Tag: saving

full-time employment is uncertain, and links

One of the things I’ve learned over the years is that most people want to hold on to their own idea of reality as long as they can. If you believe in a particular religion, or you have particular political beliefs, or dietary beliefs, etc. - you cling to it as a matter of fact rather than opinion. Even in the face of reason or fact, most people will choose belief over reality. It’s a sad phenomenon, for the most part, although it’s comforting in the short run. You want to think that what you believe is true, regardless of the facts opposing those beliefs.

I see this in my work environment all the time. It’s a tired story, but for the millionth time I’ve been asked how I can stand to be a consultant despite “all the uncertainty.” I had to hold my breath and then point out that I’ve outlasted 50% of the employees in the department I’m in. Employees are uncertain. Full-time employment is rapidly becoming a burden to companies - short-term expert consultants are far more valuable and cost-effective than full-timers. I’m not saying that’s a good thing - but it is what it is. I’m just amazed, again and again, that I have to explain to employees that my job as a contract consultant is just as secure, if not more secure, than theirs is.

A few links from around the web - including congratulations on this one, Blogging for U.S. News & World Report; frequent commenter Syd has a cool new gig going at a “real” media publication - go check it out!

draft, drift and dreft - and links

I had a sudden inspiration on that title and realized that these words summoned up my past few days in a nutshell. The draft - the NFL draft consumed a good piece of my attention for a few days. My Jets didn’t need much current-year help, so I wasn’t too worried about their picks, but the draft was interesting overall. Here in Florida the Tebow watch was unbelievable. The drift? I managed to spend another week - in a long series of weeks - without really managing to do anything about the increasingly-likely-to-end consulting contract I’m working on. This blog provides minimal income, and my other business ventures are a victim (sob story) of the poor economy. I’d like to start a landscaping design business, but it’s hard to set aside the six-figure consulting gig. And Dreft? We were up to our ears in baby-and-kid tasks this weekend; cleaning up the house, running kid-related errands and simply serving the needs of The Kids. Exhausting. Very fun, at points, don’t get me wrong: I loved chasing down a soccer field with my 2-year old daughter who has shown an amazing ability to kick and direct an adult-sized soccer ball; she caught me with a crossover misdirection that had me dreaming of MLS contract money (hah). It’s all good, but it’s all tiring!

Some links. Someday I’ll start summarizing them again, but for now, just pick a couple at random and go there!

What is the Point of Saving, the World May End Tomorrow?

“Beware of little expenses. A small leak will sink a great ship.” -Benjamin Franklin

More than 200 years ago, this great statesman, inventor, and philosopher was well aware of the power of saving. He knew that without attending to spending and expenses, saving won’t happen.

Live for today or save for tomorrow?

I have a friend named Judy (not her real name) who truly lives for today because the future is unknown. She thinks, “I may get hit by a bus, or get struck with a disease so why should I focus on saving?” But Judy isn’t stupid, she realizes there is some fallacy in this thinking as there is also a chance that she may live to a ripe old age. So, Judy struggles with the question, “how do I reconcile these competing beliefs”? She confides, “I don’t want to live my life totally focused on the future, and miss out on the fun of today. But I also don’t want to live only in the present and have no money saved if I live a long life.” Consequently, Judy has some really great stuff, a huge house, lots of beautiful furniture, but not much in the bank.

Now that she has all this stuff, the initial newness and excitement of her purchases has worn off!

Judy is also beginning to worry about the future a bit. This is a real philosophical question and a difficult one at that. “Live in the Moment,” is a wonderful tactic for enjoying the present.

But, how does one reconcile the practicality of living in the moment with the fact that we all need some money for future emergencies and spending?

For Judy and the rest of us grappling with this issue, how do you figure out how much to save? I confess that I have been struggling with this issue for many many years. It was very confronting to me last year when my husband and I went to a Monte Carlo night fund raiser. In exchange for our entrance fee we were given $10,000 worth of pretend money to gamble with all night. I was so terrified of running out of money that I only made very small bets. Consequently, I didn’t win too much………… although I didn’t lose too much either, and at the end of the night I had preserved a lot of pretend money. But the down side of my conservatism was that I FELT VERY ANXIOUS AND WORRIED ABOUT RUNNING OUT OF MONEY pretend gambling chips.

