Thursday, May 29, 2008
Before I get to the money tips, I thought I'd let my readers know that today I was the subject of an interview by Carrie over at www.ourcommoncents.com. Carrie is spending the next few weeks focusing on Gen X and Gen Y finance, and I was happy to be her first interviewee. Go check it out!
This week, I'd like to focus a little on gift giving. It is what is generally referred to as 'wedding season' around these parts, and between that and all the other gift-giving occasions that come up throughout the year, I thought I'd offer my guidelines on gift spending.
1. Set a budget
You can, in fact, put a price on friendship, or family. And no, it doesn't make you a bad person. My first and foremost rule of thumb is spend only what you are comfortable spending, and no more. My husband and I set a cap for niece and nephew birthdays, for holiday gifts, and for wedding presents. And I don't feel the least bit guilty about it. We give what is right for us.
2. Don't worry about what everyone else is spending
The reality is, someone is probably going to give a bigger or a better gift than you. But that's them. Just because your BFF Jane spent $250.00 on your other BFF's wedding gift does not mean you have to. Ignore the competition, as it were.
3. Don't just get a gift - get a good gift
One of the things I think people get confused on is that good gifts - the ones that are genuinely meaningful and appreciated - are not necessarily the most expensive gift you can get. Really think about who it is that you are giving a gift to, think about their likes and dislikes, their taste.
Don't give a gift that you would like - you may think modern art is the bomb, but if your friend decorates with asian antiques, you missed the boat. Buy something they would like, and whatever your budget, I promise you that you will be successful. This doesn't have to be difficult, just think about what that person likes and enjoys.
4. Registries are not the devil
Everyone, even Miss Manners, likes to berate the greed of modern-day expectant parents, brides and grooms. And while I do think there is a touch of the gimmes to society, I think pointing fingers at greed as the driver to wedding and baby registries is a tad overdone. Often times, registries are a list of things the bride and groom or new parents either need or would really enjoy using. So take it as such - especially if you aren't sure of their tastes. And don't assume the larger priced gifts are often put on there out of greed - sometimes people 'group up' on a larger gift, or the registering party wants the completion discount after the event.
There's no obligation to use a registry. But if the giftees have one, don't judge it. Oh, and if you do use a registry, get them what they asked for. Trust me, if they registered for the red plates, they don't want blue ones. Really.
5. Do not negotiate with gift terrorists
By this I mean - there is often that person who likes to 'up the ante' for gift givers. The gift terrorists just love to spend other people's money for them. Just because Mom is turning 70 does not mean you have to give up all hopes of ever owning a house to throw her a blowout bash because your cousin thinks you should foot the bill. Say no. Say "This is what we're willing to contribute. If it isn't sufficient, we'll do our own thing. Love you. Bye". Lather, rinse, repeat.
This goes for all sorts of gifts and events. Just because the maid of honor for your friend thinks you ought to go to Vegas for the bachelor party does not mean that you should abandon all hope of a nice dinner out locally instead. Be up front, tell people what you are willing to do, and offer to opt out. Do not be afraid of making someone angry. You are entitled to set limits on how your money is spent.
All too often, the price of the gift seems to get confused with the amount of love and thought that went into it. The only way to get away from this is to give gifts within your means, to the best of your ability, and with the recipient in mind. Remember that.
Tuesday, May 27, 2008
Okay, so I never broke out a crystal ball, but I've always tried to project our budget - and our plans, far enough into the coming months and years to try and give us an accurate picture of where we might be at, goal-wise, at any given point.
I have never - not even once - been correct.
That, in itself, is fine, and quite probably, as it should be. I'm trying to forecast likelihoods and possibilities, not facts. I never imagined I could possibly predict what actualy would happen. But I've been farther off than I thought I would be on many things. Sometimes in our favor, sometimes not, sometimes things just happened on a different timeline.
And everything has always worked out. Typically not the way I planned, but always. Realizing this has been enlightening to me. Knowing that our plans get us there, just sometimes 'there' is a different destination than originally planned
No, as a result of this clarity I'm not tossing the budget and the plans. But my husband and I are going to redesign them so that they work better for both of us, and so they are a tad more flexible. Not sure what that means yet. I've lived with my current MS Excel spreadsheet budget for many years, and I've refined it pretty well, so the idea of making changes is intimidating. But what we are doing is not working as well as we would like, so the time to re-invent is here. I look forward to sharing the redesign process and end state with all of you once we go through this process, which may take a few months.
