Friday, February 29, 2008

The Painful Stuff: How To Deal With People Who Don't 'Geddit'

If you've read my blog thus far, you realize I have a good-sized dose of pragmatism in my personality - life is not all kittens, sunshine and flowers, and I'm okay with that.  It makes me celebrate the good stuff more.  

Sometimes life is unfair - really unfair.  And sometimes, you have to explain yourself to people when what you really want to do is tell them to go away, or maybe to stuff it.

My husband and I are dealing with infertility.  It's very painful - more so than I ever expected it to be.  Little comments by friends who don't know (we haven't been very open about it) or small things can be extraordinarily painful.  Even the well-intentioned comments of others can feel like being whipped by a stick fighter from the Philippines - death by a  thousand small cuts.

It's like wearing your nerve endings outside your skin.  You try to put them back under, or cover them with gloves and knee socks, but they work their way out anyway.  Being different from the world around you sometimes hurts.  A lot.

Being different from the world around you in any way can be painful.  It's hard to say no when everyone is going out on the weekend, or your friends are all planning a great vacation that you'd love to go on but can't because you are paying off debt or saving for something, or simply don't make enough.  And since we live in a world where instant gratification is not just expected, but actually demanded, there's a world full of people who just will never understand.  

But sometimes those people who don't understand can get pushy.  "Live a little" they say.  "Oh, c'mon, join us" they implore.  But you can't, or really really shouldn't.  

And so you say "No thanks.".  And you stick with it.  But still, it can be tough to be different, and inside you sort of wish you weren't.

That's human.  Perfectly acceptable.  

But if you can reach a point where you can celebrate the differences, then you win.  I'm still working on being gracious inside when someone tells me "Oh, I get pregnant so easily" like it's some sort of superior trait.  Or "Goodness, when ARE you having kids anyway? It's not like you guys are young."  I'm gracious outside, and I'm faking it 'til I make it.

Because faking it 'til you make it works.  I know it does - I am no longer bothered even a little when people do things without me because we have different financial goals.  Those goals drive me from within, they are the candle that burns a thousand kilowatts brighter than any trip with friends or dinner out can.   

It's again about wanting what you have.  And I know that we will have a child with treatment, or have a  child by adoption, so even the painful stuff has a buffer for me, although sometimes the buffer is stronger than other times.  And in the meantime, I list my immense and varied blessings - great marriage, wonderful family, seven beloved nieces and nephews, good job, great house, good friends, great life.....

Same with money.  When you can say "Oh, I'd rather cook in" and mean it, something changes within.  Say it enough times and you will eventually mean it.  Because you go from thinking about what you don't have, to thinking about what you do.

It's a small change.  But it's bigger than the world in many ways.  And eventually, you'll wonder what all the fuss about going out, or having kids to be a 'young mom' or whatever - is all about.

Because you know your way is the best way for you.  And that, that one piece of knowledge, is the most powerful knowledge in the world.  And so you can look at the person who tells you to live a little and think "I'm living more than a little." And you smile.  And mean it.  

They may never 'geddit'.  But that doesn't mean you have to let them bother you.  

Wednesday, February 27, 2008

How to Be Optimistic In Uncertain Circumstances

It's all over the news - the economy is going to hell. At least, if you believe the media, and the economic indicators.

I'm not sure it's going completely to hell yet, but it's certainly heading into a long dwell in purgatory. I think there's some cause to worry - about jobs and financial well-being.

Lest I sound completely glass-is-half-empty, I think that there is a way to feel optimistic. It is very simply, to use a variation of the serenity prayer. Whether you are religious or not, it makes a lot of sense. Here's the part I like:

Help me to accept the things I cannot change

Give me the courage to change the things I can

And the wisdom to know the difference.

I live a lot with financial uncertainty. I'm a consultant. Sometimes I don't know whether I'll have a job at the end of the month. I always have so far, and I'm pretty good at predicting when it's time to find another job, but I take a large amount of risk every day.   Great rewards, but very high risk.

Over the last few years, I've managed to become more comfortable with rampant job and income uncertainty. Eventually you grow some thick emotional skin about it - sitting around worrying all the time is just too stressful to sustain. But having gone through enough rounds of what-will-happen-next-itis, there are some things I have learned about how to be okay with it.

The first is obvious. Guess what? You personally can't change the way the economy is going. You can't prevent a future job loss. So let it go. That doesn't mean you shouldn't be updating your resume, fishing for opportunities, and watching your portfolio, but it does mean that you can't control what happens next, so let go a little.

But you absolutely can control your personal little economic sphere right now. And doing so may make you happier.   That means maybe changing some things.   Toss the catalogs, no more internet shopping, no more quick trips to the mall.  Start transferring more money to savings and stop using credit cards.  What you want is to start building up enough to get you through a rough time.  

If you have a lot of debt, and a little savings, that can feel daunting.  But literally, every $1 you save, and every $1 you don't owe is something, and will make a difference.  

Which brings me to the other thing I have learned about how to stay positive when things look grim - start thinking small.  Very small.  Celebrate every little thing you save.  Celebrate every bit of debt you pay.  Celebrate 2 hours of overtime that gets you closer to your goals.  Think going for a walk instead of a big night on the town.  In other words, downscale your expectations.  

Why?  It works like this: If you need big showy displays of wealth or constant new clothes or or be happy, you are always upping the ante.  It's like those extreme sports people - what they are doing is never good enough, it's the next big thing.  In contrast, the people who are happy with the mountain they ski every weekend are probably more happy - because they have what they need, right there, not over the next mountain peak.  

And that's what you want - to want what you have.

That doesn't happen overnight, but once it does, you realize that the economic risk hits only your wallet, not your well-being.  At first, it may feel boring to be home on Saturday night.  But then later you may find that going for a walk before making dinner and watching reruns of CSI: Miami feels pretty cozy, relaxing and good.  