So why am I telling you this? Because at one point my husband admonished me, “Why don’t you stop worrying about running out of chips and have some fun? You know this isn’t real money!” For me, that was a wake up call, I was sacrificing the enjoyment of pretend gambling due to a fear that I would run out of PLAY money. I certainly would have been better off and had more fun if I had made some bigger bets and let go of my fear of “running out of pretend money.” Obviously, I couldn’t spend the pretend money I had at the end of the event as it was WORTHLESS! I had gone to the extreme at a party and even at this fun event; I missed the opportunity to live in the moment.

In sum, there is a fine balance between overspending and spending an appropriate amount to allow for today and tomorrow.

Practical Application

Your personal challenge is to find the best balance between spending now and saving for the future. Start simple and try saving 10% of your income. You can’t go wrong with saving 10%! And if you find it’s too much or too little, you can always adjust in the future.

Do not despair if you can’t save 10%; save as much as you can now, even if it’s just 2% of your income! In fact, it’s better to save something NOW, no matter how small an amount rather than give up and save nothing.

If you want to get a bit more specific, there are lots of calculators to help figure out how much to save for certain situations; down payment on a home, retirement, college etc. My favorite site for savings calculators is here at bankrate.com.

Assume that the world will go on…….. and not end tomorrow. Of course, fun and enjoyment are important and you need cash for the present, but to have a satisfying life, keep some cash stored away for future expenses. Don’t stress out about being really technical and calculating!

Start a saving HABIT! The amount of money is less important than beginning the habit.

Action Steps:

  • Get a notebook and label it: “(your name) Personal Finance” and keep it by the computer. Use it to keep all of your personal finance goals, thoughts, activities, and plans.
  • Tomorrow visit your personnel office at work and your bank. Follow their instructions to set up an automatic payroll transfer from your paycheck to your savings account.
  • If you can’t transfer cash directly from your paycheck, then set up a regular automatic transfer from your checking to your savings account.

Today’s guest post was from Barbara Friedberg. Get more saving and goal setting motivation and information from her blog; a good post to get started on is “How to Get what you Want Out of Life and Have the Cash to Pay for it“.

a farmers’ market is just an outdoor mall sometimes, and links

I wrote this post Saturday noonish, after returning from a morning out at the farmers’ market. I’ve noticed that far too often the term “farmers’ market” is thrown around when the event is actually more of an arts-and-crafts fair. This one today certainly was. I only saw two booths actually selling produce. Most of the vendors were selling seashell earrings, craft breads, birdhouses made out of salvaged wood, and so on. It’s a lot of fun, and it’s enjoyable for the kids (lots of music, balloons and this weekend, Easter Eggs). But going to one of these so-called “farmers’ markets” is no more than a trip to a mall. It’s outdoors, and it’s more pleasant, handcrafted stuff than the plastic-and-polyester junk at a mall, but it’s still people trying to get you to drop money on junk you don’t need.

Links of the week:

Defense Beats Offense: I agree, for the most part, but to use a football analogy all the defense in the world isn’t going to help you when you’re losing. If you’re deeply in debt - I’m talking six figures - you may need to play some offense and increase your earnings, or you’ll spend a long time waiting for coupon clipping to save you. I’m not saying you shouldn’t, but if you start a side business and establish a new wealth stream, you’re going to pay it off faster than you can by pennypinching alone.

Seth’s Blog: First and never: I don’t link to Seth much - he doesn’t need MY help - but this was insightful, I thought.

Use Less Soap and Detergent in the Washing Machine: Referencing an article in the NY Times, this caused some habit changes in my household, too.

Know your limitations when you do it yourself: Definitely. It took me as long to put crown molding in one room in our old house in Jersey as it took a skilled craftsman to do the rest of the house.

Postpone College In Order to Pay For It With Cash?: Maybe not postpone, but if you have to take out more than $40,000 or so in today’s dollars, you would be better off either (a) going somewhere less expensive or (b) postponing college and working instead. Incurring more debt than your expected first year’s salary is, frankly, stupid.

