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So, is it Going to Stick?

July 21, 2011

I think I’ve noticed a little pattern. Most of the people I know who had anything to do with the Great Depression still do many of the things they learned during the Depression. That is one thing I like so much about them. They still garden. They still save money and avoid debt like the plague. They still value hard work. In fact, even though many people who have been deeply affected by the events and repercussions of the Great Depression probably don’t need to be overly frugal because, by now, they are probably financially stable, they still are.

It seems like those events changed them.

So here we are, hopefully coming to the last half of the Great Recession. I think our family is doing some things differently because of the news, the stock markets, the housing market, etc., etc. For sure, the Great Recession has impacted almost every family in this country and many other countries. People, including us, are budgeting much more closely. People are driving differently. People are seeing debt and saving differently than they did in 2006. As I look at the way I view my monthly finances compared to how I used to see them, it is obvious that the last 3-5 years have changed me and my wife in a pretty fundamental way. The question is: Will our family still be practicing frugality, and all of the things that go with that, in ten years (assuming that in ten years we’re living through “The Great Prosperity”, which I doubt)? Are our current views only going to last until gas prices go down, houses start to sell, employment rates improve and the general financial health of the nation improves?

Here are a few questions to ponder:

1. What has changed for us, as far as our financial attitudes and habits, since the Great Recession started?

You may want to think about how you budget, how you try harder to save money, how you keep your resume up to date, whatever…

2. Which of these changes in our attitudes/habits are going to stick?

For instance, I think I’m always to going track our spending closely. I like doing it now and feel that it is empowering. I think I’m always going to focus on saving for short term. I think I’m always going to put as much of our finances on auto-pilot as is appropriate.

But what about you? 

Using Mint.com to Track Peculiar Spending…

July 10, 2011

I wrote this post while on vacation. Nice, eh?

“Peculiar” spending describes transactions that aren’t normal monthly budget items. Going on vacation is peculiar since we don’t do it every month, and I’m not sure what it normally costs.

This vacation is different in that we really put aside money for the trip, and we’re really tracking every cent we spend while on vacation. First, I want to be sure we’re not going over the budget we set for the vacation. Second, I want to start keeping track of what we spend for this annual trip each year so that I can accurately set money aside for the trip.

Mint is great. It is making this process easy.

Whenever a transaction shows up on Mint, I check to see if it is money we spent on (or for) the vacation. If it is, I “tag” it as “CA Vacation 2011”. You can make any tags you want. “Christmas 2011”, or “Landscaping 2012”, or “Birthdays 2012” or whatever. Go the transaction, then go to the place where you edit the details and tick whatever tag you want. There are a few built in, but I’ll create my own, I’m sure. I already clicked “CA Vacation 2011” for the transaction where we ate dinner at Pizza Hut.

Now look at the bottom left corner of the “transactions” screen on Mint. It should show you all of your tags. Click on the one that you’d like to see a summary of. I want to see what we’ve spent on our vacation so far:

As of this writing, we’ve spent about $60. That is sure to go up, as gas is still expensive, we end up eating out a bit, etc., etc…

See? It shows all of the transactions that I’ve tagged as “CA Vacation 2011”. Now, once this trip is over, I’ll be able to see exactly what we spent on the trip. Next year, I’ll be able to budget a little more carefully. Plus, if we go under our budget for vacation during this trip, I can either send the unused money to savings, or go on another small vacation. We win either way. If we go over budget…let’s not even consider that…

If you are anything like my wife, you do your Christmas shopping throughout the year. If so, tag each Christmas transaction. Then you’ll be able to see what you spent, total, for 2011’s Christmas shopping. That will make it a bit easier to budget for 2012.

Mini-Post: Can I Afford That Payment?

July 6, 2011

There are not many things I hate dislike more than monthly payments. I would much rather just shell out money that I’ve saved up that be committed to some monthly fee/payment/charge. But, there are times when you kind of have to face a monthly payment, at least for a while. I was reading an article in our church’s monthly magazine, which discusses a way to know if you are going to be facing a payment you can make or not. When/If you click on the link, scroll all the way down to the last “story” entitled, “Can I Afford that Payment?”, by Cassy Budd, CPA, Associate Teaching Professor, School of Accountancy.

Biggest and Most Typical Short Term Savings Mistake!

July 3, 2011

Ok, maybe “Biggest and Most Typical” is an overstated title, a bit, but not by much. Today’s short post covers one mistake that many families fall into, mine included. It is kind of a trap, and it leads a lot of people to feel so much frustration that they give up on other financial goals and go down in monetary flames all of the time.

The mistake? Simply put: People make savings goals in a vacuum. Said in another way, people make short term savings goals, forgetting about every other financial goal they have, and ignoring other financial factors, and then feel really let down when the reach the end of their goal period and have come up short. It happens to us periodically. I’ll get all excited about some future thing we want to build/buy/fund, and then I put together a “plan” in my head detailing how we’ll set the needed money aside each month until the time of purchase. Months later, I wonder why we aren’t able to hit our goals.