After the economic crisis is over, you may, like Sander and I, find you prefer date night at home in front of the fire most of the time.  That you actually enjoy the small things better.

So accept what you can't control, change what you can, and think in the small scale.  Your wallet, and your well-being will thank you.

Tuesday, February 26, 2008

To Be or Not To Be Mathematically Optimal

J.D over at Get Rich Slowly reviewed Dave Ramsey's Total Money Makeover. Having never read the book, I can't speak to it. But one of Dave's points is that the debt snowball he recommends is not always mathematically optimal, but it gives small wins, and a sense of success to those deep in debt.

That comment, along with a conversation I recently had with someone who presented compelling numbers about why it's not in my financial best interest to pay off a house early hit an interesting nerve, and I've been mulling it over ever since.

So, is it ever financially smart to do what is not mathematically optimal when it comes to money?

I believe the answer is yes.

That said, let me be up front here. I don't like debt. It may be considered a 'fact of modern life' but I disagree it has to be - at least it shouldn't be a permanent addition.

I think a lot of really smart people have really good points when they say things like "if you can make more in the stock market than your interest rate on your debt, you should invest that money". It's not a bad point, but it's a point that has more holes in it than swiss cheese. Here's why:
  • First, it assumes your portfolio is going to have the gains to offset the debt.
  • Second, it assumes you can weather a financial crisis and still maintain the minimum debt payments for as long as that crisis lasts, or otherwise always be able to maintain your expenses.
  • Third, it underestimates what can be accomplished with the savings and investments for the rest of your earning life that step up when you no longer have to send in a car payment, a mortgage payment, or pay a credit card bill.
  • Fourth, it makes personal finance purely about the finance. It isn't - there's a lot of human emotion involved in our financial life, which study after study shows. It makes the assumption that we humans make decisions purely on logic. Nothing could be further from the truth.
So let me tackle the first assumption: My portfolio will have the gains to offset the debt

Over time, this has been historically true. But in practicality, sometimes it will, and sometimes it won't, is the more likely reality. Few of us are Warren Buffett. I spent several years in the early part of this century watching my 401k balance just stay the same, no matter how much I deposited - and that was with some serious deposits, and highly rated funds. Now, I was in it for the long haul, but I bet there were a good many people who probably had investments that they intended to have use during that period.

I believe in saving and investing - very much. I believe if you aren't saving an absolute minimum of 10% of your gross income for retirement, and another 10% of your net for a rainy day and your goals, you aren't saving enough.

Investing in index funds is the only way to fly, in my opinion, as they statistically outperform actively managed fund.

Still, there are no guarantees. Past performance does not indicate future results, as Wall St. likes to say. And a bird in the hand.....

Assumption 2: I will always be able to make those debt payments, no matter what

Really? So you will never experience a job loss? Or a chronic medical condition that forces you to stop working long before you planned? Or a family crisis that comes just when the big bills are due? Or a reduction in pay?
Oh, and you are sure your emergency fund (assuming you have one) will hold out for as long as it takes?

Well, best of luck to you. I certainly hope you are correct, and all those bad things happen to other people.

Maybe you could lower your outgo so that a job loss wouldn't send you under?

Many people manage to live on one income, and that's a great way to do protect against a financial crisis. But unfortunately, unless you are living on one income and saving the other, and the other is sufficient to cover your expenses indefinitely, the risk of losing that income you live on is tremendous to you.

We now live in what has been dubbed 'the uncertainty economy'. Stagflation seems to be heading our way. I personally don't see a bright and cheery future for every person's job over the next few years, but hey, whatever works.

Assumption 3: Even with no debt, the years of compound interest on the investments will be worth more.

There's some actual hard math to support this one. But let's take my mortgage payment. We spend about $3600 a month in a high cost-of-living area. Now let's say in 15 years I no longer have that mortgage. So I invest the addition to everything we currently invest.

And I have no mortgage. I still bet I retire mighty comfortable. And I've had 15 years where I can tell a bad boss to take this job, 15 years of taking the work I like over what I need, or 15 years off my work life all together. Seems like a good trade.

Assumption 4: The math, and the money, is what matters

If that's what drives you, good. If you can get past the three hurdles I listed above, and you still think that maintaining your low-interest debt is worth it, then it works for you. And that is what counts here most in personal finance - applying what works best for you.

There is no single answer. Me, I'm security minded. I grew up with very little, and a huge amount of insecurity and lack of stability. The peace of mind I will buy with a big old zero in the debt column is worth more than the Sultan of Brunei - to me. And the freedom? I can taste it.

Still, I acknowledge it isn't for everyone. Sometimes the math matters. The only one that can search your soul and figure out what is most important is you.

There's more than one way to live, that's for sure. But for me, there is no greater freedom than the freedom to choose what to do with all of my money because I owe no one anything.

As for you, well, you'll know what the right thing to do is.

Friday, February 22, 2008

Work Is For Money

Your Money Or Your Life by Joe Dominguez and Vicki Robin is a great book.  

One of the concepts that has stuck with me since I read it years ago is the idea that work is for money.  In other words, you go to work to earn money, not for personal fulfillment.  In their words, there is no 'job charming' and so you should find something you like to do, and that maximizes your earning potential.

I think the reason this has struck me is that I think, to a certain extent, it is true.  
Not 100% true, not at all.  I know a lot of folks who have their dream job, they do what they love, they love what they do, and they would go to work whether they got paid or not.    That said, I'm not sure that all of them would go do that job on the schedule required of them, or as much as they do, and so on.  Maybe some would.  

I admire those folks.  I've found my passion - writing, but it may be a while before it is a lucrative, instead of merely enjoyable, pastime.  

