Preserved Topic: Advice: The Lucidity of Burning Pockets

O.k... O.k.. So I'm not generally one for doling out unasked-for advice. But I woke up this morning and found myself in a contemplative mood and figured it was worth sharing the mood. If any of you recall my Razor's Edge thread, you'll know that life for me and mine has been difficult of late... Alright, so it got really fucked up for a while...

Thing is.. A lot of the problems could have been avoided. Or at least buffered. We made some mistakes along the way and could have been more prudent in some of our choices. We've learned some hard lessons from all this and I thought I'd pass them along.

1) Emergency Fund. Always have a 3-6 month income buffer saved in a separate bank account or CD. Enough money to cover all your regular bills for 3 to 6 months. You never know when life is going to throw you a financial curve ball and you'll find yourself trying to recover from some kind of disaster. Whether it's major repairs to your vehicle, a huge hospital bill, loss of income due to loss of a job, extended unpaid leave time, or whatever.

2) Limit Use of Credit (Especially Credit Cards). If you think gambling, drugs, smoking can be addictive, then you need to consider the fact that using credit, especially credit cards, can also be highly addictive. It's so easy to use credit to get those toys, trips, etc.. that you want. Get them now instead of waiting and saving. Hoever, being saddled with debt is like walking around with piles of rusting chains strung around your neck. Not fun... Get one card, and only one. Use it to make one or two small purchases each month and always pay the card off on time, each month. This way you'll begin to build good credit, and will keep the card's limit free in case you need it in an emergency.

3) Fire Proof Pockets. Well all have to battle with the urge to find a way to spend money once it's in our hands. My mom used to describe it as if the money were burning a hole in your pocket. We all enjoy the pleasure of going out and spending cash. Buying new cd's, video games, clothes... Going out to dinner and a movie.. I'm not saying you should stop doing this, just temper it with some prudence. Save for the future. Make a point of socking away a set amount of money from each paycheck, even if it means waiting a week or two before getting that new gadget or whatever.

4) Plan out a Budget. Keep track of when your bills are coming in.. Plot out the expected amounts (for most bills, the amounts will rarely change).. Plot it out in some kind of graphical way so you can get a clear picture of your whole month. What you're earning, what you're spending. Seeing it all in one picture really helps to dispell some of the misconceptions of where your money is going. Include all the little things too, like that espresso you get on the way to work each morning, or the candies you buy to keep in a drawer at work. Too many people are reactionary instead of proactive when it comes to bill paying and budgeting. Companies know this and bank on it. A new scam you see in some commercials and infomercials is they'll send you a product for a rediculously low price and include a membership to a club. Well the club fees are like $10 - 30 a month, and they figure you'll never even notice that sum in all your bills. Another scam is where they'll send you free replacement items for your product, for life.. But they charge you upwards of $10 each time for "shipping and handling". Again, they figure you'll not notice such a small amount. If you plot out your budget, you'll start to see how all those little things begin to add up to a big chunk of your monthly bills.

5) Never too Early to Save for Retirement. Retirement always looks like a far off thing. Something one can worry about later. Don't be fooled. Saving a little bit when you're young can be much more powerful than rushing to save a lot in later years. At the same time, make sure that you can get to at least some of that retirement money in case of an emergency. There's no point in having thousands of dollars socked away somewhere for your future if your present is a disaster zone.

Well, that's it for my advice.. Take it.. Leave it.. I figure as long as I've shared it, I may have done someone some good. For us, we've gone through a year and a half of hell. Things we could not have predicted, but we could have tried to buffer against. From a blown rod on our van that cost more to fix than the van was worth, to an operation for my wife which meant 9 weeks of upaid recovery time, to her losing three jobs in six months (two due to layoff. One to a conflict with her boss), to unwarranteed transmission problems with the replacement van, to having to move. We'd started off this bumpy trek with a buffer of a few thousand in the bank. By the end of it, when we were waiting and praying for cashed-in retirement money, while facing the fact that we were two months behind in all our bills, and that our landlord, while being understanding and patient, would have no qualms about kicking us out on our respective asses if the money didn't come in on time. Well now the money has come in. We've paid off all our bills, and paid most ahead at elast two months. Our bank account is still laughably low, but we have out buffer now, and we're going to try our best to be smart about things over the next couple of months.. Save, plot, plan, budget. If we do it right, we may never have to worry about this kind of situation again. Hopefully... At least we're wiser than when this all started and we're still together.

So.. For the rest of you, all I can say is... Bottom line... Enjoy your youth, but temper it with some wise choices towards your future. Nuff said..

Thank you. Really.

Some valuable words - and very salient points made...

Having been through all of that myself, and still in the middle of recovery, I can safely say: easier said than done! But well worth the release from stress and worry if you can make it happen! Good luck to you and yours Witherin...

Bodhisattva: an enlightened being full of generosity who sticks around in this world to show others the way to enlightenment.

