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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?

 

A Budget Isn’t Enough

Finance

Pre-war Bayer heroin bottle, originally contai...
Image via Wikipedia

You know exactly how much you make, to the penny.   You’ve listed all of your bills in a spreadsheet, including the annual payment for your membership to Save the  Combat-Wombat.   You know exactly how much is coming in and how much has to go out each month.   Your income is more than your expenses, yet somehow,  you still have more month than money.

What’s going on?

The short answer is that a budget is not enough.

A budget is not…

…a checkbook register. Do you track everything you spend?  Are you busting your budget on $10 lattes or DVDs every few days?  Is the take-out you have for lunch every day adding up to 3 times your food budget?  Are you sure?   If you don’t track what you spend, how do you know what you’ve actually spent?  You have to keep track of what you are spending.   Luckily there are ways to do this that don’t involve complex calculation, laborious systems or even proper math.   The easy options include using cash for all of your discretionary spending(no money, no spendy!), rounding your spending up so you always have more money than you think you do, or even keeping your discretionary money is a separate debit account.  That will let you keep your necessary expenses covered.  You’ll just have to check your discretionary account’s balance often and always remember that sometimes, things take a few days to hit your bank.

…a debt repayment plan. You may know how much you have available, but if you aren’t exercising the discipline to pay down your debt and avoid using more debt, you not only won’t make progress, but you’ll continue to dig a deeper hole.   Without properly managing the money going out, watching the money coming in is pointless.

…an alternative to responsible spending. Your budget may say you have $500 to spare every month, but does that mean you should blow it on smack instead of setting up an emergency fund?   I realize most heroin addicts probably aren’t reading this, but dropping $500 at the bar or racetrack is just as wasteful if you don’t have your other finances in order.   Take care of your future needs before you spend all of your money on present(and fleeting) pleasures.

A budget is a starting point for keeping your financial life organized and measuring a positive cash flow.  By itself, it can’t help you.   You need to follow it up with responsible planning and spending.

Avoiding Financial Traps & Saving Money on Big-Ticket Purchases

Finance

 This is a guest post written by Jason Larkins. He writes at WorkSaveLive – a blog he started to help people change the way they think about their finances, careers, and lives.

Who doesn’t like to buy stuff?

Okay…I’m sure there are a few of you out there that take pride in never buying a new “toy,” but I know personally that I LOVE stuff!

Not to the point that I make dumb financial decisions that jeopardizes my family’s financial well-being, but I do have that natural American desire to have nice things and to be able to do fun stuff!

If you’re in the market to buy a Big-Ticket item (i.e. a new car, TV, or other technology gadget), what are some of the things you should be thinking through as you contemplate making the purchase?

The first mistake people make is buying on impulse. The massive majority of Americans don’t even have a thought process when it comes to buying toys, so that’s why I decided to dedicate a post on a few things you should ponder.

3 Financial Traps You Should Avoid

1. Avoid spending extra for add-ons, or features, that you’re never going to use.

It is easy to get an appliance or technology gadget that has a ton of amazing features on it – but why pay for them if you won’t use them?

Consider buying the item that may be a step below what you’re looking at.

I know that I personally love the thought of having an Ipad 2, but am I really going to utilize it to it’s full capabilities?

Probably not!

It doesn’t mean I shouldn’t have one, but it does mean I can look at the older Ipad and save some money. Or, I can avoid the purchase altogether if I don’t think it’s going to be worth the money.

2. Be cautious with offers such as “no money down,” “90 days same as cash,” or “12 months interest free.”

Nearly 88% of the “90 days same as cash” offers are actually converted to payments because the purchaser couldn’t pay off the bill before the offer was up.

3. Don’t buy it just because it’s the cheapest.

Always be sure to do research prior to your purchase – check consumer reviews and product reviews. Saving money may not be worth it if the product breaks down quickly or doesn’t have the functionality that you’re looking for.

3 Strategies to Save Money

1. Prepare for large purchases and pay cash for them.

If you can’t pay cash for the item, then there is a good chance that you can’t afford it.

Determine how much money you will need to spend on a particular item and save up for it! This is going to help you in a couple of ways:

  • It will help you avoid buying on impulse.
  • If it takes awhile to save up for the item, then this will give you valuable time to really determine if it’s something you WANT badly enough to pay that kind of cash for it.
  • It will allow you to ask for a DEAL. Every retailer pays a fee to run a debit/credit card. If you’re paying in cash the worst you can do is to ask for that 2-3% discount the store would be saving!

2. Buy at the end of the month, or at the end of the year!

Consumers rarely think of this, but it’s important for you to know that every store (and store manager) has monthly/yearly sales to report.

If they’re wanting to close out the month/year strong, they’re much more inclined to offer you a deal on whatever you’re buying!

3. Avoid the extended warranty!

Insurance (in general terms) is the act of transferring risk – the more people that pool money together to help mitigate risk (buy insurance), then the lower the cost of the insurance becomes.

