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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?

 

Budget Lesson, Part 7

Finance

It’s been a month(again!) 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’m looking at how to reduce my “set aside” funds.  These are the categories that don’t have specific payout amounts and happen at irregular intervals.   One of the convenient features of our set-aside funds–also a feature of our non-monthly bills–is that the money sits in our checking account, providing a buffer against overdrafts.   The buffer is big enough  that I can withdraw our entire month’s discretionary budget on the first of the month.

  • Parties  – Twice a year, we have large parties.  We have a barbecue(not necessarily low and slow, I’m in the midwest) and a Halloween party.   We also have three kids with birthdays.   Each year, we try to do something exotic at the barbecue.  One year, it was a turducken.  This year, we’ll be skipping the show-off portion of the show.    The Halloween party is never expensive.   I don’t drink much, so the bar stays well-stocked without frequent expensive shopping trips.   We throw two large parties for less than $300 combined, and our guests start RSVPing a year in advance.  We’re fun.   The kids are getting gypped this year.   I am over my addiction to expensive birthday parties for my kids.  There will be a small party for one, a sleepover for another, and a party combined with some cousins’ birthday parties for the third.    It sound horrible but all of them will have fun.
  • Gifts  – We set aside money for presents, but we don’t feel we need to spend all of the money we have set aside.   Anything left over stays here.  Eventually, it will be something nice for all of us.
  • Pet Care – We have 4 cats and a dog.  Cat litter and food are expenses that we can’t make disappear.  We don’t buy the fancy food, but we also don’t buy the stuff that uses cardboard as filler.   We have set a new limit at 3 pets, but that limit will only be reached through attrition.   There’s nothing to cut here for a few years.
  • Car Repair – This is another category with nothing to cut.   If we don’t spend it, and something catastrophic happens to a car, we’ll be covered.  If it doesn’t, we’ll have a bit more cushion in our checking account.
  • Furnace Warranty – When we bought a new furnace and air conditioner, we got the extended warranty.   This is an unlimited renewal warranty, so, in 5 years, we’ll have to buy it again to keep it.  If we keep it forever, they will eventually replace our furnace when it dies.
  • Medicine/Medical – It’s a sad fact that people get sick.   We set aside a small amount to cover our costs.   The costs rise and fall, but over any given quarter, I don’t think I’ve been off by more than $5.

I’ve taken a hard look at most of the bills over time, so there isn’t always a lot to cut.  Next time, I’ll be addressing our discretionary spending.

Totally Money Carnival #5, the Superbowl Edition

Misc

Welcome to the Totally Money Carnival #5, the Superbowl Edition.  It’s my privilege to be the first outside host for this carnival.

I don’t watch the Superbowl. I’ve never been into spectator sports unless I have some skin in the game. If I’m playing, or have some money riding on the outcome, I’m watching. Other than that, I’ll usually pass. Yesterday, a bunch of grown men in tights earning envy-inducing amounts of money ran around for a few hours in front of people, some of whom paid 5 figures for the privilege of watching. Yay!

Editor’s Picks

http://www.youtube.com/watch?v=hpjaOUjUPUc

Mike Piper presents Protecting Your Private Files posted at Oblivious Investor, “How can you keep your sensitive documents (scanned tax returns, for instance) both backed up and protected in the event of computer theft?”  Ed.  I love this solution, and I use it.  All of my tax returns, online receipts, and documents I don’t want to lose get treated this way.

Suzanne K. presents The Psychology of Why You Can’t Budget—And Five Tips to Help You Do It posted at PsychologyDegree.net.  Ed.  I’ve always been a fan of trying to understand what makes people tick.

Silicon Valley Blogger presents Prepare Your Tax Return: Tax Products vs Tax Pros posted at The Digerati Life, saying “If you don’t enjoy preparing your taxes, you’re not alone. There are various ways to get your tax returns done. How do you go about preparing your taxes: DIY or with the help of a pro?” Ed.  Tax time sucks.  If we abolished payroll deductions and made everybody in the country write a check to the IRS every year, there would be a revolt on the next April 15th.

