Those who enjoy living a Frugal live generally try to avoid debt.

Debt is bad financially of course because it involves paying interest, thus ensuring that whatever you’ve purchased ends up costing more in the long run than it would have if you paid the whole price up front.

Debt can also make you feel bad, knowing that if a financial emergency like a job loss occurs, you’re still on the hook for whatever you owe (plus interest).

So, if you have a mortgage or any other large debt such as a Home Equity Line of Credit (HELOC), you might be tempted to prepay the mortgage/debt in order to reduce your debt as fast as possible and save money on interest payments.

But is that always a wise financial decision? The author of My Life ROI financial blog writes in his post “To Prepay Your Mortgage Or Not” that it might make better sense from an economic standpoint to resist the temptation to prepay your mortgage (provided that you have a reasonable mortgage interest rate, of course).

For example, if you have the investment skills to earn 8% in the stock market, why would you want to prepay a mortgage that cost you only 5% interest? (Remember that if you itemize your tax return, you may get a deduction on home mortgage interest too.)

So does the argument on not prepaying a mortgage hold water on close examination? Perhaps, but even the My Life ROI blogger acknowledges that completely paying off a big debt can have major psychological benefits for lots of people.

It’s also important to note that lots of people end up losing money investing in stocks, commodities and other financial interests. If you opt to play the stock market instead of paying off your mortgage and your investments go sour, you’ll still have to make your mortgage payments plus work harder to make up your losses in the market.

Ultimately, the choice depends on individual psychology and risk tolerance. If you have an iron stomach for debt, a low interest rate mortgage and good investment skills, opting not to pay off your mortgage early could make sense. But for many people, the prudent, safe and frugal thing to do would be to put at least some extra cash toward paying down your mortgage early when possible.

Does prepaying a mortgage make sense to you? Or would you rather use free cash toward investments? Make your case in the Comments section below!

Dollar Days Blog is pleased to share the expertise of Peter Shankman, founder of Help A Reporter Out (HARO).

HARO Founder, Peter Shankman

Dollar Days Blog (DDB) – Please tell us a little about yourself and HARO.

Peter Shankman – Since I founded HARO in 2008, it has become one of the fastest-growing social media companies in North America. Every day, HARO brings nearly 30,000 bloggers, reporters and journalists, over 80,000 news sources and thousands of small businesses together to tell their stories, promote their brands and sell their products and services.

Since its inception, HARO has published more than 60,000 journalist queries; has facilitated nearly 7,000,000 media pitches, and has marketed and promoted over 2,500 brands to the media, small businesses and consumers.

HARO is entirely free to sources and journalists. Unlike a majority of social media companies, HARO is independently owned and funded and has been profitable since day one. HARO’s tagline, “Everyone is an Expert at Something,” proves over and over again to be true, as thousands of new members join at helpareporter.com each week.

Beyond HARO, I would describe myself as an entrepreneur, author, speaker, and worldwide connector.  In addition to HARO, I am founder and CEO of The Geek Factory, Inc., a boutique Marketing and PR Strategy firm located in New York City, with clients worldwide.

DDB – It sounds like HARO is meant mainly for reporters. What are the advantages for small business owners?

Shankman – HARO provides small to mid-size businesses with 75-80% open rates on the ads that headline each of its thrice-daily email digests containing reporter queries. HARO also helps many small businesses directly market to their key audiences and make money. Everyone who receives the HARO newsletter must opt-in, meaning they choose to receive the e-mail. The advertising messages are custom-written either by HARO founder Peter Shankman or by a HARO family member and presents the product or service in a fun and positive light that highlights its importance and utility. Furthermore, since HARO is a digital newsletter, hyperlinks are directly embedded within the message.

DDB – How can media exposure help a small business? Do you have any success story examples from your clients?

Shankman – Media exposure pushes a product or service into the spotlight, instantly gaining consumer focus and attention. The best way to demonstrate HARO’s success is with by citing the successes of our users.