The first part of this is looking at our goals and our fixed and non-fixed expenses. And we need to create a clear vision as to which goals and non-fixed expenses are in line with our values.
One thing I'm learning as a result of our much-longer-and-more-complicated-than-imagined attempts to become parents, is that sometimes, you just have to surrender to the now. Those of you that live in the moment may giggle that it has taken me 34 years to come to this conclusion, but as one of those type-A personalities who lives for my plans and to-do lists, and gauges a good day by what I have accomplished, I can tell you that I haven't come quietly to this conclusion, but have instead been dragged, kicking and screaming all the way.
And yet, it's a lesson that I've needed to learn. Spending my busy life never stopping to smell the roses means I'm tired and burnt out. So I am slowly trying to find middle ground - that place between letting things go and getting things done. Between living for today, and living for tomorrow.
The first step towards more downtime and a sense that our lives aren't completely out of whack is an unplanned weekend away in June. But that's only to aid our decompression. The real key is for us to come up with a way to look solidly at the future and gauge how, and when, we meet our goals.
For that, it's probably time to bring in the cavalry, a financial advisor. While financial advisors don't come with a future-predicting option, it's time to hear an outside assessment of where we stand, how possible our goals are, and what barriers stand in the way. I don't need an oracle, I just need a clear outside picture of where we stand, and help building a map to get where we are going.
The goal of having someone tweak our plans is to free us up to focus on now - having someone point us in the correct direction will allow us to stop staring at the map and get going. So after we refine our goals and our budget, we'll be seeking out a fee-based financial planner to help us formulate a plan and keep it tuned up.
I can't predict the future. But I can make sure we are headed in the right direction - forward.
We're putting in 8 2-foot wide beds with rows between them in the front yard (pictures of our in-process space will come next week). This involves taking about 4 feet of lawn space, and relocating roses, raspberries and other plants in the overgrown perennial garden that was already there. We have a lot of beautiful, mature plants that my husband is relocating in the process.
We had hoped to get the potatoes in last week, but the first garden bed wasn't finished until yesterday, so they will go in this week. We're probably a little behind, but we'll live with it.
A big financial decision came up this weekend - to rototill or not to rototill. Much of this ground is being turned for the first time in years, and the embedded root systems are making it a challenge. After talking with an experienced gardener at our local Home Depot, and pricing out new and used tillers, my husband decided to create the garden by hand, using a hand cultivator we 'borrowed' from his parents, a pickaxe, a rake and a shovel. My husband has the heart of a lion, but we've made a deal that if this gets to be too much, we'll rent a tiller.
We may end up with a smaller tiller for maintaining the garden area, such as the one by Mantis http://www.mantis.com/ but for now, we're going for it the old fashioned, and inexpensive route.
Each bed will be outlined in stone, rather than the traditional raised beds outlined in wood. We only had enough small stones on our property to outline about half of a single bed, so we'll be buying stone in bulk from a local stone dealer. While this is a little more outlay up front, the stone will never rot, can be configured more flexibly than wooden railroad tie-style beds, and looks beautiful.
To build up the beds, we're adding about a 2" layer of compost to the soil. We may add more soil amendments over the years as we need to, but this is our start.
As for the vegetables, they are now living on the deck. I've managed to kill a few plants off by planting them too early, overplanting, or not thinning - it seems to be a rite of passage to be unable to resist the siren song of spring in March, and end up with spindly tomatoes and dead squash plants. Maybe next year I'll be able to resist. But I've managed to plant enough to have extra tomatoes and peppers to give away to a friend and my mother-in-law, so I'm pleased with that. And this year, I've potted only about 1/3 of what I eventually intend to plant on an annual basis.
Next weekend the bulk of the garden will go into the ground, and I'll plant some additional squash, melons, carrots, parsnips and bean seeds. It's a busy time of year, but the end result will be worth it.