6 Things You Need to Know Before Buying Your Next Car: I hate buying cars, to be honest - I dread the whole process. Part of my problem is that I seldom manage to pay attention to tips…

Four Hour Work Week by Tim Ferriss Reviewed: I’ve reviewed the Four-Hour Work Week too (see “the four(ty) hour workweek | brip blap“), and it’s a book worth reading. Whether you agree with it, or aspire to that lifestyle, is up to you. I aspire to it but I don’t work enough to achieve it.

Breaking Up is Hard to Do: Transitioning Well from One Job to Another | Million Dollar Journey

How to Make Extra Money with Your Brain: Your brain is, of course, the main instrument of wealth-building unless you’re a pro athlete, and even then I’d argue that the difference between a run-of-the-mill pro athlete and a star athlete is probably linked more to the brain than to pure physical prowess.

Should You Do a Roth Conversion?: I’ve been debating this, but my conspiracy theory brain always kicks in: I do not believe that in the 2040s, when I’d be withdrawing from a Roth, that they will still be tax-free. I think our brilliant leaders will find a way to penalize “rich people” who have bothered to save money in their “fancy tax shelters” and we’ll see means-based withdrawal taxes. You just wait and see. It’s coming, sooner or later, for ALL retirement savings. The middle class “rich” who relied on the honesty of the government (seldom see those four words in a row, do you?) will see that all of these promised benefits will be jettisoned to take care of a war with Canada or Myanmar or whoever’s playing Eastasia that year (we have always been at war with Eurasia, Winston). End rant.

Thoughts on Tipping Etiquette: Why Should I Tip?: Because it’s expected. Why should you hold open the door for able-bodied women, or speak quietly on your cell phone on the bus? Just cause.

Is Your Budget Making You Bitter?: I don’t budget, although I probably should, but I live a frugal enough lifestyle combined with making a fair amount of income. I try never to let myself regret things like a nice evening out. If you have the ability to enjoy a pleasant evening out, enjoy it at least once in a while. It’s like dieting - once or twice a year you can have a piece of chocolate cake. It’s not like having a heroin addiction where you need to swear off cake (or eating out) forever.

Highest Paying College Degrees: I’m always surprised that engineering hangs in there at the top in various forms. Having spent the last six years on Wall Street and seeing the wild salaries there, I’d assume finance would be at the top, but I guess for every Gordon Gecko there are 2,000 Johnny Banktellers who make $30,000 a year. I’ll tell you one thing: I wouldn’t bet against an accounting degree for a money maker, though.

photo by NatalieMaynor

linklings, plutus award nomination edition

If you had to rank the biggest rewards from blogging, #2 would definitely be the recognition of your peers (#1 is communicating directly with readers - I love getting emails, even if I’m Mr. Procrastination in answering them). But in the #2 category I was surprised to hear from Flexo over at Consumerism Commentary that I’m one of the nominees for “Best Personal Finance Blog for Careers.”

I’m doubly surprised considering the quality of the other nominees: Bargaineering,Brazen Careerist, The Digerati Life and Squawkfox. I’ve appeared with Jim (and Lynnae of being frugal - another nominee for “best frugality blog”) on Marketplace Money. SVB of The Digerati Life is a blogging friend and a fellow member of The Money Writers network, who has a far better employee-to-problogger/webguru story than I do. Kerry from Squawkfox has a fantastic blog that, like mine, goes all over the place (and has written some great pieces on resumes).

And if you’ve read this blog for any length of time you know how much I like Penelope Trunk‘s writing; she’s amazing. I also owe her a lot; she and Lazy Man were the first two big-time bloggers to get in touch with me, link to brip blap and - most importantly - encourage me. Without the two of them I am pretty sure I wouldn’t be doing this today.

So given all that I’m actually not even going to ask you to vote for me, though feel free to go here and vote. With all sincerity I can say that it’s just nice to be nominated. I’m very grateful.

