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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?

 

Naked Money

Finance, Parenting

In our house, the bills don’t get hidden. I’ve never tried to hide our finances from our children. I believe doing that is part of the reason I reached adulthood with no brakes. Growing up, finances were almost entirely invisible.  Now, I believe is financial transparency.

Now, as a father, I balance the checkbook and pay bills on the laptop in the living room where my children can see me. They see the stack of bills and they watch me balance the checkbook. We discuss how much things cost and how we can cut expenses while the bills are being paid.  Even the toddlers know Daddy is doing something important.

My ten-year-old son knows what sales tax is and where to find it on a receipt. He knows what property taxes are and how much they are in our neighborhood. He knows roughly what percentage of a paycheck gets withheld. I work to make my son financially aware. My girls are too young to understand the concept of money, but they will be receiving a thorough financial education as soon as they are able to grasp the concepts.

The hard part is explaining to my son how we screwed up our finances. I’ve shown him my paycheck and discussed our debt. I have explained to him that we were making much less money when we accumulated our doom debt, while maintaining a higher standard of living.  Now, when we go to the store, he doesn’t even ask if he can borrow money until we get to his bank account.  He has learned to dislike debt in almost all forms.  I’m fairly proud that my kid voluntarily practices delayed gratification.

What he doesn’t quite grasp is the idea of living within your means, even if your means are limited.   “But, Dad, what if you don’t have much money?  Then you have to borrow money for nice things, right?”  I’m not sure how to break him of that.  Delayed gratification is an understandable concept for him, but the difference between wants and needs seems to be missing.   Any ideas?

 

Kim Kardashian’s Baby Has It Easy: How Much Does It Cost To Have a Baby?

Celebrities

If you have not heard that Kim Kardashian has officially given birth to baby North West with rapper boyfriend Kanye West, you have probably been hiding under a rock.

Kim Kardashian at the Seventh Annual Hollywood...
Kim Kardashian at the Seventh Annual Hollywood Life Magazine Awards. (Photo credit: Wikipedia)

Baby North was welcomed to the world several weeks early on June 15, and since then has been showered with thousands of dollars in gifts from family and celebrity friends like Beyonce and Jay-Z. Saying that baby North will never want for anything materialistic is putting it lightly, but how much does it truly cost for the average person to have a baby in today’s modern age? Here is a brief breakdown that will help you start saving before you start planning to have your very own precious baby.

The Hospital Bills and Doctor Visit Costs

While you probably will not have to pay for your prenatal and post-natal care out-of-pocket, the average insurance plan does come with out-of-pocket percentages that you must pay when you are hospitalized or when you visit the doctor. If you did not account for the medical bills when you were budgeting for baby, this is the first financial roadblock you will run into. You might not give labor in a luxurious suite like Kardashian, but it will feel like you did when you get the bill. Most parents report spending about $2000 out-of-pocket for the delivery and the hospital stay. This does not include the cost for co-pays for doctor visits. If you do not have insurance, expect to spend about $10,000 for a vaginal birth or $16,000 for a cesarean section, assuming there are no complications.

The Costs of Caring for a Newborn Baby

You will get some great gifts at your baby shower, but you still will spend money on the necessities. If you are not lucky enough to get $7000 gifts from your friends like Kanye and Kim, you should allot a budget for the big items first, and the basic daily necessities second. You will need a crib, a stroller, a car seat, and eventually a highchair, but these items are not as expensive as you might think. If you can pass up the designer brands, you can find great deals at consignment stores or retailers. Thrifty shoppers can purchase the must-haves like car seats, baby monitors, changing tables, cribs and strollers for $450 or less.

In addition to the immediate necessities, you will incur other regular expenses for diapers, clothing, wipes and childcare. Kim and Kanye may be guilty of buying $50 onesies, but you do not have to have custom Gucci clothing made for your little one. Remember that your baby will grow out of their infant clothing in a month or less. Accept hand-me-downs, and you can save quite a bit of money. Diapers, on the other hand, are a re-occurring expense that will not go away. Expect to spend at least $80 to $100 per month on diapers and wipes until your baby is potty trained. If you are not breastfeeding, allot about $100 per month for formula until your baby advances to baby food.

