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The no-pants guide to spending, saving, and thriving in the real world.

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Don’t Screw Future-You

Finance, Life

A conversation between me and my temporally displaced self.
Future Me: Excuse me, Jason?
Me: Yes?
FMe: <Slap!>
Me: May I ask what that was for?
FMe: Of course.
Me: What was that for, jerk?
FMe: That was payback for all of the hell you have put me through.
Me: What?!?  I’ve never even met you, before.
FMe: Of course you have.  I am future-you, and I’m sick of getting screwed by past-me, that is, you.
Me: Huh?
FMe: Listen close.  You’re not  the sharpest brick in the box and I don’t want to explain this twice.
Me: ???
FMe: A long time ago, when you first met our wife, you were dumb.
Me: I don’t appreciate….
FMe: Shut up.  I was dumb then, too.  Remember?  You…err…we bought a new truck, built an addition on our…err…your…err…whomever’s house, got married in the same year.  On top of many other expensive decisions.  Do your recall?
Me: Yes, I do.  So what?
FMe: If that wasn’t enough, you and your smoking-hot bride are still shopping like you’re rich. You drive a new car.  Your kids wear new clothes.  You’ve got a house full of new furniture.  How did you pay for all of that?
Me: Naturally, I charged it.  Zero payments, zero interest for a year!  Pretty smart, huh?
FMe: What happens in a year?
Me: I don’t know.  I’ve got a full year to figure that out.
FMe: <Slap!>  I’ll tell you what happens!  Future-you, that’s me, gets screwed!   Your raise didn’t come through.  You had a baby. The truck broke down.  Your wife took maternity leave.  A roommate moved out.  You took a loss in the stock market.  You didn’t plan!  You had no savings to cover any of those problems because you were too busy servicing debt to pay for your current life.
Me: How was I to know?
FMe: <Slap!>  Life happens!  You never know what is coming next.  You need to plan and save for what might happen.  Otherwise, you’ll just accumulate more debt to be serviced by yours-truly.  That is not acceptable.
Me:  So?  What are you going to do about it?
FMe: <Slap!>
Me: Really?  Again?
FMe: <Slap!>  I’m struggling to pay your debt. Your son starts college next year, but you’ve left me completely unable to help.  Your daughter wants to get married in a couple of years, but the Father-of-the-Bride can’t afford a tux.  My wife, your beatiful bride, wants a vacation that I can’t afford.   You’ve screwed me, dude.
Me: I’m sorry.  What can I do to fix it?
FMe: Buy me dinner, first.
Me: Huh?!?!?
FMe: Stop the excess spending. Spend less than you make, for a change.  No credit.
Me: None?
FMe: None.  Nada.  Zip.  Zilch.  Only spend what you can afford. Budget.  Pay off those nasty bills.  Don’t leave me hanging.
Me: So, what you’re saying is that, if I don’t have the money, I shouldn’t buy it?
FMe: Exactly.  That’s the path to wealth, freedom, and financial independence.  Live in the real world.
Me: Gee, thanks, Future-Me!  Now I know.
FMe: And knowing is half the battle.

What would your future-you have to say to you?

 

Teaching My Child about Money in a Way I Was Not Taught

Finance

When I was in high school and working 15 to 20 hours a week, my mom gave me free rein to use the money I earned as I would like.  Actually, she said nothing to me about saving for college or putting some money into savings.

When I had friends who complained that they had to put away some of their earnings, I commiserated with them.  How unfair of their parents to make them save some of their money!  They worked hard for their money, often at crappy part-time jobs.  They deserved to spend the money any way they saw fit.

The way I saw it, why save for college?  According to financial aid rules, if the student has any savings, she would have to use the majority of it to pay for college.  How unfair.  To add insult to injury, if prospective college students have some savings, they would qualify for less financial aid, which often meant fewer student loans.

The injustice. 

Yes, it was better to spend my hard earned money than save it and be penalized.