For example, Michael Jordan, owner of BullyStickDirect.com, called the response to his ad ‘overwhelming’ and noted that he received about a 2,000% increase in website hits the afternoon his ad appeared and into the next day. Not only was HARO the most successful advertising venue Mr. Jordan had tried, he’s also used HARO to achieve additional visibility by getting quoted in a book and major publications simply by responding to HARO queries.

Another HARO user, Jason Sadler, has called his HARO ad the ‘tipping point’ for his website, IWearYourShirt.com. Sadler said his first ad helped him sell 2-3 months worth of shirts in days, moving $8000 worth of merchandise and generating ‘a ton’ of press exposure.

DDB – Since HARO is itself a small business, what are some of the decisions you’ve made that enable HARO to compete with larger players?

Shankman – HARO was originally conceived as a Facebook group. Since Facebook caps group emails at 1,200 people, an e-mail newsletter was started. As HARO’s readership grew, HARO realized that there was great potential to include a simple, subtle, and creative ad at the top of each message.  As a small business of its own (HARO has only 6 full-time staff members), HARO has generated $1.4M in revenue in 14 months. By utilizing technology and automatic distribution services, HARO is able to keep its overhead low while, at the same time, continually offering high yield ROI on its ads.

DDB - What are some of the best decisions you’ve made as a small business owner?
Shankman -

A) Hired people whose skills complement my own.

B) Listened to people I trust; ignored the naysayers I didn’t.

C) Believed in my idea.

D) Listened to my customers and audience. Constantly.

We spend a lot of time talking on this blog about ways to save money, stay out of debt and live frugally.

Living within your means is important, but it’s also good to have some balance in your life. Over at Personal Finance Advice, guest writer Rebecka O. delves into the issue of excessive saving.

In her article “Why I Don’t Save Money,” Rebecka shares a story about her mother who died with more than $1.5 million in savings — along with unfulfilled dreams of visiting Europe, attending a Broadway show, gazing at the Pacific Ocean and seeing penguins in the wild.

Rebecka says that her mother lived frugally and that she herself shared those frugal tendencies until her mother’s death, at which point she came to question the value of saving money if it meant missing out on longed for experiences.

So Rebecka devoted herself to fulfilling her most important lifelong dreams. In about six years, she blew through her entire share of the inheritance – about $300,000.

The responses by readers to Rebecka’s story are interesting in their own right. Some people questioned whether Rebecka should have spent the entire inheritance. Other readers were OK with her spending the inheritance, but criticized her choice of even delving into retirement savings to fund her goal of fulfilling all her dreams. Several readers suggested that Rebecka should have sought some balance or moderation, splurging on some dreams while saving some of the inheritance.

Be sure to read Comment #13 by Pat Merritt which contains a nice story about Pat’s own experiences with saving and the satisfaction she has received from spending on time with her family and a special artwork purchase. Here is an excerpt from Pat’s comment -

“You see, frugality is not just saving for retirement, or a nebulous future that may not come. It’s also getting the things that you really want now. It’s a decision making mechanism that lets you decide what is important to you and to set out and get the things that really matter.”

Do you agree with Pat’s definition of frugality? Do you try to minimize expenses in order to save the most possible money – either for a rainy day or to build an estate for your family? Or do you believe that money should be used sooner rather than later to fulfill your most important dreams? Or is some compromise path the best? Share your perspective in the Comments section below.

Last year the government’s Cash for Clunkers program got plenty of attention for giving individuals financial incentives to trade in gas guzzlers in exchanger for newer, more fuel efficient replacements.

Cash for Clunkers was then followed by in many parts of the country by other programs that promoted energy efficiency by giving rebates that encouraging consumers to upgrade from old appliances to more efficient Energy Star-rated models.

Why should government support efficiency programs? The idea is that everyone wins when the government helps consumers trade up to newer models of cars or appliances. Consumers get lower electric or fuel bills. Manufacturers are able to move products that would otherwise be harder to sell in the current economic climate. Governments benefit in a couple of ways. If manufacturers can stay in business, the government has fewer unemployed people to support. And if overall energy or fuel usage declines, the government feels less pressure to build new power plants or fuel refineries.

