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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?

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Let’s Talk Pets and Other Unexpected Expenses

Finance

The following is a guest post by Crystal at Budgeting in the Fun Stuff. Her blog covers living expenses, saving for your future, and the fun stuff in between. (Ed. Thanks, Crystal!)

I’ve been complaining on and off about the cost of my poor Pug’s allergies, so I thought I’d do a little post to let all of us vent a little about unexpected expenses. 🙂

Here’s how much Mr. Pug has cost in vet bills and medicine alone since he developed major allergies to meat proteins and dairy in February 2010:

February 4, 2010 – Mr. Pug licked off some hair, so we visited the crappy vet I will never go to again – $185.29
May 11, 2010 – Mr. Pug stopped eating and his eyes looked cloudy, first visit to new vet for dry eye – $177.78
May 12, 2010 – Dermatology Exam, Skin Scraping, Ear Check, and 6 medicines – $254.00
May 18, 2010 – Check-Up on dry eye – $53.34
June 2, 2010 – Check-Up on Ear Infections, Skin Infection, and medicine refills – $134.00
July 8, 2010 – Check-Up on Skin Infection, 2 new medicines, and 2 refills – $146.80
July 8, 2010 – Antibiotics – $60.60

AND we’re scheduled for another $105 check-up this coming week for his hopefully healed ear infection. So, between February 4 and this coming week, we will have paid at least $1116.81 for vet visits and medicines alone. That doesn’t even take into account the $45 bags of vegan dog food that only lasts about 6 weeks or the $500 we spent last year on 5 tooth extractions. 🙁

Thankfully we didn’t get pets until we had excess cash flow, but DANG! He’s an expensive little boy! I love him and we’d pay it again, but I wouldn’t suggest pure breeds for anybody not willing to lay out major dough for something as “simple” as allergies. We would totally let our dogs go if they needed chemotherapy or something (yes, I have my lines), but allergies…well, how do you turn down treatment that can make a pet 99% better? I’m a sucker for his big Pug eyes…I mean, look at him:

Have you had any unexpected expenses pop up? If so, what have they been and how are you dealing with it?

Overbanked

Finance

Last week, when I mentioned that I lost my phone, there was some interest in my self-insurance warranty plan.

Post Office Savings history — Image by brizzle born and bred via Flickr

The truth is, that’s just one of 14 savings accounts I keep. I find it’s simpler to keep track of my savings goals by moving the money to separate accounts than to track everything in a spreadsheet. This lets me tell how I’m doing at a glance.

I have one account each at two major traditional banks. These savings accounts exist to provide a target for an automatic transfer that eliminates fees on the associated checking accounts. Whenever much money accumulates here, I sweep it out and throw it at my credit card.

I also have 12 accounts at INGDirect. I chose ING because they are extremely convenient and, at least at the time, had a competitive interest rate. Different countries have different banking options.

Here are the rest my accounts:

Emergency fund. I deposit $25 every month. I also keep part of my emergency fund in a CD that’s also at ING.
Property tax fund. Every month, I deposit a bit more than a twelfth of my annual property tax bill. When the time comes to pay, I just transfer the money from my account to the tax assessor. It works well.
College fund. Yes, this is a straight savings account. Right now, I’m focused on debt, not college. When my debt is gone I’ll ramp this up. I started this just to get started. From here, it’s a few seconds of work to increase the amount I contribute, which is currently $10 per month.
Warranty fund. Instead of buying warranties, or going into a panic when something breaks, I deposit $50 into this account every month. When something breaks, I take the money out of this account(assuming I have enough) and use it to replace or repair whatever is missing. $50 isn’t a lot to contribute, if you have things breaking every week. I go several months without touching this money, and it’s always been enough to cover what we need.
Vacation fund. This is pure fun money. I sock away a bit out of every check, and occasionally when other money comes in. Then, we plan our vacation around how much money we have here and how many points we have saved on our credit card. Vacations seem like a luxury when we’ve got debt, but I work so much and miss so much of my kids, day to day, that I consider this a necessity. It’s a week of downtime with my family, doing something they will remember. It’s worth it, several times over.
Braces fund. So far, we know that two of our kids are going to end up in braces. One of them will probably be this year. We had more in this account, but stole some to cover our vision therapy bill. When our insurance reimbursement finally comes back, that will go straight into this account.
Camera fund. My wife really wants a prosumer-level camera, so I started an account to save for it. If we go over budget, this is the first account we raid, since this is purely a luxury.
Personal goal accounts. We each have a goal account set up for things that don’t affect the family. As a practical matter, I save to go to FINCON and a hunting trip with my Dad and my brother, while my wife saves for a couple of scrapbooking retreats each year. These accounts are funded solely from extra money and don’t have an automatic deposit.
Car fund. This started as a car repair fund, with a $50 deposit each month. When my car was finally paid off last year, I took half of my car payment and redirected it into this account, to help us pay cash for our next car. Last month, I stole some money from this account to play stockbroker. It wasn’t a lot of money, but I’ve gotten a 25% return over the last 6 weeks.
Internet. This is just a convenient account to catch money that gets paid from things like my Amazon affiliate account.
Held for tax. The name should be self-explanatory. When I get paid from any of my side hustles, I set aside about 25% to cover any tax bill I may be missing. After I file my taxes, I shoot any leftover money out to my other savings goals or my credit card, as appropriate.

