Yours, Mine, and Ours, part 2

Posted on August 27, 2008
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In my last post, I talked about the problems caused by a lack of agreement between me and my wife about how much we save and whether personal spending by one requires the approval of the other. When we first started arguing about money, my wife’s solution was to have seperate bank accounts – my paycheck would go into an account to be used for paying our bills, while her check would go into an account to be used for savings and investments.
I was tired of fighting about money so I went along with it, but I didn’t like it for several reasons. First, I felt that since it’s all “family” money, it should go into one family account. Separating our money into different accounts seemed to me like splitting it into “my” money and “her” money. Second, since “my” money was used to pay the bills and “her” money was for savings, it meant that I had no control over the money I earned (it was all going for expenses), while she had total control over the money she earned. Finally, my pay didn’t quite cover our expenses, so every month I would have to ask my wife to transfer some money from “her” account to “my” account. Not only was I having to ask for permission for personal purchases, it felt like I was having to ask permission just to have enough money to pay our bills. I really resented this. I’m not trying to excuse what I did, but this was the reason I started buying things on credit and hiding the purchases from my wife.
Having one account hadn’t worked to my wife’s satisfaction, and having separate accounts was a disaster, emotionally (for me) and financially for us. What is the solution then? We have gone back to one account, but that has brought back arguments about how much we should be saving. I don’t want to go back to each having our own account, because I believe it is completely unfair for one spouse to have final say over almost all discretionary spending. Fortunately, I found a book that has a plan I think will work. Instead of two accounts, we will have three. The first will be a household account, which will include money to pay the bills as well as our savings and retirement plans. Then, we will each have our own private accounts for personal spending. The rule is we each get so much per month for our personal accounts, and neither has any say-so whatsoever on how the other person’s personal moeny is spent. I’ve ran this by my wife, and she’s “thinking about it.” I hope she thinks it’s worth trying, because so far the other ways we’ve tried to deal with our differences over money haven’t worked.

Cheers,
Ken

Yours, Mine, and Ours, part 1

Posted on August 26, 2008
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My wife and I have a fundamental difference of opinion regarding money. My wife’s opinion is that we should spend as little as possible, saving as much as we can (with a twist – money invested doesn’t count as “savings” in her view), and buying extras only when our savings is built up to a level that she is comfortable with. If we have unexpected expenses, discretionary spending should be curtailed until the savings can be built back up.
On the other hand, I have always been a “you can’t take it with you when you go” type of person. I usually had my paycheck spent before the next one came in – too much month left at the end of the money. If I wanted something, I bought it, and if I didn’t have the money I’d just put it on a credit card. As a result, I incurred quite a bit of credit card debt over time.
When I got married, things obviously had to change. I stopped my reckless spending, but kept the debt hidden from my wife – didn’t want her to know what a loser I was. She eventually found out anyway. We got the debt paid off fairly quickly, and things were OK for a few years. It was pretty easy to stop my casual spending because we wanted to save for a new car, which we bought in 2002. After that, we were saving for a house, which we bought in 2003. Then, we built up our savings to about $10,000.
This is when our money problem surfaced again – I felt that since we had a new car (paid for), a house of our own, and $10K in the bank (not counting my retirement plan at work), it was OK to start spending money again on things I like. Not a lot, maybe $100 to $300 per month, and my wife could spend the same amount on herself. This amount of personal spending would still allow us to save something like 10% of our net income each month. My wife felt differently – she thought we should be saving much more of our income, more like around 25% (or more).
Any time I spent money that she felt was unnecessary, she would question me about why I was spending money on myself that rightfully belonged to the family. From her perspective, any money not spent on household bills belonged to the family, and required a family (at least husband and wife) consensus on how it should be spent. I felt (and still feel) that 1. I’m an adult, 2. I work hard for the money I earn, and 3. As long as we are making reasonable contributions towards our savings, we should be able to spend some money individually without having to ask permission or otherwise justify the expense.
Since we were unable to compromise on this issue, I just started buying things I wanted again and putting them on the credit card. I didn’t have the money to pay off the balance every month (my wife would wonder where the money went), so the balance just kept building. (Before you email me to tell me how stupid this was, I already know how stupid I was). Over time, and with some medical bills, interest, etc., it eventually grew to over $17,000. When she found out last October, I thought she was going to divorce me, but she didn’t. We got paid off in only a few months by wiping out our savings and applying my wife’s entire income against the debt. We were also able to build up our savings to almost what it was before.
So, no problem, right? Uhmm, there is still a problem. To make sure I don’t slip back to my old bad habits, I showed my wife how to get online access to all our accounts. There is absolutely no way for me to hide any spending from her. I still believe, though, that I don’t need her permission for every single purchase I make. She still believes differently, to her it is “family money” and can’t be spent without family consensus. So we’re back to having stupid arguments about money – for now. I have an idea to fix it. I’ve run it by my wife, she is thinking it over.