Thinking about gardening? msn.com lists 5 foods it is cheaper to grow: http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/5FoodsItsCheaperToGrow.aspx
Thursday, May 22, 2008
Most of the financial information published by the 'big guys' these days seems to focus on the Baby Boomers. Why? They are rich (or they should be) and they are going to start exiting the workforce in large numbers very soon. Or at least they might. At their current overall rate of savings, maybe not.
But I think that more attention should be paid to the Gen Xers - my generation. Why? Because it's becoming more and more clear that in order to fund healthcare and retirement programs such as Social Security for the Boomers, we're going to be stuck with a big bill in a few years.
Now, I fully support a better healthcare solution for all Americans, rich and poor. I'm willing to pay more taxes for that, even. But where my concerns come in is that I'm not sure that our government over the next few years, while handling the unbalanced budget, the deficit, a rocky economy, a health care crisis, and Boomers retiring in record numbers, is going to have the ability to take into account the implications of their economic decisions on future generations.
Which leads me to think that my generation is going to have to save - and save hard, to make up for this lack of forward-thinking.
So here's 5 things you can do to shore yourself up for the uncertain future:
1. Save now, save as much as you can, save often
I think for our generation, savings is going to be our savings. Save for retirement, save an emergency fund, save save save.
Yes, I know savings is boring. Do it anyway.
2. Get out of, and avoid, consumer debt
Put down the Lexus brochure and back away from that flat screen, my friend. If you haven't saved for it, or you can't pay it off for your savings, the hard reality is you cannot afford it. No, I don't care that everyone you know is going on a blowout vacation and you don't want to be the only party pooper. Learn to swim against the tide, and it will serve you well.
Have some debt from more misspent days? Get up a plan to pay it off. Then use that payment money to build savings.
3. Shop for furniture frugally
Furniture, and furnishing the house, can be a big hit to the budget of those of us who are at an age where we're deep in mortgages, child care payments, and endlessly rising expenses. Never been in a used furniture store? My friend, you are in for a surprise. Sure, there are those kitchen chairs your mom had with the plaid seat cushions there, but the other day I saw this cool hand-painted asian cabinet that would look just fabulous in our dining room in the window of one.
No, I'm not telling you where I saw it. Find your own.
4. Shop for everything frugally
Okay, so this is just a carryover from #3. But think of it this way: Let's say you have about $400 a month that you can afford to put towards a car, and $4000 saved to put down on one. You could buy a luxury car for $35,000.00. Or you could buy a slightly used value car for $16,000.00. Buy the less-expensive car and it's paid off in 30 months, or 2.5 years. Then keep saving that $400, while you drive that car until it's 10 years old (yes, cars can - and do - last that long). At the end of that time, you'll have $36,000.00 to put towards your next car, or two. Meaning this would be the last car you finance - ever. Think about that for a minute. Then do it.
Buy the more expensive car....and it'll take you 77.5 months, or almost 6.5 years to pay it off.
And at year 10, you'll only have $16,800 to put down on the next one. So you'll still have a lengthy payoff window.
This thinking can be carried over into almost every type of purchase.
5. Live 1 paycheck behind
It's almost inevitable that our lifestyle expand somewhat beyond starving student status at some point. Not only will a life lived on ramen noodles most likely put you on high blood pressure medication, I don't know about you, but I don't even like ramen in the best of circumstances. And eventually you may want to trade those milk crates for a real bookcase or two.
But what you can do is expand slower than everyone around you. When you get a 3% raise, put 2% into your 401k, and the remaining 1% after taxes into taxable savings.
What you don't see, you don't miss, and quite frankly, you lived just dandy before you got that raise anyway.
There are many more things you can do to save - but the bottom line for those of us who are behind the Baby Boom is that we need to be prepared to cover our own butts - even through retirement. Think about that now.
You won't regret it.
Wednesday, May 21, 2008
We're waiting on a new schedule of doctor's appointments before we book, but we're ready to take the plunge into some much-needed time away, despite the budget impact.As we were discussing and planning, I got to wondering - can you periodically put your goals aside for immediate fun - even if your financial goals involve doing something pretty impressively expensive, like funding a downshift in 10 years? And if not, how do you know?
One could argue that, if a two nights in a bed and breakfast and a few restaurant meals destroy all hope of our being able to downshift, then we're probably in trouble in the first place. But I can't imagine this will be the only time that we consider a little 'up front' fun instead of long-term savings. So I mulling over how I might go about figuring this out.