Definately easier said than done.. Very much so. I suppose if it were easy, we'd all be rich and comfortable in our lives. But to paraphrase a quote from the movie Vanilla Sky, in life you can't taste the sweet without the sour.

having been thru it, you've hit the nail right on the head, wyth...

one thing: when drawing up a budget I separate short-term goals (monetary), long-term goals, monthly bills and yearly bills and (to keep on track) I also include an abstract paragraph on where I'm trying to go, why, and how I plan on getting there...

...that last one, believe it or not, is very important...


Harmonizing new illusions...
ICQ: 67751342

Good points Petskull.. Kind of like Mission Statements in corporations. Although, sadly those tend not to get taken too seriously by most employees. They can work if you set your mind to believing in them. Positive and negative energies.. Believe it can't work and it won't. Believe it can, and you stand a very good chance of making it work.

Great post Witherin. I guess you really made me think more about my future, where I am today, and where I would like to be a few years from now. Thanks.

-Jestah
Cell 277

So, where were you with this goldmine 10 years ago when I needed it ?

All good advice. And I , for on, should try harder to follow it.

If you don`t know where you`re going, how will you know when you get there ?

wow what a good read

I started to pack on a few pounds as I'm getting into my 20's, so I decided to start a small diet. I drink less beer, eliminated snacks inbetween meals, and other small things. Its surprising how much money you save hehe

oh, and they put those candy bars and magazines by the checkout counter for a reason: "impulse buying" don't fall for that.....

Where was I with this great advice 10 years ago? Ignoring it.. Like a fool.. At about that time I'd lost my job, spent a year and a half in a depressed economy trying to get back to par. I ended up in a job that paid half my previous salary. Along the way, I'd hung onto a leased car for way too long. Purely out of pride and love of the car. At $400+ a month, it sucked my savings right out the window.

If I could go back in time, I might be tempted to educate my younger self. Then again, if I did that, I'm fairly sure I'd never have met my wife. The tenuous links of fate would have snapped over such a radical change in my experiences.

Great advice but those little expenses add up.

About two years ago I looked at my unnecessary 'cash out' expenses and found that my monthly subscriptions to 11 magazines, $150+ coffee/mt dew expenses per month, movies - rental and theater and going out to dinner were eating over 60% of my income. Now all my entertainment/recreation is less than 10% of what it was, I probably drop about $230 a month on all of the above now in a well behaved month. Good point about the budget...seeing one month of expenses on paper can be sobering.

One thing I do now is pay cash for everything I can, no checks, no plastic, cash money leaving my hands...I found that its a LOT harder to hand over them dead presidents then it is to sign for a credit card purchase. Cash for everything!

My wife and I compromise.. Rarely do we use cash (although we both have a few bolt-holes of emergency cash). Instead, we use the debit card almost exclusively. It works just like cash, in that the money comes straight out of your bank account as soon as you use it. I find it more secure for me than cash. Plus, it keeps the money in my bank account instead of in my pocket. Especially in the case of a couple sharing an account, cash in hand means money the other person can't use.

Oh, and agreed on the little stuff and the impulse buying. Both are marketing tricks that are time-tested successes in the retail world.

Oh! Here's another mini bit of advice... When shopping... Buying the largest container of an item isn't always the best deal. Check those cost ratios.. You know.. the price/lb, price/oz stuff.. The retailers count on you not bothering to check that stuff.

A very interesting list...and for most situations, also sound advice.

I don't use credit...so have never had a 'credit' addiction to shoulder.

My philosophy is rather simple...live within your means. That means, the money that I have, is the money that I can plan with...

This rather simple philosophy is much harder to actually implement as it sounds...but the rewards are more than worth it. However, it means giving up most modern 'conviences', like status, keeping up with the Jones' and such...buying a new car every year or so, and of course, that super vacation to Bali that you've alwys wanted to take...

I still have a full life, though. I do take vacations, drive a car, I have a televison, etc...it's just that they are not, by any means, top of the market toys and such.

The interesting thing is, when you go along with this philosophy (and have little money to begin with...), and a time comes that you have much more, life is just so much easier...because one tends to live within the 'old' means'...leaving a rather large amount of money left over every month...also, this philosophy has allowed me to survive times where I had very little income...I've learned to be happy with little things...a slow, long walk with someone you love through a park, for example, instead of an expensive candlelight dinner in an expensive restaurant (I still have romantic dinners, I just cook them myself...teaching myself to cook was a very good idea...I would recommend it to every man...and I mean really cook, not just boiling water, or microwaving something...)

But thanks for the list...not bad advice...

More'n'welcome WS. I'm just glad anyone got anything out of it and I heartily agree. As to the cooking, I think pretty much everyone here would get a kick out of taking a stab at learning to cook. There's a lot of art in cooking, just as with much of what we do here. Whether you're cooking up a full course meal, or simply cooking up a steak in a skillet (did that for my wife last night. Did it up with some cajun spice, a touch of mongolian fire oil, and a basting of a rather nice sweet and sour sauce. Judging by her reactions, it came off quite well), each meal is a great oportunity to experiment. Give it a shot.

cooking at home is the easiest way to save money! Planning a menu out each week and buying all your ingredients up front and in bulk if possible... It's amazing how much money one can spend on dining out. For those of you who don't cook, there are a number of cookbooks on the market designed especially for you with easy directions and simple recipes. It takes a little discipline and planning to get it together each week, but well worth it in the long run.
I've found that these days, I prefer my own cooking to any that I'll find in a restaraunt anywhere! The food tastes fresher, the dishes are cleaner, and the service is worth a great deal more than 15%!
And a point to the debit card - this is a wonderous invention! A way to use just the funds you have available and easily keep track of every penny spent from it! Cash is good, don't get me wrong, but it's really easy to drop a dollar or 3 on a soda or coffee each day on the way to work and not remember that that's what you spent it on. If you have to sign a receipt for your purchase, you have cause to remember it.

