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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?

Focusing on the Now

Life, Relationships

My company uses a service called KnowYourCompany, that sends three emails each week to the entire staff. Each email asks a question that the staff can either respond to publicly, or just to the company leadership team.

The questions follow a formula.

On Monday, we get an email asking what we are working on. This allows us to see what everyone is doing, and in theory, makes offering your skills easier to do because you can see what you might be able to help with.

On Wednesday, the question is something about the company or our interaction with the company. One week this question was as simple as “Are there any company policies that aren’t completely clear?”

On Friday, the question is more personal. It’s a getting-to-know-each-other question. Last Friday’s question was “What’s something you want to do in the next year that you’ve never done before?”

I found that I don’t have an answer.

Right now, I don’t have any long-term goals. Recently, my personal life has been complicated enough that the idea of planning for later this year–much less the next 5 or 10 years–is more than I can deal with.

My side hustle goals are focused entirely on what needs to happen in the next week. Work goals are only a month out. My personal goals involve making it through the next few days without letting anything collapse.

Sometimes, life kicks you in the crotch so hard, you have to let the future worry about itself while you focus on what’s happening right now. Without a functional present, the future doesn’t matter. You have to focus on the Now first, or everything else evaporates.

It’s not a great situation, but it is an interesting perspective. I’ve spent so much of the last decade focusing on what comes next that what’s happening right now has suffered.

Focus on Now. Sometimes, What’s Next can take care of itself for a while.

The Best Financial Advice I Ever Received

Finance

Read through any financial book, newspaper, magazine, or blog and you’ll find no shortage of advice. It seems everyone has their own opinion on what you should be doing with your money. One book tells you to invest in real estate. Another says index funds. Another says tax liens.

After awhile it can become pretty frustrating trying to figure out what exactly is the best course of action. If all these experts have different opinions, whose advice do you trust?

Personally, the best financial advice I ever received didn’t come from a financial guru. It didn’t come from a personal finance book or magazine. It didn’t come from the Wall Street Journal or the New York Times.

It came from my dad.

I was probably about eight or nine years old and I was sitting on the floor playing with my Star Wars action figures while he sat in his chair flipping though a trade magazine. Out of the blue, he asked me for ideas on what kind of products he could sell for extra income.

Being an 8 year old boy the only things that came to mind were whoopee cushions and magic sets. But that wasn’t exactly what my dad had in mind.

“Why do you want to sell stuff anyway?” I asked him.

“To make extra money. Gotta keep food on the table,” he replied.

“But you already have a job. Just ask for a raise or something if you need more money.”

My dad just shook his head. And then he sat me down and gave me the best financial advice anyone has ever given me.

“Mike, my boss doesn’t give a damn about me. He cares about himself and his own job. If it helps him to have me around then that’s good for me. But if he decides he’s better off without me, then I’m gone. That’s the way it is. It will be the same when you get older and get a job. You’ve got to look after yourself because no one else is looking out for you. You can’t rely on your boss, or the government, or anyone else to help you look after your family. You’ve got to take the bull by the horns and do it yourself.”

Now, my dad wasn’t a financial guru. In fact he was practically broke when he died. Several years after we had our talk his company decided they could hire someone younger to do his job for a lot less money and they laid him off. Several attempts at entrepreneurship failed and he ended up burning through the family savings while racking up debt.

But his words still echo with me today. I harbor an inherent mistrust of corporate America and the knowledge that no matter how well I perform my job I could be let go without warning if they decide to send my job overseas to India or the Philippines.

But my father’s words also fill me with a need for independence and the need to build multiple streams of income to protect myself against the loss of one. Without that little speech all those years ago I might not have learned how to make websites to supplement my income. And I wouldn’t be progressing toward my ultimate plan of quitting my day job so I can focus solely on my own business while having the freedom to spend more time with my family.

Most importantly, I have goals and a plan to reach them. Without that I would be like so many of my friends who march off to work day after day with no real sense of power or purpose.

What about you? What was the best financial advice you ever received?

Written by Mike Collins of http://SavingMoneyToday.net

10 Dumb Money Moves

Finance

Free Money Finance has a post up on Stacy Johnson’s 10 dumbest money moves. I thought I’d share my take.

Here are the mistakes:

1. Not having a goal
2. Not having a spending plan
3. Attempting to derive self-esteem from possessions
4. Doing what everyone else is doing
5. Starting to save large and late rather than small and soon
6. Paying interest to buy things that drop in value
7. Turning down free money
8. Buying a new car
9. Buying more house than you need or can afford.
10. Not protecting your good credit

Here is my response(and a test: Orthogonal Monkey Silicon Beam)

1. For most of the last 15 years, I didn’t have much for financial goals. “Get more money” isn’t specific enough to be a goal, and our spending precluded the possibility, anyway. Right now, my financial goal is simple: Get out of debt. I’m down to about $61,000.

