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Archive for April, 2008

Money is No Object

April 29th, 2008 at 08:12 am

Mom's coming to town next week for a family event. Mom's visits present some interesting challenges.

I grew up in a typical middle class household. We never needed anything, but we didn't get everything we wanted either. Both of my parents worked, Dad made some good investments, Mom left paid employment when I was in high school and Dad retired not too much later at 50. While he seemed really young to retire, nobody could see the future - Dad died in his early 60's. Mom was left pretty well off.

My folks were never ostentatious, but Mom hasn't had to figure out how to drive less, or look at whether chicken or hamburger is cheaper, or put off purchasing socks for a long, long time. She has a "money is no object" kind of attitude. She and another family member have that approach - it seems like they solve all problems using money. And they expect you to do the same.

We don't have enough disposable income to solve all of our problems by spending our way out of them. We have to think a bit more, let go of a few more wants, solve our problems differently. But when you relate what's going on in your life, and your mom says, "Why don't you just buy XYZ?", it's kind of tough to come up with an answer without sounding broke. We aren't broke - we just make the choices that go with our income.

Anyway, I haven't come up with any good responses for my mom. If anyone else has handled this situation I'd love to hear how you did it.

The Sky is Not Falling

April 28th, 2008 at 05:59 am

DH and I have talked about our finances twice since "the sky is falling" conversation last week.

The first conversation was the next night. DH now realized that the sky was not falling, but was not entirely clear on where to go from here, except that we should spend less.

The second conversation happened yesterday. The mood was right so I asked DH what he thought we'd be spending money on in May. With our two-checkbook scheme the regular bills are already covered, so this would be the other categories, like food, gas, clothing, recreation, household items and the like.

I made a list of everything we thought of. That came up to $410. Then we looked at what we had to spend money on. Looking at the cost of gas was rather shocking - between our two vehicles we estimated about $500 next month. Combined with groceries at $500, and church contributions at $100, we are left with $272.55.

Even though $272.55 doesn't equal $410, we stopped our conversation there, both realizing that the work is not done. The awareness is raised though, and I think that's key. With these items on our minds we're more likely to figure out a way to get them less expensively.

$6 Door Knob

April 25th, 2008 at 09:03 pm

Last week, one of the adults (not saying which one) in the household left the garage door up all night. Fortunately for us nothing happened.

When I got up in the morning I freaked out. Since there is no lock on the door between the garage and the house, it's kind of like leaving your front door open all night. And I value my safety. And Daisy's safety. And DH's too, although he's bigger and stronger than Daisy and me. So I asked DH if he would put a lock on that door.

Today DH came home with a locking doorknob. It was extra at work - not the kind they usually use, so it would not get used again. DH had taken it to the locksmith and had it rekeyed to our dead bolt for a cost of $6. He has a working relationship with them so they may have given him a deal. He then installed it. He's handy that way.

When I asked he told me that if he'd purchased it new it would be about $35. That would be a savings of $29.

Thanks DH!

Mr Market

April 25th, 2008 at 06:43 am

I left my corporate job about six years ago to be at home with my daughter. I still have a 401-K with my former employer. I've busy with other things in my life and don't pay too much attention to it. Occasionally I'll look at it a little more closely and reallocate a bit.

My 401-K includes some of my former employer's stock. After talking with other former employees who know current employees I reallocated a portion of that stock to other funds, maybe a year or two ago. From what I heard it didn't sound like things were going all that great.

About a week ago I got the 401-K statement. As I perused the statement I noticed that stocks were down, bonds were up, and my former employer's stock was considerably lower than what it was compared to. Hmm, I thought, either they will go bankrupt in which case my stock probably won't be worth much, or they will get bought out, in which case the stock price is likely to go up. Maybe I should reallocate more of this stock. After I put the statement down I kind of forgot about it.

Fast forward to yesterday. As I read the business section of the local newspaper, I noticed that my former company is being bought by another company, and the stock price of my former company jumped quite a bit.

Just another example of Mr Market being smarter than me, as I read in Broken Arrow's blog the other day. I couldn't predict the future on this, although I think I did come up with the two most likely scenarios. And I kind of surprised myself that I actually know as much as I do.

Vision/Eyesight

April 23rd, 2008 at 03:43 pm

Although Daisy's eyes test out at 20/20, she has some vision problems. You can read a little about vision problems here:

http://www.vision-therapy.com/About_Vision.htm

She goes to vision therapy every other week with eye exercises to do at home. This treatment is not covered by our insurance. An average person goes through treatment in 9 months, going every week. At $100 per session (or $95 if you pay for four sessions at a time), even going every other week like we do adds up.