So how does all of this help small businesses? Well, as a recent article in the Small Business Trends blog pointed out, businesses too can benefit from government support for energy efficiency upgrades. The article highlights benefits in several states including:

• California, where Pacific Gas & Electric Company offers rebates of $10 to $125 for installing high efficiency light bulbs.

and

• Indiana, where Duke Energy gives small businesses up to $50,000 in annual rebates for high-efficiency improvements to HVAC-type systems.

Even if a power company won’t subsidize the actual cost of upgrades, it might still help businesses figure out how to make improvements. That’s what Minnesota’s Xcel Energy does by covering  most of the cost of heating-optimization studies.

The important thing for small businesses is to check for special offers and promotions in your state, city or local community. For instance, small business owners in Austin, Texas not only qualify for a general commercial rebate, but also an additional special 30 percent bonus rebate, plus a lighting program that covers up to 70% of installed costs.

Other small business energy efficiency grant and rebate programs exist around the country from Pennsylvania to Arizona (where the state subsidizes up to 90% of incremental measure costs).

Rather than hunting all over the Internet, you can save yourself time and energy by using the handy guide from Business.gov that provides links to state and local energy efficiency programs for small businesses.

And remember, in addition to up front savings from rebates or other forms of assistance from government and utilities, any energy efficiency improvements you make to your business should end up helping your bottom line by reducing recurring expenses.

If you really go all out and achieve superior efficiency to the point where you’re powering your business with solar or wind energy, your efficiency could even become a marketing point among Green-minded consumers. It’s a message that has worked for businesses from New Belgium Brewing to Horizon Organic.

Has your small business benefited from any government or utility-sponsored energy efficiency program? Or have you seen bottom-line savings from energy efficiency improvements. Share your experiences in the Comments field below!

Dollar Days Blog is pleased to share the expertise of Shel Horowitz, ethical/Green marketing expert.

Author and ethical marketing expert Shel Horowitz

Dollar Days Blog (DDB) – Please describe your background and business expertise in a nutshell.

Shel Horowitz – I founded my own business in 1981 with a total investment of $200, of which $12 went for initial marketing. I am still in that business, although it has morphed several times and bears no relation to its original incarnation. These days, I break down the bulk of my work into these areas:

Happy New Year! Hopefully this year will bring you health, happiness and good fortune.

Now let’s start talking about saving for 2010.

But the year just started? That’s right. That’s why this is the perfect time to start socking money away in a special savings account so that you have cash when the holidays roll around next year!

This article at eHow.com has lots of useful advice on getting out of debt incurred from excessive holiday shopping, but of course it’s much better to avoid going into debt in the first place.

How can you avoid holiday-related debts? LaToya Irby has written a useful article at About.com with 8 suggestions for avoiding holiday debts. Some of her bright ideas include shopping with cash rather than credit (that way you can’t spend more than you have) and focusing on buying gifts for others, not for yourself.

Irby suggests saving well in advance to make sure you have enough cash to buy gifts without resorting to credit cards. If you’re very disciplined with money, you be able to store that cash in your regular savings or checking account, but it might also be useful to open a special (interest-bearing) account devoted just for holiday expenditures or any other special splurges.

Read more about the benefits of this approach in the “Open a Holiday Savings Account” article in the PT Money blog.

Just think – if you set aside $100 a month, you’ll have more than $1000 for presents and gifts by the time the winter holidays arrive. Not to mention a few extra dollars in interest income.

What if you have some extra cash on hand right now? Well, you could take advantage of post-holiday sales and stock up on presents early for next year. Or you could look into buying a short-term 3-month or 6-month CD. Sites like Bankrate.com let you find the best CD interest rates.

But depending on how much money you’re looking to sock away for the holidays, you may get a better return by looking for special offers that banks sometimes run offering cash bonuses of $100 or so for opening new checking accounts. Just be sure to read all the fine print. Sometimes you’ll need to make a couple of check card purchases (even small ones) within a certain time frame to qualify for the bonus.