Kevin McKee presents How To Know if Your Job is Expendable posted at Thousandaire, saying “When businesses start doing poorly, some people are at risk of losing their job, while others are safe. Find out which category you fall in with these simple questions.”  Ed: I was given a demonstration that defines expendability in the workplace. Fill a glass with water and place it on the counter in front of you. Stick your finger in the glass. Now, pull it out. See the impression you’ve made? I’ve done the rockstar bit, and I’ve been in positions that were necessary for the profitability of larger divisions of large companies. It doesn’t matter. Corporate loyalty is a joke.

Budgeting

35% of people who attend the game write it off as a corporate expense. (source)

Miss T presents 5 Ways to Lower Your Monthly Bills | Prairie EcoThrifter.com posted at Prairie Eco-Thrifter, saying “Believe it or not, there are lots of ways to save money, no matter how much of it you have- or don’t have.”

Credit

http://www.youtube.com/watch?v=jRYLhkOV2so

Tim Chen presents Pentagon Federal Offers Best Gas & Airfare Credit Card Rewards, Period. posted at NerdWallet Blog – Credit Card Watch, saying “There is only one credit card in America that offers no strings attached 5% cash back at any gas stations (excluding the likes of Costco) – the Pentagon Federal Platinum CashBack. It also gets you 2% back at grocery stores.”

Miranda presents Accelerate Your Credit Card Debt Pay Down posted at CreditScore.net, saying “Use these techniques to pay down your credit card debt faster.”

Buck Inspire presents Moving Up and On From Prepaid Debit Cards posted at Buck Inspire.

Ryan Hudson presents How I Got a Credit Card Late Fee Waived posted at Best Credit Cards IQ, saying “Don’t take accidental late fees laying down. Do something about it. Here’s how I got rid of my late fee.”

Debt

No network footage exists of Super Bowl I. It was taped over, supposedly for a soap opera.(source)

John presents Get Out of Debt Fast – How to Speed Up the Process posted at Passive Family Income, saying “There are quite a few people today that are beginning to dig their way out of debt. They have monitored their spending, created a budget, and have done the best that they can to stick with it. But, as many of you have experienced, the excitement of becoming debt-free gets pretty old after a while.”

Finance

http://www.youtube.com/watch?v=VRDx18GYITw

Mike Collins presents Defined Benefit vs Defined Contribution posted at Saving Money Today, saying “Understanding the different types of retirement plans.”

Boomer presents 10 Ways For Women To Obtain Financial Empowerment posted at Boomer & Echo, “It’s not that difficult to get your financial life under control (your control). Remember, a man is not a financial plan.”

Frugality

The Super Bowl is measured in Roman numerals because a football season runs the span over two calendar years. This year the season began in 2010 and ends in 2011. (source)

Madison DuPaix presents Substitute, Improvise, and Make Do With What You Have posted at My Dollar Plan, saying “So often, when we run out of things we need, we run to buy something or spend money when we don’t have to. Find out how you can avoid this trap.”

Money Beagle presents The Power Of The Free Calendar posted at Money Beagle.

Amanda L Grossman presents Homemade Diversion Safes: Save Money by Making Your Own posted at Frugal Confessions – Frugal Living, saying “You can purchase your own home security money safes (diversion safes), but I thought it would be more frugal and fun to think of ones to make on your own. See what I can do with a used deodorant!”

Money Management

http://www.youtube.com/watch?v=KQkK1UCH1EU

MoneyNing presents What Would You Do with a Million Dollars? posted at Money Ning, saying “I know what I would do with a million dollars. How about you?”

