in FS, Planning

Planning for My Financial Future

I’ve been fortunate over the past few years. I’ve managed to get out of debt, quit my day job to write full time, build substantial savings, and am now able to do what I want when I want. I still work hard, of course, but I do so on my own terms. I’m a lucky man.

Next year, though, is going to be a year of changes. For one thing, my income might actually decrease. (And if it doesn’t do so in 2012, it will almost certainly do so in 2013.) At the same time, for a variety of reasons, my expenses are going to increase. I’m in no danger of deficit spending — I refuse to live beyond my means! — but this does mean I’m going to have to be more conscientious about budgeting.

Practicing what I preach
Because I’ve done relatively well over the past few years, and because my expenses have stayed low, I’ve been able to buy the things I want without much worry. There’s a reason I preach the virtues of conscious spending. If I don’t, I often find myself making spur-of-the-moment buying decisions. Well, I feel like it’s once again very important that I weigh every purchase before I make it. I’ve created a fine lifestyle; I don’t want to jeopardize this lifestyle through silly spending.

As a result — and this comes as a shock even to me — I’m swearing off comic books. (Mostly.) The thing is, it doesn’t even really feel like a sacrifice. Right now, there are other things in my life that I value more highly. Most of you know about my expensive gym membership and how important that is to me. But there are also my Spanish lessons, which I’ve been taking since June. I’d rather pay for one-on-one meetings with my tutor than to buy comics. I get more enjoyment from learning the language. (The truth is, I’d even forego my Portland Timbers tickets to continue with Crossfit and/or Spanish. Fortunately, that’s not yet necessary.)

Soon, I’ll probably also give up my office. It’s been nearly three years since I worked from home, and I think my work habits have changed. If I can find the discipline and focus to write from the living room, that’ll free up $335 a month that I can use for other things. (I won’t know if this is do-able until the middle of the year, but it’s something I definitely want to try.)

But perhaps the biggest change in my future is that I’m finally becoming interested in non-profits and charities.

Thinking of others
For years, I’ve taken a lot of crap here at Get Rich Slowly (and deservedly so) because I donate very little to charity, and I rarely volunteer my time. I was raised in a family that didn’t value charity, and as an adult I’ve been unable to find any cause I feel passionate about.

Lately, though, that’s changing and in a variety of ways. We’re hard at work planning next year’s World Domination Summit, for instance, and we’d like to tie a service theme to this leadership conference. I wasn’t that interested at first, but now I’m on fire for the idea. I think it would be awesome to recruit the power of 1000 attendees to do some good for Portland — and the world.

But on a more personal level, I’ve discovered there are causes I’m passionate about. My trips to southern Africa and to Latin America have helped me understand better the important role education plays in improving people’s lives (and especially in improving the lives of women). I find that I’m willing to donate both time and money to improve education around the world. (I’d love to find the time to work with an organization like Edge of Seven, for instance.)

In fact, I’ve realized that it’s possible for me to tie my passion for learning Spanish directly to this goal. There are several Portland-area organizations that work to provide educational opportunities for low-income Spanish-speakers in the community. In March (after I return from next trip to South America), I plan to volunteer with one of these groups, such as Adelante Mujeres. In the meantime, I’ve offered my services to one of my friends. She teaches a Spanish/English blended second-grade class, and she says she can use my help twice a week for two hours at a time. I’m both excited and nervous about this new adventure — the second-graders are going to mock me for my miserable Spanish!

Other plans
I have other smaller financial goals, as well. After my upcoming trip to Chile and Argentina, my travel fund is going to be completely empty and will need to be replenished. And since I’ve borrowed from my new-car savings to make these trips happen, I’ll need to boost account too. Plus, I’d like to find one or more small sources of recurring income — another magazine column perhaps?

My financial life continues to be rosy, largely because I follow my own advice. (Especially my own advice about finding ways to make more money.) But I don’t want to rest on my laurels. I don’t want to become complacent. I want to continue striving toward a brighter financial future — and I want to bring you along for the ride.

What about you? How was your 2011? Did you improve your financial situation? Did you earn more? Spend less? Or were you less successful than you’d hoped? And what are your plans and goals for 2012? What do you hope to do with your money?

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65 Comments

  1. I did a complete financial makeover in 2011, in part due to reading a book by ethicist Peter Singer (The Life You Can Save) and in part due to Occupy Wall Street, which made me think a little harder about my investments and what I’m supporting with them.

    I’ve read articles by Peter Singer before (How Much Should a Millionaire Give–And How Much Should You?), but his book The Life You Can Save is a life-changer. He makes an extremely compelling, logical case for why most of us should donate more to charity, and specifically charities that work in developing countries. More than 20,000 children die needlessly every day around the world, and Singer argues that letting those kids die while we blithely go on buying stuff we don’t really need is not much different from walking past a kid drowning in a shallow pond because we don’t want to get our shoes wet. He rebuts all the typical arguments for why people don’t want to give to charities, or why they prefer to give locally. This book changed my life, and I joined the nearly 12,000 people who’ve made a pledge to increase their giving on his website, thelifeyoucansave.com.