She recently had a re-evaluation and the doctor was very pleased. She's making faster progress than the doctor expected.

I think this progress is due to the fact that Daisy actually does the home work. We sit down every week day, before school time, and do it. She can't do it on her own; I have to watch her eyes, time some of the exercises, etc. I don't know how kids who go to regular school can do this - when Daisy is tired this "eye work" is very hard.

Anyway, the more regularly we work at home, the faster the treatment and the less expensive it is in total. I'm happy about that!

Oh, and I should add that I'm happy that Daisy's vision is improving. I can tell the difference even though she doesn't think she has a problem.

More Talking

April 23rd, 2008 at 06:21 am

More talking here in the onion patch. . . and that's a good, if sometimes frustrating thing.

Yesterday I decided to bring up something that was bothering me. Earlier this year DH took me out to a nice restaurant for my birthday. He did good too - choosing one that I liked and keeping it a surprise. But when the credit card bill came I was the one who had to figure out how to pay for it. Since this is typical of our life together I let it go. But in light of the other day's side-job revelations I felt pretty irritated about it and brought it up. Why am I trying to figure out how to pay for my own gift?

Apparently this was a surprise to DH. . . but it led to a larger conversation about our whole financial picture.

We discussed the spending-more-than-we're-making problem. DH took a "the sky is falling" approach, and I could see that we weren't going to be able to do any real problem solving so I just let him talk. He has a wish list of items he'd like (new truck - his is almost 16 years old, DVD player & TV, finish landscaping the backyard - his strong desire about them were news to me) but doesn't feel like he'll ever get them. He was convinced that we would run through what's left of the bonus money in the next four months. At current rates this is not mathematically possible. I did point that out, and in a nice way too, but he wasn't having any of it.

At the root of "the sky is falling" though, I think, is the recognition that his job situation is unstable. He has known this for a while. He could look for another job or try to improve the stability of the one he has but he has chosen not to act.

I just listened, and he suggested that we try to talk again tomorrow. So we'll see.

I have read many books and blogs, and have thought many times, "What a great idea! I bet we could do something like that!" Or "We could try that out, I bet it would help our budget." He doesn't seem to take that approach to life though, and that type of tunnel vision has been a real hindrance in problem solving.

Although I received much great information on discussing the mutal funds with DH, I think I'm going to have to wait on it.

Mutual Fund Jitters

April 21st, 2008 at 08:53 pm

During our conversation yesterday, DH and I discussed the mutual fund. He's kind of nervous about it, because we keep buying shares but its value doesn't seem to go up. (It's value has gone up in other years.) I haven't been following it that closely, but it is a Vanguard retirement fund. Isn't the market kind of in a slump? I know I opened up my 401-K statement recently - the stock funds were down and the bond funds were up.

Anyone have any suggestions for what to say to calm DH down about this topic? The next "good" time I'm going to discuss increasing the amount we are putting into the mutual fund.

One Step Back, One Step Forward

April 20th, 2008 at 09:10 pm

Well, it's been an interesting day here in the onion patch. Yesterday's discussion/confrontation touched off some, um, bad feelings. We finally got that straightened out enough. The mood was decent and DH and I had some free time so I brought up retirement.

DH's current strategy for retirement is: work until he can't work any more or dies. I think this strategy is a bit short-sighted. His job has no 401-K/pension/savings plan, and he has none of the above from previous jobs. I have a 401-K from my 10-year stint in corporate America.

A few years ago, in an attempt to get DH more involved in our finances, I asked him to figure out how much he thought we would need for retirement. He never got back to me.

Now, one of his coworkers' mothers is in assisted living and has outlived her money. I think she had very little, except the profit from selling her house. The assisted living center told the family that mom needed to move out when her money ran out because they no longer took medicaid (or whatever it is). This was contrary to what they were told when mom moved in. Lawyers are now involved, and DH is having an eye-opening front row seat. I think it's increased his awareness that maybe this could be a problem for us.

During our conversation I tried to get him to do as much of the thinking as he could. When do you think we'll retire? He figures at age 70. How long do you think we'll live after that? Hemming and hawing - he finally picked 85. How much money do you think we'll need? About 4000 per month, he says. Multiplying it all out he came to 720,000. Between my 401-K and our (very small) mutual fund we've got about 100,000 for retirement already. That leaves 620,000 total to this goal . . . 24,800 per year, or 2,066 per month. DH did not take any interest into account. . . but even if the numbers aren't accurate I'm happy to even have gotten him this involved in discussing retirement.