Other

More drivers are involved in alcohol-related accidents on Super Bowl Sunday than any other day of the year (except St. Patrick’s Day), according to the Insurance Information Institute. (source)

Joe Morgan presents Is Gen Y Irresponsible, Or Is It A Matter Of Perspective? posted at Simple Debt-Free Finance, saying “Generation Y has a reputation for having a sense of entitlement, but here’s one reason it may just be a matter or perspective.”

Saving

http://www.youtube.com/watch?v=_78ylMLa0JQ

Ryan @ MFN presents Roth IRA Qualifications posted at The Military Wallet, saying “Are you qualified to open a Roth IRA? Find out income and contribution requirements to see if you are eligible!”

Brian @ BeBetterNow presents Money’s Golden Rule: Spend Less Than You Earn posted at Be Better Now, “In the end, most personal finance advice boils down to spending less than you earn. Here’s another article to reinforce that.”

Spending

http://www.youtube.com/watch?v=g364TG_8Qmw

Barb Friedberg presents Wealth in Life: 25 Cheap Ideas for Fun posted at Barbara Friedberg Personal Finance, “Join in to build a massive list of low cost fun!”

Taxes

http://www.youtube.com/watch?v=R55e-uHQna0

PT presents Tax on Unemployment Compensation posted at PT Money, saying “A detailed look at what taxes are due on your unemployment compensation.”

Ken presents Important Tax Update for 2010 You Don’t Want To Miss posted at Spruce Up Your Finances, saying “A few of the tax provisions applicable to tax year 2010 such as the extension of tax filing date, expanded tax benefits, phase out on some limitations, etc.”

Fanny presents Top 10 Tax Deductions for Parents posted at Living Richly on a Budget, “Being a parent is one of the most important roles in life. Why not take advantage of all the deductions you qualify for?”

Thank you all for participating!  Next week’s host is Saving Money Today, so be sure to submit your posts.

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Living in Debt: How I Sacrificed My Future

Finance, Life

DSC_0428
Image by lazybone83 via Flickr

For those of you who haven’t been following along, I’m in debt.   Starting 13 years ago, when I was 19, I managed to bury myself in debt, until I decided I’d had enough of that…almost 2 years ago.

Why?

It wasn’t because of college expenses, though they contributed to my debt level.  I was in debt before I went to college.  Heck, I was a daddy before I went to college.

It wasn’t because of  major medical procedures.  The only major medical procedures we’ve ever had were the births of our children, and we had two of them well after we built our shackles.

It wasn’t because we bought more house than we could afford.  We own a modest house that we bought before the bubble started.

Then what was it?  Why did we do the things we did that have financially crippled us for so long?

It was a combination of things, crowned by a glorious lack of financial sophistication.  As I wrote in No Brakes, neither of us had the early training to really understand our financial decisions.  We knew bills need to be paid, but what was the difference if the money came from a credit card versus our checking account?   Why did it matter if we carried a balance on the cards, as long as we could make the payments?  What’s wrong with just making the minimum payment?

Naïve.  Unsophisticated.

That day-to-day lack of sophistication was only part of the problem, and it wasn’t the biggest part.  We made a lot mistakes, but they were all small.  Before 2001, I think our total was about $5000.  Too much, but not painful.

Between the fall of 2001 and the winter of 2002, we took our naïve decision-making process and ran with it.  It was a full-scale mistake marathon.

That year, we built an addition on our house, because a full dining room and a bigger kitchen would make our house so much more livable and it was cheaper than buying a home, new.  Oh, and since the difference between the mandatory crawlspace and a full basement room was just a few rows of concrete blocks, let’s expand it.  Wait, don’t bedrooms require walls, sheetrock, windows, closets, paint, furniture, and electricity?

That was also the year that the car companies all jumped on the 0% loan fad.   In case you don’t remember, that was the program that meant you could get a 0% loan on a new car if you picked up a 3 year term on your loan.  At 22, making maybe $45,000 combined, we decided that buying a $35,000 truck was a good idea.  To save money.   Rationalization is wonderful.  Or at least, effective.