    Even though I’m not a big believer in the power of public protests, at least not in America, the Occupy Wall Street movement got me thinking about my investments and whether I wanted to keep my money in a system that runs on greed. I learned about Impact Investing, a new branch of investing that’s totally different from standard socially responsible investing. With impact investing, you put your money to work now to help change the world while still earning a decent return. Some impact investors have seen returns in the 200+% realm, while others have lost everything; the risks and rewards are no different from those in standard investing. For retail investors, the opportunities are still pretty limited, but I found a local credit union that’s had an impact investing program for several decades and I’m in the process of shifting all my investments over to them. My potential for financial returns will be smaller but that’s more than made up for by the gain in social and environmental returns, and those are just as important to me as how much money I make. Traditional market investing represents a huge social opportunity cost, because your principal is not put to work, it just goes into some other investor’s pocket. I highly recommend the book, Impact Investing: Transforming How We Make Money While Making a Difference, by Antony Bugg-Levine and Jed Emerson. It’s inspiring.

      • In this case it’s the Caisse Solidaire of the Desjardins family of credit unions in Québec, where I live. That probably won’t be much use to you unless you happen to live in Québec! However, I’ve heard that some credit unions in the US have similar programs, where you can put your investments in a CD or bonds that are used to finance loans to social or environmental initiatives in the community. Other options to explore include missionmarkets.com, Oikocredit, and impactassets.org, the Slow Money movement, and others (all easily found with a google search).

        The basic thing to keep in mind is that you can either invest in debt or equity. If you invest in debt (e.g., your money is used to provide loans), your financial returns will be smaller but your risks will generally be smaller too. If you invest in equity, your returns could be much higher but you also risk losing your investment. The other thing to keep in mind is that impact investing is not like buying socially responsible mutual funds — in general impact investing does not use the stock market but instead you’re investing more directly in companies and organizations or initiatives. That’s what makes it interesting to me.

    • Thank you for this information. I do give to charity both locally, nationally and internationally but perhaps not as planned or thoughtful as my giving should be. I will start with Singer’s book and work on my own plans for next year.

  2. What you write reminds me of one of my favorite financial paradoxes. We think of “control” as rigidity, but you’re pointing out that having more control allows you more flexibility. And that by willingly giving something up, you’re gaining what you want.

    It’s a tough idea to wrap your head around — you explain it well!

  3. Fortunately we had a good year. Most important was that we had twins! And despite all the costs this brings, we were able to sock away a nice chunk of money for the pension fund of my wife and the study fund of our, now, five kids.
    The pension-fund is locked, the money cannot be touched. Which for us is a good feeling as when we reach 65 the money will be there, no matter what stupid things we do till then.
    The second piece of luck was that our investments in the stock-market did not loose money. Not much profit either but no loss. Overall our net worth is more or less the same as a year ago. Which is good enough for us in these uncertain times.

  4. For us, 2011 was very good. We continued saving, continued our charitable contributions, and I picked up a side job that will pay me 30k/year next year. Between the new side job and putting ourselves on a semi-strict budget, we had expected to pay down 50% of our mortgage. However, we just decided yesterday that we need to up our charitable contributions due to our increase in income. That said, we still will pay off a big chunk of our mortgage…and hopefully make life a little better for others.

  5. JD, given your charitable leanings and passion for Spanish, you should look at http://www.thegivingproject.net/. They build schools in very rural, very poor latin America. The thing i love about the way they work is the amount of buy in they get from the communities they go in to. They’re also open to people going to visit the villages they work in.

  6. Have a great year!

    Our real income continues to go down with lack of raises + inflation + increased costs for benefits. I should be getting a 10% raise this year because of a one-time promotion. But still I wonder if I need to get a new job.

    We’ve been spending a LOT of time and money at DC’s (private non-profit) school this year. That should be nice come tax time (the donations part). But we’ve also lost the bulk of the tax benefit to childcare since we’re doing K instead of pre-K.

    If all goes well, next year will see a new addtion to the family in July or August. (S)He’s currently making it difficult for me to keep most food down.

  7. Well, this year brought several wake up calls. It wasn’t fun getting those wake up calls, but they needed to happen. The shock of my money situation was brought home as well. As a result of the wake up calls, many things in my personal and financial life are better. Still loads of room for improvement on the financial side, though.

  8. So, we’ve invested $30K plus in our second mortgage this year. That’s going to save us $10k or more in the next 4 years… or $40K if over the remaining 23 yrs.

    However, my wife’s been not healthy enough to work, so that money would be much more appreciated in the emergency fund at this time.

    So, all in all, not a terrible year but could have been much better. Hoping next year we have 2 healthy adults bringing home some bacon…

  9. 2011 was very good financially but still difficult! See, it is rarely about the money! I had to make a change in my teaching assignment and I am adapting to the change. My extra income will be limited to outside my career. I am looking forward to 2012 for the additional opportunities.

  10. Give up comics? Say it ain’t so, J.D.!

    Hereabouts, 2011 was sure a better than 2010, my first year of unemployment. At least this summer enough money came in to more or less pay the bills. Not 100%, but sure better than nothing. Hope 2012 will improve life a little more.