Why does the bonus make sense over the simpler CD or interest bearing savings account? Well, imagine that you put $1200 into each account on January 1st. With the bonus offer, you get $100 and perhaps spend $2 on little debit card purchases. You then have $1298 by December 1st for holiday purchases.

With interest rates so close to historic lows, you’d be very lucky to find a CD or interest savings account paying anywhere near 2%. Even with 2% interest, you would only earn around $20 by keeping your $1200 in the bank until December.

The math works out even better if you can find a deal that lets you open a new account and get the bonus with a small opening deposit such as $100. In that scenario where you’re gradually building up your holiday shopping account incrementally, you’d get much less than $20 at 2% interest, but you’d still get all $100 from the new account bonus, making that clearly the best choice.

And if you don’t end up spending all the money in your holiday spending account? Well, you can easily transfer most of it into your general savings account as a special ‘Happy New Year’ bonus to yourself in 2011!

Have you tried creating a special savings account for holiday purchases? Or do you have some other strategy for maintaining spending discipline around the holidays? Share your experiences and ideas in the Comments section below!

Sure, it would be fantastic if your small business was featured on Good Morning America or in the pages of People magazine.

But let’s be realistic — the odds of getting covered in such a mass-market publication are low simply because of the massive level of competition for scarce pages or airtime. Good Morning America‘s producers need to attract the maximum number of viewers and if it comes down to a decision between an interview with you or Brad Pitt, well, let’s just say that the bookies won’t be taking bets in your favor.

But these days there are lots of other ways to get exposure for your business, especially online where more and more people are turning to business blogs for information, news and advice.

John Jantsch from Duct Tape Marketing has put together a good article for American Express’s Open Forum called “5 Tips for Getting More Exposure from Bloggers, Tweeters and Fans.”

John shows that with a bit of effort, your odds are good of getting covered in a respected, well-read business blog. One of his best ideas involves using sites like Digg, Stumbleupon and delicious to try to find up-and-coming blogs that aren’t yet inundated with pitches.

When you do find these blogs, John warns against simply firing off a press release and hoping for the best. The Internet is all about interactivity, participation and relationship-building. A far better approach would be to become a regular reader of the blog, subscribe to its RSS feed. If a blogger has a Facebook page, join her fan group. If a blogger uses Twitter, start following him.

One of the best ways to show a blogger that you are an engaged reader is to make useful comments (not promotional fluff) and help stimulate conversation on her posts.

Finally, when you have established yourself as a credible and engaged reader, that’s the time to pounce and send along a brief pitch for a story, explaining why your idea would be a perfect fit for the blog and its readers.

Sure, such a strategy takes an investment of time and energy, but it could be worth it to establish yourself as a go-to source for a rising-star blogger. These days, the line is thinner than ever between traditional media and the blogosphere. Bloggers are invited to participate in White House news conferences and cover political campaigns. Blogs sometimes break major news stories that have offline papers scrambling to keep up. And since bloggers have an insatiable need for content, getting known as a valuable source of good story ideas could lead to extensive ongoing coverage for yourself and your business.

Also note that blog exposure can be especially valuable for companies that sell products or services direct to consumers via the Internet. A consumer reading a blog that mentions you or your company is just a few clicks away from making a purchase…

Have you had any luck getting exposure or sales through a blog? If so, what strategies did you employ to get noticed? Share your advice and help establish yourself as a respected source right here at Dollar Days Blog by leaving a comment below!

Merry Christmas!

On this holiday, perhaps it’s worth reflecting on the difference between being frugal and being a Scrooge.

A frugal person avoids frivolous and wasteful spending. A frugal person loves value.

A Scrooge lacks generosity. A Scrooge despises lighthearted fun.

But a frugal person knows that it is possible to have fun and be kind to others even without spending an arm and a leg.

There’s nothing written in stone that says every night out on the town has to involve champagne and caviar. In fact, it’s often easier to relax and have fun by using a little imagination and creativity to plan a less costly date or meetup with friends.

