January 2018: By the Numbers

I’ve been waiting a year for this day!

At the start of 2017, because I was worried about lifestyle inflation, I began tracking my expenses for the first time in years. Using a rusty copy of Quicken 2007, I resumed updating the same budget database I’ve been using since February 2004.

After three months of tracking every penny I earned and spent, I had enough data to draw a conclusion: As much as Kim and I loved where we lived, our fancy neighborhood was costing us a small fortune. Our mortgage-free condo took more than $1000 per month to maintain (between HOA, insurance, and taxes). Meanwhile, I was forking out $500+ per month for groceries (and Kim was spending some too!) and $500+ per month for restaurants.

Prompted by these high expenses — and other factors — we sold the condo and moved twenty minutes south. We now own a smaller, older home on an acre of land just beyond the edge of Portland’s urban growth boundary.

The burning question since July has been: Did this move save us any money? Now that January 2018 is in the books, we have an answer. That answer is: “Hell yes!”

January 2018 Expense Report

On the surface, I actually spent more last month than I did in January 2017. My expenses show as $5419.29 versus $4801.76 last year. That said, about $2500 of those are unusual one-time expenses, such as $811 to repair the RV so that we can sell it, $225 for an electrical permit so that I can wire my writing studio, and $425.58 to get shots for our new kittens.

Kim with the kittens

When I compare “problem” expenses from 2017 to those from 2018, I see lots of improvement. Here’s a sample of the numbers:

  • In the condo, property taxes and HOA combined came to $1093.56 per month. In our “country cottage”, property taxes run about $250.31 per month. That’s a monthly savings of $843.25!
  • Last January, I spent $535.77 on groceries and $554.95 on restaurants for a total food expense of $1090.72. Where we live now, groceries are less expensive. Plus, we’re not within walking distance of bars and restaurants. We have to make an effort to go out to eat. As a result, I spent $397.53 on groceries last month and $190.49 on restaurants for a total food bill of $588.02. That’s a savings of $502.70!
  • Other expenses remained relatively constant. In January 2017, I spent $135.34 on transportation and $296.33 on utilities. In January 2018, I spent $147.29 on transportation and $301.61 on utilities.

I’m pleased with these numbers. I had hoped that moving would save us about $1200 per month. With one comparison month in the books, that guess looks accurate.

One final note on my financial situation: In January, my net worth rose 3.71% over December. It was up 3.33% compared to the same month last year.

I need to temper this good news with the fact that we’ve spent around $70,000 for repairs at the new place. This old house has been a money pit. We had a $59,000 “profit” on the difference between the sales price of the condo and the purchase price of the house. That profit vanished into a new bathroom, a new roof, new siding, and new floors. Without these repairs, my net worth would have been up 7.04% compared to the same month last year. (I realize some of these repairs should convert to increased home equity, but for now I’m treating them as a lost expense.)

Our new home

2018 Goals Update

Meanwhile, how am I doing on the goals I set for myself at the beginning of the year? Pretty good — but not perfect.

  • At the start of January, I said that I wanted to run at least one mile every day in 2018. That goal went out the window when I caught pneumonia and the doctor ordered me not to exercise for ten days. Still, I ran every day that I could in January for a total of 34.01 miles. (My revised goal is to run 1000 miles in 2018 — no “every day” component to it.)
  • I also said I wanted to eat three servings of plants every day in 2018 (by which I meant an average of three servings per day). This is one of those goals that seems stupid and easy to many people, but is actually very difficult for me. (I’m a meatatarian.) In January, I averaged 2.42 servings of plants per day. That’s progress, I guess.
  • Kim and I tend to drink a lot. It’s our hobby. (This afternoon, for instance, we’re headed to the Portland Seafood and Wine Festival.) I want to drink less, though, so I’m aiming to have only 500 servings of alcohol in 2018. In January, I drank 33 servings. That’s below my target pace, so yay! (One subgoal is to drink no beer until my birthday at the end of March. So far, so good.)
  • I also set a goal to publish 500 articles at Get Rich Slowly this year. In January, I published 34 articles. (These 34 articles contained 51,051 words, for an average length of 1502 words per article.) This puts me behind my intended pace, but I’m fine with that. This lofty goals is really meant to push me to publish as much as possible. If I aim for 500 pieces and only publish 400, that’s not exactly a failure.
  • Finally, I said I wanted to read one book for pleasure each week this year. I haven’t hit this one at all. I didn’t finish a single physical book in January (although I did read most of Pillars of the Earth). I consumed a lot of audiobooks, but that’s not what my aim was here. I want to read physical books. I’ve got to figure out how to fit this into my schedule.

Again, I’m pleased with this progress, although I recognize there’s room for improvement. I want to find a way to encourage myself to eat more plants! Plus, I need to set aside time to read for pleasure. I think both of these things will come with time…

How are you doing with the goals you set yourself for 2018? Are you making progress? Are you struggling? And how’s your financial situation now compared to a year ago?

My 2017 year-end review

Hello, and welcome to 2018!

What a long, strange year was 2017. And what a perfect example of just how tough it can be to predict where life will take you.