    Love your new-found altruism. I’d like to get involved in volunteerism more, too, and admire people who can find time in already busy lives to do so.

  11. For me, 2011 was very exciting. I was given a project by my civic club that led to consulting on several construction jobs.

    I grew up in the home of a carpenter and later married a carpenter. I learned a tremendous amount without realizing it so when I started the first project I came easy to me. Even negotating the contracts seemed to be second nature. After that I took on 4 more projects while finishing the first one. This brought in a good bit of extra income to my small home business.

    All of these projects should be finished in January of 2012. I believe I have been much more successful than I would have believed possible. I have been able to set aside more money in my emergency fund and still keep a good checking accounts.

    The next project I was given is to bring the books up to date for the organization. This will require going back about 10 years and putting all the records and information into the computer and backing up onto an exterior hard drive. It will also require me to learn at least two new software programs.

    I am in the process of purchasing a seperate computer for this work. I believe it will take me the better part of 2012 to complete while still running both of my other businesses. This will lead to a stead income all year long for me. What will I do with the money from this upcoming project? I’d like to pay off my morgage. I’m totally debt free otherwise but I have no savings to fall back on in an emergency.

    At age 71, I do have a small income in the form of a government check. That does not make me feel secure so I still want to set money aside for later years. As long as I’m healthy and able to continue working I will do so.

    I might add that I tithe and pay taxes on every penny that comes into my businesses as well as my personal income. I volunteer at my civic club as well as head up the gardens on our grounds while laying the groundwork for two (2) community gardens that should be up and running by Spring of 2012.

    If I could give advice to people, especially seniors, it would be to stay busy helping others in the community. Find something you love doing and share it with others. It will go a long way to keeping you in good health as well as keeping you young. You will never regret staying active and it will extend your life.

  12. What have I learned? That I can’t rely on my husband anymore. He is unwilling to change his financial life. The more frugal I am the more spending he does. What money I free up through sacrifice and conscious choices he blows through instead of paying down debt or saving for future needs. SO, I am committed to earning my own way (I’ve been a stay at home mom for twenty-two years) and investing in my future freedom. I’ve learned so much from this blog and the comments of readers. Thank you all for helping me make some tough decisions this year. I look forward with more hope and peace now; I wish the same for you.

  13. 2011.

    After 17 years on the job, and no raise for about 4 years, I was laid off at age 63.

    Combination of relief and panic. I had been interviewing for a while because it was obvious the company, and my situation, were deteriorating. I contacted everyone I had ever worked with and let them know I was available. Many responded.

    One knew of an immediate position. As luck would have it, I was hired within a week of being available. And at a higher salary then the previous job.

    I am still amazed, given the state of economy.

    Certainly I am older than just about everyone in the new company. But so far so good. Higher stress than I am used to, and one never knows what will happen. Maybe I will last there a long time and maybe I won’t. Doing my best, but it is uphill. So far it seems that I am holding my own.

    I learned something when interviewing: Enthusiasm helps. Really really helps. Maybe it is obvious, but it made all the difference.

    So with a steady income (and some severance pay from former employer), I am doing OK. maintaining savings, investments. Maintaining my commitments and volunteer activities.

    2012? We’ll see how it goes when it gets here.

  14. Good for you, JD. I was convinced if you could find something you believed in, it wouldn’t be that hard to get involved. It is when you either don’t know any needy but hard-working people or you have never actually seen a non-profit in action that it is easy to stay complacent.

    Once, however, you start giving of yourself, and if you get to see the fruit of your labor, it does change you.

  15. I wouldn’t give up the office. I’d set aside a room in the house and make that my office. Having a dedicated home office means you can deduct a portion of utilities, etc. as a business expense. That means, though, you must have a dedicated space – not a spot on the couch. I’ve had a home office for years and it’s been a good write off and work practice.

  16. 2011 was a big year of change. The year was pretty much taken over by an international move. I did a lot of extra work to cover costs while my husband did everything he could to make the move happen (which was all of it). But after the smoke cleared, we were doing ok until major vet bills sidelined us at the end of the year.

    Our savings are pretty depleted and our taxes are going up in the new year, but we’re settled, the dog is doing great, we’ve got new jobs/careers. 2012 will be doing what we can to build ourselves back up.

  17. I achieved my major financial goals for 2011: paid off my student loans (my only debt), save $10,000 in my emergency fund, and increased my net worth by $11,000 to $50,000. At the beginning of the year I wasn’t sure how I was going to do this. I knew that I needed to get a side job and earn extra money, but I wanted that side work to be in my field, and those things are never guaranteed. In August I ended up getting hired at another university as a teaching assistant (I’m a grad student), so it was win-win: more teaching experience and more money.

    Now that I’m debt-free and my emergency savings account is funded, I’m trying to figure out what to do next. I think my goal for this year will be to save towards a condo downpayment. I also want to start helping my parents out. Their health is not the best, and they live on only one income. And since my step-dad is a auto mechanic, he makes less when the economy is bad. Although they don’t want my help, I figure I’ll start saving $50/month in a “parents” fund for when they get older.

