Friday, February 6, 2009

Where'd All My Security Go?

Money is important to me.  I am not one of those people who say, I can make do on $35K/year for the rest of my life.  I can't.  It's not because I have expensive tastes.  I think it's probably because of the way I was raised.  See, my parents made a decent living, but were extremely cautious with their spending.  Making money and having money was all about security for them.  Money was valuable to the extent that it could keep us healthy, safe and productive.

I like to indulge in buying things, though I have my limits.  I recently got an expensive Burberry wallet I have been pining for.  I love it, and I'm glad I have it, but I also felt a little dirty when I bought it.  I know I didn't need it.  But I will allow myself to do stuff like that- splurge with a couple of hundred dollars.  I also see things like Chanel bags that I desire, but giving up $2,000 for a bag is something I don't think I could ever do, no matter how much money I had.  At least I hope not.

Part of the irony about buying stuff you want is that if you're anything like me, it will really actually never be enough.  I used to think if I won the lottery or married a prince, I would just go out and buy all of things I really wanted (one huge period of splurging) and then keep it kind of reasonable.  Something grand here and there, but for the most part stick to stores along the lines of J.Crew, not Bergdoff's.  But I don't think it ever ends for most girls.  There is simply too much fashion, jewelry, make-up and accessories to be had.  (Sigh.)  Perhaps it is a blessing that I can't afford fancy stuff.

But back to the overall concept of money.  I do crave security and therefore want to have money, but what's really scary is that the idea of security has completely shifted.  Working hard in school and being a top performer used to be enough to know that you would always be able to provide for yourself and loved ones.  Not these days.  I know a lot of people who are total badasses in terms of higher education and prestigious jobs and are out of work, with no end to their unemployment in sight.  And forget about making money, even just saving money is not a guarantee.  You think your company has your pension secure, that you can retire on your 401k, but for the first time in a long time, people are really and rightfully questioning all that.  The best way for us to get out of this recession is to be unafraid.  I'm with GirlMonday.  Spend.  Do the things you wanted to do.  Reach your goals.  Go for it anyway.  But I can see why people would be really, really scared to do so.  I'm tempted to withdraw from the bank and hide it under the mattress myself.

I know the economy is in the toilet right now, but I still believe in capitalism and that all of this will self-correct and all of that good stuff.  I'm for the government spending-- appropriately. Last year, I made less money that the year before (when I was a single girl aggressively working my butt off).  Sure, it was a little sad to see the gross income go down.  But it didn't bother me like it should have.  Why?  Because if I had made more money, a greater chunk of my total would have gone to taxes.  So personally, it wasn't worth it for me to put in more time and effort.  That's just the honest truth.  The government's rate of tax incentived me to work less.  I find that very sad.  

I'm all for helping out the truly unfortunate, but I have doubts about the way the government allocates my money.  There are things I want to do that I can't do because I have to give up so much of my income.  For example, I'm not going to have children until I can afford it.  Yet, some of my money is contributing to the welfare of some other kid.  It doesn't seem fair, because it's not.  I can respect that people lack resources and get into negative situations, but shouldn't I be able to help them on my own terms (e.g. charity of my choice)?  It's not just the supposedly poor the government wants to spend for.  There's the banks, the auto industry. When's the last time the government bailed you out of your debt?  I'm losing the money I have invested because of your bad management practices, but part of what I have left is devoted to saving you?  And that's going to make me more confident in the economy?

I want to hold onto my money.  Even if I have some to spare, I don't think of it as extra cash flow.  It's my security.  It's not easy out there, and I think I'm entitled to hold on to whatever I was able to get my hands on in the first place.

Thursday, February 5, 2009

Growing up with $Money$

I decided to take a different approach this week on the topic of money. I grew up in a family that would fairly be categorized as middle class. I have always had a keen sense of observation on the demonstrated behaviors of individuals that did in fact grow-up in wealthy families. Many families have a fair amount of wealth, but my focus for this article is on the group of extremely wealthy individuals. While there are always exceptions to any broad categorization of a collective group of individuals, I think that overall my perceptions of this group are quite accurate.

Many children living in a financially wealthy family environment expect more from their parents as far as clothing, trips, and gifts. They fail to understand how expensive these items and experiences can be, and also how fortunate they are to get those items and experiences. Can anyone really blame them for having these desires and not fully understanding how fortunate they are? No, not really, what kid wouldn’t have the same wants and desires? But as these children start to become teenagers and young adults this once uniform group begins to separate into two distinct clusters.

The majority group I call the “Appreciators” because they realize how fortunate they are and begin to truly appreciate the opportunities that have been provided by growing-up in a wealthy family. Then there is the minority group known as the “Suckers” because they feel set for life, have very little, if any, appreciation for their fortunate situation, and have little desire to have any meaningful impact in any arena during their life.

