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Archive for August, 2009

I say tomato, you say toh-ma-to!

August 28th, 2009 at 07:33 am

Recent research by scientists at the University of Michigan, University of Pennsylvania and Northwestern University suggests that people tend to seek out their opposites in spending patterns. The researchers also determined that people self identify that they would be happiest with people of their own spending patterns -but the research suggests that people do not actively seek out partners who share their financial outlook.

The researchers noted that the findings suggest that we dislike aspects of our own spending patterns and unconsiously look for partners who believe differently. For example, thinking: "he makes me feel so free" or "she reins me in -I feel more responsible"

Unfortunately, partners who do not share a like outlook on finances are more likely to have marital conflict, and divorce.

(the abstract of the paper is here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1339240)

My husband and I are probably fiancial opposites, but rarely fight about finances, because he's taken the "Yes, dear" approach. That, and we can talk about finances without getting mad or accusatory (mostly!).

So, in the spirit of the study: is your partner your financial opposite?

Wedding Woes (for the bridal party)

August 26th, 2009 at 06:30 am

My husband and preschooler are in a wedding on Labor Day weekend. My husband is the best man. I am hopeful that this is the last wedding they will ever be in. Ever. It's hard not to compare this non-frugal, no holds barred, to heck with the financial and scheduling constraints of the bridal party wedding extravaganza with our (as I remember it) simple and beautiful wedding and reception.

But let's see the breakdown for this extravaganza (for us):
Husband's tux (which we had to drive 150 miles for): $200;
Son's tux (and shoes??!-because his black shoes won't match the other men?!): $200;
Wedding shower gift: $60.00;
Hotel for night of wedding: $145.00 (big fight about this one -but I think we didn't have much of a choice);
Wedding brunch: $unknown (but mandatory);
Bachelor party: $unknown (husband is keeping quiet about the details);
Wedding gift: $unknown (see below).

Then, there's the babysitting for the younger son, who was not invited to the wedding, the time off work for the rehearsal, driving across the state several times, and ... (cue ominous music) my dress.

My dress, which was supposed to be frugal as well as classic. It is classic, but definately not frugal. The wedding is orthodox Greek, in the late afternoon, so I wanted a dress that would look good in the afternoon, but fit in at the evening reception. I wanted something that covered my shoulders and would look ok with a hat, in case I had to cover my head. I wanted something classic, and that would look good for any pictures with my tuxedoed husband and son.

I bought on ebay a vintage 1950's dress, tea length, black taffeta with tiny off white polka dots, cap sleeves and a beautiful asymetrical neckline. I paid too much, but in my defense: it was the perfect dress; good vintage in my size (a modern 8/10) are tough to find; and I was suckered into an ebay bidding war. Then, I had to buy the crinoline and the undergarments, which cost more than I expected. At least the hat was frugal: $10.00. Except that it was the second hat, and the first one was $15. (I love hats.) Let's just call the dress $400. (Which, sadly, is more than I spent on my own wedding dress, veil, crinoline and undergarments.)

So, with my help, this wedding has been a financial disaster. (I can only guess what it's costing the couple and their families -and I'm thinking we're up around $40,000.) That said, we have to come up with an appropriate gift for the bride and groom. They already have a fully furnished house, and I bought a lovely shower gift for the bride, so I decided to go with cash.

The question is: how much? Is $100 too low? What is expected from the best man? Cash or check?

Has anyone been to a wedding lately? Do you think there's a difference in the spending of weddings of younger couples vs. weddings of older couples? Are weddings recession-proof? Also, does anyone need a vintage dress after Labor Day weekend?

I met the financial planner

August 21st, 2009 at 09:29 am

I took an hour off today to meet with the prospective financial planner. I think it's going to be a good fit for us. He seems reasonable about his investment strategies and able to adjust to our risk levels. I definately liked that he will be able to put together and review the entire portfolio from all our sources and examine the income/growth ratios globally. He has no issue with the fact that we've got investments that I'm not willing to change right now.

I liked that he had different compensation methods (fee and comission based) and we can choose which way works best for us and change at any time. No charge for phone calls, consulations, portfolio reviews and the like.