Twelve months ago, Kim and I were firmly ensconced in our penthouse condo in southeast Portland. We had recently returned from our 15-month RV trip across the United States. After a long stretch struggling to re-acclimate to every day life, both of us had developed routines. She was working regularly at several local dental practices, while I had found my groove writing at Money Boss.

Hard at work with MMM in the condo

When I sat down to do my 2016 year-end review, I found that I’d earned $4233.36 in revenue from blogging. My goal for 2017 was to triple revenue. I also wanted to write 120 articles — about one every three days. Lastly, I intended to track every penny I earned and spent during the year, and to report about my financial habits for everyone to see.

As regular readers know, things didn’t go as planned. Continue reading

Breaking taboo: Ask your friends and family for financial advice

Last weekend, Kim and I went out to breakfast. The only other table in the small restaurant was a party of four youngish women who were laughing and having a good time. They were having such a good time, in fact, that it was impossible not to overhear their conversation.

“My dad is such a cheapskate,” one of the women said. “Last week, I drove my parents to Salem. I had to stop for gas, so I just pulled into the first service station I saw. ‘Are you sure you want to buy gas here?’ Dad asked. ‘It’s more expensive than the place down the street.’ What a tightwad! He doesn’t get that my time is valuable too. I’m not going to drive three blocks just to save a few pennies.”

The other women laughed.

“My parents are like that too,” offered a second young woman. “The other day, my mom was giving me a hard time because my husband and I like to go out to eat. We invited them to join us at Andina but she said they’d pass unless we went someplace less expensive. Can you believe that? It’s not like my parents are poor. They’re millionaires!”

Again, the other women laughed.

“My parents are millionaires too,” chimed in a third woman, “but you’d never know it. They don’t spend their money. And they’re always getting on my case about the money I spend. I’m like, ‘It’s my money. Get over it.'”

Her friends nodded in agreement, and the conversation moved on. A while later, the waitress brought them their check.

“Oh crap,” the first woman said. “I didn’t bring the right credit card. This one’s maxed out.”

“I’ll cover you,” said one of her friends. “But I’ll need you to pay me back. I have just enough money to last me ’til payday.”

“How’s your new house?” asked one of the other women.

“It’s great,” she said. “We have so much room! I just wish we could afford to furnish it all right now.” Her comrades murmured in agreement.

“Wow!” Kim said after the women had left. “That was insane. You ought to write about that.”

“I will,” I said. “I will.”

Breaking taboo
It’s all too easy to condemn people like this as shallow and short-sighted. That they don’t get the connection between their spending habits and the fact that they’re struggling with money is obvious. It’s also obvious that they don’t understand that one of the reasons their parents are millionaires is precisely because they’re frugal. Being rich doesn’t mean you spend more on gas when you don’t have to or that you go out to eat in fancy restaurants all of the time. Rather, when you watch how much you spend on gas and you’re careful about which restaurants you choose, you tend to build wealth.

This stuff is obvious, even to a casual observer.

What’s more interesting to me is that that these young women had easy access to folks who are successful with money. Yet rather than pick their brains or learn from their behavior, they make fun of them! This is more common than it ought to be. In fact, most of the people I know who struggle with money have role models whom they could learn from — but don’t.

In some ways, I sympathize. I used to be one of these people. When I was deep in debt, I was surrounded by folks who had things figured out (including my wife!) but I never bothered to ask them what I was doing wrong. It was only once I hit rock bottom that I finally reached out for help.

Today, it’s different. Now I know that one of the best ways to improve my personal finances is to talk to others who have done what I want to do.

You see, it’s taboo in our culture to volunteer financial advice. It’s rare that a person will speak up to tell you what you’re doing wrong. And when they do, you probably resent it. It’s likely that your brother or your best friend is well aware of your weaknesses, but is unwilling to mention them for fear of offending you.

But if you take the initiative, if you ask your friends and family for financial advice, that taboo doesn’t apply.

The best $20 you’ll ever spend
If you want to know how to improve your finances, choose a financial role model and take them to lunch. Pick somebody you trust. Most of the time, these folks are obvious. They’re the ones who never complain about debt, the ones who’ve accumulated a lot of savings. (Sometimes they have a nice house and nice car, but not always.)

In some cases, these role models might be family members or close friends. If you feel comfortable asking these folks for advice, do it. But you might feel more at ease if you talk to somebody who’s merely an acquaintance: a neighbor, a colleague, a mentor. (In my case, I’ve learned a lot from my real millionaire next door.)

Invite your role model to lunch. Explain that you want to pick their brain about how they’ve managed to do so well with money. Tell them you want some advice.

Before you meet for lunch, prepare some specific questions. Do you want to know about investing? About increasing income? About cutting costs? Start the conversation by sharing your story — where you’ve come from and where you want to go. Be honest. Be realistic. If you’re in debt, say so. Next, ask the other person about their story. How did they achieve their financial success? Based on their experience, what would they do if they were in your shoes?

Take notes. If the other person offers advice, don’t take it personally. Listen with an open mind. Don’t get defensive. If there are extenuating circumstances, feel free to share them but don’t try to explain away every problem in your life. A lot of times, things that seem like external barriers to you are actually internal barriers.