And if you’re interested, #3 is making some money. #4 is the simple enjoyment of creating something outside yourself. And here are my Marketplace Money appearances:

Off to the links:

  • Writing a Financial Mission Statement: I have a mission statement for this blog - if you were around for the first 3-4 months of brip blap you saw it. I haven’t had it up in a while, but I may dust it off soon and repackage it as my financial mission statement. To summarize it? You need to have just enough to stop worrying. More is too much, less is not enough.
  • Ten Things Millionaires Won’t Tell You: The only item I take exception to: “I shop at Wal-Mart.” I’m having a bit of Saul-on-the-road-to-Damascus thinking about Wal-Mart these days. I have justified buying things there in the name of saving money, but Wal-Mart’s an economic menace: they are on the wrong side of the debate on unions, health care, buying American, supporting local communities and even - in the long term - frugality. Buy products from there, and see how long those crap products made by non-union child labor in Malaysia last you. I’m still going to be a millionaire, but I’m not going to do it shopping at Wal-Mart.
  • Square Foot Gardening: How To Grow Vegetables In Your Own Backyard: Awesome. If you didn’t see it the first time around, check it out. I spent the last weekend prepping the herbs for the garden. Next weekend? Citrus trees. The next? Veggies. Did I mention it’s in the 70s here in Florida?
  • Credit Card and Debit Cards No Longer Have Automatic Overdraft and Over Limit Protection: That’s fine with me. Keep track of your spending.
  • Selling Wine – Almost Like Blogging: I like the concept of limited networks: networks with an optimal size that would suffer from growing. I’m in the network with Lazy Man, of course, so I know what he’s talking about. I was lucky to make it in on one of the last couple of rounds of expansion of the neighborhood, and I’ve enjoyed being in the network immensely - but I’d be slow to add new members, too, considering how well we interact right now.
  • 10 Ways to Save Money on a New Car: I know it’s not popular to buy new, but I’m very much in the “buy-new-and-drive-for-10-years” category of car buyers; I’m simply not comfortable buying used, and I’ve had very good luck buying new so far. Please knock on wood for me.
  • Graduate School Costs & Options: Side note: graduate school is a more cost-effective career investment than undergraduate, but due to the fact that you can’t get the one without the other it’s actually less effective as an investment. Discuss!
  • New Credit Card Laws to Protect Consumers Begin: By and large, good news.
  • Free Online Tax Filing, Tax Preparation Services & More: If the kind souls at TurboTax would accept me into their affiliate program I might promote their software - that I’ve used for about six years - but they don’t, so check out these alternatives 🙂
  • Those Who Don’t A-S-K Don’t G-E-T: Absolutely true.
  • Dear President Obama: We Need Healthcare Reform Right Now.: I restrain myself - again - from political shrieking, but yes, ram it through and be done with it. American health care is broken. I’m not voting for anyone who doesn’t at least TRY to do something.
  • Being Frugal is Foolish: I know Jim’s doing a Devil’s Advocate post, but to a certain extent I agree.
  • Online Tools for Mindful Consumerism: Check out GoodGuide - I was quite surprised about some of my favorite “good” products.
  • Independent Contractor vs. Employee: What’s the Difference?: It’s a distinction that most people don’t get, but if you have someone who works IN your household, they are an employee, not a contractor. How did that come up? Read the next article…
  • How I Made My Peace with Hiring a Housekeeper: I agree. I hate cleaning, and it’s one of the activities I’m willing to outsource to simplify and improve my life - much like I enjoy outsourcing the maintenance and upkeep of my cars.
  • On The Brink by Henry M. Paulson Jr.: I had a few choice comments about Mr. Paulson. I am, to put it mildly, no fan.

photo by hiperia3d

all about rewards credit cards (guest post)

Are rewards cards really that great? Should you shell out an annual fee to carry one in your wallet? Will they give your credit score super powers? Here’s an overview of all things rewards-card related, so you can decide their true worth for yourself.

Rewards cards rack up perks, but…

Okay, your rewards card may earn you enough miles to get to Hawaii once a year, but what are you really paying for that trip? Do you make credit card purchases simply for the rewards points? If so, those points are costing you debt you wouldn’t normally take on. Not very smart. But, if you were going to buy something anyway, and it happens to earn you some rewards points on your credit card, great!

The ratio of dollar spent to reward point earned will always tip in the credit card company’s favor. A good rule of thumb is to only charge what you would have charged otherwise, rewards or no.

