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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?

Carnival of Money Stories – Halloween Aftermath Edition

Finance, Misc

: Image by Dunechaser via Flickr

Welcome to the November 1, 2010 edition of the Carnival of Money Stories. One thing I didn’t do when volunteering to host this was to check my calendar. Did you know that November 1 follows October 31, every year? On Saturday, I had 30 people over for my annual Halloween party. On Sunday, I ran a haunt in my yard and coordinated to get a dozen kids out begging for candy while using my house as a base of operations. I’ve had guest from out-of-town since Friday. Halloween weekend is, by far, the busiest weekend of the year at my house.

Editor’s Picks

J. Savings presents Side Hustle Series: I’m a Restaurant Server posted at Budgets Are Sexy, saying, “Is serving tables thankless work? Yes. Are customers sometimes unpleasant? Of course. But the benefits are plenty!”

Wenchypoo presents Marketing, Marketing Everywhere–There’s No Escape! posted at Wisdom From Wenchypoo’s Mental Wastebasket.

The Wise Squirrel presents Does it Matter Who is the Main Provider Between Husband and Wife? posted at Squirrelers, saying, “Money story about a dual-income couple in which the husband had the opportunity for a big promotion that would have required a move, AND his wife to leave her job. Their different viewpoints are discussed.”

Business

Ryan @ CML presents Get a Tax Deduction for a Working Vacation posted at Cash Money Life, saying, “Tips on how to write off a business trip as a tax deduction.”

Career

Jeff Rose, CFP presents How to Pass the CPA Exam and Become a Certified Public Accountant posted at Jeff Rose, saying, “If you are interested in becoming a CPA, here are some of the experiences of someone who just recently passed the CPA exam.”

Jason @ Redeeming Riches presents What Sam Walton Teaches Us About Money, Success, and Family posted at Redeeming Riches, saying, “Sam Walton had it all – or did he? Find out the biggest regret he had on his death bed.”

Credit

Mr Credit Card presents Cash Vs. Credit, A Real World Experiment posted at Ask Mr Credit Card.

Debt

The Family CEO presents Debt Snowflakes: Or How I Made $821.73 in Extra Credit Card Payments This Month posted at The Family CEO.

Kaye presents Stuck in the Middle posted at Mrs Nespy’s World, saying, “The beginning of the journey was excited, the end will be exhilarating, but this “in the middle” stuff is for the birds.”

Kate Kashman presents Why Not To Bounce Checks posted at The Paycheck Chronicles, saying, “An accidental bounced check in college is still causing trouble, 20 years later.”

Michael Pruser presents Managing $225,000 in Debt Is Starting to Ware on Me posted at The Dough Roller, saying, “My struggles on managing a ton of debt!”

PT presents 5 Lessons Learned From Filing Bankruptcy posted at Prime Time Money, saying, “Lessons learned from an actual account of going through a bankruptcy.”

Silicon Valley Blogger presents Should You Pay Off Loans or Invest Your Money? posted at The Digerati Life, saying, “So you’ve got some money. Should you pay off your debt with it or invest the money? Here’s a personal account on what I’ve done.”

Housing

BWL presents Success Story: Paying Off A House In 5 Years While Tithing posted at Christian Personal Finance, saying, “This is an encouraging story of a woman who stuck to her convictions about giving 10% of her income and still managed to pay off her house in less than 5 years!”

Miranda presents Do I Really Want to Rent Out My House? posted at Personal Dividends – Money+Lifestyle.

Investing

2 Cents presents What Would Make Me Invest in the Stock Market? posted at Balance Junkie, saying, “We have not invested in the markets for a while now. A reader recently asked what it would take for us to get back in. Here’s my answer!”

