mar. 16, 2008).  Brenner warns against the following:

• A phone call from the “IRS” telling you that you’re eligible for a tax rebate and asking for your bank information so the funds can be deposited directly into you account.
• An email from the “IRS” informing you of a forthcoming tax rebate with a link to an official-looking website where you are told to provide personal information in a form.
• Cash to you for filling out a customer-satisfaction survey where you provide your social security number and credit card information.  (Do the scam artists think this one is going to work???  Does anyone believe that the IRS cares about customer service?  I guess that’s why they’re offering the cash.).
• An email from the “IRS” telling you that you are “under audit” and demanding that you provide personal financial information immediately to “make things right.”

Anytime I get correspondence from the IRS, my heart beats just a little faster.  It’s stressful enough making sure that the tax return is completed and filed properly without having to sweat over whether the IRS agent at your door is the real deal (an exaggeration, but you get the point).  So, if you have doubt about whether an IRS communication, whether it be by letter or phone call or email, is legitimate, Brenner advises you to call the IRS at 1-800-829-1040 to confirm its authenticity.