At the end of the meeting, ask your role model if they have specific recommendations for your situation. Pay the bill, thank them, and go home to think about what you’ve learned.

Not just for beginners
This exercise isn’t just for people in debt. It’s also great for folks who are learning to invest, or for those who want to boost their income. When I thought I might like to get into rental properties, I invited a friend to dinner to ask him how he started investing in real estate. I’ve had dozens of readers take me to coffee so they could get my advice on their financial situation.

If you want advice about how you could improve your finances, ask your friends.

Just One Thing: A Simple Way to Make Changes to Your Life

As part of my recent vow to do what I love, I’ve been spending a lot more time with friends. Lately, for example, my friend Castle and I have been meeting once per week to hike though Portland’s Forest Park.

One bond that Castle and I share is a desire to improve our lives. Just as I’ve lost fifty pounds over the past couple of years, she’s in the middle of a weight-loss journey. But it’s more than that. I’m constantly trying to become a better person, and so is she.

Last week on our walk, she shared the secret to her recent success.

Just One Thing
“For me,” she said, “the key is to continually try new things. Have I told you about my Just One Thing project?”

“No,” I said. “What is it?”

“Well,” she said, “it works like this. Nearly every day — not every day, but most days — I try to do one new thing, or I try to do one thing differently. It doesn’t matter what it is. It can big or it can be small. But the key is, I’m trying to do something different.”

“Like what?” I asked. “What sorts of things are you’re trying?”

“Well, take eye contact, for instance. I realized a few weeks ago that I wasn’t maintaining eye contact with people. It’s because I’m shy, but it might come across as if I don’t care about people. So, I decided one day to practice keeping eye contact.”

“How’d it work?” I asked.

“It was amazing,” Castle said. “People responded much more positively to me. Of course, some guys see the eye contact as flirting, but mostly this is a change I want to keep. See, I don’t keep all of the changes I make. The goal is just to try something new for one day. If I don’t like it, I don’t need to continue. But it doesn’t hurt me to try anything for just one day, right?”

“You know, I kind of like this idea,” I said. “What else have you done?”

“Well, some days I try a new exercise at the gym. Some days I try a new food. Some days I try something new with my art. But often it’s something simple, something that might even seem silly. Like I decided to wear lip gloss again. Don’t laugh. I used to wear lip gloss all the time, but I stopped for some reason. It’s a small thing, but I find it makes me feel more put together. I tried it for one day, and now it’s back to being part of my daily routine.”

“So, not all of the things you try need to be life changing?” I asked.

“Not at all!” said Castle. “In fact, most of them are silly little things that don’t make a huge difference, things like wearing lip gloss or making eye contact. But the thing is, even if no one change is earth-shattering, taken together these small changes make me feel better about myself. These little changes make life fun. They make it interesting.”

One Thing at a Time
Though Castle is using the Just One Thing approach to make small daily changes, I think the idea can be applied to larger parts of life.

For instance, what if instead of making one small change each day, you made one large change every month? What would that be like? Sure, it’s more difficult to commit to a change for thirty days, but that’s still a short enough time that most people could commit to make most changes. But it’s a long enough time that if the change is successful, it will have become a habit.

What sorts of changes could you try for just one month? How about taking your lunch to work instead of buying it? What about biking or taking public transportation instead of driving? You might try going to bed early and getting up early. Or committing to exercise for 30 minutes every day. Or not spending any money on impulse.

The beauty of doing Just One Thing for a day (or thirty days) is that you can focus your attention on that thing — and ignore everything else. You may recall that I’m a recent convert to the one-goal-at-a-time method of change. I used to try many things at once, but I found that doing so made me distracted. I couldn’t put my full attention into any one thing. Now when I want to change, I focus on just one thing — sort of the way Castle tries just one thing at a time. My success rate is much higher at making changes this way.

Self-improvement isn’t easy. Because it’s so easy to remain complacent, change can be tough. But sometimes there are ways to make change more effective. I think Castle’s Just One Thing method is one of them.

When you decide to make changes to your life, how do you go about it? Have you tried something like Castle’s method before? Do you find that it’s more effective focus on just one thing? Or do you have better luck when you attack multiple changes at once? What methods do you use to make sure changes stick?

Building a Collection Without Breaking the Bank

Before I moved out of the house and into my apartment, my cousin Nick paid a visit to play board games. After some rousing Carcassonne and Ticket to Ride action, I gave him a brief tour of my geek room, which was home to my board games, science fiction novels, and comic books.

“Your comic collection is growing,” he told me.

“I know,” I said. We talked about the process of building a collection while I showed him some recent additions. “These comics cost a lot of money,” I told him, “but it was much less than if I’d bought them piece by piece.”

Comic shelf

Like me, Nick has been a collector his entire life, so he understood what I meant. But while I’ve collected comic books, he’s collected stamps and coins. We may not be able to compare notes on our specific collections, but we have a good time discussing the process of collecting itself. Nick, too, tries to collect on the cheap.

No matter what you collect, there are ways to enjoy your hobby while spending less. Here are some of the ways I’ve learned to keep costs low after four decades of collecting.

