The Weight of Money

I took a few minutes from a too full schedule to follow links this week. I’m glad I did, there were several articles I enjoyed and some that related to some current and upcoming concerns that I look forward to getting to sometime this week.

First off, a new series from The Simple Dollar: The Road to Financial Armageddon.  This is mostly because I like ongoing series. I like this one because I feel taking a long look at your financial background helps you see where you are and how to get where you want to be.

Of upcoming importance are the posts by Verve Coaching outlining getting a better job and My Financial Awareness’ post on staring a getting-a-raise discussion. There may be some serious job searching in the not-near-yet-not-so-distant future if I continue to play my cards right.

In terms of relationships, there is a good outline for relationships where partners have different spending habits at The Frugal Duchess and Mac’s Money Blog focuses on that most important relationship – the one with yourself – and remembering to take care of your needs/wants too.

PF bloggers have varying levels of comfort with fiscal disclosure. Some of us are willing to throw all of our numbers out to the world while others prefer to give a more generalized representation of their finances. It is great having this variety of information available, and I especially enjoy those that do share the “open wallet” approach. However, for the PF bloggers that like to bare all, they may have partners that prefer a little more modesty with their exhibition.

I often get excited about some of my posts (yes, I enjoy my own writing as much as other’s) and sometimes like to share them with the partner. I was very energetic about the recent post on credit card numbers and couldn’t wait to show the partner. I bring up the page, all accomplished-smiles, and he says “you put all my numbers online?”

There was that tone, discomfort, uncertainty, disbelief that I’d put information like that out to the world. For a brief moment, I felt like I’d been a little too naked, that I’d crossed a line, because not only was I strutting my stuff in the streets, but I’d suddenly dragged him, unwillingly and unknowingly, out with me.

Then the moment passed as my enthusiasm began to clothe the numbers, placing them in an externalized perspective, and creatively shifted the focus from the public display to the impressive recent accomplishments. The tone was gone, the numbers remained, and it probably got filed away as yet another comfort level I’ve stretched.

These are real numbers that served up a does of reality-shock. Maybe others will think of these numbers when they are planning to carry a putchase on credit.

Relevant Factors: the numbers start with a ‘beginning’ balance of $34,340.20 and an average interest rate of 16.65% in January 2000. Purchases were continually made throughout this time. 9 months of data, including payments and balances, are missing from these records.

* six months of data missing
** three months of data missing

Important: These numbers are not representative of a debt reduction plan. New purchases were continually made – about $48,000 in new purchases if my math is right – and this is simply a record of overall activity.

In 6 years, the credit card companies have made $28,063 in interest – ouch. Imagine if the partner had only paid the minimum payment required.

Kudos: In light of these numbers (or to break out of the shadow of them), I want to point out the recent strides the partner has been making toward debt reduction. When we first started getting serious about the long term potential of the relationships, his credit card debt was $30,503.71 – a number I almost decided was too high for long term partner potential. However, he was taking action to reduce that number and continually increased those efforts. As of the month of the wedding, the debt was down to $20,835.39. As of October, the credit card debt is at $18.861.

The chart above is just for reflection and consideration. It is also evidence that you can’t hide from the numbers and long term debt relationships are financially draining.

NoCreditNeeded is hosting this week’s Festival of Frugality in Fairy Tale style. I do enjoy these creative posts but find that I’m actually even less likely to click on any links when formatted this way. Being short on time with work deadlines, I try to limit my blog reading and need to carefully consider each link I’m going to follow.

Just to clarify, I really like NCN’s creative presentations. I just can’t point out ones that I enjoyed since I didn’t follow any of the links this time – sorry.

It is finally time for me to get to the children and finances post I referenced last week. I’ve been very focused on expanding my family for a couple years now. In the beginning, it was easy to find reasons to not do it – no job was a big one and second was no partner. Now that I have those two things settled, it is getting harder to push away the choice to have another child.