No one told me differently.  In fact, many people in my family agreed with me and encouraged me to buy a used car to get to and from my job.   Of course, I paid the loan payments for the car, the gas I used and my insurance out of money from my job.  That was a responsible use of money, but I also went out to eat with friends, a lot.  At 16, I was going out to eat with my friends twice a week at least.

However, my plan worked perfectly.  When I went to college, I didn’t have to use any of my hard earned cash.  No, not me, because I hadn’t saved anything.  Instead, I left college with nearly $20,000 in student loan debt.  I took two years off and paid down as much student loan debt as I could, getting it down to about $8,000, but then I went to graduate school and took on more student loan debt.  I graduated with nearly $25,000 in debt total.  I am still paying on it today, 13 years later.

Now that I am the parent, I am one of those “awful” parents who makes her kids save.  My son knows when he gets his allowance, some goes to save, some goes to donate, and some goes to spend.  True, it makes me cringe when he uses his spend money on little trinkets like temporary tattoos, stickers, and gum, but I keep silent.  He did the work to earn the money, and he can spend it as he likes.  However, I am inflexible with saving; that money must be set aside.  When he goes to college, I expect that he will have to use the majority of that money.  Rather than seeing it as a waste, I see it as an important component of his financial education.  Spending his money to pay a portion of his college education will hopefully make him take college more seriously.

Meanwhile, I have already begun having chats with him about money, spending, and budgeting.  He watches his dad and I work hard to pay down our debt with gazelle intensity.  He sees me use a calculator at the grocery store to see how much our groceries will be.

Ultimately, he will make his own financial decisions as he grows up, but I plan to teach him throughout these important years so that even if he turns into a spendthrift, he will have a firm financial understanding to revert to as he ages.  While my mom taught me how to stretch money further, she never taught me how to save; I hope saving is a lesson my son takes with him throughout his adulthood.

How do you teach your kids about money management?

Melissa writes at Fiscal Phoenix where she encourages people to rise from the ashes of their financial mistakes as she and her husband are doing.

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Christmas for the Destitute

Finance, Parenting

First, my disclaimer:  I’m not destitute.

However, I’m trying to spend Christmas acting like I am a pauper.

Why, with small children and beautiful-and-more-than-deserving wife, would I want to deprive my family of a bountiful holiday?

Before we get into the reasons for being a horrible grinch bent on depriving my children of their god-given right to rampant consumerism, let’s look at the Philosophy of Destitution.

The primary reason to pull back and tone it down is basic frugality.  Excessive anything is not frugal. I am training my children–and for that matter, my wife and my self–in the finer arts of personal responsibility and frugality.   Accumulating debt for a fleeting holiday is insane.  If we can’t afford to buy it, we certainly can’t afford to give it.   Anything else would be setting a bad example and children learn best by example.

Another piece of the Philosophy of Destitution(when I read this word, I hear a deep, booming voice in my head, like a 30s radio superhero voiceover)  is “green”.    I consider myself a conservationalist rather than an environmentalist, so don’t read too much into that color.  I try to be responsible, instead of destructive and I try to avoid being wasteful.  Toys that won’t be played with are wasteful. A garbage can full of packaging for those same toys costs money.  It is much cheaper to avoid the landfill here.

Back to “Why”. Why would I be willing to deprive my family?

[Read more…] about Christmas for the Destitute

You’re not alone: Help with Bankruptcy & Debt

Finance

Debt managementFrequently regarded as an indication of personal failure, bankruptcy is still today widely considered a highly sensitive topic. Many will even feel uneasy speaking about their debt problems with close relatives and friends. If you, too, are facing serious debt issues and are in need of help, rest assured you are not the only one afraid of sliding into bankruptcy. In fact, thousands of households in the UK are threateningly close to insolvency and most are experiencing the exact same feelings of shame and despair. This perfectly understandable reaction has, meanwhile, unfortunately overshadowed the fact that there are hands-on practical steps especially designed to help you resolve your debt situation.