Beware annual fees

Another way rewards cards can cost you is if the credit card company charges an annual fee on the account. I personally loathe credit cards that come with annual fees because the rewards are not usually worth it. Some people view elite rewards cards that carry hefty annual fees as a status symbol. I say let them have their prestige, and I’ll hold onto my cash, thank you very much. There are plenty of rewards cards out there that don’t charge annual fees.

If you don’t qualify…

If you can’t qualify for a rewards card without annual fees, focus on improving your credit score and stick to a debit or a secured card in the meantime.

Note that some people with lower credit scores may be able to obtain a rewards card, but they may have to settle for a higher interest rate. You’ll have to decide if the rewards are worth this higher interest rate (in most cases, the answer should be no). However, if you’re one of those responsible people who pay off the entire balance each month, then the interest rate is a non-issue.

Use a rewards card to boost your credit score

Like other credit cards, rewards cards can either bolster or destroy your credit score. Using them responsibly will earn you credit score points plus land you the cool perks. Here are some tips for getting the most out of your rewards card:

  1. Read the fine print. Know the card’s APR, annual fee (if any), and the length of the card’s grace period before applying so you don’t get into trouble later on.
  2. Don’t apply for multiple credit cards at once. Only apply for a new rewards cards if you really need it or if you are unsatisfied with your current cards. Multiple credit applications in a short time period can hurt your score.
  3. Don’t charge stuff just to get the rewards points. This will land you in more debt than you can pay back.
  4. Don’t pay an annual fee for a rewards card. They’re not worth it, and don’t have any extra benefit to your credit score.
  5. Don’t max out your card. A high utilization rate will hurt your credit score.
  6. Pay your bill on time each month. This is the single most important thing you can do with any credit card to help your score.

Choose the right card for you

When you’re ready to apply for a rewards card, make sure you choose one that has benefits you’ll actually use. Here are the main rewards card options:

Cash back credit cards: Some of these offer annual cash rebates that equal some percentage of the previous year’s purchases. Others not only offer cash back, but airline miles, gas rewards, and other perks.

Reward points credit cards: These are similar to cash back cards except you’ll receive “points” instead of dollars. Some cards offer points on every purchase you make; the more you spend, the more you earn. Gas companies and retailers often offer rewards points cards.

Airline credit cards: These are only useful if you do a lot of traveling. Airline cards are not good for those who carry a balance from month to month, as the interest rates tend to be high. These cards offer a form of points or air miles that add up to free flights for card holders. Beware of blackout dates and other restrictions when you go to redeem your miles, though.

What’s in it for the creditor?

As an aside, you may be wondering how credit card companies afford to give you these perks? If there is no annual fee for the card, and you’re one of those customers who pays down their balance in full each month, isn’t the credit card company losing money on you? No, actually.

Credit card companies make money several different ways; interest and annual fees are only two of their revenue streams. Credit card companies also charge a percentage of each transaction to the merchant selling you the service or product. So even if you pay off your balance each month, your creditor is still getting money from these merchant transaction fees.

A final note

Before you get too excited about a rewards card, keep in mind that you might see more “rewards” by not using a credit card at all. Studies have shown that using cash instead of credit is likely to result in at least a 12% savings. For whatever reason, we are more hesitant to part with our cash than to whip out a credit card. So while a rewards card that offers 1% cash back has its place for online purchasing and to help us build a good credit history, using old-fashioned paper money is probably better for your bottom line.

Carrie Davis is a personal finance blogger at SpendOnLife.com, a site dedicated to giving readers true and accurate information about credit, debt, and identity theft. She is FCRA-certified and has a passion for educating others on how to achieve financial independence. Follow Carrie through the SpendOnLife RSS feed or on Twitter @SpendOnLife.

linklings, who dat edition

The ominous signs of frozen demons emerging from a frosty Hell haven’t occurred yet, although the Saints DID win the Super Bowl. Who’s next? The Browns? Are the Cubs gearing up for a run at the World Series?

Do Kids Inherit Frugality?: Yes, they do. I inherited my ideas about money and most importantly my abhorrence for debt from my parents and grandparents. I didn’t learn it through sad experience, like so many personal finance bloggers. I never had debt, never touched it, never thought about it. That wasn’t through my own experience, but through the lessons I learned from the elders of clan Blap.