The Appreciators often spend their young adult life devoting their time and energy towards setting and achieving personal and professional goals as well as helping others through social causes. They try to add meaningful activities to their lives and in some way shape or form help others. Most people in this group are humble, and don’t like to make others feel as if they are flaunting their money. A prime example of the individual that falls into this group is Anderson Cooper. Most people have seen him hosting his show on CNN, but during his younger years he spent time in Africa trying to bring about change to a struggling society. Even though Anderson comes from the Vanderbilt family, and was set for life, he demanded more from himself and actively pursued opportunities to make a meaningful impact. The point is not that a trip to Africa, or seeking out absolute righteous activities should be expected to fall with the Appreciator group, but an effort toward setting and achieving personal and professional goals should be made. I respect the individuals that compose the Appreciators because they have the desire to accomplish their own goals and make a difference in this world.

Then you have the worst of the worst, the Suckers. This group would gladly waste their entire life playing video games, snowboarding, going to concerts, and attending events and parties so that they can tell their moocher friends about how cool and exclusive it was. (This crowd always has a few moocher friends that feel special for being associated with the rich person, and the moochers often expect some freebies for being such “good” friends). Not that the Suckers don’t have the right to partake in activities they enjoy and spend their time how they desire, but I resent all of the individuals in this group. Mostly I resent them for trying to impress me and the world with their bank account and self-centered experiences when they have the potential to be and do so much more. Rather than dare to be great and make a difference in this world they would rather leach off the past blood, sweat, toil, and success of their ancestors. Instead of having a meaningful life, they would rather pursue endeavors that at best provide brief moments of satisfaction. Sadly, most in this group will listlessly roam this earth without ever realizing their available opportunities, and for this the world will quickly forget they even existed.

Wednesday, February 4, 2009

A Recipe

Ingredients:
a dozen or so envelopes
a box to fit said envelopes
a pen
a paycheck, regularly (preferable)
your debit card
a pair of scissors

Directions:
Make a list of your expenses: gas bill, TV, Cell phone... student loan payment, credit card, rent... doctor co-pays, toiletries, clothes... Don't forget things like "haircuts" and "vacation" and "gifts"- places you spend money once or only a handful-of-times a year versus once a month, or once a week.
On the upper corner of each envelope write an item.  
In the box place the envelopes for the expenses that you don't need to carry around with you.  For example, you probably don't need money for furniture on you at all times, but it's probably a good idea to have your grocery envelope in your purse.
When you get paid and the check goes into your account, you remove that exact amount in cash.  (If your bank requires a minimum balance, keep that amount in there and remove the rest).  Take your wad home and distribute the money into the envelopes.  Start with immediate necessities and work your way back.  On the envelope record what you've deposited and on what date.  
When you need to pay a bill, take the cash out of the corresponding envelope, deposit it and pay your bill.  Note on the amount you've taken out of the envelope and the date.
The next time you get paid, repeat the process.  
Come the holidays, you will have a small savings devoted fully to buying gifts.  Every six to eight weeks you have exactly what you need to pay- in cash- for your hair cut.  
Then take your debit card and pair of scissors and cut it in half.  Ok, no need to be dramatic.  Keep it but don't use it.

This is a recipe for getting in close touch with your money.  You will see, touch, distribute, spend exactly what you have and not a penny more.  You will realize you can't buy something if the fund is dry- or you will realize that you should start depositing more money into one envelope rather than another.  
It's called "the envelope system"-- it's how my grandmother used to do it- and she was a very successful businesswoman.    This guy does it too.  

Happy saving!

Tuesday, February 3, 2009

Ten Year Plan

It is fitting that Girl Friday chose money as this week’s topic—I actually received the email informing us of her selection shortly after concluding my first meeting with our financial planner. We were introduced to him through a mutual friend, and chose to schedule an appointment so that we could begin our marriage on a strong financial footing. My father is fond of telling me that money troubles are one of the leading causes of divorce. Whether it be the failure to communicate about money or the inability to align financial goals, many couples allegedly have difficulty working towards a unified financial future.

The future Mr. Tuesday and I have always prided ourselves on our ability to communicate. Even when emotions get the best of us (or me) and I flare up irrationally, we always make it a point to calm down and discuss our frustrations in a civilized manner. So it seemed appropriate that we, wanting to avoid the communication difficulties that befall some couples, sit down and chat with someone who earns a living counseling folks such as ourselves about wise decision-making.

After a few weeks of back and forth to schedule a meeting that would work with three full schedules, we confirmed a time and location and were ready to meet. He told us that all we needed to bring with us was knowledge of the balances in our respective savings, checkings, and retirement accounts, as well as any additional investments we might already have. Further, we should consult our respective employer’s benefits plans to understand life insurance, retirement, and long-term disability coverage available. We did all that; we were prepared.