For those of us who haven't found the way to make a living at something we love so much we would still do it unpaid, or haven't found a way to make a living at the things we love to do, there is our job.  Our career, even.  

I like my job. I'm pretty good at it, and I work hard most of the time.  I consider it a career, my first of what I hope will be a couple.  But if I didn't need to get up and go to work at that job every morning, I wouldn't.

I would trade my life energy - that limited amount we all have - for something else.  And that is the crux of the work is for money argument.  If you didn't have to, would you?  In my case, the work that pays me the most money I would give up.  Maybe not too quickly, I'm security conscious.  Eventually though.  

This is the idea that drove our 10-year plan.  It also makes it easier to get through the tough spots.  Work is for an end goal, which for us is financial independence.  It is a means to an end, not the end in itself.  And knowing there is an end date makes it even more freeing.  All we have to do is manage to maintain employment and do the best we can for the next 10 years an 10 months, and then we get to transition to what is next, which is a combination of some work and much more time.

There's only so much time we all have on this earth.  No one knows how much time is left on their life clock.  And while I like my nice home and stuff as much as the next person, there are other things that outweigh our desire for say, a flat screen TV.   That's not to say that we are becoming anti-materialist, certainly not.  One of our goals is to complete furnishing and renovating our home.  But there's only so much stuff that I'm willing to trade my life energy for.  
This is a hard concept for a reformed spender, and sometimes I ignore it for the immediate gratification of shopping.  But ultimately, I have to trade my life energy to earn that money, and that drives me to rank things by importance.  

And ultimately, adding years to that 10-year plan so I can have one more outfit is not the thing that rings my bells.

Work is for money.  That doesn't make work a bad thing, and it has a lot of good to it - food, shelter and so on.   But after that, how much you spend  = how much & how long you have to work. 

 And to me, it's just not always worth the money.

Tuesday, February 19, 2008

December 24, 2018

It's a big day for us. Not only is it the day before Christmas, December 24, 2018 is the date my husband and I have chosen to put the final step of our ten year plan into action. The plan that culminates in downshifting.

Downshifting is defined as making major changes to your lifestyle caused by accepting a reduced level of income by Wikipedia. (Downshift is also the name of a Transformer Omnibot, circa 1985, but that's just some brain lint I picked up with the help of Google).

But I don't think Wiki gets it quite right. I think it's trading money for time. Most of us trade time for money every day when we get up and go to work. 40 or more hours spent working, plus time getting ready for work, travelling to and from work, and so on.

When you downshift, you trade money for time, giving up some income to have more freedom.
We're on a 10 year plan to get there. And we will need every minute.

I'm a believer in setting goals. I think having something to look forward to, and to work towards is a tremendous motivator. Especially over the last few years, as I have watched some long-desired goals come to fruition, the pull towards setting and acheiving targets has become more and more a part of my - and our - life.

Downshifting is, for us, an uber-goal. It's the goal to beat all goals. It means that we can sufficiently afford for me, and potentially Sander, to not get up and go to work in our fields. It means we can live on less, or we've saved sufficiently to cover the shortfall between our income in the IT fields we are in, and what we move towards in the future.

Some people manage to downshift right at the start of their lives and stay there. They decide that time is worth more than money to them always, and live their lives accordingly. Others decide early on that earning money is what matters. And then there are those of us who never made a definitive decision either way, but have somehow landed in one camp or another - working too much or working too little.

Sander and I fall into the camp of those that found themselves very busy somewhat unintentionally. I landed in a project-based, feast or famine field, and he, while having somewhat better work/life balance, has a long commute and stressful job.

For a while now we've been daydreaming about what happens when we're ready to get off the treadmill, and we finally chose a date to make it happen. From ten years out, many things could happen, including not being ready for a multitude of reasons from the financial to the 'just not ready to quit yet'.

But we have a plan. Some parts are detailed, some less so. The highlights of the plan to get us there are as follows:

  • Pay off all cars, and have enough saved to pay cash for at least one replacement car.
  • Pay off our 2nd mortgage.
  • Pay off as much of our mortgage as we can.
  • Have a minimum of a year's worth of savings in a high interest savings account. Two years is preferable.
  • Have reached our target retirement savings goal for the time period (we intend to keep adding to it).
  • Have some seed money in the event my husband decides to open the bar he daydreams about.
  • Fund college savings accounts for our future children for an as-yet-undetermined-but-sufficient-in-our-eyes amount.
  • Have done all the major work on our house that we plan for in cash, so that the investments we need to make are primarily cosmetic.

Needless to say, this is a heckuva punch list. We're pretty far away from a lot of it. But...we have time. And we have a plan that we're working towards, a dollar and a day at a time.

On December 24, 2018, I intend to leave the world of full time work and long commutes for the last time. That doesn't mean I have no intention of working again. If I cannot provide the income we will need by writing, which is my goal, I will take a job that supplements whatever writing income I have coming in. But it won't be full-time, and it will be something that requires a few less Saturday evenings spent on a plane for work.

We are not sure if we will both downshift at the same time, and my husband may not choose to at all. We are preparing as though we both will, and can adapt our plan as needed.

Why? Well, that's more complicated for us. For me, it's because I actually think it's terribly important to be available, engaged and around as children get older, and we intend to have children that are heading towards their preteen years at that point. My husband agrees.

We also see how busy we are now, and we know it will only get more chaotic as we start our family. We're working on some flexible work options for the meantime, but at some point we may need to stop the roller coaster for a while.

Lastly, while we both enjoy what we do, there are things we love better. For me, writing is the job I will do no matter if it pays me or not. My husband hasn't chosen the dream he wishes to follow yet, but when he does, we will be ready.

A lot can happen in 10 years and 10 months, so we're keeping open minds and staying flexible. As time passes, we'll add detail to our plans, and adjust where needed.