Note: My examples below will involve collecting comic books, but they’re applicable to most other collections, as well.

Narrow your focus
Know what you’re collecting — and why. One problem with collecting is knowing when to stop. This topic came up recently at my favorite comic-book discussion forum. “At what point do you have to say enough is enough?” asked one member. How do you know when your collection is finished? How many Magic cards do you need? How many autographs? How many canning jars? How many Hummel figurines? If you don’t have a defined stopping point, your collection will never be finished.

When I was paying off debt and building savings, I cut back on my comics spending. Instead of buying everything I wanted, I decided to focus on my favorite niches. For several years, I almost exclusively bought collections of comic strips. Because there weren’t many of them, I could afford to buy almost all of the anthologies being released: Peanuts, Dick Tracy, Little Orphan Annie, Bloom County, and so on. By making my collecting more specific, I was able to indulge my hobby on a smaller budget.

Look for sales
Yes, even collectibles go on sale. When I finally found the cash to start collecting comics again in 2009, I was fortunate to discover a place that was selling back issues at 50% off their regular prices. And my favorite local comic store (Excalibur Comics in Portland — that place rocks!) regularly has 50%-off sales. I’ve been able to pick up tons of my favorite comics from the 1970s at a buck a piece. Yes, please!

Find dealers you can trust
Little LuluTry to find someone with tight grading standards. Most collectibles — including comic books — are priced based on their condition. For instance, comic book conditions can be classified as Poor, Fair, Good, Very Good, Fine, Very Fine, Near Mint, and Mint. But not everyone grades the same way. What I call Good, you might call Very Good, and somebody else might call Fair. Steer clear of dealers who claim a Good comic is Very Good (or Fine!); gravitate toward those strict graders who will sell you a Good comic for the price of one that’s only Fair.

Believe it or not, Kris collects canning jars. She and a friend share this passion, and often swap tips. They’ve also found a jar dealer they trust (though the guy is a bit of a nut). They’re willing to drive out to see him because they know he has good jars. (Here’s a story about Kris’ canning jar collecting.)

Scout unusual sources
Check out yard sales, antique stores, flea markets, and auctions. If you’re patient, you can sometimes find great deals. Once at a garage sale, I found a box of comics from the 1960s in great condition. Unfortunately, this was at the depth of my debt despair. I couldn’t afford a single one. In retrospect, I’ve always regretted not finding a way to just offer a set amount ($20? $100?) for the entire box. There would have been no harm in asking.

While Kris and her friend collect canning jars, their dealer is even more obsessed. He has a house full of them. (As I say, he’s a bit of a nut.) He goes to estate sales and asks the people if they have any home-canned food in the pantry they’d sell him. He then eats the food and adds the jars to his collection.

Settle for less
Go for the minimum condition you can live with. Some collectors want their objects to be in perfect condition. They pay a premium. If you’re willing to settle for second-best (or third-best or fourth-best), you can have highly desirable objects for cheap.

I’m willing to accept Poor quality comics, for instance. Much of my collection is simply Fair or Good. These are the comics most other collectors reject. But you know what? While they’re paying $5000 for a copy of Fantastic Four #1, I paid $500. Sure, mine is falling apart. I don’t care. I read it and enjoyed it.

My cousin Nick collects ancient coins. He’s not willing to pay top dollar for the best pieces either. In fact, he buys bags of “uncleaned coins” — basically hunks of metal caked with centuries of dirt and grime — and slowly removes the patina in order to discover what’s underneath. Most of the coins he finds this way are common, but he’s also discovered some gems. Because he’s willing to accept poorer quality, he pays far less than he otherwise might.

Buy in bulk
X-MenIf you have the cash flow, consider buying large lots just to get at a single piece. Buying large lots is generally a much better deal than buying individual pieces. The drawback, of course, is that you usually get stacks of stuff you don’t need. You either own the other pieces or you don’t want them. This can make buying a large lot to get at a single piece a bad idea, especially if the cost is high.

But if you have plenty of cash, you can actually make a profit doing this. For a while, I was targeting old Wonder Woman comics, for instance. Sometimes the only way to get the comics I was after was to buy six or eight at a time, including several I didn’t want or need. I did this, but then set the others aside to resell. (I haven’t actually resold anything yet, but I have a huge stack of stuff I’ll liquidate when I get the time. In the long-term, this should be very cost effective.)

Avoid temptation
I spend less money on comics when I stay out of comic shops and when I avoid comic blogs. I spend less on board games when I intentionally avoid learning about new games. (I went for years without buying new games, and I was perfectly happy. Now I’ve bought several in the past few months. Hanging out with Adam Baker has just made the urge to splurge grow stronger. He’s loves board games too.)

Be patient
When you find that one thing you’ve been waiting for in order to complete your collection, it can be tempting to buy it immediately. Don’t. Make sure you’re getting a good deal. As a collector, you need to know the market, you need to know what things are worth. And as a collector, you’ll spend far less if you’re willing to wait for the right item at the right price.

This can be easier said than done, of course. When you stumble upon a missing link, you can be afraid you’ll never find another one again. You want to buy it now, now, now. Train yourself to be patient. Know your price points. Be smart.