Here’s an illustration: My sweetheart and I decide, while driving home one day, that maybe we need to build a deck. The deck will cost $2000. We start thinking about this month and realize that we were able to put $500 in the bank and savings. Our minds begin racing, and simple math tells us that we could save up like this for four months, and build the deck during the fifth month. What our minds don’t do, is start to add up possible costs that we might have over the next four months. We forget that we also signed one of our sons up for soccer that will cost extra money we don’t normally spend each month. We forget that we had a vacation planned that will be a one-time expenditure that is abnormal to our monthly budget. We forget about car registration that we typically take out of savings, etc., etc…you get the point. And at the end of four months, we’ve managed to squirrel away $1200 and can’t work on our deck. Then we’re let-down, and have less of a desire to try to save up for something else.

Better plan: Look back over 6-12 months of budget and see what we typically put away each month. Look forward over the course of our goal-time and see what expenditures we can guesstimate and plan for. Then if we still think we can save $250 a month for our project, we ought to plan on $200 just to be safe. Lastly, we ought to plan to have things happen that we can’t foresee and can’t control, just so we won’t be too let-down.

Lately we’ve been pretty good at setting and hitting decent goals. But a day or two ago I was imagining buying some thing and I quickly concocted the plan that would provide the money…and instantly realized that I was devising a plan without thinking about all of the other things we’re planning for…thought I’d share!

Mini-Post: Should You Borrow Money From Your Own 401k? (I can do that?)

June 29, 2011

Just read an article in the Wall Street Journal about an idea that gets little attention (which is probably good), but that you ought to be aware of. The article, “Banking On Yourself: Is It Ever Ok to Raid Your 401(k)?“, discusses the few instances where it maybe be a wise choice to take a loan out from your own 401(k). Please understand, there aren’t many moments when that will make a lot of sense, and there are some inherent risks in so doing. But, according to the article, there are some cases where it makes sense to take a loan out from your own retirement account.

We’ve done it. Our 401(k) is in decent shape, and during a time when most 401(k)s were losing money (right along with ours) we borrowed enough money to pay off our vehicle. It was only a few thousand dollars. The interest rate was much better than the bank would have offered, plus the interest paid went right back into our 401(k), and was taken directly out of our paycheck.

As the article explains, there are some risks with borrowing from your own 401(k), so you ought to read the article (and other articles) before you consider this tactic. Then talk to one of your plan representatives and read “the fine print”. I’m not saying this is a good or bad idea, but one that you may consider in certain circumstances…

Be wise…

Good News and Bad News (and More Good News)…

June 26, 2011

So, which do you want first? The good news? Great, here it is. Through months of saving and trying to stick to our budget, we’ve managed to save enough to get the sprinkler system and grass installed in our entire yard! We’ve even squirreled away enough to add some trees, a sandbox, and a pump for the well.

Okay, now for the bad news. We are using all of that money to buy a new (to us) van. We’ve been driving a 2000 Pontiac Montana that we bought a few years ago. We tried to pay it off a little early (which we were able to do, but not by much) and it has been a pretty decent van. It seats 8 with the bench seat in the middle, has a rack on top for luggage, has two sliding doors (one is on a remote), and is pewter/brown/charcoal colored so it doesn’t show as much dirt between washings. We’ve liked it. But over the last year, we’ve had to sink a bunch of money into her just to keep her alive, and our mechanic finally broke the news that he thought she was about done for…

So, now we’re in the market for a new van. Here’s what we’re looking for: A van that seats at least 7, has a rack on top, is highly-rated for dependability, has between 40k-60k miles, and is about 3-4 years old. We’ve really narrowed it down to a Honda Odyssey, Toyota Sienna, or 2008 or ’09 Chrysler Town & Country. Still a lot of study to do before we plunk down our sprinkler money… Actually, this video makes me want to buy a Toyota…

It stinks that we won’t be able to do our yard this year, as the children were very excited to play on grass, etc. But, we feel pretty blessed that we now have a few thousand dollars saved for the van, since we would always rather have a small monthly payment.

The plan:

We had to spend about $600 to get one part of the van fixed before our trip to Lake Tahoe. We will pray that the transmission doesn’t go out (it may last another 50,000 miles, who knows?) while we’re on our trip. We keep saving money, and actually maybe get the sandbox built (since that is our children’s favorite), and start looking for a van in the fall, hopefully saving enough to put down almost half of the money. Next spring, after continuing to save, we start the yard again…

I’m glad we didn’t start the yard too quickly or go into debt for any of it! If we would have thought, “Let’s charge it, and we’re sure we’ll have the money by fall”, we’d be in a huge mess right now. We couldn’t have known that we would be buying a van this year, but that is the reason we try to be smart and frugal with our finances, right?

Lessons Learned:

  1. Rarely do things go as planned
  2. Try to save up and pay cash for everything
  3. Consumer debt is horrible and almost always makes things worse
  4. I hate shopping for vans
  5. Try not to be too let down when plans are ruined
  6. Seriously, van shopping is lame

Any ideas for a van you like?

New Real Family Real Money Facebook Page!

June 20, 2011

To make it easier to stay up-to-date and informed on the RFRM Blog, go to the Real Family Real Money Facebook Page and click “Like”…you’ll be notified anytime there is a new post on the blog, plus a few other posts on the FB Page that aren’t necessarily worth an entire blog post but may be on interest…

http://www.facebook.com/pages/Real-Family-Real-Money/147232728679249

Have at it!