In the mean time, I look forward to a VERY Merry Christmas that year.

Monday, February 18, 2008

No, I Just Thought About It More.

Many years ago, Amy Dacyczyn, author and publisher of The Tightwad Gazette was informed by someone that they could never be as creative as she was, as it was a natural talent.  To this, Amy replied "No, I just thought about it more".

The thing about living below your means, frugality and practicing thoughtful spending is that it takes planning.  It takes thought.  It takes foresight.  It takes thinking about what you are going to need - for food, for clothing, for vehicles, for housing, for heating and everything in between - in advance of needing that thing.  If you know you will need or want to purchase/obtain something in advance, the time allows you to shop around, look around, and find the best possible thing at the best possible price.

I was thinking about this in my kitchen tonight.  I spent about an hour in there, having a little time to cook in between work deadlines.  As I was preparing dinner, I was also cooking something for my lunch at work for the next 2 days, packing my husband's lunch, filling the butter keeper, putting bread for my breakfast of toast for tomorrow in the toaster oven, and filling the olive oil jar.  

It wasn't so much that I was multitasking, but that I was employing foresight.  Dinner tonight isn't something that will have leftovers, so I needed lunch food.  And since I'll be at work late tomorrow, I'm making enough for the following day as well.  And this one hour investment of my time in the kitchen allows me to spend much less time on a busy night.  

In the same vein, I headed upstairs to pull out clothes for the next few days.  The last thing I want to do at 5:30 in the morning is choose an outfit, so I make a point of picking out clothes in advance.  

Employing this approach is also why last December, after the holidays, I was buying gifts for my nephews and nieces next birthdays.  I put them in a closet, and pull them out at the appropriate time.  Great gifts for great prices.  It's also why our garden pays off - I decide in January what I want to eat in June.  

Those who aren't big fans of planning - and I am married to one of those people - do not understand how anyone could want to plan what they eat, wear, and so on.  But it helps - our lives are infinitely less chaotic when we plan.   And while planning things all the time isn't always fun, it has allowed us to steadily check off a series of goals.

Our biggest goal is to downshift in 10 years.  December 24, 2018 is the day we are planning to get me off the corporate ladder.  This takes a huge amount of planning, savings, and thought, and it's not going to be easy.

The goal is the thing that keeps us looking forward.  It's what gets me into the kitchen when a takeout pizza is calling.  It's what has kept us from buying things we don't need, instead choosing to invest the money both literally, and into our home.  

The savings gained by thinking ahead is hard to estimate.  I can calculate easily what we save by taking lunch.  But the cumulative effect of looking ahead has literally saved us thousands, if not tens of thousands, over the years.  And over time, foresight and planning tasks become second nature.  I don't even consider if I feel like packing lunches any more, it's automatic, built into my schedule.  So are many of the other things we do.  

I believe thinking about things pays off.  I know it does - I look at our home, our bank account, an our life, and I have proof.  But it's not always simple to learn how to plan ahead, or change existing habits.  I goaled myself to change 2 expensive habits a month.  I still do, although there are fewer now to change.  

So think a little - what is it you need to do tomorrow, next week, next month.  Look around for that thing.  Try making it yourself.  You'll thank yourself later.

Saturday, February 16, 2008

Deciding What Is Important

Approximately 10 1/2 months ago, my husband and I bought our first house - a beautiful old colonial in need of...well, everything.  Or almost.

Structurally it's very sound.  But otherwise, it has major infrastructure needs - new wiring, the oil tanks need to be replaced before they seep, and we've got a small barn that is currently rather slanted and falling apart.  Oh, and then there's all the appliances that need replacing, cosmetic work, and furniture, rugs and so on.  Tack that on to the fact that we moved from an 1100 sf apartment to a 2300 sf home....and, well...hmm.  

Homeownership isn't for the faint of heart.  Especially not an older home.

It's hard when you own a home not to want to do everything right now, immediately.  And society is full of temptation - catalogs, malls, commercials...if you can dream it, you can buy it. Especially the first home, the one you've dreamed about, waited for, idealized - the desire to make it all perfect can be maddening.

But there's that thing called financial solvency, and in my humble opinion, that's important too. So my husband and I have a lot of lengthy discussions filed under the header of 'prioritization'.  

These discussions are hard because home improvements are cumulatively very expensive.  It's not that a can of paint is particularly pricey.  It's that 15 cans of paint plus painting supplies and primer in order to tackle all the spaces with rotten paint jobs is hundreds of dollars.  Or, a couch isn't that bad - expensive, but doable.  It's when we add a rug, coffee table, chairs and lighting that it starts to make me squeamish.  And then there's the not-so-rewarding but necessary purchases.  

Add it all up, and, like us, you may come up with a list that seems near infinite.  And the knowledge that you, like us, are years and years away from completion of that list.  Oh, and by that time there will be a whole new list.  Welcome to the club.  Have a drink.  Have two.  You'll need them.  

Back to this prioritization thing.  My husband Sander and I spend a lot of time on this.  One of our major decisions early on was that all home improvements happen in cash.  We talk sometimes about an addition, and that might not be entirely cash, but for right now, all work or new purchases happen entirely in cash.  We pay off credit cards that we use  for points every month.  

So the cash thing is one limit we set.  The other is that home improvements cannot impair our other savings and debt repayment goals.  We have a car loan, and a first and second mortgage, plus many goals for saving that need to be attended to.

Then it's on to where the cash available for the house gets spent.  

We shoot for a balance of infrastructure work and things like furniture, lighting and so on.  A little bit of visual happiness and comfort, as well as the necessary, less sexy improvements. Still, there's a lot of negotiation that goes on.  And because this is real life, neither of us gets everything we want.  