Cheers,
Ken

Mondays are my worst best days

Posted on August 11, 2008
Filed Under Biblical Principles | Leave a Comment

I used to hate Mondays. After a long weekend of house work, yard work, partying, etc, it was really hard to get in the mood to go to work. Week days were for work, and weekends were for having fun and doing projects around the yard and in the house. The problem was, all the “relaxing” I was doing on the weekends left me too tired to put in an “optimal appearance” on Monday mornings.
Interestingly, in Exodus 20:8 – 1, the Bible has something to say about this very subject:

8 “Remember the Sabbath day by keeping it holy.
9 Six days you shall labor and do all your work,
10 but the seventh day is a Sabbath to the LORD your God. On it you shall not do any work, neither you, nor your son or daughter, nor your manservant or maidservant, nor your animals, nor the alien within your gates.
11 For in six days the LORD made the heavens and the earth, the sea, and all that is in them, but he rested on the seventh day. Therefore the LORD blessed the Sabbath day and made it holy.

Since Mondays were such a drag on the rest of the week for me, I decided to start applying this principle to my life. I don’t work on Sundays any more, at all. No Open Houses. No preparing mailers to send out. If I have a big home project to do on a weekend, it gets finished on Saturday or it gets finished the following week. I don’t even like driving home from vacation on Sundays – it’s too much like work, so we drive home on Saturday. I might do a little yard work, but only a little, and only because I find it relaxing.

I’ve found that since I started treating Sunday as an actual Day of Rest, Mondays are the most productive day of the week for me. Instead of showing almost late for work with a foggy head, I show up on time with a clear head. In fact, I like to show up an hour early to prepare for the coming week. My stress level is down, not just on Mondays but all week long.

I believe this principle applies to anyone, whether you worship the God of the Bible, a different god, or no god at all. Try setting aside your Sundays as a day of rest and see how it affects your productivity, your mental clarity, your overall well being.

Cheers,
Ken

Having the proper attitude

Posted on August 8, 2008
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Getting and staying out of debt, becoming financially stable, and building wealth requires certain attitudes and beliefs. For example, if you believe that life is just a series of random events to be dealt with as best one can, you’ll probably have a hard time getting or staying ahead financially. It’s the same way if you tend to be the type of person who blames problems on circumstances, other people, etc. To really be able to get ahead, there are some principles you need to accept:

Sounds pretty simple, but sometimes it’s hard for me to put into practice. Sometimes things will happen that I don’t like – an argument with my wife for example. I’ll say to myself “she’s too controlling,” then I’ll go out and spend some money just to prove to myself that I still control some things. The problem with that attitude in my case is that it leads to more arguments over money, which leads to more resentment, which leads to more spending, which leads to more arguing, and eventually last time it led to over $17,000 in credit card debt.
Blaming my frustrations on people and events that I can’t control hasn’t exactly been beneficial to myself and my family. I know from experience that taking responsibility for my life has definite, positive results for our family – but it’s still hard work sometimes. I wonder how much better off we would be today if 5 years ago I had insisted on marriage counseling instead of drowning my frustrations in consumption.
Maybe I’ll find out soon. I can see where we were 5 years ago, where we are now, and how much we lost in between. Next week, I’m going to insist on counseling. We’ll see how much better off we are over the next 5 years, compared to how we’ve done over the past 5.

Cheers,
Ken

The key to saving money…

Posted on August 6, 2008
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Just don’t spend it. A USA Today journalist has done just that – not bought anything for a year. Read the story for details, then ask yourself – could you actually do that? Not buy even one unnecessary thing for yourself? How would you resist the temptation? I don’t think I could do it.

Cheers,
Ken

Little addictions

Posted on August 6, 2008
Filed Under Leaks | Leave a Comment

Today, I found out that I’m addicted to… Taco Bell! The cafeteria food where I work sucks, so I usually drive to Taco Bell for lunch – $6.00 plus about a buck in gas. Today though, my wife had to bring our son to my work to register for some classes, so she brought me lunch.
About 2 hours before she got here, I felt a little hungry and though immediately about going to Taco Bell. I brushed off the idea, reasoning why spend the ~$7.00 when lunch is going to be here soon? Then things started getting a little strange. The closer the time got for her to arrive (with lunch), the more I thought about how good that #8 Special would taste. It got to the point where I almost went and got some 15 minutes before she arrived. Maybe I have a problem… but its only $7.00, and I have to eat somewhere on the days she doesn’t bring me lunch…
I was reading about the “Latte Factor” in The Automatic Millionaire and the challenge to track expenses for a week. I decided to do a little calculating to see how much this leak is costing me each year. It costs me about $3.00 to make a lunch to bring from home vs. $7.00 for Taco Bell, $4.00 per day potential savings. I work about 250 days each year. $1000.00 per year in savings just by brown bagging, and it’s healthier too. I wish I had thought of this sooner.