But then came the questions. Picture yourself ten years from now. How do you envision your finances? What job do you hold? Where are you living? Do you have children? What are you saving for?

We fell silent.

After a pause that probably felt much longer than it was, I chimed in—“we’ll certainly own a home by then. And likely have our first child, if not have another on the way.” There, I’d come up with a respectable answer.

“And your job?” He asked. “Where will you be working? Are you figuring you’ll be making Partner about that time, as well?”

Partner? Really? I need to decide that NOW?

“I don’t know. It’s difficult to say having just started at the firm. It is too early to determine whether I can really envision myself staying in the private sector. I mean, I would like to go into the Government when the time is right. If such an opportunity presents itself before the ten year point, I might consider it.”

I received a knowing nod in response, and sat in quiet introspection as the future Mr. Tuesday explained that he wasn’t certain where he was headed. He didn’t plan to build a future at his current job necessarily. “I’d like to go back to school at some point, but I really don’t want to go until I have a better sense of what I want to DO,” he explained.

More nodding.

“What about your spending habits? What kind of lifestyle do the two of you envision living for yourselves?”

More silence.

“Well, honestly, that’s something we need to work on. We know that we want to start saving to buy a home, but we’ve been dealing with a lot of extra wedding-related expenses so far this year, and really aren’t certain what a ‘normal’ cash flow is for each of us.” There, that was an educated sounding way of saying I don’t have a clue.

“Well, you realize that saving has to be the first impulse. You have to save first and allow yourself to spend only after putting aside money. That’s the only way you can really do it.” He seemed so wise and all-knowing; but what he was really doing was stating the obvious.

We felt like children, really. It’s no wonder that money breaks people apart. While it is easy to think that it is “just money,” there is a real truth to the fact that as you look forward into adult hood, everything you do is shaped by money in some form or fashion. A job becomes more than what you do from 9 to 5; or from 8 to 7, such as the case may be. The job brings the paycheck, and the paycheck is the gateway to home ownership or higher education or a fast sports car. I don’t mean to imply that money is everything; but the plans that we make, the priorities that we set for ourselves, are not possible without the financial foundation to back it up. The blood in our veins may be what keeps us alive, but the cash flowing through our bank account is what keeps us moving forward toward the ten year point. It brings a whole new layer of meaning to the saying two hearts beating as one.

Monday, February 2, 2009

Money, It's a Gas: Grab that Cash with Both Hands and Make a Stash

This week is all about money. Bucks. Dough. Moolah. Clams. Greenbacks. Quid. Cold Hard Cash. Loot. Bacon. Coin. Benjamins. And my favorite: Fitties.

This is good timing for this subject given the state of our economy and the state of my wallet. Two years ago (right before the housing market took a plunge) I bought a house. As has always been the case with me, this was just another example of my ability to time things perfectly. And to make matters worse, I didn’t plan on staying in it for very long. But that’s a story for another day. I don’t want to take up too much of your time this week and I don’t have much to say, but the house is just a perfect example of two of my thoughts on money:

The first is that with the purchase of the house, I needed to fill it with nice furniture (first thought, Pottery Barn, second thought: Restoration Hardware, third thought: Target, latest thought: Ikea, next up: Goodwill). I knew that getting everything I needed wouldn’t happen in the first year, but I really thought that 2009 would be the year I could dump the college couch out by the curb and invest in something nice. I currently own two couches, a desk, and a bed. My kitchen table and coffee table (aka TV stand) currently have commitments elsewhere as soon as I can relive them of their duties here, so that doesn’t leave me with much. No wonder I never invite anyone over……Anyway, what I’ve finally realized in the last few months is that I’d rather spend my money on traveling to see friends and going on exciting trips than have furniture. If I’m off doing something fun, then I’m not missing my crappy pink couch. And since I can’t have both….Beach House it is. Mardi Gras it is. Tahoe it is. OBX it is. And I’ll just stick with the furniture I have. And the four completely empty rooms.

Second thought about money is that I have decided to refuse to let the foul mood of our nation and the crappiness of the economy keep me from doing what I want to be doing. If I want to change jobs, I will. And I won’t be (too) afraid. If I want to try to sell my house, I’ll give it a shot (prepare for the worst), but not be afraid to do so. If I want to spend money at the rate I did before the market went in the tank, then I’ll do that as well. I’ve been too good for too long. I invest obscene amounts of money in my 401(k-for krap), own a house, and have several months of salary saved. I refuse to put my life on hold because of fear (DaddyMonday says to blame the liberal media for fear-mongering, I say - don’t tell anyone we’re related). That doesn’t mean I won’t be careful, but I’m not going to let years slip away just to be careful. I’m already on year 3……….

So there: my thoughts on the fitties.