Underachieve Your Way to Retirement: An interesting thought that compliments what I wrote about the salt mine. The highest achievers may not be the first to retire, in my opinion, because they are high achievers who don’t WANT to let off the accelerator.

Credit Terrorist or Twisted Genius?: I hate anyone who doesn’t pay unsecured debt. If you run up credit card debt, pay it. I don’t have as much of a problem with secured debt; if your house is underwater, give up the debt and return the house to its “owner”, the bank. Technically, they owned it all along and you’re just returning their asset to them. Credit card debt’s different. Unless you plan to give Megabank back that dinner at Outback and the Wii, you ought to pay them, or you are a bad person. Period.

linklings, my ache-y break-y tooth edition

Nothing like trying to prepare a post while dealing with the dull, thudding ache of repaired teeth. I had to have a few (three) fillings removed and replaced today (plus some crown repairs and a small-but-critical preventative procedure that was too technical and boring to explain here). Other than a few fillings - almost all from my distant past - and a lone root canal four years ago, I’ve had healthy teeth. But I guess as you drift on into middle age, problems are inevitable. The fillings, for example, have nothing to do with how I’ve cared for my teeth - simply the product of time. So the pros and cons of filling replacement:

Pros:

  • My teeth look MUCH better now. With the new white fillings replaced the old uranium or whatever fillings, my teeth look good as new.
  • Insurance covered about 70% of the cost.
  • The dentist and his assistant did a great job, and other than the discomfort of having to hold my jaws open for two hours I didn’t feel much.

Cons:

  • Anesthetic wears off, and as I write this I’ve got a dull throb going ka-chuk, ka-chuk right about at the gum line - on both sides of my jaw. Ugh.
  • What the insurance didn’t cover was over $400. Nice to pay as much as I do for dental insurance and still have to kick in $400.
  • The fillings were far enough back in my head that nobody other than me will notice, most likely.

Off to the links:

Democracy, Incorporated: I have steered away from politics on this blog for a while - being, once again, disillusioned and nauseous about the whole thing - and things are just likely to get worse.
Why Do You Want To Be Rich?: Easy question for me to answer - simply to have options. It would be nice not to sweat the cost of health insurance, for example.
Saving for College – An Exercise in Depression: Exactly hits on a point I’ve made before. You will NOT be able to save enough to fund an expensive private college education for your kids. Your time and effort is better spent on preparing your own retirement, so you won’t be a burden to your children. If your kids want to go to a private school in 2026, it’s going to cost more than you could ever possibly save. Be realistic, people.
No More Mondays And Why Everyday Is Friday Now: I like Dan Miller a lot, too - I enjoy his podcast a lot and I’ve started (slowly) getting into 48days.net, the social networking site inspired by his works. More on that in a future post.

how to choose a retirement strategy - or not

Are you the type of person who gets excited about new ventures? Do you like a challenge? Many people have an ‘ah-ha’ moment when they decide to get out of debt, start living a frugal lifestyle and aim towards financial freedom instead of pursuing the accumulation of stuff. One more pitfall exists early on in this process: over-thinking choices like the Roth or the traditional IRA.

There are differences, of course, and enough has been written about them that I’ll summarize it in one sentence: the traditional IRA is not taxed, but is taxed when you withdraw it; the Roth IRA is taxed now, but not when you withdraw it; both grow tax free. There are many subtle differences beyond that simplistic description. Income limits may alter the favorability of one over the other. The point most people miss, though, is that your choice doesn’t matter that much until you have a lot more money than most of us have.

You can find similar situations all over the place. Should I invest with HSBC or ING? What’s the best brokerage? Should I have 3, 6, or 12 months of emergency funds? What your decision is seldom matters as much as when you make it. I recently took the advice of a well-known semi-personal-finance blogger and opened up an interest-bearing checking account. I resolved to switch all of our checking from a large bailout bank to this interest-bearing checking account, chasing 1.5% interest on our cash. What happened? After 6 months of inconvenience, confusion and frustration I shut down the interest-bearing account. The effort to move the money, change all of the direct deposits, automatic payments and so on simply wasn’t worth it compared with a return of less than $75 per year. We have kept a low balance in our checking account for years, choosing to move excess cash to an interest-bearing online savings account. The 1.5% - which sounded so much better than 0% - simply wasn’t worth it.