Cheers,
Ken

How to get your free credit report (and score)

Posted on August 5, 2008
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If you have credit issues, you might find your email in-box filling up with spam from companies either claiming to fix your credit score or give you your credit score for free. In my opinion, companies that charge you to “repair” your credit are for the most part scam artists, but that is the subject for another post.
Companies offering you a “free” credit report and score may be legitimate, but there almost certainly be a catch – to get your “free” report and score, you have to sign up for their monthly service, typically around $15 per month. They let you start with a free trial period (usually around 7 days), during which you have to remember to cancel, otherwise you get billed the $14.95 or whatever.
Personally, I recommend you do not use these companies to get your credit report or score. While they could be coming from legitimate companies, they are just as likely to be a phishing scheme (can you tell the difference between a real or fake email from Experian?) It is much safer to get your free credit reports from annualcreditreport.com. From this site, you can view and print your reports from the 3 main credit bureaus – Equifax, Experian, and Transunion. Each company will also offer you the opportunity to purchase a look at your credit score. Don’t take them up on the offer, there is a way to get it for free (but not online).
To find my credit score, I went to a Citi Financial and asked what the going interest rates were for a personal loan for a person with poor credit. The lady said it depended on several factors, and asked if I knew my credit score. I told her I didn’t know. She asked me for my SSN, I told her, she typed it into her computer. I asked if I could see my score, so she showed me. Didn’t cost a penny.
For more information on companies offering “free” credit reports, follow this link.

What Class are you?

Posted on July 30, 2008
Filed Under Uncategorized | 1 Comment

Although I eschew talk of “Class Warfare,” David Brooks makes an interesting observation that Americans can be divided into two classes: the Investor Class and the Lottery Class. It’s interesting to me that he doesn’t choose “rich” and “poor,” or “haves” and “have-nots” to describe the two classes, and I think he’s correct to use the terms he does, because they emphasize that the class you belong to isn’t determined by how much money you have, but the class you choose to place yourself in will ultimately determine your financial success or failure.

I disagree with him on one minor point: he says some people have “little access to 401(k)’s or financial planning” which to me implies that these people are unable to invest. I don’t think that is correct. While many people don’t have a 401(k), anyone can open a Roth IRA account with Fidelity or Vanguard and start their own retirement account.

How do you determine what class you are in? It depends on your financial behavior. Do you cut expenses as much as possible? Do you spend less than you earn, saving and investing the rest? If so, then you’ve placed yourself in the Investor Class. On the other hand, if you spend more than you earn, carry a high debt load (especially debt from “anti-thrift” institutions), waste money on lottery tickets, etc, then your behavior places you solidly in the Lottery Class.

Cheers,

Ken

Just Say “No” to class warfare

Posted on July 29, 2008
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Today on The Simple Dollar, a letter from one of his readers was posted, basically complaining that Trent (the owner of the blog) was “rich,” and “can’t relate to (the reader’s) situation. I will have to find another web site to read.”

I find such an attitude to be condescending as well as pathetic. Who is this reader to judge Trent for making some good choices and reversing years of bad economic decisions? Wouldn’t it be better to read The Simple Dollar and try to learn good money habits, instead of finding “another web site to read,” maybe one by someone who doesn’t yet understand how to turn a bad financial situation around?

When I first read the letter posted, I thought it could have been written to me. Like Trent, I overcame around $17,000 in credit card debt in about a year. For someone to say that I can’t relate to what it’s like to be “poor” is an insult. When I first moved to Reno, my take home pay was about $625/month, I paid $425/month for an apartment, leaving only around $200 for food, gas, insurance, entertainment, etc. In short, I’ve been there, done that.

I really love this country (USA), and I truly believe it offers more and better economic opportunities than any other country on the planet. It’s not a zero-sum game either; ANYONE can get ahead economically by applying themselves and adopting good spending habits. For those that are currently “poor,” developing good habits can have a bigger impact than it would for someone who is “rich.”

You can stay “poor,” or you can get ahead. Playing the “class warfare” card doesn’t help anyone get ahead, and just reinforces attitudes that may in fact help ensure that they stay poor. And remember this…

“The choices you make, not the chances you take, shape your destiny”

Cheers,
Ken

“We spend too much money”

Posted on July 25, 2008
Filed Under Spending | Leave a Comment

After years of carrying a heavy debt load, my wife and I paid off all of my credit card debt by late last year and have even managed to accumulate some savings. However, the past few months have been stagnant. Looking at our latest bank and credit card statements, my wife made the comment that “we spend too much.” Of course, she is correct – we do spend too much. Beyond that, I’m not earning to my potential, but that’s a story for another day…

The question is, what do we cut out? We have a fairly low mortgage payment, and most of our other expenses are fixed (car insurance, child care, etc). About the only places to trim are our grocery and utility bills. Then it kind of dawned on me – since paying off the credit cards, we’ve sort of drifted back into the paycheck to paycheck lifestyle. Our bills are covered, but we never really developed a plan to deal with unexpected expenses, which seem to crop up all too often at the worst possible times.

My first challenge, then, is to come up with a plan to get us off of the paycheck to paycheck cycle. The way I see it, it will involve several things:

Will it work? Gosh, I hope so. There is no way I want to go back to the financial mess I was living in before.

Cheers,

Ken

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