Each Thursday, Ms. Moneypenny posts 5 money-saving tips. Have a tip you would like me to include? Post it in the comments and I'll log it for another edition.
So I'm married to a gadget-head. My husband loves gadgets, the more cutting edge, the better. While I'm not a luddite, I don't like the new new thing. It's expensive, it's often buggy, and, well....let's just say I still use a paper day book to record my appointments.
1. Don't buy cutting edge
I say this knowing what an abyss the urge for the new new thing is. After all, for his 35th birthday last year my husband got the a-ok to go stand in line for an iPhone on that first day. But for the most part, husbands with 35th birthdays not withstanding, my take is that the technology will still be there tomorrow. And the next day. And the next. And guess what? It'll get better - and cheaper. Talk to the people who spent $900 on a beta max about this.
2. Become friends with compulsive upgraders
There is always those folks - you know the ones. When MP3 players came out, they dumped their CDs. When DVDs came, they dumped their videotapes. Sure, all of us eventually experiment with the technology (iPods, are, after all, far more awesome than portable CD players, not to mention they don't skip as much) but see point #1. Stick with the cheap, proven technology, and get it for free from your gadget-head friends.
3. Look for the free deal
I love the free phones that are given away with cell phone contracts. Why pay when you can get one for free? My most recent phone cost something - $19.99, but only because I wanted a flip phone, since I was costing us minutes with 'accidental dialing' when the phone was in my purse and my wallet dialed my sister or something. Still, until that big splurge, my phones were always free. Take the free DVR instead of the expensive TiVO. And so on. No, maybe your phone won't walk the dog for you, but I bet it works great for making phone calls.
4. Don't rule out technology that can really improve your life.
For frequent travellers, I think the Kindle is fabulous - we were fortunate enough to get to play with a friend's recently. This is from someone who packs 5 or 6 books on an average trip - I read fast, and I bore easily. My back, however, kills me from the weight. Technology has made medical devices that improve and extend lives. You couldn't pay me enough to go back to the outhouse days, especially during January.
But evaluate it for it's genuine benefit to you. Ask people how they like theirs. Think about how you might use it. Then buy.
5. Evaluate the true cost.
It's a fact that modern LCD TVs draw more electricity. That iPod batteries are going to end up in a landfill somewhere. And so on. So take a look at what you are buying and the cost to the world around you. Having all the iPod models may be fun, but what does that mean to the earth from a pollution perspective? So think about it. If it's still a good spend, okay, do it. But know that our everyday actions have a price tag.
Technology has improved lives. It's also made the world more expensive, both from a wallet and an environmental perspective. So choose wisely and carefully.
Thursday, June 5, 2008
Monday, June 2, 2008
Real World Money: Gen X Finance
A casual perusal of the topics on a typical finance website comes up with a list of categories that looks like this: Boomers, Just Starting Out, Family Finances, Retirement, College Savings, Debt. Let's take a count at how many of these categories are for boomers: Retirement, Boomers, College........hmm. I've said it before - I think the personal finance media is a little biased towards this generation.
Did I say a little? Wait, I meant completely. Sure, some of these articles have broad application across generations, but I'd love to see someone like Dan Kadlec focused on folks just a little younger and with a tad fewer assets. MP Dunleavy over at msn.com is the only one that truly comes close to focusing on the issues my generation faces.
The boomer-focus does make sense - they are the ones with the most assets - and the most likely demographic for perusing personal finance websites and magazines right now. But there's a whole other group, one who is just starting to see traction for 'their' news. The somewhere in-betweeners.
I'm talking about people like my husband and I - far away from just starting out, not yet parents, and a long while to go before the traditional retirement age. Or like my friend Jay, a 30-something tech writer who owns his own condo, is dedicatedly saving for retirement, doesn't really have any consumer debt, but hasn't yet found Ms. Right.
Us in-betweeners have accomplished some of our goals, but we have more, and they often feel daunting: how the heck is my generation going to successfully pay off their college debt and still save for our own kids to go to college? Save for retirement when the real value of wages is falling, and Social Security is on the rocks? Pensions have gone the way of the dinosaur for most of us, and those who have them are often afraid to count on them. Daycare costs an astounding some of money ($1300/month in my area), paid family leave is basically nonexistent, and costs of consumables are rising.
Add to that the pressures and demands of our consumer society make purchasing vs. savings decisions difficult. Ever tried to be the only one in your working group without a cell phone and broadband internet? Right.
Okay, so that's what's facing the in-betweeners. What do we need?
I think we need more information on 5 basic things:
Did I say a little? Wait, I meant completely. Sure, some of these articles have broad application across generations, but I'd love to see someone like Dan Kadlec focused on folks just a little younger and with a tad fewer assets. MP Dunleavy over at msn.com is the only one that truly comes close to focusing on the issues my generation faces.
The boomer-focus does make sense - they are the ones with the most assets - and the most likely demographic for perusing personal finance websites and magazines right now. But there's a whole other group, one who is just starting to see traction for 'their' news. The somewhere in-betweeners.
I'm talking about people like my husband and I - far away from just starting out, not yet parents, and a long while to go before the traditional retirement age. Or like my friend Jay, a 30-something tech writer who owns his own condo, is dedicatedly saving for retirement, doesn't really have any consumer debt, but hasn't yet found Ms. Right.
Us in-betweeners have accomplished some of our goals, but we have more, and they often feel daunting: how the heck is my generation going to successfully pay off their college debt and still save for our own kids to go to college? Save for retirement when the real value of wages is falling, and Social Security is on the rocks? Pensions have gone the way of the dinosaur for most of us, and those who have them are often afraid to count on them. Daycare costs an astounding some of money ($1300/month in my area), paid family leave is basically nonexistent, and costs of consumables are rising.
Add to that the pressures and demands of our consumer society make purchasing vs. savings decisions difficult. Ever tried to be the only one in your working group without a cell phone and broadband internet? Right.
Okay, so that's what's facing the in-betweeners. What do we need?
I think we need more information on 5 basic things:
- Guidance on setting priorities
- A clearer picture of how the rest of our generation really lives (note: it's probably not like the folks portrayed in 'The Hills')
- A lot of clear discussion around how to cope with our consumption-based society
- A realistic picture of how to reach our goals - and what the options are if we don't
- A better understanding of the implications of politicians money decisions on our future
Over the next few months, I will be posting blog articles and links to articles on GenX finance, focusing in these areas. And I'd love to hear from you - what do you think Gen X should do differently? What do you think is missing for personal finance guidance?
Gen X isn't as young as it used to be....and it's time we got serious about our money.
Thursday, May 29, 2008
Thursday Money Tips: Gift Giving Edition
Each Thursday, Ms. Moneypenny posts 5 tips for saving money. Have a great tip you'd like me to include? Post it in the comments, and I'll save it for a later edition.
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.
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
Predicting the Future
Recently, I realized that I can't predict the future.
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.
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.
How Does My Garden Grow Week 9
In Massachusetts, it's officially gardening season. Memorial Day weekend typically marks the end of frost risk in New England. This year, summer came with the holiday, so we started working on the garden space that my husband designed.
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
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
Thursday Money Tips: Gen Xer Edition
Each Thursday, Ms. Moneypenny posts 5 money-saving tips. If you have a tip you would like me to include, leave me a comment and I'll take a look for a future blog post.
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.
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
What I Really Want
The other I blogged about mulling over tossing out the budget for a month to plan a getaway weekend with my husband. We've decided to go ahead with our escape plans, although instead of 3 nights and 4 days, we'll opt for 2 nights, 3 days away, and then enjoy an extra day and night at home.
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.
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.
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