The partner has given many excuses and they are all financial related. Right now the biggest one is that we need to have a house first. Well, that excuse was just fine when we had a contract on a house (that fell through) but it isn’t cutting it right now. But, despite my opposition to his reasons, I can’t help agreeing that now isn’t the right time.

However, when will it ever be the right time? Is that time ever going to show up or will we always find another excuse to put it off even further.

I can come up with so many reasons to not have a child: just started a new job, we’re in credit card debt, we have no house, we want a house with some land but maybe we’ll never afford it with just one of us working, the daughter is getting older (she is 11) and do I really want to start over, the partner is getting older, do I want a career or a family…

Those reasons can go on and on and the only thing that I have to combat them is that a child is a wonderful addition. The Coin Jar’s post, Pay off the house or have another child? No contest, includes the best advice anyone could give: let your heart be your guide.

TCJ points out that comparing all the financial or professional reasons to having a child is an apples-to-oranges comparison. I agree – a child’s laughter can’t be weighed on the same scale with an annual raise.

TCJ’s advice, let your heart be your guide, applies to those who choose to not have children based on their established reasons. I feel that you must consider the entire emotional spectrum of the decision and not rely solely on a pros/cons list. If, after considering practical and emotional options, you feel that a child is not the right choice, then that is the right choice for you.

With all of my excuses, they aren’t enough to overcome the pressing desire to have another child. No, we won’t start just yet, but I know that I won’t be able to rationalize it away for another full year either. I realize the “right time” will probably never come and that I’m not willing to give up such a beautiful experience waiting for it.

I’m taking a different approach for my goals this month. I’m feeling the need to set myself up to succeed and am basically setting goals I’m positive we will reach. Yes, this means it’ll just work out to a little ego stroking and comforting pats on the back come December – but that’s just what I need right now.

Goal: Reduce Credit Card debt by 30%.
This is a pretty lofty goal but I’ve made it a priority for November 2006. We’ll start off the holiday season with a gift to ourselves of more than $5,500 in CC debt reduction.

Goal: Begin funding the daughter’s savings account.
I have been planning to start putting all child support received for the daughter into her online savings account for several months now. Time to get past planning and start acting.

Goal: Transfer all personal bill pay accounts to joint account.
I have several auto-pay bills that come out of my personal account. I need to move those to my joint account asap.

Goal: Set up dentist appointments for all family members.
We have some FSA funds leftover, mostly because of a several month vacation from maintenance medications, which need to be used by December 31. We figure a family trip to the dentist will take care of that for us.

There, four (impressive) goals that I feel are guaranteed success.

The newest Carnival of Personal Finance has been posted at City Girl’s Financial Blog. There are some interesting articles but nothing that really jumped out at me. Plus, I’m still working on replying to last week’s articles.  In the meantime, check it out and I’ll work on getting some articles written and posted for this week.

For families on tight holiday budgets – either by circumstance or choice – it can be difficult to balance children’s wants with budgeted spending. I’ve developed some suggestions that might help.

The youngest children are still establishing their sense of what gift giving/receiving is and are often less put off by fewer gifts. Suggestion: pretty much any toy, any price, and any number will do. If only we could all hold on to this phase throughout the years of gift giving (note: many families do hold onto this phase).

Young school age children have often established a baseline of expectations, often set by peers and media, and may have an “I want more” mentality. Suggestion: to combat the higher expectations of these children, you can go for quantity versus quality. Dollar stores offer a lot of items that will help children with the need to open another gift without putting a large strain on the wallet. However, you must be careful about this method – it could set you up for overspending in later years.

Older school age children have a balance of wanting a fair share of gifts but also want better things. Suggestion: This is the point where the previous strategy backfires. They now have established an expectation of many gifts and now want better gifts. Many times you can just explain how the better gifts mean fewer gifts. Little stocking stuffers also go over well with this group and helps balance expectations of quantity and quality.

Teens are often more focused on the bigger ticket or main interest gifts and less concerned with how much they get. Suggestion: establish a per-child budget and buy what you can of what they want.