    But eventually I’ll need to take on less side work in order to finish my dissertation and try and get something published. But I’m not ready to do that in 2012.

  18. My 2012 looks to be challenging, but fun, as I work toward establishing a blog and business helping people with money choices and working toward financial freedom. (Yes, not unlike our friend J.D. Roth!) I know thousands if not millions of others have a similar goal, so I’m not counting on any income from the endeavor in 2012. As with most things, I expect perseverance will be the foremost ingredient of ultimate success.

    With respect to paid employment, while the part-time, contract job I’ve had for 3 years ends December 30th, I have a new (also part-time, contract) opportunity that would begin January 15th (and end March 31st) if I accept it. And I devote a lot of time helping to manage and run the carshare cooperative in my community, but that’s all volunteer!

    So 2012 is shaping up to be a fun year with new challenges and learning opportunities, but probably a bit tough on the bank account.

  19. Great article on financial priorities, J.D.

    As for myself, 2011 was fiscally better than 2010 (by almost 100%), and I expect 2012 to be even better. Mostly because I’ve recently stopped looking at money in terms of paying bills and more in terms of funding priorities (like you have illustrated).

    I’ve recently been hired on full time for a company that provides a great health benefits plan and retirement fund, so I’m going to take full advantage of both. I’ve also made room in my budget for a gym membership at a discount through my employer, and for once a week personal training sessions, which I’ve added for accountability reasons. I have also increased my budget for knitting. The knitting projects I do end up as gifts for other people, mostly elderly folks, so I count the time as part of my tithing. Lastly, I’ve budgeted money for textbooks as I’m in my last year of a graduate degree in theology, a degree which I intend to use towards empowering others going forward. To accommodate all these budget items, I’m working on lowering my expenses including housing expenses like utilities and food expenses like dining out (my personal vice).

    I think the single most important thing that I can do in 2012 with my finances is to take it one day at a time and to change the inner messages I tell myself about “needing” something or other. My ultimate plan is to work on being content with what I have, and to really understand how little I actually need based on what I currently own.

    Great writing, keep it coming.

  20. Man, J.D., don’t let people give you crap about the way your charity interest has evolved over the years. You, sir, got it right!

    First, you got your own financial house in order. Then, once you were completely financially independent, AND had taken care of a number of wants that were drivers of you wanting to quit your day job in the first place, only THEN have you become interested in charity.

    Before, you didn’t have any “extra” cash. Your financial glass was filling up, but not yet overflowing. It makes sense to wait until you have something to give (above and beyond a modest lifestyle) before giving something. Don’t take any crap for that.

    • A person can, however, volunteer time without offering up any money. Until I was able to give money, I always gave my time to causes that appealed to me. Even now, I volunteer my time at one organization, but not my money, choosing instead to give money and some time to another cause.

  21. I’m so glad you found a fun way to give back to your community–you’ll find it really rewarding. IMHO, the giver gets more out of the experience than the recipient. Volunteering has been a way of life for me since I was a kid, which is weird because my parents didn’t volunteer or give money to charity.

    2011 continues to be a strange year where we spent more on medical bills (husband’s hip fracture, then his cancer diagnosis) and helped our daughter in college. After deciding that teaching her how to budget her money is better than giving her money when she gets stuck, we’ve vowed to give her no money in 2012. We thought the medical bills would go down, but, sadly, my husband had another (different) cancer diagnosis last Friday so more bills in the new year. But we continued to max out all retirement vehicles and save everything we can including targeted savings for trips, new car, etc. In addition to the cancer, the big concern is about him losing his job because of all the medical stuff. Can’t control that, but we can control how we spend our money and how we invest it. We’re way better off financially than many so for that I’m thankful.

    • PawPrint: Wishing your husband Health in 2012. Nothing is ever so important as our health and our loved ones. Don’t forget to also take care of yourself as you give to those around you.

  22. JD: In regards to the office- if you find you struggle to work in the house after giving up the office, why not build an office in the garden? You have a large garden, plenty of room for a small office. Yes it would cost, but probably about the same as 2 years of renting your office, and you get complete control over things like the décor and the amount of natural light. Something to consider.

    Oh, and don’t let people give you a hard time about not giving to charity. A lot of people give to charities that do more harm than good. You can learn more at the site Good Intentions Are Not Enough (http://goodintents.org/)

    As for my own financial story, I am going to be poor for a good year and a half yet- I graduate 2013. My goal this year is to find somewhere I can afford in London so I don’t have to live with my parents and commute. My other goal is to sell something I’ve made.

  23. 2011 the good: refinanced house to a lower rate and for a shorter amount of time.
    feel productive at work, multiple house projects completed, the kids are doing well in school, 10K more in retirement fund, The bad: the money we took out for the refinance is being spent down, which causes me some anxiety, and still trying to get a handle on getting day to day expenses down.
    Probably our overall financial picture is not much changed but as we have a more liquid cushion I feel better about the situation.
    I’m hoping for 2012 to be done with main house projects and focus on other projects.