I also have a couple of monthly line items in Quicken that I haven’t broken into separate accounts, just to provide an overdraft buffer, like our gift budget.

That’s proof that I am over-banked. How about you? How do you track your savings goals?

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.

The Magic option will have occasional deals, giveaways, contests, and opportunities not available to anyone else.
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.

Please, take this chance to subscribe to the magic.

The 10-Step Saving Action Plan

Finance

: Image via Wikipedia

Getting started saving money is hard. It’s easy to get used to instant gratification and impulse purchases. Postponing material fulfillment takes discipline and deferred enjoyment. I don’t like deferring my enjoyment, but I do it. The path to successful savings isn’t always easy, but it is gratifying, when you give it the time and effort required to see actual results.

Here’s the 10 step plan to successful savings:

Recognize the need. If you don’t understand why you need to save, you won’t do it for long. If you think it’s more important to buy a new car, a new TV, or the fanciest portable gadget out there, you won’t prioritize saving. You need to think about how saving a solid nest egg will benefit you and your future self, before you can be sure you will stick to your savings plan.
Pay yourself first. When you get paid, whether it’s a traditional paycheck or a surprise windfall, immediately drop 10-15% in a savings account you keep completely off-limits, no exceptions. If you make this an unbreakable habit, you will have a surprising amount of money in a surprisingly short amount of time.
Prioritize. Prioritize your expenses. If you don’t care about a particular optional expense, get rid of it! Examine the rest of the bill for things you can trim. Do you really need 5000 channels? Can you make do with just 300 specialized versions of ESPN?
Compare prices. If you buy from the lower-priced store, you save money. No s****, huh? Doing this requires that you forgo impulse purchases and do some research before you buy most things. Shop online, at least enough to know what you should be paying.
Save your change. When you get home at night, put your change in a jar. When the jar gets full, bring it to the bank. A medium-sized mason jar full of silver-colored coins will bring in about $100. Put that directly into savings.
Save your dollars. I pay cash for everything I buy in person. When my money clip gets too many one-dollar bills, I put them all into a box. This would be a phenomenal addition to my savings account, if I weren’t planning to use it for spending money on our vacation next month.
Save the extra $$. If you get unexpected money, don’t let it enter you regular cash flow. Get it straight into a savings account. You weren’t expecting it, so you won’t miss it.
Save the new $$. Save your raise. If you start making more money, save the difference. Like #7, you’ll never miss it. Don’t give yourself a chance to expand your lifestyle.
Club the naysayers in the knees. There will always be people who denigrate your choices. If they tell you it’s crazy to live within your means, or get upset because you don’t want to go to the fancy restaurant, screw ’em. Not literally of course. We’re trying to apply a punishment here, after all. If they don’t like your choice, kick them in the shins.
Reward yourself. Don’t be afraid to schedule rewards at certain savings goalposts. When you get $5000 saved, let yourself take $300 to the high-end steakhouse. When you get $10000, look at buying the camera you want. Give yourself a reason to stay motivated. It is, after all, your money.

This is how we’ve managed to build up a small-but-comfortable emergency fund and tackle a nice chunk of our debt. Do you have plan to save?