Borrow
Sometimes you can satisfy your urge to collect by borrowing and sharing. In my case, I was able to curb some of my craving for comics by making use of the public library. The local library system stocks some expensive hardbound compilations. Since the library owns and stores them, I don’t have to. This principle can work for other types of collections, too (though admittedly my comics situation is close to ideal).

Or maybe you have a friend with a similar interest. Maybe she collects Wedgwood pottery too. Instead of both buying the same pieces, you could build a short of shared collection, lending items to each other from time to time.

Final thoughts
Uncle ScroogeIn general, collecting is not a frugal hobby. My collecting habits have been a constant drain on my bank account. I’ve come to believe that collecting is merely a form of hoarding. It’s a socially acceptable way to acquire Stuff.

As with anything, though, it’s okay to collect in moderation. But if you find yourself being sucked into your hobby, that can lead to problems, both mentally and financially. Again, I say this as one who’s been there (and may still be there). If you’re going to collect, do it right.

I wrote the bulk of this article last June. Because I’ve made some major changes to my life since then, I’ve actually called into question my own tendency to collect. If I want to travel, and if I’m going to live in an apartment, is there really a place for building a collection? What’s the point? Why don’t I “outsource” the collecting — to the public library, for instance.)

Over the past few months, I’ve put the brakes on my own collecting habits. I’ve spent $0 on comics since September, and the only books I’ve bought have been for specific purposes (learning Spanish, our monthly book group, etc.) That’s not to say I’m ready to give up collecting completely, of course, but maybe I can finally spend some time reading all of the books I’ve bought before!

I’m actually curious how many GRS readers are collectors. What do you collect? And how do you do it? What strategies do you use to keep costs down?

42 Goals in 42 Months

I’m not big on holidays. They seem fabricated — an excuse to sell stuff. Thanksgiving is a big exception. So too are birthdays. I think everyone should celebrate birthdays in a big way.

For me this year, that means commandeering Get Rich Slowly to go a little off topic. I’m not writing about money today. I’m writing about personal goals and self-improvement.

Success Junkie
I’m obsessed with self-improvement. For good or ill, all my life I’ve been on a constant quest to become a better person. (And yes, there are downsides to this.)

Last month, Megan dropped me a line:

After reading yesterday’s post, I connected to The Road to Wealth is Paved with Goals, and then 101 Things in 1001 Days, the big list of goals you set for your 38th birthday. I know your project should have ended in 2009, but I never saw an update. I’ve since become obsessed with coming up with my own 100 goals, so I’d love for you to revisit this in a post and let us know how it turned out and why or why not it worked for you!

Ah, yes. My h-u-g-e list of h-u-g-e goals. I remember that. My last progress update to this list of goals was on 10 July 2009, 839 days into the project. At that time, I’d completed 37 of my 101 goals, including all of my financial goals. (Unsurprisingly, when you build your life around something, you tend to do well at it.)

In the four years since I drafted the list:

  • I met 46 of my 101 goals.
  • I’ve come close to meeting four others.
  • Sixteen of the goals are no longer important to me. (People change, and so do their priorities.)
  • Thus, 35 of my goals were left unfinished.

I suppose if I were to grade myself by school standards, I’d get an F. But you know what? I don’t feel like a failure for what I’ve accomplished. Far from it! When I look at what I’ve done in the past four years, I’m actually a little amazed. I’ve come a long way. There’s still a lot for me to do, but I’m proud of what I’ve done — especially in the past two years.

Ad Astra Per Aspera
But there are more things I’d like to do. Because I’m getting old, the idea of accomplishing 101 things in 100 days just isn’t that appealing. In fact, as regular readers know, I’ve moved from trying to tackle large lists of goals to focusing on just a handful of unrelated goals at any one time. I find I’m more successful this way. If I tackle one fitness goal, one financial goal, one household goal, and so on, then I don’t get overwhelmed. Still, because I’m always introspective this time of year, I decided to draw up another large list of goals.

As a compromise between ambition and moderation — and to celebrate my 42nd birthday — here’s a list of 42 goals I’d like to accomplish in the next 42 months. (Deadline: 25 September 2014.)

Continue reading

The Rewards of Routine Maintenance

I had a great weekend. In fact, it was probably one of the best weekends I’ve had in years. I spent all day Saturday and Sunday doing chores. (Well, I watched the World Cup a little, too.) I spent nearly 16 hours doing yardwork, and I loved every minute of it.

This passion for pruning may seem strange to you, but it seems even stranger to me. I generally don’t like yardwork. But here’s the thing: When we bought this house in 2004, I was fairly diligent about performing routine maintenance. I pruned the hedges, mowed the lawn, cleaned the gutters, and did dozens of other little things to make sure the house and yard remained at peak form.

For several years, I stayed on top of things around Rosings Park (which is what we call our two-thirds of an acre). But about two years ago — just as Get Rich Slowly began to take over my life — I let things slide. I stopped pruning the hedges. I left tools outside to rust. I just stopped caring about the routine maintenance that had kept our home looking great.