Now, the above suggestions are on the slippery slope of producing consumerism drones. Each of these suggestions should include honest discussions about the meaning of giving and tied into family values. In our family, gifts only come twice a year and we use those opportunities to meet some of the year-long wishing for things and to maintain the holiday magic for the daughter.

Also, some suggestions for how to outline conversations about holiday spending include:

Phrase budgeted spending in a positive light. Say “Think about a couple of things you really want this year and we’ll see what we can get” versus “We’re really tight on cash this year, so there won’t be as many presents to open”.

Educate children about why you establish a holiday spending plan – you can explain your financial goals and talk about how creating budgets helps you reach those goals. Again, the point is to avoid giving the impression that your goals are creating a loss for them, i.e. “We look forward to enjoying holiday season while keeping our goals in mind” versus “We’re trying to buy a house so we’re not going to buy many presents.”

Money and blogging are increasingly linked together. While I’ve held very strong black-or-white opinions, I’ve finally reached a compromise that I’m comfortable with. Seeing how this is a blog focused on personal finance, I see nothing wrong with attempting to increase passive income streams. One way that many people have done so is through advertising and compensation.

With the creation of PayPerPost, I’ve really had to examine my comfort level with reading and posting on topics solicited by advertisers. This isn’t something new for me – I’ve previously has publishers send me books in hopes for a review,;however, PayPerPost just takes on a whole new approach.

I joined PPP and posted two articles based on available opportunities. However, PPP took so long to approve my blog, I was not able to submit them and have since been in a ethnical dilemma about whether or not I should be using the service. Thanks to a recent PPP opportunity – ironic, I know – I’ve finally reached a comfortable compromise.

Disclosure Policy.org is addressing this issue of blogging and compensation. Yes, this is a PayPerPost opportunity, but I’m responding to it in terms of its solution to my personal dilemma. They recognize the ethical situation that arises when bloggers are provided compensation for their opinions and posts. They provide a personal disclosure generator that helped spell out many options bloggers have in accepting compensation and disclosing that compensation.

Through reading the many options the generator offers, I’ve been able to make some decisions about how I want to handle compensation.

• I will accept compensation for things I write.
• I will not allow compensation to influence my opinions.
• I will not post solely for the sake of compensation.
• I will identify posts that receive compensation or we’re solicited through donations (i.e. books).
• I will create a disclosure policy that will spell out these terms.

If I find that accepting compensation for posting begins to interfere with my writing, I will cease accepting compensation and return to uncompensated blogging. I welcome anyone to comment their content opinions and speak up if they feel that my site, or anyone else’s, is being overly influence by compensated topics (PPP).

October was the first fully funded month of combined finances and I’m still working out how to best share this information. I may have to create an alternate system as I get more comfortable with YNAB budgeting program – it has advantages and disadvantages that I’m still working through.

Our monthly budget is much more detailed than what is shown. I’ve displayed some basic categories and categories showing activity. As our income streams increase, I’ll break out the income from salary, ebay sales, etc.

One thing to note is that YNAB forces you to budget all of your income. If you overspend in a category, it doesn’t reduce your current available funds (as I would expect), but instead reduces next month’s available funds. Also, if you underspend, your current available funds remain the same and that category has a surplus of funds next month. Because we’re getting used to this system, our budget was reworked several times to allocate all of the income and to adjust to overspending/underspending. So what you’re seeing is more a representation of what we spent and the results of reworking the budget to match actual spending instead of a true reflection of how well we budgeted. I may have to rework this system if I find we constantly have to rework the budget at the end of the month.

General Comments: Savings were intentionally unfunded. Due to early payments in September, only two credit cards were included in October spending – November will get an additional payment and, hopefully, some found money spending. Gas budget was originally set for $400 – commuting allowed me to have one tank of gas last for over a month. Eating out was under the original $200 budget but more than my $150 goal.

Spending: We underspent by $64.07 for October 2006!!!