That summer, we got married.   We did a phenomenal job getting married on the cheap.  We had about 100 guests, a  park to get married in, flowers, food,  and a hall to eat and dance in, for about $3000.   The problem was, we didn’t have $3000.   We didn’t have the $1500 + activities for our 10 day honeymoon on a Caribbean cruise, either, though I still plan on returning to St. Thomas.

None of those individual payments were terrible.  The biggest problem was that we piled them all so close together that we never had time to absorb their impact before taking on the next obligation.   When we did realize how much we had to pay, we made up for it by only buying big things that came with a “0% for a year” deal, like our living room set, our carpet, and our dining room table.

Then, when we finally did pay something off, or came into more money, we’d immediately expand our lifestyle to fill the void.  The month we paid off our truck, I got a significant raise.  Did we use it to pay off some other debt?  Of course not, we bought a new car on a six year term.

We had so many opportunities to make bad decisions with our money, and I think we took them all and have suffered for it, since.

If you’re in debt, what made you decide to get that way?

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Cthulhu’s Guide to Finance

Finance

This is a guest post from Cthulhu, written in his house at R’lyeh.  In the eons of his imprisonment, he has never contributed a blog post…until now.   Be nice, this is his first post ever.

Cthulhu fhtagnCthulhu fhtagn. Cthulhu waits.   Eons in R’lyeh–dead but dreaming–have taught me well the virtue of patience.    Rush not into the abyss of hasty decisions.Lie patiently until the stars align and you can once again dominate your investments.  As much as I despise virtues, patience is the one I practice.

Just as looking upon my form may cost you your sanity, obsessing over your finances may cost your loved ones the same.   Instead, set your finances on a path of prosperity and work to hasten my return.     Spend less than you earn. Earn more than you need.    Give the rest to me.

Use the Shoggoth.  Thought the postules of greenish light light may disgust those who have never devoured an entire planet, they are good for menial work.   Use them, or their demented cousin, the automatic payment, to pay your bills.   Set them to the task of making sure all of your bills are paid on time, leaving you free for more productive works.  Do not, however, make the mistake of Ubbo-Sathla, whose fecundity spawned the vermin prototype known as homo sapiens.   Keep your Shoggoth under control so they do not spend what you have not yet earned.

Avoid the Deep Ones.   When dealing with the paramount evil(though I shouldn’t say that as a bad thing) of lenders, beware my servants.    If they catch you in over your head, you will be screwed.    If you cannot pay the price, there will be fees and punishments galore.   A proper Cthulhu-fest of Chaos and Mayhem at your expense! A pound of flesh for every dollar not paid will be the standard when I arise, but for now, it is $39 for missing a payment or spending more than your limit.

“The only saving grace of the present is that it’s too damned stupid to question the past very closely.”  This quote by my favorite historian demonstrates the futility of your mortal existence.  If you learn from your mistakes, or–less painfully–the mistakes of others, you will grow as a person.   Personal growth is entirely at odds with my goals as the Greater Evil.   Learning from your mistakes will prevent you from making the same mistakes in the future.    Einstein once said “doing the same thing over and over again and expecting different results” is the definition of insanity.  That, or looking upon my form.   One of those acts can be avoided.  It is in your best interests to avoid insanity, at least until I awaken.

So many of those inhabiting my Earthly domain seem to suffer from my get Ghatanothoa‘s curse–absolute petrification in the face of their travails.   When faced with a foe, fight!   Do not collapse under the burden of your debts!  Work!  An inch, a dollar, a pound at a time: Defeat it!  Do not quit and do not give up.  Cthulhu does not forget or forgive.

That is the wisdom brought forth from my dead-but-dreaming slumber in R’yleh.   Read it, understand it, follow it.  It will serve you well until my return.

This post has been resurrected because I want to see it on the front page again.

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