The pure numbers approach doesn't so much appeal to me. Sure, I could sit here and figure out that for every $500.00 of unplanned expenses, if we saved instead of spent the money, assuming a certain rate of growth, would come out to X. But I tend to see that as fuzzy math - because it's an assumption of growth. No one knows what the markets are going to do, although they do historically grow. And there's a huge distinction between putting that $500 in a CD earning 3%, and in a mutual fund that earns 8%.
And it's not clear to me that money would have been invested for the long term. There is several ways that money might have been used: we would have either put the money towards a savings goal, or towards another, planned, more immediate goal.
That said, it can be assured that spending the $500 means that we'll lose out any potential earnings.
So there's that piece. The other piece is guessing whether our income will sufficiently make up for the shortfall. I can, and do, forecast the budget out several years, but that's not a guarantee of earnings by any means.
I realized that I needed to figure out what we really want to get from this time away - what it was worth to us in non-financial benefits, before I could even begin to calculate the financial impact.
So I thought about that for a bit - and the answer surprised me. Not only did I want rest, but was worn out by worries about our tomorrows, and how to make our tomorrow goals work. I wanted to get away from tomorrow, and live in the moment. I wanted to be able to make decisions no more pressing than what to have for dinner for a while.
I realize that I have over-planned our budget, and at the same time, I was unable to make almost any plans for our time.
We are in limbo, schedule-wise for several weeks of each month due to our medical appointments, and with some work travel planned for, but unscheduled, we have found ourselves able sometimes only to plan out a few days or a week at a time. We don't know when we'll have a child - every month I shift the budget forecast forward a month to accomodate a maternity leave, childcare costs, and other baby-related costs. But we have to keep assuming it will happen, and keep marching to our goals, without the definition of knowing when those plans will come to pass.
Living like that can take it's toll. And it has.
Knowing that if we stayed home the whole weekend, chores and projects would invade our relaxation, the decision to get away is, for right now, the best one we could make. Our mental health is worth the cost.
Eventually, I hope downshifting and early retirement will eliminate this need to escape, to get away, in order to relax. In the meantime, I'm slowly acknowledging that it is necessary for us to periodically get away from our responsibilities, both domestic and work. Isolation from planned time and to-do lists is essential.
The process of sitting down and defining what I truly wanted from this weekend away was enlightening to me. It made it clear that this was a good spend, and that if needed, other money could be shifted around to accomodate our mid and long term goals.
I'm still working out the impact of our decision to our future plans, but now I know that the price tag is worth it.
Monday, May 19, 2008
And my husband is right there with me. We are tired.
The budget, and our goals, have been daunting and overwhelming. The house, while a labor of love, is starting to feel more like labor, and less like love. Work is demanding, and my husband just experienced an involuntary job change due to some restructuring in his office. And then there's the near-constant medical intervention due to our fertility treatments.
In other words, life isn't all that fun right now. It has it's moments, but mostly it is work.
So we've started talking about chucking the budget for a month and escaping for a long weekend. Unplanned. Unbudgeted. No dishes. No laundry. No paint or shovels or mulch. Just rest, relaxation, good food, and unplanned, unbooked, open time. Kind of like the time we had a couple years ago - before all our current chaos.
I'm a planner by nature, so blowing the plan doesn't come easy for me. Especially because I know that our goals will be easily derailed by the drip, drip, drip of unplanned spending. But...(you knew there was a but here, didn't you) at the same time, at what price comes our sanity?
There are other ways we could buy ourselves some serious relaxation. Spend that long weekend money on a housekeeping services for a year, for example. Except that I haven't quite bought into the idea of a housekeeper yet. I'm not all that wild about having someone in my home when I'm not there. I'm thinking about this.
I know that a time may come when I am willing to make the trade of a vacation for a housekeeper or another service, but right now, it also seems like my husband and I ought to take advantage of what times we can just pick up and go away - eventually our fertility treatments will be successful. Eventually we won't be able to just say 'we're tired, let's go'. It seems timely to take advantage now, while we can.