Common Good

April 20th, 2008 at 01:04 am

Today DH and Daisy went to the nursery to get some plants. Tonight I looked around for a receipt - didn't see a credit card receipt and I knew DH didn't take the checkbook.

So I ask him, How did you pay for the plants? He says, with my bowling money. (DH is in a bowling league, and as near as I can tell it's something of a cross between bowling and gambling. When the season ends they get prize money based on how well the team did for the year.)

Hmm, I think to myself, I haven't seen a check for bowling in a long time. So I ask, How have you been paying for bowling? Turns out he's been doing side jobs for his current employer and getting paid cash for them. He's used this to fund bowling and put gas in his truck.

There are so many things wrong with this for me, I'm not even sure where to begin, but here are two: Firstly, I believe it's unethical not to report earnings. He has received W-2's for these side jobs in the past, but none in the last couple of years. But, worse, it says something about how he views money and our relationship. Supposedly our money is in common with joint accounts, etc. Yet not only is he not telling me about this extra income (which I'm guessing is at least a thousand dollars since September), he's also not willing to work with me on a spending plan for the money "we" do have. Instead, he'll avoid having to have this conversation by taking cash for these side jobs and spending the money in ways that make him comfortable.

I don't begrudge him wanting plants for the yard or gas for his full-size truck. I do think it would be better to work together for the common good, but I have had no success in convincing him that a common good would be good for both of us.

Bread Adventures

April 18th, 2008 at 08:54 pm

One of my current food projects is to work out a substitute for the healthy but expensive bakery bread we were buying. DH eats a sandwich every day for lunch, and Daisy likes toast. So we go through a respectable amount of bread for a three person family.

And, of course we have our bread preferences - I like to eat whole wheat but DH won't eat anything heavy - it's got to be pretty fluffy for him.

When we first started shopping at this bakery we loved their bread. It met both our desires - whole wheat and fluffy. But I think they changed their recipe or something. . . it just started to taste not as good. And they switched to all organic ingredients, which I'm all for - but it upped the price by about 50 cents per loaf.

So, at least for the moment, I've gone to making bread. There's some in the oven right now, and I'll finish this entry in time to pull it out.

I'm working towards making bread that tastes good and is easy and convenient to make. I tried a thrift store bread maker (bread sank every time), Kitchen Aid stand mixer (heavy to pull out so regularly), by hand (hard on the wrists) and am now trying out a bread bucket.

Yes, a bread bucket. I had never heard of such a thing until I read the Tightwad Gazette. I found one in a thrift store a few weeks ago. I knew exactly what it was although it stumped the cashier ("What's that? A butter churn? An ice cream maker?"). This is the second batch and it seems to be working pretty well. Even Daisy can turn the crank and knead four loaves' worth at a time.

I haven't calculated the price per loaf but a quick guesstimate would put it at less than half of the bakery's price.

Daisy Makes Change

April 17th, 2008 at 04:58 am

I believe that one of my jobs in life is to teach Daisy about money. I have not developed a plan about this yet, but I try to take advantage of "teachable moments."

Daisy is a typical eight year old girl. She's very creative and balks a bit at routine. She'll tell you she doesn't like math in that dramatic way that only an eight year old girl can do. Nevertheless, partly due to diligence in teaching and partly due to the math program we use, Daisy has a pretty good foundation in math.

Yesterday Daisy and I went to Starbucks. The total of our drinks and snacks came to $7.19. As I was pulling out the cash Daisy said, "You can give her eight dollars." The cashier heard what she said, took my eight dollars and asked Daisy how much change I should get back.

Daisy thought, and the cashier waited patiently.

"90. . . no that's not right. . . 81 cents."

"Keep it up and you'll be a good cashier," said the cashier.

That's my girl! I can see the irony in teaching her to figure out correct change and teaching her undesirable spending habits simultaneously. . . but at least she can make change.

Discussed Checkbook Number One

April 16th, 2008 at 08:35 pm

I caught DH in a good mood this afternoon, and showed him my spending plan for Checkbook Number One. I wrote it on an index card, and since it's not terribly lengthy or complicated it's easy to digest. Also included on the index card were this month's expenses in each category so far.

His reaction about it was positive.

That was nice but meaningless. Based on past behavior, I don't expect him to actually follow this plan. I just wanted to tell him what I'm doing.

He's pretty visual - perhaps I could make this information available as a pie chart? Anyone had any success with communicating information in that way to a spouse?