I tend to be the maker of the lists of what we want, Sander adds to them, and then we hit the negotiating table, which isn't really a table, more like a series of conversations via email and in the car when we are driving somewhere.  Occasionally these discussions happen while looking at the budget, but often we are not.  I keep enough of our financial picture in my head that we can have pretty detailed conversations about it.  And when I'm not sure, we put the conversation on hold until we can verify the amount in question.  

What makes the conversations work for us is that we've come to understand that we are always trying to make things better for our home and our life - we just go about it in different ways.  It's really a listening exercise for both of us.  

I think our parameters - cash and not impeding other financial goals, have made it easier.  It's the boundaries that tie our discussions into the realm of reality.  It's also driven by need.  If we don't replace our oil tanks, a seepage issue could cost us $50,000.00.  If that's not incentive to spend the $2800.00, I don't know what is.  

Still, it's an ongoing thing.  The discussions around what's next are never really done.  

Wednesday, February 13, 2008

12 Goats, 2 Chickens and A Camel

Many years ago, as my older sister was preparing to be married, a friend of hers and I negotiated her wedding contract.

Her husband to be was Jewish, and traditionally, jewish weddings come with a Ketubah, or contract. Ketubahs were actually the first contracts that spelled out a woman's rights in a marriage. A fairly profound idea at the time, that women had rights.

So these contracts were originally typically negotiated in livestock. After some haggling, we came up with the right price - 12 goats, 2 chickens, and a camel.

I'm fairly glad I never had to pay up. I'm still not sure where exactly one finds a camel in the Boston area. Stealing from circuses was never my style, and after that I ran out of ideas.

What drove the negotiations was the perception of value - and to be honest, lots of liquor on the negotiators part - of the commodity that was being contracted for. In this case, I think my sister is well worth quite a bit of livestock. I'm sure I'll get hit for that later.

But regardless, we negotiated not based on what other brides had traded for, but what the perceived worth of THIS bride was.

And I believe that it's a good approach to carry forward in your life. For example, we're in a slightly fuzzy housing market now. Prices are down, but loans are harder to come by. Sellers are afraid to lose money, buyers don't want to buy too high.

So they look at 'comps' or comparable prices. I think that's a great idea. Fabulous. Good to know what your market is. But it isn't all the picture, and perhaps it's not even most of the picture. There is this ephemereal thing in negotiations that is much more emotion than it is fact or deliberation. And that is where the room to wiggle comes in.

When we bought our house, the market was slowing. We signed our purchase and sale agreement in January of 2007. Things were coming down, but sellers still expected a spring boom, not unlike they hope for now.

We offered not quite 20% below asking. And the price had been reduced once already.

When we did this, we knew the seller had several options:

  • Walk away from our offer
  • Counter
  • Accept
She could have gotten offended, and walked. It was an awfully low offer.
But she countered, we countered back, and we ended up with a significantly reduced price.

Before we started the offer process, we set our 'walking away amount'. As in: if this house won't go to less than x, we're walking away.

We love the house. We're thrilled to live there. But we were willing to turn our backs. Because ultimately, this wasn't about her feelings or ours. It was a business deal. She wanted out, as the house had become too much for her to maintain. We wanted in. The house had been on the market for a while. It would sell, that was sure - the question was when.

And when was important to our seller.

We didn't know that, but we thought it might be. We took a risk, and negotiated based on what we thought the house was worth to us, rather than what the comps told us. And we came out with a deal that made everyone happy.

Now, I think it's important to be realistic. We had a strong sense of our market.
But we gambled - because we were willing to lose. And I think that is important when plunking down money.

You have to know what your walking away point is. You have to know what you are willing to do to get what you want. And you just might want to look at perceived value as well as the 'comps' on what you are buying. Because I guarantee you, the deal is out there. You just have to be willing to be dissapointed.

And you have to try to find the set point that makes everyone feel like they won. There's a little wiggle room in business deals, all kinds of business deals. You just have to look for an opening, and know your hand. And belive in what you are doing.

Look for the opening, the negotiating point. And make a plan.

Oh, and if you come across a camel, let me know. I still haven't paid up.

Sunday, February 10, 2008

The Thing About Giving

Is that it is addictive.

My husband and I recently started donating/lending to  Much has been made of Kiva in the press, but if you haven't heard of them, they are a micro-lending organization, one who makes small dollar loans to help people help themselves, by funding businesses and agriculture.

I love the idea that this organization supports a 'teach a person to fish' poverty eradication approach.

And I love the idea that I can see the face of the person I am helping.  

Right now, we're funding a loan for a gentleman named Haydar Hussein, a grocer in Lebanon who needs $1200.00 to expand his business.  He's a 43 year old father of two, and he'll pay us back within 12 months, on a monthly basis.  Imagine what a difference just $1200 can make in someone's life.  It brings a whole new perspective on things to me, since that $1200 is just another amount of money to add to the savings goals we have.  

And when the loan is repaid, you can then use the money to loan to someone else.  It's a cycle of beauty, this microlending thing.  

I believe strongly in giving, and as we meet our financial goals, giving will become an ever-larger part of it.  I do believe however, that you must make sure that your financial basics are covered before you give.  That means a roof over your head, enough to eat, and so forth.  An emergency fund is a necessity.  So is security for your family, such as life insurance, a will, and so forth.

But once you've got that covered, giving is a great budget line item.  It feels better than almost any other kind of spending.  

It's a direct correlation between you and making the world a better place. 

And what could be better than that?

If you want to help Mr. Hussein, and help us reach our goal of funding 100% of his loan request, go here:

Sunday, February 3, 2008

How to Avoid A Descent into Madness

I recently started a 7 week stretch of working insane hours to meet some deadlines. Under normal circumstances I leave the house around 6:20 am and get home about 6:30 pm, but this is more like getting home between 9 and 11 each night, 4 nights a week.