I’m sure you can guess the results. Over the past two years, the yard has gone feral. The neighbor’s kiwi has mated with our oak. The filberts have developed shaggy manes. Blackberries are sending thorny shoots through every nook and cranny. And the laurels — well, the laurels have been jubilant in their self expression, exploding with twigs and leaves.

Though I’d known it in theory, the past two years have taught me that if you don’t keep up with routine maintenance, your home and yard can get away from you.

Fiscal maintenance
Ah, but this is a personal finance blog, isn’t it? So what’s the connection? Most of you have probably already guessed where I’m going with this. Taking care of your finances is very much like taking care of a yard. A few routine chores performed diligently are enough to help you keep things in line. But the moment you get lazy or distracted, things fall apart.

I’m ashamed to admit that over the past few months, my personal finances have come to resemble my yard. No, I’m not spending more than I earn, and I’m not abusing credit, but I am allowing financial weeds to grow where once I would have pulled them on sight.

Last week, I got a call from a collection agency. It wasn’t a wrong number; they were calling for me. Worse, they were trying to collect on a legitimate debt. They wanted to know why I hadn’t paid the $23.23 I owed the local hospital for services rendered in February. Ouch!

Now, let me be clear: I’m not intentionally evading this bill. In fact, I have enough money in the bank to pay the bill several hundred times over. But somehow over the past few months, this bill — along with about a dozen other pieces of my financial life — got shoved aside and ignored. I thought I had other more important things to worry about, like PR for my book.

Back to basics
One thing I’ve always prided myself on is the fact that I’ve never missed a payment on anything. Even when I had over $35,000 in debt, I always paid my monthly obligations. (Sure, I was making minimum payments, but I was making them!)

When I decided to get out of debt, one of the key habits I developed was tracking every penny I spent. It didn’t matter how small the purchase (or the income) — if I earned it or spent it, I put it in Quicken. But over the past year, I’ve come to believe that I don’t need to track every penny I spend. My habits are great. My income exceeds my expenses by a wide margin. I’m making smart choices, so why should I track my spending?

But there have been unexpected side-effects to giving up my weekly Quicken ritual.

  • I don’t have the data to track long-term trends. (It feels like Kris and I haven’t been going out to eat very much since I started focusing on fitness, but is that really true?)
  • I no longer have a prompt to remind me to transfer money to savings. (I used to use my weekly finance sessions to move money to my savings account or to fund my Roth IRA or 401(k).)
  • And, most of all, I’m not paying my bills.

I know this is stupid stupid stupid, but my former habit of putting everything into Quicken once a week forced me to pay my bills when they were due. Without this trigger, I just forget to pay the hospital bill and rent on my office. The bills sit on my desk, buried under magazines and notes and comic books.

Note: I used to make fun of my cousin, Nick, for this. Nick has tens of thousands of dollars in the bank, yet he’s always getting late fees for things like the electric bill. “What the heck?” I asked him once. “How can this be possible?” He shrugged. “I don’t know,” he said. “I get the bills in the mail, put them on the table, and then I forget about them. They get buried under other mail. It’s only three or four months later that I find them again.” This used to baffle me, but now I understand.

 

There are some simple solutions to this of course. Once great way to handle the problem is to simply pay the bills as they arrive. I’ve advocated this many times in the past, and I still think it’s a smart way to operate. But I have a tough time deciphering what is a hospital bill and what it is an insurance statement. (Seriously: There are times I have no idea.)

Another solution — and the one I plan to adopt — is to simply do what I used to do. I’m going to resume tracking every penny I spend. I’m going to set up the new version of Quicken (Intuit gave me a free copy), and then do what I’ve done for the past six years. Scheduled start date: July 1st. I’m gathering all of the data now.

Final section
Last night, my pal Nickel tweeted the following:

In the middle of a marathon Quicken-updating session. Feels so good whenever I get caught up.

I knew exactly what he meant. Despite my marathon yard-work session over the weekend, I’m not even a quarter of the way done with all of the pruning and trimming that I need to do. But I cannot help but admire the work I have done. Last night, as the light began to fade, I stood for several minutes just looking at the driveway and the garage and the workshop. I felt great. (In fact, I felt so great that I’ll probably spend most of today pruning laurel and filbert instead of writing about money.)

And I’ve made a vow: In the coming years, I will not allow the yard to revert to jungle again. I’ll stay up-to-date on my chores. After all, there’s a sweet sense of satisfaction that comes from performing routine maintenance on anything. It’s nice to know that through constant low-intensity effort you’re able to keep things looking and running smoothly.

For myself, I’m just as excited about resuming my weekly finance sessions as I am about showing the laurels and blackberries who’s boss. (It’s just too bad there’s no equivalent to a hedge-trimmer for personal finance.)

Is There a Generation Gap in Saving?

I’m old-school: I went to the bank to make a deposit today. (I make most of my deposits in person, inside the branch.) While I waited, I chatted with the teller, whom I know from many previous visits. “I’m writing a book about money,” I told him. “What’s the one thing you wish you could tell people about banking?”

Save!” he said. He told me there’s a huge generation gap between savers and spenders. “The people who save are generally older. They don’t look like they have money, but they do. They’ve got a ton in their savings account and they chase the best CD rates. But the reason they have money is because they didn’t spend it when they were younger. They’ve been able to let it grow.”