Facing Checkbook Number One

April 16th, 2008 at 08:41 am

With a fair amount of savings to draw on it was easy to be in denial about overspending from Checkbook Number One.

I've gradually been realizing that we can't keep doing that. Now I'm taking a bit more action.

All of our financial stuff is set up on Quicken so it's easy to see where the money goes. You can set up reports to dissect the data anyway your analytical heart desires.

From that I've come to the following plan:

Money coming in to this account each month: $1372.55

Money going out of this account each month:
Groceries: $500
Credit Card: $500
Everything else: $372.55

I expect to tweak the numbers as I actually use this plan.

A few comments:
We could probably spend less on groceries and eating out. (In fact, we've always spent more.) I like to eat organic and local as much as possible though. . . but I can cook from scratch. We'll come to some sort of balance with it.

The credit card is likely to have at least $300 on it per month. Some regular expenses are put to the credit card, and we use it to purchase gas. I would love to see it at less than $500 per month.

Two Checkbooks

April 15th, 2008 at 03:58 pm

Right now we operate using two checkbooks.

Despite what's going on with us, they are not "his" and "hers".

One checkbook, Checkbook Number Two, is for paying regular bills and saving for certain annual expenses. These include the mortgage, insurances, property tax, medical expenses, auto repair and maintenance, phone bills, utilities, garbage, cable (basic only!), Daisy's school expenses and some of her recreational activities, the newspaper and Christmas.

The other checkbook, Checkbook Number One, is used to pay the other expenses. These include groceries and gas, clothing, gifts, church contributions, household expenses and the credit card.

I originally set up this system when I left paid employment and we dropped to one income. I didn't want to get caught short and not be able to pay the mortgage or fix the car (or my teeth - sigh). Using a spreadsheet and a year's worth of bills I determined how much should go in Checkbook Number Two. What was left was put in Checkbook Number One.

This system has worked marvelously. We basically ended up with a built-in emergency fund in Checkbook Number Two and have not run short when needing the car (or teeth) fixed. The shortfall is not in this account.

The shortfall, about $200 to $500 per month, is in Checkbook Number One. A couple of months ago we got to the point where prior savings (except DH's bonus from 2007) was depleted. We did have a discussion about it but it wasn't very fruitful. I'm determined to do something about this shortfall. More to follow.

Introduction

April 14th, 2008 at 09:37 pm

I have read lots of blogs that discuss finances, and so many of them rave on and on about how they (the writer and the spouse) are a team. They have a great financial goal, and they are headed full steam towards that goal. Over months and years you can see them, working together, achieving that goal.

But what if you are married to someone who doesn't share your financial aspirations? Or someone who pays lip-service to mutual goals but is unwilling to make sacrifices to achieve those goals? What if you are married to someone whose financial strategies cause you a great deal of discomfort? And is unwilling to work out a compromise with you? That is the unfortunate position in which I now find myself.

My quest is to figure out how to make myself more comfortable with our finances while not starting a cold war in my home, and to discover how to achieve financial goals without cooperation from my husband. (Those who are married are shaking their heads in disbelief.) I'll also add here that, while I am frustrated with my situation, I'm not trying to make my husband UNcomfortable while I make myself comfortable. I really feel that this would be the wrong-spirited way to take care of my problems.

We aren't doing too badly financially, really. We own our own home. We have a modest income. I worked until our daughter was two, then left paid employment to be home full time with her. She is now eight, and home schooled. We have no debt but our mortgage and pay off our credit card every month. Neither of us are big spenders.

But - we still spend monthly a little more than we make monthly. How is that possible without massive credit card debt, you ask? We had savings when I left work, and DH receives a bonus each year that is a percentage of his annual income. Some of this money was spent on things like insulation, a furnace and new windows. Some of it was spent on groceries. Some of it was spent on frivolities. Most of my work savings is gone. Most of this year's bonus, paid in December, is still sitting around.

Additionally, we are in our mid-40's without much saved for retirement. This has me extremely nervous. I don't expect Social Security to be around when I'm 70. I am watching our parents and their friends age. . . become less healthy. . . need help with daily activities. Someday this will be us. Aside from trying to take the best care of my health that I can, I feel we need to be more aggressive in saving for our old age.

Right now I don't have any formal goals. A goal can be measured, right? I just have a mission, and no matter how I word it, it sounds a bit selfish, but it's still my mission: to look after my own personal comfort in the areas of the amount that is spent each month and retirement savings. Goals will eventually follow.