One of the things I liked best was that he didn't talk over my head, wasn't condesending and didn't make me feel like we'd wasted the last 10 years of our lives. He's also perfectly comfortable with the fact that we'll be investing small sums for a while while we work on our other financial priorities -the credit card debt, for one.

I took all the information he had, and I'll research more over the weekend, but my gut feeling is that this is the right guy for us right now.

Home Sweet *&#@ Home!

August 20th, 2009 at 06:22 am

Unbelievably, I've now made it through 2 weeks of frugal living -and it wasn't even painful! Spending so far this week? $0.00.

Now, as I try to figure out how to manage the household finances more effectively, I'm realizing that one of the holes in our budget is the expenses associated with home maintenance. They know our kids at Home Depot, we're there so often.

I know we have some expenses coming up: pumping the septic system ($400), repairing a broken storm window ($100?), and prepping the house for winter ($50). Then there's our annual discussion of the horror of the dirt driveway. Every year I swear that I will not go another winter with that driveway...I'd also like to replace our 1950's toilets with low water versions ($300).

So, what's the best way to go about budgeting for a house that past its prime in 1962? Save for individual planned expenses? Just put the money aside every week and use it as necessary? Some kind of hybrid plan? Does anyone follow a maintenance schedule -and does it help with the budget?

Fear of the Financial Planner

August 19th, 2009 at 06:50 am

Yesterday, I made an appointment to speak to a financial advisor. My husband has a fairly robust 401k through his employer. On the other hand, I have not invested in any retirement account in over 5 years. My "portfolio" is sadly lacking.

I have an IRA and mutual fund that have languished for at least 10 years. I have something that was started by my employer before I was a partner, which appears to be invested in a CD. The total value of my retirement portfolo is less than $20,000.

In addition, I need solid advice about managing our tax liability and our current life insurance policies and limits.

I am surprised that I let the whole retirement thing get so bad, but I know that studies show that I am not alone. Women, for a variety of reasons, tend to shun away from traditional finacial planning and to delay planning for their own retirements. Instead of kicking myself about how I got here (when I was the kid that opened an IRA when I was 19!), I'm going to try to focus on the postive - it's not too late to put aside the $ to have a great retirement!

Not surprisingly, when I told my husband I was going to speak with a potential financial advisor, he was indifferent. While he's happy poking at his company stock options now and then on E*trade, he's basically uninterested in managing any of the finances. I suppose I should just be grateful that he's supportive and on board with the plan going foward.

I can't explain why, but I am terrified of this meeting. My inner voice has been telling me it's ok if I want to cancel and I've come up with some great excuses. Whenever that little voice chimes in, I remind myself that I'm not committing to anything just yet, and I take a deep breath.

Anyone have any thoughts about long term financial planning or financial planners?

The Plan! The Plan!

August 18th, 2009 at 07:24 am

My apologies to Fantasy Island. I used to love that show when I was a kid, although I suspect now that I had no idea what was going on during the episodes. At our house, I also suspect that we've been living on our own little Fantasy Island.

The first payments to the credit cards in our new reduction plan began today. At the current rate, our credit card debt will be paid off in 2 years.

I created a budget based on the payments we were already making to the lenders (which were greater than the minimums), so that the shock of our more focused frugal lifestyle wouldn't be derailed before we could appreciate some of the benefits. For example: I didn't cancel the cable/internet. I am leaving the cell phone plans alone at $30/mo for my husband and I. And, I have told myself that it is ok if I want to buy a coffee or have an inexpensive lunch out.

I also built 4 savings goals into the budget: the emergency fund, a Disney Cruise (for 2012), a Christmas fund, and a fund for a china cabinet. People would be absolutely right to say that we should be putting every cent into our debt reduction. The fact is, the all or nothing budgets haven't worked for us. My thought is that by building some of our wants into the budget, we'll have an incentive to keep to the plan.

If the debt reduction budget works out the way I've envisioned, we'll have extra each month -my plan is to put that extra towards the credit card debt.