Another reason to up and go - because of those treatments, I am tied to the doctor 2 weeks of the month - we literally can't go anywhere. Also, some planned work trips are in limbo, so we can't make lengthy getaway plans. Work may even impact our vacation this fall. But a 4-day weekend in June we can swing.
Will this impact our goals? Yes. Without a doubt it will. How much remains to be seen.
Will it be worth it? I think so.
Stay tuned for an update on whether we decide to be 'good' or not.....
But there are some sites, blogs and forums that in particular stand out, and I thought I would share them with you.
One of my all time favorite web sites on frugality and financial planning is The Dollar Stretcher. Gary Foreman, the founder is a former financial planner, and he runs a really great website with links to Bankrate.com articles as well as some of his own. If you are looking to cut costs and learn to live within your means, this site is a great place to start.
The Frugal Living area at About.com is a really the place to learn about stretching your money until it begs for mercy. With great articles about how to DIY nearly everything, as well as an excellent forum - much improved in tone and focus by the recent change in guides to Erin Huffstetler, this site is a great resource for those who want to learn to live within their means. And for those of you who aren't familiar with About.com, check it out - there's an area devoted to almost every topic under the sun, from buying antiquest to DIY car repair. It's one of the better informational resources on the web.
Two very similar-in-tone blogs, Trent over at The Simple Dollar, and J.D. at Get Rich Slowly both changed their lives via frugality. Both run excellent, informative blogs, and have acheived my goal of making a living at their writing. Trent recently acheived a lifelong goal of mine, and interviewed Amy Dacyczyn, founder of The Tightwad Gazette.
Liz Pulliam Weston, Jim Jubak and MP Dunleavy are all brilliant writers, for very different reasons. They all write for MSN's money site, and they do it well. I especially enjoy MP's Women In Red articles, which follow the lives of real women trying to gain control of their finances.
Bankrate.com has some of the best financial calculators on the web, and even though I am not her intended audience, I really enjoy Barbara Mlotek Whelehan's Boomer Bucks. This site is serious about money, and a great resource.
On the less-known side, I highly recommend checking out Our Common Cents, a brilliant site hosted by my friend Carrie. Good advice, simple solutions, worth your time. I especially enjoyed her recent article on financial literacy.
Last but not least, I have to offer kudos to CNN's personal finance area, as well as the consistently good articles put out by Money magazine on their money site. Money is one of the few mags I purchase, and their articles are typically excellent. I also enjoy their 'Millionaires in the Making' segments.
Think I should pay attention to your site? I'd love to hear about it. Leave me a comment and let's talk!
Sunday, May 18, 2008
Thursday, May 15, 2008
Interestingly, we do this too. Friday night for us, is sacred time. All too often, our dates are at home - we're gone enough during the week that home is very appealing by Friday evening - and usually involve nothing more dramatic than dinner, a movie, a fire in the woodstove and perhaps a bottle of inexpensive wine. It allows us to decompress and reconnect. Sometimes it's enough downtime. Weekends like our last one, it is not. But it is one of the wisest decisions we've ever made, booking that time together.
No projects are done, no house cleaning, no emails are checked, nothing. We sometimes even leave the dishes and kitchen cleanup until the next morning. This is sometimes hard for me to do, as I am a neat freak. But it's worth it to just sit and be together.
About once a month we go out and have a nice dinner together, but overall we really enjoy the peace and quiet of our family room on Fridays. I might try a new recipe from one of my cookbooks, or make a homemade pizza. In no way do we ever feel deprived by not going out. Quite the contrary, we look forward to our evenings.
My picture of what constitutes a date has changed over the years. I used to enjoy going out to great restaurants each weekend, or the movies, or both. I still enjoy both of those activities, but I tend to prefer to make them a treat. And I want a deal, if possible.
For example, this weekend, my husband and I plan to go see Iron Man. We've waited until the two week moratorium on discount tickets is over, because those tickets cost $6.50, not $10.50. We might see 4-5 movies a year in the theater, and when we do, we try to get a discounted price.
The same with our favorite restaurants. We save them up for a treat. One of our favorite spots, that we enjoy only on special occasions, is quite pricey, but the large portions provide us leftovers, and the have a 'BYOB' policy. Finding a place that will cork wine you have brought is far cheaper than purchasing it by the glass.
