Delayed Gratification

I work daily to raise my kids to be more financially responsible than I have been.  One of the most difficult pieces has been to explain the benefits of delayed gratification to my children. It’s hard enough, as an adult, to take delayed gratification to heart.  For a child?   It seems to be almost impossible.

My son wants an XBox 360 Elite.   Good for him.  He wants to renegotiate the terms of his allowance to get it faster.  Currently, every other time he gets an allowance paid out, it goes into his bank account, to be mostly untouched.  The other times he can do as he pleases with his money.   We are enforcing a 50% long term savings plan. Now, with a medium-term goal in mind, he wants to keep all of his money, and only put gift money into the bank account.

Should we let him tap his bank account for a shiny new bauble?  It’s been building for a while, so it’s delayed, right?   I don’t think that would accomplish much. Like any other 10-year-old, his interests change often.

Should we let him change the terms of our agreement, speeding a medium-term goal at the expense of his long-term savings?  My wife and I haven’t had a chance to discuss this, but my initial reaction is not to allow it.   His savings has the potential to turn into a decent car in a few years, if he wants.  That would be a car he knows he earned.

Last week, when we were at the store, he asked if he could borrow some money to buy a game.   I don’t expect him to carry his money around everywhere, so I would have allowed it, if he would have had the money at home.   He didn’t.   His plan was to pay me what he did have as soon as we got home, then work his butt off for a few days to earn enough extra to pay it back.   I won’t be a credit agency for my kids, so I said no.  He was disappointed, but, by the time he had earned the money, he no longer wanted the game.   I consider that a win, but I don’t know that he learned any lesson other than “Dad’s a jerk.”

Someday, when his life launch is smooth due to a lack of debt-dependence, he’ll look back on these lessons and smile.

I hope.

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Is Your Budget Doing More Harm Than Good?

Do you stress over your money?

Is your spouse under the impression that you are constantly fighting over money?

Are you constantly fighting over money?

Have you completely eliminated your quality of life?

Do you spend hours each week analyzing where your money has gone?

A total budget can have a negative effect on the other parts of your life. If your spouse isn’t 100% on board, maybe he/she needs some “blow money” that doesn’t need to be tracked.  If you aren’t spending enough time with your children because you are tracking expenses and adjusting your budget every day, you need to automate something, or at least loosen your standards.  Maybe tracking every penny isn’t the right method of budgeting for you.

Don’t let the perfect budget destroy the rest of your life. If money is still a fight, you’re going to need to compromise on something, now, or you’ll end up compromising with the help of a divorce attorney.

Don’t forget, you are living now, not in the future.   Plan for the future, but live in the present.  There is a balance there, somewhere. Find it, or you and your loved ones won’t be happy.

Update:  This post has been included in the Money Hacks Carnival.

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Budget Lesson, Part 6

It’s been a month since I’ve written a post for the budget series, so I’ll be continuing that today.  See these posts for the history of this series.

This time, I’ll be reviewing my non-monthly bills.  These are the bills that have to be paid, but aren’t due on a monthly basis.  Some are annual, some are quarterly.

  • School Lunch – This could be cut by sending a bag lunch.   We pay about $1.25 per day for school lunch.   At that price, I don’t think I can beat the nutrition, let alone the convenience of the meal.  We pay this whenever the account gets below $10.
  • Property Taxes – We pay this semi-annually.  This bill goes up every year due to the ****** ***-******* ******-******* who don’t care about their constituents making ends meet.  ******* ***** ******* *******.   Huh.  Who knew WordPress came with a censor?  I could move, but I’d have to get out of commuting distance to get this down much.
  • Life insurance – I’ve got two quarterly life insurance policies.   I can’t get these much cheaper, but I should be able to next year.  The questions asked if I’ve smoked in the last three years, and that will be up on Halloween.
  • AAA   – It’s only been recently that I’ve owned vehicles reliable enough to avoid paying my AAA dues for me.   I could cancel this, but for $80 per year, the hotel discounts make it a wash.  One vacation per year comes close to making the difference.
  • Vehicle Registration – The only way to cut this would be to get rid of a vehicle.  I don’t think that’s possible for us.  We work in opposite directions and, for at least one quarter per year, spend too much time chasing around for activities.
  • Daycare – We’ve been using our current daycare provider since my oldest(10) was one.   When my youngest turns 2 in June, our costs will go down.   Without one of us quitting our job, this bill can only go down as the kids grow up.
  • City Bill – This bill combines our garbage, water, and sewer.   With three adults, three kids, and 5 animals in the house, reducing our garbage level is difficult.  We do try to manage our water usage in the summer, to keep that down.
  • Web host – I have a few domain names and a hosting package to handle my side hustles and miscellaneous projects.    This is a deductible expense.  I have been allowing my domain names to expire if the project isn’t being actively pursued.
  • Memberships – I have annual dues to two organizations.  I’m making payments on lifetime memberships, so these will be going away in about 18 months.

Reviewing this list, there doesn’t seem to be too much I can cut and accomplish any meaningful savings.  Am I missing something?

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Budgeting Bulimia

As the President is so quick to point out, ten years ago, there was a large budget surplus.  Naturally, the government went into a massive cycle of lifestyle expansion.   That expansion, combined with lower tax revenue and a recession has brought us from a $230 billion surplus to a $1.4 trillion deficit.  That’s a bit above the trivial level.  A definite binge.

In Minnesota, there was a $2 billion surplus just a few years ago, which was obliterated by, once again, government expansion and a recession.   During the boom years, government programs were enacted with no thought to sustainability.   Nobody thought about the fact that a surplus isn’t a balanced budget, either.   We just kept adding to the budget, thinking the good times would last forever.  Another binge.

Last year, the governor of Minnesota had to “unallot” money from the budget.  He went through the budget with a red pen and struck line items until the budget was balanced, a requirement in this state.  This infuriated his political opposition.  They were not prepared for the purge.

Federally, the purge hasn’t happened, yet.  Give it time.  Excessive spending using imaginary money can only last so long.  It will stop.  The longer the binge, the harder the purge.

Families are doing the same thing. Four years ago, I got a raise and immediately bought a new car.  Binge.  Two months later, I was laid off and had to cut everything possible to make ends meet.  Purge.   Tax refunds, inheritances, drawings.  So many of these things give us an excuse to commit to long-term expenses without planning for long term sustainability.  If I inherit $5000, is that a good time to add $500 to my monthly bills?  No!  That’s an unhealthy binge.   In ten months, if the money lasts even that long, I will be forced to purge something to keep afloat.

The responsible, healthy way is the same as healthy, responsible eating.   Diet and exercise.  Spend less, save and earn more. That’s the strategy that will let you level out life’s valleys, instead of puking all over the floor.  Don’t spend every cent you see, just because it is there.  Set some aside for a rainy day.

Leave the binge-and-purge financing to the politicians.

Update:  This post has been included in the Festival of Frugality.

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