There is a good reason why addressing the issue of bankruptcy has an urgent ring to it. Recent statistics indicate a steady rise of individual company insolvencies in the UK, particularly since the 1990s. According to the British Insolvency Service, the rate of bankruptcy on an individual level has risen from a total of 24,441 in 1997 to staggering 106,645 in 2007 in England and Wales. Alarmingly, the peak doesn’t seem to have been reached yet. As  respected online-service ‘This is Money’ reports, ‘record numbers of people were declared insolvent in England and Wales’ in 2010, further noting that ‘an all-time high of 135,089 people were declared insolvent in 2010—0.7% up on the total for 2009.’ As you can gather from these numbers, you are certainly not alone with your debt problems: Around 140,000 adults are facing bankruptcy as a direct consequence of mishandling their debt issues, which translates to 385 new cases per day. It has already been pointed out that ‘the number of victims will be enough to fill both the London 2012 Olympic stadium and the Emirates Stadium.’

So, if you’re facing bankruptcy, there’s no need to feel ashamed. By taking an active stance and addressing your debt issues, you may even be able to avert insolvency altogether. With years of experience and several distinctions to our credit, the Debt Advisory Line have established themselves as leading experts in the field of debt management. We’ve already helped thousands of individuals and households who thought bankruptcy was their only option. Settling debt issues is our forte – and you shouldn’t settle with anything less.

This post brought to you by Debt Advisory Line.

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$1500 Luxury

Finance, Relationships

I’ve got some expensive habits.   Not like Charlie Sheen snorting $2500 of blow of a hooker’s boobs, but still expensive.

Charlie Sheen in March 2009
Charlie Sheen in March 2009 (Photo credit: Wikipedia)

My latest one is dancing lessons.  Linda surprised me on one of weekly date nights a few months ago.  She found a Groupon for the dancing studio we used before we got married.  It was $69 for a month of unlimited group lessons.

When the month was up, we signed on for their beginner cycle of lessons, which cost another $400.

And now we’re starting the Social Foundation program.

Social Foundation is a series of classes that teach some advanced moves, but also to teach dancers how to lead and follow properly and how to dance socially and look respectable on a dance floor in any number of situations.   Leading and following are important because every single dance move out there has specific cues that tell your partner what’s coming next.  If she doesn’t know, you both look clumsy.

So we chose the four dances we’re going to learn better and signed up.   We’re going to learn the Rumba, Waltz, Tango, and Swing.  We’re already pretty good at Rumba and Swing, but we’re going to get better.  Personally, I’m hoping to also figure out how to use the Tango on an open dance floor without crashing into people.  That way, we can pretend to be Gomez and Morticia, my heroes.

Now, the thing is, dance lessons aren’t cheap.  They cost about $100 per hour, where an hour is defined as 45 minutes.   We’re rolling the last half of our beginner lessons into our social foundation lessons and paying $1400.

Ouch.

They gave us the option of financing it over 3-4 months, but I didn’t want to pay an extra $200 for the privilege.   I think we’ll be tapping the vacation fund to pay for the lessons.

Why am I willing to pay this much?

Dancing is one of the very few things Linda and I both enjoy.  We’re pretty good at it, it’s great exercise, it’s fun, and (shhh!) it counts as foreplay.  It also doesn’t hurt to have the sidelines of the dance floor lined with people watching us dance, wishing they could do what we’re doing…or wishing their husbands were willing to learn how to dance.   This also isn’t just something we’re doing at the studio.  We are out on a dance floor dancing to a live band almost every week.  That usually comes with about $25 in cover charges and drinks.

Fun, exercise, have sex, and inspire jealousy.  That’s a winning combination.  And finding things to do that we both love to do is difficult and easily worth the $2000 we’ve paid the dance studio this year.