Usually our weekend is spent running around - with a large house to maintain, errands to run, and cooking. Now I'm facing weekends in the office. And yet, my life is still going on.

Thank heavens it is winter. At least there isn't the garden to worry about.
I've done this before, as I do project work, which is pretty cyclical. And I've learned that there are ways to minimize the fall into chaos, or at least decrease your rate of fall. The slower the descent into madness, the less money you spend - on eating out, parking, emergency this, I forgot that, and so on.

So here's what I've learned about keeping things under control financially and otherwise when things get a little nuts. I think these rules apply to many scenarios - work chaos, a new baby, and so on.

1. Acknowledge that, at some point, all attempts to maintain control will fail, and the chaos will win. It's good to know this up front, so that you are less surprised when, at some point you find yourself slightly wild-eyed, subsisting on a diet of ho-hos and condiments from the back of the fridge.

2. Start with everything as orderly as possible so that the chaos gets delayed a little. This means a spotless house, stocked pantry and freezer, all the laundry done, and, if possible, meals cooked and lunches packed for as far out as possible. Even clothes set out for a few days, or even a few weeks.

3. Make lists. Pick one or two things that must get done a day to keep your personal life running. This may be paying a couple critical bills, or dropping off the drycleaning, or calling to get your oil tank refilled. Whatever those one or two things are, pay attention to them, and them alone.

4. Make sure critical items are always put in the places they belong. This way when you are completely sleep deprived, overwhelmed and feeling like you are a special guest star in your own real-life version of "Groundhog Day" you know where your wallet, your keys, and your cell phone are.

5. When you have some downtime, split it. Half to a task that has been put aside, half to relaxing. Trust me, you'll think better if you relax occasionally.

6. Think small. Don't think "Oh, I have to clean the house, I haven't touched it in 5 weeks". Think instead "Let me dust that table over there, and water those 3 plants". For one thing, there's a likelihood that you might get the latter task done.

7. Keep up with the things that are important, and let the rest go. If you decide that having the bed made so that it's comfy to crawl into every night and packing your lunch every day are what is important, do those things. Just those things. You choose what matters, and then just move on from the rest.

8. Plan for things to be a bit more expensive. If you are up all night with a newborn, or working 80+ hours a week, you are probably going to incur some expenses for take out, and in other areas. It's okay, just try to keep it down as much as possible.
9. Remember: this too shall pass. You will get through it, even if it took 73 boxes of ho-hos to do it.
And the next time, you'll know in advance to stockpile ho-hos.

Stocking the Pantry Part II

Something that my husband said to me yesterday as we got home from our round of errands stuck with me.  He rarely joins me on my grocery shopping trips, and never on the big stock up trips.  Grocery shopping and meal planning does tend to be my purview, although he often cooks for us, and does stop off and pick things up at the store if and when we need them.

He thanked me for doing this every month, and said he realized how much work it was.

That meant a lot.   Keeping a stocked pantry, stocked cupboards, a full freezer and a meal plan is something of an art.  You need to know what you consume.  What you can fit in the space you have available.  Monitor what you have in the house.  And track ingredients for a series of meals.

It takes a while to really figure out what you use, and even then, sometimes it's easy to miss. Like yesterday, when we bought a big box of crackers, even though I discovered we had crackers at home after we got back.  So now we have a lot of crackers.  

We like crackers, so this isn't too big of a problem.  But I've bought plenty over the years that didn't get used up in time, or we bought too much of, or stockpiled something that we didn't end up wanting as regularly as we thought. 

I've managed to get us to a point where I think I know our needs well enough to mostly get it right.  Here is a few things I've learned over the years:

  • Locking yourself into a weekly or monthly menu where every night has a pre-defined meal may work for some, but it does not for us.  Deciding today what I want to eat in 3 weeks is impractical.  I might find a fabulous sale on something we love between now and then.  Or there are leftovers we need to use up, or a veggie that will go south if not used.
  • That said, I do have a menu plan that I fill in slowly over the course of the month.  I really like the calendar meal plans at and  It helps to be able to look at the month.
  • I constantly try new recipes.  I flip through my collection of cookbooks or look online.  One of my favorite sites is  I've gotten some really great recipes there.  I try to add at least one new recipe a month.  It gives us variety, justifies my cookbook addiction, and has added some fantastic recipes to our monthly repertoire.  
  • If you buy meat in bulk, immediately break it up into meal-sized portions, even if you don't feel like it.  There's nothing less enticing than a 5-lb block of frozen chicken, you, and a chisel after a long day at work.  
  • I make a monthly grocery list, divided by both category and store.  I literally start mine for March the day after I go do a big stock up shop for February.  This means anything I decided we don't need more of quite yet, or I forget is rolled onto the next month's list.  If it can't wait a month, I leave it on the current month's list.
  • While you are making your list, actually check your cabinets and pantries.  I'm all for a deal, but if you can't fit more kleenex and shampoo in your cabinets, you probably have enough.
  • Aim for the ability to eat for 2-3 months out of your pantry in an emergency.  That means buying things you like to eat, and cycling through them, not buying 10 cases of macaroni and cheese and sticking them in a bomb shelter and forgetting about them.  The former is practical. The latter makes you Captain Nuttybananas, the weird neighbor with the bomb shelter full of mac n cheese loving rats.  It's a fine line, don't cross it.  

"But MoneyPenny, gorgeous, sweetie, I hate to plan!" you whine and sulk.  "I don't know what I want to eat for lunch, much less tomorrow or the next day.  And besides, isn't a stocked pantry all full of crap like ramen noodles"

"No, my little Smurf"  I say reassuringly.  "Nary a package of ramen has crossed my path in years.  Ramen is yucky, sodium filled, and did I mention yucky?"  