For inspiration, just check out Rose Jensen’s list of “10 Tips On Enjoying a Night Out for Less” over at the Free From Broke blog. Rose’s cost-saving suggestions include sharing entrées at restaurants, exploring the great outdoors, asking friends or family to babysit, and even seeking out online coupons at sites like Restaurant.com.

Get more inspiration from Financial Learn‘s post “15 Fun Cheap Date Ideas” including coffee dates, trips to the beach, rollerblading or kayaking, even baking a cake!

That’s not to say that you should never pick up a special treat for your sweetheart at the bakery, but there’s something special about sharing the experience of making a cake, baking it and enjoying it together. Truly a case of having your cake and then eating it too.

Need even more ideas for affordable activities? Laura Trahan has several suggestions, but I particularly liked her idea to volunteer together. Whether you help build a house, clean up a park, participate in a fundraiser or deliver meals to homebound seniors, volunteering can be a fun and rewarding activity. Maybe you could take turns with your loved one picking the volunteer activity. You’ll learn about some of the causes that matter most to your spouse or partner while having a chance to share some of your own enthusiasms.

Finally, Primer Magazine offers a fun article on 5 Affordable Date Night Ideas That Won’t Make You Look Cheap, including attending an opening at an art gallery or buying tickets to show your support for an up-and-coming local band.

If you do decide to stay in, Primer Magazine suggests you can still make the evening social by inviting over some friends and hosting an off-the-wall tasting event. Instead of a snooty wine-tasting, for instance, Primer gives the example of a sodas-of-the-world tasting, but you can adapt the concept to fit your own tastes. How about an ice cream tasting evening? Now that sounds sweet.

What are some of your favorite ways to have fun with friends, spouse, partner or family without spending a mint? Share your suggestions in the Comments section below!

Dollar Days Blog is pleased to present the business expertise of Ray Silverstein, author of The Best Secrets of Great Small Businesses. Silverstein has also written a new book called The Small Business Survival Guide: How to Survive (and Thrive) During Tough Times. 

Ray Silverstein, author, founder of PRO (President's Resource Organization)

Silverstein also founded PRO: President’s Resource Organization, a network of peer advisory boards for entrepreneurs. As the founder of PRO, Silverstein has facilitated more than 1,200 “board meetings” over the last 16 years.

Dollar Days Blog (DDB) – Please provide a short bio and description of PRO.

Ray Silverstein – I created PRO in 1993 based on my success participating in peer advisory boards for larger companies. I wanted to help companies in the critical transition stage of doing to managing.

PRO provides the venue for small business executives to obtain the experience, insight, imagination and critique of experienced small business leaders.  A monthly meeting with an experienced business facilitator and business leaders concentrates on issues of concern to the attendees in running a business on a daily basis.  Emphasis is placed on working on the business and not only in the business.  The discussion is candid and a camaraderie is created between the participants to help each other.  Survival and success are critical items of interest to peer advisory board members.

DDB – What are some of the key messages in your new book “The Small Business Survival Guide?”

Silverstein - Cash is King.  If a company is in a survival mode the outlook is very short term.  No survival, no long term.  Survival requires the business owner to take action they ordinarily do not want to take, but must if they want to stay in business.  This may mean cut back of personnel, and only the best should be kept.

Management should have a complete understanding of break-even and the expenses that are necessary at break-even.  This means an understanding of the different type of expenses involved in operating the business.

Remember that tough economic times are also opportunities.  If a company is not in a survival mode this is a great time to improve personnel, market position and take advantage of situations.

DDB – How can profit and loss statements mislead you about the financial health of your organization and how can you protect yourself by projecting cash flow needs?

Silverstein – Again, the important point to remember is that cash is king. A company can make a profit and have cash go south due to increases in inventory, fixed assets, and accounts receivable.  Not being able to pay vendors, financial institutions, or employees due to lack of money will put you out of business.

Financial institutions like positive cash flow and collateral.  If you are in a service business, there is usually a lack of salable fixed assets.  Therefore, no collateral to support loans.  Therefore, only the cash flow of the business will support its ongoing activity.

DDB – You’ve suggested companies can write a ‘love poem’ to their customers to get to the front of the receivables line on collections. Are you being serious?