I worried that I was leaving money on the table, and consequently took time away from other, more important matters to chase $75. Spending time worrying about your retirement strategy can be almost as ridiculous. You’ll see a lot of advertisements for brokerages advertising the lowest fees on trades, for example. If you’re just starting out, find a low-fee brokerage and go with it. But if you opened one up years ago (as I did) that charges $8.99 per trade, don’t bother to switch to a lower-cost brokerage. As long as you aren’t a day-trader, you’ll be fine.

Much like the moment in The Matrix when Neo suddenly becomes aware of the ‘real world,’ many people have a moment of ‘financial awakening‘ that suddenly makes the world look like a little green-neon-streaming series of percentages and dollars and cents. The important thing is to learn to see beyond the numbers and realize that chasing more money is not, and never has been, the goal. What we are really chasing is time. Anyone can use time to accumulate money; the real trick is using your money to buy back time. Agonizing over strategy rather than taking the offensive is a good way to lose the game.

photo by IcE MaN Photography

linklings, payoffs and hedonic treadmills, oh my! edition

Ever since I first read about it I’ve been fascinated by the hedonic treadmill. In short, it’s the idea that people generally increase their happiness level when they achieve a goal, buy something, or otherwise improve their lives, but that the increase in happiness soon “resets” and requires that person to achieve yet another goal, buy something better, etc. You buy a BMW and briefly you’re happy, but soon you wonder why YOU can’t own a Mercedes.

But I’ve tried to use my self-knowledge of the hedonic treadmill over the past few years to analyze whether some action or purchase is going to permanently increase my state of happiness or just give me a junkie’s quick boost. For the past couple of years, on this principle, we’ve only owned two small TVs - one old CRT 21″ and a 19″ LCD, which was our main TV, as it was the only one hooked up to (basic) cable.

So Bubelah and I finally decided to get a new 40″ TV - not huge by today’s standards, but big enough. It was amazing for a few days - I could finally see the screen from across the room. Football was vastly more fun to watch.

Where am I headed with this? I realized last night I already barely notice the big screen. Not that I’m UNhappy with it - I simply noticed that the “happiness burst” I got when we purchased it is fading noticeably. Worth remembering…

Plus, the payoff: moving twice in a year (from Jersey to Florida, then from a rental to a home we own) has been quite hard, and we still are unpacking and organizing. It’s been tougher being further away from family. But yesterday it was in the low 70s and sunny and while the majority of the nation was shivering I was walking in shirtsleeves in the sunshine. I’m quite dependent on the sun - I probably have seasonal affective disorder or something - so that makes me happy. At least for now.

Links:

why I moved my money to a credit union: I’ve heard about this movement over the past few days, and while I support it wholeheartedly and intend to do it in the future, I’m not doing it now. We have so many automatic payments and linked checks and direct deposits that the idea of moving from MegaBank to a smaller bank makes me exhausted before I even do it. But I am setting up business checking, and maybe I’ll go that route for the business account.

Score Free Stuff on Your Birthday: Clever little list!

How to Save Money on Heating this Winter: Just including this for all you cold weather folks!

AT&T Lowers Monthly Cost For Unlimited Talk And Data.: I have to believe someday we’ll just pay a flat rate for phone service. I’d just like to see free incoming calls like the entire planet outside of America gets…

Saving With Purpose: Short Term Goals: $50,000 saved sounds like a medium-term goal for most people, but I agree - saving for retirement, college and so on is great but nothing lets you sleep at night like a big go-to-hell fund.

Other links:

photo by arturodonate

the two-income myth

My wife is an intelligent woman who decided to quit her professional career as a management-tracked analyst with a huge investment bank in order to be a stay-at-home parent when our son arrived, and to remain home even longer when our daughter arrived. I would have willingly stayed home in her place but being older and further along in my career I was making twice as much as she so it would not have made sense. She has now been at home for more than four years and I have noticed that there is a subtle campaign against her choice, and it makes me angry. Despite all of the talk about mothers making the ‘tough choice’ to go back to work, I think the tough choice is staying home.