  24. Giving up your office will save you a great deal but I guess, it requires mastery on discipline to spend your writing days within your home. I agree with Afi on this – to dedicate a spot in the house to be your office. I’m also thinking, you might also want to try writing in a secluded park if there is close to home from time to time?

    My 2011 was better than the previous year. I would want to earn more though and would want to feel alive. Just like you, I would want to help other people in the little way I can.

  25. Paid off all my school loans, built up a substantial savings account, we were able to pay our medical bills with no worries and totally merged our finances.

    It was a big year and a culmination of about 3-5 years of extreme frugality.

    Next year, I’d like to give more to charity (we do a pretty good job already, but I’d like to give more) and buy a townhouse.

  26. That’s pretty big of you to admit where your short-comings are. Especially the admission of not giving much to or supporting charities. Kudos to you and look forward to reading more GRS in 2012.

  27. 2011 was great in terms of earnings (about 33% higher than 2010), but I can’t say I always used the increased earnings wisely. A few big misses:

    1) Not adjusting my savings levels as salary increases happened. I have an automatic transfer to savings of a specified amount the day after each pay day. When I set it up, the dollar amount was around 8% of my net take home pay. My first mistake was not to immediately reevaluate it after a large raise, leading to about six months in which my savings rate dropped. My second mistake was to not take into account that my other fixed costs did not increase at all with my raises, and thus that it would be reasonable to save a higher percentage of each paycheck. As 2011 concludes, I now save 15% of my take home pay. In 2012, I will increase that to 20%.

    2) Not having a Roth IRA until November. No, really. I had never set one up, and it wasn’t until I was bemoaning the amount of money I had sitting uselessly in savings (doing nothing for me) to my dad that I realized I was a fool not to be setting up a Roth. On the bright side, I did fund it, and will have my 2012 Roth funded fully by March or so next year. But I kick myself most days for having blown this one for so long.

    3) Continuing to let an old 403(b) languish instead of rolling it over. Still haven’t fixed that, but at least now I have the paperwork to get the ball rolling.

    4)This is a bit more esoteric, but I worked very hard, and sometimes tremendously long hours during 2011. 80-90 hour work weeks were not abnormal. As a result, I didn’t have time to plan for life events like birthdays, siblings’ weddings, etc., and wound up pillaging my checking account to fund last-minute expensive ideas. My least favorite? A hospitality suite at an expensive Portland hotel for guests of my sister’s wedding…that I never had time to alert guests about, and thus paid for for a couple of days to absolutely no benefit for her or her guests. Face palm.

    5) Ignoring my 401(k). The deductions happened on autopilot, but it was December before I ever checked in on things, and it turns out I didn’t like the default investments and would have done better if I had paid a little more attention. On the bright side, my employer will start some minimal matching next year, so I have already upped my contribution to get the full match starting in January. I have a stretch goal of maxing out the 401(k) next year ($17,000). We shall see.

    My overall takeaway from 2011 is that when earnings and time spent at work both dramatically increase, if you’re not careful, the additional money can slip away fast either because of inattention or the increased costs of life maintenance when you have no free time.

    • You should be able to continue your current year Roth IRA contributions up until the tax filing deadline for that year. So you can contribute for 2011 until April 15, 2012.

    • Christine
      You sound like your 2011 was a whirlwind of stress. Missing a sibling’s wedding for work??? That is so unimaginable to me. At least you realize the trouble it got you into. I wish you peace and time for yourself in 2012.

  28. 2011 will go down in the Foselli family history books as a year of sacrifice and the year WE BECAME DEBT FREE!. No mortgage, school loans or car loans. It’s definitely a feeling of relief & freedom. 2012 will be the year of savings – both for retirement and our dream home. We are both committed to this new path – savings & living frugally. It’s actually quite fun! Thanks for your column & all your readers for their insight, advice and candor. It’s helped to change my life!

  29. 2011.. Wow times goes by so fast 🙂

    I’ve quit my job this year without having a new job yet because I realized being happy was more important than the wages from that job. I’ve actually found a higher paying job now that I love.

    I’ve paid of a lot of debt, then got a tax letter saying I owed another 5k from 2008. Instead of putting my head in the sand I’m now actively trying to get this decision revoked as I do belief I don’t need to pay.

    I hardly give to charity. And a lot of people do not agree with me. But I do not see the use of saving 1 kid, if that means that 1 kid will survive and get 6 kids of him/herself that subsequently need help. It feels like by helping I’m multiplying the problem. There are too many people already, by keeping more people alive and letting the population grow even more the problems will become only bigger in the future. This also means I will not get kids myself.

    I know this sounds horrible, because yes, that means that I’m consiously letting people die now. But I honestly do not see how the problems in the future will be declined by helping now. So If I have the choice between 1 starving kid now, or 6 starving kids 20 years from now…

    So I do give money for disaster relief, as this will save those that the country/world can support. But other than that I feel that the best course of action is to do nothing.

    • I’m afraid that you have a very limited conception of what most international charities actually do. There are many forms of charitable giving, beyond disaster relief, that you could support without contributing to overpopulation.