Silverstein – The goal is to create a relationship and differentiate yourself from others, with the accounts payable people.  Everyone gets tired of being badgered for payment and may look with favor to someone who takes a different tack.  This method has worked and was suggested by a PRO member. But of course a company can always take the “hard” line.

DDB – What is the best way to tell your banker if your business is in trouble – while still preserving a good business relationship?

Silverstein – A banking relationship is built on trust.  You are better off being upfront and preserving the relationship.  Bankers are more apt to work with those they trust.

But just saying you are having trouble is not enough.  You must also propose an action plan that will resolve the situation.  The plan must not be vague, but as objective objective and quantitative as possible.  You should also try to have measurable goals you will achieve, even if it is still a loss.  The bank will want to know when you expect to have positive cash flow.

DDB – What are some of the most exciting opportunities that the recession and general economic turmoil offers for small business owners?

Silverstein – The biggest asset a business has are its people.  There are a lot of great people who are looking for work.  Now is a time to upgrade your people.  Companies that have the cash and fortitude are in a great position to enhance market share.  In tough times, most companies cut back on marketing, but studies show that the companies that market now will grow faster after the economy turns around.

Times like these make businesses examine what they are doing and eliminate bad habits.  This is a great opportunity to look at what your business is and more importantly, what your business should be. Then create the strategies to get where you need to be.

Does any of Silverstein’s advice ring true based on your own business experiences? Share your thoughts and contribute to the discussion in the Comments section below!

At many restaurants, just ordering a beer or a fountain soda can set you back $5 (especially once you figure tax and tip into the equation).

So it sounds downright ludicrous to suggest that you could whip up a nutritious and delicious family dinner for less than a Lincoln.

Still, that’s exactly what Erin Chase, a.k.a. The $5 Dinner Mom, does over at her blog 5dollardinners.com. Pretty much every day – sometimes several times per day – Erin posts recipes, shopping trip reports, coupon alerts and other valuable information to help her readers put together tasty meals without breaking the bank.

For example, check out this recipe for Caesar Chicken Pasta Salad that combines protein, pasta and veggies for the whole family, with leftovers for the next day’s lunch, all for $4.55.

(Erin breaks out the cost of almost each ingredient – counting 3 cents for 1 tablespoon of olive oil. The only ingredient costs she doesn’t tabulate are for spices like salt and pepper, plus items she grows herself, like the tomatoes from her garden.)

Some of the other $5 dinner recipes that struck us as being particularly inspiring?

• Honey roasted acorn squash with brown rice

• Homemade macaroni and cheese

• Even shrimp scampi!

Admittedly, Erin is only able to bring some recipes (such as the shrimp scampi) in under budget by relying on sales, but there’s something to be said for being a savvy sale shopper at the grocery store.

Erin also seems to be a big fan of farmers markets and offers tips on the advantages of buying in bulk. For instance, she recounts getting a 5 lb. jar of honey from her local market for just $20. In another instance, she buys 2 zucchinis from the farm stand for a grand total of 18 cents!

And if you’re feeling nervous about trying out a new recipe, have no fear! Erin enhances her blog with numerous photos that show the beauty and fun of food preparation. Just check out these gorgeous photos that show the creative process behind a Grilled Eggplant Panini from start to finish.

And in case you think these meals are only fit for a sparrow, think again. On her FAQ page, Erin notes that she uses these recipes to feed her family of four, including two boys ages 4 and 2. It’s true that Erin admits she lives in the Midwest where prices tend to be lower than on the coasts, but even if you’re in a big pricey metropolis, you should still be able to put together similar recipes for just a few dollars more – certainly much less than you’d pay at a restaurant or take-out counter.

If you can’t get enough of Erin’s recipes online, keep an eye out for her first recipe book, due to appear in January 2010 from St. Martin’s Press.

Would you get a thrill out of cooking $5 dinners for your family – or would such a low threshold seem too restrictive? What are some of your favorite inexpensive recipes to cook? Share your thoughts in our Comments section below!