My pantry has in it things like Massaman curry, coconut milk, bamboo shoots, rice noodles, baby corn, fish sauce and basmati rice in case the mood for Thai strikes.  It has chick peas, black beans, kidney beans and falafel mix in case southern or middle eastern sounds good. Pasta and sauce, of course - add a little cheese and you've got a good quick meal.  Diced tomatoes make almost anything taste good, and are wonderful on homemade pizza.  A few jars of olives for various recipes.  Couscous in abundance - add a little grilled meat on top flavored with spices and some sauteed onions and peppers and you have a meal fit for...well, me at least.  Clams and clam juice for our ubiquitous clam chowder.  

And there is some Annie's Shells and Cheddar in there too.  Because occasionally that's just the thing.  

And I can make it all with a minimum of notice.  So what are you in the mood for?

Saturday, February 2, 2008

How to Prepare for The Apocalypse Part 1

The other day I was talking with a coworker about the refurb job he was about to start on his broken iPod, and somehow we got on the topic of life skills, and what happens when the apocalypse kicks off, society breaks down, and things start looking a lot like scenes from Mad Max, only with fewer Mel Gibson-ish heroes.

His theory was that it's important to have a skill that would be useful, so that you would be allowed in the 'compounds' created by the people who survived. The skills acquired as Technical Training Consultants and E-Learning Consultants such as ourselves would not be in great demand, so it would be important to have some skill set that makes you appealing to the people in the compounds, so that you are allowed in, such as building things, or bicycle repair.

It's highly desirable to be in the compound, as otherwise you would be left as chum for the Toecutter Gang, and that, as we all know, is not desirable at all.

I view him is the best kind of coworker to have - one that keeps things in perspective. Needless to say, we get along fabulously.

Fortunately my small efforts at homesteading, plus some prior experience in the military give me a fighting chance at being allowed in the compound, if not a reasonable option of starting my own compound, which is the superior choice, as long as my husband doesn't object too loudly to sharing the front lawn with a hundred or so semi-permanent residents and extensive fortifications.

I'm sure he'll adapt.

And while this makes me gloat a little to know that I will be welcomed, and that chick in the blue SUV who cut me off last week while yapping on her cell phone will probably become a snack for the roaming gangs, it does bring a sobering bent to my thoughts.

Personally, I have no desire for the apocalypse. I sort of like certain things about modern society, such as movies & medical care, and that there's this cool machine that I stuff full of dirty clothes and it spits out clean ones. My kind of magic, our washing machine. Oh, and HGTV, it would be a shame if that went away. I really love the internet as well. And the idea of never again having a cappuccino from Starbucks makes me mutter in dismay.

My list of things I enjoy about our modern world is near-endless, and this from someone who prefers a book to TV most of the time, and likes our woodstove more than central heating.

But I find it a little scary that the bulk of us have minimal skills that would allow us to survive and thrive in a crisis. We are utterly dependent on the status quo of modern society. Ask the folks who rode out Hurricane Katrina how important it was to have basic survival skills.

Breakdowns in the supply chain of goods and services are devastating. In the dead of winter, many don't have the capacity to survive in their homes, for sheer lack of any non-utility based heat.

I'm hardly one of those types who intends to run off to a homestead in the Dakotas (this would require me living in the Dakotas, so not an option) and start stockpiling Ensure like it's going out of style.

Consider that most of the tasks involving manual labor are those that are looked on with a shake of the head and a shrug in our modern society. Being an executive is valuable, knowing how to chop wood.....not so much. And yet, on a purely functional level, the wood chopper provides a much more needed resource, and requires much less infrastructure to be available - just a simple axe, a stump or another block of wood to chop on, and the wood to be chopped.

Oh, and a cute husband in jeans out there doing the chopping, but that's not a requirement, just a perk.

Under our typical yuppie exteriors, we have begun to cultivate the more basic life skills in our home. Fixing things. Gardening with heirloom seeds for sustainability. Cooking from scratch. Growing fruit trees. Canning our garden produce. Looking for local resources. Using wood from our trees to heat at least part of the house. Sewing. Looking into solar power. Doing these things is better for our budget, the environment, and we get the joy of saying we did it/made it/fixed it ourselves.

The infrastructure that sustains our modern world is fragile. Wonderful, in many senses, but fragile nonetheless. And it's fragility is worrisome to me. I like my modern world. I certainly hope that the apocalypse doesn't occur before I make it to Bali & get to trek the Lycian Way.

But if it does, come on by. Leave your cell phone and SUV at home, and bring your axe. And if you pass the Toecutter gang on the way in, tell 'em I said hello.

Stocking The Pantry

This morning my husband and I went and ran some errands.  By the time we got home, we had spent $384.20.  And I don't mind at all.   Why?

Because once a month or so we stock up our pantry, freezer and cupboards, and today was it.  

The first place we stopped was at Walgreens.  $16.23 bought some toiletries and knee highs for work....I'm just not the person who can go stocking- or sock-free in my shoes.

Then it was on to Market Basket, a discount grocer in our area.  The prices are great, but it's always a mob scene on the weekends, so I try to go no more than 1x a month.  $117.53 stocked us up on milk, cheese, canned goods, cleaning products, bread, veggies and so on.  Many of these items are organic, or biodegradable, and they are by far cheaper at this store than any other.  While we'd like to ultimately switch to an entirely local food diet, at this point we are making compromises.  We will, however, always buy organic if it is available.

Then on to BJs, our 'big box store'.  There we bought soap, shampoo, conditioner, cereal, organic eggs and meat, and a ton of other food for our pantry and freezer.  Total there was $213.07 

Before we left BJs, we stopped into the liquor area for beer and two bottles of wine.  We're having company tonight, so we wanted to be prepared.  We spent $37.37 on a case of beer and 2 bottles of merlot.  We have white wine already.