“And that’s not what kids today are doing?” I asked.

“No way,” he said. “The young people I see spend all their money. They’re trying to impress their friends. They buy all this new stuff. Their bank balances are always low. They’re not going to have money saved like the older generation does.”

Then he gave me another great example. “There are people who come in here and you can see why they have money. You look at their account history, and the only thing that comes out is the big stuff, like their mortgage or their utilities. There aren’t a lot of $5 or $6 transactions.”

I laughed and said, “I’ll bet most people have tons of little stuff.”

“Oh yeah,” he said. “It’s all little stuff. But it’s that little stuff that kills you. That’s what will make it so you don’t have anything saved when you’re older.”

Before I left, I asked him if he had any tips or tricks I should put in my chapter on banking. We talked about a couple of ideas, and then he came up with something moderately clever (though it applies to just a few people): “If you’re going to overdraw your account,” he said. “Do it all at once.”

“What do you mean?” I asked.

“Well, let me give you an example. The other day, a lady called me to complain about overdraft fees. She’d been hit with a bunch of them at the same time. But when I looked at her transactions, I couldn’t believe it. She’d gone to the same grocery store four times on the same day, so she was hit with four overdraft fees. If she’d just gone once, she’d still have overdrawn her account — but only once.”

The teller also mentioned that nobody seems to know their bank balance anymore. “They don’t use a check register,” he said, “so they have to call to ask how much they have. But the problem is that what we show you have and what you actually have can be two very different things. It can take up to a week for some transactions to show up. You should track your spending, and not just trust what the ATM says.”

I thanked the teller — who looks like he’s 25, by the way — and left.

I wonder if it’s true that there’s a generation gap in saving. Has the older generation always saved? Or did they start out trying to impress their friends, too? I feel like I’m at a middle point, moving from the “spend to impress” mode of operating to a “who cares what other people think?” way of life. The latter is more liberating and it helps my bank balance.

I’m going to try to find time to interview my neighbor for my book’s banking chapter. I think she’s a manager at a nearby bank. I’d be curious to see what advice she has for people. But really, it doesn’t seem like there are a lot of fancy things you can do with a bank account. As long as you’re saving, you’ve shopped around for a good account, and you’re not afraid to ask to have fees waived, I think you’re golden!

Personal Finance on Film: The Up Series

“Give me the child until he is seven, and I will give you the man.” — attributed to Ignatius Loyola, founder of the Jesuit order

 

Though there are many fine books about money available for the general reader, I’ve always been disappointed that there are so few movies about money. Anything directly about finance tends to be sensationalist in one way or another.

Despite this, I think that excellent films about money do exist — you just have to know where to look for them. Two years ago, for example, I reviewed The Farmer’s Wife, a poignant six-hour documentary about a Nebraska family struggling to make ends meet. “This is a great film,” I wrote. And it is. Today I want to share a series of documentary films that’s just as good.

In 1964, the BBC (British Broadcasting Corporation) produced a short film called Seven Up that explored the lives of fourteen seven-year-olds from various cities and social classes. Every seven years since, director Michael Apted (Coal Miner’s Daughter, Gorillas in the Mist, James Bond’s The World is Not Enough, and the forthcoming The Voyage of the Dawn Treader) has returned to interview these same fourteen subjects, documenting their growth into adulthood.

“[These children are] like any other children, except that they come form startlingly different backgrounds. We’ve brought these children together because we wanted a glimpse of England in the year 2000. The shop steward and the executive of the year 2000 are now seven years old.” — from Seven Up

 

The Up series is fascinating. Sure, we all get to see our families and friends grow up around us. (And then we watch their children grow.) But that happens in slow motion (well, in real time, actually.) These films allow viewers to watch fourteen people grow from childhood to middle age in a matter of hours. We see them pass through adolescence, get married, have children, lose their parents, become grandparents, and more.

Here’s a clip from the most recent installment, 49 Up:

 

Though the Up films explore all aspects of their subjects’ lives, there’s no doubt that questions of money and class play a huge role in their biographies. Viewers are allowed to decide for themselves whether the Jesuit maxim is true: Can one actually see the future adult by examining a seven year old child? Or even a fourteen year old? Do our class origins dictate our lives? Does wealth bring happiness? And what is it that gives life meaning?

Each participant has a different relationship with the films and the filmmaker. Some of the group actively dislike director Michael Apted and are reluctant to be forthcoming. But the most illuminating stories come from those who are willing to open up and share everything — warts and all.

    • For example, Tony was brought up lower class in London’s East End. He dropped out of school at fifteen to become a jockey, but it didn’t work out. He became a taxi driver instead, a job he’s held for nearly thirty years. By 42, Tony and his family had left the East End after buying a second house in Essex. By 49, they’d taken out a second mortgage on their London house to buy a third house in Spain. Tony seems to have pulled himself up to the middle class — but I wonder how much of this was financed by debt.

 

    • Suzy comes from an upper-class family. Hers is not a happy family, though. During the 1960s, her parents become divorced. Suzy grows disaffected. Up until the age of 21, one might guess she was headed for a life of spoiled indulgence. Ultimately, however, she settles down and raises a lovely family. Though she lives a comfortable life, she faces a different sort of money worry than the other participants. Her husband undertakes a business venture that puts some of their capital at risk.