Kim and Kanye may have plenty of money to give Baby North whatever her heart desires, but new parents can raise a baby on a reasonable budget. It is difficult to put an actual number on how much it costs to have a baby, but being a parent is not cheap. Keep the fact in mind that love and affection is much more valuable than the material things. Consider the real costs of being a parent, and this includes lifestyle costs and monetary costs.

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ROI for Life

Finance

How often do you examine the return on your investment of time and money? A dear friend once spent 3 hours in the waiting room of an auto shop to save $15 on an oil change. When I asked, she refused to sit quietly in the corner for an hour in exchange for $5. That’s an inefficient exchange of time for money.

Last week, a close relative spent $2000 repairing a car that’s worth about $500…after buying the replacement car. That’s a poor exchange of money for value.

Why do people make decisions like that? They seldom take a look at the values being traded. My friend knew she would have to work to replace the money she wouldn’t have saved, but didn’t think about the time she could never get back. My relative was emotionally fixated on the sunk costs of the repairs she had already put into the older car and couldn’t bear the thought of losing that “investment”. Neither was an example of rational decision-making, but rather a case of allowing emotions to rule. [Read more…] about ROI for Life

Car Dilemma

Finance

I’ve got most of my bills set up on auto-pilot, so I don’t have to worry about getting the payments in on time.   It’s a huge time saver, but it occasionally comes with a downside.

A couple of weeks ago, I was reviewing our bills and saw this on our  insurance statement:

2002 FORD $51.07
2005 CHRYSLER $47.40
1994 MERCURY $1.64
2008 DODGE $39.96
1986 HONDA — ANNUAL $17.76

There are two problems with this.

1.  We sold the 1994 Mercury a few months ago.   Then, we forgot to tell the auto insurance company.   We probably only wasted $6 on storage insurance, but it could have been worse.

2.  We have 2 drivers in the house and 3 vehicles to drive, and the highest premium is on the vehicle getting driven the least.

We haven’t decided what we are going to do, yet.

Here are our needs:

  • We have 5 people in our family.  My 13-year-old son is bordering on 6 feet tall and shows no sign of not growing.
  • Every weekend, we have at least 1 extra kid, sometimes 2.
  • We still have a giant(24 foot) boat that we won’t be selling until spring.
  • My wife wants to lease a couple of ponies next summer, which will mean a horse trailer to haul them in.

The Dodge is a Caliber, which is small.   I don’t fit comfortably in the front seat for a long period of time, and I’ve got no idea how my son manages to fit in the backseat behind me, next to two car seats without complaining.  It gets great gas mileage.

The Chrysler is a Pacifica, which fits out family perfectly, as long as there are no extras.   It gets crowded with a dog and luggage for a trip, but it’s doable.  We get gas mileage higher than the car is rated, but it doesn’t have a towing package.  Even if it did, the car can’t handle a trailer full of horse.

The Ford is an F150 we bought new.    It’s less roomy in the backseat than the Caliber, but better in the front seat and it can tow anything we need.   Also the worst gas mileage of the lot.

The Honda is a motorcycle.  I could haul both of the girls if I bungie-strap them to the backrest.  Sucks in the winter.

Our choices seem to be:

A.  Sell the Caliber.  Drive the truck.   Not perfect for hauling lots of kids, but it can work.

B.  Sell the truck.  Drive the Caliber.  Screw the horses. (Not literally.  Jeez, you have a dirty mind!)  This still isn’t great for family outings, but works for a commuter.

C.  Sell the truck.  Sell the Caliber.   Buy a mini-van.   We’re looking at the GMC Acadia or the Chevy Traverse.  Both are built on the same body, have third row seating that can fit an adult comfortably, and are rated high enough to tow a trailer full of horse.    If we sold the car and the truck, and cash out an inherited IRA that has to be cashed out over the next few years anyway, we can come up with $22,000.    That will buy a 1-year-old Traverse outright or get us within a few thousand of a similar Acadia.

I think C is the best long-term solution for our family.  What do you think?