While our trip was probably $50 or so larger than most months, because of the dinner we are hosting tonight and a few other things coming up this month, this is about average.  We spend approximately $400.00 per month on groceries, paper goods, personal care items and environmentally friendly cleaning supplies.  Some months we're over, some under, but it balances to about $400 a month by the end of the year.  

I don't really shoot for an exact amount each month - I would rather go for an average.  For one thing, this allows me to take advantage of really good deals, like today, when I had coupons for things that we use regularly.  Since we make much of our food from scratch, coupons are a rarity for me, and I wanted to take advantage.

I've tried doing our groceries other ways, and this is what works for us the best.  There's a lot of benefits to my method, including:
  • I  have limited free time.  Shopping on a weekly basis for a full week's worth of groceries is a huge time sink - about 90 minutes to 2 hours, not including meal planning.  This method allows me to spend about 2 1/2 hours one week shopping and putting away groceries at the beginning of each month, and then maybe 20 minutes a week for the remainder of the month.  
  • It also limits my temptation.  I'm easily distracted from my list, so I try to spend as little time grocery shopping as I can.
  • I often don't have time to spend on the weekends checking out farmstands and co-ops if I have to go to the regular grocery store too, but by getting the bulk of the shopping done in one week, I can go check out what is available for local food the rest of the month. It's important to me that we try to buy local, but I recognize that our time issues need to be taken into account. 

Of the money we spent, $17.83 is eligible for reimbursement from our pretax healthcare FSA account - band-aids and decongestant.  I will submit that receipt next week and we'll see that money back in our pockets - and back in the grocery budget, covering about a week's worth of milk, lunchmeat, and veggies.

Over the next 3 weeks, I will stop off at the store to get a fresh veggies, as needed, and milk. That's pretty much it... we're set for most of the month doing it this way.  I may not even need to go grocery shopping next weekend, as we have plenty of the things we need.

Believe it or not, we eat mostly fresh vegetables.  The nice thing about winter vegetables is that they tend to keep, so when you find a good deal, you can take advantage.  We just used up the last butternut squash we got at a local farm for $0.39/lb last week.  And I still have 2 perfectly good pumpkins sitting in my kitchen waiting to be made into soup or a side dish.  I buy lettuce and baby spinach pretty regularly, and occasionally other salad items.  I also try to find good deals on organic potatoes and onions, which we use with absolute abandon.  

We do eat frozen veggies, but not as much as some might think.  We will probably eat more frozen when we switch to more local food next year, between the CSA we joined and our garden.  

By the end of February, we'll probably spend about $440 on groceries.  That means that I'll need to pay attention for the months of March - May.  Not too much attention, but just enough to ensure our budget average isn't running too high until our garden starts producing.  

I don't get the absolute lowest price on everything, and I don't try.  I'd rather buy organic and environmentally friendly.  That said, I want a good deal on that stuff too.

Budget Schmudget, Or How to Have a Budget Meeting

With a not-so excited spouse.  

I believe in Quarterly to Semi-Annual 'State of the State' meetings for couples.  For my husband and I, we go through our budget, we talk about our goals, we talk about what we can and can't accomplish from both a monetary and time perspective, and we take a look at our net worth.

It isn't always easy.  

To be fair to my husband, he's very interested in what we can accomplish using the budget.  But the budget design and maintenance is my job, and the tools I use and the way I track things isn't always meaningful.  

Before I really 'got' that about our budget format, I would get very frustrated when I tried to go over the details, and so would he.  Now that we've gotten some of that on the table, I reworked my approach into something that has started to work better.

For the spouse who is 'running' the meeting, there is homework to be done.  I needed to present a clear picture of all our assets and liabilities - car loan, mortgage , retirement account balances, bank account balances, investment accounts, and so on.  Whatever makes up the picture.

Debts subtracted from your assets is your net worth.
That means ours, despite savings and investments,  is negative right now, but I'll get to that in a minute.  

It helps, in my opinion, to bring a clear picture of all spending.  If we budget $400 a month for groceries, personal care and cleaning products, are we always running over?  Why?  I track for a while and see.

It also helps to bring a list of our goals and their approximate cost.  For example, this year we want to rebuild a small outbuilding on our property, a shed/mini-barn that will become my husband's woodworking workshop.  I've put aside money in the budget, but it's unclear if that is enough.

We schedule the meeting for a Sunday afternoon, or a quiet day when no stress abounds.  We actually made a date for it this time around, and it worked  great.  Basically, it sets some boundaries around it.  Most importantly, that it will end at a defined point.  

I also have found that I wasn't always clear about what I wanted.  Once I explained to my husband that I felt that any item that got added needed to have an equal and opposite subtraction in another area to 'balance out' we did much better.  "Obvious" you say.  "Not so", says I.  Just because I thought it was perfectly obvious doesn't mean he realized that there was not room to add without subtractions.

So we had our agenda, our time, and our documentation.  This time, we spent about 45 minutes and went through June - 5 months is about as good as it gets for us at a time.  Some things required adding in, some needed to be deferred- a chainsaw to take down some trees this spring ousted a photo printer, as the trees were more critical.  And so on.

As for the net worth thing, it was a little depressing, but gave us something to work towards. Despite the fact that we save quite a bit and have only our mortgage and a car loan for debt, the amount of the mortgage means that we have a negative net worth.  

Our goal for 6 years out is to get to zero - where our assets equal our mortgage liability.  This is going to take a lot of work.  But after that, there is nowhere to go but up.  

After our meeting, I came away with a list of things that needed to be added or reworked.  He came away with a clear picture of how much we are spending and saving, and further appreciation for how much work it can be to keep us on track.  

And we both came away feeling pretty pleased with ourselves as a team, instead of tense and stressed, to have a cozy dinner of  homemade clam chowder and popovers in front of a warm fire.  

Because teams should always celebrate their victories, even the small ones.