FIRE Getters presents Early Retirement Case Study – Sandy Aldridge and Dale Lugenbehl posted at FIRE Finance, saying, “At times the fast pace of our city lives appear stifling making us long for a slower pace of life with more exposure to clean air and green vegetation. Our souls yearn for a simple life which is in greater harmony with Mother Nature. Of late our work related health problems have been making us yearn, almost every morning, for a more relaxed life with greater freedom. So we were thrilled to read about Sandy Aldridge and Dale Lugenbehl who retired early (at ages 48 and 47 respectively) more than a dozen years ago to their eight-acre farm in Cottage Grove, Oregon …”

Other

Neal Frankle presents Find A High Paying 2nd Job Using Craigslist posted at Wealth Pilgrim: Money Management Advice, Financial Stess Management, Addiction Recovery Plan & Resources, saying, “You Can Find A High Paying 2nd Job Using Craigs List If you’re looking for high paying 2nd jobs, look no further than your computer screen.”

Super Saver presents Retiree Financial Lessons from the Recession posted at My Wealth Builder, saying, “Although I wish this recession had not happened, I am glad that it happened early in our retirement, while we were better able to meet the financial challenges.”

Craig Ford presents Medi-Share Medical Sharing | A Health Insurance Substitue posted at Money Help For Christians, saying, “Medical sharing is a great way to reduce your health insurance costs.”

passive family income presents Cutting Out Wasted Expenses to Save More Income posted at Passive Family Income, saying, “How many wasted expenses are you paying for? After sorting through my family’s past years credit card and bank statements, I have found several small money leaks in our personal finances.”

Kristina presents Our Parents Estate posted at Dual Income No Kids, saying, “If your parents are divorced, how has their separation affect the way you have planned your estate?”

Donna Freedman presents Rockin’ the surveys — when it’s worth it. posted at Surviving and Thriving, saying, “Online surveys can be a nice source of extra income — except when they aren’t.”

Joe Plemon presents My Car Needs an Engine. Should I Sell it, Fix it or Junk it? posted at Personal Finance By The Book, saying, “What do you do when your beloved car needs an engine: sell it, fix it or junk it? This post explores the options.”

FMF presents My Type of Couple posted at Free Money Finance, saying, “Story of a couple who collected 400k cans to pay for their wedding.”

Lindy presents Once Upon a Time…I Used an Iron posted at Minting Nickels, saying, “One of the likely first stops in expense-slashing is the luxury of paying for laundered shirts. This is a tale of my ironing saga (yes, it qualifies as a saga). And it’s not as boring as this description sounds. Thanks!”

Sandy presents One Disaster Away posted at Yes, I Am Cheap, saying, “We sometimes pass judgment on others for the financial situation, but most of us need to realize that all it takes is one disaster to be in the same situation.”

Bucksome presents Top 7 Ways I Budget My Time posted at Buck$ome Boomer’s Journey to Retirement, saying, “Budgets are needed for more than money in this story about 7 ways to budget time.”

Tom @ Canadian Finance Blog presents How to Watch Cheap and Free TV in Canada posted at The Canadian Finance Blog, saying, “Want to know how to see free TV in Canada? You have a few options with over the air free HDTV, broadcaster’s websites and cheap services like Netflix!”

Lauren Mendel presents A Very Scary Money Story posted at Richly Reasonable – Successes and failures, all in the name of living reasonably., saying, “This Halloween week read the true, terrifying tale of how Husband and I almost lost literally every important document that we have. Muahahaha! You might want to lock your doors and close the blinds before reading this one…”

Sun presents What’s in My Wallet? posted at The Sun’s Financial Diary.

Shopping

Money Beagle presents Costco Coupon Policies – Truth or Fiction? You Decide posted at Money Beagle.

ctreit presents Our family budget has to accommodate this chocolate snob posted at Money Obedience, saying, “Name brands versus store brands.”

Rachel presents Sometimes Less Is More | MomVesting posted at MomVesting, saying, “Melinda talks about how the value of many things isn’t necessarily determined by their cost.”

That concludes this edition. Submit your blog article to the next edition of Carnival of Money Stories using the carnival submission form. Past posts and future hosts can be found on the blog carnival index page. Thank you, everyone, for participating!

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.

How to Live Happily Without a Budget

Finance

Three years ago, we sat down and built our budget. We spent 9 months adding the non-monthly bills that we forgot about when we created the budget. Setbacks and shortfalls almost killed the budgeting plan completely. It took almost an entire year to get our budget right.