We will continue to carry a heavy burden of student loan debt (my law school loans top $100,000), mortgage and car payment. I will start looking at those once we've paid off the credit cards.

Thinking about our financial situation is both frightening and empowering. I know how we got where we are, and I'm trying very hard to stay positive and focused on where we are going to be.

Happy Birthday, Davy Crockett!

August 17th, 2009 at 10:11 am

Davy Crockett was born August 17, 1786. He died at the age of 49 at the Alamo. He was a serviceman, a husband, a member of the House of Representatives, a writer and father of 6.

Davy Crockett was popularized in the 1950's by Walt Disney in a series of televison programs and films originally produced as part of the run-up to constructing Disneyland. It is reported that American consumers snapped up $300 million dollars in Davy Crockett merchandise by 1955.

For contrast: in 1786, the year of his birth, Philadelphia printers went on strike to protest a reduction in their wages from approximately $6.00 per week to $4.33 per week. (They won.) California (Disneyland's home), was purchased in 1848 for about 15 million dollars.

Davy Crockett saw the start of the industrial revolution. Over his lifetime, the steam boat (1786), gas lighting (1792), small pox vaccination (1796), tin can (1810), steam locomotive (1814), typewriter (1829), sewing machine (1830) and the stereoscope (1832) were invented.

He is quoted as having said: "Always be sure you are right, then go ahead."

Good advice. Happy Birthday, Mr. Crockett.

Weekend Recap

August 17th, 2009 at 06:46 am

Yay! My second frugal weekend was a success. I think it's getting easier -or maybe I've just had a run of good luck!

Total for the weekend? $70.00.

I am on my own with the kids this week, so I headed to Wal*Mart, coupons in hand, for frozen veggies and easy to make semi-prepared meals. I know the semi-prepared meals aren't the cheapest option, but for us, they are more practical this week. Total grocery bill for the week (including two lightsticks): $70.00.

The kids played in the backyard and their wading pool, and Saturday evening's entertainment was "Return of the Jedi," (DVR'd from a week ago) and two light sticks. Sunday we headed off to the grandparent's house for lunch, and the central AC.

We are on-track for a great frugal week!

Friday Recap - My First Frugal Week!

August 14th, 2009 at 11:51 am

What a week! Spending is up slightly at our house -but we're still on track for a good week. Last night was a pizza night. Fortunately, I had figured we'd be eating out one night a week, and the leftovers made a good lunch.

Today I had a latte and bought a fruit cup for my son for us to share while we listened to the music festival during my lunch break. He ate all the cantelope, I got the grapes, strawberry and pineapple. $4.00 for the fruit; music and sunshine: free.

The recap looks good -and I notice that I'm thinking more about the bottom line before I hand over the cash.

This weekend and all next week I'm on my own with the kids. My husband is away managing a week long DeMolay leadership camp. The financial upside is that while my husband is trapped in the woods, he's unlikely to use his debit card. Should be a nearly spend free week.

I don't have much of a weekend plan - besides the flower show at the park on Saturday. I am hoping good weather will let me put the kids in the wading pool, where they will happily wallow for hours.
My goal: spend less than $20.00 for the weekend.

Death and Taxes- mostly the latter.

August 13th, 2009 at 06:16 am

Making partner 2 years ago was very flattering. As a practical matter -it's been a financial headache. I don't make significantly more now than I did as an employee, and as a law firm partner in the U.S., I am considered self-employed. No income tax is taken from my paycheck. I am expected to make estimated quarterly payments to the government. Our firm estimates the amount of money we are likely to take in for the year and guesstimates a weekly paycheck amount. Adjustments are made as the year progresses. Quarterly disbursements to the partners are supposed to make up your quarterly tax payment. I understand that the system generally works great.

Last year, I went for three weeks without pay. (Work was slow and our clients, perhaps because of the economy, stopped paying their bills. There was a lot of hand-wringing at our house.) The quarterly disbursements were not enough to cover the tax liability. I put the money into a savings account and did the best I could with the quarterly tax payments. In a last minute save, the firm was paid by a client, my share of which went to cover our tax liability. Our long-awaited family vacation was cancelled.