First of all, before I’m jumped upon…I know there are single mothers and poorer families who have no choice. I would maintain this is a small proportion of the population, though. Single mothers definitely have no choice as the primary breadwinner, of course. Some families may have special circumstances that require both parents to work - health care costs spring to mind. I wonder, though, how many times the choice to work is the choice to support owning a second television, or keeping the premium movie channels, owning the house with the extra two rooms, or leasing a nice car - versus staying home with a child.

My family took a big hit to our finances when my wife quit work. We went from two people living in a two-bedroom apartment on two salaries to three people living in a three-bedroom house on one salary. We did it by making huge changes in our spending, and after a couple of years those changes have - surprise - become fairly routine. We understood that we could not afford as many luxury vacations or idle purchases of gadgets and jewelry and so on. The reward was that our children have been able to stay at home with their mother and be in a safe, healthy, fun environment.

This setup has not come without cost. My wife misses adult companionship and the sense of validation that you get from a professional position. We miss having the second salary, which for a while was all being plowed into savings and made for a relatively large down payment on our home. And of course my wife worries about her future job prospects once both of the kids are in school and don’t need a stay-at-home mom. But the worst thing in the past were the assaults on her decision by other women.

Bubelah relayed conversations to me from her friends and ex-colleagues and so on where the subject was inevitably “when are you going to get back to work?” Aside from the obvious insult that caring for a child is not “work”, this had a very negative effect on her state of mind. She usually laughed it off, but the simple fact is that she doesn’t really interact on a daily basis with anyone but me who supports her decision to make child care a full-time job - although since we’ve moved to Florida the support has been a bit warmer. We never felt that the trade-off of getting another salary was worth having our kids in day-care 10 hours a day before they were two years old, but that’s what we felt was expected, sometimes.

Do we need the money? We may not be able to spend freely like our friends do (particularly since we also don’t take on any debt) but we really don’t NEED any more money to meet our current expenses. I understand that sometimes both parents want to work. That is fine, but just be honest about that choice. Many people claim to be “forced” to work two jobs to make ends meet, but is it really “making ends meet” when you drive a new car and have premium movie channels and take a vacation to Aruba every year?

you know, you might be a personal finance redneck if…

With the holidays almost on us, I decided rather than posting a serious piece, I’d just post a little lighthearted thing that I wrote a while back. It’s all in good fun - I grew up in a small town in Mississippi, and now I’m back in a small town in Florida, so don’t think I’m being prejudiced! This piece obviously owes a huge nod to the original idea by Jeff Foxworthy.

you might be a redneck cat if...

(photo credit: The Duke of URL)

You might be a personal finance redneck if…

…you don’t have to pay alimony because the state you live in never recognized your marriage to your sister in the first place.
…the only stock you care about is the racing car kind.
…somebody asks you if you’d like to invest in a CD and you tell them “no, I’d rather invest in a DVD.”
…when people ask you when you want to retire, you say “right after I get a flat one.”
…you reckon that diversifying is going to be tough to do because you never did any versifying in the first place.
…keeping up with the Joneses means moving your trailer 50 feet to the right.
…you think Warren Buffet is a place where rabbits have an all-you-can-eat bar.
…you pulled your kids out of school after you heard about ‘No Child Left Behind’ because you didn’t want a bunch of one-right-buttock-only children to support.
…you don’t have to worry about the Latte factor, you have to worry about the Kools-and-Schlitz Factor.
…everyone around you had a Poor Dad.
…only use the phrase debt snowball in the middle of a snowball fight: “Watch out fer debt snowball!”
…got all happy when you heard someone talking about an IRA, because you figured it’s time for the NRA to go International.
…you ask a worker at the Wal Mart where you can find the new Formula 401 … you know, the 401K?
…your financial adviser and your bartender are the same person.
…your idea of saving for the future is buying Coke by the case.
…you don’t worry about your retirement because Ed McMahon’s assured you that you might already be a winner.

…and finally…
…you actually know in detail why a subprime mortgage isn’t such a great deal after all.

Hope everyone enjoys the holidays (this is a rehashing of an old post of mine - between moving and the general chaos around the holidays I’m not writing much).

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