      For example, you might consider giving to organizations that provide poor women in the developing world with access to contraception, thus allowing them to limit the number of children that they have to a more sustainable number. Increases in women’s education and economic status are both strongly associated with fertility decreases, so organizations that work in these sectors also help to work against overpopulation.

      Finally, one of the factors that makes families in some developing countries want to have large number of children is the high rate of infant/child mortality. Families know from experience that their children may not reach adulthood, and therefore have more children in order to ensure that some of them survive. Saving the lives of children in developing countries through provision of mosquito nets and vaccination campaigns is likely to *lower*, not *raise*, future rates of population increase.

      • Great reply from Sarabeth. It’s also worth noting that many international development charities, such as Oxfam, focus on capacity-building and economic development in poor countries, helping people stand on their own two feet instead of giving them handouts. And there is a ton of evidence to show that fertility rates decline as wealth increases.

    • Maybe you should give to planned parenthood then…. Get birth control to the people. There are other charities that get birth control to folks in other countries as well. They used to be really popular with Republicans.

  30. 2011, el año para recordar

    Hola JD! Espero que este comentario sea una buena oportunidad para practicar tu español, pues veo pocas respuestas a tus posts en este idioma. Decidí escribir aquí después de varios años como lector anónimo, atendiendo a tu pregunta sobre cómo nos fue en el 2011. Y también como agradecimiento por las enseñanzas que has compartido en GRS.

    Desde hace cuatro años sigo tu blog con mucha atención. Me gustan mucho el tono personal y el lenguaje sencillo con el que tratas los temas financieros. Como lector, innumerables veces me vi reflejado en las situaciones que tu y tus escritores invitados publicaban…sobre todo en las que describían personas sin control de sus finanzas!😳

    Así es que desde el 2007 decidí pasar de ser un lector pasivo a hacer cambios reales en mi vida financiera. Aunque estoy en un contexto diferente por mi país y mi situación económica personal, traté de poner en práctica algunos de los conceptos que son universales. Comencé por alfabetizarme financieramente, mezclé ideas de GRS y de Dave Ramsey, consulté a familiares experimentados y a algunos amigos financieros, y me tracé un plan de libertad económica.
    Poco a poco logré metas que antes ni siquiera me importaban. Hice un presupuesto mensual, registré los gastos familiares hasta el último centavo, puse en cintura las tarjetas de crédito, hice abonos extra a mi crédito de vivienda, rebajé las cuentas de agua, luz eléctrica y gas con un consumo más eficiente, y con mi esposa acordé tomar vacaciones más austeras. Entendí el leasing del carro que antes había firmado sin saber qué significaba 😥y así, con paciencia, fui logrando pequeñas victorias que en 2011 llegaron a su momento máximo. 😃Por eso el 2011 es un año memorable.

    En 2008 terminé el pago anticipado de los seguros de universidad para mis 2 hijos.
    En 2009 cancelé el leasing de mi carro, y temporalmente, lo cambié por un auto de menor valor.
    Y en 2011, ta daaaaa!…terminé de pagar mi casa propia. Todo este tiempo he estado gastando menos de lo que gano y ahorrando en un fondo de pensiones. Hoy soy un ser humano 100% libre de deudas😃.

    Aunque se que el dinero no compra la felicidad, si he construido una base de tranquilidad y he podido comenzar a ayudar con mayor decisión a personas que en mi familia necesitan apoyo. No soy una persona rica: mi esposa y yo tenemos que trabajar duro todos los días para conseguir nuestro sustento y cultivar un capital para la vejez. Pero al menos estoy consciente de lo que tengo y de lo que no, y en la mitad de mis 40’s puedo decir que construí confianza para lograr metas exigentes.

    En 2012 espero comenzar a entender mejor los mecanismos de inversión y a ahorrar lo que antes les servía a los bancos en bandeja de plata con los altos intereses del leasing, crédito hipotecario y tarjeta de crédito…y tal vez le de vida a un blog sobre esta experiencia o sobre mi campo profesional (marketing, comunicación y periodismo).

    Esa es mi pequeña historia y quería compartirla en GRS. Aunque suena fácil, hubo muchos sacrificios que nos hicieron fuertes. Hoy seguimos teniendo una vida austera, aunque de vez en cuando nos damos gustos que antes estaban prohibidos.

    Un saludo especial para ti y para todos los lectores hispanos de GRS. Que en el 2012 se cumplan sus metas, pequeñas o ambiciosas, y que…vengas a Colombia a practicar tu español y a conocer un país que es muy distinto a como lo pintan los medios de comunciación y las películas!! 😉

    Luis G.

    • Gracias por tus amables palabras, Luis, y gracias por compartir tu historia.

      Esta es la primera repuesta en español en GRS. ¡A mi me encanta! Me alegro que pueda leerlo. No puedo entender todo (hay algunas palabras no he encontrado antes de ahora) pero puedo entender la mayoría de la repuesta. También no creo que mi repuesta propia sea perfecto pero voy a intentar escribir solamente en español.

      Tengo algunas preguntas: ¿Es deuda común en Colombia? ¿Es ahorrar común? ¿Fondos de pensiones? He hablado con mi profesora particular sobre las costumbres finanzas del perú (y otras países de Latinoamérica) y creo que la gente tiene problemas muy diferente que lo que en los estados unidos. Es muy interesante.