Bodhisattva: an enlightened being full of generosity who sticks around in this world to show others the way to enlightenment.

see.... I work backwards...

if I use a debit card instead of cash- I have an acurate record of how exactly I drained my life savings in one week....

I live on $10 (maybe $20- things happen) a week.. and try not to touch the money in the bank unless it's budgeted...


Harmonizing new illusions...
ICQ: 67751342

[This message has been edited by Petskull (edited 06-18-2002).]

Well that works too PSK. It's all a matter of being realistic in your spending habits. That and recognizing your own nature when it comes to spending and controling your urges. For me, using the card is more a deterent than cash, while for you it's the opposite.

it's cool someone says this sort of stuff ..altogh if got another 4 years at shool (living of my parents) it is good to be reminded of things like that ...i think it was great of you to post this althoug it is verry much going in to your privacy

True Blacknight, I may have revealed a bit of what's going on in my private life. But I think I had to. When offering advice, I feel you need to lend credibility to your statements. People are much less likely to listen to you if they feel you don't have the right to speak from experience. I do the same thing when talking to my kids. I know they're not going to listen to what I have to say, advice-wise, unless I can speak from experience. Either personal, or veiwed through friends and associates. And I share those experiences with them so they can see that even adults can make mistakes.

"Listen, son- when I was a heroin junkie and smoked habitual herb as a broker on Wall Street, I met this hooker with a heart of gold...."


Harmonizing new illusions...
ICQ: 67751342

Money, whether via cash or card, requires a great deal of personal control anyway you look at it. Whichever way gives YOU the most control, is the one you should use.

Young people - learn that control NOW while your parents can still help you out. 'Cause when you get older and have to do it on your own - it's a harsh smack in the face from reality. They don't teach you this stuff in school. I came out of public schools and 4 years of college so unprepared for real life, I'm surprised I haven't claimed bankruptcy yet... It takes an amazing amount of planning and focus to really make it in this world...

As for personal details, they help bring the point home, as Witherin says... And it doesn't appear as though any hearts have truly been bared here, just enough to make the point... And a good point it is!
Bodhisattva: an enlightened being full of generosity who sticks around in this world to show others the way to enlightenment.

[This message has been edited by bodhi23 (edited 06-18-2002).]

Hey Petskull, I've never known anyone who worked on Wall St., although I've been there as a tourist. As to the rest.. well.....


And bodhi23.. Agreed. It's a damned shame they don't teach enogh on money management in school. I think it's taught to some degree in Home Economics. But then again. I have no clue if they even teach that course in school anymore. It's been more than 20 years since I graced the doorstep of a high school.

Last Home Ec class I took, they taught cooking and sewing... There was a brief lesson in writing checks and recording in a register, but as I recall, no lesson about reconciling a checkbook or balancing a budget. They expect you to just know all that, I guess... I haven't been all that long out of school, but long enough to realize that I won't need at least half of what I learned there... and that half of what I DO need, they didn't add to the curriculum.

I wonder if the credit card companies lobby in DC to keep that stuff hidden away? It sure wouldn't surprise me...

Bodhisattva: an enlightened being full of generosity who sticks around in this world to show others the way to enlightenment.

thanks for the advice witherin.

i have one additional suggestion:

in stockmarket playing, high risk trading, or gambling - only invest what you can afford to lose.
This is crucial. If you put your life savings into shares, then you can't sit there while your stocks fall, and wait for it to 'bounce back'. When you are forced to sell, that's when you lose your money.
This principle applies even more to gambling. If you feel like having a play, that's fine - but you must take the approach that once you bring the money out, it is lost. Gambling should simply be paying money for entertainment - just like forking out $10 for a movie. Determine at the beginning of the night how much you want ot pay for this entertainment, and once you have lost that amount, leave.

These are not theoretically deduced tips - this is advice i have learnt personally from the mistakes of others that i have been affected by.

____________
reitsma

Well said Reitsma.. Sometime before all of this happened to us, my wife and I had a chance to take a week long vacation in Vegas without the kids. Was a great time, and we managed to stay on a tight budget while having a blast. Most definately with gambling, you have to view it as entertainment. It's the same thign I used to do years ago when spending an evening in an arcade. You view it the same way you'd view going out to a movie or the theatre. You're paying for entertainment. The trick with gambling is that if you're prudent, and a bit lucky, you can have a good time and maybe come out on par or ahead of the game. Another thing I did when gambling was to pull out any winnings over and above the original budget. That way I was always gambling just the original amount I'd set for myself.