To cover ourselves this year, I've been withdrawing an amount from every paycheck to cover my estimated income tax and putting it into our E*Trade savings account. Any disbursements I receive also go into the account. My plan is to have covered all the taxes, plus some, by the end of the year. The money will continue to accrue intrerest until April, when I'll send a check to the government. Whatever is left will either stay in the account as seed money for next year, or we can pull it and use it to pay of debts.

I have no idea if this is a good way to handle our tax issues or not. We're still not meeting the quarterly payment minimum, but last year the interest on the account covered the penalty +, so I'm not too concerned.

If you're self-employed (or even if you aren't), how do you manage paying the tax man (or for other large yearly expenses)? Any hints, tricks or tips?

Shopping Trip!

August 12th, 2009 at 06:14 am

For us, CVS is the budget wooden stake. Nothing can kill the budget faster than a quick trip to CVS. Faced with hours of back pain, I broke my no-spending run for a trip to CVS. I probably could have done better if I'd thought to search for a coupon on-line before I went -but I'm going to take my attempt at frugality as a victory, all the same.

Here's my report:

Nylons were buy one get one 50% off, 2 to a package: $6.00;
Centrum vitamins were 50% off (they'll expire in 12 months -next month they can't sell them): $6.50;
Batteries: $5.99 (Reimbursed office expense)
Thermacare back heating pad: $6.99

I had a $13.00 in Extra Bucks.

Total: $6.49 (not bad!)

Waking up Tired

August 11th, 2009 at 06:47 am

We all woke up tired in our house this morning. Our little one had a bad night, and kept me up to 1 a.m. His older brother was up as well(a side effect to sharing a room) and their father ended up sleeping on the couch downstairs. This would have been fine, but he left his alarm on, which woke me an hour and a half early, and I couldn't turn it off. I had some choice words about that... Then, hearing the interesting commotion, the 4 year old determined that it must be time to get up. I tried to have a reasonable conversation with him about why children don't need to get up at 5:30 a.m., but his confused face betrayed that he belived that I had gone crazy, and he went off looking for his father.

My entire being is crying out for a medium Dunkin' Donuts latte -but I've resisted so far. The coffee at work is free. Unappetizing, but free.

The other free thing at work is Advil. Which is good, because I have a piercing pain in my back, occassionally running down my right leg. This is how I know the baby has had a growth spurt. Every few months he puts on a ton of weight, and I throw out my back. I am going to take this as nature's way of reminding me to encourage his independent streak and stop picking him up, instead of kicking myself for not doing the strenghtening excercises my doctor suggested after the first one was born.

I am on day 3 of no spending -although my bad mood has made me terribly grouchy about it. I suspect I'll be slowly making my way to the CVS later to spend my Extra Bucks on some of those disposable heating pads.

No Weekend Hangover (of the fiscal kind)

August 10th, 2009 at 08:42 am

My first fiscally responsible weekend was -well, we survived!

Saturday morning the kids and I went to grandma and papa's house, where the best in-laws in the world fed me breakfast and gave lunch to the whole gang. Then it was off to an afternoon birthday party, where we had dinner and I ate my share of cake and ice cream, and also finished off the kids' share of cake and ice cream. Score one for the budget, zero for healthy eating.

Sunday, my oldest played outside while I weeded, and then we all went for a walk in the local state park. We had a nap and I amused myself by rearranging the furniture. We ate all three meals at home, and topped it off with homemade ice cream! (This is also not good for the healthy eating score, but the ice cream is sooo rich, I only ate a tiny portion, which should be worth something)

Lest you all think this was easy, I had to squelch my first instinct of running to the mall for entertainment at hour 2 of the kids demanding the TV and me telling them no, and I was thinking of some rather unhappy endings for the Star Wars droid that couldn't help getting lost in the playground mulch, but we all made it, and we did have some fun!

Total budget outlay: $16.00! (YAY!)
Bonus: We got a reimbursement for $500 worth of materials purchased on our credit card -which I had forgotten we had done, which gives the debt reduction plan a nice boost!