      Si tu empezas un blog sobre tus experiencias, dime por favor. Quiero leerlo.

      Gracias por escribir!

      • Hola de nuevo, JD! Gracias por tu respuesta.

        La deuda es muy común en Colombia. Aparte de tener un nivel de ingresos per capita muy bajos, tenemos una cultura del endeudamiento muy acentuada. Incluso las personas que tienen un trabajo estable o buenos ingresos tienen niveles de deuda altos. Además el sistema bancario colombiano se caracteriza por ser bastante indolente, y cobrar tarifas excesivas por los servicios que presta. Así es que el porcentaje de personas con acceso a la banca formal es bajo, y deben acudir a prestamistas informales que les cobran intereses descomunales.

        Me siento muy orgulloso de ser el autor de la primera respuesta en español. Espero que sigamos en contacto!!! Ahhh, y te puedo decir que Your Spanish is better than my English!!! But if you need any assistance with te Spanish words

  31. Why don’t you try teaching basic finances in your own back yard, at the Boy’s and Girl’s club, or after school programs to the under privlidged in your own community? Charity starts at home. We have MUCH need right here on our own soil. No man is an island, and some day you will wish someone poured something into your children that you couldn’t without the thought of financial gain.

    • While it makes intuitive sense that charity should begin at home, the truth is that the need is much greater in the developing world and your dollars go much further. Forty percent of the world’ poor population lives on the equivalent of less than $2/day (a figure adjusted for purchasing power, so you have to imagine how you might live in America on $2/day). They survive using very sophisticated financial strategies (read the book “Portfolios of the Poor,” it’s eye-opening), but if someone in the family gets sick or injuried things fall apart quickly. You can save a life in the developing world with $40 or less; it costs thousands of dollars to save a life in the United States. In the time it takes for you to read this comment, a few hundred kids in a developing country have died from easily preventable causes. Yes we have needy people in our own backyards, but the poorest American is still impossibly rich by third-world standards.

  32. In case anyone’s interested…

    2011 saw me continuing good habits begun in recent years. The big one is simply not spending on insignificant things and choosing the more affordable option when presented with a choice. I’ve been able to save 1/3 of my monthly take-home pay consistently this year, and indeed have been so ahead of expectations that I treated myself to some computer upgrades and fun things at year’s end. Living beneath my means became a habit this year. That’s my big achievement.

    On the whole comic book thing. I have a similar weakness–music–one probably shared by a lot of GRS readers. I discovered this year that keeping my finances in order, and watching my account balances grow, is more pleasing than buying new music. CDs and MP3 files aren’t quite as much fun as they used to be, and I found myself doing several large purges to get rid of unwanted stuff. And what I do buy, I really savor, which has I think increased my enjoyment of music and my overall quality of life. So, JD, you may not have to swear off comic books completely, but cut your consumption down to the absolute best stuff that you know you will genuinely read with pleasure.

    2011 also saw the death of my father and reiterated for me the importance of estate planning and end-of-life financial management. My father was OK with this in some ways, and not so good in others. He was a miser. He scrimped and pinched and denied himself a lot of earthly comforts to have a retirement nest egg. He died with a lot of money saved, more than his lower middle class house and lifestyle would indicate. That said, his savings were arranged rather haphazardly and we’ve been trying to simplify and streamline his accounts to make things easier for my widowed mother. This experience has driven home the importance of knowing WHERE your money is, having organized records, making sure beneficiaries are declared, and other such simple but important matters. My Dad’s files were a travesty and I spent most of Christmas shredding old receipts (I found a plumbing bill from 1973 in one file…) and properly filing papers that Mom will need.

    In short, I’ve tried to live like people did in the 1950s and 60s, not like they did in the 1980s and 90s. Maybe that’s too simple a formulation, but that’s how I think of it.

    Happy New Year, everyone!

    • I’m sorry about your father. Seeing the chaos does make you think about getting your own financial house in order, doesn’t it? My father scrimped and saved, too, and never spent. I kept trying to get him to upgrade his assisted living apartment, get a new bed, etc., but in the end, he got pleasure out of looking at his bank balance increase. Frankly, not the way I want to live–there can be a balance between spendthrift and miser.

      • Thanks for your sentiments, and yes, it’s been a wakeup call. My parents are financially comfortable in retirement, which is a major achievement, but they could have made some simple improvements to up their quality of life at minimal cost. Dad wasn’t good at judging such things. I’m trying to do better!

  33. I remember when I started reading your blog about a year and a half ago, I had no idea what Crossfit was. Now, I’m happy to say that I definitely share your enthusiasm for CF! When we started, I thought of you and could totally see the value in it. I’m 4 months in and a shoulder injury I had is well enough to allow me to clean & press 85# and climb a rope – things I never thought I’d do again.
    How this relates to my family’s finances, however, is we can only afford the drop-in rate (which the owner bumped down to $10). We only go once or twice a week, and work out at home the other days. We have twins, and one has Cerebral Palsy so it is important for me to be a SAHM right now, but we are making things work!