Unrelated Image

Now? I refer to the budget once per month. No more. I don’t check it at bill-paying time. I don’t think about it daily. It’s there as a reference when I need it, but it no longer drives our finances. How did we get to that point?

First, we firmly established our budget. We know exactly what we need to cover our expenses. None of the predictable bills catch us by surprise any more. This is important.

Once we had the budget established, the rest was easy. I moved almost every bill to US Bank’s online bill-pay system and switched to electronic billing and automatic payments. The automatic payments are all through US Bank. I only allow my mortgage to be set up with the merchant. I want total, instant control over the rest. I won’t call a merchant to ask them to change a payment if something comes up. The bank sends me an email when a payment is automatically scheduled, and again when it is paid.

Once I got comfortable with the automatic payments, I switched to electronic billing. I don’t need to see the bill or waste the paper if I know it is being handled for me which is why I encourage you to manage all your finances online. I do check the few bills that may change, like the credit card and cell phone. Now, I see few of my bills. They are all sent electronically to my bank, automatically paid, and scheduled in Quicken–all without intervention from me.

[ad name=”inlineleft”]We also use an envelope system. I know how much we need for groceries, baby crap, clothes, etc. At the beginning of the month, I take out all of that money in cash and put it into the appropriate envelopes. Other than this money, almost everything else takes care of itself. I don’t need to pay attention to by bills on a day-t0-day basis. Any extra money that comes in gets divided among our debt repayment and savings goals, which only takes a few minutes to arrange.

I glance over my budget at the beginning of every month, but I only review it when something changes. If we change our cell phone, or our budgeted gas bill changes, I make the change to our budget. Other than that, it’s not even an afterthought.

That’s how we do it.

Another option includes the Sloppy Math System. This consists simply of rounding deposits down and rounding expenses up. The more you round, the better the system works. If you round every deposit down $50, and round every expense up to the next $10, you are naturally building more room for error. Given enough time, you will have enough of a slush fund to handle emergencies and the occasional impulse purchase.

5 Ds of Identity Theft

Finance

Scanned image of author's US Social Security card. (Photo credit: Wikipedia)

Identity theft is, at its most basic level, the act of using someone else’s identity or credit without permission. From a stolen credit card to a forged phone bill in Moscow, it all involves your good money paying for the bad habits of another. Thankfully, there are ways to reduce the odds of having your identity stolen. LTC David Grossman reviews the “5 Ds of Survival” in his seminars and books. Today, I bring you the 5 Ds of Identity Theft.

In the words of the master, “Denial has no survival value.” Denying the possibility of identity theft will not keep it from happening. You have to take steps to keep yourself safe. “It could never happen to me” is not a valid defense mechanism in any situation, financial or otherwise.

Deterrence means keeping the information away from identity thieves. The harder it is for the criminals to get your information, the more likely it is that they will move on to an easier target. And yes, a kid stealing Grandma’s credit card is a criminal and needs to be treated as such.

Some people use a shredder, but not me. I have a fire pit that catches all of my personal documents. I’d like to see an thief get my social security number from the ashes in the bottom of the pit.
Don’t carry your social security card. If you lose your wallet, your driver’s license and social security card contain all of the information needed to steal your identity. Keep it locked up at home and don’t give the number out unless absolutely necessary.
Don’t use stupid passwords. Anything listed on yourFacebook profile or otherwise available on Google in association with your name is a stupid password. Don’t make life easy for the people looking to screw you. Your birthdate, maiden name, and “password” all qualify as stupid passwords. Use KeePass to securely generate and store your passwords.
Lock up your personal information. I throw two large parties every year. Purses and wallets get stored in a locked bedroom, so nobody can grab them. That was a lesson learned the hard way. If there’s someone in your home you don’t trust absolutely, lock up anything that can be used against you.
Don’t release personal information to anyone, for any reason, unless you have initiated the contact. Don’t give a credit card number to a telemarketer. Don’t give a spammer your personal information. It’s your privacy, use it.
Don’t click anything in an email. If it’s a company you have a relationship with, type the address in your browser by hand.