The Dreaded Weekend

August 7th, 2009 at 06:44 am

The weekend is our family's budgeting nightmare. When it comes to the weekend, I am weak. After fighting with everyone all week (no, you can't have that, we're not going out to eat, and no, there's no money put aside for that), I lose my resolve over the weekend in exchange for a few moments of peace.

Before the kids were born, we lived simply, but we were out every weekend -shopping, going to museums or the movies. Even after the kids, I find we're still going out on the weekends, and whenever we leave the house - we spend. I never manage to get the kids fed before we're out, so there's always snacks and lunches, and sometimes dinners out. Every other weekend or so, we go for breakfast at a local diner. (Why, I'm not sure- the kids are not great about eating in places with actual utensils) Every weekend there's some new home related crisis involving multiple trips to the hardware store, and for some reason, the kids always need shoes. We start out with the cash method, but by the end of the weekend, that's gone and we've used the debit card too.

I'm resolved this weekend to keep the expenses down - especially since we transferred a good portion of the discretionary funds into savings accounts this month. I'll report on Monday as to my success (and failures)! Any advice on how you handle the weekend is appreciated!

Debt Reduction Without Painful Math!

August 6th, 2009 at 06:10 am

I admit it: I hate math. Too many numbers make me downright edgy.

My fear of extraneous math had prevented me from appling payments to our credit card debt in a way that works for us. Sure, I paid more than the minimum, but I never seemed to be making much progress. I figured it was an evil credit card company scheme to keep us in debt and that there was nothing we could do.

Wrong. Enter dueminder.com. You put in your credit card (or loan) information, it tells you the most effective way to apply your payments. Or snowball or avalanche. Whatever you want! If your circumstances change, update your info for a new plan. It tells me how much to pay on which card when, and I like plans. Easy to follow plans. With charts. And no math!

Dueminder will also remind you to pay your bills, which for me isn't a problem, but I can see the utility. I have taken to scheduling all my bill payments on the first weekend of the month - so they get paid all month, and I put it out of my mind.

With my newfound website, we now have a good plan going forward.

Saving - Effortlessly! (Almost)

August 5th, 2009 at 06:44 am

A few weeks ago I discovered, thanks to the New York Times, Smartypig.com. This on-line bank has a goal-based savings account. With a $25.00 intial deposit into a savings account goal, Smarty Pig will set up an automatic withdrawl from your account of choice, based upon the goal amount and date you set. I get to watch the little piggy bank graphics fill up, while I save effortlessly.

Smartypig has an average interest rate of 2.75%, which is impressive, when compared with my local bank's .02% current rate. Smartypig will also convert your completed goal funds into gift cards and give you some extra $ for doing so.

You can alert friends and family to your saving goals, and they can contribute too. (I'm trying to figure out how to encourage grandparents to go this route for the kids -but I don't want to offend them, and I know they love giving gifts to the kids!)

We're saving for Christmas, a china cabinet, and a Disney Cruise for 2012. My plan is to start with a couple shorter term goals and one long term one and see if the SmartyPig system works for us.

Starting Over

August 5th, 2009 at 06:33 am

It's a new day in our household. For me, that means waking up too early thanks to an overanxious preschooler looking for a Star Wars action figure, having a too short shower, wrestling the boys into clothes, and dragging them to the car. For them, buisness as usual. For me? Well, not so much.

In a repeat realization I have every few months, I found myself staring at a bank balance that isn't what it should be. We save, but oh we spend! And when we pay our bills, we're just not doing it efficiently.

We have amassed about $20,000 in credit card debt, the majority of it having been amassed by my husband pre-marriage. I went to law school. We bought (at different times) 2 cars. We had two amazing boys - who need full time day care. I made partner at the firm, but that screwed up our taxes. We've been paying, and paying, and paying.

I manage the finances, but I'll admit, manage isn't the best term. That would imply some kind of strategy, some thoughtful process. I pay the bills.

This blog is intended for me to track my learning process in eliminating our debt, saving for the things we really want, and making our money work for us (instead of against us).

Wish me luck!