The reason to avoid the extended warranties is because the cost you’re paying to cover your item also includes: commissions paid to the retail store, overhead for the insurance company (wages for employees, building costs, utilities, etc), and some profit for the insurance company as well.

Sure, you may be in the miniscule percentage of buyers that has their item break down on them, but the reality is that it’s unlikely.

If it was likely for your item to break down, then the insurance wouldn’t be available because it wouldn’t be a profitable endeavor for the insurance company (and they’d be out of business).

Whenever you’re buying something that has a large price tag, you should develop a process that you think through before buying it!

Always pay in cash, get a deal, and make sure you actually need everything you’re paying for.

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Experience the Live Real Magic

Misc

As some of you have noticed, the link to subscribe by email has changed.   While you do still have the option to subscribe to the rss feed through Feedburner, I’m no longer providing the link or recommending it.   What I have in its place is an actual email list.

Yes, you can now subscribe to Live Real, Now by email, without having to go through Feedburner. That means you can get all of the updates in your email, for free! This is magic.  This magic gives me another option to offer contests and free stuff.

There are two lists to choose from.

  1. The Magic option will have occasional deals, giveaways, contests, and opportunities not available to anyone else.
  2. The Posts and Magic option will send make sure you never miss a post from LRN by landing them in your email inbox. All the Magic from the first list is included here.

Your email will never be shared, with anyone, for any reason whatsoever. Ever. I hate spammers with a passion fueled by the fiery pits of hell to which spammers should be cast. I won’t be that guy.

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Sunday Roundup: Ice Fishing

Misc

Ice Fishing in Portland, Maine
Image by Captain Kimo via Flickr

Update: Something wonky’s happening with this post.  If you’re seeing it in your reader again, just ignore it.

Twenty years ago, my grandparents were living in Arizona.   They went to see Grumpy Old Men in the theater and, during an ice-fishing scene, they overheard the people next to them talking about how impossible it was.  You can’t walk on the ice, let alone drive there!   Naturally, my grandparents corrected them.

For the uninitiated, in the land of 10,000 frozen lakes, ice fishing is an actual pastime.   The ice on a lake can reach 36 inches, which is more than enough to drive on by 24 inches.    Ice-fishing aficionados will drill a hole through that frozen mess, drop a line through the hole and find dinner.    Last night, I went ice fishing for the first time in at least 10 years, probably 15.    On the lake we were on, they actually plow roads across the ice.   It sounds cold, but we were in a 20-foot fish house with a generator, a couch, and a TV.  The neatest thing was the underwater radar thingy that turns ice-fishing into a video game.

30 Day Project Update

This month, I am trying to establish the Slow Carb Diet as a habit.   At the end of the month, I’ll see what the results were and decide if it’s worth continuing.   For those who don’t know, the Slow Carb Diet involves cutting out potatoes, rice, flour, sugar, and dairy in all their forms.   My meals consist of 40% proteins, 30% vegetables, and 30% legumes(beans or lentils).    There is no calorie counting, just some specific rules, accompanied by a timed supplement regimen and some timed exercises to manipulate my metabolism.   The supplements are NOT effedrin-based diet pills, or, in fact, uppers of any kind.  There is also a weekly cheat day, to cut the impulse to cheat and to avoid letting my body go into famine mode.

I’m measuring two metrics, my weight and the total inches of my waist , hips, biceps, and thighs.   Between the two, I should have an accurate assessment of my progress.

Weight: I have lost 29 pounds since January 2nd!   That’s 4 pounds since last week.  13 more to meet my goal for February.

Total Inches: I have lost 15 inches in the same time frame, down 1 since last week.

Best Posts

Thinkgeek has a new high-protein, low-carb snack.  Did you know that toasted ants taste like bacon?  I’m far more tempted than I should be.

On the off chance that somebody has missed the memo over the years, tax protesting–the art of ignoring your taxes because you don’t like them–will not end well for you.

I’ve been fighting an urge to get a Kindle.  Over the last few weeks, the itch has been getting harder to ignore.  Money Crashers has a list of resources for free ebooks, making the itch that much worse.

That’s two posts on spending money.  Here’s one to balance that with making money.   Do you know the best time to post an eBay auction?

LRN Timewarp

This is where I review the posts I wrote a year ago.  Did you miss them then?

Have you ever participated in a financial binge & purge?  Budgeting and planning can help you avoid the purge, but you’ll have to forgo most of the binges.

Everybody gets caught by life’s ups and downs occasionally.  When that happens, how can you fix the damage to your budget and finances?

Finally, I explained my plan for shopping quickly.

Carnivals I’ve Rocked and Guest Posts I’ve Rolled

Brown Bagging Your Way to Savings was included in the Festival of Frugality.

Debt Burnout was included in the Carnival of Personal Finance.

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

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Have a great week!

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