  34. I’ve had a great year in 2011 – GRS helped me so much in understanding my finances and mapping out a plan to get rid of the small amount of credit card debt that I had while building savings. This year, I increased my income by pushing for a raise, started a 401K at work, and started to track my spending to eliminate waste, pay down debt and started to save 25% of my income (not an easy feat living in one of the most expensive cities in the world!)

    In 2012, I will get married (paying for the wedding in cash – no going into debt for one day!), move in with my husband to a subsidized apartment through the hospital (he starts his medical residency next year), and start our marriage on the right foot by budgeting and continuing to grow our joint savings account!

    Happy New Year to all – wishing you a great year (financially and otherwise!)

  35. 2011 has been a financially challenging year for us: new car, new child, new business. Our net worth and income potential are increasing, but our cash flow is tight and we feel less well off.

    In 2012 we anticipate some major changes in job and living situation, but God himself only knows where he’s going to taking us.

  36. 2011 was a mixed bag for me. I’d been reading and learning from this blog for about a year, and in the first quarter finally paid off all my credit card debt and began that emergency fund. I felt really great about that! Then in July I lost my job. I had enough banked to continue to pay the mortgage until this month. It’s the first time I’ve ever missed a payment. (Unemployment compensation provides me with 29% of my former income.) Been networking like crazy and have had several interviews but so far nothing has panned out. I am remaining positive though, and I have some new job-search strategies that I will kick in as 2012 starts. I have greatly increased my volunteering since I have the time. And I agree with previous posters about how much you get out of that giving. And though I cut back drastically on financial donations I was still able to make my yearly end of year contribution to a local community school for homeless children. So, not the best of times, not the worst of times. I appreciate this blog and all the valuable info provided by commenters. Happy New Year everyone!!!

  37. Volunteering is something I have been trying to do more of. I recently had the opportunity to volunteer and teach a financial literacy class to a bunch of 8 graders. It was soo much fun and very rewarding.

    I believe volunteering your time to others releases something within you that makes you feel and think differently. Giving should be an important part of everyone’s life.

  38. HOLY S***! IT’S A SMALL WORLD!

    I totally worked for Adelante Mujeres, first running the info booth at the farmer’s market, and then volunteering my time on computery, behind the scenes stuff (creating spreadsheets and whatnot).

    Do you know Gina, Ali, Alejandro, Kaely, or Bridget?

  39. 2011 was a big improvement over 2010 and 2012 is looking good. DH and I are on track to be debt free and then we can really start saving for the retirement property.

    GRS has been a big part of me sorting out my personal issues about money. Thanks to J.D., all the writers, and many of the commenters.

    J.D., if you don’t already know her, Havi (at The Fluent Self) might be interesting for you to talk to about World Domination Summit.

  40. We are hoping to have a new approach to charity in the new year as well. Before I married I used to give to a couple of charities I liked through payroll deduction, but I found that it didnt make me feel a connection to how the money was actually spent because it was all automatic. The last few years our giving since being married has been haphazard, basically just giving to whoever asks (some “forced giving” related to my husband’s position at work and then the ubiquitous fundraisers for walking, running, bowling, etc for various causes.) We were giving a decent amount, but we werent feeling good about it because it was giving to someone else’s cause and not our own. In 2012 we are going to try something different. We will still give to friends and to the causes my husband is asked to support through his company, but we are also going to pick one big giving goal to fund in 2012 (things like building a well for clean water in africa, buying certain animals from Heifer International, or giving a set amount as a scholarship to one of our alma maters). Each year a different member of our family will get to pick the goal and we will all track our progress throughout the year. When our baby is a bit older I hope to also spend the year learning about topics related to our charitable goal. Logically, I know that saying we are going to donate $1000 to heifer international this year is not really any different than saying that we are going to buy 2 cows, but for some reason the latter makes it seem more personal. My husband and I are excited about the new approach, and have already designated a savings account for our contributions to accumulate until we have enough to fund our gift.

    • What an interesting and helpful post. Thanks for sharing.

      My charitable giving has tended to be like yours: lots of little gifts. I’ve thought about consolidating my giving, too, but was wondering exactly how to go about it.

  41. 2011 was all about getting rid of debt for us. We still have a debt on our apartment which we had to let go of at € 30k loss. But we’re down to owing € 9k now on that (yeah us!).
    And then there’s € 3k of student loans. We will get rid of all this debt in 2012 and then we’ll start getting ready to have a family!!

    Bring on the new year, we are ready!

  42. I have 3 credit cards: 1 for gas, which is normally paid off each month; 1 for most other credit expenses; and 1 which has been used as a balance-transfer, 0% interest card. Well, as of tomorrow, the 0% interest card will be paid off! I systematically paid a set amount each month, and now I am done with this card. In 2012, I will be tackling card #2. I am looking forward to having this card being paid off each month too.
    I Love Get Rich Slowly- it has been very helpful.

  43. people need to take better control of their finances and make better investments. financial planing is the right key for make future comfortable,
    Planning for the future isn’t about having all the right answers; it’s about being willing to ask the right questions.