Detection is up to you. Some credit card companies will alert you to suspicious purchases, but you can’t rely on it. I was once called because I went to the gas station and Best Buy, which is apparently a common pattern for a stolen credit card.

Examine your credit card statements. If there’s a purchase you don’t recognize, find out what it is.
Watch for bills to arrive as expected. You do know when you pay the gas bill every month, right?
Watch for unexpected bills to arrive. If you get a statement for a credit card you don’t have, it’s a problem.
Check your credit report three times per year. AnnualCreditReport.com will let you see each of the three major credit reports each year. Space them out so you see your report every 4 months.

Defending your identity happens after you’ve detected a theft. This involves getting your credit and sometimes, your money, back.

File a fraud report with the credit bureaus. This will force potential creditor to follow certain procedures before opening new credit accounts for your identity, including calling your cell phone, if you choose. Stop the identity theft in its tracks.
Close the fraudulent accounts. Don’t leave them open for abuse.
File a police report and report the fraud to the FTC at ftc.gov/idtheft . This may or may not help catch the criminal, but without it, there will never be a punishment. Make stealing your identity an expensive proposition. Hopefully, 1o years of his life will be wasted in jail in return for the theft.

Destroy. Unfortunately, fraud and identity theft are not yet capital crimes. Maybe someday.

Deter, detect, defend. These are the secrets to avoiding, and recovering from, identity theft.

Money Problems: Day 12 – Paying for College by Doing Without

Finance

Today, I am continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

On this, Day 11, we’re going to talk about one method of paying for college.

I have a secret to share. Are you listening? Lean in close: College is expensive.

You’re shocked, I can tell.

The fact is, college prices are rising entirely out of proportion to operation costs, salaries, or inflation. The only thing college prices seem to be pegged to is demand. Demand has gotten thoroughly out of whack. The government forces down the interest rates on student loans, then adds some ridiculous forgiveness as long as you make payments for some arbitrary number of years, creating an artificial demand that wouldn’t be there if the iron fist of government weren’t forcing it into place.

Somebody in Washington has decided that the American dream consists of home ownership and a college education. Everything is a failure. He’s an idiot.

College isn’t for everybody.

Read that again. Not everyone should go to college. Not everyone can thrive in college.

Fewer than half of students who start college graduate. The greater-than-half who drop out still have to repay their loans. Do you think college was a good choice for them?

Then you get the people who major in art history and minor in philosophy. Do you know what that degree qualifies you for? Burger flipping.

Yes, I know. Just having a degree qualifies you for a number of jobs. It’s not because the degree matters, it’s because HR departments set a series of fairly arbitrary requirements just to filter a 6 foot stack of resumes. The only thing they care about is that having a degree proves that you were able to stick college out for 4 years. That HR requirement matters less as time goes on and you develop relevant work experience.

A liberal arts education also—properly done—trains your mind in the skill of learning. First, not everyone is capable of learning new things. Second, not everyone is willing to learn new things. Third, a passion for learning can be fed without college. If you don’t have that passion, college won’t create it. Most of the most learned people throughout history managed without college, or even formal education. Even if you want to feed that passion in a formal classroom, you’re assuming the professors are interested in training your mind instead of indoctrinating it with their views.

Now there are some pursuits that outright require a college education. The sciences like engineering, physics, astronomy, and psychiatry all require college. You know what doesn’t require college? Managing a cube farm. Data entry. Sales. I’m not saying those are bad professions, but they can certainly be done without dropping $50,000 on college.

Some careers require an education, but don’t require a 4 year degree, like nursing(in most states), computer programming(it’s not required, but it makes it a lot easier to break into) and others. Do you need to hit a 4 year school and get a Bachelor’s degree, or can you hold yourself to a 2 year program at a technical college and save yourself 40,000 or more?

That should be an easy choice. Don’t go to college just because you think you should or because somebody said you should, or to get really drunk. College isn’t for everybody and it’s possible it’s not for you.