I think date nights are a good investment in our marriage, in our life, and even for our finances. When I am happy and relaxed, I don't feel like buying something as a stress alleviator. It gives us time to talk about the things going on in our lives, and make good decisions.
In short, a date night, even one spent 'out' is, in my opinion, a good spend.
Sunday, May 11, 2008
Thursday, May 8, 2008
This week, I thought I'd work towards dispelling some of the myths around the costs of 'going green' for dinner (and breakfast, and lunch). Here's 5 simple things you can do to lower your food costs, while eating locally and organically.
1. Get to know your faucet
Water is cheap and healthy. Contrary to popular myth, bottled water is not safer. Tap water is actually subject to stricter guidelines. In addition, about 30% of bottled water (Dasani, anyone?) is actually tap water that's been sold to you when it could have been free. Buy yourself a Sigg bottle http://www.sigg.ch/ to drink it in, and you will be hip and healthy.
Don't believe me on the tap water? Check out:http://abcnews.go.com/Business/story?id=87558&page=1
Also, there may be some of you who think your drinks have to have flavor. At least do yourself the favor of cutting out drinks with High Fructose Corn Syrup, which has been well documented to contribute to a variety of health issues, including obesity.
2. Seek out local farms
While local food may never be as cheap as discount grocery stores, it represents the true cost of growing and raising it. The most economical way to obtain this food is perhaps through a CSA, or Community Supported Agriculture farm share, which is literally that - a share in the production of the farm for the season. You share the bounty - and the risk. Our CSA farm share costs about $28 a week for the two of us. Learn more and find resources in the links below.
3. Pot some herbs
Dried herbs in the little grocery store jars are pricey, especially the organic ones. Fresh ones are even more expensive. Consider planting a container herb garden this spring, and eat fresh basil and other culinary herbs all summer long. Even buying the little plants at the grocery store ends up being cheaper than buying those small jars.
If that doesn't work for you, consider buying quantities from Penzey's, a great herb and spice resource http://www.penzeys.com/.
4. Eat in season
This is a tough thing to do, in the winter, but it's easy and pleasurable in the summer. Incorporate a locally grown salad (even plant some lettuce, a few tomato plants and some cukes in patio planters) into your diet a couple times a week. Or pick your own strawberries this June and have lots of strawberry-related dishes. It tastes good, the environmental impact is lower, and it can be fun to grow or shop for local food. The local farm links above should help get you started.
5. Buy less packaging
If you have a choice between the head of lettuce on display and the bagged salad, pick the head of lettuce. Chopping it and rinsing it takes only a moment. And carry that forward. Explore the bulk bins. Buy larger packages of items and store them. The less packaging you use, the less trash and waste you encourage companies to use. And it's usually cheaper to buy the 'less prepared' item.
Saving the world isn't all about spending. Much of it is about not consuming, which is something all of us could do more of. M.P. Dunleavy recently wrote a great article on msn.com that speaks more to the 'less spending, more saving' approach to green living.
Monday, May 5, 2008
I did, however, put a lot of seedlings out for a couple hours to start hardening them off. I'll slowly increase their outdoor time over the next couple of weeks so that by Memorial Day they are ready to go in the ground. I'd hoped to do it earlier, but we're still getting frost warnings here, so I've decided to just go with the flow.
Sometimes you just have to let Mother Nature drive the agenda. We worked inside this weekend, which included more transplanting, and starting some more herbs. I want to make pickles and dilly beans this summer, so I need a big batch of dill.
The downside of the cool, wet weekend was that our fruit trees, seedling sweet potatoes, blackberry bushes and strawberry plants arrived, so we'll be out in the yard some evening this week getting everything in the ground. They say they are wrapped to last 3 weeks, but last year we lost our strawberry plants by waiting, so I don't want to risk it. I'm nervous about frost, but more nervous they won't survive if we wait.
The next 4 weekends will be driven entirely by Nature's schedule. We need to prep our garden beds by moving any plants that we want to keep, clearing weeds, turning the soil, and adding compost. Then we plant - and everything we've currently got growing needs to be in the ground by the first week of June. This time of year, Nature is in a hurry, and so we are too. In June and early July, we'll be able to rest a bit and work on other things, occasionally adding a vegetable or herb to the mix, before we will again hurry through August and September to preserve the harvest.