 

  • The participant with the most poignant life is Neil. As a seven-year-old, Neil is happy and bright, a charming lad from a working class Liverpool family. By 21, though, he’s dropped out of college, works odd jobs, and squats in an abandoned building. For the next twenty years, he’s essentially homeless, roaming around Britain. He’s dogged by mental health problems. But Neil is a deeply intelligent man, and he appears to turn things around during his forties. He still lives on a pittance (including some public money), but he’s become involved in local politics and seems content with his situation.

The participants sometimes chafe at the roles they believe they’re forced to play. In 21 Up, Apted asks the subjects if they think their class has affected their choices. The answers are surprising.

The three prep school boys (John, Andrew, and Charles) argue that their situation has actually limited their choices, that they’ve been boxed in by a rigid set of expectations. The three East End girls (Jackie, Lynn, and Sue) make the same argument, but from the opposite end of the class spectrum. They believe they have more choices than those in the upper classes have.

But as they age, the answers to this question change. (Perhaps people are being more honest.) In 49 Up, for example, Andrew admits that his origins played a big role in granting him the opportunities he’s had in life.


A clip from 49 Up showing some of Neil’s background.

 

Again, money is just one of the subjects these films cover. The Up series also explores family, love, spirituality, and more. As with The Farmer’s Wife, these films aren’t for everyone. I think many would find them boring. But for those with patience, the Up series can provide a rare glimpse into what it means to live.

“There are many things that might have happened in my life that haven’t happened. There’s little point in being regretful and angry about it. Life comes once and it’s quite short. You have to appreciate what’s good in it.” — Neil Hughes, 49 Up

 

Impulse Spending: The Present and the Past

I had a wave of nostalgia on Friday. My brother called to tell me that there was a problem with the computer network at the box factory. Though I no longer work for the family business, I’m still the company’s computer guy. So, I drove out to the office, tinkered with the network, and ended up having to make a run to Fry’s Electronics to pick up some parts.

Not so long ago, Fry’s was the source of much of my impulse spending. I bought computers and computer accessories, computer games and computer books. I bought compact discs and DVDs and stereo equipment. I burned through a lot of money in that store. Walking through the doors on Friday brought back a flood of memories.

I picked up the computer parts I needed and then, on a whim, I decided to look at the computer games. I’ve felt a little burned out lately, and I’ve been thinking that a good single-player game might be the perfect way to blow off steam. (I’m afraid to begin playing World of Warcraft again because I know I’ll just get sucked in.)

I stood in the Mac games section (mercifully a fraction the size of the PC games section) and looked at the options. There was a time when I’d know everything about each of these games. Gaming was my hobby. Now, though, I know nothing. Is Call of Duty good? What about Age of Empires III? I used to love Star Wars games — maybe I should pick up one of those?

In the end, I didn’t buy anything. I could easily afford the purchase, and I wouldn’t feel guilty about it, but I just couldn’t justify buying a game blindly. Plus, I would have been making the purchase on impulse. It’s one thing to buy something I know I’ll love; it’s something else to buy something just for the sake of buying it.

Back at the box factory, I spent a couple of hours getting the network up and running. As I waited for various machines to reboot, I looked though a big box of CDs I’d left behind when I quit my job.

The box was filled not only with music CDs, but also with a decade’s worth of computer software. There were dozens of games, many of which I had bought for full price ($40), installed on my computer, but never played. There were $400 database applications I had purchased because I might teach myself how to use one. There was a full version of Adobe Illustrator that I had never figured out how to use.

“There must be close to $5,000 worth of CDs in this box,” I thought, flipping through the dusty jewel cases. But then I corrected myself. I had spent about $5,000 to purchase the CDs in that box, but they’re worth almost nothing today. A few of the games have sentimental value (Re-volt is one of the best games I have ever played and I’m tempted to get it running on my Mac), but most of the software is worthless now.

As I drove home, I thought about the J.D. of 1999 and the J.D. of today. The J.D. of 1999 could not have walked out of Fry’s without buying something. Or many somethings. But then he would have felt guilty and dirty for days afterward — until he forgot about the purchase and it just became another debt that he owed.

But my attitude is completely different today. Today I’m out of debt. I can afford to purchase the music and games that I want. But mostly I don’t. I’ll buy something if I know I’ll use it, but it’s rare now that I make an impulse purchase. I no longer shop just for the sake of shopping.

I’ll admit that there are times that I long for the free-spending days of years gone by. But you know what? That J.D. of 1999 could never have afforded a Mini Cooper (used or otherwise). He was trapped in a job that he hated. He dreamed of travel but could not go. He spent a lot on Stuff that did not matter — but spent very little on the things that did.

I prefer the man that I’ve become. I like knowing that Kris and I will have no problem saving for our trip to France and Italy next year. I like driving my Mini and knowing that it’s mine (and not the bank’s). And I also like knowing that I can do a little research, find a computer game that looks promising, and then buy a copy — all without an ounce of guilt.