2. We have a budget, even if it’s been partially ignored for the last couple of months. If it weren’t for my side-hustles, we would have come out negative last month.

3. We struggle with this one a lot. “Keeping up with the Joneses” is an issue in our house. My wife’s closest family is 10 years older than we are, and has more stuff, which makes it hard to visit without making comparisons. We both know it’s irrational, but it’s the way it is.

4. We are fighting this one as well. The fight is going better than #3. We’ve stopped using new debt, which shocked our friends, and I’m working on launching a new business, to break more bonds.

5. Is 30 late? We’re saving small while he fight debt, but I think we started early enough to make the rest of our lives easier.

6. We pay far too much in interest each month, but there has been absolutely no new debt since April 2009.

7. I got into my company’s retirement plan to get the match, but that ends next month. My wife’s employer killed the match 5 years ago. There’s no free money to turn down anymore.

8. We bought a new truck, as part of our debt-accumulation, in 2001. In 2005, we instead bought a car as it came off a lease. It had 11,000 miles on it and that saved us $10,000.

9. We bought our house in 1998. It sits on 1/8 of an acre. sometimes space is tight, but we’ve watched so many people trade up and find themselves in severe trouble. I’m happy we’ve stayed here.

10. This is one we’ve always guarded. No matter how much debt we’ve had, we’ve made every payment. We’re hugging the underside of an 800 FICO score. Thankfully, we’re closing in on the point where FICO no longer matters, because we’re paying in cash.

What are your biggest money mistakes?

3 Questions to Ask in a Spending Crisis

Finance

: Image by ExecGifts via Flickr

Having a well-funded emergency fund is one of the foundation blocks for almost every saving or debt-repayment plan. The theory is that you’ll be better able to weather a financial storm if you don’t have to raid your budget or beat on your credit card every time an unexpected expense rears its ugly head. The number varies based on your pundit and your stage of life, but generally ranges from $1000 to 8 months of your expenses. The money needs to go in a liquid account, so it can be accessed when necessary, but it needs to be completely ignored otherwise. What good is an emergency fund that has been spent?

Now that you have your emergency fund, you are set, right? But what happens when something comes up? When is it okay to spend that money? Emergencies can take so many forms: medical emergencies, car repairs, accidents, a good sale. Wait. What was the last one? What actually constitutes an emergency that is worth shredding your security blanket?

Here are three questions to ask yourself before you spend that money:

Is the expense necessary? If it’s a voluntary expense, you should create a savings goal and wait to buy it until you can actually afford it. Emergency funds are meant for emergencies, not whims. A good sale is never an emergency.
Is it important? When my motorcycle breaks down, it gets parked until I can afford to pay for the repairs. When my car breaks down, I need to get it fixed so I can get the kids to daycare and myself to work.
Is it urgent? Is this an expense that can be postponed until next month, when you have a chance to sell something you don’t need, or rearrange some items in your budget to “find” the necessary cash? If it doesn’t need to be paid right now, it may be best to put it off. In the case of medical bills, you can usually get on a payment plan with no penalties, if you ask. That can change an expensive obligation to a manageable monthly bill.

Your emergency fund should only be used on things that are important, necessary, and urgent. Anything else should get postponed until you can afford to pay it using your on-budget expense items. As the wise man once said: “Lack of planning does not constitute an emergency.” Of course, if you are in a financially stable situation and willing to take a small risk for a short time, eliminating an entire debt item to save the interest can be the right decision.

What would you be willing to spend your emergency fund on?

Sunday Roundup

Misc

I know I haven’t been doing the Sunday roundups very regularly. Do you miss them? Would you like to see something else here? When I do post them, I use it as a place to post some updates about my life that aren’t necessarily finance-related, and I post some links worth visiting.

Please let me know, I love feedback.

In the meantime….

Here are some great Yakezie sites to check out.

Carnivals I’ve Rocked

Vacation, Shmaycation, Staycation? was included in the Canadian Finance Carnival.

The Unfrugal Meal was included in the Yakezie Carnival and the Totally Money Carnival.

Annoying Your Wife: 5 Ways to Succeed was included in the Carnival of Financial Planning.

Money Problems, Day 11 was included in the Best of Money Carnival.

Is that the best you can do? was included in the Totally Money Carnival, by a different host.

Thank you! If I missed anyone, please let me know.

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Have a great week!

Search Results for: how-much-should-you-tip/INGDirect/subscribe-by-email/money-problems-day-1-setting-goals/consumer-action-handbook/mistakes-made/questions-from-a-reader/experiences-v-stuff/evil-interest/future-dreams/save-your-family

Here are some great Yakezie sites to check out.

Carnivals I’ve Rocked

Get More Out of Live Real, Now

There are so many ways you can read and interact with this site.